Property owners in 1965 NJ beach replenishment taking will get compensation
"After finally conceding, in 2005, that a taking occurred forty-three years earlier, the Borough now attempts to hide behind the six-year statute of limitations to claim that plaintiffs have no right to an inverse condemnation action....Although physical invasion and physical taking of real property by a governmental entity ought to be notice sufficient to awaken property owners to act to protect their interest in receiving compensation for the taking, government also should provide some other form of notice to affected property owners before, and surely after, a physical taking." - New Jersey Supreme Court Justice Jaynee LaVeccia
The New Jersey Supreme Court issued a unanimous 7-0 opinion written by Justice Jaynee LaVecchia remanding Klumpp v. Borough of Avalon to the trial court to consider compensation for a beach replenishment taking which occurred first in 1965. Download the eminent domain decision here.
The Klumpps had built an ocean front home in 1961, which was destroyed by the famous nor’easter storm of 1962. After the home was destroyed, the Borough of Avalon appropriated the property for beach replenishment. No compensation was offered to the Klumpps. The Klumpps continued to be the record owner on the tax maps of Avalon and paid taxes. In 1995, the Klumpps sought permits to rebuild. By this time, Avalon no longer permitted access to the Klumpps property off the local road 75th Street. In addition, the Borough in 1995-96 denied Klumpp building permits and access permits thereby rendering the property useless. The Appellate Division found there had been both a physical taking in 1965 and a regulatory taking circa 1995 both denying the Klumpps all beneficial use and enjoyment of their property. See our previous blog post of August 6, 2009, Inverse condemnation at the beach. At no time did the Borough of Avalon offer any form of compensation to the Klumpps. The Supreme Court agreed with the Appellate Division and found there had been both a regulatory and physical taking of Klumpps property without compensation, contrary to the New Jersey Constitution, Article I ¶20 and the 5th and 14th amendments of the U.S. Constitution.
The critical ruling by the court in favor of Klumpp was the Supreme Court’s rejection of the statute of limitations argument set forth by the Borough of Avalon. The Court related the critical taking events to 1995-1996, when the Klumpps were denied building permits by Avalon. In remanding the matter to the trial court for consideration of inverse condemnation and just compensation, several interesting legal issues will come into play.
What is the date of valuation? N.J.S.A. 20:3-30(a)-(c) provides for a date of valuation to be the earliest of three events:
a) date of entry
b) date of interference with use and enjoyment of the property
c) date of the filing of the complaint
Date of entry here is probably 1962, when the city physically appropriated the property for beach replenishment. Was this a partial or total taking? We don’t know at this point. Date of interference with use and enjoyment could be 1995-96, when permits for a rebuild were denied. The date of the complaint filing has not yet occurred.
In addition, there is a large interest component to compensation. N.J.S.A. 20:3-31 provides for the payment of interest from the date of taking to the date of payment. Depending on the date of value selected by the court, the interest would be calculated from that date to the date of payment. Case law provides for annual compound interest. See Borough of Wildwood Crest v. Smith 235 NJ Super 404 (App.Div 1988). The interest rate is set by Rule 4:42-11(a)(iii) and varies from year to year. Current market value of a beach front lot is estimated to be in excess of $2 million by the Klumpps. Depending on the date of valuation, interest and the calculation of attorney’s fees and costs they will be amply compensated but probably not in excess of $2 million.
New Jersey Law Journal (June 24, 2010): Court Stops Sands of Time to Allow Suit Over 1960s Beach Land Taking
Press of Atlantic City (June 23, 2010): Edward and Nancy Klumpp can seek compensation for beach lot taken by Avalon in 1962, state Supreme Court decides
New Jersey Digital Legal Library: New Jersey Supreme Court Oral Arguments in Klumpp v. Avalon (March 22, 2010)