Court of Appeals finds $25,000 award reasonable for sewer easement

by Eric Christianson

City of North Liberty v. Gary Weinman
(Iowa Court of Appeals, April 5, 2017)

In 2014 North Liberty was in the process of developing what would become Iowa City Liberty High School to alleviate overcrowding in the Iowa City School District. However, the site selected did not have access to sanitary sewer. To service the area, the City of North Liberty explored several options before selecting its ultimate path in 2014. This path crosses the private property of 13 individuals. The city was able to secure temporary easements (for construction) and permanent easements (for ongoing maintenance) from 12 of the 13. The final holdout was Dr. Gary Weinman who first sought through a pair of lawsuits to force the city to stop construction and reconsider other routes. Those suits failed.

Easements are always considered takings and therefore Weinman was entitled to just compensation under the Fifth Amendment. A compensation commission decided that Weinman was entitled to $75,000. This included a temporary easement for construction (1.1 acres for four months) and a permanent easement (.75 acres). The city appealed claiming that amount was excessive. Weinman requested a jury trial so the matter was tried de novo to the jury. The jury set the compensation amount at $25,000 relying largely on the testimony of an expert assessor brought by the city.

Weinman appealed this decision to the Iowa Court of Appeals. The Court of Appeals does not  generally reverse compensation awards provided that they are not “wholly unfair or unreasonable.” In this case, because the jury’s decision was reasonable based on the evidence, the award of $25,000 was affirmed.

 

Shared driveway resulting from DOT condemnation may be undesirable, but does not constitute a taking

by Hannah Dankbar

Bailey v Wisconsin DOT
Wisconsin Court of Appeals, April 23, 2015

Bradley and Caroline Bailey appealed the circuit court’s dismissal of their takings claim against the Wisconsin DOT. The Baileys claimed that the DOT took part of their land that resulted in a change in access to their property and left them with an “uneconomic remnant” which, according to Wis. Stat. 32.05(3m) means that the “property remaining is of such size, shape or condition as to be of little value or of substantially impaired economic viability.”

The DOT condemned two parcels of the Baileys’ property as part of a highway construction project.  As part of this project the DOT moved the Baileys’ driveway and created a new access point from the highway. The Baileys claimed that the DOT’s actions left them with an “uneconomic remnant,” but the circuit court dismissed the complaint.

The Baileys first argued that the circuit court erred because the DOT failed to make a prima facie case that the “Baileys’ property had reasonable access after condemnation.”  The DOT responded that the question of reasonable access is separate from, and plays no part in a determination whether an uneconomic remnant exists under the statute.

The Court of Appeals dismissed the Baileys’ argument over any supposed stand-alone “reasonable access” issue. Instead it focused on whether the change in access left the Baileys with an uneconomic remnant. The Baileys submitted four affidavits in support of this claim: one by the Baileys’ attorney, two by individuals the Baileys listed as experts, and one by Caroline Bailey. The circuit court excluded everything in the attorney’s and experts’ affidavits based on lack of foundation and other admissibility factors.  Caroline Bailey’s affidavit was the exception. She stated that they now shared a driveway with a neighbor whom they find difficult and threatening, and with whom they believe they will be unable to agree on driveway maintenance.  The Court of Appeals found that this only demonstrated that the Baileys’ situation is undesirable; not that the remaining property is “of little value or of substantially impaired economic viability.”

Because of these reasons the Court of Appeals affirmed the circuit court’s dismissal.

DoT must pay just compensation for property erroneously recorded as “dedication” on plat map

by Hannah Dankbar and Gary Taylor

Somers USA, LLC v. Wisconsin Department of Transportation
Wisconsin Court of Appeals, March 25, 2015

Somers purchased about 47 acres in 2007 to build a truck stop off of I-94. At the time the state was planning on using about 9.5 of those acres for a frontage road, and about 3 acres for an on ramp for a highway project. An engineering company helped create the Certified Survey Map (CSM).  The initial draft of the CSM reserved both the 9.5-acre and the 3-acre parcels as “Future Wisconsin D.O.T. Right-of-Way.”  The Kenosha County Land Use Committee approved the CSM without any conditions or communications regarding land dedication for public use.

