New Jersey Transit Corporation v. Mary Franco

148 A.3d 424, 447 N.J. Super. 361

• Court: New Jersey Superior Court Appellate Division
• Decided: October 19, 2016
• Docket: A-3802-12T4
• Status: Published

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3802-12T4

NEW JERSEY TRANSIT CORPORATION,

Plaintiff-Appellant/ APPROVED FOR PUBLICATION Cross-Respondent, October 19, 2016 v. APPELLATE DIVISION

MARY FRANCO, CAROL FRANCO, M & C FRANCO & CO.,

Defendants-Respondents/ Cross-Appellants,

and

NORTH COUNTY COLLISION, INC.; VANESSA EXPRESS CO., INC.; CITY OF HOBOKEN; TOWNSHIP OF WEEHAWKEN; CITY OF UNION CITY; COUNTY OF HUDSON; PUBLIC SERVICE ELECTRIC AND GAS COMPANY; UNITED WATER COMPANY; NORTH HUDSON SEWERAGE AUTHORITY; NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION,

Defendants.

______________________________________

Argued January 5, 2016 – Decided October 19, 2016

Before Judges Reisner, Leone, and Whipple.

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-6300-09.

Victoria A. Flynn argued the cause for appellant/cross-respondent (DeCotiis, FitzPatrick & Cole, LLP, attorneys; Michael J. Ash, of counsel and on the briefs; Ms. Flynn, on the briefs).

Paul V. Fernicola argued the cause for respondent/cross-appellant (Paul V. Fernicola & Associates and Joseph R. Torre, P.A., attorneys; Mr. Fernicola, of counsel and on the briefs; Robert E. Moore, on the briefs).

The opinion of the court was delivered by

LEONE, J.A.D.

Plaintiff New Jersey Transit Corporation appeals from the

March 4, 2013 final judgment for $8,150,000, which the jury

awarded as just compensation for plaintiff's condemnation of a

property ("Property") owned by defendants Mary Franco, Carol

Franco, and M & C Franco & Co. Defendants cross-appeal a

February 12, 2014 order placing $1,967,865 in escrow to cover

estimated costs for environmental cleanup of the Property.

We hold defendants' proposal to build a cul-de-sac on its

Weehawken lots to serve proposed apartment buildings on other

lots requires either a use variance for a private driveway or

acceptance by Weehawken as a public street. Because defendants

failed to show a reasonable probability that Weehawken would

have granted either form of relief, we reverse the March 4, 2013

final judgment and remand for a new trial on just compensation.

Because the trial court properly calculated the escrow based on

the estimated remediation cost for the highest and best use used

2 A-3802-12T4 to calculate defendants' award, we affirm the February 12, 2014

order.

I.

The 1.89-acre Property was comprised of three parcels in

three different municipalities. A 51,362-square-foot parcel was

in the City of Hoboken's "Light Industrial" zone but was cut off

from the rest of Hoboken by the tracks of the Hudson-Bergen

Light Rail System on the Property's southern border. A 21,687-

square-foot parcel was in the City of Union City's "Multi-

Family – Residential" zone but was cut off from the rest of

Union City by the Palisades Cliffs on the Property's western

border. The remaining 9585-square-foot parcel was in the

Township of Weehawken's R-3 "One, Two (2) and Three (3) Family

Residence Zone." The Property's northern border was West 18th

Street and its elbow intersection with West 19th Street, two

one-way Weehawken streets which provided road access

respectively from and to the Property. The Property's eastern

border was an industrial building. The Property contained an

industrial garage in 2009 and previously had other industrial

uses.

In 2009, plaintiff filed a complaint in condemnation to

acquire the Property for public use pursuant to N.J.S.A. 27:25-

13(b). Plaintiff offered $934,500 for the Property, subject to

3 A-3802-12T4 the need to remediate any contamination. Commissioners awarded

just compensation of $1,350,000. Plaintiff and defendants

sought a trial de novo in the Law Division.

Plaintiff's original appraisal report valued the Property

at $990,000 if used for industrial development. Defendants'

original appraisal report valued the Property at $9,996,000 if

used for: a twelve-story, seventy-two-apartment high-rise

building in the Union City parcel; a four-story, fifty-four-

apartment mid-rise building in the Hoboken parcel; and five

townhouses in the Weehawken parcel. Defendants proposed road

access to the Property by a private driveway extending

Weehawken's West 19th Street.

The trial court adjourned the trial date, permitting

plaintiff to produce a new appraisal report and defendant to

respond. Plaintiff's second appraisal report recognized the

highest and best use of the Property was for multifamily

dwellings. The report valued the Property at $1,650,000 if used

for thirty-five multifamily residences.

Defendants' second appraisal report valued the Property at

$9,273,655 if used just for the high-rise and mid-rise

buildings. The report deleted the five townhouses from the

Weehawken parcel, which would instead be used for a cul-de-sac

providing access from West 19th Street.

4 A-3802-12T4 Plaintiff produced rebuttal reports, stating defendants'

proposed project would not receive municipal approval and

estimating remediation would cost $1,967,865. Defendants

produced final concept plans containing the cul-de-sac. On

October 3, 2012, the court denied plaintiff's motions in limine

seeking to exclude defendants' concept plans and expert reports.

After a seven-day trial, the jury determined just

compensation for the Property was $8,150,000, plus interest and

costs. The court's March 4, 2013 order entered final judgment

for $8,150,000, ordered the deposit in escrow of $1,967,865 as

the estimated cost to remediate the contamination, and denied

defendants' motion to bar plaintiff from filing a cost recovery

action. Plaintiff appealed, and defendants cross-appealed.

We temporarily remanded for a hearing on the estimated

remediation costs. On February 12, 2014, the trial court

entered an order keeping the $1,967,865 in escrow. Defendants

amended their cross-appeal to appeal that order.

II.

