NYLJ Article, “The Court’s Duty in a Condemnation Case”

Partners Michael Rikon & Jonathan Houghton recently authored an article in the New York Law Journal titled “The Court’s Duty in a Condemnation Case.” The article discusses a recent decision by the Appellate Division, Second Department, affirming an order of the Kings County Supreme Court Justice Wayne Saitta which granted a motion for leave to exchange amended appraisal reports and vacate the Note of Issue filed by the condemnor.

The motion followed the review of both sides’ appraisals prior to trial. The trial court reviewed the appraisals that the parties intended to rely on at trial and advised that he found both reports defective. The Court indicated that it would entertain a motion granting leave for both parties to file new reports. The Claimants did so, but the condemnor refused to file a new report and instead filed an appeal.

In affirming the lower court’s order, the Second Department wrote:

Contrary to the City’s contentions, the Supreme Court did not improvidently exercise its discretion in granting the relief requested. In an eminent domain proceeding, the court may grant leave to file an amended appraisal report “upon good cause shown.” 22 NYCRR 202.61[a][3]. In determining whether a party has shown “good cause,” the court must consider all of the relevant circumstances. (citations omitted).

In determining that “good cause” had been shown, the Appellate Division emphasized that the claimant’s request was not “based on a mere desire to introduce a new theory or new evidence or the result of inadvertence or oversight” but rather was “a direct result of the Supreme Court’s indication that the appraisal reports were inadequate and that proceeding to trial on those reports would be a  waste of the parties’ time and judicial resources.”

A condemnation proceeding is not a private litigation; rather it is the enforcement of a constitutional mandate that just compensation be paid. Just compensation is intended to ensure that the owner receives “the full and perfect equivalent of the property taken and it rests on equitable principles and it means that the owner shall be put in as good position pecuniarily as he would have been if his property had not been taken.” Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 304 (1923). As the Appellate Division noted, the rule of just compensation is “abundantly clear” that property must be appraised at its highest and best use and paid for accordingly. Where it is not appraised as such, remitting for a retrial upon the proper theory is required. As the article notes, “the lower court must apply the proper theory of valuation even if counsel refuses to apply the property methodology himself.”

The judge has the burden in a trial to assure that the award of the constitutional requirement of just compensation is attained. Supreme Court Justice Felix Frankfurther wrote, “since land and buildings are assumed to have some transferable value, when a claimant for just compensation for their taking proves that he was their owner, that proof is ipso facto proof that he is entitled to some compensation.” Kimball Laundry Co. v. United States, 338 U.S. 1 (1949). Thus, the authors note, the court has the burden of proof in condemnation cases. In ordinary litigation, if the plaintiff fails in his burden of proof he get no recovery, but this cannot happen in a condemnation proceeding: The worst that happens is he or she receives the amount proven by the condemnor. Thus, it is the judge who must carefully determine what amount constitutes “just compensation” and doing so requires appraisal reports based on the proper valuation methodology.