CONDEMNING IN GOOD FAITH: The Florida Legislature Introduces Presuit Negotiations Into the Eminent Domain Process
April 1, 2000
With the election of a Republican governor, and with the GOP controlling both
houses of the Florida Legislature, the protection of property rights has
received a great deal of attention in the Sunshine State. An example of this
attention can be seen in the 1999 Legislature’s changes to Florida’s eminent
domain laws (found in Chs. 73, 74, and related chapters). This article provides
a brief primer on one of those changes: the newly created section of Florida
Statutes concerning presuit negotiations.
Florida now has a new statute: Section 73.015, Florida Statutes. Although
several portions of the statute do not take effect until July 1, 2000 (detailed
below), according to an internal Florida Department of Transportation (FDOT)
memorandum, FDOT will implement all notice, offer and other requirements of this
statute now. The primary purpose of the new statute is to require presuit notice
and negotiations before an action can be filed, and provides for changes
regarding business damages.
Presuit Negotiations Between the Condemnor and Condemnee
Effective July 1, 2000, before an eminent domain proceeding is brought under
Chs. 73 or 74, Florida Statutes, all condemning authorities (1) must attempt to
negotiate in good faith with the fee owner of the parcel to be acquired; (2)
must provide the fee owner with a written offer; (3) if requested, a copy of the
appraisal upon which the offer is based; and (4) must attempt to reach an
agreement regarding the amount of compensation to be paid for the parcel.
While commanding the condemnor to negotiate in good faith, the statute does
not define "good faith." Similarly, the statute does not detail what
steps constitute an "attempt to reach an agreement" as to
compensation. Should the Legislature not provide these definitions, it is
prudent to presume that the courts eventually will.
At the inception of negotiation for acquisition, the condemning authority
must notify the fee owner (1) that all or a portion of the property is necessary
for the project; (2) the nature of the project and the parcel designation of the
property to be acquired; (3) that, within 15 business days after receipt of a
request by the fee owner, the condemning authority will provide a copy of the
appraisal report, maps or other documents that depict the proposed taking, and
copies, to the extent prepared, of the construction plans depicting the proposed
improvements to be constructed adjacent to the remaining property; (4) The fee
owner’s statutory rights to have his or her attorney’s fees and costs paid
by the condemning authority and the conditions under which these payments will
be made; and (5) the fee owner’s rights and responsibilities regarding notice
and offer.
The condemning authority must also provide a written offer of compensation to
the fee owner as to the value of the property sought to be appropriated and,
where less than the entire property is sought to be appropriated, any damages to
the remainder caused by the taking.
Further, the owner must be given at least 30 days after either receipt of the
notice, or the date the notice is returned as undeliverable by the postal
authorities, to respond to the offer, before the condemning authority files a
condemnation proceeding for the parcel identified in the offer. The notice and
written offer must be sent by certified mail to the fee owner’s last known
address listed on the county ad valorem tax roll. Alternatively, the notice and
written offer may be personally delivered to the fee owner of the property.
If there is more than one property owner, notice to one owner constitutes
notice to all owners. The return of the notice as undeliverable by the postal
authorities constitutes compliance with this provision. Also, the condemning
authority is not required to give notice or a written offer to a person who
acquires title to the property after the notice required by this section was
given.
Notwithstanding this section, with respect to lands acquired for
preservation, conservation, and recreational purposes, the condemning authority
is not required to give the fee owner the current appraisal before executing an
option contract.
Notice to Business Owners
As of July 1, 2000, before an eminent domain proceeding is brought under Chs.
73 or 74, Florida Statutes, by FDOT or by a county, municipality, board,
district, or other public body for the condemnation of right-of-way, the
condemning authority must make a good faith effort to notify the business
owners, including lessees, who operate a business located on the property to be
acquired (not just business owners). Currently, the condemnor is only required
to give notice to business owners who are able to claim business damages.
The condemning authority must notify the business owner of the same five
items as fee owners (detailed above). This notice must be made subsequent to or
concurrent with the condemning authority’s making the written offer of
compensation to the fee owner. The notice must be sent by certified mail to the
address of the registered agent for the business located on the property to be
acquired, or if no agent is registered, by certified mail or personal delivery
to the address of the business located on the property to be acquired.
Notice to one business owner constitutes notice to all other owners. If the
notice is returned as undeliverable, then this section is complied with. The
condemning authority is not required to give notice to a person who acquires an
interest in the business after the notice as required herein has been given.
Once notice has been made to business owners under this subsection, the
condemning authority may file a condemnation proceeding pursuant to Florida
Statutes for the property identified in the notice.
