Stavros, Inc. v. State

STAVROS, INC., Plaintiff-Respondent, v. STATE OF NEW JERSEY, by the COMMISSIONER OF

TRANSPORTATION, Defendant/Third-Party Plaintiff-Appellant, v. SOUTH STATE, INC., Third-Party Defendant-Respondent.

DOCKET NO. A-0959-17T2

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Submitted March 27, 2019

September 12, 2019

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

Before Judges Fuentes, Vernoia and Moynihan.

On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-2788-13.

Gurbir S. Grewal, Attorney General, attorney for appellant (Melissa H. Raksa, Assistant Attorney General, of counsel; Fredric R. Cohen, Deputy Attorney General, on the briefs).

Duane Morris, LLP, attorneys for respondent Stavros, Inc. (Drew K. Kapur, of counsel and on the brief; Meredith E. Carpenter, on the brief).

Braff, Harris, Sukoneck & Maloof, attorneys for respondent South State, Inc. (Adam J. Kipnis, on the brief).

PER CURIAM

Defendant State of New Jersey, by the Commissioner of the Department of Transportation (DOT), appeals from the September 14, 2017 final judgment of inverse condemnation entered following a bench trial in favor of plaintiff Stavros, Inc.¹ We affirm.

I.

We discern the following facts based on the trial record and the court's findings of fact that are supported by substantial credible evidence. Stavros owned and operated "Olga's Diner" for almost fifty years on a rectangular 2.335-acre property it owned in fee simple located in Evesham Township near what was the Marlton Circle, where Route 70 and Route 73 intersected. The dinerfaced north toward Route 70, with Old Marlton Pike behind it on the south side, and Route 73 to the east. The property had two driveways behind the diner on Old Marlton Pike. The property did not have road frontage on Route 70 or Route 73; other parcels of land sat between it and the roads. Stavros leased the parcel between its property and Route 70 from the State from 1980 to 2009, used it for parking, and thereby had access to Route 70 through the lot's two driveways. Stavros also possessed an access driveway permit, issued by the State on April 14, 1981, which authorized Stavros to construct a driveway to Route 70. Stavros accessed Route 73 via a 1959 private easement agreement with Lahn Real Estate, which owned the lot to the east of the diner and had a permit for direct access to Route 73. In this way, the Stavros property, on which it operated the diner, had direct access to Routes 70 and 73, as well as to Old Marlton Pike.

The DOT undertook a highway construction project, the Marlton Circle Elimination Project, to reconfigure the Marlton Circle such that Route 73 would be elevated and pass over Route 70. The project included the construction of several jug handles, on and off ramps, driveway installations, modifications and removals, utility removal and modifications, and basins. The project also included the DOT's permanent fee taking of three portions of Stavros's property and a temporary fee taking of a construction easement. The permanent feetakings were for Block 22.01, lots 31 and 32, lot 37 and lot 39 on the Official Tax Map of Evesham Township. The temporary fee taking was for a 6088-square-foot temporary construction easement with a right of way to enter the remaining portion of the Stavros property.

On July 30, 2004, the DOT sent Stavros a "Change of Access Letter," which proposed eliminating Stavros's Route 70 access, included a plan for reasonable alternative access, and advised that Stavros had the right to a hearing. On October 27, 2004, Stavros's counsel faxed a copy of Stavros's access driveway permit for Route 70 to the DOT. The DOT responded on January 28, 2005, stating the change in access included a permit revocation for the Route 70 access, enclosing a Revocation of Access Plan—which also eliminated Stavros's Route 73 easement access through the Lahn property—and advising Stavros of its right to a hearing.

Under the Revocation of Access plan, the DOT would construct Ramp K, which would terminate the existing direct access to the Stavros property from Route 73 but allow access by connecting the new elevated Route 73 with Old Marlton Pike. The plan provided reasonable alternative access and replaced Stavros's existing access to Route 70 with a new, shared road, Service Road M, which would connect Stavros's property with Centre Boulevard, a road to thewest of Stavros's property that extended from Route 70 to Old Marlton Pike. The plan required reconfiguration of Stavros's eastern Old Marlton Pike driveway and improvements to the other. Thus, the plan proposed three access points to Stavros's property: two driveways along Old Marlton Pike and one driveway to Service Road M.

