This term there were several state Supreme Court cases of note with respect to commercial law.
In Shelton v. Restaurant.com, No. 068404 (N.J. July 9, 2013), the Supreme Court of New Jersey interpreted the applicability of the Truth-in-Consumer Contract, Warranty, and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18, to individuals who purchase restaurant certificates via the Internet. The question was certified to the court by the Third Circuit Court of Appeals. Temporarily assigned Judge Mary Cuff wrote for the unanimous court.
Defendant Restaurant.com is an Internet business that sells discounted restaurant gift certificates. The buyer purchases the certificates, which are typically sold below face value, online. Each certificate displayed various restaurant-specific conditions and two standard terms imposed by Restaurant.com: the certificate expires one year from date of issue, except “where otherwise provided by law,” and the certificate is void “to the extent prohibited by law.”
The plaintiffs purchased certificates for various restaurants in New Jersey through Restaurant.com. Plaintiff Larissa Shelton purchased 10 certificates for New Jersey restaurants through the website from Dec. 9, 2007, to Sept. 9, 2009. Shelton paid Restaurant.com from $1 to $6 for each $25-value certificate. Plaintiff Gregory Bohus purchased one Restaurant.com certificate, with a $10 face value, for $4.??
Plaintiffs Shelton and Bohus, brought suit individually and on behalf of a class of purchasers who bought certificates, redeemable at restaurants in New Jersey, that contained: (1) a provision identifying an expiration period less than 24 months from the date of issue or sale of the certificate; (2) a provision that the expiration period or any other term in the certificate is applicable except where “prohibited by law,” without specifying whether or not that term was applicable in New Jersey; or (3) a statement that the certificate is void to the extent prohibited by law, without specifying the extent to which it is void or valid in New Jersey. The plaintiffs alleged that the certificates violate the New Jersey Gift Certificate Statute (GCS),N.J.S.A.56:8-110 to -112; the New Jersey Consumer Fraud Act (CFA),N.J.S.A.56:8-1 to -20; and the TCCWNA. The plaintiffs sought treble damages for violations of the GCS, statutory penalties in the amount of $100 for each class member pursuant to the TCCWNA, equitable relief in the nature of an injunction prohibiting future violations of the GCS and TCCWNA, and attorney fees and costs.
The defendant removed the matter to the United States District Court for the District of New Jersey and filed a motion to dismiss. The court noted the plaintiffs did not allege that the certificates purchased were worth less than their face value, were refused by the participating restaurant, had expired at the time of presentation, or were not used based on the false belief of the expiration date. Concluding that the plaintiffs “failed to set forth either out of pocket losses or demonstrate loss of value sufficient to satisfy the ascertainable loss requirement under the CFA and GCS,” the district court judge dismissed those counts. Shelton v. Restaurant.com, No. 10-0824 (JAP), 2010 WL 2384923 at *4 (D.N.J. June 15, 2010).
Further, the district court determined the plaintiffs were not “consumers” as defined in the TCCWNA because the certificates were not property. The judge concluded that the certificates purchased by the plaintiffs “provide an individual with a contingent right for discounted services at a selected restaurant” but such a right is not the purchase of “property or service which is primarily for personal, family or household purposes.” Therefore, the judge concluded that the plaintiffs were not “consumers” and the certificates were not “consumer contracts.” The district court granted the motion to dismiss.
The plaintiffs appealed. At the request of the United States Court of Appeals for the Third Circuit, the New Jersey Supreme Court considered the following questions:
(1) Whether Restaurant.com’s coupons, which were issued to the plaintiffs and redeemable at particular restaurants, constitute “property” under the TCCWNA;??
(2) If the coupons constitute “property,” whether they are “primarily for personal, family or household purposes” (N.J.S.A.56:12-15); and
(3) Whether the sale of the coupons by Restaurant.com to the plaintiffs constituted a “written consumer contract,” or whether the coupons “gave or displayed any written consumer warranty, notice, or sign” (N.J.S.A.56:12-15).
Under the TCCWNA (N.J.S.A.56:12-15) sellers may not:
offer to any consumer or prospective consumer or enter into any written consumer contract or give or display any written consumer warranty, notice or sign … which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller, lessor, creditor, lender or bailee as established by State or Federal law ….
