Vital Decision on Eminent Domain/Condemnation in Pennsylvania

This is an interesting article I co-authored concerning constitutional issues and real estate.

-Harper J. Dimmerman, Esq., (215) 545-0600

COPYRIGHT. ALM. 2013. DO NOT REPRODUCE.

“Purchase Offers and Million Dollar Takings”

 The color green seems to be on everyone’s minds these days.  The whole green revolution (as in energy), the ubiquitous Starbucks logo, money (speaks for itself) and rolling fairways are just a few images that come to mind.  As this article relates to the practice of law (it really does), it is the final one that we find the most intriguing.  After what some might perceive as a deliberate round of litigation, a compelling condemnation issue eventually made its way up to our state Supreme Court.  And with the U.S. Open just wrapping up days ago, the decision in Lower Makefield Township v. The Lands of Chester Dalgewicz and Christine Dalgewicz, et al. (No. 33 MAP 2011, Decided 5/29/13), is quite timely.

The facts are straightforward enough.  Lower Makefield Township (Appellant), apparently under the spell of this country’s golf revolution, set it sights on a 166-acre farm owned by the Appellees.  It proceeded to use its eminent domain power for the purpose of building a golf course, an entirely legitimate public use according to our Commonwealth Court.  Preliminary objections were filed to the taking and a Board of View determined that the value of this very large parcel, also in close proximity to Interstate 95, was worth about $3.9 million.  This amount was challenged and eventually got to a jury, for a six-day trial.

A total of eleven witnesses were called, including Appellee Chester Dalgewicz.  He testified regarding the farm’s history and the interest shown by several developers in purchasing the property.  He also described some of the offers received both before and after the property was condemned, including a 1995 agreement of sale with Ryland Homes for $5.1 million, and a 1998 sales agreement with Toll Brothers for $7 million, contingent upon the condemnation being overturned.  During Mr. Dalgewicz’s testimony, he described a written offer from Pulte Homes, Inc., including the $8 million offer price; the letter was also introduced into evidence.

Notably, Appellant did object, just as it had earlier via its motion in limine, contending that the offer was inadmissible, having not resulted in an actual sales agreement.  Counsel for the Township argued that any testimony concerning the offer price would be both irrelevant and prejudicial.  The lower court overruled the objection (it previously denied the motion in limine) and explained that it would be appropriate to “let in what was going on with this piece of land in terms of developers from a reasonable time before to a reasonable time after the taking.”  The trial court also observed the Township could cross-examine Mr. Dalgewicz about the offer, and that its evidentiary value was “something that should be argued to the jury[ .]”  The jury ultimately settled upon a fair market value of the property of about $5.8 million, approximately $2 million more than the number the Board of View had put on it.

Appellant filed post-trial motions, arguing that the lower court erred in admitting the offer as evidence; these were denied.  In its opinion, the trial court set forth its rationale.  In sum, the court concluded that the Pulte offer was admissible to prove how highly sought after the property was by developers.  Also, testimony concerning the Pulte offer was admissible because concerns regarding hearsay and the abstract nature of the offers were not present.  On appeal to the Commonwealth Court, the Township lost again on the issue of the admissibility of the Pulte order.  While that intermediate court acknowledged the existence of decisional law that disfavors the introduction of such offers, it could not conclude that the need for such a blanket prohibition was present here.  For instance, both parties stipulated to the authenticity of the Pulte offer and the offer was introduced merely to highlight the reasonableness of the Toll Brothers deal.  Thus, hearsay concerns could not be said to have existed.  That court also fashioned a narrow exception for cases where “a sufficient foundation was laid to establish that the offer was made in good faith, by a party acquainted with the value of the [p]roperty, and of sufficient intention and ability to pay” so as to make it a bona fide offer and, therefore, admissible.  Lastly, prejudice by its admissibility could not be established.  The ultimate jury award was over $2 million less than the Pulte offer and the information contained in the subject offer was established by other competent evidence.

On appeal to the Commonwealth’s highest court, the Township framed two issues for appeal: (1) Whether a bona fide offer to purchase property subject to condemnation, made within a reasonable time of condemnation, may be admitted to prove the fair market value of the property; and (2) whether the Commonwealth Court departed from the harmless error standard by requiring the Township to show with certainty that the trial court’s evidentiary errors affected the verdict.  The standard of review was de novo.  The Supreme Court had no trouble concluding that “traditional concerns over relevancy and the speculative nature of offers” was not presence on the instant facts.  Furthermore, in the estimation of our highest court, 1964 amendments to the Eminent Domain Code itself, which broadened the scope of admissible evidence and liberalized the receipt of expert evidence to prove value, mitigated in favor of the admission of the Pulte offer.

Courts should also be guided by the principle that “[t]he admission or exclusion of evidence is within the sound discretion of the trial court[.]”  See Lehigh–Northampton Airport Authority v. Fuller, 862 A.2d 159, 168 (Pa.Cmwlth.2004) (citations omitted).  The extent to which an offer is indeed a bona fide one is a question properly reserved for the trier of fact.  Finally, the Pulte offer was enlightening; it showed concrete demand and the legitimacy of the Toll Brothers offer.  The Lower Makefield Township makes one thing crystal clear.  When it comes to green, the Eminent Domain Code and our courts will see to it that value will be adequately assessed.  Fore!

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Harper J. Dimmerman is an adjunct professor at Temple University’s Fox School of Business and published novelist. Bradley J. Osborne is an attorney in Mr. Dimmerman’s office. Their firm represents clients in various litigation and real estate law matters.  They may be reached at harper@hjdlaw.net or 215-545-0600. They also co-founded ZipWill.com

James M. Lammendola is an Instructor at Temple University’s Fox School of Business who was in private practice for twenty years. He may be reached via e-mail at james.lammendola@temple.edu or telephone 267-254-3324.