Summary
The Alabama Supreme Court held that prejudgment interest on a condemnation award begins to accrue when the condemnor posts the required bond and obtains the right of entry, unless the condemnor took actual possession earlier. Applying that rule, the court determined that Samford University was entitled to prejudgment interest beginning February 19, 2004, when the City of Homewood posted its bond and obtained the right of entry. The court reversed and remanded for determination of the proper interest rate.
Topics
Practice areas
Questions Presented
- When does prejudgment interest begin to accrue on a condemnation award under Alabama law?
- Did the filing of the condemnation application and notice of lis pendens constitute the date of taking for purposes of prejudgment interest?
- Was Samford entitled to prejudgment interest even though Homewood had not physically entered or used the property?
Holdings
- Prejudgment interest begins to accrue on the date the condemnor posts and obtains approval of the bond that gives it the right to enter the property, unless the condemnor took actual possession before posting bond; in that event, interest begins on the date of actual possession.
- The filing of Homewood's condemnation application and notice of lis pendens did not constitute the date of taking for purposes of prejudgment interest.
- Samford was entitled to prejudgment interest beginning February 19, 2004, the date Homewood posted the appeal bond and obtained the right of entry.
Key quotations
“This Court now reaffirms the rule set out in Southern Natural Gas—that prejudgment interest begins to run on the date the condemnor posts bond on a prospective condemned property, unless the condemnor has taken actual possession of the property before posting bond, in which case the prejudgment interest on the condemnation award begins to run on the date the condemnor took actual possession.” (68)
“The record establishes that on February 19, 2004, the probate court accepted the appeal bond posted by Homewood and that at that time Homewood had right of entry onto the property; therefore, in accordance with Williams and Southern Gas, Samford is entitled to prejudgment interest, which began to accrue on February 19, 2004.” (69)
Factual background
Homewood filed a condemnation application concerning Samford University's Lot 1 of University Park West and obtained a probate-court order authorizing condemnation. On February 19, 2004, Homewood paid the probate-court award and posted a $3,000,000 appeal bond, after which the probate court granted Homewood the right to enter and possess the property pending appeal. The circuit court later awarded Samford $2,650,000 as just compensation but denied prejudgment interest because Homewood had not taken actual or physical possession.
Procedural history
Homewood initiated condemnation proceedings in the Jefferson County Probate Court, which granted the condemnation application, appointed commissioners, and awarded Samford $1,500,000. Samford appealed to the Jefferson Circuit Court, which granted summary judgment to Homewood on its right to condemn and later, after a jury trial, awarded Samford $2,650,000 in compensation. The circuit court denied prejudgment interest in its amended final judgment, and Samford appealed. The Supreme Court of Alabama reversed and remanded with directions.
Remand instructions
The circuit court must determine the proper rate of prejudgment interest for the period from February 19, 2004, the date of taking, through the date of judgment, and enter a judgment consistent with the opinion.