Court sides with Merchantville in eminent domain dispute
The state Supreme Court ruled Thursday that Merchantville officials acted properly in acquiring a rundown apartment building through eminent domain.
In a 5-0 decision, the High Court said state law required the borough to negotiate only with the owner of record of the Wellwood Manor complex on the 600 block of West Maple Avenue. A Texas firm that planned to buy the 54-unit complex at a sheriff's sale argued it should have been included in the condemnation process.
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The Texas firm, LB-RPR REO Holdings, held a $1 million lien on the Tudor-style complex and had made substantial repairs in anticipation of a turnaround effort. The borough paid $270,000 for the site, saying that was its assessed value.
Merchantville was able to force the property's sale through eminent domain because the building is in a redevelopment zone.
"The borough is very happy with the decision," said Timothy Higgins, Merchantville's attorney. "We followed the law completely and this is an affirmation of that."
He noted the apartments have been renovated by new owner Citadel Wellwood LLC, the borough's designated redeveloper.
"The place was in a very, very dilapidated state," Higgins said. "Now, it's a really nice property."
According to Thursday's ruling, the property's owner of record — Malik & Son LLC — rejected the borough's purchase offer in November 2011, saying it was "far less" than the debt on the property. An attorney for Malik also invited the borough to engage in further talks over Merchantville's offer.
The borough did not respond to the invitation, and instead filed to take the property in December 2011.
Thursday's ruling said state law specifies eminent-domain negotiations must be held with a property's owner. As a result, Merchantville was not required to address the concerns of LB. Among other issues, the firm had called the borough's offer "entirely inconsistent" with a $1.25 million bid made by Citadel Wellwood in June 2011.
The ruling also said Merchantville was not required to haggle over its offer to Malik because he had not offered "concrete and credible evidence" that the property's worth exceeded the assessed value.
"Rather, the property owner simply noted that any compensation less than the amount required to satisfy LB and other lienholders would be of no benefit to him," the ruling said.
The ruling upheld decisions in the borough's favor by a trial judge and an appellate panel. Justice Faustino Fernandez-Vina, who heard the case in Superior Court in Camden in March 2012, did not participate in Thursday's decision.
Reach Jim Walsh at jwalsh@courierpostonline.com or (856) 486-2646.