Lang v. Commonwealth, Department of Transportation
135 A.3d 225
| Pa. Commw. Ct. | 2016Background
- DOT filed a Declaration of Taking for Lang’s Millvale Industrial Park (possession by DOT stipulated as June 6, 2009). DOT paid estimated just compensation (EJC) in two installments in 2009 totaling $2,000,000. A jury later awarded $3,750,000 in 2013.
- Lang and DOT stipulated (approved Dec. 17, 2013) to an interest rate (4.25%) and a final payment date (Feb. 7, 2014); DOT calculated delay compensation of $368,643.83 and paid under its method, reserving Lang’s right to seek an additional $10,606.90 (later conceded to $8,517).
- Lang moved to compel an additional $8,517, arguing DOT should have applied its 2009 partial EJC payments first to interest accrued on the full jury verdict (treating payments as applied to interest first, then principal, like a commercial loan), which would increase delay damages owed.
- Trial court denied Lang’s motion, relying on precedent rejecting Lang’s accounting; Lang appealed to this Court.
- The Commonwealth Court affirmed: under the Eminent Domain Code (26 Pa.C.S. § 713), delay compensation is calculated and paid "at the time of payment of the award or judgment" and may not be compounded; EJC payments reduce principal and are not applied to unpaid delay interest before final calculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper method to apply partial EJC payments when computing delay damages | Lang: payments should be applied first to interest accrued on the full jury award (commercial-loan method), reducing principal thereafter | DOT: payments should reduce principal pro tanto; paying interest first would leave higher principal that accrues more delay interest (de facto compounding) | Court: upheld DOT’s method — EJCs reduce principal; delay compensation is calculated at final payment under §713(c), not by applying EJCs to interim interest |
| Whether uncertainty of property value prevents interest from running | Lang: interest ran from date of possession and payment should first satisfy interest | DOT: delay damages are not due until award/judgment payment; EJCs do not trigger calculation of delay interest then | Court: interest accrues from possession, but delay compensation is not calculated/paid until award/judgment payment per §713(c); so EJCs in 2009 were not applied to delay interest because delay was not yet due |
| Whether DOT’s calculation satisfied constitutional requirement of just compensation | Lang: DOT’s method fails to provide constitutionally adequate compensation if interest application is incorrect | DOT: its calculation and payment comply with Code and constitutional requirement | Court: DOT’s calculation complies with §713 and satisfies constitutional requirement per precedent (Wolf) |
| Whether applying payment to interest first produces prohibited compound interest | Lang: applying payment to interest first is standard and not compound interest | DOT: Lang’s method effectively causes compounding because interest prevents full reduction of principal, increasing subsequent interest | Court: treating payments so as to allow interest to accrue on prior interest (compound interest) is prohibited; Code prohibits compounding and only single delay compensation payment is allowed |
Key Cases Cited
- Hughes v. Dep’t of Transp., 523 A.2d 747 (Pa. 1987) (fixed statutory interest rate rejected; delay compensation tied to commercial rates but not compounded)
- Gross v. City of Pittsburgh, 828 A.2d 1007 (Pa. 2003) (challenge to trial court’s delay-damage accounting rejected)
- In re Condemnation of Prop. Located in Lower Windsor Twp., 986 A.2d 190 (Pa. Cmwlth. 2009) (delay compensation calculated at time of payment of award/judgment; EJCs need not trigger delay calculation)
- McGaffic v. Redev. Auth. of City of New Castle, 732 A.2d 663 (Pa. Cmwlth. 1999) (compound/double interest on delay compensation not permitted)
- Wolf v. Commonwealth, 170 A.2d 557 (Pa. 1961) (constitutional requirement that just compensation include damages due to delay)
- Ridley Twp. v. Forde, 459 A.2d 449 (Pa. Cmwlth. 1983) (delay damages are separate from condemnation property damages)