October 8, 2020, Legal Intelligencer article by: Lamb McErlane PC attorneys James C. Sargent, Jr., Esquire & Katherine E. LaDow, Esquire*

Valuation Proceedings

1. Board of Viewers

Either the condemnor or the condemnee can institute valuation proceedings by filing a petition with the court of common pleas requesting appointment of a board of viewers. 26 Pa.C.S.A. § 502. The content of the petition is specified in § 502(a).  A petition is substantially the same form whether a property owner claims a de facto taking or inverse condemnation.

The petition for appointment of viewers must be filed within six years after the condemnor paid the estimated just compensation (“EJC”) or filed the declaration of taking. 42 Pa.C.S.A. § 5527(a).[1] Significantly, valuation is as of the date of take. 26 Pa.C.S.A. § 702(a) (“Just 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.”).

The board of viewers is made up of three individuals appointed by the court to value the property (26 Pa.C.S.A. § 504), at least one of whom is an attorney (who serves as the board chairman) and who, along with at least one other member of the board must view the condemned property. 26 Pa.C.S.A. § 503.

Individual viewers are selected from a list maintained by the president judge, comprised of experienced lawyers, realtors and engineers. Pennsylvania’s Eminent Domain Code (“Code”) contains requirements for notice of view and hearing (26 Pa.C.S.A. § 505), notification to viewers of all persons with an interest in the property taken (26 Pa.C.S.A. § 506 and 507), and it requires the condemnor to furnish plans to the viewers showing the property and improvements before and after the take. 26 Pa.C.S.A. § 509.

At least two members of the board, including the chair, are required to inspect the property taken; then the board holds a hearing on damages to be paid to the condemnee. Typically, representatives of the condemnor and condemnee go to the view with their counsel. The view often is informal, and it provides an opportunity for counsel to make a presentation to the viewers, which can be like an opening to a jury––the actual procedures may be set by the chair. Practice pointer : It is advisable to take along plans showing the property before and after the take, particularly those that will be used as exhibits at the hearing, and to bring along appraisers or other experts to answer questions that arise, with whom the viewers can become acquainted.

The hearing, which can be adjourned from time to time, may be in a conference room or hearing room in the court house, typically involves witnesses and expert testimony from (one or more) appraisers selected by each party as to value of the property, and any fixed or immovable equipment, and other incidental costs to which the condemnee is entitled (for example, moving or relocation costs). Practice pointer : The condemnee has the right to testify and give a lay opinion of value. Such testimony can humanize the impact of the take, and it can be compelling. Subpoenas may be issued in advance through the court. 26. Pa.C.S.A. § 510(a)(1). As in any judicial proceeding, each side makes a presentation, and it is customary for the condemnor to go first.  Rules of evidence generally apply but normally are only informally enforced; the chair typically makes rulings.  Board of view proceedings rarely last more than one day, including the view.  The proceedings are not of record, unless the viewers (26 Pa.C.S.A. § 511(b)) or one of the parties arranges and pays for a court reporter.

2. Approaches to Valuation

In general, it is customary for a condemnor to have one or two valuations from licensed appraisers before it tenders EJC. A condemnee that wishes to challenge the condemnor’s valuation, should obtain separate appraisals.  There are three principle methods for valuation: sales comparison approach, income approach, and development or replacement approach. The nature and uses of the property dictate which of the three valuation approaches is most suitable. Practice pointer : If the comparable sales approach is used, make certain you are familiar with each comparable. At any time, the parties can arrive at a negotiated valuation for the property. Either party can initiate the valuation proceedings including those before the board of viewers and an appeal with a jury trial in the court of common pleas. Importantly, while the valuation proceedings can occur over a matter of years, the condemnor can begin using the condemned property for its intended purpose, so long as EJC has been tendered and the condemnor is in possession of the property.

3. Report of the Board of Viewers

The board of viewers are required to file a report including ten categories of information, and their award. 26. Pa.C.S.A. § 512. The Code is very specific as to the time frame for the report. The viewers must file the report within 30 days of their final hearing, or of the filing of the transcript of the hearing. 26. Pa.C.S.A. § 514(a). Ten days before the report is filed, the viewers must mail a draft to the parties with a notice of the intended day of filing. This gives the parties the opportunity to correct errors and a warning that the report will become final if not appealed within 30 days after the report is filed. 26. Pa.C.S.A. § 514(b) and (c).

