Utah Dep't of Transp. v. Admiral Beverage Corp.

Decision Date22 February 2012
Docket NumberNo. 20081054.,20081054.
CourtUtah Supreme Court
PartiesUTAH DEPARTMENT OF TRANSPORTATION, Plaintiff and Respondent, v. ADMIRAL BEVERAGE CORPORATION, Park City West & Associates, Valley Bank & Trust Company, and Valley Mortgage Company, Defendants and Petitioner.

OPINION TEXT STARTS HERE

Mark L. Shurtleff, Att'y Gen., Brent A. Burnett, Randy S. Hunter, Asst. Att'ys Gen., Salt Lake City, for plaintiff.

Reed L. Martineau, David Jason Hawkins, Salt Lake City, for defendant Admiral Beverage Corporation.

Donald J. Winder, John W. Holt, Salt Lake City, for amicus James Ivers, Katherine Havas, and P & F Food Services.

On Certiorari to the Utah Court of Appeals

Justice PARRISH, opinion of the Court:

INTRODUCTION

¶ 1 The Utah Department of Transportation (UDOT) condemned real property belonging to Admiral Beverage Corporation (Admiral) as part of the reconstruction of the Interstate 15 freeway (I–15). Admiral is entitled to compensation from the state for the taking of its property. In the district court, Admiral sought to introduce evidence of the fair market value of its property, including evidence of its damages arising from the loss of view and visibility of Admiral's remaining property. The district court ruled that evidence of the fair market value of Admiral's property was not admissible under our prior opinion in Ivers v. Utah Department of Transportation, 2007 UT 19, 154 P.3d 802. The court of appeals affirmed. We take this occasion to review Ivers. We conclude that our holding in Ivers, which allows severance damages only for “recognized property rights,” is too restrictive to accord the full protection of the Utah Constitution and is inconsistent with both Utah statutes and our prior case law. We consequently overrule that part of Ivers and allow Admiral the right to recover from UDOT for the decrease in the fair market value of its remaining property resulting from the condemnation. In so doing, we reverse the court of appeals.

BACKGROUND
I. FACTS AND PROCEDURAL HISTORY

¶ 2 This action stems from UDOT's condemnation of Admiral's property for the I–15 freeway reconstruction project. Admiral owns two parcels of land to the west of I–15 in Salt Lake County. A frontage road owned by Salt Lake City, 500 West, runs between I–15 and Admiral's property. As part of the reconstruction project, UDOT expanded I–15 to the west, causing 500 West to be moved partially onto Admiral's property. UDOT also elevated I–15 to approximately twenty-eight feet, thus cutting off the view from Admiral's property to the east and impacting the visibility of its property from the freeway. No part of the I–15 freeway itself is located on or touches Admiral's property.

¶ 3 In order to complete the project,1 UDOT filed separate condemnation proceedings against the two parcels in the summer of 1997. At that time, one of the parcels, lot 16, was owned by Admiral and the other, lot 17, was owned by Mark Investments Company. Admiral later purchased the Mark parcel and the district court subsequently consolidated the two cases.

¶ 4 The parcels at issue were appraised several times. The first appraisals took place before Admiral purchased the properties. In November of 1994, Jerry Webber appraised both parcels. Shortly thereafter, Admiral purchased lot 17, based upon the fair market value as reflected in the 1994 appraisal. Mr. Webber made a second appraisal of the fair market value of lot 16 in October of 1997. Admiral purchased that property in early 1998, again based on the fair market value as reflected in the appraisal. In assessing fair market value, Mr. Webber considered all factors customarily taken into account by a willing buyer and seller, including view from and visibility of the property. Mr. Webber did not isolate the specific values associated with view or visibility because it is “not possible to isolate and identify one and exclude the other.”

¶ 5 Mr. Webber and two other appraisers later conducted additional appraisals for purposes of this litigation. Specifically, the appraisers sought to determine the amount of severance damages to which Admiral is entitled. As with the initial appraisals, each subsequent appraisal assigned a fair market value to each parcel. Again, the appraisers focused on all factors that affect market value but were unable to assign specific values to any of the numerous factors affecting fair market value, including any decrease in value due to loss of visibility. And the appraisers could not find any comparable properties that would help to indicate or verify the value of the properties' view and visibility.

