Twp. of Manalapan v. Gentile

• Decision Date: 04 June 2019
• Docket Number: DOCKET NO. A-5302-16T1
• Parties: TOWNSHIP OF MANALAPAN, a Municipal Corporation of the State of New Jersey, Plaintiff-Appellant/Cross-Respondent, v. ANTHONY GENTILE, Individually and as Executor of THE ESTATE OF EUGENE GENTILE, EUGENE GENTILE, and FRANK GENTILE, Administrator of the ESTATE OF EUGENE JOHN GENTILE, Defendants-Respondents/Cross-Appellants.
• Court: New Jersey Superior Court — Appellate Division

TOWNSHIP OF MANALAPAN,a Municipal Corporation of the State of New Jersey, Plaintiff-Appellant/Cross-Respondent, v. ANTHONY GENTILE, Individually and as Executor of THE ESTATE OF EUGENE GENTILE, EUGENE GENTILE,and FRANK GENTILE,Administrator of the ESTATE OF EUGENE JOHN GENTILE, Defendants-Respondents/Cross-Appellants.

DOCKET NO. A-5302-16T1

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Argued January 7, 2019

June 4, 2019

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

Before Judges Sabatino and Mitterhoff.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-3821-10.

William J. Wolf argued the cause for appellant/cross-respondent (Bathgate Wegener & Wolf, PC, attorneys; William J. Wolf, Peter H. Wegener, and Ryan S. Malc, on the briefs).

Lawrence B. Sachs argued the cause for respondents/cross-appellants.

PER CURIAM

The Township of Manalapan ("the Township") appeals from a jury verdict in a condemnation action initiated against owners of a forty-nine acre plot of land. The jury returned a verdict that the fair market value of the property was $4,500,000. The Township seeks a new trial, alleging that the jury award exceeds the fair market value opined by its appraiser and is therefore against the weight of the evidence. In addition, the Township claims multiple trial errors. Defendants Anthony Gentile, the Estate of Eugene Gentile, and Frank Gentile (collectively "defendants") cross-appeal from a grant of partial summary judgment that dismissed their inverse condemnation claim, and the trial court's determination of an interest rate applicable to the jury award. Having considered the evidence from the record, and in light of the prevailing legal principles, we affirm.

We recite the relevant facts and procedural history from the record. Defendants owned a 48.94 acre plot of real property in Manalapan, New Jersey ("the subject property"). Prior to May 2002, the subject property was zoned inthe R-40/20 Residential District and in the Limited Business-Tenant District, which allows for residential subdivisions on half-acre lots. On May 22, 2002, the Township adopted zoning ordinance 2002-16, which changed the zoning of several properties, including the subject property, to RE - Residential Environmental, providing for a minimum of three acres per single-family residential lot. The areas surrounding the subject property are still zoned in the R-40/20 Residential District.

In April 2010, the Township adopted a bond ordinance to acquire the subject property for $2,800,000. On August 4, 2010, the Township commenced a condemnation action against the subject property, and subsequently filed a declaration of taking on September 14, 2010. Defendants filed an answer to the condemnation complaint and a counterclaim for inverse condemnation.¹ The Township permitted defendants to continue operating their farm and produce stand on the subject property during this time, until June 30, 2012.

On May 18, 2015, the Honorable Lisa P. Thornton, A.J.S.C., set a trial date in the instant action and ordered "[t]hat the issues to be tried by jury between the parties hereto is the value of the lands taken and the damages, if any, including damages from inverse condemnation resulting from such taking to any remaining property as of May, 2008."

On July 29, 2016, the Township filed a motion for partial summary judgment on defendants' inverse condemnation claim. During oral argument, defendants conceded that the subject property could be subdivided into marketable parcels, although the lot yield would be less than under the zoning that existed prior to the change in May 2002.

The Honorable Katie A. Gummer, J.S.C., granted the Township's motion. Judge Gummer noted that in order to state a claim for inverse condemnation, a party must be "deprived of all or substantially all of the beneficial use of the totality of his property." Defendants "conceded at oral argument that they have not been deprived of all or substantially all of the beneficial use of the totality of the property. . . . [T]he property could have been subdivided, though at a different density. They could have continued farming, though chose not to."

