Chicago Title Insurance Co. must pay more than $1.65 million in legal fees and costs in a dispute over former railroad property that Jersey City wants to transform into a park similar to Manhattan’s High Line.
Hudson County Superior Court Judge Barry Sarkisian on Tuesday ordered payment to the insureds, eight companies created by developer Steven Hyman that own parcels making up the half-mile-long Harismus Stem Embankment elevated rail spur.
The embankment, built between 1900 and 1905 with a stone structure elevated as much as 27 feet above street level, last saw rail traffic in the 1990s. It is overgrown and listed on the New Jersey Register of Historic Places.
Hyman agreed in 2003 to pay Consolidated Rail Corp. $3 million for the embankment, although closing did not occur until 2005.
Since then, his companies have been litigating against Jersey City; Conrail; the Rails-to-Trails Conservancy, a Washington, D.C.-based nonprofit; and the Embankment Preservation Coalition, a Jersey City organization.
The litigation includes 10 or more state court actions involving civil rights, land use and public records claims, as well as a federal administrative proceeding before the Surface Transportation Board and matters in the U.S. District Court for the District of Columbia and the D.C. Circuit Court of Appeals.
The New Jersey Attorney General’s Office intervened in the federal action to argue against the companies’ position that a state law on which Jersey City relies in challenging Conrail’s sale of the embankment is unconstitutional.
The dozens of lawyers who have represented Hyman’s interests include former U.S. District Judge Herbert Stern, of Stern & Kilcullen in Roseland; former Hudson County Assignment Judge Arthur D’Italia, now with Chasan Leyner & Lamparello in Secaucus; Daniel Horgan of Waters McPherson McNeill in Secaucus; and Edward McKirdy of McKirdy & Riskin in Morristown.
The companies, in 212 Marin Boulevard LLC v. Chicago Title Insurance Co., HUD-L-5801-09, sued to enforce their title policies, which provide $3 million in coverage and an unlimited amount for defense costs.
On April 29, 2011, Sarkisian granted summary judgment, holding that Chicago Title had a duty to defend the companies under the policies because some of the suits placed the title at issue.
If Jersey City prevailed, the transfer would be void under N.J.S.A. 48:12-125.1, which requires that properties like the embankment should first be offered to the government for a 90-day period.
His order stated that Chicago Title’s duty to defend applied to three matters: 212 Marin Boulevard v. Jersey City, HUD-L-4908-05; City of Jersey City Petition for Declaratory Order, Finance Docket No. 348-18, before the Surface Transportation Board; and Jersey City v. Conrail, 09-cv-1900, in the D.C. District Court — “and all related judicial determinations and appeals.”
After that decision, the companies asked for more than $5.5 million in fees and costs.
Sarkisian denied that motion without prejudice on Aug. 24, 2012, because the amount sought encompassed all past defense costs through December 2011 and not just those for the three proceedings.
On their second attempt, the companies sought $1.75 million for fees, costs and expenses in the three cases through Aug. 31, 2012, and got almost all of it.
Sarkisian’s decision on Tuesday pared off only $98,830. Most of that, $92,910, was for work done before the companies called on Chicago Title to defend. The other $5,920 was for work done on the coverage dispute.
Sarkisian disagreed with Chicago Title’s position that he needed expert testimony from the companies that the fees were reasonable and he rejected objections based on the use of block billing, “task inappropriate” billing and multiple attorneys billing meetings with one another.
He did not think the companies should have to follow Chicago Title billing guidelines, stating they were “not a term or condition of the policy,” they had never been provided to the insureds and it would be inequitable after the carrier refused to defend.
Further, Sarkisian rejected the view that Chicago Title was entitled to discovery on whether the fees were reasonable and necessary. He said that he already had sufficient basis to make that evaluation and that much of the discovery sought would include deposing lawyers who worked on the three cases. “Given the privilege issues that would undoubtedly arise, it is unclear how helpful those depositions would be,” he wrote.
Lynda Bennett of Lowenstein Sandler in Roseland, who handled the coverage case for the companies, says Sarkisian’s opinion “is correct and is fully supported by the record.”
Chicago Title’s attorney, Paul Schafhauser of Herrick Feinstein in Newark, did not return a call.
The state action has been on hold while the D.C. portion plays out. The district court dismissed for lack of standing by Jersey City but was reversed last Feb. 3. The city subsequently filed a motion for summary judgment that is still pending, while the companies, intervenors, are seeking to amend their answer to add claims against the city and Conrail.