A BEGINNERS PRACTICAL GUIDE TO EMINENT DOMAIN IN MISSOURI

FROM START TO FINISH

TREVOR L. STILES CHIEF OF LITIGATION

CITY OF LEE’S SUMMIT, MISSOURI trevor.stiles@cityofls.net

A FUNNY STORY….. GUESS WHAT, WE’VE DECIDED TO START HANDLING EMINENT DOMAIN IN-HOUSE AND NOW YOU’RE OUR “GO TO” FOR EMINENT DOMAIN.

THE MOST IMPORTANT THING TO UNDERSTAND FROM THE BEGINNING

EMINENT DOMAIN IN MISSOURI IS A CREATURE OF STATUTE AND PROCEDURE. IT IS IMPORTANT TO KNOW THE MISSOURI REVISED

STATUTES DEALING WITH EMINENT DOMAIN AND THE RULES OF CIVIL PROCEDURE GOVERNING CONDEMNATION ACTIONS.

CREATURE OF STATUTE & PROCEDURE

• RSMO. 523 et. seq. & Missouri Rules of Civil Procedure Section 86 et. seq.

A PUBLIC WORKS CONDEMNATION

PROJECT A STEP BY STEP WALK THROUGH

The Beginning….

• Your Public Works Department comes to you and says: “We have a project and we’re having trouble acquiring the land. Can you help us?”

STEP ONE: TALK TO CITY STAFF ABOUT THE PROJECT

• Ask questions about the Project – What is the project? – Why is the City doing it? – Why now? – What purpose will it serve? – How will this project serve a public use? *CAUTIONARY NOTE: MISSOURI STATUTES CLEARLY STATE THAT A GOVERNMENTAL ENTITY MAY NOT CONDEMN FOR SOLELY ECONOMIC DEVELOPMENT PURPOSES. See RSMo. Sec. 523.271

**NOTE ON CONDEMNATIONS FOR BLIGHT

A TAKING FOR BLIGHT CAN BE A PUBLIC PURPOSE, BUT

THERE MUST BE A LEGISLATIVE FINDING OF BLIGHT AND YOU WILL NEED TO BE ABLE TO SHOW THAT THERE IS SUBSTANTIAL EVIDENCE TO SUPPORT THE FINDING OF BLIGHT.

STEP TWO:

ASK CITY STAFF ABOUT THE LAND INTERESTS SOUGHT

• What interests in real property does the City need for this Project? -Why are these interests necessary for the Project? [-i.e., Right-of-Way, Stormwater Easement, Temporary Construction Easement, Fee Simple,…etc.]

*CAUTIONARY NOTE: MISSOURI COURTS HAVE STATED THAT A GOVERNMENTAL ENTITY MAY ONLY TAKE THE INTERESTS THAT ARE REASONABLY NECESSARY TO ACCOMPLISH THE PURPOSE OF THE “TAKING.” See Kansas City Power & Light v. Kansas City, 488 S.W.2d 612, 615 (Mo. 1969).

-Can the Project be worked around these tracts?

STEP TWO CONTINUED…

• What are the problems/issues with acquiring the property interests?

-Have there been any contact or negotiations with the owners of these interests? -Do we know if the owners oppose the project or do they just feel they are entitled to more money? -If the owner has issues with the Project, is there any way to address the property owners’ concerns in the Project plans?

STEP THREE:

GET AN APPRAISAL OR VALUATION OF THE LAND AND INTEREST SOUGHT

BEST PRACTICE: STATE LICENSED APPRAISER

– Make sure the appraiser is clear on the interests needed and the

duration of any temporary construction easements needed.

STEP FOUR: TAKE IT TO COUNCIL

• City Council must authorize by ordinance the use of Eminent Domain.

**In General: make sure the ordinance contains: – description of the Project and improvements – the types of interests in real property sought – the legal descriptions of real property for each interest sought

and the type of taking associated with each description (i.e., permanent right-of-way, stormwater easement, temporary construction easement, etc…).

– Legislative findings of Public Purpose and Necessity.

