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VECTOR PIPELINE, L.P. v. 68.55 ACRES OF LAND

August 14, 2001

VECTOR PIPELINE, L.P., PLAINTIFF,
v.
68.55 ACRES OF LAND, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Bucklo, District Judge.

  MEMORANDUM OPINION AND ORDER

In this condemnation case under the Natural Gas Act, 15 U.S.C. § 717, et seq. ("NGA"), Vector Pipeline ("Vector") took permanent and temporary easements in several tracts of land in Northern Illinois to build a natural gas pipeline. It acquired the appropriate Federal Energy Regulatory Commission ("FERC") certification, and invoked its power of eminent domain. When attempts to settle issues and differences with the landowners failed, Vector sued on 14 July 1999. In March 2000, I granted summary judgment for Vector, and appointed a Commission under Fed.R.Civ.P. 71A to determine just compensation due to the defendants. I gave Vector immediate possession in an order of May 15, 2000. Following extensive hearings, the Commissioners submitted their Report. Vector and several defendants offer objections to the Report, I reject these objections, adopt the Report, with the amendment as to the interest rate that the Commissioners set forth in the response to the objections, and order that judgment be entered for the defendants in the amounts specified below.

I.

Under Rule 71A, I accept the Commissioners' findings of fact unless clearly erroneous. United States v. 573.88 Acres of Land, 531 F.2d 847, 850 (7th Cir. 1975); Fed.R.Civ.P. 71A(h) (Commission's findings have effect of a special master's report under R. 53(e)(2) (report reviewed for clear error)). The burden of showing the Report to be clearly erroneous is on the party attacking the conclusions. United States v. Certain Land Situated in Ripley, Stoddard and Butler Counties, Mo., 109 F. Supp. 618, 621 (E.D.Mo. 1952). I review conclusions of law de novo. Spraying Sys. Co. v. Delavan, Inc., 975 F.2d 387, 391 (7th Cir. 1992). "Just compensation" is "that amount of money necessary to put a landowner in as good a pecuniary position, but no better, as if his property had not been taken." United States v. L.E. Cooke Co., Inc., 991 F.2d 336, 341 (6th Cir. 1993). It is measured by the use that would bring the highest price — the "highest and best" use. United States v. 69.1 Acres of Land, 942 F.2d 290, 292 (4th Cir. 1991). In the absence of proof to the contrary, the highest and best use of property is presumed to be its current use. Id. The burden of proving the value of the land taken is on the landowner. United States ex rel. TVA v. Powelson, 319 U.S. 266, 274, 63 S.Ct. 1047, 87 L.Ed. 1390 (1943).

I must first discuss which law controls. Oddly enough, the parties do not disagree on this, but Vector attempts to manufacture a disagreement that does not exist. Vector says that federal substantive law controls the measure of damages in all respects. It accuses the Commissioners of improperly applying state substantive law, although the Commissioners expressly endorse an appraisal format approach approved by the Seventh Circuit using only federal law support, see United States v. 105.40 Acres of Land, 471 F.2d 207, 210 (7th Cir. 1972), and reject what they call "the Illinois state court approach." The Seventh Circuit endorsed the proposition "that the measure of damages is the fair market value of the entire [property] before and after the taking." Id.

This "before and after" approach was expressly adopted by the Commissioners, who explained that it requires that "the appraiser first value the property as a whole and then value the remainder (including the owner's rights in the easement strip and in any temporal easements or work space"). The Commissioners cite United States v. 38.60 Acres of Land, 625 F.2d 196, 199 n. 1 (7th Cir. 1980) (Damages are measured by the "difference between the market value of the entire tract immediately before the taking and the market value of the remainder immediately after the taking."). On this approach, the difference between the two values is the basis for determining just compensation. See United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374, 378 (4th Cir. 1995); United States v. 8.41 Acres of Land, 783 F.2d 1256, 1257 (5th Cir. 1986); United States v. 38.60 Acres of Land in Henry County, Mo., 625 F.2d 196, 199 (8th Cir. 1980). These are all federal cases. Vector agrees that this is the right approach, and it fails to substantiate its claim that the Commissioners covertly used an Illinois state law approach in practice despite having officially endorsed the federal "before and after" approach that Vector itself calls for.

In any event, Vector fails to tie its claims about the controlling law to any specific difference in outcomes in damages evaluation. Instead, Vector argues that federal law requires the wholesale rejection of the Commissioners' findings because the determinations of the Commissioners were clearly erroneous or based on inadmissable evidence.

II.

A.

I now turn to the objections of various defendants, then take up Vector's objections. The McDonnell defendants object that the Commissioners erred with respect to their parcels in not taking into account the effect on the remainder of certain access rights.*fn1 The McDonnell defendants say their land could not be developed, given the access rights granted to Vector. The highest and best use of their property is development for mixed-use residential and commercial purposes, but Vector acquired "unlimited" rights to cross the remainder to reach the easement that it took.*fn2 There was testimony by the McDonnell defendants' expert appraiser, Christopher Lannert, that it is impossible to develop a plan that is subject to such access.

The issue, then, is the factual question of whether the taking destroys the value of the property for its highest and best use. Lannert's testimony, the McDonnell defendants say, is uncontradicted. But Vector's appraiser, Joseph Batis, testified to the contrary, arguing that the access rights would have no effect on the value of the remainder. The McDonnell defendants argue that the Commissioners found Batis' testimony "unpersuasive." What the Commissioners rejected, however, was the flat claim that there would be no effect on the value of the property. It does not follow that the Commissioners had to agree that the effect was as total as Lannert claimed, utterly precluding residential and commercial development, and consigning the tract to agrarian uses only. A finder of fact is "free to believe part of [a witnesses'] testimony and to reject other parts." Bergmann v. McCaughtry, 65 F.3d 1372, 1378 (7th Cir. 1995). The Commissioners found some diminution in value, thus disagreeing with Batis, but they were not persuaded by Lannert's testimony as to how much diminution there was.

Even were Lannert's testimony in fact uncontradicted, the "trier of fact [may] disbelieve uncontradicted testimony unless other evidence shows that the testimony must be true." EEOC v. G-K-G, Inc., 39 F.3d 740, 746 (7th Cir. 1994) (citing cases). Nothing here shows that the testimony must be true, and it is not believable that a property could not be developed for residential or commercial use merely because workers could cross it to reach an easement. As Batis said, there is a distinction between a pipeline company that may need to cross from time to time and a third party that may access the property at any time.*fn3

The McDonnell defendants also argue that because Batis found no reduction in value to the remainder due to the access rights, the Commissioners failed to take any reduction in value into account. This is untrue on the face of the Report, which concludes that there was a "loss of developable land that had an effect on the fair market cash value of the remainder." Report at 85. The McDonnell defendants just disagree with the Commissioners about what that loss comes to — essentially a difference of a factor of 10, roughly $300,000 as opposed to roughly $2.5 million. I find no clear error in the Commissioners' findings, and deny the McDonnell defendants' motion to modify the Commissioners' Report. I also reject as moot their motion to strike Vector's exhibit 53.

B.

C.

The Jones defendants argue that the Commissioners clearly erred in valuing their land because they relied on the testimony of Batis, who appraised only the northern parcel and not the southern one. The Jones defendants moved unsuccessfully that the Commissioners strike Batis' testimony with respect to their land. They now ask me to find that this refusal to strike this testimony was error, and that the testimony of their own appraiser, Michael MaRous, was ...


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