Redevelopment Agency of Salt Lake City v. Daskalas, s. 880302-C
| Citation | 785 P.2d 1112 |
| Decision Date | 11 October 1989 |
| Docket Number | 880292-CA,Nos. 880302-C,s. 880302-C |
| Parties | REDEVELOPMENT AGENCY OF SALT LAKE CITY, a public entity, Plaintiff, v. Ellen K. DASKALAS, an individual, d/b/a The Pawn Shop, a Utah corporation; and Terry Pantelakis, an individual, d/b/a AAA Jewelers & Loans, Defendants and Appellants, and Juanita Irene Burge; Robert D. Barrows, Jr.; Beatrice Irene Barrows, et al., Defendants and Respondents. REDEVELOPMENT AGENCY OF SALT LAKE CITY, a public entity, Plaintiff and Respondent, v. Juanita Irene BURGE; Robert D. Barrows, Jr.; Beatrice Irene Barrows; Ellen K. Daskalas, an individual d/b/a The Pawn Shop; The Pawn Shop, a Utah corporation; James Anderson, an individual d/b/a Jim's Ribs; Terry Pantelakis, an individual, d/b/a AAA Jewelers; and Loans and Sales, Inc., a Utah corporation, Defendants and Appellants. |
| Court | Court of Appeals of Utah |
Brant H. Wall and Jerome H. Mooney, III, Salt Lake City, for appellants, Daskalas, The Pawn Shop, and Pantelakis.
John T. Evans, Salt Lake City, for appellants and respondents, Burge, Barrows and Barrows.
Harold A. Hintze, Provo, for respondent, Redevelopment Agency of Salt Lake City.
Before BILLINGS, GARFF and GREENWOOD, JJ.
This consolidated case arises out of the attempt of plaintiff Redevelopment Agency of Salt Lake City (RDA) to condemn property located on Block 57 owned by defendants Burge, Barrows, and Barrows (Owners) and leased by defendants Daskalas and Pantelakis (Tenants). In Case No. 880302-CA, Owners appeal the trial court's denial of (1) payment to them of interest on funds deposited by RDA with the court, and (2) expert witness fees and trial costs. In Case No. 870236-CA, Tenants appeal the trial court's determinations (1) that Tenants had no compensable leasehold interest at the time of the condemnation, and (2) that Tenants are liable for Owners' attorney fees under their lease agreements. We affirm in part, but remand for determination of the amount of attorney fees.
About August 1, 1981, Tenants leased premises on Block 57 from Owners under separate but identical written lease agreements. These agreements granted Tenants five-year leases with options to renew for another five years, and contained "condemnation clauses" which provided, in the event the property was condemned, that the leases were terminable at will by either party. The agreements also provided that Owners would receive attorney fees if they were required to enforce the lease provisions.
In connection with its role in redeveloping portions of downtown Salt Lake City in 1984, RDA chose Lincoln Property Company (Lincoln) to redevelop Block 57. By 1985, RDA had acquired some property on the block, but not enough for Lincoln to begin construction of the redevelopment project. Seven landowners filed suit, separate from this action, contesting their inclusion within the redevelopment area. The trial court, in the separate action, ruled that RDA did not have authority to condemn the property. This ruling created a serious impediment to Lincoln's ability to develop Block 57, and gave the landowners who contested RDA's condemnation authority considerable negotiating advantage. Lincoln became increasingly discouraged with its ability to put together a sufficiently large redevelopment site and indicated to RDA that it would continue with the project only if it could be assured of acquiring the entire northern one-third of Block 57. Meanwhile, many of the other landowners on Block 57 were desperate to sell their rapidly deteriorating property to Lincoln, and many had signed options to that effect.
On June 21, 1985, RDA initiated the present condemnation action against Owners and Tenants in an effort to insure that Lincoln would have the property necessary to begin development. RDA initially offered defendants $273,000.00 for the property which it stated was the property's fair market value.
RDA filed a motion for an order of immediate occupancy of the premises on August 1, 1985. In response, Tenants' counsel executed a stipulation consenting to RDA's occupancy of the premises, based upon an agreement that Tenants could lease the property back from RDA. Owners, however, filed an answer objecting to the granting of the order of immediate occupancy, alleging that RDA did not have the power of eminent domain nor the need for immediate occupancy. Owners also claimed that Tenants had no right to any award of compensation from RDA. Tenants filed an answer, putting at issue the question of damages only.
