Opinion
No. FST CV 02 0187554 S
January 27, 2009
MEMORANDUM OF DECISION
The fair market value is the usual issue in condemnation cases. In this matter the property involved is 65 South Main Street, Norwalk, Connecticut. However, an issue of first impression has arisen. How interest, if any, is to be determined on a condemnation award?
"The general rule is that the loss to the owner from the taking, and not its value to the condemnor, is the measure of damages to be awarded in eminent domain proceedings." Gray Line Bus Co. v. Greater Bridgeport Transit District, 188 Conn. 417, 427 (1982). "In a condemnation matter, it is the condemnee's burden to show loss or damages in excess of the condemnor's figures." Commissioner of Transportation v. Larobina, 92 Conn.App. 15, 27 (2005).
The question of what is just compensation is an equitable one rather than a strictly legal or technical one. The paramount law intends that the condemnee shall be put in as good condition pecuniarily by just compensation as he would have been in had the property not been taken . . . We have stated repeatedly that the amount that constitutes just compensation is the market value of the condemned property when put to its highest and best use at the time of the taking . . . In determining market value, it is proper to consider all those elements which an owner or a prospective purchaser could reasonably urge as affecting the fair price of the land . . . The fair market value is the price that a willing buyer would pay a willing seller based on the highest and best possible use of the land assuming, of course, that a market exists for such optimum use.
The highest and best use concept, chiefly employed as a starting point in estimating the value of real estate by appraisers, has to do with the use which will most likely produce the highest market value, greatest financial return, or the most profit from a use of a particular piece of real estate . . . In determining its highest and best use, the trial court must consider whether there was a reasonable probability that the subject property would be put to that use in the reasonably near future, and what effect such a prospective use may have had on the property's market value at the time of the taking.
Northeast Connecticut Economic Alliance, Inc. v. ATC Partnership, 272 Conn. 14, 25 (2004).
"The opinions of experts are of great aid to the trier of fact in a condemnation case, but the trier is not bound by them . . . The determination of a property's value by a court is the expression of the court's opinion aided ordinarily by the opinions of expert witnesses, and reached by weighing those opinions in light of all the circumstances in evidence bearing upon value and on its own general knowledge of the elements going to establish it." Merrell v. Southington, 42 Conn.App. 292, 297-98 (1996). "In a case tried before a court, the trial judge is the sole arbiter of the credibility of the witnesses and the weight to be given specific testimony . . . The credibility and weight of expert testimony is judged by the same standard, and the trial court is privileged to adopt whatever testimony it reasonably believes to be credible." Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 65 (2007); Salcon v. Glastonbury, 111 Conn.App. 242, 254 (2008). "The trier of fact must arrive at its own conclusions as to the value of the taxpayer's property by weighing the opinion of the appraisers, the claims of the parties in light of all the circumstances in evidence bearing on value, and his own general knowledge of the elements going to establish value . . ." United Technologies Corp. v. East Windsor, 262 Conn. 11, 23 (2002).
The court makes the following findings of fact and legal conclusions.
Robert B. Barton was the owner of real property at 65 South Main Street, Norwalk, Connecticut. The property is approximately 70 feet by 197 feet and the tax assessor's field card indicates that the lot size is 13,939 square feet. Ex. 3, page 28. A Certificate of Taking for 65 South Main Skeet, Norwalk, Connecticut from Robert B. Barton to the City of Norwalk was dated February 23, 2002 and recorded in the Norwalk Land Records on February 26, 2002 in Volume 4371 at page 19. Ex. 1. The legal description of the property at 65 South Main Street, Norwalk, Connecticut is contained in the Certificate of Taking. The court finds that the date of taking is February 26, 2002.
Upon the filing of the Certificate of Taking, the City of Norwalk deposited with the Clerk of the Superior Court the sum of $127,000. After the deposit an Amended Motion for Payment of Deposit dated June 10, 2002 was filed (#106.00). The parties obtained a court order in accordance with a written stipulation that the $127,000 would be paid on behalf of Robert B. Barton to the holder of his first mortgage, New Milford Savings Bank (#114.10). In return for receiving the $127,000, New Milford Savings Bank by said written stipulation "hereby acknowledges and agrees that it has no right or interest in any award that may be recovered by Barton." (#114.10.)
This condemnation lawsuit was timely and properly filed. It met all the necessary procedural requirements. Robert B. Barton, as the condemnee, was served as a party defendant. He is claiming that the fair market value of 65 South Main Street, Norwalk, Connecticut as of February 26, 2002 is $350,000. He admits that the $127,000 already paid by the City of Norwalk is to be credited and the net due him is $223,000. He is seeking reasonable and just interest from February 26, 2002 to the date of court's award pursuit to Gen. Stat. § 37-3c (Rate of interest recoverable in condemnation cases). He claims that the "reasonable and just" interest rate is 8.0% per annum. Appellant's Trial Memorandum (#135.10). He seeks an award of appraisal and expert fees. The City of Norwalk claims that the fair market value of 65 South Main Street, Norwalk, Connecticut is $255,000. After deducting the $127,000 already paid the City admits Mr. Barton is due $128,000. The City claims that if the court finds that interest is to be awarded then the federal rate of interest in Gen. Stat § 37-3c(1) and (2) must be applied.
The operative pleadings are: the Amended Appeal and Application for Review of Statement of Compensation filed by Mr. Barton in five paragraphs dated June 10, 2002 (#108.00), in which Mr. Barton made the following Claim for Relief: "The applicant applies to this court for a review of the statement of compensation;" and the Answer of City of Norwalk dated January 15, 2004 (#119.00). In that Answer the City admitted paragraphs 1, 2, 3 and 5 of the Amended Appeal and denied paragraph 4 which alleged; "The applicant is aggrieved by the statement of compensation." Since the New Milford Savings Bank no longer has an interest in the condemnation award by reason of the stipulation referred above, no pleadings were filed by the bank.
Mr. Barton was the owner of the real property at 65 South Main Street, Norwalk, CT at the date of taking. The title to the real property is no longer in his name. The City of Norwalk determined the fair market value to be $127,000 as of the date of taking. Mr. Barton disagreed. The City now admits that the fair market value of the property at the date of taking is $255,000. This is a major increase in value. Robert B. Barton is found to be aggrieved. Karp v. Urban Redevelopment Commission, 162 Conn. 525, 526 (1972); Tilcon Minerals v. Commissioner of Transportation, Superior Court, judicial district of Windham at Putnam, docket number 058636 (October 19, 2000, Hurley, JTR).
The City offered Norman R. Benedict, an MAI appraiser, as an expert witness. Mr. Barton offered David R. Ubaghs, an MAI appraiser, as an expert witness. Both appraisers appeared, testified and their written reports were offered into evidence.
Both real estate appraisers agreed that the highest and best use for the property at 65 South Main Street, Norwalk, Connecticut would be for a mixed use development built to the maximum permitted by zoning containing one or more of the following three uses permitted by the current zoning regulations; a restaurant and taverns, multifamily dwellings, off-street parking, retail, personal and business services. Both appraisers testified that the current use of the property is not its highest and best use. Both appraisers testified that neither the cost method nor the income method was appropriate. They both used the sales comparison method in reaching their respective opinions.
The sales comparison approach "is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sales price of the property being appraised . . . After identifying comparable sales, the appraiser makes adjustments to the sales prices based on elements of comparison." Motiva Enterprises, LLC v. Town of Stratford, 50 Conn.Sup. 639, 649 (2008). The court finds that the sales comparison approach is the proper method of evaluation.