The TCCWNA also prohibits any provision in a consumer contract requiring a consumer to waive his or her rights under the act.N.J.S.A.56:12-16. Under the TCCWNA, a contract or notice cannot simply state in a general fashion that some of the provisions of the contract or notice may be void, inapplicable or unenforceable in some states; it must state if any provision is void in New Jersey.??Violators of the TCCWNA are liable to consumers for a civil penalty not less than $100, actual damages or both, in addition to attorney fees and court costs.N.J.S.A.56:12-17.
Under the TCCWNA, a “consumer” is “any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.” N.J.S.A.56:12-15. The money, property or service bought, leased, borrowed or bailed by the individual must be “primarily for personal, family or household purposes.”The court explored the meaning of “property” in order to determine whether the certificates offered by Restaurant.com fell within the scope of the TCCWNA. The court reasoned that the certificates must be considered property in order for the plaintiffs to be considered consumers.
Restaurant.com argued that the TCCWNA applies only to tangible property. The plaintiffs countered that the plain language of the statute includes both tangible and intangible property, and that when read with the GCS and the CFA, the three together lead to the conclusion that the TCCWNA includes tangible and intangible property.
The court found that because the TCCWNA does not define the term “property,” the legislature’s general definitions of commonly used terms under??N.J.S.A.??1:1-2 applied. Other than the exclusion of transactions involving the lease or sale of residential real estate,??see??N.J.S.A.??56:12-15, the TCCWNA does not expressly exclude personal property. The court concluded that intangible property falls squarely within the scope of the TCCWNA.
The court next considered whether the certificates qualified as property “which is primarily for personal, family or household purposes.” Restaurant.com argued that a purchased certificate conferred no more than a contingent right to a discount from another, which does not fall within the scope of the TCCWNA. The court found that the very nature of the certificates underscored that those items of intangible property are acquired for personal, family or household use. The court found that dining out and pursuing entertainment were quintessential personal, family or household pursuits, and were therefore “property … which is primarily for personal, family or household purposes,” under the TCCWNA.
The court rejected Restaurant.com’s argument that the transactions between it and the plaintiffs cannot be considered consumer contracts because they are not in writing. The court further rejected the notion advanced by Restaurant.com that the involvement of a third-party restaurant at which the consumer redeems the certificate negates a consumer contract relationship.
The court concluded that the TCCWNA is a remedial statute, entitled to a broad interpretation to facilitate its stated purpose. The court further found that the legislature enacted the TCCWNA to permit consumers to know the full terms and conditions of the offer or consumer contract into which they decide to enter.
The court was unconcerned with the mandatory statutory penalties that Restaurant.com faced.??Although it recognized that the certificates involved technology not contemplated at the time of the TCCWNA’s enactment, the court concluded that the statute, as drafted, covers the certificates, and noted that the “[l]egislature remains free to change the law should it so choose.”
FWPA Right of Entry
In New Jersey Dep’t of Envtl. Prot. v. Huber, 213 N.J. 338 (2013), the court was asked to consider whether entry by the New Jersey Department of Environmental Protection (DEP) onto private property, without a warrant, for purposes of conducting an inspection and testing was permissible under the circumstances. Justice LaVecchia wrote for a unanimous court.
The Hubers owned property developed subject to the Freshwater Wetlands Protection Act,N.J.S.A.13:9B-1 to -30 (FWPA). Landowners subject to the act must obtain a permit before engaging in regulated activities, such as removing soil, disturbing the water level, adding fill or destroying plant life. A neighbor of the Hubers reported to the DEP that the Hubers had engaged in FWPA prohibited activities on the property. On July 3, 2002, Michael Nystrom, a DEP supervisor, made a visual inspection of the land and took soil samples. Nystrom claimed he was given permission to access the property by the Hubers, but the Hubers later testified that they were on vacation during his inspection and had not granted permission. Additional inspections were conducted on other dates by Armand Perez, the DEP’s principal environmental specialist.
The DEP representatives confirmed that activity on the Huber property had disturbed protected areas. The DEP charged the Hubers with violations of the FWPA. The DEP then issued an administrative order and notice of civil administrative penalty assessment, detailing a $4,500 penalty against the Hubers. The Hubers appealed and the matter was transferred to the Office of Administrative Law. At the hearing, the Hubers admitted to making certain improvements on their property that violated the FWPA. The DEP presented evidence of the inspections and an aerial view of the property. The administrative law judge (ALJ) found that the DEP had shown by a preponderance of the evidence that the Hubers were improperly maintaining protected areas. The findings were largely based on the Hubers’ admissions. The ALJ did not make a specific finding as to whether the Hubers consented to Nystrom’s entry.