4. De Novo Appeal to the Court of Common Pleas

Either party can appeal the decision of the board of viewers to the court of common pleas within 30 days after the viewers’ report is filed. 26. Pa.C.S.A. §§514, 516. If one party appeals, the other party has 15 days within which to file a cross-appeal. Practice pointer: Significantly, prior to the beginning of testimony, “any party may withdraw its appeal without the consent of the other parties.” 26. Pa.C.S.A. § 516(d). Where either party is reasonably satisfied with the award of viewers but believes that the specter of a jury trial is likely to lead to settlement at a better number, a protective cross-appeal, filed within 15 days of the original appeal, § 516(c) may provide leverage.(Absent a cross-appeal, the original appellant may withdraw the appeal on the eve of trial).§516(d).

The appeal in the court of common pleas is de novo. The parties may proceed with discovery and are required to exchange expert reports and appraisals as in any civil proceeding. Either party can add or change experts and other witnesses, so long as they comply with any deadlines for doing so. The rules of procedure and evidence all are applicable.

5. Trial

Either party may demand a jury (26 Pa.C.S.A. § 517(b). Witnesses in the trial are generally the same as those who testify before the board of view. As with the board of view, the judge in a bench trial, or the petit jury must view the property to aid in an understanding of the factors having bearing on valuation. Typically, the condemnor must rent a bus to drive a jury (which can be 12 jurors and two alternates) along with the judge, any witnesses who will attend, counsel and the parties to the condemned property. Beforehand, the judge is likely to hold a conference to set the ground rules, but if none is scheduled, counsel would be wise to ask for one. Practice pointer : Maps or other visuals that will be helpful to orient the jury should be brought to the view, unless precluded by the judge (use the exhibits for trial). Expert and other witnesses should attend, so that they demonstrate their familiarity with the property and their investment in the proceedings, and so that they are familiar to the jurors.  The judge controls the manner in which the view proceeds.

The witnesses and evidence are generally the same as in the board of view proceedings. The jury verdict establishes the amount of damages. Practice pointer : What the petit jury sees in the view and hears from the parties can have great impact on the verdict. Anecdotal evidence from the condemnee may animate the process.

Where the verdict is in excess of the EJC paid by the condemnor, the condemnee is entitled to delay compensation calculated on the difference between the verdict and the EJC from the date of the take or the date the condemnee relinquished possession to the date of the verdict. 26 Pa.C.S.A. § 713. The rate used to calculate delay compensation is the prime rate plus 1%. 26 Pa.C.S.A. § 713(a).  The jury verdict, like any civil verdict, is subject to post-trial practice and appeal.

Critical to all valuation methodologies are their factual foundations.  The focus of the board of view and jury trial is the manner in which each expert has supported his/her opinion of value––are the “comparable” sales sufficiently similar; are the assumptions in the development model all sound? But, don’t underestimate the importance of the human factor––a sympathetic condemnee or condemnor can have a significant impact on value.

To be continued in the next article of this four part series, Eminent Domain in Pennsylvania–– Part III Challenging the Take.

Read the article in the Legal Intelligencer here.

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James (Jim) C. Sargent is a Partner and Co-Chairman of Lamb McErlane’s Appellate Advocacy Group and Litigation Department.  Jim represents small businesses, as well as major national and multinational manufacturers in litigation and appeals.  His practice includes commercial contracts, real estate and banking law, construction litigation, municipal law, restrictive covenants, employment contracts, as well as condemnation matters. Jim also offers mediation services in commercial/construction/business ownership disputes. jsargent@lambmcerlane.com. 610-701-4417. www.lambmcerlane.com

Katherine (Katie) LaDow is an Associate in the litigation department at Lamb McErlane PC. She concentrates her practice in the areas of state and federal civil litigation, municipal litigation, government liability & civil rights defense, personal injury, workers compensation and landlord / tenant work, as well as condemnation matters. She represents individuals, small and large businesses and municipalities in a wide array of civil, employment and tort-based disputes. kladow@lambmcerlane.com. 610-701-3261.

* Ranjani Sarode, a summer intern at Lamb McErlane PC also assisted with this article. Ranjani is attending Temple Law School, she is currently pursuing Land Use/Zoning, Real Estate, and Environmental Law as her preferred practice areas.

[1]  42 Pa.C.S.A.  § 5527 (a)(1)(i) provides in relevant part: “If a condemnor has filed a declaration of taking, a petition for the appointment of viewers for the assessment of damages must be filed within six years from the date on which the condemnor first made payment… [or]within six years of the filing of the declaration of taking.”