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In State v. Dawmar Partners, Ltd., --- S.W.3d ---, 2008 WL 4370687 (Tex. 9/26/08), the State of Texas challenged the lower court’s award to Dawmar Partners regarding (1) the value of land taken by the State as part of a highway improvement project, and (2) compensation for "severance damages" associated with the remaining land’s ("remainder") permanent loss of direct access to the highway.
The State condemned approximately 13 acres of an unimproved 80 acre tract of land owned by Dawmar Partners and others as part of a highway improvement project to widen and elevate a highway in Hewitt, Texas. Safety concerns related to the highway improvement project eliminated all direct access from the remainder property to the highway and its frontage roads.
The landowners argued they should be compensated not only for the portion of the land taken by the State, but also for the diminished value of the remainder property. They claimed the elimination of direct access from the remainder property to the highway and its frontage roads changed the highest and best use of the property from commercial use to residential use, despite the existence of direct access to two small public roads that intersect with the highway.
In response to this argument, the Texas Supreme Court noted that while "a change in a property’s use due to condemnation is relevant to the fair market value of the property… that does not mean all diminished value is compensable." The Court went on to state that "diminished value resulting from impaired access is compensable only when access is materially and substantially impaired."
The Court noted that Texas courts do not evaluate degree of impairment in light of a property’s theoretical highest and best use. Instead, "in light of the actual or intended uses of the remainder property as reflected by existing uses and improvements and applicable zoning," the Court held that "severance damages" were not appropriate in this case because: (1) while the remainder property no longer had direct access to the highway and its frontage roads, it did have access to two public roads that intersect the highway; (2) the property was unimproved, with "no evidence of existing driveways or drainage systems that would make access to the available roads impossible or impracticable;" and (3) under Texas law "access is not materially and substantially impaired merely because other access points are significantly less convenient."
If you would like a copy of this opinion, or more information on the topic, please contact the Business Litigators at Clouse Dunn LLP at info@cdklawyers.com.
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