751 A.2d 859 | Conn. Super. Ct. | 1999
On February 6, 1984, the state filed a certificate of taking for a portion of the associates' property. The taking was a federal urban systems improvement project with the state, pursuant to an agreement with the city dated July 19, 1977, acting on behalf of the city of Norwalk. Prior to the condemnation, the associates owned 176,139.21 square feet (4.0436 acres) of land on which they operated their chemical mixing plant and tank farm (Guard All Chemical Company, Inc.) in addition to a right of way over another 19,584.65 square feet (0.4558 acre). The state condemned approximately 30,492 square feet (0.7 acre) of the associates' property and the right of way.1 *357
After the taking, the associates were left with 145,647.21 square feet (3.3436 acres) of land. The state determined the value of the property taken including the right of way to be $104,000, which it deposited with the court. The associates instituted this action challenging the sufficiency of the award and seeking other relief. The associates also instituted a separate injunctive action to insure access to their property during construction of the highway in the Stamford-Norwalk judicial district. A stipulation was entered in the injunctive action on July 9, 1984, which required the state to make certain modifications and to file an amended certificate of taking.
During the course of construction of the highway in 1984-85, the state's contractor excavated, among other debris, barrels containing quantitites of environmentally sensitive chemicals. As a result, the department of environmental protection of the state of Connecticut (DEP) instituted suit against the associates in the judicial district of Hartford-New Britain on or about December 12, 1985 for reimbursement for DEP's expenses in removing and disposing of the barrels. Pursuant to a stipulated judgment, the associates agreed to repay the state $110,676.48, the amount allegedly incurred by the state to remove and dispose of the barrels, together with interest.
During construction of the highway in 1984 to 1986, the state constructed a curb cut at the edge of the *358 former right of way and Duke Place. The parties agreed that the state would complete that work in approximately three weeks. The state entered the property to do the construction, but ultimately halted its work because of environmental concerns and never completed the curb cut.
The trial of the present action commenced August 23, 1988 before a predecessor panel. The associates asserted at trial that the right of way that was taken by the state should be returned to the associates because the right of way was unnecessary for the taking. The panel indicated it would bifurcate the issues and first determine whether the panel had jurisdiction to consider whether the taking of the right of way was necessary. If it determined that it had such jurisdiction, it would go on to decide whether the right of way should be returned to the associates. On October 6, 1988, the state filed an amended certificate of taking, as required by the July 9, 1984 stipulation.
On December 28, 1988, the panel hearing the case decided that it had jurisdiction in this action to entertain the associates' request for a return of the right of way and a determination whether the right of way was necessary to the taking.2 On August 9, 1989, a successor panel of judges decided that the state had substantiated the public necessity for the taking of the right of way based on the state's claim that it was necessary for lateral support of the highway.3 The associates later filed a notice of intention to appeal the August 9, 1989 decision that the taking was necessary.
As part of the July 9, 1984 stipulated judgment, the state was to install a Jersey barrier, fencing and two *359 gates on the associates' property line. Although the entire highway project had been completed, the state never completed the installation of the Jersey barrier, fencing and gates. The associates eventually completed the work. As a result of defendant's reentry but failure to complete, the associates sought mandamus relief on or about February 14, 1990. Thereafter, the state and the DEP entered into a consent order regarding remediation and monitoring on the associates' remaining property.
While there is no Connecticut appellate case directly addressing whether evidence of contamination should be considered in a valuation proceeding, two Superior Courts considering the issue have rejected contamination evidence. In Murphy v. Waterford, Superior Court, judicial district of New London, Docket No. 520173 (July 9, 1992, Healey, S.T.R.), the town of Waterford argued that environmental contamination discovered on the property after the date of taking should be considered in arriving at the amount of just compensation. The court concluded that "because the Connecticut Statutory scheme provides for reimbursement of cleanup expenses the defendant town cannot require the reduction, in this particular proceeding, of the amount determined to constitute just compensation for this taking." Id. Further, the court stated that "even recognizing that the matter of just compensation is not strictly legal but equitable, the circumstances just set out definitely militate against permitting, if it could ever be the case, of reducing the just compensation constitutionally due this plaintiff in this particular proceeding." Id. Among other things, the court noted that the town *360 had not shown that the plaintiff was negligent and caused the contamination. Id.
