For more than 100 years, Minnesota law has allowed owners of property partially taken by governmental condemnation to recover damages related to construction-related interference. On September 30, 2020, the Minnesota Supreme Court reaffirmed that evidence of such construction-related interference is admissible, even if the evidence arose after the government took the owner's property. This case, County of Hennepin v. Laechelt, A19-0473 (Minn. 2020), is a welcome result for Minnesota's property owners facing condemnation.
To Take Property, the Government Must Pay Just Compensation.
The government's power of condemnation, or eminent domain, has been called the government's most awesome power, and for good reason. So long as the government can satisfy the low burden to show that it is taking private property for a public purpose, the private property owner cannot stop the taking. For example, a road authority (such as a county) can condemn private property to build a public road. In exchange for allowing this power, the constitution requires that the government pay the property owner just compensation. Generally speaking, this compensation is measured as the price that a hypothetical buyer would pay to a hypothetical seller for the property at the date the property is taken. And when the road authority takes a portion of the property, leaving a remainder to the property owner, just compensation includes the damage done to the remaining, untaken property.
For example, a road authority may take a strip of private land in order to widen a road, or take a temporary portion of property for the construction of an adjacent public project, and leave the remainder of the property not taken. (Often, a road authority will take both a permanent strip of land and also a temporary adjacent strip.) In such a case, the owner loses the value of the land that has been taken, but that owner has also suffered damages to the remaining property, such as noise and construction dust, loss of visibility, or construction workers' littering and loitering on the untaken property. These damages reflect the real-life harm to property owners. Businesses lose customers during an adjacent highway construction; the enjoyment of a private home is lessened by the adjacent construction zone.
The Issue in Laechelt.
Perhaps it's an obvious point, but a property owner can't prove the amount of construction-related interference unless they can present evidence of the construction and how it affected their property. And that evidence doesn't arise until after the date of taking, and after the government has finished its construction. In Laechelt, for example, the property owner submitted photographs and testimony of how the construction project impacted her property.
The evidence did not come into existence until after the taking of the owner's property, because it was evidence of what actually occurred during the construction project.
Both during trial and on appeal, the government argued that it was improper to consider such evidence. The government's argument was that, because the "before and after rule" required a measurement of the difference in market value on the date of taking, only evidence that existed on the date of taking should be considered.
The Minnesota Supreme Court rejected the government's argument. The Court noted that construction-related interference damages do arise at the date of taking—after all, the public purpose in taking land is for a construction project, and there would be no such damages but for the government's project. A hypothetical buyer would pay less for the property, knowing the property would soon and certainly be impacted by an adjacent construction project. But the hypothetical buyer may not know the actual amount of such an impact. Thus, the Court held, using evidence that comes into existence after the date of taking "simply provides the benefit of hindsight." Such evidence "may shed light on what a willing buyer and seller might reasonably expect" as of the date of taking. Therefore, the Court held, such evidence is relevant and should be considered.
Before Laechelt, property-owner attorneys have long submitted construction-related interference evidence in condemnation proceedings. The Court did not break any new ground with its holding, but it did help to clarify that this longstanding practice is proper. In certain cases, such evidence is vital to the property owner's ability to receive the just compensation promised by the constitution.
Bottom Line: If your land is partially taken by the government in a condemnation action, you may be able recover the value of the land that is taken and also compensation for damages to the portion of the land that is not taken.
We Can Help
Please contact Maslon's Construction & Real Estate attorneys if you have any questions, or if you own property that the government has threatened to take in a condemnation proceeding. We're happy to help!
 Jason Lien and Evan Nelson, joining other attorneys with the Minnesota Eminent Domain Institution, submitted an amicus brief in this case.