GFTLenexa, LLC v. City of Lenexa

• Decision Date: 06 December 2019
• Docket Number: No. 119,278,119,278
• Citation: 453 P.3d 304
• Parties: GFTLENEXA, LLC, Appellant, v. CITY OF LENEXA, Appellee.
• Court: Kansas Supreme Court

453 P.3d 304

GFTLENEXA, LLC, Appellant,

v.CITY OF LENEXA, Appellee.

No. 119,278

Supreme Court of Kansas.

Opinion filed December 6, 2019.

Lumen N. Mulligan, of DRZ Law, LLC, of Leawood, argued the cause, and Daniel R. Zmijewski and Christopher Dove, of the same firm, were with him on the brief for appellant.

Timothy P. Orrick, of Orrick & Erskine, LLP, of Overland Park, argued the cause and was on the brief for appellee.

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

GFTLenexa, LLC, appeals directly to this court from a district court judgment denying it relief in an action based on contractual relationships but styled as an inverse condemnation proceeding. GFTLenexa alleges that a condemnation through an eminent domain action eventually resulted in GFTLenexa losing a constitutionally protected property interest without fair compensation. We find the district court's reasoning persuasive and affirm its judgment. We also clarify procedural rules for taking appeals in inverse condemnation actions.

FACTS

The facts giving rise to this appeal are complicated but do not require a lengthy recitation. Oak Park Commons, L.P., (which is not a party to the litigation) owns commercial property in Lenexa, Kansas. In 2007, Oak Park Commons entered into a ground lease agreement with Centres Midwest BFS, LLC (which is also not a party to this litigation). Under the agreement, Oak Park agreed to lease the property to Centres Midwest for a 20-year term.

In 2008, Centres Midwest entered into a sublease agreement with Bridgestone Retail Operations, LLC (also not a party to this litigation). The sublease authorized Bridgestone to build and operate an 8,000 square foot tire sales center on the property. On January 20, 2010, Centres Midwest assigned its rights and obligations under the lease and sublease agreements to plaintiff GFTLenexa, with the consequence that GFTLenexa became Bridgestone's landlord. The assignment was filed with the Johnson County Register of Deeds on January 28, 2010.

On October 31, 2013, the City of Lenexa filed a condemnation action naming Oak Park, Firestone Auto Care (a part of Bridgestone Retail Operations, LLC), and numerous other parties as defendants, but neglecting to include GFTLenexa as a defendant. The City sought partial condemnation authority to make improvements to 95th Street Parkway. The City sought rights for a permanent public utility easement and a temporary construction easement adjacent to Oak Park's property. On November 21, 2013, Centres Midwest sent GFTLenexa by certified mail a notice of the condemnation action.

The district court granted the City's request on November 27, 2013. An appraisal was performed, and, in accordance with the appraisal report, on April 1, 2014, the district court ordered the City to pay Oak Park Commons $285,925 in just compensation for the City's exercise of eminent domain power. Neither GFTLenexa nor Bridgestone sought to intervene to assert an interest in the award, and neither was awarded any compensation.

On May 12, 2014, Bridgestone filed a declaratory judgment action against GFTLenexa, claiming it was entitled to a reduced rent because the property had been partially condemned. The district court granted GFTLenexa summary judgment under the theory that GFTLenexa did not receive any proceeds from the condemnation. The Court of Appeals reversed, holding that the plain language of the sublease agreement (which GFTLenexa had assumed in the transfer of rights) required GFTLenexa to proportionally reduce the tenant's rent. Bridgestone Retail Operations, LLC v. GFTLenexa , No. 114,113, 2016 WL 758730 (Kan. App. 2016) (unpublished opinion). GFTLenexa did not seek review by this court of that decision. On remand, the district court ordered GFTLenexa to reduce Bridgestone's monthly rent by 14.89% for the duration of the lease and to refund $86,126.60 to Bridgestone for past overpayment of rent.

On February 17, 2017, GFTLenexa filed suit against the City, asserting an inverse condemnation action for damage to its intangible property rights resulting from the City's condemnation action. The action was predicated on its reduced rental income from Bridgestone because of the contract action that it lost in Bridgestone Retail Operations .

The district court denied summary judgment to GFTLenexa and granted summary judgment to the defendant, City of Lenexa. GFTLenexa took a timely appeal to this court.

ANALYSIS

Supreme Court Jurisdiction

GFTLenexa took this appeal directly to the Kansas Supreme Court under the theory, as stated in its notice of appeal and docketing statement, that this is an appeal in an eminent domain proceeding. We initially consider whether the Supreme Court is the proper tribunal to which an appeal such as this one should be brought.

