SABAL TRAIL TRANSMISSION LLC v. 18.27 ACRES OF LAND IN LEVY COUNTY et al

Filing 76

ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT granted in part denied in part re 65 MOTION for Partial Summary Judgment filed by SABAL TRAIL TRANSMISSION LLC, ( Motion to reopen discovery due by 12/4/2017, Response to motion to reopen discovery due by by 12/11/2017.) Signed by JUDGE MARK E WALKER on 11/15/17. (bkp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
GAINESVILLE DIVISION
SABAL TRAIL TRANSMISSION,
LLC,
Plaintiff,
v.

Case No. 1:16cv93-MW/GRJ

+/- 18.27 ACRES OF LAND IN
LEVY COUNTY, FLORIDA, et al.,
Defendants.
__________________________/
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT
This is an eminent domain case. Over a year has passed since this Court
granted Plaintiff’s Motion for Partial Summary Judgment, ECF No. 38, as to
Plaintiff’s right to condemn an easement through Defendants’ property to build
a natural gas pipeline. Since then, Plaintiff took possession of the subject
property. Pipeline construction began and ended. And now Plaintiff must
compensate Defendants for the taking.
Plaintiff’s activities understandably caused significant heartburn for
Defendants. One Defendant described the “continued intrusion” on the
property, including Plaintiff’s practice of “fly[ing] the damn helicopter over
there,” and “people coming in . . . unannounced.” ECF No. 70-10 at 82. This
Defendant also worried about the fact that Plaintiff put the pipeline in the
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ground “less than a football field” away from his children’s bedroom windows.
Id. at 90.
Pipeline construction presented other challenges for Defendants. Most
importantly, for purposes of this Order, is the fact that during the past year
Plaintiff’s activities (1) destroyed several mature live oak trees on the property
during the construction process, (2) prevented Defendants from leasing
pasture to cattle farmers, and (3) prevented Defendants from planting more
profitable crops in accordance with their farm’s normal rotation. This Court
has considered, without hearing, Plaintiff’s Motion for Partial Summary
Judgment, ECF No. 65, to determine whether these kinds of losses may be
compensated—that is, whether a jury may consider evidence of these losses in
reaching its determination of “full compensation.” Based on the reasons stated
below, Plaintiff’s motion is GRANTED in part and DENIED in part.
I
The Natural Gas Act adopts Florida substantive law as the federal
measure of compensation in this case. Sabal Trail Transmission, LLC v. Real
Estate, Case No. 1:16cv63-MW/GRJ, 2017 WL 2783995, at *6 (N.D. Fla. June
27, 2017). Florida’s Constitution provides that “[n]o private property shall be
taken except for a public purpose and with full compensation therefor paid to
each owner or secured by deposit in the registry of the court and available to
the owner.” Fla. Const., art. X, § 6(a). Full compensation “must be determined
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by reference to the state of affairs that would have existed absent any
condemnation proceeding whatsoever.” Fla. Dep’t of Revenue v. Orange Cty.,
620 So. 2d 991, 992 (Fla. 1993). “[A]ll evidence relevant to the issue of full
compensation is admissible in eminent domain proceedings.” Fla. Power &
Light v. Jennings, 518 So. 2d 895, 895 (Fla. 1987). But “[t]he constitutional
right to receive full compensation under eminent domain is not a right to
receive general damages.” Dep’t of Agr. and Consumer Servs. v. Mid-Florida
Growers, Inc., 570 So. 2d 892, 899 (Fla. 1990).
“When an injury is to land and the injury is of a more or less permanent
nature, the usual measure of damages is the difference between the value of
the land before and after the injury.” Atl. Coast Line R. Co. v. Saffold, 178 So.
288, 602 (Fla. 1938). And when less than the entire property is taken, “full
compensation” for the taking “consists of the value of the property taken and
severance damages to the remainder caused by the taking, if any.” Partyka v.
Fla. Dep’t of Transp., 606 So.2d 495, 496 (Fla. 4th DCA 1992) (citing Fla. Stat.
§ 73.071(2), (3)(a), & (b)). Importantly, though, the Florida Supreme Court
notes that aside from the usual measure of damages, courts should “tak[e] into
account all facts and circumstances which bear a reasonable relationship to
the loss occasioned the owner by virtue of the taking of his property.”
Jacksonville Expressway Auth. v. Henry G. Du Pree Co., 108 So. 2d 289, 291
(Fla. 1958).