Even if the property owner is liable for the contamination, the cleanup costs should not be a factor in determining just compensation. If cleanup costs were factored into the amount of compensation, the condemnor would benefit from double recovery. The owner would in effect pay for the cost of cleanup by receiving less money for the condemned property and pay again as a result of any judgment against him. The equitable nature of the condemnation proceeding precludes a double payment.
The court in Northeast Economic Alliance, Inc. v. ATC Partnership, Superior Court, judicial district of Windham at Putnam, Docket No. CV940049248S (June 22, 1998, Hammer, J.T.R.) (
Based on the reasoning of Murphy5 and Northeast Economic Alliance, Inc., the cost of cleaning up the contaminated property should not be considered here. See also Aladdin, Inc. v. Black Hawk County,
While there are some cases to the contrary in a few states, the better reasoned cases exclude contamination evidence, and leading commentators appear to agree.
Additional support for refusing to consider evidence of contamination in valuation proceedings is found in Nichols on Eminent Domain, often cited in Connecticut court decisions. The authors conclude that evidence of contamination should not be admitted over objection in eminent domain valuation trials. 7A P. Nichols, Eminent Domain (3d Ed. Rev. 1999) § 13B.03, pp. 13B-86-13B-87. Supporting reasons for this position include: (1) an eminent domain valuation trial is in rem, not in personam; id., 13B-89; (2) eminent domain is independent of environmental law; id., 13B-90; (3) due process supports exclusion; id., 13B-92; (4) the burden of proof and entitlement to jury trial differ in eminent domain and environmental trials; id., 13B-97, 13B-99; (5) exclusive federal jurisdiction exists for some environmental *362 laws; id., 13B-100; (6) the risk of double liability; id., 13B-101; and (7) the project influence rule;6 id., 13B-105: "The exclusion of contamination evidence from eminent domain valuation trials is justified on several grounds. Eminent domain is a proceeding in rem, whereas [environmental] actions are in personam. . . . The differing burdens of proof, the differing entitlement to jury trial, and other procedural distinctions justify separate proceedings. . . . [S]uch evidence should not be admitted over objection. . . . `Market Value' is not a tail that wags the dog; rather, `Just Compensation' is the dominating and only principle. . . . Fair Market Value is the test only if such a standard would be `Just' and if there is indeed a `Market.' If, however, the property is definitionally nonmarketable . . . in that the `highest and best use' of contaminated property is not to sell it but to keep it devoted to its existing use . . . then clearly its value in the actual market has no bearing on the just compensation payable under . . . eminent domain. In short, the only just disposition is to exclude this evidence. . . . [E]xcluding evidence of contamination is superior to admitting such evidence . . . and . . . it is necessary to exclude this evidence because the proper province for resolving all questions of contamination is not an eminent domain valuation trial but rather a separate environmental action." Id., 13B-87-13B-88.
Nichols also decries the risk of double liability: "If the court allows evidence of contamination into the eminent domain case, it might inadvertently impose double liability because the owner might face the same liability again in a subsequent environmental case. . . . [T]he owner would receive less than fair market value, *363 disregarding cleanup costs. Then subsequently, the owner would confront liability for cleanup costs again . . . . It is submitted that this may jeopardize due process, equal protection, and just compensation." Id., 13B-101-13B-103.
Nichols also observes that: "In determining just compensation, the courts tend to admit any factor bearing upon market value. Yet, the fact that evidence is `relevant' does not itself justify its admission. Further, the fact that evidence of contamination may influence `value in the actual market' does not necessarily justify its admission in determining `fair market value' within the `hypothetical market' contemplated for purposes of `just compensation.' Eminent domain law is replete with situations in which `relevant' evidence bearing upon market value is properly excluded. The submission here is that contamination is another such situation." Id., 13B-107-13B-108.
