Category: Lowball Watch

Lowball Watch — Two From California

First, one from San Francisco. City and County of San Francisco v. Convenience Retailers, San Francisco Superior Court, case No. CGC-11-507339. This was a taking of a former railroad station site south of Market Street. The City’s final offer was $5,000,000. The owner’s final demand was $8,600,000. At trial, the condemnor dropped its opinion of value to $3,125,000 (after deducting $1,300,000 for remediation — the subject property was the site of a former service station). The owner’s evidence of value at trial was $10,875,000.

The jury verdict was $7,119,000 — or $2,119,000 more than the condemnor’s offer.

Interestingly, we are informed that neither condemnor’s counsel nor the trial judge had ever tried an eminent domain case, but that did not keep the judge from refusing to give an instruction on project influence, in spite of the fact that the evidence included a memo from the city Planning Department, stating that rezoning would not be considered because of the project in issue.

Also, there was a “trial within a trial” on the issue of contamination/remediation. The city wanted to deduct $1,300,000, and the owner contended that the only remediation would have to be the removal of old underground storage tanks. The jury found that the deduction for decontamination should be only $81,000.

The second case comes from Beverly hills — City of Beverly Hills v. Beverly Hills Land Co., Los Angeles County Superior Court, case No. BC 461 255, verdict  returned May 23, 2013. This was a taking of a former electric railway right of way, now a privately owned 12,632 sq. ft. median at the intersection of Santa Monica Boulevard and Doheny Drive, for a “gateway” entrance into Beverly Hills. The city’s appraiser testified to total just compensation of $135,000 — $111,000 for land, $24,000 for trees and other improvements. But she used the across-the-fence valuation method which yielded a value of $2,210,600 which she then discounted by 95% on the ground that in her view the owner could not use the subject property.

By our calculator, the verdict comes to over 25 times the city’s evidence.

The owner’s appraiser opined to a highest & best use as a transportation corridor. He also used the across-the-fence method, and came to the opinion of value of $5,475,000. The jury verdict came to $3,435,904.

More details as they come in.

 

Lowball Watch — Ohio

Columbus Business First of May 16, 2013, reports  that a Franklin County jury disagreed with the city’s valuation of eminent domain land acquisition for a beautification project in Westerville. The city had offered the owner $145,000, but the verdict was $1,320,000. See Brian R. Ball, Westerville Whacked With $1.3 M Verdict in Eminent-Domain Case – click here.

The article gives no indication  of the specific factual or legal bone of contention that separated the parties’ opinions of value, but the verdict came to over nine times the city’s offer.

An Eminent Domain Lowball in the Making? – New Jersey

CourierPostonline.com reports that the New Jersey Supreme Court has declined to hear an appeal of the local Diocese, regarding a taking by eminent domain of a part of its Bellmawr cemetery for highway improvements. What appears to have been in issue was the right to take, not valuation — at least not yet. See Jim Walsh, High Court Refuses Bellmawr Cemetery Hearing, Courier Post, May 2, 2023.

The New Jersey State DOT seeks to take a part of the cemetery, and as of 2007, has offered $1.9 million. The church seeks $19.4 million if the taking  is going to proceed, as it now is. So this controversy bids fair to set up at least the potential for one hell of a lowball. We are unable to  gain a realistic insight into this controversy and of the valuation factors that divide the parties because the Courier Post article is a bit terse and confusing: for one thing, it says that DOT does not intend to move any graves, but it also says that part of the compensation sought by the Diocese is for grave moving. Possibly, this grave-moving may be necessitated by the taking of a still-unused part of the cemetery that is not actually occupied by graves, and that may impact on the unused part, but that is not clear. Either way, it appears that the State and the diocese see determination of severance damages very differently. So keep your eyes on this one — if it goes to trial, it should be fun to watch.

The taking of cemeteries can be contentious and controversial because of the emotional factors involved. In the past few years, there was a major controversy in Illinois over the taking of a cemetery for the expansion of the Chicago airport. The owners challenged the taking on necessity grounds, but lost.  The Illinois Appellate Court disclaimed any ability to pass judgement on the technical matters underlying the decision on how and where to lay out the new airport. Chicago v. St. John’s United Church of Christ,  935 N.E.2d 1158 (Ill.App. 2010). But with all due respect to their Illinois Lordships, that was piffle: courts pass judgement on such technical matters all the time in connection with challenges to projects whose construction is opposed on environmental grounds. And of course, passing judgment on the soundness and care with which all sorts of techical decisions are made, is mother’s milk in tort cases where someone has been injured and claims that it happened because some machine, device, structure, construction etc. was negligently designed, constructed and/or operated. Courts seem to have no problems with those technical matters either.