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“In calculating the damage to the remaining property, Florida courts
have adhered to a ‘before and after’ rule under which severance damages are
calculated as the difference between the value of the property before and after
the taking.” Fla. Dep’t of Transp. v. Armadillo Partners, Inc., 849 So.2d 279,
283 (Fla. 2003). And “[t]he burden of proof of a claim for severance damages is
on the condemnee.” Division of Admin., State of Fla. Dep’t of Transp. v.
Frenchman, Inc., 476 So. 2d 224, 226 (Fla. 4th DCA 1985).
“As to intangibles, business damages and lost profits are not included in
. . . full compensation.” Fla. Dep’t of Revenue v. A. Duda & Sons, Inc., 608 So.
2d 881, 885 (Fla. 5th DCA 1992). “Severance damages and business damages
are interrelated but not identical concepts.” Seminole Cty. v. Sanford Court
Inv’rs, Ltd., 743 So. 2d 1165, 1170 (Fla. 5th DCA 1999). “The purpose of
awarding business damages in an eminent domain proceeding is to mitigate
the hardship suffered by a business when the taking of only a portion of
property reduces the value associated with the location of the business.” Id. at
1168.
“The payment of compensation for intangible losses and incidental or
consequential damages . . . is not required by the constitution, but is granted
or withheld simply as a matter of legislative grace.” Tampa-Hillsborough Cty.
Expressway Auth. V. K.E. Morris Alignment Serv., Inc., 444 So. 2d 926, 928
(Fla. 1983). Thus, an owner may recover business damages only by statute. Id.;
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see also Fla. Stat. § 73.071 (3)(b). Section 73.071(3)(b) limits such recovery to
cases involving a partial taking which causes damage to or destroys “an
established business of more than 5 years’ standing . . . owned by the party
whose lands are being so taken, located upon adjoining lands owned or held by
such party, the probable damages to such business which the denial of the use
of the property so taken may reasonably cause.”
In this case, Defendants have not sought business damages. See ECF No.
72 at 20. Nor have they plead such damages pursuant to statutory
requirements. See Fla. Stat. § 73.071(3)(b) (“[A]ny person claiming the right to
recover such special damages shall set forth in his or her written defenses the
nature and extent of such damages.”). This Court simply notes the difference
between constitutionally required severance damages and statutorily available
business damages to aid in its analysis—but more on that later.
II
A
To start, Defendants assert they’re entitled to compensation for the value
of several mature live oak trees that Plaintiff cut down in order to build the
pipeline. “Standing or growing timber, and trees generally, form a part of the
realty, and belong to the owner thereof, as much so as to the soil itself.” 98
C.J.S. Woods and Forests § 2 (2017) (collecting cases). With respect to
cultivated, fruit-bearing trees, the Florida Supreme Court has held that the
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value of such trees as an improvement on the land may be considered to
compensate for their loss. McClelland v. Town of Eustis, 102 So. 159, 273 (Fla.
1924). Trees may also be condemned separate and apart from the land; for
example, in a condemnation proceeding to cut down “danger trees” near a right
of way for an electric power transmission line. Florida Power Corp. v. Wenzel,
113 So. 2d 747 (Fla. 2d DCA 1959). And while standing trees are considered
part of the land itself, potted trees may be condemned as personal property,
and full compensation is owed for their destruction even if the land upon which
they’re located is not taken. See Mid-Florida Growers, Inc., 570 So. 2d 892.
In this case, the live oak trees at issue were not valued for their fruit,
nor did Defendants actively cultivate them. The trees were not personal
property—they were part of the land itself. Defendants prized the trees for
their sentimental and aesthetic qualities, and may be entitled to compensation
for their loss only if Defendants can prove they’re entitled to severance
damages resulting from a reduction in value of the remaining property after
the trees were removed for pipeline construction. Accordingly, Defendants are
not entitled to compensation based on the separate appraisal value for each
tree.
Plaintiff’s partial summary judgment motion is therefore GRANTED as
to whether Plaintiff must compensate Defendants for the lost trees based on
the separate appraisal value of each tree. However, a jury may hear evidence
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of severance damages based on the lost trees’ impact on the value of the
remainder. Additionally, this Court reserves ruling on the admissibility of
evidence of replacement costs to cure any severance damages unless and until
Defendants introduce evidence of severance damages at trial. Div. of Admin.,
State of Fla. Dep’t of Transp. v. Frenchman, Inc., 476 So. 2d 224, 228 (Fla. 4th
DCA 1985) (noting “it was error to admit testimony on the cost of cure,” when
the defendant “did not first present evidence that it had sustained severance
damages”).