In 2008 when Somers recorded their final CSM it dedicated the 9.5 acres as “Road Dedication for Future Highway Purposes,” and the 3 acres as “a road reservation for potential future state highway purposes.” All parties agree that Somers never intended to dedicate land for the highway project and that none of the governmental bodies involved had required or asked for a dedication. Individuals involved with drafting and signing the CSM stated that they do not know how the “dedication” language wound up in the document.  The State thereafter built a frontage road and on-ramp on the two parcels without compensating Somers, relying on the “reservation” and “dedication” language in the CSM to give it a right to the property without any requirement to pay Somers for the land taken. Somers filed a complaint seeking just compensation for their land. The court ordered the state to pay Somers $500,000 plus attorney fees, costs and interest. The state appealed this decision.

The Fifth Amendment of the US Constitution and Article I section 13 of the Wisconsin Constitution prohibit the taking of land without just compensation. The state relied on Wis. Stat. §236.29(1) which states, ““[w]hen any plat is certified, signed, acknowledged and recorded as prescribed in this chapter, every donation or grant to the public … marked or noted as such on said plat shall be deemed a sufficient conveyance to vest the fee simple of all parcels of land so marked or noted.” However, for the state to rely on this statute the land must be dedicated according to proper procedure under Wis. Stat. §236.34(1m)(e), which require a local governing board to approve the dedication in the CSM. No governmental board involved in Somers’ development approved any road dedication or land grant for inclusion in the CSM; therefore, the CSM lacked the force and effect required to convey the property to the State.

The court went on:  “Undeterred by the evidence that no dedication was ever intended or approved, the State proffers the absurd argument that it can still take Somers’ property without compensation as it was entitled to rely on an invalid dedication in a CSM.”

When a court leads by calling an argument “absurd” you can anticipate the results….

The court found no legal dedication, and therefore found that the state owes just compensation to the Somers.

 

 

 

 

 

Minnesota Buy-the-Farm statute gives landowner discretion in determining size of parcel to be condemned

by Hannah Dankbar

Great River Energy v David D. Swedzinski
Minnesota Supreme Court, March 4, 2015

Great River Energy (GRE) is part of the CapX2020 project, which involves installing a high-voltage transmission line from South Dakota to Minnesota. GRE sought easements of land from Minnesota landowners following Minn. Sta. §216E.12, which gives public utilities the power of eminent domain for their projects. Dale and Janet Tauer are landowners of one of the affected properties (218.85 acres) that they have leased out for farming.

In 2012 GRE first notified the Tauers about its intent to condemn a permanent 8.86-acre easement and a temporary 3.38-acre easement. The Tauers elected to compel GRE to purchase the entire property under Minn. Stat. § 216E.12, subd 4, also known as the “Buy-The-Farm” statute.  The statute gives landowners subject to condemnation proceedings the option to compel the utility to condemn a fee interest in the landowner’s entire parcel of contiguous, commercially viable land, which would make GRE the outright owner of the entire 218 acres.

The relevant section of the Buy-The-Farm statute reads:

When private real property that is an agricultural or nonagricultural homestead, nonhomestead agricultural land, rental residential property, and both commercial and noncommercial seasonal residential recreational property, as those terms are defined in section 273.13 is proposed to be acquired for the construction of a site or route for a high-voltage transmission line with a capacity of 200 kilovolts or more by eminent domain proceedings, the owner shall have the option to require the utility to condemn a fee interest in any amount of contiguous, commercially viable land which the owner wholly owns in undivided fee and elects in writing to transfer to the utility within 60 days after receipt of the notice of the objects of the petition filed pursuant to section 117.055.

GRE did not need, nor want to own the entire parcel in fee simple and so argued to the district court that when the court rules on a landowner’s election under the Buy-the-Farm statute the court must consider other factors in addition to the factors listed in the statute, including the overall reasonableness of the election.

