City of Midwest City v. House of Realty

• Decision Date: 01 April 2008
• Docket Number: No. 104,526.,No. 104,349.,104,349.,104,526.
• Parties: CITY OF MIDWEST CITY and Midwest City Urban Renewal Authority, Appellees, v. HOUSE OF REALTY, INC., Appellant, and Robert J. Barton, Robert J. "Bob" Barton, Trustee, Pamela L. Barton-Stober, Douglas D. Stober, Kathy L. Givens, Sharlette R. Madison, Jeffrey C. Tackett, Harlan Drake, Phillis Casey, Larry Phillips, Iris Jones, Donna Gunter, Diane Frith, Richard Spriggs, Arthur Lewis and William Klukoske, Forrest Freeman, County Treasurer and Board of County Commissioners of Oklahoma County, Defendants.
• Court: Oklahoma Supreme Court

198 P.3d 886

2008 OK 28

CITY OF MIDWEST CITY and Midwest City Urban Renewal Authority, Appellees, v. HOUSE OF REALTY, INC., Appellant, and Robert J. Barton, Robert J. "Bob" Barton, Trustee, Pamela L. Barton-Stober, Douglas D. Stober, Kathy L. Givens, Sharlette R. Madison, Jeffrey C. Tackett, Harlan Drake, Phillis Casey, Larry Phillips, Iris Jones, Donna Gunter, Diane Frith, Richard Spriggs, Arthur Lewis and William Klukoske, Forrest Freeman, County Treasurer and Board of County Commissioners of Oklahoma County, Defendants.

No. 104,349.

No. 104,526.

Supreme Court of Oklahoma.

April 1, 2008.

Rehearing Denied December 15, 2008.

¶ 0 The companion cases arise from an ongoing dispute between the appellee, City of Midwest City (City), and the appellant, House of Realty (landowner), concerning the City's attempt to condemn the landowner's property. In City of Midwest City v. House of Realty, Inc. [Realty I], 2004 OK 56, 100 P.3d 678, the Court held that the City did not possess authority to exercise powers of eminent domain for purposes of economic development and the removal of blighted property under the Local Development Act, 62 O.S. 2001 § 850, et seq. We held in House of Realty, Inc. v. City of Midwest City [Realty II], 2004 OK 97, 109 P.3d 314 that: 1) the issue of whether the City could use a general power of eminent domain combined with the Local Development Act was rendered moot by the City's abandonment of attempts to condemn the landowner's property; 2) the cause should be remanded for a determination of whether authority existed exempting the public trust from the general prohibition against operating a retail outlet contained in 60 O.S.2001 § 178.4; and 3) the amended and restated trust indenture of the public trust required a vote of the people before monies derived from the trust's compounded principal could be invested in the economic development project. On remand from Realty II and in response to the City's declaratory judgment action requesting approval of the City's Urban Renewal Plan along with the renewed attempt to condemn the landowner's property, the trial court consolidated the two causes. After a bench trial, the trial court: sustained the City's findings of blight; found the City's urban renewal plan to have been validly adopted in accordance with the urban renewal laws, 11 O.S.2001 § 38-101, et seq.; and denied the landowner's exceptions to the commissioners' report. We hold that: 1) the City met due process requirements in providing publication notice of meetings at which blight determinations were made; 2) the City complied substantially with the statutory requirements of 11 O.S.2001 § 38-106(B) providing that a municipal governing body may only approve an urban renewal plan once the governing body has determined, by resolution, that the area is blighted, and, thereafter, acquire the property covered by the plan; and 3) the City did not act arbitrarily, capriciously or in bad faith in making the determinations of blight.

REQUEST FOR ORAL ARGUMENT DENIED; AFFIRMED.

Terry Guy Shipley, Norman, OK, for Appellant.

Katherine E.F. Bolles, City Attorney, City of Midwest City, Midwest City, OK, for Appellees, City of Midwest City and Midwest City Memorial Hospital Authority.

Joseph H. Bocock, Spencer Taft, McAfee & Taft, Oklahoma City, OK, James R. Waldo Mock, Schwabe, Waldo, Elder, Reeves & Bryant, Oklahoma City, OK, for Appellee, City of Midwest City.

James Dan Batchelor, Leslie V. Batchelor, John C. McMurry, Emily K. Pomeroy, Oklahoma City, OK, for Appellee, Midwest City Urban Renewal Authority.

WATT, J.

¶ 1 The companion appeals are considered together and consolidated for the sole purpose of promulgating one opinion¹ addressing the three issues presented. The first is whether the landowner's due process² rights were denied by the City's publication notice of meetings at which blight³ determinations were adopted. Second, whether the City complied substantially with the statutory requirements of 11 O.S.2001 § 38-106(B)⁴ providing that a municipal governing body shall⁵ not approve an urban renewal plan unless the governing body has determined, by resolution, that the area is blighted and may acquire properties subject to the plan only after its approval. Finally, whether the City acted arbitrarily, capriciously and in bad faith in making the blight determination.

