Sanguine Doves in the Hands of the State or How the Power of Eminent Domain Has Few Practical Restraints, 0119 KSBJ, 88 J. Kan. Bar Assn 1, 28 (2019)

• Author: Chris Burger, J.
• Position: 88 J. Kan. Bar Assn 1, 28 (2019)

Sanguine Doves in the Hands of the State or How the Power of Eminent Domain Has Few Practical Restraints

No. 88 J. Kan. Bar Assn 1, 28 (2019)

Kansas Bar Journal

January, 2019

Chris Burger, J.

I believe the Kansas basketball coach had the power to hold his athletics director in his hand like a dove. And he had a choice to either crush me with his power of influence or let me fly with my vision for a better, total program. He chose to crush me." - Al Bohl, April 9, 2003…from his driveway…before his garage sale…of all his KU apparel.^[1]

The Power to Take has Few Restraints

Your property can be taken through the exercise of the power of eminent domain, which is a power that has few restraints upon it. That does not mean the power can be exercised indiscriminately—a trial court must review and affirm the authority of the condemning authority, and the Kansas Eminent Domain Procedure Act ("EDPA") requires all affected parties to be notified of the rights and interests to be taken and the hearings to be held through actual notice (such as service of process) or publication. But these procedural safeguards alone do little to limit the nature or extent of what can be taken. Instead, the practical limit on the nature and extent of a taking comes through “the purse,” namely the amount that the condemning authority must pay under the Fifth Amendment’s requirement that the condemning authority pay "just compensation" for the taking^[2] and the EDPA requirement for payment of damages caused by the taking,^[3] as defined under the EDPA.^[4]

The determination of a taking’s compensable value is complicated and sometimes contentious. Kansas law, as stated by the Kansas Supreme Court, gives condemning authorities the power to define and exclude what is being taken, who might be an affected party, and what can be considered in the calculation of the award for such taking. In response, good practitioners for affected parties try to look through the condemner’s description of the taking in light of the use and characteristics of the property and its environs in order to help ensure just compensation.

Restraints: Real or Imagined

The power of eminent domain is an inherent power of the sovereign, but the state of Kansas has legislatively shared it with various private and public entities and political subdivisions (e.g. cities, counties, school districts, public wholesale water supply districts, public utilities, cemetery corporations, and railroads).^[5] The power therefore is more widely possessed than is commonly known, and rests with some unelected bodies that may be largely insulated from political pressures seeking to limit their exercise of the power.

The power of eminent domain must be exercised for a “public use.” While this concept is comforting, the “public use” requirement fails in practice to impose a meaningful limit to the power. As Kelo v. City of New London^[6] made clear, the necessity that a taking must be for a “public use” does not assure restraint by the condemner because the “public use”^[7] term is open to great latitude in interpretation and application. The Kansas Supreme Court expressly "has held that there is no precise definition of what constitutes a valid public use, and what may be considered a valid public use or purpose changes over time. Further, this court has noted that as long as a governmental action is designed to fulfill a public purpose, the wisdom of the governmental action generally is not subject to review by the courts."^[8]

The procedures of the EDPA must be followed since it is "the only avenue through which the government can exercise its eminent domain power,"^[9] but (with the exception of some limited post-Kelo limitations on municipalities)¹⁰ the EDPA does not substantively limit the power to take. Instead, the EDPA helps to ensure that affected persons are given notice of the actions to be taken by the condemning authority and have the opportunity to participate in the process of valuing the property taken.¹¹ For example, the EDPA requires the condemning authority to identify in writing what rights are being taken and to give notice to all affected owners, possessors, and lien holders¹² of all hearings at which the petition is considered, the appraiser panel is appointed, or the panel receives evidence about the value of the taking.¹³

The procedure applicable to eminent domain proceedings depends upon the stage of the proceedings, with different powers attached to each. They can occur in two stages: a) the initial administrative proceeding in which Chapter 60 does not govern, and b) an appeal of an initial award to the district court. The initial administrative proceeding "is a special statutory proceeding and is not a civil action covered by the code of civil procedure. The proceeding is administrative rather than judicial."^[14] In appeals to the district court, the only issue to be decided (by a jury, if so elected) is the amount of just compensation and damages due the affected party, but not the scope or legitimacy of the taking. The appeal in district court is governed by Chapter 60, including its discovery rules.