The improvements on the 13,939 square foot property are 44 parking spaces with 9,000 square feet of asphalt, a four-foot-high chain link fence, three catch basins, curbs and curb cuts and some street lighting. The property is currently being used as a parking lot. There are no buildings on the property, Ex. 3, May 23, 2008 letter and Ex. 3, page 31.
The rectangular parcel is located in two different zones. The entrance to the parking facility on South Main Street is in the Neighborhood Business zone (NB). It allows among its permitted uses: restaurants, taverns, multi-family dwellings, retail, personal and service businesses and off-street parking. The immediate neighborhood is developed with these types of mixed uses. The NB zone has a Maximum Floor Area Ratio (FAR) of .7. Ex. 3, page 27. The FAR limits the maximum size of the building to 70% of the 13,939 square feet lot. There was no evidence before the court as to the exact square footage of the NB portion of 65 South Main Street. The tax map discloses that just over one-half of the parcel is in the NB zone. The rear portion of the lot is in the Light Industrial Zone (L-1). It allows among its permitted uses manufacturing, office, retail and two family homes. The maximum FAR of the L-1 zone is 1.0. Ex. 1, pages 29-30. The L-1 portion of the property is less than one-half of the lot and is landlocked with no street frontage. See Ex. 3, page f of ADDENDA. There was no evidence before the court of which FAR would apply if the entire parcel was developed as one use. Regardless of the zone boundary lines and the permitted uses in each zone, both appraisers agreed that the highest and best use is the largest possible building containing a mixed use of retail, restaurants, tenants and multifamily dwellings. "It is our opinion that the Highest and Best Use of the subject site as though vacant is commercial development to the highest density possible." Ex. 2, page 31. "The Highest and Best Use of the appraised land would be for development of the largest building oriented to the top three uses or off-street parking facility permitted by zoning." Ex. 3, page 34. Mr. Benedict's top three uses are: (1) restaurants and taverns (2) multi-family dwellings and (3) retail, personal and business services.
Mr. Barton's expert, David R. Ubaghs, used three comparable properties: (a) 19 Isaac Street, Norwalk, CT approximately 1.5 miles to the north, which sold in May 2001 for $535,000. It is a 22,651 square foot parcel and was purchased for a multifamily use in the CBDA zone. The CBDA zone permits an FAR of 2.0; and no maximum building coverage. (b) 326 Main Avenue, Norwalk, CT approximately 3 miles to the north, which sold in January 2002 for $677,500. It is a 28,793 square foot vacant lot in the B-2 zone. The B-2 zone permits an FAR of .9 and a maximum building coverage of 50%. (c) 18 South Main Street, Norwalk, CT two blocks to the north, which sold in August 2000 for $175,000. It is located in the Washington Street Design District (WSD) at the corner of Haviland Street and South Main Street. It is a 4,791 square foot lot on which approvals had been obtained and construction started on a four-story 6,155 square foot mixed use building. The WSD zone has an unlimited FAR and a maximum building coverage of 90%.
Mr. Ubaghs concluded: "The overall condition of properties steadily increases as one moves north of the subject property along South Main Street to the intersection of Washington Street and the property values decreases one moves South of the subject property along South Main Street to the intersection of Meadow Street." Ex. 2, page 24. He concluded that the fair market value of the subject property on February 26, 2006 was $350,000 measured at $25.11 per square foot.
The City of Norwalk's expert, Norman R. Benedict, compared the sales prices of fourteen properties in Norwalk. Ex. 3, page 38. Mr. Benedict broke down his analysis of the sales comparison approach into two separate techniques: the overall market comparison technique and the individual market comparison technique. Ex. 3, page 37. He determined that the mean square foot sales price of those fourteen properties was $17.78 per square foot and the median sales price was $17.31 per square foot ($17.66 plus $16.96 divided by 2). Ex. 3, page 38. This statistical analysis was used by Mr. Benedict to measure market tendencies. Mr. Benedict's appraisal report describes each of these fourteen properties in general terms by setting forth only the address, property size, price and date of sale. He did not include any information such as: distance from the subject property, zone, zoning characteristics, prospective use, land configuration and whether the sale was an arms length transaction. He did not show the fourteen properties on a map. He did note that "time and size are generally the two most important characteristics for analysis." Ex. 3, page 39. He grouped the fourteen parcels as follows: for those seven sales from March 1999 through March 2000 and for those seven sales after May 2001. He also grouped those fourteen parcels into four groups by size; (1) 9,148 to 19,602 square feet; (2) 21,344 to 32,620 square feet; (3) 44,867 to 88,427 square feet, and (4) 129,373 to 267,458 square feet. From this comparison he stated: "The result was that larger parcels of land are tending to sell for greater units of value." Ex. 3, page 42. He did not adjust the price by the time of sale before reaching this conclusion. He prepared a chart that attempted to measure land quality, neighborhood quality, location, and access. No details of these factors for each property were contained in Mr. Benedict's report nor in his trial testimony. His use of the overall market comparison technique resulted in a price of $17.20 per square foot. Ex. 3, page 47.
From these fourteen properties Mr. Benedict selected three for an examination using the individual market comparison technique. His adjustments for those three properties are contained in Ex. 3, page 48. His use of the individual market comparison technique resulted in a price of $19.20 per square foot. In discussing the three properties, Mr. Benedict only made generalized adjustments. No detailed adjustments were made for zoning and other property characteristics. No map of the location of any of these three properties were presented to the court. He compared $17.20 to $19.20 per square foot prices by giving more weight to the $17.20. He concluded that the fair market value of the subject property on February 26, 2002 was $255,000 measured at $18.30 per square foot.
Mr. Benedict's three comparable Norwalk properties were: (1) 50 West Avenue, Norwalk, CT. It sold in April 1999 for $500,000. It is a 28,314 square foot lot. The sales price was $17.66 per square foot. (2) 18 Merwin Street, Norwalk, CT. It sold in April 1999 for $390,000. It is a 28,394 square foot lot. The sales price was $15.99 per square foot. (3) 64 Putnam Avenue Norwalk, CT. It sold in December 2001 for $222,500. It is a 9,148 square foot lot. The sales price was $24.32 per square foot. Mr. Benedict used a five percent annual increase in the fair market value for the purpose of time value adjustments of those sales. Ex. 3, pages 46-48.
The court has considered and rejected Mr. Benedict's three comparable sales because they contain no data such as dimensions of the lot, land characteristics, location, zoning, maximum buildable area, utility and current property improvements. The court could not determine from the information provided whether the Benedict properties involved arms length transactions.
The court has considered and rejected two of Mr. Ubaghs' comparable sales: (1) 326 Main Avenue, Norwalk. It is located three miles north of the subject parcel. It is north of the railroad, north of the South Norwalk City center, north of I-95, and north of the Norwalk City center in Wall Street. It is close to the Merritt Parkway and the large office complexes located in that area. It was the site of a Burger King restaurant which was demolished on which will be built a 6,400 square feet retail building. It has far superior frontage; 150 feet on Main Street in a heavily trafficked area. It sold in January 2002 for $23.53 per square foot. (2) 18 South Main Sheet. It is located two blocks to the north of the subject premises in the WSD District. It is a corner lot with frontage on both Haviland Street and South Main Street. The lot is very small; 4,791 square feet. The price per square foot was the highest of all sixteen properties mentioned in the appraisal reports in evidence. At $36.53 per square foot it exceeds the next highest square foot sales price by almost 50%. The Washington Street Design District (WSD) permits a more intense zoning use than the NB or L-1 zone. WSD has an unlimited FAR compared to the .7 and 1.0 FAR for the subject property. The maximum building coverage for the WSD zone is 90% compared to the 35% and 50% for the subject property. 18 South Main Street is far superior as to location, size and zoning compared to the subject property. The lot was sold with zoning approvals in place for a mixed use development with an as-built FAR of 1.29, 50% larger than the maximum FAR that could be built on the subject property. The maximum building coverage for 18 South Main Street is more than double that of the subject property.
