Business losses may be awarded as just compensation, just not in this case
Today, we received a mixed decision from the Louisiana Supreme Court in the amicus case, South LaFourche Levee District v. Jarreau.
As you may recall, Jarreau asked the Louisiana Supreme Court to determine the measure of compensation due for the Levee District’s appropriation of land from an excavation and hauling company. The law is a bit complicated due to the fact that Louisiana property law places a servitude on certain waterfront properties for the purpose of constructing levees should they become necessary. So, when the government “takes” property located on a servitude, it’s deemed an “appropriation” rather than an “expropriation” and is channeled through a different set of rules for calculating compensation.
A recent amendment to the state constitution required that the court award no more than the compensation that would be due under the Fifth Amendment to the US Constitution. Prior to the amendment, the constitution allowed a property owner to recover for “the full extent of the loss,” which courts had interpreted to include economic losses.
At issue in Jarreau was whether the amendment still allowed for recovery of business damages because, while the value of the appropriated land was minimal, Jarrueau suffered significant economic damages. The Court of Appeal, however, concluded that business losses can never be recovered under the Fifth Amendment.
PLF filed an amicus brief arguing that, while there is a general presumption that business losses are not recoverable in a just compensation award, that presumption is due to the fact that economic injuries are often consequential to a condemnation action and are therefore not recoverable. U. S. ex rel. & for Use of Tennessee Valley Auth. v. Powelson (1943). The U.S. Supreme Court has repeatedly held that business losses are recoverable in appropriate circumstances. Mississippi & Rum River Boom Co. v. Patterson (1878). This recognition is based on the fundamental principle that a dispossessed owner must be put in “as good position pecuniarily as he would have occupied if his property had not been taken.” United States v. Miller (1943).
The Louisiana Supreme Court agreed that there are circumstances where business losses would be compensable, but that’s where the silver lining ends. The Court found Jarreau’s case distinguishable and declined to award any business losses.
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Jarreau v. South LaFourche Levee District
A Louisiana levee district condemned land containing an ongoing soil excavation business so it could use the soil for a levee. But the district shortchanged the landowner of his just compensation by paying only for the land, and not its value as a soil excavation and hauling business. Worse, the district demanded that the owner pay the district for soil that the owner had excavated before the taking. The Louisiana Supreme Court agreed that there are circumstances where business losses would be compensable, but declined to award any business losses to Jarreau. Jarreau petitioned the U.S. Supreme Court to review the case.Read more
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