Utah Bar Journal
Vol. 25, No. 3. 42.
Severance Damages Take a Sea-Change With Admiral Beverage
Utah Bar Journal Volume 25 No. 3 May/Jun 2012 Severance Damages Take a Sea-Change With Admiral Beverage by Richard E. Danleyjr. Background
In October of 2011 the Utah Supreme Court issued its opinion in Utah Department of Transportation v. Admiral Beverage Corporation, 2011 UT 62, 693 Utah Adv. Rep. 16. The opinion has not been released for publication. Admiral marks a sea-change in how Utah determines severance damages involving actual takings. It allows the claimant to recover the full diminution in fair-market value, without limiting recovery under the traditional severance damage rules, simplifies the determination of loss and, for the first time awards severance damages for loss of visibility from changes made to a public highway. However, the Utah Supreme Court limited the eligibility to recover under Admiral to four preconditions. First, an actual taking must occur; second, the property taken must be essential to the project; third, recovery must be limited to real estate; and fourth, the loss must be caused by the taking. See id. ¶ 29. If these four conditions are present the supreme court said the claimant only need prove the taking of a protected property interest to be entitled to full recovery for loss under the State Constitution. See id. ¶ 43.
Historically, recovery for severance damages was limited by a body of common-law rules developed to determine if the loss is constitutionally protected and recoverable. For ease of reference these are referred to as "severance damage rules." The holding in Admiral appears to set aside some or all severance damage rules when there is a taking and permit the claimant full recovery when the lost value is caused by the taking. Under Admiral, portions of two lots were taken and the owner sought recovery for diminution in value from the lost view out to the east and the lost visibility from the freeway due to its elevation by twenty-eight feet. See id. ¶ 2. Under Utah's severance damage rules, loss of visibility from a public highway is not a protected property interest. See State v. Harvey Real Estate, 2002 UT 107, ¶¶ 11-14, 57 P.3d 1088. Following the severance damage rules, the lower courts in the Admiral case rejected recovery for any loss in value for visibility from the freeway and also applied the so called "abutment rule" to prevent recovery for the blocked view See Admiral, 2011 UT 62, ¶ 7. The abutment rule prevents recovery for lost view or other damage if the improvements causing the damage are not constructed, at least in part, on the land taken from the claimant. In Admiral the claimant's property abutted the frontage road, not the freeway, and none of the elevated freeway was constructed on the land taken from the claimant. See id. ¶ 2. Taking a new direction, however, the supreme court permitted full recovery for all diminution in value for both the lost view out and the lost visibility from the elevated freeway. See id. ¶ 43. The Admiral court held no portion of the elevated freeway needed to be constructed on the property taken from the claimant for recovery to occur and revised the abutment rule so that it does not apply if the property taken is essential to the project for which the taking occurred. See id. ¶ 29. It also said that once a taking of a protected property interest is demonstrated (such as the taking of the owner's land) recovery for all damages caused by the taking is required under Utah law. See id. ¶ 31. This includes recovery for a property interest that is not a recognized or protected interest under Utah law (i.e., the loss of visibility from the freeway). The supreme court said that the constitutional requirements for just compensation from a taking are only satisfied when the owner is made whole by placing the owner in the same position he or she would have occupied but for the taking. See id. ¶ 28. Quoting Stockdale v. Rio Grande Western Railway Co., 28 Utah 201, 77 P. 849 (Utah 1904), the court said once the landowner demonstrates an actual taking of a protected interest, the owner is entitled to just compensation to the extent of all damage suffered. See Admiral, 2011 UT 62, ¶ 28 (quoting Stockdale, 11 P. at 852).
Severance Damages Rules.
Severance damages occur when the the public takes or damages a portion of a private owner's property, leaving the owner with some or all of the property. Traditionally the public entity with the power of eminent domain severs the owner's land by taking the portion necessary for the project and the owner keeps the remainder. Under Utah law when the public takes private property for a public use the private property owner must be...