Housing and Redevelopment Authority of the City of Saint Paul v. ExxonMobil Oil Corporation, No. A05-511 (MN 4/18/2006)

• Decision Date: 18 April 2006
• Docket Number: No. A05-511.,A05-511.
• Parties: Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, petitioner, Respondent, v. ExxonMobil Oil Corporation, et al., Appellants, City of Saint Paul, et al., Respondents Below.
• Court: Minnesota Supreme Court

Page 1

Unpublished Opinion

Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, petitioner, Respondent, v. ExxonMobil Oil Corporation, et al., Appellants City of Saint Paul, et al., Respondents Below.

No. A05-511.

Court of Appeals of Minnesota.

Filed April 18, 2006.

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).

Appeal from the District Court, Ramsey County, File No. C6-04-1291.

Lisa M. Agrimonti, Gregory M. Bistram, Briggs and Morgan, P.A., and Forrest D. Nowlin, Jr., Lindquist & Vennum, P.L.L.P., and Peter J. McCall, Assistant City Attorney, City of St. Paul, Civil Division, (for respondent Housing and Redevelopment Authority of the City of St. Paul).

Eric J. Magnuson, Diane B. Bratvold, Rider Bennett, L.L.P., and Daniel N. Rosen, Parker & Rosen, L.L.C., (for appellants ExxonMobil Oil Corporation and Mobil Pipe Line Company).

Considered and decided by Klaphake, Presiding Judge; Peterson, Judge; and Crippen, Judge.^*

UNPUBLISHED OPINION

PETERSON, Judge.

In this condemnation dispute, appellant-land owner ExxonMobil Oil Corporation argues that (a) the record does not support the finding of a public purpose for a taking by respondent Housing and Redevelopment Authority of St. Paul (HRA) when contaminated land is to be taken for residential use and it is uncertain whether the contamination can be successfully remediated; and (b) there is no public purpose for removing restrictive covenants that prohibit using the land for residential purposes. We affirm.

FACTS

HRA seeks to use a 37-acre parcel of land owned by Exxon as part of a residential development project. For more than 40 years, ending in 1995, Exxon and its predecessors used the property for storing and distributing petrochemicals. After HRA considered developing the land, Exxon put restrictive covenants on the land, precluding its use for residential purposes. When Exxon refused to voluntarily convey the parcel to HRA, HRA sued to condemn it. After a hearing, the district court issued an interim order suspending the condemnation because HRA had not adequately investigated the extent of the contamination on the land and how to sufficiently remediate the contamination to safely use the land for residential purposes.¹ HRA performed additional testing and, after a second hearing, the district court ruled that HRA had adequately addressed the concerns noted in the interim order. The district court then found that a public purpose existed for the portion of HRA's project involving Exxon's land and granted the condemnation petition. Exxon appeals.

DECISION

Generally,

[b]efore condemning private land, a condemning authority . . . must determine that there is a public use for the land and that the taking is reasonably necessary or convenient for the furtherance of that public use. Although we have said that questions of public use and necessity are "judicial questions," the scope of judicial review of the condemning authority's determination of these questions is actually narrower than that characterization might imply. This is because the determinations of the condemning authority are regarded as legislative decisions which will be overturned only when they are "manifestly arbitrary or unreasonable." Thus, there are two levels of deference paid to condemnation decisions: the district court gives deference to the legislative determination of public purpose and necessity of the condemning authority and the appellate courts give deference to the findings of the district court, using the clearly erroneous standard.

Lundell v. Coop. Power Ass'n., 707 N.W.2d 376, 380 (Minn. Jan. 5, 2006) (citations and footnote omitted). The terms "public use" and "public purpose" are treated as interchangeable. Lundell, 707 N.W.2d at 381 n.2; City of Duluth v. Minnesota, 390 N.W.2d 757, 763 (Minn. 1986). Thus, the burden of showing a public purpose is on the condemning authority, and this court must determine whether the district court clearly erred in finding that the condemning authority's finding of a public purpose is not manifestly arbitrary or unreasonable. When determining whether a finding of fact is clearly erroneous, an appellate court (a) "takes the view of the evidence which is most favorable to the trial court's findings" (Trondson v. Janikula, 458 N.W.2d 679, 682 (Minn. 1990)); (b) defers to district court credibility determinations (Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988)); and (c) will not rule the finding "clearly erroneous" unless the appellate court is "`left with the definite and firm conviction that a mistake [was] made.'" Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quoting Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn. 1987)).

