Summary
In a significant victory for property owners in Pignetti v. Pennsylvania Department of Transportation (PennDOT), the Supreme Court of Pennsylvania has relaxed the standard for establishing that two noncontiguous parcels of land should be valued as a single, combined property. The decision, which reversed a Commonwealth Court ruling and 74-year-old Supreme Court precedent, makes it easier for landowners to claim higher compensation when the State condemns noncontiguous parcels of land that are functionally related.
The Upshot
- The Pennsylvania Supreme Court relaxed the standard for a property owner to prove that noncontiguous properties share a unified purpose and should be valued as a single parcel.
- A property owner no longer has to prove that the condemnation of one property has necessarily and permanently injured the other noncontiguous property.
The Bottom Line
As a result of the more lenient standard, a property owner can claim higher compensation for condemnation of noncontiguous parcels by valuing them as a single combined parcel.
In 2019, the Pennsylvania Department of Transportation (PennDOT) condemned part of Parcel 44, jointly owned by the Pignettis, and all of Parcel 45, owned individually by Mr. Pignetti, for improvements to I-95 in Philadelphia. Though physically separated by a narrow strip of land, both parcels were used for storing vehicles and equipment related to Mr. Pignetti’s electrical business. PennDOT sought to value the parcels separately, contending they were not used for a unified purpose under Section 705 of Pennsylvania’s Eminent Domain Code. A separate valuation would likely have resulted in a lower award of just compensation because a unified parcel potentially has a significantly higher valuation. The trial court held the Pignettis’ use was a “unified purpose” and allowed the parcels to be valued as one. The Commonwealth Court reversed, applying a stricter standard from Morris v. Commonwealth, 80 A.2d 762 (Pa. 1951), which predated the original enactment of the Eminent Domain Code and required a condemnee to prove that the condemnation of one parcel would “necessarily and permanently injure” the other parcel.
Reversing the Commonwealth Court, the Supreme Court of Pennsylvania rejected the Morris standard, concluding that it had been legislatively overruled by the plain text of Section 705, which allows valuation as a single parcel when the noncontiguous parcels are “used together for a unified purpose.” The court emphasized that Section 705 should be interpreted in favor of property owners consistent with statutory construction principles related to eminent domain.
It proceeded to conclude that the Pignettis had indeed used the properties together for a single, unified business purpose, thus qualifying the separate properties to be valued as a single parcel. The court remanded the case for a determination whether the condemned parcels were in “substantially identical ownership,” as required by the Eminent Domain Code for valuation of separate parcels with a unified purpose. The court determined that neither the trial court nor the Commonwealth Court properly addressed that issue.
After Pignetti, property owners can recover based on a single valuation of noncontiguous parcels if they are used for a unified purpose, without the need to show a condemnation of one property would result in a permanent injury to the other property. Instead, showing a functional use for a shared purpose (e.g., storage, access, or operations) is now sufficient. The ruling is especially significant for business owners or developers who use multiple nearby parcels for integrated purposes, allowing for more holistic compensation evaluations in condemnation proceedings.
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