City of Baton Rouge v. Tullier
| Decision Date | 26 May 1981 |
| Docket Number | No. 14129,14129 |
| Citation | 401 So.2d 422 |
| Parties | CITY OF BATON ROUGE and Parish of East Baton Rouge v. Pearl Price TULLIER et al. |
| Court | Court of Appeal of Louisiana — District of US |
Walter G. Monsour, Jr., Parish Atty., Charles E. Pilcher, Asst. Parish Atty., Baton Rouge, for plaintiff-appellee City of Baton Rouge and Parish of East Baton Rouge.
Steve M. Marks, Baton Rouge, for defendants-appellants Pearl Price Tullier, et al.
Before ELLIS, COLE and WATKINS, JJ.
The major issue in this expropriation case is how to divide the compensation awarded between the landowner and the tenant, where the tenant is also the expropriating authority. Two minor issues are also presented. The first is whether or not the trial court erred in accepting defendants' expert's appraisal of the subject property. The second is whether or not the defendants are entitled to attorney fees.
The facts giving rise to this litigation are as follows: In 1958 Benjamin Tullier and his wife, Pearl Price Tullier, as lessors, executed a lease of 10.02 acres of land fronting on Plank Road with lessee, Commercial Properties Development Corporation. The lease had a 25 year initial term with renewal options at 25 year intervals and was to end ultimately on October 31, 2057. The lessee was to pay $750.00 per month ($9,000 per year) and was specifically precluded from subordinating the landowner's interest for financing of improvements. The lease further provided at the termination of the lease all improvements would become the property of the landlord and the lessee was obligated to return the improvements in good repair. The lease also contained a condemnation clause which will be discussed in detail later.
Commercial Properties built a Shopper's Fair and a Kroger store on the site. In 1963 Commercial assigned the lease to Tanson Enterprises, Inc. Because of changes in land use patterns the improvements were vacated sometime during the 1970s and the buildings stood deserted and vandalized. In 1979 the City of Baton Rouge and the Parish of East Baton Rouge (hereinafter referred to as the City-Parish) began negotiating with Tanson to acquire the lease. The City-Parish desired the site in order to house federally funded programs under the Comprehensive Employment Training Act (CETA) and the Equal Employment Opportunity Program (EEOP). The City-Parish paid Tanson $531,000 for the leasehold interest, including the existing structures which the City-Parish negotiator felt were worth approximately $500,000. After spending $3,446,780.34 to renovate the buildings, the City-Parish was informed the federal government would require it to have full title to the property before funding would be provided for the programs. The City-Parish's offer to the landowners of approximately $100,000 was refused. The City-Parish then filed suit to expropriate. 1 A partial summary judgment was rendered on the City-Parish's right to expropriate and a trial was held on July 18, 1980 to determine the proper award.
Testimony at trial consisted of appraisals by the various experts. Plaintiff's experts, Chester Driggers and Richard Bullard, appraised the land at values of $250,000 and $220,000 respectively. They used as their main comparable a tract of land "to the rear" of the subject tract, which had no frontage on Plank Road. Defendants' expert, John LeJeune, based his evaluation on two other comparables, each having frontage on Plank Road, and estimated the land to be worth $654,700.
Mr. Kermit Williams, another expert called by defendants, testified the improvements (as renovated by the City-Parish) were worth $4,623,000. His estimate of the land value essentially was the same as that given by Mr. LeJeune.
Plaintiff complains the trial court erred in accepting Mr. LeJeune's appraisal of land value. In its written reasons for judgment the trial court stated it was unimpressed with plaintiff's appraisers because of their heavy reliance on a "comparable" having no frontage on Plank Road. The court was impressed with the credentials of Mr. LeJeune, found his comparables to be more appropriate and therefore accepted his appraisal as being accurate. As always, the trial court is granted a great deal of discretion in assessing the probative value of evidence and since we find no manifest error, we decline to disturb his findings on this issue.
The trial court rendered judgment in favor of the City-Parish and against the Tulliers, granting the ownership of the property to the City-Parish. In written reasons for judgment the trial court determined the various values to be as follows:
2. According to the trial judge, this figure was calculated using a concept advanced by Mr. LeJeune in his appraisal report and a co-efficient factor set forth in a textbook on real estate appraisal which was cited by Mr. LeJeune. While the report and an excerpt from the textbook are in evidence, we have been unable to locate and verify the referenced basis for the calculation.
Value of the land: $ 654,700.00
Value of the improvements: k4,623,000.00
----------------------------------
Total due landowner: $ 5,277,700.00
Less lessee's loss of use
of the improvements 2: -4,616,990.10
2. According to the trial judge, this figure was calculated using a concept
advanced by Mr. LeJeune in his appraisal report and a co-efficient factor set
forth in a textbook on real estate appraisal which was cited by Mr. LeJeune
While the report and an excerpt from the textbook are in evidence, we have
been unable to locate and verify the referenced basis for the calculation
----------------------------------
Balance due landowners: $ 660,709.90
The trial court arrived at the figure representing the loss of use by the lessee by taking the present value of the improvements and subtracting the reversionary interest of the lessor, in the year 2057. (This assumes all options to extend the lease would have been exercised by the City-Parish.) Using this method, the trial court applied a 9% discount rate and figured the present value of the right to receive $4,623,000 in 77 years is $4,623,000 multiplied by the inward co-efficient factor of .0013 which equals $4,616,990.10. Therefore, this amount was deducted from the total due the landowner and given as a credit to the City-Parish. The landowner was awarded the balance of $660,709.90.
Defendants appealed and plaintiff answered the appeal. Both parties argue the division of proceeds was not done according to the terms of article 17(d) of the lease. The pertinent parts of article 17 read as follows:
"(a) In the event the entire demised premises shall be appropriated or taken under the power of eminent domain by any public or quasi-public authority, this lease shall terminate and expire as of the date of such taking and the Tenant shall thereupon be released from any further liability hereunder.
....
(Emphasis added.)
There is much discussion in defendants' brief about the proper interpretation of article 17(d). We agree with defendants that the lease was apparently drafted for the usual situation in which the lessee and the expropriator are two different entities. However, we also agree with the trial court's assessment that even though the City-Parish occupies a dual role of lessee and expropriator, it cannot be denied any rights flowing from the lease agreement. These rights include compensation for damage due to deprivation of use of the premises caused by the expropriation. It is logical to compensate the City-Parish for being unable to use the premises, as lessee.
We find the trial court did not err in awarding the City-Parish, as lessee, a sum relative to the terminated use of the improvements. We differ, however, in that we do not find the sum awarded to be "just and equitable under the circumstances," as required by article 17(d) of the lease. The following figures are illustrative of this point.
3. It is significant that of the amount paid by the City-Parish for the leasehold interest, nearly all of it represented the value of the old structures which, through renovations, resulted in new improvements valued at $4,623,000. In effect, the new improvements cost the City-Parish nearly four million dollars.
Total award (credit) granted
to lessee for loss of use: $4,616,990.10
Amount expended by City-Parish
--to obtain leasehold interest: 3 531,000.00
3. It is significant that of the amount paid by the City-Parish for the
leasehold interest, nearly all of it represented the value of the old
structures which, through renovations, resulted in new improvements valued at
$4,623,000. In effect, the new improvements cost the City-Parish nearly four
million dollars
--for improvements: 3,446,780.34
-------------------------------
Total Output: $3,977,780.34
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