Raymond v. Chittenden County Circ. Highway

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
 that corrections may be made before this opinion goes to press.


                                 No. 90-189


 Francis Raymond, et al.                      Supreme Court

                                              On Appeal from
      v.                                      Chittenden Superior Court

 Chittenden County Circumferential            December Term, 1991
 Highway


 Silvio T. Valente, J.

 Paul D. Jarvis of Jarvis & Kaplan, Burlington, for plaintiffs-appellants

 Jeffrey L. Amestoy, Attorney General, and Scott A. Whitted, Assistant
   Attorney General, Montpelier, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.   This is a condemnation action involving plaintiffs' land
 in the Town of Essex, which is being taken by the State for the Chittenden
 County Circumferential Highway (CCCH).  Plaintiffs appeal from the trial
 court's damage award, arguing that the court improperly valued the land,
 failed to include business losses, and failed to include an award for
 plaintiffs' litigation costs.  We affirm.
      The land consists of 50.07 acres which plaintiffs purchased in 1974 as
 an investment for later development.  In April 1984, plaintiffs began to
 work on developing the property.  In November 1985, they hired an engineer-
 ing firm to draft a set of development plans.  These plans showed a sub-
 division containing 87 residential units, 35 single-family homes and 52
 condominiums.  Plaintiffs then went before the Essex Planning Commission and
 received a permit to proceed with their development.  They sought an Act 250
 permit, but their application was denied by the district environmental
 commission.  They believed that the denial occurred because of the CCCH, but
 they submitted no evidence on that question to the court.
      Plaintiffs ceased their development plans when it became known that the
 land was in the path of the CCCH.  They did no site work, sought no financ-
 ing and did not solicit buyers.  After the State moved to acquire 27.71
 acres of their property, plaintiffs hired a contractor to estimate the cost
 of their plans.  The contractor proposed to build the infrastructure for
 the development for $1,323,075.  This bid was submitted in August 1989, in
 preparation for the condemnation trial.
      This action began as an inverse condemnation case in which plaintiffs
 alleged that the State's planning activities had effectively taken their
 property.  It was later converted into a normal condemnation proceeding in
 which the Vermont Agency of Transportation awarded plaintiffs $1,285,000
 for the land taken for the CCCH.  Plaintiffs appealed to superior court pur-
 suant to 19 V.S.A. { 513(a).  The parties stipulated that the land should be
 considered as fully permitted for plaintiffs' proposed subdivision
 development.  The court found that the value of the land condemned by the
 State was $1,511,200, based on a before-taking value of $1,531,200 and an
 after-taking value of $20,000.  It further found that plaintiffs had
 suffered no compensable business loss.  The court awarded plaintiffs
 $226,200, the difference between its finding of value and the award of the
 Vermont Transportation Board, plus costs of $79.39 and interest.
      Plaintiffs first argue that the court erred in valuing the land
 according to its "wholesale" rather than "retail" value.  This argument is
 based on the testimony of plaintiffs' appraiser who reported three values
 for the property, depending on its development state.  The first value,
 $1,609,000, reflected the state of the property at the time of condemnation
 -- that is, as raw land, permitted for development, and sold as one parcel.
 The second value, $1,974,000, reflected his estimate of the net value of the
 land if the infrastructure, such as roads and sewer, were in place but the
 property was still sold as one parcel.  The third value, $2,572,000,
 reflected his estimate of the net value of the land if the infrastructure
 were in place and it was sold by plaintiffs as building lots over a five-
 year period.  The State's appraisers evaluated the property as raw land,
 permitted for development, and sold as one parcel.  The court also consid-
 ered the property as raw land, and adopted a value between that asserted by
 the State's appraiser, and the first value presented by plaintiffs'
 appraiser.  Plaintiffs argue that the court should have considered the
 property as if the infrastructure had been developed.
      An owner whose property is taken by condemnation is entitled to the
 "value for the most reasonable use of the property," along with compensation
 for business loss and the reduced value of any remaining property.  19
 V.S.A. { 501(2).  The value referred to is fair market value when the land
 is taken at its highest and best use.  Appeal of Condemnation Award to 89-2
 Realty, 152 Vt. 426, 429, 566 A.2d 979, ___ (1989).  The parties agree here
 that the highest and best use of plaintiffs' land is as a housing develop-
 ment.
      Although our published cases do not address the specific issue
 plaintiffs raise, our decision in Children's Home Inc. v. State Highway Bd.,
 125 Vt. 93, 211 A.2d 257 (1965) points to a resolution.  In Children's Home,
 the property had a ravine through it, but the owner argued that its value
 should have been considered in light of a contemplated commercial
 development, because an adjoining landowner had promised to fill in the
 ravine.  The Court first stated the general valuation rule as follows:

           The landowner is entitled to the value of the parcel
           appropriated together with the difference in the fair
           market value of the remaining property immediately
           before, and immediately after, as a consequence of the
           taking.

 Id. at 95, 211 A.2d  at 260.  We went on to hold that on the date the
 property was taken it contained the ravine, and that its value was enhanced
 by its "commercial potential," but "was not subject to further increment by
 the prospect of low development costs which were never experienced in fact."
 Id. at 96, 211 A.2d  at 260.  In holding that the property could not be con-
 sidered as if the ravine were filled in, the Court concluded:

           Perhaps the highway project frustrated the plaintiff's
           plans for future development of the frontage.  If so,
           that was not the appropriation of a compensable interest
           in the land taken, within the reach of the constitu-
           tional guaranties.

