TOWNSHIP OF MONTCLAIR VS. FRANK CERINO (L-4479-15, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-0753-15T1

TOWNSHIP OF MONTCLAIR,

Plaintiff-Respondent,

v.

FRANK CERINO, MARY ANN CERINO,
DECOZEN CHRYSLER JEEP DODGE,

Defendants-Appellants,

and

NEW YORK COMMUNITY BANK,

Defendant.

Argued April 26, 2017 – Decided May 9, 2017

Before Judges Fuentes, Carroll and Farrington.

On appeal from the Superior Court of New
Jersey, Law Division, Essex County, Docket No.
L-4479-15.

John J. Reilly argued the cause for appellants
(Greenbaum, Rowe, Smith & Davis LLP,
attorneys; Mr. Reilly, on the briefs).

Jennifer Borek argued the cause for respondent
(Genova Burns LLC, attorneys; Ms. Borek, of
counsel and on the brief; Michael C. McQueeny,
on the brief).
PER CURIAM

This appeal involves the condemnation of Block 2209, Lots 1

and 16 (the subject property), also known as 59-61 Valley Road in

the Township of Montclair (Township). The subject property is

owned by defendants Frank and Mary Ann Cerino, and is presently

used to store automobiles. Defendants own two automobile

dealerships in the area: (1) 225 Bloomfield Avenue, Verona (the

Verona property), which operates as DeCozen Chrysler Jeep Dodge;

and (2) 665-679 Bloomfield Avenue, Montclair (the Montclair

property), which operates as Montclair Motor Car.

The Law Division entered an order appointing commissioners

for the condemnation hearing, thereby authorizing them to examine

and appraise the subject property and determine compensation for

the taking. The order further authorized the commissioners to

determine whether the subject property is functionally integrated

with the Verona and Montclair properties, and the amount of

severance damages, if any, to which defendants are entitled. The

order also denied defendants' motion to dismiss the condemnation

complaint for, among other things, failure by the Township to

engage in bona fide negotiations pursuant to N.J.S.A. 20:3-6.

On appeal, defendants renew their argument that the Township

failed to engage in jurisdictionally required bona fide

negotiations prior to filing the complaint. They also contend the

2 A-0753-15T1
trial court erred in ruling that only the Verona property, and not

the Montclair property, is so functionally integrated with the

subject property as to form constituent parts of a single economic

unit, and that re-litigation of this issue is barred by the

doctrine of collateral estoppel. For the reasons that follow, we

affirm.

I.

The subject property contains approximately 9508 square feet

and is improved with gravel and stone and enclosed by a chain link

fence. Defendants contemporaneously purchased the subject

property and the Montclair property in 1987, and financed the

acquisition with a mortgage that secured both properties.1 The

subject property was used to store and display vehicles in

conjunction with the Montclair property, which initially housed

defendants' DeCozen Chrysler dealership.

Defendants purchased the Verona property in 2003, and moved

the DeCozen automobile dealership there in 2007 due to the age and

condition of the Montclair property. Since that time, DeCozen has

used the subject property for the storage and display of a portion

1 In his February 25, 2014 certification, defendant Frank Cerino
represented that this debt has since been satisfied and there is
presently no mortgage encumbering the title of either property.

3 A-0753-15T1
of its automobile inventory, since the Verona property lacks

sufficient area to fully accommodate its inventory of vehicles.

After moving the DeCozen dealership to Verona, defendants

renovated the showroom on the Montclair property over time as

their financial circumstances allowed. In December 2012, the

Montclair Zoning Board of Adjustment ruled defendants had not

abandoned the use of the Montclair property for the sale of new

and used vehicles. That same month, the Township issued a business

license to defendants for the sale of new and used cars. In

January 2014, defendants reopened the showroom on the Montclair

property for the sale of pre-owned luxury automobiles under the

business name Montclair Motor Car.

