Threatt v. Forsyth County

• Decision Date: 10 July 2001
• Docket Number: No. A01A0748., No. A01A0657
• Citation: 250 Ga. App. 838,552 S.E.2d 123
• Parties: THREATT et al. v. FORSYTH COUNTY (Two Cases).
• Court: Georgia Court of Appeals

552 S.E.2d 123

250 Ga. App. 838

THREATT et al. v. FORSYTH COUNTY (Two Cases).

Nos. A01A0657, A01A0748.

Court of Appeals of Georgia.

July 10, 2001.

Reconsideration Denied July 31, 2001.

Gambrell & Stolz, Irwin W. Stolz, Jr., George E. Butler II, Atlanta, for appellants.

Jarrard & Davis, Kenneth E. Jarrard, Angela E. Davis, Atlanta, Rachel K. Iverson, Cumming, for appellee.

BLACKBURN, Chief Judge.

These two appeals arise out of a condemnation action brought by Forsyth County against property owned by James W. Threatt, Jr. and Thomas A. Threatt. The valuation issue was submitted to arbitration. In connection with the confirmation of the arbitration award, the trial court issued orders, concerning prejudgment and postjudgment interest owed by the County to the Threatts. The Threatts appeal these orders contending that the trial court erred in failing to grant their motion for prejudgment interest and by allowing the premature abatement of postjudgment interest.

The underlying facts are not in dispute and are adopted from the trial court's order. On June 4, 1996, Forsyth County filed a petition to condemn approximately 315 acres for the construction and maintenance of wastewater treatment facilities. The special master awarded $7,327,840 as the fair market value of the property on August 15, 1996. This amount was paid into the registry of the trial court on August 23, 1996, thereby vesting title to the property in the County. See OCGA § 22-2-110(b). The Threatts filed a notice of appeal in superior court, and on November 5, 1996, entered into a consent order submitting the issue of just and adequate compensation to binding arbitration. The arbitration hearings took place from approximately December 1996 through January 1997. The arbitrator's award was issued on October 26, 1999, in the amount of $16,500,000 "as just and adequate compensation for the condemnation of the property described in this case."

On March 14, 2000, the Threatts filed a motion to confirm the arbitration award and requested prejudgment interest. The County opposed the motion for prejudgment interest arguing that the issue of prejudgment interest was before the arbitrator. The parties entered into a consent order confirming the arbitration award and reserving the ruling on the prejudgment interest issue. Thereafter, the trial court determined that the issue of prejudgment interest should have been decided by the arbitrator because the condemnees' right to interest flowed from the constitutional guaranty of just compensation for the condemnees' property and would therefore be included in a determination of the "just and adequate compensation" of the property.

Case No. A01A0657

1. The issue presented in Case No. A01A0657 is whether the trial court erred by failing to allow the recovery of prejudgment interest and in holding that the arbitrator's award precluded additional prejudgment interest.

(a) As an initial matter, we must determine whether the Threatts are entitled to prejudgment interest pursuant to OCGA § 22-2-113(c). This Code section is an eminent domain statute which governs condemnation proceedings generally and provides:

If the amount awarded by the special master or the special master panel, if such a panel exists, is less than that found by the verdict of the jury, the condemnor shall be bound to pay the sum so finally adjudged less the amount previously deposited as provided in Code Section 22-2-110 plus lawful interest on the difference from the date of such deposit, in order to retain the property.

OCGA § 22-2-113(c).

The County argues, citing Kuhl v. Shepard,¹ that because OCGA § 22-2-113(c) references the verdict of the jury, the Threatts are not entitled to prejudgment interest as their claim was arbitrated rather than being submitted to a jury. In Kuhl, this Court was interpreting a provision of the Unliquidated Damages Interest Act which provided for prejudgment interest after a verdict of the jury or the award by the judge trying the case without a jury. Therein, the parties had submitted their claims to an arbitrator and received an award, but the arbitrator's award had not been confirmed and a judgment had not been entered thereon. We determined that because there was no "judgment entered within one year of the arbitrator's award, the imposition of prejudgment interest was error as prejudgment interest never began to accrue." Id. at 441, 487 S.E.2d 68.

