Division of Admin., State of Fla. Dept. of Transp. v. Frenchman, Inc.

• Citation: 10 Fla. L. Weekly 1884,476 So.2d 224
• Decision Date: 07 August 1985
• Docket Number: 84-1034,Nos. 84-772,s. 84-772
• Parties: 10 Fla. L. Weekly 1884, 10 Fla. L. Weekly 2397 DIVISION OF ADMINISTRATION, STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION, Appellant, v. FRENCHMAN, INC., et al., Appellees.
• Court: Court of Appeal of Florida (US)

Page 224

476 So.2d 224

10 Fla. L. Weekly 1884, 10 Fla. L. Weekly 2397

DIVISION OF ADMINISTRATION, STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION, Appellant, v. FRENCHMAN, INC., et al., Appellees.

Nos. 84-772, 84-1034.

District Court of Appeal of Florida,

Fourth District.

Aug. 7, 1985.

Rehearing Denied Oct. 23, 1985.

Alan E. DeSerio of Dept. of Transp., Tallahassee, for appellant.

Paul A. Turk, Jr., and Leigh E. Dunston of Gunster, Yoakley, Criser & Stewart, P.A., Palm Beach, for appellees.

GLICKSTEIN, Judge.

In a condemnation suit involving the State Department of Transportation's taking, in order to widen a highway, of a strip of land on the edge of a golf course belonging to Frenchman, Inc., the Palm Beach circuit court entered final judgment awarding $29,313 for the value of the land actually taken and $190,000 in severance damages--with interest on both sums from the date of the declaration of taking. The parties had agreed on the value of the land actually taken, and only the question of severance damages had been tried to a jury. The state timely appealed, raising the following issues:

I. WHETHER THE TRIAL COURT ERRED WHEN IT PERMITTED THE OWNERS' WITNESS TO TESTIFY TO A "COST TO CURE" WITHOUT HAVING FIRST ESTABLISHED THE EXISTENCE OF SEVERANCE DAMAGES AND THAT THE "COST TO CURE" AMOUNT WAS LESS THAN THE POTENTIAL SEVERANCE DAMAGE.

II. WHETHER THE TRIAL COURT ERRED WHEN IT ALLOWED THE OWNER TO BASE A CLAIM ON ITEMS OF DAMAGE WHICH WERE NON-COMPENSABLE.

III. WHETHER THE TRIAL COURT ERRED WHEN IT GRANTED THE OWNERS' MOTION TO STRIKE THE DEPARTMENT'S REPLY TO AFFIRMATIVE DEFENSES WHEREIN IT WAS ALLEGED THAT THE DAMAGES CLAIMED BY THE OWNER WERE CAUSED BY THE OWNERS' OWN ACTS OF NEGLIGENCE OR ILLEGAL USE OF THE AREA ACQUIRED.

IV. WHETHER THE TRIAL COURT ERRED WHEN IT AWARDED AN ATTORNEY FEE BASED UPON BENEFITS ACHIEVED WHICH ARE THE SUBJECT OF AN APPEAL.

The Florida Constitution states that "no private property shall be taken except for a public purpose and with full compensation therefor paid." Article X, Section 6(a). When the condemnation action is at issue, our eminent domain statute requires that a twelve-person jury determine solely the amount of compensation, section 73.071(1) & (3), Florida Statutes (1983). Compensation under the statute includes the value of the land being appropriated; and as well, where the action is for condemnation by the Division of Road Operations (or other specified governmental entity) of a right-of-way, and less than the entire property is being appropriated, compensated for damages to the remainder property, including damage to the owner's established business, provided the owner appropriately sets forth in its pleadings the nature and extent of such damages. § 73.071(3)(a) & (b).

Florida case law also recognizes that when less than the entire property is being appropriated, full compensation for the taking of private property by eminent domain includes both the value of the portion being appropriated and any damage to the remainder caused by the taking. City of Hollywood v. Jarkesy, 343 So.2d 886 (Fla. 4th DCA 1977). The damage to the remainder of the property is usually denominated "severance damages." The burden of proof of a claim for severance damages is on the condemnee. City of Fort Lauderdale v. Casino Realty, Inc., 313 So.2d 649 (Fla.1975); County of Volusia v Niles, 445 So.2d 1043 (Fla. 5th DCA 1984); and Division of Administration, State of Florida Department of Transportation v. Saemann, 399 So.2d 359 (Fla. 4th DCA 1981).

