Escanaba & Lake Superior R. Co. v. Keweenaw Land Ass'n, Ltd.

Decision Date24 March 1987
Docket NumberDocket No. 89848
Citation402 N.W.2d 505,156 Mich.App. 804
PartiesESCANABA & LAKE SUPERIOR RAILROAD COMPANY, Plaintiff-Appellant, v. KEWEENAW LAND ASSOCIATION, LTD. and M.A. Hanna Company, formerly known as the Hanna Mining Company, Defendants-Appellees.
CourtCourt of Appeal of Michigan — District of US

Mason, Steinhardt & Jacobs, P.C. by Walter B. Mason, Jr., Frederick D. Steinhardt, Paul Owen Ashba, Southfield, for Escanaba & Lake Superior R. Co.

Monaghan, Campbell, LoPrete, McDonald & Sogge by Boris K. Yakima, Clancey, Hansen, Chilman, Graybill & Greenlee, P.C. by Ronald E. Greenlee III, Bloomfield Hills, for M.A. Hanna Min. Co.

Jacobs, McDonald & Silc, P.C. by David E. McDonald, Sr., Ironwood, for Keweenaw Land Ass'n, Ltd.

Before ALLEN, P.J., and CYNAR and LIVO, * JJ.

ALLEN, Presiding Judge.

Is a property owner, whose land is unsuccessfully sought to be condemned by a third party under the Uniform Condemnation Procedures Act, 1 entitled to reimbursement of attorney fees and expenses pursuant to Sec. 16 of that act, M.C.L. Sec. 213.66; M.S.A. Sec. 8.265(16), where the condemnation action was dismissed because of the legal insufficiency of the proceedings but the court had not expressly found "the proposed acquisition improper?" If the answer to this question is "yes," are attorney fees and expenses of in-house legal counsel recoverable? The questions raised are of first impression.

Plaintiff, Escanaba & Lake Superior Railroad Company, is located in Delta and Dickinson counties in the upper peninsula of Michigan. It is a private agency with the power to condemn. In early 1983, plaintiff determined that it was necessary for its operations to acquire certain lands owned by defendants Keweenaw Land Association, Ltd., and M.A. Hanna Company, formerly known as The Hanna Mining Company. Specifically, plaintiff wished to condemn land containing certain amounts of rock owned by Keweenaw and acquire interests in equipment and vehicles owned by Hanna in order to crush the rock to provide ballast to place on its railroad beds in Michigan and Wisconsin. The land sought to be condemned was located at the Groveland Mine in Felch Township, Dickinson County. Plaintiff made an offer to Hanna and Keweenaw to purchase the property for $80,000, but Hanna and Keweenaw refused to sell. Therefore, plaintiff filed a complaint under Sec. 5 of the Uniform Condemnation Procedures Act (UCPA), M.C.L. Sec. 213.55; M.S.A. Sec. 8.265(5), which provides that an agency wishing to condemn property whose offer to purchase has been refused may file a complaint in the circuit court in the county in which the property is located, asking the court to determine the compensation to be paid to the owners for acquisition of the property. On June 24, 1983, and June 27, 1983, Hanna and Keweenaw filed motions for review of necessity pursuant to M.C.L. Sec. 213.56; M.S.A. Sec. 8.265(6). Hanna and Keweenaw also filed motions for summary judgment on the ground that plaintiff's complaint did not comply with all the requirements of M.C.L. Sec. 213.55; M.S.A. Sec. 8.265(5). On July 11, 1983, Judge John D. Payant denied defendants' motions for summary judgment.

On July 24, 1983, the hearing was held on defendants' motions for review of necessity, and defendants filed new motions for summary judgment. On August 8, 1983, Hanna and Keweenaw's motions for summary On August 25, 1983, plaintiff moved for a rehearing on the grant of defendants' motions for summary judgment. When defendants filed an answer in opposition to the motion, plaintiff moved to disqualify Judge Payant pursuant to GCR 1963, 912, now MCR 2.003, on grounds that Judge Payant possibly had a conflict of interest because of his stock holdings in Felch Quarry Corporation, which was located close to the property which plaintiff sought to condemn. Defendants answered in opposition to the motion and on October 17, 1983, Judge Payant denied the motion to disqualify himself, but stated that he would allow plaintiff to request referral of the motion to the state court administrator pursuant to GCR 1963, 912.3(c)(2), now MCR 2.003(C)(3)(b).

judgment were granted on the ground that plaintiff did not make a good-faith offer to purchase the property from Hanna and Keweenaw as required by M.C.L. Sec. 213.55; M.S.A. Sec. 8.265(5). The court retained jurisdiction to oversee any attempt by plaintiff to correct the error.