The appellate courts have, in the past, taken inconsistent approaches to appeals from final judgments in inverse condemnation actions. In some instances, the appeals were taken directly to the Court of Appeals, which issued opinions finally disposing of the matters. See, e.g., Isely v. City of Wichita , 38 Kan. App. 2d 1022, 174 P.3d 919, rev. denied 286 Kan. 1178 (2008); Lewis v. Globe Constr. Co. , 6 Kan. App. 2d 478, 630 P.2d 179 (1981). In some instances, the appeals were taken to the Court of Appeals, but the Supreme Court implicitly elected to assume jurisdiction by transferring the cases. See, e.g., Frick v. City of Salina , 290 Kan. 869, 877, 235 P.3d 1211 (2010) (appeal transferred from Court of Appeals on appellants' motion to transfer under K.S.A. 20-3017 ); Garrett v. City of Topeka , 259 Kan. 896, 898, 916 P.2d 21 (1996) (appeal transferred from Court of Appeals on court's own motion under K.S.A. 20-3018 [c] ).

In other instances, the Supreme Court has accepted direct appeals in inverse condemnation actions. See, e.g., Kau Kau Take Home No. 1 v. City of Wichita , 281 Kan. 1185, 1188, 135 P.3d 1221 (2006), cert. denied 549 U.S. 1265, 127 S.Ct. 1495, 167 L.Ed.2d 229 (2007) (citing K.S.A. 26-504 as authority for this court's original jurisdiction over inverse condemnation action); Korytkowski v. City of Ottawa , 283 Kan. 122, 152 P.3d 53 (2007) (accepting without discussion jurisdiction over appeal docketed in Supreme Court from judgment in inverse condemnation action).

The status quo, in which appellants take their appeals to whichever court they choose, casts a cloud of uncertainty over inverse condemnation appeals. We now seek to clarify the procedures for seeking appellate review in those actions.

Under the Kansas Constitution, the Supreme Court has "such appellate jurisdiction as may be provided by law." Kansas Constitution, Article 3, § 3. Appellate courts exercise unlimited review over jurisdictional issues and have a duty to question jurisdiction on their own initiative. Wiechman v. Huddleston , 304 Kan. 80, 84, 370 P.3d 1194 (2016).

Ordinarily, eminent domain proceedings are initiated by a governmental condemning authority for the purpose of acquiring an interest in private real property. Such actions are governed by statute, K.S.A. 26-501 et seq. Inverse condemnation proceedings, on the other hand, are usually initiated by holders of private property interests. Such actions assert that governmental action has effectively reduced or evaporated private property interests without formally instituting eminent domain procedures. These actions are grounded in the Fifth Amendment Takings Clause and are not creatures of statute.

K.S.A. 2018 Supp. 26-504 governs appeals in eminent domain cases. It allows for appeals directly to the Supreme Court in actions initiated by the condemning authority:

"If the judge to whom the proceeding has been assigned finds from the petition:

(1) The plaintiff has the power of eminent domain; and (2) the taking is necessary to the lawful corporate purposes of the plaintiff, ... the judge shall enter an order appointing three disinterested residents of the county in which the petition is filed, ... to determine the damages and compensation to the interested parties resulting from the taking.... The granting of an order determining that the plaintiff has the power of eminent domain and that the taking is necessary to the lawful corporate purposes of the plaintiff shall not be considered a final order for the purpose of appeal to the supreme court, but an order denying the petition shall be considered such a final order.

"Appeals to the supreme court may be taken from any final order under the provisions of this act. Such appeals shall be prosecuted in like manner as other appeals and shall take precedence over other cases, except cases of a like character and other cases in which preference is granted by statute."

Appeals directly to the Supreme Court are thus authorized when the plaintiff has the power of eminent domain. No such statutory provision exists for direct appeals from nonstatutory causes of action seeking compensation from the government.

K.S.A. 60-2101(a) provides that the Court of Appeals has "jurisdiction to hear appeals from district courts, except in those cases reviewable by law in the district court and in those cases where a direct appeal to the supreme court is required by law." We therefore conclude that the Court of Appeals properly exercises jurisdiction over appeals from district court orders finally disposing of inverse condemnation claims, whether those appeals are brought by the plaintiff possessing a property interest or by a defendant government entity.

Applying this rule to the present case, we decide that GFTLenexa improperly docketed this appeal with the Supreme Court. This is not, however, grounds for dismissing the appeal. See K.S.A. 20-3018(a) ("No case docketed either in the supreme court or the court of appeals shall be dismissed solely for the reason of having been filed in the wrong court....").

We could, of course, now transfer the appeal to the Court of Appeals under K.S.A. 20-3018(a) ("Any case within the jurisdiction of the court of appeals which...