Eminent Domain

BNSF Railway Company vs. Grohne

September 12, 2019

Change in the date of valuation in an eminent domain case allowed where there was a 25% increase in the market value of the condemned property between the date the complaint was filed and the date of taking

       In Illinois eminent domain cases, the jury is tasked with determining the amount of just compensation the private property owner is entitled to receive for the taking of his or her property by the government. Chicago v. Anthony, 136 Ill. 2d 169, 174, 554 N.E.2d 1381, 1383 (1990). In Illinois, the term “just compensation” is defined as the fair cash market value of the property at its highest and best use on the date of value. Fair cash market value is defined as the amount of money that a purchaser, willing, but not obligated, to buy the property, would pay to an owner willing, but not obliged, to sell in a voluntary sale. 735 ILCS 30/10-5-60.

      Typically, the date of value the jury uses to determine just compensation is the date the condemning authority files the complaint to condemn. The Illinois Eminent Domain Act, 735 ILCS 30/10-5-60, provides the date of value is the date the complaint is filed, but if the case takes longer than two years to go to trial, the judge has discretion to change the valuation date “in the interest of justice and equity.” This provision was adopted by the Illinois General Assembly and became effective January 1, 2007.

      In 2011 the Illinois Supreme Court issued its decision in Forest Preserve District v. First National Bank of Franklin Park, 2011 IL 110759, 961 N.E.2d 755, 356 Ill. Dec. 386, which adopted the reasoning of the United States Supreme Court in Kirby Industries, Inc. v. United States, 467 U.S. 1, 104 S. Ct. 2187, 81 L. Ed. 2d 1 (1984), concerning (i) the date in time when private property is actually “taken” by the government when exercising its power of eminent domain, and (ii) the date when just compensation must be determined. The United States Supreme Court in Kirby dealt with the issue of what should happen “when there is a substantial delay between the date of valuation and the date the judgment is paid, during which time the value of the land changes materially.” Kirby, 467 U.S. at 18 (emphasis added).

      In Kirby, the United States Supreme Court held that “because the federal government retains its right to decide not to acquire land even after a trial setting the amount of just compensation, the ‘date of taking’ is the date on which the government actually pays the owner and takes title to the land.” Kirby, 467 U.S. at 12. Kirby further held that “[h]owever reasonable … the date of valuation, if the result of that approach is to provide the owner substantially less than the fair market value of his property on the date the [government] tenders payment, it violates the Fifth Amendment.” Kirby, 467 U.S. at 17 (emphasis added).

      The Illinois Supreme Court in Forest Preserve District ruled that “a taking in Illinois for the purposes of applying Kirby occurs on the date that the government (1) deposits the amount of compensation that has been ascertained and awarded, and (2) acquires title and the right to possess the property.” Forest Preserve District, 2011 IL 110759, ¶ 40. The Illinois Supreme Court reasoned that “[g]iven that the condemning authority in an Illinois condemnation proceeding can abandon the proceeding at any time prior to making payment and acquiring title and the right to possession, we too find it difficult to fathom how a taking could occur any sooner.” Forest Preserve District, 2011 IL 110759, ¶ 46 (citing Kirby, 467 U.S. at 12, “the government’s ‘capacity to withdraw from the proceeding … would be difficult to explain if a taking were effectuated prior to tendering of payment’”). The Illinois Supreme Court remanded the case to determine if the property had materially increased in value from the date the complaint was filed to the actual date of taking. Forest Preserve District, 2011 IL 110759, ¶ 34, 70 (emphasis added).

      The Forest Preserve District decision begs the question: what is a material increase in value triggering a new valuation date? On July 3, 2019, the Illinois Appellate Court, Third District issued its decision in BNSF Railway Company v. Grohne, 2019 IL App (3d) 180063 upholding the trial court’s change in the date of value where the condemned properties increased 25% and 39% between the date of the complaint and the jury trial.

      In BNSF Railway Company v. Grohne, the BNSF Railway Company (“BNSF”) condemned several parcels of land from the property owner, Grohne. Pertinent to this issue, BNSF condemned parcels of land described as Grohne North, Grohne South and CTT. BNSF Railway Company, 2019 IL App (3d), ¶ 6. In support of its motion to the trial court to change the date of value based upon Forest Preserve District, the property owner submitted a current, second appraisal report from its disclosed expert appraiser as evidence of the change in value of the properties since the date of the complaint. The trial court granted the property owner’s motion for a new valuation date, and BNSF appealed the issue of whether the value of the land “substantially and materially” changed such that the trial court’s granting of the new valuation date was proper. BNSF Railway Company, 2019 IL App (3d), ¶ 78. After analyzing Kirby and Forest Preserve District, the Appellate Court ruled:

      We afford considerable deference to the trial court’s decision to set a new valuation date. We may also affirm for any reason apparent on the record. The value of Grohne North increased by 39% and the value of Grohne South and CTT increased by 25% each. Grohne was entitled to just compensation valued on the day of taking. The properties’ values increased markedly between the date BNSF filed its action for condemnation and the date of taking. The court did not abuse its discretion in granting a new valuation date.”

BNSF Railway Company, 2019 IL App (3d), ¶ 84.

      Therefore, in an Illinois eminent domain case, if a property owner can demonstrate that the property’s value increased by at least 25% after the complaint for condemnation was filed, the property owner should be entitled to a new valuation date. A question still remains after BNSF Railway Company: what is the minimum percentage change in value that will require a change in the date of value under Forest Preserve District?

Read the full BNSF Railway Company v. Grohne Case Here

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