Nichols concludes that "evidence of contamination should be excluded. All questions relating to contamination should be resolved not within the eminent domain valuation trial but in a separate action under environmental legislation and/or an appropriate common law action." Id., 13B-121.
The double liability argument is especially persuasive under the facts here. If the court allows evidence of contamination, it might inadvertently impose double liability because the owner can face the same liability again in a subsequent case. This can subvert due process, equal protection and just compensation. The panel is sensitive to the equitable underpinnings of condemnation law. See Slavitt v. Ives,
The panel, therefore, determined that it will not consider evidence of contamination in determining the amount of just compensation.
We are not dealing here with income producing farm land or with mining property. "[I]ncome cannot be capitalized to produce a residual value where the appropriated land is neither producing income nor equipped to do so." (Internal quotation marks omitted.) Lucre *366
Corp. v. Gibson,
In Orgel's well recognized text, Valuation Under the Law of Eminent Domain (cited with approval by the Connecticut Supreme Court), the author suggests that the comparative sales method is often a more accurate method of valuation than capitalization, even when the entire business is evaluated. When there is a partial taking, however, the value of the entire enterprise may have only a remote bearing on the value of the appropriated property. 1 L. Orgel, Valuation Under the Law of Eminent Domain (2d Ed. 1953) §§ 158-59, pp. 650-52. Obviously, in the absence of special circumstances, the smaller the piece of property taken, the less relevant the capitalization method.
The Connecticut Supreme Court has recognized the dangers of linking land value to business profits: "[I]t is generally recognized that neither the past nor estimated future profits of a business are reliable evidence of the value of the land on which the business is located because business profits depend on so many factors that their effect on the market value of the real estate is too remote. 1 [L.] Orgel, [supra, 655, 662;] 4 Nichols, Eminent Domain (3d Ed.) § 12.3121[1], [2]." Eljay Realty Co. v. Argraves,
Another treatise warns of the need to insure against introduction of an improper distortion in income capitalization analysis, because of disproportionate values being assigned to land and buildings. 29A C.J.S., supra, *367 386. It is noteworthy that the piece of land taken in the present case was approximately one-sixth to one-seventh of the total property in which the owner had a fee interest. It is also important that income increased after the taking according to the landowner's own appraiser's chart of annual income. The value of the entire business appears to have little or no relevance to the value of the taken property, which overall, represents a small percentage (seventeen percent) of the total property.
The court in J.J. Newberry Co. v. East Chicago, supra, 441 N.E.2d 42 held that the use of the capitalization of income approach requires that the property taken is itself capable of producing the income capitalized. That court relied on New York law which stated that a vacant, basically unimproved parcel of land was not conducive to the capitalization method, since it was the ongoing business, not the parcel, which enhanced the value of the land. Id., 42-43; see Matter of City of New York (Atlantic Improvement Corp.),
While there appear to be no Connecticut cases which have passed directly upon this issue, the better reasoned cases, especially those from New York, persuade this panel that under the facts of this case, the capitalization of income approach to valuation should not have been used for this partial taking.
Moreover, the rate of capitalization should be a reflection of the market rate, and "the same capitalization rate should be used to determine the value of the property after the taking as was used to determine its value before the taking." 29A C.J.S., supra, 386. The plaintiffs' expert did not use the same method for the "after" valuation as he did for the "before" valuation. In fact, he did not use income valuation at all for the "after" valuation. Instead, he took the "before" valuation and made some arbitrary and inadequately explained deductions. The result is that he failed to calculate a proper "after" valuation.