B
Next, Defendants assert they’re entitled to compensation for the value of
lost grazing leases. Ordinarily, Defendants lease “[i]dle land . . . to cattle
farmers in the late fall and winter as permanent pastures become dormant.”
ECF No. 70-12 at 3. But pipeline construction on Plaintiff’s easement
prevented Defendants from renting one of their parcels for this purpose.
Plaintiff contends this sort of loss falls within the category of “business
damages” not properly compensable in this action. But Defendants assert this
loss ought to be included in the measure of full compensation in light of the
facts and circumstances of this case.
In some cases, rental income is considered a kind of business damages.
The Fourth District Court of Appeal considered the question of lost rental
income in the context of an eminent domain proceeding against a trailer park.
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See Div. of Admin., State of Fla. Dep’t of Transp. v. Ness Trailer Park Inc., et
al., 489 So. 2d 1172 (Fla. 4th DCA 1986) (“Ness”). In Ness, the court affirmed
the trailer park’s compensation award which included severance damages and
business damages for lost rental income. The court concluded that the trailer
park’s lost rental income properly qualified as business damages because it
represented “a loss of income from a business conducted [on the affected
property].” Id. In so holding, the court distinguished the facts in Ness from
other cases holding that lost income based on the value of annual crops is not
a proper basis for business damages. The court noted:
[N]o law . . . puts rental income in a class with value of annual crops
when a property is used for agriculture, as income derived from the use
of the property itself . . . [is] not a proper basis for business damages.
From another perspective, it could be reasoned in the instant case that
if, as was apparently the case, the mobile homes were not affixed to the
land so as to be regarded as real estate improvements, rental income was
at least in part generated from other than use of the land itself.
Id.
In distinguishing between lost rental income and lost income based on
the value of annual crops, the court apparently relied on a distinction in
Florida law “between income from the land and income from a business
conducted upon the land.” Lee County v. T&H Assocs., Ltd., 395 So. 2d 557, 560
(Fla. 2d DCA 1981).
The analysis in Lee County is instructive. In that case, the Second
District Court of Appeal affirmed a compensation award in an eminent domain
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suit that included lost revenue for a watermelon crop that wasn’t permitted to
mature. Citing Florida’s business damages statute, the condemnor argued that
the trial court erred by improperly allowing the jury to consider business
damages when it admitted evidence of prospective profits of the melons had
the melons made it to harvest. But the court on appeal rejected this argument,
noting that “growing unmatured crops stand on a different footing,” than
“commercial business establishments.” 395 So. 2d at 560.
Essentially, the court held that a jury could properly consider evidence
of lost revenue for the watermelon crop that never made it to market as a
component of “full compensation” for the value of the land that was taken. The
court found that lost income based on the value of the growing watermelons
did not fall within the limits of Florida’s business damages statute, for “in the
case of growing crops[,] the [prospective] revenue comes from the property
itself rather than from a business operated at a particular location.” Id.
Moreover, this lost income wasn’t adequately captured by the fair
market value approach that serves as a starting point for measuring “full
compensation.” Nonetheless, the leaseholders were still constitutionally
entitled to compensation for this lost income. See id. (“Here, there was no
market for the leaseholds with the watermelons in a partial state of
development. In order to arrive at ‘full compensation,’ it was necessary to
consider other evidence bearing on the value.”). The court concluded that the
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evidence admitted “was at least as probative as that submitted by the county,
which would simply reimburse the defendants for out-of-pocket costs and
totally ignore their efforts in successfully bringing the crops to the stage of
maturity they occupied when the land was taken.” Id.
Now, in this case, Plaintiff moves for summary judgment as to whether
“full compensation” may include the value of lost grazing leases from the
season when pipeline construction prevented Defendants from renting out a
certain parcel. At first blush, Defendants’ claim for lost grazing leases mirrors
the trailer park’s claim for lost rental income in Ness. If this Court were to end
its analysis here and find that the value of such leases amounts to business
damages not properly compensable in this case, it would certainly satisfy
Plaintiff. But this would be an incorrect application of Florida law.
