Court Opinion

ID: 9919151
Source: CourtListenerOpinion
Date Created: 2024-01-17 16:11:44.736824+00
Date Added: 2024-06-11T08:04:58.736578
License: Public Domain

THE STATE OF SOUTH CAROLINA
                          In The Supreme Court

            Applied Building Sciences, Inc., Appellant,

            v.

            South Carolina Department of Commerce, Division of
            Public Railways, Respondent.

            Appellate Case No. 2021-000051

                          Appeal from Charleston County
                         Bentley Price, Circuit Court Judge

                               Opinion No. 28184
                 Heard September 12, 2023 – Filed January 17, 2024

                                   AFFIRMED

            Gene McCain Connell, Jr., of Kelaher, Connell &
            Connor, P.C., of Surfside Beach, for Appellant.

            Keith M. Babcock and Joseph B. Berry, both of Lewis
            Babcock L.L.P., of Columbia, for Respondent.

            Paul Dezso de Holczer, of Columbia, for Amicus Curiae
            South Carolina Department of Transportation. Bryan
            Eric Shytle, of Columbia, for Amicus Curiae Municipal
            Association of South Carolina.

JUSTICE JAMES: We certified this case pursuant to Rule 204(b), SCACR. We
affirm the circuit court and hold the $50,000 statutory limit on reimbursement of
reestablishment expenses in condemnation proceedings set forth in S.C. Code Ann.
section 28-11-30(4) (Supp. 2023) is constitutional.

                                         I.
      Appellant Applied Building Sciences, Inc. (ABS) is an engineering firm that
was a tenant in a building in Charleston County owned by Hibernian Heights, LLC
(Landlord). The South Carolina Department of Commerce, Division of Public
Railways (Public Railways) condemned the building and the surrounding real
property (the Milford Property) for public use. Because ABS was a tenant of the
Milford Property, ABS was entitled to just compensation for the value of its
leasehold interest; thus, ABS was named as an "Other Condemnee" in the resulting
condemnation action.
       The taking of the Milford Property forced ABS to move its business
operations to a new location. In addition to damages recoverable by ABS as just
compensation for its leasehold interest in the Milford Property, ABS was entitled to
reimbursement of two other types of expenses from Public Railways. First, under
South Carolina Code section 28-11-10, a relocating business such as ABS may apply
for reimbursement of reasonable expenses for moving tangible personal property to
the new business location. Public Railways paid the moving expenses to ABS, and
they are not an issue in this appeal.
      Second, under S.C. Code section 28-11-30(4), a relocating business may seek
reimbursement of other reestablishment expenses. S.C. Code section 28-11-30(4)
provides:

      Reestablishment expenses related to the moving of a small business,
      farm, or nonprofit organization payable for transportation projects
      pursuant to federal guidelines and regulations may be paid in an amount
      up to fifty thousand dollars, notwithstanding a lower limitation imposed
      by federal regulations.

S.C. Code Ann. § 28-11-30(4) (emphasis added).
      ABS renovated the replacement site and sought reimbursement from Public
Railways for those expenses in excess of $560,000 ("reestablishment expenses").
Citing section 28-11-30(4), Public Railways refused to pay more than $50,000.
Along with its claim for just compensation for the taking of its leasehold interest,
ABS asserted an inverse condemnation claim against Public Railways for the entire
amount of reestablishment expenses, alleging the $50,000 cap in section 28-11-30(4)
is unconstitutional under the Takings Clauses of the South Carolina and United
States Constitutions.

       Landlord, ABS, and Public Railways settled the condemnation action for
$1,700,000, and ABS received a portion of the settlement proceeds as just
compensation for its leasehold interest. ABS and Public Railways agreed to sever
ABS's inverse condemnation claim and litigate it separately. ABS and Public
Railways then filed cross motions for summary judgment with regard to that claim.
The primary issue before the circuit court was whether the $50,000 cap is an
unconstitutional limitation on the reimbursement of reestablishment expenses. The
circuit court found the cap constitutional and granted Public Railways' motion for
summary judgment. ABS appealed.
                                         II.
      The Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970 (the Federal Relocation Act) was enacted to entitle any person
"displaced" from his home or place of business by a federal or federally-funded
project to relocation expenses, including reimbursement for certain moving
expenses. 42 U.S.C. §§ 4601-4655; Norfolk Redevelopment & Hous. Auth. v.
Chesapeake & Potomac Tel. Co. of Va., 464 U.S. 30, 32 (1983). The Federal
Relocation Act generally provides that displaced persons are entitled to the
following benefits:

        (1) actual reasonable expenses in moving himself, his family,
            business, farm operation, or other personal property;
        (2) actual direct losses of tangible personal property as a result
            of moving or discontinuing a business or farm operation,
            but not to exceed an amount equal to the reasonable
            expenses that would have been required to relocate such
            property, as determined by the head of the agency;
        (3) actual reasonable expenses in searching for a replacement
            business or farm; and

        (4) actual reasonable expenses necessary to reestablish a
            displaced farm, nonprofit organization, or small business
            at its new site, but not to exceed $25,000, as adjusted by
            regulation, in accordance with section 4633(d) of this title.
42 U.S.C. § 4622(a). The Federal Relocation Act thus limits reestablishment
expenses to $25,000. 42 U.S.C. § 4622(a)(4).

       South Carolina codified the relocation requirements of the Federal Relocation
Act in sections 28-11-10 to -70, mandating relocation payments to displaced persons
and businesses regardless of whether a project uses any federal dollars. See S.C.
Code Ann. § 28-11-10 (2007); Brown v. City of N. Charleston, 314 S.C. 298, 299-
301, 442 S.E.2d 633, 634-35 (Ct. App. 1994); Act No. 1345, 1972 S.C. Acts 2522
(referring to relocation assistance "when any program or project undertaken
involving acquisition of real property will result in displacement of any person or
other legal entity"); 18 S.C. Jur. Eminent Domain § 22.1 (West 2023). When the
government uses the power of eminent domain to take property which is being
leased, the tenants may recover moving costs and rent differential payments. See
S.C. Code Ann. § 28-11-10; Brown, 314 S.C. at 299-301, 442 S.E.2d at 634-35; 18
S.C. Jur. Eminent Domain § 22.1.
       Section 28-11-30(4) was enacted in 2010 and, as noted above, caps at $50,000
"reestablishment expenses related to the moving of" small businesses, farms, and
non-profit organizations. S.C. Code Ann. § 28-11-30(4). South Carolina's
relocation assistance statute expressly provides: "Nothing in this chapter shall be
construed as creating an element of damage in an eminent domain proceeding." S.C.
Code Ann. § 28-11-70 (2007).1

                                        III.
       This case hinges on two questions: (1) are reestablishment expenses separate
from constitutional just compensation in an eminent domain action; and (2) is the
statutory cap on the reimbursement of reestablishment expenses constitutional? We
hold the answer to both questions is yes.
       "This Court has a very limited scope of review in cases involving a
constitutional challenge to a statute. All statutes are presumed constitutional and
will, if possible, be construed so as to render them valid." Joytime Distribs. &
Amusement Co., Inc. v. State, 338 S.C. 634, 640, 528 S.E.2d 647, 650 (1999) (citing

1
   Twenty-five other states have a statute authorizing the repayment of
reestablishment expenses to a displaced farm, nonprofit organization, or small
business as a result of eminent domain with a set monetary cap. The constitutionality
of the statutes in other states has apparently not been challenged.
Davis v. Cnty. of Greenville, 322 S.C. 73, 77, 470 S.E.2d 94, 96 (1996)). "A
legislative act will not be declared unconstitutional unless its repugnance to the
constitution is clear and beyond a reasonable doubt." Id. (citing Westvaco Corp. v.
S.C. Dep't of Revenue, 321 S.C. 59, 62, 467 S.E.2d 739, 741 (1995)). "A legislative
enactment will be declared unconstitutional only when its invalidity appears so
clearly as to leave no room for reasonable doubt that it violates a provision of the
constitution." Id. (citing Westvaco Corp., 321 S.C. at 62, 467 S.E.2d at 741). The
party challenging the constitutionality of a statute bears the burden of establishing
unconstitutionality. Knotts v. S.C. Dep't of Nat. Res., 348 S.C. 1, 6, 558 S.E.2d 511,
513 (2002) (citing Home Health Serv., Inc. v. S.C. Tax Comm'n, 312 S.C. 324, 327,
440 S.E.2d 375, 377 (1994)).

       The Takings Clause of the Fifth Amendment to the United States Constitution
provides that private property shall not "be taken for public use, without just
compensation." U.S. Const. amend. V; see Chi., Burlington & Quincy R.R. Co. v.
City of Chi., 166 U.S. 226, 239 (1897) (making the Takings Clause applicable to the
states via the Due Process Clause of the Fourteenth Amendment). "As its text makes
plain, the Takings Clause 'does not prohibit the taking of private property, but instead
places a condition on the exercise of that power,'" namely, the payment of just
compensation to the affected property owner. Lingle v. Chevron U.S.A. Inc., 544
U.S. 528, 536 (2005) (quoting First Eng. Evangelical Lutheran Church of Glendale
v. Cnty. of L.A., 482 U.S. 304, 314 (1987)).