Virtually all authorities advise that extreme caution be used in the application of the capitalization method. Proper use of the method depends largely on the experience and the judgment of the appraiser in considering every element that enters into the final result. A small variation in any of those items considered can produce large variations in the ultimate conclusion. Citino v. Hartford Redevelopment Agency, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 512206 (April 25, 1994, Bieluch, S.T.R.). *369
Even where the capitalization of income method has been approved, courts have cautioned it should be carefully scrutinized and based on a foundation which minimizes, to the extent possible, conjecture and uncertainty. See, e.g., State Highway Commission v. Bare,
Moreover, the trier is not limited to using one method of property valuation. See, e.g., Cosgrove v. Hartford, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV960561077 (February 27, 1998, Aronson, J.T.R.).
Compensation depends on what a ready and willing buyer would pay for the business. It is not likely that a ready and willing buyer would be able to pay significantly less for a business after a taking like this than before the taking, when the income of the business increased after the taking. See 1 L. Orgel, supra, 650-52.
While we have not ignored the remainder of the chart, some of the figures are interesting. Gross sales for 1984 exceed those for 1982 and 1983. Gross profit for 1984 exceeds that for 1982 and 1983. Net profit for 1984 exceeds that for 1982 and 1983. "Net After Manager" for 1984 exceeds that for 1982 and 1983. The appraiser attempts to explain that 1982 and 1983 saw a drop in "oil" prices. Nevertheless, it is clear that after the February 6, 1984 taking, the company earned considerably more for that year than it had in 1983 and more than in 1982. It is reasonable to assume that this explains why the plaintiffs' appraiser failed to make another income capitalization analysis "after" the taking and why he did not follow the requirements of consistency of method in the "before" and "after" valuations set forth in Mil-Pine Plaza, Inc. v. State, supra,
The appraiser used the following valuations:
value before taking $5,952,000
value after taking $4,014,000
difference $1,938,000
If, for the sake of argument, we assume the correctness of those figures, the appraisal clearly set forth that about one third of the value of the plaintiffs' total property was taken by the state. Yet, the amount of *371 property actually taken was only about seventeen percent of the total property. The land taken was not in and of itself income producing, as that term is understood. Moreover, the business continued with increased success without the condemned land. It would be unreasonable to suggest under these circumstances that a buyer could have purchased a six million dollar business for about four million dollars after a loss of only seventeen percent of non-income producing land, in the face of the business' income increasing after the taking. Clearly, it could not happen.
Moreover, the appraiser's oft repeated statement that "what the property earns is what the property is worth" is a double edged sword. Since the property increased its earnings after the taking — in effect, had increased success without the condemned land — that condemned land could not be very valuable, under the plaintiffs' own analysis.
One of the underpinnings of the analysis of the plaintiffs' appraiser was that there were no other chemical companies in Connecticut "that [have] a chemical storage tank farm." This panel is not foreclosed from using its own knowledge, as our Supreme Court has reminded us. Laurel, Inc. v. Commissioner of Transportation, supra,
Therefore, this panel finds that the comparative sales approach could have been used. "The trier may select *372
the . . . most appropriate [method of valuation] to the case before him in arriving at his own conclusion as to the value of a land interest." Id., 37. The trier "may weigh the opinions of the appraisers, the claims of the parties in light of all the circumstances in evidence which bear on value, and his own general knowledge of the elements which pertain to value." Id., 37-38. And "the visual observations made by the trier on a visit to the property are as much evidence as the evidence presented . . . by the witnesses under oath." Houston v. Highway Commissioner,
Moreover, the complex fiscal calculations presented to the court by the plaintiffs' appraiser involve a complicated, unfamiliar and unrecognized methodology that this court is not prepared to accept without a good deal more explanation than was given. It involves an arbitrary capitalization rate — used only once, not twice as required — chosen without any real regard to economic circumstances. "The rate of capitalization ultimately selected for use by the appraiser cannot be the result of an arbitrary judgment on his part; rather it is a reflection of the current, well-informed, conservative public judgment or rating as expressed in comparable investment transactions in long-term investments having characteristics similar to those found in the property under appraisal." P. Kniskern, Real Estate Appraisal and Valuation (1933) p. 399. The rate must reflect the market, and must, if used, be carefully applied both before and after the taking. There is a lack of evidence in this regard. Furthermore, under the facts of this case, the panel believes that income capitalization brought about an inflated view. It should not have been used *373 in a partial taking under the facts of this case, especially in the manner in which it was used.7
While the report and opinion of the defendant's appraiser do not suffer from the same maladies as that of the plaintiffs, we find his conclusion set forth to be, like the plaintiffs,' too result driven.8 The state never satisfactorily explained to the panel why it deposited $104,000 in court — obviously its view of damages at the time of the taking — and later claimed damages of $33,900.