RDA's and Owners' motions were noticed up for hearing on August 13, 1985. Tenants failed to appear at this hearing. Nevertheless, RDA, Owners, and the neighboring landowners, who were anxious to sell their property, stipulated to the entry of an order of immediate occupancy. The court denied Owners' motion for an award of expert witness fees and other trial preparation costs and, despite Tenants' absence, incorporated into its order the provisions of Owners' motion which stated that Tenants had no right or claim to compensation.
The stipulation giving RDA immediate occupancy, entered by the court on August 16, 1985, was contingent upon the following requirements:
First, RDA was to deposit one hundred percent of the property's appraised value, $275,220.00, with the court. This money was to be invested at the rate of eleven and one-half percent per annum while held by the court. Owners could withdraw any portion of the deposited funds, plus interest, at any time, but such a withdrawal would constitute a waiver of any and all defenses they might have as to RDA's ability to condemn the property.
Second, RDA was to submit to Lincoln an agreement for distribution of land for private development (ADL), which was to be signed by both RDA and Lincoln within thirty days. Within thirty days of the signing of the ADL, RDA was to pay to Owners additional compensation of $76,450.00 from funds that would otherwise have been paid to neighboring landowners. Even if these events did not occur, the order would become effective if Owners withdrew any of the funds deposited with the court, and Owners would be required to immediately relinquish possession of the property.
Tenants filed their answer on August 22, 1985, claiming an interest in the deposited funds. On August 23, 1985, Tenants' counsel objected to the portion of the August 16 order denying Tenants compensation, alleging that he had not been properly notified of the August 13, 1985 hearing. Owners answered Tenants' objection, stating that they had hand-carried notice of their motion to Tenants' attorney's new office at least five days prior to the hearing and, even if Tenants had appeared, that they would have had no right to participate in the condemnation proceeds. Tenants' objection was noticed up for hearing on October 11, and then was continued to November 1, 1985. The court never ruled on Tenants' objection.
Meanwhile, on October 11, 1985, RDA filed a certificate of readiness for trial. On October 25, 1985, Owners filed a motion for summary judgment, asserting that Tenants were not entitled to share in any condemnation award. Tenants opposed this motion, arguing that they were entitled to the capitalized value of their lease, known as "bonus value." The court heard Tenants' motion on November 1, 1985, but continued Owners' motion for summary judgment and, at Tenants' request, froze the funds deposited by RDA with the court until Tenants' rights were determined.
Lincoln and RDA did not sign the ADL as provided for in the August 16 stipulation, so the conditions set forth in the stipulation never came about and the order of immediate occupancy, dependent upon the conditions, never became effective.
On February 10, 1987, the court heard the issues between Owners and Tenants and granted Owners' motion for summary judgment, ruling, as a matter of law, that Tenants did not have any compensable interest aside from the value of any improvements they might have made on the property. The court also ordered that Tenants pay Owners' attorney fees pursuant to the lease agreements.
The issue of the fair market value of the property was litigated in a jury trial which began on February 23, 1987. RDA had offered Owners $275,220.00 for the property, but Owners asserted that the property was worth $660,000.00. The jury found that the property was worth $305,800.00. Tenants did not appear and did not proffer any evidence as to the value of any improvements they might have made to the property.
On March 15, 1987, Owners moved: (1) for a new trial on the issue of just compensation; (2) for the court to lift the freeze on the money deposited with the court; and (3) for the court to order that the money, including accrued interest, be paid to Owners. The court denied this motion and ordered that the funds be returned to RDA. Consequently, Owners never withdrew any of the funds deposited with the court pursuant to the August 16, 1985 stipulation.
At this time, Tenants were still occupying the premises and making rent payments to Owners under the terms of the lease agreements. The court ordered Tenants to continue paying rent to Owners until RDA obtained possession of the property.
On March 18, 1987, at the trial court's request, Owners submitted an affidavit setting forth their attorney fees incurred in defending against Tenants' claims. This affidavit indicated that Owners' attorney spent 133 hours at $100.00 per hour, for a total of $13,300.00, and itemized additional costs and expenses of $2,130.00. Tenants filed an objection to the proposed findings of fact, conclusions of law, order, judgment, and affidavit.
On March 25, 1987, a hearing was held to determine the amount of attorney fees that should be awarded to Owners. RDA proffered evidence explaining its need for immediate occupancy of the property because there was still a question as to whether RDA had the power to condemn Block 57....
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