CAN YOU DIG IT? The Valuation of Fill Materials in Determining the Fair Market Value of Condemned Property

CAN A FLORIDA PROPERTY OWNER OBTAIN COMPENSATION FOR FILL MATERIAL TAKEN FROM CONDEMNED PROPERTY?

OH YEAH YOU BETCHA!!.... MAYBE.

THE LAW GENERALLY A. Unit Rule (Undivided Fee Rule) applies Must value property as if owned by single entity Must value property as a whole rather than sum of its parts

UNIT RULE (CONTINUED) Prohibits separate valuation of timber, oil, minerals, and other commodities apart from the parcel that contains them. IDOT v. Farnsworth Mineral deposits considered in establishing FMV but cannot be valued separately. Mead v. State of New York

UNIT RULE (CONTINUED) Treatises Nichols on Eminent Domain American Jurisprudence (Am.Jur.) Corpus Juris Secundum (C.J.S.)

LAW GENERALLY B. Florida Mineral/Subsurface Rights Minerals and other substances of value which lie beneath the surface of the condemned property are valuable property rights which cannot be taken without due process of law and payment of just (full) compensation. Valls v. Arnold Industries

VALUATION A. Fair Market Value B. Unit Rule Strictly Observed C. Rules regarding Valuation Testimony Set Forth in Case of U.S. v. Land in Drybed of Rosamond Lake

KEY RULES FROM ROSAMOND LAKE 1. Expert cannot multiply gross material present by market value per unit to get FMV of parcel; 2. Expert can use such calculations as a factor (only) in determining FMV; 3. Must demonstrate a market for the commodity in question.

KEY RULES (CONTINUED) 4. Expert can only consider in testifying to value those factors that would have been reasonably considered in negotiations between the “willing” Buyer and Seller; 5. Jury ultimately decides whether the factors testified to by the expert affect FMV.

VALUATION (CONTINUED) D. Case Studies: SWIFT & Co. (FL case) – Owner allowed to offer expert testimony of phosphate deposits to establish valuation (factor for jury to consider); Cameron v. U.S. – U.S. Gov’t took 850 acres of pasture land – excavated 83,000 cubic yards of shell marl. Owner could not get compensation – could not prove market existed; Department of Highways v. Moore (KS case) – DIRT case. Kansas DOH condemned 13 acres by a TCE. Extracted 177,000 cubic yards of fill. Owner could take issue of dirt as a “factor” in determining FMV to the jury.

UNIT RULE QUIZ Issue on Appeal – YOU BE THE JUDGE!! “Whether the trial court erred by allowing the material to be valued according to the number of cubic yards taken, rather than as an element of the land upon which it sat.”

EXCEPTIONS TO THE RULE No! Unit Rule does not apply where the mineral deposit itself is the subject of condemnation. The deposit is treated as merchandise rather than land. [Nichols] Case Study: IDOT v. Farnsworth “Pile of Gob”

UNIT RULE EXCEPTION In the absence of a showing of severance damages, a landowner whose property is taken for borrow pit purposes may not recover more than the market value of the land. LA DOH v. Hayward. *So, what if severance damages can be shown?

FLORIDA FILL CASES YOU CAN DIG IT…(or at least get paid for it) FDOT v. Stack – evidence that the land taken was good for fill dirt should have been admitted as a factor for the jury to consider in arriving at FMV.

DOT V. COOPER “Eminently unfair” (pun intended?) for FDOT to take land paying timberland values, then sell fill material from the land to the contractor for construction of the roadway. Evidence of per unit value of dirt allowed as a factor in determining FMV.

REAL LIFE SCENARIO 61 acre site Zoned AG with approved future use (Residential Overlay) as residential 5.8 acre stormwater pond. Condemnor will extract 38,500 cubic yards of good fill valued at $210,000.00 Severance damage claim for cost to replace fill cost for future development (Berms, roadways, building pads)?

QUESTIONS? (WAIT FOR IT…)

SPECIAL THANKS TO: Blake Gaylord, Esquire Rodney Wade, Esquire Bill Reeve, MAI,ISFC