In October 2016, Dale Zeitlin tried to a Maricopa County jury the issue of whether the taking of access from a property located in downtown Phoenix damaged the property.

The property was a rectangular shaped property located in downtown Phoenix across from the Phoenix Sun’s arena. The property consisted of about 35,000 square feet.

In 2007, the City of Phoenix constructed the light rail line in front of the Garretson property. The light rail was constructed entirely within the City of Phoenix right of way for Jefferson Street. The construction of the light rail did not take any portion of  Garretson’s property, but had the effect of blocking access to Jefferson Street. Garretson continued to have access along two other roads, First Street and Madison Street.

In 2009, the City of Phoenix filed a motion for summary judgment arguing that because there had been no taking of land and because Garretson’s property continued to have access to other streets, the fact that the light rail blocked Jefferson Street access was not a compensable taking of a property right. The trial court agreed with the City and held that the only property right was one to the street system and not a particular street. Garretson appealed the ruling to the Arizona Court of Appeals, which reversed the trial court’s decision. The Supreme Court of Arizona then accepted a petition for review because the issue of the taking of access was an issue of state wide concern. The State of Arizona Department of Transportation (ADOT) filed a brief that argued Mr. Garretson should not be paid for the elimination of access.

The Supreme Court agreed with Garretson that the elimination of access to Jefferson Street was a taking of a property right and a compensable interest. The Supreme Court remanded the case to the trial court, with instructions that a jury should determine the amount of damages, if any, the property suffered as a result of the loss of Jefferson Street access.

At trial, the City argued that the property did not suffer damages because, according to the City’s experts, the property had the same value with Jefferson Street access as without it. The jury rejected the City’s case, and found that Garretsons’ property had decreased in value in the amount of nearly $3M due solely to the loss of Jefferson Street access. The jury found Garretson’s architectural and appraisal evidence compelling. Under Arizona law, prejudgment interest is tacked on to the judgment, so that Garretson will receive nearly $4M as total just compensation.

The case is important as it requires a government (state, county, municipal) to pay a landowner for the loss of access. This means that in every eminent domain and condemnation case that results in a change of access, a property owner should look at whether the loss of access has reduced the value of his property

See article in the Arizona Republic here.

In appraisal malpractice cases, a lender’s direct compensatory damages are the difference between what the lender loaned against property in reliance on an appraisal that overvalued the property at the time the loan was made, and what the lender would have loaned had the appraisal accurately stated the value of the property. In deciding how much money to loan to an owner or purchaser of real property, a lender bases the amount of the loan on the value of property as established by an appraisal. Where an appraiser overvalues the property at the time the loan is made, the result is the lender, in reliance on the appraisal, loans more than it would have had the appraisal accurately shown the value of the property. If a lender later suffers a loss after the property is foreclosed or sold at trustee’s sale, the measure of damages consists of two components. First the lender is entitled to out of pocket damages, which is the difference between the value of what was received in the transaction and the value given for it. Second, the lender is entitled to damages for the monetary loss suffered as a consequence of the lender’s reliance on the faulty appraisal. The lender’s direct conmpensatory damages are the difference between what the lender loaned and what it would have loaned had the appraisal been accurate. This can only be established following foreclosure or trustee’s sale. Following the sale, the lender’s damages should be calculated by deducting from the amount of the loan made in reliance on the appraisal, the value of the property at trustee’s sale less expenses.