Background
The Kentucky Transportation Cabinet (KYTC) filed a condemnation petition against Field & Main Bank as part of a large highway project redesigning an interchange between KY 351 and former US 41 in Henderson — ultimately part of completing the I-69 gap and constructing a new Ohio River bridge. The property at issue was a drive-thru branch at 1720 2nd Street. KYTC originally sought 82 square feet in fee simple (roughly half a parking space — the very tip of a corner of the bank’s lot) plus 657 square feet as a temporary easement for construction.
In March 2022, the Henderson Circuit Court entered an Interlocutory Order and Judgment (IOJ) confirming KYTC’s right to condemn and take possession. Neither party appealed the IOJ. Court-appointed commissioners valued the taking at $1,900; KYTC voluntarily deposited $5,800. After mediation failed, KYTC redesigned the interchange so that no permanent fee interest was needed and moved to amend its petition to convert the entire 739 square feet to a temporary easement only. The circuit court granted the amendment without an evidentiary hearing, and commissioners then returned a revised value of $2,145. Bank appealed.
Bank’s deeper grievance was not the small corner parcel itself but the overall project’s effect on customer access: three new roundabouts on KY 351 eliminated left-turn access across 2nd Street into Bank’s property, though right-turn and cut-through access via Franklin Street remained available.
The Court’s Holding
The Court of Appeals dismissed the appeal and remanded, resolving two questions of first impression. First, on the amendment: an IOJ is final only as to the right to take, not as to what interest is ultimately taken. Because Bank never appealed the IOJ, it lost its opportunity to contest the right to take any interest in the 82 square feet. An amendment that reduces — but does not increase — the interest taken affects only compensation, not the right-to-take phase, and therefore does not generate a new appealable order. The court further held that KYTC’s decision to take less than originally planned was legally compelled, not bad faith: Kentucky law requires a condemnor to take the least necessary interest, and an evidentiary hearing on the amendment was unwarranted.
Second, on inverse condemnation: the court held that a condemnee whose access claim arises from the broader project’s effect on other nearby properties — rather than from the parcel directly at issue — may assert that claim as a counterclaim in the condemnation proceeding under CR 13.08 and KRS 416.650. Bank’s answer and exceptions had consistently invoked a “total taking” theory, putting KYTC on clear notice. On remand, the circuit court must determine whether to allow an omitted counterclaim and, as a threshold legal question, whether Bank has been deprived of reasonable access — a high burden under Kentucky law.
If Bank cannot show deprivation of reasonable access, the compensation trial is limited to the fair rental value of the temporary easement. The court also noted that HB 542 (effective April 13, 2026), which amended the pre-litigation purchase process under KRS 416.550 and 416.560, does not apply retroactively to this case.
Key Takeaways
- An interlocutory order and judgment in a condemnation case is final only as to the right to take; a later amendment reducing the interest taken goes to compensation only and does not create a new, independently appealable order.
- Kentucky law affirmatively requires a condemnor to take the least necessary interest — so amending a petition to convert a fee simple taking to a temporary easement is legally mandated, not bad faith, and no evidentiary hearing on that change is required.
- A condemnee asserting inverse condemnation based on traffic-pattern changes caused by the broader highway project — not the specific parcel condemned — may bring that claim as a counterclaim in the condemnation proceeding; CR 13.08 and KRS 416.650 permit this.
- Reasonable access is a threshold legal question the trial court must resolve before the compensation trial can proceed; mere inconvenience or increased circuity of travel is not compensable under Kentucky law.
- HB 542 (2026) made significant changes to Kentucky’s condemnation pre-litigation procedures and warrants close study by practitioners, but has no retroactive effect.
Why It Matters
This decision resolves two previously open procedural questions in Kentucky condemnation practice. By holding that amendments reducing the scope of a taking are solely compensation matters and do not reopen the right-to-take phase, the court streamlines large highway projects where design changes are routine — and closes off landowner strategies aimed at leveraging amendments to extract additional litigation opportunities or force condemnors to retain larger fee interests than the project requires. The ruling reinforces that property owners must timely appeal an IOJ or forfeit their right-to-take objections entirely.
The court’s guidance on inverse condemnation counterclaims is equally significant. By authorizing condemnees to assert access-deprivation claims arising from surrounding project work within the condemnation proceeding itself — rather than requiring separate litigation — the decision promotes efficiency and avoids parallel proceedings. At the same time, the court’s reminder that deprivation of reasonable access sets a high bar, and that meritless counterclaims risk CR 11 sanctions, signals that this procedural opening is not an invitation to reflexive inverse condemnation filings in every highway case.