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Borough of Harvey Cedars v. Karan

ELR Citation: 43 ELR 20149
Nos. A-120-11, (N.J., 07/08/2013)

The Supreme Court of New Jersey reversed and remanded a lower court decision awarding $375,000 in damages to beachfront property owners whose oceanfront view was obstructed by a dune built to serve as a barrier from powerful storms and ocean surges. A city used its power of eminent domain to construct the dune along the entire length of Long Beach Island. At a condemnation trial, the owners were able to introduce evidence of the loss in value to their home caused by the obstruction. But the court did not allow the city to show that the dune enhanced the value of the owners' property by protecting it from storm damage. It 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. The jury awarded the owners $375,000 in damages, premised mostly on the loss of their oceanfront view, and an appellate court affirmed. But New Jersey's highest court ruled 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 pay out that disregards the home's enhanced value resulting from a public project. To calculate that loss, one must look to the difference between the fair market value of the property before the partial taking and after the taking. Here, the trial court did not permit the jury to consider that the dune would likely spare the owners' home from total destruction in certain fierce storms and from other damage in lesser storms. Although the jury found that the owners' property decreased in value because the dune obstructed their view, a buyer would likely also consider the value provided by the dune in shielding the property from destruction. The city should have been permitted to present evidence of non-speculative, reasonably calculable benefits arising from the dune project, and the jury should have been charged that determination of just compensation required calculation of the fair market value of the owners’ property immediately before and after the taking and construction of the dune. These errors require a new trial.