Constitutional – Condemnation Proceedings – Statutory Limit – Leasehold Interest – Reestablishment Expenses – Just Compensation

Listen to this article

The $50,000 statutory limit on reimbursement of reestablishment expenses in condemnation proceedings set forth in S.C. Code Ann. section 28-11-30(4) (Supp. 2023) is constitutional.
We affirmed the circuit court.
Appellant Applied Building Sciences, Inc. (ABS) is an engineering firm that was a tenant in a building in Charleston County owned by landlord Hibernian Heights, LLC. The South Carolina Department of Commerce, Division of Public Railways condemned the building and the surrounding real property (the Milford Property) for public use. Because ABS was a tenant of the Milford Property, ABS was entitled to just compensation for the value of its leasehold interest; thus, ABS was named as an “Other Condemnee” in the resulting condemnation action.
The taking of the Milford Property forced ABS to move its business operations to a new location. In addition to damages recoverable by ABS as just compensation for its leasehold interest in the Milford Property, ABS was entitled to reimbursement of two other types of expenses from Public Railways. First, under South Carolina Code section 28-11-10, a relocating business such as ABS may apply for reimbursement of reasonable expenses for moving tangible personal property to the new business location. Public Railways paid the moving expenses to ABS, and they are not an issue in this appeal.
ABS renovated the replacement site and sought reimbursement from Public Railways for those expenses in excess of $560,000 (reestablishment expenses). Citing section 28-11-30(4), Public Railways refused to pay more than $50,000. Along with its claim for just compensation for the taking of its leasehold interest, ABS asserted an inverse condemnation claim against Public Railways for the entire amount of reestablishment expenses, alleging the $50,000 cap in section 28-11-30(4) is unconstitutional under the Takings Clauses of the South Carolina and U.S. Constitutions.
Landlord, ABS, and Public Railways settled the condemnation action for $1,700,000, and ABS received a portion of the settlement proceeds as just compensation for its leasehold interest. ABS and Public Railways agreed to sever ABS’s inverse condemnation claim and litigate it separately. ABS and Public Railways then filed cross motions for summary judgment as to that claim. The primary issue before the circuit court was whether the $50,000 cap is an unconstitutional limitation on the reimbursement of reestablishment expenses. The circuit court found the cap constitutional and granted Public Railways’ motion for summary judgment. ABS appealed.
This case hinged on two questions: are reestablishment expenses separate from constitutional just compensation in an eminent domain action; and is the statutory cap on the reimbursement of reestablishment expenses constitutional? We answered yes to both questions.
ABS did not meet its burden of establishing the cap on reestablishment expenses in section 28-11-30(4) is unconstitutional. As long as the General Assembly acts within constitutional confines, it has plenary power to make policy decisions. Such a policy decision is reflected in the General Assembly’s enactment of the $50,000 cap in section 28-11-30(4).
Affirmed.
Applied Building Sciences Inc. v. South Carolina Department of Commerce, Division of Public Railways (Lawyers’ Weekly No. 010-001-24, 7 pp.) (George C. James Jr., J.) Gene McCain Connell, Jr., of Kelaher, Connell & Connor, P.C., of Surfside Beach, for appellant; Keith M. Babcock and Joseph B. Berry, both of Lewis Babcock L.L.P., of Columbia, for respondent; Paul Dezso de Holczer, of Columbia, for Amicus Curiae South Carolina Department of Transportation; Bryan Eric Shytle, of Columbia, for Amicus Curiae Municipal Association of South Carolina. South Carolina Supreme Court