I recently wrote an article discussing the potential litigation that could arise from huge dunes which may be built in New Jersey to protect against floods. For the last five years, Harvey and Phyllis Karan have been fighting the government of Harvey Cedars for payment on a partial taking of their property. In a case that is eerily similar to what we are seeing today, Harvey Cedars obtained portions of beachfront property from the homeowners through eminent domain to erect a storm protection dune system.
The Karans sued the municipality seeking “just compensation” for the partial taking of their property, arguing they were entitled to damages for the amount of property they lost to the project and also for their now impeded views. The municipality contended the jury should determine whether the dune project added value which offset the decrease in value to the Karans’ home. The trial court denied the municipality’s request because the dune protection was not a specific benefit to the Karans but to the public as a whole. The jury returned a $375,000 verdict in favor of the Karans, which was upheld on appeal. The Supreme Court agreed to consider the matter and handed down an opinion today.1
Traditionally in partial takings, a general benefit to the public as a whole should not be considered as a setoff against the just compensation. Only a specific benefit provided to the property owner could be considered. The Supreme Court changed courses today, removing the distinction between general and specific benefits and declaring,
[J]ust compensation should be based on nonconjectural and quantifiable benefits, benefits that are capable of reasonable calculation at the time of the taking. . . . Benefits that both a willing buyer and willing seller would agree enhance the value of property should be considered in determining just compensation.2
Any factors that could potentially impact the value of the property can be considered in determining just compensation in a partial takings case.
The case was reversed and remanded for a new trial. It will be some time before this matter is decided, but it is sure to be watched eagerly by the legal community as an indication of compensation for similar takings in the wake of Hurricane Sandy.
1 Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, — A. 3d —, 2013 WL 3368225 (N.J. July 8, 2013).
2 Id. at 38-39 (citations omitted).