Dep't of Transp. v. Gilling.

• Citation: 796 N.W.2d 476,289 Mich.App. 219
• Decision Date: 15 July 2010
• Docket Number: Docket Nos. 285369,287552.
• Parties: DEPARTMENT OF TRANSPORTATIONv.GILLING.
• Court: Court of Appeal of Michigan (US)

289 Mich.App. 219

796 N.W.2d 476

DEPARTMENT OF TRANSPORTATION

v.GILLING.

Docket Nos. 285369

287552.

Court of Appeals of Michigan.

Submitted Sept. 9, 2009, at Lansing.Decided July 15, 2010, at 9:00 a.m.

Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Ronald W. Emery, Assistant Attorney General, for plaintiff.Steinhardt Pesick & Cohen, PC (by H. Adam Cohen, Jerome P. Pesick, and Jason C. Long), Birmingham, for defendants.Before: SAAD, P.J., and WHITBECK and ZAHRA, JJ.SAAD, P.J.

These consolidated appeals arise out of a condemnation proceeding brought by plaintiff, the Michigan Department of Transportation (MDOT), to acquire a multiacre parcel located on highway M–24 (also known as Lapeer Road) in Lapeer County as part of a road-widening project. In Docket No. 285369, MDOT appeals the trial court's judgment on the jury verdict in favor of defendants, Lawrence P. Gilling, Margaret Gilling, Stephen L. Gilling, Donna Gilling, Robert L. Gilling, Connie Gilling, Gilling's Nursery & Landscaping, Inc., and Gilling's Artistic Landscaping, Inc. (collectively, “Gilling”). In Docket No. 287552, MDOT appeals the trial court's postjudgment order that awarded Gilling attorney fees and costs under MCL 213.66.

I. CONDEMNATION: MOVING AND RELOCATION EXPENSES ¹

The trial court ruled that business-interruption damages include moving and relocation expenses. The trial court further held that the statutorily authorized administrative-reimbursement proceedings constitute a supplementary scheme for the recovery of moving and relocation expenses not otherwise fully compensable under state condemnation law. See MCL 252.143; MCL 213.328(1); MCL 213.355. We agree in part. First, we hold that claims for business-interruption damages do not allow for lost profits, but permit recovery of moving and relocation expenses. However, although moving and relocation expenses can include expenses for moving trade fixtures, we hold that the trial court erred by classifying defendants' nursery stock as trade fixtures. We also hold that the trial court abused its discretion when it excluded key expert testimony that supported MDOT's position that Gilling was unreasonable in moving to an interim location before moving to its final destination. Finally, we hold that administrative-recovery schemes supplement rather than supplant a property owner's constitutional right to recover just compensation for moving and relocation expenses as part of a business interruption. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

II. FACTS AND PROCEEDINGS

In September 2005, MDOT filed a complaint under the Uniform Condemnation Procedures Act (UCPA), MCL 213.51 et seq. , seeking to acquire a multiacre parcel that was owned by members of the Gilling family and two corporate entities and was used to operate a retail nursery and landscaping businesses. MDOT acquired the property to implement a road-widening project on M–24. Gilling did not challenge the necessity or public use supporting the taking. Therefore, the primary issue was and is the amount of just compensation to which Gilling is entitled.

In September 2005, Gilling relocated its businesses to a leased property site that Gilling found unsuitable as a permanent location. In January 2006, Gilling submitted to MDOT its claims for compensable items. Under MCL 213.55(3), if the property owner believes the good-faith written offer made for the property by MDOT under MCL 213.55(1) is inadequate, the owner may submit a written claim to MDOT that details the nature and substance of property damage caused by the taking apart from the value of the property taken and not described in the good-faith written offer. An underlying premise of Gilling's claim is its assertion that its businesses had to be relocated to an alternate site because the partial taking left only a “small, inadequate remainder [.]” MDOT reimbursed Gilling approximately $147,000 for moving and relocation expenses for the move to the interim site pursuant to this administrative proceeding.

