Utah Supreme Court Rules That Post-Valuation Evidence May Be Admissible in Condemnation Proceedings

The Utah Supreme Court has reversed a lower court rulings and held that evidence of post-valuation sales may be admissible in eminent domain proceedings.  This is an important, and potentially problematic, ruling that property owners should be aware of. 

In 2009, the Utah Department of Transportation (“UDOT”) announced its intent to condemn a parcel of property situated along the I-15 corridor in connection with a project at 11400 South in Draper, Utah.  In the litigation that followed, the parties disagreed on the quantum of damages for the condemned property and on the amount of severance damages to the property owner’s remaining property.  By the time the case went to trial in 2018, the property owner had sold the remaining property, which was developed into two car dealerships.  

Before trial, the property owners move to exclude any evidence of the sales on the basis of a categorical rule prohibiting evidence of any sale or development of property after the date of taking.  The district court granted the motion and endorsed the “general rule that a party may not rely on post-valuation facts and circumstances to prove severance damages.”

On appeal, the Utah Supreme Court reversed the district court’s holding and ruled that “there is no categorical rule foreclosing the relevance of evidence of a subsequent transaction involving the property in question.”  In so doing, the Court stated:  “[E]vidence of a sale or other development after the date of valuation may at least sometimes speak to the market value of the property on an earlier date.  A post-valuation-date sale or development of property may be relevant to the extent it aids the factfinder in checking assumptions about the development potential of the property in question—assumptions made in assessing the value of the property on the valuation date.”

This holding represents a significant shift from how most district courts in the state have approached this issue in the past.  In light of the ruling, property owners should be cautious of entering into any sales or lease transactions on condemned property before the amount of just compensation is determined at trial because doing so could undermine claims for just compensation.