Lawson v. State ex rel. Secretary of the Department of Transportation

91 A.3d 544, 2014 WL 1622687, 2014 Del. LEXIS 194
Supreme Court of Delaware·Decided April 23, 2014·No. No. 518, 2013·Published·Cited by 23 cases

Opinion

JACOBS, Justice:

INTRODUCTION

By Opinion dated July 22, 2013, this Court ordered the dismissal without prejudice of a condemnation proceeding instituted in the Superior Court by the plaintiff-below/appellee, the State of Delaware Department of Transportation (“DelDOT”), against the defendants-below/appellants, Jack and Mary Ann Lawson (the “Law-sons”). Thereafter, the Lawsons moved in the Superior Court proceeding for an award of litigation expenses and costs, which the Superior Court denied by order dated September 25, 2013. The Lawsons appeal from that order. They claim entitlement to reimbursement for the litigation expenses they incurred by virtue of the condemnation proceeding, under both the Real Property Acquisition Act, and the [546] common law bad faith exception to the so-called “American Rule.” They also claim that they are statutorily entitled to an award of costs.

This appeal requires us to construe, for the first time, certain language in 29 Del. C. § 9503, the reimbursement provision of the Real Property Acquisition Act (the “Act”). We hold that that provision requires reimbursement for litigation expenses related to a condemnation proceeding where a court determines that the subject property cannot be acquired by the governmental entity’s particular exercise of its underlying eminent domain power in that specific proceeding. Accordingly, we determine that the Superior Court erred by denying the Lawsons’ motion for litigation expenses under 29 Del. C. § 9503. We also conclude, however, that the Superior Court correctly determined that the Lawsons were not entitled to litigation expenses under the bad faith exception to the American Rule. Finally, we hold that the Superior Court erred by not addressing the Lawsons’ application for costs.

We therefore affirm in part, reverse in part, and remand the case to the Superior Court to determine the litigation expenses and costs to which the Lawsons are statutorily entitled.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY1

The Lawsons own approximately ten acres of' real property located at 323 Strawberry Lane in Middletown, Delaware.2 That property is zoned as “CR, Regional Commercial District,” although the Lawsons currently use the property for their single — family residence — a legal nonconforming use.3 Were the Lawsons to develop their property for commercial use (as the property’s zoning designation permits), they would need to widen the property’s current 12-foot-wide driveway to obtain the requisite DelDOT commercial entrance permit.4

Beginning in 2010, DelDOT sought to acquire approximately 1.51 acres of the Lawsons’ property5 to construct a storm water management pond parallel to Strawberry Lane.6 The acreage DelDOT sought to acquire included all the Lawsons’ property that fronted Strawberry Lane. That acquisition, if agreed to, would leave the Lawsons without access to the road.7 To resolve that problem, DelDOT planned to build a raised berm across the storm water management pond, over which it would construct a new 12-foot-wide driveway for the Lawsons.8

In December 2010, DelDOT obtained an appraisal of the Lawsons’ property that valued the fee interest at $130,000.9 That appraisal was calculated by subtracting the estimated post-taking fair market value of the Lawsons’ property ($420,000) from that property’s estimated pre-taking fair market value ($550,000). Both fair market [547] value estimations assumed that the highest and best use of the Lawsons’ property was for commercial development.10

In September 2011, DelDOT offered the Lawsons $133,100 for the property acquisition and the temporary construction easement.11 At a meeting with DelDOT on September 12, 2011, the Lawsons expressed concern that the planned relocated 12-foot-wide driveway would not allow the property to be commercially developed.12 On October 12, 2011, the Lawsons’ real estate representative informed DelDOT that two engineers had concluded that the relocated driveway could not accommodate a commercial entrance — which, therefore, would preclude commercial development. To compensate them fairly, the Lawsons proposed a purchase price of $550,000.13 In November 2011, the Lawsons’ attorney again told DelDOT that the Lawsons’ post-taking property (with the planned 12-foot-wide driveway) could not be commercially developed, for which reason DelDOT’s appraisal and proposed $133,100 purchase price were inadequate.14

On January 18, 2012, DelDOT filed a condemnation action in the Superior Court.15 By order dated May 15, 2012, the Superior Court granted DelDOT’s motions for possession and for a protective order,16 and denied the Lawsons’ motions to dismiss and to compel.17 By order dated May 17, 2012, that court granted DelDOT immediate entry and possession over the Lawsons’ property.18 On June 22, 2012, this Court accepted the Lawsons’ interlocutory appeal from those orders.

By Opinion dated July 22, 2013, this Court reversed the Superior Court judgment, vacated the Superior Court orders, and remanded with instructions to dismiss the condemnation action without prejudice.19 We determined that because Del-DOT’s appraisal erroneously assumed that the Lawsons’ post-taking property would be suitable for commercial use, DelDOT had failed to establish a purchase price that was “reasonably believed [to be] just compensation” for the acquisition.20 Therefore, this Court held, the condemnation violated Section 9505(3) of the Act, 29 Del. C. § 9505(3), and the DelDOT action must be dismissed.21 On August 7, 2013, the Superior Court dismissed the DelDOT [548] condemnation action, without prejudice.22

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Lawson v. State ex rel. Secretary of the Department of Transportation, 91 A.3d 544, 2014 WL 1622687, 2014 Del. LEXIS 194 (Del. 2014).

91 A.3d 544 (Lawson v. State ex rel. Secretary of the Department of Transportation) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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