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January 1, 1900
"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.