In September 2007, Gilling purchased another site that was better suited to its purpose and relocated to the new, permanent location. In the condemnation proceedings before the trial court, Gilling claimed that it was entitled to compensation for its business-interruption damages, including the costs and expenses of relocating its businesses from the interim site to the permanent site. During Gilling's subsequent motion to exclude MDOT's business-valuation expert witness from trial, MDOT admitted that it was statutorily required to reimburse an owner for actual moving and relocation expenses. MCL 252.143. But MDOT pointed out that it had already reimbursed Gilling approximately $147,000 for moving and relocation expenses for the move to the interim site in the administrative proceeding. MDOT argued that the types of business-interruption expenses sought by Gilling were actually moving and relocation expenses. MDOT contended that such expenses were properly sought administratively rather than in condemnation proceedings.

In response, Gilling asserted that MDOT's prior administrative payment was “totally irrelevant to MDOT's duty to appraise, and pay, [Gilling's] constitutional business interruption damages.” In other words, Gilling contended that any statutory moving and relocation allowances did not limit a landowner's constitutional business-interruption damages. It asserted that “an owner's statutory moving allowance, and constitutional business interruption damages, are distinct.” According to Gilling, under the UCPA, “any amounts that MDOT already paid in statutory moving costs are subtracted from the just compensation estimate for business interruption.” Gilling pointed out that its business-interruption appraisal had already made an adjustment for the prior payment. Therefore, according to Gilling, it was not seeking a double payment. After reviewing the facts and proceedings, the trial court denied Gilling's motion to exclude MDOT's expert. The trial court agreed with MDOT that “relocation costs are compensable under MCL 252.143 and are not part of the condemnation proceedings,” but concluded that “business interruption damages are part of these proceedings so long as they do not duplicate the relocation costs.”

In a later motion in limine to prohibit MDOT from presenting issues of law to the jury, Gilling explained that its actual costs substantially exceeded MDOT's administrative payments. Therefore, Gilling contended, it was not seeking double payment. Rather, according to Gilling, it was merely seeking additional payment for its business-interruption costs caused by the need to relocate. Gilling claimed that because of the inadequacy of MDOT's just-compensation payment, Gilling was unable to initially secure a permanent location and therefore had to incur additional costs in relocating again. Gilling stated that its interim site was not appropriate for use as a permanent site because of limited frontage, poor soil, and inadequate storage. MDOT responded that Gilling was improperly attempting to “ ‘lump’ all of [Gilling's] moving, re-establishment and relocation costs under the heading of ‘Business Interruption Damages.’ ” Although MDOT acknowledged that some of Gilling's claimed damages could be considered business-interruption damages, it maintained that business-interruption damages did not include moving and relocation expenses.

MDOT then moved in limine to exclude all evidence of Gilling's moving and relocation expenses. It argued that MCL 252.143 specifically excludes such expenses from condemnation actions. MDOT recognized that there can be business-interruption expenses that do not involve moving or relocation, which would be compensable as just compensation in a condemnation action. But MDOT contended that any moving and relocation expenses were not compensable in that same manner. MDOT asserted that if Gilling believed that the original administrative payment was insufficient to reimburse it for the move to the interim site, then Gilling could have administratively appealed that decision. Likewise, MDOT stated that Gilling could seek administrative payment of its moving and relocation expenses for the second move.

In a written opinion, the trial court addressed both Gilling's motion in limine to prohibit MDOT from presenting issues of law to the jury and MDOT's motion in limine to exclude all evidence of Gilling's moving and relocation expenses. According to the trial court, the primary question before it was whether Michigan's administrative procedures for claiming moving and relocation expenses were a property owner's exclusive means of obtaining reimbursement for such costs, or whether those procedures were optional and in addition to the statutory-condemnation and common-law remedies. The trial court observed that the answer to this question required interpretation of MCL 252.143, which states: “Relocation and financial assistance allowed under this act are independent of and in addition to compensation for land, buildings or property rights and shall not be the subject of consideration in condemnation proceedings.”

The trial court noted that the parties agreed that a property owner could not claim damages in a condemnation proceeding that duplicated his or her administrative claims. And the trial court acknowledged that Michigan caselaw made clear that business-interruption damages are compensable in condemnation proceedings, separate from administrative proceedings, provided that damages could be proved with a reasonable degree of certainty. Therefore, according to the trial court, the issue boiled down to whether moving and relocation expenses could legitimately be part of business-interruption damages.

Noting a lack of Michigan precedent on point, the trial court examined caselaw from other jurisdictions. The trial court determined that the case that...