Rhode Island Supreme Court Rules Eminent Domain Abandonment Right of First Refusal Does Not Pass With The Estate To Heirs

Under New York State Eminent Domain Procedure Law (“EDPL”) § 406, if the condemnor takes property by eminent domain and then abandons the project for which the property was acquired, and the property has not been materially improved, the condemnor may not dispose of the property for private use within ten years of acquisition “without first offering the former fee owner of record at the time of acquisition a right of first refusal to purchase the property at the amount of the fair market value of such property at the time of such offer.”

If the acquisition was a partial taking, the condemnor does not have to offer the former fee owner the right of first refusal unless “unless such former fee owner has title to the contiguous remainder parcel at the time the condemnor determines to dispose of the property.”  Id.

But who is considered the “former fee owner” who has the right of first refusal to purchase the property?  Does the former fee owner’s right pass with the estate to the heirs, successors, or assigns?

Considering this issue for the first time, in Estate of Deeble v. Rhode Island Department of Transportation, No. 2014-235-Appeal, 2016 R.I. Lexis 42 (March 24, 2016), the Supreme Court of Rhode Island recently decided that the estate is not entitled to a right of first refusal to repurchase land condemned for highway purposes under article 6, section 19 of the Rhode Island Constitution, which shares similarities to EDPL § 406.

Basically, the Rhode Island Constitution, article 6, section 19, states that the condemnor may take more land than is necessary for actual construction of public highways.  After construction, the remainder of the property “may be held and improved for any public purpose or purposes, or may be sold or leased for value with or without suitable restrictions, and in case of any such sale or lease, the person or persons from whom such remainder was taken shall have the first right to purchase or lease the same upon such terms as the state or city or town is willing to sell or lease the same.”  Id.

In Estate of Deeble, the Rhode Island Department of Transportation (“RIDOT”) took a 31,502 square feet parcel of real property from Richard and Virgina Deeble in January 2001.  Virginia died in 2006 and Richard died in 2009.

After completing the project, RIDOT had 24,601 square feet of surplus condemned property.  Under a state law, RIDOT sold the surplus land to the State of Rhode Island I-195 Redevelopment District Commission.  The estate of Deeble sued under the Rhode Island Constitution, article 6, section 19, arguing that the estate had right of first refusal because that right passed to the heirs, successors and assigns.  RIDOT argued that the right is personal to Richard and Virginia and died with them.

Both the Superior Court and Supreme Court held that the Constitution’s language is clear and unambiguous.  The Supreme Court looked to the history, context and purpose of article 6, section 19.  Ultimately, the Supreme Court reasoned that the language “the person or persons from whom such remainder was taken” was unambiguous and that “[h]ad the General Assembly intended for the right of first refusal to transcend the death of the original condemnee, it would have expressly included such language” but did not.

In New York, two cases may shed light on this issue.

In Parker v. City of New York Department of Housing Preservation and Development, the daughter heir of the condemnees asserted that she was entitled to the right of first refusal under EDPL § 406.  237 A.D.2d 268, 269 (2d Dep’t 1997).  Although the court dealt with another procedural issue and ultimately decided that the City did not abandon the public purpose for which the property was condemned, id. at 271, it could be telling that the City did not argue, and the court did not mention, that the right of first refusal does not pass to heirs.  This silence could indicate that the right of first refusal passes to heirs.

However, Shapiro v. Othmer, seems to say the opposite.  249 A.D.2d 400 (2d Dep’t 1998).  In Shapiro, the condemnor Town of Carmel, in 1982, acquired 19.3 acres of a 93 acre parcel of land that petitioner Saul Shapiro and Emil Landau jointly owned.  Id. at 401.  The Town abandoned the project within three years and leased the condemned parcel for a non-public use until 1990.  Id.  In 1992, Saul Shapiro and Emil Landau’s successors conveyed their interest in the contiguous remainder of the property to Saul Shapiro’s son, Stephen.  Id.

The appellate court, in affirming the lower court, held that “by transferring his entire interest in the adjoining property to his son in 1992, the petitioner divested himself of any potential right of first refusal that he might otherwise have claimed under former EDPL 406 (A).  That right, having once been extinguished, could not be resurrected by the reconveyance of a .5% interest in the contiguous remainder from his son to him, by a deed dated April 13, 1995, and recorded on May 1, 1995.  We note that this token reconveyance was timed to interfere with the Town’s resolution of May 8, 1995, authorizing the sale of 8 of the 19 acres to a third party.”  Id.

Additionally, the lower court provided support for its reasoning.  172 Misc.2d 231, 237 (Sup. Ct. Putnam County 1997).

“[T]he court is guided by the 1974 Report of the State Commission on Eminent Domain and Real Property Tax Assessment Review which states, in relevant part (at 40-41):

‘Comment § 406 … In cases of a partial taking in fee the offer need only be made to the former fee owner in possession, since the intent is to unify the property as it existed before the acquisition.’  (Emphasis supplied.)

The court finds that the above-mentioned ‘Comment to Section 406’ is indicative of the Legislature’s intent to attempt to put the parties back to the same position as existed before the acquisition.”  Id.  (Emphasis in original).

It is arguable, though, that Shapiro is not analogous because it is not a case of the former fee owner dying but of the former fee owner intentionally and actively divesting itself of its right of first refusal under EDPL § 406.  Thus, an heir could fit the Legislature’s intent behind § 406.  It could still be consistent with Shapiro to find that the right of first refusal passes with the estate to heirs.

Until a New York court provides clarity and directly rules on this issue, the Rhode Island Supreme Court decision remains instructive.

Posted in Cases of First Impression, Eminent Domain, Future of the law, Recent cases
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