UDOT v. Kmart Corp.

In 2010, the Utah Department of Transportation (UDOT) condemned an access point from Bangerter Highway to the West Point Shopping Center. At the time of the condemnation, the shopping center was owned by FPA West Point, LLC. FPA leased buildings in the shopping center to a number of businesses, including K MART Corporation (Kmart). Both FPA and Kmart entered the condemnation proceedings, asserting rights to just compensation. The first appeal (Utah Department of Transportation v. FPA West Point, LLC) addressed valuation methods in the context of a condemnation award determination. In that case, the Utah Supreme Court held that courts must use the aggregate-of-interests approach (which determines the value of properties with divided ownership interests by assessing the value of each property interest separately) in deciding the amount of a condemnation award. In this appeal the issue presented for the Supreme Court's review centered on whether the district court erred by granting a condemnation award to Kmart, a lessee, even though Kmart’s lease contained a clause terminating its leasehold interest in the event of a condemnation. The Court held that it did: because the termination clause extinguished all of Kmart’s compensable property interests, Kmart was not entitled to compensation. Accordingly, the district court’s grant of a condemnation award to Kmart was reversed. View "UDOT v. Kmart Corp." on Justia Law