¶ 6 In early 2005, UDOT filed a motion in limine regarding the evidence that would be admissible at trial to prove Admiral's severance damages. UDOT's motion sought to exclude evidence of severance damages caused by loss of visibility from the freeway into the non-condemned portion of Admiral's property. Admiral responded with its own motion in limine seeking to allow evidence of all factors affecting the market value of its remaining property. The district court granted UDOT's motion and denied Admiral's motion in a Memorandum Decision and Order of October 31, 2005. Though the district court certified its order as final and Admiral appealed in 2006, the court of appeals dismissed the appeal without prejudice, holding that the order was not eligible for certification under rule 54(b) of the Utah Rules of Civil Procedure. The case continued in the district court. UDOT thereafter filed additional motions in limine to exclude certain severance damage evidence, which the district court granted in a minute entry dated December 27, 2007, ten months after we issued our opinion in Ivers v. Utah Department of Transportation, 2007 UT 19, 154 P.3d 802.

¶ 7 Admiral sought an interlocutory appeal on the question of whether the trial court erred in excluding evidence of severance damages based on the loss of view from Admiral's remaining property. The court of appeals agreed to review the case and affirmed the district court in a brief memorandum decision. Dep't of Transp. v. Admiral Beverage Corp., 2008 UT App 426, ¶ 5, 198 P.3d 1003. The appeals court held that because Admiral's property did not directly abut I–15, but instead abutted 500 West, the abutment rule limited Admiral's compensable right of view to 500 West. Id. ¶¶ 3–5. The court of appeals specifically noted that our Ivers decision had not eliminated the abutment rule. Id. ¶ 3 n. 1.

¶ 8 Following the court of appeals' decision, Admiral petitioned for a writ of certiorari. We granted review on the issue of whether the court of appeals erred in its ruling on Admiral's claim for severance damages for loss of view. After hearing oral argument, we issued an order for supplemental briefing and rehearing on the issue of whether Ivers should be overruled to the extent that it prevents a landowner from recovering severance damages for loss of visibility.

II. OVERVIEW OF IVERS V. UTAH DEPARTMENT OF TRANSPORTATION

¶ 9 Because the continued validity of our decision in Ivers v. Utah Department of Transportation, 2007 UT 19, 154 P.3d 802, is at issue, we review the central holdings of that case. The facts of Ivers and this case are strikingly similar. Ivers was a condemnation action filed by UDOT in connection with a project to widen and elevate U.S. Highway 89. Id. ¶ 1. UDOT exercised its power of eminent domain to acquire a portion of property owned by the operator of an Arby's restaurant (Arby's) in Farmington, Utah. Id. The condemned property was used for the creation of a frontage road, and no portion of the raised highway, its footings, or its foundation was constructed on the condemned land. Id. ¶ 3.

¶ 10 Arby's sought severance damages resulting from the loss of visibility of its restaurant from the highway and the loss of view from the property. Id. ¶ 5. It argued that the loss of visibility and view materially diminished the market value of its remaining property. Id. The trial court precluded Arby's from presenting evidence of damages resulting from the loss of visibility or loss of view. Id. The court of appeals affirmed. Id. ¶ 6.

¶ 11 On certiorari review, we “address[ed] separately Arby's claims for loss of view from their property and the loss of visibility of their property.” Id. ¶ 10. As to the first issue, we held that Arby's was not entitled to damages for loss of visibility because “landowners do not have a protected interest in the visibility of their property.” Id. ¶ 12. We reasoned that a claim for loss of visibility was tantamount to a claim for decreased traffic flow past one's business. Id. ¶ 13. And we had previously held that a landowner does not have a right to a certain flow of traffic. Id.

¶ 12 Unlike loss of visibility, we held that loss of view was compensable. Id. ¶ 16. This was because “Utah law ... recognize[s] an easement of view from one's property.” Id. (emphasis omitted). UDOT argued that, notwithstanding Arby's easement of view, Arby's was not entitled to damages for loss of view because the raised highway was not built on the portion of land UDOT had acquired from Arby's. See id. ¶¶ 18–19. We rejected this argument. Id. ¶ 21. We held that severance damages are appropriate [w]hen land is condemned as part of a single project—even if the view-impairing structure itself is built on property other than that which was condemned—if the use of the condemned property is essential to the completion of the project as a whole.” Id. This is because “the impairment of view caused by the completion of the project could and would not have arisen ‘but for’ the condemnation.” Id.

¶ 13 Admiral urges us to overrule the part of Ivers that prevents a landowner from recovering severance damages for loss of visibility. We have jurisdiction pursuant to Utah Code section 78A–3–102(3)(a).

STANDARD OF REVIEW

¶ 14 “On certiorari, we review the decision of the court of appeals and not...

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