We must hew to our standard of review. Plaintiff's appeal

challenges the trial court's denial of its requests to exclude

expert testimony and reports concerning municipal approval of

defendants' proposal. We must apply a "deferential approach to

a trial court's decision to admit expert testimony, reviewing it

5 A-3802-12T4 against an abuse of discretion standard." Townsend v. Pierre,

221 N.J. 36, 53 (2015) (citation omitted). However, we must

also consider whether a variance "was needed in the first

instance. That is purely a question of law . . . subject to de

novo review." Nuckel v. Borough of Little Ferry Planning Bd.,

208 N.J. 95, 102 (2011).

III.

"In a condemnation action the determination sought is the

amount of just compensation. Just compensation is a function of

the value of the property in light of its highest and best use,

which is ordinarily evaluated in accordance with current zoning

ordinances." Borough of Saddle River v. 66 East Allendale, LLC,

216 N.J. 115, 119 (2013). "To constitute the 'highest and best

use,' a use must be . . . 'legally permissible'" in that zone.

Hous. Auth. v. Suydam Inv'rs, L.L.C., 177 N.J. 2, 20 (2003)

(citation omitted); see 66 East Allendale, supra, 216 N.J. at 137.

However, "[c]ertain circumstances may permit valuation to

include an assessment of a change in the permitted use of a

property, but only if there is a reasonable probability that a

zoning change would be granted." 66 East Allendale, supra, 216

N.J. at 119. "If valuation of a property based on another use

is to be considered by a jury, the determination of reasonable

probability of a zoning change must be made by the judge before

6 A-3802-12T4 the evidence is presented to the jury, and it must be made

clearly to enable appellate review." Ibid. Thus, "condemnation

actions may include competing experts opining over the

likelihood of obtaining a zoning change if the court first

determines that there is a reasonable probability of such a

change." Id. at 142.

The crucial issue on appeal is whether the creation of a

cul-de-sac on the Weehawken parcel of the Property would have

required and received approval by Weehawken.1 State law provides

"[n]o permit for the erection of any building or structure shall

be issued unless the lot abuts a street giving access to such

proposed building or structure." N.J.S.A. 40:55D-35. To

provide access from the high-rise and mid-rise buildings to an

abutting street, and to provide a driveway between the

buildings' parking garages and the street, defendants proposed a

cul-de-sac extending Weehawken's West 19th Street. The cul-de-

sac would occupy the majority of each of the lots in Weehawken.

1 Plaintiff also notes the complexity of seeking land-use approvals for a property in three different municipalities. However, on appeal plaintiff does not contest that the high-rise building in the Union City parcel could be developed as of right. Nor does plaintiff show that Hoboken would not have granted a use variance allowing the construction of the mid-rise building. Indeed, Hoboken's 2004 Master Plan proposed the section of Hoboken cut off by the Light Rail tracks be rezoned as residential to be more similar to Weehawken's zoning.

7 A-3802-12T4 A.

Use of defendants' Weehawken parcel as a cul-de-sac would

be a "use" of that land. The Township of Weehawken Code (Code)

provides: "Use shall mean the specific purpose for which land or

a building is designed, intended, occupied or maintained." Code

§ 23-3.1. "No building or premises shall hereafter be erected

or used for any purpose other than a purpose permitted in the

zone in which the building or premises is located[.]" Code §

23-4.2. A driveway is not included in the definition of a

"[s]tructure," and is thus not within the definition of

"[b]uilding," but it remains a use of the land and the premises.

Code § 23-3.1.

The permitted uses for lots in Weehawken's R-3 "One, Two

(2) and Three (3) Family Residence Zone" were one-, two-, and

three-family dwellings; townhouses with driveways covering not

more than twenty-five percent of the lot; clubs; and specified

accessory uses. Code §§ 23-5.2 to -5.4. The R-3 Zone did not

list the use of a lot solely or primarily as a street, driveway,

or cul-de-sac as a permitted, conditional, or accessory use.

The situation here resembles that in Nuckel. There, our

Supreme Court considered whether a developer who proposed to

place a driveway on one lot to service a hotel on the adjacent

lot was "required to obtain variances under the Municipal Land

8 A-3802-12T4 Use Law (MLUL), N.J.S.A. 40:55D-1 to -163, specifically N.J.S.A.

40:55D-70(d)(1) and (2)." Nuckel, supra, 208 N.J. at 97.2

N.J.S.A. 40:55D-70 provides "[t]he board of adjustment shall

have the power to . . . d. [i]n particular cases for special

reasons, grant a variance . . . to permit: (1) a use or

principal structure in a district restricted against such use or

principal structure[.]"

In Nuckel, supra, the zoning ordinance did "not address

driveways, access roads, or the like as permitted uses or

conditionally permitted uses in the [zone]." 208 N.J. at 98.

The Supreme Court observed that was "likely because, as a rule,

. . . a driveway is considered an accessory use." Id. at 104.

However, the Court emphasized that the zoning ordinance in

Nuckel defined an accessory use as "a use which is customarily

incidental and subordinate to the principal use of a lot or a

building and which is located on the same lot." Ibid. (citation

omitted). The Court ruled such language "precludes the

characterization of a driveway on [one lot] as accessory to the

hotel on [another lot]." Ibid. The Court then reasoned: "[I]f

it is not accessory, what is the nature of the driveway? We

conclude that it must be a new principal use." Id. at 105.

2 Here, the only issue is a variance under N.J.S.A. 40:55D- 70(d)(1), which is also referred to as a "use variance," "D variance," or "(d)(1) variance."

9 A-3802-12T4 Though acknowledging the argument that "[a] driveway in

itself is neutral," the Court in Nuckel ruled that, under such

an argument, "neutrality only allows a driveway to 'take[] color

from the uses'" which it serves. Ibid. (alterations in

original) (quoting Beckmann v. Township of Teaneck, 6 N.J. 530,

536 (1951)). "It does not prevent a driveway from constituting

a new 'use' in and of itself." Ibid. In any event, such an

"argument, at best, would allow the driveway to be characterized

as a new principal hotel use, but not an accessory use." Ibid.

