New Jersey High Court Rules Against Homeowners in Dune Dispute

A New Jersey town can present evidence of the benefits of building dunes as storm barriers when homeowners with beachfront properties seek compensation for losing their ocean views, the state’s highest court ruled.

The Borough of Harvey Cedars on Long Beach Island, New Jersey, had appealed a $375,000 state-court judgment to pay a couple for the loss of their water views when the municipality constructed a 22-foot high, 30-foot wide dune. The couple, Harvey and Phyllis Karan, sued after the town condemned part of their multimillion-dollar beachfront property for the dune, which was completed in 2010.

The New Jersey Supreme Court today unanimously ordered a retrial, saying the borough “should have been permitted to present evidence of the non-speculative, reasonably calculable benefits arising from the dune project.”

Governor Chris Christie has clashed with beachfront homeowners over the state’s plan to build dunes to protect its 127-mile coast after Superstorm Sandy. Christie, a Republican seeking re-election, has argued that the economic benefits of the dunes system outweighs property owners’ concerns regarding boardwalks, snack bars and bathrooms near their homes.

Just compensation to homeowners for taking a portion of property for public projects is not in question, the Supreme Court said. Instead, the question is how to calculate that compensation when a public project “may lessen in part and enhance in part the value of the remaining property.”

The trial court in the Karans’ dispute erred in not permitting the jury to consider “that the dune would likely spare the Karans’ home from total destruction in certain fierce storms and from other damage in lesser storms,” the court ruled.

“In a partial-takings case, homeowners are entitled to the fair market value of their loss, not a windfall, not to a payout that disregards the home’s enhanced value resulting from a public project,” the court said.

During a trial over the borough’s condemnation, real estate appraisers for the municipality and the Karans valued the home at $1.9 million before the easement was acquired in November 2008. The borough valued the homeowners loss over the land taken at $300 compared with a $500,000 loss estimated by the Karans’ appraiser.

The easement covered more than a quarter of the 11,868- square foot property, according to court records. The three- story home, built in 1973, is anchored on pilings with exterior decks that offer panoramic views of the beach and ocean, according to court records.

The Karans house wasn’t damaged when Sandy came ashore in New Jersey on Oct. 29, leaving 2.7 million people in the state without power and crippling mass transit while severely damaging some coastal towns.

Peter Wegener, an attorney for the Karans, didn’t immediately respond to a phone message seeking comment on the ruling.

Christie has said it will cost $36.9 billion to repair the damage from Sandy and prevent future devastation.

The case is Borough of Harvey Cedars v. Karan, A-120-11, Supreme Court of New Jersey.

With assistance from Terrence Dopp in Trenton. Editor: Fred Strasser, Andrew Dunn