February 1st, 2016 — In Articles
Can Prohibiting Demolition Constitute a Taking?
While it is clearly a taking when the government institutes condemnation proceedings to acquire private property and demolish any improvements upon the land, it’s much less clear that the government has taken an owner’s property rights when it tries to prohibit demolition on the owner’s private property. This issue arose in a recent case decided by Ohio’s First District Court of Appeals on December 30, 2015. The short answer: In some cases, prohibiting demolition can constitute a taking of private property under the Fifth Amendment.
The Saga of the Gamble House
In State ex rel Greenacres Foundation v. City of Cincinnati, No. C-150038 (Dec. 30, 2015) – the “Gamble House”—a private residence in Cincinnati that was originally owed by James Norris Gamble – the court found that the City’s failure to issue a demolition permit constituted a regulatory taking. (Side bar: Mr. Gamble invented Ivory Soap, and is the son of the “Gamble” in the ubiquitous Proctor & Gamble brand.)
When the current owners of the Gamble House applied for a demolition permit in 2010, the home had been vacant for nearly 40 years. The Court of Appeals described it as being in “an extremely dilapidated state,” with extensive damage and numerous animal infestations. At the time, the property was zoned for single-family residential homes without any sort of historic designation.
Upon receiving the permit application, Cincinnati’s chief building official declined to issue a demolition permit, citing the historic significance of the Gamble House. While the owners sought approval through a series of administrative appeals, the Cincinnati City Council adopted an ordinance designating the property as historic. It then issued a “Notice of Violation-Vacant Building” to the owners and denied the owners’ request for a waiver of the requirement to obtain a Vacant Building Maintenance License.
Subsequently, the owners sought a “Certificate of Appropriateness” to move forward with the demolition—as required under the new historic designation. The Historic Conservation Board denied the request and the owners took their case to court.
Just Compensation for Refusal to Permit Demolition
Almost two years later, the Ohio First Circuit Court of Appeals ruled that the city had acted improperly by relying on the late-applied historic designation to prevent the demolition. With its hand forced, the city issued a demolition permit and the owner promptly demolished the Gamble House.
Based on the Court’s ruling, in 2014 the owner filed a second lawsuit seeking just compensation for a taking of private property under the Fifth Amendment. Specifically, they argued that the city’s refusal to grant the demolition permit constituted a regulatory taking because the city’s actions deprived them of all economically beneficial use of the property. Perhaps unsurprisingly, the city challenged the owners’ claim, by asserting that the owners could have continued to “use” the dilapidated home as they had prior to applying for the permit.
Here, too, the Court sided with the owners. It rejected the city’s appraisal assigning value to the property since the cost of repair “would vastly exceed the value of the home,” and it agreed with the owners that they could not make any economically-viable use of the home in its pre-demolition state. However, it also ruled that the owners were only entitled to compensation from the date that the Historic Conservation Board denied their request for a Certificate of Appropriateness. Based on the Court’s ruling in the earlier case, this was the date that the regulatory taking occurred.
Contact Owners’ Counsel of America to Speak with an Inverse Condemnation Attorney in Your State
The saga of the Gamble House demonstrates the lengths to which some property owners must go to protect their rights. If you are facing a similar issue, your local OCA attorney may be able to help. To speak with an inverse condemnation lawyer in your state, please contact us today or locate a lawyer here.
(Side bar #2: We learned about both this case and Mr. Gamble’s P&G/Ivory soap fame from OCA Hawaii member, property rights attorney, and self-described “takings nerd” Robert Thomas. More analysis about this case can be found on his Inverse Condemnation blog here.)
January 28th, 2016 — In Articles
Rails-to-Trails Takings: Property Owners’ Rights When Land Use Changes
In 1983, Congress enacted the federal National Trails System Act Amendment (known as the “Rails-to-Trails Act”) in order to preserve abandoned railroad rights of way by converting them into public recreational trails. Trails established under the Rails-to-Trails Act can range from walking and biking trails to green spaces for public use, such as the New York City High Line which was the subject of a recent takings case in the U.S. Court of Appeals for the Federal Circuit and a blog post.
The High Line case, like many others, focused on the adjacent landowners’ rights under the Fifth Amendment to the U.S. Constitution. While Rails-to-Trails cases involve situations where the land may have been encumbered by an easement, conversion of that easement to a different use is a taking of the landowner’s interest in the land requiring payment of just compensation.
