1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No.: 19-cv-1513-WQH-AHG
12 Plaintiff, ORDER 13 v. 14 3.69 ACRES OF LAND, MORE OR LESS, SITUATE IN IMPERIAL 15 COUNTY, STATE OF CALIFORNIA; 16 THE UNKNOWN HEIRS OF THE ESTATE OF HARRY FINERMAN, 17 DECEASED; IMPERIAL IRRIGATION 18 DISTRICT; and IMPERIAL COUNTY TAX COLLECTOR, 19 Defendants. 20 21 HAYES, Judge: 22 The matter before the Court is the determination of just compensation pursuant to 23 Rule 71.1(h) of the Federal Rules of Civil Procedure. 24 I. PROCEDURAL BACKGROUND 25 On August 12, 2019, the United States filed a Complaint in Condemnation, 26 condemning 3.69 acres of land in Imperial County, California (“Subject Property”), for the 27 public purpose “to construct, maintain, and repair barriers, roads, lighting, cameras and 28 sensors to help secure the United States/Mexico border within the State of California.” 1 (ECF No. 1-2 at 2). The United States identified the holder of title to the Subject Property 2 as “The Unknown Heirs of the Estate of Harry Finerman, Deceased,” based on a Grant 3 Deed recorded on August 20, 1945. (Id. at 7). The United States identified the interested 4 parties to the litigation as the Unknown Heirs of the Estate of Harry Finerman, Deceased, 5 the Imperial Irrigation District, and the Imperial County Tax Collector. 6 On August 13, 2019, the United States filed a Declaration of Taking (ECF No. 3) 7 and a Notice of Condemnation (ECF No. 4). On August 13, 2019, the Court issued an Order 8 directing the Clerk of the Court to deposit the estimated just compensation of $5,550, 9 tendered by the United States, into the Registry Bank Account of the United States District 10 Court for the Southern District of California. (ECF No. 7). Thereafter, title of the Subject 11 Property passed to the United States. See 40 U.S.C. § 3114(b). 12 On October 28, 2019, the United States filed a Certification of Service by 13 Publication, certifying that the Unknown Heirs of the Estate of Harry Finerman, Deceased, 14 “cannot be personally served because, after a diligent inquiry, the place of residence of the 15 said defendant cannot be ascertained by the plaintiff.” (ECF No. 9 at 1). On November 5, 16 2019, the United States filed executed Waivers of Service as to the Imperial County Tax 17 Collector and the Imperial Irrigation District. (ECF Nos. 10-11). On November 8, 2019, 18 the Imperial County Tax Collector filed an Answer to the Complaint. (ECF No. 12). On 19 November 27, 2019, the United States filed Proof of Service by Publication as to the 20 Unknown Heirs of the Estate of Harry Finerman, Deceased, certifying that the United 21 States “caused the Notice of Condemnation for Publication to be published, once a week 22 for three consecutive weeks, on October 29, 2010, November 5, 2019, and November 12, 23 2019, in the Imperial Valley Press.” (ECF No. 13 at 1). On September 10, 2020, the 24 Imperial County Tax Collector filed a Disclaimer of Interest. (ECF No. 15). 25 On June 2, 2021, the Court set a hearing to determine just compensation for 26 September 23, 2021. (ECF No. 28). On September 22, 2021, the United States filed a 27 Certificate of Service, certifying that “on June 7, 2021, the United States mailed a copy of 28 1 the Court’s Order of June 2, 2021, to all parties of record for whom an address is known 2 and who have not disclaimed interest in this litigation.” (ECF No. 29 at 1). 3 On September 23, 2021, the Court held a hearing to determine just compensation. 4 (ECF No. 30). 5 On October 15, 2021, the Court ordered the United States to supplement the record 6 to detail the “reasonably diligent search of the records” the United States has undertaken 7 to determine the current title holder of the Subject Property pursuant to Rule 71.1(c)(3) of 8 the Federal Rules of Civil Procedure. (ECF No. 31 at 2). On October 25, 2021, the United 9 States filed a Response, asserting that Westcor Land Title Insurance Company (“Westcor”) 10 performed a search of the public records and determined title in the Subject Property to be 11 vested in Harry Finerman, subject to a reservation of right of way currently held by the 12 Imperial Irrigation District. (ECF No. 32). The United States asserted that it “attempted to 13 contact Harry Finerman to give notice of this condemnation,” but “the United States could 14 find no record of a Harry Finerman living in or near Imperial County, California, and a 15 search of the records, including LexisNexis, indicated that the only two Harry Finermans 16 to have lived in Southern California died in October 1966 and July 1987.” (Id. at 2). The 17 United States attached the Westcor report, which includes a description of the chain of title 18 ending in a transfer to Harry Finerman. (ECF No. 32-1). 