Business Law in PA

A request for the payment of just compensation also includes claims which are controlled by the legal principles espoused by the Pennsylvania Appellate Courts under the “Assembled Economic Unit Doctrine”.

The Assembled Economic Unit Doctrine was first developed by the Pennsylvania Supreme Court in Singer v. Redevelopment Authority of Oil City, 437 Pa. 55, 261 A.2d 594 (1970).  In Singer, a retail grocery store was condemned by the Redevelopment Authority of Oil City as part of an urban renewal project.  The property owner in that case was dissatisfied with the award from the Board of View and appealed.  At the conclusion of a jury trial, the property owner was awarded $55,000 for damages to real estate, $5,000 for business dislocation and loss of patronage under the Eminent Domain Code (the “Code”), as well as $790.50 for moving expenses.

In Singer, the Pennsylvania Supreme Court, after expanding on the concept of the assembled industry plant doctrine, held that the assembled industrial plant doctrine applied in the area of eminent domain.  In its analysis, the Pennsylvania Supreme Court formulated a doctrine that, in essence permitted the concept of just compensation to be measured by the “Assembled Economic Unit Doctrine”, which was similar to the assembled industrial plant doctrine.  Id., at 65, 599.

What is particularly noteworthy about the holding of Singer is that the Pennsylvania Supreme Court determined that if a significant portion of the value of Singer’s business was derived from his steady patrons, he may still receive damages under the Eminent Domain Code, even if he chooses not to relocate and sells the business to another.  Singer, at 66, 600.

While the Court in Singer ultimately held that the condemnee had received proper, fair and adequate compensation under the Eminent Domain Code, nevertheless, in order for the Assembled Economic Unit Doctrine to apply, a condemnee would have to show that there is no other building within a reasonable distance which could have been suitably adapted to the functioning of his business.   Thus, the Assembled Economic Unit Doctrine was established as a basis for just compensation in certain applicable factual scenarios. 

The Pennsylvania Supreme Court held in Singer, that, in Pennsylvania, the Assembled Economic Unit Doctrine applies:

“(W)hen the nature of the business requires a unique building for its operation, such that no other building within a reasonable distance is adaptable to the functioning of this business, then the condemned building, itself, will be considered an essential part of any meaningful economic unit in this industry. In this situation, even though all or most of the machinery, equipment and fixtures are removable, since no new site is available, Condemnee cannot maintain his economic position by relocating. Therefore, all machinery, equipment and fixtures which are vital to the economic unit and a permanent installation therein will be considered a part of the real estate of the condemned property under the Assembled Economic Unit Doctrine. Only thus can the Condemnee receive ‘just compensation.”

Redevelopment Authority of Johnstown v. Teung, 289 A.2d 498, 501-502 (Pa. Cmwlth. 1972)(emphasis added), citing, Singer v. Redevelopment Authority of the City of Wales City, 437 Pa. 55, 67, 261 A.2d 594, 600 (1970).

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