The three comparables sales used by each appraiser were different. 19 Isaac Street, Norwalk was the only Ubaghs' comparable sale mentioned in Benedict's list of fourteen properties.
19 Isaac Street, Norwalk, CT sold in May 2001 for $535,000. It is in a CBDA zone and fronts on two streets. It is located in a more stabilized neighborhood to the rear of the retail development of the Wall Street neighborhood in central Norwalk. Zoning approvals had already been obtained for retail on the first floor and 21 residential units on the remaining floors. A later approval was obtained for 27 residential units. The 22,651 square foot lot was undeveloped in May 2001. The sales price was $23.62 per square foot. The CBDA's zone provides a greater density of mixed use development with a 2.0 FAR compared to the subject properties .7 and 1.0 FAR for its two zones. The maximum building coverage is unlimited in the CBDA zone. The frontage on two streets also make it superior to the subject property.
Mr. Ubaghs used a 3% annual price adjustment. Ex. 2, page 24. Mr. Benedict used a 5% annual price adjustment. Ex. 3, pages 46-48. The court adopts the average and uses a 4.0% fair market value annual increase. From May 2001 to February 26, 2002 is nine months. The fair market value of 19 Isaac Street would have increased by 3.0% from May 2001 to February 26, 2002 resulting in a time adjusted square footage price of $24.33. A downward adjustment must be made for the superior location, street frontage and zoning density of 19 Isaac Street. The court will reduce the square footage price by 8.5% for the above adjustments.
After conducting the above adjustments, the court finds that 19 Isaac Street, Norwalk, CT has an adjusted square footage fair market value as of February 26, 2002 of $22.26. Applying the $22.26 per square foot value to the subject property of 13,939 square feet the result is $310,282, rounded off to $310,000. No adjustments need be made for environmental considerations or demolition costs. This $310,000 fair market value exceeds by $183,000 the $127,000 already paid to Robert B. Barton by the City of Norwalk.
The court then reexamined 326 Main Avenue, Norwalk and noted that Mr. Ubaghs determined an adjusted square footage price of $22.91. This results in a fair market value as of February 26, 2002 for the subject property of $319,342, a difference of approximately three percent from the $310,000 found by this court. Since 326 Main Avenue is superior to the subject property, this value is further confirmation of the reasonableness of the $310,000 price determined by this court.
As a further test the court used Mr. Benedict's three comparable sales; 50 West Avenue, 18 Merwin Street and 64 Putnam Avenue, and adjusted their per square footage price by five percent from the sales date to the date of taking and then took the average of the three. The result was $20.99 per square foot. Multiplying this by 13,939 square feet results in an average fair market value of $292,579, a difference of approximately 5.6% from the $310,000 found by the court to be the fair market value of 65 South Main Street, Norwalk, Connecticut on February 26, 2002. Adding 326 Main Avenue to these three brings the average square footage to $21.47, on average fair market value of $299,270, a difference of just over three percent.
The court finds that based on the sales comparison method that the fair market value of 65 South Main Street, Norwalk, Connecticut on February 26, 2002, the date of taking, was $310,000.
At oral argument on the last day of trial the City of Norwalk placed in issue the fair market value of the subject property based on its current use as a parking lot. The City argued that the fair market value as testified to by the experts should be lowered since the current use as a parking lot is not its highest and best use and there is no evidence that Mr. Barton ever intended its use to be anything other than a parking lot. Northeast Connecticut Economic Alliance, Inc. v. ATC Partnership, supra, 222 Conn. 25. The City made this argument despite the fact that both experts agreed; that the highest and best use was a mixed use building built to the maximum permitted by the current zoning and that the comparable sales method not the cost or income method, was the appropriate appraisal method.
At oral argument the City confirmed: that this court is not bound by the opinions of the experts appraisers, either as to fair market value or the method used to determine fair market value; that "highest and best use concept, chiefly employed as a starting point in estimating the value of real estate by appraisers, has to do with the use which will most likely produce the highest market value, greatest financial return, or the most profit from a use of a particular piece of real estate;" that the court must arrive at its own conclusion of value "weighing the opinion of the appraisers, the claims of the parties in light of all the circumstances in evidence bearing on value and his own general knowledge of the elements going to establish value." In addition, both parties agreed at oral argument that the court can establish a fair market value that is less than the $255,000, the lowest appraisal, or higher than $350,000, the highest appraisal.
The three most common approaches to determine fair market value of real property are the sales comparison approach, the income approach and the cost approach. Motiva Enterprises, LLC v. Town of Stratford, supra, 50 Conn.Sup. 646. The income approach is further broken down into two sub categories: capitalization of net income and capitalization of gross income. Id., 646, fn.7. The court has already used the sales comparison method in this Memorandum of Decision to find that the fair market value was $310,000 on February 26, 2002.
The cost method is also known as the cost less depreciation and obsolescence. Second Stone Ridge Cooperative Corporation v. Bridgeport, 220 Conn. 335, 342 (1991). In this case the tax records, the reports of both appraisers and the photographs demonstrate that there are no buildings or structures on the property. The entire lot is an asphalt parking lot with 44 delineated parking spaces. The other improvements on the property are minimal. See page 5 of this Memorandum of Decision. Ex. 3, May 23, 2008 letter. There is no evidence of the reproduction costs of the minimal property improvements in evidence. The court finds that the cost method cannot be used to determine fair market value of what is basically property that is just a level above unimproved land. The two real estate appraisers found that the cost method was not appropriate.
The court now turns to the income method. The court has no evidence of the costs incurred in maintaining the property as a parking lot in order to obtain net income. Those costs would include real estate taxes, snow plowing, repairs, electricity for the lighting and routine cleaning, maintenance and possibly employee salaries. There is some evidence of real estate taxes in the October 2003 grand list. Ex. 2, page 28. Without evidence of these current costs, this court could only speculate as to the net income. Therefore, the court will not use the capitalization of net income method.
The court can use the capitalization gross income method: "One year's income expectancy can be capitalized at market-driven capitalization rate." Ex. 3, page 36. The court finds from the evidence that 65 South Main Street is improved by 44 delineated parking spaces on a fully asphalted laid out organized parking lot. Ex. 3, page 14, Ex. 3. May 23, 2008 letter. The immediate neighborhood of the subject property consists of the Washington Street Design District, an urban renewal project of condominiums apartments, offices and stores; the mixed use residential and commercial uses on South Main Street and the surrounding streets; and the South Norwalk train station serving Metro North. "The Norwalk train station is located several blocks southwest of the subject and is part of the New Haven branch of the Metro-North System." Ex. 2, page 24, Ex. 3, page 6 and attached maps. The need for off-site parking to serving these neighborhood uses is in evidence. "On-site parking is scarce." Ex. 2, page 24; Ex. 2 Addendum B. Tax Map.