19 II. DISCUSSION 20 The United States can condemn property for public use, but it must pay just 21 compensation for the value of what is taken. See U.S. CONST. amend. V. When a whole 22 parcel is taken, just compensation is “the fair market value of the property on the date it is 23 appropriated.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 9-10 (1984) (citing 24 United States v. 564.54 Acres of Land, 441 U.S. 506, 511-13 (1979)). When a portion of a 25 parcel is condemned, just compensation is the difference between the fair market value of 26 the whole parcel immediately before the taking and the fair market value of the remainder 27 of the parcel after the taking. See United States v. Miller, 317 U.S. 369, 376 (1943). Fair 28 market value is the price a reasonable seller would demand, and the price a “willing buyer 1 would pay in cash to a willing seller” for the property. Kirby, 467 U.S. at 10 (quoting 2 564.54 Acres of Land, 441 U.S. at 511). Fair market value must be based on the property’s 3 “highest and best use,” which is the most profitable, legal use for which the property is 4 adaptable and needed or likely to be needed in the reasonably near future. See Olson v. 5 United States, 292 U.S. 246, 255 (1934). A property owner “must be made whole but is 6 not entitled to more.” Id. 7 The court determines just compensation where, as here, no party has demanded a 8 jury trial. See Fed. R. Civ. P. 71.1(h)(1). During the hearing on just compensation, “a 9 defendant – whether or not it has previously appeared or answered – may present evidence 10 on the amount of compensation to be paid and may share in the award.” Fed. R. Civ. P. 11 71.1(e)(3). The property owner bears the burden of proving just compensation. See United 12 States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 273 (1943). An award of just 13 compensation may not be predicated on speculative or conjectural potential. See Olson, 14 292 U.S. at 255. 15 In this case, the United States has acquired the following Subject Property as a result 16 of condemnation pursuant to 40 U.S.C.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No.: 19-cv-1513-WQH-AHG
12 Plaintiff, ORDER 13 v. 14 3.69 ACRES OF LAND, MORE OR LESS, SITUATE IN IMPERIAL 15 COUNTY, STATE OF CALIFORNIA; 16 THE UNKNOWN HEIRS OF THE ESTATE OF HARRY FINERMAN, 17 DECEASED; IMPERIAL IRRIGATION 18 DISTRICT; and IMPERIAL COUNTY TAX COLLECTOR, 19 Defendants. 20 21 HAYES, Judge: 22 The matter before the Court is the determination of just compensation pursuant to 23 Rule 71.1(h) of the Federal Rules of Civil Procedure. 24 I. PROCEDURAL BACKGROUND 25 On August 12, 2019, the United States filed a Complaint in Condemnation, 26 condemning 3.69 acres of land in Imperial County, California (“Subject Property”), for the 27 public purpose “to construct, maintain, and repair barriers, roads, lighting, cameras and 28 sensors to help secure the United States/Mexico border within the State of California.” 1 (ECF No. 1-2 at 2). The United States identified the holder of title to the Subject Property 2 as “The Unknown Heirs of the Estate of Harry Finerman, Deceased,” based on a Grant 3 Deed recorded on August 20, 1945. (Id. at 7). The United States identified the interested 4 parties to the litigation as the Unknown Heirs of the Estate of Harry Finerman, Deceased, 5 the Imperial Irrigation District, and the Imperial County Tax Collector. 6 On August 13, 2019, the United States filed a Declaration of Taking (ECF No. 3) 7 and a Notice of Condemnation (ECF No. 4). On August 13, 2019, the Court issued an Order 8 directing the Clerk of the Court to deposit the estimated just compensation of $5,550, 9 tendered by the United States, into the Registry Bank Account of the United States District 10 Court for the Southern District of California. (ECF No. 7). Thereafter, title of the Subject 11 Property passed to the United States. See 40 U.S.C. § 3114(b). 12 On October 28, 2019, the United States filed a Certification of Service by 13 Publication, certifying that the Unknown Heirs of the Estate of Harry Finerman, Deceased, 14 “cannot be personally served because, after a diligent inquiry, the place of residence of the 15 said defendant cannot be ascertained by the plaintiff.” (ECF No. 9 at 1). On November 5, 16 2019, the United States filed executed Waivers of Service as to the Imperial County Tax 17 Collector and the Imperial Irrigation District. (ECF Nos. 10-11). On November 8, 2019, 18 the Imperial County Tax Collector filed an Answer to the Complaint. (ECF No. 12). On 19 November 27, 2019, the United States filed Proof of Service by Publication as to the 20 Unknown Heirs of the Estate of Harry Finerman, Deceased, certifying that the United 21 States “caused the Notice of Condemnation for Publication to be published, once a week 22 for three consecutive weeks, on October 29, 2010, November 5, 2019, and November 12, 23 2019, in the Imperial Valley Press.” (ECF No. 13 at 1). On September 10, 2020, the 24 Imperial County Tax Collector filed a Disclaimer of Interest. (ECF No. 15). 