Redevelopment Authority of Washington v. Sepesy

528 A.2d 287, 107 Pa. Commw. 227, 1987 Pa. Commw. LEXIS 2271
CourtCommonwealth Court of Pennsylvania
DecidedJuly 2, 1987
DocketAppeal, No. 1295 C.D. 1986
StatusPublished
Cited by8 cases

This text of 528 A.2d 287 (Redevelopment Authority of Washington v. Sepesy) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Redevelopment Authority of Washington v. Sepesy, 528 A.2d 287, 107 Pa. Commw. 227, 1987 Pa. Commw. LEXIS 2271 (Pa. Ct. App. 1987).

Opinion

Opinion by

Senior Judge Kalish,

The Redevelopment Authority of the County of Washington (condemnor) appeals from a decision of the Court of Common Pleas of Washington County which [229]*229denied its motion for post-trial relief and entered judgment in favor of Joseph R. Sepesy, Diane L. Sepesy, Robert P. Sepesy and Loretta J. Sepesy (condemnees). We affirm.

Condemnees owned a parcel of land in the Borough of California, Washington County. A restaurant with a liquor license was operated on the land. The property was condemned by condemnor on October 18, 1982. A Board of View awarded damages to condemnees in the amount of $52,900. Condemnees filed an appeal from the award.

Prior to trial, condemnor paid to condemnees $40,800 as its estimate of just compensation for general damages. In addition, condemnor paid condemnees $10,000 for business dislocation damages, and $17,465 for direct loss of personal property, i.e., the machinery, equipment, and fixtures.

At the time of trial, the building on the property had been demolished, and the liquor license was held by the Liquor Control Board for safekeeping. The jury returned a verdict for damages to condemnees in the amount of $110,000. Condemnor filed a motion for post-trial relief which was denied.

Condemnor contends that this case raises the question of the applicability of the Assembled Economic Unit Doctrine to the facts of this case, specifically in reference to the damages to be paid for the real estate and the liquor license only, where the bulk of the personal property, including the liquor license, is movable. Condemnor asserts that the Assembled Economic Unit Doctrine may not apply to valuation of a restaurant and liquor license, and that the trial court erred in its charge to the jury in connection with the standard to be used in determining the value of the real estate where the building was a restaurant-tavern with a liquor-dispensing license.

[230]*230Our scope of review is limited to a determination of whether the trial court abused its discretion or committed an error of law. Pidstawski v. South Whitehall Township, 33 Pa. Commonwealth Ct. 162, 380 A.2d 1322 (1977).

The just compensation to which condemnees are entitled, pursuant to section 601 of the Eminent Domain Code (Code), Act of June 22, 1964, Special Sess., P.L. 84, as amended, 26 P.S. §1-601, as applied to real estate, is the fair market value of condemnees’ entire interest. Fair market value is defined as the price which would be agreed upon by a willing buyer and seller, including such factors as the use of the property, machinery, equipment, and fixtures forming part of the real estate. Section 603 of the Code, 26 P.S. §1-603.

Since the Code did not define when machinery, equipment, and fixtures become part of the real estate, our Supreme Court fashioned the so-called Assembled Economic Unit Doctrine to meet this problem. The doctrine attempts to preserve the economic status of a condemnee by moving the condemnee and establishing a comparable economic unit elsewhere.

Under the doctrine, where the condemned building is so unique that a comparable building was not available or adaptable within a reasonable distance from which the condemnee drew his patrons, all machinery, equipment, and tools, even though they could be moved, may nevertheless be left there by the owner, and he will be entitled to receive the fair market value, in place, as part of the real estate. Singer v. Oil City Redevelopment Authority, 437 Pa. 55, 261 A.2d 594 (1970); Redevelopment Authority of Erie v. Pulakos, 17 Pa. Commonwealth Ct. 251, 330 A.2d 869 (1975).

It is the function of the jury to determine whether the Assembled Economic Unit Doctrine applies to the facts of a particular case, based on credibility and the [231]*231weight of the testimony. Benkovitz Appeal, 56 Pa. Commonwealth Ct. 523, 425 A.2d 1178 (1981). This case was tried on the basis of this doctrine. The nature of the business and the uniqueness of the building was such that no other building within a reasonable distance from which condemnees drew their patrons was available or adaptable to the functioning of the business as an economic unit. There was testimony in the record to that effect. The building, land, machinery, equipment, and fixtures became part of the real estate, to be valued as such, in place, at the fair market value.

The trial court was correct, when it instructed the jury:

In this case, the plaintiffs-condemnees have already received payment for the machinery, equipment and fixtures forming part of the real estate taken, and you should therefore reduce the amount of damages by the fair market value of the machinery, equipment and fixtures for which the plaintiffs have already received compensation. The condemnees, the Sepesys, have produced evidence that they have received the sum of $17,465 as the fair market value of the machinery, equipment and fixtures.

How does the fact that this real estate has use value because of the liquor license impact on the valuation of the real estate? Use is an extremely important factor to be considered by an expert in formulating his opinion of fair market value.

The issuance of a liquor license in Pennsylvania constitutes governmental permission to use particular premises for a particular purpose. ... it cannot be disputed that a liquor license adds significant use value to a particular premises. . . . The use value added to a particular premises by a liquor license is not unlike the [232]*232use value which a premises enjoys because it may be used for a particular purpose under a zoning enactment.

Redevelopment Authority of the City of Philadelphia v. Lieberman, 461 Pa. 208, 222, 336 A.2d 249, 257 (1975) (emphasis in original).

This concept was further elaborated in 1412 Spruce Street, Inc. v. Pennsylvania Liquor Control Board, 504 Pa. 394, 474 A.2d 280 (1984), where the court indicated that it is not the per se existence of a liquor license that is the inquiry, but rather the value of the business property where it has the opportunity for business income. In other words, it is the opportunity for business income brought about by the liquor license that affects the value of the real estate. This is in line with the concept of ownership of property which is viewed as the accumulation of legal interests in the physical object, rather than the physical object itself, and includes such things as the right to possess, use, and dispose of the physical object. Lieherman.

The real estate appraisal expert is confronted with this problem of enhancement in the value of the real estate, and how it is measured, when he formulates his opinion of its fair market value.

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Cite This Page — Counsel Stack

Bluebook (online)
528 A.2d 287, 107 Pa. Commw. 227, 1987 Pa. Commw. LEXIS 2271, Counsel Stack Legal Research, https://law.counselstack.com/opinion/redevelopment-authority-of-washington-v-sepesy-pacommwct-1987.