Court of Appeals: Just Compensation Claims Naming City Instead of CDA were Proper under Doctrine of Apparent Authority
A recent published opinion from the Wisconsin Court of Appeals used the doctrine of apparent authority to clear up confusion in a compensation action. Haas v. City of Oconomowoc, 2017 WI App 10, 373 Wis. 2d 737, 892 N.W.2d 324.
The case arose from the City and its community development authority’s condemnation of the landowners’ property as part of a downtown revitalization project. After years of negotiations, appraisals, and discussions between the landowners on one side and the City and Community Development Authority on the other, the landowners filed just compensation appeals in Waukesha County Circuit Court. The appeals named the City of Oconomowoc – not the Community Development Authority – as the defendant. Adding to the confusion is that neither the City nor the CDA directly performed all the steps required of condemnors. See Haas, 2017 WI App 10, ¶ 18.
The City moved to dismiss the complaint for naming the wrong defendant and the Waukesha County circuit court granted this motion. The landowners appealed and the court of appeals reversed after considering (1) whether the City was properly named as the defendant and (2) if there was a problem with the circuit court’s jurisdiction over the CDA.
In a recent per curiam opinion, the Wisconsin Court of Appeals discussed what grounds the Department of Transportation can give to close a business’s driveway and the route landowners may be left with. Slater v. DOT, No. 2015AP1628, unpublished slip op. (Wis. Ct. App. July 27, 2016) (per curiam).
In April, the North Carolina Court of Appeals decided a case involving billboard compensation. Department of Transportation v. Adams Outdoor Advertising of Charlotte, 785 S.E.2d 151 (N.C. Ct. App. 2016). This case is interesting because it addresses a number of billboard issues. But it’s especially notable for Wisconsinites as the North Carolina court relied, in part, on a Wisconsin case.
But back to North Carolina. Adams Outdoor Advertising acquired a billboard and all the property rights associated with it in 2001. Five years later Adams and the lot owner signed a new lease, which was to begin in 2007, run for ten years and have one automatic ten-year extension. In December of 2011, the DOT filed an action condemning the billboard as part of a highway construction project. The parties could not agree on a purchase price, so the matter went to a hearing. The hearing went against DOT and the agency appealed.
On appeal, DOT set forth three main arguments: First, the circuit court lacked subject matter jurisdiction; second, the trial court erred in finding items of damage compensable; and third, that the trial court erred by adopting the wrong measure of compensation. The court of appeals addressed these arguments in turn.
First, the appellate court reviewed DOT’s contention that the circuit court operated under the wrong set of laws. The appellate court explained that North Carolina Article IX governs general condemnation while Article XI specifically allows billboard removal. DOT pointed out that the circuit court had held the hearing under Article XI. The condemnation included a billboard, true, but the billboard was merely incidental to the fact that DOT needed that property. So, according to DOT, the court should have applied the Article IX rules. The court of appeals agreed, somewhat. It held that although the lower court technically applied the wrong article, the distinction was harmless to the specific hearing. Therefore, concluded the court of appeals, the trial court did not lack subject matter jurisdiction.
The second argument involved items of damages that the circuit court deemed compensable. This argument involved four sub-issues, which the court of appeals addressed.
The first sub-issue: Was the defendant’s billboard a permanent leasehold improvement or personal property? The circuit court considered the billboard to be a permanent improvement and therefore compensable. The court of appeals disagreed:
The second sub-issue: Are Defendant’s alleged loss of business and outdoor advertising income compensable property interests? The trial court concluded that there existed a “right to receive rental income.” The court of appeals disagreed again. It reasoned that longstanding North Carolina law prohibits evidence of lost business profits for condemnation actions because they are too speculative in nature, cannot be calculated with certainty, and are reliant on too many contingencies. The appellate court explained that the right to receive rental income instead fell under the category of non-compensable business profits and therefore should not have been considered in this case.
The third sub-issue: Was the DOT permit granted to Adams under North Carolina's outdoor advertising control law a compensable property interest? The reviewing court explained that generally, a government-issued permit does not give rise to a compensable property interest. Thus, it was error for the value of the permit to be considered by the finder of fact in determining just compensation.
The fourth sub-issue: Was the option to renew contained the in Adams’ lease a compensable property interest? DOT argued no, and therefore the lease should not be considered by the finder of fact. In its opinion, the court of appeals began by laying out the rules generally favoring inclusion of the option to renew. However, unlike many other states, North Carolina has not specifically recognized the expectation of perpetual leasehold renewal as a compensable property interest. The court refused to expand the law and concluded that the circuit court had erred.
