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Inverse Condemnation: Taking Parking Lot Takes Building

parking lotA city inversely condemned a commercial building when it took the parking lot that served it, according to the Connecticut Appellate Court in Barton v. Norwalk, to be officially released on February 23, 2016.

In this appeal, plaintiff had purchased an office building in 1981. The city said the building had insufficient parking, so plaintiff constructed a lot across the street to serve it. Years later, the city condemned the parking lot in connection with its construction of a new police station. Plaintiff challenged the city’s just compensation for the lot, claiming that the “highest and best” use for the property was mixed development. Plaintiff also “twice tried to amend his pleadings in that case to add a claim for losses to [the commercial building] as a result of the taking of [the parking lot].” The city successfully objected to both amendments.  Superior Court found that the highest and best use was mixed development and awarded plaintiff additional compensation.

Plaintiff then commenced a separate action to recover for losses to the commercial building on a theory of inverse condemnation. “The [trial] court found that the lack of parking, caused by the taking of 65 South Main by eminent domain, ‘ha[d] substantially destroyed the [plaintiff’s] ability to operate the property as a leasable facility and enjoy even a modicum of financial success. The evidence shows the lack of parking, which the [city] initially insisted upon, reduced the . . . [property’s] chances of commercial success to negligible or nonexistent’ and amounted to ‘a substantial destruction of the [plaintiff’s] ability to enjoy or use the property . . . .’ As such, the plaintiff ‘proved [his] claim of inverse condemnation.'”

Defendant appealed. The Appellate Court affirmed.

City’s Main Arguments on Appeal

“The [city] appealed … , arguing that: (1) judicial estoppel barred the plaintiff’s recovery for losses to 70 South Main; and (2) in any case, the interference with the plaintiff’s use of [the commercial building] was not so substantial as to be an inverse condemnation.”

The thrust of the city’s judicial estoppel argument was that plaintiff had obtained additional compensation for the parking lot by asserting that its highest and best use was mixed development. Plaintiff could not now be heard to say that he needed it to be a parking lot.

Appellate Court Concludes Taking Parking Lot Inversely Condemned Building

The Appellate Court noted that “[t]ypically, judicial estoppel will apply if: 1) a party’s later position is clearly inconsistent with its earlier position; 2) the party’s former position has been adopted in some way by the court in the earlier proceeding; and 3) the party asserting the two positions would derive an unfair advantage against the party seeking estoppel.”

The court concluded that the first prong failed. Plaintiff’s “parking lot as mixed use” position in the first action was not “clearly inconsistent” with its “parking lot as parking lot” position in the second action because the law does not require the owner actually to put the property to its highest and best use. In other words, “highest and best use” determines just compensation. Actual use is irrelevant to just compensation.

Moreover, plaintiff’s claim that the best use for the parking lot, standing alone, was mixed development did not contradict his argument that the best use for the building and the lot, standing together, was as an office building with a parking lot to serve it.

The court also concluded that the third prong failed: “[T]he question is whether a party gained more by taking inconsistent positions than it would have by taking consistent positions…. [P]laintiff’s two positions allowed him to recover once for [the lot] and once for [the building], the same as if he had valued [the lot] as a parking lot instead of as a mixed use development. He gained no advantage, let alone an unfair one.” In other words, plaintiff was entitled to recover twice and did recover twice so he did not gain anything extra.

As to the city’s second argument on appeal, the court noted that “inverse condemnation requires either: (1) total destruction of the property’s economic value; or (2) substantial destruction of the owner’s ability to use and enjoy the property.” The facts showed substantial destruction. Plaintiff had been unable to lease roughly 90% of the building’s space because there was no parking. One tenant, a church, remained, at a below market rent, solely because the city allowed church members to park for free on city property. Plaintiff’s expert testified without contradiction that the land might be worth more than the land and building.

Other Things to Note

In the trial court, plaintiff claimed that he was entitled to offer of compromise interest because the city rejected his offer of compromise. “The court denied the plaintiff offer of compromise interest on the ground that he failed to meet two requirements of § 52-192a: (1) that a plaintiff offer to settle his action ‘for a sum certain’; and (2) that, after the defendant rejects the offer, the plaintiff recover ‘an amount equal to or greater than the sum certain’ he requested.”

Plaintiff cross-appealed. The Appellate Court concluded that plaintiff’s offer was not for a sum certain. It included not a certain dollar amount but an amount for fees and costs “up to $20,000” and permits and approvals to renovate the buildings. “Up to” is not a sum certain, nor is permits/approvals.

 

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