The Federal Court of Claims once again demonstrated the importance of having an expert who is current with the standards and vicissitudes of our constantly changing world.
The recent case of Dorothy L. Biery, et al., and Jerramy and Erin Pankratz, et al., v. United States, No. 07–693L and No. 07–675L CONSOLIDATED 2012 WL 5914521 (Fed.Cl.), (Filed: November 27, 2012, the US Court of Claims), involved the appropriate damages to be applied for a governmental “taking of the plaintiffs’ reversionary interest in land underlying two recreational trail segments previously used as a railroad corridor.” See Biery v. United States, 99 Fed. Cl. 565, 580 (2011). Easement is a special area that often requires expert witnesses, such as real estate appraisers, land-use experts, accountants, and economists.
The heart of the matter was how much the government should compensate the Plaintiffs for the delay between when the government seized the land and when the government actually paid the Plaintiffs.
As most of us have experienced – either professionally or personally – the government is never shy about collecting interest on overdue taxes. In Biery, Judge Nancy B. Firestone made it clear that what’s good for the goose is good for the gander.
The seminal question was the standard by which a government creditor is to be compensated when it has suffered a substantial delay in being made whole by the United States Government.
The government argued that the court should apply the rate provided by the Declaration of Takings Act, 40 U.S.C. § 3116 (2006) (“DTA”), which applies the current 52-week T-bill rate in determining delay compensation.
Plaintiffs’ financial expert witness, however, prevailed in his argument that such an application would be grossly unfair, given the fact that during the actual time of delay, the Federal Reserve had maintained the T-bill rate at an unnaturally low level due to the weak economy. The Judge agreed with Biery, relying upon the seminal case of Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10 (1984) (“[T]he owner is entitled to interest thereon sufficient to ensure that he is placed in as good a position pecuniarily as he would have occupied if the payment had coincided with the appropriation.”).
Rather than the DTA, Judge Firestone found that Plaintiffs’ expert witness made a comprehensive and persuasive argument that an objectively prudent investor would have diversified his investments during the period of delay. Given the economic conditions, the objective standard to be used in assessing delay compensation would have been consistent with Moody’s Index over that same period. The difference was substantial: had the court utilized the DTA, the delay compensation would have been $33,375. By relying upon Moody’s Index the court found that to date, the delay compensation should be $85,157.
By using an expert witness who was reputable, up to date and thorough, Bierey, et al., nearly tripled their recovery.
By: Ian Heller, Esq.