Why Rails-to-Trails Conversions Require Payment of Just Compensation
When the government takes private property through its power of eminent domain, the Fifth Amendment requires payment of just compensation. What constitutes a “taking” is not always clear, and in many instances this is one of the central issues in eminent domain and inverse condemnation litigation.
However, when the government converts an abandoned railroad right of way into a public trail, some courts have held that this constitutes a taking of the adjacent landowner’s property under the Fifth Amendment. As a result, property owners affected by Rails-to-Trails conversions may be entitled to just compensation – despite the fact that their land was once encumbered by a railroad right of way.
If a rail company no longer has use for its railroad right of ways, it may abandon the rail line. When the line is abandoned, ownership can revert back to the underlying landowner, usually the adjacent property owner. An adjacent landowner may have a reversionary interest in the land if the railroad right of way was granted to the company as an easement for the purposes of operating the railroad. In such situations, when a railroad abandons the line, it gives up its easement rights to use the land and “fee simple” – complete and exclusive – ownership reverts to the underlying landowner.
Courts have held that these landowners are entitled to just compensation because the landowners retained a reversionary interest in the land underlying a railroad right of way granted as an easement only.
Recent Rails-to-Trails Takings Cases
Nonetheless, Rails-to-Trails takings cases often end up in court. In the High Line case, the federal government argued that six words in the easement (which a prior owner granted in 1932) justified the conversion without just compensation. The landowners disagreed and their attorneys offered a different interpretation of the easement while also arguing that the government’s assertions were contrary to state law.
In another recent case, a group of landowners sought compensation when the government undertook a Rails-to-Trails conversion on their properties in Florida. The government refused to pay on the grounds that the railroad had not obtained an easement, but rather “fee simple” (outright) ownership in the subject property. Unfortunately, the federal trial court, federal appellate court and the Florida Supreme Court all agreed, and as a result the appellate court affirmed the denial of just compensation. The landowners are currently appealing the case to the U.S. Supreme Court.
Marvin M. Brandt Revocable Trust v. United States
If the Supreme Court accepts the case, it will likely consider the landowners’ claims in light of its decision in the 2014 case of Marvin M. Brandt Revocable Trust v. United States. In this Rails-to-Trails case, the government sought to preserve the railroad right of way by filing a quite title action arguing that the federal government owned the land underneath the right of way to avoid paying the adjacent private landowner just compensation. Owners’ Counsel of America jointly filed an amici brief with the National Federation of Independent Business (NFIB) Small Business Legal Center in support of Brandt. The Supreme Court ultimately ruled that the landowner was the reversionary fee simple owner and entitled to just compensation for the taking of the property for the trail conversion.
Contact Owners’ Counsel of America About Your Rails-to-Trails Case
If you own land that is subject to an abandoned railroad right of way that is desired for public use as a trail, an eminent domain attorney with Owners’ Counsel of America can help you protect your Constitutional rights. To speak with a local attorney about your case, contact Owners’ Counsel of America today.
January 25th, 2016 — In Articles
Georgia Court Rules Property Owners Are Entitled to Compensation and Attorneys’ Fees for Abandoned Condemnation Efforts
As we have previously discussed, while the Fifth Amendment to the U.S. Constitution requires payment of just compensation when the government exercises its power of eminent domain, several states have laws in place that provide property owners with additional financial remedies under certain circumstances. One such remedy that exists in many states is the ability to recover attorneys’ fees—typically when the government does something (such as making an unreasonably low compensation offer) that interferes with the property owners’ rights.
As highlighted by a recent Georgia case (brought to our attention by OCA Hawaii Member Robert Thomas in this post), another situation where state law may allow for recovery of attorneys’ fees is when the government abandons its efforts to condemn a person’s or business’ property. While Georgia’s statute regarding attorneys’ fees is relatively clear, this case in particular is notable because the Georgia Court of Appeals explicitly rejected the city’s argument that payment of attorneys’ fees plus compensation for the temporary taking of the property prior to abandonment would amount to a “double recovery.”
Right to Attorneys’ Fees for Abandoned Condemnation
Georgia is among several states that have laws providing for payment of landowners’ legal fees when the government abandons its efforts to condemn their property. Section 22-1-12 of the Georgia Code states:
In all actions where a condemning authority exercises the power of eminent domain, the court having jurisdiction . . . shall award the owner . . . his or her reasonable costs and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of the condemnation proceedings, if . . . [t]he proceeding is abandoned by the condemning authority.
