GLOUCESTER COUNTY IMPROVEMENT AUTHORITY VS. GALLENTHIN REALTY DEVELOPMENT, INC. (L-2718-10, BURLINGTON COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: July 24, 2018
• Docket: A-2342-15T1
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2342-15T1

GLOUCESTER COUNTY IMPROVEMENT AUTHORITY,

Plaintiff-Respondent,

v.

GALLENTHIN REALTY DEVELOPMENT, INC.,

Defendant-Appellant,

and

STATE OF NEW JERSEY, BOROUGH OF PAULSBORO, COLONIAL PIPELINE CO., ATLANTIC CITY ELECTRIC CO., and PAULSBORO ACQUISITION CORP.,

Defendants. __________________________________

Argued October 23, 2017 – Decided July 24, 2018

Before Judges Sabatino, Ostrer and Rose.

On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-2718-10.

Peter H. Wegener argued the cause for appellant (Bathgate, Wegener & Wolf, PC, attorneys; Peter H. Wegener, on the briefs). James M. Graziano argued the cause for respondent (Archer & Greiner, PC, attorneys; James M. Graziano, on the brief).

PER CURIAM

In this condemnation case, defendant Gallenthin Realty

Development (GRD) appeals from the jury verdict establishing

$750,000 as just compensation for the April 23, 2010 taking by

defendant Gloucester County Improvement Authority (Authority) of

roughly three acres of GRD's sixty-three-acre property in

Paulsboro.

GRD's sole point on appeal pertains to an evidentiary ruling.

GRD sought to confront a testifying Authority expert with a

document which, GRD argued, tended to establish that the property's

proximity to a rail line and navigable water enhanced its value.

GRD also intended to introduce the document into evidence. The

court sustained the Authority's objection and barred GRD's use of

the document. The court also denied GRD's motion for a new trial,

in which GRD revisited the issue. Applying our deferential

standard of review, we reject GRD's argument that the trial court

erred in its evidentiary ruling, and we affirm the final judgment.

I.

We previously affirmed the trial court's order approving the

Authority's power to condemn the property, and appointing

commissioners to fix compensation. Gloucester Cnty. Improvement

2 A-2342-15T1 Auth. v. Gallenthin Realty Dev., Inc., No. A-2214-10 (App. Div.

Aug. 8, 2012). The matter proceeded to a jury trial after GRD

appealed from the Commissioners' report.

This was only the most recent round in governmental efforts

to obtain GRD's property. The Borough of Paulsboro previously

designated all of GRD's property as an "area in need of

redevelopment" pursuant to N.J.S.A. 40A:12A-5, which would have

made the entire property subject to condemnation. Zoned for a

marine industrial business park, the property is mostly wetlands.

Slightly less than one third, at the northern end, consists of

developable land. The Mantua Creek, which empties at its northern

end into the Delaware River, lies on the property's eastern edge.

A rail spur runs along the western side of the property, although

it was uncertain whether it could carry rail traffic because it

was unclear whether it satisfied Conrail standards. To the north

of the site is the planned Paulsboro Port redevelopment property,

which includes land once used by British Petroleum (BP) as a

packaging site, and land owned by Dow/Essex Chemical. That

property is bounded to the north by the Delaware River, and to the

east by the Mantua Creek.

In 2003, the Borough joined Gallenthin's property in its

redevelopment plans with the larger property to the north, which

had already been designated an area in need of redevelopment.

3 A-2342-15T1 Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, 191 N.J.

344, 350-54 (2007). However, GRD appealed, and the Supreme Court

invalidated the designation. Id. at 373.

After the Supreme Court's decision, the Authority sought the

more limited taking at issue here. It condemned 3.395 acres in

fee simple, 0.256 acres in permanent easements, and a 1.73 acre

temporary construction easement. Of the 3.395 acres, slightly

over one acre was utilized for a new roadway, to link the site to

the north with a connection to I-295 to the south. The roadway

entered Gallenthin's property by a bridge over the Mantua Creek,

and then followed a northerly and then north-westerly path across

the uplands portion of GRD's property. Slightly over two acres

of the condemned property consists of a triangle of land to the

north of the road, bounded to the east by the Mantua Creek, but

accessible to the rest of Gallenthin's property by the embankment

along the creek.

