A case argued Monday at the state Supreme Court may help determine the price tag for protecting the New Jersey shoreline from destructive storms like Hurricane Sandy.
At stake is a $375,000 condemnation award to a Harvey Cedars couple for the partial blocking of their ocean view by the Army Corps of Engineers’ erection of a 22-foot-high sand dune on their Long Beach Island property.
An Ocean County jury agreed with Harvey and Phyllis Karan that the dune conferred only the general benefit of protecting the island and its inhabitants, not a special benefit to their property that would allow a reduction of the award for the partial taking. The Appellate Division agreed last March 26.
The condemnation case, Harvey Cedars v. Karan, A-120-11, is a microcosm of the dilemma facing state and local governments after Sandy, since building protective sand dunes will cost an exorbitant amount if every affected landowner must be paid for ocean view reduction.
Harvey Cedars’ attorney, Lawrence Shapiro, told the justices on Monday that the jury should have been allowed to consider the fact that the Karans’ property is closer to the shore and thus receives greater protection.
"Allow the presentation of both sides to the jury," said Shapiro, of Ocean Township’s Ansell, Grimm & Aaron. "There is a direct benefit to the subject property."
Justice Anne Patterson asked Shapiro to define the specific benefit.
"The project is dealing with the protection of property," Shapiro said. "Here, we can demonstrate what the benefit is."
Shapiro said a jury should be allowed to weigh both the positive and negative impacts of dune construction on home values.
Patterson asked if there is a formula that could be used.
"That would be wonderful," Shapiro said before acknowledging that finding a formula would be difficult. "Courts have struggled with it," he said.
"Fundamental fairness" requires that jurors be allowed to look at both benefits and liabilities, Shapiro said.
The Department of Law and Public Safety participated as amicus. Christopher Porrino, the director of the Division of Law, represented the department and sided with Harvey Cedars.
"There is a direct, quantifiable benefit," Porrino said. "The house is protected from devastation.
"A house protected from devastation is worth more than one that is not."
The Karans’ attorney, Peter Wegener, told the court that his clients were the only ones paying for a benefit that is being enjoyed by surrounding homeowners.
"There is no reason why that should be," said Wegener, of Lakewood’s Bathgate, Wegener & Wolf.
Justice Barry Albin suggested that the construction of the sand dune may have enhanced the value of the Karans’ $1 million home by $500,000, an assertion Wegener denied.
"The evidence in this case … did not demonstrate any increase in market value because of the sand dune," Wegener said.
Why should benefits be excluded from the equation? Patterson asked.
"That’s the law under Sreel," Wegener said.
Wegener pointed to market statistics that showed a home one row in from the beach is worth $700,000 less than one directly on the beach.
"The difference between the two is the view," he said. "We all know the house has lost value."
The question of whether jurors can consider potential benefits may ultimately be decided by the Legislature.
In April, the Senate Environment and Energy Committee unanimously recommended passage of a bipartisan bill, S-2599, which provides that compensation include "consideration of the increase in value to the entire property due to the added safety and property protection" of sand dunes.
The legislation is being sponsored by Sens. James Whelan, D-Atlantic; Linda Greenstein, D-Middlesex; and Jennifer Beck, R-Monmouth.