SYLLABUS
(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).
Klumpp v. Borough of Avalon (A-49-09)
Argued March 22, 2010 -- Decided June 22, 2010
LaVecchia, J., writing for a unanimous Court.
In the wake of the 1962 Atlantic nor'easter storm that devastated much of the New Jersey shore, the Borough of Avalon built a protective dune on property owned by plaintiffs Edward and Nancy Klumpp. Plaintiffs' appeal challenges the Borough's failure to adhere to procedural requirements in executing the taking of their private beachfront property and raises the question whether they should be denied relief on the basis that their claim is out of time.
In 1960, plaintiffs purchased oceanfront property in the Borough and built a summer home. In March 1962, "The Great Atlantic Storm" struck the coastline, causing flooding and destroying property, including plaintiffs' home. Plaintiffs did not return for many years. In August 1962, pursuant to a legislative Act authorizing municipalities to take immediate emergency action, the Borough adopted resolutions allowing it to take possession of property to build protective sand dunes without first paying compensation. The resolutions noted that the Borough could not deny a person's right to just compensation if the Borough's occupation of the property amounted to a taking. The dune project included constructing a dune on plaintiffs' property, limiting access to the property, and constructing a footpath across it for public beach access. With no information from the Borough to the contrary, plaintiffs believed they remained the property's rightful owners. The official town map designated it as private. After the dune was completed in 1965, the Borough adopted ordinances restricting the use of beachfront areas, including plaintiffs' property. One ordinance vacated the public right of access to a portion of 75th Street, which had provided access to the property. Another prohibited construction of residential structures.
Notwithstanding its regulation of development, the Borough maintained throughout its pre-litigation dealings with plaintiffs that it had not effectuated a taking of their property, and it rejected plaintiffs' claims that they were entitled to compensation. Indeed, dating back to 1962, plaintiffs received tax bills, which they paid until litigation commenced. It was not until after plaintiffs filed suit that the Borough conceded a taking had occurred. Plaintiffs sought a declaratory judgment that they had a right of access and compelling the Borough to provide them access, which they needed to seek approval from the Department of Environmental Protection to build a home. The Borough argued that it had gained title to the property through adverse possession, claiming that it had been in actual possession since 1962, when it began to construct the dune, and that the statute of limitations barred plaintiffs' claim. In 2005, in support of its cross-motion for summary judgment, the Borough argued for the first time that its 1962 resolutions had effectuated a taking of plaintiffs' property.
The trial court granted summary judgment to the Borough and dismissed plaintiffs' complaint, without prejudice to their filing an inverse condemnation claim. The court found that the Borough possessed the property since 1962, even though plaintiffs remained record title owners. The Appellate Division reversed and remanded for further proceedings, stating it was not confident on the record that the Borough had been in continuous possession since the early 1960s. On remand, plaintiffs amended their complaint to seek the Borough's ejectment, contending they were the rightful owners and entitled to access. The Borough sought a judgment declaring that: (1) it had effectuated a taking in 1962; (2) plaintiffs failed to take action within six years to recover compensation, their sole remedy; and (3) the Borough is the legal and equitable title owner. The Borough also reasserted its original counterclaims, including adverse possession. At the remand hearing, the Borough admitted that a taking occurred in 1962; maintained that plaintiffs had no right to access the property; and conceded that, prior to the assertion of its counterclaim, it never before had alleged that it owned plaintiffs' property.
In deciding the remand issues, the trial court noted that it relied on facts from Raab v. Borough of Avalon, 392 N.J. Super. 499 (App. Div.), certif. denied, 192 N.J. 475 (2007). The court entered judgment for the Borough and dismissed plaintiffs' claims for access and ejectment, determining that plaintiffs retained only "bare legal title" to the property. Because the court determined that the Borough had exclusive possession and control of the property without ever having sought plaintiffs' permission to occupy the property, the court found that its conduct constituted a taking as of 1962. The court further found that the Borough's contradictory actions over the years had reinforced plaintiffs' belief that they maintained an ownership interest. Nevertheless, the court determined that plaintiffs were aware that the Borough had used its property as part of the dune protection program and that they essentially abandoned any effort to possess or use it after 1962. Because plaintiffs never brought an action seeking compensation, the court found it unnecessary to address application of the statute of limitations for a claim seeking compensation for a regulatory or possessory taking. The Appellate Division affirmed, stating that inverse condemnation occurred and the Borough is the true owner. The panel explained that inverse condemnation provides a remedy to ensure that an owner whose land was taken de facto receives just compensation. The panel concluded that plaintiffs had "bare legal title" and nothing more; and that once they became aware of the Borough's physical occupation of their property, the burden shifted to them to seek compensation.
