Condemnors Acting Badly, Another Installment

It is a straight forward concept. If you exercise your power of eminent domain, you must, under our Federal and State Constitutions, pay just compensation. Section 101 of the Eminent Domain Procedure Law (“EDPL”) states that it is the purpose of the EDPL “to assure that just compensation shall be paid to the persons whose property rights are acquired by the exercise of the power of eminent domain.” The same provision requires payments to property owners to be expedited. The policy, set forth in section 301 requires the condemnor to make every reasonable and expeditious effort to justly compensate condemnees. All of this is supposed to happen with reduced litigation.

The problem is that it just does not happen. One of the reasons for the bad conduct on behalf of the condemnors is that many condemnation proceedings are controlled by the developers for whom the land is acquired. Every aspect of the proceeding and trial for damages is controlled by the developer who foots the bill.

Recently, in a trade fixture case in Rockland County, we were absolutely flabbergasted to learn that the condemnor’s trade fixture expert was instructed to disregard the title vesting date and value the trade fixtures at a much later date, many years later. The reason offered by condemnor’s counsel was that the condemnee did not vacate until after the title vesting date. This frivolous argument, unique in our law and without any basis, ignored the fact that the condemnor did not want the tenant to vacate the property. When it did, the tenant vacated and paid use and occupancy charges.

The law is well established that the amount of damages to which the claimant is entitled as a result of the eminent domain proceeding is measured and fixed as of the date of title vesting. Wolfe v State of New York, 22 NY2d 292 (1968). It could be earlier if there was an earlier de facto taking – but never later than the title vesting date.

Trade fixtures must be valued on the title vesting date because that is when title to the fixtures is transferred to the condemnor. See Buffalo v JW Clement Co., 28 NY2d 241, 258-59 (1971) (an appropriation of land, unless qualified when made, is an appropriation of all that is annexed to the land, whether classified as buildings or as fixtures, and the value of the fixtures must be included in determining the total value of the property so appropriated… They are part of the realty so long as they remain fixtures…) (citing Marraro v State, 12 NY2d 285, 292 [1963]; Jackson v State, 213 NY 34, 35 [1914]; Matter of Willcox, 165 AD 197, 200 [2d Dep’t 1914]).

The case law provides absolutely no authority to contend otherwise. Indeed, it has been held that compensation must be valued as of title vesting even if a condemnee remains in possession and the trade fixtures are later destroyed by a subsequent fire. Chester Litho, Inc. v Palisades Interstate Park Com., 27 NY2d 323 (1971). Another case, Gottfried v State of New York, 23 Misc2d 733 (Ct Cl 1960) held that the theft of trade fixtures which occurred after title vesting did not impact the condemnor’s obligation to pay just compensation for them.

Until attorneys representing condemnors start playing by the rules and take the requirement to comply with the constitutional obligation to pay, and not avoid, just compensation seriously, we will continue to see unnecessary litigation in this regard. This improper conduct might end if judges were not reticent about imposing sanctions for frivolous arguments.