Highly-Segmented Takings

It is so commonplace as to appear unremarkable that eminent domain actions often are directed against small slivers of property. Typically, the condemnor will acquire only a physical part of the owner’s parcel, a practice that has become familiar in part because of the acquisition of strips of rural land for highway expansion.261 _A

sometimes more problematic example involves the condemnee that

257. Brown, 123 S. Ct. at 1417 (emphasis added) (footnote omitted). 258. Id. at 1422 n.2 (Scalia, J., dissenting) (citation omitted).

259. Dwight H. Merriam, Panning for Gold in the Trickle of Supreme Court Cases This Term: What Can We Learn from the IOLTA and Referendum Cases?, ZONING & PLAN. L. REP., June 2003, at 1, 6 (quoting Michael M. Berger).

260. Seeinfra Part IV for a discussion of the seven theories.

261. See, e.g., Thomas W. Merrill, Incomplete Compensation for Takings, 11 N.Y.U. ENVTL. L.J. 110, 121 (2002) (observing that “[m]any (perhaps most) condemnations are partial takings; that is, the taker acquires only a fraction of the owner’s property and leaves the balance in the owner’s hands. This will often occur, for example, when the tak- ing is for a highway or a utility right-of-way”).

intends to acquire a larger set of rights, has been successful in nego- tiating purchases from the other owners, and utilizes eminent do- main to acquire the interest of the holdout.262

An anti-segmentation rule applies to the partial condemnation of parcels. The condemnor must pay severance damages for injury to that part of the parcel not condemned.263 The Supreme Court applied this principle to a temporary taking, which involved the condemna- tion of a leasehold interest in a building, in United States v. General Motors Corp.264 _{The condemnation was a short-term leasehold in the}

middle of the condemnee’s long-term leasehold. Just compensation was held to include severance damages to that part of the owner’s in- terest not taken:

If the Government need only pay the long-term rental of an empty building for a temporary taking from the long-term tenant a way will have been found to defeat the Fifth Amendment’s man- date for just compensation in all condemnations except those in which the contemplated public use requires the taking of the fee simple title. In any case where the Government may need private property, it can devise its condemnation so as to specify a term of a day, a month, or a year, with optional contingent renewal for in- definite periods, and with the certainty that it need pay the owner only the long-term rental rate of an unoccupied building for the short term period, if the premises are already under lease or, if not, then a market rental for whatever minimum term it may choose to select, fixed according to the usual modes of arriving at rental rates. And this, though the owner may be damaged by the ouster ten, a score, or perhaps a hundred times the amount found due him as “fair rental value.” Whatever of property the citizen has the Government may take. When it takes the property . . . terminating altogether his interest, under the established law it must pay him for what is taken, not more; and he must stand whatever indirect or remote injuries are properly comprehended within the meaning of “consequential damage” as that conception has been defined in such cases. . . .

It is altogether another matter when the Government does not take his entire interest, but by the form of its proceeding chops it into bits, of which it takes only what it wants, however few or minute, and leaves him holding the remainder, which may then be altogether useless to him, refusing to pay more than the “market rental value” for the use of the chips so cut off. This is neither the “taking” nor the “just compensation” the Fifth Amendment con-

262. See, e.g., County of Sussex v. Merrill Lynch Pierce Fenner & Smith, Inc., 796 A.2d 958 (N.J. Super. Ct. Law Div. 2001) (holding that county originally planning condemnation of a building could settle with the owner and other tenants and condemn the lease of a sin- gle nonconsenting tenant only), aff’d, 796 A.2d 913 (N.J. Super. Ct. App. Div. 2002). 263. See, e.g., State v. Pahl, 95 N.W.2d 85, 90 (Minn. 1959).

templates. The value of such an occupancy is to be ascertained, not by treating what is taken as an empty warehouse to be leased for a long term, but what would be the market rental value of such a building on a lease by the long-term tenant to the temporary occu- pier.265

According to Tahoe-Sierra, General Motors is, perhaps, not on point, since different rules apply to regulatory takings than to physi- cal takings.266 Nonetheless, it is difficult to square the application of

Tahoe-Sierra’s fairness-based jurisprudence to the denominator of the takings fraction while permitting abusive segmentation with re- spect to the numerator.

Another example of deprivation of severance damages is the North Carolina Supreme Court’s recent decision in Department of Transportation v. Rowe.267 _{Traditionally, severance damages with re-}

spect to the remainder of a parcel partially condemned have been off- set by the “special benefits” that will rebound to the owner of the par- cel from the project for which the condemnation is undertaken.268 _In

Rowe, the court extended this offset to “general benefits” received by the owner as well.269 _{This means that severance damages are reduced}

for benefits received from the condemnation project, even though the condemnees received no greater general benefits than others in the vicinity who suffered no condemnation at all. Also, the landowner subjected to the condemnation probably contributed to the cost of the project through taxation, thus conferring general benefit upon the community.