Getahn Ward

USA TODAY NETWORK – Tennessee

In 2014, PSC Metals sued owners of 19.5 acres of its scrapyard over a hike in the lease rate.

This week's ruling means the leased land should be viewed as vacant land with potential beyond industrial use.

A jury will decide on the fair market value of the property, taking into account factors such as the flood plain.

Some Metro officials consider the scrapyard an eyesore with redevelopment potential.

A Nashville judge has ruled that the portion of PSC Metals' East Bank scrapyard leased from private landowners should be valued based on its highest and best use, which isn't necessarily industrial.

U.S. District Judge Aleta A. Trauger's ruling this week is a preliminary win for the three families whose combined 19.5 acres represent nearly half of the scrapyard controlled by billionaire investor Carl Icahn.

The overall complaint, which Icahn's PSC Metals filed against members of the Liff family and two other families nearly two and a half years ago, will proceed to trial in November. A jury will decide on the fair market value of the property, taking into account factors such as a portion being in the flood plain, other environmental considerations and need for rezoning for any other potential uses that could be pursued.

Nashville attorney Bill Harbison of Sherrard Roe Voigt & Harbison PLC said the three families whom he represents were pleased with Monday's ruling, which he said was careful and thorough and correctly applied the law. "We remain focused on this litigation and are diligently working on next steps," he said.

The dispute over dueling reappraised values to determine how much PSC Metals should pay under a new lease of the 19.5 acres effective August 2014 is continuing as some city officials have considered the 50-acre scrapyard an eyesore with redevelopment potential. Financial success of that operation, however, makes the Mayfield Heights, Ohio-based scrap metal recycling company reluctant to sell its property.

In its lawsuit, PSC Metals said it was being overcharged $1.2 million a year after a reappraisal real estate firm CBRE performed for the landlords valued the industrial site as if zoned for a mix of uses.

Before 2014 PSC Metals paid $98,000 a year in rent to owners of the four tracts, but based on CBRE's valuation of the leased premises at $12.4 million that annual rent was increased to $1.74 million a year. PSC Metals' own appraisal from appraiser Philip R. Russ, which considered industrial the highest and best use, valued the leased premises at $3.65 million and calculated the annual rent due at $511,000.

Several attempts at mediation failed before this week's ruling on dueling motions for summary judgment. In determining highest and best use, PSC Metals wanted how the land is used taken into account, but the defendants wanted to also factor in potential for residential, commercial, office and/or retail uses.

Under Trauger's ruling, the assessment of the property's value must be performed based on the value on Aug. 1, 2014, when PSC Metals' current 10-year lease term with the landlords began.

The scrapyard is bounded by the Cumberland River, Korean Veterans Boulevard and Shelby Avenue.

Reach Getahn Ward at gward@tennessean.com or 615-726-5968 and on Twitter @getahn.