With “Good Faith” Like This, Who Needs Bad Faith?

A number of states have laws that require condemnors to make good faith offers to prospective condemnees before filing an eminent domain action, the theory being that this will encourage early settlements, and reduce the numbers of condemnation cases burdening the courts. Alas, human nature being what it is, it’s common that those prelitigation offers turn out to be something less than in good faith. In the olden days, as congressional hearings of the 1960s revealed, it was common that condemning agencies routinely offered prices that were actually below condemnors’ own appraisals. The “good faith offer” requirement was supposed to cure that problem.

As it turned out, however, not necessarily. One such case comes to us from Missouri, which we find remarkable because Missouri courts, by and large, are not overly solicitous of condemnees’ rights. But it appears that there are limits to everything. In Planned Industrial Expansion Authority etc. v. Ivanhoe Neighborhood Council, 316 S.W.3d 418 (Mo.App. 2010), the owners agreed to sell their property to a private party and to accept $650,000 as the price. But the authority stepped in and offered — are you ready? — $180,400. Predictably, the owners refused to sell at that price, so the authority filed a condemnation action. The owners responded by challenging the condemnation on the grounds that the authority’s offer was not in good faith, so the condemnation action was improperly brought. The trial court agreed, dismissed the action and awarded the owners attorneys’ fees.

So far, this would appear to be an unfortunate but not uncommon story. What makes it noteworthy, is the authority’s argument on appeal. According to the court of appeals, the condemnor argued that as long as it used a state licensed or certified appraiser, and he used “generally accepted practices,” his appraisal did not have to be in good faith. No, we are not making this up. Here is what the court said by way of response: “The Expansion Authority has cited no authority for the proposition that that it is a ‘generally accepted practice’ to submit an appraisal in less than good faith, and we would reject the proposition in any case.”

So we sit here wondering what those condemnor’s folks were thinking — or were they thinking at all? — when they decided to march into court and expressly defend bad faith conduct. But if the court opinion is to be believed, they did just that.

So in case you need an example, here is why the process of eminent domain is so widely despised. And while we offer three loud “attaboys” to the court for its performance in this case, it would not hurt for their Lordships to ponder what is it that the courts have been doing in the past to inspire such astonishing thinking on the part of condemnors’ appraisers and lawyers.

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