City of Tucson, Corp. v. Cheryl A. Tanno & the Estate

• Decision Date: 10 October 2018
• Docket Number: No. 2 CA-CV 2017-0143,2 CA-CV 2017-0143
• Parties: CITY OF TUCSON, a municipal corporation, Plaintiff/Appellee, v. Cheryl A. TANNO and the Estate of Pasquale J. Tanno, Defendants/Appellants.
• Court: Arizona Court of Appeals

431 P.3d 202

CITY OF TUCSON, a municipal corporation, Plaintiff/Appellee,

v.Cheryl A. TANNO and the Estate of Pasquale J. Tanno, Defendants/Appellants.

No. 2 CA-CV 2017-0143

Court of Appeals of Arizona, Division 2.

Filed October 10, 2018

Jennings, Strouss & Salmon P.L.C., Tucson, By John J. Egbert and Danielle J.K. Constant, Counsel for Plaintiff/Appellee

Stubbs & Schubart P.C., Tucson, By Thomas M. Parsons, Counsel for Defendants/Appellants

Judge Eppich authored the opinion of the Court, in which Presiding Judge Vásquez and Judge Espinosa concurred.

OPINION

EPPICH, Judge:

¶1 In this eminent domain case, Cheryl Tanno and the estate of Pasquale Tanno appeal from a final judgment awarding them $365,910 in compensation for real property condemned by the City of Tucson. They argue the trial court committed error in making evidentiary determinations, refusing to tender certain jury instructions, and declining to award sanctions for a purported discovery violation. For the reasons that follow, we affirm.

Factual and Procedural Background

¶2 In 2015, the City of Tucson filed an eminent domain complaint in superior court seeking to condemn a parcel of real property owned by the Tannos. The city sought to acquire the property for the development of the "Downtown Links," a proposed roadway project it asserted was for public use. In response, the Tannos requested a determination of the value of the condemned property and a jury trial.

¶3 After the conclusion of discovery, the city filed several motions in limine seeking to exclude portions of expert testimony disclosed by the Tannos, portions of Cheryl’s testimony regarding the value of her property, and evidence relating to certain legal theories advanced by the Tannos. After conducting three hearings, the trial court granted the majority of the city’s motions.

¶4 The case proceeded to a jury trial, where the sole issue was the value of the Tanno property. At trial, the court reaffirmed its prior evidentiary rulings, in some instances considering more evidence than was available at the time of its pretrial rulings. The jury returned a verdict in favor of the Tannos, awarding them $365,910 for the fair market value of the property. The trial court issued a final, appealable judgment based on the jury’s verdict. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

Eminent Domain

¶5 In Arizona, the state, a county, city, town, village, political subdivision, or person, may exercise the right of eminent domain to acquire property for public use. See A.R.S. § 12-1111. Pursuant to our constitution, however, a property owner is entitled to just compensation for land taken by eminent domain. Ariz. Const. art. II, § 17. "Just compensation is the amount of money necessary to put the property owner in as good a financial position as if the property had not been taken." City of Phoenix v. Wilson , 200 Ariz. 2, 5, ¶ 8, 21 P.3d 388, 391 (2001). Further, "[t]he value of land taken by eminent domain in Arizona is to be determined by the market value of the property: by what a willing buyer would pay for the property and what a willing seller would take." State ex rel. Ordway v. Buchanan , 154 Ariz. 159, 162, 741 P.2d 292, 295 (1987). The market value of the property is set as of the day of the summons. A.R.S. § 12-1123(A).

¶6 The Tannos argue the trial court committed several errors that prevented them from receiving just compensation for their property. Their arguments largely stem from the court’s decision not to admit certain evidence, which the Tannos contend would have shown the property’s value. "A trial court has broad discretion in the admission of evidence, and we will not disturb its decision absent an abuse of that discretion and resulting prejudice." Crackel v. Allstate Ins. Co. , 208 Ariz. 252, 268, ¶ 59, 92 P.3d 882, 898 (App. 2004). "To test whether a trial court has abused its discretion, we must determine not whether we might have so acted under the circumstances, but whether the lower court exceeded the bounds of reason by performing the challenged act." Toy v. Katz , 192 Ariz. 73, 83, 961 P.2d 1021, 1031 (App. 1997). "It is well established law in Arizona that appellate courts will not disturb the exercise of discretion of the trial court if it is supported by any reasonable evidence." Peters v. M & O Constr., Inc. , 119 Ariz. 34, 36, 579 P.2d 72, 74 (App. 1978).

