United States v. 50 Acres of Land
83 L. Ed. 2d 376, 469 US 24, 1984 U.S. LEXIS 162 (1984)
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Rule of Law:
When the government condemns property owned by a public entity, the Fifth Amendment's requirement of "just compensation" is satisfied by paying the property's fair market value at the time of the taking, provided that value is ascertainable. The public entity is not entitled to the higher cost of acquiring a substitute facility.
Facts:
- In 1978, as part of a flood control project, the United States government condemned approximately 50 acres of land owned by the city of Duncanville, Texas.
- The city had used the condemned site as a sanitary landfill since 1969.
- Due to its duty to provide waste disposal services, the city acquired a new 113.7-acre site to replace the condemned landfill.
- The city developed the new site into a facility that was larger and superior in quality to the one that was condemned.
- The cost for the city to acquire and develop the new substitute site exceeded $1,276,000.
- Expert testimony at trial established that there was a fairly robust market for sanitary landfill properties in the area, making the fair market value of the condemned property ascertainable.
Procedural Posture:
- The United States initiated a condemnation action against the city of Duncanville in the U.S. District Court for the Northern District of Texas.
- The government filed a motion in limine to exclude evidence of the cost of a substitute facility, which the District Court denied.
- A jury, responding to special interrogatories, found the fair market value of the property to be $225,000 and the reasonable cost of a substitute facility to be $723,624.01.
- The District Court entered judgment for the lower amount ($225,000), concluding that fair market value was the appropriate measure of compensation.
- The city of Duncanville, as appellant, appealed to the U.S. Court of Appeals for the Fifth Circuit.
- The Court of Appeals reversed, holding that the proper measure of compensation was the cost of creating a functionally equivalent substitute facility, and remanded for a new trial.
- The United States, as petitioner, was granted a writ of certiorari by the U.S. Supreme Court.
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Issue:
Is a public condemnee, which has a duty to replace a condemned facility, entitled to compensation measured by the cost of acquiring a substitute facility rather than the fair market value of the property taken?
Opinions:
Majority - Justice Stevens
No. When the fair market value of a condemned public property is ascertainable, that value is the proper measure of just compensation, and the public entity is not entitled to the cost of a substitute facility. The Fifth Amendment does not mandate a more favorable rule of compensation for public condemnees than for private parties; the same principles of just compensation presumptively apply to both. The normal measure of just compensation is the market value of the property at the time of the taking, and deviations are only required when market value is too difficult to find or its application would result in manifest injustice. A city's legal obligation to maintain public services does not justify a distinction from private condemnees, who often face an economic necessity to replace their property. Awarding the cost of a new, superior facility would provide the city with a windfall and would introduce a subjective, complex, and uncertain valuation method, contrary to the objective standard of fair market value.
Concurring - Justice O’Connor
No. While the market value standard is appropriate on the facts of this case, the Court's opinion should not be read to foreclose the possibility that substitute-facility compensation could be required in a different case. If a public entity could prove that the market value of its condemned property deviates significantly from the indemnity principle and that a replacement is necessary to provide an essential public service, then limiting compensation to fair market value could be manifestly unjust. Because the city of Duncanville failed to make such a showing, payment of fair market value constitutes just compensation here.
Analysis:
This decision establishes that the fair market value standard for just compensation applies equally to public and private condemnees, rejecting a special rule for public entities. It significantly curtails the 'substitute-facilities doctrine,' clarifying that it is not a required measure of compensation when a property's market value is ascertainable. The ruling promotes a uniform, objective standard in takings cases, discouraging complex and subjective valuations based on replacement costs. For future cases, this precedent places a high burden on public entities to demonstrate that fair market value is either impossible to determine or would result in 'manifest injustice' before a court will consider an alternative measure of compensation.