The Minnesota Supreme Court acknowledged that it utilized a “requirement of reasonableness” in a prior case under the statute; however, the Court noted that since that case was decided there have been amendments to the statute. Those amendments limit the factors for courts’ consideration to whether the parcel is “contiguous, commercially viable, and nonhomestead agricultural land.”  Courts cannot inject a “reasonableness” test, nor can the courts consider whether the landowner lives on the parcel, as GRE also argued.  Furthermore, the “in any amount” language leaves the parcel size determination up to the landowner, and does not give the Court discretion to determine the reasonableness of the amount for condemnation.

The Supreme Court affirmed the lower courts’ rulings in favor of the Tauers.

 

 

City’s reduction of assessed value for condemnation calculation “beyond anything that appears reasonable”

by Rachel Greifenkamp

Iyad Nabham v. City of Beloit

(Wisconsin Court of Appeals, April 24, 2014)

In June of 2011 the City of Beloit issued a condemnation order on property owned by Iyad Nabham after an inspection in March 2011 during which several substantial code violations were identified. This was despite the fact that an inspection four months prior found only “minor violations.” The building in question houses a retail business and five apartment units, the City of Beloit ordered Nabham to raze the structure within 30 days as they had found that the estimated repair cost to bring the building up to code was $63,000 and the property’s value was $49,300. Nabham contested the condemnation order and was granted a temporary injunction and trial in circuit court.

The violations found in March had existed for many years and the city offered no explanation for why the violation suddenly required immediate attention. The City of Beloit also did not justify why the value of repairs was increased from the inspector’s estimate and the property’s assessed value was cut in half. According to the circuit court judge, the value of the property was cut in half between 2007 and 2011 for the purpose of allowing the City to claim that repairs would cost 50% of the assessed value. Finally, the inspector’s report contained several unnecessary references to Nabham’s Middle East ethnicity. It was concluded that such details suggested that the city had an interest in removing the building because of the ethnic background of the people living there rather than code violations.

The circuit court action concluded with the injunction being made permanent, the repairs being deemed unnecessary, and a reassessment of the building’s value. The City of Beloit appealed. The Wisconsin District IV Court of Appeals affirmed the circuit court, stating:

“Overall the evidence supports the circuit court’s credibility determination and findings.  The circuit court found that there were no violations needing repair and that the City suddenly reduced the assessed value of the property “beyond anything that appears reasonable.”  Not only was there no basis for the City’s declaration that the building was “so out of repair as to be dangerous,” but there also was no basis to claim needed repairs exceeded 50% of the assessed value…We conclude that the circuit court’s findings are based on a credibility assessment and those findings support a determination that the condemnation order was unreasonable.  We affirm the injunction order.”

The city was ordered to withdraw the condemnation order and begin the inspection process again.

Appellant in rezoning denial cannot turn appeal into inverse condemnation action

by Gary Taylor

Dahm v. Stark County Board of County Commissioners
(North Dakota Supreme Court, December 19, 2013)

Richard Dahm submitted an application to the County Board for a rezoning to change his property designation from agricultural to residential. Dahm also sought approval of a preliminary plat called Duck Creek Estates, a 99 lot residential subdivision to “provide a rural living environment in a quasi-urban setting . . . .” The land is two miles west of the Dickinson city limits, and located in between Interstate-94 to the north and Highway 10 to the south. The property is adjacent to a previously platted subdivision called Maryville Subdivision.  Two public hearings were held before the Planning and Zoning Commission. At the first hearing, the city/county planner recommended denial based on several alleged deficiencies, including: Dahm did not specify which residential district he wanted to rezone his property to; there was no contract with adjacent land owners ensuring access to Highway 10; the application did not indicate whether road and access widths would meet or exceed Stark County regulations; the application did not indicate what type of bridge would overpass Duck Creek; the application did not delineate the location of wetlands or flood plains or include a flood plain analysis and environmental study; development could result in “pinching” the water flow of Duck Creek; and no potable water was available at the site. The planner also found the application was inconsistent with the Stark County Comprehensive Plan.

