The facts at issue in Elpa Builders, Inc. v. State of New York are relatively straightforward. The property owner (the “Owner”) owned a 53,645-square-foot parcel of property (the “Property”) along New York State Route 347 (“Route 347”) in the Town of Smithtown. The Property is improved with a commercial building and is subject to a long-term ground lease with Taco Bell.
In 2015, under the exercise of its constitutional eminent domain power, the State of New York (“NYS”) acquired two strips of land adjacent to Route 347 and its crossroad on the Property. The taking totaled just over 3,100 square-feet of land. Although the taking did not affect the Taco Bell restaurant on the Property, it reduced the Property’s frontage and parking space, and resulted in the removal of three large trees.
As compensation for the taking, the Owner accepted an advance payment of $302,460 from NYS. The Claimant also signed an agreement with NYS. The agreement provided that if the Claimant sought to have the amount of compensation determined by the Court of Claims (the “Court”), then NYS would be awarded the difference between the advance payment and the amount determined by the Court in the event that the latter was less than the former.
Approximately six months after the taking, the Claimant commenced an action in the Court of Claims which sought $2 million from NYS as just compensation for the taking. The Court ultimately determined the appropriate amount of just compensation to be $283,920. Thus, the Court awarded NYS $18,540, that amount representing the difference between the advance payment and the court-determined amount. The Claimant appealed, arguing that the Court’s award to NYS violates the Claimant’s constitutional right to just compensation.
In determining the value of just compensation to be provided for a government taking of property, the Court’s objective is to put the property owner “‘in the same relative position, . . . as if the taking had not occurred’ [citations omitted].” Generally, for a partial taking of property, the Court will try to determine the fair market value of the property as a whole, both prior to and after the taking, using the difference as its measure of damages. The Appellate Division, Second Department concluded that the Court properly considered all evidence, did not improvidently exercise its discretion, and reached a reasonable determination concerning the Property’s value.
The Second Department also rejected Claimant’s argument that the $18,540 repayment back to NYS violates its right to just compensation. The prior agreement between the parties and the language of Eminent Domain Procedure Law (“EDPL”) § 304(H) belies Claimant’s argument. EDPL § 304(H) provides:
“When an advance payment to a condemnee made pursuant to this section by the condemnor exceeds the award of the court for that property, the court shall, on motion, enter judgment in favor of the condemnor for the amount of such excess and appropriate interest. . . .”
Thus, not only is NYS entitled to the $18,540 difference pursuant to the parties’ agreement, but EDPL § 304(H) itself requires it.
Accordingly, the Second Department rejected the Claimant’s arguments and affirmed the Court’s award.
Takeaway: Property owners receiving advance payment for a government taking of land must be cognizant of the potential consequences of electing to have a court determine just compensation. Sometimes, it may be wise to accept the advance payment and refrain from seeking court intervention.
 Eminent domain is the power of a governmental authority to appropriate private land for public use, provided it pays the property owner just compensation therefor.