The subject property adjoins the Township's municipal

facility. On August 12, 2013, the Township adopted Ordinance O-

13-44 (the Ordinance), which authorized it to acquire the subject

property "for public purposes, principally but not limited to the

provision of necessary additional parking facilities for the

Montclair Police Department and Municipal Court Building[.]" The

Ordinance recited that an independent appraisal prepared by

Hendricks Appraisal Company LLC valued the subject property at

$475,000. It also authorized the institution of eminent domain

proceedings to acquire the subject property in the event good

faith negotiations with defendants proved unsuccessful.

4 A-0753-15T1
 By letter dated March 25, 2013, the Township offered to

purchase the subject property for $475,000. Defendants, through

counsel, rejected the offer on April 9, 2013. Among other reasons,

defendants maintained that "the Township's proposed taking of the

[p]roperty constitutes a partial taking, which results in

severance damages to [defendants'] car dealership propert[ies] in

Verona and Montclair which are functionally integrated with the

use of the [p]roperty which the Township proposes to take."

Consequently, defendants asserted that the Township's offer was

not a bona fide offer because it did not consider or include such

severance damages. On May 3, 2013, the Township Attorney responded

"[i]t is the Township's position that the property is not

functionally integrated [with the Verona property] so as to

generate severance damages." Also, "[i]n light of the fact that

the former Montclair dealership has been and is vacant and unused

for several years, [the Township] did not consider that [Montclair]

property as having any impact on the value of the noncontiguous

[subject property]."

On December 30, 2013, the Township filed a complaint and

order to show cause seeking to acquire the subject property through

eminent domain (the prior action). Following oral argument, Judge

Patricia K. Costello dismissed the complaint without prejudice on

April 8, 2014. She noted the Township's initial offer did not

5 A-0753-15T1
include severance damages in the valuation. The judge found that

the subject property and defendants' auto dealerships "are

functionally integrated." She reasoned:

Despite the congruence of defendants' facts
with the Township's own description of the
[subject property], the Township maintains
that the [subject property] is not integrated
with the dealerships. Yet to support their
argument, the Township provides no reasoning
in either their papers or their appraisal
report. Instead, the Township presents only
their conclusion that the [subject property]
is not functionally integrated. Without any
contrary facts or analysis, it is clear that
the [subject property] is used in conjunction
with the defendants' dealerships as the
[subject property] is used to store
defendants' excess automobile inventory. This
court finds defendants have demonstrated a
clear integration between the [subject
property] and the car dealerships.

Judge Costello further found that "[t]he Township had the

opportunity to, but did not substantially revise their appraisal

to address the severance damage claims." As a result, the judge

concluded the Township had failed to engage in bona fide pre-

condemnation negotiations with defendants, as required by N.J.S.A.

20:3-6, and dismissed the complaint without prejudice.

The Township's appraiser conducted exterior inspections of

all three properties on April 25, 2014, and November 3, 2014.

Frank Cerino was present during the April inspection but not the

November inspection. On December 5, 2014, the Township obtained

6 A-0753-15T1
a revised appraisal report that took into account the integration

and severance damage claims raised by defendants in the prior

action. It expressly noted:

This appraisal super[s]edes and replaces
a previous report prepared by this office and
dated January 30, 2013. That appraisal report
involved and addressed only the proposed
acquisition parcel – 59-61 Valley Road,
Montclair. As previously discussed, the
recent decision by the Honorable Patricia K.
Costello, A.J.S.C., directed that all three
properties be combined and valued as a single
economic unit which has been reflected and
addressed in this appraisal.

The Township's appraiser determined that the subject property

and the Verona property were functionally integrated, but the

Montclair property was not. The report elaborated:

This appraisal has been prepared . . .
in response to a recent decision by the
Honorable Patricia K. Costello, A.J.S.C. In
the decision, the [c]ourt notes, that based
on statements by the property owner, both his
Verona car dealership and his Montclair
dealership were "functionally integrated"
with the proposed . . . acquisition parcel.
Based on my observations during the physical
inspections of all three properties, it is
readily apparent that the Verona Dealership
property and [the subject property] are
functionally integrated as the [subject
property] is fully occupied by new cars from
the DeCozen dealership. In addition, signage
on the site identifies its use and occupancy
as a storage yard for DeCozen Chrysler-Jeep-
Dodge. Although [the Montclair Property] may
offer the sale of some new automobiles for the
Verona Dealership, it is primarily a used car
facility which has no service department or

7 A-0753-15T1
 capabilities. Furthermore, there is no direct
brand affiliation between Chrysler-Jeep-Dodge
and the Montclair dealership facility. In
other words, the Montclair building is not a
licensed franchise or dealership for any
automotive brand.

