Aladdin, Inc. v. Black Hawk County

• Decision Date: 23 April 1997
• Docket Number: No. 95-2140,95-2140
• Parties: ALADDIN, INC., An Iowa Corporation, Appellee, v. BLACK HAWK COUNTY, Iowa, Appellant, and William Ramsey, Brad Condon, Jim Westemeier, Nancy Showers, Lavern Cutsforth, and Dave Fegley, Defendants, and American Trust & Savings Bank, Appellee.
• Court: Iowa Supreme Court

Page 608

562 N.W.2d 608

ALADDIN, INC., An Iowa Corporation, Appellee, v. BLACK HAWK COUNTY, Iowa, Appellant and William Ramsey, Brad Condon, Jim Westemeier, Nancy Showers, Lavern Cutsforth, and Dave Fegley, Defendants, and American Trust & Savings Bank, Appellee.

No. 95-2140.

Supreme Court of Iowa.

April 23, 1997.

Rehearing Denied May, 16, 1997.

David J. Dutton and Sydney A. Thomas of Dutton, Braun, Staack, Hellman & Iversen, P.L.C., Waterloo, and Peter W. Burk, Assistant County Attorney, for appellant.

William L. Meardon and Charles A. Meardon of Meardon, Sueppel, Downer & Hayes, P.L.C., Iowa City, for appellee-Aladdin.

Chad C. Leitch of O'Connor & Thomas, P.C., Dubuque, for appellee-American Trust.

Considered en banc.

ANDREASEN, Justice.

In Aladdin, Inc. v. Black Hawk County, 522 N.W.2d 604, 606 (Iowa 1994) [hereinafter Aladdin I ], we held certiorari was the proper procedure to review the Black Hawk County Compensation Commission's (Commission) compliance with statutory and constitutional requirements for a valid condemnation. We remanded the certiorari action to the district court for a ruling on whether alleged illegalities occurred so as to invalidate the compensation award. Id. at 607. On remand, the district court invalidated the Commission's award because it (1) failed to consider a compensation award for the value of dry cleaning equipment, and (2) illegally reduced the value of the land by the estimated cleanup cost of existing groundwater contamination. On appeal, we affirm.

I. Background Facts and Proceedings.

We stated the basic facts in the first appeal:

Aladdin, Inc., operated a laundry business in Waterloo, Iowa. In 1992, Black Hawk County condemned Aladdin's facilities, pursuant to Iowa Code chapter 472, in preparation for the building of a new county jail. After conducting a hearing at which both sides presented evidence of the property's value, the Black Hawk County Compensation Commission awarded Aladdin damages.

Aladdin I, 522 N.W.2d at 604.

Following the award, Aladdin filed a petition for writ of certiorari, alleging several illegal acts by Black Hawk County (County) and the Commission. The district court dismissed part of the writ and later annulled the writ. Following appeal, we remanded the action for a ruling on the record previously made, to determine "whether the illegality alleged by Aladdin occurred so as to invalidate the compensation award." Id. at 607.

On remand, the district court addressed the alleged illegalities. The court first concluded that the Commission's allowance for moving and relocation expenses of the dry cleaning equipment, instead of a compensation award for the value of the equipment, was illegal. As a result, it invalidated that portion of the Commission's report. The court also concluded that an eminent domain proceeding is not the proper forum to assess liability for environmental contamination. Therefore, the court invalidated the condemnation award of damages for real estate because the Commission's reduction of real estate value by the cost of remediation was illegal. The County filed timely notice of appeal.

II. Scope of Review.

Certiorari lies where an inferior tribunal, board, or officer, exercising judicial functions, has exceeded its jurisdiction or has acted illegally. Iowa R.Civ.P. 306. The compensation commission is an inferior tribunal. Illegality exists when the findings of the tribunal do not have substantial evidentiary support or when the tribunal does not apply the proper law. Amro v. Iowa Dist. Ct., 429 N.W.2d 135, 138 (Iowa 1988). This certiorari action presents both legal and constitutional issues. Our review of the legal issues is for correction of errors at law. Iowa Coal Mining Co. v. Monroe County, 494 N.W.2d 664, 668 (Iowa 1993). Our review of the evidence bearing on the constitutional claims is de novo. Id.