In the case in question, the City of Canton initiated quick-take proceedings to condemn a parcel of land. It deposited roughly $800,000 with the trial court, which it had calculated as just compensation for the condemnation. The trial court promptly declared the city the title-owner of the property and granted it possession of the land.
The landowner subsequently challenged both the amount of compensation and the taking as a whole. Approximately 15 months later, with the parties still in litigation, the city abandoned its efforts to secure the property. The landowner sought to recover its attorneys’ fees and costs pursuant to Section 22-1-12, and the city actually agreed that it was liable for these amounts under the law.
Right to Compensation for Temporary Taking Prior to Abandonment
Where the city disagreed, however, was on the landowner’s action for just compensation under the Fifth Amendment. The city argued that the recovery of fees and costs should be the landowner’s sole remedy for the abandoned condemnation.
However, the Georgia Court of Appeals ruled that the landowner was entitled to both (i) attorneys’ fees and costs, and (ii) just compensation for the temporary taking. This decision was based in large part on the fact that the trial court had granted the city title in the original proceeding.
Are You Facing Condemnation? Contact Owners’ Counsel of America
While not all courts will award compensation for a temporary taking such as in the case discussed above, it is important for property owners facing condemnation proceedings to understand and protect their rights. If you are facing condemnation in Georgia or any other state nationwide, contact Owners’ Counsel of America to speak with a local eminent domain lawyer today.
January 21st, 2016 — In Articles
The Government’s Offer Isn’t Always “Just” Compensation
In order to exercise the power of eminent domain, government agencies are required – by the Fifth Amendment to the U.S. Constitution – to pay just compensation to the affected property owners. We discussed the Constitutional “just compensation” requirement in a previous post, which also highlighted some state laws that provide for additional compensation to individuals and businesses when private property is condemned by the government.
Since the law requires the payment of just compensation, one would expect the government to pay it without putting up a fight. Unfortunately, experience has shown that government agencies across the country routinely make unreasonably low offers in an effort to acquire private property for public projects. Gideon Kanner, an Honorary Member of Owners’ Counsel of America, keeps tabs on these offers in his “Lowball Watch,” which covered seven such cases in 2015. These cases included eminent domain proceedings from North Carolina to California, with disparities between the government’s initial offer and the final compensation award reaching upwards of $3 million.
California Jury Awards $3.2 Million After $1.8 Million Compensation Offer
One of the most recent cases involving a lowball condemnor offer was reported in November 2015. The California Department of Transportation (Caltrans) seized 34 acres from 94-year-old ranch owner, Lorraine Silveira, as part of a highway expansion project in the northern San Francisco Bay Area. Caltrans offered Ms. Silveira roughly $1.8 million as “just compensation” for the taking of her property by eminent domain. It had valued the condemned property at just $575,000.
Ms. Silveira’s attorneys sought $6 million in compensation, and when Caltrans refused to pay, the Marin Independent Journal reports that extensive litigation ensued. The owner’s attorneys attacked the state appraiser’s “absurdly low valuation,” and presented evidence during the 20-day trial that the taking would damage the value of the remaining property and limit its future use as a winery. The jury returned a verdict awarding Ms. Silveira $3.2 million in compensation – $1.7 million for the property taken plus $1.5 million for damages to the remainder resulting from the highway expansion project.
The property owner is currently seeking to recover her attorneys’ fees from Caltrans.
Have You Received an Unreasonable Offer of “Just Compensation”?
Government agencies typically commence eminent domain proceedings by providing a condemnation notice or initial offer to the property owner. Condemnors must then follow certain procedures, which vary from state to state but often include conducting an appraisal and offering payment of just compensation. Unfortunately, many property owners accept the government’s offer or attempt to negotiate better compensation or better terms on their own behalf.
As this case and numerous cases before it has demonstrated, property owners need to be vigilant about protecting their property rights. If you have received an offer that you believe is unreasonably low, you have the opportunity – and the right – to make sure you are justly compensated. To learn more about protecting your constitutional right to just compensation, you can contact a local attorney with Owners’ Counsel of America for a free consultation.
Speak with an Eminent Domain Attorney with Owners’ Counsel of America
Owners’ Counsel of America is a network of the leading eminent domain attorneys nationwide. If you have received a condemnation notice from a local, state or federal government authority, we invite you to contact us for more information about your legal rights.
