Time to Curb Developers from Controlling Condemnation Litigation

If you are reading an appellate court decision deciding a condemnor’s appeal from an award your client recovered and the Court quotes Judge Cardozo in New York, O. & W.R. Co. v. Livingston, 238 NY 300 (1924), it’s not good. This is the case where Judge Cardozo wrote that “it is the duty of the state ,in the conduct of the inquest by which the compensation is ascertained, to see that it is just, not merely to the individual whose property is taken, but to the public which is to pay for it.”

So if you read this sentence in an appellate decision, invariably the award is going to be lowered. No one suggests that a claimant should be overpaid for its former property. But if a trial court in a complex condemnation matters makes a determination within the range of evidence, it should stick.

Some would think that there is a bias in favor of condemnors. Perhaps it is the belief that appellate courts should serve to protect the local municipality’s treasury. This laudable concept ignores the fact that the majority of today’s eminent domain takings, at least in New York, are private land grabs benefiting well-connected developers.

Case in point: On September 23, 2014, the Court of Appeals denied leave to appeal in AAA Electricians v. Village of Haverstraw, 144 AD3d 955 (2d Dept 2014). . The Appellate Division affirmed an award of $6,500,000 after the trial concerning the condemnation of land on the Hudson River in Haverstraw. The property was taken to convey to a developer who built luxury condominiums, the “Harbors at Haverstraw.” Although the Village condemned the land, there was no question that the developer directed the litigation. It is, after all, the developer which is responsible for the payment of any award for the land.

The pre-vesting offer was $3,480,000. The advance payment was paid in the amount of $2,596,150. But at at trial, the Village’s appraiser claimed that the value of the 18.9 acres of land taken was merely $1,000,000.

On appeal to the Appellate Division, the Hon. C. Scott Vanderhoef, the Rockland County Executive, filed an amicus brief in which he argued that the “Village of Haverstraw is one of the poorest Village’s (sic) in the County.” But he had to know that the Village was not going to pay a penny on the award; it will all come from the builder.

In the Court of Appeals, a total of 17 amicus curiae were filed urging that leave be granted. I believe that the considerable legal effort expended in the post-trial litigation was not paid for the by Village, but by the developer. I could be wrong, but I just don’t think so.

It is not just excessive litigation that troubles us. It is the dirty tricks that often accompany developer controlled condemnation litigation. Appraisals are frequently exchanged which are substantially lower than the advance payment. Claimants are advised that they can keep the advance payment if they settle and do not proceed to litigate for just compensation, or that a deficiency judgment will be taken against them. We often see the strangest arguments presented in these sponsor driven cases. A recent example was that trade fixtures did not have to be valued as of the title vesting date. Claims that would ordinarily be easy to settle become impossible because of strategy advanced by the party responsible for the payment.

In Town of Cheektowaga v. Starlite Builders, Inc., 247 AD2d 933 (4th Dept 1998). The trial court entered a directed verdict in favor of the condemnor, striking the Claimant’s appraisal and dismissing the proceeding. The Appellate Division held that the trial court erred in granting the condemnor’s motion for a directed verdict and dismissing the proceeding. Quoting Matter of County of Nassau [County Beach Club], 43 AD2d 45, 48, aff’d 39 NY2d 958, the Fourth Department noted, “a condemnation proceeding is not a private litigation.”

Courts should realize that much of the litigation being conducted in eminent domain is caused by the powerful developers who just don’t care about anything but keeping their land costs low. It might be time to award sanctions for the violation of section 301 of the Eminent Domain Procedure Law which requires that the condemnor, “at all stages subsequent to an acquisition by eminent domain of real property necessary for a proposed public project to make every reasonable and expeditious effort to justly compensate persons for such real property by negotiation and agreement.”

Our legislature should consider amending our Eminent Domain Law to preclude a condemnor from lowering its appraised damages except in the case of a mathematical error. It should also review the wisdom of taking private property to turn over to a developer so that the developer can build and sell luxury housing.

Posted in Condemnation Procedures, Eminent Domain, Eminent Domain Abuse, Future of the law, New York, Offer & Compensation, Recent cases, Valuation
No comments yet.

Leave a Reply