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New Jersey Supreme Court Approves of Condemnation to Stop Development: Mount Laurel Township v. MiPro Homes, L.L.C.



December 13, 2006

Last year, we reported on the decision of the Appellate Division in Mount Laurel Township v. MiPro Homes, L.L.C., 379 N.J. Super. 358 (App. Div. 2005). View our previous article. Reversing the decision of the trial court, the Appellate Division rejected a challenge brought by MiPro Homes, a real estate developer, to Mount Laurel Township’s condemnation of its 16.3-acre parcel, on which it had received final subdivison approval just twenty-days earlier. In a brief opinion issued on December 7, 2006 — and over a sharply worded dissent from Justice Rivera-Soto — the New Jersey Supreme Court affirmed the judgment of the Appellate Division. Mount Laurel Township v. MiPro Homes, L.L.C., No. A-85/86-05 (N.J. Dec. 7, 2006).

MiPro Homes planned to build twenty-three single-family homes on its parcel, priced between $400,000 and $450,000. When Mount Laurel learned of these plans, it added the parcel to its open space acquisition plan. At the same time, MiPro Homes proceeded with its plans, obtaining preliminary approvals and conducting significant site preparation work. After MiPro Homes obtained final subdivision approval on May 9, 2002 — and after Mount Laurel tried, without success, to acquire the site via voluntary sale — Mount Laurel brought a condemnation action on May 24, 2002, and filed a declaration of taking on May 31, 2002. MiPro Homes sued to challenge the condemnation, and the trial court agreed, finding that while acquisition of property for open space is a proper public purpose, the “real” (and invalid) purpose of the condemnation was to stop development. The Appellate Division reversed, and the case went to the Supreme Court upon a grant of certification.

The Supreme Court affirmed, “for the reasons expressed . . . in [the Appellate Division’s] opinion.” The Court reiterated the Appellate Division’s point that numerous statutes authorize loans and grants for open space acquisition, and some of them give municipalities the power of eminent domain for recreation and conservation purposes. The Court went on to say that even if Mount Laurel’s “real purpose” was to limit development, this did not render the taking invalid, as that motive “is not inconsistent with the motive driving the public interest in open space acquisition generally.” Finally, the Court ordered that on remand, the property be valued at its fair market value, including the value associated with the final subdivision approval.

Justice Rivera-Soto, in dissent, took issue with the reasoning of the majority and the Appellate Division. Focusing on the after-the-fact nature of Mount Laurel’s claim that it condemned the parcel for open space purposes, he agreed with the trial court’s conclusion that the real reason for the taking was public pressure to stop the development, and that at least under the circumstances presented, such a motive could not be a proper public purpose to justify a condemnation. Justice Rivera-Soto also disagreed with the majority’s order regarding the compensation that must be paid to MiPro Homes. Finding the majority’s measure “woefully inadequate,” he would have held that MiPro Homes was entitled to the aggregate of its “restitution damages” (development costs to date, including acquisition costs) and its “expectancy damages” (including all reasonably foreseeable profits from the sale of the homes).

By essentially collapsing anti-development motives into open space acquisition as a proper motive for condemning undeveloped land, MiPro Homes gives municipalities a powerful, albeit potentially expensive, tool in any battle with developers whose projects attract public opposition. Only where there is evidence of fraud, bad faith, or manifest abuse can a developer hope to challenge such a condemnation.