New Jersey Supreme Court Agrees to Hear Arguments in Bizarre Inverse Condemnation Case
By: Henry T. Chou, Esq.
On November 10, 2009, the Supreme Court granted certification in the matter of Klumpp v. Borough of Avalon, in order to consider the issue of whether owners of beachfront property lost ownership of their land by virtue of a municipality's claim in 2005 that it acquired the property by inverse condemnation forty-three years ago in 1962.
The dispute arose from a Nor'Easter in 1962 that decimated the Avalon shore, including the beachfront home of Edward and Nancy Klumpp. After the storm, Avalon Borough adopted an ordinance that allowed the Borough to enter the private property of homeowners in the disaster zone to restore dunes, without any compensation to those homeowners. The Borough offered to exchange the damaged properties for other properties owned by the Borough further inland. Some disaffected homeowners accepted the Borough's offer, but the Klumpps did not.
Subsequently, Avalon vacated and demolished the street fronting the Klumpps' home and built sand dunes over the property. However, over the course of the next 40+ years, the Borough continued to tax the Klumpps for the property at the rate of 46 cents per year based on a property value assessment of $100.
When the Klumpps sought to develop the property in 1997, the Borough denied their request and denied that a taking had occurred by way of the 1962 ordinance. The Klumpps then applied to the New Jersey Department of Environmental Protection for a coastal construction permit in 2003, which was also denied because the Klumpps could not demonstrate it had road access to the property.
When Avalon refused to allow road access to the property, the Klumpps sued for a declaration that they were entitled to access their property. In the course of that litigation, the Borough claimed for the first time in 2005 that it owned the property by virtue of inverse condemnation in 1962 and the trial court accepted that argument, even while acknowledging that there had been no "semblance of due process or compliance with statutory requirements." Remarkably, the Appellate Division upheld the trial court's ruling, dismissing the Klumpps' legal ownership of the property as "indicia of plaintiffs' bare legal title...and nothing more."
After the Klumpps filed a petition for certification to the New Jersey Supreme Court, various non-profit associations outraged by the lower court decisions joined the fray as amicus, including the Pacific Legal Foundation, the New Jersey Builders Association and the New Jersey Land Title Association. The amicus, who are encouraged by the Supreme Court's decision to hear the matter, believe that the lower courts improperly dismissed the significance of the Klumpp's legal title and gave municipalities the ability to strip landowners of title under the guise of inverse condemnation without compliance with any of the mandated statutory procedures.