The updated appraisal further concluded that no severance

damages were warranted with respect to the Verona property:

The appraiser is of the opinion that
other than the Market Value conveyed for the
proposed partial acquisition noted herein, no
severance damages to the remainder were
indicated. As previously reported, both
properties are non-contiguous (being
approximately one mile apart). The property
owner has stated that as a requirement of his
dealership franchise agreement with Chrysler,
he is required to maintain a new car inventory
of approximately 250 vehicles and that due to
municipal zoning ordinances, only 200 vehicles
can be stored on site. (This excludes the
approximately thirty-six (36) vehicles on
display within the enclosed showroom area).
Therefore, the remaining 50 vehicles are
stored at [the Montclair property]. The
Verona dealership has a non-delineated
capacity for 205 vehicles along the exterior
of the building. As indicated above, an
additional thirty-six (36) vehicles are on
display within the showroom. The property
owner has also reported that a separate parcel
located to the rear of 141 Bloomfield Avenue,
Verona is being leased at an annual cost of
$48,000.00 for the storage of 60 to 70
vehicles.

The appraisal has presented a Market
Value estimate of all three of the subject
properties as a combined single economic unit.
In addition, a valuation of the Verona
dealership and the Montclair building
following the acquisition of the [property]

8 A-0753-15T1
 was also presented. The difference between
the before and after valuations represents the
Market Value of the proposed acquisition,
including damages to the remainder, if any.

The appraiser concluded that, as of November 3, 2014, the fair

market value of the Property was $470,000.

On February 3, 2015, the Township again offered to purchase

the subject property for $475,000, accompanied by the updated

appraisal. Defendants did not respond, and the Township sent them

a second letter on April 1, 2015. On April 30, 2015, defendants

rejected the offer. The rejection letter contended that: the

Township's offer was not a basis for bona fide negotiations; the

Township did not value the property as required by the court in

the prior action; and the Township's conclusion that the partial

taking does not cause severance damages was misinformed and legally

deficient. Defendants took issue with the appraiser's position

that the subject property and the Montclair property are not

functionally integrated. They also contended the appraiser erred

in: basing the denial of the award of severance damages on the

fact that the property and the Verona property are non-contiguous;

failing to account for the storage of used vehicles in determining

the storage capacity of the Verona property; and referencing a

month-to-month lease at 141 Bloomfield Avenue, Verona, which

defendants had since terminated. Defendants' rejection letter,

9 A-0753-15T1
however, did not provide a counteroffer. It also requested that

"the Township not [] take their property."

On May 1, 2015, the Township attorney responded that he would

"review" defendants' rejection letter and "respond" to it.

Instead, on June 25, 2015, the Township filed a new complaint and

order to show cause again seeking to condemn and acquire the

subject property. The matter was assigned to Judge Dennis F.

Carey, III, who conducted oral argument on August 20, 2015.

Defendants asserted that the doctrine of collateral estoppel

precluded re-litigation of Judge Costello's determination in the

prior action that the three properties were functionally

integrated. Judge Carey rejected this argument, stating:

Addressing the issue of Judge Costello's
April [8], 2014 opinion . . . [s]he says,
["]The [c]ourt must therefore determine
whether the defendant dealership and the
taking parcel are functionally integrated. I
[find] that they are.["] I do not believe
that I am bound by that in terms of collateral
estoppel. I think that . . . when that
statement is taken in context, it's clear that
that was [] a factor in that . . . she had no
choice . . . . [T]he appraisal, at that
point, had never [analyzed] the issue one way
or the other, so it was really uncontested.

