DEPT OF TRANSPORTATION V HAGGERTY CORRIDOR PARTNERS LTD
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Michigan Supreme Court
Lansing, Michigan
Chief Justice:
Opinion
Justices:
Clifford W. Taylor
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED JULY 15, 2005
MICHIGAN DEPARTMENT OF
TRANSPORTATION,
Plaintiffs-Appellee,
v
No. 124765
HAGGERTY CORRIDOR PARTNERS
LIMITED PARTNERSHIP, PAUL D.
YAGER, trustee, also known as
PAUL D. YEGER, and NEIL J. SOSIN,
Defendants-Appellants.
_______________________________
BEFORE THE ENTIRE BENCH
YOUNG, J.
Defendants
own
land
that
was
partially
condemnation proceedings initiated by plaintiff.
taken
in
At issue
is whether the trial court properly allowed defendants to
present, in support of their proffered calculation of just
compensation,
evidence
that
their
property
had
been
rezoned from residential to commercial after the taking.
We
rezoning
conclude
was
that
irrelevant
the
to
evidence
the
issue
of
of
the
the
posttaking
condemned
property’s fair market value at the time of the taking.
Because the trial court abused its discretion in admitting
this evidence, and because the error was not harmless, we
affirm
reversed
the
judgment
the
jury’s
of
the
verdict
Court
and
of
Appeals,
remanded
the
which
case
for
further proceedings.
I.
Defendant
Partnership
FACTS
AND
Haggerty
owned
PROCEDURAL HISTORY
Corridor
approximately
Partners
335
acres
Limited
of
an
undeveloped tract of land in Novi, Michigan, which it had
assembled for the future purpose of building a high-tech
office
park.
Transportation
Plaintiff,
(MDOT),
the
sought
Michigan
to
condemn
Department
of
approximately
fifty-one acres of this property for construction of a
portion of the M-5 Haggerty Road Connector in the city of
Novi.
As
required
under
MCL
213.55,1
MDOT
provided
defendants with a good-faith offer of $2,758,000 for the
property, based on its then-applicable single-family and
agricultural zoning classification.2
Defendants, believing
1
MCL 213.55(1) requires a condemning agency, before
initiating negotiations for the purchase of property, to
make a “good faith written offer” based on the agency’s
appraisal of just compensation for the property.
2
At the time, the property was zoned by the city of
Novi for single-family homes and agricultural uses (R-A
Residential/Acreage). In May 1998, approximately two and
Footnotes continued on following page.
2
that the property’s “highest and best use”3 was commercial
rather than residential, refused MDOT’s offer.
In December 1995, MDOT initiated an eminent domain
proceeding
under
the
Michigan
Uniform
Condemnation
Procedures Act (UCPA)4 to condemn the property.
as
might
be
expected,
the
parties
At trial,
presented
widely
divergent evidence with respect to just compensation.
Consistent with its theory that the highest and best
use
of
the
property
was
residential,
MDOT
presented
evidence that, at the time of the taking, the property was
not likely to be rezoned to permit the commercial use
proposed by defendants.5
MDOT’s appraiser testified that
one-half years after the taking occurred, Novi rezoned the
property for office/service/technology uses (OST).
3
“‘Highest and best use’ is a concept fundamental to
the determination of true cash value. It recognizes that
the use to which a prospective buyer would put the
property will influence the price that the buyer would be
willing to pay.” Edward Rose Bldg Co v Independence Twp,
436 Mich 620, 633; 462 NW2d 325 (1990). Thus, a condemnee
is generally entitled to compensation based on the
“highest and best use” of his property. St Clair Shores v
Conley, 350 Mich 458, 462; 86 NW2d 271 (1957).
4
5
MCL 213.51 et seq.
For example, MDOT presented the testimony of Novi’s
chief planning consultant that, in 1993, the planning
commission recommended that the parcel not be rezoned
commercial. The consultant further testified that, as of
the date of the taking, there was no plan to rezone the
Footnotes continued on following page.
3
it was economically feasible to develop the parcel, both
before and after the taking, as a residential subdivision,
and that, in 1995, it was not reasonably possible that the
land would be rezoned for commercial use.
an
estimation
development
of
that
defendants’
fifty-four
land
residential
On the basis of
would
lots,
support
MDOT’s
appraiser testified that the difference in the value of
defendants’ property before and after the taking amounted
to $1,415,000.
Defendants, on the other hand, sought to establish
that they, along with other knowledgeable participants in
the commercial real estate market, knew at the time of the
December 1995 taking that the property was likely to be
rezoned to allow for its planned use as an office park.6
Defendants’ appraiser testified that the land could not
have been profitably developed as residential property,
and that rezoning was imminent at the time of the taking.
property because
dollar homes.
of
the
demand
6
for
large-lot,
million-
For example, defendants presented evidence that city
officials
had
made
representations
concerning
their
interest in rezoning the area to accommodate business
interests and that, at the time of the taking, Novi’s
economic development coordinator was already involved in
the
planning
for
an
OST
zoning
classification
to
accommodate defendants’ planned use of their property. At
the time of the taking, however, defendants had not
petitioned the city to have the land rezoned.
4
Against this backdrop, defendants’ appraiser arrived at a
just compensation figure of $18.6 million.
Consistent
value
of
taking
that
the
was
it
with
their
residential
increased
would
soon
theory
that
property
on
because
be
of
rezoned
the
the
the
fair
market
date
realistic
commercial,
of
the
prospect
defendants
sought to introduce evidence of the fact that the property
had, in fact, been later rezoned.
show
that
in
May
1998,
Defendants wished to
approximately
two
and
one-half
years after the taking occurred, defendants’ property was
rezoned for office/service/technology (OST) uses.
MDOT
filed a motion in limine to bar this evidence, arguing
that it was irrelevant to the fair market value of the
property as of the date of the taking.
denied
refused
MDOT’s
to
motion.
grant
MDOT’s
Additionally,
alternative
The trial court
the
trial
request
to
court
present
evidence that the rezoning took place solely as a result
of the taking.7
7
Evidence of value related solely to the taking
itself, including evidence of a rezoning that occurs
because of the taking, is not admissible for just
compensation purposes.
See MCL 213.70(1); Silver Creek
Drain Dist v Extrusions Div, Inc, 468 Mich 367, 378 n 13;
663 NW2d 436 (2003), citing In re Urban Renewal, Elmwood
Park Project, 376 Mich 311, 318; 136 NW2d 896 (1965) (“The
Footnotes continued on following page.
5
At MDOT’s request, the jury was taken on a bus tour
of defendants’ property.
The parties vigorously dispute
what the jurors saw on this tour.
jurors
saw
mainly
an
MDOT contends that the
undeveloped
tract
with
some
commercial buildings under construction on a portion of
the property.
the
jurors
Defendants contend, on the other hand, that
saw
many
completed
office
buildings
on
the
developed portion of the property and that only a small
portion of the property remained undeveloped.
There is no
record to support either party’s contention.
The jury was instructed that fair market value must
be assessed as of the date of the condemnation, and not as
of some future date.
The jury was further instructed,
with respect to the zoning reclassification, that
if there was a reasonable possibility, absent the
threat of this condemnation case, that the zoning
classification would have been changed, you
should consider this possibility in arriving at
the value of the property on the date of the
taking.
The jury determined that just compensation was owed to
defendants in the amount of $14,877,000.
On appeal to the Court of Appeals, MDOT contended
that
the
trial
court
erred
in
denying
its
motion
to
effect on market value of the condemnation proceeding
itself may not be considered as an element of value.”).
6
exclude evidence of the posttaking rezoning decision and
in
further
establishing
prohibiting
that
the
condemnation itself.
MDOT
zoning
from
introducing
change
was
caused
evidence
by
the
The Court of Appeals majority agreed
that the trial court abused its discretion in allowing the
jury to consider evidence of the posttaking zoning change
and that the error was not harmless:
The subject property was to be valued “as
though
the
acquisition
had
not
been
contemplated.”
MCL
213.70(1).
Plaintiff
attempted to introduce evidence establishing that
the subject property was rezoned because of the
condemnation.
If so, the actual rezoning was
irrelevant.
Indeed, the value of condemned
property should have been determined without
regard to any enhancement or reduction of the
value attributable to condemnation or the threat
of condemnation.
State Highway Comm v L & L
Concession, 31 Mich App 222, 226-227; 187 NW2d
465 (1971). Defendants were not entitled to the
enhanced
value
that
resulted
from
the
condemnation project, only the value of the
property at the time of taking.
In re Urban
Renewal, Elmwood Park Project, 376 Mich 311, 318;
136 NW2d 896 (1965). Although the potential for
rezoning on the date of taking was properly
considered, evidence of the actual zoning change
was irrelevant to the value of the property on
the date of taking and should not have been
disclosed to the jury.
Moreover, we agree with
plaintiff’s
contention
that
the
evidence
improperly contributed to the jury’s finding that
the rezoning was reasonably possible.
At the
very least, the improperly admitted evidence
tainted the jury's resolution of the “reasonable
possibility” question of fact.
Therefore, we
conclude
that
the
trial
court
abused
its
discretion in admitting the evidence.
7
We reject defendants’ contention that the
evidentiary error was harmless. Had the evidence
not been admitted, it is unlikely that the jury
would have been exposed to the evidence that
defendants now claim renders the improperly
admitted evidence harmless.[8]
Consequently, we
deem it appropriate to reverse and remand for
further proceedings.[9]
[Unpublished opinion per
curiam of the Court of Appeals, issued July 22,
2003 (Docket Nos. 234099, 240227), slip op, p 3.]
The
dissenting
judge
opined
that
the
evidence
was
properly admitted:
As the trial court concluded, evidence of
the actual rezoning had the tendency to make the
existence of the possibility of rezoning more
probable than it would be without the evidence.
MRE 401. More importantly, however, is the fact
that there is no Michigan case on point regarding
the admissibility of the subsequent fact of
rezoning, and our Sister States’ case law provide
[sic] divergent views. However, one respected
source (also cited by the trial court) indicates
that “[t]he fact that, subsequent to the taking,
the zoning ordinance was actually amended to
permit the previously proscribed use has been
held to be weighty evidence of the existence (at
the time of the taking) of the fact that there
was a reasonable probability of an imminent
change.”
4 Nichols, Eminent Domain (3d ed), §
12C.03[3].
Accordingly, it cannot be said that
8
Defendants contended that the posttaking rezoning
evidence was merely cumulative of the jurors’ bus tour of
the
property,
because,
in
light
of
the
extensive
commercial development present on the property at the time
of the tour, it was evident that the property had already
been rezoned to allow for commercial uses.
9
In light of its conclusion, the majority did not
address MDOT’s contention that the trial court further
abused its discretion in prohibiting it from introducing
evidence that the rezoning was caused by the condemnation.
8
the decision to admit the evidence was an abuse
of discretion when no prior case has so held, and
there is respected authority that favors the
ruling made by the trial court.
Moreover, even if the admission of the
evidence was an abuse of discretion, it was
harmless error in light of the jury instructions
and other competent, admissible evidence that
allowed the jury to properly conclude that
rezoning was a reasonable possibility. Here, the
jury was presented with sufficient evidence
regarding
whether
there
was
a
reasonable
possibility that the subject property would be
rezoned, independent of the evidence of the
actual rezoning, a fact which the majority
concedes.
Further, the trial court properly
instructed
the
jury
on
the
principles
of
condemnation law set forth by the majority, and
repeatedly stressed the principle that the jury
must value the property as of the date of the
condemnation, rather than at some future date
. . . . [Murray, J., dissenting, slip op, pp 2-3
(citations omitted).]
The
dissent
further
rejected
MDOT’s
alternative
argument that the trial court erred in refusing to allow
it to introduce evidence establishing that the rezoning
was directly attributable to the condemnation proceedings.
Judge
Murray
enhancement
condemned
noted
in
value
parcel
to
that
of
be
MCL
the
213.73,
remainder
considered
in
which
of
a
allows
partially
determining
just
compensation, was inapplicable and did not serve to permit
MDOT to introduce this evidence because MDOT did not plead
in its complaint that defendants’ property was enhanced
9
because of the improvement.10
Thus, Judge Murray opined,
the majority’s decision “effectively ignores the fact that
defendants’ evidence directly relates to the ‘reasonable
possibility’
that
effectuated.”
rezoning
of
the
property
would
be
Id. at 4.
