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City of Ocean City v. Maffucci

July 22, 1999

CITY OF OCEAN CITY, PLAINTIFF-APPELLANT,
v.
GERARD AND CONSTANCE MAFFUCCI, AND 2910 WESLEY AVENUE CONDOMINIUM, DEFENDANTS, AND 2825 WESLEY AVENUE CONDOMINIUM, DEFENDANT-RESPONDENT.



Before Judges Long and Carchman.

The opinion of the court was delivered by: Long, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted April l3, l999

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

Defendants Gerard and Constance Maffucci, individually and as principals of the 2910 Wesley Avenue Condominium, and Louis and Martha Spadaccino, as principals of the 2825 Wesley Avenue Condominium, own beachfront duplexes on Wesley Avenue in Ocean City.

In l993, as a result of a joint project of the State of New Jersey and the Army Corps of Engineers to build new sand dunes along seven miles of Ocean City beach, Ocean City sought to purchase an easement from the beachfront owners. In l995, when a price could not be negotiated, the city instituted a condemnation action against defendants, the Maffuccis, 2910 Wesley Avenue Condominium, and 2825 Wesley Avenue Condominium. Included in the proceeding was a fifty by eighty foot strip of beach in front of 2825 Wesley Avenue in which the Spadaccinos are first floor tenants. As a result of the dune project, the view of the ocean from the Spadaccino's condominium has been completely obstructed and direct access to the beach has been eliminated by nine foot high dune grasses. Beach access must be gained by a pathway 80 feet north of the condominium.

On July 22, l997, after a hearing, three commissioners appointed to appraise the value of the easement taken by the City and set just compensation, issued a report declaring just compensation to be $l.00. No reasons were stated for this award. Defendants appealed.

A jury trial was held *fn1 at which the main issue was whether the defendants were entitled to severance damages. Defendants claimed that the easement damaged the remaining part of their property and diminished its market value by $l00,000. The City countered that the easement caused no damage to the property as a whole.

A trial ensued at which Ackley O. Elmer, a real estate appraiser, testified for Ocean City. According to Elmer, because beach view and access rights have no value, loss of riparian (littoral) *fn2 rights did not devalue the property. Elmer undertook a comparative sales study of property in Ocean City. He testified that there is no difference in value between beachfront property and non-beachfront property. In measuring the current value of the condominium, Elmer did not include in his comparables any beachfront property. He testified that the loss of view suffered by the first floor of the condominium "had no effect at all" on the valuation. In fact, even "if the lower unit devalued, the upper unit increased in value." Elmer explained that the property must be considered "as a whole" for appraisal purposes, and not as two individual units in a duplex. Thus, he determined that the value of the easement was $1.00 and that there was no severance damage to the remaining land where the condominium was located.

Cyril Galvin, a coastal engineering expert, testified for defendants that the dune eliminated any view of or access to the beach from the Spadaccino's condominium. Galvin explained that the dune continually increased in height and width from the date of taking to the time of trial and that it would continue to do so:

The dune clearly blocks the line of sight to the water and this obstruction will increase markedly in the coming years because of the vegetation growth and the trapping of the sand from the newly widened beach.

In his report, Dr. Galvin also suggested that Elmer's analysis was skewed because he did not evenly distribute the dates of sales on properties he valued for comparison throughout the sales period he examined. In other words, Elmer examined 44 sales over four years (1986-1990) but not eleven a year. In 1988 he used nineteen sales, then 9, 6, and 7 in 1987, 1989, and 1990 respectively. Thus, according to Dr. Galvin, Elmer's comparables may have been skewed by fluctuations in the real estate market.

Chip Collins, a real estate expert, also testified for the defendant. Collins agreed that the value of the easement was $1.00. However, he testified that the severance damages to the defendant were $100,000. Of this amount, $75,000 was damage to the first floor; $25,000 to the second floor. Collins calculated damages two ways:

pursuant to the first method, he determined the value of the land taken plus the value of the remaining parcel before the taking, and subtracted the value of the remaining parcel after the taking. That is: $1 $1,000,000 (1st floor: $425,000; 2nd floor: $575,000) - $900,000 (1st floor: $350,000; 2nd floor: $550,000) = $100,001. These "before and after taking" figures were based on comparable sales. Method two valued the entire parcel before the taking and subtracted the value of the entire parcel after the taking. ($1,000,000 - $900,000= $100,000).