And I [] don't think she intended to
close the door on that issue since . . . she
didn't have . . . a finding by an appraisal
one way or the other.

So I don't think that the [] fact that
the new appraisal that is subject to this

10 A-0753-15T1
 case, defines that the Verona property is
functionally integrated, and the Montclair []
property is not, again, would defeat the
application for eminent domain."

The court found the Township satisfied its statutory duty to

conduct bona fide negotiations, reasoning:

So, the [] issue is . . . the fact that
the plaintiff, [T]ownship, did not provide
another offer in response to the April 30[],
2015 letter. Does that in [e]ffect mean that
the [T]ownship failed in [its] obligation to
conduct [bona fide] negotiations? I don't
think that they did. I think that [] when one
looks at this case as a whole, clearly there
[were] [bona fide] negotiations.

There was a history between the parties
of trying to resolve the issue of the taking
and [] then the [T]ownship had made it pretty
clear that . . . the new appraisal found that
the Verona property was [] functionally
integrated with the property subject to the
taking, although the appraisal did not
contemplate that there would be any
compensatory damages from that finding.

And that [] may or may not end up being
the case. . . . The [T]ownship had made it
clear that . . . they did not believe that the
Montclair property . . . was functionally
integrated, and therefore, that was going to
be their position. Period. And that they
[analyzed] both things.

. . . .

The [defendants] didn't make a counter
offer. And that's the way negotiations
normally work. . . . [Defendants] just
pointed out why they were rejecting the offer,
or what they found [were] the flaws in [] the
analysis by the new appraisal, which may or

11 A-0753-15T1
 may not have merit. And -- but that doesn't
really translate into the basis for -- a
dollar and cents negotiation and it basically
comes down to money.

. . . .

I can understand . . . that at that point
there really was no point [to respond to
defendants' rejection letter], and I don't
think that [the Township's] lack of response
to the April 30[] letter disqualifies them
under [] their obligation to conduct [bona
fide] negotiations.

The trial court memorialized its decision in a September 8,

2015 order. The court appointed three disinterested commissioners

and instructed them to "examine and appraise the land and

improvements set forth in the [c]omplaint taken by [the Township]

for public purposes as stated therein and to fix and determine the

compensation to be paid by [the Township] in accordance with law,

including a determination as to integration as disputed between

[the Township] and [d]efendants and the amount of severance

damages, if any[.]" This appeal followed.

II.

We begin our analysis by recognizing the fundamental precept

that

[t]he right to "just compensation" when the
government takes property for a public use is
one of the essential guarantees of both the
United States and New Jersey Constitutions.
U.S. Const. amend. V ("[N]or shall private
property be taken for public use, without just

12 A-0753-15T1
 compensation."); N.J. Const. art. I, ¶ 20
("Private property shall not be taken for
public use without just compensation."). This
fundamental right is of ancient origin,
preceding the founding of our Republic, and
is found even in the text of the Magna Carta.
Magna Carta ch. 28 (1215), reprinted in The
Anglo–American Legal Heritage 84 (Daniel R.
Coquilette, 2d ed. 2004) ("No constable or
other bailiff of ours shall take grain or
other chattels of anyone without immediate
payment therefor in money. . . .").

[Borough of Saddle River v. 66 E. Allendale,
LLC, 216 N.J. 115, 136 (2013) (quoting Borough
of Harvey Cedars v. Karan, 214 N.J. 384, 402
(2013)).]

The Eminent Domain Act (Act), N.J.S.A. 20:3-1 to -50, sets

forth procedures to implement the constitutional requirements

governing the taking of private property for government's use.

Borough of Saddle River, supra, 216 N.J. at 136. N.J.S.A. 20:3-6

provides that before filing a complaint seeking authority to take

property by eminent domain, a plaintiff must engage in "bona fide

negotiations with the prospective condemnee[.]" The taking agency

must first conduct an appraisal of the property, allowing the

owner the opportunity to be present at the inspection. Ibid.

