3 Damages Resulting from a Taking: an Overview
| Library | Eminent Domain: A Handbook on Condemnation Law (ABA) (2011 Ed.) |
Mark M. Murakami and Christi-Anne H. Kudo Chock
The Fifth Amendment guarantees just compensation and does not provide for other damages relating to or arising from condemnation.1 However, liberal interpretation of constitutional and statutory provisions by state courts, among other things, has led to the development of eminent domain law involving the recovery of damages2 that relate to the project or the property itself.3
This chapter discusses issues related to (and types of) damages in the following order: partial physical takings of an adjacent or remaining parcel, total and partial loss of access, zoning restrictions, loss of business, moving costs, improvements (enhanced value created by government, timing and impact of improvements, and projected improvements), lost mineral deposits, inclusion of fixtures, inclusion of trees and crops, trespass, proximity damages (nuisance, noise, and lack of access), temporary takings, and consequential and constitutional damages.
The condemnation of a part of a parcel of land is a special situation with the potential for "additional" damages4 because a property owner may be entitled to just compensation for the part of the property that was physically taken, as well as "severance damages" to compensate for any damage to an adjacent or remaining parcel.5 In general, severance damages refer to the diminution of the market value of the remainder area caused by the taking (severance) or by construction of an improvement in the manner proposed. Because anything less than a full, physical ouster of an entire parcel does not per se require compensation under the Fifth Amendment,6 many states, by either constitutional amendment or statute, allow compensation for dam ages to the remainder after a partial physical taking.7 Some factors,8 which are categories of damages in and of themselves, include loss of access, zoning violations, and the loss of business, all of which are discussed in further detail in this chapter.
Total Loss
In general, an owner has a right of ingress to and egress from his or her property9 that is compensable if it is taken or materially interfered with.10 Depending on the factual circumstances and governing law, whether the impairment or loss of access to property constitutes grounds for recovery may be a question of fact for a jury to determine11 or a question of law for the court.12 Limitations on access-related damages are rooted in the historical notion that property transferred from the sovereign to an owner13 was subject to certain restrictions,14 including, among other things, the public's right of access.15 As such, the government can use its police power to manage roads and traffic16 in a manner that affects access to private property without compensa-tion.17 When it is unclear whether the government is attempting to use its eminent domain or legitimate police powers, courts typically take an ad hoc approach to determine which part of the government's conduct is compensable, if at all.18
Partial Loss
A property owner's common law right19 or easement20 to access public roadways is a vested right of reasonable access that cannot be materially interfered with or taken without just compensation.21 But reasonable access does not necessarily equate to a particular means of access.22 As such, damage resulting from a circuitous, but reasonable, access route is not recoverable in the absence of an applicable statutory right of access.23 Further, a temporary impairment of access due to construction is generally noncompensable.24
Zoning restrictions do not per se constitute a taking,25 but when government exceeds its regulatory authority in a manner that is not "roughly proportionate" to a valid use of its police power, zoning restrictions may constitute a compensable taking.26 Even if a zoning restriction or delayed rezoning27 does not itself amount to a taking, recovery may still be available if government action or inaction amounts to a substantive due process violation.28 More specifically, zoning restrictions that lower the value of a property, without more, may not give rise to any claim for damages, assuming those restrictions do not constitute a regulatory taking.29 However, where the zoning restrictions constitute an impermissible taking and the offending ordinance subsequently is invalidated, damages may be recovered and the restrictions may be disregarded when computing the amount of damages to be awarded.30
The Model Eminent Domain Code allows evidence of existing zoning or other restrictions upon use, and the reasonable probability of a change in those restrictions, to support a determination of property value.31
Zoning violations related to a taking may be grounds for a claim for damages.32
The general rule is that loss of business is not considered when valuing a property to determine compensation for a taking.33 When determining compensation, absent a statute providing otherwise,34 courts may disregard goodwill, or an intangible property right in the business's reputation,35 as well as going concern value, or the price a willing buyer and seller would accept for the business in question.36 Exceptions to the general rule based on statute37 or case law38 have grown out of a desire to avoid any unnecessarily harsh consequences brought about by the disregard of business loss in the determination of compensation. More specifically, profit may be recoverable where income was derived from the property itself, as in the case of farming or ranching.39 Further, inventory40 or rental income41 related to a condemned business property may be considered to determine fair market value under certain circumstances. Leasehold interests are also compensable property rights42 and, under certain circumstances, the total cost of the acquisition of separate interests in property may be greater than the value of the property in the aggregate.43 Moreover, the Model Eminent Domain Code provides for compensation of the loss of goodwill.44
Generally speaking, the Fifth Amendment does not require compensation for moving expenses necessitated by a condemnation.45 Congress has tempered this rule by requiring the payment of relocation and other related costs associated with federally funded condemnations under the Uniform Relocation Assistance Act (URAA),46 which allows displaced persons in federal condemnation cases to receive moving and related expenses,47 costs associated with or incidental to obtaining replacement housing (for owner-occupiers),48 and amounts necessary to enable displaced persons to lease or rent a comparable replacement dwelling (for tenants and certain others).49 The purpose of the URAA is to supplement compensation, not to create additional just compensation components50 or any additional element of damage not in existence prior to the URAA.51
Overview
In general, everything on the property, whether "improved" by natural52 or artificial means,53 may be considered when determining compensation. The Model Eminent Domain Code attempts to both broaden and standardize consideration of improvements as part of the valuation process by including in its definition of "market value" the cost of relocating and rehabilitating improvements taken or, if relocation and rehabilitation is impracticable, the cost of providing improvements of substantially comparable character and of the same or equal utility.54
Enhanced Value Created by Government
Increased property value due to an anticipated public improvement is typically disregarded when determining valuation.55 More specifically, where the location of the proposed project is definite, enhanced value related to the expected improvement should not be considered,56 but where the location of the proposed project is not definite and a property's value is increased as a result, the enhanced value may be considered.57
Timing and Impact on Damages
The general rule is that value, including improvements, is determined at the time the condemnor takes possession.58 As such, the appraisal report should include, among other things, "a brief description of improvements (both before and after the acquisition if a partial acquisition); the indicated value of the property by each appraisal approach used (both before and after the acquisition if a partial acquisition); the final estimate of value (both before and after the acquisition if a partial acquisition)[; and] photographs showing the front elevation of the major improvements . . . and interior photographs of any unique features."59 Under the Model Eminent Domain Code, the right to compensation begins to accrue when the complaint is filed, but compensation may also be due for improvements placed on a property after the commencement of an action.60
Projected Improvements
Projected future improvements and any related costs or income may be disregarded as speculative when they are included in a claim for damages, but the same may be included in the appraisal of a property's highest and best use.61 Projected public improvements cannot be used to depress property values in anticipation of condemnation.62 The effect is often referred to as "condemnation blight," or the depreciation of the value of a property as a result of a pending or potential condemnation.63
Land below the surface, including mineral rights, is considered property. 64 For example, a condemnee may have a valuable property interest in gravel, limestone, oil, gas, gold, or diamonds, among other minerals.65 As such, the acquisition of property by eminent domain includes the rights to any subsurface minerals,66 the value of which is properly considered in determining compensation to the property owner.67 And, where the property interest taken is less than fee simple, the condemnee may retain the right to remove minerals underlying the land that has been taken, so...
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