Rather than making a formal recommendation to the County Board, the Zoning Commission continued the hearing to allow Dahm to revise his application. Dahm submitted additional information, including a letter responding to the deficiencies, a development narrative, an application package addendum, and proposed zoning maps. The Southwestern District Health Unit also submitted a letter stating that Dahm’s plans for a sewer system were satisfactory. Prior to the second public hearing, the city/county planner again recommended denying Dahm’s application based on several deficiencies, including: the lack of a traffic impact analysis; road access did not meet Stark County standards; the application did not include the location of wetlands and flood plains; the absence of a flood plain elevation study to ascertain whether the project met the requirements of the National Flood Insurance Program and state law; the absence of a field wetland delineation for use during U.S. Army Corps of Engineers 404 Permit Process; no potable water; and that the application was inconsistent with the Stark County Comprehensive Plan.

At the second public hearing, Dahm’s attorney stated that an adjacent landowner agreed to provide highway access, on the condition that the adjacent owner’s property could also be re-zoned. Dahm’s attorney also claimed traffic density would be about 925 vehicles per day. Members of the neighboring Maryville subdivision voiced their opposition to the application based on concern over traffic and dust control. The planner also spoke in opposition to the application. Members of the Planning and Zoning Commission reiterated their trepidation about traffic access points, increased traffic density, and the lack of a study concerning the wetlands and flood plains. Based on these concerns, the Zoning Commission voted 8-0 to recommend a denial of the zoning amendment request.  The County Board adopted the recommendation of the Zoning Commission and denied Dahm’s request by a vote of 5-0. In voting to deny the application the County Board also included a provision that Dahm could not appear before the County Board for six months.

Dahm appealed the County Board’s decision to the district court and also sought to introduce evidence of similar zoning requests that had been previously approved by the County Board. The court denied Dahm’s motion to submit additional evidence and affirmed the County Board’s decision to deny the application for zoning change.  Dahm appealed to the North Dakota Supreme Court.

The Court first noted that in framing its zoning decisions, the Zoning Committee and County Board looked to the Stark County Comprehensive Plan, a growth management policy amended in 2010 based on the county’s rapid growth in the agricultural and energy sectors. In its official recommendation, the Zoning Commission stated “there continues to be concerns with density, traffic, and sewer and water issues for residential development of the property.” Additionally, the Zoning Commission determined the application was inconsistent with at least four goals of the Comprehensive Plan related to compatibility of environmental characteristics of the site, adequacy of sewer and water services, the preservation of open spaces and natural resources, and the prohibition against locating development away from paved roads. The Court concluded that the procedure followed by the county “characterizes an exercise of discretion” that is “the product of a rational mental process by which the facts and the law relied upon are considered together . . . .”

Dahm also argued that when a subdivision plat addresses all issues listed in a county’s subdivision regulations it becomes the “mandatory duty” of the zoning authority to approve a subdivision plat.  The Court disagreed, stating that “The board shall consider all other relevant facts and determine whether the public interest will be served by the subdivision. . . . If it finds that the proposed plat does not make appropriate provisions, or that the public use and interest will not be served . . . then the board of county commissioners shall disapprove the proposed plat.”  The Zoning Commission and the County Board did take into account such factors as open spaces, drainage, streets, water supplies, and waste disposal, in addition to other considerations, in denying the application. Because it found Dahm’s application was at odds with the Comprehensive Plan, it was under no duty to approve the request.

Finally, Dahm argued the six-month restriction from appearing before the County Board was not only arbitrary, capricious, and unreasonable, it was also unconstitutional because a new ordinance (increasing minimum lot sizes from 7,000 square feet to 5 acres) was passed during the six-month prohibition period.  Because Dahm purchased the property in reliance on the original ordinance and subdivision regulations, the County Board’s denial deprived Dahm of all reasonable use of the property.  The Court stated that the moving party in a denial of a change in zoning request cannot turn his appeal into an inverse condemnation action, and declined to address Dahm’s claim of an unconstitutional taking of his property. It found that the decision to implement a six-month appearance restriction was also not arbitrary, capricious, or unreasonable.  The Board noted that Dahm had presented the Duck Creek Estates project three months in a row without adequately resolving the issues of roads, sewage, water, and population density. As the district court reasoned, “the time and effort expended by the Stark County Zoning Board, the City and County Planner, and by the Stark County Commission persuades the Court that there was no violation of Stark County’s authority and obligation to regulate land use . . . by their decision to impose the six month prohibition.” Given the repeated attempts to re-zone and the failure to make the requisite adjustments, it was not unreasonable for the County Board to implement a six-month wait period.

