U.S. v. 50 Acres of Land

• Citation: 706 F.2d 1356
• Decision Date: 13 June 1983
• Docket Number: No. 81-1615,81-1615
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. 50 ACRES OF LAND, etc., et al., Defendant, The City of Duncanville, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1356

706 F.2d 1356

UNITED STATES of America, Plaintiff-Appellee, v. 50 ACRES OF LAND, etc., et al., Defendant, The City of Duncanville, Defendant-Appellant.

No. 81-1615.

United States Court of Appeals, Fifth Circuit.

June 13, 1983.

Saner, Jack, Sallinger & Nichols, Peter G. Smith, H. Louis Nichols, Dallas, Tex., for defendant-appellant.

Thomas H. Pacheco, Dirk D. Snel, Raymond N. Zagone, Appellate Sect., Land & Natural Resources, Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas, 529 F.Supp. 220.

Before BROWN and JOLLY, Circuit Judges, and MAHON^*, District Judge.

JOHN R. BROWN, Circuit Judge:

Today we find ourselves lodged among melon rinds, coffee grounds, countless tin cans and sundry other unlikely neighbors amidst the City of Duncanville sanitary landfill. In this ignoble setting, we examine one of our most treasured constitutional principles--the Fifth Amendment's precept that private property shall not be taken for public purposes without just compensation. We consider the question of what constitutes the payment of "just compensation" to a public condemnee who has a duty to replace a condemned public facility. Appellee, the United States, contends that Duncanville is entitled only to the fair market value of its old landfill, which was condemned by the government. Duncanville argues that just compensation is the cost of a substitute landfill. We agree with Duncanville and conclude that under the Fifth Amendment a public condemnee which has a legal or factual duty to replace a condemned facility is entitled to the reasonable cost of a functionally equivalent substitute facility. We conclude also that the trial court's instruction concerning the substitute facilities standard was inadequate to enable the jury to make an intelligent determination of that cost. Accordingly, we remand for a new trial.

Indeed, this case is redolent with Fifth Amendment issues, as Duncanville objects also to the trial court's award of 6% interest under the Declaration of Taking Act, 40 U.S.C. Sec. 258a. This Court has very recently held that the 6% rate is a floor, not a ceiling, on allowable rates of interest in this situation, and that the refusal to allow a higher rate of interest may be a denial of just compensation under the Fifth Amendment. U.S. v. 329.73 Acres of Land, Situated in Grenada and Yalobusha Counties, State of Mississippi, (5th Cir.1983) (en banc ) 704 F.2d 800. As we remand for a new trial on the issue of the reasonable cost of a substitute facility, we also remand to the district court the question of a proper rate of interest.

Duncanville is a small home rule city of approximately 28,000 people located in the southwest portion of Dallas County, Texas. It operated a sanitary landfill on a tract of approximately 50 acres southwest of the city, along Ballwag Road in Dallas County, near the Tarrant County line. The United States condemned this tract (the Ballwag site) pursuant to the construction of Lakeview Lake, a redundantly named U.S. Army Corps of Engineers flood control project. ¹ In accordance with the provisions of the Declaration of Taking Act, the government deposited its estimated value of the condemned property, $199,950.00, into the registry of the Court. ²

For approximately two years after the taking of the Ballwag site, Duncanville trucked its daily garbage to a landfill near Ferris, Texas, some 22 miles to the southeast. It then acquired a new site of its own in northwest Ellis County (the Ellis County site), approximately the same driving time from Duncanville as the Ballwag site. This site consists of approximately 113.7 acres. Duncanville has been using the Ellis County site since January 1, 1981.

Duncanville demanded a jury trial on the issue of compensation, contending that the amount offered by the government was inadequate because Duncanville was entitled to the reasonable cost of substitute facilities, rather than merely the fair market value of the condemned property. Duncanville asked for the cost of the Ellis County land, the costs of permitting and preparation, and the costs of the interim use of the Ferris landfill.

After the presentation of evidence and arguments, the trial judge submitted two special interrogatories to the jury. Special question number one required a finding as to the fair market value of the 50-acre Ballwag site, which the jury fixed at $225,000. Special question number two required a finding as to the cost of supplying a functionally equivalent substitute landfill site, which the jury fixed at $723,654.01. The district court then concluded that as a matter of law the market value of the Ballwag site was the proper measure of compensation and entered judgment for $225,000.00. He set interest on the unpaid balance of $25,050.00 at 6%. ³ Duncanville appeals.

The Fifth Amendment to the U.S. Constitution provides,

[N]or shall private property be taken for public use, without just compensation.

The issue here is what measure of compensation is "just" when a public entity is obligated to replace its condemned public facility.

