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Magee v. West Jefferson Levee District

Court of Appeals of Louisiana, Fifth Circuit

December 13, 2017

ANGELA D. WIFE OF/AND MARK L. MAGEE
v.
WEST JEFFERSON LEVEE DISTRICT AND SOUTHEAST LOUISIANA FLOOD PROTECTION AUTHORITY-WEST

         ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 709-308, DIVISION "A" HONORABLE RAYMOND S. STEIB, JR., JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, ANGELA D. WIFE OF/AND MARK L. MAGEE JORDAN N. TEICH RANDOLPH J. WAITS

          COUNSEL FOR DEFENDANT/APPELLEE, WEST JEFFERSON LEVEE DISTRICT AND SOUTHEAST LOUISIANA FLOOD PROTECTION AUTHORITY-WEST, KENNETH E. PICKERING, W. PATRICK BAKER

          Panel composed of Judges Susan M. Chehardy, Marc E. Johnson, and Hans J. Liljeberg

          SUSAN M. CHEHARDY, CHIEF JUDGE

         Plaintiffs, Angela and Mark Magee, appeal the 24th Judicial District Court's judgment of January 17, 2017 awarding plaintiffs supplemental compensation for the appropriation of their property by defendant, the West Jefferson Levee District. The plaintiffs also appeal the district court's March 6, 2017 judgment awarding attorneys' fees. For the reasons that follow, we amend in part and affirm as amended the court's January 17, 2017 judgment, and affirm the court's March 6, 2017 judgment.

         FACTUAL AND PROCEDURAL HISTORY

         In 1998, plaintiffs purchased a tract of property on Walker Road in Belle Chasse, Louisiana. The approximate 6-acre property fronts on the Hero Canal and is protected by an earthen levee. At the time of the purchase, the property was encumbered by a levee servitude, as well as railroad and utility servitudes.

         In 2000, a levee-heightening project commenced along the Hero Canal that affected plaintiffs' property. Plaintiffs granted Plaquemines Parish a servitude over their property for the project. In addition to cash consideration for this servitude, a gravel road that was built over the levee for the project was to be left in place after its completion for plaintiffs' use.

         After the levee heightening was completed, plaintiffs began construction of their "dream home" in 2004. The custom-built approximate 4, 000-square-foot raised home was constructed out of concrete and steel to withstand hurricane force winds-indeed, it survived Hurricane Katrina. The house included an approximate 3, 000-square-foot wraparound covered porch and other select features, such as double-insulated windows, a custom kitchen, and an elevator. The first floor was fourteen feet above the concrete slab. On the slab level was covered parking space and an enclosed workshop out of which Mr. Magee performed marine construction and repairs. Plaintiffs also constructed a dock on the Hero Canal that was accessed by the gravel road and where Mr. Magee moored his boat. The house was completed and certified for occupancy on June 15, 2005.

         Almost four years later, in a letter dated February 6, 2009, plaintiffs learned of another impending levee enhancement project. In that letter, the West Jefferson Levee District ("the Levee District") advised plaintiffs that a variety of surveys, assessments, and tests would be performed on or around their property in connection with the U.S. Army Corps of Engineers West Bank and Vicinity Hurricane Protection Project. Subsequently, in a letter dated December 22, 2009, plaintiffs were advised that "[s]hould a portion of your property be required for the construction of this levee upgrade, and should you be displaced by the project, you may be eligible for Relocation Assistance Benefits."

         Then, in a letter dated January 27, 2010, plaintiffs were notified that a portion of their property had been appropriated for the project. This letter advised:

[O]n January 25, 2010, the Board of Commissioners for the Southeast Louisiana Flood Protection Authority-West, convened in a Regular Monthly Meeting, for and on behalf of the West Jefferson Levee District, appropriated land owned by Mr. Mark L. and Mrs. Angela D. Magee, determined by the U.S. Army Corps of Engineers to be necessary for construction of the Hero Canal Reach One, Second Lift Levee Enlargement, West Bank and Vicinity Hurricane Protection Project.

