Frick v. City of Salina

• Decision Date: 05 June 2009
• Docket Number: No. 99,791.,99,791.
• Citation: 208 P.3d 739
• Parties: Ben J. and Lavelle FRICK, et al., Appellants, v. CITY OF SALINA, Kansas, a Municipal Corporation, Appellee.
• Court: Kansas Supreme Court

208 P.3d 739

Ben J. and Lavelle FRICK, et al., Appellants, v. CITY OF SALINA, Kansas, a Municipal Corporation, Appellee.

No. 99,791.

Supreme Court of Kansas.

June 5, 2009.

Joseph R. Borich, III, of Leawood, argued the cause, and Douglas J. Patterson, of Leawood, was with him on the briefs for appellants.

Jason B. Prier, of Foth & Orrick, L.L.P., of Overland Park, argued the cause, and Timothy P. Orrick and Anthony J. Orrick, of the same firm, were with him on the brief for appellee.

The opinion of the court was delivered by LUCKERT, J.:

This appeal requires us to determine the standard of review to be applied by a district court when considering an appeal from a determination of relocation benefits under the Kansas Relocation Assistance for Persons Displaced by Acquisition of Real Property Act, K.S.A. 58-3501 et seq. (Kansas Act). The district court rejected the displaced property owners' argument that K.S.A. 58-3509(a), which provides an "appeal to district court shall be a trial de novo," entitled them to a new trial and determined the separation of powers doctrine required a limited scope of review that considered if the hearing examiner's determination of benefits was supported by substantial competent evidence.

We conclude the district court erred in applying the narrow scope of review that is applicable if an agency makes a purely administrative decision. Here, the hearing examiner performed a judicial function which a court can review de novo. Nevertheless, in prior cases addressing similar statutory provisions which have allowed a trial de novo on appeal from an administrative decision, this court has held that the district court should make independent findings of fact and conclusions of law based on the record before the administrative agency. Applying this precedent, we reverse the district court's decision and remand for application of this standard of review.

Facts and Procedural Background

The City of Salina undertook a public improvement project, generally referred to as the North Ohio Street Improvement Project (the Project), which involved the reconstruction of North Ohio Street, the construction of a bridge over the Union Pacific railway lines, and the redesign and reconstruction of appurtenant side roads. This Project required the City to acquire real property of Ben and Lavelle Frick, on which the Fricks operated a large retail complex that housed numerous businesses. After unsuccessful negotiations for the purchase of the property, the City acquired the property through the power of eminent domain. Court-appointed appraisers awarded the Fricks just compensation for the property, after which the Fricks appealed. The appeal was later dismissed by mutual agreement of the parties.

Meanwhile, the City advised the Fricks of general eligibility requirements and procedures for obtaining relocation benefits for their displaced businesses. The City and the Kansas Department of Transportation (KDOT) had entered into an agreement which governed the Project and provided, in part, that the City and KDOT would share the costs, duties, and responsibilities associated with all aspects of the Project. The City agreed that "it will, in its own name, acquire by purchase, dedication or condemnation, the rights of way, easements and access rights" necessary to complete the Project. Although no federal funding was allocated to the Project, the City and KDOT mutually agreed that the Kansas Secretary of Transportation would provide relocation assistance for eligible persons as defined in the federal Uniform Relocation Assistance Act Amendments of 1987 (Federal Act), 42 U.S.C. § 4601 et seq. (2006), and in accordance with our state counterpart, the Kansas Act, K.S.A. 58-3501 et seq.

The Federal Act and its implementing federal regulations, which are designed to minimize the adverse impact of displacement, apply only in situations where the displacement is a direct result of programs or projects undertaken by a federal agency or with federal financial assistance. 42 U.S.C. § 4621(a)(1) (2006). The Kansas Act was established in order to comply with the Federal Act. K.S.A. 58-3502 provides in part:

"Whenever any program or project is undertaken by the state of Kansas, any agency or political subdivision thereof, under which federal financial assistance will be available ... and which program or project will result in the displacement of any person by acquisition of real property ... the state, agency, or political subdivision may:

"(1) Provide fair and reasonable relocation payments and assistance to or for displaced persons....