Then, it must send an offer in writing, which includes "the

property and interest therein to be acquired, the compensation

offered to be paid and a reasonable disclosure of the manner in

which the amount of [the condemnor's] offered compensation has

been calculated[.]" Ibid. When the condemnor fails to engage in

13 A-0753-15T1
bona fide negotiations, the complaint must be dismissed. Morris

Cty. v. 8 Court St., Ltd., 223 N.J. Super. 35, 37 (App. Div.),

certif. denied, 111 N.J. 572 (1988).

Our Supreme Court has held that the "reasonableness of pre-

negotiation disclosures centers on the adequacy of the appraisal

information; it must permit a reasonable, average property owner

to conduct informed and intelligent negotiations [and] an

appraisal should contain an explanation of the valuation approach

or methodology actually used." State, by Comm'r of Transp. v.

Carroll, 123 N.J. 308, 321 (1991). In Carroll, the Court found

the State had complied with the pre-litigation requirements under

N.J.S.A. 20:3-6, and set forth the minimally required information

to be provided to the condemnee. It held: "The appraisal's

description of the valuation method, its inclusion of 'comparable'

sales, and its specific rejection of other valuation methods,

i.e., the income and cost approaches, imparted minimally

sufficient information to the property owner." Ibid.

N.J.S.A. 20:3-29 directs that the "condemnee shall be

entitled to compensation for the property, and damages, if any,

to any remaining property[.]" If prior to the taking two or more

parcels are functionally united, so that each is "reasonably

necessary to the use and enjoyment of the other," the taking of

less than the combined whole of the properties is a partial taking,

14 A-0753-15T1
entitling the condemnee to severance damages with respect to the

remaining related property. Hous. Auth. of Newark v. Norfolk

Realty Co., 71 N.J. 314, 325 (1976). Under such circumstances,

the appraiser must consider the value of that portion to the whole

and not just the part that is the subject of the taking. "It is

necessary to assign a value not only to the property actually

taken, but also to the property that is left" when calculating

just compensation. State, by Comm'r of Trans. v. Silver, 92 N.J.

507, 515 (1983). However, "[i]n order to obtain severance damages,

the landowner must show that the remaining parcel and the parcel

which has been taken were constituent parts of a single economic

unit." Hous. Auth. of Newark, supra, 71 N.J. at 322.

The Court has clearly defined severance damages:

Severance damage in condemnation cases can
occur only when there is a partial taking of
another parcel of property. The traditional
measure of damages for such a taking may be
stated as either (1) the value of the property
actually taken together with the diminution
in value of the part that remains (severance
damage) or (2) the difference between the
value of the entire property before the taking
and the value of the remainder after the
taking.

The mere fact that the condemned parcel is
physically separated from the remaining parcel
does not foreclose a condemnee from recovering
severance damages.

[Hous. Auth. of Newark, supra, 71 N.J. at 321
(citations omitted).]

15 A-0753-15T1
 Here, the focus of defendants' argument is their disagreement

with the conclusions reached by the Township's appraiser that the

subject property and the Montclair property are not functionally

united, and that the Verona property will not suffer severance

damages as a result of the taking of the subject property. We do

not find defendants' contentions persuasive.

We conclude the Township followed the proper procedure under

N.J.S.A. 20:3-6, tendered a reasonable offer based on its

appraiser's findings, and provided all necessary information to

defendants including the methodology used to value the subject

property. The appraisal met the standards set forth in the law,

in that it explained its method of valuation and specifically

considered and rejected defendants' position that the subject

property formed a unity of use with the Montclair property, and

that the Verona property will sustain severance or consequential

damages from the taking of the subject property.

Contrary to defendants' contention, any disagreement between

the parties regarding the method of valuation and the resulting

damages is an issue for the commissioners, and is not a valid

basis to deny the entry of a judgment for condemnation. In

reaching this conclusion, we draw guidance from the Court's holding

in Hous. Auth. of Newark, supra, 71 N.J. at 325, that

16 A-0753-15T1
 a condemnee may offer evidence of severance
damage resulting from the taking of a
noncontiguous parcel provided that he has
demonstrated (1) that the two parcels are
functionally integrated; that each is
reasonably necessary to the use and enjoyment
of the other (unity of use); and (2) that he
substantially owns both parcels (unity of
ownership).