In Nuckel, the lot containing the driveway was zoned for

hotels but already had a principal use, an auto-body shop. Id.

at 97-98. The Court held, because the municipal "Code prohibits

more than one principal use, a (d)(1) variance is required" for

use as a driveway. Id. at 105.

Like the zoning ordinance in Nuckel, Weehawken's zoning

ordinance provides: "Use, Accessory shall mean a use which is

customarily incidental and subordinate to the principal use of a

lot or a building and located on the same lot therewith." Code

§ 23-3.1. Therefore, using the Weehawken lots for a cul-de-sac

to serve as the driveway for the high-rise and mid-rise

apartment buildings in the adjacent lots would constitute "a new

principal use." Nuckel, supra, 208 N.J. at 105. Because that

principal use is not permitted in Weehawken's R-3 zone, "a

10 A-3802-12T4 (d)(1) variance [was] required." Ibid.; see Cox & Koenig, N.J.

Zoning & Land Use Admin. § 38-1, at 786-77 (2016).

Similarly here, a use variance would be required even if

the cul-de-sac could be viewed as taking its color from the uses

which it would serve. Nuckel, supra, 208 N.J. at 105. Such an

argument, at best, would allow the cul-de-sac to be

characterized as a new principal use, namely high-rise and mid-

rise apartment buildings. See Cox & Koenig, supra, § 38-5, at

795-96 (finding it "logical that construction of accessory

driveways on [lots on which there was no preexisting use] should

imbue them with the characteristics of the use they served" on

adjacent lots). Because such a use was not permitted in

Weehawken's R-3 zone, a use variance would be required even

under this argument. See Angel v. Bd. of Adjustment, 109 N.J.

Super. 194, 196-99 (App. Div. 1970) (requiring a variance for a

driveway on one lot serving a use in another lot where that use

is not permitted in the former lot).

Accordingly, we hold a use variance was required to the

extent defendants sought to use their Weehawken lots as a

private cul-de-sac connecting the high-rise and mid-rise

apartment buildings to the Weehawken streets. However,

defendants' experts never opined there was a reasonable

probability Weehawken would grant such a variance.

11 A-3802-12T4 Defendants' principal experts were engineer Robert L.

Costa, planner Peter G. Steck, and appraiser Jon P. Brody.

Based on Costa's original proposal for a private driveway to

connect West 19th Street to the high-rise and mid-rise apartment

building use in the other lots, Steck testified in his November

28, 2011 deposition that "there would probably need to be a D

variance approval in Weehawken for the driveway" because "the

accessory component of the use takes the coloration of the

principal use."3 However, Steck did not opine on the likelihood

Weehawken would grant a use variance. Steck's original April

19, 2011 report failed to mention the need for this use

variance. Brody also failed to mention the need for a use

variance from Weehawken either in his April 20, 2011 original

appraisal report or his November 28, 2011 deposition.

On January 20, 2012, the trial court heard plaintiff's

motion to strike defendants' original expert reports.

Plaintiff's counsel argued Steck's report was "deficient for

failure to recognize that Weehawken and Weehawken's land use

boards had jurisdiction over both the improvements in Hoboken

3 At trial, Steck confirmed that because "a private driveway through Weehawken" would be an "accessory use [which] takes on the coloration of the principal use, . . . it would have triggered the need for a use variance." Steck acknowledged he "didn't form an opinion" on whether Weehawken would have granted a use variance.

12 A-3802-12T4 and Union City by virtue of the access through the Weehawken

parcel." Defendants' counsel agreed Steck "overlooked the fact

that that private driveway, because it provides access to the

permitted use in Union City and to the Hoboken parcel[,] . . .

is as much a part of those high-rise and mid-rise developments

as the buildings themselves and that it technically required a

use variance from Weehawken for that private driveway" because

"the Weehawken zone only allows townhouses."

Defendants' counsel "wanted to amend the report to resolve

the access issue to eliminate the need for the use variance."

Thus, defendants filed three revised expert reports right before

the January 20, 2012 argument on plaintiff's motion to strike

defendants' original expert reports.4

B.

Defendants' revised expert reports tried to avoid the need

for Weehawken's approval by offering to dedicate the cul-de-sac

as a public street. Costa's January 16, 2012 revised concept

4 On January 23, 2012, a motion judge denied plaintiff's motion to strike defendants' original expert reports. The court instead allowed plaintiff to re-depose defendants' three experts and to produce rebuttal reports in response to defendants' new expert reports. Plaintiff has not expressly appealed that order. Plaintiff has expressly appealed the May 24, 2012 order by another motion judge denying defendants' motion to strike plaintiff's rebuttal reports but allowing defendants to produce rebuttal reports. In any event, plaintiff has not shown either order was an abuse of discretion.

13 A-3802-12T4 plan included the cul-de-sac as a "proposed right of way

dedication to West 19th Street." Steck's January 17, 2012

revised report proposed "the entire 9,585 square foot

[Weehawken] parcel would be dedicated to the Township of

Weehawken as a public right-of-way thereby providing compliant

lot frontage and public road access to the Union City and

Hoboken portions of the tract." Steck's report claimed this

would "not involve any zoning review and consequently would be

permitted in Weehawken's R-3 Zone." Brody's January 18, 2012

revised appraisal report agreed the "highest and best use is for

[the Weehawken parcel] to be employed as [a] cul-de-sac

extension of West 19th Street providing access for the

development of the balance of the site, [namely] those lands

lying in Hoboken and Union City." Brody again assumed no need

for approval by Weehawken.

However, "[a]n individual cannot, at his pleasure, create

public highways for his own benefit upon his own land, and

impose upon the public the burthen of maintaining them." Holmes

v. Mayor of Jersey City, 12 N.J. Eq. 299, 308 (E. & A. 1857);

see Roger A. Cunningham & Saul Tischler, Dedication of Land in

New Jersey, 15 Rutgers L. Rev. 377, 381-82 & nn.29-31 (1961).

