               IN THE SUPREME COURT OF THE STATE OF KANSAS

                                        No. 114,850

                     ADAM PENER, as Personal Representative of
                       the Estate of ALEXANDER GOLD, and as
       TRUSTEE of the ALEXANDER GOLD REVOCABLE TRUST DATED 01/26/1994,
                                      Appellants,

                                              v.

     MICHAEL S. KING, SECRETARY OF TRANSPORTATION FOR THE STATE OF KANSAS,
                                    Appellee.


                              SYLLABUS BY THE COURT


1.
       Under the Eminent Domain Procedure Act, K.S.A. 26-501 et seq., in a partial
taking case there are only two issues: (a) the value of the entire property or interest
immediately before the taking; and (b) the value of that portion of the land or interest
remaining immediately after the taking.
2.
       In ascertaining the amount of compensation and damage in an eminent domain or
condemnation proceeding, the cost of new fences or loss of fences and the cost of
replacing them with fences of like quality are not to be considered as separate items of
damages but are to be considered only as they affect the total compensation and damage.


3.
       In a condemnation proceeding, the award will not be disturbed on appeal from the
district court as long as it is supported by substantial evidence.




                                              1
4.
        The verdict in a condemnation proceeding must be within the range of the opinion
testimony admitted at trial.


5.
        In a condemnation proceeding, the landowner's attorney fees are statutorily
provided for in two instances. One occurs when the condemning authority abandons the
proceedings after a court-appointed appraiser award. The other occurs when the
condemning authority appeals a court-appointed appraiser award to the district court and
the jury renders a verdict for the landowner that is greater than the appraiser award.


        Appeal from Wyandotte District Court; R. WAYNE LAMPSON, judge. Opinion filed March 24,
2017. Affirmed.


        Todd H. Bartels, of Polsinelli PC, of Kansas City, Missouri, argued the cause, and Amy E.
Morgan, of the same firm, was with him on the briefs for appellants.


        Timothy P. Orrick, of Orrick & Erskine, L.L.P., of Overland Park, argued the cause, and Paul G.
Schepers, of the same firm, was with him on the brief for appellee.


The opinion of the court was delivered by


        BILES, J.: This is an eminent domain proceeding initiated by the Kansas
Department of Transportation for a highway improvement project. Adam Pener was the
trustee and personal representative of the trust and estate that owned the condemned
property at the time of the taking. He challenges the damages award entered by the
district court after a bench trial, claiming the court gave insufficient weight to the
replacement value for a fence and to a comparable sale when it calculated the property's


                                                    2
value. Pener also argues the district court should have awarded him attorney fees and
expenses. We affirm.


                       FACTUAL AND PROCEDURAL BACKGROUND

       The taking involved three tracts located in Wyandotte County that were owned by
two entities for which Pener is the fiduciary—the Alexander Gold Revocable Trust dated
01/26/1994, and the estate of the late Alexander Gold. KDOT condemned permanent
highway right of way easements covering 142,858 of these tracts' approximately 338,000
total square feet.


       Before KDOT commenced the condemnation, it offered to buy the right of way for
$104,930, but an agreement could not be reached. KDOT filed its petition under the
Eminent Domain Procedure Act, K.S.A. 26-501 et seq. The district court appointed an
appraisers' panel pursuant to the act, and the panel determined damages totaling
$195,500. Unsatisfied, Pener invoked the landowners' statutory rights to trial in the
district court. See K.S.A. 2016 Supp. 26-508(a). The parties tried the case to the court,
rather than a jury.


       Three witnesses testified about the property's value before and after the taking.
The district court found the damages from the taking were $295,702. The court also
denied Pener's claim for attorney fees and expenses.


       Pener timely appealed. Jurisdiction is proper. K.S.A. 2016 Supp. 26-504
("Appeals to the supreme court may be taken from any final order under the provisions of
[the Eminent Domain Procedure Act].").




                                             3
                        THE DISTRICT COURT'S DAMAGES AWARD


       Pener argues the district court erred in calculating the damages award because it
failed to include the replacement cost for a security fence that was part of the taking and
because it gave insufficient consideration to a comparable sale. We reject both claims.


The district court properly considered the cost to replace fencing.