Missouri Heritage Value statute declared constitutional; family awarded $2 million in eminent domain proceeding

by Gary Taylor

St. Louis County v. River Bend Estates HOA
(Missouri Supreme Court, September 10, 2013)

The Missouri Heritage Value statute (statute) was adopted by the Missouri legislature in 2006.  It provides for additional compensation for the exercise of eminent domain over homesteads, and properties held within the same family for 50 or more years.  If a property has been owned within the same family for 50 or more years, “just compensation” is determined by statute to be fair market value plus an additional 50 percent (“heritage value”), thus equaling 150 percent of fair market value.

St. Louis County condemned 15 acres of property for a highway extension project.  The property was deeded to Arthur Novel in 1904, who farmed it with his wife until their deaths in 1968.  It stayed in the family and was owned by the Novels’ descendents until the condemnation proceedings.  The condemnation court awarded the descendents $320,000 for acquisition of the property, and an additional $160,000 for heritage value, resulting in a total award of $480,000.  The descendents appealed, and at trial the jury awarded them $1.3 million, to which the court added $650,000 for heritage value for a total award of approximately $2 million (including interest).  The county appealed.  Because the challenge was to the constitutionality of the statute the appeal went directly to the Missouri Supreme Court.

The bulk of the opinion addressed numerous evidentiary and procedural issues, but the Court did eventually address the County’s  three constitutional challenges: (1) the statute impermissibly altered the judicial definition of “just compensation” by permitting the addition of heritage value to fair market value; (2) the statute requires condemning authorities (in this case, the County) to expend public funds without a public purpose in violation of the Missouri Constitution; and (3) the statutory requirement that a judge compute heritage value invades the province of the jury to determine just compensation – also in violation of the Missouri Constitution.

Definition of “just compensation.”  The Missouri Constitution declares that “private property shall not be taken or damaged for public use without just compensation.” The US Supreme Court has interpreted “just compensation” to mean the fair market value of the property at the time of the taking.  The County argued that constitutional interpretation is the province of the judiciary, not the legislature.  The Court did not disagree; noting, however, that the statute does not alter the definition of “just compensation,” but rather “provid[es] additional benefits to certain property owners whose real property is taken for public use.” It cited US Supreme Court cases that “support the proposition that a legislature may compensate losses and damages beyond those traditionally included in its interpretation of ‘just compensation.'”  “‘Just compensation’ is a minimum measure that must be paid, not a maximum one.”

Expenditure of public funds.  Missouri Constitution Article III, Section 38(a) states that the legislature “shall have no power to grant public money or property …to any private person, association or corporation….”  The County asserted that compensation payments beyond the constitutional minimum serve no public purpose and are therefore unconstitutional.  To determine whether there is sufficient public purpose behind a grant of public money the Missouri courts have employed the “primary effect” test.  This test allows expenditures whose primary object is to serve a public purpose, even if it involves as an incident an expense which, standing alone, would not be lawful.  The Court determined that the primary purpose of the expenditure was to acquire property for a public purpose, and that the payment for heritage value is merely incident to that public purpose.

Computation by judge of heritage value.  Missouri Constitution Article I, Section 26 requires that just compensation “be ascertained by a jury.”  The Court quickly dismissed this argument by noting its previous declaration that heritage value is a payment in addition to “just compensation” – not part of the just compensation calculation.

The Court upheld the roughly $2 million jury award.