So, to recap. The court of appeals disagreed with the circuit court on four of the four “compensable item” sub-issues. The court below would be reversed.
Lastly, the court of appeals turned to DOT’s final argument—that the circuit court had adopted the wrong measure of damages. The court of appeals agreed. The court of appeals went into the North Carolina rules addressing the measure of damages and the procedural nature of the case. But, the essence was that the circuit court’s decision to include the compensation for the billboard was erroneous and thus the measure of damages was also erroneous, necessarily.
With that, the court of appeals affirmed that the trial court did not lack jurisdiction. But most importantly, it reversed the circuit court on the several issues of the billboard’s compensation.
Recently, the United States Court of Appeals for the Seventh Circuit took up three cases involving competition in the utility industry. See MISO Transmission Owners, et al. v. FERC, No. 14-2153 (7th Cir. April 6, 2016). These cases and the opinion focused on the Federal Energy Regulatory Commission’s (“FERC”) ability to block right of first refusal, traditionally held by regional planning organizations.
First, some background. MISO is a regional electric transmission organization. It coordinates power transmission throughout U.S. and Canadian regions by monitoring and managing power supplies. And it checks competition by permitting companies to step into new territories. The case against a free market here was that traditionally, the right of first refusal helped prevent waste. That is, when one company was already suited to developing transmission in an area, the native company would have the right of first refusal on necessary projects. The ability to grant such rights was changed in 2011 with the FERC Order No. 1000. The Order required, by its terms, regional planning to identify and allocate costs and, importantly, removed the right of first refusal. This brings us to the three cases, here.
First Case—The Mobile-Sierra Doctrine
The first case challenged what deference FERC would give to MISO’s members’ agreement permitting the right of first refusal. Specifically, the challengers argued that under principles known as the “Mobile-Sierra doctrine,” FERC would not get involved where the utilities had contracted with each other.
The Seventh Circuit described the doctrine’s origins. Slip op. at 8–9; See also United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956); Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956). That doctrine arose out of cases in which utilities contracted for below reasonable prices. Seeking relief, the utilities sought to get out from under those rates. Ultimately, the Supreme Court reversed the Federal Power Commission’s intervention, noting that although the Commission could not force a utility to charge a less-than-fair-return rate, it was not required to step in when a utility had itself bargained for a less-than-fair-return rate, assuming that the public interests were not adversely affected (for example, by impairing the financial ability of the utility to continue, impose excessive burdens on other consumers, or be unduly discriminatory). Slip op. at 8 (citing Sierra, 350 U.S. 348, 355).
The challengers here relied on the doctrine—the presumption that utilities that had contracted with each other would be left to the contract unless it threatened the public interest—to support their argument that FERC had no business interfering in their bargained-for MISO Transmission Owners Agreement, which contained the right of first refusal. Put another way, they argued that FERC could not touch MISO’s agreement unless there were a threat against the public interest.
Judge Posner, writing for the court, however, distinguished the agreements at issue in Sierra, which were bargained-for competitive agreements, with the agreement here. with those here (noting that MISO’s is “a contract in which the parties are seeking to protect themselves from competition from third parties”).
Second Case—Local or Regional?
But even under the new Order No. 1000, there are ways in which a competitor can be stymied. This was demonstrated in the second case. Even after the Order, FERC has allowed some of MISO’s members to build certain types of projects under a right of first refusal. Specifically, these types of projects are called “baseline reliability projects.” These are projects with the sole purpose of solving reliability problems in electrical transmission and they are contrasted with multi-value projects, which are larger, have a more regional focus, and spread costs across regions. The reason the baseline reliability projects are allowed to maintain their rights of first refusal is that the costs to consumers are limited to the local service area. Accordingly, a limitation to this exception is that FERC is not allowed to exempt all reliability projects from cost sharing but it can exempt some as long as other types of transmission projects can be included in a regional plan for purposes of cost allocation.
The second case concerned that exemption, ultimately turning on the definition of local and regional. LSP, a transmission company wanting to compete for baseline reliability projects in a region, challenged FERC’s decision to allow right of first refusal for baseline reliability projects, arguing that this decision violates Order No. 1000.