The trier may accept or reject expert testimony in whole or in part "and may give constructions to the evidence which are at variance with the claims advanced by the parties." Toffolon v. Avon,
Therefore, we are left with the facts set forth by both sides, our view of the property and our own knowledge of the value of condemned land.
Adequate damages do not include exemplary damages which are punitive and have nothing to do with *374 compensation for loss of property. 26 Am.Jur.2d 776, Eminent Domain § 367 (1996). Furthermore, we do not believe punitive damages are merited.
Damages for an easement provide another problem. If an easement is taken, when the "before and after" formula is used, damages are determined by the decrease in the value of the whole estate. Redevelopment Agency v. Tobriner,
"Where part of a parcel of land or an easement in it is taken by eminent domain, the general rule is that the damages are the difference between the market value of the whole tract as it was before the taking and its market value after the taking." Northeastern Gas Transmission Co. v. Tersana Acres, Inc.,
Clearly, the arbitrary selection by the plaintiffs' appraiser of an additional figure for the right of way resulted in an improper measurement of that easement. Since our Supreme Court instructs that an easement's value is included in the difference between the "before and after" values of the property; Northeastern Gas *375
Transmission Co. v. Tersana Acres, Inc., supra,
The plaintiffs also claim damages because the property has become more nonconforming than before. They allege that the partial taking caused a setback violation to their property which was already nonconforming and urge damages under General Statutes §
The plaintiffs' brief indicates (almost parenthetically) a pro forma "willingness" to grant a deed of the entire parcel at their appraiser's figure of close to six million dollars. Although the statute is mentioned generally in its claims for relief, this is the first time the plaintiffs made specific mention of a total taking. The plaintiffs have never insisted or demanded that the state acquire the total of the property for its actual current value. See Tolland Enterprises v. Commissioner of Transportation, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV920508173 (April 28, 1993, Shea, S.T.R.) (where plaintiff never previously demanded a total taking, state not required to do so under §
The short answer is provided by Laurel, Inc. v. State,
However, the panel can properly consider a variance or nonconformity as a factor affecting the market value of the plaintiffs' remaining land. Smith v. Zoning Board of Appeals,
The panel is persuaded by the logic of Tolland Enterprises. The probability of a variance is so great that damages are limited to the cost of obtaining that variance. Like the ruling in Tolland Enterprises, the panel is sufficiently familiar with the work involved to conclude that a reasonable allowance for those expenses would be $10,000, and finds it appropriate that the state bear that expense. This solution places the plaintiffs back into the position they were in prior to the taking.9 Under the circumstances presented, the panel declines to award additional damages for this issue.
The plaintiffs also claim they may wish to enlarge their plant. The proper test of severance damages is not the cost of future remedial action, but the present impairment of value; Alemany v. Commissioner of Transportation,
Moreover, it is not reasonably likely that there could be any zoning approval for future development of the property in question because of the presence of underground pollution. Securing zoning approval in the face of the contamination found in the area is not a probability this panel can adopt. Accordingly, other than as stated, the panel rejects the plaintiffs' argument regarding additional damages for zoning problems.
