Oklahoma ex rel. Dep't of Transp. v. United States, 14-5100
| Decision Date | 01 June 2015 |
| Docket Number | No. 14-5100,14-5100 |
| Parties | STATE OF OKLAHOMA, ex rel. DEPARTMENT OF TRANSPORTATION, Plaintiff - Appellee, v. UNITED STATES OF AMERICA, SMALL BUSINESS ADMINISTRATION, Defendant - Appellee, ARVEST BANK, a foreign corporation, Defendant - Appellant, and CROW REAL ESTATE INVESTMENTS, LLC, a terminated Oklahoma limited liability company; CROW ENTERPRISES, LLC, an Oklahoma limited liability company, d/b/a Turnpike Chrysler Jeep Dodge; COUNTY TREASURER OF OTTAWA COUNTY, OKLAHOMA; SECURITY BANK, Defendants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
(N.D. Okla.)
ORDER AND JUDGMENT*Before BRISCOE, Chief Judge, LUCERO and MATHESON, Circuit Judges.
This appeal by Defendant-Appellant Arvest Bank (Arvest) involves a dispute over the priority rights to funds deposited in the district court as just compensation for a condemnation of real property by the Oklahoma Department of Transportation (ODOT). Arvest appeals the district court's ruling that it was not entitled to first priority in the deposited funds because it had released its lien on the property during the pendency of the condemnation proceedings. The district court had jurisdiction under 28 U.S.C. § 2410(a)(4) because the Small Business Administration (the SBA) held a mortgage on the condemned property. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
ODOT filed a petition in federal court to condemn 1.88 acres of a 5.16 acre parcel of land owned by Crow Real Estate Investments, LLC and Crow Enterprises, LLC (collectively, "Crow") for highway expansion. ODOT named as defendants Crow, which operated a car dealership on the property; Arvest, which then held afirst-priority mortgage lien on the property for $468,040.27; the SBA, which held second-priority lien on the property for $129,022.45; and the County Treasurer of Ottawa County, Oklahoma. See Okla. ex rel. Dep't of Transp. v. Lamar Adver. of Okla., Inc., 335 P.3d 771, 775 (Okla. 2014) ().
In Oklahoma, "[c]ondemnation proceedings are begun by one party filing a petition in district court to appoint a commission made up of three disinterested landowners to determine the amount of just compensation." Indep. Sch. Dist. No. 5 v. Taylor, 324 P.3d 415, 420 (Okla. Civ. App. 2013) (internal quotation marks omitted). After inspecting and assessing the property, the commission files a report with the district court assessing the just compensation for the taking. Id. at 421; Okla. Stat. tit. 69, § 1203(c). The interested property holders then have a right to demand a jury trial on the issues of damages in a condemnation proceeding. Taylor, 324 P.3d at 421; Okla. Stat. tit. 69, § 1203(e). A jury verdict sets the final damage award and supersedes the commissioners' assessment of just compensation. City of Okla. City v. Garnett, 296 P.2d 766, 767 (Okla. 1956); Okla. Stat. tit. 69, § 1203(e). "[T]he 'date of taking' is established when the condemner pays the commissioners' award into court." Okla. ex rel. Dep't of Transp. v. Post, 125 P.3d 1183, 1188 (Okla. 2005).
The court referred ODOT's condemnation proceeding to a magistrate judge, who appointed three commissioners to estimate the just compensation for the taking. Before the commissioners issued their report, ODOT amended its complaint to take the full 5.16 acres, based on Crow's representation that it would be physically and functionally impossible for it to operate a car dealership on the remaining acreage if ODOT only took 1.88 acres. The commissioners estimated the just compensation for the full 5.16 acre parcel at $1,856,506.42. In early March 2010, ODOT deposited that sum with the court. Crow, Arvest, the SBA, and ODOT each filed a timely demand for a jury trial on the issue of damages.
While the pre-trial proceedings were pending, Crow asked the court to disburse the funds on deposit. As no party objected, on March 29, 2010, the court ordered the deposited funds to be disbursed as follows: $1,259,443.70 to Crow, $468,040.27 to Arvest, and $129,022.45 to the SBA. The court's order made explicit, however, that "[n]either the deposit previously made, nor the disbursement ordered herein, shall constitute a waiver of any parties' right to demand a jury trial or right to contest the amount of just compensation for the subject property." Aplt. App. at 102.