25 On June 2, 2021, the Court set a hearing to determine just compensation for 26 September 23, 2021. (ECF No. 28). On September 22, 2021, the United States filed a 27 Certificate of Service, certifying that “on June 7, 2021, the United States mailed a copy of 28 1 the Court’s Order of June 2, 2021, to all parties of record for whom an address is known 2 and who have not disclaimed interest in this litigation.” (ECF No. 29 at 1). 3 On September 23, 2021, the Court held a hearing to determine just compensation. 4 (ECF No. 30). 5 On October 15, 2021, the Court ordered the United States to supplement the record 6 to detail the “reasonably diligent search of the records” the United States has undertaken 7 to determine the current title holder of the Subject Property pursuant to Rule 71.1(c)(3) of 8 the Federal Rules of Civil Procedure. (ECF No. 31 at 2). On October 25, 2021, the United 9 States filed a Response, asserting that Westcor Land Title Insurance Company (“Westcor”) 10 performed a search of the public records and determined title in the Subject Property to be 11 vested in Harry Finerman, subject to a reservation of right of way currently held by the 12 Imperial Irrigation District. (ECF No. 32). The United States asserted that it “attempted to 13 contact Harry Finerman to give notice of this condemnation,” but “the United States could 14 find no record of a Harry Finerman living in or near Imperial County, California, and a 15 search of the records, including LexisNexis, indicated that the only two Harry Finermans 16 to have lived in Southern California died in October 1966 and July 1987.” (Id. at 2). The 17 United States attached the Westcor report, which includes a description of the chain of title 18 ending in a transfer to Harry Finerman. (ECF No. 32-1). 19 II. DISCUSSION 20 The United States can condemn property for public use, but it must pay just 21 compensation for the value of what is taken. See U.S. CONST. amend. V. When a whole 22 parcel is taken, just compensation is “the fair market value of the property on the date it is 23 appropriated.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 9-10 (1984) (citing 24 United States v. 564.54 Acres of Land, 441 U.S. 506, 511-13 (1979)). When a portion of a 25 parcel is condemned, just compensation is the difference between the fair market value of 26 the whole parcel immediately before the taking and the fair market value of the remainder 27 of the parcel after the taking. See United States v. Miller, 317 U.S. 369, 376 (1943). Fair 28 market value is the price a reasonable seller would demand, and the price a “willing buyer 1 would pay in cash to a willing seller” for the property. Kirby, 467 U.S. at 10 (quoting 2 564.54 Acres of Land, 441 U.S. at 511). Fair market value must be based on the property’s 3 “highest and best use,” which is the most profitable, legal use for which the property is 4 adaptable and needed or likely to be needed in the reasonably near future. See Olson v. 5 United States, 292 U.S. 246, 255 (1934). A property owner “must be made whole but is 6 not entitled to more.” Id. 7 The court determines just compensation where, as here, no party has demanded a 8 jury trial. See Fed. R. Civ. P. 71.1(h)(1). During the hearing on just compensation, “a 9 defendant – whether or not it has previously appeared or answered – may present evidence 10 on the amount of compensation to be paid and may share in the award.” Fed. R. Civ. P. 11 71.1(e)(3). The property owner bears the burden of proving just compensation. See United 12 States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 273 (1943). An award of just 13 compensation may not be predicated on speculative or conjectural potential. See Olson, 14 292 U.S. at 255. 15 In this case, the United States has acquired the following Subject Property as a result 16 of condemnation pursuant to 40 U.S.C. §§ 3113 and 3114: 17 The southerly 60 feet of lots 3, and 4 of Section 24, Fractional Township 17 South, Range 13 East, S.B.M., according to the Official Government Plat 18 Resurvey accepted by The Department of Interior General Land Office being 19 dated November 19, 1880. Said 60 feet also being measured parallel and perpendicular to the International Boundary between the United States and 20 Mexico. 21 Said Tract containing 3.69 acres, more or less. 22
