Cincinnati v. Gilbert

2013 Ohio 4145

• Court: Ohio Court of Appeals
• Decided: September 25, 2013
• Docket: C-120626 C-120643
• Status: Published

Opinion

[Cite as Cincinnati v. Gilbert, 2013-Ohio-4145.] IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

CITY OF CINCINNATI, : APPEAL NOS. C-120626 C-120643 Plaintiff-Appellant/Cross- : TRIAL NO. A-1006196 Appellee, : O P I N I O N. vs. : RICHARD GILBERT, : and : LEE GILBERT, : Defendants-Appellees/Cross- Appellants. :

Civil Appeals From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: September 25, 2013

John P. Curp, City Solicitor, Terrance A. Nestor and Donald W. Harper, II, Assistant City Solicitors, and McMahon Degulis LLP and Erica M. Spitzig for Plaintiff- Appellant/Cross-Appellee,

The Blessing Law Firm, William H. Blessing and Angela L. Wallace, for Defendants- Appellees/Cross-Appellants.

Please note: this case has been removed from the accelerated calendar. O HIO F IRST D ISTRICT C OURT OF A PPEALS

D INKELACKER , Judge.

{¶1} In four assignments of error, plaintiff-appellant/cross-appellee city of

Cincinnati claims that the trial court erred when rendering its decision in this

appropriation case. Defendants-appellees/cross-appellants Richard and Lee Gilbert

raise one assignment of error in their cross-appeal. We affirm.

The Case Below

{¶2} In 2007, the Gilberts brought a direct action in this court asking for a

writ of mandamus to compel the city of Cincinnati to commence an appropriation

action to compensate them for the taking that resulted from systemic overflows of

raw sewage onto their property caused by the inadequacy of the Brittany Acres Pump

Station, the station that processed raw sewage for the area. The Gilberts had

purchased the Anderson Township property in 1998. This court denied the request,

but later reopened the matter when the Gilberts presented newly-discovered

evidence. This court granted the writ as it related to the physical taking of the

property caused by the overflows. State ex rel. Gilbert v. City of Cincinnati, 1st Dist.

Hamilton No. C-070166, 2009-Ohio-1078. The Ohio Supreme Court affirmed that

decision. State ex rel. Gilbert v. City of Cincinnati, 125 Ohio St.3d 385, 2010-Ohio-

1473, 928 N.E.2d 706.

{¶3} The city filed this appropriation action in 2010. The matter

proceeded to a jury trial. The Gilberts presented evidence of the diminution of the

value of their property as a result of the overflows. Their expert explained the

impairment of their use of the property as a result of the discharges, and calculated

the year-by-year value of the Gilbert’s loss of use during the period from 1998, when

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they had purchased the property, through 2009, when the pump station was repaired

and the overflows ceased. The total amount of the loss of use was $209,987.

{¶4} The city argued that only the narrow area around the creek at issue—

the only area that was physically involved with the raw sewage—was subject to

taking. Its employees testified as to value without consideration of the sewage

stench’s effect on the uninvaded portion of the property.

{¶5} The jury agreed with the Gilberts and awarded $209,987 as the value

of the property taken. It made no award for damages to the property apart from the

amount it set for compensation for the taking. After a subsequent hearing, the trial

court adopted the Gilbert’s interest calculation, which was based on a calculation

“using the particular legal interest rate for each year in which there was an

appropriation.” In so doing, the trial court rejected the city’s argument that the

applicable interest rate was three percent—the statutory interest rate in effect on the

date of judgment. At that time, the trial court also denied the Gilbert’s request for

attorney fees.

The Damage Award

{¶6} The city’s first three assignments of error attack the premise that the

Gilberts could recover for the stench caused by the sewage being dumped on their

property as a taking. The city argues first that the only taking that occurred was

limited to the immediate area upon which sewage overflowed. Any problems

associated with the odor, the city asserts, were an element of damages to the

remaining property. The city’s second assignment claims that the trial court should

not have allowed an expert to testify as to the loss resulting from that odor in terms

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of a taking. The essence of the city’s argument is that any such award is in the nature

of damages. It is not, in itself, a taking.

