*241 Just Compensation and the Framers' Intent: a Constitutional Approach to Road Construction

*241 JUST COMPENSATION AND THE FRAMERS' INTENT: A CONSTITUTIONAL APPROACH TO ROAD CONSTRUCTION DAMAGES IN PARTIAL TAKING CASES

University of Detroit Mercy Law Review
Winter 2000

Alan T. Ackerman [FNa1]; and Noah Eliezer Yanich [FNaa1]

Copyright (c) 2000 University of Detroit Mercy School of Law; Alan T. Ackerman;and Noah Eliezer Yanich

Under well-settled judicial interpretations of the "Just Compensation" or "Takings" Clause of the Fifth Amendment [FN1] to the United States Constitution and its counterpart in the Michigan Constitution, [FN2] when only a portion of a landowner's property is taken *242 by eminent domain, the general rule is that the landowner is entitled to just compensation both for the part of the property actually taken and also for any diminution in the value of the part not taken [FN3] which is traceable to the condemnation.

The partial takings rule is frequently applied in eminent domain proceedings undertaken for construction of new roads and highways or modification of existing ones. In that situation, Michigan law recognizes one principal qualification to the general rule: any loss of value to the remainder parcel attributable to diversion of traffic flow is not compensable.

The general rule regarding compensable damages in eminent domain cases involving partial takings has traditionally been distinguished from the rule that applies in inverse condemnation cases in which a landowner brings suit against a governmental entity alleging that it has caused some injury to his or her land equivalent to a physical taking. In inverse condemnation cases involving road construction projects in which there is no government action tantamount to a physical taking of property, courts in a number of jurisdictions have denied compensation for acts causing diminution in the value of the property, unless the landowner can allege and prove some injury unique to his or her land. [FN4] In other words, absent a direct appropriation of property (or its functional equivalent), the courts have generally required the landowner to show an injury different in kind from that suffered by other landowners in the vicinity of the project.

In the recent decision of Spiek v. Department of Transportation, [FN5] the Michigan Supreme Court had occasion to consider whether it would adopt the limitation on inverse condemnation cases imposed in many other jurisdictions. The landowners in Spiek were asserting a claim for inverse condemnation on the basis of traffic noise, vibration, pollutant emissions, and particulate depositions (dust and dirt) resulting from the construction of a service drive adjacent to their property. Drawing on an older Michigan case and several sister state cases, the Michigan Supreme Court held that the inverse condemnation claim could not be maintained because the plaintiffs had failed to allege an injury beyond the normal inconveniences *243 experienced by all landowners situated in proximity to a public highway.

The Spiek court plainly stated that its holding was limited to cases not involving direct or physical takings of property. [FN6] As such, it has no applicability to remainder damages in eminent domain cases. The weight of authority in other jurisdictions argues against any extension of this rule to cases involving an actual physical appropriation of land. More fundamentally, though, as will be demonstrated in this article, such an extension would be contrary to the intent of the framers of the Just Compensation Clause of the 1963 Michigan Constitution, as revealed by the minutes of the 1961 Constitutional Convention. In its rejection of an attempt to add language to the provision that would have allowed recovery for "road construction damages" on adjacent land, the delegates made it clear that they did not want to expand liability for such damages in inverse condemnation cases, but that they did desire to retain existing rules allowing for full compensation in cases where land was actually taken.