The only case of that kind known to us, where the cemetery owner prevailed on the right to take, was the old California case of Eden Memorial Park v. Superior Court, decided in the 1960s, but that was a short-lived victory. After losing in state court on statutory grounds (under a statute forbidding the taking of cemeteries for highways), the State DOT went whining to the feds who obliged and condemned the subject parcel in federal court under federal law, and then conveyed it to DOT. The owners then challenged the state’s ability to take title, being as that would indirectly violate that statute and result in the acquisition by the State of cemetery land for a use forbidden by statute, but the California Supreme Court disagreed and allowed the transfer of that land by deed from the feds to the State.

We wrote about the problem of cemetery takings before, and if you want to see it discussed in slightly more detail, click on www.gideonstrumpet.info/?p=393.

Follow up. For additional information on this case go to the New Jersey Einent Domain Blog http://njcondemnationlaw.com/

 

Lowball Watch – California

Word reaches us from Solano County, California, of another worthy entry in this category of eminent domain cases.

Solano County v. Valine, No. FCS032554, April 3, 2013, was a partial taking case. The county took 10 acres out of a larger parcel, splitting it into two parts, respectively 25 and 43 acres.  Condemnor’s deposit was $575,000, and the final statutory pretrial offer was $750,000 (raised from $700,000). The owner’s demand was $877,000.

The trial testimony of condemnor’s first appraiser was $320,420 for the take, plus $129,600 in severance damages. The second county appraiser testified to $350,408 for the take, and $124,000 in benefits, with no severance damages.

The jury verdict was $328,823 for the take, plus $924,148 in severance damages, for a total of $1,252,971, over twice the condemnor’s deposit.

Lowball Watch — California

We are informed that the case of Sacramento Area Flood Control Agency v. Souza, Sacramento Superior Court, Case No. 34-2010-00083124, was decided at the trial court level on February 5th, 2013, after the jury deliberated for one hour and 15 minutes.  This was a taking of 2.256 acres from the front of a larger parcel of 4.68-acres.

Condemnor’s pretrial offer was $250,000; the owner’s demand was $330,000. At trial, the condemnor’s evidence of value was lowered to $195,000. The condemnee’s evidence of value was $465,000. Neither side testified to severance damages. The jury verdict wa $455,000.

Lowball Watch – New York

Here comes another one from the Empire State. The case caption is Longridge Associates v. Metropolitan Transportation Authority, Putnam County Supreme Court,  Index No. 1877/03. The essential facts are: Condemnor’s pre-litigation offer – $700,000; condemnor’s trial evidence – same; trial court award – $4,375,000.

Condemnor’s problem was that it contended that the property’s highest and best use was nothing — just to hold the land.

Lowball Watch — Louisiana

A worthy entry into our “Lowball Watch” department comes from Louisiana. It’s State DOT v. Monteleone, La. Ct. of Appeal (5th Cir.), No. 11-CA-1013, filed November 13, 2012. This was a taking of a 153-acre tract of land for highway improvement. For purposes of valuation it was subdivided by the appraisers and the court into three parcels. As a result the opinion is long and fact-intensive, so if you want to understand the controversy fully, you should read it in its entirety. The date of value was 1987.

The DOT’s deposit was only $46,558, whereas after two trials (see 967 So.2d 798 for the first appellate opinion which reversed the first award of an additional $45,114 with no severance damages, because of jury misconduct). The final award for the taking, after the second trial, came to $214,534.14. plus $1,416,466.40 in severance damages, plus $1,584,442.54 in accrued interest (and counting), plus $173,030 in costs, plus $900,000 in attorneys fees for the trial. The case was remanded for calculation of attorneys fees for the appeal, to be added to the attorneys fees for the trial.

The controversy centered on DOT’s contention that the highest and best use was only the land being left in a natural state as “recreational,” whereas the owners contende that a part of it was developable as industrisl. Note also that this condemnation action was filed — are you ready? — in 1987, which accounts for the high interest figure. No explanation for this long delay (other than the first trial and first appeal which still makes this delay pretty long).

This post was edited on November 26, 2012

Lowball Watch — New York

Here is a dispatch from Rockland County, New York. The local Sewer District brough a condemnation action to take a 64-acre tract of vacant land located in Ramapo, and offered the owner $244,000. The owner declined it, so the case went to trial. At trial, the condemnor upped its evidence of value to $320,000. The owner’s appraiser opined to compensation of $8,850,000 based on a market data analysis. The trial judge (there are no juries in New York eminent domain cases) awarded $8,100,000, plus interest from February 15, 2005. In other words, the award was thirty-three times the offer.

The case is Split Rock Partnership v. Rockland County Sewer District, Rockland County Supreme Court, Index No. 7604/04.

The controversy centered on the property’s highest and best use. The owners contended that the subject property was suitable for development of a large commercial building. Condemnor disagreed.

If you have an interest in valuation evidence, we recommend you reard this entire lengthy opinion which is fact-intensive.

Lowball Watch — Texas

Tradition has it that everything is bigger in Texas and that goes for lowballing condemnees too. The Associated Press reports what appears to be an epidemic of lowballing in Texas, in connection with the feds’ condemnation of land for a border fence. The story has been published in the Metropolitan News-Enterprise, a legal newspaper in Los Angeles, under the headline Landowners Say They Were Shortchanged in Deals for U.S.-Mexico Border Fence, October 16, 2012, at p. 5.