{¶7} Ohio courts have consistently held that when the state appropriates

land under its power of eminent domain, the landowner is entitled to a remedy

consisting of two elements: (1) compensation for the property taken, and (2)

damages for injury to the property which remains after the taking, i.e., the residue.

See, e.g., Hurst v. N. Seventh St. Church of Christ, 12th Dist. Butler No. CA90-10-

204, 1991 Ohio App. LEXIS 3142 (July 1, 1991); R.C. 163.14.

{¶8} "Compensation" means the sum of money which will compensate the

owner of the land actually taken or appropriated; that is, it is the fair market value of

the land taken. Norwood v. Forest Converting Co., 16 Ohio App.3d 411, 415, 655

N.E.2d 1365 (9th Dist.1984), citing 38 Ohio Jurisprudence 3d, Eminent Domain,

Section 103, 154-155 (1982). "Damages," in the strict sense in which the term is used

in an appropriation proceeding, means an allowance made for any injury that may

result to the remaining lands by reason of the taking. Id.

{¶9} Courts—including this court—have concluded that the temporary

nuisances that go along with a temporary taking can be part of the taking. “Evidence

of temporary inconvenience, dirt, noise, and the like are admissible in determining

the value of the temporary easement.” (Emphasis added.) Wray v. Deters, 111 Ohio

App.3d 107, 111, 675 N.E.2d 881 (1st Dist.1996), citing Wray v. Parrson, 101 Ohio

App.3d 514, 655 N.E.2d 1365 (9th Dist.1995). In that context, the “temporary

easement” was the takings part of the calculation, not the damages portion. In

Deters, this court counted not just the physical trench dug into the property as a

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taking, but also “all the attendant noise, danger, annoyance, dirt and disruption of

life.” Id. Quoting the Ninth Appellate District, we concluded that

such temporary conditions that impair the enjoyment of the

residue are properly considered in determining the fair market

value of a temporary taking because they are the kinds of factors

that an ordinarily prudent business person would consider in

establishing rental value.

Id., quoting Parsson, at 519, 655 N.E.2d 1365.

{¶10} The difference between takings and damage to the residue is the

permanence of the damages. For example, if the city had built a sewage treatment

plant on the Gilberts’ property, then the odor would be damage to the residue

because it would be permanent. In Roseville v. Thompson, 58 Ohio App.3d 29, 567

N.E.2d 1334 (5th Dist.1989), the Fifth Appellate District addressed a case in which

just that had occurred. It held that “this sewage plant is to be constructed solely on

the property of appellees. The damages that will be suffered as to the residual

property by both the odor and the potential leakage into the water supply are

unique.” (Emphasis added.) Id. at 32. But, where the taking and damage are

temporary, both can be compensated under the taking portion of the award.

{¶11} In sum, these cases indicate that the nuisance compensation can

either be accomplished through considering the amount of the temporary taking, or

as compensation for the damage to the residue. As the Ninth Appellate District

noted,

the damages to the residue are the decrease in property value less

a credit for the amount paid in compensation for the taking. * * *

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As the amount paid for the temporary easement is analogous to

rent and is only paid to compensate the property owner for the use

of the property for the period of the easement, it should not [be]

considered in figuring the damages to the residue.

Parsson 101 Ohio App. 3d at 521-522, 655 N.E.2d 1365. So, as long as there is no

double recovery, the award is proper. We overrule the city’s first two assignments of

error.

{¶12} In its third assignment of error, the city argues that instructions to the

jury regarding this loss were improper and created the possibility of a double

recovery. In this case, there was no award for damages, only a compensation award

for the taking. Therefore, any error as to how the jury was instructed regarding

compensation versus damages was harmless because it did not create a double

recovery. See Farmers Ins. of Columbus, Inc. v. Lister, 5th Dist. Fairfield No. 2005-

CA-29, 2006-Ohio-142, ¶ 50. Since there was no double recovery, the award was

proper. We overrule the city’s third assignment of error.

The Interest Rate on the Judgment

{¶13} In its fourth assignment of error, the city argues that the trial court

erred when it computed the interest due on the award. We disagree.

