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City of Long Branch v. Liu

September 21, 2010

CITY OF LONG BRANCH, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
JUI YUNG LIU AND ELIZABETH LIU, HIS WIFE, ADELINA'S PIZZA, JIMMY'S PIZZA, JIMMY JETTY, INC., AND JIMMY'S FAMOUS BOARDWALK HOTDOG, DEFENDANTS-APPELLANTS, AND ADMINISTRATOR OF SMALL BUSINESS ADMINISTRATION, HOROAPH CO., L.L.C. T/A DAIRY KING, GIFTED SARA, WIZARD WORLD, INC., SPECIALTY MERCHANDISE ASSOCIATION, FUNHOUSE, AND CLUB 115, DEFENDANTS.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). There are two issues presented in this appeal. First, whether the trial court erred by not including as part of the landmass of property taken by plaintiff, through the power of eminent domain, approximately 225 feet of dry land added to the shoreline as the result of a government-funded beach replenishment program. Second, whether the trial court erred in not overturning the verdict of the jury, which concluded that defendants were not entitled to additional compensation for the property's furnishings, fixtures, and equipment.

In 1996, the City of Long Branch (City) passed an ordinance adopting a redevelopment plan for areas of beachfront property in the municipality. As part of the redevelopment project, the City sought to acquire oceanfront property, including commercial property owned by defendants Jui Yung Liu and Elizabeth Liu. The Lius' property contained a wood deck and building supported by pilings. Inside the building, the Lius ran a number of businesses, including restaurants. The Lius rejected the City's offer to purchase the property for $900,000. Consequently, on May 14, 2001, the City filed a complaint to take the Lius' property through the power of eminent domain. In the complaint, the City described the property conveyed to the Lius in a 1977 deed. By the time the City initiated its condemnation action, however, the Lius' beachfront had increased by more than two acres as a result of a multi-million dollar beach replenishment program financed by the City, State, and federal government.

The Lius moved to amend the City's complaint describing their property to account for the increase in the shoreline's landmass resulting from the beach replenishment project, claiming that they should be compensated for that land. The Honorable Robert O'Hagan, J.S.C., denied both the Lius' motion to amend the complaint's description of the property and the motion for reconsideration. In a written opinion, Judge O'Hagan concluded -- through the application of common-law principles -- that the increased landmass seaward of the mean high water mark designated in the Lius' 1977 deed, created by the government-funded beach replenishment program, belonged to the people of the State of New Jersey, not the Lius. He also recognized that the State does not lose title to the dry land added to a beach as the result of an avulsion -- "a sudden . . . addition to land caused by either natural or manmade force."

At the trial, the City of Long Branch presented an appraiser who testified that the fair market value of the Lius' property was $927,000 as of the date the City filed its condemnation complaint. That appraisal included the value of the property's furnishings, fixtures, and equipment (FF&E). The City submitted the report of an expert on the appraisal of furnishings, fixtures, and equipment, who valued the Lius' FF&E at $19,200. The Lius called their own expert who valued the contents of the Lius' restaurants at $176,400. Another expert for the Lius stated that the fair market value of the boardwalk property -- with $175,000 of FF&E -- was $2,855.000.

In addition to examining pictures of the Lius' building, the jury viewed a videotaped walkthrough of the property. The video was taken about two months after the Lius moved from the building. At the time of the video, the windows were boarded up, broken glass was on the ground, items appeared to have been removed, and there was evidence of vandalism. The jury also viewed numerous color photographs of the furnishings, fixtures, and equipment submitted by the Lius. In its verdict, the jury determined that a fair and just value of the Lius' property, as of May 14, 2001, was $1,450,000. On the verdict sheet, the jury stated that "the building on the Liu property and the various [FF&E] therein form a single functional unit." On the same verdict sheet, the jury answered that "a reasonably willing purchaser of the Liu property" would not "pay substantially more for that property with the equipment ('FF&E') in place." Based on those answers, the jury awarded the Lius no compensation for the FF&E.

The Lius moved for a new trial or additur, claiming that the jury's failure to award compensation for the FF&E was against the weight of the evidence. The Lius also claimed that the erroneous admission of the videotape denied them a fair trial. The trial court denied the motion, characterizing the case as a battle of the experts in which the jury had the final say. The court found nothing in the jury's award that was "plainly wrong or shocking to the conscience."

In an unpublished opinion, the Appellate Division affirmed the trial court's ruling on the shoreline issue, but on different grounds. The appellate panel declined to "delve into the distinctions drawn by the common law" between an accretion and avulsion. Instead, the panel resolved that "no policy justification" would permit the Lius to reap a private monetary benefit -- an enhanced valuation of their property in a condemnation action -- as a result of a public agency spending public funds for a restoration project that increased the area of dry land on the beach.

