Foster v. City of Detroit, Michigan, 17840

• Decision Date: 11 December 1968
• Docket Number: No. 17840,17843.,17840
• Parties: Thomas E. FOSTER and Georgia Lee Foster, Plaintiffs-Appellees and Cross-Appellants, v. CITY OF DETROIT, MICHIGAN, Defendant-Appellant and Cross-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

405 F.2d 138 (1968)

Thomas E. FOSTER and Georgia Lee Foster, Plaintiffs-Appellees and Cross-Appellants, v. CITY OF DETROIT, MICHIGAN, Defendant-Appellant and Cross-Appellee.

Nos. 17840, 17843.

United States Court of Appeals Sixth Circuit.

December 11, 1968.

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William J. Coughlin, Asst. Corp. Counsel, Detroit, Mich., for appellant, Robert Reese, Corp. Counsel, Edward M. Welch, Asst. Corp. Counsel, Detroit, Mich., on the brief.

Elvin H. Wanzo, Detroit, Mich., for appellees.

Before O'SULLIVAN and PHILLIPS, Circuit Judges, and CECIL, Senior Circuit Judge.

O'SULLIVAN, Circuit Judge.

We here consider the appeal of the City of Detroit from a District Court judgment which holds that the city is liable to the appellees for damages suffered by them through condemnation activities of the city. In 1950 Detroit, preparatory to establishing a housing project, started condemnation proceedings to acquire the property of plaintiffs and others. These proceedings remained pending for some ten years and were then discontinued. The plaintiffs' complaint, filed after the discontinuance, alleged, and the District Court has found, that in the ten years that intervened between the commencement and discontinuance of the condemnation proceedings, the area involved became decayed and "blighted" and property values declined as a result of the condemnation action. That such occurred is not challenged by this appeal, and its truth is obvious.

The first condemnation case was discontinued on June 16, 1960. On November 22, 1961, plaintiffs, Thomas E. and Georgia Lee Foster, brought this class action under F.R.Civ.P. 23(a) (3) on behalf of themselves and other property owners similarly affected by the city's action. Federal Court jurisdiction was claimed under 28 U.S.C. § 1331, averring that the city's conduct violated rights of plaintiffs guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution, and that the courts of Michigan could not vindicate such rights. Plaintiffs' pleading asserted that Article XIII of the Michigan Constitution¹ and relevant decisions of its Supreme Court limited plaintiffs' means of compensation for the damages to their property to recovery in condemnation for the "taking" of plaintiffs' property and that the time of "taking" was the date of the jury verdict. At the time the complaint was filed, November 22, 1961, no condemnation proceedings were pending. On April 4, 1962, Detroit, after regrouping the areas to make up a newly-planned urban renewal project, began a second condemnation case to obtain the property of plaintiffs. On May 21, 1962, the city moved to dismiss plaintiffs' complaint on several grounds, and on August 17, 1962, the District Court granted the motion, being of the view that it lacked jurisdiction of plaintiffs' case. Foster v. Herley, 207 F.Supp. 71 (E.D.Mich.1962). The District Judge there observed, inter alia:

"Again, the city initiated eminent domain proceedings, in which the property will be valued as unimproved property and the plaintiff will be denied any award for the losses suffered over the past twelve years as a result of misfeasance and nonfeasance attributable to the City of Detroit.

* * * * * *

"The action taken by the City of Detroit did not result in compensation\'s being made or secured. Hence, it did not accomplish a taking of the plaintiff\'s property. Anderson Trust Co. v. American Life Ins. Co., 302 Mich. 575, 5 N.W.2d 470. Whether damages should be awarded upon the plaintiff\'s claim is a matter to be determined under the law of torts. The decisions of the Michigan Supreme Court do not settle the question, but there are decisions of other courts recognizing an independent action to recover damages sustained through unreasonable delay or lack of good faith in prosecuting eminent domain proceedings that are subsequently abandoned.

* * * * * *

"To be sure, the considerations that have led to the recognition of an action for unreasonable delay in the abandonment of such proceedings also underly the guaranty of the Fourteenth Amendment. * * * This suit must turn upon a question of law unsettled in Michigan, and the most that can be said is that a constitutional question lurks in the background." 207 F.Supp. at 72, 73.

Upon appeal, this Court reversed, holding that lack of jurisdiction was not exhibited by the allegations of the complaint. Foster v. Herley, 330 F.2d 87 (6th Cir. 1964). We there said:

"The judgment is reversed and the case remanded to the District Court with directions to take jurisdiction in the matter and hear and decide the case on its merits. Section 2106, Title 28 United States Code; Dean Milk Co. v. City of Madison, 340 U.S. 349, 356-357, 71 S.Ct. 295, 95 L.Ed. 329." 330 F.2d at 91.