III. Just Compensation.

The United States Constitution provides that "private property [shall not] be taken for public use, without just compensation." U.S. Const. amend. V. The Fourteenth Amendment makes this provision binding on the states. Iowa Coal Mining Co. v. Monroe County, 555 N.W.2d 418, 430 (Iowa 1996) (citing Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160, 101 S.Ct. 446, 450, 66 L.Ed.2d 358, 364 (1980)). The Iowa Constitution similarly provides that "[p]rivate property shall not be taken for public use without just compensation first being made...." Iowa Const. art. I, § 18. In determining what constitutes "just compensation," courts must look to the individual facts of each case. CMC Real Estate Corp. v. Iowa Dep't of Transp., 475 N.W.2d 166, 170 (Iowa 1991). We have stated:

The term "just compensation," as found in [the] Constitution and statute, has no technical or purely legal significance. The words express in a general way the meaning intended....

....

Ordinarily, market value is the criterion, but in certain cases it is not the true standard by which to determine the value. It is difficult, if not impossible, to lay down a rule of universal application as to what may be considered as elements of damage, as the equities of the parties must more or less depend upon the particular facts and circumstances of each case....

Des Moines Wet Wash Laundry v. City of Des Moines, 197 Iowa 1082, 1086-87, 1089, 198 N.W. 486, 488, 489 (1924).

To determine the amount of compensation, courts generally look to the property owner's loss, not the gain of the entity causing the taking. CMC Real Estate Corp., 475 N.W.2d at 170. The property owner's loss is usually measured by the extent to which the taking deprived it of an interest in its property. Id. When the entire property is taken, our general rule is that the measure of damage is the reasonable market value at the time of the condemnation. Kaperonis v. Iowa State Highway Comm'n, 251 Iowa 39, 41, 99 N.W.2d 284, 285 (1959). The overriding purpose is to make the property owner, whose property is condemned, whole. Forst v. Sioux City, 209 N.W.2d 5, 7 (Iowa 1973).

In giving meaning to the Fifth Amendment requirement of "just compensation," the Supreme Court has sought to put the owner of the condemned property "in as good a position pecuniarily as if his property had not been taken." Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 708, 78 L.Ed. 1236, 1244 (1934). Later, the Court stated:

However, this principle of indemnity has not been given its full and literal force. Because of serious practical difficulties in assessing the worth an individual places on particular property at a given time, we have recognized the need for a relatively objective working rule. The Court therefore has employed the concept of fair market value to determine the condemnee's loss. Under this standard, the owner is entitled to receive "what a willing buyer would pay in cash to a willing seller" at the time of the taking.

Although the market-value standard is a useful and generally sufficient tool for ascertaining the compensation required to make the owner whole, the Court has acknowledged that such an award does not necessarily compensate for all values an owner may derive from his property. Thus, we have held that fair market value does not include the special value of property to the owner arising from its adaptability to his particular use.

....

But while the indemnity principle must yield to some extent before the need for a practical general rule, this Court has refused to designate market value as the sole measure of just compensation. For there are situations where this standard is inappropriate. As we held in United States v. Commodity Trading Corp., 339 U.S. 121, 123, 70 S.Ct. 547, 549, 94 L.Ed. 707, 711 (1950):

"When market value has been too difficult to find, or when its application would result in manifest injustice to owner or public, courts have fashioned and applied other standards.... Whatever the circumstances under which such constitutional questions arise, the dominant consideration always remains the same: what compensation is 'just' both to an owner whose property is taken and to the public that must pay the bill?"

Hence we must determine whether application of the fair-market-value standard here would be impracticable or whether an award of market value would diverge so substantially from the indemnity principle as to violate the Fifth Amendment.

The instances in which market value is too difficult to ascertain generally involve property of a type so infrequently traded that we cannot predict whether the prices previously paid, assuming there have been prior sales, would be repeated in a sale of the condemned property.

United States v. 564.54 Acres of Land, 441 U.S. 506, 510-13, 99 S.Ct. 1854, 1857, 1858, 60 L.Ed.2d 435, 440-42 (1979) (citations omitted).

To implement the constitutional requirement of "just compensation," our Iowa statute requires a compensation commission to assess the damages the owner will sustain by reason of the appropriation. Iowa Code § 472.14 (1991) (chapter 472 was transferred to chapter 6B in 1993). The word "damages" means the same as "just compensation." Henry v. Dubuque & Pac. R.R., 2 Iowa (Cole) 288, 300 (1855). We have stated:

The foundation finding for the damage award in condemnation is the value of the property before condemnation. If it can be established that there is a market for the property, by evidence of a general buying and selling of that kind of property, the first finding will be the market value. But if the nature of the property [is] such that no market for that kind of property can be ascertained or established, the primary finding will be intrinsic or actual value of the property. Once the value is found before condemnation, either market or actual as the case may be, the next question is the value after condemnation. If the whole of the property is taken the first finding of value is the measure of recovery.

Nedrow v. Michigan-Wisconsin Pipe Line Co., 245 Iowa...