Can DelDOT withhold draft property appraisals during eminent-domain negotiations as 'potential litigation' records?

Official title

19-IB67 12/18/2019 FOIA Opinion Letter to Mr. Richard Abbott re: FOIA Complaint Concerning the Delaware Department of Transportation

Plain-English summary

Richard Abbott represents Ocean One Holdings in a DelDOT acquisition tied to the SR1/SR16 grade-separated intersection project in Sussex County. The state needs to acquire two parcels owned (in part) by Ocean One's family-limited-partnership client. Abbott served a six-part FOIA request seeking communications about appraisals, draft appraisals, final appraisals, RFPs, agreements with the appraiser, and communications about appraisal methods.

DelDOT responded item by item: produced some communications with attorney-client redactions, claimed exemption for draft appraisals, said no final appraisals existed at that date, produced bid solicitations and the appraiser agreement, and said no communications-about-appraisal-methods records existed. Abbott pushed back on three items: (1) the attorney-client privilege over communications, (2) the withheld draft appraisals, and (3) the no-final-appraisals statement, which he believed was wrong based on hints in the produced communications.

Mid-dispute, DelDOT produced final appraisals on November 14 and November 22, 2019. That mooted Item 3.

The AG resolved the remainder in DelDOT's favor.

DelDOT's position: it is required by Delaware's Real Property Acquisitions Act to negotiate before filing a condemnation suit; it is in those negotiations now; the parties dispute appraisal methodology and have not agreed on price; Ocean One's counsel has been involved since 2017 and has sent demands and asserted possible 14th Amendment claims; condemnation litigation is foreseeable. Draft appraisals would not be discoverable in such litigation under Superior Court Rule 26 anyway, since they are work product of DelDOT's expert.

The AG accepted both prongs of the ACLU v. Danberg test:

• Prong 1: Litigation foreseeable. Counsel retained, demand letters sent, methodological disputes, no agreement on price.
• Prong 2: Clear nexus. Draft appraisals and the related communications go directly to the just-compensation question that any condemnation suit would turn on.

DelDOT also argued attorney-client privilege and work product. The AG accepted those secondary justifications too.

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why did the AG accept "negotiations" as evidence of foreseeable litigation?

Delaware's eminent-domain framework requires negotiation before condemnation. When negotiation is statutorily mandatory and the parties have failed to agree, the next step (litigation) becomes more concrete. The opinion rests on multiple specific facts: counsel involved since 2017, demand letters, methodological disputes, no agreement on price, possible constitutional claims. That stack of indicators tips the analysis toward foreseeable litigation.

Are draft appraisals always exempt from FOIA?

No. The exemption depended on the litigation context. In a non-litigation posture, a draft appraisal might or might not be withheld depending on other exemptions (deliberative process under § 10002(l)(2) was withdrawn here). Once foreseeable litigation exists, the analysis becomes much more permissive of withholding.

Can the agency hide records through FOIA that would later be discoverable in litigation?

Sometimes. The opinion notes that Superior Court Rule 26 would not require draft expert reports to be produced, and the same analysis applies to communications with an expert. FOIA does not give a more expansive right of access than civil discovery would; in some cases, it gives less.

What does "moot" mean in a FOIA context?

When the requested records have already been produced, the petition is moot as to those records. The AG cited Flowers v. Office of the Governor for that principle. Final appraisals were produced in mid-November, after the petition was filed; the AG dismissed those claims as moot.

What about the no-records-exist response?

The opinion does not explicitly address Item 6 (communications about appraisal methods), where DelDOT said no responsive records existed. The AG accepted DelDOT's representations on the items that were actually contested (Items 1 and 2). For Item 3, the records that did exist (final appraisals) were produced before the AG ruled.

Background and statutory framework

The Real Property Acquisitions Act requires Delaware agencies to negotiate in good faith before filing condemnation. The eminent-domain process flows: appraisal, written offer of just compensation, negotiation, condemnation suit if negotiation fails. Draft appraisals sit at the start of that pipeline; they are central to the agency's settlement position.

The two-part ACLU v. Danberg test for the potential-litigation exemption asks (1) whether litigation is foreseeable and (2) whether the records have a clear nexus to the litigation. AG opinions consistently apply this test in negotiation-phase eminent-domain cases.

The interplay with Superior Court Rule 26 is important: if a record would not be discoverable in litigation, the AG often treats that as supporting withholding under FOIA. The logic is that FOIA should not be a backdoor around discovery rules.

