Court Opinion

ID: 2674663
Source: CourtListenerOpinion
Date Created: 2014-05-16 07:03:40.252096+00
Date Added: 2024-06-11T08:39:50.755674
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                  APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-0122-12T4

NEW JERSEY TRANSIT CORPORATION,
an instrumentality of the                APPROVED FOR PUBLICATION
State of New Jersey,
                                               May 6, 2014
      Plaintiff-Appellant,
                                           APPELLATE DIVISION

v.

EUGENE E. MORI,

      Defendant-Respondent,

and

PNC WEALTH MANAGEMENT and
TOWNSHIP OF NORTH BERGEN,
in the County of Hudson,
a municipal corporation of
the State of New Jersey,

     Defendants.
_______________________________

          Argued September 11, 2013 – Decided May 6, 2014

          Before    Judges    Fuentes,     Simonelli     and
          Fasciale.

          On appeal from the Superior Court of New
          Jersey, Law Division, Hudson County, Docket
          No. L-1616-09.

          Ryan P. Kennedy argued the cause for
          appellant (Hill Wallack LLP, attorneys; Mr.
          Kennedy, of counsel and on the briefs).

          William J. Ward argued the cause for
          respondent (Carlin & Ward, P.C., attorneys;
            Mr. Ward and James M. Turteltaub, of counsel
            and on the brief; Scott A. Heiart, on the
            brief).

    The opinion of the court was delivered by

SIMONELLI, J.A.D.

    This     matter   involves    the    valuation     of   approximately         one

acre of vacant land in the Township of North Bergen owned by

defendant Eugene E. Mori and acquired by plaintiff New Jersey

Transit      Corporation    (NJ         Transit)      through       condemnation

proceedings (the taking area).1             There is no dispute the taking

area contains navigable waters of the United States under the

exclusive    jurisdiction   of    the       United    States      Army    Corps    of

Engineers (ACOE).

    NJ      Transit   claimed    the     taking      area   was    wetlands,      as

determined by the ACOE, and valued it at $61,000.                        NJ Transit

also argued there was no reasonable probability the ACOE would

have granted a private developer the right to construct a two-

story self-storage facility by obtaining a regulatory exemption

known as a Section 404 permit.2             According to Mori's expert on

land value, a two-story self-storage facility represented the

1
   The taking area also included a small slope easement and a
temporary construction easement.
2
   Section 404 of the Clean Water Act requires a permit prior to
the placement or discharge of dredged and/or fill material into
waters of the United States, including wetlands. 33 U.S.C.A. §
1344(a).

                                        2                                  A-0122-12T4
property's best and highest use.                Mori countered that the taking

area was uplands valued at $858,000, and if wetlands, valued at

$666,000 because there was a reasonable probability the ACOE

would have granted a Section 404 permit for the proposed private

development.         The    jury    awarded     Mori    $425,000      plus   interest

without indicating whether it valued the taking area as wetlands

or uplands.

      NJ    Transit    appeals       from    the    August     2,   2012     order   of

judgment, and from the denial of its motion in limine to bar

Mori's land value expert from testifying that the taking area

was   not       wetlands,   or     if   wetlands,      there    was   a    reasonable

probability the ACOE would issue a Section 404 permit for the

proposed development.              As a threshold issue, we conclude the

ACOE has exclusive jurisdiction to determine whether the taking

area falls under the category of wetlands.                   The trial court thus

erred      in     submitting       this     issue    to   the       jury     for     its

determination.

      We also conclude it was error for the trial court to submit

to the jury the question of whether the ACOE would have granted

a Section 404 permit to a private developer without the court

first conducting the gate-keeping function the Court ordered in

Borough of Saddle River v. 66 East Allendale, LLC, 216 N.J. 115,

119 (2013).         Under these circumstances, the trial court was

                                            3                                 A-0122-12T4
obligated      to   conduct        an    N.J.R.E.          104   pre-trial       hearing     to

determine      whether       there       existed       sufficient        evidence      of     a

reasonable probability the ACOE would have granted a permit for

the proposed private development.                     Accordingly, we reverse the

jury verdict, vacate the judgment, and remand for such further

proceedings       as   may    be     warranted         consistent        with    the   legal

principles we discuss herein.

    The facts are straightforward.                          Mori owned approximately

fourteen acres of vacant land in the Township of North Bergen

adjacent to West Side Avenue and 69th Street.                               On March 31,

2009,    the   date    of     the    taking,        this     property      was    zoned     for

industrial      and    other        related         development      under       the   local

municipal Intermodel A Zone.                NJ Transit took approximately one

acre of the property for the purpose of constructing a bridge

over 69th Street.            This was generally known as the 69th Street

Bridge    Grade     Separation          Project.           The   project     included       the

correction of a dangerous at-grade railroad crossing at 69th

Street, replacement of the crossing with a bridge spanning the

existing railroad tracks, and road and drainage improvements to

West Side Avenue, 69th Street and the surrounding area.

