UDOT v. Target Corp.

February 28, 2020

2020 UT 10 (February 28, 2020)

The Utah Supreme Court clarified prior cases regarding severance damages in partial takings and held that a berm supporting a freeway overpass constituted an “improvement” in statute justifying a jury award of severance damages.

UDOT’s project to widen I-15 and replace an existing interchange resulted in the taking of a small portion of property of the Target store in American Fork. The part taken was used to create a berm to support a raised on-ramp while the vast majority of the interchange was built on property already owned by UDOT. The resulting project removed a direct access to Target’s parking lot and the increased height of the new interchange interfered with the store’s visibility to passersby. Target sued for severance damages for decreased access and visibility. The jury awarded over $2.3 million and UDOT appealed, arguing that severance damages were not warranted under prior cases as the taken property was not “essential” to the project as a whole.

The appellate court identified a framework from prior cases for awarding severance damages if the landowner can show a causal link between the partial taking and the diminution of value of the remainder by one of two ways: (1) causation is presumed if the visibility issues stem from a “structure” built on the part of property taken, and (2) if visibility issues stem from a “structure” not built on the taken property, causation is not presumed and the landowner must demonstrate the use of the condemned property is “essential” to the completion of the project as a whole. The appellate court found the entire interchange to be the relevant “structure”, and because it rested partially on the severed property, causation was presumed and it was not necessary to show the condemned portion of property was essential to the project as a whole.

The Utah Supreme Court affirmed on different grounds, finding its prior cases had “muddied the waters” on analyzing severance damages. The key question, under the statutory framework, was whether severance damages awarded to Target were caused “by reason of . . . construction of the improvement in the manner proposed by” UDOT. Prior cases had departed from the statutory text by tying the analysis to “structures” or “projects” rather than “improvements.” Also, while older cases limited damages stemming only from actions taken on the original property, more recent cases allowed damages if they flowed from actions outside the original property as long as deemed “essential” to the “project as a whole.”

The Supreme Court traced the original meaning of “improvement” in statute to mean any amelioration of the land that materially advances the purpose of the condemning authority. Applying this statutory definition, the Court concluded that a berm, while in and of itself is not an improvement serving a public purpose, is nevertheless a component part of the broader interchange aimed at fulfilling such a purpose. The jury award was therefore appropriate.