In United States v. 564.54 Acres of Land, More or Less, Situated in Monroe and Pike Counties, Pennsylvania, (Lutheran Synod), 441 U.S. 506, 99 S.Ct. 1854, 60 L.Ed.2d 435 (1979), the Supreme Court declined to discuss the precise question presented here. The Court ruled that the payment of fair market value is sufficient compensation to a private non-profit organization whose property is operated for a public purpose.

In Lutheran Synod, the Court acknowledged that generally an award of fair market value strikes "a fair 'balance between the public's need and the claimant's loss' upon condemnation of property for a public purpose." 441 U.S. at 512, 99 S.Ct. at 1857, 60 L.Ed.2d at 441, quoting United States v. Toronto, Hamilton & Buffalo Nav. Co., 338 U.S. 396, 402, 70 S.Ct. 217, 221, 94 L.Ed. 195 (1949). Nevertheless, the Court recognized and reaffirmed that fair market value is not and cannot be the single, inflexible measure of just compensation.

"[W]hen market value has been too difficult to find, or when its application would result in manifest injustice to owner or public, courts have fashioned and applied other standards.... Whatever the circumstances under which such constitutional questions arise, the dominant consideration always remains the same: What compensation is 'just' both to an owner whose property is taken and to the public that must pay the bill?"

441 U.S. at 512, 99 S.Ct. at 1857, 60 L.Ed.2d at 442, quoting United States v. Commodities Trading Corp., 339 U.S. 121, 123, 70 S.Ct. 547, 549, 94 L.Ed. 707 (1950). See also United States v. 320.0 Acres of Land, More or Less, in the County of Monroe, State of Florida, 605 F.2d 762, 780-81 (5th Cir.1979).

The substitute facilities doctrine arose from that realization that "just compensation" and "fair market value" are not always synonymous. Its genesis is in language written by Chief Justice Taft in Brown v. United States, 263 U.S. 78, 44 S.Ct. 92, 68 L.Ed. 171 (1923). In Brown, three-quarters of the town of American Falls, Idaho, was to be inundated and destroyed by the waters of a reservoir on the Snake River. In that extreme situation, the Chief Justice observed, "a method of compensation by substitution would seem to be the best means of making the parties whole." 263 U.S. at 83, 44 S.Ct. at 94, 68 L.Ed. at 180. ⁴

Generally, the substitute facilities standard has been applied to the condemnation of streets, alleyways, bridges, sewers, and other public facilities for which fair market value cannot accurately be determined. Numerous cases have recognized and applied this principle. See, e.g., United States v. Streets, Alleys and Public Ways in Village of Stoutsville, in Monroe County, Missouri, 531 F.2d 882 (8th Cir.1976); County of Sarpy, Nebraska v. United States, 181 Ct.Cl. 666, 386 F.2d 453 (Ct.Cl.1967); United States v. Certain Lands Located in the Townships of Raritan and Woodbridge, Middlesex County, New Jersey, 246 F.2d 823 (3rd Cir.1957); Town of Clarksville, Va. v. United States, 198 F.2d 238 (4th Cir.1952); City of Fort Worth, Tex. v. United States, 188 F.2d 217 (5th Cir.1951); United States v. Los Angeles County, Cal., 163 F.2d 124 (9th Cir.1947); United States v. Des Moines County, Iowa, 148 F.2d 448 (8th Cir.1945); Jefferson County, Tennessee v. Tennessee Valley Authority, 146 F.2d 564 (6th Cir.1945). If no substitute facility is necessary, fair market value will be the standard for compensation, when it can be ascertained. See United States v. 3,727.91 Acres of Land, More or Less, in County of Pike, State of Missouri (Ellsberry Drainage District), 563 F.2d 357 (8th Cir.1977); United States v. Certain Property in Borough of Manhattan, City, County and State of New York, 403 F.2d 800 (2d Cir.1968); State of California v. United States, 395 F.2d 261 (9th Cir.1968). Often, however, only nominal damages are justified where streets, highways and the like need not be replaced. See, e.g., Village of Stoutsville, supra; Franklin County, Georgia v. United States, 341 F.2d 106 (5th Cir.1965), State of Washington v. United States, 214 F.2d 33 (9th Cir.1954); Woodville, Okla. v. United States, 152 F.2d 735 (10th Cir.1946).

This is a rather different case. Unlike the vast majority of substitute facility cases, here the parties agree that the landfill has a determinable market value, although at trial they disagreed as to what that value was. ⁵ The United States contends that because fair market value can be ascertained, that value must be the measure of compensation. We conclude, however, that the reasonable cost of a functionally equivalent facility is the just measure of compensation when a public entity is obligated to replace the condemned property.

Although the indemnity principle which animates the just compensation clause of the Fifth Amendment ...