This Court granted defendants’ application for leave
to appeal, limited to the issues “(1) whether a posttaking
zoning decision can be considered in determining value at
the
time
of
the
taking,
and
(2)
whether
the
Court
of
Appeals decision in this case is consistent with Dep’t of
Transportation v [VanElslander], 460 Mich 127 [594 NW2d
841] (1999).”11
We would hold that the evidence of a
posttaking rezoning is irrelevant to a just compensation
determination, that the error in the admission of such
evidence
in
this
case
was
not
harmless,
and
that
our
conclusion is wholly consistent with VanElslander, supra,
10
The dissent’s rationale here is difficult to
follow, and we agree with Justice Markman’s conclusion
that MCL 213.73 does not apply. See post at 29. As the
dissenting judge himself notes, MDOT made no “enhancement”
claim under MCL
213.73.
Rather, it simply sought to
rebut defendants’ posttaking rezoning evidence with its
own evidence that the rezoning was caused by the
condemnation and, thus, could not properly be considered
in determining just compensation. See MCL 213.70(1), (2).
11
470 Mich 874 (2004).
10
and
we
affirm
the
judgment
of
the
Court
of
Appeals
majority.
II.
Evidentiary
rulings
discretion.12
underlying
See
v
REVIEW
reviewed
for
preliminary
evidentiary
Lukity13
OF
are
However,
an
People
STANDARD
ruling
(“[T]he
are
an
abuse
of
issues
reviewed
admission
of
law
de
of
novo.
evidence
frequently involve[s] preliminary questions of law, e.g.,
whether
a
rule
admissibility
of
evidence
of
the
evidence.
questions of law de novo.”).
or
statute
This
precludes
Court
reviews
A trial court abuses its
discretion when it admits evidence that is inadmissible as
a matter of law.14
III.
ANALYSIS
A. INTRODUCTION
Const
1963,
art
10,
§
2
provides
that
“[p]rivate
property shall not be taken for public use without just
compensation therefor being first made or secured in a
12
VanElslander, supra at 129.
13
460 Mich 484, 488; 596 NW2d 607 (1999).
14
People v Katt, 468 Mich 272, 278; 662 NW2d 12
(2003).
11
manner prescribed by law.”
The term “just compensation”
as used in our Constitution, as well as in the UCPA, is a
term of art that “imports with it all the understandings
those sophisticated in the law give it.”15
The concept of
just compensation “‘includes all elements of value that
inhere in the property,’”16 and must be determined on the
basis
of
all
factors
relevant
to
its
cash
or
market
value.17
As we have recently had occasion to reaffirm, fair
market value is to be determined as of the date of the
taking.
See Silver Creek, supra (“‘[A]ny evidence that
would tend to affect the market value of the property as
of
the
date
of
the
condemnation’”
is
relevant
in
determining just compensation.).18
In keeping with these venerated principles concerning
the
calculation
specifically
15
of
provides
just
that
compensation,
fair
market
the
value
UCPA
“shall
be
Silver Creek, supra at 379.
16
Id. at 378, quoting United States v Twin City Power
Co, 350 US 222, 235; 76 S Ct 259; 100 L Ed 240 (1956)
(Burton, J., dissenting).
17
Silver Creek, supra at 377, quoting Searl v Lake Co
School Dist No 2, 133 US 553, 564; 10 S Ct 374; 33 L Ed
740 (1890).
18
Silver Creek, supra
VanElslander, supra at 130.
12
at
379,
n
14,
quoting
determined with respect to the condition of the property
and the state of the market on the date of valuation.”19
The
UCPA
prohibits,
however,
the
consideration
of
any
changes in market conditions that are substantially due to
the general knowledge of the imminent condemnation of the
property.20
Instead, with the exception of enhancement in
value of the remainder of a partially taken parcel,21 “the
19
See former MCL 213.70 (1980 PA 87), now MCL
213.70(3), amended by 1996 PA 474, effective December 26,
1996 (emphasis supplied).
The 1996 amendment of MCL
213.70, which took effect after the condemnation complaint
was filed in this case, does not contain any substantive
changes that would affect our analysis in this case.
20
See former MCL 213.70 (1980 PA 87), now MCL
213.70(1), (3), amended by 1996 PA 474, effective December
26, 1996.
21
See MCL 213.73, which provides, in part:
(1) Enhancement in value of the remainder of
a parcel, by laying out, altering, widening, or
other types of improvements; by changing the
scope or location of the improvement; or by
either action in combination with discontinuing
an
improvement,
shall
be
considered
in
determining compensation for the taking.
(2) When enhancement in value is to be
considered
in
determining
compensation,
the
agency shall set forth in the complaint the fact
that
enhancement
benefits
are
claimed
and
describe the construction proposed to be made
which will create the enhancement. . . .
* * *
Footnotes continued on following page.
13
property
shall
be
valued
in
all
cases
as
though
the
acquisition had not been contemplated.”22
B.
POSSIBILITY
A
OF
condemned
determined
REZONING
AS A
FACTOR AFFECTING JUST COMPENSATION
parcel’s
“‘“based
upon
fair
a
market
value
consideration
relevant facts in a particular case.”’”23
of
must
be
all
the
Accordingly,
(4) The agency has the burden of proof with
respect to the existence of enhancement benefits.
As explained in note 10 of this opinion, this portion
of the UCPA is inapplicable to this dispute. MDOT raised
no argument that the award of just compensation had to
reflect any enhancement to the remainder of defendants’
property by virtue of the condemnation.
It must be noted that the principles set forth in MCL
213.70 and 213.73, as well as the principles we today set
forth, are wholly reciprocal.
Just as MCL 213.73 allows
the condemning agency to offset the fair market value of
partially taken property by the increased value to the
remainder, MCL 213.70(3) allows the property owner to seek
increased
just
compensation
on
the
basis
of
the
devaluation of his remaining property due to the taking.
Similarly, just as our holding today precludes a property
owner from seeking increased just compensation on the
basis of an ex ante event, it also precludes the
condemning agency from paying a reduced amount on the
basis of such an event. See note 34 of this opinion.
22
See former MCL 213.70 (1980 PA 87), now MCL
213.70(1), amended by 1996 PA 474, effective December 26,
1996.
23
Silver Creek, supra at 378, quoting In re Widening
of Gratiot Ave, 294 Mich 569, 574; 293 NW 755 (1940),
quoting In re Widening of Michigan Ave, 280 Mich 539, 548;
237 NW 798 (1937); see also State Hwy Comm’r v Eilender,
362 Mich 697, 699; 108 NW2d 755 (1961).
14
evidence
demonstrating
the
likelihood
of
a
zoning
modification, just like any number of circumstance that
may affect a property’s value on the open market, may be
relevant
in
determining
just
compensation.
However,
because just compensation must be calculated on the basis
of the market value of a property on the date of the
taking,
the
relevance
of
any
such
evidence
is
wholly
dependent on whether, and how, the particular factor at
issue
would
have
affected
market
participants
on
that
date.
Our case law is quite clear in this regard.
As we
noted in State Hwy Comm’r v Eilender:24
We look at the value of the condemned land
at the time of the taking, not as of some future
date. If the land is then zoned so as to exclude
more lucrative uses, such use is ordinarily
immaterial in arriving at just compensation.
But, on the other hand, it has been held, “if
there is a reasonable possibility that the zoning
classification will be changed, this possibility
should be considered in arriving at the proper
value. This element, too, must be considered in
terms of the extent to which the ‘possibility’
would have affected the price which a willing
buyer would have offered for the property just
prior to the taking.” [Emphasis supplied.]
24
362 Mich 697, 699; 108 NW2d 755 (1961), quoting
United States v Meadow Brook Club, 259 F2d 41, 45 (CA 2,
1958).
15
Thus,
we
concluded
nonspeculative
change,
as
in
Eilender
“reasonable
evidenced
by
that
a
possibility”
an
already
nonfrivolous,
of
a
zoning
pending
zoning
modification, could properly be considered in determining
just compensation.25
Similarly, we held in VanElslander, supra, that the
trial court abused its discretion in refusing to allow
plaintiff MDOT to present into evidence an appraisal of
the condemnees’ property that was based on the possibility
that
a
zoning
variance
could
be
obtained
violations created by the condemnation.
to
cure
the
Noting that “‘any
evidence that would tend to affect the market value of the
property as of the date of condemnation is relevant,’”26 we
held that the possibility of obtaining a variance, just
like
the
relevant
possibility
to
the
of
a
zoning
just-compensation
modification,
may
determination.
be
We
stressed, however, that such evidence was only relevant to
the extent that it aided the fact-finder in determining
25
Eilender, supra at 700.
26
VanElslander, supra at 130, quoting the Court of
Appeals dissent.
16
“‘“the price which a willing buyer would have offered for
the property just prior to the taking . . . .”’”27
Applying these longstanding principles as reaffirmed
in Eilender, VanElslander, and Silver Creek, we would hold
that the trial court here committed an error of law, and
thus abused its discretion,28 when it denied MDOT’s motion
to exclude evidence of the posttaking zoning modification.
We of course agree with the Court of Appeals dissent,
and
with
evidence
existence
our
is
of
colleagues,29
dissenting
“evidence
any
fact
having
that
any
is
that
tendency
of
to
consequence
relevant
make
the
to
the
determination of the action more probable or less probable
than it would be without the evidence.”30
Where we believe
the dissenters have gone astray is in misidentifying the
“fact that is of consequence.”
27
Id. at 131,
(emphasis supplied).
28
quoting
Eilender,
supra
at
699
See Katt, supra at 278.
29
Our responses to the “dissent” refer to Justice
Markman’s opinion.
Although Justice Weaver has also
issued a dissent, this dissent does nothing more than
reiterate, in abridged fashion, the opinion of Justice
Markman.
30
MRE 401.
17
The dissenters frame this consequential fact as the
existence of a “reasonable possibility” that the property
would be rezoned.
See post at 4.
The possibility of a
zoning modification must, indeed, be a “reasonable” one in
order, as a matter of logic, for it to have any bearing on
fair market value.
equation.
However, this is only part of the
The “reasonable possibility” of a zoning change
bears on the calculation of fair market value only to the
extent
that
theoretical
property
“fact
it
could
willing
immediately
that
is
of
have
affected
buyer
would
prior
to
the
consequence”
the
have
price
offered
taking.31
is
the
that
a
for
the
Thus,
the
reasonable
possibility of a zoning modification, as that possibility
might
have
been
perceived
by
a
market
participant
on
condemnation day.32
31
See VanElslander, supra at 130; Eilender, supra at
699; In re Widening of Gratiot Ave, supra.
32
Justice Markman purports to agree that “‘the “fact
that is of consequence” is the reasonable possibility of a
zoning modification, as that possibility might have been
perceived by a market participant on condemnation day.’”
Post at 8, n 8. Yet his analysis completely ignores the
italicized phrase, which is critical to the justcompensation inquiry.
A market participant in December
1995 would have had absolutely no way of knowing that the
subject property would have been rezoned two and one-half
years later.
Moreover, as we have pointed out, the
objective probability that something will occur in the
Footnotes continued on following page.
18
Any information that was available at the time of the
taking may certainly be relevant in determining the price
that a property might fetch on the day of the taking.
For
example, in this case, defendants were properly permitted
to present evidence that they had met with city officials
regarding
their
plans
for
the
area,
and
that
these
officials had expressed a willingness to make the required
zoning
other
changes;
members
that
of
the
the
Novi
business
Chamber
of
community
Commerce
and
supported
the
proposed zoning change; that Novi’s Economic Development
Coordinator,
Greg
Capote,
did
not
believe
that
the
property was suitable for single-family development; that
there was a dire need for zoning to accommodate high-tech
office development; and that, at the time of the taking,
Capote was already involved in the planning for an OST
zoning
classification
development.
to
accommodate
this
type
of
All of this evidence pertains to information
that might have affected the value of the property as of
the date of condemnation, December 7, 1995.
the
time
defendants
acquired
their
Novi
Indeed, at
property,
beginning in 1988, the property was more valuable in their
future is in no way dependent on what actually occurs
after that probability is calculated.
19
eyes because of the looming possibility of a future zoning
change.33
In
utterly
contrast,
a
posttaking
irrelevant
compensation.
to
the
event
or
occurrence
calculation
of
is
just
Market participants are, as a general rule,
not omniscient, and would not be aware on the date of the
taking that a posttaking event is absolutely certain to
occur.34
A posttaking occurrence cannot possibly affect
the
market
fair
value
of
property
on
the
day
of
the
condemnation, because the occurrence has not yet come to
pass
and,
thus,
cannot
contribute
to
the
mass
of
information affecting the market value of the property on
33
Of course, as of the date of the taking, December
7, 1995, defendants had not even made a formal request for
a zoning change.
34
Consider the stock market.
The price of a given
share is often affected by available information.
The
value of a share may decrease, for example, as rumors
spread that a company’s chief operating officer might be
indicted for a crime related to the operation of the
business.
