TRENTON - When their Long Beach Island town built a dune system a few years ago, it blocked Harvey and Phyllis Karan's view of the ocean. They sued and won $375,000.

That very same dune saved the Karans' home during Hurricane Sandy last October, but a court battle spawned by the dispute lives on - and could have a major effect on efforts to protect the entire Jersey Shore from future storms.

The borough of Harvey Cedars appealed the case all the way to the New Jersey Supreme Court, which on Monday heard arguments about how oceanfront homeowners should be compensated for ocean views lost to dune projects.

The state wants a dune system in place along the entirety of its 127-mile coastline. But it needs permission from every oceanfront property owner to use a small portion of their land to erect the dune and maintain it. Christopher Porrino, director of the state law division, said 2,000 easements from homeowners are required for the project, with about half remaining unsigned.

At issue in the Karan case is whether the protective benefits of a dune project outweigh the detriment caused by lost ocean views. Gov. Chris Christie has repeatedly ridiculed homeowners' complaints about dunes blocking their views, and called the Karans and others in their circumstances "knuckleheads" during a recent public meeting on Long Beach Island.

"A house protected from destruction is more valuable than one that is not," Porrino told the justices on Monday.

Attorneys for Harvey Cedars said lower courts erred by refusing to let a jury consider the benefits that the dune project conveyed to the Karans, and instead let them consider only what the loss of their oceanfront view was worth. The town offered $300 in compensation for the lost view from a home worth close to $2 million.

"The jury really had one eye closed," said Lawrence Shapiro, one of the borough's lawyers.

David Apy, a lawyer for the Jersey Shore Partnership, which joined the case on the side of Harvey Cedars, said jurors "weren't allowed to consider something that everyone else would want to consider: How does this project help them?"

Peter Wegener, an attorney for the Karans, who are in their 80s, argued there was no financial data at the time that showed there was any financial benefit from having a dune system built between one's home and the ocean. That drew several rounds of skeptical questioning from three justices.

"The government spent millions of dollars to improve the beach in front of your clients' house," Justice Barry Albin said. "It increases the value of your clients' home drastically. All you want the jury to consider is the lost view. Is that what you think our concept of just compensation should be in the 21st century?"

Wegener said the view is a valuable commodity that figures prominently in the selling prices of homes near the beach.

"You're taking away the view where Mr. Karan used to sit and watch his grandchildren play, and he can no longer do that," Wegener said.

"Take away the dune, and you can take away the house, too," Albin responded.

Justice Anne Patterson said she could find no law anywhere on the books requiring juries not to consider the benefits that might come with a project requiring the use of eminent domain to acquire land.

The justices heard 90 minutes of argument on the case before adjourning. A decision could come in September, attorneys for Harvey Cedars estimated.

Mayor Jonathan Oldham was encouraged by the questions the justices asked, and by many of their comments in response to the answers they received.

"I'm looking for protection for the whole shore," he said after the hearing. "Harvey Cedars has already done our project, but at this point, no one is going to sign an easement if they can get $300,000 for holding out."

So far, nine Harvey Cedars homeowners have either settled or won court awards totaling near $1 million in dune compensation cases, forcing the borough to borrow money to cover the payments, the mayor said.

"There are some homeowners that have had their view altered," he said. "Yet they also received a great benefit. There were homeowners in Harvey Cedars that were not able to sell their homes before because there were no dunes; you couldn't put a towel on the sand in front of their homes because the waves were lapping at their pilings. Now they can sell them."