The “Big Beautiful Wall” and Its Ugly Damages

President Biden ordered a freeze on further wall construction and acquisitions until his administration can sort things out.  The Trump administration rushed through its fence wall building program by utilizing a section of the Real ID Act of 2005 that empowers the head of the Department of Homeland Security “to waive legal requirements” the Secretary “determines necessary to ensure expeditious construction of the barriers and roads” at the border.  That allowed the former administration to suspend 84 separate laws and regulations and proceed without considering the damage it was causing to the environment, to sacred tribal lands, to habitats for endangered species or to the species themselves.

The project caused condemnation of hundreds of parcels in South Texas along the Rio Grande which marks the border between the United States and Mexico.  The condemnation cases are in various stages.  Many property owners accepted the government’s offer and settled.  Others are in various stages of litigation.

There have been several cases challenging the funding mechanism for the wall construction.

Congress was not in favor of the wall and would not provide funding.  The past President then caused the longest government shutdown in U.S. history by refusing to sign a spending bill unless Congress approved $5 billion in wall funding.  Bypassing Congress, he transferred $10 billion from the Pentagon’s budget for wall construction.

In California v Trump, 963 F.3d 926 (9th Cir. 2020), the Ninth Circuit held that budgetary transfer of funds for the construction of a wall on the southern border of the United States in California and Mexico were not authorized under the Department of Defense Appropriation Act of 2019.  The Court also found that the construction of the wall satisfied the causation requirement for injuries to California’s and New Mexico’s quasi-sovereign interests.  Further, that the border wall construction projects at issue are not carried out with respect to a “military installation.”

Washington v Trump, 441 F. Supp. 3d 1101 (U.S. Dist. W. Wash, 2020) was a similar suit.  The State of Washington sought to enjoin the defendants from diverting money from funding for a project at a Naval submarine base.  The Court held that the border wall did not meet the definition “military construction.”

The wall constructed by President Trump was 40 miles with another 412 miles of reconstructed pre-existing wall.  It was only a small portion of the 1,954 miles of the U.S. – Mexico border.  The expense was around $15 billion.

President Biden issued his Executive Order on January 20, 2021 which directed the Federal government to assess “the legality of the funding and contracting methods used to construct the wall.”  It resulted in a pause on all work projects undertaken in accordance with the prior administration’s diversion efforts.  As noted, there were multiple successful lawsuits which reached the U.S. Supreme Court.

The Biden administration will determine whether to go forward in the Supreme Court, but such an action is highly unlikely.  However, discontinuing further construction is not enough according to many environmentalists.  According to the Sierra Club, “Ultimately the destructive border wall must be torn down.  Constructing a wall has stripped environmental, cultural and health protections from border communities, bulldozed through Tribal sites and burial grounds, and left irreversible scars on wildlife habitat and local towns.”

Let’s not forget that with the fence construction halted, the Army Corps of Engineering could end up deconstructing projects now in progress.  Because billions of dollars’ worth of wall-building contracts have been awarded, the government agencies involved would need to go through a lengthy process to reach a settlement over canceled projects.

During Trump’s four years in office, the government filed more than 200 eminent domain lawsuits against property owners from Laredo to Brownsville, including at least 60 filed in the weeks between when Vice President Biden was elected and inaugurated as the 46th President.

It has been reported that government lawyers have withdrawn their requests for immediate possession.  However, the condemnation cases remain pending with several hearings scheduled for March.

These are not simple direct taking cases.  They are partial takings.

As a general rule, the measure of damages in a partial taking case is the difference between the fair market value of the whole property before the taking and the fair market of the remainder after the taking.  Acme Theatres Inc. v State of New York, 26 NY2d 385 (1970); Diocese of Buffalo v State of New York, 24 NY2d 320, 323 (1969).

The fact that there was a partial taking does not automatically mean that there has been damage to the remainder.

Two-Step Appraisal

What is then done is to perform a two-step appraisal process.  First, the entire property is valued based on its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time.  Chemical Corp. v Town of East Hampton, 298 AD2d 419, 420 (2d Dept 2002).  Then direct damages are calculated by valuing the property which was acquired.  The next part of the formula is valuing the remainder which results after the partial taking.  This is where the appraiser will determine whether or not the remainder has sustained consequential damages which are damages occasioned to the property remaining (the remainder), not only by reason of the direct taking, but also by virtue of the use to which the appropriated property is put by the condemnor.

Severance damages are damages that occur simply because the property acquired is no longer a part of what was once the whole property, it has been severed.  The property may have been improved with a structure which may have been partially demolished.  Obviously, the part not taken has lost value, probably all of its value.  A taking may cause the remainder to be of a size that no longer can be used under zoning laws for its highest and best use, or it may have been left with unsuitable access to a street for its highest and best use.

In Priestly v State of New York, 23 NY2d 152 (1968), the court defined “suitable” as meaning “that which is adequate to the requirements of or answers the needs of a particular object.  The concepts are not mutually exclusive and, therefore, a finding that a means of access is indeed circuitous does not eliminate the possibility that that same means of access might also be unsuitable in that it is inadequate to the access needs inherent in the highest and best use of the property involved.”  Priestly at 156.

A partial taking may decrease the amount of available parking spaces essential for a shopping mall.  One of the surest guides in measuring damages occasioned by a partial taking is the diminution in rental value resulting therefrom.  Humble Oil & Refining Co. v State of New York, 12 NY2d 861 (1962).  Further, a deterioration of the quality of the income in the after situation merits the award of substantial consequential damages.  Star Plaza v State of New York, 79 AD2d 746 (3rd Dept 1980).  True consequential damages on the other hand come from the manner or use that the property directly taken is put to by the condemnor.  Some examples: South Buffalo Ry. Co. v Kirkover, 176 NY 301 (1903) (railroad use); Dennison v State of New York, 28 AD2d 28, aff’d 22 NY2d 409 (1968) (damages to remainder caused by loss of view and noise); Criscuola v Power Authority of the State of New York, 81 NY2d 649 (loss of value to remainder caused by high voltage power line).  Judge Joseph Bellacosa wrote in Criscuola that, “evidence of fear in the marketplace is admissible with respect to the value of property taken without proof of the reasonableness of fear.”  Criscuola at 652.

Posted in Border Wall, Consequential Damages, Direct Damages, Partial Takings
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