"Of course, the public is not under any duty to accept a

dedication of land." Cunningham & Tischler, supra, 15 Rutgers

14 A-3802-12T4 L. Rev. at 395 & n.99. Thus, "[a] city is not required to

accept a dedicated street." N.J. Junction R.R. Co. v. Mayor of

Jersey City, 68 N.J.L. 108, 109 (Sup. Ct. 1902), aff’d o.b., 70

N.J.L. 826 (E. & A. 1904). "Dedication and acceptance are

separate and distinct matters." Englander v. Township of West

Orange, 224 N.J. Super. 182, 188 (App. Div. 1988). "It is

settled that mere dedication of streets . . . does not

constitute them public highways, unless or until such streets

are in some way accepted by public authorities[.]" Highway

Holding Co. v. Yara Eng'g Corp., 22 N.J. 119, 127 (1956).

"Once an owner of land makes an offer of dedication, . . .

[t]he offer remains in place until the municipality accepts or

rejects it[.]" Township of Middletown v. Simon, 193 N.J. 228,

241 (2008). Generally, "the actual dedication to public use is

consummated when the dedication is accepted by an appropriate

ordinance or resolution of the municipality." State v. Birch,

115 N.J. Super. 457, 464 (App. Div. 1971). The Legislature has

provided: "The governing body of every municipality may make,

amend, repeal and enforce ordinances to . . . accept any street,

highway, lane, alley, square, beach, park or other place, or any

part thereof, dedicated to public use, and thereafter, improve

and maintain the same." N.J.S.A. 40:67-1, -1(b); see N.J.S.A.

15 A-3802-12T4 40:67-2.5 Acceptance of "dedication may also be accomplished by

other 'official conduct which manifests an intent to treat the

land in question as dedicated to the public use.'" Englander,

supra, 224 N.J. Super. at 188 (quoting Birch, supra, 115 N.J.

Super. at 464); see State v. Township of South Hackensack, 111

N.J. Super. 534, 539 (App. Div. 1970) (requiring acceptance by

conduct to be "unequivocal, clear and satisfactory"), certif.

denied, 57 N.J. 433 (1971). Thus, whether by ordinance or by

official conduct, it would be Weehawken's choice whether to

accept defendants' offer to dedicate the cul-de-sac.

Steck's revised report suggested Weehawken's engineer could

simply review defendants' offer of dedication. However, it is

generally the governing body which accepts the dedication. In

his February 14, 2012 deposition, Steck acknowledged defendants

could only make "an offer to the governing body of Weehawken to

accept [the cul-de-sac] as a public street." Neither Steck nor

defendants' other experts ever opined there was a reasonable

probability Weehawken's governing body would accept the

dedication.

Absent Weehawken's acceptance of defendants' "dedication,"

defendants would "retain[] ownership" of the Weehawkin lots.

5 Similarly, "[a] municipality that wishes to reject a dedication may pass an ordinance to that effect." Simon, supra, 193 N.J. at 242; see N.J.S.A. 40:67-1, 19.

16 A-3802-12T4 Township of Middletown v. Simon, 387 N.J. Super. 65, 75 (App.

Div. 2006), aff'd in part, rev'd in part, 193 N.J. 228. Thus,

the proposed cul-de-sac would remain the private driveway of

defendants, who "as the titleholder at all times had the right

to use the property lawfully, subject, however, to the

dedication." Osterweil v. City of Newark, 116 N.J.L. 227, 231

(E. & A. 1936). However, as set forth above, a use variance

would be required to use the Weehawken parcel lawfully as a

private driveway.

Thus, Weehawken's approval was necessary whether the cul-

de-sac was private or dedicated for public use. Indeed, it

would be contrary to the purposes of the municipal regulation of

land use to allow a party to escape the need to obtain a use

variance by making an offer to dedicate which the municipality

will not accept. "It is the intent and purpose of" the MLUL

"[t]o encourage municipal action to guide the appropriate use or

development of all lands in this State" and "[t]o ensure that

the development of individual municipalities does not conflict

with the development and general welfare of neighboring

municipalities." N.J.S.A. 40:55D-2(a), (d).

Although ordinances accepting or rejecting an offer to

dedicate a driveway as a public street are not "zoning

ordinances," they reflect "zoning considerations." Howell

17 A-3802-12T4 Props., Inc. v. Township of Brick, 347 N.J. Super. 573, 581

(App. Div.), certif. denied, 174 N.J. 192 (2002). Therefore,

under 66 East Allendale, we hold defendants were required to

show a reasonable probability Weehawken would either grant a use

variance for the cul-de-sac or accept the dedication of the cul-

de-sac as a public street. See N.J. Transit Corp. v. Mori, 435

N.J. Super. 425, 428, 432-33 (App. Div. 2014). Defendants'

experts offered neither opinion, rendering their opinions

legally inadequate. Indeed, they offered the legally-inaccurate

opinion that Weehawken had no say in the matter.

C.

Prior to trial, plaintiff filed a motion in limine to bar

introduction of the revised concept plans prepared by Costa and

the revised expert reports by Steck and Brody, and to bar their

testimony.6 Plaintiff contended the experts' opinions failed to

analyze whether there was a reasonable probability Weehawken

would grant a use variance. Plaintiff also argued it was

6 Plaintiff earlier filed a motion to strike defendants' expert reports and concept plans. A third motion judge denied that motion on August 10, 2012, stating only "no prejudice shown to moving party for 10 day late service of report." Plaintiff appeals that order but has not shown it was an abuse of discretion to grant that extension or to allow the slightly altered July 3, 2012 concept plans. To the extent plaintiff's motion to strike raised the larger issues raised by its motion in limine, it is sufficient that we address the motion in limine.

18 A-3802-12T4 speculative that Weehawken would accept dedication of the cul-

de-sac. As a result, plaintiff moved to strike the experts'

opinions as net opinions. Alternatively, plaintiff asked the

court to hold an evidentiary hearing under N.J.R.E. 104 to

determine the admissibility of the experts' opinions.

