370 Ltd. Partnership v. State Roads Commission

JOHN F. McAULIFFE, Judge, Specially Assigned. These parties are before the Court a second time on issues arising from “quick-take” condemnations of land. A history of the proceedings may be found in this Court’s earlier decision, State Roads Comm’n v. 370 Limited Partnership, 325 Md. 96 , 599 A.2d 449 (1991). The current controversy involves the correct method of computing the prejudgment interest to which the landowner is entitled.

I. On 9 October 1985, the State Roads Commission of the State Highway Administration (the State) filed two “quick-take” condemnations petitions in the Circuit Court for Montgomery County, pursuant to Sections 8-318 to 8-331 of the Transportation Article, Maryland Code (1977, 1991 Cum. Supp.). The petitions designated for taking parts of two unimproved tracts of land owned by or under contract to 370 Limited Partnership (the Partnership). From the larger tract ⁴⁹² (the Cornelius tract) the State took 15.93 acres, and from the smaller tract (the PEPCO tract) the State took 7.62 acres.

Pursuant to the provisions of § 8-323, the State deposited at the time of the initial filings $3,122,600 for the Cornelius tract and $1,495,000 for the PEPCO tract, representing the State’s estimate of fair compensation for the takings. The funds were withdrawn by the Partnership soon thereafter. On 10 October 1986, just over one year after the initial filings, the State filed formal condemnation petitions. On 6 November 1987, the State filed an “Amended Condemnation Petition” taking an additional 4.095 acres from the PEPCO tract in order to construct a bridge across the interstate highway.

Concurrent with the filing of the amended petition, the State deposited an additional $4,346,400 for the benefit of the Partnership, which the Partnership withdrew. In February of 1988, the State filed a Notice of Amendment, stating that the additional funds deposited in November of 1987 were intended to be allocated in part to each tract. The State’s amendment explained that only a portion of the funds was for the additional four acres taken and that the remainder reflected the State’s revised estimate of the amount necessary to provide just compensation for the total takings from both tracts. On 30 June 1989, the circuit court determined that the property should be valued as of the trial date.

The State then requested a pretrial ruling that the Partnership would not be entitled to prejudgment interest. The lower court held that it would not allow prejudgment interest because the trial date valuation gave the Partnership the benefit of appreciation in the value of the land. The jury awarded $19,052,581 to the Partnership as just compensation for the property taken and damage to the remainder. The State noted an appeal to the Court of Special Appeals, and the Partnership cross-appealed on the issue of prejudgment interest.

This Court granted certiorari before consideration of the case by the Court of Special Appeals. We upheld the ruling of the trial court concerning the valuation date, but we did not agree that the determination of a ⁴⁹³ valuation date favorable to the landowner would serve to deprive the landowner of its statutory right to prejudgment interest. We remanded the case to the circuit court for determination and award of prejudgment interest. Upon remand, both parties submitted written proposals urging various methods of computing the prejudgment interest.

The Partnership argued, among other things, that prejudgment interest should be compounded annually, and that the interim payment of $4,346,400 made by the State on 6 November 1987 should be treated as having been made on the date the award was made by the jury because the statute did not contemplate credit against interest for payments made after the initial filing, and because the State had made a tactical decision to have the subsequent taking of 4.095 acres treated as a part of the original taking. The State argued that the deposits it made in 1985 and in 1987 should be added together, and the resultant sum deducted from the amount of the award to determine the base amount on which prejudgment interest should be calculated. Then, to allow for the fact that 14.8 percent of the land taken was not taken for the entire period, but only from 6 November 1987 to 21 December 1989, the State proposed a computation of 6 percent interest on 85.2 percent of the base amount for the entire period (October 1985 to December 1989) and on 14.8 percent on the base amount for the shorter period (November 1987 to December 1989). The State computed the prejudgment and postjudgment interest it believed to be due, and paid into court the balance then due under its computations.

Judge DeLawrence Beard heard oral argument and, accepting the State’s proposed method of computation, entered an order fixing prejudgment interest at $2,356,431. The Partnership appealed, and this Court again granted certiorari before consideration of the case by the Court of Special Appeals.

II

We conclude that neither party advocated the method of computation that should be employed in this case, and that