Moorhead Econ. Dev. Auth. v. W. Anda

Decision Date12 November 2010
Docket NumberNo. A07-1918,A07-1930.,A07-1918
Citation789 N.W.2d 860
PartiesMOORHEAD ECONOMIC DEVELOPMENT AUTHORITY, Respondent, v. Roger W. ANDA, et al., Appellants, Kjos Investments, Respondent Below.
CourtMinnesota Supreme Court






Syllabus by the Court

In a quick-take eminent domain proceeding, the date of valuation is the date when title and possession of the condemned property are transferred from the owner to the condemning authority.

When the government condemns property that is contaminated at the time of the taking, the property should be valued “as remediated” rather than as contaminated or as clean.

In eminent domain proceedings, estimations of or the actual cost of remediation are not admissible, and condemnation awards should not be reduced dollar-for-dollar by the cost of remediation. Evidence of contamination of the property being taken can be admitted and considered only to the extent necessary to determine the value of the property “as remediated”-namely, if there is any loss of value to the property due to the stigma of the contamination.

When valuing condemned property, the fact finder should take into account conditions that exist at the time of the taking even if those conditions are discovered subsequent to the taking. In the context of environmental contamination conditions, the condition can be taken into account only to determine any impact stigma may have on the value of the property.

Because nuisance and negligence are distinct theories, appellant's challenge to the negligence basis of liability was inadequate to challenge the nuisance basis of liability.

Under the specific circumstances of this case, appellant did not waive review of the district court's findings and conclusions on liability by failing to challenge the nuisance basis of liability in his principal brief to the court of appeals.

The district court did not err when it denied appellant's motion for judgment as a matter of law because the evidence was not practically conclusive against the jury's finding that appellant's negligence caused the contamination of property condemned by respondents, nor was the jury's finding contrary to law.

An “unreasonable failure to avoid an injury or to mitigate damages” is one type of fault described and required to be considered under the Comparative Fault Act, Minn.Stat. § 604.01, subd. 1a (2008).

The district court erred when it refused to submit a comparative fault instruction and question to the jury because evidence at trial tended to demonstrate that respondent may have been at fault by “unreasonabl[y] fail[ing] to avoid an injury or to mitigate damages.” See Minn.Stat. § 604.01, subd. 1a.

The district court's error in failing to submit a comparative fault instruction and question to the jury warrants a new trial on the issue of damages because the failure to properly instruct the jury destroyed the substantial correctness of the jury's charge as a whole.

Because the district court's conduct did not “render a fair and impartial determination by the jury improbable,” the court's conduct does not require a new trial.

John T. Shockley, Ohnstad Twichell, P.C., West Fargo, ND, for respondent.

Roger J. Minch, Serkland Law Firm, Fargo, ND, for appellant.

Susan L. Naughton, League of Minnesota Cities, St. Paul, MN, for amicus curiae, League of Minnesota Cities.

Bradley J. Gunn, Howard A. Roston, Malkerson Gilliland Martin LLP, Minneapolis, MN, for amici curiae, Howard A. Roston and Bradley J. Gunn.



In March 2001 the Moorhead Economic Development Authority (MEDA) exercised its condemnation power to take Roger W. Anda's commercial property as part of a redevelopment project. The project area included Anda's property and more than 20 other nearby properties. After taking title to and possession of Anda's property through a quick-take procedure, MEDA and the property's developer, Moorhead Holiday Associates (MHA), discovered fuel-oil contaminated soil on Anda's property and two adjoining properties. Under contractual time pressure to deliver Anda's property and the adjoining properties to a franchise developer, MHA acted quickly to remediate the contaminated properties. The remediation process for the three properties took approximately one week to complete and cost $1,599,568.

Court-appointed commissioners subsequently awarded Anda $488,750 as compensation for the taking of his property. Both Anda and MEDA appealed the commissioners' award to the Clay County District Court. MEDA also commenced a separate action against Anda to recover damages for the cost of remediating the contamination discovered on the two adjoining properties, which MEDA alleged was a result of fuel oil leaking from Anda's property. The parties agreed to consolidate the actions. At trial, the jury found Anda's property was worth $455,000 “had it not been impaired by fuel oil contamination” and $0 “taking into account the fuel oil contamination.” The jury also found Anda liable for the contamination of the two adjoining parcels in the amount of $474,512. The court then concluded that Anda was not entitled to damages for the taking of his property because the cost of remediating Anda's property exceeded the property's fair market value.

