Toler v. Ga. Dep't of Transp.

• Citation: 328 Ga.App. 144,761 S.E.2d 550
• Decision Date: 10 July 2014
• Docket Number: No. A14A0267.,A14A0267.
• Court: United States Court of Appeals (Georgia)
• Parties: TOLER et al. v. GEORGIA DEPARTMENT OF TRANSPORTATION.

328 Ga.App. 144

761 S.E.2d 550

TOLER et al.

v.GEORGIA DEPARTMENT OF TRANSPORTATION.

No. A14A0267.

Court of Appeals of Georgia.

July 10, 2014.

Joseph Alexander Boone, Irwinton, Ivy Neal Cadle, Macon, Charles Lucius Ruffin, Atlanta, for Appellant.

Michael Devlin Cooper, Macon, Paul Hammond Dunbar III, Augusta, John A. Draughon, Samuel S. Olens, for Appellee.

McMILLIAN, Judge.

On May 3, 2000, the Georgia Department of Transportation (“DOT”) initiated proceedings to condemn 1.7 acres of land in Wilkinson County (the “Property”) owned by Charlotte Lord Toler, Ray E. Toler, and William T. Toler (the “Tolers”). The Tolers appealed the condemnation and demanded a jury trial. They later asserted a claim for business losses arising out of kaolin production on the land. The matter proceeded to trial over 12 years after the initial taking, and on June 30, 2012, the jury awarded the Tolers $212,135 for “real property taken and damaged,” but awarded them nothing on their business loss claim. The Tolers appeal the portion of the verdict denying them any recovery on the latter claim.

The record shows the Property was part of a larger tract, which was encumbered by a 1991 lease agreement (the “Lease”) under which the Tolers granted J.M. Huber Corporation (“Huber”) the right to mine kaolin and other like minerals. Under the Lease terms, Huber was required to pay the Tolers a lump sum of $50,000, along with an earned royalty of $2.07 per ton of mined kaolin, with a periodic cost of living adjustment. Huber had conducted mining on the Property in two separate phases and had paid the Tolers over $1 million under the Lease, but the Property was not being actively mined on the date of the taking. Although originally named as a party to the proceedings, approximately ten years into the litigation, on January 28, 2010, Huber assigned to the Tolers all rights to any condemnation awards to which it was entitled (the “Assignment”). It is undisputed that the Tolers did not pay Huber any consideration for the Assignment.

At trial, the Tolers sought compensation not only for the loss of their fee simple interest in the Property, but also for the business loss Huber suffered as a result of the taking, which, in the Pretrial Order, they asserted totaled $3,718,251.39. They contended that these losses were based on the loss of the ability to sell kaolin that would have been extracted from the 1.7 acres condemned by the DOT “and the surrounding area as required by setbacks and slopes.” The Tolers assert that their business loss claim was hampered by a series of evidentiary rulings by the trial court that the Tolers enumerate as error on appeal.

“The admissibility of evidence lies in the trial court's discretion, and the appellate court reviews evidentiary rulings under the abuse of discretion standard.” Thornton v. Dept. of Transp., 275 Ga.App. 401, 403(1), 620 S.E.2d 621 (2005). See also Davis Co., Inc. v. Dept. of Transp., 262 Ga.App. 138, 142(2), 584 S.E.2d 705 (2003). Similarly, we review the trial court's denial of a motion in limine for an abuse of discretion. Forsyth County v. Martin, 279 Ga. 215, 221(3), 610 S.E.2d 512 (2005). We now turn to the Tolers' enumerations, reciting additional facts as necessary to consider the parties' arguments.

1. The Tolers first assert that the trial court erred in denying their motion in limine seeking to exclude evidence and argument regarding the consideration they paid for the Assignment and by allowing such evidence and argument at trial.

The Tolers filed a pre-trial motion in limine “to exclude any documentary or oral testimony by DOT, any of DOT's witnesses and/or mention by counsel for DOT regarding the consideration paid by the Tolers to [Huber] for the Assignment of its claim.” They argued in their motion that such evidence had no probative value for the issues in the case. The trial court denied the motion in limine at trial and also overruled the Tolers' objections to this evidence at trial during the cross-examination of their valuation expert. The trial court stated in response to the objection that the evidence was “entirely relevant” to the issue of the value of the business loss claim. ¹ The DOT, in fact, relied on this evidence in both their opening statement and closing argument to rebut the Tolers' claimed losses of $3.7 million. The Tolers assert that this evidence and argument was prejudicial because it allowed the jury to infer that the amount paid for the Assignment reflects the value of Huber's business losses. We agree.

