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Karam v. State

February 13, 1998


Argued January 22, 1998

On appeal from Superior Court of New Jersey, Law Division, Monmouth County.

Before Judges Baime, Wefing, and Braithwaite.

The opinion of the court was delivered by: Baime, P.j.a.d.

This is a regulatory taking case. In 1924, Charles and May Schweinert purchased from the State the riparian land adjoining their upland property situated along the Manasquan River. Under the riparian grant, the tide-flowed land could only be used for construction of a dock or recreational pier. The grant required common ownership of the upland property and the riparian land. Although the Waterfront and Harbor Facilities Act of 1914 (N.J.S.A. 12:5-1 to -11), more commonly known as the Waterfront Development Act, was in effect at the time the riparian grant was issued and required State approval as a condition for improving the tide-flowed land, the Schweinerts never applied for a permit and never sought to erect a dock on their property. Plaintiffs purchased both the upland and riparian lands in 1993, and sometime thereafter applied to the Department of Environmental Protection (DEP) for a permit. By this time, however, the riparian land was designated a "special restricted area" because it harbored high densities of shellfish. Following the DEP's denial of their application for a development permit, plaintiffs brought this inverse condemnation action. The Chancery Division granted partial summary judgment in plaintiffs' favor and certified its order as final. The State appeals. We reverse.


The salient facts are not in dispute. On May 19, 1924, the Board of Commerce and Navigation conveyed to the Schweinerts the riparian land adjoining their upland property, restricting its use to the erection of a pier or dock. Although the upland and riparian parcels have consistently been delineated as separate lots on the municipal tax map and in the various deeds executed over the years, the grant required common ownership of the lands or the right to the tide-flowed property would become void.

Because the Waterfront Development Act was in place at the time the riparian grant was issued, a development permit was required as a condition for improving the tide-flowed property. The history of the regulatory framework promulgated under the Act is described at length in Last Chance Development Partnership v. Kean, 232 N.J. Super. 115 (App. Div. 1989), aff'd, 119 N.J. 425 (1990), and need not be recited here. Ironically, the impetus for the statutory scheme came from the reports of the New Jersey Harbor Commission, a body appointed by Governor Woodrow Wilson, that recommended rapid and orderly development of the waterways to facilitate commerce and navigation. In the early 1970's, however, governmental focus shifted in favor of wildlife conservation and environmental protection. In 1973, the Legislature enacted the Coastal Area Facility Review Act (CAFRA), see N.J.S.A. 13:19-1 to -21, which, among other things, was designed to assure that any future development would be "reasonably consistent and compatible with the natural laws governing the physical, chemical and biological environment of the coastal area." N.J.S.A. 13:19-2. The DEP was empowered to adopt and amend rules and regulations to effectuate the purposes of the Act. N.J.S.A. 13:19-17. Pursuant to that authority, the DEP adopted N.J.A.C. 7:7E-3.2(d), which prohibits the construction of docks in certain classified waters.

In 1987, the Manasquan River was classified as a "special restricted area," meaning that it harbored moderate to high densities of shellfish that were uncontaminated and fit for human consumption. See N.J.A.C. 7:12-1.2 and N.J.A.C. 7:12-3.2. In 1993, the DEP's Bureau of Shellfisheries again surveyed the Manasquan River and reached the same conclusion. Because the river serves as an active shellfish habitat, erection of a pier or dock in the tide-flowed land is prohibited.

Over the years, the Schweinerts subdivided their property along the river, always selling off the upland land with the riparian parcel to each purchaser. Before the river was classified as a "special restricted area," many of these property owners erected docks. Plaintiffs purchased the upland and riparian properties in 1993. Although the DEP's classification of the river as a "special restricted area" was a matter of public record at the time of the purchase, plaintiffs were unaware of the prohibition against the construction of docks. Relying on their riparian grant and the docks that had previously been erected on neighboring properties, plaintiffs applied for a development permit. On May 11, 1993, the DEP denied plaintiffs' application.

Plaintiffs brought this action. During the litigation, plaintiffs sold the upland and riparian lands for $1,100,000, conditioned upon their continued pursuit of this inverse condemnation claim. In a brief oral opinion, the Chancery Division granted plaintiffs' motion for partial summary judgment, finding that the DEP's denial of a development permit deprived the property owners of any viable economic use of the riparian grant. This appeal followed.


We deal again with the complexities attendant to claims of inverse condemnation. Commonly, constitutional questions involve no more than a value judgment upon a factual complex rather than an evident application of a precise rule of law. Inevitably, resolution of such issues reflect the seasoning and experience of the one who Judges, which in turn hinge upon the concerns and problems confronting the court when the issue is presented and decided. This observation is particularly compelling in the context of Fifth and Fourteenth Amendment "taking" jurisprudence, where the courts often engage in "ad hoc, factual inquiries," determining issues on a case-by-case basis. Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332, 343 (1979); see also Gardner v. New Jersey Pinelands Comm'n, 125 N.J. 193, 205 (1991) (application of takings principles requires "fact-sensitive" examination of the regulatory scheme and the extent to which it interferes with property rights and interests). The result is a welter of seemingly irreconcilable opinions, each seeking to alleviate the tension between the competing values involved. The problem is accentuated because decisions have been rendered over the meandering course of history, and societal concerns given priority by one generation are often considered of less consequence by the next. In resolving the issue before us, we tread upon uncertain and constantly shifting terrain.

Prior to Justice Holmes'opinion in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922), "it was generally thought that the Takings Clause reached only a `direct appropriation' of property, Legal Tender Cases, 12 Wall. 457, 551, 20 L.Ed. 287 (1871), or the functional equivalent of a `practical ouster of [the owner's] possession,' Transportation Co. v. Chicago, 99 U.S. 635, 642, 25 L.Ed. 336 (1879)." Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1014, 112 S.Ct. 2886, 2892, 120 L.Ed.2d 798, 812 (1992). Justice Holmes recognized in Mahon that if private property were subject to unbridled, uncompensated intrusion under the police power, "the natural tendency of human nature [would be] to extend the qualification more and more until at last private property disappear." 260 U.S. at 415, 43 S.Ct. at 160, 67 L.Ed. at 326. The principle was thus adopted that "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." Ibid. But land use law teems with activity which every day touches the lives of millions, and there is no clear line of demarcation separating overly intrusive regulation that requires just compensation, and mild burdens adjusting the benefits of economic life that do not.

The question of what constitutes a "taking" for purposes of the Fifth Amendment "has proved to be a problem of considerable difficulty." Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 123, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631, 648 (1978). The Supreme Court "has been unable to develop any `set formula' for determining when `Justice and fairness' require that economic injuries caused by public action be compensated by the government . . . ." ...

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