Court Opinion

ID: 9461425
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:14:22.589723+00
Date Added: 2024-06-11T17:37:03.553722
License: Public Domain

LUMBARD, Senior Circuit Judge
(concurring in part, dissenting in part):
Although I concur in the majority’s conclusion that the District of Columbia failed to accord plaintiff due process of law, I believe that the district court’s award of $75,000 for the damage to the buildings must be set aside.
The Special Master held:
3. The income approach to valuation is not controlling in this case since the buildings were never completed nor were they ever income producing from the date rehabilitation commenced until their destruction.
6. The measure of damages to the buildings in this case is the cost to replace or reproduce them in the condition in which they existed immediately prior to their destruction in October of 1970, which was $37,500 per building or a total of $75,000. Chicago, Milwaukee, St. Paul & Pacific RR. Co. v. Tindal, 249 F.Supp. 988 (S.D. Iowa 1966).
Affirming that decision, the district court stated:
Considering the wrongful nature of the taking, that is, the demolition of the buildings without proper notice to plaintiff Miles, and considering the testimony presented to the Special Master, it is the conclusion of this Court that the cost of replacement as determined by Magistrate Margolis is the most appropriate measure of compensation to plaintiff Miles.
The Special Master erred as a matter of law in not taking account of the testimony of plaintiff’s own witness, Wallace Kidwell, who testified as to the value of the properties using the eapitalization-ofearnings or income approach. Mrs. Miles held the properties as investments, with a view toward again making them income-producing properties. Certainly their value to her as such should be taken into account to limit an assessment of damages based upon replacement cost. Indeed, the case cited by the Special *197Master stands for that very proposition. In Chicago, Milwaukee, St. Paul & Pacific RR. Co. v. Tindal, 249 F.Supp. 988 (S.D.Iowa 1966), the court found that the replacement cost of a railroad warehouse destroyed by fire was $8,000 (value new ($20,000), less depreciation prior to the fire ($12,000)). But as the defendant had paid an annual rental of only $284 for the building, which had few alternate uses, the court found the actual value to be only $3,000 (roughly ten times earnings).1
The Special Master disregarded Kid-well’s testimony because the buildings were never completed and never produced any income between the date rehabilitation commenced and the date of demolition. However, Mr. Kidwell, an expert, clearly could and did make an estimate of the income-producing potential of the property based on rentals generated and costs incurred by similar properties when wholly rehabilitated. The fact that Mrs. Miles’ properties never produced income following the commencement of rehabilitation does not make the capitalization-of-earnings-approach irrelevant. Indeed, it is the most appropriate measure because Mrs. Miles was rehabilitating the buildings for the very purpose of generating income.
Kidwell testified that, based on the capitalization-of-earnings-approaeh, the value of the buildings in 1966, if completed, would have been $50,000. However the value of the property as it then stood was probably somewhat less since Kidwell testified that the neighborhood had deteriorated since 1966. Moreover, Kidwell’s determination of the value of the buildings was on the assumption that they were completed. Mrs. Miles’ buildings were far from completed. The District of Columbia’s examiner had concluded that the interior was only forty percent rehabilitated. Thus, it would be necessary to subtract the cost of completion from Kidwell’s estimate of the properties’ value in order to arrive at a proper damage award.
The majority suggests that the Special Master may have found that Kidwell’s testimony using the income-valuation approach was not credible, and that that accounts for the exclusive focus on the cost of reconstruction in assessing damages. I must disagree. Kidwell was Mrs. Miles’ own witness, and the Special Master described him as a “qualified real estate appraiser.” His testimony, which took account of the location of the buildings and the rental income which would probably have been generated if the buildings had been completed, was not contradicted by any other witness. Calcara, plaintiff’s other witness, was offered only as a professional builder and rehabilitator, not as a professional real estate appraiser. (A. 163) It seems that the Special Master disregarded Kidwell’s testimony not because he did not find it credible, but because he incorrectly held that the measure of damages should be replacement cost, where the buildings were never completely rehabilitated pri- or to their demolition and had not begun to generate income again.
The majority opinion also relies upon the finding of the district court, reviewing the Special Master’s award, that “the evidence put forth by plaintiff Miles as to the cost of replacing the structures was the only credible expert testimony before the Special Master.” However the district court offered no reasons to support its conclusion, and indeed none are apparent from the transcript which the district court had before it. In these circumstances, I believe that the court’s complete disregard of Kidwell’s testimony as to the value of the buildings, based on an income or capitalization-of-earnings-approach, was clearly erroneous.
Moreover, the district court’s finding as to Kidwell’s credibility may well have been influenced by the court’s apparent belief that the “wrongful nature of the taking” should be taken into account in assessing damages to Mrs. Miles. The court was clearly in error when it considered the inadequacy of the notice as a *198factor in assessing damages. In any event the attempts of the District of Columbia to contact Mrs. Miles, even though constitutionally insufficient, make the district court’s “punishment” rationale for the high damage award wholly inappropriate, especially since Mrs. Miles had discontinued any rehabilitation efforts years earlier and had permitted the properties to become more and more run down.
The damage award should be vacated and the case remanded for reconsideration of the amount of damages in light of the foregoing.

. See also O’Brien Bros. v. The Helen B. Moran, 160 F.2d 502, 505-06 (2d Cir. 1947) (damage to a ship).