Opinion ID: 900919
Heading Depth: 1
Heading Rank: 9

Heading: Fair Rental Value Model

Text: [¶ 44.] Fair rental value is a more equitable measure of damages than interest on lost profits because, as noted above, SDDS would not have had any profits during its startup period. To be sure, the trial court here did instruct on fair rental value as a measure of damages, but calculating fair rental value, without more guidance, is at least as problematic as determining damages under the Nemmers model. First, the fair market rental value of the property from July 1, 1991, until February 6, 1995, without the effect of the referendum, cannot be anything but speculative, for there were no comparable rentals in the area. As the Nemmers II court says of sales, [w]hen there are no comparable sales, market value must be estimated, 764 F.2d at 505, so we say of rentals. Therefore, second, and more important, the estimates of fair rental value would involve the very same calculations that SDDS used to establish its damages as lying between $17 million and $51 million. That is, if SDDS had rented Lonetree to company X for use as a landfill, presumably X (according to SDDS's figures) would have made profits lying between $17 million and $51 million. Then, if SDDS were to have collected, say, 10% of those profits in rent, its damages would range between $1.6 million and $5.5 million. Third, however  and this consideration is for us dispositive  aside from the initial uncertainty of the numbers, fair rental value is unusable for an entirely different reason: there would have been no company X that would have rented Lonetree for use as a landfill for only forty-three months because there would have been little or no profit according to SDDS's projections for that initial period. Indeed, no company would have rented Lonetree for use as a landfill except for a period well in excess of forty-three months. [14] That is, the fair market rental value over that limited period is incalculable because Lonetree probably could not have been rented as a landfill for so short a time. Unlike Kimball Laundry, 338 U.S. 1, 69 S.Ct. 1434, 93 L.Ed. 1765, where a laundry facility was taken over by the federal government for a period of time, during which it could certainly have generated rental income while being used as a laundry in the private sector, Lonetree could not have been rented, except for range land, for a forty-three-month period. But that result, like the result under the Bass III model, would be unfair to SDDS. Accordingly, the trial court's first method of calculating damages must also be rejected.