After hearing argument, the trial court denied plaintiff's

motion on October 3, 2012. The court ruled the opinions of

defendants' experts were not net opinions, and found the

development was legally permissible, for two reasons.

First, the trial court relied on Steck's testimony

concerning the Residential Site Improvement Standards (RSIS).

The court found "it is reasonably probable in light of

anticipated compliance with RSIS that Weehawken would approve

development of the cul-de-sac." However, Steck did not testify

the RSIS made it reasonably probable Weehawken would accept the

cul-de-sac as a public street. Rather, Steck testified that the

proposed cul-de-sac was in full compliance with the RSIS, that

the municipality was obligated to accept those standards, and

that, if a site plan was required, "Weehawken would be obligated

to accept it as a conforming RSIS cul-de-sac." However, Steck

testified he would "leave it up to the attorneys to say whether

in such a situation Weehawken would be obligated to accept it as

a public street."

19 A-3802-12T4 In any event, the RSIS are "a uniform set of technical site

improvement standards" that address the "technical requirements"

for "construction work on, or improvement in connection with,"

site improvements such as streets in residential developments.

N.J.S.A. 40:55D-40.1, -40.2(e), -40.2(f); see Northgate Condo.

Ass'n v. Borough of Hillsdale Planning Bd., 214 N.J. 120, 143

(2013). For example, the RSIS establish a cul-de-sac's maximum

average daily traffic, width, radius, grade, and construction

materials. N.J.A.C. 5:21-4.1, -4.2 nn.(e), (m), -4.19. Such

RSIS provisions "supersede any site improvement standards

incorporated within the development ordinances of any

municipality." N.J.S.A. 40:55D-40.5.

However, the RSIS do not purport to determine whether cul-

de-sacs may be built on one lot to serve a use on another lot,

whether use variances should be granted, or whether offers of

dedication should be accepted. Rather, the Legislature stressed

such "policymaking aspects of development review are best

separated from the making of technical determinations."

N.J.S.A. 40:55D-40.2(g); see N.J. State League of Municipalities

v. Dep't of Cmty. Affairs, 158 N.J. 211, 218, 226 (1999). The

Legislature expressly provided: "Nothing contained in this act

shall in any way limit the zoning power of any municipality."

N.J.S.A. 40:55D-40.6. Similarly, "[n]othing contained in these

20 A-3802-12T4 rules shall be construed to limit the powers of any municipality

to establish and enforce any requirement concerning . . .

reservation of areas for public use," including streets.

N.J.A.C. 5:21-1.5(d), (d)(1); see N.J.S.A. 40:55D-38(b)(4), -44.

Accordingly, defendants, by proposing a cul-de-sac constructed

in compliance with the RSIS, could not deprive Weehawken of its

power to decide whether to grant a use variance or accept an

offer of dedication as a public street.7

Second, the trial court cited the opinion of plaintiff's

planner that the cul-de-sac was unnecessary because defendants'

Property was not "landlocked." Plaintiff's planner claimed a

narrow finger of the Property, protruding between the adjacent

industrial building and the Light Rail tracks, connected to

"Adams Street," a paper street on the Hoboken parcel. There was

a dispute whether the paper street could be developed as it was

cut off from the streets of Hoboken by the Light Rail tracks.

Further, even if developed, the paper street would still route

traffic from the Property onto the same Weehawken streets.

7 Plaintiff also contends the trial court improperly prohibited it from responding to Costa's revised concept plans and from offering testimony on whether they satisfied the RSIS. On remand, to the extent defendants assert those concept plans satisfy the RSIS, plaintiff shall have an opportunity to respond.

21 A-3802-12T4 More importantly, defendants' experts admittedly did not

propose use of that paper street or that narrow finger of the

Property to provide road access. Indeed, such use would be

inconsistent with defendants' proposed development, which placed

the mid-rise building as close as legally possible to both the

Light Rail tracks and the adjacent industrial building, thus

precluding any vehicular access from either the mid-rise or

high-rise buildings to the narrow finger or the paper street.

Instead, defendants' experts opined road access was needed

through a cul-de-sac on the Weehawken parcel. The issue before

the trial court was the validity of their opinion that Weehawken

did not need to approve the cul-de-sac. Their opinion would

have been undermined by the possibility of alternate road

access. See Angel, supra, 109 N.J. Super. at 198 (upholding the

denial of a use variance for an access road because the

developer's property was not "landlocked" and had "a viable

alternative" means of access). Further, using that alternate

access would have been incompatible with the proposed 126-unit

development on which defendants based their appraisal.

Thus, we reject the trial court's reasons for denying

plaintiff's motion in limine to exclude the opinions of

defendants' experts, which were inadmissible because they were

legally inadequate and legally inaccurate. As in 66 East

22 A-3802-12T4 Allendale, supra, the trial court did not perform its

"gatekeeping function by screening out potentially unreliable

evidence and admitting only evidence that would warrant or

support a finding that a zoning change is probable." 216 N.J.

at 138 (quoting State v. Caoili, 135 N.J. 252, 264 (1994)).8

D.

The erroneous admission of defendants' expert testimony was

prejudicial. Before the jury, Costa testified Weehawken's land

use ordinance had no "jurisdiction or authority over the cul-de-

sac." Steck testified that "Weehawken does not have any

discretion," that "when an owner builds something in accordance

to the RSIS standards, the municipality must accept it," and

that "[a]pproval is not needed from Weehawken." He told the

jury the authorities in Weehawken "have to accept the cul-de-

sac." Brody testified he relied on Costa and Steck. Thus,

"[t]he experts' testimony did not cure the deficiency in the

required analysis for reasonable probability" but only

compounded it. 66 East Allendale, supra, 216 N.J. at 145.

Because their testimony was legally incorrect and legally

inadequate, "the quality of the evidence that the jury was

8 Because the reports were inadmissible for the reasons set forth above, we need not consider whether they were also inadmissible as net opinions or whether the trial court should have held a hearing under N.J.R.E. 104.

