The town of Cape Elizabeth has won the first round of a legal dispute over waterfront access that has divided the Shore Acres neighborhood for years.

A judge ruled Monday that several residents of Pilot Point Road failed to prove that they own an undeveloped portion of Surf Side Avenue that runs along the rocky shore between their multimillion-dollar homes and Broad Cove.

The plaintiffs in the lawsuit filed in January 2018 are Imad and Hulda Khalidi, David and Kara Leopold, Andrew Sommer and Susan Ross, Stewart and Julie Wooden, and Pilot Point LLC. Each property is valued at $1 million to $2 million for tax purposes, according to town records.

Known as a paper street, Surf Side Avenue first appeared on a 1911 plan for the Shore Acres subdivision, but it was neither completed nor formally accepted by the town.

In their lawsuit, the property owners claim the town’s right to establish a public way on Surf Side Avenue has lapsed because they were allowed to encroach on the undeveloped street and “(exhibit) ownership in a manner inconsistent with a public way for a period exceeding twenty years.”

The complaint notes that the property owners have incorporated the paper street into their backyards, installing items such as a wooden deck, a brick patio, a fenced-in garden, a stone walkway, a brick stairway, an established hedgerow and an irrigation system on the narrow, 800-foot-long strip of land.

In her decision, Superior Court Justice Michaela Murphy decided that the structures identified in the lawsuit “do not exhibit ownership over the property in a manner that is inconsistent with the incipient dedication and would not likely constitute adverse possession of the property.”

Town Manager Matt Sturgis said town officials were pleased with the judge’s determination, but they anticipated and were preparing for the plaintiffs to file an appeal with the Maine Supreme Judicial Court. A notice of appeal must be filed by Aug. 6.

An attorney for the property owners didn’t respond Tuesday to a call for comment.

In September 2018, the Town Council rejected a proposed settlement to the dispute, under which the town would have vacated any claim to the paper street and the plaintiffs would have dropped the lawsuit, paid the town $500,000, assumed ownership of the land and started paying taxes on it.

Inland residents of the 115-home Shore Acres subdivision have for decades enjoyed the deeded right to hike along Broad Cove. In recent years, newer waterfront neighbors have indicated that they want to prevent the town from ever extending that right to the general public.

The dispute has sometimes flared into neighborhood confrontations, especially after the town’s Conservation Committee identified Surf Side Avenue as a potential public walking trail in the town’s 2013 Greenbelt Plan.

Under state law, the town may either vacate, accept or continue to extend the town’s right to accept the paper street. More than 1,400 town residents signed a petition asking the council to accept Surf Side Avenue as a public way.

Under Maine law, when a subdivision plan is recorded in the Registry of Deeds, “the public acquires rights of incipient dedication to public use of the ways laid out on the plan.” Adverse possession, or squatter’s rights, may take effect when another person uses a landowner’s property for at least 20 years uninterrupted. However, this legal doctrine is widely understood to be ineffective in claiming ownership of government land.

A 1987 statute stipulates that if a paper street isn’t built within 20 years, the private rights-of-way related to that paper street are terminated. However, the state has allowed municipalities to extend public claim to paper streets in 20-year increments, which the Cape Elizabeth Town Council has done twice for Surf Side Avenue, through 2036.

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