STEP FIVE: STATORY 60 DAY LETTER RSMo. 523.250

Notice of intended acquisition--mailing requirements. 523.250. 1. At least sixty days before filing of a condemnation petition seeking to acquire an interest in real property, the condemning authority shall provide the owner of

record of such property with a written notice concerning the intended acquisition. Such notice shall include:

(1)Identification of the interest in real property to be acquired and a statement of the legal description or commonly known location of the property;

(2) The purpose or purposes for which the property is to be acquired;

STEP FIVE CONTINUED… (3) A statement that the property owner has the right to: (a) Seek legal counsel at the owner's expense; (b) Make a counteroffer and engage in further negotiations; (c) Obtain such owner's own appraisal of just compensation; (d) Have just compensation determined preliminarily by court- appointed condemnation commissioners and, ultimately, by a jury; (e) Seek assistance from the office of the ombudsman for property rights created under section 523.277; (f) Contest the right to condemn in the condemnation proceeding; and (g) Exercise the rights to request vacation of an easement under the

procedures and circumstances provided for in section 527.188. An owner may waive the requirements of this subsection prescribed

above in a writing executed by the owner.

STEP FIVE CONTINUED…

2. The written notice required by this section shall be deposited in the United

States mail, certified or registered, and with postage prepaid, addressed to the owner of record as listed in the office of the city or county assessor for the city or county in which the property is located.

The receipt issued to the condemning authority by the United States Post Office

for certified or registered mail shall constitute proof of compliance with this notice requirement; provided, however, that nothing in this section shall preclude a condemning authority from proving compliance with this notice requirement by other competent evidence.

STEP SIX: 30 DAY OFFER

Written offer, requirements--explanation of determination of property value. 523.253. 1. A condemning authority shall present a written offer to all owners of record of

the property. The offer must be made at least thirty days before filing a condemnation petition and shall be held open for the thirty-day period unless an agreement is reached sooner. The offer shall be deposited in the United States mail, certified or registered, and with postage prepaid, addressed to the owner of record as listed in the office of the city or county assessor for the city or county in which the property is located.

The receipt issued to the condemning authority by the United States Post Office for certified or registered mail shall constitute proof of compliance with this requirement; provided, however, that nothing in this section shall preclude a condemning authority from proving compliance with this requirement by other competent evidence. Nothing in this section shall prohibit the parties from negotiating during the thirty-day period.

STEP SIX CONTINUED… 2. (1) Any condemning authority shall, at the time of the offer, provide the property

owner with an appraisal or an explanation with supporting financial data for its determination of the value of the property for purposes of the offer made in subsection 1 of this section.

(2) Any appraisal referred to in this section shall be made by a state-licensed or

state-certified appraiser using generally accepted appraisal practices. ***Tip– EVEN IF YOU SENT AN OFFER WITH YOUR 60 DAY LETTER, GO AHEAD

AND SEND ANOTHER OFFER OR RENEW THEPRIOR OFFER WITH A NOTICE THAT SUIT WILL BE FILED IN THIRTY (30) DAYS, AND IN ACCORDANCE WITH RSMo. 523.253.

STEP SEVEN: RESEARCH PRIOR TO FILING SUIT

• The 60 day waiting period for the statutory notices is a good time to do

background research regarding necessary parties for the action in eminent domain.

• Mo. Supp. Ct. R. 86.03: “…the owners of any or all the property that is to be

condemned, or the use of which is to be condemned, or which will be benefited by an improvement involved in a condemnation proceeding, or who may have an interest therein may be made parties defendant.”

***Rule of Thumb: Those who have an interest in the property and are not a

party to an action in eminent domain are not bound by it. ***Best Practice: (1) Name all individuals or entities having any interest of

record in the property; and (2) any lessees of the property, if known.

STEP SEVEN CONTINUED… • Have a title company do an ownership and encumbrance report on the

property sought to be taken. • Utilities and other Government Agencies who have interests which conflict

with those you are seeking… • Do not like to be named as Defendants. See if you can work out

relocation agreements to avoid having to name them as Defendants.

