Free Objection - District Court of Arizona - Arizona

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John A. Weil, Bar No. 005621 Lori A. Butler, Bar No. 016139 W EIL & W EIL, PLLC 1600 S. Fourth Avenue, Suite C Yuma, Arizona 85364 Tel: (928) 783-2161 Fax: (928) 783-6082 Attorney for Defendants Curtis/Perricone

IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 v. 192.019 Acres of Land, more or less, located in Yuma County, State of Arizona, et al., Defendants. Defendants, Glen G. Curtis, Trustee of the Curtis Family Trust Dated July 25, 1986, and Sam Perricone, Trustee of the Amended and Restated Declaration of Revocable Trust of Sam Perricone and Mary Louise Perricone Dated May 22, 1992 ("Landowners"), herein object to the proposed form of judgment submitted by Plaintiff because it does not accurately state the interest calculations. I. INTRODUCTION Plaintiff submitted a proposed form of judgment with an incorrect interest calculation. Paragraph 10 states that the United States shall deposit the deficiency amount of $2,403,999.25, together with interest earned thereon as provided by 40 U.S.C. § 3116, from October 16, 2003, to the date of deposit of this deficiency balance. The proposed form of judgment fails to include interest on the deposit already withdrawn, where disbursement of the deposit was unduly delayed. If disbursement of an Plaintiff, DEFENDANTS' OBJECTION TO PROPOSED FORM OF JUDGMENT UNITED STATES OF AMERICA, Case No. CV03-2006-PHX-SRB

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award is delayed, the owner is entitled to interest thereon sufficient to ensure that he is placed in as good a position pecuniarily as he would have held if the payment occurred at the same time as the taking. Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 10-11 (1984). I. FACTUAL BACKGROUND On October 16, 2003, the United States filed a Complaint in Condemnation and Declaration of Taking in this action and deposited estimated just compensation with the Court, allegedly for all interests in the property, in the amount of $2,332,982.90. Docket No. 2, 4. Glen G. Curtis and Sam Perricone are the former landowners of this property ("Landowners"). On December 9, 2003, the Landowners filed their Motion for Withdrawal of Estimated Compensation by Condemnees. The Landowners requested the immediate distribution of deposit in the amount of $2,332,982.90, citing irreparable harm. Landowners provided the Affidavit of Glen Curtis in which Mr. Curtis emphasized that the funds were needed to immediately replace the citrus groves taken by the Plaintiff. Docket No. 23. On December 22, 2003, Plaintiff filed its Response to Defendants Curtis and Perricone's Motion for Withdrawal, opposing distribution because it was currently completing service by publication on Earl and Esther Zion, who might have a claim for mineral rights, and because Defendants Yuma Mesa Irrigation and Drainage District and Yuma County Treasurer claimed an interest in the estimated just compensation on deposit. Docket No. 34. Plaintiff's position was inaccurate. Previously, on December 18, 2003, the Yuma County Treasurer filed a Disclaimer of Interest claiming no compensation for the taking of the property. Dkt. No. 29. Furthermore, on December 15, 2003, Yuma Mesa Irrigation and Drainage District ("YMIDD") filed a Response to Motion to Withdrawal of Estimated Compensation. Docket No. 28. The Response was a single sentence:

