City of Wichita v. Denton

• Decision Date: 04 January 2013
• Docket Number: No. 97,952.,97,952.
• Citation: 294 P.3d 207
• Parties: CITY of WICHITA, Kansas, a Municipal Corporation, Appellee, v. Kenneth D. DENTON, d/b/a Tillies Flower Shop, Appellee, and Clear Channel Outdoor, Inc., Appellant.
• Court: Kansas Supreme Court

294 P.3d 207

CITY of WICHITA, Kansas, a Municipal Corporation, Appellee,

v. Kenneth D. DENTON, d/b/a Tillies Flower Shop, Appellee,andClear Channel Outdoor, Inc., Appellant.

No. 97,952.

Supreme Court of Kansas.

Jan. 4, 2013.

Syllabus by the Court

1. The usual test for reviewing the district court's grant of summary judgment in an eminent domain action is the same standard employed in other civil actions. Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences that may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the court applies the same rules; and, where it finds reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.

2. To determine whether personal property has become an improvement to real estate, Kansas courts consider (1) the degree of permanency with which the property is attached to the realty; (2) the adaptation of that property to the use or purpose to which the realty is devoted; and (3) the intention of the property's owner to make them a permanent accession to the freehold. When evidence on whether a piece of property is a fixture is susceptible to only one inference, the question may be settled as a matter of law.

3. Kansas defines just compensation in terms of the fair market value of condemned property interests. Fair market value is the monetary amount that a well informed buyer is justified in paying and a well informed seller is justified in accepting for property in an open and competitive market, assuming that the parties are acting without undue compulsion. This definition necessarily takes into account the industry standards that govern the valuation of different types of property on the open market.

4. In order to better accommodate the different types of property that are bought and sold in today's marketplace, the Kansas Eminent Domain Procedure Act was modified in 1999 to place the three principal methods of valuing modern real estate on equal footing. These include the (1) cost approach-the reproduction cost of the property at the time of taking less depreciation; (2) market data approach—the value of the property based upon the recent sales of comparable properties; and (3) income approach—the capitalization of net income from the property. The income approach, also known as the income—capitalization approach, is particularly suitable when property is producing or is capable of producing income.

5. It has long been the rule in this state that the profits from a business conducted on a particular piece of property are not compensable losses in a condemnation action. A well-settled exception exists for rents or other income generated by the land itself.

6. On the facts of this eminent domain case, the district court did not err in excluding evidence of the value of a billboard structure because it was personal property for which compensation was not required.

7. On the facts of this eminent domain case, the district court did not err in granting the City of Wichita's motion for partial summary judgment and motion in limine excluding evidence of the advertising income generated by a billboard structure on condemned real estate, because the evidence represented business profits rather than rental income and was thus irrelevant for determining the value under any authorized valuation method.

8. When a party is introducing evidence relating to the value of condemned property under an income-capitalization approach, the evidence may include expert testimony relating only to the income-generating potential of a particular part of the land. The unit rule is not violated as long as the ultimate award from the valuation proceedings is not itemized and assigns only one value to the property as a whole.

JoAnn T. Sandifer, of Husch & Eppenberger, LLC, of St. Louis, Missouri, argued the cause, and Caroline L. Hermeling, of the same firm, and Paul S. McCausland, of Young, Bogle, McCausland, Wells & Blanchard, P.A., of Wichita, were with her on the briefs for appellant Clear Channel Outdoor, Inc.

David M. Rapp, of Hinkle Elkouri Law Firm L.L.C., of Wichita, argued the cause, and Roger M. Theis, of the same firm, was with him on the brief for appellee City of Wichita, Kansas.

Stephen E. Robison, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, argued the cause, and Lyndon W. Vix, of the same firm, was with him on the brief for appellee Kenneth D. Denton, d/b/a Tillies Flower Shop.