Specifically, Collins' "value of the remaining parcel after the taking" calculation was based on four things: loss of view, loss of direct beach access, loss of use, and loss of privacy.

Q: Now . . . 2825 Wesley Condominium. Would you explain to us what you did there and what you found?

A: First of all, in applying the market data approach of before and after, I used the basis of loss in value by analyzing the property with the dune area. My Conclusions were that there was loss in value to each of the respective floors individually. I analyzed it from four basic standpoints.

The first stand point was from the loss in value due to the loss of view. My Conclusions were that there was a loss in value due to a loss in view from the first floor unit but not the second floor unit. The second area is that I determined that there was a loss in value due to a loss of direct access to the beach and the water. In my opinion that loss was applicable to both the first floor unit and the second floor unit.

The third area was also in value due to a loss in the use of that particular area. The open space enjoyment in the area being deprived by use was a loss suffered by the unit owners of both the first floor unit and the second floor unit. And fourth and finally, the loss in value due to the loss in the privacy by the creation of an alleyway with people walking directly in front of each of the units back and forth to the beach was a loss in value that was experienced by both the first floor and the second floor.

With these items in mind, the direct data approach was by trying to come up with comparable sales of the first floor unit and the second floor unit before the occurrence of these items and then applying it to the occurrence of these items after they took place, the before and after case.

Collins assigned loss of view 60%; loss of access 20%; loss of use 10%; and loss of privacy 10%. He testified that while it is still possible to smell and hear the ocean from 2825 Wesley Avenue, it is "barely" visible because of the dune, and "there is absolutely no view, whatsoever, of the strand as before." Collins disagreed completely with Elmer regarding the value of visual and physical access to the ocean. Collins, a real estate agent/broker who specializes in beach property, explained that in the "many years" he has rented, sold, and appraised beachfront property in Ocean City, beachfront makes a difference in value. Collins testified that close to "95%" of all people looking for property in Ocean City "want to be on the beach."

They want to be able to see the beach . . . they want to be able to see the ocean. They want to be able to use the adjacent lands on the beach. They want to enjoy the beachfront immediately in front of the property that they have. This is what determines the value of the property that we handle on the beach. People come to our shore to be able to see and enjoy the beach immediately in front of the property that they get. They do not come to the beach for safety factors. They do not come to the beach for soil control. They come to the beach so they can sit and use it.

Collins testified that the "gold coast properties" (beachfront) have riparian rights which makes them valuable: "the value would be that you not only own the portion of your property that your home is on, but you also own the beach all the way out to the water." [T]he value attached to that particular property is determined by the demand by what the people . . . are going to use it for. That's what they want it for. That's why they buy these things. That's why they'll pay so much for property--so much more for property on the beach . . . .

As to the loss of direct access to the beach, Collins testified:

Q. How far is the access to the beach from this unit, the first floor unit?

A. Measured from where?

Q. I don't care, the north property one.

A. 80 feet.

Q. 80 feet?

A. 80 feet, yes.

Q. So isn't it a fact that although they lost some beach closer to the bulkhead, they've gained beach out towards the ocean.

A. Yes.

Q. And there's no net loss is there?

A. Except that the use of the beach directly adjacent to the property is in my opinion, very, very valuable.

A. [The beach] is not adjacent to the property [anymore] is what I'm referring to.

Q. Oh, so it's a fact they have to walk another 100 feet, that's a problem for them.

A. They lost more than 100 feet.

Q. 200 feet? How far is it?

A. Well, it's 80 to cross over and then they've got to go across the cross over and then they've got to go down another 150 feet or so [to reach the beach].

Q. That sounds like a problem now.

Concerning loss of use, Collins testified:

Q. Now, tell me what the second floor unit owners have lost from the beach?

A. They've lost the use of the beach directly in front of the property.

Q. But they can get to the ocean, right?

A. Yes.

Q. They can find the beach?

A. Yes.

Q. They can build sand castles?

A. Yes.

Q. They can picnic?

A. Yes.

Q. They can play football and they go in the water, all those things, correct?

A. Yes.

A. Except that the use of the beach directly adjacent to the property, is, in my ...


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