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Full Opinion
delivered the opinion of the Court.
When a municipality takes private property for a public use, the property owner is entitled to âjust compensationâ under our State and Federal Constitutions. N.J. Const, art. I, H 20; N.J. Const. art. IV, § 6, H 3; U.S. Const, amend. V. In this ease, as part of a massive public-works project, the Borough of Harvey Cedars exercised its power of eminent domain to take a portion of the beachfront property of Harvey and Phyllis Karan to construct a dune that connects with other dunes running the entire length of Long Beach Island in Ocean County. The dunes serve as a barrier-wall, protecting the homes and businesses of Long Beach Island from the destructive fury of the ocean.
That the Karans are entitled to âjust compensationâ for the taking of a portion of their property for this public project is not in question. Instead, the focus here is on how to calculate âjust compensationâ when the taking of a portion of the property for a public project may lessen in part and enhance in part the value of the remaining property.
At a condemnation trial, the court permitted the Karans to introduce evidence of the loss in value to their home caused by the dune obstructing their oceanfront vista. The trial court, however, denied Harvey Cedars the opportunity to show that the dune enhanced the value of the Karansâ property by protecting it from the damage and destruction that is wrought by powerful storms and ocean surges. Based on our state-law jurisprudence, the court determined that only special benefits, not general benefits, flowing from a public project can be considered in calculating the enhanced value to the remaining property. In the courtâs view, the storm protection afforded by the project is a general benefit because the dunes not only protect all property owners in Harvey Cedars but also presumably add value to their property. Accordingly, the court did not allow the jury to consider evidence that the dunes â constructed at public expense to protect the islandâs homes from minor and catastrophic storms â enhanced the value of the Karansâ property. The jury awarded the Karans $375,000 in
We now conclude that when a public project requires the partial taking of property, âjust compensationâ 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. In a partial-takings case, homeowners are entitled to the fair market value of their loss, not to a windfall, not to a pay out that disregards the homeâs enhanced value resulting from a public project. To calculate that loss, we must look to the difference between the fair market value of the property before the partial taking and after the taking. In determining damages, the trial court did not permit the jury to consider that the dune would likely spare the Karansâ home from total destruction in certain fierce storms and from other damage in lesser storms. A formula â as used by the trial court and Appellate Division â 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 ownerâs true loss. Compensation in a partial-takings case must be âjustâ to both the landowner and the public. United States v. Commodities Trading Corp., 339 U.S. 121, 123, 70 S.Ct. 547, 549, 94 L.Ed. 707, 712 (1950). A fair market value approach best achieves that goal.
Because that approach was not followed in this case, we reverse the judgment of the Appellate Division and remand for a new trial.
I.
The Beach- amd, Storm-Protection Project
The backdrop to this case is a beach-restoration and storm-protection project on Long Beach Island funded by federal, state, and local governments. This massive public project â carried out by the U.S. Army Corps of Engineers and the New Jersey
The dune-construction project required the securing of easements on properties bordering the ocean.
The Boroughâs obligation was to secure eighty-two perpetual easements over the portions of private beachfront properties closest to the ocean on which the dunes would be built. The Borough acquired sixty-six easements by voluntary consent of the property owners. However, the owners of sixteen beachfront properties, including the Karans, did not consent. As a result, in July 2008, the Borough adopted an ordinance authorizing it to
The Borough and the Karans could not agree on a figure representing just compensation for a perpetual dune easement over the seaside portion of their property. The Karans rejected the Boroughâs offer of $300 as compensation for both the land taken and any devaluation of the remaining property.
The Karansâ Property
The Karansâ single-family, beachfront home sits on 11,868 square feet of land in Harvey Cedars. Constructed in 1973, the house is anchored on pilings and has three stories, with the upper two floors containing the dining and living quarters. These two floors open onto exterior decks, which had provided a panoramic view of the beach and ocean. The first level consists of a two-car garage and storage area for the heater, HVAC, and utility equipment.
To construct the twenty-two-foot dune, the Borough sought a perpetual easement over a strip of 3,381 square feet of the Karansâ land nearest to the ocean. The easement covers more than one quarter of the Karansâ property. The Karans claim that the newly constructed dune, standing between their home and the ocean, obstructs their view of the beach.
The Eminent Domain Action
In November 2008, the Borough instituted an action in the Superior Court, Law Division to acquire by eminent domain an easement over the Karansâ property. In an April 2009 order, the trial court adjudged that the Borough had exercised its eminent-domain powers to acquire part of the Karansâ property and appointed three disinterested commissioners to âfix and determine the compensation to be paid.â
First Rule 10k- Hearing
Before trial, the Karans moved to bar any testimony from the Boroughâs expert, Dr. Donald M. Molliver, Ph.D., concerning storm-protection benefits afforded by the dune that increased the value of the Karansâ home. The Karans argued that the storm-protection project provided âgeneral benefitsâ to all Harvey Cedars property owners â to some greater or lesser degree â and therefore was not admissible as an offset against the value of the loss caused by the partial taking of their property. The trial court concluded that whether the dune constituted a special or general benefit was a fact issue to be decided by the jury.
