Daily Development for Tuesday, August 27, 2008
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

Here are two relatively predictable, but interesting eminent domain decisions favoring landowners.  Note the second case comes out against the landowner but offers lots of guidance for preparing future cases. 

EMINENT DOMAIN.  The city’s denial of a curb cut and driveway permit, which effectively destroyed the applicant’s right of access to the public road, was a taking, even though it did not deprive the landowner of all economically viable uses of the property, and the landowner had not developed the property in reliance on the existing grade of the abutting public street. 

The State ex rel. Hilltop Basic Resources, Inc. v. City of Cincinnati, 886 N.E.2d 839 (Ohio 2008).
Hilltop owned 30 acres of riverfront property in the City of Cincinnati.  Much of the property was separated from the abutting road by two rail lines, over which Hilltop purchased the right to construct a roadway.  In 1996, the City granted Hilltop’s application for a permit to construct a curb cut and driveway connecting the property to River Road.  Construction never commenced, however,  and the permit expired. 

In 2004, Hilltop leased the property to Queensgate Terminals, LLC (“Queensgate”), which planned to develop the property as a barge-to-rail transportation facility.  Nearby bridge improvement needs made it necessary for the City to make plans to elevate River Road by seven feet, eliminating the property’s access to River Road.  When Hilltop again applied for a curb cut and driveway permit to connect the property to the street, the City denied its application due to the proposed project’s incompatibility with the pending bridge reconstruction. 

Hilltop and Queensgate responded by petitioning for a writ of mandamus to compel the city to institute eminent domain proceedings, claiming the city’s actions constituted a taking of their property.  The Court of Appeals, Hamilton County, issued the writ of mandamus, which the City appealed.

The Supreme Court of Ohio found that while mandamus will not issue if an adequate remedy, such as an administrative appeal, exists in the ordinary course of law, Queensgate lacked a sufficient alternative under the Cincinnati Municipal Code.  The Supreme Court rejected the City’s argument that the denial of curb cut and driveway access does not constitute a compensable taking because it does not deny the landowner all economically viable use of the property.  Where a fundamental element of ownership has been eliminated, deprivation of all economically viable uses need not be established.  Instead, the test is whether governmental action has substantially or unreasonably interfered with the landowner’s right of access to the abutting public street.  Ohio courts also have rejected making an arbitrary distinction between developed and undeveloped property with respect to whether a compensable taking has occurred.

The Supreme Court affirmed that there is no requirement that the affected parcel have been developed in reliance on the existing road grade in order to qualify as a taking.  The right to compensation can be established by a reasonable potential future use.  Thus, the Court of Appeals properly concluded that the city’s preclusion of curb cut and driveway construction substantially and unreasonably interfered with Queensgate’s right of access to the abutting public road.  The Court of Appeals was justified in issuing the writ of mandamus to compel Cincinnati to initiate an appropriation proceeding.

EMINENT DOMAIN.  Temporary easements of road frontage that briefly obstruct interior acreage should be valued on the basis of rental value of the easement for its duration, plus, the rental value of the interior acreage only when actual obstruction occurs or when the condemnee shows that the temporary easement impeded the property’s sale or development. 

McMurdy v. State of New York, 10 N.Y.3d 234, 2008 N.Y. Slip Op. 02499. 

In 1980, Claimant purchased a vacant, unimproved parcel of land in Islip, New York.  The Parcel had 75 feet of frontage on Montauk Highway and was zoned for residential use.  In April 1999, the State of New York permanently claimed a 2.5 foot-deep strip along the length of the Parcel’s frontage as part of a highway project.  The State also took a temporary easement over a 10 foot-deep strip along the entire front of the parcel for grading purposes.  Claimant commenced a proceeding for damages from the Appropriation and the Easement. 

The parties agreed to damages for the Appropriation, but disputed how to calculate consequential damages for the Easement – i.e., the damages associated with loss of access to the unencumbered interior portions of the Parcel.  Relying upon Matter of Kadlec v. State of New York, 264 A.D.2d 420 (2d Dept 1999), Claimant sought the rental value for the whole parcel for the full period of time the easement was in effect – regardless of how long access to the Montauk Highway was actually obstructed.  The State countered that consequential damages were only appropriate for those days when access to the interior was actually blocked.  Based on Kadlec, the trial court found for the Claimant and awarded rental value for the entire duration of the Easement. 

The State appealed, arguing that damages were only appropriate for the duration during which the Easement either obstructed access to the Parcel, or interfered with the Parcel’s sale or development into its highest and best use. The Court of Appeals reversed.

The Court cited Village of Highland Falls, 44 N.Y.2d 505 (1978):  “[it] has been held by this court … that compensation need not be paid for the State’s taking of a temporary easement when there is no actual interference with the property owner’s use of his property” (Id. at 507, citing Great Atl. & Pac. Tea Co. v. State of New York, 22 N.Y.2d at 75, 87 (1968)).  The Court also noted, however, that Village of Highland Falls: warned that uncertain access may not be access: 

“[not] to be ignored … although not always measurable, is the damage to a property owner caused by uncertainty regarding the condemnor’s intention.  A temporary easement that leaves the property owner under constant threat that his use of the property may be curtailed or stopped is likely to affect business or other financial decisions even if use is never interrupted … ”(44 N.Y.2d at 509). 

The Court found that Claimant was not entitled to consequential damages for the entire period of the easement because, unlike Kadlec, the State proved the actual interval of obstruction – 10 days in this case.  The Court found that Claimant was not entitled to damages based on uncertainty of the State’s intention because the Easement did not thwart the Parcel’s highest and best use.  Specifically, 1)  the Easement reserved Claimant a concurrent right of access; 2)  there was no evidence that Claimant had sought the zoning change needed for commercial development; 3) Claimant never applied for a work permit to build an entrance connecting the Parcel to Montauk Highway; 4) Claimant had not sought a yard-width variance required for commercial development; and, 5) there was no evidence that Claimant was planning to sell or develop the property.  The proper measure of damages was the rental value of the land encompassed within the Easement plus, as consequential damages, the rental val

ue of the unencumbered interior for any period when highway access was not possible because the Easement was in use.

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