Jury Says Zero Dollars for Land Owner

It’s a rarity to get something for nothing. But a recent eminent domain case in Russellville ended with a jury verdict in favor of the Arkansas Highway & Transportation Department getting land for needed right-of-way without paying for it.

The case is described as the first time in recent memory a landowner was forced to relinquish ownership for a public purpose without receiving any monetary compensation.

The two-day trial in Pope County Circuit Court ended with an 11-1 decision that the AHTD shouldn’t have to pay for 8.6 acres owned by Cogswell Properties LLC, led by Keith Cogswell.

The AHTD successfully argued that its roadway improvements would cause the value of Cogswell’s remaining land to increase more than the value of the land taken.

This “enhanced value” argument isn’t new when the AHTD — representing state taxpayers — decides to offer zero compensation to acquire right-of-way, the landowner refuses and the dispute goes to trial. However, it is a very rare day in Arkansas when a jury doesn’t award the landowner any monetary compensation.

A number of prospective jurors were disqualified from hearing the case when they indicated a landowner shouldn’t be forced to give up land without being paid something for it, period.

Cogswell was in that camp. During his Jan. 4 deposition, Cogswell was asked if he “believed that there are circumstances under which if the state has improved the value of the remainder the state shouldn’t have to pay for it?”

“I believe if you take somebody’s property, you should pay for it,” Cogswell replied.

The state was able to offer evidence about the future value enhancement afforded Cogswell’s remaining property, while Cogswell wasn’t allowed to introduce evidence on how the condemnation affected his future plans for relocating his auto dealership to the property.

Tom Ferstl, who has served as an expert witness in condemnation litigation for plaintiffs and defendants, was surprised by the verdict. Ferstl, owner of Little Rock’s Affiliated Appraisers of Arkansas, was retained by Cogswell.

During his Jan. 4 deposition, Ferstl made clear his view that the state shouldn’t force a landowner to relinquish ownership without paying for the land.

“My testimony is going to be that, as of the date of taking, it had not increased his value, and that, in my opinion, always, almost without exception, a property owner should be paid for property that is condemned by the condemning authority,” he said.

Ferstl wonders if the jury got caught up in the state’s future enhancement argument and overlooked that the highway improvements still under construction had no immediate affect on the value of the property taken more than a year ago.

“I think the problem the jury had with this was ‘What is the definition of immediately?'” he said.

Ferstl valued the land taken for the right-of-way at $777,380 and the overall 60.7-acre tract it was carved out of at $5.46 million.

The in-house AHTD appraisal came in at $172,800 for the land taken, with a $1.22 million valuation for the full 60.7 acres. That appraisal included an “after” valuation on the remaining property of $2.28 million, thanks to the interchange.

Cogswell made a written settlement offer on Feb. 13, eight days before the trial:

“Based on the facts that have been gathered to date, it appears that the facts are on my side. However, in an effort to be rightfully compensated for the taking of my property and to avoid further expense, I would like to offer the State Highway Department the following settlement: 1) allow Cogswell Properties to donate the taken property to the State, thus creating a tax savings of approximately $326,000 and 2) have the State Highway Department pay the difference between Tom Ferstl’s appraised value of $777,380 and the tax savings of $326,000 resulting in a payment to Cogswell Properties of $451,380.”

Some familiar with the Feb. 21-22 trial wonder if a wild-card variable factored into the decision against Cogswell. His potential status as an unsympathetic defendant is apparent.

Cogswell is a wealthy car dealer well-known in the area. Several years ago, he was in the middle of a well-publicized lawsuit brought by his mother and sisters concerning his handling of the family business his father built.

Accused of shortchanging his mom and sisters, that public squabble didn’t help his reputation. The case was settled four years ago shortly before it went to trial.

New Interchange

Cogswell’s former 8.6 acres at the southwest corner of Interstate 40 and Highway 326 will be part of a new $5.6 million interchange.

The court allowed AHTD to take possession of the property on Dec. 28, 2004, and work on the project, which includes widening the existing overpass to five lanes, began a year ago and should be completed by June.

The Cogswell property is one of five parcels totaling 31.6 acres used for the new interchange. The two parcels in the northeast corner are still in litigation as part of condemnation suits brought by the AHTD.

Like Cogswell, the owners of that land and the owners of land in the northwest quadrant of the interchange weren’t offered any compensation for their land.

The two parcels in the northeast corner involve 7.95 acres owned by the estate of Anna Howell Bullock and 1.67 acres owned by Juanita Sutterfield.

The Sutterfield land was taken because the new off-ramp construction required the realignment of Hob Nob Road and new right-of-way through her property. Sutterfield sold 45.98 acres on the north side of the realignment for $1.5 million to Russellville Realty on Dec. 13, 2005.

The 8.19 acres used for the on-ramp in the northwest corner wasn’t taken by AHTD. Instead, Lewis Weir donated the property and took a sizable tax write-off.

Weir sold the balance of his land, 68.9 acres, to Cooper Realty Investments of Rogers for $2.3 million on Jan. 11, 2006.

AHTD paid $21,000 to the Bullock estate for 5.16 acres used for on-ramp right-of-way in the southeast corner of the interchange.

Sherry Pratt, an AHTD negotiator, met with Keith Cogswell at his Ford dealership offices in Russellville on Oct. 21, 2004, to review the right-of-way plans and discuss the appraisal report in hopes of striking a deal for his land.

“Mr. Cogswell said he did not agree that the on/off ramps would increase the value of the residual 52.6 acres,” Pratt wrote in her report. “He said he had purchased this property for a new dealership location, and the off ramp would impair his visibility because the AHTD will not maintain the right-of-way between I-40 and his property line.

“He also said access [to his property] is impaired due to [the new] controlled access. Negotiator explained that the off ramp would make his property ‘first off on the right,’ which is very desirable for high density commercial which is more valuable than the low density commercial [zoning] he now has.

“[The change in] access [to his property caused by the project] and the cost to develop access across the creek were considered by the appraiser in setting the value. Mr. Cogswell said the cost to develop a road [to cross the creek] was not included.

“He said he would not sell the property right now for double what the appraiser put on the ‘before’ value.

On Nov. 2, Pratt phoned Cogswell to ask about the AHTD offer and left a detailed message after she was unable to speak with him.

On Nov. 9, Pratt called a second time and left a message on Cogswell’s voice mail asking for a return call, which he did later that day.

“I told him I wanted to verify that had received the copy of the appraisal, and I needed a response to the offer,” Pratt wrote in her report. “Mr. Cogswell said he had the copy of the appraisal report and his response to the $0 offer was ‘no.'”

Informed that his file would be forwarded to AHTD’s legal department, Cogswell said his answer was still “no.”

It’s unclear if Cogswell will appeal the decision. Several attempts to contact his lawyer were unsuccessful.

• For a look at the new interchange, click here.