Similarly, during the preindictment period,
that share’s value may rise or fall depending on
investors’ perceptions regarding the probability that an
indictment is or is not imminent.
The fact that the
officer is, in fact, indicted, however, does not and
cannot have any bearing on the market price of the share
on the day before the day the officer is indicted.
The
fact of the actual indictment is, then, quite irrelevant
in determining why the share was trading at a given price
on the day before the indictment was filed.
Rather, it
was merely the speculation concerning the indictment that
made the stock price fluctuate.
20
that
day.
In
short,
a
posttaking
zoning
change
is
irrelevant to the just compensation calculation because it
does not make the fact of consequence——that information
regarding the reasonable possibility of a zoning change
may have impacted the market value of property on the date
of the taking——more probable or less probable.35
The trial court’s ruling and the Court of Appeals
dissenting
position
on
the
35
admission
of
posttaking
The error of defendants’ position is evident when
one considers that it makes fair market value wholly
dependent on extraneous temporal considerations: when the
condemnation trial occurs and when, if ever, a zoning
change occurs.
For example, suppose that identical
adjoining
properties,
separately
owned,
are
zoned
residential on the day that each is condemned.
Suppose
that one trial occurs two months before the properties are
rezoned commercial, while the other trial does not occur
until after the rezoning.
The first property owner to go
to trial will, of course, not be able to present to the
jury evidence that the property was actually rezoned. The
second property owner, however, will be in a position to
argue that the fact that the rezoning actually occurred
increased the probability, on the day of the taking, that
the rezoning was going to occur, and, in turn, that a
higher fair market value must be assigned to that
property. This illustrates the incongruity of defendants’
position: The two properties, on the day of the taking,
had precisely the same probability of being later rezoned;
yet the second owner, solely by virtue of the later trial
date, will be permitted to present evidence to show that
not only was there a “reasonable possibility” of rezoning,
but future rezoning was an absolute certainty. Aside from
the obvious logical error of defendants’ position,
adopting such a rule would also lead to gamesmanship and
strategic filing. Indeed, this rule would give condemning
agencies every incentive to postpone zoning plans in order
to reduce the price of just compensation.
21
evidence are informed by a common logical fallacy.
As our
dissenting colleague, Justice Markman, argues: “That the
property was, in fact, rezoned makes it ‘more probable’
that a ‘reasonable possibility’ of rezoning existed at the
time
of
argument
the
taking.
supposes
that
Post
the
at
8.
At
probability
its
of
a
core,
this
particular
occurrence at a specific point in time is made stronger by
after-the-fact
events.36
This
fallacy
presumes
that
a
zoning event occurring after the date of condemnation has
logical and legal relevance to the hypothetical “willing
buyer’s” calculation of the price of the property on the
condemnation date.
In order to understand the flaw in the probability
theory and rationale of the Court of Appeals dissent and
the trial court, it is important to remember the context
36
In the world of psychology, this phenomenon is
known as “hindsight bias,” whereby the subject, upon
learning
that
something
occurred,
overestimates
the
ability to predict that that “something” would occur. See
<http://en.wikipedia.org/wiki/Hindsight_bias> (noting that
“[p]eople are, in effect, biased by the knowledge of what
has actually happened when evaluating its likelihood”).
Compare this flawed ex ante probability logic with
the common logical fallacy known, in the realm of
causation theory, as “post hoc ergo propter hoc” (“after
this, therefore because of this”).
In each case, the
subject assigns inflated significance to an after-the-fact
event.
22
of
the
just
compensation
valuation
goal.
Although
condemnation results in a “forced sale,” the price the
condemning agency is required to pay must approximate that
price which a willing buyer would have offered for the
property at the time of the taking.
information
concerning
events
condemnation
could
Consequently, because
possibly
not
occurring
have
after
influenced
the
the
conduct of a willing buyer on the date of the taking, it
can
never
be
logically,
and
thus
legally,
relevant
in
determining the price that the theoretical willing buyer
and
seller
would
have
agreed
upon
on
the
date
of
the
theory
of
taking.
Consider
the
application
of
this
probability to an event–such as the toss of a die–the
probability of which is known.
That a six is rolled after
one predicts this outcome does not increase the strength
of the prediction beyond the usual one-in-six chance of
being
correct.
However,
contrary
to
conventional
probability theory, the proffered dissenting probability
theory suggests that the predictive force of a “six” call
is made stronger by the mere fact that the thrown die
actually revealed a six.
It is hard to understand how
such a “back to the future probability theory” works any
23
more logically when an event less predictable than the
roll of a die is at issue.
While a posttaking change in zoning may suggest that
one party may have had a more astute prognostication of
local zoning practices, it cannot seriously be advanced
that a zoning change made after the taking could in any
way have influenced a “willing buyer’s” pricing decision
on
the
day
of
the
taking.
Only
that
which
could
legitimately influence a buyer at the time of the taking
is
legally
and
logically
relevant
to
the
amount
compensation that must be paid for a taking.
of
Because
events that occur after the taking fall outside this zone
of
potential
influence,
they
cannot
logically
and
therefore legitimately be considered in determining just
compensation.
This case well illustrates the illogic of admitting
evidence of postcondemnation events to influence the factfinder’s
determination
of
just
compensation
statute.
Here, the change in zoning occurred two and one-
half years after the date of the taking.
to
envision
how
a
theoretical
under
the
It is difficult
“willing
buyer”
of
defendants’ property would have factored into his purchase
24
offer in 1995 a zoning decision made by Novi37 more than
two years after that date.38
As noted by the Court of Appeals dissent and by our
dissenting
colleague,
post
at
17,
4
Nichols,
Eminent
Domain (3d ed), § 12C.03[3], indicates that “‘[t]he fact
that, subsequent to the taking, the zoning ordinance was
actually amended to permit the previously proscribed use
has been held to be weighty evidence of the existence (at
the time of the taking) of the fact that there was a
reasonable probability of an imminent change.’”39
Although
37
As an aside, it must be remembered that it was the
city of Novi, and not the condemning authority (MDOT),
that rezoned this property.
We are not, in this case,
concerned with any allegations of fraud or gamesmanship on
the part of the condemning agency (for example, by
delaying an inevitable rezoning decision in order to avoid
paying a higher amount as just compensation for a taking).
38
We stress again that it is not the probability of a
zoning change that is irrelevant to the just-compensation
determination.
Indeed, we adhere to the rule, set forth
in Eilender and VanElsander, that evidence of the
reasonable possibility of a zoning change is admissible to
the extent that it aids in determining the fair market
value of the property at the time of the taking. Rather,
it is merely the fact of the posttaking zoning change that
is irrelevant, as it is of no import in determining “‘the
price which a willing buyer would have offered for the
property just prior to the taking . . . .’” VanElslander,
supra at 131, quoting Eilender, supra at 699.
39
Similarly, it is noted in 9 ALR3d 291, § 11 that
some courts have permitted the introduction of this type
Footnotes continued on following page.
25
it is true that some courts have, indeed, permitted the
introduction
of
reasons
have
we
posttaking
expressed,
employed by these courts.40
with
the
New
posttaking
rezoning
Jersey
zoning
we
evidence,
reject
the
for
the
reasoning
We do not, for example, agree
Supreme
change
Court
may
that
serve
evidence
to
“support
of
a
the
reasonableness of the factual claim that on the date of
taking
the
parties
to
a
voluntary
sale
would
have
recognized and been influenced by the probability of an
of evidence, while other
admission of such evidence.
courts
40
have
rejected
the
While there is a dearth of case law on point,
Justice Markman has cited a small handful of foreign cases
supporting his position. It is far from evident that the
few cases cited in the Nichols text and in footnote 10 of
Justice Markman’s dissent, post at 10 n 10, represent a
majority rule.
In any event, we are hardly compelled to
subscribe to the view of a few misguided courts.
These
cases give lip service to the notion that it is fair
market value at the time of the taking that must guide the
determination of just compensation; yet, without providing
a satisfactory explanation for doing so, they sanction the
admission of evidence that is wholly irrelevant to market
status at that critical time.
We choose, rather than
blindly to follow the lead of these few jurisdictions, to
adhere to the principles set forth in the UCPA and
developed under our Constitution.
Moreover, as the
Nichols text itself recognizes, “[a]n important caveat to
remember in applying [the rule that the probability of
rezoning
may
be
considered
in
determining
just
compensation] is that the property must not be evaluated
as though the rezoning were already an accomplished fact.
It must be evaluated under the restrictions of the
existing zoning with consideration given to the impact
upon market value of the likelihood of a change in
zoning.” Nichols, supra at § 12C.03[2].
26
amendment
in
the
near
future
in
fixing
the
selling
price.”41
The issue, again, is whether the perception of
the existence of a market factor (such as the possibility
of an imminent rezoning) would change the amount that a
fictional buyer would be willing to pay on a given date.
The fact that something that was only a possibility on day
1 becomes a reality on day 2 is not relevant to fair
market value on day 1.42
Our dissenting colleague, as evidenced by his lengthy
discussion
describing
the
“imperfect”
nature
of
the
eminent domain procedure in calculating just compensation,
appropriately explains why condemnation, being a forced
41
New Jersey v Gorga, 26 NJ 113, 118; 138 A2d 833
(1958).
42
We note further that, perhaps fearful of misuse of
such evidence, the New Jersey court in Gorga stressed that
the posttaking zoning amendment at issue had to be
“carefully confined to its proper role” and could be
received only for the purpose of establishing the
reasonableness
of
the
factual
claim
that
market
participants would have been influenced by the possibility
of a future zoning change.
Id. at 118.
We think that
admission of posttaking zoning changes cannot be so easily
“confined.”
After all, the jurors will have been told
that an event that was merely a possibility pretaking is
now a foregone conclusion.
Moreover, Justice Markman does not explain how to
limit his approach to only posttaking rezoning situations
(and not to the myriad other posttaking events that might
be argued to be somehow relevant to fair market value,
such as catastrophic property damage).
27
sale,
can
only
transaction.
approximate
a
real
market
real
estate
Although we are certainly not unsympathetic
to the plight of the innocent landowner who is compelled
to sell its property to the public, the governmental power
of condemnation is one that is specifically condoned by
our Constitution and regulated by the UCPA.
Justice Markman’s proposal—that we allow in evidence
of
posttaking
events
in
order
to
counterbalance
the
“artificial construct” of the hypothetical willing buyer
and seller—is not only inimical to the constitutional and
statutory duty to determine fair market value as of the
date of the taking; it is also illogical.
Justice
Markman
inadmissibility
of
incorrectly
evidence
of
We submit that
assumes
that
posttaking
the
occurrences
leads to the invariable “detriment of the property owner”
and
“the
benefit
of
the
government.”
Post
at
23.
Although the property owners in this particular case might
be benefited by the introduction of such evidence, the
converse would be true were the government permitted to
introduce
evidence
of
posttaking
diminishing effect on property value.
events
having
a
It is not difficult
to imagine a situation in which a condemning authority
might
seek
to
present,
in
28
connection
with
its
just-
compensation
calculation,
evidence
that
the
condemned
property was rezoned after the taking from commercial to
residential, resulting in a lower market value.43
B.
HARMLESS ERROR
Defendants argue that any error was harmless because
MDOT
requested
that
the
jury
view
the
property
and
because, during the view, the jury saw evidence that a
commercial
office
park
defendants’
remaining
was
being
property.
The
constructed
Court
of
on
Appeals
majority held that this evidence would likely not have
been admitted had defendants not been permitted to present
evidence of the posttaking rezoning.
We disagree; MDOT’s
motion for a jury view was granted before the trial court
ruled
that
experts.
defendants
Moreover,
could
we
simply
put
on
have
their
no
valuation
basis
in
the
existing record to determine what it was that the jury
actually
saw,
and
the
parties
give
radically
divergent
opinions on this point.
43
Again, Justice Markman appears to be of the belief
that the condemning agency in this case is somehow
profiting, at defendants’ expense, from the rezoning
decision.
Yet this case illustrates how misplaced is
Justice Markman’s supposition.
In this very case it was
not plaintiff MDOT, but a third party—the city of Novi—
that made the rezoning decision.
29
We
nevertheless
harmless.
conclude
that
the
error
was
not
Although the jury was properly instructed that
it was to determine fair market value as of the date of
the taking, it was not instructed that it was to consider
only the information extant at the time of the taking.
Rather, the jury no doubt believed that the fair market
value of the property on the date of the taking was to be
calculated as if rezoning were a fact, as it was at the
time of the trial.
