UTAH COURT OF APPEALS AFFIRMS $13 MILLION JUST COMPENSATION AWARD AGAINST UDOT

On November 8, 2018, the Utah Court of Appeals affirmed a lower court’s award of $13 million dollars in just compensation to property owners after a condemnation trial against the Utah Department of Transportation (“UDOT”).  In 2011, UDOT filed initiated the eminent domain proceedings seeking to acquire a strip of land that crossed through the property owners’ property (the “Subject Property”).  At the time UDOT initiated the condemnation proceedings, its appraisers opined that the fair market value of the Subject Property was $8,068,800.  The property owners disagreed with that valuation, believing the Subject Property to be worth significantly more.  Ultimately, the parties reached an impasse and the case proceeded to trial.  During trial, “UDOT attempted to convince the trial court that the [Subject Property] was nearly worthless dirt.”  2018 UT App. 213, at ¶ 1.  However, because it “thought more of the [Subject Property], the trial court disagreed with UDOT’s “low-ball” approach, and it ultimately awarded the property owners $13 million in just compensation, approximately $5 million more than UDOT’s appraised value.  Unhappy with the verdict, UDOT appealed, arguing that the district court had erred in at least two ways.

First, UDOT argued that the district court misapplied the project-influence rule—which requires exclusion of “any enhancement or decrease in value attributable to the purpose for which the property is being condemned . . . in determining the fair market value of the property.”  Id. at ¶ 10.  UDOT argued that the district court had erroneously applied the rule by:  (1) not excluding value increases resulting from development patterns that occurred after the relevant project was announced, (2) not excluding project influence in determining the Subject Property’s highest and best use, and (3) relying on comparable properties allegedly influenced by the project.  The Utah Court of Appeals quickly rejected UDOT’s arguments, stating:  “Because evidence was presented at trial showing that the development the court considered would have happened regardless of the construction of the [relevant project], . . . the district court did not misapply the project-influence rule.  Id. at ¶ 9.  This holding represents an important advancement in Utah’s eminent domain law and provides guidance to property owners, attorneys, and appraisers regarding the proper application of the project-influence rule. 

Second, UDOT argued that the valuation method the district court used to arrive at its verdict was flawed.  The Utah Court of Appeals did not, however, reach this issue because it concluded that UDOT had invited any error committed by the district court.  In other words, the Court of Appeals held that, to the extent the district court committed error, it was UDOT’s fault because UDOT encouraged the court to make the allegedly erroneous rulings.

 After rejecting UDOT’s arguments, the Utah Court of Appeals affirmed the district court’s rulings and verdict in whole.  In addition to providing important precedent, this enormous victory for the property owners demonstrates the importance of property owners retaining counsel to represent them in eminent domain proceedings against any condemning authority. 

 A complete version of the Court of Appeal’s opinion can be found here:  https://www.utcourts.gov/opinions/appopin/UDOT%20v.%20LEJ%20Investments20181108_20160648_213.pdf

Utah Court of Appeals Affirms $2.3 Million Award of Severance Damages And Clarifies The Law Regarding What Is Required To Demonstrate Severance Damages

On February 8, 2018, the Utah Court of Appeals in UDOT v. Target Corporation, et al., confirmed a jury’s award of $2.3 million dollars in severance damages arising from the loss of visibility and access to commercial property in American Fork, Utah.  In 2009, UDOT decided to commence two construction projects that required, among other things, the expansion of I-15 and construction of a new freeway interchange in American Fork.  To facilitate construction of the interchange, UDOT condemned two small parcels of land in fee as well as a perpetual slope easement.  During trial, the property owners argued that the interchange significantly decreased visibility into their property and that the takings also caused them to lose a heavily used “right out exit.”  The property owner’s appraiser testified that the reduced visibility and loss of the “right out exit” resulted in a $2.3 million in severance.  The jury agreed with the property owners and awarded them $2.3 million in severance damages and $87,910 in just compensation for the parcels taken in fee and for the perpetual slope easement.