January 4th, 2016 — In Articles
Can Eminent Domain Be Used to Acquire Natural Gas and Water Rights?
In most eminent domain cases, property owners are fighting to protect their land from condemnation. Whether for a public park, road, hospital, or utility, the government most often uses its power of eminent domain to obtain the right to build on private property.
But, what if the government isn’t seeking to take your property, but rather the resources beneath it? This presents an important question for landowners in resource-rich states like California, Montana, Pennsylvania, West Virginia, and others. Recently, cases and proposed statutes affecting private property owners’ natural gas and water rights have brought this issue to the forefront.
The Broad Power of Eminent Domain
Broadly speaking, the government has the power to exercise eminent domain to take private property rights in addition to acquiring entire parcels of land. Such cases may involve easements and restrictive covenants, affecting only a portion – however valuable – of a landowner’s property.
In general, this concept extends to claims involving underground resource rights. These resources – like the land itself – are valuable private property, and the owners deserve the full protection of the Fifth Amendment’s right of just compensation. However, determining what constitutes just compensation can be a challenge, and in some states, legislators are taking action to require owners to give up their underground natural resource rights.
Determining Just Compensation for Natural Gas and Water Rights
Cases involved natural resource rights can be exceedingly complex. Even the most basic issues – determining who owns what and what constitutes just compensation – can lead to years of legal wrangling and disputes. However, as a property owner, it is critical to protect your rights, and an experienced property rights and eminent domain attorney can help make sure that neither the government nor a private oil and gas company oversteps its bounds.
Recently, a string of cases in Texas has shed new light on the issue of valuing underground resource rights. Depending on the circumstances involved, the cases suggest two possible alternatives:
- The “before and after” approach, which looks at the difference in property value with and without the affected rights; and,
- Focusing on the loss of the income-producing value of the property once the resources are drained.
These alternatives are consistent with those used in other types of eminent domain cases as well.
Forced Pooling: Compelling Landowners to Give Up Rights to Minerals, Gas and Other Underground Resources
When resources such as oil, gas, or other minerals exist in an area extending under multiple parcels of private property, the concern arises as to how to account for each individual property owner’s rights. Under a legal concept known as “forced pooling” or “compulsory integration,” once a certain percentage of landowners in a drilling area agree to a lease allowing extraction, the remaining owners can be forced to follow suit. Forced pooling allows drilling companies to petition the regulatory agency overseeing drilling in a state for permission to harvest resources from a large area without reaching lease or drilling agreements with each affected landowner. These laws also provide that all landowners in a drilling unit receive compensation for the resources extracted from a pooled area. A video explaining forced pooling and landowners’ concerns is available here.
Thirty-nine states, have forced pooling statutes on the books. As of this writing, the laws in West Virginia and Pennsylvania do not apply to drilling in the Marcellus or Utica shale formations, however, proponents have or are trying to expand the laws to include such drilling operations. Similarly to eminent domain laws and procedures, the specific provisions of forced pooling or compulsory integration vary from state to state. In states where Marcellus and Utica shale exploration and drilling is occurring property owners with underground natural gas and water rights must be vigilant to ensure that they are not being denied their property rights without just compensation.
Contact an Attorney with OCA to Protect Your Underground Natural Gas or Water Rights
Owners’ Counsel of America (OCA) is a nationwide network of some of the most-experienced private property rights and eminent domain attorneys in the country. If you are concerned about protecting your underground mineral, natural gas or water rights, please contact us today.
December 28th, 2015 — In Articles
When Can Property Owners Challenge Eminent Domain?
While state and federal government agencies have the power of eminent domain – to take private property for public use – that power is not unlimited. Eminent domain power is limited by the Fifth and Fourteenth Amendments to the U.S. Constitution and by individual state constitutions and laws. If the government seeks to take your property, there are potential defenses an eminent domain attorney may employ to challenge the taking. While certain defenses challenge the condemnation outright, others focus on ensuring that you receive just compensation for the taking of your property. In this article, we provide a brief overview of four of the most common defenses to condemnation:
- The government lacks the authority to condemn your property
- The government lacks a sufficient public purpose for condemnation
- The government does not your property for the public project
- The government has not offered just compensation for your property
Common Defenses to the Exercise of Eminent Domain
The Government Lacks the Authority Needed to Condemn Your Property
In order to condemn your property, the government agency seeking to exercise eminent domain must have the authority to do so. Government agencies cannot simply make a decision to condemn a private owner’s property and move forward. This authority may be granted by a statute that is either general in nature or enacted for a specific purpose. Departments of transportation, public utilities, and the federal government generally have the power of eminent domain.