23 (ECF No. 3 at 6). Westcor performed a search of the public records on behalf of the United 24 States and determined title in the Subject Property to be vested in Harry Finerman, subject 25 to a reservation of right of way currently held by the Imperial Irrigation District. The United 26 States identified the interested parties in the Subject Property on the date of taking as the 27 Unknown Heirs of the Estate of Harry Finerman, Deceased, the Imperial Irrigation District, 28 and the Imperial County Tax Collector. The United States has demonstrated that the 1 Imperial Irrigation District and the Imperial County Tax Collector waived service, and the 2 Unknown Heirs of the Estate of Harry Finerman, Deceased, were served by publication 3 pursuant to Rule 71.1(d)(3)(B) of the Federal Rules of Civil Procedure. The only interested 4 party to file an answer or notice of appearance was the Imperial County Tax Collector, 5 which has since disclaimed its interest in the Subject Property. 6 The United States has further demonstrated that the Imperial Irrigation District, the 7 only “part[y] of record for whom an address is known and who ha[s] not disclaimed interest 8 in this litigation,” received notice of the hearing. (ECF No. 29 at 1; see ECF No. 13-1 at 2 9 (Notice of Condemnation for Publication, stating, “You are [] notified [] that unless you 10 file a Notice of Appearance, this proceeding may proceed to pretrial or trial without further 11 notice to you”)). No interested parties or landowners appeared at the hearing. 12 At the hearing, the Court admitted into evidence the Unites States’ Exhibit 2: (1) the 13 Declaration of Eric E. Roman, a Certified General Real Estate Appraiser in the State of 14 California and the Appraisal Branch Chief of the United States Army Corps of Engineers’ 15 Regional Appraisal Center, Real Estate Division, Sacramento District; and (2) the attached 16 Property Appraisal Report prepared by Roman on April 23, 2019. The Property Appraisal 17 Report stated that it was prepared in conformity with the U.S. Army Corps of Engineers 18 appraisal guidelines, the Uniform Appraisal Standards for Federal Land Acquisitions, and 19 the Uniform Standards for Professional Appraisal Practice. The Property Appraisal Report 20 stated that the Subject Property is part of a larger parcel of approximately 22.15 acres of 21 land along the United States-Mexico border. The Property Appraisal Report concluded that 22 the value of the larger parcel before acquisition was $33,225 on March 6, 2019—the date 23 of the appraisal. The Property Appraisal Report concluded that the value of the remainder 24 of the parcel after acquisition of the Subject Property was $27,690. The Property Appraisal 25 Report concluded that the Subject Property has a fair market value of $5,550. No party has 26 contested the conclusions of Property Appraisal Report or the estimation of the fair market 27 value of the Subject Property. Having reviewed the Property Appraisal Report, the 28 1 Declaration of Eric E. Roman, and the filings in this case, the Court concludes that the sum 2 of $5,550 is just compensation for the taking in this case. 3 III. CONCLUSION 4 IT IS HEREBY ORDERED: 5 1. The owners of the property interests condemned by the United States on the 6 date of taking were as follows: the Unknown Heirs of the Estate of Harry Finerman, 7 Deceased, the Imperial Irrigation District, and the Imperial County Tax Collector. 8 2. Title to the Subject Property transferred to the United States upon the filing 9 of the Declaration of Taking and the deposit of estimated just compensation, as provided 10 by 40 U.S.C. § 3114(b). 11 3. The full just compensation payable by Plaintiff, United States of America, for 12 the taking of the Subject Property as identified in the Complaint and Declaration of Taking 13 (ECF Nos. 1, 3) shall be the sum of $5,550, inclusive of interest. 14 4. Final Judgment will be entered against the United States by separate order in 15 the sum of $5,550 (said sum being full and just compensation) in full satisfaction of any 16 and all claims of whatsoever nature against the United States by reason of the institution 17 and prosecution of this action and the taking of the said lands and all appurtenances 18 thereunto. 19 5. Any claimant entitled to any such money may, on petition to the Court and 20 upon notice to the United States and full proof of the right thereto, obtain an order directing 21 payment of just compensation for the property interest acquired. 22 /// 23 24 /// 25 26 /// 27 28 /// 1 6. If the funds remain unclaimed for five years following entry of final judgment, 2 Clerk of the Court is to deposit those funds into the Treasury in the name and to the 3 || credit of the United States. See 28 U.S.C. § 2042. Thereafter, any claimant entitled to any 4 ||such money may, on petition to the Court and upon notice to the United States and full 5 || proof of the right thereto, obtain an order directing payment of just compensation for the 6 || property interest acquired. 7 || Dated: October 28, 2021 BME: ie Z. A a 8 Hon. William Q. Hayes 9 United States District Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28