Tennessee Business Litigation Lawyers Blog
Landowners in Tennessee sometimes become defendants in eminent domain cases (also called condemnation actions) filed by the state, or a city or county government. These cases often become “battles of appraisers.”
When the government files a condemnation case, it must pay just compensation to the landowner. Tennessee courts have defined “just compensation” to mean “market value” which they have further defined to mean the price which a willing buyer would pay to a willing seller assuming that the seller was not required to sell the land and the purchaser was not required to purchase it. The date that market value is to be determined, in an eminent domain case, is the date of appropriation. (Not some future date or past date).
In determining market value in condemnation cases, all the factors that enhance or detract from the value of the land should be considered. For example, it is proper to consider the other reasonable available uses of the property, and comparable sales. It is not proper for a jury to consider any increase or decrease in the value of the land because of the announcement or construction of a new improvement on the property.
In Tennessee, a trial court has wide discretion in determining whether to allow the testimony of a real estate appraiser in a condemnation case. Tennessee courts have followed a liberal approach in allowing appraisers to testify in eminent domain cases. Tennessee courts have held that a real estate appraiser should not be prohibited from testifying merely because he or she may have used some criteria which are not standard criteria used by appraisers.
A Tennessee case which provides a very useful review of the ground rules governing the use of real estate appraisers in condemnation actions is City of Brentwood v. Cawthon, which is a 2010 opinion of the Tennessee Court of Appeals. In that case, the Plaintiff owned a 34.58 acre tract of property in Brentwood, Tennessee. The City of Brentwood acquired a .72 acre parcel of the tract by eminent domain.
On the .72 acre parcel, which it acquired by eminent domain, the City of Brentwood built a water tower approximately fifty feet high. The water tower was built on the highest and most level part of the Plaintiff’s tract. The Plaintiff landowner argued that, because of the water tower, the land in his tract which was not taken was worth less. In Tennessee, not only is a landowner entitled to money for the property actually taken, but also, a landowner is entitled to money if the taking diminished the value of the landowner’s remaining property.
In the City of Brentwood case, the Plaintiff’s expert appraiser testified that the value of the Plaintiff’s remaining property had been reduced by 12.5% because of the construction of the tower. That expert supported his opinion on two bases. First, he opined that the future development of the property had been adversely affected because, in his professional experience, property owners in Williamson County desired building homes on hilltops to showcase them. He also opined that hilltop properties brought a premium price in Williamson County.
The Plaintiff landowner’s expert also based his opinion on the fact that the Plaintiff’s remaining land was less aesthetically pleasing because of the water tower. The expert testified that he had seen TVA and TDOT reports which showed that power lines and elevated roadways could diminish the value of real estate as much as 80-85%.
The appraiser used by the City of Brentwood testified that the remaining land in the Plaintiff’s tract had not been diminished in value because of the water tower. The jury rejected that expert’s opinion, and awarded the Plaintiff $194,850.00, as incidental damages, for the dimunition in the value of his remaining property.
The City of Brentwood appealed to the Tennessee Court of Appeals. It argued that the testimony of the Plaintiff’s expert should not have been admitted because it was without an adequate foundation. The City argued that, other than his professional experience and the TVA and TDOT reports, which did not even relate to water towers, there was no data to support the opinions of the Plaintiff’s expert.
The court of appeals held that the testimony of the Plaintiff’s expert was admissible. To the court of appeals, the professional experience of the Plaintiff’s appraiser was adequate to allow him to testify as to the amount by which the Plaintiff’s property had been reduced in value. The City of Brentwood case is a handy tool for an eminent domain lawyer representing a client facing a condemnation action, and a “low ball” offer from the government.