The Court granted plaintiffs' petition for certification. 200 N.J. 503 (2009).
HELD: Ordinarily, the relief available to a property holder from a governmental taking accomplished without adherence to the Eminent Domain Act's requirements would be to pursue an inverse condemnation action within the six-year statute of limitations period under N.J.S.A. 2A:14-1. On the unique facts of this case, however, equity demands that plaintiffs be allowed the opportunity to amend their complaint to add a claim for inverse condemnation to pursue valuation of their property at the time of the taking that occurred in or around 1965, when the dune was constructed on their property.
1. The federal and State Constitutions protect against a governmental taking of private property without just compensation. To accomplish a physical taking, the government may enter the land without authorization or exercise its power of eminent domain through a condemnation proceeding under the Eminent Domain Act. If the government seizes property without first bringing a condemnation proceeding, the burden shifts to the landowner to bring an "inverse condemnation" action, a concept that recognizes that the landowner need not wait in vain for government compensation. (pp. 17-20)
2. Inverse condemnation fits comfortably within N.J.S.A. 2A:14-1, which provides a six-year statute of limitations for actions for trespass and injuries to real property. A six-year limitations period is consistent with that of federal and other states' takings jurisprudence. Also, in contrast to our thirty- and sixty-year periods for adverse possession, a limited timeframe for inverse condemnation advances the public interest in providing fair compensation for the government's taking. The closer in time a landowner commences the action, the more precise the valuation. In sum, where a governmental entity takes property for public use and provides adequate notice through physical or regulatory action, application of N.J.S.A. 2A:14-1's six-year statute of limitations is reasonable, promotes judicial efficiency and uniformity, and diminishes the uncertainty of ownership and potential litigation. The cause of action for inverse condemnation begins to accrue on the date the landowner becomes aware or, through the exercise of reasonable diligence, should have become aware, that he or she has been deprived of all reasonably beneficial use. (pp. 20-26)
3. Application of the six-year limitations period does not satisfactorily resolve this case. In Raab, which the trial court analogized to this case, the Borough directly notified the plaintiffs that, through a property-exchange program, any property taken as part of the dune construction project could be exchanged for other property. As a result, the Appellate Division held that the Raab plaintiffs failed to bring their inverse condemnation claim within the six-year period. Here, in contrast, there is no evidence that the Borough informed plaintiffs of the property-exchange program and no explanation why they were not included. Until 2005, the Borough maintained that no taking occurred. It was only after plaintiffs filed suit that the Borough sought a declaration for title to the property by adverse possession and claimed that the statute of limitations barred plaintiffs' claims. Because of the Borough's position, plaintiffs understandably demanded access to their property and filed claims for trespass and ejectment. After finally conceding, in 2005, that a taking occurred forty-three years earlier, the Borough now attempts to hide behind the statute of limitations to claim that plaintiffs have no right to an inverse condemnation action. In these circumstances and in the interest of justice and fairness, plaintiffs must be afforded a remedy for the appropriation of their property for public use. (pp. 26-28)
4. The Court agrees with the trial court's conclusion, affirmed by the Appellate Division, that a physical taking occurred in respect of plaintiffs' property no later than in 1965. After the 1962 storm, the Borough began the dune project that resulted in the construction of a protective dune on a portion of plaintiffs' property. The Borough placed fences to limit public access and constructed a pathway for access from the vacated street to the beach. Although a physical invasion and taking of property ought to be notice sufficient to awaken property owners to protect their interests, government should also provide some other form of notice to affected property owners before, and surely after, a physical taking. (pp. 29-30)
5. Here, instead of assuming responsibility for its taking of plaintiffs' property, the Borough skirted its obligation to answer for its action. Tax bills were sent to plaintiffs as owners of this property; the Borough designated the property as private on official town maps; and the Borough took various contradictory positions, even when faced by assertions that it had taken plaintiffs' property through the erection of a dune with its immediate use restrictions. Thus, here there are multiple reasons for concluding against strict enforcement of the limitations period for filing an inverse condemnation action. Government should not be permitted to invoke a legal theory only to abandon it later in favor of another that time-bars an otherwise valid claim. Here, it would be unjust to allow this action to end with a judgment both depriving plaintiffs of their property and refusing them any compensation for the taking. Equity demands that plaintiffs be allowed the opportunity to amend their complaint to include a claim for inverse condemnation to seek compensation from the Borough. (pp. 31-33)
The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART and the matter is REMANDED to the trial court for further proceedings consistent with the Court's opinion.
CHIEF JUSTICE RABNER and JUSTICES LONG, ALBIN, WALLACE, RIVERA-SOTO and HOENS join in JUSTICE LaVECCHIA's opinion.