¶ 2 As to the first issue, we hold that the City complied with due process requirements in providing publication notice⁶ of meetings at which blight determinations were made. The determination is supported by: Isaacs v. Oklahoma City, 1966 OK 267, 437 P.2d 229,⁷ cert. denied, 389 U.S. 825, 88 S.Ct. 63, 19 L.Ed.2d 79 (1967) in which this Court recognized that blight determinations are legislative rather than adjudicatory proceedings⁸ coupled with a long line of Oklahoma jurisprudence holding that due process protections do not apply in legislative proceedings;⁹ the lack of any requirement in either the Local Development Act or the Urban Renewal Act for personal notice of blight proceedings;¹⁰ and the landowner's opportunity to enjoy the full range of due process protections in the condemnation proceedings.¹¹

¶ 3 Second, under the facts presented, it is clear that blight determinations were made before the urban renewal plan was adopted and the City renewed its attempt to condemn the property at issue after the plan's adoption. Therefore, we determine that the City complied substantially with the statutory requirements of 11 O.S.2001 § 38-106(B).¹²

¶ 4 Finally, we may overturn the City's blight determinations only if, in making the findings, it acted arbitrarily or capriciously.¹³ There is no evidence of abuse. Rather, we hold that the record contains sufficient evidence to support a finding of blight.

FACTS AND PROCEDURAL HISTORY¹⁴

¶ 5 In City of Midwest City v. House of Realty, Inc. [Realty I], 2004 OK 56, 100 P.3d 678, the Court held that the City did not possess authority to exercise powers of eminent domain for purposes of economic development and the removal of blighted property under the Local Development Act, 62 O.S. 2001 § 850, et seq. We held in House of Realty, Inc. v. City of Midwest City [Realty II], 2004 OK 97, 109 P.3d 314 that: 1) the issue of whether the City could use a general power of eminent domain combined with the Local Development Act was rendered moot by the City's abandonment of attempts to condemn the landowner's property; 2) the cause should be remanded for a determination of whether authority existed exempting the public trust from the general prohibition against operating a retail outlet contained in 60 O.S.2001 § 178.4;¹⁵ and 3) the amended and restated trust indenture of the public trust required a vote of the people before monies derived from the trust's compounded principal could be invested in the economic development project.

¶ 6 The companion appeals represent the third and fourth causes arising originally from a joint plan of the City and the Midwest City Memorial Hospital Authority (Hospital Authority) to redevelop approximately eighty acres on S.E. 29^th Street (development area) in Midwest City. In these appeals, the only portion of the tract subject to condemnation is the landowner's one and one-forth (1 1/4) acre holding located near the northeast corner of S.E. 29^th.

¶ 7 We recognized in Realty I that the City made a determination that the area at issue was blighted as early as May 28, 2002.¹⁶ In response to the decisions in Realty I and Realty II, the City adopted Resolution No. 2004-19 on September 14, 2004. The resolution acknowledged that blight, consistent with the definition encompassed within Oklahoma's urban renewal laws, existed in the development area. The City also confirmed the May 28, 2002, finding of blight and directed that an urban renewal plan be prepared for the development area.¹⁷ On October 12, 2004, the City adopted Resolution No. 2004-25, which specifically referred to the May 28, 2002, finding of blight and cited Realty I for the proposition that the Oklahoma urban renewal laws allowed municipalities to acquire properties through condemnation. Furthermore, the resolution adopted the Midwest City Downtown Urban Renewal Plan and authorized the acquisition of property through condemnation as identified in the plan.¹⁸ The City's urban renewal plan provides for the obtaining of any properties not previously acquired by the Hospital Authority.¹⁹

¶ 8 The original commissioners' report issued on March 15, 2002; and the assessed damages were deposited with the court clerk. Requests to stay Realty I and Realty II were denied both by the trial court and this Court in the spring of 2004. Following the issuance of mandate in Realty I, on April 29, 2004, the City took possession of the landowner's property, demolishing the structures on the tract. Except for the existence of one retail outlet, the entire project area was cleared by July of 2004.

¶ 9 On November 20^th and 21^st, 2006, a two day bench trial was held to resolve issues on remand from Realty II and in response to the City's declaratory judgment action requesting approval of the City's Urban Renewal Plan along with the renewed attempt to condemn the landowner's property. The trial court consolidated the two causes; sustained the City's findings of blight; found the City's urban renewal plan to have been validly adopted in accordance with the urban renewal laws, 11 O.S.2001 § 38-101, et seq.; and denied the landowner's exceptions to the commissioners' report. Petitions in error were filed in the two causes in February and March of 2007, respectively. On April 13, 2007, the landowner filed a motion to consolidate the related appeals. The City requested that the causes be retained in its motion of May 3, 2007. We made the causes companion cases and granted the motion to retain. The briefing cycle was completed on December 11, 2007.

DISCUSSION

¶ 10 a. The City met due process requirements by providing...