Contract for deed purchaser not “owner” for condemnation purposes

by Kaitlin Heinen

City of Cloquet v. Julie Crandall, et al.
(Minnesota Court of Appeals, December 10, 2012)

Kerry and Julie Crandall operated an auction business out of a downtown building when the City of Cloquet took the building’s parcel by condemnation for the construction of a new human services building. The district court granted title to the City in July 2010. Three court-appointed commissioners determined that $198,000 was fair compensation under a fair-market-value analysis and under a minimum-compensation analysis under Minnesota Statutes section 117.187. When the parcel was condemned, the Crandalls had been in the process of purchasing it under contract for deed. In August 2010, the contract for deed sellers executed a satisfaction, stipulating with the Crandalls that the contract was fully paid. In September 2010, the district court recognized the satisfaction and entered a stipulation order observing that the sellers disclaimed any continuing interest in the property.

Before the district court trial, the City unsuccessfully moved to exclude any evidence bearing on a minimum-compensation analysis, arguing that the Crandalls were contract for deed vendees rather than owners. Appraiser John Vigen testified as an expert witness for the City, stating that the “Carlton property” was comparable to the Crandalls’. The Carlton property’s building was older, smaller, poorly constructed, and had limited access by comparison, but Vigen testified that it was comparable because the Crandalls’ auction business did not use all of the space available on the parcel and because the Carlton property zoning classification allowed it to be used as an auction business. To the contrary, the Crandalls’ real estate expert David Reach testified that the small size, poor condition, and limited access made the Carlton property unsuitable for the Crandalls’ business. Instead, he identified the Kolar property (formerly a car dealership) as comparable, though it was much larger and more expensive. Reach testified that it was comparable because the Kolar property included a building with floor space equal to the Crandall property’s building. The district court found that the Carlton property was a comparable property, thus upholding that the Crandalls were entitled to $198,000 in compensation. Both the Crandalls and the City appealed to the Minnesota Court of Appeals.

The Minnesota Court of Appeals first addressed the September 2010 order recognizing the August 2010 satisfaction of the contract for deed. The Crandalls claim that the order’s stipulated satisfaction functioned as an assignment to them of vendors’ rights, vesting in them a fee title interest in the property. However, neither the satisfaction nor the order is an assignment. An assignment requires the grantor’s manifest intention to assign a specific right. The satisfaction of the contract for deed only releases the Crandalls from contract obligations. Further, the district court had already transferred title to the City in its July 2010 order. When the satisfaction was executed in August, the vendors had no title to transfer to the Crandalls. So the Minnesota Court of Appeals held that the September order did not grant vendors’ rights to or vest fee title to the property in the Crandalls.

Both the Crandalls and the City argue that the district court misinterpreted section 117.187, which states: “For the purposes of this section, ‘owner’ is defined as the person or entity that holds fee title to the property.” The Crandalls argued that they are entitled to minimum compensation as contract for deed vendees. Though section 117.187 is restricted to “owners,” the Crandalls claim that contract for deed vendees are still considered owners. Section 117.036, enacted at the same time as section 117.187, defines “owner” as “fee owner, contract purchaser, or business lessee who is entitled to condemnation compensation under a lease.” This section indicates that the legislature classifies fee owners and contract purchasers separately, but “contract purchaser” is not expressly defined nor is the term used elsewhere in regards to real estate. The Minnesota Court of Appeals concluded that “contract purchaser” must include contract for deed purchasers. To interpret “fee title” owner in section 117.187 to include contract for deed vendees would mean that “contract purchaser” in section 117.036 is superfluous. So it must be inferred that the legislature intended to exclude contract for deed purchasers from the scope of section 117.187. If the legislature wanted to include contract purchasers in section 117.187,  it would have included them explicitly. In fact, “fee owners” traditionally includes only those holding legal title.

Furthermore, section 507.092 states that “[n]o contract for deed or deed conveying fee title to real estate shall be recorded…” The separate specification of “contract for deed” and “deed conveying fee title” shows that the legislature does not intend for a contract for deed to include fee title. Additionally, section 117.187’s history suggests that the legislature intended to exclude contract for deed vendees. When the Eminent Domain Conference Committee added the definition of “owner” to section 117.187, committee members specifically discussed the meaning of the language at issue here.  Legislative counsel Bonnie Berezovsky asserted that “fee owner would not include a purchaser under a contract for deed.” Although the opinion of legislative counsel is not proof of legislative intent, the court found her comment persuasive as a legal explanation of what is  and is not included as an “owner” in section 117.187.

