NJ Supreme Court Erodes Special Benefits, Like the Dunes

This morning, the New Jersey Supreme Court has issued its much-anticipated decision in the dune replenishment case, Borough of Harvey Cedars v. Karan, which was argued this May.

A copy of the decision is available here.

This opinion is hot off the press and we are reading it now, but the Court has reversed the decisions below, which barred introduction of evidence about the potential storm protection benefits that construction of a sand dune would have upon oceanfront property as “special benefits”.  The case has been remanded for a new trial.

Under this new decision, a trial court would now allow certain evidence of benefits provided.  As the Court held, juries determining just compensation should use a “straightforward fair market value approach”, considering any “non-speculative, quantifiable benefits” capable of “reasonable calculation” at the time of the taking.”

We’ll need to digest this one and will report further, but our preliminary impression is that the Court, while well-intentioned, may have opened the door to many more motions in limine and made the management of a just compensation trial more onerous.  Practitioners in the field have, for many years, contended that the “benefits” provided by a particular project are ordinarily speculative and not capable of reasonable calculation.  Without quantifiable market support, the holding in Karan would not appear to endorse admission of such evidence, but we anticipate that government agencies in New Jersey and elsewhere may now try to use this decision to bolster arguments in favor of otherwise inadmissible evidence.

Stay tuned.