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"To the extent that the estimated compensation includes compensation to Defendant YUMA MESA IRRIGATION AND DRAINAGE DISTRICT ("YM IDD") for loss of its assessment base, Defendant YMIDD objects to Defendants CURTIS and PERRICONE'S Motion for Withdrawal of Estimated Compensation." YM IDD did not claim any of the estimated just compensation on deposit. On January 8, 2004, because no action had been taken on the Motion for Withdrawal of Estimated Compensation, Landowners filed a second motion entitled Motion for Immediate Distribution of Deposit or for Emergency Hearing. Landowners requested immediate distribution again, citing that unless the deposit is immediately disbursed to Landowners, they run the risk that the Court may, at a later date, determine that the delay in disbursement was not caused by Plaintiff and therefore, no interest would be paid on the amount deposited (only the deficiency). In this motion the Landowners also pointed out that YMIDD seeks to be compensated for its loss of operation and m aintenance assessments. This loss is a separate element of damage that was not included in Plaintiff's appraisals or included in the estimated deposit. Therefore, Landowners continued to seek withdrawal of the full deposit. On January 13, 2004, Judge Holland denied the Motions as "premature". Judge Holland stated that Defendants Zion "at least superficially" might have a compensable interest in the property and time for service and response had not run. Docket No. 43. On January 14, 2004, Plaintiff filed the Plaintiff's Response to Defendants Curtis and Perricone's Motion for Immediate Distribution of Deposit or Emergency Hearing. Plaintiff admits that service on the Zion's was not begun until December 12, 2003. Plaintiff states that service was completed on December 26, 2003, but does not explain why the Certificate of Publication of Service was not filed until January 15, 2004, after the Court's order. After service by publication, the Zions failed to make an appearance in this case. On January 28, 2004, Landowners filed a Second Motion for Immediate Distribution of Deposit. Docket No. 49.

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On February 2, 2004, the United States filed a Response to Second Motion claiming that Landowners' request for distribution of the full deposit was excessive due to the claim of YMIDD. Docket No. 52. On February 9, 2004, response was also filed by YMIDD seeking just compensation in the sum of $588,952.99, but not seeking withdrawal of any deposit. Docket No. 53. Despite attempts to obtain a stipulation for withdrawal of the deposit, the United States and YMIDD declined to enter any stipulation. Although there was no dispute over withdrawal of $1,744,030.90 (Full deposit less $588,952.99 claimed by YMIDD), the United States and YMIDD were not willing to enter into a stipulation to allow distribution of the undisputed portion of the deposit. Therefore, Landowners filed a Supplemental

Memorandum Regarding Second Motion for Immediate Disbursement of Funds emphasizing the undisputed portion of the deposit. On April 1, 2004, the Court entered an Order granting immediate disbursement of $1,744,030.90 to the Landowners. The Court ordered that the remaining balance

($588,952.90 plus accrued interest) be retained in the Court Registry System on account of YMIDD. Subsequently, after formal mediation, on May 12, 2005, YMIDD and United States entered into a Global Settlement Agreement. On June 17, 2005, YMIDD and United States entered into a Stipulation for Just Compensation On June 21, 2005, Judgment in the amount of $409,513.35 was entered for YMIDD for their interest in the property. Thereafter Landowners requested that Plaintiff enter a stipulation regarding withdrawal of the remaining funds on deposit to Landowners. Plaintiff refused to enter into a stipulation. Plaintiff advised it would not oppose an appropriate motion. On September 9, 2005, Landowners filed a Motion for Withdrawal of Remainder of Deposit, requesting distribution of the remaining funds in the Court Registry System in the

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amount of $179,439.55. On October 6, 2005, the Court ordered distribution of $179,439.55 to Landowners. However, the financial office of the Court would not release the funds until an order was entered as to accrued interest. Thus, on December 5, 2005, the Court ordered distribution of $179,439.55 plus accrued interest. Ultimately, a jury verdict was returned in the amount of $4,327,468.80. The proposed judgment provides for interest on the deficiency amount of $2,403,999.25 from October 16, 2003, to the date this amount is deposited with the Court, pursuant to 40 U.S.C. § 3116. The deficiency amount is the amount of the verdict less the two withdrawals made by Landowners (withdrawals of $1,744,030.00 and $179,439.55). Landowners object to the proposed judgment because it fails to provide for interest on the amounts previously withdrawn by the Landowners, where withdrawal was unjustly delayed by the United States. II. LEGAL ARGUMENT Payment of just compensation to an individual whose property is taken by eminent domain is required by the Fifth Amendment. United States Constitution, Amendment V, West Virginia v. United States, 479 U.S. 305, 311 n.2 (1987). The United States Supreme Court has defined just compensation to be: "the full and perfect equivalent in money of the property taken. The owner is to be put in as good a position pecuniarily as he would have occupied if his property had not been taken." United States v. Miller, 317 U.S. 369, 373 (1943). When payment of fair market value is deferred for a period following the taking, "something more than fair market value is required to make the property owner whole, to afford him `just compensation.'" Albrecht v. United States, 329 U.S. 599, 602 (1947). The landowner is entitled to such addition as will produce the full equivalent of the value paid contemporaneously with the taking. Phelps v. United States, 274 U.S. 341, 344 (1927).