*NOTE - PROPERTY ALREADY

PUT TO A PUBLIC USE

“…. As a general rule, property already devoted to a public use cannot be taken for another public use which will totally destroy or materially impair or interfere with the former use, unless the intention of the legislature that it should be so taken has been manifested in the express terms or by necessary implication, mere general authority to exercise the power of eminent domain being in such case insufficient; * * *. However, the general rule does not ordinarily apply where the power of eminent domain is being exercised by the sovereign itself, such as the state or federal government, for its immediate purposes, rather than by a public service corporation or a municipality.” State of Missouri ex rel. State Highway Commission v. Hoester, 362 S.W. 2d 519, 522 (Mo. banc 1962) (citing 29 D.J.S., Eminent Domain, Section 74, page 861-862).

NOTE: ADDING “ALL UNKNOWNS” AS DEFENDANTS

PRO’S AND PRACTICAL CONS. JUDGMENT CALL BASED ON THE INFORMATION

AVAILABLE AND THE CIRCUMSTANCES.

STEP EIGHT: FILING SUIT

DRAFTING THE PETITION – See Mo. Sup. Ct. R. 86.04: In general, make sure your petition contains: 1. Description of the property and rights sought; and 2. The names of the owners or interested parties of the property to be

condemned (if unknown, a statement that they are unknown); and 3. Authority to bring a condemnation action; and

STEP EIGHT CONTINUED…

4. Nature of the improvement or use associated with the taking (i.e.,

description of the project); and 5. That good faith negotiations occurred but were unsuccessful (or that an

owner is incapable of contracting, is unknown, can not be found or is a non-resident of the state); and

6. Copy of the construction plans required by Section 227.050 of the

Revised Statutes of Missouri shall be filed in the circuit clerk's office and incorporated by reference; and

7. Prayer for the appointment of three disinterested Commissioners, to assess the damages which such owners may severally sustain because of the condemnation.

STEP EIGHT CONTINUED…

• Service on Defendants

– personal service – service by certified mail if out of state. – service by publication if parties names or their location is

unknown or if parties are out of state. • See Mo. R. Civ. P. 86.05 & 86.051

STEP EIGHT CONTINUED…

OTHER GENERAL ASSOCIATED FILINGS WHEN INITIATING CONDEMNATION SUIT:

– Order for filing petition and setting date and place for hearing – Motion and order for private process – Affidavit requesting service by certified mail – Affidavit requesting service by publication – Notice upon order for service by publication

STEP NINE: CONDEMNATION HEARING

• Jurisdictional hearing before the Court • Determines if statutory pre-requisites to condemnation have been

complied with • Determines that:

– Condemning authority has the power to exercise eminent domain; and – Good faith negotiations have occurred; and – Taking is for a public use; and – The taking is necessary. ***Note: Case law holds that the condemning authority cannot rest on

their Petition alone, must present evidence. ***Tip Regarding Defendant Stipulations: All named parties must

stipulate or the condemning authority must present evidence of the above.

STEP NINE CONTINUED… NOTE:

– Public Purpose: It is not necessary for a finding of public use that all, or even a large part, of the community actually benefit from the intended improvement, rather, it is sufficient that the improvement be a benefit to any considerable number.

– Necessity: a legislative determination of necessity will not be upset unless there is evidence of fraud, bad faith, or the arbitrary exercise of legislative discretion.

STEP NINE CONTIUED…

SAMPLE OUTLINE FOR CONDEMNATION HEARING: 1. Ordinance 2. Project Engineer

-Overview of Project, Project plans, tract maps of takings, why each taking is necessary for the project, and how each taking relates to the project.

3. Right-of-Way Agent -Good faith negotiations (appraisal, 60 day notice letter, offer at

or above appraisal, offer made 30 days prior to filing suit, return mailing receipts of statutory notice and offer,…etc.)

STEP NINE CONTINUED…

HAVE PREPARED FOR THE COURT: – Proposed Order of Condemnation & Appointment of

Commissioners; and – Proposed Oath of Commissioners

NOTE ON DISCOVERY

• Missouri Courts allow for Defendants to conduct limited discovery

prior to the Condemnation Hearing. The discovery however is limited only to those issues related to the Condemnation Hearing.