More important, the trial court sorely compounded the
error by refusing to allow MDOT to rebut the posttaking
evidence by demonstrating that the rezoning was directly
attributable to the condemnation itself.
In this regard,
we
that
agree
with
our
dissenting
colleague
the
trial
court erred in precluding the admission of such evidence.
See post at 1-2.
As we have noted, the UCPA provides that
just compensation is not to be determined on the basis of
changes in market conditions that are substantially due to
the general knowledge of the imminent condemnation of the
property; rather, as MCL 213.70 provided at the time of
the filing of this condemnation action, “[t]he property
shall be valued in all cases as though the acquisition had
30
not
contemplated.”44
been
Thus,
to
the
extent
that
defendants presented any evidence supporting a change in
market value, MDOT should have been permitted to establish
that
such
a
change
in
value
condemnation of the property.
was
a
result
of
the
Because MDOT was deprived
of this clear statutory right, the trial court’s initial
error in admitting the posttaking rezoning evidence was
inconsistent with substantial justice45 and, therefore, may
not be considered harmless.
We thus affirm the judgment
of the Court of Appeals and remand this case for a new
trial.
IV.
CONCLUSION
The trial court abused its discretion when it denied
MDOT’s
property
motion
was
condemned.
to
rezoned
exclude
evidence
commercial
after
that
the
defendants’
property
was
Such evidence is irrelevant to the critical
just compensation inquiry, which is what a willing buyer
would pay for the property on the date of the taking.
Because the trial court further compounded this error by
44
See former MCL 213.70 (1980 PA 87), now MCL
213.70(1), amended by 1996 PA 474, effective December 26,
1996.
45
MCR 2.613(A); see also Ward v Consolidated Rail
Corp, 472 Mich 77, 84; 693 NW2d 366 (2005).
31
refusing to allow MDOT to establish, as contemplated by
the UCPA, that the zoning change was effectuated by the
fact
of
the
condemnation
itself,
the
admission of the evidence was not harmless.
error
in
the
We affirm the
decision of the Court of Appeals and remand for further
proceedings.
Robert P. Young, Jr.
Clifford W. Taylor
Maura D. Corrigan
32
S T A T E
O F
M I C H I G A N
SUPREME COURT
MICHIGAN DEPARTMENT OF
TRANSPORTATION,
Plaintiff-Appellee,
v
No. 124765
HAGGERTY CORRIDOR PARTNERS
LIMITED PARTNERSHIP, PAUL D.
YAGER, trustee, also known as
PAUL D. YEGER, and NEIL J. SOSIN,
Defendants-Appellants.
_______________________________
KELLY, J. (concurring).
In this case, we consider whether evidence of rezoning
after a taking is admissible to demonstrate that, when the
taking
occurred,
existed.1
a
reasonable
possibility
of
rezoning
We hold the evidence inadmissible.
The lead opinion by Justice Young concludes that the
evidence
is
irrelevant.
inadmissible
I
disagree
on
and
the
ground
believe
that
that
it
this
is
view
erroneously constricts the definition of legal relevance by
placing
a
temporal
constraint
on
it,
whereas
legal
relevance is an encompassing characteristic of evidence.
1
I use “taking” in this opinion synonymously with
“condemnation” to refer to the government’s expropriation
of private property from its owner for public use through
the power of eminent domain.
A majority of the Court agrees that the evidence of
rezoning is relevant because it corroborates a fact that is
of consequence to the determination of the action: whether
there existed a reasonable possibility of rezoning at the
time of the taking.
A
different
inadmissible.
MRE 401.
majority
agrees
that
the
evidence
is
However, my reasoning differs from the other
three justices comprising this majority.
I would hold that
the inadmissibility of the evidence lies in the fact that
its
probative
value
prejudicial effect.
The
admission
is
substantially
outweighed
by
its
MRE 403.
of
the
evidence
of
rezoning
unjustly
overwhelmed other relevant evidence that showed rezoning
was not reasonably likely and that the parcel’s reasonable
value
was
as
residential
property.
The
jury's
consideration of this evidence caused substantial injustice
to plaintiff.
court’s
Accordingly, it was an abuse of the trial
discretion
to
admit
it,
and
the
error
was
not
harmless.
I agree with the decision of the Court of Appeals to
set aside the jury verdict, although for slightly different
reasons.
I also agree to remand the case for a new trial
at which the evidence that the property was rezoned after
the taking will not be admitted.
2
UNDERLYING FACTS
This controversy concerns land on which a portion of
phase II of the M-5 Haggerty Road Connector in Novi was
built.2
Plaintiff
Michigan
Department
of
Transportation
filed a complaint under the Michigan Uniform Condemnation
Procedures Act (UCPA)3 to take the land by condemnation.
The
land
Haggerty
is
part
of
Corridor
a
larger
Partners
tract
Limited
owned
by
defendant
Partnership.
The
partnership had aggregated the tract over time by acquiring
adjacent parcels in the expectation of future development.
The issue concerns the reasonable market value of the
land at the time of the taking.
the
land
was
undeveloped.
zoned
When it was expropriated,
residential-agricultural
and
was
At trial, defendants asserted that they had
planned to seek to have it rezoned to commercial use.
They
hoped to develop the land into a technology park, as they
had done with a tract in nearby Farmington Hills.
Plaintiff
defendants
made
based
an
on
offer
its
to
value
buy
the
land
for
residential
from
or
2
This portion of the Connector includes a north and
southbound roadway between Twelve and Fourteen Mile Roads,
west of Haggerty Road in the city of Novi, Oakland County.
3
MCL 213.51 et seq.
the act as it existed
complaint was filed.
All statutory references are to
at the time the condemnation
3
agricultural use, consistent with its zoning classification
at
the
time
of
the
taking.
Michigan
law
requires
the
government to make a good-faith offer to purchase land for
its
fair
complaint.
market
value
MCL 213.55.
before
filing
a
condemnation
Defendants rejected the offer.
They believed that the true market value was much higher
because there was a reasonable possibility that the land
would be rezoned for commercial use in the near future.
THE COURT PROCEEDINGS
Plaintiff filed its condemnation complaint on December
7, 1995.
the
land
Defendants
It again asserted that the fair market value of
was
its
responded
value
that
for
the
residential
land
was
worth
purposes.
more
than
plaintiff offered due to its potential for commercial use.
Plaintiff
countered
that
rezoning
was
not
reasonably
possible.
Defendants planned to present significant evidence to
show
that
rezoning
for
commercial
possible at the time of the taking.
use
was
reasonably
Key to their argument
was evidence that the portion of the tract not condemned
was in fact later rezoned commercial.
Two and a half years
after the taking, Novi rezoned the noncondemned land for
office/service/technology use.
4
Plaintiff
made
this evidence.4
concluded
not
prejudicial.
awarded
motion
to
prevent
introduction
of
The trial court heard oral argument and
that
relevant,
a
it
was
too
The
damages
admissible.
The
court
remote
in
time,
evidence
was
admitted,
consistent
with
and
found
not
and
defendants’
it
overly
the
jury
evaluation,
which was based on use of the land if zoned commercial.
On
appeal,
plaintiff
evidence was erroneous.
trial
court
because
it
‘reasonable
had
abused
“tainted
possibility’
argued
that
admission
of
the
The Court of Appeals held that the
its
the
discretion
jury’s
question
of
in
admitting
resolution
fact.”
of
The
it
the
Court
reversed the judgment of the trial court and remanded the
case
for
evidence.5
a
new
trial
without
the
erroneously
admitted
Unpublished opinion per curiam of the Court of
Appeals, issued July 22, 2003 (Docket Nos. 234099, 240227).
The Court of Appeals decision was not unanimous.
The
dissent argued that the majority did not give the trial
court’s evidentiary ruling the deference it was due and
4
Plaintiff’s March 6, 2001, motion in limine to bar
testimony of a May 1998 zoning change.
5
The Court of Appeals, in dicta, also discussed the
trial court’s consideration of defendants’ “cost to cure”
the taking.
We did not grant leave to appeal on this
issue, and I decline to express a view about it.
5
that the trial court’s decision should be affirmed.
It
observed that this Court held in Dep’t of Transportation v
VanElslander6 that the possibility of subsequent rezoning
can be relevant to the market value of land at the time of
the taking.
It opined that any error was harmless.
Defendants
sought
leave
to
appeal
to
this
Court.
Until today, no published decision of this Court or of the
Court
of
Appeals
has
directly
presented,
and
it
is
Recognizing
its
jurisprudential
addressed
susceptible
to
the
arising
significance,
we
question
again.
granted
leave to appeal
limited to [the issues] (1) whether a posttaking
zoning decision can be considered in determining
value at the time of the taking, and (2) whether
the Court of Appeals decision in this case is
consistent with [VanElslander, supra]. [470 Mich
874 (2004).]
JUST COMPENSATION
We
review
evidence
at
decisions
trial
regarding
for
an
VanElslander, supra at 129.
law
that
the
government
the
abuse
admissibility
of
of
discretion.
It is basic to condemnation
may
take
private
property
for
public use as long as it pays just compensation for it.
Const 1963, art 10, § 2.
6
460 Mich 127, 130; 594 NW2d 841 (1999).
6
“Just compensation” is a legal term of art.
Silver
Creek Drain Dist v Extrusions Division, Inc, 468 Mich 367,
376; 663 NW2d 436 (2003).
It is intended to place the
property owner in as good a position financially as if the
property had not been taken.
This ensures that neither the
property owner nor the public is enriched at the other’s
expense.
State Hwy Comm’r v Eilender, 362 Mich 697, 699;
108 NW2d 755 (1961).
Just compensation is the fair market value of land at
the time of its taking.
Id.
Under the UCPA, what is just
compensation is determined as of the date the condemnation
complaint is filed and as if the government’s acquisition
of the land had not been contemplated.
MCL 213.70.
The jury assesses the value of condemned land as of
the
date
of
condemnation
acquiring or losing it.
foresee the future.
through
the
eyes
of
those
The market participants cannot
In the case under consideration, the
participants would not have known that the land would be
rezoned.
The participants’ prediction of whether there was
a reasonable possibility of rezoning could be based only on
information available at the time of the taking.7
7
Current
Defendants’ real estate appraiser testified that the
present value of real estate may be assessed by comparing
Footnotes continued on following page.
7
property
values
are
based
in
part
on
potential
changes
discounted for their uncertainty.
The law accepts that a reasonable possibility that the
zoning
classification
will
be
changed
“‘should
considered in arriving at the proper value.’”
be
Eilender,
supra at 699, quoting United States v Meadow Brook Club,
259
F2d
41,
45
(CA
2,
1958).
In
Eilender,
the
state
presented an appraisal based on the property’s residentialuse
zoning
status.
The
based on commercial use.
property
owner’s
appraisal
was
An application by the owner to
rezone the property for commercial use was pending at the
time of the taking.
Commercial use of the property in Eilender would have
been consistent with the zoning of property in some of the
surrounding
area.
But
the
city
commissioners
compensation that reflected the state’s assessment.
the value of
properties.
a
given
property
with
that
of
awarded
In so
similar
There was testimony that relevant similarities include
the locations, sizes, and available uses of the parcels.
Recent sales are more relevant than older sales. However,
an appraisal should also consider possible market changes
during the time a property can reasonably be expected to
remain on the market.
For instance, a large, undeveloped
parcel like the one at issue here may remain on the market
for two to three years before a buyer is found. Comparison
data is drawn from appraisals done by other professionals
and from public records.
8
doing, they failed to consider the reasonable possibility
that
the
property
would
be
rezoned.
We
held
that
an
application for rezoning, submitted before the taking, was
relevant to show the reasonable possibility of rezoning and
should be considered in determining the property’s market
value.8
Eilender at 699-700.
THE RELEVANCE
OF THE
FACT
OF
FUTURE REZONING
At trial in this case, defendants submitted evidence
suggesting that Novi might rezone defendants’ land to a use
higher
than
possibility
affected
the
residential.
of
rezoning
property’s
at
Because
the
fair
time
market
if
of
there
the
value.
was
a
taking,
it
Hence,
any
possibility of rezoning it was relevant.9
Similarly, I agree with Justices Markman and Weaver
that the rezoning was relevant to show that two-and-onehalf years before it occurred, a reasonable possibility of
8
In his opinion, Justice Markman fails to discuss the
factual context out of which Eilender arose. The facts in
Eilender differed critically from those in this case.
There, we remanded the case to allow the jury to hear about
an application for rezoning that had been submitted when
the taking occurred.
In contrast, the jury in this case
heard evidence that was not available to the market
participants at the time of the taking.
9
Relevant evidence is that which has “any tendency to
make the existence of any fact that is of consequence to
the determination of the action more probable or less
probable” than without the evidence. MRE 401.
