Opinion ID: 900919
Heading Depth: 1
Heading Rank: 5

Heading: Damages for Temporary Taking

Text: [¶ 33.] We now turn to the question of proper calculation of damages for the forty-three month period during which SDDS was denied the use of its permit. Obviously, the trial court found this case perplexing and to solve the question of proper damages told the lawyers on the first day of trial that there just is no one measure of damages here. And my inclination frankly is to let you both submit your theory of damages to the jury and let them decide what's just compensation. At the end of the trial, the court allowed the jury to choose one of three different means of computing damages. In brief, these were (1) the fair market rental value of the property for the period of the taking, (2) the lost return on investment on the portion of fair market value lost over the period of the taking (the Nemmers II model), and (3) the market rate of return on the value of option and royalty income. After the conclusion of the trial, the court determined that the jury instructions improperly permitted the jury to award consequential damages and ordered a new trial. [8] Reviewing jury instructions for error of law, we adhere to the minority rule that, if any one of alternative theories of recovery is correct, it is presumed that the jury followed the correct one. See generally Allen v. McLain, 75 S.D. 520, 69 N.W.2d 390 (1955). However, under the unique circumstances of this case, we conclude that none of the three instructions was an accurate statement of the law. [9] [¶ 34.] Before proceeding to a discussion of the three measures of damages in the jury instructions, we reemphasize the following points:  [T]he default rule remains that, in the regulatory takings context, we require a ... fact-specific inquiry. Tahoe-Sierra, ___ U.S. at ___, 122 S.Ct. at 1484, 152 L.Ed.2d at ___.  [T]he landowner has no right under the Just Compensation Clause to insist that a `temporary' taking be deemed a permanent taking. First English, 482 U.S. at 317, 107 S.Ct. at 2387, 96 L.Ed.2d at 265.  Various methods for calculating compensation for temporary takings have been created: fair rental value, option value, interest on lost profit, before-and-after valuation (two methods), market rate of return, the equity interest approach, the Herrington standard, and the public benefits approach. Tretbar, Calculating Compensation, 42 UKanLRev at 217-18 (citations omitted). Some courts suggest that any of these measures may be appropriate, depending on the facts of the specific case. Corrigan v. City of Scottsdale, 149 Ariz. 538, 720 P.2d 513, 518-19 (1986) (en banc). Nonetheless, regardless of the method used, compensation must be limited to the property owner's actual loss, id. at 519, as calculated with reasonable certainty. City of Austin v. Teague, 570 S.W.2d 389, 395 (Tex.1978).  One problem that pervades these various damage measures is the speculativeness inherent in deciding what level of use owners might have made of their property but for the temporary taking. Herrington v. County of Sonoma, 790 F. Supp. 909, 915 (N.D.Cal.1991). The danger is the possibility of allowing a landowner to receive the full investment portfolio return on merely its delayed use of the property. Id. at 923.  Because of (a) the unsettled nature of temporary takings law, (b) the wide divergence in the various damage measures, and (c) the inherent speculativeness of many of these, courts are free to craft new measures in accordance with the fact-specific inquiries that almost all temporary takings demand. Thus the Herrington court created an entirely new probability model, and the Bass IV court substantially modified the model it had initially proposed in Bass Enterprises Production Co. v. United States, 45 Fed. Cl. 120 (1999) ( Bass III ).  All that having been said, the fact remains that, the recovery for a temporary taking is generally the rental value of the property. Bass II, 133 F.3d at 895. Our task, then, is to fit this general rule to the specific facts of the case at hand.