New Jersey Supreme Court Requires Proof of Diminution of Market Value to Establish Damages

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In Kornbleuth v. Westover, 2020 N.J. LEXIS 298, the Supreme Court of New Jersey considered whether the trail court properly dismissed the plaintiffs’ trespass claim against their neighbors for failing to offer evidence of diminution of the market value of their property. The Supreme Court upheld the dismissal, finding that the plaintiffs’ damages could not be determined, as a matter of law, because they did not offer evidence of the diminution of market value of their property as a result of the trespass. Although the plaintiffs presented evidence of the cost to restore the property, the court held that determining the applicable measure of damages for a trespass claim is dependent on the diminution of market value and whether or not the restoration costs are proportionate to that value.

In Kornbleuth, the defendants, Thomas and Betsy Westover, hired contractors to remove bamboo from their backyard. The Westovers’ property was adjacent to and shared a 100-foot joint property line with the plaintiffs’ property. The joint property line contained a bamboo barrier that was twenty feet tall and thirty feet wide. The plaintiffs, Joseph and Donna Kornbleuth, referred to this barrier as a “bamboo fence” which provided complete visual privacy from the defendants’ property. The Westovers’ contractors removed all of the bamboo along the property line.

The plaintiffs filed a complaint against the Westovers, alleging trespass and conversion, claiming that the removal of the bamboo interfered with their privacy and aesthetic interests. The plaintiffs sought damages to restore a similar bamboo fence.

In discovery, the plaintiffs submitted expert reports by a landscape architect that identified restoration costs between $17,000 and $41,000. At the end of discovery, the defendants moved for summary judgment on grounds that the plaintiffs failed to produce evidence of the diminution in the property’s market value, which is the applicable measure of damages. The plaintiffs conceded that they had not produced evidence of the diminution in the property’s market value because, instead, they sought to recover restoration costs. The defendants argued that without proving that the lost bamboo held unique personal value, restoration (or replacement) costs are not recoverable under New Jersey law. The trial court granted the defendants’ summary judgment motion, and denied the plaintiffs’ motion for reconsideration. The Appellate Division upheld the trial court’s decision. The plaintiffs appealed to the New Jersey Supreme Court.

The Supreme Court began its review by considering section 929 of the Restatement (Second) of Torts, which relates to damages for trespass to land. This section states that for damages related to trespass which do not amount to a total destruction, the measure of damage is either the diminution of market value as a result of the alleged damage, or the cost of restoration. However, commentary to that section explains that if the cost of restoration is disproportionate to the diminution in the value of the land caused by the trespass, then the only appropriate measure is diminution of market value, absent “a reason personal to the owner for restoring the original condition.” The court referred to the personal relationship with the property as a “peculiar value.”

The court did not define what qualifies for an award of peculiar value damages, but held that the insured’s general interest in privacy and assertions of aesthetic value did not qualify. In addition, the court noted that reasonableness is the “upper limit of damages” and that even if the plaintiffs established that the property had a peculiar value, evidence of diminution of market value was still necessary to determine the overall reasonableness of the restoration costs sought. The court held that without any evidence of the diminution of market value, a trier of fact would be “legally disabled from determining whether restoration costs were a reasonable measure of damages.” Thus, the court upheld the trial court’s decision granting the defendants’ summary judgment motion and denying the plaintiffs’ motion for reconsideration.

The Kornbleuth case establishes that, in New Jersey, a plaintiff asserting property damage for a trespass claim must introduce evidence of the diminution of market value of the property, even if the plaintiff seeks to recover restoration costs. This case also suggests that even if a plaintiff establishes a peculiar value for damaged property, a court may still consider whether restoration costs are disproportionate to the diminution of market value in determining the reasonableness of the restoration costs.

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