....

"(4) pay or reimburse property owners for necessary expenses as specified in ... the federal act."

Attempting to meet these requirements in this case, the parties participated in extensive negotiations regarding relocation benefits. A team of relocation specialists examined the Fricks' relocation process on behalf of the City to determine any benefits to which the Fricks were entitled. The Fricks' requests for relocation benefits were eventually divided into two main categories — Category I consisted largely of move-out expenses and Category II consisted largely of reestablishment and reconnection expenses.

After working with the Fricks to obtain information on the relocation costs for their various businesses, the City paid the Fricks for the relocation of the personal property from the site, i.e., the Category I move-out expenses. The Fricks, dissatisfied with the amount of the payment, appealed and requested an administrative hearing. As required by K.S.A. 58-3509, the City selected an independent hearing examiner to conduct a review of the City's determination of eligible relocation benefits. After the hearing was conducted, the City paid the Category II benefits, the Fricks timely appealed that award, and a second hearing was conducted. Following each hearing, the administrative hearing examiner issued separate decisions that in large part upheld the awards made by the City.

The Fricks appealed both administrative decisions to the district court, and the cases were consolidated. From the start, the parties disagreed about the standard of review to be applied by the district court. The Fricks contended that because the plain language of K.S.A. 58-3509 states that an appeal to the district court "shall be a trial de novo" on the issue of relocation benefits, they were entitled to a trial anew on the merits of the issue. The City argued that the Kansas Act for Judicial Review and the Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq., controls and, therefore, the district court's review had to be limited to the administrative record.

The district court issued an order on September 6, 2006, finding that "under either statutory authority the scope of review remains essentially the same; i.e., the court should review the record before the hearing [examiner] to determine if the decision is lawful, supported by the evidence, and reasonable, [not] arbitrary and capricious." The court ruled, however, that the Fricks would be permitted to present additional evidence relevant to the issue of "fair and reasonable relocation payments and assistance" as provided by K.S.A. 58-3502(1). The district court further determined that the KJRA does not apply to this case because the condemning agency and appointing authority is the City of Salina, and cities, by definition, as a political subdivision of the state, are not included in the coverage of the KRJA. Nevertheless, relying on Kansas case precedent, the district court held that because the Fricks sought review of an administrative action, the court's scope of review was limited in light of Rydd v. State Board of Health, 202 Kan. 721, Syl. ¶ 4, 451 P.2d 239 (1969). In Rydd, this court held that the separation of powers doctrine prohibits the legislature from imposing upon the judiciary "the function of a trial de novo of actions of an administrative agency in the sense of authorizing the court to substitute its judgment for that of the administrative agency in matters other than law or essentially judicial matters." 202 Kan. at 729, 451 P.2d 239. The district court, therefore, interpreted the term "trial de novo" in K.S.A. 58-3509 to mean a limited review of the administrative record.

Before trial, the Fricks filed their witness and exhibit lists which identified 24 witnesses and numerous exhibits. They also served 37 interrogatories and a broad request for the production of 27 documents. The City responded by filing a motion asking the district court to clarify its September 6, 2006, order. After conducting a hearing at which the parties argued their positions regarding the scope of review and the scope of discovery, the district court granted the City's motion to clarify and modified its previous order.

The district judge acknowledged that in the September 2006 order, "I was trying to have it both ways, make everybody happy, and very often you can't do that.... It was not strictly administrative review, because the Court did allow for such other evidence as might be necessary to hear.... I think I was wrong on that." On June 19, 2007, the court entered its modified order which prohibited the Fricks from supplementing the agency record with "additional evidence relevant to the issue of fair and reasonable relocation benefits and assistance as provided by K.S.A. 58-3502(1)."

Subsequently, the district court reviewed the transcripts and exhibits of the administrative hearings and concluded that the hearing examiner's findings and conclusions in both written decisions were supported by substantial evidence and the law, including the federal regulations applicable to relocation benefits for displaced businesses. Consequently, the district court affirmed both decisions of the hearing examiner, denied additional relocation benefits to the Fricks, and incorporated by reference the examiner's decisions into the...