Certiorari Denied in the NY Dormitory Authority Case

We note that River Center LLC v. Dormitory Authority of New York, No. 11-922, is on this morning’s list of SCOTUS orders denying certiorari. This was a case in which the owners argued that the condemnor had depressed the value of the subject property before filing a condemnation action to take it. Unfortunately, the record on that one was not the best from the owner’s point of view.

It was a biggie. The New York Appellate Division reduced the owner’s recovery by some $14,000,000. The questions presented to SCOTUS were:

1. Whether the Fifth Amendment permits a state to deny compensation to an owner for loss of the reasonably probable development potential of a condemned development site taken through eminent domain proceedings, unless the property owner can show that development will come to fruition in the near future.

2. Whether, in awarding just compensation under the Fifth Amendment, a state may exclude damages resulting from deliberate governmental interference with a development project that delays development and suppresses the property’s value at the time of the taking over what it would otherwise have been.

3. Whether the Fifth Amendment permits a court in a condemnation proceeding to restrict evidence of value to the testimony of appraisers and to exclude or ignore otherwise competent testimony of property value (a) from the property’s owner, and (b) from third parties able to provide market-based evidence of value, such as financing proposals and offers to lease and buy.

The subject of precondemnation blight and how to handle it in the appraisal process has not received the attention it deserves from the Supreme Court whose efforts only made things murkier. If you have an interest in that subject, you may find of interest our article Condemnation Blight: Just How Just Is Just Compensation? 48 Notre Dame L. Rev. 765 (1973) — an oldie but a goodie that one. It received the Shattuck Prize from the American Institute of Real Estate Appraisers (now the Appraisal Institute).

There is no way of knowing this for sure, but we increasingly believe that SCOTUS’ veture into taking law — both inverse and direct condemnation — in the past two decades, screwed things up and resulted in such a justified public uproar that the Justices figure that they best leave well enough alone, and stay away from this subject. We further think that the division of views on the court is such that there simply aren’t enough votes, one way or another to come up with a coherent view of a workable Fifth Amendment jurisprudence. So what we got in the cases the court did consider on the merits is — if you’ll pardon the expression — jurisimprudence.

Follow up. For a detailed writeup of this case see Kelly Rizzetta, Developer’s $189M Valuation Case Denied High Court Review, Law360.com, April 30, 2012.