{¶14} R.C. 163.17 provides that, in an appropriation action where the

appropriating agency took possession of the property prior to paying the award,

interest shall be calculated “from the date of the taking to the date of the actual

payment of the award,” and “shall be the rate of interest for judgments as set forth in

section 1343.03 of the Revised Code.” Prior to 2004, R.C. 1343.03 set the statutory

interest rate at ten percent per annum. As of June 2, 2004, the interest rate was set

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at the federal short-term rate plus three percent. See 2003 Sub.H.B. No. 212, 150

Ohio Laws, Part III, 3417. The amount is adjusted annually.

{¶15} The uncodified law in 2003 Sub.H.B. 212 states that the change in the

statutory interest-rate calculation was to be applied to pending cases in a specific

manner. See 2003 Sub.H.B. 212, Section 3, 150 Ohio Laws, Part III, 3421; Maynard

v. Eaton Corp., 119 Ohio St.3d 443, 2008-Ohio-4542, 895 N.E.2d 145, ¶ 8.

In actions pending on the effective date of this act, the interest

rate provided for in section 1343.03 of the Revised Code prior

to the amendment of that section by this act shall apply up to

the effective date of this act, and the interest rate provided for

in section 1343.03 of the Revised Code as amended by this act

shall apply on and after that effective date.

2003 Sub.H.B. 212, Section 3, 150 Ohio Laws, Part III, 3421.

{¶16} In its determination of the interest rate in this case, the trial court

used the “particular interest rate for each separate year in which there was an

appropriation.” Since the action was commenced after the effective date of the

statute, there is no reason not to simply apply the statute as written. Contrary to the

Gilbert’s position in their brief, they were not entitled to use the ten percent interest

rate through 2004. The action was not pending at the time the statute changed, and

thus that particular, uncodified provision of the statute does not apply. The statute

calls for a variable interest rate to be applied for each successive tax year, and the

trial court properly determined the interest rate in this case. See Jones v.

Progressive Preferred Ins. Co. 169 Ohio App.3d 291, 2006-Ohio-5420, 862 N.E.2d

1054, ¶ 22 (in the context of prejudgment interest, applying the interest rate for each

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year from the accrual date forward). We overrule the city’s fourth assignment of

Attorney Fees

{¶17} The Gilberts claim that they are entitled to attorney fees and costs

because the city never made a good-faith offer to settle. The Revised Code provides

that a property owner is entitled to recover costs and expenses, including attorney

and appraisal fees, that the owner actually incurred when the government fails to do

so. R.C. 163.21. But that award is contingent upon the owner providing the agency

with an appraisal or summary appraisal of the property being appropriated or with

the owner's sworn statement setting forth the value of the property and an

explanation of how the owner arrived at that value no less than 50 days prior to the

date initially designated by the court for trial. R.C. 163.21(5)(b).

{¶18} The Gilberts claim that their deposition testimony during the

mandamus action before this court met that requirement. But that testimony was to

the total value of the land when the Gilberts were trying to make the city purchase

the whole parcel under a regulatory-takings, investment-backed expectations theory.

This court and the Ohio Supreme Court rejected that theory, and the Gilberts made

no subsequent presentation of the value of the property being appropriated under

the current temporary, partial taking theory.

{¶19} The purpose of R.C. 163.21 is to facilitate the settlement of

appropriation cases. The reason an owner is to provide the information regarding

the value of the property is to allow the government to make an informed offer to

purchase or compensate. The Gilberts’ deposition testimony—a recitation of the

value of the entire property listed years before trial by the Hamilton County

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Auditor—was wholly insufficient. Absent an appraisal or a statement under oath

regarding the value of the property actually taken, the trial court was not required to

award costs and attorney fees. We overrule the Gilberts’ sole assignment of error.

Conclusion

{¶20} Having considered the assignments of error of both the city of

Cincinnati and the Gilberts, we conclude that the trial court committed no error

below. Therefore, we affirm its judgment.

Judgment affirmed.

CUNNINGHAM, P.J., and DEWINE, J., concur.

Please note: The court has recorded its own entry on the date of the release of this opinion.