U.S. v. Certain Land Situated in Detroit

• Decision Date: 06 March 2009
• Docket Number: No. 79-CV-73934-DT.,79-CV-73934-DT.
• Citation: 600 F.Supp.2d 880
• Parties: UNITED STATES of America, Plaintiff, v. CERTAIN LAND SITUATED IN THE CITY OF DETROIT, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

600 F.Supp.2d 880

UNITED STATES of America, Plaintiff, v. CERTAIN LAND SITUATED IN THE CITY OF DETROIT, et al., Defendants.

No. 79-CV-73934-DT.

United States District Court, E.D. Michigan, Southern Division.

March 6, 2009.

COPYRIGHT MATERIAL OMITTED

Julia C. Pidgeon, United States Attorney's Office, Detroit, MI, for Plaintiff.

William R. Seikaly, Jeffrey T. Stewart, Seikaly & Stewart, Craig L. John, Mark H. Sutton, Dykema Gossett, Bloomfield Hills, MI, Dale W. Rhoades, Rhoades, McKee, Grand Rapids, MI, James F. Hibey, Verner, Liipfert, Washington, DC, Willard J. Lindley, CenTra, Inc., Warren, MI, John J. Giannini, Detroit, MI, Michael J. Laramie, Bodman, Longley, Troy, MI, for Defendants.

OPINION AND ORDER REGARDING DEFENDANT DETROIT INTERNATIONAL BRIDGE COMPANY'S MOTION TO RECOVER FEES AND EXPENSES PURSUANT TO THE EQUAL ACCESS TO JUSTICE ACT

GERALD E. ROSEN, Chief Judge.

I. INTRODUCTION

This 1979 condemnation action, which was tried before a jury in February 2002 on the issue of just compensation, is presently before the Court on the Motion of Defendant Detroit International Bridge Company ("DIBCO") to recover $2,822,682.30 for attorneys' fees and expenses it incurred in this case pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412 (the "EAJA"). The Government has responded to DIBCO's motion and DIBCO has replied.

Having reviewed and considered Defendant's Motion, the parties' briefs, and the Court's record of this matter, the Court has determined that oral argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(e)(2), this matter will be decided on the briefs. This Opinion and Order sets forth the Court's ruling.

II. PERTINENT FACTS

This condemnation action has a long a protracted history which has been detailed in a number of published opinions.¹ The case started in 1979 when the Government sought to obtain three parcels of land located near the Ambassador Bridge through eminent domain. DIBCO owned two of the parcels which it had acquired a few years earlier with an eye towards alleviating bridge congestion.² The larger of the two parcels, which DIBCO purchased in 1977 for $1.2 million, had housed a truck terminal used by the previous owner, Overland-Western Corporation.

Before purchasing the Overland parcel, DIBCO informed the Government of its intentions and the Government responded favorably that it was contemplating leasing space on the property to carry out secondary Customs truck inspections. However, negotiations concerning leasing DIBCO's property broke down, and on October 11, 1979, the Government instituted these proceedings, filed a Declaration of Taking, and took possession of the property in 1980.

Initially, the Government valued the two parcels at $828,000, and this amount was paid to DIBCO in 1980. DIBCO thereafter sought further compensation through litigation and settlement negotiations. These settlement negotiations, in turn, spawned yet further litigation.

In 1991, the Government and DIBCO agreed to settle the condemnation proceeding pursuant to a Memorandum of Agreement ("MOA") under which the Government agreed to enlarge the scope of its Customs inspection expansion and condemn other properties, including the totality of a parcel owned by Commodities Export Company and Walter Lubienski. Commodities and Lubienski operated a duty-free shop on the property which competed directly with Ammex, another duty free shop located at the foot of the Ambassador Bridge. Ammex is owned by the Manuel J. Moroun family, which also owns and controls DIBCO.

The MOA called for the Government to pay DIBCO $1.24 million as compensation for the two parcels of land owned by DIBCO which were being condemned, and DIBCO, in turn, agreed to pay the Government for the costs of acquisition of the other properties, including the property owned by Commodities Export and Lubienski.

In response to challenges to the MOA launched by Commodities and Lubienski, the Government retreated from its stated intent to take the totality of Commodities' property, and for nearly eight years avowed—in pleadings, in on-the-record hearings, and in chambers conferences— that it had no intent of putting Commodities out of business, and that it only needed to take in fee a small corner of Commodities' parking lot to complete a truck ramp off of the Bridge, and an easement across the parking lot for access to a to-be-constructed government parking lot on adjacent property. Ultimately, in 1996, condemnation actions against the Commodities and Lubienski properties were filed to take the small portion of the Commodities parking lot as had been represented by the Government.

