TRENTON — In a decision that could have far-reaching implications for beach replenishment efforts along the Jersey shore, a state appeals court panel Monday upheld a hefty award for a Harvey Cedars couple who contended that building dunes to restore the beach diminished the value of their oceanfront home.

The $375,000 jury award to Harvey and Phyllis Karan is the largest of all the cases where beachfront property owners clashed with officials in the affluent Ocean County borough on Long Beach Island and likely could mean trouble for future beach replenishment projects, experts said.

"There is a very strong likelihood this will end beach replenishment as we know it in the state," said Lawrence Shapiro, the Ocean Township attorney representing Harvey Cedars. "People will see a money grab. People may say `I’m not going to give an easement because I could get money.’"

In dire need of wider beaches for storm protection, Harvey Cedars joined with the state Department of Environmental Protection and the U.S. Army Corps of Engineers for a $25 million beach replenishment project that built 22-foot high dunes on the oceanfront in 2009 and 2010.

As part of the project, Harvey Cedars was required to obtain 82 easements from the oceanfront homeowners. Shapiro said the borough had trouble getting most of the easements after offering homeowners $300 each. The borough moved to condemn 15 of the easements, prompting three unresolved court cases, Shapiro said. About five of the condemnation cases settled for a "substantial" amount, in the range of $150,000 to $160,000, Shapiro and Mayor Jonathan Oldham said.

The Karans said they lost value in their home, which is assessed at $1.7 million, because the dunes block most of their "formerly spectacular ocean view." They wanted $500,000; the borough’s real estate expert, as he did in the other cases, said the loss was worth $300.

Harvey Cedars, a town with 337 year-round residents and a $2.9 million budget, set aside $1.1 million for its share of the beach replenishment project but would be on the hook for another $500,000 to pay for the easements, Shapiro said.

"To try to protect people’s homes makes sense to me, but to give an exorbitant payout does not," Oldham said. The borough has not decided whether to ask the state Supreme Court to hear the case, officials said.

During the trial last year, Superior Court Judge E. David Millard would not allow the borough to argue that the oceanfront homeowners received a "special benefit" from the dunes, which were designed to protect the beach and curtail flooding.

Shapiro tried to argue the oceanfront homeowners particularly benefited from frontline storm protection by the new dunes. But attorneys for homeowners contended the dunes created the same benefit for all the borough’s residents, not just those living on the oceanfront.

"The dune is not a special benefit. It is a benefit for the entire island," said William Ward, an attorney who represented oceanfront homeowner Martin Flumenbaum, who settled with the borough in 2010.

Because of the Karan case, neighboring Long Beach Township is considering bringing any contested easement cases to federal court because that court recognizes special benefits, said township mayor Joseph Mancini.

In the Loveladies and North Beach sections of town, where the lots are bigger than those in Harvey Cedars, jury awards in those cases would likely be higher than the Karans’, he said.

If the Karan case sets precedent, the town won’t be able to afford to pay an average $300,000 for each of the 200 easements it needs, Mancini said.

"Sixty million dollars in awards when you only have a $22 million budget," he said. "The math doesn’t work."

Related coverage:

• N.J. will receive $24M to replenish coastline, prevent future flooding

