M & R Investment Co. v. State

— 447 — OPINION By the Court, Springer, J.: This action, tried before a jury, was brought by the State of Nevada (State) seeking to condemn property owned by M & R Investment Company (M & R). The State’s eminent domain action was intended to obtain approximately fourteen acres of M & R’s twenty-seven-acre parcel of property for the expansion of the 1-15 interchange at Flamingo Road in Las Vegas. The twenty-seven acres is situated on the west side of 1-15. The Dunes Hotel, also owned by M & R, is on the east side of 1-15 directly across from the property at issue. Contemporaneously with the filing of the complaint, the State filed a motion for immediate occupancy. The court granted that motion and required $2,393,800.00 to be deposited in court by the State (the value of the land as per the state appraisal). M & R’s answer to the State’s complaint placed into issue the question of which property was to be considered the large parcel for purpose of valuating the parcel condemned and determining severance damages. M & R contended that the large parcel — 448 — should consist of the combined properties on both the west and east sides of 1-15. The State insisted that only the twenty-seven-acre parcel on the west side of 1-15, from which the condemned acreage was taken, should be considered the large parcel. The district court agreed with the State and ruled at a pre-trial hearing that the large parcel consisted of only the twenty-seven acres on the west side of 1-15. After the district court’s ruling on the large parcel issue, M & R sought to include the possibility of joinder in its expert’s valuation of the parcel condemned. The trial court disallowed the use of the joinder theory by M & R’s real estate expert because it was substantially similar to the large parcel theory and constituted an attempt to avoid indirectly the court’s earlier ruling concerning the composition of the large parcel. Ultimately, the jury returned a verdict placing the fair market value of the condemned fourteen acres at $2,040,000.00 and severance damages to the remainder of the west parcel at $180,000.00. M & R appeals the award. Certain historical facts provide context and clarity to the issues before us. Originally, M & R owned a 188-acre parcel of land situated at the southwest corner of Flamingo Road and Las Vegas Boulevard. In 1965, the State successfully brought an eminent domain action for the purpose of building 1-15. As a result, approximately twenty-seven acres were isolated on the west side of the freeway; the balance remained where the Dunes Hotel and golf course are located on the east side of the freeway. M & R was paid $45,000.00 in severance damages at that time. In 1980, M & R formulated two alternative plans to develop the parcel on the west side of the freeway in conjunction with its hotel, casino and golf course. The first plan was to move four or five holes of the golf course to the west side of the freeway, thus releasing property on the east side for condominium development. Later, M & R formulated a plan to connect the west parcel to the east parcel by a monorail in contemplation of using the west parcel as a park for recreational vehicles. During the period in which these improvements were contemplated, the Dunes Hotel used the west parcel for overflow hotel parking. Cars were parked there during special events at the Dunes Hotel and Caesar’s Palace. Later approval for the expansion of the interchange at 1-15 and Flamingo Road necessitated condemnation of approximately fourteen acres from the twenty-seven-acre parcel west of the freeway, thus resulting in the present action. M & R contends on appeal that the district court erred in ruling that the twenty-seven-acre parcel situated west of 1-15 was the large parcel for purposes of determining the value of the parcel taken and severance damages to the remainder. Alternatively, M & R contends that the — 449 — district court erred in ruling that the theory of joinder was not applicable. M & R argues that the issues should have gone to the jury for factual determinations. For reasons hereinafter specified, we conclude that the trial court so erred, and we reverse the judgment. Large Parcel and Severance Damages As noted above, M & R sought to have the condemned fourteen acres in the west parcel considered part of the large parcel consisting of those parcels on both the east and west sides of 1-15. The concept of large parcel is instrumental