Free Motion in Limine - District Court of Arizona - Arizona

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PAUL K. CHARLTON United States Attorney District of Arizona SUE A. KLEIN Assistant U.S. Attorney Arizona State Bar No. 11253 Two Renaissance Square 40 North Central Ave., Ste. 1200 Phoenix, Arizona 85004-4408 Telephone: (602) 514-7500 E-mail: [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America, Plaintiff, v. 192.019 Acres of Land, more or less, located in Yuma County, State of Arizona; Glen G. Curtis, Trustee of Curtis Family Trust; Sam Perricone, Trustee of Amended and Restated Declaration of Revocable Trust of Sam Perricone and Mary Louise Perricone; Earl O. Zion and Esther E. Zion; Yuma County Tax Assessor, Yuma Hospital District No. 1; Yuma County Citrus Pest Control District; Yuma County Pest Abatement District; Yuma County Flood Control District; Farm Credit Services Southwest; Intangible property rights, Yuma Mesa Irrigation and Drainage District; and Unknown Owners, Defendants. The United States of America moves this Court to exclude at trial any evidence CIV-03-2007-PHX-SRB MOTION IN LIMINE TO EXCLUDE EVIDENCE OF PRECONDEMNATION ACTIVITIES AND CONSEQUENTIAL DAMAGES WITH ACCOMPANYING MEMORANDUM OF POINTS AND AUTHORITIES

21 of pre-condemnation activities and consequential damages. This motion is supported 22 by the accompanying Memorandum of Points and Authorities. 23 24 25 26 27 28 Respectfully submitted this 10th day of July, 2006. PAUL K. CHARLTON United States Attorney District of Arizona s/Sue A. Klein ________________________ SUE A. KLEIN Assistant U.S. Attorney

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MEMORANDUM OF POINTS AND AUTHORITIES Defendants' appraisal and deposition testimony raise the issue that the project for which

3 the subject property was acquired adversely influenced the subject property. (See Exhibit A, 4 Sanders appraisal pp. 14-15; Exhibit B, Sanders deposition, August 31, 2005, p. 139; Exhibit 5 C, Sanders deposition, March 21, 2006, pp. 36-37; Exhibit D, Curtis deposition, pp. 53-54). 6 Defendants complain that mere knowledge of the project prevented them from selling or 7 developing the subject property. The United States does not dispute that the project was 8 announced several years prior to the acquisition of the subject property. This is quite 9 common as compliance with the National Environmental Policy Act (NEPA), 42 U.S.C. § 10 4321, et seq., is required for a project such as the expansion of the Yuma Marine Corps Air 11 Station and NEPA requirements include, among other things, several opportunities for public 12 input and consideration of alternatives. 13 Defendants appear to claim that the announcement of the project interfered with or

14 restricted their use of the property, and that they are entitled to compensation for such 15 activities. Defendants are incorrect. Interference or restriction on the use of property by a 16 government regulatory action does not necessarily constitute a taking. Tabb Lakes, Ltd. v 17 United States, 10 F.3d 796, 800 (Fed. Cir. 1993). "In this case, the cease and desist order, 18 while stopping the filling of wetlands, specifically left the door open to development by 19 obtaining a permit. That type of regulatory taking has unequivocally been held not to effect a 20 taking." Tabb Lakes, Ltd., 10 F.3d at 800 (citing United States v. Riverside Bayview Homes, 21 Inc., 474 U.S. 121, 126-127, 106 S. Ct. 455, 458-459 (1985)). "[M]ere fluctuations in value 22 during the process of governmental decision making absent extraordinary delay, are incidents 23 of ownership. They cannot be considered a 'taking' in the constitutional sense." Tabb Lakes, 24 Ltd., 10 F.3d at 801 (citing Agins v. City of Tiburon, 447 U.S. 255, 263 n.9, 100 S. Ct. 2138, 25 2143 n.9 (1980) (quoting Danforth v. United States, 308 U.S. 271, 285, 60 S. Ct. 231, 236 26 (1939)). Governmental interference as a part of preliminary decision making does not 27 amount to a taking. Tabb Lakes, Ltd., 10 F.3d at 801. 28
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Defendants were not precluded from selling or developing their property on their own in