9
rezoning
may
have
existed.
If
something
occurs,
by
definition, the occurrence had to have been possible then
and likely at some time beforehand.
The fact that the
reasonable possibility may not have arisen until after the
taking does not render evidence of the rezoning irrelevant.
It has some tendency to make more likely the existence of a
reasonable possibility before the taking.
However, Justice Young erroneously relies on the fact
that
a
market
participant
could
not
have
rezoning at the time of the taking.
known
of
the
This confuses the
temporal relationship between the events with their legal
relationship.
Although the market participant could not
have known that an event would occur in the future, the
fact that it did occur shows that it was reasonable to
believe beforehand that its occurrence was likely.
Justice
misplaced.
Young’s
example
of
the
roll
of
a
die
When one is asked beforehand the result of the
roll of a die, six is among the guaranteed results.
of
the
six
is
alternative
results
occurring with every roll.
has
an
equal
Each
chance
of
The fact that a six was rolled
is unnecessary to prove that six was possible or that it
was reasonable to believe before the roll that six was
possible.
10
Rezoning is more like a horse race than the roll of a
die.
The probability of a certain horse winning depends on
many factors.
They include, among others, the condition of
the horse on race day, the condition of the other horses,
and the condition of the track.
The odds on a bet placed
on that horse, which are an expression of the perceived
probability
of
that
horse
winning,
factors known before the race.
are
based
on
these
If the horse wins, the
victory corroborates the strength of the prediction that
the horse would win.
But there are no guarantees that the
horse will ever win, unlike the result of the roll of a
die.
Similarly, there are no guaranteed outcomes when one
estimates whether property will be rezoned.10
one
of
several
possibilities.
The
probability
occurring may never become a reality.
rezoning
corroborates
the
assertion
Rezoning is
of
it
But the fact of
that
the
belief
it
would be rezoned was reasonable, just as a winning bet
corroborates the belief that a horse would win.
As Justice
Young notes, rezoning suggests that the prognostication is
more
accurate
than
another’s
10
that
was
to
the
contrary.
Similarly, there are no guarantees that an officer
of a corporation will be indicted. See ante at 20 n 34.
11
Ante at 29.
Hence, the evidence of rezoning is legally
relevant.
THE PREJUDICIAL EFFECT
OF A
FUTURE FACT
Just because evidence is relevant does not mean that
it is admissible.
evidence
“if
The trial court may exclude relevant
its
probative
value
is
substantially
outweighed by the danger of unfair prejudice, confusion of
the issues, or misleading the jury . . . .”
We
have
noted
that
“[e]vidence
is
MRE 403.
not
inadmissible
simply because it is prejudicial. Clearly, in every case,
each
party
attempts
to
introduce
prejudice to the other party.”
evidence
that
causes
Waknin v Chamberlain, 467
Mich 329, 334; 653 NW2d 176 (2002).
“In this context,
prejudice means more than simply damage to an opponent’s
cause.
A party’s case is always damaged by evidence that
the facts are contrary to his contentions, but that cannot
be grounds for exclusion.”
People v Vasher, 449 Mich 494,
501; 537 NW2d 168 (1995).
This rule “‘is not designed to permit the court to
‘even out’ the weight of the evidence . . . or to make a
contest where there is little or none.’”
People v Mills,
450 Mich 61, 75; 537 NW2d 909 (1995), quoting United States
v McRae, 593 F2d 700, 707 (CA 5, 1979).
evidence
that
is
unfairly
The rule prohibits
prejudicial.
12
“Evidence
is
unfairly
marginally
prejudicial
probative
when
there
evidence
exists
will
preemptive weight by the jury.”
be
a
danger
given
that
undue
or
People v Crawford, 458
Mich 376, 398; 582 NW2d 785 (1998).
THE DISTINCTION BETWEEN FACT
AND
REASONABLE POSSIBILITY
The mischief here is that, once a juror hears evidence
that
rezoning
concluding
occurred,
anything
the
but
juror
that
will
have
difficulty
rezoning
was
reasonably
possible when the taking occurred.
As noted earlier in
this opinion on p 10, it is not necessarily true that the
possibility reasonably existed at the time of the taking.
Rezoning might have become reasonably possible only upon
the happening of one or more events after the taking.
The
taking itself could be one such event, as plaintiff argued
at trial.
Moreover,
it
does
not
follow
from
the
fact
that
something occurs that people could have reasonably believed
beforehand
that
illustrations:
it
would
occur.
Consider
these
In January 1968 one could have predicted
that it was reasonably possible that Neil Armstrong would
set foot on the moon in July 1969.
Similarly, one could
say today that it is reasonably possible that man will
visit Mars in future years.
13
Merely because an event occurred does not mean that it
was
reasonably
possible
on
a
given
date
beforehand.
Reasonable predictions of space exploration require one to
know much about the status of our space program at the time
the prediction is made.
reasonable
possibility
of
An accurate assessment of the
these
two
space
explorations
depends on the information known beforehand.
reasonable
prediction
of
future
rezoning
Similarly, a
requires
that
certain knowledge be available to the market participant at
the time of the taking.
See p 8 n 7 of this opinion.
The distinction between the fact of an occurrence and
whether it was reasonably possible on a given date before
it occurred has eluded many.
For example, one prominent
treatise, cited by the trial court, the dissent in the
Court of Appeals, and Justice Markman, characterized the
fact
of
posttaking
rezoning
as
“weighty
evidence.”
4
Nichols, Eminent Domain (3d ed), § 12C.03[3].
It is not enough that posttaking rezoning is probative
of
an
antecedent
Markman argues.
possibility
of
rezoning,
as
The question is was it reasonably possible
at the time of the taking?
In this case, the taking was
two-and-one-half years before rezoning occurred.
that
rezoning
Justice
did
occur
does
14
not
mean
that
The fact
it
was
reasonably possible at the time of or before the taking
that it would occur.
At
first
blush,
posttaking
rezoning
is
compelling
evidence that there was a strong possibility of rezoning at
the time of the taking.
But the admission of this evidence
was unfair because of the significant danger that the jury
would
not
properly
limit
its
consideration
of
it.
Admission of this evidence risks that the jury will accord
it weight wildly disproportionate to its probative value
and treat rezoning when the taking occurred as a foregone
conclusion.11
This is the “hindsight bias” discussed by
Justice Young that leads the jury to give the evidence
undue weight and render it unfairly prejudicial.
at 22 n 36.
bias
See ante
Rather than prove Justice Young’s point, this
demonstrates
why
the
evidence
can
be
relevant
yet
unfairly prejudicial.
Evidence of posttaking rezoning also tends to confuse
the value of property once rezoned and its value when it
was only reasonably possible that it would be rezoned.
In
a
is
takings
case,
the
amount
that
11
the
property
owner
In his opinion, Justice Markman illustrates this
danger, post at 21-22.
Admission of posttaking rezoning
evidence may encourage a witness to testify that it shows a
reasonable possibility of rezoning although when the taking
occurred, there was no reasonable possibility.
15
entitled to be paid is the latter value.
However, the jury
may improperly award just compensation based on the value
of the land as rezoned as if the property had already been
rezoned before the taking.
Justice Markman proceeds on the faith that the jury
can limit the evidence to its proper sphere.
17-18.
See post at
However, this approach negates the trial court’s
role as a gatekeeper under MRE 403.
The court must ensure
that the influence of the evidence presented to the jury is
not wildly disproportionate to its probative value.
In
every
case,
the
fact
of
subsequent
rezoning
is
unavailable to the market participant at the time of the
taking.
As Justice Markman points out, it allows one party
the benefit of the skyscraper or stadium looming overhead
whereas the market participant was limited to imagination
and someday plans.
It is highly prejudicial because it
gives
unfair
one
party
an
advantage
over
the
other
by
giving the jury information that the hypothetical market
participant could not have obtained.12
12
Justice
Markman
muses
about
the
subjective
motivations of the parties in a marketplace transaction.
However, those motivations are irrelevant here.
“Just
compensation” is not intended to perfectly replicate a
private deal. Nor does it consider that the property owner
Footnotes continued on following page.
16
Just
as
the
market
does
not
have
the
twenty-twenty hindsight, neither do litigants.
benefit
of
The jury
must assess the value of the property “‘on the basis of
facts
as
they
then
would
have
appeared
to
evaluated by the mythical buyer and seller.’”
and
been
Roach v
Newton Redevelopment Auth, 381 Mass 135, 138; 407 NE2d 1251
(1980), quoting New Jersey v Gorga, 26 NJ 113, 118; 138 A2d
833 (1958).13
In the interest of having the same availability of
information as the market participants at the time of the
was an unwilling seller. In fact, the analysis is meant to
ensure that this factor is not considered.
Like all “objective” legal determinations, “just
compensation” is a legal construct.
I disagree that it
should be ascertained by considering factors that were
unavailable to market participants at the time of the
taking.
13
See also Reeder v Iowa State Hwy Comm, 166 NW2d 839,
842 (Iowa, 1969) (inference that the adoption of the
ordinance more than eight months after condemnation proves
that the higher use was the best use “at time of taking
. . . is manifestly lacking in substance”) (emphasis in
original).
These cases and others cited by Justice Markman for
the proposition that evidence of posttaking rezoning is
admissible, dealt only with whether the evidence was
admissible because it was relevant.
They admitted the
evidence without addressing its prejudicial effect.
See
also Bembinster v Wisconsin, 57 Wis 2d 277, 284-285; 203
NW2d 897 (1973); Texas Electric Service Co v Graves, 488
SW2d 135, 137 (Tex App, 1972). Thus, I am not as persuaded
as is Justice Markman by their less thorough analysis.
17
taking, the jury should not know of posttaking rezoning.
It causes too great a danger of confusion of the issues and
unfair
prejudice
to
the
taking
party,
outweighing
its
probative value.14
THIS EVIDENCE
OF
POSTTAKING REZONING WAS UNFAIRLY PREJUDICIAL
The highly prejudicial tendency of posttaking evidence
to confuse and mislead substantially outweighed its minimal
probative value in this case.
land was worth $2,758,200.
$18,586,000.
Plaintiff estimated that the
Defendants set their damages at
The jury substantially agreed with defendants
and awarded them $14,877,000.
The award suggests a high likelihood that the jury was
overwhelmed with the evidence of the posttaking rezoning.
The jury appears to have ignored significant evidence that
rezoning
was
not
foreseeable.
Novi’s
chief
planning
consultant testified that, in 1993, the planning commission
recommended that the land not be rezoned commercial.
revealed
that
the
city
had
no
plan
to
rezone
the
He
land
because there was a demand for large-lot, million-dollar
14
Justice Markman implies that our decision today
improperly favors the government.
Post at 23 n 18.
Although the government may benefit today, I strive to
apply the rules of evidence objectively and in accordance
with their goal of deciding cases fairly and on their
merits. I do not consider the identities of the parties.
18
homes.
He told the jury that the intention of the city
council and the planning commission was to maintain the
property for residential purposes.
As of the date of the
taking, he would not have recommended a change in zoning.
Also,
defendants
had
no
pending
petition
for
a
zoning
change, unlike the defendant in Eilender.
The evidence of posttaking rezoning was not harmless,
as
defendants
argue.
Plaintiff
presented
sufficient
evidence to the jury that it could have concluded that
there was little reasonable possibility of rezoning at the
time of the taking.
was
substantially
demonstrates
that
But defendants’ damages award, which
in
agreement
the
jury
with
likely
gave
their
the
evidence far more weight than it merited.
admission
here
violated
MRE
403
and
claim,
posttaking
Therefore, its
was
an
abuse
of
discretion.15
I
agree
with
Justice
exacerbated the error.
Young
that
the
trial
court
The court admitted the evidence of
rezoning but precluded plaintiff from presenting evidence
that
the
rezoning
occurred
as
15
a
result
of
the
taking.
My analysis would not prevent a trial court from
considering
posttaking
rezoning
when
determining
the
admissibility of other evidence that was available at the
time of the taking. MRE 104(a).
19
Plaintiff should have been allowed to counter the effect of
the evidence once it was admitted.
Michigan
condemnation
takings
award
law
may
See ante at 30.
has
be
long
recognized
disturbed
on
that
appeal
a
where
erroneously admitted evidence caused substantial injustice
in the result.
Michigan Air Line R v Barnes, 44 Mich 222,
227; 6 NW 651 (1880); MCR 2.613(A).
the
erroneous
admission
of
I find that because of
evidence,
a
substantial
injustice occurred here.