       Some additional facts put this question into better perspective. During the
negotiations leading up to the filing of the eminent domain action, KDOT represented
that a separate offer of "[c]ompensation to cure any damages caused by the project,
including fencing replacement" had been made to Shostak Iron and Metal Co., Inc.,
which was leasing the tracts. After the appraisers' panel entered its award, Shostak asked
for apportionment. The district court ultimately dismissed Shostak's claims based on
lease language in which it agreed not to share in any condemnation award.


       At the bench trial, Pener testified new fencing was required on the tracts' new,
post-taking property line. Based on an exhibit KDOT prepared for the appraisers' panel,
in which KDOT represented its damage estimate included $65,720 to replace fencing,
Pener believed the district court's damage award should include that additional amount.
He claimed KDOT "stipulat[ed] to" this figure. Pener also said he believed the Shostak
lease would require the existing fence to be replaced and that security was important to
the property's use before its eventual redevelopment. Pener's expert witness testified he
valued the property after the taking by reducing his appraisal an additional $70,000 to
replace the fence, which he considered necessary.


       KDOT's expert testified the fence taking resulted in only an $11,000 diminution in
the value after the taking. Therefore, he believed it would be inappropriate to spend
                                             4
$70,000 to replace the fence because that sum exceeded the contributory value of the
fence section to the property as a whole, i.e., $11,000. A KDOT staff attorney testified
KDOT negotiated the "compensation for [the] cost to cure" with Shostak and had agreed
to present the settled-upon $65,720 amount to the court-appointed appraisers. He did not
believe he discussed the issue with Pener at the time. He acknowledged KDOT agreed at
the administrative hearing to pay the $65,720 cost of replacing the fence by including the
amount as an item in its appraisal.


       After hearing this testimony, the district court found the "fence [was] not going to
add $70,000 worth of value." Accordingly, it used KDOT's expert's approach and found
the fence's taking resulted in an $11,000 diminution in the property's value.


       On appeal, Pener argues the trial court should have included the entire $65,720
amount from KDOT's appraiser-panel exhibit in its damages award. This argument turns
on Pener's reading of K.S.A. 26-513(d), the interpretation of which presents a question of
law subject to de novo review. See Hoesli v. Triplett, Inc., 303 Kan. 358, 362, 361 P.3d
504 (2015).


       Under K.S.A. 26-513(b), "If the entire tract of land or interest in such land is
taken, the measure of compensation is the fair market value of the property or interest at
the time of the taking." But "[i]f only a part of a tract of land or interest is taken, the
compensation and measure of damages is the difference between the fair market value of
the entire property or interest immediately before the taking, and the value of that portion
of the tract or interest remaining immediately after the taking." K.S.A. 26-513(c).


       "'Fair market value' means the amount in terms of money that a well informed buyer is
       justified in paying and a well informed seller is justified in accepting for property in an
       open and competitive market, assuming that the parties are acting without undue

                                                     5
       compulsion. The fair market value shall be determined by use of the comparable sales,
       cost or capitalization of income appraisal methods or any combination of such methods."
       K.S.A. 26-513(e).


       The statute further provides:


       "In ascertaining the amount of compensation and damages, the following nonexclusive
       list of factors shall be considered if such factors are shown to exist. Such factors are not
       to be considered as separate items of damages, but are to be considered only as they
       affect the total compensation and damage under the provisions of subsections (b) and (c)
       of this section. Such factors are:


               ....


               "(8) Cost of new fences or loss of fences and the cost of replacing them with
       fences of like quality, to the extent that such loss affects the value of the property
       remaining." (Emphasis added.) K.S.A. 26-513(d)(8).


       Relying on the italicized language, Pener argues the trial court erred by not
including the entire $65,720 in its judgment, claiming "[a]warding [l]andowners a cost to
cure for fence replacement was essential, given that [KDOT's] removal of this fixture . . .
'affect[ed] the value of the property remaining.'" But this argument misconstrues K.S.A.
26-513(d) and is contrary to our caselaw.


       In Rostine v. City of Hutchinson, 219 Kan. 320, 323-24, 548 P.2d 756 (1976), this
court held the italicized portion of the statute


       "is a codification of the rule of law of this state which prohibits the use of the 'summation
       method' of valuation.