       The South Carolina Constitution states, "[P]rivate property shall not be taken
for private use without the consent of the owner, nor for public use without just
compensation being first made for the property." S.C. Const. art. I, § 13. The
General Assembly established how just compensation should be ascertained in an
eminent domain proceeding in section 28-2-370 of the South Carolina Code: "In
determining just compensation, only the value of the property to be taken, any
diminution in the value of the landowner's remaining property, and any benefits as
provided in § 28-2-360 may be considered." S.C. Code Ann. § 28-2-370 (2007).

       Several United States Supreme Court decisions issued prior to the enactment
of the foregoing federal and South Carolina relocation assistance statutes are
pertinent to our decision today. The Supreme Court has noted the Constitution and
statutes do not define "just compensation," but it has become recognized that "just
compensation is the value of the interest taken," the so-called "market value."
United States v. Petty Motor Co., 327 U.S. 372, 377 (1946). In Petty Motor, as here,
there was a complete taking of the tenant's leasehold interest. Id. at 378. As part of
the tenant's evidence of just compensation for the loss of its leasehold interest, the
trial court allowed the tenant to introduce evidence of the expenses the tenant
incurred in moving and reinstalling its equipment at its new business location. Id.
at 377. The Petty Motor Court held this was error, finding the removal or relocation
of personal property is not to be included in valuing property taken and that
businesses displaced as a result of condemnation do not have a constitutional right
to receive expenses related to relocation. See id. at 377-78 ("Since 'market value'
does not fluctuate with the needs of condemnor or condemnee but with general
demand for the property, evidence of loss of profits, damage to good will, the expense
of relocation and other such consequential losses are refused in federal
condemnation proceedings." (emphasis added)). The Court held the cost of removal
or relocation should not be admitted because these costs "are apart from the value of
the thing taken" and are "personal to the lessee." Id. at 378. The Court noted the
lessee would have to move at the end of his term unless the lease was renewed and,
therefore, the compensation for the value of the leasehold covers the loss from
premature termination in most situations. Id. at 378-79.
       United States v. Westinghouse Electric & Manufacturing Co. clarified that
when the government takes a tenant's entire leasehold interest, the expenses of
removal or of relocation are not to be included in valuing what is taken. 339 U.S.
261, 264 (1950). The Supreme Court has also held the cost of removing personal
property from land taken is recoverable only if provided for by statute. Joslin Mfg.
Co. v. City of Providence, 262 U.S. 668, 676 (1923) (holding "the cost of removing
personal property from land taken is not a proper element of damage unless made so
by express statute, and it was not an unconstitutional exercise of power for the
Legislature, in creating the right, to define its extent" (internal citation omitted)).

       "South Carolina courts have embraced federal takings jurisprudence as
providing the rubric under which we analyze whether an interference with someone's
property interests amounts to a constitutional taking." Hardin v. S.C. Dep't Transp.,
371 S.C. 598, 604, 641 S.E.2d 437, 441 (2007) (citing Byrd v. City of Hartsville, 365
S.C. 650, 656 n.6, 620 S.E.2d 76, 79 n.6 (2005)). Therefore, Petty Motor,
Westinghouse, and Joslin Mfg. Co. guide our decision today.                  Because
reestablishment expenses are separate from damages awardable as just
compensation under the United States and South Carolina Constitutions, the $50,000
cap set forth in section 28-11-30(4) violates neither the Takings Clause of the Fifth
Amendment nor Article I, section 13 of the South Carolina Constitution. Ashmore
v. Greater Greenville Sewer Dist., 211 S.C. 77, 96, 44 S.E.2d 88, 96 (1947) (holding
the General Assembly's plenary power is limited only by the United States and South
Carolina Constitutions and legislation "not expressly or impliedly inhibited by one
or the other of these documents may be validly enacted").

                                         IV.
       ABS has not met its burden of establishing the cap on reestablishment
expenses in section 28-11-30(4) is unconstitutional. As long as the General
Assembly acts within constitutional confines, it has plenary power to make policy
decisions. Such a policy decision is reflected in the General Assembly's enactment
of the $50,000 cap in section 28-11-30(4). See Ashmore, 211 S.C. at 96, 44 S.E.2d
at 97 ("[I]n the General Assembly rests plenary legislative power, limited only by
the constitutions, State and Federal."). We affirm the circuit court.

AFFIRMED.
BEATTY, C.J., KITTREDGE, FEW and HILL, JJ., concur.