This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff, a hotel developer, experienced a 142-day delay in constructing a hotel near the Albuquerque airport due to the City of Albuquerque's encroaching waterlines, which required relocation. This delay caused additional construction costs and lost profits. The Plaintiff had entered into a franchise agreement with Hilton Inns, Inc., which included a liquidated damages clause for delays, and had secured financing and hired a contractor before construction began (paras 2-3).
Procedural History
- District Court of Bernalillo County: The court awarded the Plaintiff $456,242 for lost profits, $153,518.45 for excess construction costs, plus interest and costs. The court denied the Plaintiff's request for attorney fees (para 1).
Parties' Submissions
- Appellant (City of Albuquerque): Argued that the district court erred in awarding consequential damages, including lost profits and excess construction costs, in an inverse condemnation action. The City also contended that the award of costs was improper (para 1).
- Appellee (Primetime Hospitality, Inc.): Asserted entitlement to consequential damages, including lost profits and excess construction costs, as part of just compensation for the temporary taking. The Plaintiff also argued that the district court erred in denying attorney fees (para 1).
Legal Issues
- What is the proper measure of damages for a temporary, total physical taking of commercial property in the early stages of construction?
- Are lost profits and excess construction costs recoverable in an inverse condemnation action?
- Should attorney fees be awarded in this case?
Disposition
- The Court of Appeals reversed the award of lost profits and remanded for reconsideration of damages based on rental value during the period of the taking (para 54).
- The Court affirmed the award of excess construction costs, except for the cost of the buttress wall, which was remanded for further consideration (para 54).
- The Court vacated the award of costs and affirmed the denial of attorney fees (para 54).
Reasons
Per Bustamante J. (Pickard and Wechsler JJ. concurring):
Measure of Damages: The Court emphasized that just compensation in temporary takings cases must reflect the owner's actual loss, but it rejected the Plaintiff's claim for lost profits as a separate category of damages. Instead, the Court held that lost profits could be considered as part of the calculation of fair rental value during the period of the taking (paras 39-40).
Excess Construction Costs: The Court upheld the award of excess construction costs, except for the cost of the buttress wall. It reasoned that these costs were directly related to the City's interference and necessary to restore the property. However, the cost of the buttress wall required further analysis to determine its reasonableness as a mitigation expense (paras 23-26).
Attorney Fees: The Court declined to expand the rule in Landavazo v. Sanchez to award attorney fees in all inverse condemnation cases. It found no evidence of aggravated or wrongful conduct by the City that would justify such an award in this case (paras 46-53).
Costs: The Court vacated the award of costs to allow the district court to reassess them after determining the proper measure of damages on remand (paras 42-45).
The Court concluded that the district court must ensure no double recovery occurs and that damages are calculated in accordance with the principles of just compensation (paras 27, 41).