Court Opinion

ID: 9694931
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:01:09.837682+00
Date Added: 2024-06-11T18:20:07.089283
License: Public Domain

STEELE, Circuit Judge
(concurring in part and dissenting in part).
I concur with the majority on issues 3 and 5 through 14, but dissent on issues 1, 2, and 4. I would reverse and remand for a new trial because the jury award was based upon the improper measure of damages, and because the real issue between the parties was whether a de facto taking occurred, which issue was never litigated.
MEASURE OF DAMAGES
The trial court established the date of the taking as February 4, 1991, the date the city passed its condemnation resolution. At that time the only property the Kelleys owned was the condemned parcel. The measure of damages when an entire parcel is condemned is its fair market value at the time of the taking. Rapid City v. Baron, 88 S.D. 693, 227 N.W.2d 617 (1975); City of Huron v. Jelgerhuis, 77 S.D. 600, 97 N.W.2d 314 (1959).
The problem in this case is one of timing. The City and the Kelleys started negotiations long before the time of the sale of the KFC parcel. Prior to the sale, the property the Kelleys owned was large and the KFC parcel supplied street frontage access, making it a valuable parcel. All of the appraisals were performed when the Kelleys owned the large tract. Knowing what part of the large parcel the City wanted, the appraisers used the measure of damages applicable to partial taking. That measure is the difference between the fair market value of the entire tract immediately before the taking and the fair market value of what remains after the taking. State Highway Commission v. *114Hayes Estate, 82 S.D. 27, 140 N.W.2d 680 (1966).
The measure of damages for a partial taking includes compensation both for what is taken and for the diminution in the fair market value of the remainder; the two elements of damages are integrated and inseparable. Hayes Estate, supra. The purpose of this measure is to allow compensation to the owner when the value of the whole tract before a taking exceeds the sum of the values of the property taken and its severed remainder after the taking.
The measure may be illustrated by an equation. “A” is the fair market value of the whole tract before the taking. “B” is the fair market value of the property taken after the taking. “C” is the fair market value of the severed remainder after the taking. “D” is the diminution in the fair market value of the severed remainder after the taking. A=(B + C + D). The elements on the right side of the equation are inseparable. B and D are the elements that the owner receives money compensation for; C is the remainder property which the owner retains.
The Kelleys sold all of the remainder of their property before the established time of taking. Therefore, the only parcel which should have been valued by the jury was the condemned parcel. That parcel was isolated and had no street access. Yet all of the testimony, including that of Daryl and Donald Kelley, save one opinion rendered by a city appraiser, included compensation for both the parcel condemned and for the diminution in the fair market value of the parcel sold to KFC. The one appraiser who valued just the cond.emned parcel placed its fair market value (FMV) at $219,300. The jury’s verdict was for $450,000; therefore the jury obviously accepted valuations based on a partial taking.
As an example of the fallacy in the partial taking approach in this case, Kelleys’ appraiser valued the entire parcel as it existed before the KFC sale at $692,908 and the FMV of the KFC parcel after the taking at $224,044 to arrive at his opinion of compensation due at $468,864. The last figure inherently includes all elements on the right side of the above equation — the value of the property taken, the remainder property, and the diminution in the value of the remainder because of the severance.
At the time of the trial, the “remainder” property (the KFC parcel) had been sold at what Kelleys concede was at FMV, but there was no evidence submitted of its sale price (C in the equation). The only evidence of the FMV of the condemned property (B in the equation) was the opinion of one of the City appraisers, and there was no evidence of whether the KFC parcel was at all diminished in value because of its severance (D in the equation).
The sale of the KFC parcel before the established time of taking skews the partial taking approach, because its actual sale price must be inserted in the equation. That being the ease, elements B and D must be considered separately, and that was not done here. Therefore, there is a real possibility of a substantial error in valuation under the circumstances of this ease.
The simple fact remains that because the Kelleys owned only the detention pond parcel at the established time of the taking, this was not a partial taking case, and only the FMV of the condemned parcel should have been determined.
DE FACTO TAKING
The heart of the dispute between the parties is that Kelleys contend that the City interfered with their use and enjoyment of the property to the extent that there was a taking long before they sold the KFC parcel. The City insists with equal vigor that a taking did not occur until the condemnation resolution was passed.
When a governmental authority substantially interferes with the property interests of the owner prior to initiating formal condemnation proceedings, a taking may occur at that time. Hurley v. State, 81 S.D. 318, 134 N.W.2d 782 (1965); City of Brookings, supra. This is sometimes referred to as a “de facto taking.”
The general elements of proof to establish a de facto taking are: (1) substantial government action; (2) a causal link between the *115action and the damage claimed; and (3) resulting injury. The burden is on the claimant to establish these elements by substantial evidence. City of Brookings, supra.
The trial court established the date of the taking as February 4,1991 (after the Kelleys had sold all of their remaining property), and so instructed the jury. How that date was established is not clear from the record. If the Kelleys contend that the time of the taking was before they sold the KFC parcel, then they would be entitled to use a partial taking approach, but they must establish the time of taking to the trial court. It does not appear that the issue of whether there was a de facto taking, and if so, the time thereof, was ever litigated. Kelleys bore the burden to show a de facto taking by substantial evidence. They in effect obtained a verdict based upon a de facto taking without having to provide proof thereof. The City preserved the issues by making timely motions to exclude and to strike the proffered testimony.
For the above reasons, I would reverse and remand for a new trial.