I.

Exxon argues that Minnesota lacks published authority addressing whether "public purpose" includes converting environmentally contaminated properties into housing sites and that City of Duluth could be read to weigh against allowing such a determination because, in that case, the supreme court affirmed a condemnation of contaminated mixed-use property for a project that was intended to relocate residents and to limit the use of the property to use by heavy industry. We reject this reading of City of Duluth for two reasons. First, contrary to the district court's findings here, Exxon assumes that HRA's remediation will not be sufficient to allow Exxon's land to be used for residential purposes. Second, City of Duluth is distinguishable. There, the land involved a toxic-waste dump, and the object of the development was to economically rehabilitate the area by encouraging the construction of a paper mill, which was a use of the land that apparently did not involve remediating the existing contamination. City of Duluth, 390 N.W.2d at 760-62. Here, the land is contaminated, a remediation plan is in place, and the district court found that the plan adequately addressed the health-related concerns raised in the interim order.

The core of Exxon's appeal is that the finding of a public purpose is clearly erroneous because the finding is based on the district court's underlying determination that sufficient remediation can be achieved to allow using the land for residential purposes, and the remediation determination is not supported by the record. Exxon argues that HRA needed to show at least a "reasonable likelihood" that remediation sufficient to allow residential use of the property would be successful.² There are four problems with this "reasonable likelihood" argument.³

First, citing Minn. Canal & Power Co. v. Fall Lake Boom Co., 127 Minn. 23, 32, 148 N.W. 561, 564 (1914), and Minn. Canal & Power Co. v. Pratt, 101 Minn. 197, 226, 112 N.W. 395, 403 (1907), Exxon asserts that (a) "judicial review of a condemnation petition includes a determination of whether the public purpose is reasonably attainable"; and (b) a condemnation petition is "properly denied" when the condemning authority is unable to establish a "reasonable likelihood" that the condemning authority will achieve a public purpose.

When a city condemning land for economic-rehabilitation purposes had an ordinance that required entities doing business with the city to have an affirmative-action policy, and when the entity contemplated as the eventual owner-occupant of certain condemned land did not have an affirmative-action policy, it was argued that the condemnation was illegal under the Minnesota Canal cases. This court rejected the argument, stating:

[T]he Minnesota Canal trilogy[⁴] stands for the proposition that a condemning authority cannot undertake a public project if the project itself is not permitted by law. The public purposes for the present condemnation (obtaining a mid-priced retail store, increased public parking and employment, etc.) and the means of accomplishment (through tax increment financing for [the contemplated owner-occupant]) are all legal. In the Minnesota Canal cases, however, the diversion of lakes and rivers, no matter how attempted, was not permitted by law.

In re Condemnation by Minneapolis Cmty. Dev. Agency (MCDA), 582 N.W.2d 596, 600 (Minn. App. 1998), review denied (Minn. Oct. 29, 1998). Thus, to the extent Exxon relies on the Minnesota Canal cases to argue that the district court must predict whether remediation will be successful, rather than determine whether the proposed project is authorized, Exxon reads the Minnesota Canal cases more broadly than they were read by this court in MCDA and its progeny. See Itasca County v. Carpenter, 602 N.W.2d 887, 890-91 (Minn. App. 1999) (discussing Fall Lake and MCDA in the context of "legal impossibility").

Second, in a recent Connecticut case that did not involve remediation of contaminated property, the United States Supreme Court stated:

petitioners maintain that for takings of this kind [a taking of residential property for economic development purposes] we should require a "reasonable certainty" that the expected public benefits will actually accrue. Such a rule, however, would represent an even greater departure from our precedent. "When the legislature's purpose is legitimate and its means are not irrational, our cases make clear that empirical debates over the wisdom of takings—no less than debates over the wisdom of other kinds of socioeconomic legislation—are not to be carried out in the federal courts." [Hawaii Housing Auth. v. Midkiff, 467 U.S. 229, 242, 104 S. Ct. 2321, 2329 (1984)]. Indeed, earlier this Term we explained why similar practical concerns (among others) undermined the use of the "substantially advances" formula in our regulatory takings doctrine. See Lingle v.Chevron U.S.A. Inc., 544 U. S. ___, ___ 125 S.Ct. 2074, 2085, 161 L.Ed.2d 876 (noting that this formula "would empower—and might often require—courts to substitute their predictive judgments for those of elected legislatures and expert agencies"). The disadvantages of a...