***This is probably the type of material that could be gained through a

Sunshine Law Request.

STEP 10: COMMISSIONERS’ HEARING & PROPERTY VIEWING

• Commissioners’ Hearing: – Supposed to be held within 45 days of commissioners taking their

oath. – As attorney for plaintiff, you may be put in the position to coordinate

when & where the Commissioners Hearing & Property Viewing will take place.

– Regarding presentation of arguments at the hearing: “the only rule is, there are no rules.”

• Property Viewing (Helpful Tips): – Have surveyor stake the easements and/or right-of-way(s) sought. – Have Project engineer on hand to answer any questions of the

Commissioners.

STEP 10 CONTINUED… SAMPLE OUTLINE FOR COMMISSIONERS’ HEARING:

1. Have Project engineer give brief general overview of the Project and the takings sought.

2. Appraiser will be your main witness. -qualifications; and -methodology of appraisal; and -how comparative sales were found; and -methodology and reasoning for adjustments to comparative sales; and -Amount of damages/just compensation.

STEP 10 CONTINUED…

HOW FORMAL TO MAKE THE PRESENTATION?

– It all depends….

STEP 10 CONTINUED…DAMAGES DAMAGES – FAIR MARKET VALUE, HERITAGE VALUE & HOMESTEAD TAKING…

523.001. For the purposes of this chapter, the following terms shall mean: (1) "Fair market value", the value of the property taken after considering comparable sales in the area,

capitalization of income, and replacement cost less depreciation, singularly or in combination, as appropriate, and additionally considering the value of the property based upon its highest and best use, using generally accepted appraisal practices. If less than the entire property is taken, fair market value shall mean the difference between the fair market value of the entire property immediately prior to the taking and the fair market value of the remaining or burdened property immediately after the taking;

(2) "Heritage value", the value assigned to any real property, including but not limited to real property owned by a business enterprise with fewer than one hundred employees, that has been owned within the same family for fifty or more years, such value to be fifty percent of fair market value;

(3) "Homestead taking", any taking of a dwelling owned by the property owner and functioning as the owner's primary place of residence or any taking of the owner's property within three hundred feet of the owner's primary place of residence that prevents the owner from utilizing the property in substantially the same manner as it is currently being utilized.

STEP 10 CONTINUED…

• As attorney for the condemning authority you will

probably be tasked with providing the Commissioners: (1) a proposed Report (with blank spaces for amounts

which they assess), and (2) a proposed order for payment of Commissioners fees and expenses.

NOTE ON COSTS

• Be prepared as the condemning authority to pay costs.

see Mo. R. Civ. P. 86.09. • What costs?

– Filing Fees – Service Fees – Costs for the Clerk copying and filing the Commissioners Report. – -Commissioners Fees and Costs

STEP 11: AFTER COMMISSIONERS TURN IN THEIR REPORT

30 DAYS TO EITHER PAY AWARDS OR FILE EXCEPTIONS TO

THE COMMISSIONERS REPORT OR BOTH. THE CONDEMNING AUTHORITY HAS THE RIGHT TO TAKE

POSSESSION OF THE PROPERTY UPON PAYMENT OF THE COMMISSIONERS AWARDS INTO THE COURT.

FAILURE TO DO SO WILL CAUSE THE CONDEMNING AUTHORITY TO FORFEIT THE RIGHT TO CONDEMN THE PROPERTY FOR TWO YEARS.

OR

STEP 11 CONTINUED…

WHAT ARE “EXCEPTIONS”? – Any party to a condemnation action can file

exceptions if they are displeased with the Commissioners’ awards.

• By filing for exceptions, a party to the condemnation is asking for a Jury Trial on the issue of just compensation. The exceptions action is treated as a separate action from the condemnation.

• In an exceptions action all rules of procedure apply, i.e., rules of evidence, discovery …etc.

THE END

QUESTIONS…STORIES…COMMENTS…