Citations

• 29 Del. C. §§ 10001-10007 (Delaware FOIA)
• 29 Del. C. § 10002(l)(2), (l)(6), (l)(9)
• 29 Del. C. § 10005
• ACLU v. Danberg, 2007 WL 901592 (Del. Super. Mar. 15, 2007)
• Flowers v. Office of the Governor, 167 A.3d 530 (Del. Super. 2017)
• Chem. Indus. Council of Del., Inc. v. State Coastal Zone Indus. Control Bd., 1994 WL 274295 (Del. Ch. May 19, 1994)

Source

• Landing page: https://attorneygeneral.delaware.gov/2019/12/18/19-ib67-12-18-2019-foia-opinion-letter-to-mr-richard-abbott-re-foia-complaint-concerning-the-delaware-department-of-transportation/
• Original PDF: https://attorneygeneral.delaware.gov/wp-content/uploads/sites/50/2019/12/Attorney-General-Opinion-No.-19-IB67.pdf

Original opinion text

DEPARTMENT OF JUSTICE
NEW CASTLE COUNCIL
820 NORTH FRENCH STREET
WILMINGTON, DELAWARE 19801

KATHLEEN JENNINGS
ATTORNEY GENERAL

CIVIL DIVISION (302) 577-8400
FAX: (302) 577-6630
CRIMINAL DIVISION (302) 577-8500
FAX: (302) 577-2496
FRAUD DIVISION (302) 577-8600
FAX: (302) 577-6499

OFFICE OF THE ATTORNEY GENERAL OF THE STATE OF DELAWARE
Attorney General Opinion No. 19-IB67
December 18, 2019
VIA EMAIL
Richard L. Abbott, Esq.
Abbott Law Firm, LLC
[email protected]
RE: FOIA Petition Regarding the Delaware Department of Transportation

Dear Mr. Abbott:

We write regarding your correspondence on behalf of your client, Ocean One Holdings, LLC, alleging that the Delaware Department of Transportation ("DelDOT") violated the Delaware Freedom of Information Act, 29 Del. C. §§ 10001-10007 ("FOIA") with respect to your records request. We treat your correspondence as a Petition for a determination pursuant to 29 Del. C. § 10005 regarding whether a violation of FOIA has occurred or is about to occur. For the reasons set forth below, we find that DelDOT has not violated FOIA as alleged.

BACKGROUND

On September 25, 2019, you submitted a records request on behalf of your client to DelDOT for the following documents:

1. All written communications from January 1, 2018 to present ("Communications") regarding appraisals or review appraisals of property and/or value ("Appraisals") for lands owned by DandA Brittingham Family Limited Partnership (the "Property") performed for any acquisition for the DELDOT SR1/SR16 Grade Separated Intersection (the "Project").
2. All draft Appraisals regarding the Property for the Project.
3. All final Appraisals regarding the Property for the Project.
4. All requests for proposals issued by DelDOT to solicit bids from appraisers for Appraisals regarding the Property.
5. All written agreements with any appraiser for any of the Appraisals regarding the Property.
6. All Communications by or between DelDOT employees or agents regarding appraisal methods for the Appraisals of the Property.

DelDOT responded to each numbered item, as follows: 1) enclosed some responsive communications regarding the appraisals but noted that certain records have been withheld pursuant to the attorney-client privilege; 2) stated draft appraisals are exempt pursuant to 29 Del. C. § 10002(l)(2), 29 Del. C. § 10002(l)(6) including attorney-client privilege, and 29 Del. C. § 10002(l)(9); 3) stated no final appraisals exist as of that date; 4) enclosed responsive bid solicitations; 5) enclosed written agreements with the appraiser; and 6) stated no responsive records exist for communications regarding appraisal methods.

By letter dated November 4, 2019, you responded to DelDOT, challenging DelDOT's responses to Items 1-3. First, you alleged that DelDOT improperly asserted the attorney-client privilege, as "virtually no" communications were produced regarding the appraisals or review appraisals and you claimed it is "inconceivable that every single communication between and among DelDOT and its fee appraiser were solely for the purposes of the rendition of legal services by a lawyer." Second, you argued that withholding the draft appraisals was improper, as they are not subject to attorney-client privilege or the exemption for trade secrets or commercial or financial information, nor is there any potential litigation. You claimed that the parties have not started negotiating. Third, you stated that some records in the initial production indicate that DelDOT, in fact, does have final appraisals, and those final appraisals must be produced. You asked DelDOT to provide all the requested records within ten days. DelDOT then sent the final appraisal for one of the subject parcels. After a series of brief exchanges about the status of the other requests, this Petition followed.

The Petition challenges DelDOT's response to the FOIA request, arguing DelDOT improperly withheld the appraisals and the communications regarding appraisals. First, you state that there is no potential litigation, as Real Property Acquisitions Act requires voluntary negotiations be exhausted before a condemnation action may be filed. Second, you contend real estate appraisals do not meet the exemption for trade secrets or commercial or financial information. Finally, you argue that attorney-client privilege "has been asserted where it does not apply," incorporating the arguments in your November 4, 2019 letter by reference.