         Attached to this letter was a copy of the appropriation resolution as well as surveys and maps. The resolution specified by reference to the attached maps that a certain portion of the land would be subject to a permanent servitude and another portion would be subject to a temporary servitude. The temporary servitude would be effective for three years "or until completion of construction, whichever occurs later." However, about nine months later, in a letter dated October 6, 2010, the Levee District advised plaintiffs that pursuant to the U.S. Army Corps of Engineers' determination that the three-year temporary servitude was no longer necessary, the Board of Commissioners for the Southeast Louisiana Flood Protection Authority-West convened on September 28, 2010 and terminated the temporary servitude.

         Thereafter, the property was appraised by five experts to determine its market value before and after the appropriation for purposes of calculating the just compensation owed to plaintiffs. The experts explained there are three methods to assess market value: the income approach, the cost approach, and the comparable approach. The income approach is utilized in scenarios where the property generates income, typically in the form of rents. None of the experts found the income approach applicable and so none of the five appraisals utilized it in this case. The cost approach is generally defined as the estimated replacement cost of the property less depreciation plus land value as if it were vacant. And, in the comparable approach, the subject property is compared to the most recent, similar, and proximate market sales. The Louisiana Supreme Court has recognized, in the expropriation context, that "[t]he jurisprudence has generally held that the 'market approach, ' or the use of comparable sales in the vicinity of the land sought to be expropriated, is the primary tool of analysis of fair market value because it is, in most cases, likely to produce more accurate results." Exxon Pipeline Co. v. Hill, 00-2535 (La. 5/15/01), 788 So.2d 1154, 1163.

         Henry W. Tatje, III was retained by the Levee District to appraise the property in 2010. He exclusively employed the comparable approach in his appraisal. Utilizing January 25, 2010 as the effective date, he estimated the value of the property before the appropriation at $595, 000 and the value after at $102, 000. Accounting for the loss of value from the terminated three-year temporary servitude at $4, 800, Mr. Tatje concluded the just compensation owed to plaintiffs was $497, 800.

         Wayne Sandoz was also retained by the Levee District to appraise the property in 2010. Though he performed both the cost approach analysis and the comparable approach analysis, Mr. Sandoz explained that he gave "almost exclusive weight" to the comparable approach in his appraisal of the property. Utilizing January 25, 2010 as the effective date, he estimated the value of the property before at $545, 000, the value after at $98, 700, and the value of the terminated three-year temporary servitude at $2, 700.[1] Mr. Sandoz concluded the just compensation owed to plaintiffs was $446, 300.

         Richard Murphy was retained by the Louisiana Property Acquisition Company, LLC ("LaPAC")[2] to appraise the property in 2010. Similar to Mr. Sandoz, though Mr. Murphy performed both the cost approach analysis and the comparable approach analysis, he gave "full weight" to the comparable approach in his appraisal of the property. Utilizing January 25, 2010 as the effective date, he estimated the value of the property before at $644, 745, the value after at $105, 528, and the value of the terminated three-year temporary servitude at $3, 237.[3] Mr. Murphy concluded the just compensation owed to plaintiffs was $539, 217.

         Byron Keith Core was retained by the Louisiana Office of Coastal Protection and Restoration Authority to appraise the property in 2010. He employed both the cost approach and the comparable approach in his appraisal. Utilizing January 25, 2010 as the effective date, he estimated the value of the property before at $720, 000 and the value after at $139, 688. Accounting for the loss of value from the terminated three-year temporary servitude at $3, 660, Mr. Tatje concluded the just compensation owed to plaintiffs was $583, 972.

         Mr. Core's appraisal was adopted as the official appraisal of the property, and in a letter dated February 11, 2011, LaPAC advised plaintiffs that the just compensation due them was $583, 972. Enclosed in the letter was a check from the Louisiana Department of the Treasury dated February 11, 2011 in the amount of $583, 372 and a check from LaPAC dated February 11, 2011 in the amount of $600, made payable to plaintiffs.[4] This letter further advised plaintiffs: "[W]e ask that you please sign the Check Receipts acknowledging receipt of the referenced checks and return them to us in the self addressed postage paid envelope. Execution of these receipts will not impair your right to contest the amount of just compensation."

