Posted by: Patricia Salkin | September 29, 2014

NY Appellate Court Address Just Compensation Damages Following Eminent Domain Proceeding

KKS Properties, LLC (“KKS”), was the owner of property in the Town of Bethlehem, New York. In conjunction with the construction of an extension of State Route 85, the State of New York (“SONY”), appropriated a parcel of KKS’s property, which bifurcated the property from north to south, leaving a parcel to the east of the bypass and a parcel to the west. The eastern parcel continued to enjoy access while access to the western parcel was reduced. Both parties entered into an agreement for an advance payment in the amount of $718,500 for the appropriated land. However, believing such compensation to be insufficient, claimant commenced a proceeding, asserting that the limited access granted to the western parcel of its land had rendered the northernmost 16.04 acres unsuitable for development to its highest and best use, and sought consequential damages of $1,583,000.

At trial, KKS presented testimony that SONY’s appropriation, and the corresponding restrictions to vehicular and utility access severely limited its ability to develop the western portion of its land for its highest and best use. KKS also presented testimony of a licensed real estate appraiser, who opined that the highest and best use of the parcel, both before and after, was for commercial development consistent with the zoning requirements. The land was valued before the taking at $2,360,000 and after the taking at $350,000, thus estimating total direct and consequential damages to be $2,010,000.

SONY offered testimony of a certified general real estate appraiser. She opined that the highest and best use of the property, both before and after, was for residential development and valued the direct damages for the taking of claimant’s property at $211,000. Further, the value of the entire property before the appropriation was $773,000 and that the value after the appropriation was $574,000; as the differential was less than the direct damages assessed, she concluded that claimant did not suffer any consequential damages.

The Court of Claims found KKS’s property would not have been rezoned absent the bypass extension and concluded the highest and best use of the land was for residential development. The total damages of $532,000 were a result of the taking. SONY then moved pursuant to EDPL 304 (H) for an order awarding it judgment against KKS for overpayment. The court entered judgment in favor of SONY for $304,679.57, which included the overpayment of $186,500, plus statutory interest. KKS appealed.

On appeal, the Appellate Division reversed. The court stated that while it was settled that a condemnee may not receive an enhanced value for its property when the enhancement can be exclusively attributed to the reason for the taking itself, the court found that SONY failed to demonstrate that “but for” the bypass extension, KKS’s property would not have been rezoned. Further, the predominant rule in condemnation cases is that in determining an award to an owner of condemned property, the findings must either be within the range of the expert testimony, or be supported by other evidence and adequately explained by the court. Here, because the appraisals of both parties’ experts were flawed, leaving the court without competent proof on which to base its valuation, the court had to remit the matter to the Court of Claims to determine the valuation of KKS’s property and the calculation of damages based on the property’s highest and best use as hamlet and commercial hamlet lands

In re Acquisition of Real Prop. by State, 119 AD3d 1033 (NY 7/3/2014)

The opinion can be accessed at:

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