The Tolers, as condemnees, were entitled to just compensation for the taking of the Property, and “where, as here, there is a partial taking of property by condemnation, just and adequate compensation is the sum of the market value of the property that is taken and the consequential damage, if any, to the property that remains, both measured as of the time of the taking.” Gwinnett County v. Ascot Investment Co., 314 Ga.App. 874, 875(1), 726 S.E.2d 130 (2012). In addition to their just compensation for the taking, the Tolers also sought to recover Huber's business losses. Business losses may be recoverable as an additional element of damages in a condemnation proceeding under certain conditions. “[W]hen the business belongs to a separate lessee [such as Huber], the lessee may recover for business losses as an element of compensation separate from the value of the land whether the destruction of his business is total or merely partial, provided only that the loss is not remote or speculative.” Dept. of Transp. v. Dixie Highway Bottle Shop, Inc., 245 Ga. 314, 315, 265 S.E.2d 10 (1980). Therefore, “[b]usiness [loss] is not an element of consequential damages, but an entirely separate element of recoverable damages. The destruction of an established business is and must be a separate item of recovery.” (Citation and punctuation omitted.) Buck's Svc. Station, Inc. v. Dept. of Transp., 191 Ga.App. 341, 342(2), 381 S.E.2d 516 (1989). “Further, to be recoverable, business losses must have been caused by the taking.” (Citation and punctuation omitted.) Ga. Power Co. v. Jones, 277 Ga.App. 332, 335(1), 626 S.E.2d 554 (2006). Additionally, “business losses are recoverable as a separate item only if the property is ‘unique.’ ” (Citations omitted.) Dixie Highway Bottle Shop, 245 Ga. at 315, 265 S.E.2d 10.

The issue of whether a business property is “unique” so as to support an award of business loss is a question for the jury. Carroll County Water Auth. v. L.J.S. Grease & Tallow, Inc., 274 Ga.App. 353, 356(3)(b), 617 S.E.2d 612 (2005). And the Georgia courts have established three general rules for determining whether a business property is unique. But “[t]hese rules have been merged to include all three concepts as independent criteria under one general rule. Only one of the three criteria need be satisfied in order to authorize recovery of business loss damage.” (Citation and punctuation omitted.) Id. The first rule provides that “[i]f the property must be duplicated for the business to survive, and if there is no substantially comparable property within the area, then the loss of the forced seller is such that market value does not represent just and adequate compensation to him.” (Citation and punctuation omitted.) Id. at 355(3)(b), 617 S.E.2d 612. The second test narrowed the first test “by requiring that the property have a value particular to the owner incapable of being passed to a third party before the property can be considered unique.” Id. And the third rule provides that

unique properties are generally not of a type bought or sold on the open market. Hence, there is no market value in the ordinary sense of the term, since market value pre-supposes a willing buyer and willing seller, which do not ordinarily exist in such a case. In cases of such a character, therefore, market value will not generally be the measure of compensation.

(Citation and punctuation omitted.) Id. at 355–356(3)(b), 617 S.E.2d 612. The trial court charged the jury on these legal principles at trial.

In arguing that evidence of what they paid for the Assignment has no relevance to these issues, the Tolers rely on this Court's opinion in Dept. of Transp. v. Mendel, 237 Ga.App. 900, 517 S.E.2d 365 (1999). In that case, the DOT condemned a portion of a larger tract of land for a road project. The original condemnee was in bankruptcy at the time of the taking, and the bankruptcy trustee filed an appeal of the DOT's condemnation proceeding on behalf of the bankruptcy estate. Before the condemnation matter proceeded to trial, Mendel offered to purchase the condemnee's remaining property for $187,500. After Mendel raised his offer to $220,000, the trustee sold him the property and also assigned him the rights to the bankruptcy estate's pending claim in the condemnation proceeding. Id. at 900, 517 S.E.2d 365. Before trial, the DOT filed a motion in limine to limit Mendel's claim for recovery to the amount he paid for the assignment, which the DOT calculated as $32,500, which was the difference between Mendel's original offer of $187,500 and the final purchase price of $220,000. Id. at 900–901(1), 517 S.E.2d 365. The DOT argued that unless Mendel's recovery was limited to that amount, he would receive “an unauthorized windfall.” Id. at 901(1), 517 S.E.2d 365 The trial court denied the motion, and the DOT appealed after the jury returned a verdict for $165,000 in favor of Mendel. Id. at 900, 517 S.E.2d 365.

In affirming the trial court ruling on the motion in limine, this Court noted that after the assignment, Mendel stood in the shoes of the original condemnee. Mendel, 237 Ga.App. at 901(1), 517 S.E.2d 365. And the Court reasoned that “[t]he only relevant inquiry” in such a case, which did not involve any claim for business losses, “is the fair market value of the property at the time of the taking” and found that “[t]he amount of money which Mendel may have paid for the assignment...