Opinion ID: 1100036
Heading Depth: 1
Heading Rank: 7

Heading: The Quick Taking Statute

Text: Upon adoption of Article 1, § 4 of the 1974 Louisiana Constitution, which broadened the concept of just compensation to cover the full extent of the owner's loss, the legislature amended and reenacted the statutory rules governing quick takings for highway purposes, La.R.S. 48:441-460, to harmonize them with the new due process guarantee and the established statutory and jurisprudential precepts. As part of this legislation, La.R.S. 48:453 became effective January 1, 1975, and at the time of the taking in this case provided: A. The measure of compensation for the property expropriated is determined as of the time the estimated compensation was deposited into the registry of the court, without considering any change in value caused by the proposed improvement for which the property is taken. B. The measure of damages, if any, to the defendant's remaining property is determined on a basis of immediately before and immediately after the taking, taking into consideration the effects of the completion of the project in the manner proposed or planned. C. The owner shall be compensated to the full extent of his loss. D. The department shall present its evidence of value first. [amended by Act 391 of 1976 to provide that: The defendant shall present his evidence of value first.] E. Reasonable attorney fees may be awarded by the court if the amount of the compensation deposited in the registry of the court is less than the amount of compensation awarded in the judgment. Such attorney fees in no event shall exceed 25% of the difference between the award and the amount deposited in the registry of the court. By the amendment and reenactment of La.R.S. 48:453, the legislature (1) recognized the new express constitutional requirement that the owner shall be compensated to the full extent of his loss; (2) incorporated the established rule that compensation for takings shall not include any increment in market value resulting from the fact that the improvement has been proposed; (3) expanded this rule to provide that any change in market value caused by the proposed improvement, whether an increase or a decrease, shall be disregarded; (4) incorporated the severance damage before and after test and special benefits rule; [4] and (5) added rules governing attorneys fees and the order of trial. The clear legislative aim of La.R.S. 48:453 pervades each of its parts. Its object is to implement the constitution by assuring that each owner is justly compensated to the full extent of his loss for property taken or damaged by the state, i.e., to see to it that he is placed in as good a position pecuniarily as he enjoyed prior to the taking. This purpose is expressly stated by the statute and each section of the legislation must be construed to further its central goal. Interpreting the statute in this way, we conclude that it is designed to compensate each person only for the amount of his own loss due to a taking or damage of his property by the state. The legislative and jurisprudential history of the rules incorporated by La.R.S. 48:453 indicates clearly that they by no means express the ultimate ends of eminent domain law. Rather, they merely require adjustments when the actual market value at the time of taking does not reflect an owner's actual loss or gain due to the effects of the proposed improvement. Under La.R.S. 48:453(A), expropriation-induced changes in value, whether upwards or downwards, are excluded from consideration so that neither party will be adversely affected by market abnormalities caused by the prospect of the expropriation. [5] The rules of adjustment were never intended to permit any owner or class of owners to receive compensation, for land taken or damaged, which amounts to more or less than an individual owner's actual loss. In La.R.S. 48:453(A), the legislature provided that compensation for property taken shall be measured without considering any change in value caused by the proposed improvement for which the property is taken. Although the statute does not explicitly so state, we think it was intended that the courts should disregard only changes in value caused by the proposed improvement which occurred subsequent to the expropriatee's purchase of the property. In the vast majority of cases in which market value at taking is affected by the proposed improvement, the expropriatee is the owner of the property at the time of its change in value. In measuring compensation in such a case, an adjustment to market value is appropriate under our long standing policy that the state should pay an owner the true value of his property taken without respect to any increment in value (or devaluation) caused by the purpose for which it is taken. See, Shreveport Traction Co., supra . [6] In the unusual case in which an expropriatee purchases the property following such a change in value, however, this type of adjustment is not called for because the expropriatee has not been adversely affected by the previous change in value. In reality, his property interests did not undergo any expropriation-induced change in value. To apply the adjustment in such an unusual case would cause the expropriatee to be compensated for more or less than his actual loss. If, for instance, an expropriatee purchases property, already depressed in value by the proposed project, and his compensation for the taking is adjusted upwards pursuant to La.R.S. 48:453(A) to offset expropriation-induced depreciation, he would reap a windfall. An expropriatee in such a case has not been adversely affected by the expropriation-induced depreciation of the property; he benefitted from its effects which were reflected in the reduced purchase price he paid. On the other hand, if an expropriatee purchases property subsequent to the time that a project is proposed, and the value of the property already has been enhanced by the proposed project, a mechanistic application of La.R.S. 48:453(A) would require an adjustment downwards of the market value of the property despite the fact that the expropriatee may have purchased the land in good faith at its enhanced value. In view of the legislative aim to compensate each owner to the full extent of his loss, the statute implicitly applies only to changes in value which occur during an expropriatee's ownership of the property, or else the lawmakers did not advert to the unusual situation presented by this case and thus failed to provide for it in La.R.S. 48:453(A). We reject as unlikely and incongruous with the statute's purpose, history and constitutional underpinnings, the notion that La.R.S. 48:453(A) is designed to permit a small class of expropriatees to be compensated for more or less than the full extent of their losses. We have found no Louisiana case in which an expropriatee acquired the property taken after a change in value caused by the proposed improvement for which it was taken. We found no case in any jurisdiction in which an owner was permitted to recover for condemnation-induced depreciation of market value which occurred before he acquired the property. In a Superior Court of New Jersey case, State v. S. Nablone Trucking Co., Inc., 128 N.J.Super. 