Lowball Watch – Texas – World Class

As far as we know, this is the world-class runner up in the lowball derby. The thus far reigning champion is a case from California, where in a partial taking of an existing, operating high-voltage transmission corridor, the State D.O.T. (known around here as CalTrans) deposited $200,000, whereas the jury verdict, upheld later by the state supreme court came to $49,500,000. People ex rel. Dept. of Transp. v. Southern Cal. Edison Co., 94 Cal.Rptr.2d 609 (2000). Still, this one that comes to us from Texas is a worthy contender.

The Enbridge Pipeline sought to condemn a right of way and first offered $35,685.00, which it later increased to $47,580. The Commissioners awarded $47,580, but when the case was tried to a jury, the award came to $20,955,000, which was affirmed on appeal.

The bone of contention was the pipeline’s argument that the subject property, that had several gas company leases on it, plus 15 pipelines entering it, as well as a fully permitted gas processing plant, should be valued as “a bare and undeveloped tract of rural real estate.” Nothing doing, said the court. The “scope of the project” rule did not apply because all these gas facilities on the subject property may have been of a kind contemplated by the condemnor gas company, but they were installed by others, long before this condemnation, so the influence of this particular project did not contribute to the value of the subject land in its before condition. In other words, a condemnor is entitled to value the subject property uninfluenced by the project it intends to build on it (and even that subject to an exception), but it has no right to disregard an increment of value generated by a project (or projects) that someone else has created on  the subject land.

You can find the opinion of the Texas Court of Appeals telling this story in Enbridge Pipeline (East Texas) L.P. v. Avinger Timber, L.L.C., 326 S.W.3d 390 (Tex.App. 2010).

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