Eminent Domain Act Does Not Require Condemning Authority to Negotiate With Anyone Other Than Record Title Holder

Borough of Merchantville v. Malik & Son, LLC, 218 N.J. 556 (2014).  In this eminent domain case, the Appellate Division held that, in taking a piece of property by condemnation, the Borough of Merchantville was obligated by the Eminent Domain Act, N.J.S.A. 20:3-1 to -50, to negotiate in good faith as to a purchase of that property only with the property’s record owner.  That opinion, written by Judge Axelrad and reported at 429 N.J. Super. 118 (App. Div. 2013), is discussed here.  The Appellate Division rejected the argument of a mortgage holder that had obtained a final judgment of foreclosure for that property that the Borough was obligated to negotiate in good faith with the mortgage holder.  The mortgage holder’s petition for certification was granted.  This morning, however, the Supreme Court affirmed the Appellate Division’s decision.  Judge Cuff wrote the Court’s unanimous opinion.

In essence, the Court relied on the plain language of the Eminent Domain Act.  N.J.S.A. 20:3-6 states that before a condemnation action may be instituted, a condemnor must engage in “bona fide negotiations with the prospective condemnee, which negotiations shall include an offer in writing by the condemnor to the prospective condemnee holding the title of record to the property being condemned, setting forth the property and interest therein to be acquired.”  Judge Cuff found that this language clearly dictated the result.  “The plain language of N.J.S.A. 20:3-6 directs that the condemning authority is required to negotiate with the party holding the title of record it seeks to acquire.  Moreover, N.J.S.A. 20:3-2(c) defines a condemnee ‘as the owner of the interest in the private property being condemned.’  This language has been interpreted to mean exactly what it says, that is, the condemning authority has the obligation to negotiate only with the title holder of record when it seeks to acquire the fee interest.  City of Atl. City v. Cynwyd Invs., 148 N.J. 55, 70 (1997).”

Where less than a fee interest is condemned, such as a leasehold interest, the negotiations are to be with the leaseholder, as the Court stated in Town of Kearny v. Disc. City of Old Bridge, Inc., 205 N.J. 386, 407 (2011).  As Judge Cuff observed, however, Kearny itself said that “where a fee simple is being condemned, negotiations will take place with the fee owner alone.”

This result was consistent with the law across the country, Judge Cuff stated, citing Nichols on Eminent Domain, and with a pre-Eminent Domain Act case, Coles v. Midland Tel. & Tel. Co., 67 N.J.L. 490, 493 (Sup. Ct.), aff’d, 68 N.J.L. 413 (E. & A. 1902).  But it was the plain language of the statute that ultimately carried the day for the Borough.