Ninth Circuit: Post-Taking Sales Admissible in Federal Condemnation

In United States v. 4.85 Acres of Land, No. 07-35310 (Sep. 29, 2008), the US Court of Appeals for the Ninth Circuit held that the trial court should not have refused to admit evidence of sales at properties nearby the property taken, even though the sales occurred after the taking.

The federal government condemned land as a buffer zone for a fish hatchery, taking only a portion of the properties involved.  The landowners subdivided the portions not taken, and began developing these properties.  The subdivided lots were sold after the date of the taking.

The landowners offered evidence of these comparable sales into evidence, but the trial court categorically refused to allow evidence of post-taking sales.  During deliberations, the jury asked whether there had been any sales of the adjoining property, and whether it could consider these sales.  The trial court instructed the jury it could not consider such evidence.  Not surprisingly, the jury returned a valuation verdict that was in line with the government's appraisal, which was approximately one-third of the value claimed by the landowners. 

The trial court asserted the post-taking sales were not relevant since post-taking sales would not be in the contemplation of a willing buyer and seller of the taken parcels.  "The court expressed concern, however, that excluding the post-take sales would 'deny[ ] the jury . . . some very, very relevant credible evidence as to what market value really was.'" Slip op. at 13888.  

The Ninth Circuit reversed, holding that there should not be a per se prohibition on evidence of post-taking comparable sales.  Although a condemnation itself "may increase prices and the government should not have to pay for such artificially inflated values," there should not be a blanket rule against admissibility, and any danger can be mitigated by a limiting instruction to the jury.  Slip op. at 13891.  The Ninth Circuit vacated the valuation verdicts, and remanded the case to the district court to give it another try.