State, Dep't of Transp. v. Cowan, 120 Nev. 851

Summary

The Supreme Court of Nevada affirmed a condemnation judgment awarding Stuart and Barbara Cowan $260,000 for the goodwill of their gas station business, which was destroyed when the leased property was condemned for highway expansion. The court held that, under the circumstances, the undivided-fee rule did not provide just compensation and that business goodwill was an appropriate measure of damages. The court also upheld the district court’s evidentiary rulings and award of attorney fees and costs.

Holdings

1. An inverse-condemnation counterclaim is inappropriate when the government has formally exercised eminent-domain power by filing a condemnation action and naming the affected parties.
2. When condemnation destroys a lessee's existing business and the business cannot be relocated because its value is uniquely tied to the condemned location, just compensation may include the value of the business's goodwill in addition to the leasehold value.
3. Business goodwill is an appropriate measure of damages when a condemned business cannot be relocated, while anticipated profits and lost business opportunity are generally not compensable.
4. The district court did not abuse its discretion by admitting evidence of the Cowans' 1994 purchase price for the business-goodwill interest in valuing the business taken in 1999.
5. The district court did not abuse its discretion by excluding comparable California sales and appraisals that it found insufficiently probative of Nevada property conditions and potentially confusing or misleading to the jury.
6. The district court did not abuse its discretion in awarding attorney fees and costs, rejecting the Cowans' reliance on inverse-condemnation fee provisions, or denying their motions for judgment notwithstanding the verdict, a new trial, or an additur.

Questions Presented

1. Whether the Cowans could maintain an inverse-condemnation counterclaim when the State had formally exercised eminent-domain power.
2. Whether a lessee whose business was destroyed by condemnation and could not be relocated was entitled to compensation for business goodwill.
3. Whether lost business opportunity, anticipated profits, or lost income were compensable in this condemnation action.
4. Whether the district court abused its discretion by admitting the Cowans' 1994 purchase price for the business-goodwill interest.
5. Whether the district court abused its discretion by excluding comparable California sales and appraisals and evidence of uninstalled gaming value.
6. Whether the district court abused its discretion in awarding attorney fees and costs.
7. Whether the district court erred in denying the Cowans' post-trial motions and in entering judgment on the jury's verdict.

Disposition

affirmed