In order to determine gross income, the court took judicial notice of the official website of the City of Norwalk; www.norwalkct.org. This judicially noticed fact is one that is "capable of ready and unquestionable demonstration." This fact is not of "common knowledge," West Hartford v. FOIC, 218 Conn. 256, 264 (1991). The court did not give either party notice of fact that it was going to take judicial notice of parking lot income. The court was only invited to consider the actual use of the subject premises as a parking lot at oral argument. There was no evidence of income actually generated by the existing parking lot or potential income that would be generated by its continued use as a parking lot. The two appraisers did not use the income method. The court was never asked by the parties to consider the current use of the property as a parking lot until that issue was raised by the City of Norwalk in its oral argument after all the evidence has been presented. "The trial court must give the parties an opportunity to be heard prior to taking such notice." State v. Zayas, 195 Conn. 611, 615 (1985); FDIC v. Napert-Boyer Partnership, 40 Conn.App. 434, 441 (1996).
The website www.norwalkct.org defined itself as the "official website of the City of Norwalk, Connecticut." Various municipal departments and agencies can be accessed on that website. One of those City agencies is the Norwalk Parking Authority. It has the same website and publishes the parking rates for the South Norwalk train station at www.norwalkct.org/ParkingAuthority/southnorwalkrr222.htm. On January 14, 2009 the Parking Authority website contained parking rates for the municipal parking lot located at the South Norwalk train station which is only a few blocks from the subject premises. The monthly parking permit is $75.00 and the daily parking rate is $8.00. There is no annual rate. The daily rate of $8.00 was established on July 22, 2008 and the monthly permit was increased to $78.00 on December 23, 2008 effective February 1, 2009 according to a five-page detailed document entitled "Norwalk Parking Authority Approved Rates."
Another website also contains information on the South Norwalk Railroad Station; www.norwalk.com/SoNoRR/parking.html. The parking rates shown on this website as of January 14, 2009 are; "Annual parking permit $556.50; Semi-annual permit $318.00; Monthly parking permit $63.60; Daily parking fees Monday-Friday $6.50, Saturday, Sunday $4.75." It appears from the comparison of both websites that the www.norwalk.com/SoHoRR/parking.html is out of date since the "official website of the City of Norwalk" no longer has annual or semiannual permits and the daily rates have increased to $8.00 with an effective date of July 23, 2008. In any event the court will use the $556.50 annual permit rate from www.norwalk.com and the $75.00 monthly and $8.00 daily rate from www.norwalkct.org in determining the annual gross rent of the subject property. The annual parking fee of $556.50 times 44 parking spaces results in a gross annual income of $24,486. The monthly parking fee of $75.00 per month times 44 parking spaces is gross annual income of $39,600. The daily parking rate from Monday though Friday times 252 business days a year times 44 parking spaces results in gross annual income of $88,704. A five percent vacancy or collection fee must be deducted from the above figures in order to obtain a gross annual income figure. Realty Times, Clifford A. Hockley, February 7, 2001, http://realtytimes.com/rtpages/200102007 vacancies.html. In a chart these amounts are:
Annual income Annual Income Less 5%
Annual Parking Permit ($556.50/yr) $24,486 $23,262
Monthly Parking Permit ($75/month) 39,600 37,620
Daily Parking Fee ($8.00/day) 88,704 84,269
The court will use the monthly parking permit rate. This will dispense with the hiring of collection employees on site to monitor the daily rate. The monthly permit can readily be paid in advance by check or credit card for the subject premises. Therefore, the court finds that the commercially reasonable current annual income for the subject premises as its exists, an unpaved 44 parking space site, is $37,620.
To that $37,620 must be applied the capitalization rate. Ex. 3, page 36. There was no evidence of the capitalization rates and no capitalization rate numbers were referenced in the written reports of the two estate appraisals. The court can take judicial notice of capitalization rates providing it gives the parties the opportunity to be heard. State v. Zayas, supra, 195 Conn. 615: FDIC v. Napert-Boyer Partnership, supra 40 Conn.App. 441. The court is going to select a cap rate in effect on February 26, 2002. The court has consulted five sources found on the internet for this purpose. (1) CT Page 1640 www.realtyrates.com "Current and Historical Cap Rate Indices;" (2) www.property-investing.org/cap-rate-data.html: (3) www.netgainrealestate.com/cap-rate-recommendations/2/; http://seekingalpha.com/article/55183 "Real Estate Cap Rates 1990-2007; and (5) The Wall Street Journal, June 25, 2008; at http://online.wsj.com/article/SB121436232049002445.html." Real Capital Analytics and Federal Reserve data rates 2001 to 2007." The court takes judicial notice of the historic cap rates for 2002 as set forth in the above five internet sites. The court will exercise its discretion and use a capitalization rate of 8.0% as of February 26, 2002. Applying the 8.0% capitalization rate to the annual gross income of $37,620 the market value is calculated to be $470,250.
That $470,250 has used the 8.0% cap rate in effect in February 2002. That $470,250 has used the current income to determine market value. Therefore, the $470,250 would be the current fair market value based on the current annual income if a 8.0% cap rate was used. The court then must discount the $470,250 from 2009 to February 26, 2002. For rounding off purposes the court will consider that period to be seven full years. The City of Norwalk appraiser used 5.0% as the annual increase in real estate value. Although the court has used 4.0% for an annual adjustment value, the City was the party arguing for the income method. The use of a 5.0% discount rate will provide a lower fair market value than a 4.0% discount rate.
Applying the 5.0% discount rate to the 2009 value found of $470,250, the value of that $470,250 in February 2002 is $334,000. The court finds that the fair market value of the subject property on February 26, 2002 is $334,000 using the capitalization of gross income method.
"The process of estimating the value of property . . . is, at best, one of approximation and judgment, and there is a margin for a difference of opinion." Burritt Mutual Savings Bank v. New Britain, 146 Conn. 669, 675 (1959). The court adopts the sales comparison method. It does not adopt the results of the capitalization of gross income method. The court finds that the fair market value of 65 South Main Street, Norwalk, Connecticut on February 26, 2002 is $310,000.
Gen. Stat. § 37-3c states as follows: "The judgment of compensation for a taking of property by eminent domain shall include interest at a rate that is reasonable and just on the amount of the compensation awarded. If a court does not set a rate of interest on the amount of compensation awarded, the interest shall be calculated as follows: . . . (2) if the period for which interest is owed exceeds one year, interest . . . shall be calculated . . . at an annual rate equal to the weekly average one-year constant maturity yield of United States Treasury securities, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the beginning of each year for which interest is owed." Interest runs from the date of the taking.
No evidence was offered of the one-year constant maturity yield. The parties seem to agree that such a one-year constant maturity yield would be much less than the 8.0% rate of interest claimed by the plaintiff. The court requested that the parties offer evidence on the issue of interest. The City is claiming that if interest is to be awarded, it must be the one-year constant maturity rate required by Gen. Stat. § 37c-3c. Mr. Barton is claiming that the court must apply the "reasonable and just" interest standard and that rate is 8.0% per annum as stated in Gen. Stat. § 37-1.
The Statutes in Title 37 are not models of consistency or clarity. Frequently parties will request and trial courts award in addition to a damage award, "statutory interest." Mariculture Products Ltd v. Those Certain Underwriters at Lloyd's of London, 110 Conn.App. 668, 674, fn 6 (2008); Rejouis v. Greenwich Taxi, Inc., 263 Conn. 132, 134 (2003). There is no such statute in Connecticut. Gen. Stat. § 37-3a is the statute most frequently cited as the authority for "statutory interest." Under § 37-3a; "Interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . Yet § 37-3a only sets a cap at 10%. Any rate of interest from 10% lower is "statutory interest." Stuart v. Stuart, 112 Conn.App. 160, 180-81 (2009).