The Hubers appealed the ALJ’s decision. The Appellate Division applied an exception to the Fourth Amendment of the U.S. Constitution, recognized in New York v. Burger, 482 U.S. 691 (1987). Burger recognized an exception to warrant requirements for administrative inspections of commercial property in a closely regulated business. The Appellate Division applied Burger to reject the Hubers’ argument that the DEP could not enter their property absent consent or a warrant.
The Hubers filed a petition for certification with the New Jersey Supreme Court, which was denied. The Hubers’ motion for leave to file a motion for reconsideration as within time and an accompanying motion for reconsideration were denied. The Hubers then filed a petition for certiorari to the Supreme Court of the United States. The court denied certiorari, noting that the appeal came from a decision of a state intermediate appellate court; however, the denial included a statement, from Justice Alito and joined by Chief Justice Roberts and Justices Scalia and Thomas, questioning whetherBurgercould appropriately be applied to residential property, thus allowing the state to contravene the??Fourth Amendment. Due to Justice Alito’s statement, and the extensive motion practice of the Hubers, the New Jersey Supreme Court granted certification.
The court held that the exception to the warrant requirement for administrative inspections of commercial property in a closely regulated business recognized in Burger does not apply to a DEP inspection of residential property under the FWPA. The court acknowledged that land subject to FWPA restrictions is subject to a right of entry and inspection. However, the court held that in exercising that right, the DEP must comply with its own processes, which require the inspecting DEP agent to present the residential homeowner his or her credentials when seeking consent to entry of the property. The court determined that if the homeowner denies entry, the commissioner may order that entry be provided and the DEP is entitled to judicial process to compel access to the property subject to the permit. Either consent or a warrant is required. Ultimately, the court did not resolve the conflict regarding Nystrom’s entry of the Huber property, but instead found through the DEP’s other evidence and the Hubers’ admissions that there was sufficient evidence to show the Hubers had violated the FWPA.
Commercial Real Estate Utilities
In 612 Associates v. N. Bergen Mun. Util. Auth.,No. 067931 (N.J. March 7, 2013), the court was asked to consider which municipal entity was entitled to a sewer connection fee and whether submitting the fee to escrow prevented the municipal entities from recovering a larger fee from the property developer. Justice Hoens wrote for a unanimous court.
After the plaintiff, a condominium developer, completed its building project, a dispute arose between the North Bergen Municipal Utilities Authority (North Bergen MUA) and the North Hudson Sewer Authority (North Hudson SA) as to which was entitled to the statutorily-authorized sewer connection fee owed on the project. North Hudson SA relied on the statute governing sewage authorities,N.J.S.A.40:14A-8, and North Bergen MUA relied on the statute governing municipal utilities authorities,N.J.S.A.40:14B-22. In an effort to complete its project, the plaintiff filed a complaint against both entities and requested permission to deposit the connection fee into an escrow account. Pursuant to a consent order, the plaintiff deposited the sewer connection fee into an escrow account. The two authorities were then obliged to litigate over the escrowed fee.
The trial court found for North Hudson SA, as the condominiums were connected directly to its lines. North Bergen MUA appealed, arguing that the purpose of the fee was to permit both entities to recoup the costs of building sewer systems. The Appellate Division reversed, and held both entities were entitled to charge connection fees.??404 N.J. Super. 531(App. Div. 2009). The Appellate Division reasoned that because the parties had entered into the consent order that allowed payment of the fee into escrow, no further fee could be imposed on the plaintiff. The matter was remanded to apportion the escrowed sum.
The Supreme Court granted North Hudson SA’s petition for certification, granted leave to supplement the record with new information, and remanded the matter to the Appellate Division. The Appellate Division further remanded to the trial court for an evidentiary hearing. The trial court created a formula to divide the fee.
The Appellate Division declined to reconsider its earlier decision that an equitable apportionment was required. The Supreme Court granted North Hudson SA’s second petition for certification.
After reviewing the history of the statutory provisions, including court opinions that influenced amendments, the court discerned a legislative intent that connection fees are meant to be calculated to effect a fair and reasonable contribution toward the costs of the system by all users. The court found that the statutory intent was not advanced by granting the connection fee entirely to the entity that simply carried sewage through its lines for a short distance but prohibiting the adjoining authority (the one actually treating the sewage in its facility) from recovering any part of its costs.