The challenger, LSP, argued that by classifying baseline reliability projects as “local,” an entire type of transmission facility is exempted from regional cost sharing, and that when a project spans more than one pricing zone, it must be considered regional. But Judge Posner writes that if costs are allocated to the pricing zone in which the facility is located, the project is not regional. And even where there is some spillover of benefits to other zones, the exemption was still acceptable because the local allocation of costs is equal to the allocation of benefits, considering any spillover of benefits to other zones is minimal. Slip op. at 11.
Third Case—Obstacles to Expansion?
The third case was also brought by LSP, challenging three obstacles made by FERC relating to expanding its operations in the MISO region. Again, in short, LSP wanted to compete in the MISO region. The court addressed the three challenges and rejected them in turn.
The first obstacle, argued LSP, was MISO’s refusal to base its authorization decisions on estimates of cost of building. FERC gave MISO its consent to do this. The court was not persuaded by LSP’s arguments against this, noting that there is no indication that the criteria that MISO did use favored their incumbent developers.
The second obstacle, LSP claimed, was MISO’s ability to include a provision in its tariff to honor rights of first refusal created by state and local law. Order No. 1000 only applies to federal rights of first refusal, as FERC did not want to intrude on the State’s traditional role in regulating the siting and construction of transmission facilities. LSP also argues that even if MISO can allow right of first refusal by state law, they cannot exclude outsiders from competing. The court concluded requiring MISO to disregard the end game—the state-imposed right of first refusal—would be a “waste of time.” Slip op. at 13. The court also noted that FERC has imposed some constraints and has not given MISO unlimited discretion to rely on state law in making its decisions. See id. Specifically, the court pointed to FERC’s decision to prohibit organizations, like MISO, from basing their decision on the transmission developer’s getting or ability to get state approval for things like operation, public utility status, and the right to eminent domain.
The third obstacle of which LSP complained was FERC’s treatment of Entergy Corp. Again, FERC eliminated federal rights of first refusal only for regional projects, not local projects. Accordingly, the argument here was whether Entergy Corp. should be classified as local or regional. Entergy does business in Texas, Arkansas, Louisiana, and Mississippi through separate operating companies. Here, the court explained that “local” is relative and does not follow the usual definition of “local” when dealing with “the service area of a giant electrical transmission utility.” Slip op. at 14. But, as the court noted, even though Entergy had its component companies in separate states, they actually operated as one. Therefore, Entergy was determined to be a local company, although its operating range straddled multiple states.
With all three obstacles addressed, the court rejected LSP’s arguments in the third case. And with that, the Court denied all three challenges to rulings by the FERC.
For the second year in a row, our Wisconsin Eminent Domain Law Blog has been named to the annual list of Wisconsin Law blogs. Here's a link to Joe Forward's article, which came out today, in the Wisconsin State Bar magazine, Inside Track. The article mentions how law blogs are a vehicle for lawyers to showcase their in-depth knowledge in specific areas of the law.
Last year, the Wisconsin Eminent Domain Law Blog was also named to the list. (Here's the inaugural list.)
A recent Wisconsin Supreme Court decision came out against jury trials for landowners in some controlled access highway cases. (Full disclosure: Eminent Domain Services, LLC submitted an amicus brief addressing the history of controlled access highways.) You can read the court’s full opinion here, but we wanted to focus here on Justice Prosser’s dissent.
The landowner here, Hoffer Properties, owned 9.90-acres in Jefferson County west of Watertown abutting STH 19 to the south. In 2002, STH 19 was designated “controlled access,” according to Wis. Stat. § 84.25. Hoffer retained direct access to STH 19 by means of two driveways. Then, in 2008, the DOT relocated STH 26 so that it intersected with STH 19 just to the west of Hoffer’s property. The relocation meant Hoffer’s direct access to STH 19 was eliminated. Also, as part of the project, DOT took 0.72 acres and a temporary limited easement from Hoffer through eminent domain. Hoffer was given $90,000 for the taking and he was given alternate access through an adjacent parcel. After DOT's jurisdictional offer and award of damages, Hoffer appealed the amount of compensation. (See "What is a Jurisdictional Offer?")
The focus of the dispute was the alternate access. Hoffer’s argument was that when an abutting property owner’s direct access to an existing controlled-access state trunk highway is eliminated, the property owner must be compensated by the DOT when a jury finds that the replacement access is not reasonable. DOT responded that Hoffer could only raise that reasonableness argument through inverse condemnation. There, Hoffer would have to show that the alternate access was so circuitous that he lost all or substantially all beneficial use of the land, resulting in a “regulatory taking.”