23 A-3802-12T4 allowed to consider undermined the soundness of the jury's

property valuation determination." Id. at 119.

Moreover, it was unclear whether there was a reasonable

probability Weehawken would grant a use variance or accept

defendants' offer to dedicate the cul-de-sac as a public street.

The proposed cul-de-sac would have been considered a "Street" as

defined in Weehawken's Code § 23-3.1, but it was not depicted on

an official map or Weehawken's most recent Master Plan.

Weehawken requires such streets meet certain requirements:

Streets not shown on the Master Plan or Official Map shall be arranged so as to provide the appropriate extension of existing streets and shall be suitably located to accommodate prospective traffic and to provide access for firefighting and/or emergency equipment and shall be coordinated so as to compose a convenient system consistent with the Official Map, if any, and with streets shown on the Master Plan.

[Code § 22-10(c)(1) (emphasis added).]

Plaintiff's rebuttal reports included a traffic review,

which stressed West 19th Street and West 18th Street were

"narrow local streets" restricted to one-way traffic which

"experience low traffic volume demand and are difficult to

navigate by large vehicles." Plaintiff's traffic expert opined

it would be hard for fire trucks to access the cul-de-sac. He

added that there was "[n]o provision for circulation around the

24 A-3802-12T4 [proposed high-rise and mid-rise buildings] for fire access,"

that "safe access for emergency vehicles is not provided," and

that "[t]he lack of access and the limitations of the cul-de-sac

may be unacceptable to the local fire departments and emergency

services." Plaintiff's engineering expert noted the vast

majority of the units in both the high-rise and the mid-rise

buildings were inaccessible to fire apparatus, which was

unlikely "to be approved by the local fire department."

The report of plaintiff's planning expert noted defendants'

proposed high-rise and mid-rise apartment buildings were

inconsistent with the surrounding Weehawken low-density

residential neighborhood and "the Weehawken Master Plan, which

places an emphasis on preserving the character of its one-,

two- and three-family and townhouse residential neighborhood."

He opined Weehawken would object due to "the lack of capacity on

West 18th and West 19th Streets to handle traffic generated by

the development." He reasoned, as the proposed development was

inaccessible from the rest of Hoboken and Union City, that those

cities would ask Weehawken to provide fire and other emergency

services to the high-rise and mid-rise buildings and that

Weehawken would object given the limits on emergency access.

Plaintiff's planning expert opined: "The notion that

Weehawken would ever grant use variance approval for any plan

25 A-3802-12T4 that accommodates what amounts to dense residential development

projects in an area served exclusively by local residential

streets without providing any benefit to Weehawken whatsoever is

beyond comprehension." Similarly, he opined it was "highly

unlikely that Weehawken Township would accept the public road

dedication" of the cul-de-sac because it would require Weehawken

taxpayers to pay "to maintain a roadway that is utilized

exclusively by residents of developments who do not pay property

taxes in Weehawken."

Thus, Weehawken's approval could not be assumed. See Menlo

Park Plaza Assocs. v. Planning Bd., 316 N.J. Super. 451, 461-62

(App. Div. 1998) (rejecting the "[p]laintiff's desire for an

outlet road from its proposed development into another

municipality," which would "turn a quiet dead-end residential

street into a busy thoroughfare," "would detrimentally alter the

character of the neighborhood," and would "provide[] no benefit

to" that municipality), certif. denied, 160 N.J. 88 (1999); cf.

Howell Props., supra, 347 N.J. Super. at 579-88.

E.

Accordingly, the prejudicial error in denying plaintiff's

motion in limine, and thus allowing defendants' experts to offer

trial testimony which was legally inadequate and legally

incorrect, "necessitate[s] a new trial on the issue of just

26 A-3802-12T4 compensation." 66 East Allendale, supra, 216 N.J. at 119.

Prior to the new trial, the trial court shall permit defendants

to prepare amended reports to alter the project proposed in the

three municipalities or to proffer legally-adequate expert

opinion on whether there was a reasonable probability Weehawken

would either grant a use variance for, or accept the dedication

of, the cul-de-sac. The court shall allow plaintiff to respond

to any amended reports or opinions offered by defendants. The

court must then "examine the evidence proffered in support of

the reasonable probability of a zoning change and determine

whether it can render its required determination based on the

papers." Id. at 143. If not, the court shall hold "a pretrial

N.J.R.E. 104 hearing." Ibid. "[O]nly 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[.]" Id. at 142.

We express no opinion on whether defendants will be able to

show such a reasonable probability. Nonetheless, we reject

plaintiff's argument that testimony showing a reasonable

probability would be improper because the cul-de-sac has not yet

been constructed or because approval has not yet been received

or is not certain. See, e.g., id. at 139 (noting a jury could

27 A-3802-12T4 consider the reasonable probability of "future variance

approval[,] . . . potential subdivision," and "future site plan

approval when determining fair market value"); State v. Hope

Road Assocs., 266 N.J. Super. 633, 645 (App. Div. 1993) (noting

a jury could consider "the township's willingness to accept

. . . a means of ingress and egress"), modified in part, 136

N.J. 27 (1994); see also Caoili, supra, 135 N.J. at 267-70

(distinguishing State v. Inhabitants of Phillipsburg, 240 N.J.

Super. 529 (App. Div. 1990)). If the court finds a reasonable

probability, "the jury may consider the probability of the

future zoning change or variance approval in determining the

premium a buyer and seller would fix to the property." 66 East

Allendale, supra, 216 N.J. at 140; see State v. 200 Route 17,

L.L.C., 421 N.J. Super. 168, 179 (App. Div. 2011).

IV.

We next consider defendants' cross-appeal, which arises

from the undisputed fact that the Property is contaminated. In

Suydam, supra, our Supreme Court held "contaminated property

that is the subject of condemnation is to be valued as if it has

been remediated." 177 N.J. at 7. "[T]he condemnor should

appraise as if remediated and deposit that amount into a trust-

escrow account in court." Id. at 24. The contamination issue

28 A-3802-12T4 is reserved for a subsequent "cost-recovery action" in which the

condemnor can "recover any remediation costs." Id. at 22, 24.

