Township of Manalapan v. Gentile, 242 N.J. 295 (2020). Justice Solomon wrote this opinion, issued today, for a unanimous Court. The question was whether, in this condemnation case, the Law Division erred in allowing the jury to hear testimony that the subject property’s highest and best use would require a variance without first having decided whether it was reasonably probable that the necessary variance would be granted.
This issue was not new to the Court. In Borough of Saddle River v. 66 East Allendale, LLC, 216 N.J. 115 (2013), the defendant property owner had argued the highest and best use of its property was as a bank. That use, however, required a variance. The Court held that “only when the trial court has first determined that the evidence is of a quality to allow the jury to consider the probability of a zoning change should the jury be permitted to assess a premium based on that zoning change.” Speculative evidence, irrelevant evidence, or no evidence at all would not suffice.
After carefully recapitulating 66 East Allendale and the case on which it built, Comm’r of Transp. v. Caioli, 135 N.J. 252, 265 (1994) (“the jury may consider a potential zoning change affecting the use of the property provided the court is satisfied that the evidence is sufficient to warrant a determination that such a change is reasonably probable”), Justice Solomon said that the question posed here “was answered in 66 East Allendale.” He described the trial proceedings on the highest and best use issue and found that the Law Division (and the Appellate Division, which had affirmed the Law Division) erred because, here, “the jurors were invited to set a valuation based on a highest and best use that would require a variance without any judicial consideration of the probability of obtaining that variance.”
The context of the appeal was the Township’s motion for a new trial due to the admission of the testimony about highest and best use. Justice Solomon recognized that the standard of review of the denial of a new trial is “whether denying a new trial would result in a miscarriage of justice shocking to the conscience of the court.” Because “the quality of the evidence that the jury was allowed to consider undermined the soundness of the jury’s property valuation,” the jury’s verdict (a valuation of $4.5 million when the Township’s expert had valued the property at $2.83 million based on current zoning) was “a manifest miscarriage of justice that shocks the conscience and requires a new trial.”
On remand, the Court directed, if the property owner seeks to argue a highest and best use that is dependent on a variance, the court must first hold a Rule 104 evidentiary hearing and determine whether there is a reasonable probability that the variance would be granted. Only then could the jury be presented with evidence regarding that highest and best use.