Jersey City won a $2.1 million victory in state appeals court this week against a development group that includes Donald Trump's son-in-law, Jared Kushner.

The case revolves around the site that is now home to the new Trump tower, under construction on Bay Street. Morgan Street Developers Urban Renewal Company LLC -- which developed the new Trump tower and is owned by Kushner and KABR Group -- sued Jersey City to get $2,119,891 the city received in 2006 from the developer who had originally intended to develop the site.

The city had promised to repay the $2.1 million to Vector Urban Renewal, the original developer, but it kept the cash after Vector defaulted on its mortgage and walked away from the project, according to the appellate court decision.

Morgan Street, which bought the property in a sheriff's sale in April 2011, argued in court that it inherited the $2.1 million credit the city owed Vector, but the appellate court on Monday ruled against the developers, saying they had no right to be reimbursed for money Vector paid the city.

The decision reverses a lower-court ruling in the developers' favor. A request for comment from Morgan Street's attorney was not immediately returned.

Kushner, who is married to Trump's oldest daughter, Ivanka, is now helping manage the Republican presidential nominee's campaign. He and KABR Group are also behind two massive residential projects slated for Journal Square and the original Trump Plaza tower on Morgan Street. The 447 units at Trump Bay Street are expected to open next year.

Back in 2006, when Vector was still planning to build a 50-story tower on the Bay Street site, it paid $2.1 million to the city because the city said it was "in immediate need of funds" and would repay Vector via tax credits once the project was completed, the appellate court ruling says.

The mortgage holder foreclosed on the property in April 2010 and Morgan Street purchased the mortgage note that month, then won the deed after a sheriff's sale, according to the appellate ruling. Morgan Street was designated as the redeveloper of the property in 2013 and, when it applied for a five-year tax abatement from the city, it asked to be credited the $2.1 million paid by Vector seven years before, the ruling says. The city refused.

The Hudson County Superior Court judge who initially ruled in Morgan Street's favor said the developers were due the $2.1 million credit because it assumed Vector's obligations when it purchased the property and because allowing the city to keep the money "would result in Jersey City being unjustly enriched," according to the newest court ruling.

But the three-judge appellate panel ruled on Monday that because Morgan Street's plan for the property was different than Vector's plan, the new owners of the property cannot claim any of the previous owner's benefits.

"Whether or not the city's retention of Vector's payments constituted a windfall to the city, Morgan (Street) has no right to reimbursement or credit for Vector's payments," the ruling says.

Terrence T. McDonald may be reached at tmcdonald@jjournal.com. Follow him on Twitter @terrencemcd.