Second Rule lOb Hearing
Closer to trial, before a newly assigned judge, the Karans moved for reconsideration of the earlier decision to submit the issue of special versus general benefits to the jury. The court concluded that only a consideration of special benefits, not general benefits, should go to the jury. But first, the court would have to decide as a matter of law whether the benefits derived from the dune were special or general. In accordance with its evidential gatekeeping role, the court took testimony to resolve the issue.
At the Rule 104 hearing, the Borough presented expert testimony from Randall A. Wise of the Army Corps of Engineers, a civil engineer specializing in coastal engineering. Wise explained that he had been assigned the task of assessing the storm-damagereduetion benefits that the dune project would provide to Harvey Cedarsâ oceanfront properties. Wise emphasized that certain storms would cause damage to frontline properties but not to
Based primarily on Wiseâs testimony, the court concluded that the financial benefits of the beach-replenishment and storm-protection project were shared â even though in differing degrees â by the larger community of Harvey Cedars and therefore were general benefits. The court pointedly stated that merely because âdiffering property owmers enjoy the benefit to differing degrees does not convert a general benefit into a special benefit.â
In support of that proposition, the court referred to Sullivan v. North Hudson County Railroad Co., 51 N.J.L. 518, 18 A. 689 (E. & A.1889), a ease involving an eminent-domain action in which a railroad acquired an easement over a landownerâs property. Id. at 519-20, 18 A. 689. The trial court deduced from Sullivan that benefits enjoyed by the Karans from the construction of the dune that were likewise enjoyed â âin greater or less degreeâ â by their neighbors were general benefits not to be weighed by the jury, quoting id. at 540, 18 A. 689. Based on its reading of Sullivan, the court deemed special benefits to be those that âdirectly increase!. ] the value of particular tractsâ as opposed to those that
The Trial
At the condemnation trial, a jury was impaneled to determine âjust compensationâ for the partial taking of the Karansâ property. The Boroughâs civil engineer, Frank Little, provided background information about the beach-replenishment and storm-protection project on Harvey Cedars. The cost of the project was approximately twenty-five million dollars, with the Borough bearing approximately one million dollars of the cost, the State approximately seven-and-one-half million dollars, and the federal government the balance. In 2010, the Army Corps of Engineers completed a twenty-two-foot-high dune east of the bulkhead line of the Karansâ property â the portion of the property on which, by law, no construction is permitted. The new dune replaced a dune approximately sixteen-feet high. The old dune was considered vulnerable and ineffective. Little noted that, in 1992, a winter storm damaged eighty oceanfront homes, totally destroying three, which set in motion a state-funded beach replenishment program. Under the current project, the dunes are to be maintained by the Army Corps of Engineers every five to seven years.
The Borough and the Karans each presented real estate appraisers as expert witnesses. The two appraisers both agreed that the value of the Karansâ oceanfront home was 1.9 million
In accordance with the courtâs ruling, the Boroughâs appraiser, Dr. Molliver, did not refer to any financial benefits accruing to the Karansâ home from the construction of the twenty-two-foot dune. Dr. Molliver opined that the value of the Karansâ home did not change with the acquisition of the easement and the construction of the dune. He reached this conclusion because he found that the Karansâ view was not blocked: âThey could still see the ocean. They have an expanded beach. Thereâs a panoramic view standing from the decks on the second and third levels.â Although Dr. Molliver agreed that the view was the key valuation issue in the case, he never visited the Karansâ deck after the dune construction. Dr. Molliver determined that the Boroughâs taking of 3,381 square feet of the Karansâ property had a de minimis value of only $300.
Robert Gagliano, the Karansâ real estate appraiser, opined that the obstruction of the Karansâ view of the beach by the dunesâ even though an ocean view remained â decreased the market value of the home by approximately twenty-five percent. He valued the loss of view at $500,000 based on a comparative-sales analysis of other oceanfront properties and suggested that the presence of the dune, in effect, converted the Karansâ home into a second-row home where there are partially obstructed views of the ocean.
Harvey Karan testified that his home was built on pilings in 1973 and, since that time, he had not had âa lick of waterâ invade
The jury inspected firsthand the view from the Karansâ home and decks before deliberating.
