Housing Authority v. Walser Auto Sales, No. C8-01-309.

• Decision Date: 18 April 2002
• Docket Number: No. C8-01-309.
• Citation: 641 N.W.2d 885
• Parties: The HOUSING AND REDEVELOPMENT AUTHORITY in and for the CITY OF RICHFIELD, Respondent, v. WALSER AUTO SALES, INC., et al., Petitioners, Appellants, R.J. Walser, et al., Petitioners, Appellants.
• Court: Minnesota Supreme Court

641 N.W.2d 885

The HOUSING AND REDEVELOPMENT AUTHORITY in and for the CITY OF RICHFIELD, Respondent, v. WALSER AUTO SALES, INC., et al., Petitioners, Appellants, R.J. Walser, et al., Petitioners, Appellants.

No. C8-01-309.

Supreme Court of Minnesota.

April 18, 2002.

Rehearing Denied May 22, 2002.

Bradley J. Gunn, Carolyn V. Wolski, Minneapolis, for Appellants Walser Auto Sales Inc. and Motorwerks, Inc.

Bruce D. Malkerson, Malkerson, Gilliland & Martin, LLP, Fred L. Morrison, University of Minnesota Law School, Minneapolis, Christopher J. Dietzen, Larkin, Hoffman, Daly & Lindgren, Ltd., Bloomington, for Appellants R.J. Walser, Paul Walser & Andrew Walser.

John M. LeFevre, Jr., Corrine H. Thomson, Stephen J. Bubul, Kennedy & Graven, Minneapolis, for Respondent The Housing & Redevelopment Authority in & for the City of Richfield.

Susan L. Naughton, League of Minnesota Cities, St. Paul, for Amicus Curiae League of Minnesota Cities and Minnesota Chapter of the National Association of Housing and Redevelopment Officials.

James W. Schutjer, Minnesota Automobile Dealers Association, St. Paul, for Amicus Curiae Minnesota Automobile Dealers Association.

Karen A. Schaffer, Minnesota County Attorneys Association, Hastings, for Amicus

Curiae Minnesota County Attorneys Association.

Heard, considered, and decided by the court en banc.

OPINION

GILBERT, Justice.

In July, 2000, respondent Housing and Redevelopment Authority for the City of Richfield commenced a quick take condemnation pursuant to Minn.Stat. § 117.042 (2000) to acquire real property owned by appellants Walser Auto Sales, Inc., Motorwerks, Inc., R.J. Walser, Paul Walser, and Andrew Walser. Appellants objected to the condemnation petition and the district court held a trial. In January 2001, the court granted respondent's petition. This case presents the issue of whether an appeal challenging the public purpose of a quick take condemnation pursuant to Minn.Stat. § 117.042 is moot based either on reciprocal vesting at the time the property was transferred to respondent or on subsequent changes to the property after judgment was entered by the district court on the public purpose challenge to respondent's use of eminent domain. We also granted review of the court of appeals decision affirming the district court.

In 1993, respondent and the City Council of the City of Richfield (City) passed resolutions approving a Redevelopment Plan for the Richfield Redevelopment Project Area (1993 Redevelopment Plan). This plan grouped the previous redevelopment projects and additional property into one comprehensive redevelopment plan that included approximately 90 percent of Richfield, but it did not include appellants' property. In May 1999, respondent recommended that the City adopt a resolution to modify the 1993 Redevelopment Plan to include the Interchange West Area, an area bounded by Penn Avenue on the west, 76th Street on the north, Knox Avenue on the east, and 78th Street on the south. This area included appellants' property. A public hearing was held on June 14, 1999 and the City passed a resolution authorizing the Modification of the 1993 Redevelopment Plan so that it would include the Interchange West Area.

Around August 1999, Best Buy Co., Inc. (Best Buy), identified the Interchange West Area as a possible site for a new corporate headquarters. On March 28, 2000, respondent and Best Buy entered into a contract for private development of the Interchange West Area. This contract required Best Buy to make diligent efforts to negotiate the purchase of the buildings located in the Interchange West Area. Despite Best Buy's efforts to do so, Best Buy was unable to negotiate a deal to purchase appellants' property. As a result, sometime between April and July 2000, Best Buy requested that respondent acquire this property through the use of eminent domain.

On July 17, 2000, respondent passed a resolution authorizing the use of eminent domain to acquire property owned by appellants. Respondent then filed a petition in Hennepin County District Court seeking to acquire appellants' property pursuant to a "quick take" under Minn.Stat. § 117.042.¹ Appellants challenged the quick take and a trial was held. On January 19, 2001, the district court granted respondent's petition and entered judgment authorizing a quick take, subject to appellants' right to remain on the property pursuant to a lease until midnight on June 15, 2001. The court also ordered the transfer of title to respondent subject to it depositing the approved appraised value of the property with the court and filing the order with the appropriate recording agency.