The main point of contention at trial was the highest and

best use of the property. The Authority's expert, Jerome McHale,

testified that just compensation was $489,400 since the highest

and best use was future industrial. The Authority's witnesses

depreciated the value of the parcel's access to the Mantua Creek,

contending it was too shallow and narrow to accommodate vessels

that would support a commercially viable marine-related use.

4 A-2342-15T1 McHale noted there were many waterfront properties in the area

that did not utilize water access. Authority witnesses also

contended that utilizing the rail line for an intermodal

transportation facility on GRD's property would be uneconomical.

McHale asserted there were many industrial properties with rail

lines in the area that were unused because trucking was preferable.

McHale asserted that neither the existing rail line, nor the

property's location on the Mantua Creek, enhanced the property's

value.

GRD took the opposite position. George A. Gallenthin, III,

an owner of GRD, contended that the creek could accommodate barges,

before the bridge destroyed the feasibility of doing so, in part

because it left only twenty-five feet of clearance between the

creek and the bridge bed. He also testified that the rail spur

had been repaired and utilized by a neighboring landowner in recent

years. GRD argued that its proximity to the Paulsboro Port made

it a desirable location for ancillary port-related uses.

GRD's appraiser, Anthony Graziano, testified that just

compensation was $2,123,000. He explained that the highest and

best use of the property involved the water access and the rail

line. Specifically, he opined that the property could be used for

a dredge transfer station or marine cargo terminal. Graziano

5 A-2342-15T1 opined that rail access and water access each enhanced the value

of industrial property by fifteen percent.

During McHale's redirect examination, he recounted that GRD

had not commercially used its waterfront since 1964. He asserted,

"[I]n 2010 and as of today [the trial was in September 2015] there

is no demand for this type of waterfront property. There[] [are]

other old facilities out there . . . all along the waterfront that

are available if you want to put them to waterfront use. There's

just no demand for that."

On recross-examination, GRD attempted to rebut McHale's

assertion about the lack of demand. GRD's counsel inquired about

Paulsboro's effort to add GRD's property to the redevelopment area

that included the Paulsboro Port. He asked, "And you're aware

that back in 2005, the Borough of Paulsboro had started a

redevelopment project for the Paulsboro port. Right?" McHale

answered, "They did, right, about ten years ago." Counsel then

followed, "Right. And the Borough of Paulsboro wanted this

property . . . " At that point, the Authority's counsel objected.

An extended colloquy followed. GRD's counsel stated that he

intended to confront McHale with a 2005 "certification" from former

Paulsboro Mayor John J. Burzichelli, which was filed by the Borough

of Paulsboro in the first litigation to support the area-in-need-

6 A-2342-15T1 of-redevelopment designation.1 GRD's counsel argued that McHale

had opened the door to proof that there was demand for the property

for waterfront use; and that the Burzichelli certification

demonstrated such demand. Counsel also stated his desire to

introduce the certification into evidence. He proffered the

certification, which stated:

2. The Borough has signed a Ground Lease with BP Products North America in order to build a marine terminal and distribution center along the Delaware River. The Borough is completing negotiations with the South Jersey Port Corporation for construction and operation of a marine terminal.

3. Independent studies have concluded the development will have an estimated total impact of over $300 Million Dollars and will create thousands of new jobs in the municipality. The project will revitalize the entire community, strengthen the local economy, and draw new business to the surrounding area.

4. The Gallenthin's property is part of the overall redevelopment area and essential to the overall redevelopment of the area.

[(Emphasis added).]

GRD contended that Burzichelli's statement in paragraph 4

meant the property was essential to a port project, which in turn

1 Although denominated a "certification," Burzichelli did not comply with Rule 1:4-4(b). Instead, he certified that his statements were "true to the best of my knowledge, information and belief . . . ."