On appeal, UDOT argued that the property owners had not presented sufficient evidence of a necessary causal link between the taking of their property and their claimed severance damages resulting from the loss of visibility due to the new interchange.  In rejecting this argument, the Utah Court of Appeals explained that “[t]here are two methods by which a landowner can demonstrate the requisite causal link.  First, if the visibility issues stem from a ‘structure’ that is built upon the part of the property that was taken, causation is presumed.  Second, if the visibility issues stem from a ‘structure’ that was not built on the part of the property that was taken, causation is not presumed, and the property owner is entitled to severance damages only if it can demonstrate that ‘the use of the condemned property is essential to the completion of the project as a whole.’”  Both on appeal and before the district court, the property owners argued that they were entitled to a presumption of causation because a slope supporting a retaining wall for the new interchange was located on the condemned property.  Agreeing with the property owners, the Court of Appeals announced four important holdings, which clarify Utah law.  First, “to be considered to have presumptively caused severance damages,” a structure “does not have to be entirely constructed on land taken from the claimant.”  Second, the Court determined that the relevant “structure” for purposes of the severance damages analysis was the new interchange, rather than the interchange’s individual component parts.  Third, although only “one extremely small part . . . of the [i]nterchange was built on land taken,” the Court held that the property owners were “entitled to recover severance damages caused by loss or visibility resulting from construction of the entire [i]nterchange.”  (Emphasis added).  Fourth, because the interchange was at least partially constructed on the condemned property, the Court of Appeals held that it was not necessary for the property owners “to prove that the taken parcels were ‘essential’ to the Projects as a whole.”

With respect to the severance damages awarded for the lost exit, UDOT suggested on appeal that the property owners did not present sufficient evidence of damages during trial because their appraiser did not separately assess the severance damages caused by the loss of visibility and the loss of the exit.  In rejecting this argument, the Court of Appeals held that “there is no requirement . . . that Claimants must present their severance damages on a line-item basis, including a discrete value for, specifically, damages suffered by virtue of the loss of the right-out exit.”  Rather, “Claimants are free to present their severance damages evidence in a more general way, by presenting to the factfinder evidence of what the property was worth prior to the taking, and what it is worth after the taking.”  The Court noted, however, that “in some cases and under some factual circumstances, appraisers would be able to itemize and individually value the various factors that compromise the total diminution in value” and that “[w]here this is possible, and where appraisers are comfortable making this attempt, claimants may wish to consider presenting such evidence, since stating diminution in value only in general terms carries some risk.”

It is currently unclear whether UDOT will seek certiorari from the Utah Supreme Court to appeal the Court of Appeal’s opinion.  The full text of the Court of Appeal’s opinion can be found here:  http://www.utcourts.gov/opinions/appopin/UDOT%20v.%20Target%20Corporation20180208_20160122_24.pdf.

Condemnee Prevails Before Utah Court of Appeals In Eminent Domain Case

On May 5, 2016, the Utah Court of Appeals issued its decision in Utah Department of Transportation v. Boggess-Draper Company, LLC, an eminent domain case.  In 2010, the Utah Department of Transportation (“UDOT”) initiated condemnation proceedings against Boggess-Draper Company, LLC (“Boggess-Draper”) to take several parcels of Boggess-Draper’s private property.  Although UDOT initially indicated otherwise, in 2013 it filed a motion contending that Boggess-Draper had previously conveyed to UDOT all rights appurtenant to the property during an earlier, unrelated eminent domain matter.  Before the trial court, Boggess-Draper argued that extrinsic evidence demonstrated that UDOT’s position was incorrect, but the district court refused to consider such evidence.

On appeal, Boggess-Draper contended that the district court erred by refusing to consider extrinsic evidence.  In its May 5, 2016 decision, the Utah Court of Appeals unanimously agreed with Boggess-Draper’s position.  In so doing, the Court stated:  “We conclude that Boggess-Draper’s extrinsic evidence indicated the existence of a latent ambiguity” and “that the district court committed reversible error by declining to consider the extrinsic evidence.”

Steven J. Joffee, along with his former partner at his previous law firm, litigated the appeal on behalf of Boggess Draper.  A copy of the Utah Court of Appeals’ opinion can be found here:  https://www.utcourts.gov/opinions/appopin/UDOT%20v.%20Boggess-Draper20160505.pdf

Important Victory At Utah Supreme Court For Condemnees.