In February 2005, Stavros met with DOT representatives and objected to the Revocation of Access Plan. Stavros claimed the plan revoked its state highway access without providing reasonable alternative access to the property. A meeting was held on May 5, 2005, for the purpose of exchanging information and hearing Stavros's concerns with the access design, and was attended by sixteen people, including State employees, consultants, engineers, a Deputy Attorney General, the Stavros representatives—John Stavros and his son, Tom Stavros—and their counsel. The court determined that at the May 2005 meeting, "[t]here was no discussion of terminating access to Route 70 in April 2009 or the need for any phased or staggered agreements with Stavros for implementing the new reasonable access as authorized" pursuant to N.J.S.A. 27:7-94(d).

On February 21, 2006, the DOT Commissioner issued a final access decision, which left the Revocation of Access Plan intact and described all of the proposed takings as well as construction for the reasonable alternativeaccess, "but not any dates as to the closing of the Route 70 access." The DOT's final determination also provided Stavros with notice of its right to appeal to the Office of Administrative Law (OAL) if it contested the DOT's determination that the plan provided reasonable alternative access. Stavros did not appeal to the OAL and "accepted the DOT determination that the new substituted access was reasonable."

Underlying Condemnation Action

On June 12, 2008, the DOT filed a complaint for permanent and temporary condemnation of portions of Stavros's property, including temporary easements for construction of the designated reasonable alternative access "with rights to use the remainder of the Stavros property until completed." The complaint did not include a claim related to the temporary condemnation of Stavros's reasonable access property rights. The initial State appraisal for the takings alleged in the complaint was based on the assumption that the reasonable alternative access described in the Revocation of Access Plan would be provided by the DOT prior to its termination of Stavros's existing access to Routes 70 and 73 during construction of the project, and suggested $410,000 in just compensation, without any consideration of the DOT's temporary possession of the remaining land.

On September 19, 2008, the court entered an order for final judgment permitting the DOT to exercise its power of eminent domain and appointing commissioners to fix the compensation to be paid for the DOT's acquisition of Stavros's property. Stavros did not object to the order. It is not disputed that the diner closed in November 2008 for unrelated reasons.

Marlton Circle Construction Project

The DOT awarded the contract for the highway construction project to South State on March 30, 2009. On April 1, 2009, the DOT issued a letter to Stavros canceling Stavros's lease of the State-owned lot between Stavros's property and Route 70, effective April 15, 2009, because the DOT required use of the lot for the project. The court found that the DOT and South State decided to use the State's lot as South State's construction staging area for the project prior to April 1, 2009.

Route 70 Access and the April 15, 2009 Meeting

Sometime between April 1 and 15, 2009, an informal meeting took place between the DOT, South State and Stavros's representatives at the DOT's request. The meeting was not held in accordance with any statutory or administrative requirements, no prior notice of the meeting was given, and there is no official record of what occurred. However, trial testimony revealed that asketch of a proposed construction yard and temporary fence on the State's lot, prepared by South State "for the State," was presented at the meeting. The court inferred that "the decision to erect the fence was, at a minimum, partly the decision of the State, if not wholly, because the sketch was prepared for the State," and found credible Tom Stavros's testimony that he did not know he could object to the fence's installation and "never thought it was his place to make a decision regarding South State using the State [lot] because neither the State nor South State ever indicated he could object." The court also noted that Tom Stavros reasonably believed he had no basis to object to the construction of a fence on the property because, prior to the meeting, the State notified Stavros that it was terminating Stavros's lease for the property.

On April 15, 2009, South State moved onto the State lot and cut off Stavros's access to the Route 70 driveway by placement of a construction trailer and installation of a fence. At this time, the reasonable alternative access to the Stavros property described in the DOT's Revocation of Access Plan—through the two Old Marlton Pike driveways, Service Road M and Centre Boulevard—was not completed or open for public access. Indeed, the court determined that the reasonable alternative access described in the plan was not...