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Addressing Your Clients' Concerns in Eminent Domain Proceedings
by Amy Grasso
Eminent domain is a topic to which most attorneys were exposed in law school and that nearly as many then forgot as quickly as possible. Many attorneys approach eminent domain as they do Brussels sprouts -- they acknowledge that the practice area may appeal to someone out there, but they avoid it at all costs. This article is not meant to encourage you to begin an eminent domain practice. Rather, it attempts to give an overview of some aspects of eminent domain proceedings so you can assist your clients with some of their more common questions, should the topic arise.
Let me negate one misperception: eminent domain proceedings are not dry. They are, rather, often emotionally charged. For most people, real property is their single biggest asset and they cannot comprehend that the government can take that asset from them involuntarily, in a situation in which they have little control, and for an amount of money far less than they believe the property to be worth. Thus, client education and listening is often as big a part of the process as are legal maneuvering and advocacy. Nonetheless, the following will give you a good starting point.
1. The Property Owner Will Have Ample Notice of the Proposed Taking
Eminent domain cases begin long before a complaint is filed. Some property owners will learn of the proposed taking through their own research, public hearings, or town gossip, especially if the condemnation is associated with a large public project. Aside from this informal notice, as a prerequisite to filing a complaint for condemnation, a property owner will receive formal written notice from the condemning authority. The notice generally is followed by an offer from the condemning authority for the purchase of the property. The offer must be made in good faith and is usually based upon an independent appraisal that the condemning authority has ordered for the property. Before acting on this offer, the property owner should solicit the assistance of an attorney and consider his or her options to determine whether the offer of just compensation is acceptable or should be challenged.
Before a lawsuit is filed is precisely the time when a client should engage in pre-condemnation planning. Should the owner improve the property? The compensation due to be paid the owner is generally measured at the time the property is taken (“date of take”), and owners are entitled to continued use and enjoyment of their property up to that date, in spite of the potential condemnation. Consequently, with proper planning an owner may be able to enhance the value of the property before the date of take. Similarly, maintenance of the property (it will be viewed by appraisers, and even the jury) and evidence the owner may want to collect as to the property’s condition need to be discussed at this stage.
2. Property Owners Have the Right to Challenge the Government’s Determination of Just Compensation
Many property owners do not realize that they are not required to take the compensation initially offered to them. They are constitutionally entitled to “just compensation,” but the condemning authority and property owner may disagree as to what constitutes just compensation, which frequently becomes the primary issue in a condemnation trial. Other issues, such as the public need for the take, are rarely litigated due to the strong presumption accorded the legislative authority to make that decision, although these issues should always be considered by the attorney handling the case for the property-owner.
a. Just Compensation in a Traditional Condemnation Proceeding.
Condemnation cases usually proceed as any other civil action with deadlines for expert designations, discovery, pretrial motions, etc. But some special rules do apply. Such actions are really legislatively-mandated civil proceedings, which are sui generis and operate as a “special proceeding” with in rem jurisdiction. Procedural differences include, for example, that the owner must disclose any appraisal of the property whether or not they intend to name the appraiser as an expert or call them at trial. The owner’s commission of an appraisal should thus be carefully considered and timed. Also, as an in rem proceeding, the filing of counterclaims and use of declaratory relief are greatly restricted.
In an eminent domain proceeding, the property owner will need to obtain an appraiser who will testify as to his determination of value. Other experts may be necessary to a particular case (such as land planners or traffic experts) to lay a predicate for the appraiser’s testimony and opinion of value. At trial, the jury will be afforded the opportunity to visit and view the property. It will then hear testimony from the various appraisers and other experts. The property owner may also testify and provide an independent opinion of value, even if they are not an expert. The jury will determine the value of the property condemned and any severance damages, if applicable (discussed further, below) to make an award of just compensation.
In traditional condemnation cases, the property is valued as of the date of the trial. After the jury verdict, the condemning authority may opt to pay the amount determined by the jury (the inquisition) in exchange for the transfer of the property’s title. Or it may decide that the jury’s determination of compensation is too expensive for its project and opt to abandon the condemnation. If the condemning authority decides to abandon the condemnation, it is required to pay reasonable costs and attorney’s fees incurred by the owner to defend the condemnation action. This traditional procedure can be used where the cost of the property may affect the determination of whether to move forward with a project.
b. Just Compensation in a “Quick-Take” Condemnation Proceeding
There are instances in which a project must proceed and cannot be “held up” by a protesting property owner or drawn-out litigation. In such cases, the legislature has granted the condemning authority “quick-take” power so that it can proceed with the project without delay due to a property-owner challenge. The government takes possession of the property and proceeds with the public project. The amount of just compensation estimated by the government is paid into court, although final amount of just compensation to be paid is yet to be determined. Consider, for example, a highway project. All the property needed for the highway can be “taken” so that the road can be built without delay, although the amount of just compensation owing to any given property owner may not be fully resolved until trial, long after the taking has occurred. In these cases, the condemning authority cannot “change its mind” if the jury award is too high, as is the case in traditional condemnation cases. It is bound to pay the jury’s award.
