Early intervention by property owner counsel can sometimes result in convincing condemning authorities to alter either their project or the rights sought to prevent catastrophic consequences to the owner and massive just compensation claims.
I recently represented a property owner who constructed a multi-million dollar commercial building with its parking lot over an existing pipeline easement. A few years later, the pipeline company approached the owner to acquire an amended easement to facilitate construction of a second pipeline. The property owner’s concerns focused upon the temporary disruption to its business that would have been caused by the construction itself. The owner did not realize the potential impacts of the easement upon the property moving forward.
The pipeline company enjoyed an easement that prevented “structures” from being placed “over the pipeline.” It took the absurd position that this language prohibited any structures within the entire 50 foot wide easement area. It took the at least arguable position that a parking lot constituted a structure. The pipeline company sought an easement that explicitly prevented any parking lot from existing in a 75 foot wide swath through the middle of the parking lot. The pipeline company offered only a trivial amount of just compensation and did not take into account any of the impacts upon the building if a large section of its parking lot was no longer available, disregarding the legal requirement that just compensation be based on the assumption that the agency will use its newly acquired rights to the fullest extent allowed by law. To review a published article discussing this concept, please click here.
Rather than sitting back and allowing the pipeline company to file a condemnation that would have certainly resulted in multi-million just compensation claims, potentially hundreds of thousands of dollars of attorneys’ fees to my firm, years of litigation for my client, years of stress and uncertainty for my client, and the potential that even a multi-million dollar award would not be enough to put it in the same position it enjoyed before the taking, I set about to attempt to solve the problem. I provided legal research indicating that a parking lot was not a structure and other legal theories establishing that even if it was, the pipeline company had waived its right to demand removal of the parking lot. I identified the extent of the just compensation claims that the pipeline company would face. Even if the pipeline company believed it was most likely to win its arguments, I established that the risk it faced if it was wrong far outweighed the cost it would incur by negotiating a resolution.
The pipeline company ultimately agreed to resolve the case. The original concern of my client, temporary disruption of its parking lot during construction, was eliminated through an agreement by the pipeline company to use soil borings underneath the parking lot to install the pipe instead of disrupting the parking lot. The pipeline company agreed not to demand the wider, 75 foot easement, and stayed within the original 50 foot wide easement. Finally, it agreed that the owner was entitled to retain its parking lot. If any future circumstances such as the need to repair the pipeline caused it to damage the parking lot, the pipeline company would repair it.
This deal was in the best interest of my client. It avoids the temporary disruption that caused it to hire me in the first place and is safe from what was truly the potential to destroy its entire business if the easement originally sought by the pipeline company preventing existence of the parking lot had been implemented.
This deal was best for the pipeline company. While it will incur additional significant costs to bore under the parking lot, it will save far more than that in litigation expenses and just compensation claims.
And while I passed on a chance to trap an agency who was acting without understanding the consequences of its actions, thus foregoing the opportunity to generate hundreds of thousands of dollars in attorney fees, I have the satisfaction of having solved my client’s problem and doing the right thing. But that opportunity existed only because I was hired early enough in the process. This case illustrates exactly why it is critical to obtain the representation of an eminent domain specialist immediately upon being confronted by a potential taking.
Feel free to contact me if you have any questions about any eminent domain issues.