State v. Elbert, A18-1280

• Decision Date: 22 April 2020
• Docket Number: A18-1280
• Citation: 942 N.W.2d 182
• Parties: STATE of Minnesota, BY its COMMISSIONER OF TRANSPORTATION, Respondent, v. Rosemary R. ELBERT, et al., Appellants.
• Court: Minnesota Supreme Court

942 N.W.2d 182

STATE of Minnesota, BY its COMMISSIONER OF TRANSPORTATION, Respondent,

v.Rosemary R. ELBERT, et al., Appellants.

A18-1280

Supreme Court of Minnesota.

Filed: April 22, 2020

Keith Ellison, Attorney General, Matthew Ferche, Assistant Attorney General, Saint Paul, Minnesota, for respondent.

Harold A. Frederick, Eric S. Johnson, Fryberger, Buchanan, Smith & Frederick, P.A., Duluth, Minnesota, for appellants.

Jon W. Morphew, Morphew Law Office, PLLC, Minneapolis, Minnesota; Leland J. Frankman, Frankman Law Offices, Minneapolis, Minnesota; James A. Yarosh, Siegel Brill, P.A., Minneapolis, Minnesota; and Stuart T. Alger, Malkerson Gunn Martin, LLP, Minneapolis, Minnesota, for amicus curiae Minnesota Eminent Domain Institute.

OPINION

CHUTICH, Justice.

Appellants Rosemary Elbert and family (the Landowners) own valuable property along Highway 61 between Silver Bay and Little Marais on the north shore of Lake Superior. The State, acting through the Minnesota Department of Transportation (the Department), condemned a small portion of the Landowners’ property for a construction project intended to improve the safety and quality of Highway 61. After a hearing, court-appointed commissioners awarded the Landowners $390,904.29 in damages, $305,000 of which were severance damages attributable to the presumed loss of access to the property from the abutting highway during construction. The Landowners never lost access during the project. The parties stipulated to damages for the remaining claims, but each appealed the damages awarded by the Commissioners to the district court.

The district court rejected the Landowners’ theory of damages supporting their claim for severance damages, and the court of appeals affirmed. Because we do not assume that the taking of a temporary easement includes the taking of access and decline to adopt a new rule of law that so holds, and because the damages based on construction-related interferences the Landowners seek are not compensable as a matter of law, we affirm.

FACTS

The Landowners own about 115 acres of property on the north shore of Lake Superior. Divided by Highway 61, one part of the Landowners’ property is above the highway, and the other borders Lake Superior. In February 2013, the Department successfully petitioned the district court through eminent domain for temporary and permanent easements to reconstruct and widen a 5.3-mile segment of Highway 61. The 1½ year project included plans to resurface the pavement, regrade the slopes of the ditches, and adjust culverts.

Relevant here, the Department sought and acquired by court order land designated as Parcel 41. Parcel 41 contained 0.71 acres of permanent easements, varying in "depth from 20 to 90 feet," and providing "permanent workspace around drainage culverts." The areas encumbered by the permanent easements were "existing drainage areas consisting of gullies, watercourses, or other lower areas not generally usable for building zones." The permanent easement included the following rights: "to acquire all trees, shrubs, grass and herbage within the right of way therein to be taken, and to keep and have the exclusive control of the same."

The Department sought and the district court granted 3.29 acres of temporary easements within Parcel 41, including a "20- to 30-foot deep, temporary construction easement across the length of frontage on the upper side of the roadway," and a "20-foot, temporary workspace ... encumber[ing] most of the frontage of the lower side." The temporary easements also included a "50-foot deep workspace ... at the [Landowners’] driveway for reconstruction of the apron."

In its May 2013 order concluding that the taking was necessary, the district court appointed three commissioners to determine the amount of damages sustained by the Landowners because of the taking. A hearing was held on December 6 and 7, 2016.

John Hinzmann, an engineer who oversaw the highway project for the Department, testified that the petition for temporary easements did not seek to acquire the right of access to the Landowners’ property. Had it wanted to acquire that right, the Department would have had to "buy that access" and "delineate it" on its condemnation maps as "access control." He also testified that the construction contract specified that the contractors must maintain reasonable access to the Landowners’ remaining property to the maximum extent possible; if they failed to do so, the contract provided for a $500 fine "for each incident at each location for each day or portion thereof."

