The monster nor'easter of 1962 didn't leave much of Edward and Nancy Klumpp's beachfront property in Avalon, N.J., and what was left the borough took away -- without compensating or even telling them. They continued to pay taxes on the land for decades. In fact, until they took legal action to rebuild, the borough denied a taking had occurred.
Now, half a century later, the Klumpps have won the right to just compensation.
A unanimous state Supreme Court ruled on Tuesday that because the borough didn't play fair, the couple can bring an inverse condemnation action long after the six-year statute of limitations has expired.
"Here, instead of assuming responsibility for its taking of the Klumpps' property, the Borough shirked its obligation to answer for its actions," Justice Jaynee LaVecchia wrote for the court in Klumpp v. Borough of Avalon (pdf), A-49-09. "The Borough's inconsistent positions toward the Klumpps' status in respect of their property should not be permitted to work to its advantage."
The court remanded the case to the trial court for a hearing to determine the valuation of the Klumpps' property as of 1965, when the alleged taking occurred.
After the March 1962 storm, which heavily damaged many New Jersey beach communities, Avalon adopted an ordinance giving itself the right to enter any property in the disaster zone for a restoration project, without compensating the owners.
In return, Avalon allowed the affected landowners to swap their properties for other land owned by the borough, and some of the owners took advantage of the offer. The Klumpps, who beach house was flattened in the storm, did not, for reasons that are not in the record.
The borough demolished the access street to their property and replaced it with protective dunes. The Klumpps say they knew of the dune placement and street closure but not that the borough had seized the property by fiat, since they were never given actual notice.
The land remained on the tax rolls as private property with a value of $100. The annual tax bill was 46 cents, and the Klumpps paid it. The borough maps still showed the lot as private property.
In 1997, when the couple inquired about rebuilding on the land, the borough said no, but it denied that the ordinance constituted a taking. The Klumpps were told they were merely the subject of a regulation for the benefit of the community, and no compensation was due.
The Klumpps tried another tack. In 2003, they asked the state Department of Environmental Protection for a coastal construction permit, and when it was denied because there was no access to the property, they applied to the borough for either access to the property or compensation.
The borough also maneuvered. It switched positions after the Klumpps filed suit for access and said there had in fact been an inverse condemnation in 1962 and the time to challenge the taking had passed.
The borough won. A trial judge ruled, and the Appellate Division affirmed, that the borough took functional possession of the property in 1962 and that the Klumpps were obliged to contest the acquisition within a six-year statute of limitations.
The state high court, however, found good reasons for equitable tolling of the statute of limitations: the annual tax bills, the map designations and the borough's inconsistent positions.
"After finally conceding, in 2005, that a taking occurred forty-three years earlier, the Borough now attempts to hide behind the six-year statute of limitations to claim that plaintiffs have no right to an inverse condemnation action," LaVecchia said..
"Although physical invasion and physical taking of real property by a governmental entity ought to be notice sufficient to awaken property owners to act to protect their interest in receiving compensation for the taking, government also should provide some other form of notice to affected property owners before, and surely after, a physical taking," she continued. "It should go without saying that turning such square corners is minimally what citizens should expect from their government when such drastic action is visited on property owners."
The Klumpps' attorney, Richard Hluchan, of Voorhees' Hyland Levin, says the ruling "will stop the borough's abuse of the eminent domain process." As for the possible amount of compensation, he says, "That's a discussion we're certainly going to be having."
Avalon's attorney, Michael Donohue of Vineland's Gruccio, Pepper, DeSanto & Ruth, says, "The Court crafted an equitable remedy based on the facts of this case." He says he will argue on remand that the Klumpps should be compensated only for the value of the property after the storm, which he estimates was in the range of several thousand dollars.
