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"Just Compensation”—Non-Compensable Damages in Eminent Domain Proceedings
by Todd D. Green
When the State exercises its power
to take private property under
the Eminent Domain Act, it must pay
just compensation for the property
taken. “Just compensation” is defined
as the fair market value of the property
as of the date of the taking, determined
by what a willing buyer and willing
seller would agree to, neither being
under any compulsion to act. It is the
value that would be assigned to the
property by knowledgeable parties
freely negotiating under normal market
conditions based on all the surrounding
circumstances at the time of taking.
However, under the laws of the State of
New Jersey, not all losses suffered by a
condemnee are compensable. The
following presents a general description
of the damages our courts have held to
be non-compensable under the laws of
eminent domain.
Loss of Business Profits
Most jurisdictions including
New Jersey, do not allow for recovery
of loss of business profits or good will
resulting from eminent domain
proceedings. The rationale for denying
recovery of business profits and good
will is the profits of a business are too
uncertain and depend on too many
contingencies to be accepted as
evidence of the usable value of the
property upon which the business is
situated. See State by the Commr. Of
Transp. v. Dickert. Economic gains
are realized from the skill of the
workers and management and are
independent of the real estate, which
is the only asset the condemning
authority is acquiring.
Loss of Access
Under the State Highway
Management Act, each owner of real
property is entitled to reasonable access
to the general system of streets and
highways in the State, but not to a
particular means of access. The general
rule is that the property owner is not
entitled to access to his land at every
point between it and the highway, but
only to free and convenient access to
his property and the improvements
on it. Essentially, no compensable
damages result from the government’s
change to a traffic pattern where the
only harm that results is the inconvenience
of having to navigate a more
circuitous route. The reasoning behind
this rule is that the change in the traffic
pattern is borne by the general public
and is not a private injury suffered by
the individual property owner. See
State v. Charles Inv. Corp., (holding that
property owner was not entitled to
compensation for the economic harm
suffered as a result of the decreased
traffic flow directly in front of his
station). Moreover, the change in the
traffic pattern is not compensable
because it is an exercise of the government’s
police power and not a “taking”
pursuant to the Fifth Amendment.
Visibility
In State v. Stulman, the Appellate
Division specifically considered a
damages claim based on the loss of
visibility.The court rejected the owner’s
argument that he was entitled to compensation
for the loss of visibility of his
property because the loss resulted, not
from the partial taking in the case, but
from the construction of a new highway
on property belonging to others.
The right to compensation for loss
of visibility is denied principally upon
the theory that one has no control over
his neighbor's property and therefore
could not prevent his neighbor, under
most principles of real property law,
from erecting barriers to prevent his
right to be seen. Therefore, a taking by
a public authority takes nothing from
him.
However, loss of visibility damages
may be recoverable if increased
development costs are incurred by the
property owner as a result of the loss of
visibility. For example, in State by
Com'r of Transp. v.Weiswasser, the Court
upheld a property owner’s right to
introduce evidence of damages
resulting from loss of visibility as an
element of the severance damages to
the remainder property. The Court
found that the loss of visibility would
have a direct effect on the property
owner’s marketing costs in developing
the property into single-family
residences. Therefore, the Court held
that “just compensation” requires
compensation for the diminution of
value to the remainder of property that
is specifically attributable to visibility
lost as a direct result of the partial-
taking.
Conclusion
Understanding damage claims in
eminent domain proceedings is very
complex. Competent legal counsel is
critical to evaluating your rights. Hill
Wallack LLP has years of experience in
handing eminent domain cases for both
condemning authorities and property
owners. Our assistance can make the
difference between “just compensation”
and unjust compensation.
Todd D. Green is an associate
of Hill Wallack LLP and member of
the Real Estate Division and the
Regulatory & Government Affairs
Practice Group. His principal area of
practice is in the areas of economic and
business development with a particular
emphasis on municipal law and
government affairs.
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