The language of Gen. Stat. § 37-3a is directory not mandatory. The plain language of the statute sets a cap of 10% otherwise the phrase "and no more" would be meaningless. Ferrigno v. Cromwell Development Associates, 244 Conn. 189, 196 (1998). "Consistent with its plain language, § 37-3a establishes a maximum rate above which a trial court should not venture in the absence of specific legislative discretion." Sears, Roebuck and Company v. Board of Tax Review, 241 Conn. 749, 765-66 (1997). Gen. Stat. § 37-3a sets the maximum rate, a ceiling of 10%. It does not set 10% as the fixed rate of statutory interest. Id., 766; White Oak Corp. v. Department of Transportation, 217 Conn. 281, 297 (1991).
Periodically the Legislature has amended Gen. Stat. § 37-3a and increased the top interest rate: PA 72-292 increased the top rate to 6.0%; P.A. 79-364 increased the top rate to 8.0% and P.A. 88-257 increased the top rate to 10.0%. The selection of a rate of interest from 0% to 10.0% under Gen. Stat. § 37-3a is discretionary with the trial judge. The choice of an interest rate is a matter lying within the discretion of the trial court. Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 734-35 (1997); Iseli Co. v. Connecticut Light and Power Co., 211 Conn. 133, 144 (1989).
Simply to chose 10.0% as the interest rate because that is the only number referenced in Gen. Stat. § 37-3a is not the proper exercise of judicial discretion. The following two trial court decisions are examples of the correct use of Gen. Stat. § 37-3a. The two trial judges selected, not the 10% maximum interest rate but interest rates of 5% or 8% in the exercise of their discretion. Choi v. Argenti, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number CV 98 0168719 S (April 21, 2003, Lewis, JTR). ("General Statutes § 37-3a provides that interest at the rate of not more than 10% may be imposed." fn 2); Lebrun v. Lebrun, Superior Court, judicial district of New Haven of New Haven, Docket Number FA 94 0366032 S (November 7, 2008, Frazzini, J.) ("Accordingly, the court exercises its discretion to order statutory interest at the rate of eight per cent per year on the arrearage owed . . ."). Id., fn 4.
Other statutes in Title 37 establish rates of interest either higher or lower than 10%. Gen. Stat. § 37-1 states: "the compensation forbearance of property loaned at a fixed valuation or for money, shall, in the absence of any agreement to the contrary, be at the rate of eight per cent a year;" Gen. Stat. § 37-2 states that no borrower shall recover interest "in excess of the rate of six per cent a year." Gen. Stat. § 37-3a(b) requires that interest: "shall be no more than five per cent per year" for a debt arising out of hospital services. Gen. Stat. § 37-3b, permits "interest at the rate of ten per cent a year on a negligence recovery commencing ninety days after the judgment. Gen. Stat. § 37-4 states that an interest rate of "greater than twelve per cent per annum" is usurious. Gen. Stat. § 37-9(3) permits any rate of interest on a "bona fide mortgage of real property for a sum in excess of five thousand dollars."
Gen. Stat. 37-3c, which is the authority for awards of interest in condemnation cases, contains a two-step process. First, the court may award "interest at a rate that is reasonable and just on the amount of the compensation awarded." Second, if the court fails to "set a rate on the amount of compensation awarded" the court shall award interest at "an annual rate equal to the weekly average one-year constant maturity yield of the United States Treasury securities as published by the Board of Governors of the Federal Reserve System." This second method contains the calculation of interest for the first year and a slightly different calculation of interest for succeeding years. The court finds this second method, the default rate, the treasury rate set forth in Gen. Stat. § 37-3c is not reasonable. "In a case such as the present, where the Court finds that the condemning authority awarded damages equal to less than 75 percent of the fair market value of the property taken, the treasury bill rate is not reasonable." City of New Haven v. Spose, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 01-0456998 S (February 19, 2003, Berdon, JTR).
Does Conn. Stat. § 37-3c mandate an award of interest? There are seven reasons why the answer to this question is: Yes. (1) The statute contains a default rate of interest if the court fails to award "reasonable and just" interest. "If a court does not set a rate of interest on the amount of compensation awarded, the interest shall be calculated as follows: . . ." (2) The word "shall" appears twice in the statute. It first mandates the awarding of a reasonable and just rate of interest. "The judgment of compensation for a taking of property by eminent domain shall include interest at a rate that is reasonable and just . . ." Failing such a reasonable and just rate, the default rate of interest "shall be calculated as follows . . ." Blakeslee Arpaia Chapman, Inc. v. EI Constructors, supra, 239 Conn. 752 (finding similar language in Gen. Stat. § 52-192a mandatory). (3) A condemnation award is to place the condemnee in as good a position as if the real property was not taken. Since the condemnee no longer has the right to receive the appreciation in value of the real property after the date of taking, interest is provided to the condemnee. The losses suffered from the date of taking to the actual payment are proper damages to the condemnee. Clark v. Cox, 134 Conn. 226, 229-30 (1947). (4) Interest has been awarded by condemnation case law for generations. Stamford v. Vuono, 108 Conn. 359, 371 (1928); Connecticut v. Giant's Neck Land Improvement Company, 116 Conn. 119, 124 (1933). Housing Authority v. Pezenik, 137 Conn. 442, 447 (1951) "Interest at a proper rate is a good measure by which to ascertain the amount so to be added." Clark v. Cox, supra, 134 Conn. 232. (5) The legislature is presumed to know the state of the law when it enacted Gen. Stat. § 37-3c. The legislative history supports the conclusion that interest is mandatory. "Sen. Aniskovich: Madam President, it would set in statute a separate interest calculation for amounts owed for a period of less than one year and amounts owed for a period of less than one year and amounts owed for periods in excess of one year and would have the effect of reducing the interest payable with respect to such amounts from the statutory rate of 10 per cent to approximately three to five percent based on the variable rate of setting the financial factor that's set forth in the statute." Connecticut General Assembly Senate, Proceedings 1995, Volume 38, Part 10, 3330-696. May 30, 1995, page 003674. (6) The Attorney General rendered an opinion on whether interest is mandatory in testimony before the General Assembly Finance, Revenue and Boarding Committee on March 14, 2002. "Current law requires that an eminent domain judgment include interest charged at a rate set by the court, or, if the court doesn't set the interest rate, at a rate equal to the annual interest rate of a 52 week U.S. Treasury Bill." (7) Gen. Stat. § 37-3c is mandatory under the tests used to determine whether a statute is mandatory or directory. Weems v. Citigroup, Inc., 289 Conn. 769, 790-91 (2008). These seven reasons are supported by Commissioner of Transportation v. Vega, 109 Conn.App. 16, 19-20 (2008).
The court will set a "reasonable and just" interest rate. The default rate set in Gen. Stat. § 37-3c does not place the condemnee in the same position he would have been had he still owned the real property. An award of interest commonly found in real property transactions would more fairly compensate the condemnee. "The general rule is that the loss to the owner from the taking and not its value to the condemnor is the measure of damages to be arrived in eminent domain proceedings." Gray Line Bus Co. v. Greater Bridgeport Transit District, supra, 188 Conn. 427.
There appears to be no appellate or trial court decision in Connecticut that discusses the methodology for the court determining what is "reasonable and just" interest. Most trial courts that have ordered interest have not discussed the method used to determine the interest rate applied. Usually trial courts use the 8.0% rate set by Gen. Stat. § 37-1 or the 10.0% top rate set by Gen. Stat. § 37-3a.