                                                     6
               "The 'summation method' denotes a process of appraisal whereby each of several
       items that contribute to the value of real estate are valued separately and the total
       represents the market value thereof. Use of this method of appraisal has generally been
       rejected since it fails to relate the separate value of the improvements to the total market
       value of the property. . . . In contrast, the 'unit rule,' which is the generally accepted
       method of valuation, denotes a process of appraisal whereby the total value of real estate
       is first determined without placing a value on each of the separate contributing items.
       Consideration of the value of buildings and improvements is limited to the extent they
       enhance the value of the land taken. The same rule applies to machinery or other articles
       of personal property which have become affixed to the real estate. . . . In Hoy v. Kansas
       Turnpike Authority, 184 Kan. 70, 334 P.2d 315, we emphasized the requirement in this
       state that improvements be considered only to the extent they enhance the value of the
       whole property and not as separate items:


               "'Improvements, such as here involved, located upon land which is condemned,
       are not to be valued separately but are part of the real estate and must be considered in
       determining the value of the land taken . . . .' [Citations omitted.]"


See also Kansas City Mall Assocs. v. Unified Gov't of Wyandotte County/KCK, 294 Kan.
1, 12, 272 P. 3d 600 (2012) (noting unit rule requires total value be determined and limits
consideration of the value of buildings and improvements to the extent they enhance the
value of the land taken) (citing Creason v. Unified Gov't of Wyandotte County, 272 Kan.
482, 485-86, 33 P.3d 850 [2001]).


       Pener presented evidence of the fence's replacement value, including what he
characterized as KDOT's admission as to that amount. KDOT's appraiser testified the loss
of the fence diminished the parcel's post-taking value by only $11,000. When the district
court adopted KDOT's view, it acted consistent with K.S.A. 26-513(d)'s admonition that
replacement cost be considered to the extent it affected value rather than as a separate
item of damages.

                                                      7
The compensation award is supported by substantial evidence.


       Pener next argues the district court's judgment must be reversed because it failed
to give sufficient consideration to a particular comparable sale among those discussed at
trial. Three witnesses testified about the property's value before and after the taking.


       Pener testified the combined value of the three tracts prior to the taking was
$1,183,000, and their value after the taking was $613,500, leaving a difference of
$569,500, although there were some minor discrepancies in his trial testimony. He
arrived at these figures based on his opinion that the pre-taking value was about $3.50 per
square foot because of the recent sale of a nearby property for $3.71 per square foot,
which Pener refers to as "comparable sale one." And because Pener believed the smaller
size of his remaining parcel after the taking reduced the field of potential purchasers, he
calculated the post-taking value at $3.14 per square foot. He also added the fence's value,
as discussed above, so his total damages were $635,059.


       Pener's retained appraiser, Kenneth Jaggers, testified the property's highest and
best use was assemblage of the tracts for heavy industry, and the most likely buyer would
be a developer able to identify and secure a user. Based on his review of comparable
sales—including "comparable sale one"—Jaggers concluded the property was worth $2
per square foot both before and after the taking. He testified two tracts had a combined
market value prior to the taking of $585,300 and an after value of $318,600—a $266,700
difference, which included the fence replacement. Jaggers said the third tract's pre-taking
value was $89,000 and $0 after—an $89,000 difference. His combined difference in pre-
and post-taking value for all the tracts was $355,700.




                                              8
       KDOT's retained appraiser, Robert Marx, testified the property's highest and best
use was redevelopment. But he also noted the improvements on the property should be
used until someone came in with a redevelopment plan. He believed the property's value
before the taking was $660,000 and $400,000 after.


       In summary, the range the testimony established for the property's value
immediately before and immediately after the taking was:


                 Witness        Before value       After value    Difference
                 Pener          $1,183,000         $613,500       $569,500
                 Jaggers        $674,300           $318,600       $355,700
                 Marx           $660,000           $400,000       $260,000


       The district court found the damages from the taking were $295,702. It determined
the property's value prior to the taking was $742,150 and $446,448 after the taking. The
court described its decision as "kind of . . . a [compromise] position" in which it "in large
part adopt[ed] the approach that's set out by Mr. Marx."