A landowner may be successful in challenging the authority to take private property in situations where the condemnor assumed it had been granted eminent domain authority when, in fact, it had not. To defend against a taking, eminent domain lawyers may present evidence that a statute did not include a particular type of project, expressly omitted it or required certain steps to be followed – such as a 3/5 vote of the state legislature for approval to use eminent domain.
The Government Lacks a Sufficient Public Purpose for Condemnation
The power of eminent domain only allows condemnation of private property for a legitimate public purpose. While “public purpose” has been interpreted broadly, there may be defenses against the government’s exercise of eminent domain. If the government cannot justify its proposed condemnation with a valid public purpose, its actions may violate your constitutional rights.
Recently, local governments and redevelopment authorities have used the power of eminent domain to condemn private property on behalf of developers, to pave the way for new construction in areas designated as “blighted” by municipal authorities. The intended public purpose or benefit may be to increase tax revenues and ignite economic development for a struggling municipality or to replace or improve what some may consider to be a “blighted” or older community. In some states, such a purpose has been expressly prohibited by statute or constitutional amendment and a public purpose challenge may be successful.
The Government Does Not Need to Condemn Your Property for a Public Project
Even if the government has established a valid public purpose, it may not condemn your property if the intended acquisition of your property is not “necessary” to the project. Under most state statutes, condemnors are only authorized to take enough private property to complete the intended project. Some landowners have successfully defended their property and defeated a taking by arguing a lack of necessity.
In such cases, the landowner’s eminent domain attorney may have challenged the take on the basis that the owner’s land was simply not necessary for the project. For this defense to be successful, the owner’s condemnation attorney must present evidence that the project could be constructed without the subject property and, as such, that land was not needed. If the condemning agency identifies more property for condemnation than absolutely necessary, a defense of this nature may be successful to defeat the taking.
The Government Wants to Take Your Property Without Paying Just Compensation
Finally, if the government has the authority, follows the required procedures and the condemnation of your property is necessary to execute a true public purpose, obtaining just compensation may be your only option under the law. If you feel that the government has not made a reasonable offer for your property, your eminent domain lawyer may be able to negotiate a fair settlement on your behalf.
In many cases, the condemnor’s appraiser only considers the value of the land appropriated not the damages the taking will have on your remaining property. If the condemnor has not offered compensation for the reduction in value to your remaining property or to cure any negative impacts to your remaining property, an eminent domain attorney may help negotiate such compensation. For a property owner facing eminent domain, it is important to understand how properties are valued in condemnation proceedings and what is compensable under the law.
Do You Have Questions? Contact an about Eminent Domain Attorney at Owners’ Counsel of America
The defenses available to you will depend upon the unique facts and circumstances involved in your case. If you are facing condemnation and want to learn more about protecting your property rights, contact an eminent domain attorney with Owners’ Counsel of America.
December 22nd, 2015 — In Articles
U.S. Supreme Court Asked to Consider Constitutional Challenge to California Zoning Ordinance
As we previously discussed, Owners’ Counsel of America (OCA) and the National Federation of Independent Business Small Business Legal Center (NFIB) have asked the U.S. Supreme Court to review an important property rights case decided by the California Supreme Court earlier this year. If not overturned, the case, California Building Industry Association v. San Jose, No. 15-330 (September 16, 2015), could set a damaging precedent that allows California agencies to impair the value of private property without paying the property owners just compensation.
How the California Supreme Court’s Decision Affects Property Owners’ Rights
Under the U.S. Constitution and the constitutions and laws of every state, government agencies can only exercise the power of eminent domain upon payment of just compensation. The exercise of eminent domain can take many forms, from direct seizure of private property to regulating the use of private land which impairs its value.
Unfortunately, this fundamental protection is often overlooked by government agencies. OCA attorneys across the country fight to protect landowners’ rights against overzealous government action. The OCA/NFIB brief in California Building Industry Association v. San Jose is one recent – and important – example.
The case arose out of a city ordinance that requires residential developers to help mitigate the Silicon Valley affordable housing crisis. Under the ordinance, any developer constructing more than 20 units is required to either:
- Designate 15 percent of the units for sale at below-market prices to qualifying buyers for up to 55 years,
- Construct alternate affordable housing, or
- Give land or money to the City of San Jose.