The district court denied Anda's motions for a new trial and judgment as a matter of law. Anda appealed this denial and the district court's judgment to the court of appeals. Anda raised three issues on appeal. He challenged the valuation of his property on the date of the taking; he challenged the judgment of liability for the contamination of the two adjoining properties; and he asserted that the district court's rulings denied him a fair trial. The court of appeals affirmed. We reverse the court of appeals and hold Anda is entitled to a new trial on the issues of the value of his property on the date of taking and the damage award for remediation of the two adjoining properties.

Anda's Property

Appellant Roger W. Anda owned a parcel of real property located next to Interstate Highway No. 94 in the City of Moorhead, Minnesota, commonly referred to as the Holiday Office Park. The Holiday Office Park contained a commercial office building built sometime in the 1960s. The building was an elevated glass and stucco structure supported by steel stilts. A mechanical room and a paved parking lot were on the ground level underneath the elevated part of the building. The building housed business tenants and produced significant income for Anda even though it was no more than 40 percent occupied at the time relevant to this dispute. 1 In 1972, Anda purchased a 25 percent interest in the Holiday Office Park property. At that time, three other individuals had an ownership interest in the property, and Monty Kjos, a tenant of the building, was the property manager. In 1995, Anda became the property's sole owner.

Fuel-Oil Use

The building on Anda's property was designed to primarily use natural gas as its heating fuel, but it had a dual-heating or off-peak system. This system enabled the furnace to burn either natural gas or fuel oil. Fuel oil was stored in a 560-gallon underground storage tank buried under the parking lot, directly below the building. Though the storage tank was not visible, there were some visible signs of its existence. Copper tubing ran from the storage tank to the furnace. The furnace had a large toggle switch that could be used to control the furnace's fuel source. Approximately six feet of a one-and-one-half inch thick storage-tank-vent pipe ran along the outside of the first-floor mechanical room. And the storage tank's fill pipe cap was six inches in diameter and was visible until it was paved over sometime in the 1980s.

Mattson Oil Company delivered fuel oil to the storage tank for at least eight years, apparently from 1964 until 1972 or 1973. A Mattson Oil employee testified that during that time, the storage tank was on a “keep full” status, which meant that Mattson Oil refilled the tank every two weeks regardless of whether the tank was completely empty. The Mattson Oil employee testified that in 1972 or 1973 he emptied the tank, leaving two gallons of fuel oil in the bottom that he was unable to remove. The employee also testified that he had experience with emptying leaking tanks and stated that the tank was not leaking. He based his opinion on three observations: (1) there was no water in the tank; (2) the drained fuel oil looked fine; and (3) Mattson Oil was able to use the drained fuel oil in its own heating system.

Kjos, Holiday Office Park's former property manager, testified at trial that he was aware of the storage tank and understood how the dual-heating system worked. Kjos also testified that before Anda acquired an interest in the property, a former owner gave Anda and Kjos a tour of the property and informed them of the dual-heating system. At trial Kjos explained that he was not sure fuel oil was ever used at the building, stating that when he became property manager in 1972 electrical tape held the furnace toggle switch in place in the natural gas position. Kjos also testified that he did not remove the tape or ever use fuel oil to heat the building. Kjos stated that he discontinued the fuel-oil order with Mattson Oil, but said that he could not remember whether he discussed the decision to do so with Anda.

Anda testified that he had no knowledge of the storage tank or dual-heating system until “recently” and he never used fuel oil during his ownership of the building. He explained he saw only natural gas bills for the property. But, Anda testified that he recalled Kjos telling him after the condemnation hearing that Kjos bought fuel oil, just not a whole lot.

Moorhead Holiday Associates and the Redevelopment of Anda's Property

Moorhead Holiday Associates (MHA) is a partnership...

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