       Both sides correctly note the district court's valuation determinations are factual
findings that are reviewed for substantial competent evidence, and we will apply that
standard. In a condemnation proceeding, the award will not be disturbed on appeal from
the district court as long as it is supported by "substantial evidence." See Gault v. Board
of County Commissioners, 208 Kan. 578, 584, 493 P.2d 238 (1972) (rejecting unspecified
challenges to verdict and "not[ing] briefly . . . the jury's verdict is supported by
substantial evidence based upon present use of the [tract]"); Diefenbach v. State Highway
Commission, 195 Kan. 445, 447, 407 P.2d 228 (1965) ("It is a universal rule of this court
that if a verdict is supported by substantial evidence it will not be disturbed on appeal.").


                                               9
The award must be supported by the testimony. See Miller v. Glacier Development Co.,
284 Kan. 476, 492, 161 P.3d 730 (2007).


       In particular, the verdict in a condemnation proceeding must be within the range of
the opinion testimony admitted at trial. Mettee v. Kemp, 236 Kan. 781, 787, 696 P.2d 947
(1985). The before value must not be more than the highest expression of opinion
evidence and the after value must not be less than the lowest expression of opinion of the
value of the property remaining after the taking. City of Wichita v. May's Company Inc.,
212 Kan. 153, 156, 510 P.2d 184 (1973). An award within the range offered by experts is
supported by the evidence. See Miller, 284 Kan. at 493 (holding error admitting purchase
price of property subject to condemnation proceeding was harmless because award was
within range of values given by experts, so sufficient evidence other than purchase price
supported jury's award).


       The witnesses' opinions on value—not the comparable sales on which they rely—
are the controlling consideration in determining whether the award is proper: "The fact
that evidence is presented of comparable sales and of the various factors set forth in
K.S.A. 26-513(d) [Ensley] does not authorize a jury to make a finding as to 'before' and
'after' values which is not within the range of the opinion evidence." Mettee, 236 Kan. at
789. Here, the district court's findings on the taking's "before" and "after" values were
each within the testimony. The court found damages from the taking in the amount of the
difference between those values.


       Accordingly, the district court's findings were supported by substantial evidence
and will not be disturbed on appeal. Pener's argument that the court did not give
sufficient consideration to "comparable sale one" simply invites this court to improperly
reweigh the evidence, which we cannot do. See Peterson v. Ferrell, 302 Kan. 99, 104,
349 P.3d 1269 (2015).
                                             10
                   THE DISTRICT COURT'S DENIAL OF ATTORNEY FEES


       Pener next argues the district court erred when it denied his motion for attorney
fees and expenses. He makes two arguments: (1) the court erred as a matter of law when
it determined it lacked statutory authority to award attorney fees under K.A.R. 36-16-1
(2009); and (2) the court should have awarded fees and expenses under its inherent power
to sanction KDOT for what Pener characterizes as the agency's bad-faith prelitigation
conduct. Neither of these novel arguments has merit.


       In condemnation proceedings, the landowner's attorney fees are statutorily
provided for in only two instances. One occurs when the condemning authority abandons
the proceedings after a court-appointed appraiser award. See K.S.A. 2016 Supp. 26-
507(b). The other occurs when the condemning authority appeals a court-appointed
appraiser award to the district court and the jury renders a verdict for the landowner that
is greater than the appraiser award. See K.S.A. 26-509 ("Whenever the plaintiff
condemner shall appeal the award of court appointed appraisers, and the jury renders a
verdict for the landowners in an amount greater than said appraisers' award, the court
may allow as court costs an amount to be paid to the landowner's attorney as attorney
fees."). As KDOT points out, neither of these situations was present.


       KDOT paid the appraisers' award into the court, and the landowners initiated the
appeal. See In re Central Kansas Electric Coop., Inc., 224 Kan. 308, 319, 582 P.2d 228
(1978) (trial court erred by allowing attorney fees to landowners who had "originally
been appealing parties" when both parties appealed, but landowners dropped their appeal
just before trial in apparent attempt to put themselves in a position to request attorney
fees). We have neither an abandonment of the condemnation nor an appeal by KDOT
from the court-appointed appraisers' award.
                                              11
K.A.R. 36-16-1 does not authorize attorney fees and expenses in this case.


