“Unity rule” for valuation of multiple parcels not followed in Ky condemnation cases: BIANCHI V. CITY OF HARLAN (SC 5/22/2008)

EMINENT DOMAIN:  "Unity rule" for valuation of multiple parcels not followed in Ky
DATE RENDERED: 5/22/2008

The City of Harlan (“Harlan”) filed petitions to condemn four parcels owned by the Bianchis. The condemned tracts were generally used for parking for its tenants in the neighboring properties. The Bianchis also owned several neighboring properties, most of which were used for retail stores.

The commissioners found a value for the four combined properties, to which both parties filed exceptions. The Bianchis also moved to file a counterclaim seeking compensation for the loss of value their other properties would sustain by the taking of the four properties. A jury awarded the Bianchis $120,000 for taking the four parcels and $43,640 for the lost value of their neighboring properties.

On appeal, the Court of Appeals affirmed the $120,000 award, but reversed the award for lost value because it did not believe the neighboring property could be deemed united for condemnation purposes. The Supreme Court accepted discretionary review.

The Bianchis argued that they were not compensated adequately for the four lots that were taken and that these properties should have been valued as a portion of the Bianchis’ entire holdings. The Court disagreed, stating that the measure of value when a portion of a tract is condemned is the market value of the entire tract immediately before condemnation less the market value of the remainder after condemnation. The Court also stated that the procedure used by the trial court – taking the value of the part taken and adding the value of the harm to the remainder – has been expressly rejected in Kentucky. Moreover, the Court found that the “unity rule,” which sometimes allows two or more parcels to be unified for valuation purposes if it can be shown that they are contiguous and are united in use and ownership, did not apply. The Bianchis had not alleged a necessary or permanent injury to their remaining property or a substantial interference with the continued use of it; injury to business or lost profits is not a proper element of compensation for condemnation. The Supreme Court affirmed the Court of Appeals’ reversal of the judgment on the Bianchis’ counterclaim.

Sam Hinkle

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