         On April 18, 2011, plaintiffs executed a Statement of Abandonment, in which they "disclaim[ed], waive[d] and abandon[ed] any and all right, title and interest in and to any and all personal property, located or about street address 719 Walker Road, Belle Chasse, Louisiana[.]" Plaintiffs' home was demolished sometime in May of 2011. On December 12, 2011, plaintiffs filed suit, contesting the amount of just compensation.

         As the litigation progressed, plaintiffs retained expert Dr. Wade Ragas to appraise the property in 2014. He employed both the cost approach and the comparable approach in his appraisal. Utilizing April 18, 2011 as the effective date, he estimated the value of the property before at $1, 325, 000 and the value after at $149, 600. Accounting for the loss of value from the terminated three-year temporary servitude at $4, 109, Dr. Ragas concluded the just compensation owed to plaintiffs was $1, 179, 509.

         Plaintiffs accordingly amended their petition seeking $595, 537 (the difference between $1, 179, 509 and $583, 972), plus compensation for the loss of rental income, the loss of business income, the increased costs of conducting their business elsewhere, and damages to the remainder of their property.

         A four-day bench trial commenced on September 7, 2016 where extensive expert testimony was taken. The court issued its judgment on January 17, 2017, finding the fair market value of plaintiffs' property, as of January 25, 2010, was $754, 430 and the value after $100, 000. Accounting for the loss of value from the terminated three-year temporary servitude at $4, 000, the court concluded the just compensation owed to plaintiffs was $658, 430. Crediting the sum of $583, 972 already paid to plaintiffs, the court rendered judgment in favor of plaintiffs and against the West Jefferson Levee District in the amount of $74, 458, together with legal interest thereon from the date of judicial demand and for all costs of the proceedings. The court followed this judgment with written reasons on January 26, 2017, offering an explanation for its findings and calculations. On March 6, 2017, the court issued a separate judgment awarding attorneys' fees at 25 percent of the $74, 458 judgment and $5, 000 for fees related to plaintiffs' expert.

         Plaintiffs appeal both the January 17, 2017 and March 6, 2017 judgments.

         ASSIGNMENTS OF ERROR

         On appeal, plaintiffs assign five errors:

(1) The district court erred in finding that the Levee District's failure to adhere to the mandatory requirements of La. R.S. 38:301 did not convert the taking of the Magee property from a protected appropriation for hurricane and flood protection projects to some other form of condemnation.
(2) The district court erred in its market valuation of the Magee property, including the date applied for valuation purposes.
(3) By finding that the appropriation statute applied to the taking of the Magee property, the district court erred in fixing attorneys' fees at twenty-five percent of the judgment entered on January 17, 2017.
(4) The district court erred in ordering legal interest on the $74, 458 judgment from the date of the judicial demand rather than from the date of taking.
(5) The district court erred in fixing fees of the Magees' expert, Dr. Wade Ragas, at $5, 000.

         DISCUSSION

         Before considering plaintiffs' assignments of error, we think it useful to first set forth some general precepts governing this matter.

         Governmental takings of property are limited by both the federal and state constitutions. S. Lafourche Levee Dist. v. Jarreau, 16-788 (La. 3/31/17), 217 So.3d 298, 305. The Fifth Amendment of the United States Constitution, made applicable to the states pursuant to the Fourteenth Amendment, provides: "No person shall…be deprived of life, liberty or property without due process of law; nor shall private property be taken for public use, without just compensation." Id. The definition of "just compensation" required by the Fifth Amendment has repeatedly been held to be measured by "the market value of the property at the time of the taking." Id. (quoting Horne v. Department of Agriculture, --U.S.--, 135 S.Ct. 2419, 2432, 192 L.Ed.2d 388 (2015)).