Connecticut has a system in effect for establishing a reasonable rate of interest when the previously set rate was a variable "prime rate" of a now failed lending institution. These are called "failed index" cases. A good example is FDIC v. Napert-Boyer Partnership, 40 Conn.App. 434, 439 (1996). In Napert-Boyer the defendants obtained a loan from Connecticut Bank and Trust Company and the variable interest rate established by the loan documents was tied to CBT's prime rate. CBT failed and the FDIC took over the loan. The trial court was asked to apply the failed index rule and establish a variable rate of interest. "When a variable interest rate is based on the rate of a failed institution, the trial court must determine whether the submitted rate is reasonable by examining the documents and testimony offered by the plaintiff." Id., 439; Central Bank v. Colonial Romanelli Associates, 38 Conn.App. 575, 578 (1995). The trial judge took judicial notice of the fact that Fleet Financial Corp was a major bank holding company in the New England region and proceeded to substitute Fleet's variable prime rate as the new index rate. It was held error for such judicial notice to be taken. The case was remanded for an opportunity for each party to offer evidence what reasonable rate of interest must be applied and/or to rebut the opposition evidence. FDIC v. Napert-Boyer Partnership, supra, 40 Conn.App. 442-43.
Neither party in this case offered evidence of the default rate of interest set forth in Gen. Stat. § 37-3c; the one-year constant maturity. The City of Norwalk had indicated that it may call the Comptroller of the State of Connecticut as a witness to establish that rate. Neither party offered a witness on the interest issue. There was dialogue between counsel and the court on the record. The court indicated to counsel that it was not able to locate a document that contained the exact language of Gen. Stat. § 37-3c. The court informed counsel that there was a variance between the statutory language and a Federal publication entitled "Federal Reserve Statistical Release H-15." The statute states: "interest shall be calculated from the date of taking at an annual rate equal to the weekly average one-year constant maturity yield of United States Treasury securities, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of taking." The court has already found the date of taking to be February 26, 2002, a Tuesday.
The Federal Reserve System publishes a historical record of interest rates entitled "Federal Reserve Statistical Release Historical Data." www.federalreserve.gov/releases/h15/data.htm. This document was not offered into evidence. The court takes judicial notice of this Release H-15. H-15 contains six pages and lists 62 separate "Instruments" each having four separate frequencies; "Business day, Weekly (Friday), Monthly and Annual." Under the "Instruments" column appears, "Treasury constant maturities." Under that heading appears two other subheadings: "Nominal" and "Inflation indexed." Under the "Nominal" subheading appears twelve different "Instruments" each labeled by a period of time from "1-month" to "30-year." There is a "Nominal Instrument" entitled "1-year." There are no "1-year" instruments listed under the "Inflation indexed" subheading. Under the "Frequency" column for "Treasury constant maturities: Nominal, 1-year" are the above mentioned four categories of "Business day, Weekly (Friday), Monthly, and Annual."
The subheading "Nominal" contains an explanatory Footnote 11; "Yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002 and reintroduced on February 9, 2006." Between these dates was a factor for adjusting the daily nominal 20-year constant maturity rate in order to estimate a 30-year nominal rate at www.treas.gov. The above language of H-15 is not identical to Gen. Stat. § 37-3c but closely approximates the statutory language.
Despite the difference in terminology, the unexplained difference between 20-year constant maturity and 30-year nominal rate and the adjustment factor, the court will take judicial notice of H-15 "Treasury constant maturities. Nominal 1-year, Weekly (Friday)." This last phrase is in hyper-text on H-15. When that hyper-text is clicked, a new page appears containing further explanatory material and columns of numbers on 41 pages with a line and number for every seven days commencing January 5, 1962. Page 1 of those 41 pages states: "Instrument; U.S. government securities/Treasury constant maturities/Nominal." "Maturity, 1-year," "Frequency Weekly (Friday)." For each week a separate interest rate is established. There is no "annual rate equal to the weekly average" in H-15.
Thus the court and/or the parties must calculate weekly interest from the date of taking to the date of payment. In this case that will result in over 360 separate weekly multiplication calculations plus an additional 360 separate weekly division calculations and finally one very large addition calculation. Gen. Stat. § 37-3(c) does not state that one of those weekly interest rates must be applied on an annual basis, thus reducing the total calculations to 7 multiplication calculations, 7 division calculations and one addition calculation. H-15 does not publish the average of all 52 weekly rates as an annual rate.
Since there is no mention of compound interest in H-15, all interest calculations will be based on the principal due of $183,000 at simple interest. In order to calculate the default interest rate in Gen. Stat. § 37-3c the $183,000 must be multiplied by each weekly interest rate and then each result is divided by 52. These 720 plus calculations are then added. Since February 26, 2002 was a Tuesday, the preceding Friday was February 22, 2002 and the succeeding Friday was March 1, 2002. The court is certain that interest is measured from the date of taking, February 26, 2002, but is not certain if the first calculation of weekly interest must use the February 22, 2002 rate (2.24%) or the March 1, 2002 rate (2.28%). In addition the court is not certain if interest should start on each succeeding Friday or each succeeding Saturday. All of these matters should have been presented to the court by counsel, but were not. In any event one day's interest at 2.24% on $183,000 over a 360-day calendar year as per Gen. Stat. 37-1(a) would be $11.39, essentially de-minimus in relation to the overall judgment rendered in this matter. At 2.28% the per diem interest would be $11.59.
The court has consulted Release H-15 for the annual one-year constant maturity for each full calendar year from 2002 through 2008 in order to roughly estimate interest. H-15 contains the following annual rates: 2002 — 2.0%; 2003 — 1.24%; 2004 — 1.89%; 2005 — 3.62%: 2006 — 4.94%; 2007 — 4.53%, and 2008 — 1.83%. The average of these seven interest rates is 2.86% per annum. This court has not done the necessary 720 plus weekly calculations. This court has used the 2.86% annual average interest rate as a rough approximation of the interest on $183,000 for the rounded-off seven full years from February 26, 2002 to February 25, 2009. That amount is $36,637 for a total award of $219,637. Using Mr. Barton's 8.0% rate for those seven years, the interest would be $102,480 for a total award of $285,480. The issue of interest is a significant factual and legal issue, a difference of approximately $65,843. With such a substantial amount at issue, the court continues to wonder why neither party formally addressed the issue of interest at trial. "In exercising this equitable authority the trial court may consider all relevant information and should allow the parties, if appropriate, to submit evidence relative to the rate of interest available during the period of overassessment." Sears Roebuck and Company v. Board of Tax Revenue, supra, 241 Conn. 766.
The court takes judicial notice of "Federal Reserve Statistical Release H15 — Historical Data" for the following: "Instruments;" "Conventional mortgages" and "Bank prime loan," under the "Annual" "Frequency" column. Other trial judges have considered similar interest rates. Laurel, Inc v. Commissioner of Transportation, 180 Conn. 11, 46, fn. 10 (1980). "Annual" "Conventional mortgages" in the Release H-15 state that they are based on the "30-year fixed rate conventional home mortgage commitments." The "Annual" for "Conventional first mortgages" in H-15 are as follows: 2002 — 6.54%; 2003 — 5.82%; 2004 — 5.84%; 2005 — 5.86%; 2006 — 6.41%, 2007 — 6.34% and 2008 — 6.04%. The average of these seven interest rates is 6.12%.
"Bank prime loan" in H-15 state that they are based on the "Rate posted by a majority of top 25 (by assets in domestic offices) U.S.-chartered commercial banks." The Bank prime loan" "Annual" rates in H-15 are as follows: 2002 — 4.67%; 2003 — 4.12%, 2004 — 4.34%, 2005 — 6.19%, 2006 — 7.96%, 2007 — 8.05% and 2008 — 5.09%. The average of these seven interest rates is 5.77%.
The court is not taking judicial notice of the interest rate that this court will apply. It is taking judicial notice of the interest rates mentioned in H-15.