THE EFFECT
OF THE
VIEW
OF THE
LAND BY
THE
JURY
It bears noting that, contrary to the Court of Appeals
dissent, plaintiff did not open the door to evidence of
posttaking
rezoning
or
requesting a jury view.
limine
opposing
March 6, 2001.
the
render
its
admission
harmless
by
Plaintiff filed its motion in
evidence
of
subsequent
rezoning
on
At a March 15 hearing, although the court
did not rule, its language suggested that ultimately it
would deny the motion.
By March 28, the trial court had not ruled on the
motion.
Plaintiff feared that it would receive an adverse
ruling.
Therefore, it moved for a jury view.
Plaintiff
argues that it did so to provide some evidence that the
property, most of which remained undeveloped at the time,
was
more
akin
to
residential
20
property
than
commercial
property.
the
Plaintiff asserted that it would have withdrawn
motion
if,
before
the
jury
view,
the
court
had
announced its decision to exclude defendants’ posttaking
rezoning evidence.
Plaintiff did not preclude appellate
review by properly anticipating and attempting to mitigate
the trial court’s error.
Moreover, the jury view did not render harmless the
erroneous admission of the evidence of posttaking rezoning.
There is no record evidence of what the jury saw when it
viewed the property.
It may have seen some commercial
construction and inferred that part of the parcel had been
rezoned.
But I agree with plaintiff that the jury view was
not
equivalent
the
of
uncontroverted
evidence
that
the
entire parcel had been rezoned.
DEP’T
My
view
VanElslander,
is
OF
TRANSPORTATION
not
V
VANELSLANDER
inconsistent
supra.
In
that
with
case,
our
the
decision
in
Department
of
Transportation took a portion of the defendants’ land.
As
a consequence, a building on the remainder of the land was
in
violation
of
local
department
attempted
to
reasonably
possible
for
effect
the
of
taking
set-back
introduce
the
on
requirements.
evidence
defendants
the
obtaining a zoning variance.
to
uncondemned
that
The
it
was
mitigate
the
building
by
A variance could have cured
21
the set-back violation and avoided loss of the building.
On appeal to this Court, the department argued that the
defendants’ appeal was moot because the building had been
demolished.
We held that the evidence showing the possibility of
obtaining a variance was admissible.
Also, the fact that
the building had been demolished did not render the appeal
moot.
VanElslander, supra at 132.
In
determining
just
compensation,
the
jury
in
VanElslander was entitled to hear of the likelihood that,
at
the
time
of
the
taking,
sought and granted.
entitled
to
rezoning.
hear
a
variance
might
have
been
Similarly, the jury in this case was
evidence
showing
the
likelihood
of
But just as subsequent demolition was not an
appropriate
consideration
VanElslander,
neither
when
was
determining
subsequent
damages
in
rezoning
an
appropriate consideration here.
CONCLUSION
The
government
must
pay
takes land for public use.
compensation
is
the
the taking.
compensation
when
Const 1963, art 10, § 2.
fair
Eilender, supra at 699.
just
market
value
of
the
it
Just
land.
It is determined at the time of
MCL 213.70.
22
The
rezoning
prejudicial
on
the
effect
of
evidence
determination
of
fair
substantially outweighs its relevance.
reason,
it
is
not
admissible
to
of
subsequent
market
MRE 403.
show
the
value
For that
reasonable
possibility of rezoning at the time of the taking.
In this
case, the erroneous admission of this evidence was an abuse
of
discretion.
It
was
not
harmless
because
it
caused
substantial injustice to plaintiff.
I agree with the conclusion of the Court of Appeals.
Plaintiff is entitled to a new trial without the admission
of evidence of the posttaking zoning change.16
I agree with
the decision to remand the case to the trial court and not
retain jurisdiction.
Marilyn Kelly
16
Consequently, I need not address the argument that
the trial court should have admitted evidence that the
taking itself caused the rezoning.
23
S T A T E
O F
M I C H I G A N
SUPREME COURT
MICHIGAN DEPARTMENT OF
TRANSPORTATION,
Plaintiff-Appellee,
v
No. 124765
HAGGERTY CORRIDOR PARTNERS
LIMITED PARTNERSHIP, PAUL D.
YAGER, trustee, also know as
PAUL D. YEGER, and NEIL J. SOSIN,
Defendants-Appellants.
_______________________________
WEAVER, J. (dissenting).
I dissent from the majority’s conclusion that evidence
of a posttaking rezoning is inadmissible in this case.
I
agree with Justice Markman’s conclusion that the evidence
of
a
posttaking
admissible
in
rezoning
this
case
is
to
relevant
enable
evidence
the
jury
to
that
is
assess
whether a “reasonable possibility” of rezoning existed on
the date of the taking and whether the possibility would
have affected the price a willing buyer would have offered
for the property at the time of the taking.
would
conclude
that
the
trial
court
discretion in admitting the evidence.
did
Therefore, I
not
abuse
its
I also agree with Justice Markman’s conclusion that
the
trial
plaintiff’s
court
did
evidence
abuse
that
its
discretion
the
in
posttaking
excluding
rezoning
was
caused by the taking, where this evidence was offered to
counter defendants’ argument that there was a reasonable
possibility of a zoning change.
Therefore,
I
would
vacate
the
Court
of
Appeals
decision and remand this case for a new trial.
Just
compensation
for
private
property
that
is
condemned for public use is intended to “put the party
injured in as good position as he would have been if the
injury had not occurred.”
State Hwy Comm’r v Eilender, 362
Mich
755
697,
699;
108
NW2d
(1961).
Determining
just
compensation “is not a matter of formula or artificial rule
but
of
sound
judgment
and
discretion
relevant facts in the particular case.”
based
Id.
upon
the
We have held
that a reasonable possibility that a zoning classification
will be changed is relevant and should be considered when
determining
just
“‘possibility’
willing
buyer
compensation
would
would
prior to the taking.”
have
have
to
the
affected
offered
extent
the
for
the
price
that
the
which
a
property
just
Id. at 699 (citation omitted);
see
also Dep’t of Transportation v VanElslander, 460 Mich 127,
130; 594 NW2d 841 (1999).
A posttaking change in zoning is
2
relevant1 because it may assist the jury in assessing the
possibility of a zoning change at the time of the taking—
i.e., how likely a zoning change was at the time of the
taking—and whether that possibility would have affected the
price a willing buyer would have offered for the property
at the time of the taking.2
that
the
trial
court
did
Therefore, I would conclude
not
abuse
its
discretion
in
admitting evidence of a posttaking change in zoning.
Additionally,
just
as
the
defendants
in
this
case
should be permitted to introduce evidence of a posttaking
change in zoning to demonstrate the possibility of a zoning
change at the time of the taking and how the possibility
would
have
should
be
affected
permitted
defendants’ evidence.
the
to
price,
offer
plaintiff
evidence
in
this
to
case
counter
Such evidence includes evidence that
1
As defined in MRE 401, “relevant evidence” is
“evidence having any tendency to make the existence of any
fact that is of consequence to the determination of the
action more probable or less probable than it would be
without the evidence.”
Further, “[a]ll relevant evidence
is admissible, except as otherwise provided by the
Constitution of the United States, the Constitution of the
State of Michigan, these rules, or other rules adopted by
the Supreme Court.” MRE 402.
2
As stated by the Supreme Court of New Jersey, “In
short if the parties to a voluntary transaction would as of
the date of taking give recognition to the probability of a
zoning amendment in agreeing upon the value, the law will
recognize the truth.” New Jersey v Gorga, 26 NJ 113, 117;
138 A2d 833 (1958).
3
the
rezoning
in
this
case
was
a
result
of
the
taking.
Therefore, I would conclude that the trial court abused its
discretion in excluding evidence that the rezoning was a
result of the taking.
Consistent with this opinion, I would remand the case
to the trial court for a new trial.
Elizabeth A. Weaver
Michael F. Cavanagh
4
S T A T E
O F
M I C H I G A N
SUPREME COURT
MICHIGAN DEPARTMENT OF
TRANSPORTATION,
Plaintiff-Appellee,
v
No. 124765
HAGGERTY CORRIDOR PARTNERS
LIMITED PARTNERSHIP, PAUL D.
YAGER, trustee, also known as
PAUL D. YEGER, and NEIL J. SOSIN,
Defendants-Appellants.
_______________________________
MARKMAN, J. (dissenting).
The majority concludes that evidence of a posttaking
rezoning is inadmissible to demonstrate that a “reasonable
possibility” of rezoning existed on the date of the taking.1
I respectfully disagree.
Because I believe that evidence
of a posttaking rezoning is admissible to demonstrate that
a “reasonable possibility” of rezoning existed on the date
of the taking, I do not believe that the trial court abused
its discretion in admitting such evidence.
1
However, I do
Throughout this opinion, I use the term “majority”
when referring to both Justice Young’s lead opinion and
Justice Kelly’s concurring opinion, and I use the term
“plurality” when referring only to Justice Young’s lead
opinion.
believe
that
the
trial
court
abused
its
discretion
in
prohibiting plaintiff from introducing evidence that the
posttaking rezoning was caused by the taking.
Therefore, I
would
Appeals
vacate
the
decision
of
the
Court
of
and
remand this case for a new trial, in which defendants would
be allowed to introduce evidence of the posttaking rezoning
and plaintiff would be allowed to introduce evidence that
such posttaking rezoning was caused by the taking.
I. FACTS
Defendant
AND
PROCEDURAL HISTORY
partnership,
a
partnership
that
develops
real estate, owned 335 acres of vacant property in Novi.2
In 1995, the Michigan Department of Transportation (MDOT)
began proceedings to condemn fifty-one acres of defendants’
property for use in the construction of the M-5 Haggerty
Road Connector in Novi.
On the date of the taking, the
property was zoned for residential use, but in 1998 the
property was rezoned for commercial use.
which
the
jury
compensation”
was
due
charged
with
defendants,
2
the
At trial, at
determining
trial
the
court
“just
allowed
According to defendants, they purchased this property
to build a high technology office park, anticipating that
the
property
would
be
rezoned
from
residential
to
commercial.
After the taking, the property was rezoned
from residential to commercial and defendants did build an
office park on their remaining 284 acres.
2
defendants to present evidence of the posttaking rezoning.3
However, the trial court refused to allow MDOT to introduce
rebuttal evidence that the property was rezoned only as a
result of the taking.
$18.5
million
in
Defendants requested approximately
compensation
approximately $2.7 million.
approximately
$14.8
and
MDOT
agreed
to
pay
The jury returned a verdict of
million.
In
a
split
decision,
the
Court of Appeals affirmed in part, reversed in part, and
remanded for a new trial.
Unpublished opinion per curiam,
issued July 22, 2003 (Docket Nos. 234099 and 240227).
The
majority held that the trial court abused its discretion in
admitting evidence of the posttaking rezoning, and, thus,
remanded for a new trial.
The dissenting judge concluded
that the trial court did not abuse its discretion either in
admitting
evidence
of
the
posttaking
rezoning
or
in
excluding evidence that the posttaking rezoning was caused
by
the
taking,
and,
thus,
he
would
have
affirmed
the
verdict.
II. ANALYSIS
Art 10, § 2 of Michigan’s 1963 Constitution provides
that “[p]rivate property shall not be taken for public use
3
At MDOT’s request, the jury saw the property in its
posttaking state.
3
without
just
compensation
therefor
being
secured in a manner prescribed by law.”
first
made
or
“‘“The purpose of
just compensation is to put property owners in as good a
position as they would have been had their property not
been
taken
from
VanElslander,
(citations
them.”’”
460
Mich
omitted).
Dep’t
of
129;
594
127,
Therefore,
“the
Transportation
NW2d
841
proper
v
(1999)
amount
of
compensation for property takes into account all factors
relevant
to
Extrusions
(2003).
market
Div,
value.”
Inc,
468
Silver
Mich
367,
Creek
Drain
379;
663
Dist
NW2d
v
436
In order to determine “just compensation,” we must
determine the market “value of the condemned land at the
time of the taking . . . .”
State Hwy Comm’r v Eilender,
362 Mich 697, 699; 108 NW2d 755 (1961).
The fair market
value
determined
of
condemned
property
“shall
be
with
respect to the condition of the property and the state of
the
market
on
the
date
of
valuation.”
MCL
213.70(3).
“‘[A]ny evidence that would tend to affect the market value
of
the
property
relevant.’”
as
of
the
date
of
condemnation
is
VanElslander, supra at 130 (citation omitted).
A. RELEVANCE
OF
EVIDENCE
OF
POSTTAKING REZONING
It is well established and uncontested that one of the
factors
relevant
possibility
that
to
the
market
value
zoning
4
is
the
“‘reasonable
classification
will
be
changed.’”
Eilender, supra at 699 (citation omitted).