2 the time between the announcement of the project and the acquisition of the property. 3 Further, defendants acknowledge that land values in the area increased from the time the 4 project was announced until the date of acquisition of the subject property. 5 The United States contends that any damages or value claimed by the landowners to

6 have been caused by precondemnation activities cannot be awarded in this case. The Court 7 is without jurisdiction to award damages for property rights alleged to have been taken prior 8 to the date of talking. The method by which the landowners are pursuing their claim is 9 improper, because it requires the Court to impermissibly expand the scope of the taking. The 10 defendants have agreed that the date of valuation in this case is October 16, 2003. The 11 Declaration of Taking describes property taken on October 16, 2003, and this Court cannot 12 award damages for claims other than just compensation for the property rights described in 13 the Declaration of Taking. Therefore, the Court should exclude all evidence of pre14 condemnation claims. 15 The landowner is entitled to be paid "just compensation as measured by the fair market

16 value of the property or interest taken as of the day of the taking." United States v. 38.60 17 Acres of Land, 625 F.2d 196, 198 (8th Cir. 1980). Just compensation includes fair market 18 value of the land actually taken. United States 38.60 Acres of Land, at 198-199. It does not 19 include compensation for the value of the property "until there has been a taking." United 20 States v. 3.66 Acres of Land, 426 F. Supp. 533, 535 (N.D. Cal. 1977). 21 By claiming pre-condemnation activities affected the subject property, defendants, in

22 essence, attempt to insert an inverse condemnation claim into this case. This defendants 23 cannot do. Unless the amount sought is $10,000 or less, this Court cannot consider a taking 24 prior to August 16, 2003. Defendants may attempt to obtain relief on these issues in the 25 Court of Federal Claims. See United States v. 40.00 Acres of Land, 483 F.2d 927, 928 (9th 26 Cir. 1973). Counterclaims are not allowed in condemnation cases. Fed.R.Civ.P. 71A(e) 27 allows the landowner to plead objections to the taking itself, but then says, "no other 28
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1 pleading or motion asserting any additional defense or objection shall be allowed." See also 2 United States v. 87.30 Acres of Land, 430 F.2d 1130, 1132 (9th Cir. 1970); United States v. 3 38.60 Acres of Land, 625 F.2d 196, 199 (8th Cir. 1980); United States v. 45.50 Acres of 4 Land, 634 F.2d 405, 407 (8th Cir. 1980). 5 Likewise, while both appraisers indicate that the highest and best use of the subject

6 property is some form of industrial use, defendants maintain that this use would have existed 7 but for the project and utilized developed industrial sales to value the property. This 8 characterization is an attempt to obtain compensation for a potential business loss or 9 consequential damages allegedly caused by the project. This type of damage is not 10 compensable in a condemnation case. 11 The Fifth Amendment to the Constitution does not require compensation for damages

12 that are considered to be consequential, regardless of the severity of the costs. The 13 compensation paid under the Fifth Amendment is for property taken and not for injury to the 14 business, financial or personal affairs of the condemnee. The pivotal case on this point is 15 Monongahela Navigation Co. V. United States, 148 U.S. 312 (1893). 16 17 18 148 U.S. at 326. 19 Consequential damage has been defined as the "unintentional incident of the taking of 20 land." Mitchell v. United States, 267 U.S. 341, 345 (1925). Many of the cases excluding 21 consequential damages deal with loss of business profits, business opportunity, and good will 22 and frustration of business plans. Two early Supreme Court cases set up the principles that 23 have been consistently followed since the 1920's: Omnia Co. v. United States, 261 U.S. 502 24 (1923); and Mitchell v. United States, 267 U.S. 341 (1925). In Omnia, the government took 25 all of a steel manufacturer's production for one year, causing an Omnia Co. contract for the 26 27 28
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And this just compensation *** is for the property, and not to the owner. Every other clause in this Fifth Amendment is personal ***. Instead of continuing that form of statement *** the personal element is left out, and the "just compensation" is to be a full equivalent of the property taken.