The California Building Industry Association (CBIA) challenged the ordinance as an illegal “exaction” and an unconstitutional taking. In short, it argued that the ordinance denied property owners of value – albeit for a public purpose – without just compensation. The California Supreme Court disagreed and upheld the ordinance.
Why OCA Has Asked for the U.S. Supreme Court’s Review
If allowed to stand, the California Supreme Court’s decision could have wide-ranging implications for property owners throughout the state, and possibly even nationwide. Along with the face value of the California Supreme Court’s ruling in San Jose’s favor, allowing the decision to stand would represent a departure from existing U.S. Supreme Court jurisprudence that provides the protections sought by the CBIA.
In a line of cases dating back to 1987, the U.S. Supreme Court has held that conditions such as those imposed by the City of San Jose are subject to heightened scrutiny under the unconstitutional conditions doctrine. In Nollan v. California Coastal Comm’n, Dolan v. City of Tigard, and St. Johns River Water Management District v. Koontz, the Court established that the government must show that what a developer proposes to do or build contributes to a “problem,” and that the government-imposed condition will mitigate the impact and is proportional to that impact. However, in California Building Industry Association v. San Jose, the California courts applied a lesser, non-constitutional standard that merely requires a “rational basis” for the ordinance in question.
In the California courts’ eyes, the ordinance does not constitute a taking since developers have the option to accept a reduced (below-market) purchase price or construct alternate affordable housing instead of giving up land or money to the government. This, according to the courts, makes the ordinance a mere “zoning restriction” not subject to heightened scrutiny. The courts found that since the ordinance aids (at least in theory) in resolving the affordable housing crisis – a crisis that has not been blamed on residential developers – it has a “rational basis” that supports the conditions imposed by the City of San Jose.
At OCA, we are strongly opposed to the California Supreme Court’s decision. Regulating the value of a private owner’s property is a clear form of condemnation, and one that cannot be taken lightly. We are urging the U.S. Supreme Court to step in and apply its longstanding precedent that provides appropriate protections for property owners’ rights.
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Owners’ Counsel of America is a network of the nation’s leading attorneys in the areas of inverse condemnation and eminent domain. If you need legal assistance with a property rights matter, please contact us online or find an OCA lawyer in your state today.
December 14th, 2015 — In Articles
Florida Court Upholds Attorneys’ Fees Award for ‘Excessive Litigation’ in Condemnation Cases
When the government takes a private citizen’s land through the exercise of eminent domain, it is obligated to pay the landowner “just compensation” for the property taken. This requirement is established by the Fifth Amendment to the U.S. Constitution and the constitutions in all 50 states, and it serves to protect the fundamental rights of landowners across America.
But, this begs the question: What is just compensation? How is it calculated, and who gets to decide?
The answers to these questions depend on where your property is located. Different states have taken different approaches to determining what constitutes “just compensation,” and in some states, entire categories of losses are off of the table, such as loss of business good will. One category some states include the calculation of “just compensation” is the owners’ reasonable attorneys’ fees incurred in defending his or her property rights in eminent domain litigation.
Attorneys’ Fees and Just Compensation: A State-By-State Issue
Condemnation litigation can be expensive for all parties involved. Unfortunately, individual property owners and businesses may bear the brunt of the financial impact of taking a condemnation case to court.
Recognizing the burdens of litigating eminent domain proceedings, states such as Florida, Michigan, New York and Ohio, have enacted laws that allow property owners to recover attorneys’ fees under certain circumstances. These laws are generally based on the understanding that property owners who are forced to take legal action to defend their property rights against the government should be entitled to recover the costs of their defense as a component of just compensation.
The Florida Supreme Court’s Decision on Attorneys’ Fees for ‘Excessive Litigation’ in Eminent Domain
A recent case from the Florida Supreme Court underscores the important role that attorney fee statutes play for property owners facing condemnation.
In Joseph B. Doerr Trust v. Central Florida Expressway Auth., No. SC14-1007 (Nov. 5, 2015), the property owner succeeded in challenging the Expressway Authority’s offer of just compensation. The jury awarded $5.7 million – $800,000 above the Expressway Authority’s offer of $4.9 million. The property owner also sought to recover its attorneys’ fees under Florida’s condemnation statute, and the trial court awarded $816,000 in fees to the owner’s eminent domain attorneys.
