September 25, 2017

Colorado Court of Appeals: District Court Correctly Characterized Water Storage Plan as Frustrated Plan in Condemnation Action

The Colorado Court of Appeals issued its opinion in Board of County Commissioners of County of Weld v. DPG Farms on Thursday, June 15, 2017.

Condemnation—Highest and Best Use—Lost Income—Costs.

The Board of County Commissioners of Weld County (the County) filed a petition in condemnation to extend a public road over 19 acres of DPG Farms, LLC’s 760-acre property (the property). When condemnation proceedings were initiated, the property was used primarily for agricultural and recreational purposes. The parties stipulated to the County’s immediate possession of the 19 acres and proceeded to a valuation trial. The dispute centered on the highest and best use of 280 acres that contained gravel deposits. DPG’s experts testified about the highest and best use of the property. The district court determined, as a matter of law, that the evidence was too speculative to support a finding that water storage was the highest and best use of the relevant area (Cell C); instead, it determined that the highest and best use of those acres was gravel mining, but not water storage as well. The jury awarded DPG $183,795 in damages for the condemned property and nothing for the residue. DPG then requested costs. The district court rejected a substantial portion of the costs on grounds that they were disproportionate to DPG’s success and that certain expert evidence had been excluded.

On appeal, DPG contended that the district court erred in rejecting water storage as the highest and best use of certain portions of the property. The Court of Appeals reviewed the evidence that the district court’s determination was based on and concluded that the district court did not err in determining, as a matter of law, that the evidence was too speculative to support a jury finding that water storage was the highest and best use of Cell C.

DPG also argued that the trial court erred in excluding evidence of lost income, arguing that it was admissible pursuant to an income capitalization approach to valuing the property. DPG’s evidence of a potential income stream was admissible not as the measure of its damages but rather as a factor that could inform the fair market value of the property. And both the appraiser and the mining expert testified that the potential income stream from mining informed their fair market valuations. Because the lost income evidence, on its own, did not reflect the proper measure of damages, the district court correctly excluded it.

Finally, because the income valuation evidence presented by DPG’s experts was properly excluded, the district court did not abuse its discretion in limiting DPG’s award of costs on this basis.

The judgment and cost order were affirmed.

Summary provided courtesy of The Colorado Lawyer.