When the U.S Department of Housing and Urban Development told the city in 2005 that it had violated federal relocation law in dealing with Ed and Debbie Munoz, the city told the feds to take a hike.
The Munozes, whose Juniata Park business was in the path of a planned housing development, complained that they'd lost their business, home and savings in part because the city had kept them in the dark for two years about plans to take their property.
And they said the city had failed to apprise them of their legal rights to relocation expenses and business counseling at a time when it would have made a difference.
As the Daily News reported last year, the city told HUD and the Munozes it had followed the law in acquiring the land and owed them nothing.
But the Munozes took the city to court, and a federal jury saw it differently.
After a four-day trial in March, a jury concluded that the city indeed had violated the federal Uniform Relocation Act, and awarded the Munozes $497,230 in damages. The city also must pick up the Munozes' legal fees.
"We all cried. My daughters just sobbed," Debbie Munoz said of the moment she heard the verdict. "It was vindication for us hanging in there through this nightmare."
The Munozes bought a neighborhood grocery and garden center in August 2001 with high hopes for a second career. Debbie was a social worker with an interest in gardening. Ed had run a small business.
They got bank loans for $1 million to buy and improve the grocery, pledging their New Jersey home as collateral.
But soon after they opened the place, they started hearing from angry customers that the city was going to close the market and take the land for a planned housing development.
"People were coming in real hostile, accusing us of selling out to the project," Debbie Munoz said.
So while business deteriorated over the next 2-1/2 years, Munoz tried to get information from every city agency she could get on the phone about plans for the area.
She got nowhere.
"We had to make business decisions, and couldn't get any straight answers," Munoz said. "We couldn't sell without disclosing the possibility it might be taken, but didn't want to invest in something that had no future."
Ed Munoz became seriously ill in 2002 with ulcerative colitis and related complications, which the couple believe were stress-related.
The Munozes finally closed the business and declared bankruptcy in spring 2004, just as the city was moving to acquire the property.
Once the business was in bankruptcy, city officials said, the city was legally barred from offering the Munozes compensation for the property. The city got the parcel at a sheriff's sale, and the Munozes got nothing.
The Munoz property was taken for the Twin Homes at Frankford Creek, a 50-unit mixed-income development that city officials and the Frankford Community Development Corp. began planning at least as early as 2002.
City officials maintained that from 2002 through 2004, it wasn't clear whether the Munozes' corner lot would be needed for the project.
And they said they couldn't have legally informed the Munozes until that spring, when legislation authorizing the taking of their land went to City Council. But information developed in the civil case suggests the city had its eye on the Munozes' property much earlier.
For example, then-city housing director Deborah McColloch's notes of a September 2002 meeting on the Frankford Creek project contain the phrase "need to acquire the entire triangle," indicating an area that includes the Munoz property.
And an April 2003 letter from the Frankford CDC, which was developing the project, specifically asked the city's Redevelopment Authority to acquire the Munoz property.
There were other documents, including site plans and a state loan application, that referred to the Munoz property.
"The law requires that as soon as it's practical, the city has to tell property owners that the city is considering acquiring their land," said the Munozes' attorney, James Golden. "It's really common sense."
Golden said the evidence makes it clear that the city hid its plans from the Munozes, and they were harmed.
City officials declined to be interviewed on the verdict, though RDA spokesman Frank Keel said in a prepared statement that the city sees "no factual or legal basis" for the judgment, and the city has filed motions to challenge the verdict.
In court filings, city lawyers acknowledged that federal law requires early notice to property owners, and that a HUD handbook says that "as soon as an agency has identified properties it might be interested in . . . the agency needs to notify the owners in writing."
But they insisted that the city has good reasons not to tell property owners until it is sure it will acquire their parcels. If the city informs owners of a possible taking and plans then change, city attorneys argued, the city could be exposed to legal action.
Further, the city argued that the Munozes' business had failed for many reasons, including the closing of a nearby Acme, actions taken by the previous owner and Ed Munoz's illness.
The city's "forensic accountant determined from a review that [the Munozes'] business was worthless after December of 2002, nine months before the FCDC and the city had even obtained the requisite funding to make the project happen," city attorneys wrote.
Debbie Munoz agreed that her business had other problems, but said the uncertainty and ill will that the impending project brought hurt the business, and that the two years she spent not knowing what the city's plans were left her in a decision-making limbo.
Munoz said she was disappointed that the city appears determined to appeal the jury's decision.
"I wish I could get up tomorrow morning and just live my life," Munoz said. "I need to have this off my mind at 4 o'clock in the morning."
Three years after the Munozes lost their property, construction still hasn't begun on the Twin Homes at Frankford Creek.
City documents say that should happen later this year.
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