Flea Market Explosion Fears Don’t Support Fees

PHILADELPHIA (CN) - Sumner Redstone's flagship business National Amusements cannot recoup legal fees after reopening a flea market amid worries about leftover Army explosives, the 3rd Circuit ruled.

Palmyra, a southern New Jersey borough of just 7,000 people, closed a National Amusements flea market there for five months in 2008 after a city contractor reported that a weapons-testing facility used by the U.S. Army during and shortly after World War II may have left unexploded munitions there.

Munitions Management Group discovered "an unexploded artillery shell flush with the surface of the Market's parking lot, which, because vendors often drove stakes into the ground to secure their tents, raised concerns of accidental detonation," according to the ruling.

After Police Chief Richard Dreby closed the site with an emergency order, the contractor "discovered and disposed of hundreds of munitions on the property, both explosive and inert," the court said.

National Amusements Inc. (NAI) filed suit, however, claiming "Palmyra overstated the danger posed by the unexploded munitions as pretext to shut down NAI's economic activity on property Palmyra had been eyeing for redevelopment," according to the ruling.

Before the court could resolve the theater chain's motion for an injunction, however, the parties agreed that National Amusements could operate its market on weekends, provided that it took and paid for certain safety precautions.

For the next two years, National Amusements fought for legal fees related to the consent order. In May 2012, a federal judge in Camden sided with the borough after finding that "any success NAI had in relation to the consent order was based on its state law not claim, not its federal law claims."

A three-judge panel of the federal appeals court affirmed last week, noting that "NAI's private interest in maintaining revenue from the continued operation of the market is substantially outweighed by the overwhelming government interest in protecting the public safety from the danger posed by unexploded munitions."

"Although the market had operated without incident for years, NAI does not dispute the presence of unexploded munitions," Judge Maryanne Barry wrote for the panel.

Though the government must pay just compensation for land takings, precedent shows that "'background principles of nuisance and property law' independently restrict the owner's intended use of the property," according to the ruling.

"It is difficult to imagine an act closer to the heartland of a state's traditional police power than abating the danger posed by unexploded artillery shells," Barry wrote.

Courts "have never held, however, that a party may recover attorney's fees ... for interim relief when a district court ultimately dismisses the party's claims on their merits," which was the fate of taking claims put forth by National Amusements, according to the ruling.

"The consent order resolving the motion for a preliminary injunction motion did grant some of the relief sought by NAI: the reopening of the market," Barry added. "To the extent that NAI achieved success in securing the consent order based on its constitutional claims, however, these claims rested on a premise the District Court ultimately rejected."

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