The court found that both North Bergen MUA and North Hudson SA were entitled to a portion of the connection fee due to the statutory criteria that govern the fees and fair payment toward the costs of the system. The court further determined that 612 Associates created an interpleader action by placing the fee in the escrow account, and that doing so allowed the authorities to dispute which of them was entitled to the fee. The court held that this escrow relieved the plaintiff of any further obligation. As such, a connection fee that might or might not represent the full fee under the court’s reading of the statutes became the entire fee, requiring that the Law Division divide that sum. The court found no abuse of discretion in the apportionment of the fee, and because it did anticipate future doubt as to application of statutory permission relating to connection fees, it did not alter or further analyze the lower court’s allocation.
In Hirsch v. Amper Financial Services, No. 070751 (N.J. Aug. 7, 2013), the court considered whether it was proper to compel arbitration between a nonsignatory and a signatory to a contract containing an arbitration clause on the basis that the parties and claims were sufficiently intertwined to warrant application of equitable estoppel. Justice LaVecchia wrote for a unanimous court.
Plaintiffs, Michael Hirsch, Robyn Hirsch and Hirsch, LLP, alleged that they lost money in a Ponzi scheme. They had used defendant Amper Financial Services (AFS) to make some conservative investments through an AFS employee, Marc Scudillo. Scudillo was also a representative for Securities America, Inc. (SAI), a separate corporation that served as a broker-dealer handling securities transactions. On Scudillo’s recommendation, the plaintiffs purchased securitized notes from Medical Provider Financial Corporation (Med Cap) totaling $550,000. The plaintiffs signed two applications with SAI for the purchase of the Med Cap notes. Scudillo signed each agreement as the “registered representative” of SAI. Each SAI application contained a clause requiring disputes to be arbitrated by the Financial Industry Regulatory Authority (FINRA).
At some point the Med Cap investments began to perform poorly. Scudillo reassured the plaintiffs that their investments were fine. The SEC later charged Med Cap officers with securities fraud.
The plaintiffs launched two complaints. The first was the required FINRA arbitration with Scudillo and AFS. The second was a law division proceeding against EisnerAmper (the accounting firm that recommended Scudillo) and AFS, alleging breach of contract, violations of the New Jersey Consumer Fraud Act, breach of fiduciary duties, negligent supervision, misrepresentation, violations of the New Jersey Uniform Securities Law and malpractice.
AFS and EisnerAmper filed a third-party complaint against SAI for indemnification and contribution. SAI moved to compel arbitration, arguing that: (1) the language of the arbitration clause is sufficiently broad to cover the disputes with AFS and EisnerAmper; (2) AFS is a party to the arbitration clause because Scudillo, who served as a representative for both SAI and AFS, signed the arbitration agreement; (3) AFS and EisnerAmper are subject to the arbitration agreement under agency principles; and (4) AFS and EisnerAmper are subject to the arbitration agreement under the doctrine of equitable estoppel. AFS and EisnerAmper joined in SAI’s motion. The trial court granted the motion, finding that the plaintiffs could not avoid the arbitration by simply not naming SAI as a defendant. The Appellate Division affirmed. The court granted the plaintiffs’ request for certification.
The court found that the strong preference to enforce arbitration agreements is not without limits. There must be a valid agreement under state contract-law principles to arbitrate. The court recognized the fundamental principle that a party must agree to submit to arbitration.
The court examined EPIX Holdings Corp. v. Marsh & McLennan Cos., 410 N.J. Super. 453 (App. Div. 2009), which was the basis for the Appellate Court’s opinion. In EPIX, the appellate panel had held that a nonsignatory to an arbitration agreement, which was the parent company of a signatory, may compel the other signatory to arbitrate if the claims and parties were “substantially connected.” The court also examined Angrisani v. Financial Technology Ventures, 402 N.J. Super. 138 (App. Div. 2008), a case where the appellate panel concluded the plaintiff could not be compelled to arbitrate his claims against the defendant because he did not engage in conduct that could support a finding of equitable estoppel. The court noted other cases applying equitable estoppel to compel arbitration generally involved claims against a nonsignatory closely aligned to a contracting party, such as a parent or successor corporation. The court then addressed the emerging “intertwinement” theory, which it described as an extension of equitable estoppel.