7 A-2342-15T1 meant it was essential because of its water and rail access. GRD

cited references in Gallenthin Realty Dev., Inc. to studies,

preceding designation of GRD's property, which noted that the

property was "not fully productive" as evidenced by the fact that

it was vacant and unimproved, and the rail line was underutilized.

See 191 N.J. at 352. That study made no mention of use of the

property for access to the planned port project to the north.

Ibid. GRD contended Paulsboro, in 2005, did not want the GRD

property included in the redevelopment area in order to provide

road access to the Paulsboro Port; GRD noted that a study at the

time instead recommended a vehicle route north of the GRD property.

The Authority responded that Burzichelli's certification said

nothing about why Paulsboro believed the GRD property was

essential. In particular, it failed to say the property was

essential because of its access to Mantua Creek. The Authority

noted that the redevelopment area already had direct access to the

Delaware River. Nor did the certification state that the property

was essential because the rail spur passed through it. The

Authority noted that GRD had the opportunity to call Burzichelli

as a witness, but did not.

The court sustained the objection, explaining: "I don't think

there's enough before me to say that Paulsboro wanted it for rail

and water, as opposed for some ancillary reason. Integral to the

8 A-2342-15T1 port can be a lot of things." The judge noted that Paulsboro's

successor in interest, the Authority, wanted GRD land for a bridge

and road, "I need something more to show that [the desired

objective in] 2005 was for the rail or water . . . ." Noting that

the Authority's objection was based on relevance grounds, the

judge disavowed reliance on N.J.R.E. 403, stating, "There's no

prejudice. This isn't a[n] [N.J.R.E.] 403 issue."

In denying GRD's motion for a new trial, the court amplified

the reasons for its ruling, stating that the document would lead

to speculation by the jury. "I think it's still very, very

speculative and it doesn't talk in terms of what the Borough was

contemplating its use for." The court also indicated it was

concerned about the hearsay nature of the certification, stating,

"I was worried about Burzichelli not being able to be cross-

examined on it when he could have been available to testify as to

what the plans were . . . ."

II.

GRD's sole point on appeal is that the court erred in (1)

barring GRD from confronting McHale with the Burzichelli

certification on re-cross-examination; and (2) barring GRD from

introducing the certification into evidence. GRD and the Authority

renew and amplify arguments they presented to the trial court.

9 A-2342-15T1 We are guided by a deferential standard of review. "The

trial court is granted broad discretion in determining both the

relevance of the evidence to be presented and whether its probative

value is substantially outweighed by its prejudicial nature."

Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999). Likewise,

a trial court exercises "broad discretion in determining the scope

of cross-examination." Manata v. Pereira, 436 N.J. Super. 330,

343 (App. Div. 2014) (quoting State v. Silva, 131 N.J. 438, 444

(1993)). In applying this standard, an appellate court may not

"substitute its judgment for that of the trial court, unless 'the

trial court's ruling was so wide of the mark that a manifest denial

of justice resulted.'" State v. Perry, 225 N.J. 222, 233 (2016)

(quoting State v. Marrero, 148 N.J. 469, 484 (1997)). There is

no error if there is adequate, substantial, and credible evidence

in the record to support the decision. Estate of Hanges v. Metro.

Prop. & Cas. Ins. Co., 202 N.J. 369, 384 (2010).

We view the court's exclusion of Burzichelli's certification

as a ruling on relevance. "'Relevant evidence' means evidence

having a tendency in reason to prove or disprove any fact of

consequence to the determination of the action." N.J.R.E. 401.

In determining relevance, the trial judge should focus on "the

logical connection between the proffered evidence and a fact in

issue, i.e., whether the thing sought to be established is more

10 A-2342-15T1 logical with the evidence than without it." State v. Hutchins,

241 N.J. Super. 353, 358 (App. Div. 1990).

The test for relevance is broad and generally favors

admissibility. State v. Deatore, 70 N.J. 100, 116 (1976). "The

burden of establishing this connection is not onerous: 'if the

evidence makes a desired inference more probable than it would be

if the evidence were not admitted, then the required logical

connection has been satisfied.'" State v. Garrison, 228 N.J. 182,

195 (2017) (quoting State v. Williams, 190 N.J. 114, 123 (2007)).