       Pener asserts his fees are recoverable under K.A.R. 36-16-1, which implements
state law authorizing compliance with the federal Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970, 42 U.S.C. § 4601 (2012) et seq., (the
URA). K.A.R. 36-16-1 provides: "The provisions of 49 C.F.R. Part 24 . . . shall be
applicable to all acquisitions of real property by the department of transportation for the
state highway system including those acquisitions in which federal funds are not
available for or used in payment of acquisitions." To implement the URA, the United
States Department of Transportation promulgated 49 C.F.R. Part 24. See 49 C.F.R. § 24.1
(2015). The reference in K.A.R. 36-16-1 to Part 24 encompasses 49 C.F.R. § 24.107
(2015), which concerns litigation expenses and provides:


               "The owner of the real property shall be reimbursed for any reasonable expenses,
       including reasonable attorney, appraisal, and engineering fees, which the owner actually
       incurred because of a condemnation proceeding, if:


               "(a) The final judgment of the court is that the Agency cannot acquire the real
       property by condemnation;


               "(b) The condemnation proceeding is abandoned by the Agency other than under
       an agreed-upon settlement; or


               "(c) The court having jurisdiction renders a judgment in favor of the owner in an
       inverse condemnation proceeding or the Agency effects a settlement of such proceeding."


       Pener contends the phrase "all acquisitions" in the state regulation "mandates the
broadest possible application" and "extends the obligation to reimburse litigation
expenses beyond inverse condemnation cases to 'all acquisitions of real property.'" He
                                                   12
points to (1) the absence of the words "inverse condemnation" in 42 U.S.C. § 4654(c)
(2012), the URA provision addressing litigation expenses; and (2) the court's holding in
Bonanza, Inc. v. Carlson, 269 Kan. 705, Syl. ¶ 5, 9 P.3d 541 (2000), stating that the
language in the regulation provided for litigation expenses even when the landowner is
not displaced.


       This argument involves the interpretation of statutes and administrative
regulations, which present questions of law subject to de novo review. See May v. Cline,
304 Kan. 671, 675, 372 P.3d 1242 (2016) (interpretation of administrative regulation is
question of law and no deference is given to agency's interpretation); 269 Kan. at 707
(applying de novo review to landowner's claim that state and federal statutes and
administrative regulations authorized award of attorney fees in inverse condemnation
action). As with statutes, the court must give effect to the intent expressed by the plain
and unambiguous language in the regulation. See Ussery v. Kansas Dept. of SRS, 258
Kan. 187, 194, 899 P.2d 461 (1995). K.A.R. 36-16-1 specifically makes "[t]he
provisions" of 49 C.F.R. Part 24 applicable to "all acquisitions of real property . . . ."


       The C.F.R. provisions plainly require the reimbursement of attorney fees only
when a taking is abandoned or in inverse condemnation cases. Pener's argument for an
expansive interpretation that universally covers "all acquisitions" would obliterate the
limiting provisions in the C.F.R. Moreover, K.A.R. 36-16-1 applies to an administrative
claims process, not eminent domain litigation under K.S.A. 26-501 et seq. Pener's
argument is without merit.


       Pener's reliance on Bonanza is equally misplaced. In Bonanza, KDOT condemned
the landowners' property for a federally-assisted state project but failed to pay the
condemnation award within the time provided by statute. Landowners sued, claiming this
failure constituted abandonment of the condemnation proceedings and sought to recover
                                              13
damages for KDOT's use of their property and for litigation expenses, including attorney
fees. The district court declined to award fees because the landowners were not displaced
by the project. KDOT defended that ruling on appeal by arguing, among other things, that
K.S.A. 58-3502—part of the Kansas statutory scheme authorizing compliance with the
URA's expense-reimbursement provisions—applies only to displaced persons.


       The Bonanza court suggested the plain language of K.S.A. 58-3502 (Furse 1994)
authorized litigation expenses to be reimbursed only when the condemnee is displaced.
269 Kan. at 718-19. But, it reasoned, the legislature intended for the State to be in
compliance with the URA, which does not make reimbursement for those expenses
contingent on the condemnee's displacement. 269 Kan. at 719. Accordingly, "the
limitation of litigation expenses in inverse condemnation proceedings to displaced
persons in K.S.A. 58-3502 is unreasonable because under such a construction, Kansas
would not be in compliance with the Federal Act." 269 Kan. at 719. It further held
"[c]onstruing the entire Act in light of the expressed legislative purpose, the only
reasonable construction of [the state act] is that the statutes authorize KDOT to
promulgate regulations that provide for the payment of litigation expenses under certain
circumstances, without regard to whether the condemnee is displaced by the government
taking." 269 Kan. at 719-20.


