December 24, 2008
Sometimes a condemnor does not take all of an owner’s property. A partial taking is a frequent occurrence in a street widening. But it may also occur in takings for sewer lines, electrical transmission lines, or gas lines.
As a general rule, the measure of damages in a partial-taking case is the difference between the fair market value of the whole property before the taking and the fair market of the remainder after the taking. Acme Theatres Inc. v. State of New York, 26 NY2d 385 (1970); Diocese of Buffalo v. State of New York, 24 NY2d 320, 323 (1969).
The fact that there was a partial taking does not automatically mean that there has been damage to the remainder. ‘It is widely accepted that a partial taking does not itself cause a consequential loss***. Damages for such a loss must be based upon either the opinion of an experienced, knowledgeable expert*** or an actual market data showing a reduction in the value of the remainder as a result of the appropriation.’ Zappavigna v. State of New York, 186 AD2d 557, 560 (2d Dept. 1993).
What is then done is to perform a two-step appraisal process. First, the entire property is valued based on its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time. Chemical Corp. v. Town of East Hampton, 298 AD2d 419, 420 (2d Dept 2002). Then direct damages are calculated by valuing the property which was acquired. The next part of the formula is valuing the remainder which results after the partial taking. This is where the appraiser will determine whether or not the remainder has sustained consequential damages which are damages occasioned to the property remaining (the remainder), not only by reason of the direct taking, but also by virtue of the use to which the appropriated property is put by the condemnor. Some decisions use the term consequential damages for all damages suffered by the remainder. Technically, these damages are consequential or severance and can be both.
Severance damages are damages that occur simply because the property acquired is no longer a part of what was once the whole property, it has been severed. The property may have been improved with a structure which may have been partially demolished. Obviously, the part not taken has lost value, probably all of its value. A taking may cause the remainder to be of a size that no longer can be used under zoning laws for its highest and best use, or it may have been left with unsuitable access to a street for its highest and best use.
In Priestly v. State of New York, 23 NY2d 152 (1968) at p. 156, the court defined ‘suitable’ as meaning ‘that which is adequate to the requirements of or answers the needs of a particular object. The concepts are not mutually exclusive and, therefore, a finding that a means of access is indeed circuitous does not eliminate the possibility that the same means of access might also be unsuitable in that it is inadequate to the access needs inherent in the highest and best use of the property involved.’
A partial taking may decrease the amount of available parking spaces essential for a shopping mall. One of the surest guides in measuring damages occasioned by a partial taking is the diminution in rental value resulting there-from. Humble Oil Refining Co. v. State of New York, 12 NY2d 861 (1962). Further, a deterioration of the quality of the income in the after situation merits the award of substantial consequential damages. Star Plaza Inc. v. State of New York, 79 AD2d 746 (3rd Dept 1980). True consequential damages on the other hand come from the manner or use that the property directly taken is put to by the condemnor, some examples: South Buffalo R. Co. v. Kirover, 176 NY 301 (1903) (railroad use); Dennison v. State of New York, 28 AD2d 28, aff’d 22 NY2d 409 (1968) (damages to remainder caused by loss of view and noise); Criscuola v. Power Authority of the State of New York, 81 NY2d 649 (loss of value to remainder caused by high voltage power line).
Judge Joseph Bellacosa wrote in Criscuola that ‘Evidence of fear in the marketplace is admissible with respect to the value of property taken without proof of the reasonableness of the fear.’
New York Court of Appeals
In the key holding, the New York Court of Appeals ruled:
- There should be no requirement that the claimant must establish the reasonableness of a fear or perception of danger or of health risks from exposure to high voltage power lines.
- Whether the danger is a scientifically genuine or verifiable fact should be irrelevant to the central issue of its market value impact.
A claimant, however, is not relieved from giving any proof to establish his claim and just compensation damages. Criscuola v. PASNY, mandates that a claimant must still establish some prevalent perception of a danger emanating from the objectionable condition. The Court of Appeals stated, ‘No witness, whether expert or nonexpert, may use his or her personal fear as a basis for testifying about fear in the marketplace. However, any other evidence that fear exists in the public about the dangers of high voltage lines is admissible.’