In April 2010, Arvest released its mortgage lien on the Crow property in response to a letter from Crow's attorneys demanding it do so. SBA did not release its mortgage lien.
In December 2010, ODOT filed a second amended complaint, reducing the amount of land being taken to the original 1.88 acres, having determined Crow could operate its dealership if ODOT acquired only 1.88 acres. The parties consented to the filing, and pursuant to court order the commissioners issued a second report valuing the 1.88 acre parcel at $592,766.00.
ODOT then moved for return of the excess disbursed funds, namely, the $1,263,740 difference between the commissioners' valuation of the 5.16 acre parcel and the 1.88 acre parcel. Crow, Arvest, and the SBA objected, arguing in part that any return was premature in light of the pending jury trial, which would make the final damage award. Arvest and the SBA also argued they should not be required to return the excess funds because their liens would not be fully satisfied by the $592,766.00 valuation. Arvest did not inform the court it had released its lien.
Following a hearing, the magistrate judge granted ODOT's motion in April 2012. He ruled there had been two distinct takings under Oklahoma law during the condemnation proceeding: (1) the taking of the 5.16 acre parcel, effective when the funds were deposited with the court, but which terminated when the parties consented to ODOT's second amended complaint, and (2) the taking of the 1.88 acre parcel, which was effective when the commissioners filed the second valuation report because ODOT had already paid the just compensation monies into the court. Because the parties had consented to ODOT reducing its condemnation to 1.88 acres, the magistrate judge concluded it would violate Oklahoma's constitution andcondemnation laws to allow Crow, Arvest and the SBA to retain use of the funds disbursed based on a condemnation of 5.16 acres.
On April 26, 2012, the magistrate judge ordered Crow, Arvest, and the SBA to return all of the disbursed funds so as to (1) repay directly to ODOT each parties' proportionate share of the $1,263,740 excess funds and (2) to re-deposit with the court all of the remaining $592,766 pending trial.1 Stating, as it turns out incorrectly regarding Arvest, that neither Arvest or the SBA had released its lien, the magistrate judge required the remaining funds be re-deposited for later determination of the parties' relative priorities because the $592,766 valuation was likely to be insufficient to fully satisfy both liens. Aplt. App. at 282. Arvest appealed the magistrate judge's order to the district court, but still did not disclose it had released its lien. The district court affirmed the order. Arvest and the SBA returned their excess funds to ODOT and re-deposited the remaining funds with the court. Crow, however, never returned or re-deposited any of the funds it had received.
In September 2012, ODOT informed the court a title search revealed Arvest had released its lien in April 2010, and Crow had encumbered the property to Security Bank. Thereafter, based on the parties' stipulation, the district court enteredan Agreed Partial Journal Entry of Judgment in December 2012, establishing a final just compensation award of $559,443.70 for the 1.88 acre parcel, granting ODOT a mortgage on Crow's entire property, and ruling disbursement of the funds on deposit would be determined by subsequent court order.
Arvest, ODOT, and the SBA each sought the full amount of the $190,636.81 on deposit with the court. ODOT argued it should receive all the money because Crow's failure to return the disbursed funds meant it had paid more than the just compensation for the 1.88 acres. The SBA asserted it had first priority on the funds because Arvest had released its lien. Arvest countered that it should be recognized as the equitable holder of a first priority lien, arguing it had been obligated by Okla. Stat. tit. 46, § 15(A) to release its lien when the money was disbursed, and would not have released its lien had it known ODOT would later amend its complaint.
The magistrate judge issued a report and recommendation (R&R) rejecting ODOT's argument, concluding ODOT's proper remedy was to maintain a suit against Crow to recover the excess monies. The magistrate judge concluded that Arvest's release of its mortgage lien eliminated its first priority status, and that the SBA was entitled to all the funds on deposit as the first priority lien holder. The district court adopted the R&R on July 28, 2014, and ordered all of the funds be paid to the SBA. Arvest appeals.
ODOT argues we lack jurisdiction over this appeal because the district court's July 28 order was not a final appealable order under § 1291. ODOT contends it is still entitled to an order from the district court granting it an additional money judgment against Crow for the unreturned disbursement. We disagree.
The December 2012 Agreed Partial Journal Entry of Judgment determined the amount of just compensation for ODOT's condemnation. The July 28, 2014 order determined the parties' priority rights to the funds on deposit and ordered those funds disbursed. As part of that determination, the July 28 order resolved ODOT's argument that it was entitled to the funds as reimbursement from Crow: it...
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