Eminent Domain Law

In modifying, the Appellate Division held that landowner was entitled to damages suffered on the parcel as a whole, not only on the parcel over which the county took an avigation easement. The court noted that separate parcels should be treated as one tract for assessing severance damages when the parcels are continuous, held in common ownership, and where there is "unity of use" between the parcels. In this case, common ownership was not disputed, and the court held that the power line easement did not prevent the parcels from being contiguous. The court then concluded that landowner had demonstrated the existence of a planned development comprising both parcels, which was sufficient to establish unity of use. As a result, landowner was entitled to compensation for damages to the southern parcel as well as the northern parcel. The court ultimately concluded, based on its analysis of the testimony at trial, that landowner was entitled to $520,242 in damages.

Comment

Abutting parcels of land are contiguous for condemnation purposes even if they are separated by roads or natural barriers, so long as the owners are entitled to cross those roads or barriers. For example, in Erly Realty Dev., Inc., v. State, 43 A.D.3d 301, the court held that land separated by a creek should be treated as a single parcel when the state took part of the parcel because the owners held an easement entitling them to cross the creek.

When government takes one of several contiguous parcels owned by the same owner, there is no unity of use entitling the owner to recover damages for harm to the parcels not taken if the parcels have been developed for distinct separate uses. For example in Matter of Town of Oyster Bay, 156 A.D.3d 704, the Second Department found no unity of use between the parcel condemned and an adjacent parcel which claimants had leased for use as a supermarket when the lease gave the supermarket the right to erect a fence to exclude users of the adjacent land from the leased parcel. In light of the lease, and the fence built by the supermarket, the court found that the leased parcel was not part of the same economic unit as the adjacent land, and held that the owner was not entitled to have the parcels valued as a whole for condemnation purposes Similarly, in Ephraim Holding Corp. v. State, 30 A.D.2d 623, the Third Department held that an owner of abutting buildings was not entitled to consequential damages to one building when the state condemned and tore down the other buildings, exposing an unsightly wall previously hidden by the abutting building. The court found there was no unity of use because there were no physical connection between the buildings, the buildings were constructed at different times, acquired by the claimant at different times, and rented to different tenants for businesses that were not related to each other. These cases are unlike County of Warren, where the land was undeveloped at the time of the taking.

When adjacent parcels are controlled by the same person or entity, courts have found unity of ownership even if legal title is held in different form. For example in Guptill Holding Corp. v. State, 23 A.D.2d 434, the Third Department held that two contiguous, jointly used parcels, separately owned by an individual and a family holding corporation in which the individual was the president and treasurer of the corporation satisfied unity of ownership for the purpose of awarding severance damages in eminent domain. Claimant Guptill was able to show that he used the corporations as legal devices to effectively run all his interests and that the subject tracts of land were under Guptill's control. Guptill owned 498 out of the 500 shares of the corporation, purchased property in his personal name using bank financing by consolidating the mortgages on all the real property owned by the family corporation, and he did not reimburse the corporations for payments nor owe the corporations any money.

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Valuation for Prospective Use Rejected

DiGiacomo v State 2020 WL 2078567, AppDiv, Third Dept. (Opinion by Colangelo, J.)

In an eminent domain proceeding, claimant appealed from a judgment of the Court of Claims awarding $110,600 plus interest. The Appellate Division affirmed, rejecting claimant's contention that the property should be valued for restaurant use.

The state acquired a permanent easement over property improved with two building, a four-unit commercial main building and a separate storage building. A pizzeria had occupied one of the units in the main building until 2012, when a fire required reconstruction of the main building. Since that time, the units in the main building have been partitioned for commercial use. Claimant's appraised, however, testified that the highest and best use of the main building included recombination of two of the units for restaurant use. He conceded that, after the taking of the easement, the highest and best use was for commercial purposes, and arrived at a damage figure of $228,400. The Court of Claims, however, concluded that the highest and best use, both before and after the taking of the easement, was for commercial purposes, and valued the claimant's loss at $110,600. Claimant appealed.

In affirming, the Appellate Division concluded that claimant's appraiser had engaged in hypothetical speculation because claimant failed to demonstrate a reasonable probability that the property would have been used as a restaurant in the reasonably near future.

Comment

In an eminent domain proceeding, a landowner is entitled to compensation for a use other than a property's present use when zoning allows the alternative use and there is a reasonable probability that the property would or could have been put to that use in the reasonably near future. Under this standard, Rochester Urban Renewal Agency v. Lee, 83 A.D.2d 770, held that landowner was entitled to compensation for an intensive commercial use, rather than its existing lighter commercial use, because of the reasonable probability that further commercial development would occur on the parcel, which was situated at the intersection of two busy streets and in close proximity to other large commercial properties, such as a shopping mall and plaza. The parcel's location, combined with the fact that the existing commercial use occupied an aging and deteriorating structure, made it highly likely that the property would be developed into a more intensive commercial use and demonstrated the feasibility of such a use. By contrast, the court in Liere v. State, 39 A.D.2d 980, rejected a landowner's argument that the highest and best use of an income-producing farm was for future industrial use because there was no market for this property as an industrial site. The court did not allow the land to be valued for future or potential use because, without a market for it for anything other than farming, there was not a reasonable probability that the land would have been put to industrial use in the reasonably near future.

A landowner is entitled to just compensation for a use not permitted by current zoning when there were substantial prospects that the property would be rezoned to permit that use. Spriggs v. State, 54 A.D.2d 1080, held that the value of land zoned for single family homes must reflect the high likelihood that an application for rezoning to allow multiple apartment development would have been granted at the time of taking. The court noted that many other recent applications from nearby properties had been granted and that the property was not suitable for single family dwellings due to its proximity to a railroad line and to a subdivision that contained inexpensive, poorly maintained homes.

When, as in Spriggs, the highest and best use requires rezoning, a landowner is awarded the value of the property as presently zoned, with an increment or premium added to allow for the probability of rezoning. In re Washington Ave., in Plainview, Town of Oyster Bay, Nassau County, 67 Misc.2d 144, held that the subject property must be valued with a 30% enhancement factor above the value of it zoned as one-acre residential plots because there was a reasonable probability, but not a certainty, of rezoning to allow for one-quarter-acre plots. At the time of condemnation, a substantial portion of the nearby properties had been rezoned to greater density uses than one-acre plots and, a nearby shopping center, proposed sportsmens' park, and property with unlimited uses made the subject property unfit for one-acre residential plots due to noise and activity.