 Id.  In cases following Children's Home, we have emphasized that valuation
 must occur as of the date of the taking.  See, e.g., Jensen v. State, 136
 Vt. 200, 202, 388 A.2d 421, 422 (1978); Thorburn v. State Highway Bd., 130
 Vt. 11, 13-14, 285 A.2d 755, 757 (1971).
      The rule that follows from these cases is that the value must be set
 as of the date of condemnation when the land is in a raw state without the
 infrastructure.  As in Children's Home, the condemnation of plaintiffs' land
 frustrated their development plans, but the plans themselves are not compen-
 sable.  We note that our position is consistent with those taken by other
 courts in similar situations.  In general, courts have held:
         [R]aw land as such, with little or no improvement or
         preparation for subdivision may not be valued as if the
         land were in fact a subdivision.  Thus, the "lot method"
         approach to valuation may not be used.  The measure of
         compensation is not the aggregate of the prices of the
         lots into which the tract could be best divided, since
         the expense of clearing off and improving the land,
         laying out streets, dividing it into lots, advertising
         and selling the same, holding it and paying taxes and
         interest until all lots are disposed of cannot be
         ignored, and is too uncertain and conjectural to be
         computed.

           . . . .

           The accepted rule for evaluation of such land, there-
         fore, is that the land will be considered in its present
         condition as a whole, with consideration given to any
         increment or enhancement of value due to the property's
         present adaptability to subdivision development.

 4 J. Sackman Nichols on Eminent Domain { 12B.14[1][a], at 12B-163-168 (rev.
 3d ed. 1990) (footnotes omitted).
      It is not unfair to value this property as raw land that can be used
 for a housing development.  Its development potential is contained in this
 value.  Plaintiffs can take the proceeds of the condemnation and buy an
 equivalent piece of land and develop it.  The difference between the
 "retail" and "wholesale" values of the land, as plaintiffs have termed them,
 involves work and risk, which plaintiffs neither expended nor assumed.
      Plaintiffs' second argument relates to the first.  In this argument,
 they seek the increment to their appraisers' third valuation.  That value,
 set by the appraiser at $2,572,000, assumes that plaintiffs completed the
 infrastructure and then sold the lots individually for housing development.
 Plaintiffs argue that the increment to this value is compensable because it
 reflects a business loss which is specifically allowed under 19 V.S.A. {
 501(2).
      Vermont is one of the few states to recognize business loss as an item
 of damage in a condemnation proceeding.  See Appeal of Condemnation Award to
 89-2 Realty, 152 Vt. at 429, 566 A.2d  at 980.  To be compensable, the busi-
 ness loss must be one "'which has not necessarily been compensated for in
 the allowance made for [the] land.'"  Id. (quoting Sharp v. Transportation
 Bd., 141 Vt. 480, 486, 451 A.2d 1074, 1076 (1982)).  It is allowed only with
 respect to a "fixed and established business."  Sharp, 141 Vt. at 486, 451 A.2d  at 1076.  For example, in Green Mountain Marble Co. v. State Highway
 Bd., 130 Vt. 455, 462, 296 A.2d 198, 203 (1972), we held that no business
 loss was compensable for a marble quarry that had been idle for many years,
 despite the evidence that marble that could be quarried was present.
      Plaintiffs do not meet the requirements for a business loss award.
 They do not have a fixed and established business developing land.  More-
 over, it is impossible to distinguish business loss from the value of the
 land because the nature of the business is the sale of the land.  Thus,
 plaintiffs are necessarily compensated in the value of the land for their
 work in designing the subdivision and obtaining permits.  Further compen-
 sation would be either duplicative or for business activity that did not
 exist.
      Finally, plaintiffs argue that the court erred in failing to award
 them attorney's fees and other litigation expenses under either 19 V.S.A. {
 512(b) or { 514.  Section 512(b) applies, however, only where "the plaintiff
 prevails against the state in an action for inverse condemnation."  Although
 this began as an inverse condemnation action, it became an appeal of a
 transportation board condemnation award made pursuant to 19 V.S.A. { 511, as
 if the inverse condemnation action had never been brought.  Thus, plaintiffs
 have not prevailed in an inverse condemnation action and are not entitled to
 the expenses they seek pursuant to { 512(b).
      The availability of costs in a condemnation action is governed by 19
 V.S.A. { 514, the other statute on which plaintiffs rely.  That statute
 allows the court to "tax costs," but does not also allow the award of
 "disbursements and expenses, including reasonable attorney, appraisal and
 engineering fees," as is contained in { 512(b).  Moreover, the allowance of
 reasonable attorney's, appraisal and engineering fees for inverse condem-
 nation actions is a relatively recent addition to the statutes that cannot
 be taken as defining costs for condemnation actions.  See 1971, No. 218
 (Adj. Sess.) { 1 (adding the provision that is currently 19 V.S.A. {
 512(b)).  Thus, { 514 covers only the traditional concept of costs, which
 does not include the items plaintiffs seek.  See In re Appeal of Gadue, 149
 Vt. 322, 327, 544 A.2d 1151, 1153-54 (1987); 32 V.S.A. { 1471; V.R.C.P.
 54(d).  The trial court properly awarded the allowable costs.
      Affirmed.

                                         FOR THE COURT:




                                         Associate Justice