State Takes Part of Rockland Co. Strip Mall By Eminent Domain

Was Owner Entitled to Substantial Los of Space/“Severance”? 

When I took the prep course for the New York State Bar Examination 1969, micro-subjects– like eminent domain, zoning and the like–were mentioned and reviewed only in passing or not at all. Over the years I have learned that friends and colleagues turned those singular topics (worthy of only cursory review when studying for the “Bar”) into full-time and successful careers. And that each such area has a specific jurisprudential legacy of constitutional, statutory and decisional law. As a recent case illustrates, the “taking by eminent domain” of a small portion of a large suburban shopping center involved and invoked just one substrate of that complicated legacy–“severance damages”.

The State of New York took by eminent domain a piece of land, measuring 6,026 square feet, along the frontage of Route 306 in the Village of Wesley Hills in Rockland County.  The land taken–for the purpose of constructing a sidewalk and a bus shelter–was part of a shopping center owned by Wesley Hills Center, LLC. The taking resulted in nonconformities in parking spaces and the loss of a landscape buffer. The Court of Claims awarded Wesley Hills $432,000 in severance damages. The State appealed.

Question presented: Did the Court of Claims err in awarding severance damages to Wesley Hills?

The 55,570 square foot strip mall–built in 1960 and renovated in 1991–had a gross leasable area of 54,454 square feet. The mix of large and small bank, food service, retail and professional tenants shared a common parking area of 238 parking spaces, of which 70 were along Route 306. Before the taking, 39 of those 70 spaces were non-conforming. After the taking, 24 more spaces were rendered non-conforming.

The taking of 6,026 square feet (0.3 acres) across the property’s entire Route 306 frontage for a distance of 837 linear feet left a remainder of 249,628 square feet on 5.729 acres. The property taken was entirely within the lawn and landscaped buffer area, except where it crossed entrance drives. Neither the existing building nor the parking area were actually touched by the taking. The access driveways remained the same, except for wheelchair access modifications. The area was replanted with grass and a new line of trees.

Both experts agreed, and the Court concurred, that the highest and best use of the property was as a neighborhood shopping center. And the parking was at a maximum before the taking.

The property was the only shopping center in Wesley Hills. There was no competing center for several miles.

Wesley’s expert found damages in the amount of $1,380,000, reflecting a diminution in value of the property as a result of the taking. In including damages for the fee taking of $96,810, site improvements in the amount of $52,000 and the cost of relocating a sign in the amount of $60,000. Added to that was the value of 28 months of a temporary easement of $970 per month or $27,160.  For a total of $1,407,160.

The State’s expert found that there was no diminution in value as a result of the taking. And that Wesley was only entitled to direct damage for the property taken in fee of $145,000, cost-to-cure damages in the amount of $13,300 and damages for a 28 month temporary easement in the amount of $35,800 based upon a monthly rental of $1,279.58.  For a total of $194,100.

The Court of Claims found total damages and just compensation in the amount $755,160. Land value taken in fee of $96,000, Severance damages of $580,000, Improvements taken of $52,000. And temporary easement of $27,160.   

Upon appeal, the appellate court modified the award because the Court of Claims failed to reduce the severance value of the land by the amount of direct damages assessed. Revised award total: $607,160. Consequential damages: $432,000. Direct damages: $148,000.  And temporary easement $27,160.

When property is taken by eminent domain, the Constitution requires the State to compensate the owner so that the owner may be put in the same relative position, insofar as this is possible, as if the taking had not occurred. In addition, when the State takes part of a condemnee’s property and leaves a remainder, just compensation includes not only the direct damages for the portion that was taken, but also any consequential or indirect damages caused by the taking that impaired the remaining portion of the property.

Consequential damages, also known as severance damages, reflect the fact that, in addition to the loss of value of the property actually taken, the condemnee’s remaining property may suffer a diminution in value as a result of the loss of the condemned parcels. Damages for such a loss must be based upon either the opinion of an experienced, knowledgeable expert or on actual market data showing a reduction in the value of the remainder as a result of the appropriation. The severance damages awarded were based on the opinions of experienced, knowledgeable experts.

Where there is a partial taking of land, courts usually apply a before and after rule. That rule measures damages as the difference between the fair market value of the whole property before the taking and the fair market value of the remainder of the property after the taking. In determining an award to an owner of condemned property, the findings must either be within the range of the expert testimony or be supported by other evidence and adequately explained by the court. The measure of damages must reflect the fair market value of the property in its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time.

Both Wesley Hills’ expert appraiser, Ronald Haberman, and the State’s expert appraiser, Kenneth Golub, agreed in their respective reports that the property was being put to its highest and best use as a shopping center on the date of the taking. The Court of Claims’ measure of severance damages was within the range of the expert testimony, and was adequately explained by the court.

The authority of the appellate court to review findings of fact after a nonjury trial is as broad as that of the trial court. The court may render the judgment it finds warranted by the facts, taking into account that, in a close case, the trial court had the advantage of seeing and hearing the witnesses. Where the trial court’s explanation of its award is supported by the evidence, it is entitled to deference and will not be disturbed on appeal. The Court of Claims’ explanation of the reasoning for its award of severance damages was supported by the evidence.

Whether a partial taking diminishes the value of the remaining property was a credibility issue for the trial court. Here, the Court of Claims found that several factors undermined Golub’s assessment of the fair market value of the remainder of the property, and there was no basis to disturb that determination.

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