It is only since the adoption of the 1963 Constitution that the circuit courts have functioned as the tribunals for hearing condemnation cases. Under the 1908 constitution, the proceedings were not "judicial" at all but, rather, an "inquisitorial, special and summary proceeding" subject to judicial review and supervision for certain purposes. [FN7] However, under the current constitution, which requires that condemnation proceedings be documented in a court of record, condemnation must be handled in accord with the procedures followed in other judicial proceedings. [FN8] The proceedings are not limited to circuit courts; because the probate court is also a court of record, [FN9] it too may be empowered by the Michigan Legislature to conduct condemnation proceedings. [FN10] The Michigan Legislature may specify the procedures to be followed, failing which the ordinary rules governing civil trial procedures apply. [FN11]

*244 I. The Rule Regarding Just Compensation in Eminent Domain Cases

Involving Partial Takings

The rule governing the payment of just compensation in eminent domain cases in which only a part of a landowner's land is condemned has a long tradition in our state and federal constitutional law. The rule is a straightforward application of the core principle of federal and state eminent domain law, which is that "just compensation" requires that landowners be compensated for the entire loss caused by the appropriation of their land, and thereby placed in as good a position as they would have been if the condemnation had not occurred. [FN12] The only way to fulfill that objective in a partial taking case is to compensate the landowner not only for the land taken, but also for reductions in the value of the remainder traceable to the condemnation or the creation of the project for which the land was condemned.

Fitzsimons & Galvin, Inc. v. Rogers [FN13] was one of the first Michigan Supreme Court cases to articulate the partial takings rule and to explain its rationale. The Fitzsimons & Galvin court began its discussion by holding that, under article 13, section 2 of the 1908 Michigan Constitution, the condemning authority must pay compensation in an amount that "puts the injured party in as good a condition as he would have been if the injury had not been inflicted." [FN14] Citing an 1882 decision, [FN15] the court said that, where part of a landowner's property is condemned, the compensation to be *245 paid "includes the value of the land [taken], or the amount to which the value of the property from which it is taken is depreciated." [FN16] In City of Grand Rapids v. Barth, [FN17] the Michigan Supreme Court articulated what has become the modern formulation of the rule:

The measure of damages is the injury done to the fair market value of the entire tract by the taking of only a part. In other words, the owner is entitled to recover the difference between the fair market value of the entire tract before the taking and the market value of what is left after the taking . . . . [FN18]

The Barth rule was quoted verbatim by the Michigan Supreme Court in State Highway Commissioner v. Walma, [FN19] and has been incorporated, with slight modifications, in the Michigan Standard Jury Instructions for "Partial Takings." [FN20] In condemnation trials, the market value of the entire parcel before taking, as well as the value of the remainder, is usually proved through the testimony of expert appraisers.

The Michigan rule is by no means unique; the rule, or a variant of it, is used "almost universally" in the federal and state courts. [FN21] In Bauman v. Ross, [FN22] the United States Supreme Court observed that "[t]he just compensation required by the Constitution to be made to the owner is to be measured by the loss caused to him by the appropriation." [FN23] "Consequently," the Court said, "when only part of a parcel is taken for a highway, the value of that part is not the sole measure of the compensation or damages to be paid to the owner; *246 but the incidental injury or benefit to the part not taken is also to be considered." [FN24]

In applying the partial takings rule, in principle any loss of market value to the remainder that results from the taking should be compensable. [FN25] By way of example, Michigan Standard Jury Instruction 90.12 lists six factors that may be considered in determining loss of a property's market value. These six factors are:

(1) its reduced size, (2) its altered shape, (3) reduced access, (4) any change in utility or desirability of what is left after the taking, (5) the effect of the applicable zoning ordinances on the remaining property, and (6) the use which the [condemning authority] intends to make of the property it is acquiring and the effect of that use upon the owner's remaining property." [FN26]

The Michigan courts apply the "before or after" rule to the calculation of severance damages except where a "cost to cure" method is appropriate. In Department of Transportation v. Sherburn, [FN27] the Michigan Court of Appeals offered the following summary of Michigan's approach to the calculation of severance damages (including the "cost to cure" method):

[W]here, as here, a partial taking occurs, it is possible for the property not taken (the remainder) to suffer damages attributable to the taking. These damages have been described as "severance damages," which may be measured by calculating the difference between the market value of the property not taken before and after the taking. Where severance damages have occurred, it may sometimes prove possible for the property owner to perform certain actions *247 upon the property to rectify the injuries in whole or in part, thus decreasing the amount of severance damages and correspondingly increasing the parcel's market value. These actions constitute a "curing" of the defects, and the financial expenditures necessary to do so constitute the condemnee's cost to cure.