While the court in Ness held that rental income was compensable as a
component of the trailer park’s business damages, it did so only by establishing
that such income was “generated from other than use of the land itself.” 489
So. 2d at 1181. In Ness, the lost rental income fit squarely within the box for
“income from a business conducted upon the land,” as opposed to “income from
the land.” Lee County, 395 So. 2d at 560. But in this case, the value of
Defendants’ lost grazing leases derives directly from use of the land itself,
much like the value of the lost watermelon crop in Lee County. This value is
not adequately captured by the usual measure of fair market value.
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Defendants’ expert estimates that Defendants were actually unable to
lease 274 acres for grazing at a rate of $75 per acre, amounting to a loss of
$20,550. ECF No. 70-12 at 8. Defendants would have rented this idle land
“absent any condemnation proceeding whatsoever.” Fla. Dep’t of Revenue, 620
So. 2d at 992. But because Plaintiff’s easement cut through the affected parcel,
Defendants could not lease the property for grazing during the construction
period. Therefore, “taking into account all facts and circumstances which bear
a reasonable relationship to the loss occasioned the owner by virtue of the
taking of his property,” this Court finds that “full compensation” may include
consideration of the value of Defendants’ lost grazing leases. Henry G. Du Pree
Co., 108 So. 2d at 291. Plaintiff’s motion for partial summary judgment, ECF
No. 65, is DENIED as to the issue of lost grazing leases.
C
Lastly, Plaintiff seeks summary judgment as to whether the measure of
full compensation includes losses occasioned by the taking’s disruption of
Defendants’ ordinary crop rotation in 2017. Defendants assert Plaintiff’s
construction activity on their easement forced Defendants to plant a less
profitable crop (peanuts) on some of their affected property instead of the more
profitable crop (watermelon) that they had expected to plant in 2017. Plaintiff
again asserts this is an intangible loss of profits that falls within the category
of business damages not properly compensable in this action. But Defendants
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contend this loss is compensable though not adequately captured by measuring
the fair market value of the property. This Court agrees with Defendants that
evidence of this actual loss occasioned by Plaintiff’s taking, which interfered
with Defendants’ ordinary crop rotation and reduced their income for the 2017
growing season, should be presented to a jury determining the measure of full
compensation in this case.
As a preliminary matter, Defendants assert Plaintiff is estopped from
refusing to compensate them for the interruption of their farming operations
based on certain assurances Plaintiff made to the Federal Energy Regulatory
Commission during the application process for its Certificate of Public
Convenience and Necessity. But Plaintiff correctly points out that such a
counterclaim or defense is not properly before this Court. Defendants failed to
raise promissory estoppel in its answer. Federal Rule of Civil Procedure
71(e)(3) states in part that “[a] defendant waives all objections and defenses
not stated in its answer.” Moreover, “[n]o other pleading or motion asserting
an additional objection or defense is allowed.” Fed. R. Civ. P. 71(e)(3). And
federal courts have routinely held that they lack jurisdiction to hear
counterclaims in eminent domain proceedings. See United States v. 38.60 Acres
of Land, More or Less, Situate in Henry Cty., State of Mo., 625 F. 2d 196, 199
(8th Cir. 1980); Kansas Pipeline Co. v. Herbert F. Landwehr, et al., 210 F. Supp.
2d 1253, 1258 (D. Kan. 2002). To the extent Defendants raise promissory
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estoppel as an additional defense, it has waived the argument. And to the
extent Defendants raise a counterclaim under the doctrine of promissory
estoppel, this Court lacks jurisdiction to entertain such a claim in this
proceeding. But this is not the end of the road for Defendants.
Apparently losing sight of this Court’s prior ruling that Florida
substantive law governs in this case, Plaintiff cites at length to federal law for
the proposition that a condemning authority “must pay only for what it takes,
not for opportunities which the owner may lose.” ECF No. 65 at 8 (quoting U.S.
ex rel and for Use of Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 281-82
(1943)). Though, as Defendants accurately point out, several of Plaintiff’s cited
cases prohibited compensation for lost opportunities or lost profits largely
because evidence of such losses was too speculative. This Court is not
persuaded by Plaintiff’s argument for three reasons. First, Florida’s measure
of “full compensation,” not federal law, applies in this case. Second,
Defendants’ asserted losses are not “business damages.” And third,
Defendants’ 2017 crop-income losses are not speculative in the least. Instead,
they represent Defendants’ actual losses caused by Plaintiff’s taking.
