2800 N. Broad St., LLC v. Com. of PA, DOT

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

2800 N. Broad Street, LLC :

:

v. : No. 925 C.D. 2020

: ARGUED: June 7, 2021

Commonwealth of Pennsylvania, :

Department of Transportation, :

Appellant :

BEFORE: HONORABLE P. KEVIN BROBSON, President Judge

HONORABLE J. ANDREW CROMPTON, Judge (P)

HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION BY

SENIOR JUDGE LEADBETTER FILED: July 2, 2021

The Commonwealth of Pennsylvania, Department of Transportation,

appeals from an order of the Court of Common Pleas of Philadelphia County

overruling the Department’s preliminary objections to the petition for appointment

of a board of viewers filed by 2800 N. Broad Street, LLC (Condemnee) pursuant to

Section 502 of the Eminent Domain Code (Code), 26 Pa.C.S. § 502. We reverse and

remand this matter with directions to the trial court to grant Condemnee’s request

for appointment of a board of viewers for purposes of ascertaining just compensation

for the de jure partial taking of Condemnee’s properties, and to strike Condemnee’s

request that the court declare a de facto taking.

The relevant background is as follows. In October 2018, the

Department filed a declaration of taking for a partial taking of Condemnee’s

properties at 3900-18 Richmond Street, Philadelphia, Pennsylvania,1 as a part of the

1

In the declaration of taking and condemnation plan, the Department refers to the properties

as Parcel 71. Parcel 71 is a consolidation of the properties at issue.

road improvement project for State Route 0095, Section AF3.2 (Decl. of Taking,

Schedule of Prop. Condemned at 1; Reproduced R. “R.R.” at 5a.) In addition to a

temporary construction easement of 1955 square feet, the partial taking included

1104 square feet from a total of 18,264 square feet. Condemnee did not file

preliminary objections to the declaration of taking.

In March 2020, Condemnee filed a petition for appointment of a board

of viewers seeking damages for the de jure partial taking of its properties under

Section 502(a) of the Code and a declaration of a de facto taking of the remainder of

its properties under Section 502(c). Specifically, Condemnee contended that the

Department’s partial de jure condemnation effected a de facto taking of the entirety

of Condemnee’s property interest such that the remainder had no economic value

after the condemnation. In support, Condemnee alleged that it had obtained permits,

development approvals, and zoning approvals before the declaration of taking to

construct fourteen two-family attached dwellings but that the condemnation had

rendered development impossible because the entirety of the property was necessary

for the planned development.3 (Mar. 18, 2020, Pet. for Appt. of a Bd. of Viewers,

¶¶ 8, 12, and 13; R.R. at 13a-14a.)

In preliminary objections, the Department asserted that where there was

a declaration of taking, Condemnee erred in asserting a de facto taking in the petition

for appointment of a board of viewers. The Department alleged that “[t]he

2

This segment of the project effects a total of 0.187 miles of roadway situated along portions

of land adjacent to I-95 and extending along Richmond Street to just beyond the intersection of

Wheatsheaf Lane. The purpose of the partial taking is to improve the access ramps from I-95 to

the Betsy Ross Bridge.

3

Condemnee asserted that the Philadelphia Zoning Code required off-street parking for the

proposed units and that the planned vehicular access was to be via a common drive from

Wheatsheaf Lane, a cross street to Richmond Street. (May 11, 2020, Br. of Condemnee in Opp’n

to Prelim. Objs. at 3; R.R. at 76a.)

2

condemnation and filing of a declaration of taking, whether considered a partial or

total taking, ‘encompasses’ the entire parcel for purposes of determining just

compensation.” (Apr. 20, 2020, Prelim. Objs., ¶ 18; R.R. at 43a.) The Department

alleged that only a de jure taking occurred and that any damages were part of and

the result of the declaration of taking. It also contended that Condemnee failed to

allege or to establish any exceptional circumstances that substantially deprived it of

the beneficial use and enjoyment of the properties, other than the declaration of

taking. In addition, the Department objected to allegations that any of its actions

affected the highest and best use of the properties, including the remainder, other

than the declaration of taking. The Department also denied that it prevented

Condemnee from developing or using the remainder after the declaration of taking.

(Id., ¶¶ 41 and 42; R.R. at 46a.) Accordingly, the Department argued for the

dismissal of Condemnee’s de facto taking claims under Section 502(c) of the Code.

Without specifically ruling on the Department’s preliminary objections,

the trial court granted Condemnee’s petition and ordered an appointment of viewers.

Following the Department’s motion for reconsideration asserting, inter alia, that

there were factual issues to be determined in an evidentiary hearing,4 the trial court

vacated its order and directed the Department to file an answer to Condemnee’s

petition within ten days. In the answer, the Department incorporated its preliminary

objections, denied the petition’s seminal averments, and demanded strict proof of

the averments at an evidentiary hearing. Condemnee’s answer to the preliminary

objections followed. Subsequently, the trial court overruled the preliminary

objections and, without holding an evidentiary hearing, concluded that a de facto

taking had occurred. The Department’s appeal to this Court followed.