Sanford Hoff, the Landowners’ real estate appraiser, opined that the Landowners incurred severance damages of $305,000 for an assumed loss of access to the unencumbered property. He testified that the highest and best use for the Landowners’ property was development of residential property and resort-style operations. According to Hoff, because the temporary easement extended most of the length of the property, potential developers would just "assume that during the construction period, they weren't going to have access" to the property. He maintained that a difference existed between losing legal access and losing practical access to the property and that losing access in a practical sense would make it hard for potential buyers to do advance planning for development, thereby affecting the value of the property.

Hoff further testified that losing access to the unencumbered property was a "construction interference." He admitted that his estimation of damages based on construction-related interferences came from the Department’s construction project itself and was based solely on the assumed lack of access, and not any other construction activities or alleged damages. Hoff was unaware that the contractor was required to maintain reasonable and adequate access throughout the project.

James Zapolski, an inspector for the Department in charge of overseeing the project, testified that he was never notified of "any interruption in rights to access the property at any time during the project or during the pendency of the temporary easement." He was not aware of any closures of the Landowners’ single gravel driveway, and stated that, whatever construction work was done on the driveway was done one side at a time to preserve access. He also noted that the temporary easements for construction workspace along the highway were largely unused and that construction occurred on only one side of the highway at a time.

The commissioners determined that damages amounted to $390,904.29. Notably, they attributed $305,000 worth of the total damages to the temporary loss of access to the property.

Each party appealed the award to the district court, filing cross motions for partial summary judgment. The district court granted the Department’s motion, finding that the Department did not acquire the right to access by its condemnation petition. The court specifically found that "[a]t all times, the [Landowners] retained their property right to reasonably convenient and suitable access to Highway 61 throughout the project and the term of the temporary easements." The court also noted that, if the Landowners believed that a taking of the right of access had occurred, "the takings claim must either be determined in a separate mandamus action or by a motion to the district court to have that question of law determined and, if necessary, added to the case prior to presentation of the case to the court-appointed Commissioners."

The district court was also unpersuaded by the Landowners’ arguments concerning their claim for takings damages based on construction-related interferences. Quoting County of Anoka v. Blaine Building Corp. , 566 N.W.2d 331, 334 (Minn. 1997), the court found that an expert opinion on market valuation could not claim "severance damages from ‘the impact of the construction project as a whole.’ " The court found that a valuation opinion could not be based on a hypothetical developer not wanting to compete with a highway right-of-way project; rather, the district court found that expert opinions must include certain assumptions about buyers and sellers. Specifically, the court concluded that buyers and sellers would "perform enough due diligence to understand the property rights acquired (the easement) and to understand what was not acquired (the right of access), and would ... understand the obligations of the project contractor to not interfere with the owners’ right of reasonably convenient and suitable access."

The parties stipulated that $80,904.29 in damages—attributable to the permanent and temporary easements and loss of trees and the vegetative buffer in these areas—was unaffected by the district court order, and preserved the right to appeal "all damages and claims excluded by" the district court order.

The court of appeals affirmed. State v. Elbert , No. A18-1280, 2019 WL 1757934, at *2 (Minn. App. Apr. 22, 2019). The court rejected the Landowners’ argument that easement damages are "based on the government’s fullest possible use of the easement" as "inconsistent with Minnesota law." Id. at *2–3. The court of appeals also concluded that the Landowners did not allege damages based on construction-related interferences because they did not "identify any alleged damages actually suffered" on their property. Id. at *3.

The Landowners sought review, which we granted.

ANALYSIS

On appeal from summary judgment, we inquire whether a genuine issue of material fact exists and whether the district court erred in its application of the law. Bjerke v. Johnson , 742 N.W.2d 660, 664 (Minn. 2007). We view the evidence in the record "in the light most favorable to the party against whom summary judgment was granted." Id. (quoting O'Malley v. Ulland Bros. , 549 N.W.2d 889, 892 (Minn. 1996) ). When the relevant material facts are not in dispute, we review the district court’s interpretation of the law de novo. Id.

"A state’s ability to use eminent...