    On     August      15,    1996,       the       ACOE    issued   a     jurisdictional

determination that areas of the property, including the taking

area, were wetlands subject to its jurisdiction (the 1996 JD).

                                                4                                   A-0122-12T4
The 1996 JD found there were thirty-nine non-assumable waters of

the   United   States/wetland   areas      located   within   the   proposed

project site.     Approximately twenty-six wetlands were determined

to be above the headwaters, and thirteen, including the taking

area, were determined to be below the headwaters.               Because NJ

Transit's proposed activities on the site involved the discharge

of dredged or fill material into the wetland areas, the 1996 JD

required NJ transit to obtain a Section 404 permit.            The 1996 JD

noted the extent of the discharge or fill would determine the

level of authorization that would be required.                Although the

1996 JD specified it was valid for a period of five years, a

jurisdictional determination associated with an issued Section

404 permit is valid until the permit's expiration.3

      NJ Transit applied for a Section 404 permit for its work in

the taking area.      On November 22, 2000, the ACOE granted the

permit,   which   imposed   several       conditions,   including   that    NJ

Transit must purchase 2.24 acres of wetland mitigation credits

to compensate for the wetlands in the taking area that would be

filled during the project's construction.               Because NJ Transit

3
   See U.S. Army Corps of Eng'rs, Regulatory Guidance Letter, No.
05-02, "Expiration of Geographic Jurisdictional Determinations
of Waters of the United States" (five year rule), (June 14,
2005)                         available                        at
http://www.usace.army.mil/Portals/2/docs/civilworks/RGLA/rg105-
02.pdf.

                                      5                             A-0122-12T4
was a public entity, it was entitled to a discounted 2.3 to 1

ratio    of    filled   wetlands     to    mitigation      credits.       A   private

developer, such as Mori, would have paid a higher ratio.                              NJ

Transit paid $336,000 for the mitigation credits.

      In      October   2006,   Mori       asked    the    ACOE    to   verify    that

approximately eleven acres of the property, including the taking

area, were not wetlands subject to federal jurisdiction based on

Rapanos v. United States, 547 U.S. 715, 126 S. Ct. 2208, 165 L.

Ed.     2d    159   (2006).     In     a    March    10,    2008    jurisdictional

determination, the ACOE found that Rapanos did not apply, and

reverified there were waters of the United States and wetlands

on the property that remained subject to its jurisdiction (the

2008 JD).       The 2008 JD specified it was valid for a period of

five years.

      Mori administratively appealed the 2008 JD.                   On December 1,

2008, the ACOE upheld the 2008 JD and advised Mori he could

apply for a Section 404 permit for any proposed work in the

jurisdictional area.4         Mori never applied for a permit.

      A "jurisdictional determination" is defined as follows, in

pertinent part:

4
   On December 8, 2008, the ACOE issued a revised jurisdictional
determination that did not affect the 2008 JD's reverification
of wetlands located on the property that were subject to federal
jurisdiction and regulation.

                                            6                                 A-0122-12T4
              [A] written [ACOE] determination that a
              wetland . . . is subject to regulatory
              jurisdiction under Section 404 of the Clean
              Water Act [33 U.S.C.A. § 1344] or a written
              determination that a waterbody is subject to
              regulatory jurisdiction under Section 9 or
              10 of the Rivers and Harbors Act of 1899 [33
              U.S.C.A. § 401-426p].      Additionally, the
              term includes a written reverification of
              expired JDs and a written reverification of
              JDs   where   new  information   has   become
              available that may affect the previously
              written determination.

              [33 C.F.R. § 331.2 (2014).]

A   jurisdictional          determination          "represent[s]         the       [ACOE's]

definitive administrative position that [] property contain[s]

wetlands."      See Fairbanks N. Star Borough v. U.S. Army Corps of

Eng'rs, 543 F.3d 586, 591 (9th Cir. 2008), cert. denied, 557

U.S.   919,    129    S.    Ct.    2825,    174    L.   Ed.      2d   552    (2009).      "An

approved jurisdictional determination upheld on administrative

appeal is [the ACOE's] 'last word'" on whether the property is

wetlands subject to the federal regulatory jurisdiction.                             Id. at

593 (quoting Sierra Club v. U.S. Nuclear Regulatory Comm'n, 825

F.2d   1356,     1362       (9th    Cir.     1987)).             However,        absent    an

enforcement     action,      a     jurisdictional          determination          does    not

constitute       a     final       agency         action      under         the     federal

Administrative        Procedure      Act    (APA),      5     U.S.C.A.       §    704,    for

purposes of judicial review, Fairbanks, supra, 543 F.3d at 591,

597,   and     must    be    appealed       pursuant        to    the   administrative

                                            7                                      A-0122-12T4
procedures    set     forth       in   33   C.F.R.    §    331   (2014).       If   the

jurisdictional       determination          is    upheld   on    appeal,     then   the

aggrieved party must apply for a Section 404 permit in order to

proceed further.       Fairbanks, supra, 543 F.3d at 594, 597.                      The

ACOE's     decision    on     a    permit        application     must   be    appealed

pursuant to the administrative procedures set forth in 33 C.F.R.

