Borough of Harvey Cedars v. Karan

70 A.3d 524, 214 N.J. 384, 43 Envtl. L. Rep. (Envtl. Law Inst.) 20149, 2013 WL 3368225, 2013 N.J. LEXIS 725
CourtSupreme Court of New Jersey
DecidedJuly 8, 2013
StatusPublished
Cited by24 cases

This text of 70 A.3d 524 (Borough of Harvey Cedars v. Karan) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Borough of Harvey Cedars v. Karan, 70 A.3d 524, 214 N.J. 384, 43 Envtl. L. Rep. (Envtl. Law Inst.) 20149, 2013 WL 3368225, 2013 N.J. LEXIS 725 (N.J. 2013).

Opinion

Justice ALBIN

delivered the opinion of the Court.

When a municipality takes private property for a public use, the property owner is entitled to “just compensation” under our State and Federal Constitutions. N.J. Const, art. I, H 20; N.J. Const. art. IV, § 6, H 3; U.S. Const, amend. V. In this ease, as part of a massive public-works project, the Borough of Harvey Cedars exercised its power of eminent domain to take a portion of the beachfront property of Harvey and Phyllis Karan to construct a dune that connects with other dunes running the entire length of Long Beach Island in Ocean County. The dunes serve as a barrier-wall, protecting the homes and businesses of Long Beach Island from the destructive fury of the ocean.

That the Karans are entitled to “just compensation” for the taking of a portion of their property for this public project is not in question. Instead, the focus here is on how to calculate “just compensation” when the taking of a portion of the property for a public project may lessen in part and enhance in part the value of the remaining property.

At a condemnation trial, the court permitted the Karans to introduce evidence of the loss in value to their home caused by the dune obstructing their oceanfront vista. The trial court, however, denied Harvey Cedars the opportunity to show that the dune enhanced the value of the Karans’ property by protecting it from the damage and destruction that is wrought by powerful storms and ocean surges. Based on our state-law jurisprudence, the court determined that only special benefits, not general benefits, flowing from a public project can be considered in calculating the enhanced value to the remaining property. In the court’s view, the storm protection afforded by the project is a general benefit because the dunes not only protect all property owners in Harvey Cedars but also presumably add value to their property. Accordingly, the court did not allow the jury to consider evidence that the dunes — constructed at public expense to protect the island’s homes from minor and catastrophic storms — enhanced the value of the Karans’ property. The jury awarded the Karans $375,000 in [389]*389damages, premised mostly on the loss of their oceanfront view. The Appellate Division affirmed. Borough of Harvey Cedars v. Karan, 425 N.J.Super. 155, 167-68 (App.Div.2012).

We now conclude that when a public project requires the partial taking of property, “just compensation” to the owner must be based on a consideration of all relevant, reasonably calculable, and non-conjectural factors that either decrease or increase the value of the remaining property. In a partial-takings case, homeowners are entitled to the fair market value of their loss, not to a windfall, not to a pay out that disregards the home’s enhanced value resulting from a public project. To calculate that loss, we must look to the difference between the fair market value of the property before the partial taking and after the taking. In determining damages, the trial court did not permit 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. A formula — as used by the trial court and Appellate Division — that does not permit consideration of the quantifiable benefits of a public project that increase the value of the remaining property in a partial-takings case will lead to a compensation award that does not reflect the owner’s true loss. Compensation in a partial-takings case must be “just” to both the landowner and the public. United States v. Commodities Trading Corp., 339 U.S. 121, 123, 70 S.Ct. 547, 549, 94 L.Ed. 707, 712 (1950). A fair market value approach best achieves that goal.

Because that approach was not followed in this case, we reverse the judgment of the Appellate Division and remand for a new trial.

I.

The Beach- amd, Storm-Protection Project

The backdrop to this case is a beach-restoration and storm-protection project on Long Beach Island funded by federal, state, and local governments. This massive public project — carried out by the U.S. Army Corps of Engineers and the New Jersey [390]*390Department of Environmental Protection — provides vital protection to the island’s residents from beach erosion and storms that threaten homes and businesses with damage and destruction. One part of the project involves the pumping of massive amounts of sand onto the beach to extend the shoreline seaward by 200 feet. Another part involves beach nourishment every seven years over a period of fifty years to battle beach erosion. The last part of the project calls for the construction of dunes along the entire length of the island sufficient to hold back storm-triggered waves capable of destroying or seriously damaging homes and businesses. The dune seaward of the Karans’ property is designed in the form of a trapezoid — twenty-two feet high and thirty feet wide at the top — and was built to replace an existing sixteen-feet-high dune.

The dune-construction project required the securing of easements on properties bordering the ocean.1 The responsibility and cost of acquiring those easements fell to the municipalities on Long Beach Island. One such municipality is the Borough of Harvey Cedars.

The Borough’s obligation was to secure eighty-two perpetual easements over the portions of private beachfront properties closest to the ocean on which the dunes would be built. The Borough acquired sixty-six easements by voluntary consent of the property owners. However, the owners of sixteen beachfront properties, including the Karans, did not consent. As a result, in July 2008, the Borough adopted an ordinance authorizing it to [391]*391acquire easements over those sixteen properties through its statutory powers of eminent domain. See N.J.S.A. 20:3-1 to 50.

The Borough and the Karans could not agree on a figure representing just compensation for a perpetual dune easement over the seaside portion of their property. The Karans rejected the Borough’s offer of $300 as compensation for both the land taken and any devaluation of the remaining property.

The Karans’ Property

The Karans’ single-family, beachfront home sits on 11,868 square feet of land in Harvey Cedars. Constructed in 1973, the house is anchored on pilings and has three stories, with the upper two floors containing the dining and living quarters. These two floors open onto exterior decks, which had provided a panoramic view of the beach and ocean. The first level consists of a two-car garage and storage area for the heater, HVAC, and utility equipment.

To construct the twenty-two-foot dune, the Borough sought a perpetual easement over a strip of 3,381 square feet of the Karans’ land nearest to the ocean. The easement covers more than one quarter of the Karans’ property. The Karans claim that the newly constructed dune, standing between their home and the ocean, obstructs their view of the beach.

The Eminent Domain Action

In November 2008, the Borough instituted an action in the Superior Court, Law Division to acquire by eminent domain an easement over the Karans’ property.

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70 A.3d 524, 214 N.J. 384, 43 Envtl. L. Rep. (Envtl. Law Inst.) 20149, 2013 WL 3368225, 2013 N.J. LEXIS 725, Counsel Stack Legal Research, https://law.counselstack.com/opinion/borough-of-harvey-cedars-v-karan-nj-2013.