Inverse Condemnation Defeated: Wildwood Property Owner Fails to Exhaust Administrative Remedies

On Friday May 18, 2012, a New Jersey appellate court affirmed – and published – the trial court’s decision in Dock Street Seafood, Inc. v. City of Wildwood, ___ N.J. Super. ___ (Law Div. Docket No. L-17056-06).  Plaintiff/appellant owns a vacant parcel of property located at 600 West Baker Ave in Wildwood, N.J. adjacent to its seafood business property on West Montgomery Avenue.  The Baker Ave property was designated “in need of redevelopment” in 2002.  A redevelopment plan was adopted shortly thereafter, and a redeveloper was named – K. Hovnanian.

The property owner never challenged the in need of redevelopment designation.

At some point thereafter,  K. Hovnanian made an offer to purchase the Baker Avenue property for $660,000.  The offer was rejected.  K. Hovnanian backed out of the deal when the market turned in 2007.

The property owner was interested in developing the property itself, but never submitted an application because City officials consistently stated that they would not permit private development within the redevelopment area.  Therefore, in 2006, the property owner filed a lawsuit alleging that the City’s actions resulted in a “taking” of private property without payment of just compensation, i.e. filed an “inverse condemnation” suit.

A Law Division judge tried the case and dismissed the property owner’s takings claim.  The trial judge reasoned that the property owner failed to exhaust administrative remedies by not filing an application for development before filing the lawsuit.  The property owner argued that such efforts would have been futile given municipal officials’ insistent statements that they would not permit private development within the redevelopment area.

The Appellate Division affirmed based upon the opinion below.

While we have yet to learn whether the owner will be submitting its own development plan to “exhaust” its administrative remedies, this opinion appears to have been made based upon the trial court’s factual determination as to whether the administrative remedy of approvals was really available or, whether (as suggested by the owner) those efforts would have been futile.  Not much in the way of new law, which makes it somewhat surprising that the case was approved for publication, but nonetheless, score one for the municipality in this case.