TRENTON - In a case with wide implications for Shore restoration following Hurricane Sandy, the state Supreme Court heard an appeal Monday of a $375,000 jury award to a Long Beach Island couple who said construction of a barrier dune in 2010 deprived them of their ocean view.

The Army Corps of Engineers built a 22-foot-high dune for storm protection in front of Phyllis and Harvey Karan's house after Harvey Cedars condemned a portion of their beach five years ago.

A Superior Court jury awarded the couple damages in 2011, finding that the dune construction, while benefiting many of the surrounding homeowners, had substantially diminished the value of the Karans' $1.9 million home.

Lawyers for both sides traded arguments for nearly two hours Monday over the question of whether the dune construction was a benefit since it protected the Karans' home from flooding.

The appellate division of Superior Court upheld the jury verdict in 2012, finding that the couple deserved substantial compensation.

"The project did not permit any new or more lucrative use of the property," the appellate court said, rejecting the idea that the Karans had received a special benefit. "Its highest and best use remained residential."

But some members of the Supreme Court on Monday seemed skeptical that there was a legal basis for the award.

"The government spent millions to increase the value of the home [with the dune construction], and you don't want the jury to consider that?" asked Justice Barry Albin. "You only want the jury to consider the loss of view. Should that be our standard of just compensation in the 21st century?"

Peter Wegener, the Karans' lawyer, said that to do otherwise would be unfair to his clients. The dune protection project, a series of barrier dunes along the oceanfront in Harvey Cedars, would benefit scores of homeowners farther from the beach than the Karans.

But without compensation for their lost view and portions of their beach, the Karans would, in effect, be forced to pay for a disproportionate share of the project, he said.

The case has drawn attention of local and senior state officials. Authorities are seeking easements up and down the Shore for flood protection projects, and in some places homeowners have declined. Harvey Cedars initially offered owners of beachfront homes about $300 each for portions of their beach where the dunes were to be built, and about 80 homeowners accepted. But the Karans and more than a dozen others declined.

In attendance in the courtroom Monday was Commissioner Bob Martin of the state Department of Environmental Protection, whose agency is deeply involved in Sandy restoration projects.

Martin said his department was concerned that the jury award, if left to stand, would greatly increase the cost of easements needed for the flood protection.

"This case is very important to us," Martin said.

Harvey Cedars' lawyer Lawrence Shapiro, who specializes in commercial law and condemnations, said his client simply was trying to persuade the court to require that juries in such cases weigh the positive effects of the barrier dune construction against the loss of value caused by the taking of property and the loss of view.

"What it comes down to is what does just compensation mean?" Shapiro said.

At a pre-trial hearing, a witness for Harvey Cedars testified that the dune construction would protect the Karans' home from Sandy-type flooding for 200 years or more. The witness, Benjamin Wise, a civil engineer with the Army Corps of Engineers, said the corps seeks evidence in advance of projects to establish that they will benefit nearby property owners.

In the Karans' case, however, he was unable to quantify that benefit, and the trial judge ruled that any evidence asserting that the dune construction created value for the Karans could not be heard by the jury.

Contact Chris Mondics at 215-313-3022 or cmondics@phillynews.com.