DelDOT's counsel responded on November 26, 2019 ("Response"). DelDOT explains that it is "in the process of acquiring two parcels of real property needed for the construction of a grade separated interchange at the intersection of SR 1 and SR 16 in Sussex County." On November 14, 2019, DelDOT offered just compensation for one parcel and for a billboard and easement on the second parcel. DelDOT notes it is required to engage in negotiations to obtain the parcels, and it is currently in negotiations with your client; if such negotiations fail, DelDOT may file a condemnation action to acquire the property through eminent domain. DelDOT represents it has "re-reviewed" the withheld the communications with the appraiser and confirmed that those records are appropriately withheld under 29 Del. C. § 10002(l)(6) as attorney-client privileged or attorney work product materials.

Additionally, DelDOT contends that its draft appraisals are properly withheld as attorney-client privileged or attorney work product materials and pursuant to 29 Del. C. § 10002(l)(9), which exempts records pertaining to potential or pending litigation which are not records of any court. Applying the two-part test for the potential litigation exemption, DelDOT contends both prongs are met. First, DelDOT argues there is a realistic and tangible threat of litigation. DelDOT is required by statute to negotiate with your client before it can file a condemnation suit. DelDOT states your client has retained counsel, identifying two attorneys who have worked on this matter on your client's behalf since 2017. DelDOT contends that your client's counsel has sent written demands, asserting claims and demanding action and disputing the appraisal methodology and the necessity of obtaining the entire fee simple interest on one parcel instead of an easement. Your client has requested a service road Also, DelDOT alleges that your client has accused DelDOT of unequal treatment and discrimination, thereby creating reasonably foreseeable claims under the 14th Amendment of the United States Constitution. In addition, DelDOT contends that the parties have not agreed to an amount and litigation over the amount is foreseeable. Further, as DelDOT's appraiser prepared these draft appraisals for the purpose of establishing DelDOT's estimate of just compensation, they are exempt under attorney-client privilege or attorney work product.

DelDOT asserts you are attempting to gain an advantage in future litigation, as the draft appraisals reports would not be available to your client pursuant to Superior Court Rule 26 in any subsequent litigation between the parties. DelDOT alleges that the communications you seek regarding the appraisals also would not be available under Rule 26, as these records are communications with DelDOT's expert witness. Finally, DelDOT represents that the final appraisals were sent to you on November 14, 2019 and November 22, 2019, rendering your claims for Item 3 moot.

DISCUSSION

As a preliminary matter, we accept DelDOT's representation that it has provided the final appraisal reports to you on November 14, 2019 and November 22, 2019, and any objection to this item in the request is now moot. We next address the Petition's remaining claims regarding Items 1 and 2: draft appraisals and the communications regarding the appraisals.

FOIA exempts "any records pertaining to pending or potential litigation which are not records of any court." DelDOT asserts your client requests these records for use in potential eminent domain litigation with DelDOT. A two-pronged test is used to determine if the potential litigation exemption would justify a records denial under FOIA: "(1) litigation must be likely or reasonably foreseeable; and (2) there must be a 'clear nexus' between the requested documents and the subject matter of the litigation." "When determining whether litigation is 'likely or reasonably foreseeable,' the public body should look for objective signs that litigation is coming." These signs may include factors such as a "written demand letter in which a claim is asserted, or action is demanded, [which] may give rise to a proper inference that litigation will soon follow." Other indications may include prior litigation between the parties, proof of ongoing litigation with similar claims, or retention of legal counsel with respect to the claim at issue and expression of an intent to sue.

Your client and DelDOT are involved in negotiations for DelDOT's acquisition of your client's property. DelDOT has provided copies of the final appraisals supporting its offer in your negotiations, but your client is seeking the draft appraisals and communications related to those appraisals. The Delaware Code expressly provides that condemnation litigation may ensue if these negotiations are not successful. DelDOT represents that the parties have disputed appraisal methods and have not reached final resolution regarding the amount of just compensation to date, nor have the parties resolved other remaining issues surrounding this acquisition. Under these circumstances, we find that DelDOT adequately demonstrated that potential litigation is likely or reasonably foreseeable, and the draft appraisal reports and communications related to the appraisals have a clear nexus to this potential litigation. As such, we conclude DelDOT properly denied the requests for the draft appraisals and the communications regarding the appraisals under 29 Del. C. § 10002(l)(9).

CONCLUSION

For the reasons set forth above, we conclude that DelDOT has not violated FOIA as alleged.

Very truly yours,
/s/ Alexander S. Mackler
Alexander S. Mackler
Chief Deputy Attorney General

cc:

Bradley S. Eaby, Deputy Attorney General
Dorey L. Cole, Deputy Attorney General