As
this Court held in Eilender, supra at 699, “‘if there is a
reasonable possibility that the zoning classification will
be
changed,
this
possibility
should
be
considered
(Citation omitted.)4
arriving at the proper value.’”
in
In
other words, if, at the time of the taking, there existed a
“reasonable possibility” that the property would be rezoned
to
allow
“more
lucrative
uses,”
this
possibility” should be considered.5
Id.
be
extent
considered
in
terms
of
the
“reasonable
This factor “‘must
to
which
the
“possibility” would have affected the price which a willing
buyer would have offered for the property just prior to the
taking.’”
Id. (citation omitted).
Property that is zoned
to allow “more lucrative uses” is worth more money than
property that is not so zoned.
Therefore, property that
has a “reasonable possibility” of being rezoned to allow
4
Justice Kelly states that I am mischaracterizing this
Court’s holding in Eilender.
I cite Eilender only for a
proposition
with
which
everybody
apparently
agrees—a
“reasonable possibility” of rezoning should be considered
when determining “just compensation.”
I do not suggest
that this Court in Eilender already answered the question
at issue here.
5
The opposite, of course, is true as well. That is,
if, at the time of the taking, there existed a “reasonable
possibility” that the property would be rezoned to exclude
“more lucrative uses,” this “reasonable possibility” should
also be considered. Id.
5
“more lucrative uses” is worth more money than property
that
does
not
have
a
“reasonable
possibility”
rezoned to allow “more lucrative uses.”6
of
being
A person whose
property has been taken by the government is entitled to
the full market value of the taken property, taking into
consideration the totality of factors that a willing buyer
would consider, including the “reasonable possibility” of
rezoning.
The majority does not disagree that the “reasonable
possibility”
of
rezoning
is
a
factor
that
must
considered when determining “just compensation.”
the
majority
concludes
that
the
fact
itself
be
However,
that
the
property was rezoned after the taking cannot be considered
in
determining
taking,
a
disagree.
compelling
whether
there
“reasonable
was,
possibility”
at
the
of
time
of
rezoning.
the
I
Instead, I believe that such evidence may afford
evidence
that
a
“reasonable
possibility”
of
rezoning existed at the time of the taking.
In this case, one of the primary issues for the jury
to resolve was whether, at the time of the taking, there
6
As the plurality recognizes, “at the time defendants
acquired their Novi property, beginning in 1988, the
property was more valuable in their eyes because of the
looming possibility of a future zoning change.”
Ante at
19-20.
6
was a “reasonable possibility” that the subject property
would
be
rezoned
from
residential
to
commercial.
MDOT
argues that the trial court abused its discretion when it
allowed defendants to introduce evidence that, although the
property was zoned residential at the time of the taking, 2
1/2 years later the property was rezoned commercial.
The
Court of Appeals majority agreed with MDOT, concluding that
“evidence of the actual zoning change was irrelevant to the
value of the property on the date of taking and should not
have been disclosed to the jury.”
The
Court
of
Appeals
Slip op at 3.
dissent,
on
the
other
hand,
concluded that the trial court did not abuse its discretion
in admitting evidence of the posttaking rezoning.
with this dissent.
I agree
MRE 402 provides that “[a]ll relevant
evidence is admissible, except as otherwise provided by the
Constitution of the United States, the Constitution of the
State of Michigan, these rules, or other rules adopted by
the Supreme Court.”7
MRE 401 defines relevant evidence as
7
MDOT does not argue that the admission of the
posttaking rezoning violated the Constitution of the United
States or the Constitution of the state of Michigan.
It
only argues that the evidence is not relevant and that,
even if it is relevant, it should be excluded pursuant to
MRE 403, as discussed later in this opinion.
7
that “having any tendency to make the existence of any fact
that is of consequence to the determination of the action
more probable or less probable than it would be without the
evidence.”
As
already
discussed,
whether
a
“reasonable
possibility” of rezoning existed at the time of the taking
is
of
consequence
compensation.”8
to
the
determination
of
“just
That the property was, in fact, rezoned
makes it “more probable” that a “reasonable possibility” of
rezoning existed at the time of the taking.
of
Appeals
dissent
explained,
“evidence
As the Court
of
the
actual
rezoning had the tendency to make the existence of the
8
I do not know why the plurality suggests that I
“misidentify[] the ‘fact that is of consequence,’” ante at
17, because I agree with the plurality that “the ‘fact that
is of consequence’ is the reasonable possibility of a
zoning modification, as that possibility might have been
perceived by a market participant on condemnation day.”
Ante at 18 n 32 (emphasis in the original).
Where the
plurality and I differ is with regard to whether evidence
of a posttaking rezoning makes it “more probable” that a
“reasonable possibility” of rezoning existed at the time of
the taking. I agree with the plurality that the fact that
the property was subsequently rezoned does not necessarily
mean that a “reasonable possibility” of a rezoning existed
at the time of the taking.
However, the fact that the
property was subsequently rezoned makes it “more probable”
that a “reasonable possibility” of a rezoning existed at
the time of the taking than would the fact that the
property was not subsequently rezoned.
8
possibility
of
rezoning
without the evidence.”
more
probable
Slip op at 2.
than
it
would
be
This is true because
a jury confronted with the reality of a subsequent rezoning
would
be
acting
in
an
altogether
logical
fashion
by
comparing this reality to an alternative reality in which
no subsequent rezoning had occurred, and concluding that
the former reality gives rise to a greater inference than
the
latter
taking.
that
the
impetus
for
rezoning
preceded
the
Whether this inference is strong or weak would
depend on the totality of the circumstances.
The majority, however, would, in every case, deny the
property
actual
owner
the
rezoning,
ability
to
regardless
introduce
of
the
evidence
strength
of
of
an
the
inference raised by the rezoning either by itself or in
conjunction with other evidence.
evidence
of
actual
rezoning
Because I believe that
gives
rise
to
the
wholly
logical inference that the genesis of that rezoning may
have preceded the taking, I would not bar the introduction
of such evidence.9
Indeed, the leading treatise on eminent
9
The plurality is impressive in the breadth of the
analogies that it brings to bear in its analysis, ranging
from probability to the stock market to psychology. If, as
I understand it to be the plurality’s point, the future is
unpredictable, I am persuaded.
If, on the other hand, it
is the plurality’s point that when the future becomes the
present it is of no relevance in assessing what the
Footnotes continued on following page.
9
domain observes that evidence of a posttaking rezoning “has
been held to be weighty evidence of the existence (at the
time of the taking) of the fact that there was a reasonable
probability of an imminent change.”
4 Nichols, Eminent
Domain (3d ed), § 12C.03[3].
As the New Jersey Supreme
Court
evidence
has
explained,
such
“support[s]
the
reasonableness of the factual claim that on the date of
taking
the
parties
to
a
voluntary
sale
would
have
recognized and been influenced by the probability of an
amendment in the near future in fixing the selling price.”
New Jersey v Gorga, 26 NJ 113, 118; 138 A2d 833 (1958).10
prospects
disagree.
yesterday
were
of
that
10
future,
I
respectfully
Other states have held that evidence of a posttaking
rezoning is admissible to help the jury determine the “just
compensation” due for the taking.
Roach v Newton
Redevelopment Auth, 381 Mass 135, 137; 407 NE2d 1251 (1980)
(holding that “[a]ctual amendment of the zoning law,
subsequent to the taking, may be ‘weighty evidence’ of such
a prospect”); Bembinster v Wisconsin, 57 Wis 2d 277, 284285; 203 NW2d 897 (1973) (holding that “[t]he type of
evidence which has been admitted as material as tending to
prove a reasonable probability of change includes . . . the
actual amendment of the ordinance subsequent to the
taking”); Texas Electric Service Co v Graves, 488 SW2d 135,
137 (Tex App, 1972) (holding that “if subsequent to the
taking and before the trial the ordinance was actually
amended to permit the previously forbidden use then that of
itself was weighty evidence of the existence at the time of
the taking of the fact that there was a reasonable
probability of an imminent change”); Reeder v Iowa State
Hwy Comm, 166 NW2d 839, 841 (Iowa, 1969) (holding that a
rezoning ordinance enacted more than eight months after the
Footnotes continued on following page.
10
B. MARKETPLACE TRANSACTIONS VERSUS CONDEMNATION
PROCESS
As the majority explains, the jury is charged in cases
of
this
sort
with
“hypothetical,”
buyer,
would
“theoretical,”
determining
“theoretical,”
have
paid
a
“fictional,”
what
a
“fictional,”
“mythical,”
“willing”
“mythical,”
“willing”
“hypothetical,”
seller
for
the
property in a “voluntary,” transaction at the time of the
taking.
Ante at 15, 17, 18, 22, 23, 24, 25 n 38, and 27,
28, 31; ante at 15.
process
does
not
However, in truth, the condemnation
involve
a
typical
willing
buyer,11
a
taking, although not dispositive, was admissible).
See
also 9 ALR3d 291, § 11[a], p 320 (“[c]hange of an existing
zoning ordinance, subsequently to the time of condemnation,
has been held admissible in a trial for the award of
compensation as bearing on the degree of probability and
the imminence of the change at the time of the taking”); 4
Rathkopf’s The Law of Zoning and Planning, § 75:8 (4th ed)
(“[a] change in the zoning classification of a condemned
parcel or similarly situated adjacent properties subsequent
to a taking is considered weighty evidence of a reasonable
probability of an imminent change at the time of taking”).
Contrary to the plurality’s suggestion, ante at 26 n 40, I
have chosen to “blindly . . . follow the lead of these few
jurisdictions,” only if the entirety of the analysis
contained in this dissent is disregarded. I cite the above
cases only to contrast the support in other states for the
position expressed in this dissent with the utter absence
of similar support for the majority’s position.
11
“As to the condemnor/government in the hypothetical
‘fair market value’ scenario, the government stands in the
shoes of a ‘willing [private] buyer.’”
13 Powell, Real
Property, § 79F.04[2][a][ii], p 39.
11
willing seller, or a voluntary transaction.12
involves
a
transaction
in
which
the
Instead, it
government
takes
property without the permission or consent of the property
owner,
in
what
is
essentially
a
“forced
sale.”
The
property owner is not a willing seller, and the government
is not a typical willing buyer.
The condemnation process
bears little in common with a voluntary sale of property in
the market between a willing seller and a willing buyer.
It is a source of its confusion that the majority
fails to give significance to these differences.
Yet, they
are determinative of the very issue before this Court.
The
majority provides that the jury is to “suppose” that the
property owner is indistinguishable from a willing seller,
that
the
government
is
indistinguishable
from
a
typical
willing buyer, and that both have entered into a market
transaction.
value
that
Next, the jury is asked to “imagine” the
a
“reasonable”
buyer
and
placed on the property in the market.
seller
would
have
Finally, although
the jury can be apprised by the governmental “buyer” that
at the time of “sale,” the property was zoned residential
12
“Not only does the ‘fair market value’ test posit a
hypothetical buyer and a hypothetical seller, it also
posits a hypothetical market . . . .”
13 Powell, Real
Property, § 79F.04[2][a][iii][A], p 39.
12
and
there
rezoned,
was
no
the
“reasonable
jury
cannot
be
possibility”
apprised
of
by
it
the
being
private
“seller” that such rezoning, in fact, has already occurred.
The
upshot
of
this
procedure
is
that
the
jury
must
“imagine” a typical willing buyer, a willing seller, and a
voluntary transaction—none of which, of course, exist in
reality—while at the same time the jury must not consider a
reality that does exist, namely, that the government has
taken property that has been rezoned.
Moreover, not only is the jury to “imagine” a market
transaction
where
in
reality
there
is
none,
but
in
calculating the “fair market value” of the property being
“sold” the jury must imagine a particular moment in time at
which
the
taking,
or
“forced
sale,”
occurred,
placing
itself in the shoes not of any real parties involved in the
taking, but of a nonexistent “reasonable” buyer and seller.
This is in further contrast to a genuine market transaction
in which the buyer and the seller stand in their own shoes,
and there is no need for a jury, or any other third party,
to imagine anything concerning the value of property.
What
is
the
significance
of
the
fact
that
the
condemnation process is not truly equivalent to a market
transaction?
Its significance lies in its demonstration
that the majority operates on a faulty premise when it
13
insists that the jury, in making its “fair market value”
determination, can have access only to such information as
would have been possessed by a “real” buyer and seller at
the time of the “real” transaction.
In the instant case,
this means, according to the majority, that the jury must
be
deprived
of
the
information
rezoned after it was taken.
that
the
property
was
Apart from the fact that all
of the majority’s “realities” are merely fictive, there is
simply
genuine
no
basis
for
the
proposition
transaction
and
parties
that
to
parties
a
to
a
constructive
transaction can, or should, be placed on an equal footing
concerning the range of access to information.