The circuit court, however, concluded that if the DOT provides replacement access to the property, no compensation is required, and it denied Hoffer a jury. Hoffer then appealed and the Court of Appeals upheld the circuit court’s decision. Likewise, the Supreme Court affirmed this decision with a concurrence by Justice Abrahamson in which Justice Bradley joined. The lead opinion explained, “when DOT changes an abutting property owner’s [direct] access to a controlled-access highway but other access is given or exists, the abutting property owner is precluded from compensation...as a matter of law and no jury determination of reasonableness is required.”
However, Justice Prosser’s dissent is worth further examination. The dissent expresses concern that by precluding juries from ever finding the alternative access unreasonable, property owners are deprived of their statutory right to a jury trial and circuit court judges are also prevented from finding that alternative access is not reasonable. The issue is “whether no compensation is required if DOT provides any alternative access—even if that alternative access is plainly unreasonable—so long as the property owner cannot meet the requirements for inverse condemnation.” While Justice Prosser does not write that the replacement access in this case is unreasonable, he takes issue with the interpretation which would not allow a jury to hear the evidence and make a judgment.
In support, Justice Prosser cites several cases that rule whether or not compensation must be made. The interlacing thought in these cases is that each makes reference to the reasonableness of the alternate access to a controlled-access highway. Although in general, if a property owner’s loss of direct access is replaced with some reasonable access they will not be compensated, Justice Prosser asserts that “the broad scope of reasonableness does not preclude a finding of unreasonableness in specific circumstances.”
Because reasonableness is a matter of degree, this determination should be decided by a jury, which as Justice Prosser points out, is “a vital check by an impartial fact finder on the exercise of government power.” A huge gap exists between reasonable access and access so deficient that is constitutes inverse condemnation. Thus, the dissent concludes the lead opinion permits “government officials to push property owners into that chasm without compensation.”
A Wisconsin takings case will be heard by the Supreme Court of the United States. Last Friday, the country’s highest court granted review on Murr v. State, 2015 WI App 13, 359 Wis. 2d 675, 859 N.W.2d 628 (per curiam) cert. granted, 2016 WL 205943 (U.S. Jan. 15, 2016) (No. 15-214).
The dispute involves a St. Croix County family’s attempts to develop two parcels of waterfront land separately. These attempts ran up against a county ordinance, which tracked the state’s regulation, effectively merging the two waterfront lots for sale and development purposes.
In a prior case, the landowners sought a variance to sell the lots separately. See Murr v. St. Croix County Board of Adjustment, 2011 WI App 29, 332 Wis. 2d 172, 796 N.W.2d 837. The local Board of Adjustment denied the request and that decision was affirmed by the circuit court and at the Wisconsin Court of Appeals. The Wisconsin Supreme Court declined to review the case.
In the current case, the landowners have challenged the regulation on takings grounds. Specifically, the Murrs alleged that the county’s ordinance and the state regulation on which it was based, Wis. Admin. Code. § NR 118.08(4) (Feb. 2012), meant that they could no longer sell or develop one of the two lots as a separate lot. Thus, the landowners have argued, the ordinance and regulation deprived them of all or practically all of the use of one of the lots.
Nevertheless, the circuit court granted summary judgment in favor of the County and State. The circuit court reasoned that when determining whether the regulation deprived the landowners of use of their land, the court would consider both parcels together. And, when viewed as one combined parcel, the property retained some use. So, there was no compensable taking as a mater of law.
The Murrs appealed to the Wisconsin Court of Appeals. In the Court of Appeals, the Murrs argued that the two lots should have been considered separately. Put another way, the court should have determined if there were any beneficial uses remaining on Lot E—without taking into account what could be done on Lot F or on the combination of the two parcels. However, the Court of Appeals rejected this argument, reasoning that an earlier Wisconsin Supreme Court case, Zealy v. City of Waukesha, 201 Wis. 2d 365, 548 N.W.2d 528 (1996), controlled the outcome here. In Zealy, the Supreme Court rejected the landowner’s attempt to split one piece of property into distinct segments for the purposes of determining whether one of those segments was rendered useless by a regulation. Applying that case, the Court of Appeals rejected the Murrs' arguments to consider the regulation’s effects on Lot E. With the two parcels (Lot E and Lot F) considered as one larger parcel, the Court of Appeals agreed with the circuit court that the overall property still had utility.
The landowners sought review from the Wisconsin Supreme Court. But, that request was denied.
