No. 48694-2-I.The Court of Appeals of Washington, Division One.
Filed: October 7, 2002. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION.
Appeal from Superior Court of King County, No. 99-2-21243-6, Hon. Richard McDermott, May 17, 2001, Judgment or order under review.
Counsel for Appellant(s), John S. Barnes, Assistant Attorney General, 905 Plum St, P.O. Box 40113, Olympia, WA 98504-0113.
Counsel for Respondent(s), Richard W. Pierson, Kingman Peabody Pierson Fitzharris, 505 Madison St. # 300, Seattle, WA 98104-1138.
ANNE L. ELLINGTON, J.
The State of Washington condemned a portion of John Hokenson’s land as part of a project to improve State Route (SR) 18. Hokenson moved certain business equipment to another location in order to avoid a cable or power outage during construction, and sought to recover the costs. The trial court found his temporary relocation costs were a reasonable mitigation of severance damages, and awarded moving costs, premises rental, and equipment costs. The State contends these expenses are not recoverable. The State is partially correct, but we affirm.
FACTS
Background.
John Hokenson’s property in unincorporated King County lies along S.E. 240th Street, which formerly intersected with SR 18. As part of a project for widening some three miles of SR 18, S.E. 240th is to be regraded to create an underpass under SR 18. The State therefore condemned a portion of Hokenson’s land fronting S.E. 240th Street. The State has also taken a construction easement in order to reconnect the driveway. The road work will lower the grade in front of Hokenson’s house some eight to 12 feet, and will take about two or three weeks. The entire SR 18 project is estimated to last about two years.
Hokenson operates an internet service provider (ISP) business from his house, which was specially constructed for this purpose. His clients include the City of Maple Valley, the Maple Valley Fire Department, and its 911 emergency dispatch system. Hokenson has installed numerous underground cables from his house to the utility junction box. The junction box is located in the condemned portion of the property, and must be relocated as part of the project.
The State and Hokenson agreed upon just compensation for the take and part of the severance damages to the remainder. They proceeded to a bench trial on Hokenson’s claim for costs incurred to relocate equipment offsite during construction in order to avoid the consequences of damage to cable and telephone lines on the property. Hokenson described his claim to the trial court as `the question of cost to cure a portion of the severance damages arising from the taking by the State of a construction easement[.]’[1] Hokenson alleged he had `mitigated a potential total loss of his business,’ and that the feared outage `would certainly diminish and [a]ffect the market value and thus constitute a legitimate severance damage to his property.’[2]
During a previous public construction project in his neighborhood, cables were severed at the site, and Hokenson lost service for one day. He therefore fears similar outages will occur during this project, particularly in light of the substantial grading and digging required on his property in the vicinity of his underground cables, and he alleges that the loss of service would be catastrophic to his business. He therefore moved essential equipment to a downtown Seattle building equipped with the necessary cable and other connections. He sought to recover the costs of premises and equipment leases for the 30 months he estimated the construction project posed a possibility of interruption to his business, together with the costs of relocation to and from Seattle.
Trial Testimony.
The State presented the testimony of assistant project engineer Ali Amiri, who described the project and its purpose. Hokenson then presented evidence of the potential consequences of loss of cable and telephone service. He explained that his business was dependent upon providing uninterrupted service to his customers, that he had service level agreements promising customers that his service would be down less than one percent of the time, that many of his dial-up customers discontinue patronage if service were interrupted, and further that interruption of service to the Fire Department was a life and fire safety concern. In sum, Hokenson’s testimony described loss of internet service as catastrophic to his business and, potentially, to public safety.
Real estate appraiser Robert Bonjorni testified that even a short outage could have a very significant impact on Hokenson’s business. Scott Hussey, a senior network consultant, testified that even a one-hour outage would be highly detrimental to Hokenson’s business. The State did not object to this testimony, nor did it offer any rebuttal evidence.
The trial court found Hokenson’s fears reasonable, found relocation a reasonable mitigation of cost to cure severance damages, and made an award of $77,304 to Hokenson for costs to cure. The State appeals.
DISCUSSION
Where the State’s exercise of its eminent domain power results in a partial taking, just compensation is the difference between the fair market value of the entire property and the fair market value of the remainder. It includes the value of the property taken and any severance damages[3] caused by the taking. Severance damages are awarded where the remainder is less valuable, as a result of the taking, than it was before.[4] The question is the demonstrable impact on the market value of the remainder.[5] The State points out that Hokenson presented no evidence of market value, and contends Hokenson’s claim is simply one for temporary inconvenience and business losses, which are not compensable.[6] Hokenson contends his claim is not for inconvenience or business losses, but for costs to cure or severance mitigation. The trial court agreed, and so found.[7] The State does not challenge this finding.
