Borough of Harvey Cedars v. Karan

Defendants Harvey and Phyllis Karan owned a beachfront home which had a panoramic view of the beach and ocean. Plaintiff Borough of Harvey Cedars sought an easement over more than one quarter of the Karans’ property to build a storm-protection dune which would invariably obstruct the Karans’ view. When the Karans withheld consent, the Borough used its eminent domain power to acquire the easement. Since the parties could not agree on just compensation, the Borough filed an action in the Law Division. The Karans rejected a three-member panel of appointed commissioners’ award and demanded a jury trial. At the end of trial, the court charged the jury that the Karans were entitled to “just compensation,” defined as the difference between the fair market value of the property immediately before the taking and the fair market value of the remaining property immediately after the taking. It explained that fair market value included those features that enhanced the property, as well as those that diminished it, but it specifically prohibited the jury from considering any project-related general benefit enjoyed by other residents of the Borough. The jury awarded the Karans $375,000. The issue of what constituted “just compensation” was before the Supreme Court on appeal. The Court concluded after its review that a property’s fair market value should be used as the benchmark in computing “just compensation”: non-speculative, reasonably calculable benefits that increase the property’s value at the time of the taking regardless of whether those benefits are enjoyed to a lesser or greater degree by others in the community. Because the Borough was prohibited from presenting evidence of such benefits, and the trial court erroneously charged the jury as to the calculation method for just compensation, the Court remanded for a new trial.

Borough of Harvey Cedars v. Karan