On March 24, 2016, the Utah Supreme Court issued an important decision for private property owners in the State of Utah facing the threat of eminent domain proceedings.  In Salt Lake City Corporation v. Evans Development Group, LLC, the Utah Supreme Court unanimously held that the Salt Lake City Corporation (the “City”) lacked statutory authority to condemn private property owned by Evans Development Group, LLC (“Evans Development Group”).  In so holding, the Court concluded that the City “did not follow the condemnation procedures required by statute” and that condemning authorities do not have power to take property for exchange purposes in the manner the City had attempted.  Based upon these conclusions, the Utah Supreme Court vacated the district court’s Final Judgment of Condemnation, ordered the City to return the property to Evans Development Group, and instructed the district court to determine the monetary damages and attorney fees to which Evans Development Group is entitled as a result of the City’s wrongful condemnation of their property.  Steven J. Joffee, and his former partner at his previous law firm, litigated the appeal on behalf of Evans Development Group.  A copy of the Utah Supreme Court’s opinion can be found here:  https://www.utcourts.gov/opinions/supopin/SLC%20Corp%20v.%20Evans%20Development20160324.pdf

Utah Court of Appeals Affirms Trial Court’s Ruling That Section 78B-6-510 Prohibits Cross-Examination Of Expert Appraiser Regarding Prior Appraisal Prepared To Obtain Immediate Occupancy.

On August 20, 2015, the Utah Court of Appeals in UDOT v. TBT Property Management, Inc., affirmed a district court’s finding that Section 78B-6-510 of the Utah Code (“Section 78B-6-510”) prohibits a private property owner from cross-examining an expert appraiser regarding a prior appraisal of the subject property that the expert prepared to support a motion for immediate occupancy.  Section 78B-6-510 states:  “If a condemning authority seeks immediate occupancy of the condemned property, the condemner must file with the clerk of the court a sum equal to the condemning authority’s appraised valuation of the property sought to be condemned.  That amount shall be for the purposes of the motion only and is not admissible in evidence on final hearing.” 

During trial, TBT Property Management, Inc. (“TBT”), the private property owner, attempted to cross-examine UDOT’s expert appraiser on a prior appraisal that he had performed of the subject property in connection with a motion for immediate occupancy.  UDOT’s counsel objected to the questioning, arguing that it was prohibited by Section 78B-6-510, and the district court sustained the objection.

On appeal, TBT challenged the district court’s ruling, arguing that the line of questioning would have fallen outside of Section 78B–6–510’s bar because TBT did not seek to elicit the amount UDOT tendered to obtain occupancy of the property but rather sought only to question [UDOT’s expert appraiser] about how he arrived at the fair market value of the property in [a] 2008 appraisal.”  TBT further argued “that the question posed to [UDOT’s expert appraiser] was a legitimate attempt to impeach [UDOT’s expert appraiser] on his subsequent valuation and that it was therefore error for the trial court to restrict its cross-examination on this point.”  The Utah Court of Appeals rejected these arguments, stating:  “Even if TBT did not seek to elicit testimony prohibited by Section 78B–6–510 by asking [UDOT’s expert appraiser] to confirm the amount of the 2008 valuation, TBTs question placed before the jury the precise information that Section 78B–6–510 bars from evidence. The trial court therefore did not abuse its discretion in striking the testimony and ruling that TBT could not inquire as to the specific valuation reached by [UDOT’s expert appraiser] in his 2008 appraisal.”

It is currently unclear whether TBT will seek certiorari from the Utah Supreme Court to appeal the Court of Appeal’s decision.  The full text of the Court’s opinion can be found here:    https://www.utcourts.gov/opinions/appopin/UDOT%20v.%20TBT%20Property%20%20Management,%20Inc.20150820.pdf

 

Utah Supreme Court Questions But Does Not Decide Whether Condemnation Of Excess Property Satisfies The "Public Use" Requirement Of The State And Federal Constitutions.

On June 24, 2014, the Utah Supreme Court issued an opinion in UDOT v. Carlson, 332 P.3d 900 (Utah 2014).  In its opinion, the Court questioned but did not decide whether condemnation of excess property satisfies the the "public use" requirement of the state and federal constitutions.  The full text of the Court's opinion can be found here:  https://www.utcourts.gov/opinions/supopin/UDOT142420140624.pdf