Michigan Law Recognizes that Even Temporary Takings of Property Rights Are Compensable
A recent matter in another state that resulted in a $4,000,000 settlement above the $51,537 originally offered included a temporary taking claim. In that case, the project was announced in 2006, the owner learned shortly thereafter that his access would be curtailed significantly, commercial users interested in developing his property moved to a different property on the same intersection due to the access restrictions, and his access was physically reduced years before a formal takings lawsuit was filed due to interim construction activities.
In First English Evangelical Lutheran Church of Glendale v Los Angeles Cnty., Cal, 482 US 304, 318 (1987), the United States Supreme Court recognized cases that “involved appropriation of private property by the United States for use during World War II. Though the takings were in fact “temporary,”…there was no question that compensation would be required for the Government's interference with the use of the property…These cases reflect the fact that ‘temporary’ takings which, as here, deny a landowner all use of his property, are not different in kind from permanent takings, for which the Constitution clearly requires compensation.” Since it “is axiomatic that the Fifth Amendment's just compensation provision is ‘designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,’” even if the taking is temporary, “the government [must] pay the landowner for the value of the use of the land during this period” Id, at 318-319.
Shortly after that decision, the Michigan Court of Appeals reached a similar conclusion. “We hold that where there has been a finding of an unconstitutional taking of private property without compensation, the property owner is entitled under the Michigan Constitution to compensation for the period during which the taking was effective. That the township acted under its police power without any intent to ultimately condemn or acquire the property does not preclude a claim for compensation.” Poirier v Grand Blanc Twp, 167 Mich App 770 (1988) (Poirier I). After reaching that conclusion, the Court of Appeals “remanded the case to the trial court for a determination of damages for defendants' taking of plaintiff's property.” Poirier v Grand Blanc Tp, 192 Mich App 539, 542 (1992) (Poirier II). Poirier II evaluated the damages that are available, recognizing “that a flexible approach to the award of compensation in cases involving temporary taking is the best approach.” Id, at 545.
The duration of time that a government prevents use of a property can be an issue when establishing a temporary taking. Poirier II upheld a finding that “the taking began on August 10, 1982, the date” of an adverse zoning decision and ended “on August 30, 1984, the date the trial court entered its order to rezone the property.” Id, at 548. Therefore, a roughly two-year period is sufficient under Michigan law to establish a temporary taking. A Maryland case was helpful. In Reichs Ford Rd Joint Venture v State Roads Comm'n of the State Hwy Admin, 388 Md 500, 504 (2005), the State “issued a general public announcement pertaining to a newly proposed interchange” that would require acquisition of property from the plaintiff and contacted the property owner at various times before finally initiating a formal condemnation in 2001.” Between 1998 and 2000, Reichs Ford requested informally, on several occasions, that the SHA formally exercise its eminent domain powers or abandon the proposed taking of the subject property.” Id, at 505. After Reichs Ford lost its gas station tenant, it “filed a complaint” in “2000, claiming damages based on a theory of inverse condemnation. Reichs Ford claimed that, by placing its property ‘under the cloud of imminent condemnation’ for such a lengthy period of time, the SHA rendered the property economically unusable and thus was liable for damages that accrued as a result of the unwarranted delay.” Id, at 506. The Maryland Supreme Court held that Reichs Ford could pursue a de facto taking claim for “damages incurred from the time [the gas station tenant] failed to exercise its option to extend the lease and the filing of the complaint. The damages included, among other things, lost rents, property taxes, and carrying costs” in addition to receiving just compensation damages. Id.
The Maryland case also recognized that “combining a claim for damages from a temporary taking with the ultimate condemnation action is supported by principles of judicial economy.” Id, at 523. In Michigan, the Uniform Condemnation Procedures Act recognizes that a “defendant may assert as a counterclaim, any claim for damages based on conduct by an agency which constitutes a constructive or de facto taking of property.” MCL 213.71. Therefore, if the period preceding a formal taking rises to the level of a temporary taking, the property owner can assert a temporary taking as part of that lawsuit.
When a formal taking is eventually contemplated, temporary taking issues should be evaluated in correlation with the scope of the project rule, which requires that a “change in the fair market value before the date of the filing of the complaint which the agency or the owner establishes was substantially due to the general knowledge of the imminence of the acquiring by the agency, other than that due to physical deterioration of the property within the reasonable control of the owner, shall be disregarded in determining fair market value….[T[he property shall be valued in all cases as though the acquisition had not been contemplated.” This video, Scope of the Project Rule (Video) — Michigan Condemnation Blog, and this written post, discuss the application of that rule.
Temporary takings need not be a part of a formal taking. They may result from an adverse zoning decision, as was the situation in the Poirier cases. I regularly represent owners in zoning proceedings.
Please feel free to contact me about any of these issues.