The trial court’s description of Hokenson’s damages as mitigation of severance damages or `cost of cure reimbursement’ is a mischaracterization. Costs to cure are the costs incurred by an owner before a partial taking, to minimize the damage to the remainder by correcting a condition which is a direct, proximate, non-remote, and non-speculative result of the taking, and which would have influenced the post-take value of the parcel.[8] Such costs are not directly compensable, but may be admitted for purposes of establishing just compensation as evidence of the effect of the taking on market value.[9]
There is thus no such thing as `cost to cure reimbursement.’ No evidence of market value was presented. Hokenson’s claim is not for cost to cure. Severance damages are the diminution in value, if any, of the remainder of the parcel after a partial taking. Again, this is a market value determination, not a measure of costs to avoid business interruption caused by the construction.[10]
Again, no evidence of market value was presented. Hokenson’s claim is not for severance damages. Hokenson points out that his appraiser, Bonjorni, testified that he valued the property, not the business. It is true that he so stated, briefly, on cross-examination. But Bonjorni’s testimony focused entirely upon the reasonableness of Hokenson’s relocation during construction; he was not asked his opinion as to the property’s value, nor did he offer any testimony from which such an opinion could be remotely inferred. Hokenson nonetheless argues that his failure to present evidence of the diminished market value of the remainder does not defeat his claim for cost to cure. Relying upon State v. Evans,[11] he contends the State should have presented such evidence: `The State’s failure to properly cross-examine Mr. Bonjorni or to present contrary evidence is fatal to its appeal.’[12] Hokenson is mistaken.
First, his reliance upon Evans is misplaced. There, the State contended the condemnee offered no evidence of value after the take. The court held the jury had all the essential figures to compute the before and after value, and that `[i]f the State had reason to believe that the after value would be different than the before value less damages, it should have examined Evans on that fact.’[13] Here, there was no evidence of before value, no evidence of after value, and nothing from which either could have been calculated. Further, it was not the State’s burden to establish Hokenson’s entitlement to these claimed damages. The parties and the court[14] acknowledged the rule that no burden of proof exists in condemnation cases. This rule was likely misapplied here; given the nature of Hokenson’s claim for damages, the burden was probably his.[15]
Certainly the burden was not the State’s. Hokenson’s argument that the State was required to present evidence to prove his damages, when the State disputed his entitlement to such damages, rests upon no logical basis. Hokenson makes another argument. He relies, as did the trial court, upon Union Elevator Warehouse, Inc. v. State ex. rel. Dep’t of Transportation.[16] There, the State closed a highway intersection, resulting in permanent closure of the main access road to Union Elevator’s business a short distance away. Union Elevator bought an inverse condemnation action, and showed that the grain elevator business is highly competitive, that customers were likely to switch to competitors rather than use a circuitous and dangerous route to reach its premises, that it was the only business affected by the road closure, and that there was no reasonable alternate access.[17]
The court noted that while a non-abutting owner usually has no claim for compensation, such a claim may be justified where the owner can show the physical impairment of his access is different in kind from that of the general public, and is not merely an added inconvenience common to all travelers.[18] This is a standard rule of eminent domain.[19] On the basis of this rule, the court held Union Elevator was entitled to compensation because it suffered complete loss of reasonable access, a consequence different in kind from the inconvenience a road project causes to members of the general public.[20] This analysis is inapposite here. Union Elevator did not involve a temporary condition, or a claim of severance damages, or a claim of costs to cure. Further, the measure of damages on remand would have been the reduction in the value of the parcel due to its loss of commercially reasonable access.[21]
The State argues Hokenson’s claim is for noncompensable damages for `temporary downtime to his business.’[22]
The first difficulty is that the trial court found otherwise (`Mr. Hokenson is not requesting reimbursement for lost business earnings or other business losses.’[23] ), and despite its argument below and on appeal, the State does not assign error to this finding. It is thus a verity on appeal.[24] Second, the State’s characterization of Hokenson’s claim ignores the fact that Hokenson’s underground cables are part of his realty. Hokenson’s claim is probably best described as one for mitigation of temporary loss of use of the remainder. Compensation for temporary loss of use caused by damage from road construction may include the cost of restoration of the property to its original condition, and damages for loss of use.[25] Had Hokenson remained on site, and suffered the feared interruption in cable service because of severance of or damage to his cables, he would have had a claim for temporary loss of use of his property, including loss of income. Mitigation of damages from such a loss of use is appropriate where the loss seems reasonably certain. Implicit in the trial court’s findings here is the premise that such a loss was in fact likely, rather than merely speculative.[26] The evidence supports that implicit finding.
Further, the trial court found that the risk of interruption was potentially catastrophic to Hokenson’s business,[27] and to `the public which is served by the City of Maple Valley and their Fire Department.’[28] The State did not assign error to these findings and they are therefore verities on appeal.[29] The court also found that Hokenson’s relocation of critical equipment was a reasonable mitigation of this potentially significant loss.[30] The State challenges this finding.