Now, the landowners' case will be heard by the Supreme Court of the United States. With its grant of certiorari, the country’s highest court will now answer, “[w]hether, in a regulatory taking case, the ‘parcel as a whole’ concept as described in Penn Central Transportation Company v. City of New York, establishes a rule that two legally distinct but commonly owned contiguous parcels must be combined for takings analysis purposes.”
Briefing and oral argument are up next.
Last July, we summarized a federal court decision, which put a hold on any expansion of State Trunk Highway 23 between Fond du Lac and Plymouth, Wisconsin.
You’ll remember that the decision focused on the Environmental Impact Statement prepared by DOT and the FHWA. Briefly put, the court concluded that the Environmental Impact Statement was too unclear. It failed to clearly show how the DOT applied its traffic projection models to Highway 23 and failed to explicitly say whether to examine new population data. Because of these problems, the court vacated earlier approval of the highway expansion.
Today, the case continues with further briefing and DOT’s second crack at the EIS as in December 2015, DOT moved to reinstate the record of decision and enter judgment in their favor.
Without going into too much detail, DOT argues that its new submissions – a brief outlining the basics and a more detailed technical memorandum – should adequately address any vague parts of the EIS. With these parts cleared up, DOT argues, the court should allow DOT’s highway expansion to go through. Therefore, the court should, according to DOT, reinstate the earlier approval for roadway expansion.
According to the court’s scheduling order, 1000 Friends will now have until late February to respond. Then, the agencies will have the opportunity to present a reply brief after that. The result is that briefing is scheduled to continue through late March of this year, at the earliest.
A recent per curiam opinion from the Wisconsin Court of Appeals suggests that a power line may be required to get new easements when it updates from wooden structures to steel poles. Although the case is generally unciteable in Wisconsin courts, the implication is significant.
The case, Garza v. ATC, involved a landowner challenge to an electric transmission line company’s right to clear trees and vegetation on the Garza’s property. Appeal No. 2014AP2278, 2014AP2279, unpublished slip op. (Wis. Ct. App. Nov. 19, 2015) (per curiam). The company, ATC, claimed it had the right to do so under the terms of a 1969 easement over the land now belonging to the Garzas.
The easement granted ATC’s predecessor “the perpetual right, privilege and easement to erect, maintain and operate an electric transmission line, comprising wood pole structures conductors and other wires, counterpoises, guy wires, braces and other usual appendages and appurtenances....” Id. ¶ 2. The easement language further granted ATC’s predecessor the “right from time to time to clear all brush and trees within 90 feet of each side of the center line of such transmission line...” Id.
Importantly, in the intervening decades, the power line was updated from one line on wood poles to two lines, now on steel poles.
The Garzas filed suit, arguing that ATC did not have the right to clear their land. ATC filed its own action in response.
Addressing the validity of the easement, the trial court ruled that replacing the steel support poles and adding additional line had not invalidated the original easement. Id. ¶ 7. The lower court reasoned that the easement contained language, which allowed ATC’s predecessor and its assignees with the ability to change transmission lines as needed or in response to technological advances. The circuit court granted ATC’s motion for summary judgment. The Garzas appealed.
As the court of appeals explained, the real issue here was whether the 1969 easement applied to the updated transmission line. The court seeks the intent of the easement. The primary source of that intent is within four corners of the conveyance. Id. ¶ 11. Here, concluded the court of appeals, the language of the easement demonstrated the scope of 1969 brush clearing easement was only for a wood pole easement. That language clearly did not include steel poles, as had been constructed. Id. ¶ 16.
First, the court of appeals rejected ATC’s contentions as to how the easement language should be interpreted. ATC argued, generally, that the general purposes of the easement shouldn’t be construed so narrowly. The company argued that the overall purpose of the 1969 easement was to allow for the construction and updating of a power line. Upgrading the line to two lines on steel poles fell under that purpose, argued ATC. However, the court of appeals responded, “[i]f ATC needs to place a steel pole structure, then it needs a new easement to enjoy that use.” Id. ¶ 18.
Second, the court of appeals rejected ATC’s argument that it had acquired a prescriptive easement to continue clearing along the line. The company alleged that even if the specific terms of the easement did not apply, the company still had an easement by virtue of its use of the property. By maintaining the line for over ten years, argued ATC, it had acquired the right to continue to do so under Wis. Stat. § 893.28(2). The court of appeals rejected ATC’s prescriptive easement argument, explaining that ATC had failed to show proof in the record that the company had in fact cleared vegetation in the area at issue for the past 10 years. Id. ¶ 22.