Finally, throughout the trial, the plaintiffs complained that the direct access provided by the state was inferior to the somewhat circuitous right of way they previously used and that it caused safety problems and parking problems for trucks using their facilities. Apparently, it was possible previously to park waiting trucks on the right of way, a difficulty now in view of the reduced space arrangement. While the panel is sympathetic to the problems of parking large trucks, our task is to resolve problems in terms of dollars, and we are well aware that there is considerable case law that direct highway access may increase the value of property as far as a prospective buyer is concerned. See Tandet v. Urban Redevelopment Commission,
The plaintiffs needed access that was adequate to the maintenance and furtherance of their commercial business. "The condemnor must leave an owner . . . with reasonable access to the highway for [its] purposes where [it] had access immediately prior to the condemnation. However, . . . [it] is not entitled to damages *379
. . . for the taking or closing off of access to a highway where reasonably suitable alternative means of access remain." United States v. Certain Land in the State of New Jersey,
It is well known that damages resulting merely from circuity of access have been considered damnum absque injuria. Selig v. State,
This subject has already been the subject of collateral litigation between the parties. Therefore, at least some of this issue has presumably already been addressed by the Superior Court. The panel is also mindful that a willing buyer might well pay more for property which has direct access. In fact, the prior access was far more circuitous than the present direct access. The panel has *380 not received concrete evidence that proves a serious safety hazard. While there was some testimony which evinced a clear preference for the more convenient prior arrangement, there is no evidence that the post-taking income has suffered or that parking problems have somehow affected business income. Moreover, there were no "concrete" plans presented for renovation of parking areas. In the final analysis we conclude that the issue comes down to a matter of inconvenience, and the factors on both sides of the argument appear to cancel each other out.
We have received insufficient information on the question of the Amended Certificate of Condemnation and Assessment of Benefits and Lien, and we leave that issue to the court that handled the separate injunctive action. That court accepted and entered a stipulated judgment that spawned the documents in question, and is in the best position to deal with its aftermath.
The plaintiffs submitted thirty "Claims of Law," purportedly pursuant to Practice Book §
In Easton v. Easton, supra,
"[T]rial courts must be afforded substantial discretion in choosing the most appropriate method of determining the value of a taken property. . . . In condemnation proceedings the trial court is more than a trier of facts or an arbiter of differing opinions of witnesses; it is charged with the duty of making an independent determination of value and fair compensation in light of all the circumstances, the evidence, its general knowledge and its viewing of the premises." (Citations omitted; internal quotation marks omitted.) French v. Clinton,
When only a part of a tract is taken, just compensation includes recovery for the part taken, and recovery for severance damages visited on the remainder as a necessary, natural and proximate result of the taking. Bowen v. Ives,
The plaintiffs have requested severance damages for: (1) furtherance of a zoning nonconformity; (2) loss of their right of way resulting in access that they claim is less safe and private; and (3) problems of ponding and drainage due to a change of grade and removal of a *383 natural watercourse, which caused the plaintiffs to expend $48,504.17 to cure the grade and install drainage. We have already discussed the plaintiffs' zoning claims and their claims relating to access. Furthermore, the previous panel of referees conclusively addressed claims regarding loss of the right of way and a separate action addressed the subject of access. This leaves the claims for loss of use because of ponding and the damages relating to curing the problem.
We must consider damages which forseeably follow from the proper construction of the project, including damages to the remainder which are a necessary, natural and proximate result of the taking. Wakeman v. Commissioner of Transportation,
The ponding and the money spent to cure it were a necessary, natural and proximate result of the taking; and the "costs to cure" have been considered as they affect market value. Before the plaintiffs' expenditures, the commercial enterprise was hindered by excessive water which collected on the property and froze in the winter. We do not find that the plaintiffs' loss of use of the ponding area was as total as assumed by their appraiser; but we do find that the plaintiffs are entitled to compensation for their occasional inability to use some of the property prior to the attempt to cure the problem.
The plaintiffs also claimed additional damages under General Statutes §
We have searched our notes and the exhibits for the date of filing under General Statutes §
It is apparent that if the commissioner fails to file the required map, a purely literal reading of the statute could shield him from damages, even if he has successfully tied up property — perhaps even destroyed its marketability — for an unreasonable period of time. Section
Therefore judgment may enter for the plaintiffs in the amount of $356,103 plus reasonable and just interest of six percent, from the date of taking to the date of the judgment.