Higher Mathematics Department, Or How Can a $1,655,280 Parcel of Land Suffer $2,000,000 in Severance Damages?

In connection with our duties as editor of Just Compensation, it’s our sometimes enlightening and sometimes depressing task to read every reported eminent domain and inverse condemnation opinion handed down by the courts. And to paraphrase the title of that famous old song, folks, nobody knows the drivel we have seen doing that. But interspersed with the familiar judicial dross there are some items that are quite worthwhile — some expound and illuminate law, others discuss interesting factual situations, or appraisal practices. And then there are those rare bits and pieces that just cause you to chuckle. Here is one of them.

In School District No. 12 v. Security Life of Denver Ins. Co., 179 P.3d 1 (Colo.App. 2007) the school district set out to condemn two parcels, A and B. Prudently, the District was not sure whether it could afford both, so it prevailed on the trial ourt to instruct te jury to value parcel A as well as parcel B, and also determine severance damages to parcel B in case the District could only acquire parcel A. So far, so good.

The jury came back with $5,619,240 for parcl A, $1,655, 280 for parcel B, and $2,000,000 in severance damages to parcel B. Say what?! How could the severance damages to parcel B exceed its value? But wait, there’s more. The owners’ lawyers managed to persuade the trial judge that not only was this severance damages verdict OK, but also — are you ready? — that the jury intended to award the owner both the value of parcel B and the severance damages to it.

It probably won’t come as a surprise to you that on appeal the Colorado Court of Appeals, said “nice try but no cigar,” and reversed. It held that the jury’s verdict was mathematically impossible. The jury had been instructed to find severance damages to parcel B only if the taking was of parcel A alone. But valuing parcel B in its entirety meant that there could be no severance damages to it — it had to be one or the other (a total taking or a partial taking), not both. So the awarding both the value of the entire parcel B as well as severance damages to it was a logical no-no. And so, valuation of parcel B had to be remanded for retrial.

Funny as all this may be, we can’t help but admire the sheer audacity of the owner’s silver-tongued lawyer who persuaded the trial ourt to enter a judgment for $3,655,280 as compensation for a parcel the jury found to be worth only $1,655,280.  As the late, lamented California Supreme Court Justice Otto M. Kaus once put it to a respondent’s lawyer defending clear error of a trial ourt, “Counsel, you won a trick case below, and I hope you enjoyed it while it lasted.” 

UPDATE.  Whoops. We may have been a bit hasty. A divided Colorado Supreme Court reversed the Court of Appeals, three judges dissenting. The reason for the reversal was that the court saw this not as one case, but two. First, a trial to take parcel A as of 2004 and find its value plus severance damages to parcel B. Second, to find the value of parcel B as of 2005. Thus, although the parties tried it as one case, by the time the valuation of Parcel B took place it had already suffered severance damages from the taking of parcel A, and its value was diminished accordingly. So contrary to the way the Clolorado Court of Appeals saw this case, it was actually two condemnations with two different dates of value. See School Dist. No. 12 v. Security Life of Denver, 185 P.3d 781 (Colo. 2008).

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