Here, there is no dispute over the actual, physical property

the Township seeks to condemn. Rather, the dispute concerns the

valuation of the subject property and the extent of any damages

thereby resulting to defendants' Verona and Montclair properties.

Judge Carey aptly preserved defendants' right to offer evidence

of severance damages by expressly authorizing the commissioners

to make "a determination as to integration as disputed between

[the Township] and [d]efendants and the amount of severance

damages, if any[.]"

Contrary to defendants' argument, Judge Costello's findings

in the prior action regarding integration of the three properties

did not preclude the subsequent re-litigation of that issue. The

doctrine of collateral estoppel "bars relitigation of any issue

which was actually determined in a prior action, generally between

the same parties, involving a different claim or cause of action."

Ziegelheim v. Apollo, 128 N.J. 250, 265 (1992) (quoting State v.

Gonzalez, 75 N.J. 181, 186 (1977)). The purpose of the doctrine

is to avoid re-litigating issues that have been fully and fairly

17 A-0753-15T1
litigated and determined in an earlier proceeding. First Union

Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007);

Lopez v. Patel, 407 N.J. Super. 79, 93 (App. Div. 2009).

Collateral estoppel is an equitable remedy, and the decision of

whether to apply it in a particular case is left to the trial

court's discretion after the court "weigh[s] economy against

fairness." Barker v. Brinegar, 346 N.J. Super. 558, 566 (App.

Div. 2002).

To successfully assert the bar of collateral estoppel, a

party must establish the following factors:

(1) the issue to be precluded is identical to
the issue decided in the prior proceeding; (2)
the issue was actually litigated in the prior
proceeding; (3) the court in the prior
proceeding issued a final judgment on the
merits; (4) the determination of the issue was
essential to the prior judgment; and (5) the
party against whom the doctrine is asserted
was a party to or in privity with a party to
the earlier proceeding.

[First Union Nat'l Bank, supra, 190 N.J. at
352 (citations omitted).]

Collateral estoppel is limited to issues actually litigated and

decided in a prior action. Ibid. "[W]hen the five elements of

collateral estoppel . . . are not satisfied, the inquiry ends."

Perez v. Rent-A-Center, Inc., 186 N.J. 188, 199 (2006) (internal

citation omitted).

18 A-0753-15T1
 Applying these principles, we conclude that the issue of

whether the subject property and the Verona and Montclair

properties are so functionally integrated as to form a single

economic unit was not fully and fairly litigated in the prior

action. In dismissing that action, without prejudice, Judge

Costello expressly noted that the Township had completely failed

to address the issue of severance damages or state why they were

not applicable. In contrast, the issues of integration and

severance damages were squarely addressed in the Township's

updated valuation analysis that formed the basis of its February

3, 2015 and April 1, 2015 offers to purchase the subject property.

Accordingly, we discern no abuse of discretion in Judge Carey's

determination that the doctrine of collateral estoppel did not bar

his consideration of these issues.

Finally, defendants' April 30, 2015 rejection of the

Township's updated offer, coupled with their unwillingness to

engage in additional, meaningful negotiations, triggered the

Township's right to re-file its complaint. The Act specifically

supports such a conclusion. It provides: "A rejection of said

offer or failure to accept the same within the period fixed in the

written offer . . . shall be conclusive proof of the inability of

the condemnor to acquire the property or possession thereof through

negotiations." N.J.S.A. 20:3-6. When a prospective condemnee

19 A-0753-15T1
rejects a condemnor's offer, the obligation to continue

negotiations in an effort to avoid litigation is effectively

discharged. Ibid. Accordingly, we share the trial court's

conclusion that the Township satisfied its statutory duty to

conduct bona fide negotiations.

Affirmed.

20 A-0753-15T1