         The Louisiana Constitution of 1974 provides for governmental takings of property in both Article I, § 4 and Article VI, § 42. Jarreau, 16-788, supra. Article I, § 4 provides for the expropriation of private property for public purposes, while Article VI, § 42 provides specifically for the appropriation of private property necessary for levee or levee drainage purposes. Id.

         Appropriation, as opposed to expropriation, is carried out by a resolution of the appropriating authority, without the need for a judicial proceeding. Jarreau, 16-788, supra (citing Richardson & Bass v. Board of Levee Commissioners, 77 So.2d 32 (1954)); see also 1A Frank L. Maraist, Civil Law Treatise, Civil Procedure-Special Proceedings, §9.9, at 183 (1st ed. 2005). Thus, the "right of appropriation has been characterized as the right to act first and talk later." Wynat Dev. Co. v. Bd. of Levee Comm'rs, 97-2121 (La. 4/14/98), 710 So.2d 783, 785, cert. denied, 525 U.S. 1017, 119 S.Ct. 542, 142 L.Ed.2d 451 (1998).

         The difference between a Louisiana landowner's protection against appropriation of property necessary for levee and levee drainage purposes, which is excepted from the protections of Article I, § 4, [5] and expropriation for any lawful purpose, arises from the particular nature of the levee servitude and the way in which it was traditionally exercised by public bodies. Jarreau, 16-788, supra. "The constitutional justification for the power of appropriation rested on the theory that the State and its sovereign predecessors in title have never granted a perfect title in any riparian lands to any private person since the settlement of Louisiana." Delaune v. Kenner, 550 So.2d 1386, 1389 (La.App. 5th Cir. 1989), writ denied, 553 So.2d 475 (La. 1989). Indeed, lands fronting navigable rivers have long been burdened in Louisiana by the legal servitude under La. C.C. art. 665[6] for the construction and maintenance of levees. See 4 A.N. Yiannopoulos, Civil Law Treatise, Predial Servitudes, §11:15, at 660 (4th ed. 2013); Jarreau, 16-0788, supra at 308 (noting that riparian land has been burdened by public servitudes and onerous levee obligations since before the Louisiana Purchase). Accordingly, lands used or destroyed for levee purposes "were not 'expropriated' but merely 'appropriated' for levee construction and the payment is an indemnity for the public use." See Yiannopoulos, supra at 663. "Appropriation involves the taking of a servitude whereas expropriation may involve the taking of ownership." Yiannopoulos, supra at 663 n.20; accord Delaune, supra ("While appropriation of land does not vest title in the State, expropriation of land does.").

         Because the matter at hand concerns the taking of land for levee purposes via appropriation, we turn to Article VI, § 42 of the Louisiana Constitution, which provides:

A. Compensation. - Notwithstanding any contrary provision of this constitution, lands and improvements thereon hereafter actually used or destroyed for levees or levee drainage purposes shall be paid for as provided by law. With respect to lands and improvements actually used or destroyed in the construction, enlargement, improvement, or modification of federal or non-federal hurricane protection projects, including mitigation related thereto, such payment shall not exceed the amount of compensation authorized under Article I, Section 4(G) of this constitution. However, nothing contained in this Paragraph with respect to compensation for lands and improvements shall apply to batture or to property the control of which is vested in the state or any political subdivision for the purpose of commerce. If the district has no other funds or resources from which the payment can be made, it shall levy on all taxable property within the district a tax sufficient to pay for property used or destroyed to be used solely in the district where collected.
B. Appropriation. - Nothing in this Section shall prevent the appropriation of such property before payment.

         La. R.S. 38:301 implements the foregoing constitutional directive for compensating the appropriation of land for levee purposes. Subsection La. R.S. 38:301(C)(1)(h), which applies when property is taken by way of a permanent levee servitude, provides in pertinent part:

The measure of compensation for lands and improvements taken or destroyed for levee and levee drainage purposes by way of a permanent levee servitude shall be the fair market value of the property taken or destroyed before the proposed use of the property or construction of the levee facilities, without allowing any change in value caused by the construction of the levee facilities.

With these precepts in mind, we now turn to plaintiffs' assignments of error.

         Assignment ...


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