Gen. Stat. § 37-3c requires the default interest rate to be calculated weekly. The statute is silent on what periodic calculation of "reasonable and just" interest must be used. Historically courts have applied a single rate of interest when required by statute or contract. This court finds that a single rate of interest from February 26, 2002 to the date of this decision and until payment made is a reasonable method of calculating interest.
Since interest is intended to place the owner of commercial real property in the same position as if the real property had not been taken, the court finds that mortgages closely approximate the use of money for real estate investment purposes. Laurel, Inc. v. Commissioner of Transportation, supra, 180 Conn. 39. The subject premises are commercial real estate. The court takes judicial notice that conventional commercial mortgage rates are higher than the conventional residential mortgage rates reflected in H-15. The court will apply a 6.25% annual rate of interest and finds that rate to be reasonable and just. 6.25% annual interest will be applied to the $183,000 from the date of taking, February 26, 2002 until payment.
The court finds that 6.25% interest is due from February 26, 2002 on $183,000 ($310,000 less $127,000). From February 26, 2002 to January 25, 2009, the 6.25% interest is $79,109. Per diem interest on and after January 26, 2009 is $31.77 using a 360-day calendar year. Gen. Stat. § 37-1(a).
When a trial court takes judicial notice of financial facts, an opportunity must be offered for each party to produce evidence on the subject. Izard v. Izard, 88 Conn.App. 506, 510 (2005): Moore v. Moore, 173 Conn. 120, 122-23, fn 1 (1977). "The mere fact of inflation may be judicially noticed without offering the parties an opportunity to be heard. The extent of that inflation and its effect on the necessary expenses of the parties, however, is open to dispute." Moore v. Moore, supra, 173 Conn. 123-24.
If the parties are satisfied with the court's judicial notices and the interest calculations made by this court, then this judgment is a final judgment. The court did not establish the 6.25% interest by judicial notice but used the interest rates and interest facts that it judicially noticed as part of the exercise of the discretion. In the event that either party disputes the rate of interest established by this court, its calculation, and/or any other facts judicially noticed in this Memorandum of Decision and wishes to have a hearing or offer evidence, such a motion shall be filed within twenty days hereof and be entitled a Motion to Open the Judgment. FDIC v. Napert-Boyer Partnership, supra, 40 Conn.App. 441. The Motion shall be filed as a P.B. § 11-11 motion so that any appeal period will be automatically stayed on the entirety of this Memorandum of Decision. The court will then assign this matter for an evidentiary hearing on the Motion to Open the Judgment as well as the rate or rates of interest and/or calculations of interest or any other facts judicially noticed in this Memorandum of Decision. The parties may offer evidence of the "reasonable and just" interest rate from February 26, 2002 to date as well as the "one-year constant maturity yield" rate for the same period. Connecticut Department of Transportation v. Cumberland Farms, Superior Court, judicial district of Waterbury, Docket Number CV 02-169565 S (March 16, 2005, Eveleigh, J.); Leverty and Hurley Co. v. Commissioner of Transportation, 192 Conn. 377, 383, fn. 6 (1984).
In addition to the award of $183,000 damages and interest, Mr. Barton claims a reasonable real estate appraisal fee and expert testimony fee pursuant to Gen. Stat. § 48-26. The court finds that in 2002 Robert B. Barton hired an expert to conduct a real estate appraisal in this condemnation matter and that real estate appraiser expert testified at trial. The court is required to exercise its discretion to allow a "reasonable appraisal fee and reasonable fees for expert testimony incurred by the property owner in connection with such proceeding." Gen. Stat. § 48-26.
The City of Norwalk objects to the appraisal fees and expert testimony fees on these grounds: There was insufficient evidence of the reasonableness of these fees, preparation time cannot be awarded under § 48-26 and travel time is not allowed by § 48-26. The expert in question, David R. Ubaghs, prepared the real estate appraisals, which report was an exhibit at trial. At the end of his direct testimony he testified that he charged Mr. Barton and Mr. Barton paid these fees: $2,800 for the 2002 real estate appraisal and $4,500 for his expert trial testimony. Neither party called expert witnesses as to the reasonableness of these fees. The City of Norwalk did not cross-examine Mr. Ubaghs on his fees nor did it call Mr. Ubaghs as its own witness as to these fees. Norman R. Benedict, the other real estate expert who testified, was not asked any questions about fees or the amount he charged the City of Norwalk for his services as a real estate appraiser or expert trial witness. Mr. Benedict was available for those purposes. There were no affidavits, billing records or contemporaneous time records offered into evidence covering Mr. Ubaghs' fees.
In 2004 our Supreme Court addressed the requirements for the proof of attorney fees at trial. Our appellate courts have not extended this rule to other experts.
Accordingly, when a court is presented with a claim for attorneys fees, the proponent must present to the court at the time of trial or, in the case of a default judgment, at the hearing in damages, a statement of the fees requested and a description of services rendered. Such a rule leaves no doubt about the burden on the party claiming attorneys fees and affords the opposing party an opportunity to challenge the amount requested at the appropriate time.
Smith v. Snyder, 267, Conn. 456, 479 (2004).
Thus, as our case law demonstrates, to support an award of attorneys fees, there must be a clearly stated and described factual predicate for the fees sought, apart from the trial court's general knowledge of what constitutes a reasonable fee. Although we have been careful not to limit the contours of what particular factual showing may suffice, our case law demonstrates that a threshold evidentiary showing is a prerequisite to an award of attorneys fees. Id., 477.
Smith v. Snyder, supra, 267, Conn. 477.
The parties have a right to an evidentiary hearing on the issue of reasonableness of fees. Barco Auto Leasing Corporation v. House, 202 Conn. 106, 121 (1987). In this case the City of Norwalk by not calling witnesses and utilizing cross-examination at trial has waived its right to an evidentiary hearing on fees. The trial was the opportunity to prevent such evidence. The due process rights of the City were protected at trial. Hartford Electric Light Co. v. Tucker, 183 Conn. 85, 91-92 (1981). Therefore the court has three items of evidence of reasonableness: Mr. Ubaghs' testimony that the amount he charged for his expert services, Mr. Ubaghs' expert experience, training and MAI stature and the payment by Mr. Barton of those fees.
There is a general rule as to the reasonableness of expert fees that is usually applied in personal injury economic damage cases.
It is also claimed that, as there was no direct evidence of the reasonableness of the charges made by the doctor, there was not proof supporting a recovery of expenses for medical and surgical treatment, and error is assigned in charging that they were recoverable and in refusing to charge, as requested, that the bill should not be considered. The finding is that the surgeon rendering the services had been in practice over thirty years and enjoyed a high reputation as a bone specialist. He testified in detail as to his treatment of the plaintiff during the two and one half months in the hospital and extended services thereafter; the bill was for $212. It has been held that it is not sufficient to show the amount of the charge for such services without other evidence as to their value . . . However, we regard as preferable the rule that proof of the expenses paid or incurred affords some evidence of the value of the services, and if unreasonableness in amount does not appear from other evidence or through application of the trier's general knowledge of the subject-matter, its reasonableness will be presumed. This accords with the general practice in trials in this State and is fair as well as practicable; it is only in exceptional cases that the reasonableness of physician's charges as an element of damage in negligence cases is questioned or open to question, and in such cases the adverse party may offer evidence on that point . . . Also, evidence of the nature and extent of the services rendered and of the standing, experience, and ability of the physician not only is an important aid in determining the reasonableness of his charges, but also may serve to repel suspicion of collusive charge of a speculative fee, which sometimes has been regarded as a purpose for requiring specific proof of reasonableness. The court was correct in not withdrawing the expense of medical and surgical treatment from consideration as an element of damage.