On February 16, 2001, appellants filed their notice of appeal but did not move for a stay of the January 19, 2001 order or post a supersedeas bond. On March 9, 2001, appellants moved the district court for a stay to prevent respondents from transferring title to Best Buy. The court denied appellants' request for a stay, concluding that it had no jurisdiction to stay the transfer from respondent to Best Buy because the transfer from appellants to respondent had already occurred. This order also provided that in the event the court of appeals were to conclude that the district court had jurisdiction, appellants would be required to post a supersedeas bond in the amount of $15 million. The court stayed the effect of its order for 48 hours, allowing appellants time to appeal to the court of appeals. Appellants did not appeal and respondent transferred title to the property to Best Buy on March 16, 2001.

On July 3, 2001, the court of appeals affirmed the district court, concluding that appellants' appeal was not moot and that the district court did not clearly err in granting respondent's condemnation petition. Housing and Development Auth. in and for the City of Richfield v. Walser Auto Sales, Inc., 630 N.W.2d 662, 671 (Minn.App.2001)

. Specifically, the court held that the appeal was not moot because property acquired through the use of eminent domain can be ordered returned in the absence of a proper showing of public purpose. Id. However, the court of appeals concluded that the district court's findings, including that the property was taken for a public purpose, were not clearly erroneous. Id. Since this holding, construction on the property has continued to move forward. Therefore, we allowed the parties to submit a supplemental record on the mootness issue related to the events that have occurred since the district court's order. In reviewing this supplemental record, we consider only those documents containing undisputed facts and take judicial notice of the fact that the judgment was recorded to transfer title, all of appellants' buildings have been demolished, and some buildings have been constructed on portions of the property.

We must first address the mootness issue for when an event occurs pending appeal that makes a decision on the merits unnecessary or an award of effective relief impossible, the appeal should be dismissed as moot. See In re Application of Minnegasco, 565 N.W.2d 706, 710 (Minn.1997)

. An issue is not moot if a party could be afforded effectual relief. See In re Schmidt, 443 N.W.2d 824, 826 (Minn.1989). Respondent argues that the appeal in this case is moot for two reasons. First, respondent argues that appellants' public purpose challenge became moot upon the transfer of title to the property to respondent because the rights of both parties became reciprocally vested at that time. Second, respondent argues that even if the parties' rights did not reciprocally vest upon the transfer of title, the events that have occurred subsequent to the transfer of title have rendered appellants' public purpose challenge moot.

In State ex rel McFarland v. Erskine, we held:

In every form of procedure for appropriating land for the public use, there must be a point where the right of the condemner to abandon the proceeding is lost and the right of the landowner to compensation becomes vested. As a general rule the condemner cannot deprive the landowner of a vested right to compensation by abandoning the proceeding. The theory upon which [this] rule is based is that, upon final termination of the proceeding, the right of the condemner to take and hold the land and the right of the landowner to the money are correlative and coincident and vest simultaneously in the respective parties.

165 Minn. 303, 307, 206 N.W. 447, 449 (1925). We have followed this rule of reciprocal vesting in subsequent cases. See County of Hennepin v. Mikulay, 292 Minn. 200, 212-13, 194 N.W.2d 259, 266-67 (1972)

; Independent School Dist. No. 273 v. Gross, 291 Minn. 158, 167-68, 190 N.W.2d 651, 657-58 (1971); State, by Lord v. Myhra G.M.C. Truck & Equip. Co., 254 Minn. 17, 20, 93 N.W.2d 204, 206 (1958). However, the concept of reciprocal vesting only arises "upon final termination of the proceeding" when the right of the condemning authority to take and hold the land gives rise to the right of the landowner to compensation for the taking. Erskine, 165 Minn. at 307, 206 N.W. at 449. Here, there was not a final termination of the proceeding when the appeal was taken because the crux of the appeal, whether respondent ever had the right to take and hold appellants' property, had not been finally resolved.

The dispute over respondent's right to take appellants' property makes this case fundamentally different from the line of cases relied upon by respondent. Specifically, in those cases there was no issue on appeal as to the condemning authority's right to take the land at issue; rather, the reciprocal vesting doctrine was invoked to enforce an owner's right to payment when the condemning authority, without the consent of the landowner, sought to abandon, dismiss, or discontinue the condemnation proceedings. See City of Maplewood v. Kavanagh, 333 N.W.2d 857 (Minn.1983)

; Mikulay, 292 Minn. 200,

194 N.W.2d 259; Gross, 291 Minn. 158,

190 N.W.2d 651; Myhra, 254...