The court found other courts have properly recognized that arbitration may be compelled by a nonsignatory on the basis of agency principles. However, the court determined that equitable estoppel as a basis to compel arbitration has limited applicability. The court held that the decision in EPIX compelling arbitration was appropriate based on the agency relationship between the parties, but that the theory of intertwinement did not apply. The court held that equitable estoppel is invoked in the interest of fairness, but does not apply absent proof that a party detrimentally relied on another party’s conduct.
The court recognized there was no arbitration clause between the parties other than the Med Cap contract between the plaintiffs and SAI. The clause includes no other parties but Scudillo, who served as SAI’s representative when executing the agreement. The court determined that Scudillo had signed the contract containing the arbitration agreement as an agent of SAI, not as an agent of AFS or EisnerAmper. SAI shares no corporate relationship with AFS or EisnerAmper, and neither AFS nor EisnerAmper could have expected to arbitrate under the agreement. The court found that the motion to compel arbitration should have been denied.
The court held that although contract principles may sometimes warrant compelling arbitration without an arbitration clause, intertwinement alone is insufficient to warrant the application of equitable estoppel to compel arbitration. The court reversed the Appellate Division and remanded to the Law Division for further proceedings.
In Norfolk Southern Railway Co. v. Intermodal Properties, No. 070240 (N.J. Aug. 6, 2013), the court considered the eminent domain limitation in N.J.S.A. 48:3-17.7. Specifically, the court examined: (1) the requirement that a public utility’s taking of private property be “not incompatible with the public interest”; and (2) the requirement in N.J.S.A. 48:12-35.1 that a railroad may only take property to the extent that the “exigencies of business may demand.” Justice Hoens wrote for the unanimous court.
Plaintiff Norfolk Southern Railway Company owns and operates Croxton Yard, a freight facility in Secaucus. At the facility, freight containers are transferred between trains and tractor-trailers. In order to remain efficient, Norfolk must limit dwell time (the time it takes trucks to enter and then leave the yard), as well as how long a container stays in the yard between off-loading and pick-up. By 2002, dwell time had significantly increased, and the plaintiff’s business was expected to grow. In the future, Norfolk planned the Crescent Corridor project, an expansion of service from New York and New Jersey across the United States and into Mexico. Norfolk attempted to expand its yard by obtaining three adjacent properties, including one owned by defendant Intermodal Properties. The property owned by Intermodal would provide additional truck parking and connect two Norfolk yards together. Norfolk believed that acquiring Intermodal’s property would also decrease dwell time. Intermodal did not accept any purchase offers from Norfolk, so Norfolk attempted to acquire the property through its railroad eminent domain powers. Norfolk filed an action for the taking with the New Jersey Department of Transportation, which referred the case to an administrative law judge (ALJ).
During the hearing, Intermodal submitted that it intended to use its property as a parking facility for the Secaucus Junction passenger rail station. Intermodal argued this use was better for the public interest. The ALJ precluded Intermodal from invoking the prior public use doctrine because the property was not being used for a public purpose at the time, and was not zoned to permit a parking facility. Intermodal had the property rezoned, but the ALJ deemed this irrelevant, as Intermodal presented no evidence of a contract for public parking on the property. In contrast, Norfolk’s condemnation would benefit the public by alleviating highway congestion, reducing dwell time and increasing railroad efficiency. The ALJ rejected Intermodal’s argument that the statute permitting railroad takings only “as exigencies of business may demand” required Norfolk to prove an urgent need. Instead, the ALJ found that the language permitted condemnation to meet business demands. In light of the increased business and the planned Crescent Corridor project, the ALJ held that Norfolk had satisfied this requirement.
Intermodal appealed, and the Appellate Division affirmed the ALJ’s findings. The court granted Intermodal’s petition for certification.
Under N.J.S.A. 48:3-17.7, a railroad may only exercise eminent domain if such exercise is “not incompatible with the public interest.” New Jersey courts have found that railroads and their related facilities are public uses. The question of whether a property owner can defeat a railroad’s exercise of eminent domain by introducing proofs that the owner’s proposed use would better serve the public interest required the court to analyze the prior public use doctrine. The doctrine prohibits condemnation where a proposed taking will destroy an existing public benefit or prevent a proposed one.
The court determined that a property owner invoking the prior public use doctrine must have the power to exercise eminent domain itself. Norfolk sought to condemn Intermodal’s property, but Intermodal had no powers of condemnation. Further, its use was not public. Although Intermodal suggested a future public use, that use was not public prior to Norfolk’s attempted acquisition. The court found that Intermodal could not invoke the prior public use doctrine. Additionally, the court noted that N.J.S.A. 48:3-17.7 focuses on the condemnor’s proposed use and not alternative proposals that may be more in the public interest.
