A New Jersey case that set a high court precedent and sparked legislation on compensating seaside landowners for construction of view-blocking protective dunes has settled — for a dollar.
Owners Harvey and Phyllis Karan also will recover $24,000 in litigation costs, under the agreement approved by the borough of Harvey Cedars council on Tuesday.
Their lawyer, Peter Wegener of Bathgate Wegener & Wolf in Lakewood, who took the case on a contingent-fee basis, will get nothing. Wegener says his elderly clients are “exhausted” and have no interest in further litigation.
The long-running case won them a $375,000 jury verdict in April 2011, aided by a judge’s ruling that excluded evidence of economic benefit to the landowners from dune construction.
The award shocked many in state and local government, since it seemed to open the floodgates to recoveries by all owners of shore land on which protective dunes are built that obscure their views.
That specter loomed large after Hurricane Sandy struck last October, causing widespread damage to unprotected beach communities.
During the recovery that followed, Gov. Chris Christie pushed for more dune construction and publicly lambasted shore-front owners who sought compensation for easements on their land.
His call for corrective legislation led to introduction last March of a pair of bills that would limit what municipalities must pay to aggrieved homeowners in such cases. The pending bills would mandate that compensation “include consideration of the increase in value to the entire property due to the added safety and property protection provided by the dune or replenished beach.”
In the Karans’ case, their property was among 82 parcels on which easements were obtained as part of a dune-fortification project begun by Harvey Cedars in 2008. A 22-foot-high sand wall blocked their once-pristine view of the surf and reduced the usable area of their property by a third.
The Karans were among 16 owners who sought compensation for the exercise of eminent domain. Their appraiser testified that the view obstruction devalued their $1.9 million property by $500,000. The borough’s appraiser — arguing the devaluation should be offset by the value of the protection the dunes provided — set the loss at $300.
Ocean County Superior Court Judge E. David Millard excluded any evidence of the dunes’ purported monetary value, holding that they provided a “general” benefit to the community rather than a “specific” benefit to the Karans’ home.
Millard’s order and the $375,000 jury verdict was affirmed by the Appellate Division in March 2012.
Last July 8, the court unanimously reversed, ruling that “[in] partial-takings cases, 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.” The court rejected as outdated the legal distinction between special and general benefits.
On remand, the Karans engaged in talks with the borough and the state, which sought to intervene in the case, and reached the $1 settlement, made public on Wednesday.
Christie said in reaction: “The impact of that court ruling should now be clear to anyone who thinks they were in line for a big government check. Sandy changed everything. It’s time to do the right thing to not only protect your own property, but the property of all your neighbors.”
The borough’s lawyer, Lawrence Shapiro of Ocean Township’s Ansell Grimm & Aaron, says any recovery on a retrial likely would have been “substantially closer to our end of the [valuation] spectrum than theirs.”
Shapiro, who also represents homeowners in condemnation matters, says that going forward, “I would have to advise [them] of the strong likelihood that they would not get significant funds” in these dune-construction cases.
Wegener disagrees on both counts.
In another Harvey Cedars case, a jury awarded $275,000, the appeal of which was stayed pending a decision in the Karans’ case. It will likely be retried with the same evidence. “There’s just nothing in the marketplace to show that” a protective dune adds any monetary value to a property, Wegener says.
“I have found that juries do weigh the evidence and are not likely to be swayed by political speeches or self-serving press releases,” he says. “The law still is, you have to pay for what you take.”