Carangelo v. Nutmeg Farm, Inc., 115 Conn. 457, 461-63 (1932).
Mr. Ubaghs' testimony meets these requirements. The City had offered the opportunity to offer rebuttal testimony or cross examination and they declined that offer. There is nothing in the record that shows Mr. Ubaghs' fees for either his appraisal or expert testimony are unreasonable. Since their reasonableness is presumed under the law, this court finds that his charges of $2,800 for the real estate appraisal and $4,500 for his expert testimony at trial are reasonable. That disposes of the City of Norwalk's first objection.
The City claims that preparation time and travel time cannot be awarded under Gen. Stat. § 48-26. This issue has not been addressed by our appellate courts. The court then must analyze Gen. Stat. § 48-26 twice; First, as to the real estate appraisal fees and second, as to the expert testimony. Once the court has found, as it has in this case, that "the award of compensation . . . exceeds the amount of compensation, damages or benefits last offered by such public or public corporation," then the court may consider awarding costs of real estate appraisers. Gen. Stat. § 48-26 states: "Whenever, in the exercise of the power of eminent domain . . . the court may order the condemnor to pay the reasonable appraisal fees and reasonable fees for expert testimony incurred by the property owner in connection with such proceeding."
Gen. Stat. § 48-26 is not mandatory since it states: "may award." Since the fair market value found of $310,000 far exceeds the $127,000 paid by the City of Norwalk at the time of taking, the court exercises its discretion and will award such real estate appraisal and expert testimony fees. A similar fee statute has been recently interpreted by our Supreme Court. Gen. Stat. § 52-260(f) provides: "When any practioner of the healing arts . . . gives expert testimony in any action or proceeding, including by means of a disposition, the court shall determine a reasonable fee to be paid to such practioner of the healing arts . . . and taxed as part of the costs in lieu of all other witness fees payable to such practioner of the healing arts . . ." "It is clear that the language of § 52-260(f) neither authorizes a reasonable fee for an expert's trial preparation time as distinguished from his or her in-court trial testimony, nor expressly authorizes costs for an expert's travel, transportation and hotel costs." Smith v. Andrews, 289 Conn. 61, 87 (2008).
The language of § 52-260(f) and § 48-26 are similar. The court finds that travel time and preparation time are excluded from an award under Gen. Stat. § 48-26. "Accordingly, absent such an express legislative provision, we find no reason to abrogate this state's long-standing adherence to the American rule that litigants are responsible for the payment of their own litigation expenses." Id., 87.
The legislature did not expressly add preparation time and travel time to the statute in regards to "reasonable fees for expert testimony." The court finds that it has no authority to award costs to Mr. Barton for Mr. Ubaghs' preparation time or for his travel time for the two days he testified.
The legislature stated that a "court may order the condemnee to pay the reasonable appraisal fees . . . incurred by the property owner in connection with such proceeding." These "reasonable appraisal fees" do not involve an appearance in court or testimony. The legislature had to have known how a real estate appraiser conducts his professional duties: travel to the site, travel to the comparable sales sites, travel to public records, obtaining computer records, obtaining real estate sales information, taking photographs, preparing maps, analyzing the data, determining the method of appraisal and determining the fair market value. In most cases the real estate appraiser prepares a written report. The real estate appraiser cannot perform his duties without incurring travel time and preparation time. This court finds that Gen. Stat. § 48-26 contains the express authority that travel time and preparation time are included in the "reasonable appraisal fees." The court finds Mr. Ubaghs' appraisal fee of $2,800 reasonable and will award that fee.
The court must now review Mr. Ubaghs' testimony supporting the $4,500 trial testimony expert fee. He charged Mr. Barton the $4,500, which $4,500 Mr. Barton paid. He calculated the $4,500 fee by multiplying the 15 hours he spent times $300 per hour. This included trial time and preparation time. The testimony of the amount of preparation time that was involved in the 15 hours was unclear. The City did not cross-examine and no doubt the plaintiff did not find the need to offer a minute by minute accounting by Mr. Ubaghs in his direct testimony. The court is therefore left with vague and inconclusive evidence of the exact amount of preparation time that is included within the 15 hours.
Mr. Ubagh was the first witness at trial and only witness called by Mr. Barton. He testified on the first day of trial, Wednesday, October 22, 2008 and concluded by testimony on the second day of trial, Friday, October 24, 2008. The City of Norwalk requested that it be permitted to call its real estate expert, Norman R. Benedict, out of order on the first day of trial. The court granted that permission since Mr. Benedict would not have been available on Friday. Mr. Ubaghs' direct examination was interrupted. Mr. Benedict testified for the remainder of the first day of trial. Mr. Ubaghs was a sworn witness in attendance at trial on Wednesday, October 22, 2008. He was not excused as a witness. The transcript cannot reveal whether Mr. Ubaghs was in the court during the entirety of Mr. Benedict's testimony. Mr. Ubaghs had to be available to resume the witness stand on Wednesday, if Mr. Benedict's testimony concluded before the end of the first day of trial. This court recollects that he was in court during at least a part of Mr. Benedict's testimony. This court will credit Mr. Ubaghs with a full day court appearance for Wednesday, October 22, 2008.
Mr. Ubaghs was the first and only witness on Friday, October 24, 2008. He completed his testimony just before the luncheon break. The court will credit Mr. Ubaghs with a half-day court appearance for Friday, October 24, 2008. Since Mr. Ubaghs did not know if his Friday testimony would take all day, it may be reasonable to credit him with a full day of testimony for Friday, since he would have arranged his afternoon business schedule to be available at trial.
Mr. Ubaghs, when administered the oath, gave a Stamford address to the clerk. This trial took place at 123 Hoyt Street, Stamford, Connecticut. Any travel time that Mr. Ubaghs spent would be minimal on both trial dates.
If two days of trial time are awarded, the 15 hours at 7.5 hours per day of trial time is reasonable. If one and one-half days of trial time are awarded then 11.25 hours of trial time is reasonable. The court finds the $300 per hour rate is reasonable. At 11.25 hours $3,375 is a reasonable fee. The court finds that the "reasonable fees for expert testimony" of David Ubaghs is $3,375.
Therefore, the two fees found pursuant to Gen. Stat. § 48-26 total $6,175. This $6,175 is part of the condemnation award.
The purpose of a condemnation award is to place the condemnee in as good a position as if the property had not been taken. This is the public policy behind the statute requiring interest to be paid on a condemnation award Gen. Stat. § 37-3c. The court finds that the Ubaghs appraisal report was prepared on January 14, 2002. Ex. 2. Mr. Barton paid Mr. Ubaghs $2,800 seven years ago. Consistent with the above public policy interest at the annual rate of 6.25% should be added as an additional award to the condemnee. That interest for seven years is $1,225 from January 14, 2002 to date. Since the plaintiff did not make a claim for interest on the $2,800 appraisal fee, the court exercises its discretion and does not award interest on the $2,800 appraisal fee.
The court awards Robert B. Barton $6,175 in fees pursuant to Gen. Stat. § 48-26.
The City of Norwalk shall pay to Robert B. Barton the following sums: $183,000 for remainder of fair market value due; $79,109 interest at 6.25% annually on said $183,000 from February 26, 2002 until January 25, 2009, per diem interest of $31.77 after January 25, 2009 until payment, real estate appraisal and expert fees of $6,175; and costs taxed by the clerk, if such additional costs are allowed in condemnation matters.