. . . .

We conclude, as prior Michigan law illustrates, that the proper measure of damages in a condemnation case involving a partial taking consists of the fair market value of the property taken plus severance damages to the remaining property if applicable. [FN28]

There is one category of damage to the remainder that the Michigan Supreme Court has declared to be non-compensable: damage resulting from reduced traffic flow to the property. In State Highway Commissioner v. Watt, [FN29] the defendants owned a parcel consisting of approximately twenty acres. A highway ran along the western boundary of the property and cut across its northwest corner. The state condemned a 1.3-acre portion of the easterly side of the property as part of a project to relocate the highway so that it would run east of the property. In determining the market value of the entire parcel before taking (and of the remainder after the taking) the landowner's appraisers took into account the fact that a motel situated on the western side of the property on a "well traveled tourist highway" [FN30] would have "meager business prospects after traffic diversion to the new road." [FN31] The trial court ruled that the just compensation owed to the landowners would be limited to the value of the land taken and could not include damages to the remainder arising from any decrease in commercial traffic. [FN32]

*248 The Michigan Supreme Court affirmed in a 4-to-3 decision. The majority adopted the analysis of, and quoted long passages from, a dissenting opinion in a Kansas case, Riddle v. State Highway Commission. [FN33] In a similar factual scenario, the Kansas Supreme Court held that damages resulting from loss of traffic flow were compensable. The Watt majority quoted a passage from the Riddle dissent that, while recognizing the general rule regarding recovery of damage to the remainder, stated that "courts generally, if not universally, recognize and approve an exception to this rule . . . ." [FN34] "[T]he owner of land abutting on a highway has no property or other vested right in the continuation of the flow of traffic which passes his door so long as he is not deprived of ingress and egress to the highway . . . ." [FN35] As such, the Kansas dissent continued, damages to the remainder from a change in traffic flow are not compensable in an eminent domain proceeding. [FN36]

The Watt court's rejection of the rule in other states allowing damages for loss of traffic flow may be properly attributed to the court's refusal to recognize a property right in the maintenance of any particular amount of traffic flow to or past a property by virtue of its proximity to a public highway. The government has the prerogative to build new roads [FN37] and to alter, vacate, or abandon existing public roads. [FN38] Conceptually, the advantage conferred on property by the existence of any particular system of public highways and the location of such property in relation thereto is not part of the bundle of rights recognized by Michigan law as incidental to property ownership and, thus, falls outside the ambit of matters for which the Fifth Amendment requires that just compensation be paid when governmental action impairs or destroys property value. [FN39]

*249 Thus, even where vacation of a public highway makes access to a particular property more problematic for a landowner, compensation need not be paid in the absence of an actual taking of a portion of the landowner's property. If vacation of a street or road requires landowners elsewhere to take longer or more circuitous routes to their properties, the inconvenience is in the eyes of Michigan jurisprudence damnum absque injuria, and they have no right to demand "just compensation" in the non-condemnation context. [FN40]

Such problems are not a function of condemning property for a highway because a new highway could be built anywhere, and changes in traffic flow to commercial enterprises on existing streets and highways are a function of the use to which the entire highway system, as it exists from time to time, is put by the traveling public. Because the government neither requires nor forbids the public to follow any particular routes, the advantages and disadvantages of traffic flow patterns simply do not rise to the level of property interests and, hence, fall outside the ambit of constitutional principles of just compensation for "takings" of private property for public use. No one can be said to "own" the value of commercial traffic flowing on a highway in the sense of being able to compel continuation of that level of commercial traffic, or to demand compensation upon a diminution thereof traceable to governmental action. Similarly, no one has a property interest in obtaining access to an existing highway by the most direct possible means. [FN41]