State of Delaware v. Middletown Development, Inc.

Superior Court of Delaware·Decided March 10, 2015·No. 14C-10-295·Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY

STATE OF DELAWARE, upon the ) Relation of the Secretary of the ) DEPARTMENT OF TRANSPORTATION )

Plaintiff, )

v. ) C.A. No. N14C-10-295 PRW )

MIDDLETOWN DEVELOPMENT, INC., ) a Delaware Corporation; 5.6080 ACRES OF ) LAND, more or less, as a Fee Simple Taking, ) situate in the Town of Middletown, New ) County, Delaware; 0.0221 ACRE OF LAND, ) more or less, as a Temporary Construction ) Easement Taking, situate in the Town of ) Middletown, New Castle County, Delaware; ) and MIDDLETOWN APARTMENTS ) PHASE I, LLC, a Delaware Limited Liability ) Corporation, )

Defendants. )

Submitted: February 18, 2015 Decided: March 10, 2015

OPINION

Upon Plaintiff’s Motion for Possession, GRANTED.

Upon Defendants’ Motion to Dismiss, DENIED.

Gregory B. Williams, Esquire, Fox Rothschild LLP, Wilmington, Delaware, Attorney for Plaintiff.

L. Vincent Ramunno, Esquire, Ramunno & Ramunno, P.A., Wilmington, Delaware, Attorney for Defendants.

WALLACE, J.

I. INTRODUCTION The Delaware Department of Transportation (“DelDOT”) instituted condemnation proceedings against Middletown Development, Inc. and the properties to be taken (collectively “Middletown Development”). DelDOT now moves for an entry of an order granting it possession of the property. Middletown Development opposes the possession motion and moves to dismiss the condemnation action claiming that DelDOT failed to reasonably negotiate in good faith, as required under Delaware’s Real Property Acquisition Act (“RPAA”). For the reasons set forth below, DelDOT’s motion for possession is GRANTED, and Middletown Development’s motion to dismiss is DENIED.

II. FACTUAL AND PROCEDURAL BACKGROUND The property (“Property”) at issue is part of roughly 17 acres of real estate that Middletown Development owns in Middletown, Delaware. Middletown Development owns some surrounding tracts that it has developed, but the entire 17-acre parcel remains undeveloped and a source of controversy between Middletown Development and DelDOT.

In 2004, Middletown Development attempted to subdivide and rezone the 17-acre parcel of which the land DelDOT seeks is a part. 1 According to Middletown Development, the Town of Middletown denied its request and informed it that DelDOT might require a portion of that parcel for a proposed US Route 301 project (“301 Project”). In 2006, and again in 2007, principal in and now counsel for Middletown Development, L. Vincent Ramunno, wrote to DelDOT to determine what, if any, portion of its 17-acre parcel DelDOT planned to condemn and take. DelDOT responded in 2007, stating that it was uncertain how much, if any, of Middletown Development’s property it might need to condemn for the 301Project. 2 Mr. Ramunno apparently again inquired about DelDOT’s Route 301 project in June 2010, claiming that DelDOT had previously informed him they would be using the entire parcel for stormwater facilities. DelDOT’s November 2010 response letter indicated it was unable to locate any person, minutes, or records substantiating Mr. Ramunno’s claim. 3

1 At the time, Middletown Development represented the size of the property as 19 acres.

In its opposition motion, Middletown Development acknowledges that the applicable parcel “may actually be closer to 17 acres.” Def.’s Opp’n to Mot. for Possession ¶ 10 n.2. 2 See April 6, 2006 Letter, April 20, 2007 Letter, and May 7, 2007 Letter, Exs. C-E to Def.’s Opp’n to Mot. for Possession. 3 See November 30, 2010 Letter, Ex. A to Affidavit of Robert Palandrani, Ex. E. to Pl.’s Reply Br.

