Arizona Supreme Court holds that condemning an appurtenant easement entitles the property owner to severance damages.

A master planned community that included 590 single-family homes was bordered by two undeveloped desert parcels on the east and west. The homeowners’ association for the community owned both parcels, and each homeowner had easement rights that allowed them to access the parcels and that prevented the development of either parcel. These easements ran with title to each home, otherwise known as “appurtenant easements.”

Eventually, due to the growth of the Phoenix metro area, the State sued to condemn the parcels, and the homeowners’ easements, in order to build a new freeway. The homeowners were entitled to just compensation for the condemnation, and they sought both the value of the easements themselves and damages for the resulting decrease in the value of their homes because of the proximity to the new freeway. The State agreed that the homeowners were entitled to the former but not the latter—those types of proximity damages fell into the category of “severance damages” which, the State believed, were only due when the condemned property was land or other real property, not interests like easements.

In the condemnation proceeding, the superior court granted the homeowners’ motion for summary judgment, determining that the homeowners may proceed in seeking severance damages. On appeal, the court of appeals reversed and agreed with the State that severance damages were only available when the condemned property at issue was a physical parcel of land.

On review, the Arizona Supreme Court affirmed the superior court’s judgment and vacated the court of appeals’s decision. Because the availability of compensation turned on whether appurtenant easements were considered “part of a larger parcel” of land under the statutory scheme governing eminent domain, the Supreme Court viewed the matter as an exercise in statutory interpretation. The Court took the question in steps: first, it had no trouble concluding that easements were property for purposes of condemnation. It then noted that a “parcel” included both possessory and non-possessory (such as easements) interests. Finally, applying case law from the property tax context, the Court concluded that a “larger parcel” of land included a dominant estate plus the appurtenant easement interests it held.

Applying this framework, the Court concluded that the homeowners were entitled to severance damages. The homeowners’ easements were condemned by the State, and those easements had been part of the title that ran with their homes. As such, the easements were severed from the larger parcel, the larger parcel being the homeowners’ homes plus their easements.

Chief Justice Timmer authored the opinion for a unanimous Court.

Posted by: Joshua J. Messer