Appeal of Condemnation Award to 89-2 Realty

• Decision Date: 01 September 1989
• Docket Number: No. 87-556,87-556
• Parties: In re Appeal of CONDEMNATION AWARD TO 89-2 REALTY.
• Court: Vermont Supreme Court

Page 979

566 A.2d 979

152 Vt. 426

In re Appeal of CONDEMNATION AWARD TO 89-2 REALTY.

No. 87-556.

Supreme Court of Vermont.

Sept. 1, 1989.

Mark W. Roberts of Bloomberg & Oettinger, Burlington, for plaintiff-appellant.

Richard F. Peterson, Jr. of Spokes, Foley & Stitzel, Burlington, for defendant-appellee.

Before ALLEN, C.J., PECK, GIBSON and MORSE, JJ., and KEYSER, J. (Ret.), Specially Assigned.

PECK, Justice.

Plaintiff appeals a condemnation award on the issue of damages. See 19 V.S.A. § 501(2) (defining damages) (formerly 19 V.S.A. § 221(b)). Two issues are presented: (1) whether the trial court erred when it did not award separate compensation for business loss on the remaining parcel; and (2) whether the trial court erred when it decided that plaintiff was not damaged by the rerouting of access lanes to the property. We remand for further findings.

Plaintiff corporation owns a 100,000 square-foot shopping center on 6.88 acres fronting Williston Road in South Burlington. In January 1986 the City of South Burlington condemned a strip of .19 acres of plaintiff's parking lot along the road in order to widen the road. Before construction, the existing lot contained 163 parking spaces and two-way traffic lanes in front of the stores. If redesigned to maximize parking, the lot could have held as many as 211 cars, and the condemned parcel would have represented thirty spaces. As part of the road project, the City also changed the access to the property by consolidating the ingress and egress. Concerned that the post-construction parking arrangement would cause traffic congestion in the lot, plaintiff negotiated an agreement with the City for an additional egress from the lot. The additional exit consumed ten spaces more, under the maximized parking design. After the road construction and improvements, the lot has 171 parking spaces (eight more than it had previously), and improved access, but the parking spaces are narrower. In addition, the overall land-to-building ratio, described in feet, has decreased from 2.9:1 to 2.8:1.

The compensation award of $40,300 by the City Council was appealed to the superior court. 19 V.S.A. § 513. After a bench trial, the court increased the award to $53,714, which reflected additional "costs to cure" (i.e., related construction costs, such as sign changes, restriping, and median islands), including $28,735 to pay for the land, and $3,000 for temporary and permanent termination of related rights. Plaintiff argues, however, that the court did not include compensation for the diminished value of the business on the remaining parcel.

Plaintiff first asserts that 19 V.S.A. § 501(2) requires that the award reflect not only the fair market value of the land taken for public purposes, but also "the direct and proximate decrease in the value of the remaining property ... and the business on the property." Plaintiff advances several theories to describe the impact on the retail property: that the market value of the shopping center has been diminished by the change in the ratio of land to building area and that the rental value of the property is reduced because its leases are partially dependent on a percentage of retail sales, which will decrease due to parking limitations.

"Just compensation for the property taken is construed as being reimbursement of the fair market value of the property taken, plus the damage suffered by the remainder." Crawford v. State Highway Bd. 130 Vt. 18, 24, 285 A.2d 760, 764 (1971). The rule of compensation for land taken by eminent domain includes compensation for business losses where applicable. Penna v. State Highway Bd., 122 Vt. 290, 295, 170 A.2d 630, 634 (1961). Compensation for business losses is statutory in Vermont, one of the few states to recognize loss to the individual over and above the value of the land. Cf. 42 A.L.R.3d 148, § 4 (1972). Compare, for example, the New Jersey court's directive in State v. Cooper Alloy Corp., 136 N.J. Super. 560, 568, 347 A.2d 365, 369 (App.Div.1975): "[Do] not include losses or costs that are incidental to a taking, such as loss to or destruction of good will, loss of profits, inability to relocate or frustration of the condemnee's plans. These items are generally held not to be directly attributable to the realty, but rather peculiar to the owner."

In Vermont, the value of the land taken at its highest and best use is first calculated, and then, if " 'the plaintiff has suffered a loss to his business which has not necessarily been compensated for in the allowance made for his land,' " separate damages must be awarded for business loss. ^* Sharp v. Transportation Bd., 141 Vt. 480, 486, 451 A.2d 1074, 1076 (1982) (quoting Penna, 122 Vt. at 293, 170 A.2d at 633). Compensation for business losses, however, is not the same as valuation of the property through consideration of the profits made by the business. See, e.g. Crawford, 130 Vt. at 24-25, 285 A.2d at 764 (plaintiff had waived his rights to business losses, valuation based on previous years' returns upheld); see also State v. Hollis, 93 Ariz. 200, 204, 379 P.2d 750, 752 (1963). Here, plaintiff requests damages based on the market value of the property.

The parties stipulated that the .19 acres taken by eminent domain was "valued at" $28,735. We have no indication from the record what factors were considered in the stipulated value. From the cross-examination of plaintiff's expert we note that comparative land values of $3.50 per square foot were used to calculate a similar figure, but the trial court made no finding regarding the amount, other than to note that it represented "market value" at the highest and best use. The trial court found that because the highest and best use was synonymous with the current use of the parcel, the price stipulated was its value to the business and no other damages for lost business need be calculated.

That conclusion is, however, erroneous. Because the parties stipulated to the amount of "value" without further description of the calculation, we can only speculate what that figure included. Moreover, it is unclear whether losses to the shopping center demonstrated by plaintiff are "compensated for in the allowance made for [the] land." Penna, 122 Vt. at 293, 170 A.2d at 633. While it is mandatory that the court award compensation for business losses, 19 V.S.A. § 501(2), plaintiff has not made lost profits the focal point of its appeal. Instead, plaintiff requests only that it be compensated for the change in the fair market value of the retail business on the remainder.

It appears that the parties followed the practice suggested in Sharp, and calculated the fair market value of the land condemned separately from the impact on the remainder. The thrust of the litigation was the consequences of...