Pending the cost-recovery action, "the condemnor may seek

an order requiring a portion of the award to be set aside to

satisfy the condemnee's clean-up and transfer obligations." Id.

at 7. "When there is a dispute over the amount however, a

trial-type hearing will be held under R. 4:73-9(b) at which the

condemnor will bear the burden of supporting the estimate of

[such] transactional costs." Id. at 26; see Casino Reinvestment

Dev. Auth. v. Teller, 384 N.J. Super. 408, 416 (App. Div. 2006)

("Cleanup and remediation costs are transactional costs

attendant to the condemnation proceeding.").

Here, we remanded for such a Suydam hearing. The parties

submitted expert testimony and exhibits, including plaintiff's

original and revised Property Acquisition and Environmental Cost

Estimating (PAECE) reports. Plaintiff relied on its revised

PAECE report, which called for removal of contaminated soil,

hazardous materials, drums, and underground storage tanks.

In particular, plaintiff proposed to remove up to two feet

of soil significantly contaminated by polychlorinated biphenyls

(PCBs) from the northern two-thirds of the Property and to cap

the Property with asphalt. Plaintiff asserted such remediation

was needed to meet the requirements of the United States

29 A-3802-12T4 Environmental Protection Agency (EPA) for remediating PCBs in

"[h]igh occupancy areas." 40 C.F.R. § 761.61(a)(4)(i)(A)

(2016). The EPA defines a "[h]igh occupancy area" as any area

where an unprotected individual would spend more than "an

average of 16.8 hours or more per week," such as "a residence."

40 C.F.R. § 761.3. The cost of remediating PCBs for such

sustained occupancy accounted for most of the revised PAECE

report's total estimated remediation cost of $1,967,865.

Defendants contended the remediation of PCBs should be only

that required for a "[l]ow occupancy area," with exposure of

less than 16.8 hours per week. Ibid. As a result, defendants'

expert estimated remediation would cost below $500,000.

Defendants stressed that plaintiff originally condemned the

Property with the intent to use it as the location of a shaft

for the construction of the ARC Commuter Tunnel under the Hudson

River. Thereafter, that project was cancelled. In its revised

PAECE report, plaintiff stated: "The proposed use of this

property has not been finalized, although NJ TRANSIT intends to

use it for Public Transportation purposes."

After a three-day hearing, the trial court credited

plaintiff's evidence and discredited defendants' expert. The

court found that "[p]laintiff met its burden to prove that [its]

cost estimation is not 'frivolous or exaggerated,' and that such

30 A-3802-12T4 estimate is founded on reasonable and extensive environmental

assessment of the property." On February 12, 2014, the court

ordered the $1,967,865 to remain in escrow pending final

determination of remediation costs at a cost-recovery action.

Defendants contend the estimate of remediation costs should

have been based on the use of the Property which plaintiff

originally intended — a tunnel shaft. Plaintiff contends the

trial court properly based the estimated remediation costs on

the highest and best use for the Property — residential

development.

In considering these contentions, we find guidance in

Suydam. There, our Supreme Court chose to value condemned

contaminated property "as if remediated" rather than "as is."

Suydam, supra, 177 N.J. at 23. The Court stressed that "'[t]he

inquiry is not limited to the actual use of the property on the

date of taking but is, rather, based on its highest and best

use.'" Id. at 20 (citation omitted). The Court ruled "that

valuing property as if remediated assures just compensation

insofar as it relates to the notion of 'highest and best use.'"

Id. at 23. The Court rejected valuing the property "as is"

because "its contaminated state will necessarily circumscribe

its uses, concomitantly diminishing its fair market value."

Ibid.

31 A-3802-12T4 Moreover, the Court in Suydam was concerned that parties

not get "a windfall." See ibid. The Court emphasized the value

of the property "as if remediated" was an "enhanced value

[which] is to be generated by the incurring of a transactional

cost." Id. at 25. "[T]he estimated value in a contamination

case has a component that is altogether outside the property

itself — the transactional cost that will be incurred to give

the condemnee the benefit of the as if remediated value." Id.

at 26. The Court found "withholding only the estimated

transactional costs, which, in reality, do not belong to the

condemnee," resulted in "no unfairness to the condemnee." Ibid.

"What would be unfair would be to value the property as if

remediated and allow the condemnee to withdraw that enhanced

amount without a withholding to secure the transactional costs."

Here, the trial court awarded defendants the enhanced value

of the Property if used, and remediated, for residential

development. Placing one "residence" or more on the Property

would involve sustained occupancy sufficient to make it a

"[h]igh occupancy area" and thus require more extensive

remediation under EPA standards. 40 C.F.R. § 761.3. The

estimated cost of such remediation was "folded into the

estimate" of the Property's value and did not belong to

32 A-3802-12T4 defendants. Suydam, supra, 177 N.J. at 25-26. Withholding that

estimated cost was not unfair to defendants. By contrast,

defendants would receive an unfair windfall if they were awarded

the enhanced value of the Property as if remediated for

residential development, without withholding the cost of such

remediation.

Accordingly, we hold the escrow for the estimated costs of

environmental cleanup of a condemned contaminated property

should be based on the remediation necessary to achieve the

highest and best use of the property used to calculate the

amount of the condemnation award. This approach, like the

approach adopted in Suydam, "most fairly treats both the

condemnor and the condemnee." See id. at 27.

Defendants rely on Borough of Paulsboro v. Essex Chemical

Corp., 427 N.J. Super. 123 (App. Div.), certif. denied, 212 N.J.

