City of Tucson v. Estate of DeConcini, 2
| Citation | 748 P.2d 1206,155 Ariz. 582 |
| Decision Date | 24 September 1987 |
| Docket Number | CA-CV,No. 2,2 |
| Parties | CITY OF TUCSON, a municipal corporation, Plaintiff/Appellant, v. ESTATE OF Evo DeCONCINI, Ora DeConcini, a widow; Peter V. Gallo, as Trustee, Defendants/Appellees. 87-0105. |
| Court | Court of Appeals of Arizona |
The City of Tucson appeals from the judgment and denial of its motion for new trial in an eminent domain case, contending the award of compensation was excessive because the trial court erred in admitting and considering evidence of future profits from contemplated improvements. We find no error and affirm.
Appellees, the Estate of Evo DeConcini, Ora DeConcini and Peter Gallo as trustee, are the owners of a parcel of property located on the northwest corner of Stone Avenue and Speedway Boulevard in Tucson. In August 1985 the city filed a complaint to condemn a large portion of the parcel in connection with a project to widen Speedway Boulevard. At the time, a Whataburger restaurant was located on the property, having been built in 1972. The portion taken included the restaurant.
At the trial to the court on the sole issue of the amount of damages, the vice president of real estate and franchise development of Whataburger, Inc. 1 testified that on December 21, 1983, his corporation had entered into a lease amendment agreement with appellees under which appellees agreed to reimburse Whataburger, Inc. up to $100,000 for its cost of remodeling the restaurant. Whataburger agreed to repay the remodeling costs plus interest over a 12-year period. In addition to granting permission for Whataburger to undertake the remodeling and in agreeing to lend the money to finance it, appellees also agreed to extend the term of the existing lease from 1991 to 2003. The amendment also provided for increased monthly minimum rental payments for the remainder of the lease period. The percentage rental figure of five percent of gross sales remained the same.
Whataburger's vice president testified as to the details of the remodeling which was contemplated by the corporation. They included adding a drive-through window, installing a tile roof in place of the existing metal roof, closing in some of the windows, and stuccoing part of the walls. The vice president testified that Whataburger had applied for a building permit in March 1984, which was refused because the city was planning to take the property. The applicable valuation date for the property was August 7, 1985.
Prior to the December 1986 trial, the city filed a motion in limine to preclude admission of evidence pertaining to the proposed remodeling and the increased income that appellees were projected to receive as a result of the remodeling. The court took the motion under advisement and heard the evidence, after which he ruled that the evidence was admissible and could be considered in determining the amount of the damage award.
Appellees' appraiser testified that he relied most heavily on the income approach in determining the market value of the property taken. In determining the market value under the income approach, the appraiser utilized the gross income figures which had been provided by the Whataburger vice president. The vice president testified that, in the year before the taking, the restaurant had a gross income of $600,000. Based on the restaurant's location (which he testified was the best Whataburger location in Tucson) and the increased sales which had resulted from the remodeling of the second-best Whataburger location in Tucson, the vice president testified that the corporation would have realized an annual 35% increase in gross income if the property had not been taken and the restaurant torn down. The appraiser thus assumed a gross income of $800,000 per year in calculating the market value of the property taken. His figure for total damages resulting from the taking, including damages to the remainder, was $533,000.
The city's appraiser based his calculations on the property as it existed prior to the taking. The date of his appraisal was November 1984. He did not consider the effect of the proposed remodeling and relied on all three appraisal approaches, giving the greatest weight to the income approach in determining the market value. His figure, adjusted to the actual date of taking, was $326,700. The trial court awarded $425,000 in damages, finding that appellees were entitled to "compensation for both the limitation of access on the remaining parcel occasioned by the taking as well as some consideration for future profits as a result of the planned improvements."
On appeal, the city contends the court should neither have admitted the evidence regarding future profits nor considered it in determining the amount of the award because the evidence was speculative and hypothetical. Remote and speculative damages may not be considered in eminent domain cases. City of Tucson v. Rickles, 109 Ariz. 82, 505 P.2d 253 (1973); Arizona Water Co. v. City of Yuma, 7 Ariz.App. 53, 436 P.2d 147 (1968). The city contends the figures relied upon by appellees' appraiser were "sheer speculation" as to the amount of increased income appellees would receive as a result of the remodeling.
The ultimate inquiry in any condemnation case is the market value of the condemnee's land. Evidence which has a material bearing on market value should be admissible, without regard to whether it relates to an eventuality that might or might not occur in the 'near' or more 'distant' future, as long as the prospect of the event has substantial present influence on market value. It seems to us that the real purpose of the 'near future' and anti-'remote or speculative' qualifications of the rule stated in Nichols [4 Nichols on Eminent Domain § 12.322 (3d ed. 1962) ] is to exclude consideration of an asserted prospective rezoning which is nothing...
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