The opinion of the court was delivered by PER CURIAM:

This is an eminent domain proceeding involving the City of Wichita's condemnation for highway purposes of a tract of land owned by Kenneth Denton and located on the northwest corner of the intersection of Kellogg and Rock Roads. Clear Channel Outdoor, Inc., leased from Denton approximately 500 square feet of the property for operation of a double-sided, tri-vision billboard. The tract was valued at $1,075,600, with no compensation given for the billboard structure and with no consideration as to the advertising income produced by Clear Channel's leasehold. The City and Denton accepted the appraisers' award; Clear Channel appealed pursuant to K.S.A. 26–508. The district court granted summary judgment in favor of the City, affirming the appraisers' award. We have jurisdiction to review Clear Channel's appeal to this court pursuant to K.S.A. 2011 Supp. 26–504.

Facts

In 2002, the City filed a petition under the Kansas Eminent Domain Procedure Act (EDPA), K.S.A. 26–501 et seq., wherein it sought to acquire fee simple title to property described as 7960 East Kellogg for highway purposes. This property is located on the northwest corner of the intersection of Kellogg and Rock Roads. The petition named Denton, the owner in fee title of the property and owner and operator of Tillies Flower Shop, and Clear Channel, a lessee on the property, among others, as defendants.

Clear Channel leased approximately 500 square feet of the 26,610–square–foot tract from Denton for the operation of a two-sided, tri-vision billboard. In November 2001, Clear Channel renewed its lease with Denton for an additional 20 years. The lease provided that Clear Channel was authorized to erect and maintain outdoor advertising structures (billboards) on the property and stated that in the event the leased property was condemned, Clear Channel was entitled to “just compensation for the taking of the Structures and Tenant's leasehold interest in the Lease.” In addition, the lease term automatically extended 30 years from the date of condemnation if the leased property was acquired by a government entity by way of eminent domain.

The billboard located on the property was originally constructed in 1985 by Clear Channel's predecessor in title and was in “nearly new” condition at the time of the taking. The structure consisted of a steel monopole that held two 14–by–48–foot, back-to-back billboard signs, each of which rotated three advertisements in 8–second intervals. The steel pole measured 3 feet in diameter and, including the billboard, extended 34 feet above the ground. The pole was set in a concrete foundation that extended approximately 12–feet square and 12–feet deep; the foundation itself was composed of roughly 96 tons of concrete. The entire structure weighed approximately 22,000 pounds and was designed to withstand gale-force winds.

Clear Channel considered its leasehold estate a premier location for outdoor advertising, asserting that it was “the most unique and valuable property interest” it owned in the Wichita area. The location provided access to the highest level of traffic circulation in the area and good visibility, and was part of a desirable socioeconomic area characterized by strong retail and commercial activity. The billboard space was steadily leased to advertisers, generating total revenue of $84,128 in 2003 alone. Clear Channel paid Denton $13,860 annually for its leasehold.

During the eminent domain proceedings, the district court appointed three appraisers to view the property and determine the appropriate compensation for the interests therein. The court instructed the appraisers that they were to value the tract as a whole. After the appraisers had inspected the property, the court held a hearing and entered an award of $1,075,600 as compensation for the taking.

Pursuant to K.S.A. 26–508, Clear Channel appealed the appraisers' award to the district court and requested a jury trial to determine the total damages for the condemned property. Denton did not appeal the appraisers' award and sided with the City on its arguments.

In August 2003, the City moved for partial summary judgment, seeking a legal determination of the property subject to valuation and, more specifically, arguing that the billboard and Clear Channel's permit, advertising contracts, and related assets were personal property not acquired by the City. In essence, the City argued that the EDPA required that the City compensate Clear Channel only for its interest in real property, as determined by the petition and appraisers' report, and that the City had taken only Clear Channel's leasehold estate and not the business assets used to conduct the advertising business there.

In its response, Clear Channel emphasized that the billboard was attached to the ground in concrete and thus constituted a fixture that was subject to valuation. In...