Are there any claims available to a property owner whose property has been either physically taken, or rendered useless through zoning regulations under Michigan law? The answer is yes; a property owner may assert an inverse condemnation claim in limited circumstances.
A claim for inverse condemnation is based on a violation of the state of Michigan constitutional provision prohibiting the taking of private property for public use without just compensation.[1] An inverse or reverse condemnation suit is one instituted by a landowner whose property has been taken for public use without the commencement of condemnation proceedings by a governmental entity.[2]
Understanding the claim
Generally, a plaintiff alleging an inverse condemnation must establish (1) that the government’s actions were a substantial cause of the decline of the property’s value and (2) that the government abused its powers in affirmative actions directly aimed at the property.[3] Further, a plaintiff alleging inverse condemnation must prove a casual connection between the government’s action and the alleged damages.[4] Additionally, any injury to the property of an individual, which deprives the owner of the ordinary use of it, is equivalent to a taking, and entitles him to compensation. A governmental action that has permanently deprived the property owner of any possession or use of the property is a taking for purposes of inverse condemnation.[5]
However, not every injury to property remotely associated with governmental actions will amount to a taking.[6] Rather, a plaintiff must establish a causal connection between the government’s action and the plaintiff’s loss.[7] There generally is no question when the government either physically takes property or regulates land that results in a taking. The question is whether the government’s actions were a substantial cause of the decline of the property’s value and (2) that the government abused its powers in affirmative actions directly aimed at the property.
The answer too the first question involves the hiring of two experts to provide the answer. The first is a commercial appraiser and the second is a damages expert. These experts will look at the property value prior to the taking / regulation and after the taking / regulation to determine if the action of the government was the substantial cause of the decline of the value of the land. The city will hire their own experts and then the matter will come down to a fact issue for a jury to decide.
The second inquiry may also be a fact question for trial. Recall that you need to prove that the government’s actions were a substantial cause of the decline of the property’s value and (2) that the government abused its powers in affirmative actions directly aimed at the property. The abuse of power standard is a very low standard for the government to prove. It is based on health, safety and welfare.
Damages
Finally, a word about damages: damages are only allowed in condemnation cases when proven with reasonable certainty. As part of discovery for a business case, the property owner will need to open its books and show what the impact of the loss to the business is as a result of the physical taking of the property and the cost to build a new parking lot in the rear of your property. The loss of speculative profits, therefore, has been held not to be allowable as an element of compensation. However, a property owner may present evidence of “the most profitable and advantageous use it could make of the land” even if the use was still in the planning stages and had not been executed. Attorney fees, experts and cost are not considered damages.
If you are facing an issue involving the physical taking of land, or when the imposition of a regulation results in a taking of land, please call one of the professionals at Dalton & Tomich PLC to answer your questions.
[1] Const, Am V; Const 1963, art 10, § 2; Hart v Detroit, 416 Mich 488, 494; 331 NW2d 438 (1982); Kethman v Oceola Twp, 88 Mich App 94, 105; 276 NW2d 529 (1979); Merkur Steel Supply Inc v Detroit, 261 Mich App 116, 129; 680 NW2d 485 (2004), quoting In re Acquisition of Virginia Park, 121 Mich App 153, 158; 328 NW2d 602 (1982)
[2] Electro-Tech, Inc v H F Campbell Co, 433 Mich 57, 88-89; 445 NW2d 61 (1989) (citation and quotation marks omitted).
[3] Hinojosa v Dep’t of Natural Resources, 263 Mich App 537, 548; 688 NW2d 550 (2004) Marilyn Froling Revocable Living Trust v Bloomfield Hills Country Club, 283 Mich App 264, 295; 769 NW2d 234 (2009).
[4] Id.
[5] Marilyn Froling Revocable Living Trust v Bloomfield Hills Country Club, 283 Mich App 264, 294; 769 NW2d 234 (2009).
[6] Attorney General v Ankersen, 148 Mich App 524, 561; 385 NW2d 658 (1986)
[7] Id.
