Amdt5.9.9 Consequential Damages

Fifth Amendment:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

The Fifth Amendment requires compensation for the taking of “property;” it does not require payment for losses or expenses incurred by property owners or tenants incidental to or as a consequence of the taking of real property, if those losses or expenses are not reflected in the market value of the property taken.1 The Court has stated that when the government takes property by eminent domain it must compensate the property owner “for what is taken, not more; and [the property owner] must stand whatever indirect or remote injuries are properly comprehended within the meaning of ‘consequential damage’ as that conception has been defined in such cases. Even so the consequences often are harsh. For these whatever remedy may exist lies with Congress.” 2 The Court held, for example, that business owners may not recoup diminution of the value of their business attributed to a taking,3 that the government was not required to incorporate the value of an unused right to exercise eminent domain to seize neighboring acreage when taking the underlying property,4 and that a state law barring utilities from incorporating into their rates certain costs associated with construction of non-operational nuclear power facilities did not constitute a taking.5

The Court has on occasion carved out exceptions of sorts to this strict rule. For example, in Kimball Laundry Co. v. United States, the government seized a tenant’s laundry plant for the duration of the war, which turned out to be less than the full duration of the lease, and, having no other means of serving its customers, the laundry suspended business during the military occupancy. The Court narrowly held that the government must compensate for the loss in value of the business attributable to the destruction of its “trade routes,” that is, for the loss of customers, whose patronage the laundry had developed over the years.6 Another exception to the general rule occurs with a partial taking, in which the government takes less than the entire parcel of land and leaves the owner with a portion of what he had before; in such a case compensation includes any diminished value of the remaining portion ( “severance damages” ) as well as the value of the taken portion.7

Mitchell v. United States, 267 U.S. 341 (1925); United States ex rel. TVA v. Powelson, 319 U.S. 266 (1943); United States v. Petty Motor Co., 327 U.S. 372 (1946). For consideration of the problem of fair compensation in government-supervised bankruptcy reorganization proceedings, see Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555 (1935): New Haven Inclusion Cases, 399 U.S. 392, 489–95 (1970). back
United States v. Gen. Motors Corp., 323 U.S. 373, 382 (1945). back
Mitchell v. United States, 267 U.S. 341 (1925). back
United States ex rel. TVA v. Powelson, 319 U.S. 266 (1943). back
Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989). back
338 U.S. 1 (1949). See also United States v. Pewee Coal Co., 341 U.S. 114 (1951) (in temporary seizure, Government must compensate for losses attributable to increased wage payments by the Government). back
United States v. Miller, 317 U.S. 369, 375–76 (1943). “On the other hand,” the Court added, “if the taking has in fact benefited the remainder, the benefit may be set off against the value of the land taken.” Id. back