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This standard requires that extra amounts must be paid when the taking precedes payment of compensation. United States v. Blankinship, 543 F.2d 1272,1275 (9 th Cir. 1976). This additional element of compensation includes interest at a proper rate. Id.; Albrecht, 239 U.S. at 602. "This is true because he who pays $1.00 tomorrow to discharge a debt of $1.00 due and payable today, pays less than he owes." Blankinship, supra. Thus, interest is part of the award of "just compensation." Albrecht, supra. These principles are applicable to takings under the Declaration of Taking Act ("DT Act"). Blankinship, supra. The DT Act includes this interest provision in reference to the deposit made by the government. 40 U.S.C. § 3114 states, in pertinent part: "(c) Compensation. (1) Determination and award. Compensation shall be determined and awarded in the proceeding and established by judgment. The judgment shall include interest, in accordance with section 3116 of this title, on the amount finally awarded as the value of the property as of the date of the taking and shall be awarded from that date to the date of payment. Interest shall not be allowed on as much of the compensation as has been paid into the court. . . ." 40 U.S.C. § 3114. The Supreme Court has stated that this statute serves a dual purpose. First, to give the government immediate possession of the property and to stop the running of interest in the amount deposited when the government does not oppose distribution of the funds to the condemnee and when the deposit turns out to be less than the required compensation as a result of actual value of the land. Miller, 317 U.S. 369 (1943); United States v. 99.66 Acres of Land, 970 F.2d 651, 659-660 (9 th Cir. 1992); McKendry v. United States, 219 F.2d 357 (9 th Cir. 1955). Second, to alleviate hardship to the condemnee during the condemnation proceedings by giving the landowner immediate cash compensation of the deposit. Id. The owner must have immediate use of cash approximating the value of his land. Bishop v. United States, 288 F.2d 525 (5 th Cir. 1961). As stated in Bishop:

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"Congress did not by the word "deposit" . . . mean that the constitutional mandate of just compensation would be satisfied by the mere act of delivering cash to some depository. It contemplates a transfer of funds for the effectual withdrawal and use by the former owner of the property taken. Unless that were so it could not constitute a`payment . . . of estimated compensation . . .' or a `payment on account of compensation. This essential purpose of the deposit is not achieved where, by action of the government as the petitioning litigant, the right to immediate use of the sum of the registry is denied to the owner." When the government places a deposit with the Court, the deposit is not available

8 for "use" until the Court orders the withdrawal to the condemnee. 9 As stated, Landowners made many applications for payment of the deposit so that 10 they could obtain the "use" of their money. See Atlantic Coast Line R. Co., 132 F.2d 11 12 Landowners had to make bring another motion to obtain the "use" of the remaining 13 deposit. 14 As to the first and second motions seeking payment, the United States responded 15 that distribution was not appropriate, although the United States claims it is not opposing 16 the motions. In actuality, the United States did oppose the motions because it claimed 17 distribution to Landowners was not warranted. The United States opposed distribution 18 for several reasons: (1) the United States did not timely serve Earl and Esther Zion; and 19 (2) the Landowners claim was excessive, due to the outstanding claims of YMIDD and 20 Yuma County Treasurer. 21 As shown above, at the time of Plaintiff's opposition to Landowners' Motion for 22 immediate distribution, Yuma County Treasurer had disclaimed any interest to just 23 compensation and YMIDD had not sought any portion of the estimated just compensation 24 on deposit. Thus, the United States delayed distribution with inaccurate statements 25 regarding other defendants. The United States also delayed distribution due to its failure 26 to timely serve two defendants. 27 28 7 959, 962 (5 th Cir. 1943). Again, after learning of Plaintiff's settlement with YMIDD