In light of these representations by the Government, the Court and the Sixth Circuit rejected Commodities' and Lubienski's repeated arguments that the Government and its competitors had colluded to put them out of business through a condemnation process financed in part by the competitor under the auspices of the MOA. However, rather than put an end to Commodities dispute, the Government's representations of intent to take only a small portion of Commodities property and not put Commodities out of business engendered a whole new round of litigation.

On the eve of trial on the issue of just compensation owed to Lubienski and Commodities, the Government filed a new condemnation action to take all of Commodities property. Then, when the Government, Commodities and Lubienski settled for a significant sum, DIBCO, instead of moving to intervene in the Commodities condemnation to challenge the settlement, sought to reopen the 1979 condemnation action on the grounds that the MOA had been breached and the Agreement was, therefore, rendered null and void. The Government agreed that the MOA was no longer operative. Therefore, the 1979 condemnation action proceeded to trial.

The matter was tried before a jury in February 2002 on the issue of just compensation for the Government's taking of the two parcels of land owned by DIBCO.

During the trial, the Government's expert, David Treadwell, testified that the highest and best use of the Overland parcel was as a truck terminal. Based on this conclusion, Mr. Treadwell valued the Overland parcel at $875,000. Mr. Treadwell valued the smaller DIBCO parcel at $48,000, for a total value of the condemned property of $923,000.

DIBCO landowner witness, Manuel J. Moroun testified that, in his opinion, the property was worth $13,000,000. DIBCO's appraiser, William P. Walsh, gave two alternative values. Based on the integrated use of the property as part of the adjacent Bridge property, Mr. Walsh valued the property at $8,150,000. Based on the property's use as a bonded warehouse or some other such facility having an enhanced market value due to the proximity of the property to the Ambassador Bridge, Mr. Walsh valued the parcels at $598,161 (Parcel 1) and $5,549,100 (Parcel 2), for a total value of 6,147,261.

The Court, however, limited the jury's consideration of Mr. Moroun's and Mr. Walsh's "integrated use" valuations. With respect to Mr. Moroun's testimony, the Court instructed the jury:

THE COURT: I want to give the jury— again, I want to give the jury a cautionary instruction. You can consider this as to what Mr. Moroun's own value that he attributed to was.

But in terms of reaching the ultimate issue on the valuation of the properties, you cannot consider it for that purpose.

[2/13/02 Tr. p. 558]

With respect to Mr. Walsh's testimony, the Court instructed the jury:

THE COURT: Ladies and gentlemen, you heard testimony on Friday from Mr. Walsh in which he indicated that the value of the property that has been taken by the Government was $50 per square feet—$50 per square foot, when valued in conjunction with the bridge as part of a use on the bridge.

I have ruled that that is not compensable. That is not a compensable use.

In other words, you may not take into consideration the value of the property when it is used in conjunction with the bridge or together with the bridge itself. That is known as a special use or a peculiar use to the owner of the bridge property at the time. That is not compensable.

However, I have also ruled that you may consider the property as being valued because of its location approximate to the bridge or near the bridge.

In other words, you may take into account its location as being near the bridge in arriving at what its highest and best use is. I will give you an instruction on that.

But I am now instructing you that the testimony Mr. Walsh gave you on Friday concerning the use of the property, the $8 million figure, when it is used in conjunction with the bridge, must be disregarded, cannot be considered by you....

[2/19/02 Tr. p. 877-78.]

After six days of trial, the jury returned a verdict awarding DIBCO $4,098,174 as just compensation for the two parcels.³ A Judgment in favor of DIBCO for that amount was subsequently entered on February 20, 2002, 188 F.Supp.2d 747. The Judgment was later superseded by an Amended Judgment in the total amount of $2,858,174 entered on September 30, 2003, 286 F.Supp.2d 865, which reflected deductions for the Government's previous deposits with the Court and payments to DIBCO of $828,000 and $412,000.⁴

DIBCO thereafter appealed to the Sixth Circuit Court of Appeals arguing that the amount awarded by the jury was inadequate because the District Court had precluded the jury from considering its proffered valuation theories based upon (1) lost profits alleged suffered by the Ambassador Bridge (which was adjacent to one of the parcels of property) and/or (2) the diminution in the value of its property after the taking (i.e., the difference between the before and after taking value of the Bridge and the adjacent property taken) contending that the highest and best use of the condemned parcel adjacent to the bridge was its integrated use as a part of the Ambassador Bridge.⁵

The Sixth Circuit rejected all...