in determining both the value of the property condemned and whether severance damages are to be awarded in an eminent domain action. Historically, severance damages are awarded when a partial taking of a landowner’s property occurs. The owner recovers not only the value of the land actually taken, but also the amount by which the remaining parcel is diminished in value by virtue of the severance. See Andrews v. Kingsbury Gen. Improvement Dist. No. 2, 84 Nev. 88, 436 P.2d 813 (1968); NRS 37.110.' Severance damages will not be awarded for injury to separate and independent parcels owned by the condemnee. Sharp v. United States, 191 U.S. 341 (1903); State v. McDonald, 656 P.2d 1043 (Wash. 1983). The issue thus presented becomes one of identifying the remaining parcel that is injured when property is condemned. In other words, from which “large parcel” was the condemned property taken? In order to show that a parcel condemned is part of a larger parcel, it is generally held that there must be unity of title, contiguity, and unity of use of the property. City of Los Angeles v. Wolfe, 491 P.2d 813, 815 (Cal. 1971). Ordinarily, physical contiguity must be shown but is not always necessary. 491 P.2d at 815. The parcels damaged need not be physically contiguous to — 450 — those taken so long as the evidence discloses an actual and existing2 unity of use and purpose and an existing, lawful and utilized access between the parcels. 491 P.2d 819; Cole Investment Co. v. United States, 258 F.2d 203 (9th Cir. 1958); Housing Authority of the City of Newark v. Norfolk Realty Co., 364 A.2d 1052 (N.J. 1976); Sauvageau v. Hjelle, 213 N.W.2d 381 (N.D. 1973) (unity of use evidenced by integrated use of non-contiguous parcels); State Road Commission v. Williams, 452 P.2d 548 (Utah 1969) (unity of use evidenced by non-contiguous parcels functioning as a single economic unit); 4A Nichols, The Law of Eminent Domain, § 14.26[1] at 14-678 (J. Sackman ed. 1985). Under the prevailing rule, identification of the larger tract is an issue of fact to be decided by the trier of fact. United States v. 8.41 Acres of Land Situated in Orange County, State of Texas, 680 F.2d 388 (5th Cir. 1982), reh’g denied, 685 F.2d 1385 (1982); Victor Co. v. State, 186 N.W.2d 168 (Minn. 1971); 4A Nichols, above, § 14.26 at 14.649. Some jurisdictions hold that the identification of the large parcel is a question of law, fact, or both, which the judge should determine. United States v. 105.40 Acres of Land, More or Less, in Porter County, State of Ind., 471 F.2d 207 (1972); People v. Nyrin, 63 Cal.Rptr. 905 (Ct.App. 1967). While accepting the prevailing rule as being preferable in general, we recognize that there may be instances wherein the facts are so compellingly clear that the issue becomes one of law for determination by the trial court. In this case, however, the facts are not so compellingly clear as to warrant taking the determination away from the jury. The use of the west parcel as a parking facility in conjunction with the Dunes Hotel would have justified a jury finding that there was a unity of use favoring M & R’s position. The district court erred in — 451 — not allowing the jury to determine whether the condemned west parcel was part of the east parcel for the purpose of awarding severance damages. Thus, the district court’s ruling on the large parcel issue is reversed, and the cause is remanded for a new trial in accordance with this opinion. Joinder and Valuation of Parcel Condemned After the trial court ruled that the twenty-seven-acre parcel west of the freeway was the large parcel for the purpose of awarding severance damages, precluding damages to the east parcel, M & R sought to have the entire west parcel valued in connection with the east parcel under the theory of joinder. The trial court rejected the joinder theory as an attempt to achieve the large parcel composition urged previously and rejected by the court. Joinder, also referred to as assemblage, is a theory involving the prospect of joining separate parcels. People v. Ocean Shore R.R., 196 P.2d 570 (Cal. 1948). If the highest and best use of separate parcels would involve a prospective, integrated, unitary use, then such prospective use may be considered in fixing the value of the property condemned providing joinder of the parcels is reasonably practicable. 