Our holding in Kuhl is distinguishable from the present case, however, because here, the arbitrator's award has been confirmed and a judgment entered. We did not address the present issue in Kuhl. Additionally, we have held that "[a]n arbitration award is not unlike the verdict of a jury. Thus, if an award is confirmed the judgment must be entered in conformity with the award." (Citation omitted.) Thacker Constr. Co. v. A Betterway Rent-A-Car.²

In the present case, the parties agreed to arbitrate the issue, and the trial court ordered that the issue outlined in the arbitration agreement be arbitrated according to the agreement; and, furthermore, the arbitration award has been confirmed and a judgment issued. Although eminent domain statutes must be strictly construed, see Thomas v. City of Cairo,³ the strict construction is meant to favor the private land owner. Such construction ensures that the needs of the state are appropriately balanced against the fundamental right of private ownership. We therefore find that the requirements of OCGA § 22-2-113(c) for prejudgment interest have been met in the present case.

(b) Having determined that OCGA § 22-2-113(c) is applicable to the present case, we turn to whether the trial court erred by failing to enforce the mandatory requirement of prejudgment interest. This is not a case in which the right to prejudgment interest is in question. OCGA § 22-2-113(c) requires, under the circumstances herein, that prejudgment interest be paid in order for the governing authority to keep the property.

In Haddon v. Shaheen & Co.,⁴ we recognized an arbitrator's inherent power to award prejudgment and postjudgment interest in the absence of a contrary provision in the arbitration agreement. However, in the present case, the right to prejudgment interest is established by statute. Prejudgment interest is allowed only when the subsequent award is more than that awarded by the special master. OCGA § 22-2-113(c). Because it is uncontroverted that evidence of the special master's award is not allowed during a subsequent jury trial and was not before the arbitrator, he could not have determined the appropriate amount of interest and included it within the $16.5 million award. See OCGA § 22-2-110(d). The Threatts submitted to the trial court the affidavit of the arbitrator in which he explains that he did not consider that the issue of prejudgment interest was before him. Forsyth County moved to strike the affidavit. The trial court denied the motion, finding that the issue was moot because it determined that, despite the fact that the arbitrator had not determined prejudgment interest, the issue was within the arbitrator's jurisdiction and the Threatts should have moved to modify the arbitrator's award pursuant to OCGA § 9-9-11.

The trial court's ruling fails to consider the mandatory nature of prejudgment interest in the case at bar. An arbitrator's jurisdiction is limited to the terms of the arbitration agreement. Haddon, supra. Arbitrators improperly overstep their authority by determining matters outside the scope of the controversy presented. Id. at 598, 499 S.E.2d 693. See also OCGA § 9-9-13(b)(3).

In the present case, the arbitration agreement submitted the issue of just and reasonable compensation for certain property to the arbitrator. In Dept. of Transp. v. English,⁵ we approved the trial court's charge to a jury regarding the determination of compensation for condemned property, to wit:

In estimating the value of property taken for public use, generally it is the market value of the property which is to be considered. In estimating its value, all the capability of the property and all the uses to which it may be applied, or to which it is adapted, may be considered, and not merely the condition it is in at the time and the use which it was then applied by the owner. The owner is to be paid just and adequate compensation for his property; that is, the value to him, not its value to the condemnor. The measure of damages for property taken by the right of eminent domain, being compensatory in its nature, is the loss sustained by the landowner, taking into consideration all the purposes for which the property is available. Generally speaking, the measure of damages is the market value of the property to be taken, and when this would give just and adequate compensation to the owner, this rule should be applied; the measure of damages for the part of the property actually taken by the Highway Department is the difference between the market value of the whole property just before the taking and the market value of the remainder immediately after the taking.

(Punctuation omitted.) Id.

Therefore, just and adequate compensation for condemned property is generally the market value of the property. And, market value is to be determined from the date of the taking. In R.E. Adams Properties v. City of Gainesville⁶ we reiterated that "[w]hen private property is condemned for public use the owner is entitled to receive just and adequate compensation as of the date of the taking and not as of the date of the announcement of the taking, and the value of the property should be fixed at the time of its taking." (Punctuation and emphasis omitted.) Id. The arbitrator did exactly what was asked of him; he determined the fair market value of the Threatts' property as of the date of the taking. After such a determination has been confirmed and a judgment rendered the amount of prejudgment interest pursuant to ...