August 17, 2017

Valuation Issues: Recovering Inseparable Damages

Imagine this: A local municipality has decided to expand the road behind your property. The road expansion project has many components. The number of lanes will increase from two to four. There will be a new raised median in the center of the road and new gutters to collect water runoff. The road is in a hilly area, so the engineers have decided to cut into the slopes on either side of the road to make way for the new pavement. And several utility lines that are currently buried beside the road will have to be relocated. The local municipality may take a slice off the back of your property to make way for some of these additions.

When the government only takes a piece of a landowner’s property, it is known as a partial take. In the case of a partial take, the landowner may be damaged not only by the loss of part of her property, but also by the effect that the government’s project has on the value of the rest of her property. A landowner is entitled to just compensation for damages that a partial take causes to the rest of her property, which are known as damages to the residue. Damages to the residue can include any effect on value that is the natural, necessary and reasonable result of the taking.

Nevertheless, condemnors across the country sometimes argue that damages to the residue should be limited to damages caused by the government’s specific use of the partial take, and not by the project as a whole. To overcome these arguments, landowners frequently turn to the inseparability exception, which allows a landowner to recover damages to the residue caused by the project as a whole where those damages are inseparable from the damages caused by the government’s use of the partial take.

Applying the Inseparability Exception

In a partial take, it is sometimes difficult to distinguish the effect of the government’s use of a particular piece of land from the government’s use of adjacent land taken for the same purpose. For instance, in the case of a road expansion, the government may use the partial take to construct only one aspect of the project — such as a lane, a gutter, a new slope or relocated utilities — and then obtain a different piece of property to build the rest of the project. But the overall expansion of the road may convert it from a local thoroughfare into an arterial highway, with concomitant increases in noise, pollution and traffic. The construction of a median may also change access to the property to a right-turn only exit and entrance. Some condemnors have argued that these overall effects should be ignored because they do not arise from the government’s specific use of the partial take.

In making these arguments, condemnors frequently rely on the rule that a landowner cannot recover damages that arise from the government’s taking of adjacent properties owned by someone else. Condemnors argue the landowner is not “at the bargaining table” for damages to another person’s property, and the government should not have to pay more for property than a private actor would in the open marketplace. In addition, generally speaking, the government is not required to compensate the public at large for damages that a public project might cause to local property values. 

A landowner whose property has been taken by a condemnor, however, is already at the “bargaining table.” In a private transaction, a seller would likely use a purchaser’s plans for development — both on the piece of property purchased and on adjoining lands — as a bargaining chip to secure a higher price. Similarly, the cardinal rule of just compensation is that the condemnor must make a landowner whose property has been taken financially whole. To preserve this interest, many courts recognize the inseparability exception, which allows the landowner to recover for the effect the entire public project has on the value of the rest of her property when the damages due to the government’s use of the partial taking and the damages due to the government’s use of adjoining lands are inseparable.

Proving the Inseparability Exception

Whether damages caused by the government’s use of the partial take are inseparable from damages caused by the entire public project is a fact-intensive inquiry. One factor courts look to is whether the partial take is a necessary or consequential part of the public project as a whole. Another factor is one of degree — whether the partial take is a substantial or integral part of the project. Courts also may consider the interconnectedness or interrelatedness of the government’s use of the partial taking with other aspects of the project. Still others might ask whether the damages arising from the government’s use of the partial take are the same type of damages caused by the project as a whole, which would suggest that they are all part of the same effect.

There are several key pieces of evidence that can shed some light on this inquiry. For starters, the government’s own condemnation pleadings may demonstrate that the partial take will be used for the purpose of the public project. Public records concerning the definition and scope of the project can also be instructive. For example, the scope of the project may have required the government to comply with certain building codes, or outside financing for the project may have been contingent on increasing its scale. Engineering plans for the project, and particularly for the partial take, are also a key piece of evidence that the court will consider. An engineer’s expert opinion may be helpful to establish whether the partial take is a necessary or integral part of the public project. Other experts can speak to the nature and extent of damages caused by various parts of the project.

Takeaways

The inseparability exception may allow landowners to more fully recover damages to the residue caused by a public project. To make a successful claim for inseparable damages, the landowner will need to focus on the scope of the project as a whole, the purpose of the partial take and the cause of the damages to her residue. Expert opinions may be necessary not only to establish the relationship between the government’s planned use for the partial take and the rest of the public project, but also the nature and extent of damages to the residue. 

The success of such claims often turns on the unique facts and circumstances at play, and not on any inflexible legal rule or dogma. Moreover, not all states have adopted the inseparability exception, and in those states that have, there can be variances in the way the exception is applied. For these reasons, you should seek advice from an experienced eminent domain attorney before attempting to navigate this complex legal area. An experienced eminent domain attorney can help you determine whether and how the inseparability exception is used in your state, and whether your case just might fit the bill.

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