SIL. CR. DRAIN DIST. v. EXTRUSIONS DIV. INC.

• Decision Date: 27 June 2001
• Docket Number: Docket No. 216644.,Docket No. 216182
• Citation: 245 Mich. App. 556,630 N.W.2d 347
• Parties: SILVER CREEK DRAIN DISTRICT, Plaintiff-Appellee, v. EXTRUSIONS DIVISION, INC., Defendant-Appellant, and Azzar Store Equipment, Inc, Defendant. Extrusions Division, Inc., Plaintiff-Appellant, v. City of Grand Rapids and Kent County Drain Commissioner, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

630 N.W.2d 347

245 Mich. App. 556

SILVER CREEK DRAIN DISTRICT, Plaintiff-Appellee, v. EXTRUSIONS DIVISION, INC., Defendant-Appellant, and Azzar Store Equipment, Inc, Defendant.

Extrusions Division, Inc., Plaintiff-Appellant, v. City of Grand Rapids and Kent County Drain Commissioner, Defendants-Appellees.

Docket Nos. 216182, 216644.

Court of Appeals of Michigan.

Submitted June 15, 2000, at Grand Rapids.

Decided May 4, 2001, at 9:00 a.m.

Released for Publication June 27, 2001.

Warner Norcross & Judd LLP (by Douglas A. Dozeman and Christian E. Meyer), Grand Rapids, for Extrusions Division, Inc.

Varnum, Riddering, Schmidt & Howlett LLP (by Paul J. Greenwald and Matthew Zimmerman), Grand Rapids, for Silver Creek Drain District and Kent County Drain Commissioner.

Before SMOLENSKI, P.J., and ZAHRA and COLLINS, JJ.

ZAHRA, J.

In these consolidated cases, appellant Extrusions Division, Inc. (Extrusions), appeals by leave granted, challenging the trial court's finding of just compensation for a parcel of real property subject to a taking by Silver Creek Drain District (the drain district). We reverse and remand for further proceedings consistent with this opinion.

I. FACTS

The land at issue is located in Grand Rapids and is referred to by the parties as "Old South Field." Extrusions purchased Old South Field in 1982, intending to use it for future expansion of its North Complex, which is adjacent to Old South Field.¹ Extrusions built a fence around Old South Field following its purchase, but otherwise left the property vacant and unimproved. In 1990, the drain district began evaluating options for alleviating flooding in the area. Through a series of public meetings it was disclosed that Old South Field was an excellent location for construction of a storm water detention pond.

In January 1992, Extrusions applied for a permit from the city of Grand Rapids to construct a warehouse on Old South Field. The city refused to grant the permit. On October 2, 1992, Extrusions filed an inverse condemnation action against the city and the Kent County Drain Commissioner. Extrusions claimed the city's refusal to grant the building permit, and the failure of the drain commissioner to "pursue a purchase" of Old South Field, constituted an unconstitutional taking of private property without just compensation.

On March 7, 1994, the drain district provided Extrusions a "just compensation" offer for Old South Field in the amount of $211,300. The drain district stated within its offer that it reserved its right to bring a federal or state cost recovery action regarding the release of hazardous substances on the property. The parties stipulated below that "some alleged hazardous substances were disposed of or placed on the Old South Field" by the party that owned the property before Extrusions. On May 26, 1994, the drain district executed a "Declaration of Taking," declaring that Old South Field was being taken to effect a necessary public improvement. The declaration of taking was recorded with the Kent County Register of Deeds on June 6, 1994. On June 21, 1994, the county treasurer executed an affidavit attesting to the deposit of $211,300, the amount estimated as just compensation for Old South Field. On June 29, 1994, the drain district filed its condemnation action.² In its complaint, the drain district again reserved its right to bring a federal or state cost recovery action regarding the release of hazardous substances on the property.

On February 20, 1995, pursuant to stipulation of the parties, the trial court ordered Old South Field conveyed to the drain district and ordered the drain district to pay Extrusions $211,300 for the taking. Despite the February 20 stipulation, on April 21, 1995, the drain district brought a motion requesting that the funds remain in escrow as security for remediation costs associated with environmental contamination of Old South Field. The drain district estimated the total environmental remediation cost to be $467,100. Extrusions argued for release of the escrow funds, claiming it was not liable for remediation costs of any environmental contamination on the property.³ On November 3, 1995, pursuant to stipulation of the parties, the trial court ordered the drain district to remove from escrow and pay Extrusions the $211,300 offered as just compensation together with interest from the date of conveyance.⁴ The drain district complied with that order and paid those sums.⁵

A bench trial commenced almost two years later on the issue of valuation of Old South Field. On November 6, 1997, the trial court issued an opinion, finding that the value of Old South Field at the time of the taking, without consideration of environmental cleanup costs, was $278,800. The court then found:

At the time of the taking, Old South Field was an environmentally contaminated site, with respect to which a reasonably prudent purchaser would have required, at a minimum, a formal Type-C Closure from the DNR as a condition precedent to closing.