4

(June 19, 2020, Mot. for Reconsid., ¶¶ 15 and 17; R.R. at 125a-26a.)

3

The issues before us are as follows:5 1) whether Condemnee erred in

filing a petition seeking damages for the de jure partial taking of its properties under

Section 502(a) of the Code and a declaration of a de facto taking of the remainder

of its properties under Section 502(c), and thus whether the trial court erred in

overruling the Department’s preliminary objections as to Section 502(c) of the Code

(de facto taking); 2) whether the trial court erred in determining that a de facto taking

occurred without holding an evidentiary hearing; and 3) whether Condemnee erred

in failing to file preliminary objections to the declaration of taking.

I

As an initial matter, we note that Condemnee properly filed a petition

for a board of viewers to assess damages for the de jure partial taking of its properties

under Section 502(a) of the Code. However, that part of the petition seeking a

declaration of a de facto taking of the remainder of its properties under Section

502(c) was erroneous. Presumably, Condemnee believed that a de facto claim was

needed to assert that the property not included in the declaration of taking had been

rendered valueless. This is incorrect. Where there is a declaration of taking filed

for a de jure partial taking, damages are determined by considering both the value

of the property actually acquired and the damages to the remaining property. In

other words, the de jure partial taking of the properties already contemplates

damages to the remainder of the property. Condemnee appears to conflate the

concept of a de facto taking with the circumstance in which a government action has

rendered one’s property valueless. This is a misconception. Just as a de jure taking

of a portion of property may (or may not) diminish the value of the remaining portion

or render it entirely valueless, a de facto taking may render the property valueless or

5

We have restated and reordered the issues for accuracy and clarity.

4

may simply diminish its value. The difference lies not in the extent of lost value but

in the manner in which the value was lost, i.e., by a declaration of taking or by some

other action by an entity which has the power of eminent domain.

Two Code provisions are relevant: the measure of damages provision

found in Section 702 and the “Effect of condemnation use on after value” provision

found in Section 706. 26 Pa.C.S. §§ 702 and 706. Section 702(a) provides that

“[j]ust compensation shall consist of the difference between the fair market value of

the condemnee’s entire property interest immediately before the condemnation and

as unaffected by the condemnation and the fair market value of the property interest

remaining immediately after the condemnation and as affected by the

condemnation.” 26 Pa.C.S. § 702(a) (emphasis added). The effect of Section 702(a)

is that the scope of the property interest to be valued is the entire property interest,

not just the portion set forth in the declaration of taking. In other words, the “before”

and “after” values of the entire property must be taken into consideration. Scranton

Penn Furniture Co. v. City of Scranton, 498 A.2d 469 (Pa. Cmwlth. 1985).

The second Code provision, Section 706(a), sets forth the general rule

for “determining the fair market value of the remaining property after a partial

taking,” stating: “[C]onsideration shall be given to the use to which the property

condemned is to be put and the damages or benefits specially affecting the remaining

property due to its proximity to the improvement for which the property was taken.”

26 Pa.C.S. § 706(a). See Middletown Twp., Del. Cnty. Sewer Auth. v. Baker, 522

A.2d 1182, 1184 (Pa. Cmwlth. 1987) (expert in determining “after” value may

consider the cost of alterations or adjustments to remaining property reasonably

required by the condemnation as this affects the fair market value of the remainder).

5

Moreover, the statutory scheme regarding petitions for appointment of

a board of viewers makes it clear that the trial court erred in overruling the

Department’s preliminary objections to the portion of Condemnee’s petition under

Section 502(c) of the Code (de facto taking). Section 502 of the Code clearly

delineates distinct procedures for requesting a board of viewers depending on

whether a declaration of taking has been filed. Specifically, Section 502(a) provides:

(a) Contents of petition.--A condemnor,

condemnee or displaced person may file a petition

requesting the appointment of viewers, setting forth:

(1) A caption designating the condemnee or

displaced person as the plaintiff and the condemnor as the

defendant.

(2) The date of the filing of the declaration of taking

and whether any preliminary objections have been filed

and remain undisposed of.

....

(6) A request for the appointment of viewers to

ascertain just compensation.

26 Pa.C.S. § 502(a) (emphasis added). Thereafter, Subsection (c) provides:

(c) Condemnation where no declaration of

taking has been filed.--

(1) An owner of a property interest who asserts that

the owner’s property interest has been condemned without

the filing of a declaration of taking may file a petition for

the appointment of viewers substantially in the form

provided for in subsection (a) setting forth the factual basis

of the petition.