The trial court charged the jury that the Karans were entitled to âjust compensationâ for the easement acquired by the Borough âmeasured by the difference between the fair market value of the entire property on November 7th, 2008 immediately before the taking and the fair market value of the remaining property on November 7th, 2008 immediately afterâ the taking. The court explained that âfair market value of a property is the amount that a willing buyer and a willing seller would agree upon through armâs length voluntary negotiationsâ based on âall surrounding circumstances,â including âall the features that enhanced the value of the propertyâ as well as those âthat diminished its value.â However, the court advised the jury to disregard, in valuing the Karansâ remainder property, any general benefit flowing from the public project. To that end, the court gave this additional instruction:
In determining the value of the [Karansâ] property remaining after the Boroughâs taldng of the easement!,] you may not consider general benefits produced by the dune project which [the Karans] may enjoy in common with other property owners in the area to reduce the value. In other words, the Borough is not entitled to any credit nor should the amount of just compensation to the Karans be reduced by virtue of any general benefit which they may receive along with other property owners in the Borough as a result of the dune and beach replenishment project.5
The court denied the Boroughâs motion for a new trial and, in the alternative, a remittitur. The court held to its earlier expressed view that general benefits â the benefits accruing from the storm-protection project â were not admissible to offset the propertyâs reduced value from the obstructed ocean view, and also concluded that the jury probably discounted Dr. Molliverâs testimony because â despite his credentials â he never witnessed the view from the Karansâ deck.
II.
The Appellate Division affirmed. The appellate panel agreed with the trial court that the storm protection afforded to the Karansâ property by the dune-construction project could not be considered by a jury to decrease the Karansâ compensation award for the partial taking of their property and the diminished ocean view from their house. Harvey Cedars, supra, 425 N.J.Super. at 165-68, 40 A.3d 75. The panel reasoned that the advantage accruing to the Karans from the newly constructed dune was not a special benefit but rather âa classic example of a general benefit,â which cannot be used to offset the loss from a partial taking. Id. at 166, 40 A.3d 75. The panel explained, â â[gjeneral benefits are those produced by the improvement which a property owner may enjoy in the future in common with all other property owners in the area,â â id. at 165, 40 A.3d 75 (quoting State v. Interpace Corp., 130 N.J.Super. 322, 330-31, 327 A.2d 225 (App.Div.1974)), whereas special benefits are those that ââdiffer in kind, rather than in degree, from the benefits which are shared by the public at large,â â id. at 166, 40 A.3d 75 (quoting 3-8A Nichols, supra, § 8A.02).
We granted the Boroughâs petition for certification. Borough of Harvey Cedars v. Karan, 210 N.J. 478, 45 A.3d 983 (2012). We also granted the motions of the Attorney General and The Jersey Shore Partnership to participate as amici curiae.
III.
The Borough argues that the jury should have been âpermitted to consider evidence of the distinct and measurable protective special benefit â afforded to the Karans from the publicly financed storm-protection project â â[ejvidence a willing buyer and willing seller ... would have considered in their determination of fair valueâ of the Karansâ property after acquisition of the easement.
The Borough asserts that the Appellate Division and trial court reached the anomalous result of allowing âevidence of the asserted negative impactâ of the dune project on the Karansâ home while barring evidence of âthe unique, positive impact of the very same Lpjrojectâ on the same property. The Borough also argues that whether the dune project conferred a special benefit on the Karansâ property was a jury issue. It submits that, based on this Courtâs reasoning in State v. Gorga, 26 N.J. 113, 138 A.2d 833 (1958) and State v. Caoili, 135 N.J. 252, 639 A.2d 275 (1994), âthe gate keeping function of the trial court is to determine if evidence is reliable and not speculative, and once determined to be reliable, it is for the jury to determine what, if any, impact the evidence presented has on just compensation.â The Borough faults the trial court for âwad[ingj into the juryâs territory in reaching the ultimate conclusion that the evidence did not present a special benefit.â
Amicus, the Attorney General, advocates for a fair market value approach to the just-compensation determination in condemnation cases. In the Attorney Generalâs view, a general benefit is one that is âspeculative or uncertainâ or one that âindirectly and equally affects all landowners in a community,â and therefore âcannot be set off from a condemnation award.â On the other hand, a special benefit that confers âquantifiable benefitsâ in direct physical relation to a public project and that â âadmits of reasonable computationâ â may be considered in determining a condemnation award, citing Mangles v. Hudson Cnty. Bd. of Chosen Freeholders, 55 N.J.L. 88, 92, 25 A. 322 (Sup.Ct.1892). By that standard, the Attorney General finds that the dune project provides both general and special benefits to the Karansâ property.
