By DONALD WITTKOWSKI
City Council met in closed session Monday to discuss a possible settlement in a long-running legal saga pitting Ocean City against two brothers who were awarded nearly $17.9 million for property that the municipality seized using its power of eminent domain.
Citing pending litigation, Council President Pete Madden, Mayor Jay Gillian and City Solicitor Dorothy McCrosson all declined to comment after the nearly hour-long executive session during a special meeting called by the governing to discuss the legal battle.
Madden said Council would eventually disclose details of the closed session to the public “when it’s the appropriate time.”
The large swath of land is bordered by 16th Street, 17th Street, Haven Avenue and Simpson Avenue. It is currently undergoing environment cleanup because of contamination suspected to be from a former dry-cleaning business that was once located on the property.
The city acquired the property in 2021 from brothers Jerry and Harry Klause by using its power of eminent domain, but a court battle has continued over the value of the land. In October, a jury decided that the city should pay Klause Enterprises nearly $17.9 million for the land, far more than what the city wanted to pay.
Jerry Klause sat in Council chambers Monday while the governing body met behind closed doors. He was there to see whether the city would take any action in the litigation, including the possibility of a settlement with Klause Enterprises. Council, however, took no action after emerging from closed session.
“My comment is, the jury spoke for my brother and I,” Klause said, declining to discuss the matter further.
Although city officials declined to comment, a Council resolution describing the purpose of the closed session revealed that the city has been in settlement discussions with representatives of Klause Enterprises.
“Recent discussions with representatives of Klause Enterprises have raised the possibility of resolving the litigation, provided agreement can be reached prior to December 15, 2023,” according to the resolution.
December 15 is a crucial date because that is when the city is scheduled to return to court on its motion seeking a new trial in the dispute with the Klause brothers over the price of the land. Now, both sides are exploring the possibility of a settlement to end the long-running litigation.
“Resolving the matter could be in the best interests of the public and foregoing the opportunity to do so could result in substantial harm to the public interest,” the Council resolution says.
The city fought for over two years to acquire the privately owned Klause Enterprises land, which once served as the location for a car dealership. The city’s goal was to preserve and protect the property from densely packed housing development.
Before the city stepped in to acquire the property, the Klause brothers had proposed building 22 single-family homes on the site.
After Ocean City and the Klause brothers could not agree on a price for the land, the city decided to exercise its power of eminent domain to seize the property. New Jersey’s eminent domain law requires government bodies to pay “just compensation,” or fair market value, to the private property owner.
The dispute over the value of the land went to trial this year, culminating with a jury’s ruling on Oct. 17 that the property was worth nearly $17.9 million – and ordering the city to pay that amount to the Klause brothers.
Under the city’s ownership, Mayor Gillian has proposed preserving the property for open space and possibly using a portion of it for public parking to support the Ocean City Community Center, a municipal complex that attracts hundreds of thousands of visitors each year. The complex includes the Free Public Library, the Arts Center, the Aquatic & Fitness Center, the Historical Museum and the Seniors Center.
According to the city’s plans, the property would help to create a corridor of public land stretching from 15th to 20th streets. The property would connect the city’s Emil Palmer Park, the Community Center and other public facilities within a five-block area.