The Dennison case was an important building block for the Court of Appeals’ decision in Criscuola. In Dennison, the Third Department and Court of Appeals affirmed a Court of Claim award which considered the loss of privacy and seclusion, the loss of view, the traffic noise, lights, and odors as factors causing consequential damage to the remaining property. The proof of such damages was not based on scientific proof, but an appraiser’s objective opinion of the effect of the taking on the remainder. This has been further defined to include loss of enhancement due to the location and aesthetic qualities of a property. See City of Yonkers v. State of New York, 40 NY2d 408, 413 (1976), Cummings v. State of New York, 62 AD2d 1084 (3rd Dept 1978), loss of a buffer zone, and loss of setback which concerned potential future use of the land for shrubbery and landscaping. Monser v. State of New York, 96 AD2d 702 (3rd Dept. 1903).
Obviously, there are many other situations which create consequential damages. One for example is a partial taking for a new sewer line. In an assay of damages, the claimant’s appraiser would note the effects of the taking. The remainder parcel may be rendered nonconforming as to zoning because there was the elimination of a required side yard. The existing building floor area was oversized for the remainder lot. Access along the property line of the remainder to its rear yard could have been eliminated. The partial condemnation may have caused a partial loss of required off-street parking. These will be factual issues for determination by a trial court. Whether a partial taking results in a change of value of the remainder presents a credibility issue for the trial court. Chemical Corp. v. Town of East Hampton, 298 AD2d 419 (2d Dept 2002).
In determining consequential damages caused by the use to which the property directly taken is put, there are two considerations which must be made. First, the property must be valued and the right to damages must be set as of the date title vests in the condemnor. Wolfe v. State of New York, 22 NY2d 292 (1968). Second, damages must be determined not necessarily on what the condemnor plans to do but what it has the right to. Kravec v. State of New York, 40 NY2d 1060 (1976).
Thus, if the state’s appropriation of highway-abutting land (true frontage on a street), or the physical construction of the improvement itself so impairs access to the remaining property that it can no longer sustain its previous highest and best use, then the state must pay consequential damages to the owner. Priestly v. State of New York, 23 NY2d 152, 155-157 (1968).
If the appropriation results in the loss to the claimant of its right to enter and exit its property, it will be entitled to consequential damages. Pollack v. State of New York, 41 NY2d 909, 910 (1977). Legal access is required and damages are to be fixed on point of the taking. But, note that the state could provide access by appropriating a neighbor’s property for suitable access to the subject remainder, or by providing a specific reservation of suitable access in the appropriation maps, provided this is done prior to or contemporaneously with the appropriation. Lake George Associates v. State of New York, 7 NY3d 475 (2006).
‘Cost to Cure’
But note, that the condemnor cannot offer later to fix the problem. While dealing with consequential damages, one should be mindful that there is a duty to mitigate damages. In condemnation, the mitigation is called ‘cost to cure.’ There are limits to the concept. The ‘cost to cure’ cannot exceed the amount of consequential damages. An owner cannot be made to look outside the limits of the subject property to find a ‘cost to cure.’ Matter of County of Suffolk (Sills Road), 63 AD2d 673 (2d Dept. 1978).
In St. Patrick’s Church, Whitney Point v. State of New York, 30 AD2d 473 (3rd Dept. 1968), the condemnee actually cured the problem by purchasing land adjacent to the appropriated property 14 months after the appropriation and the state offered the price paid for the land as the ‘cost to cure.’ The Appellate Division, Third Department said, ‘We are not here dealing with any mitigation of damages by something that occurred or could occur upon the property remaining after the appropriation as in Mayes Co. v. State of New York, 18 NY2d 549, where the ‘cost to cure’ theory was allowed because the cure was to occur within the bounds of the claimant’s lands.’
Sound reason requires that the theory cannot be used in cases of subsequent acquisitions of lands outside the bounds of the appropriated property; nor should a condemnee’s right to compensation be made to depend upon whether adjacent land could easily be purchased. These established principles are clearly recognized in 4 Nichols, Eminent Domain (3d ed.) (S 14.22, p. 525) where, in referring to the rule of cost of restoration, it is stated that ”the restoration must be possible without going outside the remaining portion of the tract in controversy,’…That the adoption of the novel theory advanced by the State, illogical in its foundation, might well lead to confusion and havoc in the use of well-reasoned and judicially founded principles of providing just compensation for the taking of a citizen’s lands, is all too evident.’
A condemning authority may argue that a claimant should have taken a specific action to mitigate damages. But to pursue this effort to reduce consequential damages, the condemnor must present evidence that it would be reasonably accomplished. Fodera Enterprises v. State of New York, (2d Dept 2000).
A partial taking may consist of a small taking, yet may cause substantial damage to the remainder.
Reprinted with permission from the December 24, 2008 edition of the New York Law Journal © 2011 Incisive Media Properties, Inc. All rights reserved. Further duplication without permission is prohibited.