In quick-take proceedings, the actual determination of “just compensation” is no different than in a traditional condemnation proceeding. The jury sees evidence and assigns a value to the property taken and damages caused to the remainder, if any. There are procedural differences, however, that can make a difference monetarily. To start, when the condemning authority files its petition it also generally deposits with the court the amount it has determined to be the just compensation due. If the jury awards an amount greater than that which was deposited, the property owner receives the difference plus pre-judgment interest on that difference from the date of take to the date of payment. If the jury awards a lesser amount, however, the owner must pay back the difference. Further, the date of take, which is also the date of valuation in a quick-take case, may be a debated issue, especially if the government enters onto the property before filing the petition. With a fluctuating market where land values are rapidly appreciating or depreciating, for example, a different date of take can have a large impact on the valuation of the property. Thus, timing is another issue that should be considered early.
3. The Amount of Property to be Taken is Not Often Flexible
Some clients are concerned that the condemning authority is exceeding its boundaries, taking advantage of them, overreaching, or simply being unfair. They may ask whether the condemning authority can simply take whatever it wants. The answer is that it can take as much as it needs, or in other words, as much of the property as is reasonably necessary for the public purpose underlying the condemnation. But courts give great deference to the condemning authority’s determination of how much property is necessary for the public purpose, so challenges on this ground are infrequent and not often successful. A reduction or modification of the taking, however, may be negotiated with the condemnor. It may present a classic “win-win” solution if the taking plans may be modified to reduce the detrimental impact on the owner and reduce the amount of compensation the condemning authority must pay without hindering the project.
Alternatively, some clients will be concerned that the condemning authority should take more than it intends to take. This is a concern in “partial takings,” in which the condemning authority is taking only a portion of the property. Property owners often ask in these types of proceedings whether the state can be compelled to take the entire property. Although the condemning authority cannot be required to take all more than it deems necessary, as with arguments to reduce the take, it may be in the condemnor’s financial interest to enlarge the take and reduce severance damages, especially when the remainder property is an uneconomic remnant. A property owner is entitled to be justly compensated for the property taken, as well as any reduction in value to the property that the government does not take. This form of compensation is referred to as severance damages, because it refers to damages caused to the remainder of the property “severed” by the taking. Consider, for example, a homeowner that has a large front yard abutting a small quiet road. If a portion of that land is taken to expand the road into a 4-lane highway, the remaining property will likely suffer a reduction in value, and that reduction in value is compensable.
The amount of property taken—and the impact on the property owner—should be considered early. For example, if there is a legitimate challenge to the need for the amount of property taken, the attorney will fare well by soliciting information early, rather than waiting to do so through interrogatories after a lawsuit is filed. Property owners may wish to develop a community effort, early on, in opposition to the proposed public project. Similarly, if the property owner is subject to a partial take that will disrupt his enjoyment of the remainder of the property, what options can be pursued to make the client most happy? Often, an increase in the just compensation award is not the only avenue. The purpose of an award of just compensation is to place the property owner in as good a position as he would have occupied if his property had not been taken. Often, creative thinking, and working closely with the condemning authority, can achieve this goal.
The limits of this article did not permit consideration of many of the issues that arise in the context of eminent domain proceedings, which can be challenging, intellectually stimulating, and even fun. Hopefully it has nonetheless provided some assistance with respect to a few of the common concerns of property owners and their attorneys. The consistent theme is that there is value in preparing early and planning ahead. Once eminent domain is imminent many of the owner’s options (including political leverage) may be foreclosed. A property owner should begin working with experienced counsel early in the process to evaluate options, assess the issues unique to the particular case and this area of law, and to begin considering how best to achieve the client’s goals.
Amy Grasso is a litigation associate with Miller, Miller & Canby, Chtd. and practices with the law firm’s Eminent Domain team. She can be reached at firstname.lastname@example.org. Miller, Miller & Canby has extensive experience in protecting clients' rights when their property interests are threatened, or taken, by governmental authorities for public use. More information can be found at www.millermillercanby.com.