United States v. 1.604 Acres of Land, more or less, Situate in Norfolk
844 F. Supp. 2d 668
E.D. Va.2011Background
- United States filed a land condemnation action on July 1, 2010 to take 1.604 acres in downtown Norfolk, VA for a courthouse annex.
- Defendant 515 Granby, LLC is the fee owner and Marathon Development Group, Inc. managed development of the property.
- Granby Tower development stalled due to financing and market conditions after the government indicated possible condemnation in 2005–2006.
- Pre-taking, sales efforts generated hundreds of deposits and dozens of contracts, many containing condemnation clauses; loans and financing subsequently collapsed amid the 2007–2009 financial crisis.
- The government formally notified of taking in November 2009; actual taking occurred July 1, 2010, with all Granby Tower sales canceled by then.
- The court resolves multiple pretrial motions addressing the scope of the project rule, admissibility of interference evidence, highest-and-best-use issues, valuation methodology, and spoliation-related relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of the project rule applicability | Rule should permit evidence of project influence. | Rule should preclude excluding project influence evidence. | Denied (no jury consideration of project influence). |
| Exclusion of government interference evidence before taking | Exclude only post-taking data; allow pre-taking impact. | Pre-taking government actions affected value. | Granted; exclude government interference and project-influence evidence pre-taking. |
| Highest and best use as Granby Tower continuation | Granby Tower continuation is not the sole reasonable use. | Continued Granby Tower development is financially feasible. | Granted; exclude valuation based on Granby Tower highest and best use. |
| Valuation evidence: grant, entrepreneurial incentive, and costs | Exclude grant, entrepreneurial incentive, and questionable cost data as non-compensable/unduly speculative. | Entrepreneurial incentive and costs are valid cost-approach inputs. | In part; exclude grant-related valuation and all evidence tied to Granby Tower as HBU; allow limited cost evidence with proper foundation. |
| Spoliation instruction and related relief | Seek adverse-inference instruction and preclusion on feasibility evidence. | No spoliation shown; no instruction warranted. | Denied as moot; resolved by above exclusions. |
Key Cases Cited
- United States v. Miller, 317 U.S. 369 (U.S. 1943) (just compensation equals fair market value as of taking)
- United States v. 69.1 Acres of Land, 942 F.2d 290 (4th Cir. 1991) (burden on landowner to prove value; scope rule governs valuation adjustments)
- United States ex rel. TVA v. Powelson, 319 U.S. 266 (U.S. 1943) (origin of valuation burden and scope considerations)
- United States v. Reynolds, 397 U.S. 14 (U.S. 1970) (scope-of-the-project rule; depreciation not attributable to condemnation)
- United States v. Va. Electric & Power Co., 365 U.S. 624 (U.S. 1961) (government should not depress value prior to taking)
- 320.0 Acres of Land v. United States, 605 F.2d 762 (5th Cir. 1979) (judge decides scope-of-the-project; jury applies value effects)
- United States v. 49.01 Acres of Land, 669 F.2d 1364 (10th Cir. 1982) (scope of project test requiring public imminence and identification)
- United States v. 62.17 Acres of Land, 538 F.2d 670 (5th Cir. 1976) (scope-of-project factors for land acquisition)
- United States v. Certain Land Situated in the City of Detroit, 450 F.3d 205 (6th Cir. 2006) (screening and admissibility of proposed highest-and-best-use theories)
- Omnia Commercial Co. v. United States, 261 U.S. 502 (U.S. 1923) (frustration of contract not compensable in condemnation)
- United States v. Petty Motor Co., 327 U.S. 372 (U.S. 1946) (market value not fluctuating with condemnor or condemnee needs)