So what does this mean? Well, it’s a per curiam opinion. There’s no precedential value and it may not be cited in court documents. Nevertheless, the opinion may provide some insight into the thought process the court would use in analyzing other power line easement language. Landowners and their attorneys might look closer at the specific language of older utility easements on their property. By the same token, condemning authorities may look closer at the terms they choose to include in acquisition documents. The case is a reminder that those terms may be dispositive of issues arising decades later. There may be a fine line between describing a utility, roadway, or purpose of an easement and limiting them to specific parameters.
There is a divide between what a property is worth in the real world versus what the court will allow a jury to hear as fair market value. For example, Wisconsin courts generally prohibit condemnation appraisers from using an appraisal method commonly used in the business world, the Income Approach, to get fair market value. Even though the Income Approach might reflect the real-world price, it’s not allowed in court to prove that property’s fair market value.
Highlighting this tension between how you get a price in the business world and fair market value is a recent Texas pipeline case. In Enbridge G & P (East Texas) LP v. Samford, the Texas Court of Appeals addressed the testimony about the real world value of a pipeline. No. 12-13-00307-CV (Tex. App. July 31, 2015).
Enbridge sought to install a gas pipeline over three parcels owned by the plaintiff-landowners. To do so, Enbridge acquired a 50’ permanent easement for the pipeline itself and a 25’ temporary limited easement for incidental construction. The litigation focused on the amount compensation Enbridge owed the landowners for these easements.
At trial, both Enbridge and the landowners had appraisers testify to the easements’ fair market values. The landowners also called two other experts to testify about the pipeline easements’ values. One of these experts testified to “what a gas pipeline is worth.” He explained that according to his background – he had been a county attorney and had experience negotiating sales of pipeline easements – the pipeline easement was really worth $850 per-rod (16’6”) to the gas industry. Indeed, the court of appeals acknowledged that this practice was “common in pipeline easement negotiations.” He contrasted his view with the traditional appraisal approach. The traditional appraisal approach, he suggested, determines fair market value of an easement but does not reflect the amount pipeline companies would pay for the easement outside of condemnation. Importantly here, the expert’s $850 per rod value included all damages to the property: the value of the part taken by the pipeline, the cost of the temporary easement, and compensation for any harms to the “remainder” property outside of the easement.
Enbridge objected to the expert’s testimony. The trial court was unmoved and permitted the expert to testify. The jury returned a verdict compensating landowners according to the expert’s on the per-rod value of the pipeline. Nevertheless, the jury also compensated the landowners for damages to the outside the easement. Thus, the jury double-counted damages: The expert’s per-rod value already compensated damages to the remainder and the jury awarded separate compensation for damage to the remainder.
Enbridge appealed the trial court’s decision to allow the landowners’ expert to testify. Enbridge argued that the expert’s per-rod method did not follow the set rules for determining just compensation. Those rules, Enbridge explained, required that compensation be based on the change to the property’s fair market value. The expert’s per-rod method didn’t calculate fair market value of the landowners’ land. Thus, Enbridge argued, the expert’s per-rod method was an “improper...measure of damages.” Appellant’s Br. at 4. It was the jury’s use of the per-rod value led to an improper verdict. Id.
The court of appeals agreed with Enbridge. The problem with the per-rod method, the court wrote, is that the method did not separate the compensation for the pipeline easement itself from the compensation for damages to the remainder of the property. The method was inappropriate to present to a jury tasked with determining just compensation.
The court of appeals pointed to precedent. In an earlier Texas case, the court warned against confusing the damage for the taking and the damage to the remainder. State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194 (1936). To avoid such confusion, the Carpenter court declared that juries must be asked, first, to determine the value of the part taken and, second, to calculate the damage of the taking to the remainder of the property. Carpenter, 89 S.W.2d at 197.
To the court of appeals in the present case, it was clear that the jury combined compensation for the easement based on the per-rod method with the additional damages to the remainder. Thus, Enbridge was right – the expert’s methods led to improper double damages. The trial court should have excluded the expert’s per-rod testimony.
The case serves as a reminder that getting to just compensation in an eminent domain case requires an in-depth knowledge of the field’s intricacies. What may be an industry standard – like pricing pipeline easements per-rod – may not always be an acceptable method in court. These rules may be complex and counter-intuitive. That’s why it’s important to call on an attorney with specialized skills in eminent domain.