United States District Court, D. Nevada
ORDER GRANTING STATE OF NEVADA'S SUMMARY JUDGMENT
MOTIONS REGARDING LOST RENTS AND HOLDING COSTS (ECF NOS. 69,
P. GORDON UNITED STATES DISTRICT JUDGE
State of Nevada exercised its eminent domain powers and
condemned property needed for a public roadway project called
Project Neon. Among the condemned property was a portion of a
vacant lot at 1404 S. Martin Luther King Boulevard in Las
Vegas. Defendants Darrell E. Jackson; Thomas M. Strawn, Jr.;
and Andrew S. Levy (the “Landowners”) own the
property. ECF No. 23 at 8.
State filed an eminent domain action to assess the just
compensation due for the property. The Landowners
counterclaimed for pre-condemnation damages based on several
categories of damages. Id. at 5-14. At issue in
these motions are the Landowners' requests for (1) lost
rent for an office building they allegedly had planned to
build and (2) holding costs of interest, late charges, and
unpaid charges associated with the loan the Landowners took
out to purchase the property.
State moves for summary judgment on these claims, arguing
that due to the Great Recession and an inability to obtain
interested tenants, the Landowners had already abandoned
their plan to develop an office building before the State
announced its Project Neon plans. The State contends the
Landowners cannot show the State's announcement of its
intent to condemn a portion of the property caused any loss
of rents and that any such losses are speculative because no
building was ever constructed and no tenants were obtained.
The State also argues the holding costs are speculative
because there is no evidence the Landowners would have
obtained a construction loan, would have completed
constructing the office building by any particular date,
would have had tenants, and would have used those funds to
pay off the loan.
Landowners respond that genuine disputes remain about whether
they ceased development on the property due to the
uncertainty following the announcement of Project Neon. They
also argue that had the State not announced Project Neon,
they would have been able to convert the purchase money loan
into a construction loan. They contend their damages are not
speculative because they have provided a breakdown of
interest payments, late charges, and unpaid charges that
accrued during the time the property was unable to be
developed due to the State's announcement.
parties are familiar with the facts, so I will not repeat
them in full here. In short, the Landowners purchased the
property in 2007 and were able to change the zoning from
residential to office. Shortly after obtaining the zoning
change, the Landowners began to receive information about
Project Neon suggesting that some or all of the property
would be condemned. The Landowners assert that in light of
that possibility, and because the exact amount of the
property to be condemned was uncertain, they did not pursue
their plan to construct an office building on the property.
They seek damages resulting from the property essentially
being “frozen” after the State announced its
intention to condemn.
judgment is appropriate if the movant shows “there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a), (c). A fact is material if it “might affect the
outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). An issue is genuine if “the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party.” Id.
party seeking summary judgment bears the initial burden of
informing the court of the basis for its motion and
identifying those portions of the record that demonstrate the
absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden
then shifts to the non-moving party to set forth specific
facts demonstrating there is a genuine issue of material fact
for trial. Fairbank v. Wunderman Cato Johnson, 212
F.3d 528, 531 (9th Cir. 2000). I view the evidence and
reasonable inferences in the light most favorable to the
non-moving party. James River Ins. Co. v. Hebert Schenk,
P.C., 523 F.3d 915, 920 (9th Cir. 2008).
recognizes a claim for pre-condemnation damages. State ex
rel. Dep't of Transp. v. Barsy, 941 P.2d 971, 976
(Nev. 1997), overruled on other grounds by GES, Inc. v.
Corbitt, 21 P.3d 11 (Nev. 2001) and modified in part
by Buzz Stew, LLC v. City of N. Las Vegas, 181 P.3d 670
(Nev. 2008) (en banc). But “not every decrease in
market value as a result of precondemnation activity is
compensable.” Sproul Homes of Nev. v. State ex rel.
Dep't of Highways, 611 P.2d 620, 622 (Nev. 1980). To
make out a pre-condemnation damages claim, the landowner must
show: (1) “an official action by the [would be]
condemnor amounting to an announcement of intent to
condemn;” (2) the condemnor “acted improperly
following the agency's announcement of its intent to
condemn, ” such as by “unreasonably delaying an
eminent domain action after announcing its intent to condemn
the landowner's property;” (3) resulting in
damages. Buzz Stew, 181 P.3d at 672-73;
Barsy, 941 P.2d at 976-77.
Landowners bear the burden of providing an evidentiary basis
to support the amount of damages they seek. Frantz v.
Johnson, 999 P.2d 351, 360 (Nev. 2000). “Although
the amount of damages need not be proven with mathematical
certainty, testimony on the amount may not be
speculative.” Clark Cty. Sch. Dist. v. Richardson
Const., Inc., 168 P.3d 87, 97 (Nev. 2007).
Landowners do not present non-speculative evidence sufficient
to withstand summary judgment as to lost rents or holding
costs. As to rents, the Landowners never applied for a
construction loan and no building was ever constructed or
leased out. ECF No. 69-3 at 9, 11. There is no evidence of a
tenant willing to rent office space in the planned building
if it was constructed, what date such rents might begin, or
at what rate. The one potential tenant the Landowners
identified backed out of the proposed deal (ECF No. 69-7 at
6-7), but there is no evidence it did so due to Project Neon.
One of the Landowners admitted it would have been difficult
to obtain a tenant given the economic conditions in Las
Vegas. ECF No. 78 at 4. Consequently, it would be speculative
as to whether a building would have been constructed, when it
would have been completed, whether the Landowners would have
obtained any tenants (let alone how many), when such
tenancies would begin, what portion of the building the
tenants would rent, and how much the tenants would pay to
rent the space.
the Landowners' request for holding costs is speculative
because they assume, without any evidentiary support, that
they would have been able to obtain a construction loan.
However, they present no evidence that any particular lender
would have extended a construction loan or what the terms of
that loan would have been. Additionally, the Landowners
request the entire carrying costs related to the purchase
money loan, but they disregard the fact that a construction
loan would have also carried interest that they would have
had to pay, and presumably that interest would have attached
to a higher loan balance to cover both the prior purchase
loan plus construction costs. See Sunridge Builders, Inc.
v. Old Blue, LLC, No. 56335, 2013 WL 485831, at *2 (Nev.
Feb. 6, 2013) (stating the “damages for loss of a loan
are usually limited to the difference between the interest
rate contracted for and the rate the injured party is able to
secure”). Because there is no evidence that the
Landowners would have been able to obtain a construction loan
(especially during the recession), the amount of that loan,
or the interest rate that would have applied, damages for
holding costs are speculative and cannot be said to have been
caused by the Project Neon announcement.
cases the Landowners cite do not support their position. In
each of those cases, the party seeking damages was able to
present evidence of actual tenants lost or actual purchase
offers that fell through due to the announcement of the
potential condemnation. See City of N. Las Vegas v. 5th
& Centennial, LLC, No. 58530, 2014 WL 1226443, at *1
(Nev. Mar. 21, 2014), clarified on denial of reargument
sub nom. City of N. Las Vegas v. 5th & Centennial,
331 P.3d 896 (Nev. 2014) (evidence of purchase offer
withdrawn after offeror learned that condemnation project
would place too many limitations on the property);
Barsy, 941 P.2d at 973-74, 977 (evidence that
existing tenants did not renew and no new tenants were
interested). This case is different.
THEREFORE ORDERED that plaintiff State of Nevada's
motions for summary judgment regarding lost rents
(ECF No. 69) and ...