Eminent domain is the power of the government to take private property and convert it into public use through a process known as condemnation.
The power of eminent domain exists as an inherent governmental power. The power of eminent domain is not contingent on a particular legislative or constitutional “trigger” in that it ”appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty.” Boom Co. v. Patterson, 98 U.S. 403, 25 L. Ed. 206, 25 L. Ed. 2d 206 (1879).
Both federal and South Carolina law limit the exercise of eminent domain power.
The Fifth Amendment of the U.S. Constitution provides the primary limitation on eminent domain power. The Fifth Amendment provides in part “nor shall private property be taken for public use, without just compensation” The Fourteenth Amendment made the Fifth Amendment’s limitation on uncompensated taking applicable to state and local governments.
Article I, Section 13 of the South Carolina Constitution provides limitations on the exercise of eminent domain power. Article I, Section 13 states:
Except as otherwise provided in this Constitution, private property shall not be taken for private use without the consent of the owner, nor for public use without just compensation being first made, therefore.
There are two basic types of condemnation, direct condemnation and inverse condemnation.
In a direct condemnation proceeding, a government entity moves to condemn property, questions of proper public use and just compensation due to the property owner are then considered.
Inverse condemnation involves some government action that deprives a property owner use of his property. “In inverse condemnation cases, the property owner is the moving party claiming an act of the sovereign has damaged his property to the extent of an actual taking entitling him to compensation.” Cobb v. S.C. Dep’t of Transp., 365 S.C. 360, 365, 618 S.E.2d 299, 301 (2005).
“South Carolina courts have embraced federal takings jurisprudence as providing the rubric under which we analyze whether an interference with someone’s property interests amounts to a constitutional taking.” Hardin v. South Carolina Dept. of Transp., 371 S.C. 598, 641 S.E.2d 437, 443 n. 4 (2007).
Permanent physical occupations involve some government activity that interferes with the use of property. Even minor interferences will qualify as a taking. Loretto v. Teleprompter Manhattan CATV Corp, 458 U.S. 419, 427 (1982). Further, indirect entry to property caused by a government entity such as flooding may justify compensation. Columbia Venture, LLC v. Richland County, Opinion No. 27563 (S.C. Aug. 12, 2015).
South Carolina courts have held that certain government regulations of land can be tantamount in its effect on the direct physical invasion of land by the government. “government regulation of private property may, in some instances, be so onerous that its effect is tantamount to a direct appropriation or ouster.” Dunes W. Golf Club, LLC v. Town of Mount Pleasant, 401 S.C. 280 (2013) See also Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 605 S.Ct. 2886, 120 L.Ed.2d 798 (1992).
Government regulation creates a per se taking in two scenarios:
Partial takings involve circumstances where the application of a regulation to particular property is considered a taking that affects less than the property as a whole. To determine whether there is a taking under this category, apply the three Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 57 L.Ed.2d 631 (1978), factors, which require an examination of the following:
South Carolina courts apply what is known as the “parcel as a whole” rule, which states in a regulatory takings analysis the court must consider the regulation’s effect on owner’s interest in entire tract, not just portion affected by regulation. Byrd v. City of Hartsville, 620 S.E.2d 76, 365 S.C. 650 (2005).
A land-use exaction involves compensation that a development is required to pay to the government before starting construction or putting land to a new use. To be valid, an exaction must satisfy two conditions:
Partial involve circumstances where a regulation’s effect on a particular property does not deny all economically beneficial or productive use. South Carolina Courts apply the three Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 57 L.Ed.2d 631 (1978), factors to determine if a taking has occurred:
Evidence that can be introduced in condemnation actions and inspections of property are specified in Section 28-2-340 of The Eminent Domain Procedure Act. The Act states that the following evidence may be admitted:
Federal and South Carolina courts maintain that a condemned property must confer a public benefit, not necessarily use by the public. To be sufficient to authorize a taking within the meaning of the “public use” requirement contained in the Fifth Amendment. Berman v. Parker, 348 U.S. 26 (1954). South Carolina courts have avoided offering a rigid definition of public use rather opting for a contextual definition in which “The term is an elastic one to keep abreast of changing social conditions, and presents a question of fact in each particular case.” Karesh v. CITY COUN. OF CITY OF CHARLESTON, 247 S.E.2d 342, 271 S.C. 339 (1978).
However, the court has stated that Tuomey Hospital v. City of Sumter et al., 243 S.C. 544, 551, 134 S.E. (2d) 744, 747 (1964), “Mere benefit to the public or permission by the owner for use of the property by the public are not enough to constitute a public use, but it must appear that the public has an enforceable right to a definite and fixed use of the property.”
