Relocation Benefits of Wilkins Pontiac, Inc., Application of

• Decision Date: 25 April 1995
• Docket Number: No. C7-94-1933,C7-94-1933
• Citation: 530 N.W.2d 571
• Parties: In re the Application of RELOCATION BENEFITS OF WILKINS PONTIAC, INC.
• Court: Minnesota Court of Appeals

Page 571

530 N.W.2d 571

In re the Application of RELOCATION BENEFITS OF WILKINS PONTIAC, INC.

No. C7-94-1933.

Court of Appeals of Minnesota.

April 25, 1995.

Review Denied June 23, 1995.

Syllabus by the Court

1. The Economic Development Authority has discretion in determining the amount of relocation benefits under 49 C.F.R. § 24.303(a)(14).

2. Attorney fees incurred to obtain a franchisor's permission to relocate are not reimbursable under the relocation benefits statute.

Christopher J. Dietzen, Larkin, Hoffman, Daly & Lindgren, Ltd., Bloomington, for relator.

Wayne G. Popham, Bruce L. McLellan, Popham, Haik, Schnobrich, Kaufman, Ltd., Minneapolis.

Considered and decided by HARTEN, P.J., HUSPENI, and MINENKO, ^* JJ.

OPINION

EUGENE MINENKO, Acting Judge.

Wilkins Pontiac's petition for relocation benefits was denied by the Economic Development Authority. Wilkins appealed and a hearing was conducted. The hearing officer granted a portion of Wilkins's claimed relocation expenses. Wilkins now brings this appeal, claiming it is entitled to additional reimbursement consisting of carrying costs and attorney fees. We affirm.

FACTS

Wilkins Pontiac (Wilkins) was a car dealership on Excelsior Boulevard in St. Louis Park. The Economic Development Authority (EDA) for the City of St. Louis Park wished to redevelop certain property along Excelsior, including the site occupied by Wilkins. Wilkins opposed the redevelopment of the area and demanded that it be allowed to stay at the Excelsior Boulevard location. Although the developer retained for the project subsequently withdrew from it, Wilkins was aware that the EDA nonetheless intended to pursue the redevelopment; thus, Wilkins contacted its franchisor GM-Pontiac regarding the need to relocate.

The EDA eventually entered into a redevelopment agreement with a different developer in January of 1987 and informed Wilkins that a possible relocation site owned by Westinghouse was on the market. In March of 1987, Wilkins obtained an option to purchase that property and employed an attorney to investigate the possibility of the property being rezoned for use as a car dealership. As a result of the investigation, Wilkins concluded that obtaining rezoning approval was unlikely.

The EDA commenced a proceeding for the condemnation of the Wilkins site and arranged for estimates both of the fair market value of the fixtures on the property and of the costs of Wilkins's relocation. The pleadings requested the court to order that the transfer of title and possession of Wilkins Pontiac would occur on November 16, 1987. Although in negotiations Wilkins advised the EDA that GM-Pontiac would need to consent to a relocation site, the EDA and the redeveloper maintained their position that Wilkins should vacate the premises by November 16, 1987. Wilkins concluded that it would need more time to relocate to the Westinghouse site--which it had deemed a suitable site--or that it would be forced to close the business and lose the franchise. Westinghouse would not grant Wilkins an option on the property, and the EDA denied Wilkins's request for a continuance of the hearing date of November 18, 1987.

The EDA, the redeveloper, and Wilkins then entered into a written settlement agreement. This agreement provided that Wilkins would dismiss all of its claims and would purchase the Westinghouse site for the relocation of the Pontiac dealership in exchange for the redeveloper's payment of $237,500 and the EDA's payment of $262,500 to Wilkins. The agreement was contingent on the necessary zoning approvals and the approval of the site by GM-Pontiac. The agreement allowed Wilkins to remain on its premises until October 31, 1988, and permitted Wilkins to present a claim for relocation benefits if GM-Pontiac did not approve the relocation. Wilkins purchased the Westinghouse site, but was denied approval by GM-Pontiac to transfer its car dealership. Wilkins eventually entered into a confidential settlement agreement with GM-Pontiac with respect to this denial. The redeveloper then terminated its involvement with the redevelopment project.

