Dune Project Award Sent Back for Recalculation

TRENTON, N.J. (CN) - A New Jersey couple who lost their oceanfront view for a dune project that helped them weather Hurricane Sandy may not deserve $375,000 in compensation, the state Supreme Court ruled.

The case stems from an Army Corp of Engineers dune-protection project that took place in 2008. To protect homes and businesses on Long Beach Island from damage during storms, several towns on the barrier island commenced a dune-building and sand-replenishment project to add depth to their beaches and to build higher, 22-foot dunes.

One island township, the borough of Harvey Cedars, moved to condemn a portion of Harvey and Phyllis Karan's property for the project.

Since the parties agreed that the project would at least partially obstruct their ocean view, the township appointed "three disinterested commissioners" to calculate compensation, according to the ruling.

The Karans rejected the township's offer and demanded a jury trial. When the borough proffered an expert who would testify that the storm-protection benefits afforded by the dune actually increased the value of the Karans' home, the couple argued that this testimony should be barred since the project provided "general benefits" to the entire community and therefore could not be offset against the value of the loss caused by the partial taking of their property.

The trial court agreed and barred the borough from presenting such evidence in valuing the property.

Even without that testimony, the borough estimated the lost value to the Karans' $1.9 million home at just $300. The Karans put the figure at $500,000, and the jury ultimately awarded them $375,000 in compensation for their lost view.

An appellate panel also sidelined the storm-protection benefit in April 2012, just six months before Hurricane Sandy ravaged the East Coast. With the new dune in place, however, the Karans' property survived one of the costliest storms in U.S. history.

The Supreme Court awarded the borough a new trial on Monday.

"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," Justice Barry Albin wrote for the five-member panel.

With the borough's expert excluded, the jury could not consider all factors, according to the ruling.

"In determining damages, the trial court did not permit the jury to consider that the dune would likely spare the Karans' home from total destruction in certain fierce storms and from other damage in lesser storms," Albin wrote. "A formula - as used by the trial court and Appellate Division - that does not permit consideration of the quantifiable benefits of a public project that increase the value of the remaining property in a partial-takings case will lead to a compensation award that does not reflect the owner's true loss."

"Clearly the properties most vulnerable to dramatic ocean surges and larger storms are frontline properties, such as the Karans'," he added. "Therefore, the Karans benefitted to a greater degree than their westward neighbors." He notes that "without the dune, the probability of serious damage or destruction to the Karans' property increased dramatically over a thirty-year period."

The ruling comes as New Jersey prepares for massive beach-replenishment projects in the wake of Hurricane Sandy, with some towns struggling to obtain easements from property owners to do the work.

New Jersey Gov. Chris Christie, who supports building dunes along the state's coastline to better safeguard properties for hurricanes, praised the ruling through his spokesman, Michael Drewniak.

"This is a decisive victory for the citizens of New Jersey and provides the critical next step in securing and preserving New Jersey's shoreline," the governor's office said. "Engineered dune systems paid for with public dollars benefit everyone, including holdouts who selfishly refuse to provide easements to protect not just their own homes, but the homes and businesses inland of them as well."

Christie also noted that "those holdouts are the greatest beneficiaries of dune systems and are not entitled to a windfall at the public's expense."

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