26 Pa.C.S. § 502(c) (emphasis added). Because Subsection (c) applies only where

a declaration of taking has not been filed, Condemnee’s request for a declaration of

6

de facto taking thereunder was improper and thus, the Department’s preliminary

objections should have been sustained.

The scope of preliminary objections for a de facto taking and for a de

jure taking is the same. Jacobs v. Nether Providence Twp., 297 A.2d 550, 552 (Pa.

Cmwlth. 1972). “[P]reliminary objections under the Code are intended as a

procedure to resolve expeditiously all legal and factual challenges to the declaration

of taking before the parties move to the second distinct proceeding of qualifying

damages.” W. Whiteland Assocs. v. Dep’t of Transp., 690 A.2d 1266, 1268 (Pa.

Cmwlth. 1997). The trial court should have sustained the preliminary objections to

the de facto taking claim thereby resolving that legal challenge before the matter was

ready to proceed to a board of viewers. In light of this determination, the remaining

issues raised by the Department are moot. However, we address them briefly to

clarify the procedural principles which appear to have been misunderstood by both

the parties and the trial court.

II

We agree with the Department that the trial court misconstrued the

evidentiary hearing requirement with respect to de facto takings. With respect to de

facto takings, Section 504(d)(5) of the Code provides: “If an issue of fact is raised,

the court shall conduct an evidentiary hearing or order that evidence be taken by

deposition or otherwise, but in no event shall evidence be taken by the viewers on

this issue.” 26 Pa.C.S. § 504(d)(5). Additionally, this Court has held that where

preliminary objections raise an issue of fact as to whether a de facto taking has

occurred, the trial court must take evidence, even if the parties have not requested

7

an evidentiary hearing. Hill v. City of Bethlehem, 909 A.2d 439, 443 (Pa. Cmwlth.

2006).6

III

We turn now to the Department’s argument that Condemnee waived its

claim to allege a de facto taking when it failed to file preliminary objections to the

declaration of taking challenging the nature and extent of the condemnation. We

disagree. Such a claim was not required to be, nor should it have been, raised by

preliminary objection. In re Condem. by Dep’t of Transp., of Right of Way for State

Route 79, Section W10, a Ltd. Access Highway, in the Twp. of Cecil, 798 A.2d 725,

732 (Pa. 2002) (“Sluciak”).

In In re Condemnation by County of Allegheny (“Appeal of Keith”), 861

A.2d 387, 392 (Pa Cmwlth. 2004), we rejected as improper the owners’ procedural

decision to file preliminary objections to a declaration of taking alleging that a partial

de jure condemnation resulted in a larger de facto taking of their property. The Court

held that raising the issue of a de facto taking in that manner was improper because

the owners were seeking a judicial determination of the value of their property after

condemnation, which is not a judicial function. Instead, the owners “are entitled to

the difference between the fair market value of their property before and after the

condemnation, both values to be fixed by a jury of view or traverse jury on appeal;

they are not entitled to a judicial determination that their property has no value after

the take.” Id. [citing In re N. Huntingdon by N. Huntingdon Twp. Mun. Auth. for

Sewerage Purposes (“Appeal of Milas”), 387 A.2d 183, 183-84 (Pa. Cmwlth. 1978)].

In other words, “[a] de jure condemnation [for a partial acquisition] cannot be

6

Where there has been a declaration of taking, the case can go directly to a board of viewers

to determine the amount of damages. However, where no declaration has been filed, the trial court

must first determine that a taking has occurred before the board of viewers can determine damages.

8

converted to a de facto condemnation by an averment in a preliminary objection to

a declaration of taking that the effect of the de jure condemnation was to render the

property valueless.” Appeal of Keith, 861 A.2d at 392.

IV

Accordingly, we reverse the trial court’s order and remand this matter

to the trial court with directions to strike Condemnee’s request that the court declare

a de facto taking and to grant Condemnee’s request for appointment of a board of

viewers for the purpose of assessing damages for the effect of the de jure partial

taking on the entirety of Condemnee’s properties.

_____________________________________

BONNIE BRIGANCE LEADBETTER,

President Judge Emerita

9

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

2800 N. Broad Street, LLC :

:

v. : No. 925 C.D. 2020

:

Commonwealth of Pennsylvania, :

Department of Transportation, :

Appellant :

ORDER

AND NOW, this 2nd day of July, 2021, the order of the Court of

Common Pleas of Philadelphia County is hereby REVERSED. This matter is

REMANDED with directions to the trial court to grant Condemnee’s request for

appointment of a board of viewers for purposes of ascertaining just compensation

for the de jure partial taking of Condemnee’s properties, and to strike Condemnee’s

request that the court declare a de facto taking.

Jurisdiction relinquished.

_____________________________________

BONNIE BRIGANCE LEADBETTER,

President Judge Emerita