In August 1988, GM-Pontiac employed an attorney to seek rezoning of another property on which Wilkins had an option. The rezoning request, which eventually went before the city council, was denied in May 1989. Wilkins continued to seek the consent of GM-Pontiac to relocate its car dealership to the Westinghouse property but as time went on concluded that GM-Pontiac would not grant the approval. At last, in January 1991, GM finally granted approval for the Westinghouse site, but made clear that Wilkins would have to defend a protest by a competing car dealership if one arose. In the meantime, Wilkins had put the Westinghouse property up for sale and had received various offers. These offers were withdrawn when the city declared a moratorium on the granting of land use approvals. By the spring of 1992, Wilkins had been able to obtain approval to lease the Westinghouse premises, and leased them fully by May 1992.

In late 1990, Wilkins began negotiations for the purchase of a parcel in Golden Valley to which it wished to relocate its car dealership. The final purchase agreement was executed on January 31, 1992, and construction commenced that summer. Wilkins moved to the new site in September of 1992.

In August 1992, Wilkins formalized its request for relocation benefits and gave notice to the EDA of its intent to vacate the Excelsior Boulevard premises on September 30, 1992. Wilkins claimed carrying costs from the Westinghouse property, and attorney fees in the amount of $1,015,610, costs of relocating of between $79,000 and $103,000, costs of nonremovable fixtures of $126,598, offsets of $13,877, and the cost of installing a new sign of $14,150. Wilkins also claimed $49,194 in attorney fees for its pursuit of GM's approval of the Westinghouse site, its eventual procurement of a new franchise agreement and the franchisor's approval of the Golden Valley site, and its settlement with GM-Pontiac for wrongfully withholding its approval of the Westinghouse site.

The EDA denied Wilkins's claim, and Wilkins appealed. The hearing officer found that the attorney fees charged and paid to Wilkins's attorney were reasonable, and concluded that as a direct and proximate result of EDA's condemnation of the subject property, Wilkins incurred expenses consisting of carrying costs, attorney fees, costs of the physical move, and the loss of immovable fixtures. The officer concluded that Wilkins took reasonable steps to mitigate any damages in connection with carrying the Westinghouse property. Nonetheless, the hearing officer concluded that the carrying costs related to the Westinghouse site were not recoverable. The officer concluded that Wilkins was entitled to recover relocation expenses in the amount of $254,648.

Now on appeal, Wilkins claims an entitlement to recover the carrying costs it incurred on the Westinghouse property and to recover attorney fees in addition to that already awarded.

ISSUES

1. Is Wilkins entitled to recover the carrying costs it incurred on the Westinghouse property when it was not in the end able to relocate to that property?

2. Is Wilkins entitled to the full amount of attorney fees it requested?

ANALYSIS

On appeal, this court is to determine whether the agency kept within its jurisdiction and then decide whether the decision of the agency was arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of the law or without evidence to support it. Markwardt v. State Water Resources Bd., 254 N.W.2d 371, 374 (Minn.1977).

Wilkins brought its claim for relocation expenses under Minn.Stat. § 117.52 (1992). This statute applies to all acquisitions undertaken by any acquiring authority where no federal funding is involved. Id., subd. 1. This statute requires the acquiring authority to provide relocation assistance in accordance with federal regulations promulgated to provide similar relief. Id. The federal statute enabling such regulations is found at 42 U.S.C. §§ 4621, 4622 (1988). Section 4622 provides that a displacing agency shall provide for the payment to the displaced person of

1) actual reasonable expenses in moving himself, his family, business, farm operation, or other personal property;

* * * * * *

3) actual reasonable expenses in...