460 (2012). However, there "both parties' experts and the trial

court attributed a lower value to the property because . . . [it

was] occupied by a closed landfill." Id. at 131. Here, by

contrast, defendants received a higher value for the Property

because it was treated as remediated for residential

Defendants contend the Property would have been a "[l]ow

occupancy area" if used for a tunnel shaft, the contaminated

33 A-3802-12T4 soil would have been removed in constructing the shaft, and they

should not have to escrow for construction costs. However,

defendants' contentions lost their premise when the ARC Commuter

Tunnel project was cancelled. In any event, defendants'

contentions do not address the correct use. Because defendants

were awarded compensation based on the highest and best use of

residential development, it is appropriate to escrow the

estimated amount needed to remediate for that use.

For the same reason, it is not dispositive what, if any,

alternate use plaintiff will have for the Property now that the

tunnel project has been cancelled. Indeed, defendants argue it

would be unfair to make the remediation estimate depend on

plaintiff's ultimate choice of an alternate use.

Defendants argue plaintiff will never remediate the

Property to the level needed for residential development. That

concern is addressed in Suydam. Under Suydam's approach,

defendants will receive the portion of the escrowed amount which

plaintiff does not spend to remediate the Property:

[A] portion of the award sufficient to cover cleanup costs is escrowed or held in trust until the exact amount of cleanup costs has been determined. Once response costs are determined, a corresponding amount representing the owner's liability is then disbursed from the trust or escrow account. Only the surplus, if any, is paid to the owner.

34 A-3802-12T4 [Suydam, supra, 177 N.J. at 25 (quoting 7A Nichols on Eminent Domain § 13B.03(4), at 13B-68 (Patrick J. Rohan & Melvin A. Reskin eds., 3d ed. 2002)).]

Thus, if plaintiff does not incur the full cost of remediating

the Property to the "high occupancy" level, defendants will

receive the resulting surplus funds from the escrow.

Defendants challenge the calculation of the estimated

remediation costs. We may not "'disturb the factual findings

and legal conclusions of the trial judge unless we are convinced

that they are so manifestly unsupported by or inconsistent with

the competent, relevant and reasonably credible evidence as to

offend the interests of justice.'" Klumpp v. Borough of Avalon,

202 N.J. 390, 412 (2010) (citations omitted). We reject

defendants' challenges for substantially the reasons given in

the trial court's February 12, 2014 written opinion.

The trial court's Suydam hearing served to "obviate the

concern" raised by defendants "over frivolous or exaggerated

cleanup cost[]" estimates which "tie up the condemnee's award."

Suydam, supra, 177 N.J. at 26-27. Defendants fault the pace of

remediation, but they will be entitled to interest on any unpaid

balance due to them when the escrow is distributed. N.J.S.A.

20:3-31.

Defendants stress plaintiff's original PAECE report

estimated cleanup costs would be only $158,254. However,

35 A-3802-12T4 plaintiff's initial appraisal asserted the highest and best use

of the Property was industrial. Defendants then convinced

plaintiff and the trial court the highest and best use of the

Property was residential development. The revised PAECE report

stated "the appraisers for NJ TRANSIT and the property owner

have found a highest and best use of residential development,"

so the more stringent EPA requirements would have to be met "due

to the high occupancy development scenario for the subject

property." Thus, it was appropriate for plaintiff to change its

estimate of remediation costs to reflect the more stringent

remediation requirements for such sustained occupancy. 40

C.F.R. § 761.61(a)(4)(v).9

Furthermore, plaintiff's original PAECE report was merely

"a preliminary environmental assessment" based on limited

testing done while defendants were in possession of the

Property. Suydam, supra, 177 N.J. at 26. In Suydam's companion

case, the Supreme Court stated "a complete initial environmental

investigation prior to condemnation is neither possible nor

desirable in many cases because of the extent of the disruption

it might entail." N.J. Transit Corp. v. Cat in the Hat, LLC,

9 Defendants claim plaintiff's changed estimate was triggered by the cancellation of the tunnel project. Even if true, it is irrelevant, as remediation costs were properly estimated based on the use on which defendants' just compensation was awarded.

36 A-3802-12T4 177 N.J. 29, 42 (2003). The Court recognized that, as a

practical matter, "the most invasive environmental testing

ordinarily takes place after condemnation when construction of a

project begins. That is why the value as if remediated

including transactional costs is merely an estimate" and why the

condemnor can increase its estimate based on later testing.

As set forth in the trial court's opinion, plaintiff

advised defendants the estimate might increase. We reject

defendants' argument that plaintiff failed to "turn square

corners" regarding the revised estimate. F.M.C. Stores Co. v.

Borough of Morris Plains, 100 N.J. 418, 426 (1985) (citation

omitted); see State v. Town of Morristown, 129 N.J. 279, 286

(1992).

Defendants argue plaintiff waived its right to bring a

cost-recovery action. However, plaintiff has consistently

reserved that right in its complaint and thereafter. See

Suydam, supra, 177 N.J. at 24; Cat in the Hat, supra, 177 N.J.

at 41. We find "no factual foundation for" waiver. Hous. Auth.

v. Suydam Inv'rs, L.L.C., 355 N.J. Super. 530, 544 (App. Div.

2002), aff’d o.b. in part, rev'd in part, 177 N.J. 2, 28 (2003).

Finally, defendants claim judicial estoppel because

plaintiff asserted in other litigation that a different property

37 A-3802-12T4 condemned for the ARC Commuter Tunnel may have public uses,

including for a different rail tunnel. However, plaintiff's

assertions in the other litigation made no mention of

defendants' Property. Plaintiff certainly did not assert

defendants' Property would be used for a tunnel shaft, nor did

the other court rely on such an assertion. See Bhagat v.

Bhagat, 217 N.J. 22, 36 (2014). In any event, the escrowed

estimated remediation costs depended on its use for residential

development, as that was the basis for defendants' award.

Defendants' remaining arguments "are without sufficient

merit to warrant discussion." R. 2:11-3(e)(1)(E).

V.

We reverse the March 4, 2013 final judgment and remand the

case for a new trial on just compensation. We affirm the

February 12, 2014 order. We do not retain jurisdiction.

38 A-3802-12T4