South Carolina, voters approved a constitutional amendment in 2006 that forbids taking property for economic development in response to the decision in Kelo v. New London, 545 U.S. 469, 125 S. Ct. 2655, 162 L. Ed. 2d 439 (2005) whereby the United States Supreme Court allowed the condemnation and transfer of land to a private corporation for economic development purposes. The South Carolina law narrowed the definition of public use to exclude seizing blighted properties for economic development purposes unless it presents a clear danger to health and safety.
The Eminent Domain Procedure Act governs how property owners challenge condemnation actions. The provisions of this chapter shall constitute the exclusive procedure whereby condemnation may be undertaken. Godwin v. Carrigan, 227 S.C. 216, 225, 87 S.E.2d 471, 475 (1955)
It is important to note that under the Act the issues concerning just compensation and the right to condemn are considered in separate proceedings.
S.C. Code Ann., § 28-2-470 states “An action challenging a condemnor’s right to condemn must be commenced in separate proceedings filed in the court of common pleas in the county in which the property or a portion thereof is located.”
S.C. Code Ann., § 28-2-470 states a Challenge Action must be commenced within 30 days of the service of the condemnation notice. If not filed in in a timely manner
S.C. Code Ann., § 28-2-470 states that the trial of the Challenge Action is separate from the trial on the issue on just compensation.
A Challenge Action must be predicated on deficiencies in the condemnation process. These deficiencies are condemnor’s 1) bad faith; 2) fraud; or, 3) clear abuse of discretion.
A landowner challenging a condemnation proceeding has the burden of proof to establish that the condemning authority is acting fraudulently, in bad faith, or is clearly abusing its discretion. Sease v. City of Spartanburg, 242 S.C. 520, 131 S.E.2d 683 (1963).
Further, a landowner may challenge the whether a particular condemning authority will be legitimately placing the condemned property to public use. The questions presented under this scenario would center on the amount of public benefit derived from the condemned property or allegations that the benefits from a condemned property are improperly directed to a private beneficiary.
Some Challenge Actions allege that the condemnation is not reasonably necessary to accomplish the purpose of the project. This type of challenge often overlaps with abuse of discretion claims in that the acquisition condemned property exceeds what are necessary for the purpose of the project. Atkinson v. Carolina Power & Light Co., 239 S.C. 150, 121 S.E.2d 743 (1961):
According to S.C. Code Ann., § 28-2-510 (A) a landowner prevailing in a Challenge Action is entitled to recover reasonable attorney’s fees and litigation costs. “If, in the action challenging the condemnor’s right to take, the court determines that the condemnor has no right to take all or part of any landowner’s property, the landowner’s reasonable costs and litigation expenses incurred therein must be awarded to the landowner.”
A landowner should not file a Challenge Action to delay condemnation or for any improper purpose beyond a good faith dispute as to the process. Landowners who engage in frivolous conduct can be penalized under S.C. Code Ann., § 28-2-510 which states “If the court determines the right to take issue was not raised and litigated in good faith by the landowner, the court must award the condemnor the reasonable costs and litigation expenses incurred therein.”
Section 28-2-370 of The Eminent Domain Procedure Act offers the definition of just compensation: “Just compensation includes the value of the property to be taken, any diminution in the value of the landowner’s remaining property, and any benefits as provided in § 28-2-360 may be considered.”
The just compensation required by the Constitution to be paid to a landowner is premised on the actual loss caused to him by the condemnation of his land. He is entitled to receive the value of what he has been deprived of and no more. Smith v. City of Greenville, 229 S.C. 252, 92 S.E.2d 639 (1956).
As part of the just compensation calculation, the following factors may also alter the compensation a landowner is entitled; the factors are outlined below:
A landowner may be entitled to benefits deriving from the proposed use of the condemned land. S.C. Code Ann. § 28-2-3 states “In any condemnation action, benefits to be derived from the proposed project including the value of any property or rights relinquished or reverting to the landowner as a part or result thereof, must be taken into consideration in determining the amount of compensation and due allowance made for them.”
A landowner may also be entitled to damages resulting from the devaluation of the remaining property in a partial taking. The devaluation may be the result of decreased market value of the property resulting from the taking. S.C. State Highway Department v. Touchberry, 248 S.C. 1, 148 S.E.2d 747 (1966).
In valuing property, South Carolina law requires an appraiser to consider the property’s highest and best use. “Highest and best use” has been defined as “the most favorable use to which the property may reasonably be put in the not too distant future.” SC STATE HWY. DEPT. v. Bryant, 171 S.E.2d 349, 253 S.C. 400 (1969).
The calculation of the highest and best use does not allow for consideration of speculative and remote uses rather the fair market value at the time of the taking should be considered. However, a property with high potential to appreciate may affect its fair market value this appreciation must be reasonably probable. South Carolina State Highway Department v. Westboro Weaving Co., 244 S.C. 516, 521, 137 S.E.2d 776, 779 (1964).