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Due to the response of the United States, distribution to the Landowners was delayed. The first two motions was denied as premature due to Plaintiff's failure to serve two Defendants. Service was then completed. Thereafter, Landowners filed the third application for full distribution of the deposit. Again Plaintiff responded that Landowners' demand for full distribution of the deposit was excessive due to the claim of YMIDD. Although partial distribution was ordered on April 1, 2004, Plaintiff affirmatively acted to delay distribution in this case. Although the DT Act expressly prohibits interest awards on amounts deposited with the Court, the Ninth Circuit has recognized that under some circumstances the Constitution requires payment of interest on amounts deposited despite the DT Act's prohibition. United States v. 50.50 Acres of Land, 931 F.2d 1349, 1353 (9 th Cir. 1991). "We adopt the reasoning of our sister circuits that the government may be obligated to pay interest on deposited monies only if disbursement of the funds is delayed by government action." Id. In Bishop, the Court found that when the government's actions frustrate the DT

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Act's purpose, interest must be charged. Bishop v. United States, 288 F.2d 525 (5 th Cir. 1991). The Fifth Circuit held it was acceptable for the government to oppose distribution

18 in order to protect its rights, but interest would accrue during that period. Id. at 528. See 19 also United States v. 15.03 Acres of Land, 253 F.2d 698 (2d Cir. 1958)(when government 20 obtained an ex parte order prohibiting distribution pending its appeal it was obligated to 21 pay interest.) 22 In the Third Circuit the court found that the government had not fulfilled its duty 23 under the DT Act because it had imposed upon the Court the cumbersome task of 24 allocating the deposit among separately owned parcels. United States v. 355.70 Acres of 25 Land, 327 F.2d 630, 632 (1964). The government was required to pay interest for the 26 delay in disbursement to the property owners. 27 28 8

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Several courts have determined that where the government opposes payment on the ground that the demand was excessive, interest is allowable on any part of the final award, in excess of any amount withdrawn from the date of taking to the date of payment. See United States v. 53 1/4 Acres of Land, 176 F.2d 255, 259 (2d Cir. 1949)(citing United States v. Certain Lands in St. Louis, 41 F.Supp. 809 (D.C.E.D. M o. 1941), aff'd sub nom. 131 F.2d 882 (8 th Cir. 1941); O'Donnell v. United States, 131 F.2d 882 (8 th Cir.); United States v. 3.71 Acres of Land, 50 F.Supp. 628 (E.D.N.Y. 1943)(If, due to objections of the government, a claimant is deprived of a sum representing just compensation, interest should be allowed for the period during which the claimant was deprived of the just compensation.)). If withdrawal of the deposit is denied in full or in part, on grounds demand was excessive, interest is allowable on any part of the final award in excess of any amount withdrawn. See 53 1/4 Acres, supra Here, at all times Plaintiff claimed that Landowners' claim to the full deposit was excessive. In addition, Plaintiff delayed distribution by failing to timely serve Defendants Zion. These affirmative acts of delay support a determination that interest should be awarded for all times prior to withdrawals of the deposit. III. CONCLUSION Based on the foregoing, and previous filings with the Court, Landowners object to the proposed judgment because it does not include an award of interest from the date of taking to the date of withdrawals of the deposit. Accordingly, the Landowners respectfully request the Court order that the proposed judgment state that: 1. The judgment shall include interest from the Date of Taking, October 16,

2003, to the date of withdrawal, April 1, 2004, on the amount of $1,744,030.90.

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2.

The judgment shall include interest from the Date of Taking, October 16,

2003, to the date of withdrawal, December 31, 2005, on the amount of $179,439.55.

Respectfully submitted this 12 th day of September, 2006. Weil & Weil, PLLC

By: /s/ John A. Weil John A. Weil

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CERTIFICATE OF SERVICE I hereby certify that on September 12, 2006, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM /ECF registrants: Sue A. Klein Assistant U.S. Attorney Two Renaissance Square 40 North Central Ave., Ste. 1200 Phoenix, AZ 85004-4408 [email protected] I hereby certify that on September 12, 2006, I electronically transmitted the

9 attached document to the following: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 /s/ Linda Simpson Linda Simpson The Honorable Susan R. Bolton United States District Court 401 West Washington Street, SPC 50 Phoenix, Arizona 85003 [email protected]

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