I

The state contends that the trial court committed reversible error when, over the state's objection, it permitted the owners' appraisal witness to testify on the cost to cure damage, caused by the taking, to the remainder of the property, when the necessary predicate of showing the existence of severance damages had not been laid. The substance of the state's reasoning is as follows: The conventional measure of severance damages is the reduction in the value of the remainder property occasioned by the taking. Kendry v. Division of Administration, State Department of Transportation, 366 So.2d 391 (Fla.1978). The usual manner of determining this reduction is by comparing the pre-condemnation and post-condemnation fair market values of the property. Evidence of the cost of cure of the damage to the remainder property is then admissible in order to mitigate the amount of the award: the condemnor is entitled to the adoption of the lesser criterion of damage. 5 Nichols on Eminent Domain § 23.2 (3d Ed.1976). Thus, in Hill v. Marion County, 238 So.2d 163 (Fla. 1st DCA 1970), without ruling the above principle was the law in Florida, the court approved admission of evidence of the cost of cure "because there was evidence before the jury that the decrease in the market value of the property was greater than the loss under the 'cost of cure approach'...." Id. at 166. In Mulkey v. Division of Administration, State of Florida Department of Transportation, 448 So.2d 1062 (Fla. 2d DCA 1984), after noting that severance damages are measured by the reduction in value of the remainder property, the court stated that "the courts have recognized that this general measurement of damages may be replaced by a cost-to-cure approach in instances where such cost is less than the decreased value of the remainder." Id. at 1065.

We think this is a correct statement of the law of this state as in the majority of American jurisdictions. However, we do not say that the only way to lay the predicate for showing cost of cure is to use comparable sales information as the basis for providing testimony on the pre-condemnation and post-condemnation fair market value of the remainder property.

The fair market value of properties put to special uses is frequently difficult or impossible to ascertain from the market, as a market rarely is made for such properties. In such cases, if the value of the damage to the remainder of a property, a part of which is being appropriated to public use, could be determined only by comparison of fair market values, and cost of cure evidence could be admitted only after such evidence had been supplied, it would not be possible to satisfy the constitutional requirement that full compensation be paid when property is taken for public use.

The state points out that there are two recognized approaches to valuation of property, in addition to the comparable sales approach: the income or economic approach and the cost approach. McNays v. Claughton, 198 So.2d 366 (Fla. 3d DCA 1967). Here the owners' appraisal witness plausibly explained that he could not find usable comparable sales of golf courses, and the impact of the taking on income of the golf course could not be dependably determined until several years had elapsed. It further appears reasonable to suppose that if comparable sales of golf courses are rare, the possibility of estimating a golf course's income loss, because of a taking, by locating and examining the economic history of other golf courses similarly affected is even more remote. But the witness did not say why he failed to use the cost approach, and was unable to put a value on the damages to the remainder property resulting from the taking.

The cost approach to appraisal of real property is especially appropriate when the property contains relatively unique or specialized improvements, and comparable properties are not on the market. J.E. Eaton, Real Estate Valuation Litigation 101 (19__). The object of the approach is to determine the cost of producing a substitute property with the same utility as the property being valuated. This is done by subtracting from the estimated replacement cost of the improvements then on the property the estimated depreciation that has occurred in the improvements, and adding the estimated value of the land. Id. Such appraisal of the remainder property can be made as it was before the taking and as a result of the taking. The difference between these figures--if any--is the reduction--or, conceivably, increase--in value of the property. Care must of course be taken not to include the value of the property taken when attempting to valuate damage to the remainder property. Also, it should be borne in mind that in this state benefits accruing to the remainder property's value when a public entity has condemned a right-of-way may offset severance damages, but may not offset the value of the land actually taken. § 73.071(4), Fla.Stat. (1983).

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