(Adds details about homeowners, comments from lawyer)
By Jonathan Stempel
July 8 (Reuters) - Less than a year after Hurricane Sandy devastated the New Jersey shore, the state's highest court made it easier for cities and towns to avoid paying costly compensation to homeowners whose water views have been blocked by the building of sand dunes.
The New Jersey Supreme Court on Monday overturned a $375,000 jury award to an elderly couple who complained that a dune built before the storm to help protect their home had blocked their panoramic beachfront and ocean view.
A unanimous five-judge panel said the jury should have been allowed to consider the benefits of the 22-foot (6.7-meter) high dune as well as the loss of value to Harvey and Phyllis Karan's property in the Borough of Harvey Cedars.
In ordering a new trial, Justice Barry Albin said the Karans were not entitled to "a windfall at the public's expense" that could result if they were compensated for their lost view, while ignoring how the dune could help save their home.
The Karans had rejected a $300 offer of compensation for the land taken and view lost, which their appraiser said reduced their property's value by about $500,000.
Peter Wegener, a lawyer for the Karans, said he was "disappointed but not entirely surprised" at the decision.
"It would appear that the court was influenced by a desire to reach a result that was more politically acceptable than indicated by the evidence in the original case," he said.
Wegener said a settlement remains possible. "Our clients have always been willing to settle, but not for $300," he said.
New Jersey has been trying to protect and rebuild its 127-mile (204-km) coastline since Sandy struck last Oct. 29.
The storm destroyed or damaged hundreds of thousands of homes, leveled or washed away boardwalks and theme-park rides, and cost an estimated $37 billion statewide.
DEMON THAT PEOPLE LIVE WITH
Reconstruction could stall, however, if enough homeowners claim that the work impeded their views or else constituted a "taking" of their property without just compensation.
New Jersey Governor Chris Christie, a Republican seeking re-election this year, has said the benefits of building dunes outweigh concerns of "knucklehead" homeowners more concerned with their own interests.
Property assessors valued the Karans' home at $1.9 million before Harvey Cedars in 2008 began obtaining easements, either with homeowners' consent or through eminent domain, to protect dozens of beachfront properties.
The easement covered more than one-fourth of the Long Beach Island property, court papers show, and the 22-foot-tall dune was built to replace a dune that was 16 feet (4.9 meters) tall.
"A willing purchaser of beachfront property would obviously value the view and proximity to the ocean," Albin wrote. "But it is also likely that a rational purchaser would place a value on a protective barrier that shielded his property from partial or total destruction."
Harvey Cedars is roughly 65 miles (105 km) east of Philadelphia.
"We're very pleased with the decision," Harvey Cedars Mayor Jonathan Oldham said in a telephone interview. "There would not be any replenishment (of dunes) if homeowners could receive large awards. Hurricanes are a demon that we live with, and not to be able to protect against them is very short-sighted." (Editing by Ellen Wulfhorst, Maureen Bavdek and Leslie Adler)