The court determined that the reasonable cost of securing such a formal Type C clearance was $237,768. Subtracting that amount from the value of the property without consideration of environmental cleanup costs, the court arrived at the sum of $41,032, which it concluded was the net fair market value of the property and constituted just compensation on the date of the taking. On January 6, 1998, the court issued a final order, stating Extrusions is "entitled to keep all amounts previously paid to it [by the drain district]" and dismissing all other claims.⁶

On appeal, Extrusions presents three arguments to support the conclusion the trial court erred in determining the amount of just compensation for the taking of Old South Field.⁷ First, Extrusions argues the trial court should not have considered the environmental contamination and potential cleanup costs when it calculated just compensation for the property. Second, Extrusions argues the trial court erred in its determination that the fair market value of Old South Field, without regard to environmental cleanup costs, was $278,800. Third, Extrusions claims the trial court erred in failing to consider and award damages caused to the North Complex as a consequence of the condemnation of Old South Field. Each issue is addressed separately.

II. ANALYSIS

A. Can environmental contamination and cleanup costs be considered in determining just compensation in a condemnation action?

Our federal and state constitutions prohibit the taking of private property without just compensation. U.S. Const., Am. V; Const. 1963, art. 10, § 2. Just compensation is the full monetary equivalent of the property taken. Dep't of Transportation v. VanElslander, 460 Mich. 127, 129, 594 N.W.2d 841 (1999), quoting K & K Constr., Inc. v. Dep't of Natural Resources, 217 Mich.App. 56, 72-73, 551 N.W.2d 413 (1996), rev'd on other grounds 456 Mich. 570, 575 N.W.2d 531 (1998). The purpose of just compensation is to put a property owner in as good a position as it would have been if the taking had not occurred. Wayne Co. v. Britton Trust, 454 Mich. 608, 622, 563 N.W.2d 674 (1997).

Michigan has adopted the Uniform Condemnation Procedures Act (UCPA), M.C.L. § 213.51 et seq., which provides procedures for the condemnation, acquisition, or exercise of eminent domain of real property by public agencies. We review de novo issues arising from the interpretation and application of statutes. Oakland Co. Bd. of Co. Rd. Comm'rs v. Michigan Property & Casualty Guaranty Ass'n, 456 Mich. 590, 610, 575 N.W.2d 751 (1998). The primary goal of judicial interpretation of statutes is to ascertain and give effect to the Legislature's intent. Frankenmuth Mut. Ins. Co. v. Marlette Homes, Inc., 456 Mich. 511, 515, 573 N.W.2d 611 (1998). If the plain and ordinary meaning of a statute is clear, judicial construction is neither necessary nor permitted. Cherry Growers, Inc. v. Agricultural Marketing & Bargaining Bd., 240 Mich.App. 153, 166, 610 N.W.2d 613 (2000). We may not speculate regarding the probable intent of the Legislature beyond the words expressed in the statute. In re Schnell, 214 Mich.App. 304, 310, 543 N.W.2d 11 (1995). When reasonable minds may differ with respect to the meaning of a statute, the courts must look to the object of the statute, the harm it is designed to remedy, and apply a reasonable construction that best accomplishes the purpose of the statute. Marquis v. Hartford Accident & Indemnity (After Remand), 444 Mich. 638, 644, 513 N.W.2d 799 (1994).

Section 5 of the UCPA provides that a condemnation complaint "shall ask that the court ascertain and determine just compensation to be made for the acquisition of the [condemned] property." MCL 213.55(1). However, the UCPA provides very little guidance regarding the factors a court should consider when called on to determine just compensation. See M.C.L. § 213.70 and 213.73.⁸ Courts have generally been constrained only by the requirement that the property owner be placed in as good a condition as the owner would have been had no taking occurred. Britton Trust, supra.

Whether environmental contamination and cleanup costs associated with such contamination can be considered in determining just compensation in a condemnation proceeding is an issue of first impression in Michigan. When the UCPA was enacted in 1980, it was silent with respect to the prospect that property acquired through the exercise of eminent domain could be affected by environmental contamination. Since the enactment of the UCPA, courts throughout Michigan and across the country have been inundated with litigation arising from state and federal legislation addressing environmental contamination and recovery of costs associated with environmental cleanup. The Michigan Legislature amended the UCPA in 1993 to incorporate procedures addressing the potential of liability arising from cleanup costs of property subject to acquisition through the...