The Amount to be Paid, and Not Paid

“Just compensation” must be paid for property taken.¹⁵ The EDPA legislatively establishes “just compensation” and damages as the "fair market value" of the property taken (if a total taking)¹⁶ or (if a partial taking), the difference in the fair market value of the property before the taking and the value of the property remaining after the taking.¹⁷ "‘Fair market value’ is defined [by the EDPA] as: "the amount in terms of money that a well-informed buyer is justified in paying and a well-informed seller is justified in accepting for property in an open and competitive market, assuming that the parties are acting without undue compulsion."¹⁸ "The fair market value shall be determined by use of the comparable sales, cost or capitalization of income appraisal methods or any combination of such methods.¹⁹ “Value,” as interpreted by Strong, does not require the application of these appraisal methods but rather allows for any competent evidence bearing on market value.²⁰

Unpegging “value” from approved appraisal methodologies gives greater, but not unfettered, liberty in asserting compensation claims. Daubert should remain applicable, as does the panel’s or trial court’s ability to control its own proceedings, including the application of the rules of evidence. The EDPA is silent as to the applicability of any rules of evidence at the appraisal hearing, and the informal nature of such hearings strongly suggests none would apply, subject only to the panel’s general power to control its proceedings. The rules of evidence apply on appeal to the trial court.

"Generally speaking, ‘[t]he district court has broad discretion in determining what evidence will be allowed in an eminent domain proceeding.'"²¹The appellate courts "will not second-guess the specific evidentiary decisions of the trial court absent an abuse of discretion. Considerable discretion is vested in the trial court in admitting or rejecting evidence of value, and the latitude accorded to the parties in bringing out collateral and cumulative facts to support value estimates is left largely to the discretion of the trial court."^[22] Cases are won and lost within this discretion, which could be viewed as an equitable tool to better promote justice or a source of greater unpredictability and uncertainty. For example, in Strong, witnesses were given great leeway in their opinions about value and compensation.²³ A few years later in Doug Garber Construction,²⁴the same Kansas Supreme Court upheld the trial court’s exclusion of testimony because of its apparent incredibility.

Essentially, when the entirety of a property is being taken, the compensation is for its full value, and the valuation of partial takings requires consideration of a “nonexclusive list of factors [in K.S.A. § 26-513 that] shall be considered if such factors are shown to exist.”²⁵ This list is not exhaustive but gives guidance on what can and should be valued. The factors give insight to an attentive condemning authority as to how to describe the taking and potentially to exclude some factors from the taking description.

There may also be factors that are not identified in the EDPA, yet would affect the particular property’s value. For example, valuation is determined according to the property’s highest and best use²⁶ rather than how it is used at the time of the taking. Another example is where the described property should be joined for valuation purposes to other property or otherwise considered as part of a larger parcel than what has been described. These are matters that may not be known to a condemning authority that is not familiar with local conditions but are known by affected parties who have personal and local knowledge.

There are events that may affect value but cannot be used in determining just compensation. The amount of compensation is limited to the reduction in value of the real estate as a whole rather than a sum of various separate items of damage.²⁷ Just compensation therefore must not be calculated by adding the values of individual items taken, such as a fence. This rule, referred to as the Unit Rule, rejects the Summation Method: The “summation method” denotes a process of appraisal whereby each of several items that contribute to the value of real estate are valued separately and the total represents the market value thereof. Use of this method of appraisal has generally been rejected since it fails to relate the separate value of the improvements to the total market value of the property. ... In contrast, the 'unit rule,' which is the generally accepted method of...