DelDOT made its appraisal and first offer for the Property in 2012. The Negotiation Record and Affidavit of DelDOT Real Estate Representative Robert Palandrani reflects that in a letter dated July 26, 2012, DelDOT offered to purchase the 5.6080 acres (and temporary construction easement) needed from Middletown Development for its appraised fair market value of $352,025. The appraisal attached to the letter was prepared by an independent fee appraiser. DelDOT proposed to acquire a fee acquisition for $350,500, “Damages to the Remainder” for $1,175, and a temporary construction easement for $350.4 An August 15, 2012 log note in the Negotiation Record indicates that DelDOT and Mr. Ramunno discussed the offer over the phone. The note further indicates Mr. Ramunno told Mr. Palandrani the offer was “fair” but that he believed DelDOT should purchase the entire 17-acre parcel.5 The parties corresponded from July 2012 through August 2014 about DelDOT’s proposed acquisition.6 At several points throughout the

4 See July 26, 2012 Letter, Ex. A to Affidavit of Robert Palandrani, Ex. E. to Pl.’s Reply Br. 5 Negotiation Record, Ex. E to Pl.’s Reply Br. at 1 (handwritten entry).

6 See id. The entire Negotiation Record and appended correspondence show the following contacts:

• Letter exchanges on: July 26, 2012 (sent July 27, 2012); October 4, 2012;

December 3, 2012; December 6, 2012; January 28, 2013; February 14, 2013;

February 19, 2013; March 28, 2013; April 30, 2013; May 22, 2013; June 5, 2013;

July 12, 2013; October 23, 2013 (sent October 24, 2013); October 31, 2013;

correspondence, DelDOT noted in the log that it believed the parties had reached an “impasse” in negotiations.7 This was apparently due, in part, to Mr. Ramunno’s claim that the Department had inversely condemned the entire parcel by preventing him from developing it.8 It was not until May 14, 2014, that Middletown Development provided DelDOT with a counter offer of $1,147,000, based on its own appraisal. DelDOT then increased its offer to $390,000 on August 11, 2014. Middletown Development rejected that offer as “totally inadequate and unacceptable.”9 DelDOT 10 instituted condemnation proceedings on October 31, 2014, by filing a complaint against Middletown Development, Inc., 5.6080 acres of land as a taking in fee simple, 0.0221 acre of land as a temporary construction easement

November 26, 2013; December 5, 2013; January 6, 2014; February 5, 2014; May 14, 2014; May 20, 2014; and August 12, 2014.

• Telephone conversations or voicemails documented on: August 15, 2012;

December 6, 2012; February 5, 2014; May 2, 2014; and August 11, 2014.

7 See, e.g., id. at 2 (May 8, 2013 entry stating “we discussed the apparent impasse . . . “);

id. at 3 (July 12, 2013 entry stating “I have recommended condemnation numerous times to District Manager. We are at Impasse.”). 8 See April 30, 2013 letter from L. Vincent Ramunno to DelDOT, Ex. E to Pl.’s Reply Br.

(“As I repeatedly stated verbally and in writing for several years, DelDot inversely condemned the entire 19 acres parcel years ago. In fact, I was going to file an inverse condemnation action some time ago but I was assured that we would be able to resolve this.”). 9 Def.’s Opp’n to Mot. for Possession ¶ 6.

10 The State of Delaware has brought this action by and through its Department of Transportation.

taking, and Middletown Apartments Phase I, LLC. 11 On November 5, 2014, DelDOT filed a Motion for Possession of the Property to be taken in condemnation, attaching a notice of the motion and an affidavit of necessity. A Certificate of Deposit was filed on November 12, 2014, reflecting the deposit of $352,025.00 with the Court as the amount DelDOT estimated to be just compensation.

Middletown Development filed an opposition to DelDOT’s Motion for Possession seeking: a denial of the motion; dismissal of the action with prejudice; a directive for DelDOT to comply with the requirements of 29 Del. C. § 9504 and § 9505; and an award of attorneys’ fees.

At a hearing on the Motion to Possess, the Court directed Middletown Development to answer the complaint and, at their request, provided the parties additional time to engage in further negotiations. The parties reportedly met in late November, 2014, and continued to correspond into December, but they were unable to come to an agreement.12 Middletown Development then filed an Answer

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State of Delaware v. Middletown Development, Inc., (Del. Ct. App. 2015).

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