Because the Crandalls were not fee title owners entitled to minimum compensation under section 117.187, the district court erred by denying the City’s motion to exclude the Crandalls’ minimum-compensation evidence at trial. The Minnesota Court of Appeals reversed and remanded the district court’s ruling.

Installation of traffic light considered a general benefit in calculating condemnation award

by Victoria Heldt

City of Maryland Heights, Missouri v. Robert J. Heitz and Loretta Tucker
(Missouri Court of Appeals, November 1, 2011)

Heitz and Tucker have owned a 12-acre piece of property in Maryland Heights, Missouri since 1961, when it was surrounded by vacant land.  Heitz constructed a building to house Heitz Machine and Manufacturing and built a private drive down the center of the property that ran from Dorsett Road to the building.  Subsequently, Interstate 270 was constructed to the west of the property and developers showed an interest in purchasing it for commercial or retail use.  Heitz showed no interest in selling the entire parcel, but came to an agreement in the early 1980’s with Charles Drury, Sr. that provided Drury two and a half acres of land on which to build a Drury Hotel in exchange for Heitz becoming a limited partner in the venture.  The construction of the hotel still left a portion of Heitz’s property vacant along Dorsett Road.

Heitz continued to receive offers to purchase the remaining land including one from Mr. Drury who expressed interest in building another hotel on the remaining portion of the land.  It was his custom to convert older Drury hotels into Pear Tree Inns and then construct a new Drury Hotel nearby.  Another offer was received from the Edward D. Jones Company which had developed a North Campus in Maryland Heights.  The campus covered 50 acres of land to the southeast of the intersection of Dorsett Road and Interstate 270.  Edward D. Jones wanted to expand but was unable to do so due to the current configuration of the Dorsett-270 intersection.  The intersection next to the Jones campus (Dorsett Road and Progress Parkway) was very near to Interstate 270 and caused traffic congestion.  Jones sought to relocate Progress Parkway and formed a redevelopment plan with the City in 2002 which included building a public road over Heitz’s property.  Heitz claimed to have no knowledge of the City’s development plan.  Jones made yet another offer to Heitz to purchase the property since he would need an entrance to his campus from Dorsett Road.

Eventually, a portion of the Heitz property was condemned.  The private drive that the Heitz’s previously built that provided access to Heitz Machine would be made into a four-lane public road and two traffic signals would be constructed as outlined by the redevelopment plan.  The City valued the property at approximately $1.2 million.  Heitz disputed the valuation in the condemnation proceedings.  Heitz felt the compensation was not sufficient.  His property was less valuable from his perspective because Drury no longer had an interest in purchasing it for another hotel once the size of his remaining parcel was reduced.  The City felt the plan actually improved the property’s value, and that thus the damages were excessive.  Each party brought witnesses to testify to the value of the land.  The court awarded damages of approximately $1.8 million to Heitz.

The City brought seven claims on appeal, the first regarding the court’s finding that a traffic light is a general benefit.  They argued that it provided a special benefit and should be used to offset damages to Heitz.  They purported that the stoplight increased the property’s “accessibility, visibility, frontage, and connectivity” and that it lessened the cost of future commercial development.  Heitz argued that it did the opposite since it removed the property’s access to Dorsett Road.  The Court found that it was indeed a general benefit for three reasons.  First, a special benefit is derived from the specific location of the improvement.  Since the benefit would still exist of the stoplight was placed elsewhere in the area, it is not specific.  Second, the Court found that the traffic signal is a “secondary, necessary byproduct of the construction of the road,” so it is unable to confer an individual, specific benefit.  Third, the stoplight did not result in a vested right since the City could remove it whenever it saw fit.  For those reasons, the benefit could not be construed as special.