Evidence of Project Influence

¶7 The Tannos first argue the trial court erred in precluding evidence of the city project’s influence on the value of their property. They argue they should have been permitted to present evidence of a roadway project initiated by the Arizona Department of Transportation (ADOT) in the 1980s, asserting the Downton Links is a continuation of that same project. They argue the decades-long development of the roadway resulted in a substantial decrease to the value of their property, or "condemnation blight."

¶8 Under the project influence doctrine, "property may not be charged with a lesser or greater value at the time of taking, when the change in value is caused by the taking itself or by anticipation of appreciation or depreciation arising from the planned project." City of Phoenix v. Clauss , 177 Ariz. 566, 569, 869 P.2d 1219, 1222 (App. 1994) ; see also A.R.S. § 28-7097 ("[W]hen determining the market value of the property to be taken ... a decrease or increase in the market value ... before the date of valuation caused by the public project for which the property is to be acquired ... shall be disregarded."). Thus, pursuant to this doctrine, a property owner in an eminent domain action is entitled to recover damages from a decrease in value caused by the government project for which the property is taken. See Clauss , 177 Ariz. at 569, 869 P.2d at 1222. But, "[t]he doctrine applies only to properties that were ‘probably within the scope of the project from the time the government was committed to it.’ " Id. (quoting City of Tucson v. Ruelas , 19 Ariz. App. 530, 532, 508 P.2d 1174, 1176 (1973) ).

¶9 The trial court determined the ADOT project and the Downtown Links were separate and distinct projects. The court thus concluded that any decrease in value caused by the ADOT project would not have been recoverable as damages caused by development of the Downtown Links project. In doing so, the court concluded the ADOT project had been abandoned "in or about the year 2000," and further concluded "the City began planning the Downtown Links Project in approximately 2005 or 2006." As a result, the court precluded the Tannos "from seeking damages for ‘Condemnation Blight’ allegedly caused by the State of Arizona’s plans and activities related to the [ADOT project]."

¶10 The Tannos have not established the trial court abused its discretion, as there was reasonable evidence to support the court’s conclusion that the Downtown Links was distinguishable from the ADOT project. See Peters , 119 Ariz. at 36, 579 P.2d at 74. While the projects are similar, perhaps even similar enough to support a determination that the Downtown Links is a continuation of the prior ADOT project, our role on review is limited to determining whether there was reasonable evidence to support the court’s conclusion that the two projects were distinct. See Toy , 192 Ariz. at 83, 961 P.2d at 1031.

¶11 The ADOT project initially sought to construct a state route with a speed limit of fifty miles per hour, similar to a freeway. Plans for the Downtown Links also include a parkway-style roadway, but with plans to include landscaping, major infrastructure for rainwater drainage, and a speed limit of thirty miles per hour. There was evidence the city had planned to complete the last mile of the project which had been abandoned by ADOT in 1989.¹ However, the Downtown Links was not approved by a city resolution until 2009. If the Downtown Links were a mere continuation of the ADOT project, we fail to see how a separate resolution approving it would have been necessary.

¶12 Based on the trial court’s reasonable conclusion that the two projects were distinct, any decrease in value caused by the ADOT project would not have been attributable to the Downtown Links. Thus, any evidence of such would not be admissible as evidence of project influence from the Downtown Links. See Clauss , 177 Ariz. at 569, 869 P.2d at 1222. Accordingly, the court did not abuse its discretion in precluding the Tannos from seeking damages for project influence prior to 2005 or 2006, the timeframe in which the city had apparently committed to the Downtown Links project.

Evidence of Best Use

¶13 The Tannos next argue the trial court erred in disallowing evidence of the best use of their property. Specifically, they contend they should have been permitted to present expert testimony of the property’s potential "assemblage" with other properties in the area, thereby increasing its potential value.²

¶14 In order to determine the value of property in a condemnation case, the highest and best use of the property must be considered. Wilson , 200 Ariz. 2, 5–6, ¶ 8, 21 P.3d 388, 391–92. There is no rigid formula to determine the value of a parcel of property, and each case must be viewed in light of its own facts. Id. ¶¶ 15-16. While the best use of a smaller tract of property may be in combination with others as part of a larger tract of property (as in an assemblage theory), such evidence of best use should be grounded in common sense and market data. Cf. id. ¶¶ 12, 16. "Remote and speculative damages may not be considered in eminent domain cases." City of Tucson v. Estate of DeConcini , 155 Ariz. 582, 583, 748 P.2d 1206, 1207 (App. 1987).

¶15 The trial court precluded evidence of assemblage, stating it was the Tannos' "burden to show that as of the time of taking, development based on assemblage of surrounding parcels was reasonably probable at any time in the foreseeable future," and concluding the Tannos had failed to meet that burden. It also noted that even if...