The Expressway Authority appealed, arguing that under the statute’s “benefits achieved” formula (a percentage of the difference between initial offer and final compensation), the attorneys’ fee award should have been limited to $227,652. After remand and a second appeal, the question made its way to the Florida Supreme Court.
The Florida Supreme Court sided with the property owner. While acknowledging that the state legislature has the authority to establish formulas (like the “benefits achieved” formula) for calculating attorneys’ fees, the Court held that it cannot do so in a way that deprives property owners of their constitutional rights. In Florida, this includes the right to “full compensation” in eminent domain litigation. In this particular case, the lower court found that the Expressway Authority “had engaged in a ‘clear pattern’ of excessive litigation,” and the Court held that this justified an award above and beyond that afforded by the statutory formula.
Of course, in states without attorneys’ fees statutes (such as Hawaii), the property owner may not be able to recover attorneys’ fees. OCA lawyers offer a free initial consultation to property owners facing condemnation or who may be concerned that their property has been affected by government action. OCA’s eminent domain attorneys will speak with you to gather the facts and will answer your questions about the process and your rights. There is no fee for this initial consultation.
Contact an Eminent Domain Attorney at Owners’ Counsel of America
Owners’ Counsel of America (OCA) is a network of experienced eminent domain attorneys who represent property owners nationwide. If you are concerned about whether you can afford to hire an eminent domain attorney to represent your property rights in a condemnation proceeding, contact us to coordinate a free initial consultation.
November 30th, 2015 — In Articles
How is Property Valued in a Condemnation Proceeding?
When a government agency, utility, energy company or other entity takes private property through eminent domain (known as “condemnation”), the landowner is entitled to the payment of just compensation. This right to just compensation is firmly established in the Fifth Amendment to the U.S Constitution, as well as state constitutions and laws across the country.
But, what does it mean for compensation to be “just,” and who decides what is a just amount? Someone has to place a value on the land taken. And, when the “taking” involves an easement or regulation, the property owner’s losses may not be strictly tied to the value of the affected property.
Determining What Constitutes Just Compensation
The Fifth Amendment of the United States Constitution provides that private property may not be taken for public use without payment of “just compensation” to the private owner of the property. A property owner should be fairly and fully indemnified for the loss of the property. As such, an owner has the right to recover the equivalent in financial compensation of the property condemned.
Through the payment of just compensation, a landowner is entitled to be restored to the financial position he or she would have been if the property had not been taken. Generally, the measure of damages for property taken by eminent domain is its fair market value. Fair market value is a practical standard to aid the parties and courts in determining what constitutes just compensation. Fundamentally, this involves obtaining one or more appraisals of the property being condemned.
However, as we have previously discussed, the appraisal of property for purposes of a condemnation proceeding will not necessarily be the same as its appraisal for other purposes, such as for purposes of obtaining bank financing. As a result, working with an attorney and appraiser who have specific experience in eminent domain matters will be critical to ensuring that you receive just compensation for your condemned property.
Conducting Appraisals for Condemned Property
Generally speaking, appraisers in eminent domain cases use three different approaches to value real property that is being condemned. These are:
- The market data (comparable sales or sales comparison) approach
- The cost approach
- The income capitalization approach
The market data approach is most common. With this approach, the appraiser will analyze recent sales of properties that are comparable to the property being condemned in terms of size, location, zoning and other factors. The appraiser will then perform an adjustment to account for specific details and may weigh comparables differently in order to come up with a market value for the subject property. The market data approach theorizes that a property that is similar in size, style, age, improvements, location, and all other characteristics should have a value similar to other comparable properties in the area around the same date of sale.
The cost approach will generally be used to appraise unique and special-use properties, however, it may also be the best method to appraise condemned property when market data may be scarce. The cost approach method estimates the replacement value of a property by determining the cost of its components – the land and improvements. Rather than valuing a property as a whole, the cost approach establishes the value by adding the separate values of the land and improvements together.
The income capitalization approach is generally employed with income-producing properties, such as rental properties and some commercial properties. The income capitalization approach estimates the property’s value by evaluating how much income a property is capable of producing. This approach is the most technical of the three approaches. This approach considers three principals: anticipation, supply & demand and substitution.