196 P.2d at 581; see also City of Stockton v. Vote, 244 P. 609 (Cal. 1926); People ex rel. Dep’t of Public Works v. TeVelde, 91 Cal.Rptr. 556 (Ct.App. 1970). Hence, when valuating the condemned parcel as part of a large parcel or assemblage, the requisite unity of use may be merely prospective; whereas, when assessing severance damages to the remaining part of a large parcel, the requisite unity of use must be actual and present. Although joinder is a consideration in valuating the condemned property and the damages to the remaining parcels, the possibility of joinder has no bearing on the propriety of awarding severance damages to the remaining parcels. Ocean Shore R.R., 196 P.2d at 582. Thus, even where severance damages to a remaining parcel may not be appropriate, the possibility of joinder may still be a proper consideration in the valuation of the property taken. United States v. Certain Parcel of Land in Jackson County, Mo., 322 F.Supp 8419 (W.D. Mo. W.D. 1971). To take advantage of the joinder theory, a condemnee must show that joinder or integration of the various parcels in question is reasonably practicable. Factors considered include time and — 452 — costs of uniting the land and willingness of other owners to participate in the assemblage. See City of Stockton, 244 P. at 609. The party urging the position must lay a foundation showing some probability of joinder and carry the burden of proof. In laying such a foundation, elements affecting value which are possible, but not reasonably probable, should be excluded. Ocean Shore R.R., 196 P.2d at 583. It is up to the jury to determine whether the market value of the condemned parcel is increased when the possibility of joinder exists. Whether the combination of two parcels is “reasonably practicable” is clearly a question of fact for the jury. See County of Santa Clara v. Ogata, 49 Cal.Rptr. 397 (Ct.App. 1966). M & R attempted to offer the testimony of its appraiser, Mr. Metcalf, to show that under his professional appraisal the highest and best use of the property on the west side was usage in conjunction with the M & R property on the east side. Metcalf was also willing to opine that there was a reasonable possibility that the two properties could be joined for joint usage. The district court refused to admit any evidence regarding joinder with the larger east parcel and limited Metcalfs testimony to the value of the property taken in relation to the smaller, west parcel only. Evidence of the planned golf course and monorail construction would have justified a jury finding of a reasonably practicable future integration of the east and west parcels. The district court erred in not allowing Mr. Metcalf to testify to the condemned parcel’s value based on the possibility of joinder. The district court’s rulings erroneously removed the issues of large parcel and joinder from the jury’s consideration of just compensation. Accordingly, the judgment upon the jury verdict is reversed and the matter remanded for retrial. Gunderson, C. J., and Young, J., concur. Footnotes [1] NRS 37.110 states, in pertinent part: The court, jury, commissioners or master must hear such legal testimony as may be offered by any of the parties to the proceedings, and thereupon must ascertain and assess: 2. If the property sought to be condemned constitutes only a part of a large parcel, the damages which will accrue to the portion not sought to be condemned, by reason of its severance from the portion sought to be condemned, and the construction of the improvement in the manner proposed by the plaintiff. As far as practicable, compensation must be assessed for each source of damages separately. [2] M & R asserts that there exists a federal minority rule which provides for severance damages to noncontiguous parcels when evidence discloses an integrated unitary use in the reasonably near future. Baetjer v. United States, 143 F.2d 391 (1st Cir. 1944), cert. denied, 323 U.S. 772 (1944). This statement, however, is merely dicta. Furthermore, the language in Baetjer is derived from United States v. Powelson, 319 U.S. 266 (1943). The holding in Powelson is in reference to joinder and is not related to the issue of severance damages. Baetjer’s dictal expansion of the law of large parcel has been questioned by both commentators and other federal courts. E.g., United States v. Certain Parcel of Land in Jackson County, Mo., 322 F.Supp. 841 (W.D. Mo., W.D. 1971); Annotation, Eminent Domain-Damages-Severance, 6 A.L.R.2d 1197, 1203 (1949). Thus, we view the so-called minority rule more as an aberration than as an alternate rule.