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1 purchase of the products to be frustrated. The court said that the frustration of a contract is 2 not the same as an appropriation and is not compensable. 3 In Mitchell, the government took land used to grow corn for a canning business. The

4 court said that there was no showing that the United States took a business or intended to do 5 so. "If the business was destroyed, the destruction was an unintended incident of the taking 6 of land." 267 U.S. at 345. Compensation for business losses resulting from the taking were, 7 therefore, not allowed. 8 Another Supreme Court case, Bothwell v. United States, 254 U.S. 231 (1920),

9 considered a claim by a landowner for destruction of hay and the forced sale of cattle when a 10 new dam flooded the land and destroyed the hay. The court said there would be recovery 11 "for what actually has been taken," but continued as follows: 12 13 14 254 U.S. at 233. 15 More recently, Yachts America, Inc. v. United States, 779 F.2d 656, 660 (Fed. Cir. 16 1985) cited Mitchell for the proposition that loss of a business is not compensable as a 17 separate element. See also United States v. 91.90 Acres of Land in Monroe County, 18 Missouri, 586 F.2d 79, 87 (8th Cir. 1978), cert. denied, 441 U.S. 944. 19 The defendants say that they could have sold or developed the property but for the 20 government project. Nothing prevented defendants from acting on these potential uses 21 except for vague references that the project has adversely affected the subject property. The 22 United States must pay only for what it takes not for opportunities which an owner may lose. 23 United States ex rel. TVA v. Powelson, 319 U.S. 266, 281-282 (1943); United States v. 24 General Motors Corp., 323 U.S. 373, 380 (1945) (damage to the rights of ownership taken 25 does not include losses to the owner's business or other consequential damages). 26 27 28
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But nothing could have been recovered for destruction of business or loss sustained through enforced sale of the cattle. There was no actual taking of these things by the United States and consequently no basis for an implied promise to make compensation. ***

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The government cannot be made liable under the Fifth Amendment for any frustration

2 of plans or delay in plans that the owners may have projected for their property. There is a 3 distinct difference between the taking of property, which is compensable, and the upsetting 4 of a business or commercial venture, which is consequential to the taking and hence not 5 compensable. United States ex rel. TVA v. Powelson, 319 U.S. 266 (1945); Mitchell v. 6 United States, 267 U.S. 502 (1923). Consequential damages are excluded in the application 7 of federal law. Market value does not fluctuate with the needs of the condemnor or 8 condemnee, but with the general demand for the property, therefore, evidence of loss of 9 10 profits, damage to goodwill, the expense of relocation and other such consequential losses 11 are refused in federal condemnation proceedings. United States v. Petty Motor Company, 12 327 U.S. 372 (1946), reh'g denied, 327 U.S. 818. A condemnation action is not a "damage" 13 suit for allowing damages incident to the taking, such as frustration of contracts, planned or 14 existing business profits, costs of acquiring substitute facilities, removal expense, losses due 15 to excess plant facilities remaining in ownership, or losses due to sale, abandonment 16 curtailment or relocation of business enterprises. These are considered as unintended 17 incidents of the taking and for which no recovery can be had. Mitchell v. United States, 18 supra; Omnia v. United States, supra; Bothwell v. United States, 254 U.S. 231 (1920). 19 The mere possibility of a use is not enough. The possibility must be real and reasonably 20 21 imminent with demand sufficiently strong to influence market value. Olson v. United States, 22 supra, at 256. Defendant's claim for compensation based on their alleged inability to convert 23 their property to a different use is clearly an attempt to recover for non-compensable 24 consequential damages and should be excluded. 25 26 27 28
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WHEREFORE, the United States requests this Court to grant its motion and exclude

2 evidence of pre-condemnation activities and consequential damages. 3 4 5 6 7 8 9 10 11 12 13 14 CERTIFICATION I hereby certify that on July 10, 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:
John A. Weil Attorneys at Law

Respectfully submitted this 10th day of July, 2006. PAUL K. CHARLTON United States Attorney District of Arizona s/Sue A. Klein ____________________________ SUE A. KLEIN Assistant U.S. Attorney

15 Weil & Weil 17 18 19 20 21 22 23 24 25 26 27 28

16 1600 S. Fourth Ave., Ste. C
Yuma, Arizona 85364
s/Nancy Stotler

_____________________

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