You know that when a case is about the timing of a project, and the courts recitation of the facts begins with "In 1998, Petitioner West Virginia Department of Transportation Division of Highways ("DOH") announce plans regarding a public improvement project that would severely impact Respondents' property[,]" the rest of the opinion is going to be worth reading.
Well, that's how the West Virginia Supreme Court's opinion in W. Virginia Dep't of Trans. v. Pifer, No. 18-0517 (Nov. 19, 2019) kicks off. It continues: "More than a decade later, however, DOH changed the project plans and condemned only a small portion of Respondent's property." Slip op. at 1.
The case involved an independent gas station (and related business), and the DOH's plans to improve the interchange of Interstate 77 and the road fronting the land. The DOH's announced plans included the nearly total taking of the owners' 2.45 acre parcel, and the buildings and gas pumps and storage tanks. It told the owners the it would start planning in 2003, and construction would begin in 2005. But it delayed. Fast forward several years, to 2008, when "a DOH employee met with Michael E. Pifer at his service station to announce DOH changed the project plans, preliminarily, and Respondents' project would largely be spared." Slip op. at 4. In the end, DOH would end up condeming a very small portion of the land in fee, and two others for temporary construction easements. The estimate of compensation for the partial taking: $3,550. The commissioners determined comp should be $17,500, a sum neither party was happy with. So they held a jury trial.
The owners introduced evidence that the delay in the taking caused "condemnation blight" (damage cause by the delay), The highest and best use of the property was to lease it to a major gas dealer "rather to compete with one," and the announcement of the project and threat of condemnation killed any such plans:
When asked if he made any efforts following 2000 to lease the gasoline service station, Mr. Pifer explained: “Well, I didn’t have to make efforts, they come to us. But every one of them said ‘When the road’s done. When the Road’s done we want to talk to you. When the road’s done we will be interested in leasing your facility.’” Mr. Pifer stated further that “no one wanted to lease off of us if the place was going to be torn up and the road construction was going to be three years long. I mean, it really hurts your business when they’re doing stuff out there.”
Slip op. at 6.
The jury agreed: it awarded what the court called a "nominal sum" for the taking, but $175k in condemnation blight damages, The trial court added interest, "increasing the total verdict to $466,114." Slip op. at 1. The jury apparently rejected DOH's appriaser who testified there was no evidence of condemnation blight, because the Pifer's gas station wasn't affected, and "Respondents continued to operate their business during all relevant times." Slip op. at 7. The jury awarded $2k for the fee take, $1,800 for the TCE's and $35k per year for each of the five years the project blighted the property. The trial court added interest.
The West Virginia Supreme Court affirmed the blight judgment. The court first noted that West Virginia's constitution "expand[s] the scope of the constitutional protection to both the taking and damaging of private property." Slip op. at 9. And this wasn't simply a taking, but a "damaging." The court focused on DOH's argument about the date of the taking. concluding that when the property was taken was not in contention, but that the date of the damages was a fact question properly determined by the jury. The court agreed that the date of the taking was the date on which DOH filed the eminent domain action. The court also noted that the owners didn't claim that a "de facto taking occurred years earlier." Rather, they sought condemnation blight damages. Slip op. at 12-13.
We emphasize that the phrases “condemnation blight damages” and “de facto taking” are not interchangeable. The distinction between the two approaches is not merely theoretical; a de facto taking may entitle the owner to establish an earlier date for purposes of property valuation and recovery of interest.
Slip op. at 14.
The court also affirmed the judgment for the amount of damages for the "cloud of condemnation." Slip op. at 16. The court rejected DOH's argument that the project influence rule required the jury to disregard the effect of the taking on just compensation for the property taken (and thus the evidence of the effect of the delay in the taking on the owners' business should have been excluded).
DOH’s argument is fundamentally flawed. HURA and Gomez offer little guidance as to the issue before us because those cases addressed condemnation blight within the context of the West Virginia Code § 54-2-9 take. That issue is not before us. Just compensation for the take was negligible, and there was no damage to the residue following the take because Respondents’ property was largely unaffected by the time the condemnation proceeding was filed. If we were to follow DOH’s direction and attempt to force Respondents’ damages into a West Virginia Code § 54-2-9 taking analysis, they would vanish. Respondents would be deprived of just compensation and obliged to absorb economic losses caused by DOH’s protracted delay in implementing the public project alone. Thus, we decline DOH’s invitation to apply an overly restrictive market value concept of compensation based on the facts presented.Instead, the issue here is whether West Virginia landowners can recover damages related to condemnation blight as an element of just compensation.
Slip op. at 19.
The court held that "[w]e find ample justification for allowing a landowner to recover damages related to condemnation blight under appropriate circumstances." Slip op. at 20. West Virginia is a "or damaged" jurisdiction. Compensation is a personal civil right ("property refers to the rights of the landowner") and thus "compensation granted to him or her should take into account appropriate personal losses." Slip op. at 21. This is about persons, not land. Finally, the burdens of public projects should be on everyone, not a single landowner. In short, in condemnation blight cases, the focus is on precondemnation losses to the owner, not the market value of the land.
The court noted California's Klopping decision (what it called "the leading case"), as well as Nevada's Buzz Stew, and decisions from Wisconsin and Missouri, as also focusing on the losses to the owners, not loss of value of the property taken.
The court wrapped up by outlining the nature of a condemnation blight claim:
We therefore hold that a landowner may seek damages for condemnation blight as an element of just compensation in a condemnation proceeding. W.Va. Const. art. III, § 9; W.Va. Code § 54-2-9a (2016). Because some delays relating to public projects are natural and unavoidable, before a landowner may recover damages for condemnation blight, he or she must establish that there has been an unreasonable delay in instituting the condemnation proceeding following its official announcement. Mere planning of the public project is insufficient to trigger a claim for damages. Additionally, a landowner must prove his or her damages were caused by the condemning authority’s actions or inactions.
Slip op. at 25.
Finally, the court agreed with DOH that the trial court miscalculated the interest owed. But you can read that (starting on page 27) if you like.
W. Virginia Dep't of Transportation v. Pifer, No. 18-0517 (W. Va. Nov. 19, 2019)
