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St. Charles Land Co. II, L.L.C. v. City of New Orleans

Court of Appeal of Louisiana, Fifth Circuit

December 23, 2014

ST. CHARLES LAND COMPANY II, L.L.C., J. EDGAR MONROE FOUNDATION, BURGESS ST. CHARLES LAND, L.L.C., MICHAEL BURGESS, AS TRUSTEE FOR GEORGE BURGESS, JR., TRUST AND GEORGE BURGESS, JR. TRUST #4 AND BURGESS PROPERTIES, L.L.C.
v.
CITY OF NEW ORLEANS BY AND THROUGH THE NEW ORLEANS AVIATION BOARD

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[Copyrighted Material Omitted]

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ON APPEAL FROM THE TWENTY-NINTH JUDICIAL DISTRICT COURT PARISH OF ST. CHARLES, STATE OF LOUISIANA. NO. 72,824, DIVISION " D" . HONORABLE M. LAUREN LEMMON, JUDGE PRESIDING.

AMENDED IN PART; AFFIRMED AS AMENDED.

RANDALL A. SMITH, L. TIFFANY HAWKINS, J. GEOFFREY ORMSBY, ATTORNEYS AT LAW, New Orleans, Louisiana, COUNSEL FOR PLAINTIFF/APPELLANT.

YVETTE A. D'AUNOY, MARIANNE GARVEY, ATTORNEYS AT LAW, New Orleans, Louisiana, COUNSEL FOR DEFENDANT/APPELLEE.

Panel composed of Judges Marc E. Johnson, Robert M. Murphy, and Stephen J. Windhorst.

OPINION

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[14-101 La.App. 1 Cir. 2] The issue in this inverse condemnation case concerns the amount of compensation due landowners as a result of the taking of their land by the New Orleans Aviation Board. In this appeal, Plaintiffs/landowners challenge the trial court's judgment finding the amount of just compensation owed by Defendant, New Orleans Aviation Board, for taking the subject property to be $30,740.00. For the reasons that follow, we amend the judgment and affirm as amended.

FACTS & PROCEDURAL HISTORY

In January 2011, Plaintiffs/landowners, St. Charles Land Company, II, L.L.C.; J. Edgar Monroe Foundation; Burgess St. Charles Land, L.L.C.; Michael W. Burgess, as Trustee for George Burgess Jr., Trust #3 and George Burgess, Jr., Trust #4; and Burgess Properties, L.L.C. (collectively " Landowners" ), filed a petition against Defendant, City of New Orleans by and through the New Orleans Aviation Board (hereinafter referred to as " NOAB" ), seeking compensation for NOAB's alleged taking of immovable property without proper expropriation [14-101 La.App. 1 Cir. 3] proceedings or payment of just compensation. The Landowners alleged that in 1956, NOAB leased approximately 200 acres of land from them or their predecessors-in-interest. According to the petition, the lease had a term of 22 years, but NOAB purchased a significant portion of the leased land in 1962 prior to the expiration of the lease.[1] The Landowners alleged

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that NOAB has continued to occupy, from April 2, 1987 through the present, eight acres of land, which were not included in the 1962 Act of Sale and which were owned by the Landowners or their predecessors-in-interest, without payment of just compensation. The Landowners asserted that in April 1987, NOAB began constructing an extension of an airport runway over the eight acres of land, and that NOAB continues to utilize the expanded runway to date. In their petition, the Landowners sought just compensation to the full extent of their loss for the taken property and attorney's fees.

The parties entered into many stipulations prior to trial. In their stipulations, the parties agreed that (1) the property at issue consisted of 8.08 acres; (2) all parties believed in good faith that NOAB owned the 8.08 acres from the 1962 Act of Sale until March 1, 2010, when the Landowners discovered that the land had actually been appropriated; (3) NOAB was liable and obligated to pay just compensation for its April 2, 1987 appropriation of the 8.08 acres; (4) the only issue for trial was the amount of just compensation due to the Landowners, including interest, attorney's fees, expert fees and costs; [2] and (5) the applicable date for valuation of the property was March 1, 2010.

[14-101 La.App. 1 Cir. 4] The matter proceeded to a bench trial on March 5, 2013, with the only witnesses being real estate appraisal experts and a wetlands permitting expert.

The Landowners called two real estate appraisers, Mr. Heyward Cantrell and Dr. Wade Ragas, to testify in their case-in-chief. Mr. Cantrell explained that the first step in the appraisal process is to determine the highest and best use, or most profitable use, of the property. In determining such use, an appraiser must consider what is legally permissible, what is physically possible, and what is financially feasible.

Mr. Cantrell explained that the subject property was a relatively thin parcel of land, being 159 feet wide and over 2,200 feet long. He concluded that the highest and best use of the 8.08 acres was airport-related uses. In reaching his conclusion, Mr. Cantrell considered the fact the land was leased by NOAB in 1956, for a term of 22 years, with an agreement that the property was only to be used for approach ways, runways, and related airport facilities. He explained that the use of the land was restricted by the lease until 1962, when NOAB acquired the property and continued to use it as an approach until incorporating the land into its east-west runway expansion project in the 1980s. Mr. Cantrell further considered the property to be a part of a transportation corridor. He testified that he did not value the property as part of the airport, but rather valued the property as a key parcel needed for complete assemblage of the airport complex.

Mr. Cantrell explained that he based the value of the 8.08 acres by considering neighborhood property and the land's proximity to the airport. He relied on four comparable property sales and added a premium of 30% for plottage value, which is applicable when property is assembled with an adjacent piece of property thereby adding more value to the appraised property. He further deducted the costs of clearing, demucking, and filling

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the land that had been done by NOAB [14-101 La.App. 1 Cir. 5] after it appropriated the land, which was approximately $847,831. Mr. Cantrell ultimately concluded that the fair market value of the 8.08 acres as of March 2010 was $1,703,000.00.

Dr. Wade Ragas had a similar valuation process. He noted that since 1956, the property had been a part of the airport inside an air transportation corridor. He likewise found that the highest and best use of the 8.08 acres was airport-related development, or assemblage with the existing airport facilities. Dr. Ragas reviewed comparable sales involving nearby vacant land that had a commercial industrial use in close proximity to the airport, but that did not directly benefit from the airport such as runway proximity. Dr. Ragas considered eight comparable property sales and adjusted for plottage value by adding a premium of 20%. He also deducted for the fill and demucking previously done by NOAB. Dr. Ragas opined that the fair market value of the 8.08 acres in March 2010 was $1,457,000.00.

NOAB countered Mr. Cantrell and Dr. Ragas' expert opinions with that of its experts, Henry Tatje and Jimmie Thorns, Jr. Mr. Tatje explained that he valued the property in the condition it was in at the time of the appropriation, which was partially a canal bottom and partially unimproved wetlands. In determining the highest and best use of the property, Mr. Tatje ignored the adjoining public project for which it was being purchased. Rather, he determined the highest and best use of the land in the context of the general market place and without any consideration of the airport's influence on the property. Within these parameters, Mr. Tatje found the highest and best use of the property to be ...


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