Claims for Business Damages
If the business qualifies for business damages pursuant to Florida Statutes,
and the business intends to claim business damages, the business owner must,
within 180 days after receipt of the notice or the date the notice is returned
as undeliverable by the postal authorities, or at a later time mutually agreed
to by the condemning authority and the business owner, submit, via certified
mail, to the condemning authority a good-faith written offer to settle any
claims of business damage.
Absent a showing of a good-faith justification for failure to submit a
business-damage offer within 180 days, the court must strike the business owner’s
claim for business damages in any condemnation proceeding. If the court finds
that the business owner has made a showing of a good-faith justification for the
failure to timely submit a business damage offer, the court shall grant the
business owner up to 180 days within which to submit a business damage offer, to
which the condemning authority must respond within 120 days.
The business owner must provide or show (1) an explanation of the nature,
extent and monetary amount of such damage (this information must be prepared by
the owner, a CPA or a business damage expert (not defined) familiar with the
nature of the operations of the owner’s business); and (2) copies of the owner’s
business records (including but not limited to tax information) substantiating
the good-faith offer to settle the business-damage claim. If additional
information is needed beyond data that may be obtained from business records
existing at the time of the offer, the business owner and condemning authority
may agree on a schedule for the submission of such information.
The provided business records are considered confidential and exempt from
disclosure. However, to qualify for confidentiality, it must be shown that the
disclosure of the business records should likely cause substantial harm to the
owner’s competitive position and the owner must request that the records be
held exempt.
Of note to this issue is a change to the business damage qualification
period. Effective January 1, 2000, the number of years the business needs to be
in existence to claim business damages is reduced from five to four. However,
this change will sunset on January 1, 2003. No provision is made for what will
occur after the sunset.
Condemnor’s Response to the Business Damage Offer
Within 120 days after receipt of the good-faith business-damage offer and
accompanying business records, the condemning authority must, by certified mail,
accept or reject the business owner’s offer or make a counteroffer. Failure of
the condemning authority to respond to the business damage offer, or rejection
thereof pursuant to this section, must be deemed to be a counteroffer of zero
dollars.
Mediation and Settlement
At any time in the presuit negotiation process, the parties may agree to
submit the compensation or business-damage claims to nonbinding mediation. In
the event that there is a settlement reached as a result of mediation or other
mutually acceptable dispute resolution procedure, the agreement reached shall be
in writing, and shall incorporate by reference the right-of-way maps,
construction plans, or other documents related to the taking upon which the
settlement is based.
In the event of a settlement, both parties shall have the same legal rights
that would have been available under law if the matter had been resolved through
eminent domain proceedings in circuit court with the maps, plans or other
documents having been made a part of the record.
Attorney’s Fees and Costs if There is a Presuit Settlement
If a settlement is reached between the condemning authority and a property or
business owner prior to a lawsuit being filed, the property or business owner
who settles compensation claims in lieu of condemnation shall be generally
entitled to recover costs as follows:
Attorney’s fees for presuit negotiations under this section regarding the
amount of compensation to be paid for the land, severance damages, and
improvements must be based on the benefit achieved from the condemning authority’s
offer on the land, improvements and severance damages.
If business damages are recovered by the business owner based on the
condemning authority accepting the business owner’s initial offer or the
business owner accepting the condemning authority’s initial counteroffer,
attorney’s fees must be based on skill, labor, responsibility incurred and
other such factors specified in the statute.
Otherwise, attorney’s fees for the award of business damages must be based
on the difference between the final judgment or settlement of business damages
and the counteroffer to the business owner’s offer by the condemning
authority.
Presuit Costs
Presuit costs must be presented, calculated, and awarded in the same manner
as provided in section 73.091, Florida Statutes, after submission by the
business or property owner to the condemning authority of all appraisal reports,
business damage reports, or other work products for which recovery is sought,
and upon transfer of title of the real property by closing, upon payment of any
amounts due for business damages, or upon final judgment.
If the parties cannot agree on the amount of costs and attorney’s fees to
be paid by the condemning authority, the business or property owner may file a
complaint in the circuit court in the county in which the property is located to
recover attorney’s fees and costs.
This shall only apply when the action is by the Department of Transportation,
county, municipality, board, district or other public body for the condemnation
of a road right-of-way.
Confidentiality
Evidence of negotiations or of any written or oral statements used in
mediation or negotiations between the parties under this section is inadmissible
in any condemnation proceeding, except in a proceeding to determine reasonable
costs and attorney’s fees.
The Legislature made many other changes to Florida’s eminent domain-related
statutes. These changes include issues of prejudgment interest, attorney’s
fees, business damages for partial takings and billboards.
Mr. Hattaway is a Real Estate and Eminent Domain attorney in the Orlando
office. He can be reached at 407-244-1138 and jhattaway@hklaw.com