We have no doubt that proof of demand for the GRD property

because of its water or rail access would pertain to "a fact of

consequence" in the case. A key issue at trial was whether those

two attributes of the property enhanced its value, or were

inconsequential. The crux of this appeal is whether the

Burzichelli certification made an inference of such demand – by

Paulsboro in particular – more probable than it would be absent

the document.

We recognize the trial court did not recite the standard for

assessing relevance found in N.J.R.E. 401. The court addressed

whether the evidence was sufficient to enable it to conclude – as

opposed to a jury – that Paulsboro wanted the property for its

water and rail access. However, we are satisfied that the court

nonetheless applied the essential test of N.J.R.E. 401 – whether

11 A-2342-15T1 the evidence tended to establish GRD's proposition that Paulsboro

wanted the property in 2005 for its water and rail access.

Applying our deferential standard of review, we uphold the trial

court's assessment that the certification did not support such an

inference.

GRD's proposed use of the certification required multiple

inferential steps. First, the jury would have had to infer that

because Paulsboro deemed the property essential to the

redevelopment area, Paulsboro specifically deemed the property

essential to the port project to the north. Alternatively,

Paulsboro could have deemed the property essential because it was

a vacant, underutilized property. Indeed, the crux of the issue

before the Supreme Court was whether the property was subject to

designation under the redevelopment law simply because it was not

fully productive. Gallenthin Realty Dev., 191 N.J. at 348. GRD's

expert before the Paulsboro Planning Board contended that the

property "was not necessary for the BP/Dow Redevelopment Area."

Id. at 353 (emphasis added). GRD's expert also noted that a

Borough expert's recommendation to designate the property in need

of redevelopment "was based exclusively on N.J.S.A. 40A:12A-5(e),

not . . . that the property may be an important adjunct to the

BP/Dow Redevelopment Area." Ibid. (emphasis added). Hence, GRD's

prior position undermines its present arguments.

12 A-2342-15T1 Second, even if the jury made that first inferential leap,

it would also need to infer the property was essential to the port

project because of the property's own water and rail access. As

noted, the port project's land already had water access directly

to the Delaware, and to the same rail spur that passed through

GRD's property. Paulsboro could have deemed the property essential

to the port project because the property could be used for

ancillary purposes – such as providing road access, or providing

industrial uses that did not exploit the site's own water and rail

access.

Third, even if the jury made those two inferential leaps, it

would need to conclude that Paulsboro's demand in 2005 was

reflective of market demand, and therefore probative of the

property's value, in 2010. Authority witnesses addressed the

lasting negative impact of the 2008 recession on property values

in April 2010. The witnesses contrasted the 2010 economy with

headier times before the recession, and the economic recovery by

the time of trial.

Although not a basis for our decision, we also note that the

Burzichelli certification was hearsay, and, apparently,

inadmissible. The certification was an out of court statement,

offered for the truth of the assertion that the property was

essential to the redevelopment area. See N.J.R.E. 801(c). The

13 A-2342-15T1 Authority ultimately hired Burzichelli ten years later,2 but there

is no evidence that when he made the statement in 2005, he did so

as an agent of the Authority, so as to qualify as a statement of

an agent of a party opponent. See N.J.R.E. 803(b)(4). We are

aware of no other exception to the hearsay rule that would have

enabled GRD to introduce Burzichelli's certification into evidence

for its truth. The fact that the document appeared to be certified

did not make it admissible, putting aside the non-compliance with

Rule 1:4-4. See Jacobs v. Walt Disney World, Co., 309 N.J. Super.

443, 454 (App. Div. 1998) (stating that "factual assertions based

merely upon 'information and belief' are patently inadequate").

In sum, applying the narrow scope of review applicable to

evidentiary rulings in civil trials, we discern no persuasive

grounds to set aside the jury's award and the corresponding

judgment.

Affirmed.

2 We separately grant Gallenthin's motion (M-1601-17) to supplement the record with evidence of Burzichelli's subsequent employment.

14 A-2342-15T1