On November 14, 1983, plaintiff formally requested Judge Payant to refer the motion for disqualification to the state court administrator to be assigned to another judge pursuant to GCR 1963, 912.3(c)(2), for that judge to decide the motion de novo. The state court administrator assigned the motion to Judge Craig Rolfs, whereupon plaintiff promptly filed a motion to disqualify Judge Rolfs on the grounds that Judge Rolfs was a personal friend of Judge Payant. On February 2, 1984, Judge Rolfs by opinion and order declined to disqualify himself. One June 29, 1984, Judge Rolfs formally denied the motion to disqualify Judge Payant.

On September 8, 1984, defendants filed a joint motion for reimbursement of costs and attorney fees that they expended in the condemnation action, requesting reimbursement of $80,108.18. This motion was brought pursuant to M.C.L. Sec. 213.66(2); M.S.A. Sec. 8.265(16)(2), which reads:

"If the property owner, by motion to review necessity or otherwise, successfully challenges the agency's right to acquire the property, or the legal sufficiency of the proceedings, and the court finds the proposed acquisition improper, the court shall order the agency to reimburse the owner for actual reasonable attorney fees and other expenses incurred in defending against the improper acquisition." (Emphasis supplied.)

Hearing on the motion was held October 8, 1985, at which counsel for the railroad argued: (1) that the trial court had not found "the proposed acquisition improper" as required by the statute, but had only found the legal proceedings inadequate because the railroad had not made a good-faith offer; (2) that legal fees incurred by plaintiff in connection with the motions to disqualify Judges Payant and Rolfs were not reimbursable; and (3) that salaries and fringes of in-house legal counsel and staff were not reimbursable since they were costs which defendants would have incurred even if plaintiff had not sought to condemn the property.

Counsel for defendants argued: (1) that when the trial court found the proceedings inadequate for lack of a good-faith offer, the court necessarily found "the proposed acquisition improper"; (2) that the attempts to disqualify Judges Payant and Rolfs were necessarily part of the attempt to condemn; and (3) that all the expenses incurred by defendants were reimbursable, it being the intention of the Legislature to put the property owners in as good a condition as they would have been had the condemnation proceeding not been brought.

On December 12, 1985, Judge Payant issued an opinion and order awarding the full amount of reimbursement requested by Hanna and Keweenaw. The court found that all the amounts contained in defendants' motion were reasonable and were attributable to all the proceedings which took place in the condemnation action. The court further found that expenses incurred in defense of the motions to disqualify Judges Payant and Rolfs were properly reimbursable. By order entered December 12, 1985, the court awarded I. Did the trial court err in holding that defendants are entitled to reimbursement of attorney fees and expenses under MCL 213.66(2); MSA 8.265(16)(2) where the condemnation action brought under the Uniform Condemnation Procedures Act was dismissed because of the legal insufficiency of the proceedings but the court had not expressly stated when dismissing the complaint that the proposed acquisition was improper?

Hanna the sum of $75,055.72 and Keweenaw $14,693.65. From that order plaintiff appeals as of right, raising six issues.

Attorney fees may not be awarded in a condemnation action unless specifically authorized by statute or court rule. Canton Twp. v. Kaufman, 87 Mich.App. 719, 720, 276 N.W.2d 505 (1979), lv. den. 408 Mich. 858 (1980). The issue in the instant case is not the reasonableness of the attorney fees and costs charged. The parties have stipulated to their reasonableness. The question is whether the fees and costs so stipulated are reimbursable at all where the court, in dismissing plaintiff's complaint for failure to make a good-faith offer to purchase as required by the statute, did not expressly find "the proposed acquisition improper." We begin our analysis by looking to the meaning of the word "improper," as that term is used in M.C.L. Sec. 213.66(2); M.S.A. Sec. 8.265(16)(2), set forth supra.

Webster's Third New World International Dictionary (1964) defines the word "improper" as:

"... not proper; as a: not accordant with fact, truth, or right procedure ... b: not regularly or normally formed or not properly so called ... c: not suited to the circumstances, design or end ... d: not in accord with propriety, modesty, good taste, or good manners...." (Emphasis supplied.)

Plaintiff contends that the statute set forth a two-pronged test which the owner of the land must meet in order to be eligible for reimbursement: (1) the owner must successfully challenge the condemnor's right to acquire property or the legal sufficiency of the proceedings, and (2) the court must find the proposed acquisition improper. According to plaintiff, the trial court failed to meet the second prong. We agree that the statute sets forth a two-pronged requirement, but we strongly disagree that the trial court failed to meet the second prong. Clearly, when the trial court found that plaintiff had not made a good-faith offer to purchase as required by the statute, the court found the proceedings procedurally insufficient. This met the...

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