Pennsylvania Eminent Domain

The California legislature is considering a bill that could increase the likelihood condemnees will be reimbursed its litigation expenses. Under the current law, a condemnee can recover litigation expenses, such as attorneys’ and experts’ fees, if a court finds that the condemning agency’s final offer of compensation was unreasonable and that the final demand of the condemnee was reasonable when considering the compensation ultimately awarded. AB 408 provides that if the condemnor’s offer is lower than 90 percent of the compensation awarded, the court must award litigation expenses.   That bill is still in committee.

I recently litigated a partial taking of a truck stop outside of Harrisburg, PA.  The most significant impacts to the property were caused by the closure of one of the driveways.

The condemnor claimed that the taking did not cause any damages.  We were able to prove that the taking caused significant damages to the functionality of the property.  The Board of View award $1,250,000.

As with many cases, it was important in this case to present experts in addition to an appraiser to further support the appraiser’s opinions.  A critical component of proving the impact was presenting industry experts including a nationally recognized truck stop expert and an engineer.  They established the real impacts of the closure of the driveway.

The Pennsylvania Commonwealth Court recently ruled that the failure of a local sheriff’s office to include a return of service document in filings related to a disputed tax sale violated notification requirements under state law.  In that case, the allegation was that the Montgomery County Tax Claim Bureau failed to comply with notice provisions because affidavits filed in court by the county sheriff did not include notice of the tax sale.  “In this case, Bureau relied on the affidavits to meet its burden of proving compliance with all applicable statutory notice requirements,” ” Judge Patricia McCullough said in the opinion. “However, because the affidavit of personal service did not include the copy of the notice required by [the statute], that affidavit of personal service was not ‘complete on its face.'”  The court also reversed the trial court’s reliance on the incomplete affidavits to conclude that there was proper notice, emphasizing that “law is clear that ‘no owner occupied property may be sold’ unless the owner has received personal service of notice.”

Texas lawmakers may eliminate a private North Texas company’s ability to use eminent domain to build toll roads.  State Rep. Cindy Burkett, R-Garland, introduced a bill in response Texas Turnpike Corp.’s plans for a rural toll road from Garland to Greenville. The company is believed to be the only private entity in the state that an old law still allows to use eminent domain for projects.

The Institute has been harshly critical of the Appraisal Foundation.  Most recently, the Appraisal Institute, in a Dec. 12 comment letter, reiterated its concern to the Appraisal Foundation’s Appraisal Practices Board regarding an exposure draft that the Institute alleges contains numerous errors.  It alleges that it could damage the appraisal process and impose additional burdens on appraisers.  AI noted in its letter that the APB has no statutory authority and is strongly opposed to the Appraisal Foundation encouraging regulators to consider utilizing information in the materials for enforcement purposes.   It ends the letter by stating, “As you know, the Appraisal Institute has many objections to the existence of the Appraisal Practices Board and its functions. Should The Appraisal Foundation continue with this effort we certainly hope that it will ensure, at a minimum, that appraisers receive accurate, proper and competent guidance.”

It is truly amazing that these two important bodies can’t get along.

One of the first bills introduced in the newly convened North Carolina State Legislature seeks to limit condemnation powers.  House Bill 3, seeks to amend the North Carolina State Constitution to ban the use of eminent domain for private use.  Specifically, House Bill 3 seeks to amend N.C.G.S. 40A-3 to limit takings by “private condemnors” to those for “public use” only, a change from the current “private condemnor” power to take for “public use or benefit”.  However, it also adds takings by “private condemnors” for the construction of “facilities related to the distribution of natural gas” to the list of permitted takings. 

NC is one of the few states that did not pass legislation in the wake of the 2005 US Supreme Court Kelo case.  That case held that a condemnation for economic development satisfied the US constitutional “public purpose” requirement even if a private entity would ultimately own the condemned property.  The Kelo Court stated, however, that it was only ruling on the constitutionality of the taking and that federal and state legislatures could limit the powers if they felt it was necessary.  If passed, the NC bill would appear to prevent that type of taking. 

An Oklahoma appellate court recently reconfirmed that a taking by a state or local entity must satisfy, among other things, both the state and U.S. Constitutions.  In that case, the City of Muskogee condemned a property for a parking lot.  The property owners alleged that the taking was not for a “public use” as that term is used in the Oklahoma Constitution because the city and its parking authority “agree[d] to lease the parking spaces to [a private entity’s] employees first before they are offered to the public.” 

The Oklahoma Court of Civil Appeals agreed and found that the taking violated the Oklahoma Constitution and explained that it “is clear ‘that private property may not be taken or damaged by the condemning agency unless the taking … is necessary for the accomplishment of a lawful public purpose.’”  In a footnote the court stated that the city “cannot avoid constitutional restrictions on the power of eminent domain by merely labeling the proposed parking facility as a public utility.” The court held the parking lot “was designed and established primarily for the purpose of serving a private entity” and “employees of that entity’s tenant.”

It is unclear whether this taking would have been constitutional under the U.S. Constitution’s “public use” requirement.  However, this case illustrates that states can have stricter eminent domain requirements and a taking by a state or local entity must satisfy both Constitutions.

About a year ago, the Philadelphia RDA condemned property owned by a nationally recognized artist. This condemnation received a great deal of local and national attention including newspaper and radio coverage (I was interviewed by one station). The property owner, James Dupree, used this property as his studio. The property was one of 17 properties condemned by the RDA allegedly to cure blight in that neighborhood and would have been used to build a new supermarket.

Dupree challenged the taking and the RDA has now decided to abandon the condemnation and the project.  Brian Abernathy, executive director of RDA, said in a statement, “Unfortunately, the legal costs associated with Mr. Dupree’s appeals make it impossible to continue . . . . While we have explored the potential of building around Mr. Dupree’s property, a viable project under these conditions is not possible. In short, the inability to acquire Mr. Dupree’s property puts the prospect of bringing fresh food to this community at serious risk.”

This decision has also attracted the attention of the press locally and nationally including the Washington Post.  Once again, this show the sensitivity of issues relating to the taking of private property. 

Two D.C. Council committees advanced legislation allowing for the use of eminent domain in the construction of a $300 million professional soccer stadium in Washington, D.C.  The bill will now go before the full council for a vote on Tuesday.  While the legislation allows for eminent domain to be used to acquire the land, Mayor-elect Muriel Bowser, chair of the economic development committee, said she remains hopeful they will be able to come to a new agreement with the city for the land.

One frequent issue in eminent domain and other valuation cases is the admissibility of appraisals obtained by a party other than the appraisal they intend to actually use.  For example, in a case that will be heard by the VA Supreme Court, VDOT had two appraisals in an eminent domain case.  VDOT chose only to present the lower value appraisal to the jury and the judge prohibited any reference to VDOT’s higher appraisal.  VDOT has been criticized for this tactic and have been accused of bullying tactics by one newspaper.   http://hamptonroads.com/2014/11/states-high-court-should-put-vdot-its-place-unfair-property-appraisals

It is not uncommon for a property owner or a condemning authority to have more than one appraisal.  Condemnors have been criticized for paying property owners the lower of the appraisal amounts.  The VA Supreme Court will decide the admissibility of these appraisals.

It is also not uncommon for property owners to obtain more than one appraisal in eminent domain and other settings.  One way we try to protect these appraisals from being obtained by third parties is to retain the appraiser – or other experts – as “consulting experts.”  These experts’ work product can then be protected as confidential “work product.”

So, if you are considering retaining valuation experts, it is important to consider retaining these experts through an attorney.