Can landowners claim interest on eminent domain deposit funds? Security Investment Ltd. v. Brown Explained

The Utah Court of Appeals addressed whether property owners can claim interest on funds deposited during eminent domain proceedings in Security Investment Ltd. v. Brown, ultimately holding that no such property right exists.

Background and Facts: UDOT initiated eminent domain proceedings against two properties in Woods Cross, filing motions for occupancy and depositing $139,300 and $290,600 with the court clerk as required by Utah Code § 78-34-9. The deposited funds were held in a trust account and earned interest over nearly two years before landowners received their just compensation awards. When landowners sought payment of the accrued interest, the clerk refused without a court order, leading to this separate lawsuit against state employees.

Key Legal Issues: The court addressed two primary questions: (1) whether landowners have a property right to interest accrued on deposited funds during eminent domain occupancy proceedings, and (2) whether the Utah Governmental Immunity Act’s notice requirement applied to this claim.

Court’s Analysis and Holding: The court held that landowners have no property right to interest on deposited funds. Under Utah Code § 78-34-9, deposited funds serve limited purposes for occupancy motions only, and the statute specifically provides that interest shall not be allowed on amounts paid into court. The court distinguished this from the constitutional right to just compensation, noting that just compensation includes interest from the date of taking but excludes interest on deposited amounts. Additionally, the court found that landowners failed to comply with the Governmental Immunity Act’s notice requirement, filing their notice of claim after rather than before filing suit.

Practice Implications: This decision establishes clear boundaries for eminent domain compensation claims. Practitioners should understand that statutory deposit requirements serve procedural purposes and do not create additional property rights for landowners. Most critically, any claims against governmental entities require strict compliance with notice requirements under the Governmental Immunity Act—failure to file proper notice before suit deprives courts of subject matter jurisdiction regardless of claim merit.