370, 320 A.2d 186 (1974), cert. denied, 65 N.J. 575, 325 A.2d 708 (1974), a situation similar to Mr. Bitterwolf's was presented. The reasoning of the court, although not based on statutory law, is persuasive and similar to our view: Whatever may have been the depreciating effect (if any) upon the market value of the condemned premises resulting from the prior announcement of the proposed taking, defendant-owners benefitted from it to the same or greater extent at the time they purchased the premises in 1970. And, just as an owner is not entitled to benefit from an enhancement in value as a result of a previous announcement of a proposed taking, 4 Nichols, supra, § 12.3151[1]; Annotation, `CondemnationDamagesEnhanced Value,' 147 A.L.R. 66 (1943); Jersey City Redevelopment Agency v. Kugler, supra, 58 N.J. [374] at 379, 277 A.2d 873, so a landowner who has not been damaged by the depreciating effect of such prior announcement is not entitled to reap a windfall. If there were any doubt that defendant-owners were not damaged as a result of any such depreciating effect, it is at once dispelled when it is observed that the amount awarded the owners by the jury ($508,500) exceeded the price paid by them for the premises just 16 months earlier ($325,000) by the sum of $183,500more than 56% over and above the 1970 purchase price. In the present case, if there can be any doubt that Mr. Bitterwolf should not recover for the depreciation of property value which was caused by the state's announcement of the project and which occurred prior to his purchase of the property, it is dispelled by the observation that the amount awarded him for the part taken plus severance damages to the remainder ($71,579.97) [7] exceeded the price he paid for the entire premises just 23 months earlier ($48,000) by the sum of $23,579.97more than 49% over the 1973 purchase price. Furthermore, defendant's own appraisers, Mr. Stevenson and Mr. Boetner, placed an after-taking value of $35,196 and $46,936 respectively on the defendant's remainder. We conclude for the foregoing reasons, that the previous courts fell into an error of law by assuming that La.R.S. 48:453(A) required the trier of fact to disregard any change in value to the property caused by the proposed improvement which occurred before Mr. Bitterwolf's ownership. The adjustment to market value required by this statute applies only to changes in value which occur subsequent to the expropriatee's purchase of the property. The evidence in this case makes it clear that most, if not all, of the change in value induced by the project's announcement occurred before Mr. Bitterwolf acquired the property. Accordingly, all of the change in value which occurred before Mr. Bitterwolf became the owner of the property should have been considered in measuring the compensation for the property taken and the damage to the remainder. Since Mr. Bitterwolf was not adversely affected by expropriation-induced depreciation of the property's value, he is not entitled to an adjustment which is designed solely to protect parties against such losses. The award for the property taken and the severance damages should have been based on actual market values. [8] The issue presented in this case was res nova prior to this decision. The previous courts' erroneous construction of La.R.S. 48:453 skewed the awards for the property taken and the severance damages. The landowner's appraisers based their selection of comparables on the same incorrect theory. Although this court is not disposed to remand a case for retrial simply because a litigant has pitched his case on the wrong theory, we think there is countervailing extenuation in this case. The statute with which the parties and the courts had to contend below is not a model of clarity. Only after laborious examination and exegisis of jurisprudence covering many areas of expropriation law were we able to interpret the statute with confidence. Although it is clear that Mr. Bitterwolf is not entitled to compensation for expropriation-induced depreciation in value which occurred prior to his purchase of the property, there is a possibility that some of the downward change occurred during his ownership. The testimony of expert witnesses and the findings of the trial judge are ambiguous on whether the depressive effect on market value attributable to the project's announcement had fully run its course before Mr. Bitterwolf acquired the property. Because of these difficulties the record compiled in the trial court is less than adequate for the determination of just compensation for the taking and severance damages. Accordingly, in the interest of justice and a proper and legal judgment, the judgments below will be reversed and the case will be remanded to the trial court for further proceedings consistent with the views herein expressed. One further issue should be mentioned briefly. Mr. Bitterwolf's vendor by warranty deed assigned all of his rights as owner to the defendant when he purchased the property. Therefore, Mr. Bitterwolf argues, he is entitled to assert his vendor's claim against the state for the depreciating effects upon its value during the vendor's ownership caused by the proposal of the improvement. The short answer to this contention is that Mr. Bitterwolf's vendor had no cause of action or claim to assign. At the time of the sale there had been no taking of the property. An actual taking is required before damages are allowed except in instances in which a landowner suffers special damages not sustained by the public in general, rather than merely incidental damages. Reymond v. State, Dept. of Highways, 255 La. 425, 231 So.2d 375 (1970). See, M. Dakin & M. Klein, Eminent Domain in Louisiana pp. 63-4 (1970); Tate, supra, at 433; Dakin, Developments in the Law, 1979-1980: Expropriation, 41 La.L.Rev. 474 (1981) Comment, ExpropriationConsequential Damages Under the Constitution, 19 La.L.Rev. 491 (1959). REVERSED AND REMANDED TO TRIAL COURT. MARCUS, J., dissents and assigns reasons.