The City’s second argument challenged Mr. Drury’s testimony, inasmuch as Heitz failed to list him as an expert witness.  The Court found Drury did not need to be classified as an “expert witness” since he was merely discussing his prior dealings with Heitz and his knowledge of that specific piece of property.  The remainder of the City’s complaints challenged the admissibility of other expert witnesses and claimed errors in Heitz’s cross-examination and closing argument.  The Court denied all remaining points and affirmed the condemnation award.

Demolition is abatement of a nuisance, not a taking requiring condemnation

by Victoria Heldt

Hendrix Roosevelt v. City of Detroit
(Michigan Court of Appeals, October 13, 2011)

This case deals with the demolition of a building in Detroit, Michigan.  In 2003, the City sent a dangerous building violation notice to the owners of the building after they discovered it was dilapidated, only had a half roof, and was open to trespass.   After a hearing was held, a demolition notice was sent.  At the time, Roosevelt was not on record as an owner of the building, so he didn’t receive these notices.  In 2005, Roosevelt filed a demolition deferral application and listed the building’s address as the place to send him notice.  The City granted the deferral on the condition that the building not is kept open to public trespass.  If the condition was not met, the building would be demolished without further notice.  A notice was sent to the building addressed to Roosevelt, but it was returned as Roosevelt had moved from the building.  In 2006 the City inspected the building and found it was in violation of the deferral agreement.

Roosevelt filed another deferral request in 2007 and provided 258 Riverside Drive as an address at which to reach him.  The City denied the request and sent notice both to the building’s address and to the alternative address Roosevelt provided.  Both notices were returned in the mail.  In September of 2007 the building was demolished.  Roosevelt filed a claim arguing that the demolition of the building violated the Michigan constitution, violated federal due process, and was the result of gross negligence by two City employees.  The court dismissed the federal claim and remanded the case to the circuit court to resolve the remaining claims.  On both of these claims the circuit court granted summary judgment for the City.  In 2010 the City petitioned to reopen the case in order to present a counterclaim for demolition costs.  The petition was granted, and when Roosevelt failed to oppose the demolition costs, the court awarded demolition costs to the City.  All claims made their way to the Michigan Court of Appeals.

As for the state constitution claim, the Court of Appeals laid out three main reasons why the claim was properly dismissed by the circuit court.  First, monetary damages are reserved for plaintiffs with no other avenue of relief.  Roosevelt’s first line of relief would have been via a federal due process claim, which was alleged and was denied.   The Court also noted that the City’s actions did not constitute a “taking.”  A “taking” occurs when the government confiscates property for public use.  In these instances, the government must go through the proper condemnation process.  An exception exists, however, if the property is causing a public nuisance.  Nobody has the right to use their property as a nuisance; therefore it is not considered a “taking” if the government uses its power to stop a public nuisance.  Roosevelt’s building was considered a public nuisance since it “imperiled the health, safety, and welfare” of the neighborhood.  Thus, the government did not commit a “taking” when it demolished the building.  The Court’s final point regarding this claim was that Roosevelt cannot claim a due process violation if he actually received notice.  The fact that he filed petitions for demolition deferral was evidence that he knew of the demolition plans.  Consequently, there was no due process violation.

In regards to the gross negligence claim against the municipality’s employees, the Court noted that governmental employees are protected from lawsuits if they were “acting within the scope of their authority, were engaged in the exercise or discharge of a governmental function, and their conduct did not amount to gross negligence that is the proximate cause of the injury or damage.”  In this case, the Court focused on the phrase “proximate cause.”  The Court concluded that this phrase is to be interpreted as the “most immediate and direct” cause of the action (in this case, the demolition of the building) and that it refers to one cause.  In this case another cause existed in correspondence with the demolition, namely Roosevelt’s failure to uphold the conditions of the deferral.  As a result of those factors, the employee’s actions are not deemed gross negligence.

Finally, Roosevelt challenged the circuit court’s action in assessing the demolition costs to him since state statute specifies that a judgment lien, and not a personal judgment, should be granted in demolition costs.  The Court agreed with Roosevelt and found that the trial court abused its discretion in awarding the city a personal judgment against Roosevelt.  After affirming the district court’s decisions regarding the constitutional claim and the gross negligence claim, it remanded the case for the granting of a judgment lien.

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