On December 27, 2016, the Township filed five motions in limine, requesting the following relief: (1) declaration that defendants waived all claimsand issues, other than fair market value, as of the date of taking; (2) limiting expert opinion on fair market value to a 2010 valuation date; (3) barring respondents from utilizing a 2008 valuation date; (4) barring respondents from utilizing a 2002 valuation date; and (5) barring respondents from presenting testimony pertaining to offers to purchase their property.

Judge Gummer, after giving the parties an opportunity to brief the issue, denied the Township's motions in limine. Specifically, with respect to setting the valuation date as April 2010, the court found that granting the motion would effectively dispose of the entire case because defendants relied on the May 18, 2015 order in building their case. Judge Gummer continued,

It would be highly prejudicial to [defendants] on the morning of trial to say that [defendants were] supposed to have a 2010 valuation and didn't. That issue could have been raised before the Court in any of the number of conferences before this Court, in any aspect of the motions filed by [the Township], it could have been raised. And it never was. Not until this motion [in] limine.

The matter proceeded to trial beginning on January 9, 2017.

The Township presented its retained appraiser, James Stuart, MAI, SRA, to opine on the subject property's market value. Stuart testified that as part of his assignment, the Township instructed him to assume that the property could yield twelve lots.

Stuart used the market approach in appraising the property. To determine the value of the subject property on a per-lot, rather than a per-acre, basis, Stuart examined comparable properties. Based on the comparable properties, Stuart determined that the value of the lots ranged from $203,000 and $236,250. He then took a lot value of $236,000 and multiplied it by twelve lots.

In determining the per lot value, Stuart took the subject property's location and the fact that the property has access to sanitary municipal water and the sewer system into account. The sites he compared to the subject property had well water and septic systems. Sanitary municipal water and sewer access are not typically available in rural areas such as where the subject property is located.

When asked, Stuart was initially unsure if he visited the subject property prior to the May 2008 appraisal. He denied having met defendants. Eventually, after being confronted with a prior appraisal from 2003, Stuart admitted to conducting an appraisal of the subject property for defendants and to having met defendants previously.

Defendants presented an urban planner, Paul Phillips, AICP, PP, to testify regarding the subject property's highest and best use. Prior to Phillips' testimony, the Township objected because Phillips' expert report was created forthe 2002 litigation and he did not create an updated report for the instant litigation. After listening to arguments from defendants and the Township, the trial court permitted Phillips to testify about a limited portion of his expert report. The court first expressed concern that Phillips' report was created for a prior litigation. However, this concern was alleviated when the court learned that both parties intended to use expert reports created for the prior litigation in the instant matter. The court limited Phillips' testimony to the following issues: (1) the physical characteristics of the subject property and the surrounding areas, and (2) his opinion regarding the highest and best use of the subject property. The trial court instructed defendants' counsel that Phillips was not permitted to opine about how to obtain a variance or the likelihood that defendants would be granted a variance.

Regarding the highest and best use of the subject property, Phillips testified that

given where this site is located, given the surrounding development context, given the fact that there's sewer service available to the property, that I believe it's ideally suited for a development that would be generally consistent with that R20 half acre designation and that would amount to essentially a density that would be, if my math is correct, up to six times the density of the underlying RE three acre zoning.

On cross-examination, Phillips conceded that the subject property is zoned for three-acre lots, not half-acre lots. To create half-acre lots on the subject property, defendants would need to change the zoning designation or obtain a variance.

Prior to trial, defendants had provided an expert market value appraisal by Russell Sterling, MAI, CRE to the Township in discovery, and listed Sterling as a witness in its pretrial disclosures. However, defendants did not call Sterling at trial. The Township made a motion to compel Sterling's testimony. The trial court denied the Township's motion, noting

[T]hat a party lists a witness in their pretrial disclosures does not require that party to call that person as a witness at trial. . . .

So there's no guarantee in that, that any of the witnesses in fact would be called[.]

Additionally, defendants examined Anthony Gentile primarily regarding the physical characteristics of the subject property. On cross-examination, the Township attempted to elicit the market value of the subject property that Sterling provided in his appraisal. The trial court also refused to allow questioning on the contents of Sterling's appraisal, finding that the contents of the report were hearsay as...