       Bonanza's rationale simply does not apply because the interpretation of K.A.R. 36-
16-1 Pener advocates for is not necessary to bring the State into compliance with the
URA, which authorizes attorney fee awards only in abandoned takings and inverse
condemnation cases. See 42 U.S.C. § 4654(a), (c); see also 49 C.F.R. § 24.107.


       K.A.R. 36-16-1 does not authorize an award of attorney fees under the
circumstances of this case.


                                             14
The district court correctly denied attorney fees under its inherent authority.


       Finally, Pener argues the district court should have awarded fees under its inherent
power to do so for what Pener characterizes as KDOT's bad-faith conduct: (1) making a
"low-ball" offer prior to litigation without providing an appraisal with it; (2) basing the
prelitigation offer on an appraisal that did not comply with accepted appraisal practices;
(3) failing to respond to Pener's attempts to negotiate a proper valuation amount; and (4)
failing to timely update its initial appraisal after receiving Pener's response to its initial
offer. Notably, these allegations all concern behavior prior to KDOT initiating the
condemnation.


       Pener does not cite any authority regarding the scope of a court's inherent power to
sanction prelitigation bad-faith conduct. Pener refers to Alpha Med. Clinic v. Anderson,
280 Kan. 903, 926, 128 P.3d 364 (2006), but that case simply considered whether the
court should impose sanctions for misconduct during an appeal: violating the court's
order sealing the record on appeal by attaching portions of the record to an appellate brief
and openly discussing the brief and attachments at a press conference. This case is simply
not pertinent to the argument Pener advances.


       There is caselaw supporting the proposition that a trial court possesses inherent
powers to sanction when "'reasonably necessary for the administration of justice,
provided these powers in no way contravene or are inconsistent with substantive statutory
law.'" Comprehensive Health of Planned Parenthood v. Kline, 287 Kan. 372, 419-20, 197
P.3d 370 (2008) (quoting Wilson v. American Fidelity Ins. Co., 229 Kan. 416, 421, 625
P.2d 1117 [1981]). The caselaw also supports the proposition that a court's sanction
powers may extend to conduct outside the litigation, including "'as a means of enforcing
obedience to a law which the court is called on to administer.'" Kline, 287 Kan. at 429
(Davis, J., concurring) (quoting Wilson, 229 Kan. at 421).
                                               15
       But we need not engage in a lengthy discussion on the extent of these powers in
this case. Even if the court could have awarded Pener the sanctions he requested on some
other set of facts, it could not have done so on these facts. In denying Pener's motion for
fees and expenses, the district court commented it would "probably" find KDOT did not
act in bad-faith and later said it did not find "those special circumstances exist in this case
to justify deviation" from the general rule that attorney fees and expenses are only
awarded under specific statutory circumstances, i.e., abandoned takings, inverse
condemnation cases, and when the condemning authority loses after appealing the court-
appointed appraisers award. In other words, nothing in the record suggests sanctions were
necessary to compel KDOT's obedience to any applicable law or that this was otherwise
an exceptional case in which KDOT intended to utilize the condemnation process to
harass, delay, or achieve other improper ends.


       Indeed, the opposite conclusion is more readily apparent. The district court
characterized the course of this condemnation as a typical example of how the statutory
condemnation process works. After KDOT filed its petition, the district court found the
takings were necessary to KDOT's lawful purposes. KDOT abided by the litigation
timeline it set out in its offer letter: It needed to acquire the property by September 1 and
would proceed to bring a condemnation action if its offer was not accepted. In addition,
KDOT supplied evidence tending to disprove Pener's claim it relied on improper
appraisal methodologies to present a "low-ball" offer. These facts would not support an
award of attorney fees and expenses. The district court did not err in denying the motion.


Affirmed.


ROSEN, J., not participating.


                                              16
MICHAEL J. MALONE, Senior Judge, assigned.1




1
 REPORTER'S NOTE: Senior Judge Malone was appointed to hear case No. 114,850
vice Justice Rosen under the authority vested in the Supreme Court by K.S.A. 20-2616.
                                          17