This finding is indeed problematic, in that it depends upon a flawed analysis. Hokenson testified he could not ensure uninterrupted service simply by installing temporary overhead cables at his property, because the feeder cables were at risk in numerous other locations along the project route. For the same reason, he sought relocation costs not just for the three weeks his own cables are at risk, but for 30 weeks the duration of the entire project, along three miles of SR 18. Hokenson was not asked about any differences in cost of the overhead cable approach versus relocation of his equipment, nor did the trial court make any specific finding on the issue. But the risk of damage to the feeder cables is not attributable to the taking of Hokenson’s property on 240th Street. If cables are damaged elsewhere, such that Hokenson is affected, the service interruption will presumably be widespread, and numerous users will experience inconvenience and potential business losses. Using language echoing Union Elevator, the court found:
that general equitable principles require payment of just compensation so that a property owner damaged as a result of highway construction will not be made to suffer monetarily more than members of the general public for the highway project. To not compensate Mr. Hokenson for his cost of cure expenses would impose such an inequitable burden upon him.[31]
The court went on to award 30 months’ relocation expenses as Hokenson’s reasonable damages for `cost to cure, severance damages.’[32]
This analysis was error. Even if the Union Elevator argument were available to an abutting owner in a condemnation proceeding, the result would be compensation for permanent loss of market value. No such loss has been shown here. Therefore, the finding that Hokenson will suffer more than the general public, while a verity on appeal, does not advance Hokenson’s position as to his damages. Hokenson may have the shelter of Union Elevator only if he can persuade us that its rule should be extended to cover a temporary loss of internet access, and that the expense of eliminating all risk of such a loss should be compensable. We are not persuaded. The impact of such a burden on public road improvement projects is hard to overstate, and Hokenson points to no case in which such a rule was adopted. Many businesses rely heavily upon their internet and network connections, and may suffer significant difficulties from interrupted service. It is infeasible for the State to bear the cost of temporarily relocating all businesses thus affected.
The court’s finding that Hokenson’s relocation was a reasonable mitigation was apparently inseparable from the court’s Union Elevator analysis, and depended upon Hokenson’s rejection of overhead cables or other mitigation because of Hokenson’s fear that he might be affected by damage to cables other than his own. But Hokenson is, at most, entitled to recover the reasonable cost of mitigating damage from loss of use of his property as a result of damage to the cables on his own property, not to recoup the expense of ensuring that the project has no effect whatsoever on his business. Nonetheless, the record contains no evidence as to the relative cost of temporary overhead cables, and Hokenson’s evidence supports the finding that his temporary relocation was reasonable and necessary. We will therefore not disturb it. This finding supports an award of costs only for the three weeks during which the project poses a physical risk to the cables located on Hokenson’s property, not for 30 weeks.
However, this is merely an observation without consequence, for the State assigns no error to the court’s findings as to damages. They are therefore verities on appeal, whatever their flaws.[33] Because there was a legal and evidentiary basis for mitigation damages, and because the damages findings are verities on appeal, we affirm.
Affirmed.
WE CONCUR: BECKER, J.
[A] form of eminent domain compensation that is in some cases due to an owner when a condemnor has taken only part of a single parcel of land or part of multiple parcels that are used as a `unit’. . . . [T]he owner is entitled to compensation for a loss of value to the part of the land that remains, caused by the fact that (1) the project for which the condemnation is made will devalue the remaining land or (2) the remaining land is worth less severed from the part taken than when both parts could be used together. These additional items of damage are severance damages.
`In order to raise such form of technical issue, to which rules arising out of burden of proof would apply, it would be necessary for the one party to determine upon a definite, particular proposal as to value, which definite proposal would be affirmed by one party and denied by the other. Such unusual proposal would doubtless furnish the necessary technical issue to which the technical rules applicable to burden of proof would apply[.]’ Amunsis, 61 Wn.2d at 163-64
(quoting Martin v. City of Columbus, 127 N.E. 411 (Oh. 1920)). Hokenson’s claim here is one of those technical and unusual issues. And even if there is no burden of proof in the traditional sense, Hokenson had the burden of persuasion: It is conceded that the state or other condemner has the burden of proceeding with the evidence as to value. It seems to us that no matter what is said about to burden of proof, it follows as a practical matter that if the property owner wants more than the condemner’s evidence indicates the fair market value to be, he will have to introduce some evidence of value more convincing to the minds of the jury than that offered by the condemner. Amunsis, 61 Wn.2d at 162.
(1971) (`where the injury or damage is special or peculiar to the particular property involved and not such as is common to all the property in the neighborhood, compensation may be allowed not as a distinct element of damage, but only as it may affect the market value of the property. The measure of damages is the difference between the fair market before and after the infliction of the damage.’).
(1952) (`If . . . the property may be restored to its original condition the measure of damages is the reasonable expense of such restoration, and in a proper case the loss of use or of income therefrom for a reasonable time pending such restoration.’) (citing Kincaid v. City of Seattle, 74 Wn. 617, 134 P. 504 (1913); Messenger v. Frye, 176 Wn. 291, 28 P.2d 1023
(1934); Armstrong v. City of Seattle, 180 Wn. 39, 38 P.2d 377 (1934); Ghione v. State, 26 Wn.2d 635, 175 P.2d 955 (1946); 3 Sedgwick on Damages, § 932 (9th ed. 1916)); see also Keesling v. Seattle, 52 Wn.2d 247, 324 P.2d 806 (1958).