- Principle of Anticipation – A buyer of property will base the purchase on an expectation of the future benefits. Value is defined as the present worth of future benefits, or, how much a buyer will pay today for something that he believes he will get in the future.
- Principle of Supply and Demand – The value of property is a function of supply and demand. For example, the rent an owner can set for property will depend on the amount of similar properties and the demand for such property in that area.
- Principle of Substitution – Rent levels are based on a comparison of the rental rates of surrounding properties and the possibility that a tenant could select an alternative or substitute property.
“Equitable Principles of Fairness”
Ultimately, the goal in eminent domain proceedings is to arrive at a fair market value for the condemned property. There are few hard-and-fast rules, and the U.S. Supreme Court has stated that satisfying the Fifth Amendment’s requirement for just compensation “derives just as much content from the basic equitable principles of fairness . . . as it does from technical concepts of property law.” United States v. Fuller, 409 U.S. 488, 490 (1973). As a result, if you are questioning a valuation of your condemned property, it is in your best interest to seek experienced legal representation.
Owners’ Counsel of America | Experienced Eminent Domain Attorneys Nationwide
For more information about seeking just compensation in eminent domain proceedings, contact an eminent domain attorney with Owners’ Counsel of America for a free initial consultation. Call our office at (877) 367-6963 or locate an attorney in your state today.
November 2nd, 2015 — In Articles
Easements and Restrictive Covenants: When the Government Takes Without Taking
When most people think about eminent domain and the condemnation of private property, they imagine the government acquiring a citizen’s private property and converting it to a public use. While this is often the case, it is not the only way that the government can acquire private property.
Governments may claim “non-possessory” rights in private land. Such rights allow the government to either (i) use, or (ii) place restrictions on a landowner’s use of private property.
Understanding Easements and Restrictive Covenants
Two of the most common types of non-possessory property interests are easements and restrictive covenants.
When the government (or, in some cases, a private entity) needs access to private property, it may exercise its power of eminent domain to do so. . In broad strokes, an easement is the legal right of one party to use or access someone else’s property, whether that be over, under or through the land. Easements are limited to certain, specified purposes. So, if the government or a private entity wishes to use eminent domain to obtain an easement on your property, it must spell out how, where, and why it intends to use your land.
TransCanada’s efforts to clear the way for the Keystone XL Pipeline provide a good example. Over the past several years, TransCanada’s attorneys have been seeking to obtain easements on private property in Nebraska and across the West so that TransCanada can lay its pipeline if and when it receives government approval. Other examples of easements obtained by government agencies through the eminent domain process include easements for:
- Utilities – such as water, sewer or electrical transmission lines;
- Sidewalks, driveways or other access above or below ground; or
- For construction purposes – a temporary use of the private property during the construction of a public project.
While an easement provides a right to use someone else’s land, a restrictive covenant places limits on how an owner can use his or her own property. A recent case out of New York provides an interesting example.
Blue Island Development, LLC v. Town of Hempstead, is an inverse condemnation case that arose out of land use restrictions placed upon a proposed condominium development on Long Island. Blue Island Development acquired a piece of waterfront land improved with an old oil storage facility. Blue Island intended to remediate the contamination and construct condominiums. The developer petitioned for a zoning change so that it could convert the property’s use into condos. The Town of Hempstead granted the change, but conditioned its grant upon the developer agreeing to sell (rather than lease) all of the individual units. This is an example of a restrictive covenant.
Other examples of restrictive covenants include:
- A prohibition on building on private property;
- A restriction on constructing buildings above a certain height; or
- Limiting the purposes for which land can be used.
Challenging Easements and Restrictive Covenants
Like condemnations that involve taking ownership of private property, landowners have the ability to challenge the government’s exercise of eminent domain to acquire easements and actions to establish restrictive covenants or control land use.
For example, in the case discussed above, Blue Island sought a modification of the covenant which the Town subsequently denied. Blue Island filed an action for administrative relief and declaratory judgement alleging the denial of a modification to the covenant effected an unconstitutional taking of private property. In its complaint Blue Island argued that the restrictive covenant was improper because:
- It did not advance a legitimate government interest; and
- It denied Blue Island an economically viable use of its land.
If you are facing an eminent domain action seeking to acquire easement rights or your use of your property has been frustrated by land use restrictions or a restrictive covenant, an experienced attorney will be able to help you fight to protect your constitutional rights. To speak with an eminent domain attorney, call (877) 367-6963 or request a consultation online today.