“Full compensation” means full compensation. Florida courts state over
and over that the natural starting point for measuring full compensation is the
fair market value of the land taken. But that’s not the be-all and end-all
consideration. “The theory and spirit of [constitutionally guaranteed full
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compensation] require a practical attempt to make the owner whole.” Henry G.
Du Pree Co., 108 So. 2d at 292 (affirming compensation for actual cost of
moving personal property after finding such constitutionally guaranteed and
not too speculative for consideration). And it bears repeating that full
compensation depends upon the facts and circumstances of each case.
The facts and circumstances of this case demand consideration of
Defendants’ crop-income losses for the 2017 season occasioned by Plaintiff’s
construction activities. Despite Plaintiff’s argument to the contrary, these
losses are not “business damages.” Like the grazing leases discussed above,
these losses encompass income produced from the land itself rather than
income generated from a business conducted on the land. See Polk County v.
Grooms, 625 So.2d 1249 (Fla. 2d DCA 1993). Nonetheless, these losses aren’t
adequately captured by estimating the fair market value of the land, though
they still ought to be considered in order to make Defendants whole.
Defendants ordinarily would have grown watermelons on all the fields
at issue had Plaintiff not taken the easement and commenced pipeline
construction. Importantly, this crop was not chosen on a whim—it was part of
Defendants’ plan to manage the health of their land’s soil in an effort to prevent
crop disease. ECF No. 70-10 at 29, 32. But Plaintiff’s easement essentially
bisects one of the fields intended for watermelons. ECF No. 70-12 at 3. Pipeline

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construction on this parcel prevented Defendants from laying irrigation
necessary to grow watermelons in 2017. Id.
Despite this obstacle, Defendants did not sit on their hands and rack up
their potential losses during the 2017 growing season. Instead, they mitigated
their losses by planting watermelons where they could and peanuts where
watermelons weren’t feasible. Comparing net income from an undisturbed
watermelon season (which includes expected income from grazing leases) with
the income actually realized in 2017, Defendants’ expert estimates losses
amounting to $457,152. ECF No. 70-12 at 8.
These numbers are not in the least speculative. They are grounded in
the fact that Defendants actually planted and harvested watermelons in 2017.
As the court noted in Lee County:
Theoretically, the value of the property at the time of the taking
ought to reflect both the promise and the risk inherent in the growing of
the crops based upon past experience rather than events which have not
yet occurred. But recitation of what actually happened in the market and
of the weather conditions which actually prevailed is in this instance the
best possible evidence available. It removes from doubt any speculation
over what the market might be, and it takes into consideration whether
the crop would have survived the balance of the winter.
Lee County, 395 So. 2d at 560-61 (emphasis added). A jury ought to be able to
consider this evidence in order to reach its determination of full compensation.
This Court notes that the condemning authority in this case is a private
entity. This private entity, privileged with the power of eminent domain, has
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decreased the value of Defendants’ land. Not only must Defendants now have
to contend with the fact that a natural gas pipeline crosses their farm, they
also had to cope with pipeline construction itself—a process that threw a
wrench in Defendants’ farming plans for the 2017 growing season. Had
Defendants’ land not been taken in the first place, they would have planted all
their affected fields with watermelon in early 2017 and earned a higher net
income as a result. Plaintiff’s suggestion that Defendants ought to just eat this
loss is contrary to the letter and the spirit of Florida’s “full compensation”
requirement in eminent domain proceedings. In making Defendants whole, a
jury should hear evidence of this loss. Accordingly, Plaintiff’s summaryjudgment motion is DENIED as to the issue of crop-income losses.
III
For these reasons,
IT IS ORDERED:
1. Plaintiff’s motion for partial summary judgment, ECF No. 65, is
GRANTED to the extent Defendants seek compensation for the
separate appraisal value of each tree. But Defendants may present
evidence of severance damages resulting from the loss of the subject
trees.

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2. The balance of Plaintiff’s motion, ECF 65, is DENIED. A jury may
consider evidence of lost grazing leases and watermelon crop income
losses in determining full compensation.
3. This Court understands its ruling might cause some issues as it
relates to the parties’ appraisals or expert opinions as they currently
stand. For this reason, this Court will entertain a motion to reopen
discovery for the limited purpose of addressing those issues raised
by this Order. Any motion to reopen discovery must be filed on or
before Monday, December 4, 2017. If a motion to reopen discovery is
opposed, an expedited response is due on or before Monday,
December 11, 2017.
SO ORDERED on November 15, 2017.
s/Mark E. Walker
United States District Judge

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