N.J.S.A. 48:12-35.1 limits a railroad’s power to condemn to circumstances “as exigencies of business may demand.” The court held that our modern understanding of the word “exigency” as urgent or pressing is not consistent with the phrase “exigencies of business” that was a term of art used to mean the ordinary course of business at the time the statute was drafted. The court found that the nature of railroad business required long-term planning, and that there was never anything urgent, immediate or emergent about a need for railroad land. Therefore, it determined that the statute did not require a railroad to show an urgent need to be permitted to perform the taking.
The court held that Norfolk’s proposed use met the N.J.S.A. 48:3-17.7 requirement that a taking be “not incompatible with the public interest.” The court found Intermodal did not have eminent domain power to put its property to public use and that there was no prior public use of the property. The court further determined that under N.J.S.A. 48:12-35.1, there need not be an urgent requirement for land to justify a condemnation as an “exigency of business.” The court found that this provision only limits a railroad’s power to condemn to those circumstances where the general needs or ordinary course of business require it. The court affirmed the judgment of the Appellate Division.
In Borough of Harvey Cedars v. Karan, No.070512 (N.J. July 8, 2013), the court was asked to consider just compensation in a partial taking of land. The plaintiff, Borough of Harvey Cedars, appealed the trial court order excluding certain evidence, entering a $375,000 valuation judgment and denying its motion for a new trial. Justice Albin wrote for a unanimous court.
Defendants, Harvey and Phyllis Karan, owned a beachfront home in Harvey Cedars, on Long Beach Island. The living quarters of the home were located on the top two floors and provided panoramic views of the beach.??The borough sought an easement over more than one quarter of the Karans’ property, and when the Karans withheld their consent, the borough used its eminent domain power to acquire the easement to construct a 22-foot high dune to protect the home and the town from storm damage. The defendants asserted that they had never had water enter the living quarters of the home and did not believe the dune was necessary. The dune partially obscured the Karans’ previously unobstructed view. The borough offered the Karans $300 for the loss of the view, while the Karans’ appraiser estimated the value of the partial taking at approximately $500,000. Since the parties could not agree on just compensation, the borough filed an action in the Law Division. Three disinterested commissioners were appointed to determine just compensation for the taking. The Karans rejected the commissioners’ compensation award and demanded a jury trial.
Pretrial, the Karans moved to bar testimony from the borough’s expert concerning the storm-protection benefits afforded by the dune, which increased the value of their home. At theRule104 hearing, the borough’s expert testified that without the dune, the chance of severe storm damage to the home was very high, but that with the addition of the dune, the chance of the home surviving future storms was exponentially greater. The Karans argued that evidence of the dune’s potential increase in value to their home should be inadmissible, as the dune would provide a “general benefit” to the entire borough. Typically, general benefits are not admissible as an offset against the loss in value caused by a partial taking. The court concluded that the question of whether the dune constituted a special benefit affecting only the Karans, or a general benefit to the whole borough, was a jury issue. The Karans moved for reconsideration. The trial court conceded that the dune would likely benefit the Karans to a greater degree than members of the community without beachfront property; however, the court determined that the storm-protection benefits to the home were inadmissible general benefits shared by the entire community.
The jury awarded the Karans $375,000, for the partial taking and the obstructed view. The award was affirmed by the Appellate Division. The Supreme Court granted the borough’s petition for certification.
The court held that the Appellate Division’s application of the general-benefits doctrine was inconsistent with contemporary principles of just compensation. It held that when a partial taking occurs, a property’s fair-market value should be used as the benchmark in computing just compensation. The court held that nonspeculative, reasonably calculable benefits that increase the property’s value at the time of the taking should be considered in a just compensation calculation. It reasoned that although the jury had determined that the dune decreased the Karans’ property value due to the obstructed view, a buyer would likely consider the value and safety provided by the dune. By prohibiting the jury from considering this added benefit, the lower courts had altered the actual fair-market valuation by the jury. The court held that the borough should have been allowed to provide evidence of the 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 Karans’ property immediately before and after the taking and construction of the dune.It further held that these increased benefits to the Karans’ property should be considered in the just-compensation calculation, despite the fact that the dune also benefitted others members of the community. The court held that a new trial was required. •