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Calnan v. Block 1067

A-4061-00T2 (N.J. Super. App. Div. 2002) (Unpublished)

NUISANCE; DAMAGES— Where a property owner is damaged by a neighbor’s nuisance, but the price paid for its property already took into account the adjacent nuisance, the “savings” should be deducted from any claim for damages that the owner has against its neighbor.

The owner of an historic building successfully sued its neighboring property owner on the basis that the adjacent owner had failed to maintain its own property in accordance with the local building code and the inattention constituted the maintenance of a private nuisance. The Court ordered equitable relief, including allowing the owner of the historic structure to enter upon the neighboring property to perform improvements and repairs, at the cost of the neighboring property owner. When it came to awarding damages, however, the lower court, although finding that the delinquent property owner had maintained a private nuisance that interfered with the historic property owner’s reasonable enjoyment of its property, rejected any claim based on lost profits. “Generally, lost profits are recognized as a proper measure of damages so long as they are ‘capable of being estimated with a reasonable degree of certainty.’ ... Evidence of lost profits must be ‘based on sound fact and not mere opinion alone.’” The Appellate Division came to a different conclusion. The lower court had found that the owner of the historic structure purchased the property at a $55,000 discount below market value because of the poor condition of the adjacent property. In fact, the lower court stated, “[i]t is debatable whether the $55,000 should be discounted as a direct sum or rather should it be treated as a percentage.” The lower court also found a problem in determining the market value of the affected property because it would depend on the level of improvement of the adjacent distressed property. The lower court found that the delinquent property owner’s “obligation [was] only to maintain his property at a reasonable level, not to match the [historic property] step by step in their efforts of improvement.” The Appellate Division held that the lower court was correct in finding that the delinquent property owner “maintained a private nuisance by participating in neglectful and wasteful conduct by failing to make necessary repairs, resulting in structural defects, water leaks, and rubbish and waste throughout the premises.” It then proceeded to point out that “[p]roperty damage[s] recoverable for interference with the use and enjoyment of a plaintiff’s land include ‘(a) the difference between the value of the land before the harm and the value after the harm, or at [plaintiff’s] election in an appropriate case, the cost of restoration that has been or may be reasonably incurred; [and] (b) the loss of use of the land.’” Consequently, the Court found that the lower court mistakenly required the owner of the historic property to prove the condition in which the delinquent owner “should be expected to maintain his property in order to establish damages for loss of value. ... A plaintiff should not be made to lose the natural, anticipated appreciation in a real estate investment because of a neighbor’s continuing failure to abate a private nuisance, even though the nuisance was present at the time the plaintiff purchased the property. The difference between the value of the land before the harm and the value after the harm would necessarily have to take into consideration any discount received by a plaintiff as a result of purchasing the property at less than market value because of the existence of the nuisance. In other words, the difference between the amount paid and the market value at the time of purchase should be deducted from the loss in market value resulting from the existence of the nuisance.”

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