Amicus, The Jersey Shore Partnership, also encourages this Court to adopt a fair market value approach to ascertaining the amount of a condemnation award when the remaining propertyâ after a partial taking â directly and quantifiably benefits from a public project. The Partnership states that the law has become âmired in technical, nonsensical argumentsâ over the meaning of general and special benefits and proposes that the test should be whether the benefits, however characterized, are ascertainable and directly enhance the remaining property. The Partnership asserts that the engineered dunes, financed at public expense, provide a distinct, unique, and quantifiable benefit to oeeanfront homes because they spare those homes from âtotal destruction ... from the power of the oceanâs waves.â
The Karans urge this Court to affirm the Appellate Division and maintain our long-standing, common-law distinctions between general and special benefits. According to the Karans, the prohibition against the use of general benefits from a public project as an offset to a condemnation award in a partial-takings ease flows directly from the language both in Sullivan, supra, 51 N.J.L. at 540, 18 A. 689, and Village of Ridgewood v. Sreel Investment
The Karans also argue that the trial court properly made the threshold-admissibility determination that the dune-construction project was a general benefit and therefore not a legally cognizable basis for decreasing a condemnation award. Thus, they contend that only when the court first rules that the benefits conferred by a public project are âspecialâ may a jury consider whether the project financially increases the value of the remaining property in a partial-takings ease.
IV.
The question before us solely concerns an issue of law â how to compute âjust compensationâ in a partial-takings case. Because our standard of review is de novo, we owe no deference to the legal conclusions reached by the trial court and Appellate Division. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378, 658 A.2d 1230 (1995) (noting that âinterpretation of
A.
We begin with some basic principles of law governing the case before us. The right to âjust compensationâ when the government takes property for a public use is one of the essential guarantees of both the United States and New Jersey Constitutions. U.S. Const, amend. V (â[N]or shall private property be taken for public use, without just compensation.â); N.J. Const, art. I, 120 (âPrivate property shall not be taken for public use without just compensation.â). This fundamental right is of ancient origin, predating the founding of our Republic, and is found even in the text of the Magna Carta. Magna Carta ch. 28 (1215), reprinted in The Anglo-American Legal Heritage 84 (Daniel R. Coquillette, 2d ed. 2004) (âNo constable or other bailiff of ours shall take grain or other chattels of any one without immediate payment therefor in money____â);
Our State Constitution also specifically guarantees âjust compensationâ for a municipalityâs taking of an easement on private property for a public use. N.J. Const, art. IV, § 6, H 3 (âAny agency or political subdivision of the State ... may be authorized by law to take or otherwise acquire ... easements upon ... property to preserve and protect the public ... place, improvement, or use; but such taking shall be with just compensation.â). The Eminent Domain Act, N.J.S.A. 20:3-1 to 50, also makes clear that in the case of a partial taking of property, such as the
When an entire piece of property is acquired by the State or a municipality by the power of eminent domain, the landowner is entitled to just compensation measured by âthe fair market value of the property as of the date of the taking, determined by what a willing buyer and a willing seller would agree to, neither being under any compulsion to act.â State v. Silver, 92 N.J. 507, 513, 457 A.2d 463 (1983) (internal citations omitted); see also Caoili, supra, 135 N.J. at 260, 639 A.2d 275 (same). The landowner whose property is taken in its entirety for a public use is not entitled to enhanced compensation because the taking will benefit his neighbors or increase the value of their homes. See Continental, supra, 66 Cal.Rptr.2d 630, 941 P.2d at 824. Had Harvey Cedars taken the whole of the Karansâ property for the construction of a dune, no one would argue that â because of the future benefits that their neighbors would enjoy from the public project â the Karans would be entitled to more than the fair market value of their property, 1.9 million dollars.
However, our partial-takings jurisprudence, from its earliest beginnings, has not necessarily reflected the straightforward fair market value approach that is evident in total-takings cases. To find the source of the special/general benefits dichotomy, we must look back, understanding that âa page of history isâ sometimes âworth a volume of logic.â New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 507, 65 L.Ed. 963, 983 (1921).
B.
In our early common law, when part of a landownerâs property was taken for a public project, the benefits conferred on the remainder property could not be used to offset his loss or damages by the taking. See 2 Nichols, supra, § 246 at 761 (Matthew Bender, 2d ed. 1917). Indeed, compensation had to be paid in
In State v. Miller, private property was taken for the construction of a road pursuant to legislation, an â[A]ct,â which required a payment of damages to the landowner but which did not provide for the consideration of âbenefits or advantagesâ accruing to the landowner. 23 N.J.L. 383, 384-85 (Sup.Ct.1852). In light of the Actâs silence on the consideration of benefits, the Supreme Court held that the calculation of an award to the landowner did not require deducting the roadâs benefits from the value of the loss of the property. Id. at 385. The Court observed that âthere is no reason why the man whose land is occupied by a public highway should be made to contribute more for the public and common benefit than his neighbor, whose lands are not occupied, but who is equally benefited by the improvement.â Ibid.
In Carson, supra, the Legislature appointed certain individuals to cut a creek through private property but made no allowance for âfirst m