The Appellate Division also affirmed the trial court's denial of the Lius' motion for a new trial or, alternatively, for additur. The appellate panel declined to "second guess" the jury's verdict that a reasonably willing purchaser would not have paid substantially more for the property with the FF&E in place. The panel found that the jury was properly instructed. The panel further concluded that the trial court did not abuse its discretion in admitting the video into evidence and that the Lius could not have suffered prejudice from the admission of the video because, in any event, the evidence did not support an award for FF&E.

The Supreme Court granted the Lius' petition for certification on the shoreline and the furnishings, fixtures, and equipment issues. The Court also granted amicus curiae status to several entities.

HELD: In this eminent domain action, the trial court properly determined that the expanded dry beach (previously tidally flowed) that was produced by the government-funded beach replenishment program fell within the public trust doctrine and was not the property of the upland owners, the Lius. Therefore, the Lius were not entitled to compensation for property they did not own. In addition, the jury determination that a reasonably willing purchaser would not have paid substantially more for the property with the furnishings, fixtures, and equipment was not a miscarriage of justice. The Court rejects the Lius' contention that they did not receive just compensation for their property.

1. The legal principle that the State holds "ownership, dominion and sovereignty" over tidally flowed lands "in trust for the people" traces its origins to Roman jurisprudence. The public trust doctrine was passed down to the common law of England, where the king -- the sovereign -- possessed title to tidally flowed lands for the benefit of all people. After the American Revolution, title to tidal lands in New Jersey transferred from the king to the State, where sovereignty vested in the people. Generally, the State of New Jersey "owns in fee simple all lands that are flowed by the tide up to the high-water line or mark," O'Neill v. State Highway Dep't, 50 N.J. 307, 323 (1967), and the owner of oceanfront property holds title to the property upland of the high water mark, Borough of Wildwood Crest v. Masciarella, 51 N.J. 352, 357 (1968). The shoreline to the ocean, however, is in a constant state of flux. The ever changing nature of the shoreline raises questions concerning property ownership when, by natural or artificial means, sand is either added to or taken from a beach. The common law has developed a set of principles that govern the property rights of the upland owner and the State to tidally flowed lands when events alter the shoreline. (Pp. 9-12)

2. The mean high water mark, generally, is the boundary line that divides private ownership of the dry beach and public ownership of tidally flowed lands. That boundary line fluctuates over time through the processes of accretion, erosion, and avulsion. Unlike accretion and erosion, which happen "gradually and imperceptibly," an avulsion produces a sudden gain or loss of shoreline and does not result in a shifting of the property line. The prior mean high water mark remains the demarcation line between the property rights of the oceanfront owner and the State. Moreover, the law, generally, makes no distinction between whether an accretion or avulsion is the product of natural forces or manmade efforts. The common-law doctrines of accretion, erosion, and avulsion have long been a part of New Jersey's jurisprudence. Owners of littoral property, the State, and the public have had reason to rely on those well-settled rules governing title to land that borders the sea. The Court will not undermine the stability of that carefully developed common law by now crafting a new set of rules of the game. (Pp. 12-20)

3. The Court will not adopt a free-standing concept of "natural equity" as a basis for giving oceanfront owners an indefeasible right of direct contact with the water. That approach is untethered to traditional common-law principles governing littoral property -- in particular, the doctrine of avulsion -- and would be contrary to the public trust doctrine. Moreover, the doctrine of avulsion itself is founded on principles of equity. The beach replenishment program -- which the Court determines constituted an avulsion -- erected a buffer protecting the Lius' property, and therefore the Lius were a direct beneficiary of the replenishment program. In the end, however, under the public trust doctrine, the people of New Jersey are the beneficiaries. Because the old mean high water mark remains the boundary line between private and public property, there was no true loss of land to the Lius or gain to the State. In the context of this eminent domain action, the Lius cannot be recompensed for the taking of property they never owned. Therefore, the trial court properly denied the Lius' motion to amend the City's complaint describing the Lius' property as set forth in the 1977 deed. Last, the Court parts with the Appellate Division, which declined to apply the doctrines of avulsion and accretion and instead decided the case on public policy grounds. (Pp. 20-26)