§ 331.10 (2014).         A final ACOE permit decision is reviewable

only in federal court, not state court.                     33 C.F.R. §331.6-.10

(2014).    As we have acknowledged,

            [O]ur federal system contemplates a policy
            which      generally     permits      federal
            administrative agencies to execute their
            duties free from interference by the state
            judiciary.   .   .   .  Vital   among   these
            considerations is the concept of comity,
            that is, a proper and mutual respect between
            the    federal    and   state    governments.
            Interference by the state judiciary with
            respect to a responsibility conferred upon a
            federal agency with presumed expertise in
            its assigned field would be inherently
            abrasive and would tend to erode the mutual
            respect between governmental entities which
            is so necessary to the effective operation
            of our federal system.

            [In re Application for a Rental Increase at
            Zion Towers Apts. (HMFA #2), 344 N.J. Super.
            530, 537 (App. Div. 2001) (alteration in
            original) (citation omitted) (denying review
            of HUD decision in state court).]

    Here, the ACOE twice determined that the taking area was

wetlands     under     its        exclusive       jurisdiction.         The     ACOE's

determination was dispositive and not reviewable by a federal

                                            8                                 A-0122-12T4
court, let alone a state court.               Accordingly, it was error for

the jury to determine whether the taking area was wetlands or

uplands.

      Because the taking area was wetlands, it should have been

valued as such.         The issue, therefore, was whether there was a

reasonable probability at the time of the taking that the ACOE

would have granted a Section 404 permit for the proposed private

development.       As noted earlier, our Supreme Court has held that

the   trial     court    must      determine      the   issue    of    reasonable

probability prior to the commencement of the trial.                    See Saddle

River, supra, 216 N.J. at 119, 138 (citing State by Comm'r of

Transport. v. Caoili, 135 N.J. 252, 265 (1994)).

      In Saddle River, the dispute concerned whether there was a

reasonable probability that a bulk variance would be granted to

permit   the    defendant's     proposed       development      of    the   subject

property.      Id. at 120.      Plaintiff Borough of Saddle River filed

a   motion    in   limine    for    an    order    striking     the   reports       of

defendant's expert witnesses as inadmissible net opinion because

their opinions on the reasonable probability of a zoning change

lacked a proper foundation.              Id. at 123.      In the alternative,

the Borough asked the court to perform its gatekeeping function

and conduct a pre-trial N.J.R.E. 104 hearing "to assess whether

                                          9                                 A-0122-12T4
there was a reasonable probability of a zoning change for the

property."        Ibid.

      The trial court denied the motion in limine, concluding it

could not resolve the issue on the evidence proffered in support

of the reasonable probability of a zoning change, and deferring

its decision until after presentation of the experts' testimony

at trial.        Id. at 123-24.         The court also denied an N.J.R.E. 104

hearing, concluding it was too time-consuming and Caoili did not

require     it    as    gatekeeper      to    conduct     an    expansive     pre-trial

hearing     to    fully    vet    the    issue.        Id.     at    124.     The    court

explained        it    could   perform       its     gatekeeping      function      during

trial.      Ibid.         At   various       times    during    the    experts'      trial

testimony, the court conducted N.J.R.E. 104 hearings and ruled

they could continue testifying.                    Id. at 127-29.        Prior to jury

deliberations, the court denied the Borough's motion to strike

the   experts'        testimony,     and     ruled     the   jury     would   determine

whether there was a reasonable probability of a zoning change

for the property that would impact its value.                         Id. at 132.      The

jury returned a verdict for the defendant for just compensation.

Id. at 133.

      Our   Supreme       Court    held      that    where     the    issue   cannot     be

resolved on motion based on the evidence proffered in support of

the reasonable probability of a zoning change, the court must

                                             10                                  A-0122-12T4
conduct    a    pre-trial    N.J.R.E.        104   hearing     and     "render   its

determination that there exists the reasonable probability of a

zoning    change   based     on    the   standard       that   would    govern   the

particular zoning change under consideration."                  Id. at 142-43.

    In this case, because the competing expert reports did not

engage in the required analysis completely, the court should

have conducted a pre-trial N.J.R.E. 104 hearing and rendered a

determination that there existed the reasonable probability the

ACOE would have granted a Section 404 permit as of the taking

date for the proposed private development.                     We, thus, reverse

and remand for a hearing and, if necessary, a new trial.                           On

remand, the court's determination must be based on the statutes,

regulations, and ACOE standards and criteria that would govern a

Section   404    permit     as    of   the    taking    date   for   the   proposed

private development.         Id. at 143, 146.           The court must place on

the record the basis for its findings.                 Id. at 142-43, 146.

    Reversed and remanded for further proceedings consistent

with this opinion.

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