By the address made to us on the former appeal, we were advised of the commencement of the second condemnation case on April 4, 1962, but not that such proceedings had been completed and that plaintiffs had, on February 13, 1963, been awarded and paid the sum of $5,200 for their involved property pursuant to the condemnation jury's verdict. The record makes clear, however, that such amount represented the jury's estimate of the value of Foster's property on the date of its verdict and made no allowance for the damages suffered by plaintiffs for the blighting of their property by the ten-year pendency of the first condemnation case. Plaintiffs did not appeal the judgment of the Recorder's Court of Detroit affirming the jury's award. It is fair to say that at the time plaintiffs' complaint was filed and when the second condemnation was commenced and concluded, Michigan had not by statute or clear decisional announcement provided a remedy whereby to compensate property owners for damages consequent upon the long pendency of an ultimately-discontinued condemnation proceeding. In its answer to the plaintiffs' amended complaint, filed May 14, 1964, the City of Detroit averred:

"Answering Paragraph Twelve, Defendant denies that Plaintiff\'s constitutional rights have been violated in that, under the provisions of the Michigan Statutes and the Charter of the City of Detroit, the value of Plaintiff\'s property is established at the time of the taking thereof in eminent domain proceedings and not at some prior time. Defendant affirmatively avers, that under the Constitution and laws of the state of Michigan and the Charter of the City of Detroit, it has been established that the time of taking in eminent domain proceedings is the date upon which the award of the jury is deposited and not some prior time."

On October 4, 1965, in a cause involving a condemnation case arising out of the same urban renewal project as the case at bar, the Supreme Court of Michigan recited that:

"the city Detroit contends that in Michigan * * * the time of taking is that time when necessity is determined and compensation made or secured." In re Urban Renewal Elmwood Park, 376 Mich. 311, 314, 136 N.W.2d 896, 898 (1965). (Also cited as City of Detroit v. Cassese).

The relevancy of this decision to the case at bar is later discussed herein.

Pursuant to our remand, this case came on for hearing before Judge Kaess who, on July 15, 1966, entered judgment for plaintiffs in accordance with his opinion reported as Foster v. City of Detroit, 254 F.Supp. 655 (E.D.Mich.1966). His order provided that plaintiffs would recover damages against the city according to a formula set out in the opinion and that all persons properly coming within the class on whose behalf the action was commenced, F.R.Civ.P. 23 (a) (3), would have six months after judgment within which to intervene; that a Special Master would be appointed to "determine their membership in the class and the extent, if any, of their damages, in accordance with the formula adopted in this opinion." 254 F.Supp. at 669. Upon the filing of notice of appeal by the City of Detroit, the District Judge ordered that "the appointment of and reference to the Special Master will be deferred pending such appeal, and that all questions to be determined by the Special Master will be continued until that time."

Appellant City of Detroit asks reversal upon these principal grounds:

1) That the District Judge erred in not reconsidering the question of jurisdiction after the proofs were taken in at the trial.

2) That plaintiffs' action and that of the unnamed members of the class are barred by laches and the Michigan three-year statute of limitations.

3) That the action is not a proper class action under Rule 23(a) (3), F.R.Civ.P. as that rule existed at the time of hearing and judgment.

4) That the members of the class should not have been allowed to intervene after verdict and judgment.

Appellees, Fosters, argue as cross-appellants that the District Court's formula for recovery was erroneous.

1) Jurisdiction.

The opinion of Judge Miller of this Court, reversing the dismissal of the cause for lack of jurisdiction, adequately discusses the rules by which the presence of Federal jurisdiction is determined. Foster v. Herley, 330 F.2d 87 (6th Cir. 1964). We read his opinion as saying that if the facts alleged in the plaintiffs' complaint were established, remedy would be available in the appropriate United States District Court. We think it fair to say that until the announcement of the decision in City of Detroit v. Cassese, 376 Mich. 311, 136 N.W.2d 896 (1965), it was the position of the City of Detroit that the law of Michigan did not provide any remedy to plaintiffs for what the City of Detroit did to them by its first, and aborted, condemnation case.

The city's pleadings in the District Court make clear the foregoing. In its answer to the second amended complaint, filed after our decision sustaining the District Court's jurisdiction which was announced after the conclusion of the city's second condemnation case, it was averred:

"Defendant admits that it has acquired Plaintiff\'s property by eminent domain

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