4. No one disputes that furnishings, fixtures, and equipment that are a functional unit of a building condemned in an eminent domain action are compensable. Article I, Paragraph 20 of the New Jersey Constitution provides: "Private property shall not be taken for public use without just compensation." Moreover, the Court held in State v. Gallant, 42 N.J. 583, 590 (1964), that where industrial machinery constitutes "a functional unit" in a condemned building and "the difference between the value of the building with such articles and without them [] is substantial, compensation for the taking should reflect that enhanced value." The trial court in this case instructed the jury consistent with Gallant and Model Jury Charge (Civil) § 9.13 (Condemnation -- Machinery) (April 1996). The jury had before it competing valuations. It is obvious that the jury made an independent calculation of the value of the Lius' property ($1,450,000), rejecting the appraisals given by both the City's expert and the Lius' expert. A motion for a new trial or, alternatively, an additur, based on a claim that a jury award was against the weight of the evidence, should not be granted unless it "clearly and convincingly appears" that the award was so deficient that it constitutes a "miscarriage of justice." See Baxter v. Fairmont Food Co., 74 N.J. 588, 596 (1977) (quoting R. 4:49-1(a)). On a new trial motion, after a six-person jury has returned a verdict, the judge does not sit as a seventh juror, and, on appeal, this Court does not sit as the juror of last resort. By the standard described, the trial court did not err in denying the Lius' motion for a new trial. (Pp. 31-38)

The judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, WALLACE, RIVERA-SOTO, and HOENS join in JUSTICE ALBIN's opinion.

The opinion of the court was delivered by: Justice Albin

Argued December 2, 2009

In this appeal, defendants Jui Yung Liu (through his heir or heirs)*fn1 and Elizabeth Liu, his wife, claim that they did not receive just compensation for their oceanfront property, which was taken by plaintiff City of Long Branch through its power of eminent domain. First, in a pretrial ruling, the trial court rejected the Lius' contention that the value of their property should have been increased to reflect the approximately 225 feet of dry land added to the shoreline of their property as the result of a government-funded beach replenishment program. The Appellate Division affirmed. We do so too. Under the public trust doctrine, and long-standing common-law principles, the land seaward of the mean high water mark belongs to the people of this State.*fn2 The rapid infusion of sand to the beach by the government-funded project, extending the dry land seaward from that earlier mean high water mark, did not result in a change in title to the formerly submerged land. That new dry beachfront -- previously lapped by the ocean's tides -- remained in trust for the benefit of the people of New Jersey. Accordingly, the Lius were not entitled to be compensated for land that they never owned.

Second, at the conclusion of the condemnation trial to determine the value of the Lius' property, the jury found that "a reasonably willing purchaser" would not have paid substantially more for the property because of the property's furnishings, fixtures, and equipment. The trial court denied the Lius' motion for a new trial, maintaining that the verdict was not a miscarriage of justice. The Appellate Division affirmed on this issue as well. Here, the jury was properly charged on the law and had the opportunity to weigh and evaluate the evidence and credibility of the witnesses. On that basis, we agree that the verdict valuing the Lius' property is unassailable and must be upheld.

This opinion proceeds in two parts. On each issue, we address separately the relevant facts and trial and appellate court rulings. We first determine whether the trial court erred by not including as part of the landmass of the condemned property the increased acreage of shoreline resulting from the beach replenishment project. We then turn to whether the trial court erred in not overturning the verdict of the jury, which concluded that the Lius were not entitled to additional compensation for the property's furnishings, fixtures, and equipment.

I.

In 1996, the City of Long Branch (City) passed an ordinance adopting a redevelopment plan for areas of beachfront property in the municipality. As part of the redevelopment project, the City sought to acquire oceanfront property, including commercial property located at 115 Ocean Avenue owned by the Lius. The Lius' property contained a wood deck and building supported by pilings. Inside the building, the Lius ran a number of businesses, such as Jimmy's Famous Boardwalk Hotdog, The Café, and Club 115, and leased space to other commercial tenants, such as Wizard World Arcade.

The Lius rejected the City's offer to purchase the property for $900,000. Consequently, on May 14, 2001, the City filed a complaint to take the Lius' property through the power of eminent domain. In the complaint, the City described by metes and bounds the property conveyed to the Lius in a 1977 deed. The easternmost part of the Lius' property extended to the 1977 mean high water mark of the Atlantic Ocean. However, by the time the City initiated its condemnation action in May 2001, the Lius' beachfront had increased by more than two acres from the description given in the 1977 deed, and the prior mean high water mark was approximately 225 feet inland.*fn3

The expanded landmass was the product of a beach replenishment program undertaken in the mid- to late 1990's. The federal, state, and a number of municipal governments partnered in a multi-million dollar beach replenishment program to restore and preserve the shoreline of various Jersey shore communities. The City of Long Branch contributed over 1.3 million dollars in municipal funds to the beach replenishment program; overall, the federal government expended 27 million dollars and the State 10 million dollars on the program. The United States Army Corps of Engineers spearheaded the project, using methods such as pumping sand from beneath the ocean's surface and throwing it onto the shoreline, thus extending the length of dry land on the beach. The dumping of sand off the shore of the Lius' property occurred over an approximately two-week period. That two-week beach replenishment program produced approximately 225 additional feet of dry land ...


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