The public project consists of a congressionally authorized, 670-mile long metal fence along the border, intended to curb “illegal immigration” and the taking is for its construction.

The problem that is stirring things up is the great disparity in prices that the feds are paying. Many complaints are coming from owners of small parcels that are being taken, who are largely unrepresented, and who, without legal advice tend to accept the government’s offers in the naive belief that Uncle Sam wouldn’t cheat them. Hah! In fact, condemnees who are represented by counsel do much better than others.

“An Associated Press analysis of nearly 300 Texas land cases found that most of the settlement money went to a small group of owners, all of whom had attorneys. The legal help appeared to pay off: Of nearly $15 million that has been paid out, 85 percent has been awarded to just a third of the property holders.”

Of course, these people were largely owners of larger, more valuable land, and thus had a greater incentive and greater means to hire counsel. But that doesn’t change the fact that even those folks were targeted for lowball offers.

“One recent case involved 8 acres at the entrance to a sable palm grove managed by the Nature Conservancy. The government initially offered $114,000, but in August the matter was settld for nearly $1 million.”

Which according to our calculator comes to over eight times the original lowball offer. In another case,

“The fence forced a developer to scrap plans for an entertainment district along the Rio Grande in Brownsville. The government’s first offer was $233,300. After a three-year legal battle that almost went to a federal trial, both sides settled for $4.7 million.”

Which comes to twenty times — you read it right, twenty times — the original offer!

These lowball offers from which the feds retreat when challenged, are not just limited to cases in which the owners are affluent and well represented. The AP cites the case of one Oscar Ceballos who was offered the “ridiculous” amount of $1600, but who, even when represented by an unspecialized legal aid lawyer, was able to settle for $40,000, or twenty-five times the original offer.

So what’s the feds’ excuse? Get this. “Federal attorneys say the initial offers represented only a starting amount that would permit the seizures to begin and could be adjusted later.” In our opinion, that sounds like bullshit. If memory serves us, the Uniform Relocation Assitance Act requires that prospective condemnees are offered the highest approved government appraisal amount, not some sort of  a “starting” lowball bid. So in our opinion what the feds are doing, is taking unfair advantage of unsophisticated land owners of modest means and cheat them when they can.

We have written about this stuff earlier — see “[Un]equal Justice Under Law,” 40 Loyola of L.A. L. Rev. at pp. 1106-1107 (quoting Keith Harper, MAI, describing from an appraiser’s point of view how typical lowballing works in cases of mass condemnations). Do take a look at it, as well as at the infamous statement of a government land acquisition functionary, threatening landowners with prolonged delays and needless litigation unless they accepted “30 cents on the dollar;” quoted at id. pp. 1105-1106.

Thiese morally shoddy practices were common and were exposed in congressional hearings in the 1960s. The Uniform Relocation Assistance Act was supposed to put an end to such stuff. But as you can see from the AP story reported here, it hasn’t. For an insight into how it was done in the old days, see Curtis J. Berger and Patrick Rohan, The Nassau County Study: the An Empirical Look Into the Practices of Condemnation, 67 Columbia L. Rev. 437 (1967).

So what’s the feds’ excuse now? According to the Associated Press, they say that “the initial offer represented only a starting amount that would permit the seizure to begin with and could be adjusted later.” But as noted above, the Uniform Relocation Assistance Act requires fair offers — actually, the highest amount from an approved cindemnor’s appraisal — and forbids such shoddy haggling. Moreover, for all that appears from the AP article, the feds don’t “adjust” it later when the owners accept the lowball offer.

All of this is yet another reason why eminent domain is so widely despised.

Afterthought.  All this talk about a border fence stimulates a question. Why is it that when we build a border fence to keep out poor Mexicans who are only looking to better their lot in life, it seems OK and you don’t see lachrymose op-eds lamenting this activity and denouncing  our government for it, but when the Israelis do the same thing to keep out bloodthirsty terrorists out to cross the border to kill innocent men, women and children, the bien pensant, politically correct folks get their knickers in a twist?  Jes’ wonderin’.

Lowball Watch — New York

The New York Supreme Court awarded $7,992,000 for the taking of a 241,772 sq. ft. parcel. The city’s valuation was $995,000, but after adjustment for cleanup costs and the presence of wetlands on the subject property, the trial court awarded $7,992,000. The award is thus some eight times the city’s evidence.

The bone of contention was the extent to which the presence of wetlands on the subject property would interfere with its development. The case is City of New York v. South Beach Bluebelt, Supreme Court of Richmond County, No. 4004/08, September 28, 2012.

If you plan to read the opinion, be advised that it is long and fact-intensive. Bring your appraiser hat if you plan to do it.

Also, as watchers of Law and Order know, in New York the Supreme Court is a trial court — the lowest court of general jurisdiction. What others call the Supreme Court is called the Court of Appeals in New York. Richmond County is Staten Island.