This is a
false equivalency because the underlying transactions are
not equivalent.
In the market transaction, the buyer and the seller
will
typically
distinctive
possess
or
considerable
unique
to
information
that
is
themselves—sentimental
considerations concerning property, subjective assessments
of value, and estimations of worth that are a function of
their personal experiences, their varied speculations of
the future, and their diverse financial circumstances and
ambitions.
the
jury,
Such “subjective” factors are inaccessible to
which
can
only
make
14
a
“fair
market
value”
determination on the basis of “objective” factors.13
as
the
then
participants
possess
in
the
information
“subjective”
that
is
Just
transaction
unavailable
to
may
the
participants in the “objective” transaction, the corollary
is also true.
transaction
are
For the participants in the “subjective”
involved
in
the
task
of
calculating
“personal value,” while the participants in the “objective”
transaction
are
involved
in
the
calculating “fair market value.”
amount
as
accurately
as
very
different
task
of
In calculating the former
possible—“personal
value”—it
is
necessary merely that the buyer and the seller be permitted
to take into consideration as much information as is of
13
defined
willing
pay to
to sell
"Market value” or “fair market value” is
as the amount of money which a purchaser
but not obliged to buy the property would
an owner who was willing but not obliged
it.
The hypothetical nature of this “value”
should be obvious.
Moreover, the condemnee is
assumed to be not only a “willing seller” but
also a person who will act as a purely economic
creature, when in fact neither assumption may be
true.
One inescapable result of imposing the
purely economic “willing seller” persona onto the
condemnee
is
that
the
formula
permits
no
compensation
for
subjective
or
sentimental
attachment that the condemnee may have to the
property.
Only objective transferable value is
considered.
Subjective nontransferable value,
such as . . . sentimental value generally [is]
not
included
in
the
just
compensation
calculation.
[13 Powell, Real Property, §
79F.04[2][a][i], pp 37-38.]
15
importance to each.
In calculating the latter amount as
accurately as possible—“fair market value”—it is necessary
in contrast that as much relevant information as available
concerning value be taken into consideration.
For
the
reasons
set
forth
earlier,
I
believe
that
evidence of posttaking rezoning is relevant to “fair market
value.”
this
Such relevance is not diminished by the fact that
information
might
not
have
been
available
participants in a “subjective” transaction.
“objective”
transaction
of
the
to
Although the
condemnation
process
can
never truly replicate the “subjective” transaction of the
marketplace,
it
can
nonetheless
possible on its own terms.
be
made
as
perfect
as
This can be achieved only by
making available as much relevant information as possible
to the fact-finder.
C. PROBATIVE VALUE VERSUS DANGER
OF
UNFAIR PREJUDICE
MDOT argues that, even if evidence of the posttaking
rezoning
is
relevant
pursuant
to
MRE
403.
evidence,
MRE
it
403
should
be
provides,
excluded
“[a]lthough
relevant, evidence may be excluded if its probative value
is
substantially
outweighed
by
the
danger
of
unfair
prejudice, confusion of the issues, or misleading the jury,
or by considerations of undue delay, waste of time, or
needless presentation of cumulative evidence.”
16
However,
“[e]vidence
is
prejudicial.”
NW2d
176
not
inadmissible
simply
because
it
is
Waknin v Chamberlain, 467 Mich 329, 334; 653
(2002).
“‘“Relevant
evidence
is
inherently
prejudicial; but it is only unfair prejudice, substantially
outweighing
probative
value,
which
permits
exclusion
of
relevant matter under Rule 403 . . . .”’”
Id. at 334
(citations
prejudicial
when
there
omitted).
exists
“Evidence
a
danger
is
that
unfairly
marginally
probative
evidence will be given undue or preemptive weight by the
jury.”
Id. at 334 n 3, quoting People v Crawford, 458 Mich
376, 398; 582 NW2d 785 (1998).
“The fact that, subsequent
to the taking, the zoning ordinance was actually amended to
permit the previously proscribed use has been held to be
weighty
evidence
of
the
existence
(at
the
time
of
the
taking) of the fact that there was a reasonable probability
of an imminent change.”
4 Nichols, Eminent Domain (3d ed),
§ 12C.03[3] (emphasis added).
Evidence of a posttaking
rezoning “is not merely marginally probative evidence, and
thus there is no danger that marginally probative evidence
will be given undue weight by the jury.”
335 (emphasis added).
Waknin, supra at
Further, the trial court repeatedly
instructed the jury that it was to value the property as of
17
the date of the taking,14
and we must presume that the
jurors understood and followed these instructions.15
People
v Dennis, 464 Mich 567, 581; 628 NW2d 502 (2001).
14
The trial court instructed the jury:
Your award must be
value of the property
taking. . . .
based upon the market
as of the date of
* * *
The Court has instructed you on the subject
of highest and best use. One of the things that
must be considered in deciding what the highest
and best use of the property was at the time of
the taking is the zoning clarification -- zoning
classification of the property at that time.
However, if there was a reasonable possibility,
absent the threat of this condemnation case, that
the
zoning
classification
would
have
been
changed, you should consider this possibility in
arriving at the value of the property on the date
of taking. . . .
In this case, the market value of the
property, both before and after the taking, must
be determined as of December 7th, 1995, and not
at an earlier or later date. [Emphasis added.]
15
Justice Kelly contends that admission of evidence of
a posttaking rezoning would be too confusing for a jury to
handle, and the plurality concludes that such evidence
“cannot be . . . easily ‘confined.’”
Ante at 16, 18, 19;
ante at 27 n 42. I believe that a jury is quite capable of
making a distinction between the fair market value of the
property at the time of the taking and the fair market
value of the property at some later time.
I also believe
that a jury is quite capable of understanding that just
because the property today is zoned commercial does not
Footnotes continued on following page.
18
D. PRACTICAL VALUE
OF
EVIDENCE
OF
POSTTAKING REZONING
At trial, MDOT argued that there was no “reasonable
possibility”
that
the
property
would
be
rezoned.
Not
permitting defendants to respond to this argument with the
fact
that
the
property
has,
undermines
the
integrity
of
in
the
requiring a jury to ignore reality.
fact,
been
judicial
rezoned
process
by
That is, the majority
would require the jury to ignore the skyscraper that looms
over a property, or the crowds milling about the new sports
stadium.
Such a determined obliviousness to reality brings
no honor to a justice system when there are customary and
traditional means—a trial court that precisely instructs on
the
law
and
a
jury
that
faithfully
abides
by
the
necessarily mean that there was a “reasonable possibility”
of the property being rezoned commercial 2 1/2 years
earlier.
If jurors can be trusted sufficiently to
determine what constitutes “just compensation,” or the fair
market value of property, they can also be trusted to pay
heed to the trial court when it plainly instructs them on
proper and improper uses of evidence.
Justice Kelly has determined that “the jury was
overwhelmed with the evidence of the posttaking rezoning,”
that it “ignored significant evidence that rezoning was not
foreseeable,” and that it “likely gave the posttaking
evidence far more weight than it merited.” Ante at 18, 19.
There is no evidence to sustain this determination, other
than the fact that the jury’s calculation of fair market
value was closer to that proposed by defendants than by
plaintiff.
Moreover, “just compensation” is a factual
question that is normally left to the jury to decide, not
the judges of this or any other court.
19
instructions—by which to ensure that the skyscraper or the
sports stadium is evaluated only for proper purposes.
The
majority is correct that evidence of a posttaking rezoning
is not dispositive concerning whether there existed at the
time
of
the
rezoning.
taking
a
“reasonable
possibility”
a
However, it is incorrect that such rezoning can
never be of any relevance in this regard.
with
of
all
other
determination,
aspects
the
of
relevance
the
of
Rather, just as
“just
a
compensation”
particular
posttaking
rezoning must be assessed on a case-by-case basis.
The premise of our justice system is that providing
more, rather than less, information will generally assist
the
jury
in
discovering
sustains
the
judicial
system,
important
truth-seeking
a
role
responsibility
truth.
the
that
jury
of
the
truth.
Relevant
“In
process.
is
called
American
upon
fact-finder
role
evidence
and
entails:
the
to
assume
the
searching
the
massive
for
the
‘The purpose of trial is to find the truth and
exact justice through the transmission of information to
the jury.’”
Comment, Speaking out: Is Texas inhibiting the
search
truth
for
by
prohibiting
juror
questioning
of
witnesses in criminal cases?, 32 Tex Tech L R 1013, 1014
(2001) (citation omitted).
The costs to our justice system
are almost always much greater, in my judgment, when the
20
jury
is
deprived
consideration
relevant
evidence
such
of
of
evidence
is
than
enabled
when
and
a
the
risk
incurred that it will be considered for improper purposes.
For
we
can
reasonably
protect
against
the
latter
risk
through careful instructions and thoughtful deliberations.
By contrast, lost evidence will forever taint a decision
that could have been enhanced by the consideration of such
evidence.
evidence
While
can
be
recognizing
abused,
such
that
posttaking
evidence
also
rezoning
carries
the
potential to ensure a truer and better-informed calculation
of fair market value.
To deprive the jury in this case of
the ability to consider the rezoning is to undermine its
ability to determine the truth in this matter, and thereby
to
produce
“just
the
most
compensation”
accurate
determination
which
to
possible
defendants
of
are
constitutionally entitled.16
Finally, knowing that a jury will be apprised of all
relevant
information
also
may
16
serve
felicitously
to
Contrary to Justice Kelly’s criticism, I am not
attempting to “negate[] the trial court’s role as a
gatekeeper.”
Ante at 16.
I agree that it is the trial
court’s role to exclude evidence with regard to which “its
probative value is substantially outweighed by the danger
of unfair prejudice . . . .”
MRE 403.
In view of her
criticism, it is ironic that it is Justice Kelly who would
reverse the decision of the trial court admitting evidence,
finding this to constitute an abuse of discretion.
21
encourage those who testify and who argue before the jury
to do so in a more accurate and precise fashion.
example,
For
a government witness may be more hesitant to tell
the jury that there was no “reasonable possibility” of a
rezoning if the witness knows that the jury will eventually
be informed that the property has, in fact, been rezoned.
In
other
cocksure
words,
in
his
a
government
or
her
witness
assertion
may
that
well
there
be
less
was
no
“reasonable possibility” of a rezoning if there is a realworld
check
majority’s
upon
the
approach,
witness’s
the
testimony.
government
will
Under
remain
free
the
to
tell the jury that absolutely no possibility of a rezoning
existed, and the property owner will be unable to rebut
this assertion by being allowed to inform the jury that the
property has, in fact, been rezoned.17
17
To allow such a
The plurality asserts that the admission of evidence
of a posttaking rezoning would “lead to gamesmanship”
because it “would give condemning agencies every incentive
to postpone zoning plans in order to reduce the price of
just compensation.”
Ante at 21 n 35.
The plurality,
however, fails to give any attention to the fact that the
exclusion of such evidence will give the government the
ability to paint a false or distorted picture of the worth
of property in the face of a contrary reality.
That is,
while the admission of such evidence may lead to
gamesmanship outside the courtroom, the exclusion of the
evidence may lead to gamesmanship inside the courtroom.
Besides the fact that the inclination of a government to
engage in gamesmanship outside the courtroom may say much
Footnotes continued on following page.
22
distorted picture of the reality surrounding the exercise
of a constitutional power, to the benefit of the government
and to the detriment of the property owner, is to undermine
the integrity of the constitutional process.18
about its inclination within the courtroom, this Court must
necessitously be most concerned about conduct within the
courtroom. Maintaining the integrity of the legal process
is one of our principal charges. Presumably, the political
processes
are
available
to
address
the
conduct
of
governments that seek to thwart evidence in order to deny
their own citizens fair market value for their “taken”
properties.
Moreover, gamesmanship outside the courtroom is far
less
likely
to
arise
than
gamesmanship
within
the
courtroom.
Many factors play a role in a government’s
decision whether or not to rezone property; how much the
government will have to pay for property that has already
been condemned is only one of these factors. On the other
hand, during a trial in which the exclusive issue is how
much does the government have to pay for the condemned
property, the government’s dominant interest will always be
to paint a picture of property of as little market value as
possible.
18
The plurality contends that my concern is misplaced
because it was the city of Novi’s decision to rezone the
property, not MDOT’s.
Ante at 29 n 43.
However,
regardless of which governmental entity decided to rezone
the property, it cannot be disputed that the majority’s
decision to exclude evidence of the posttaking rezoning is
beneficial to the government and detrimental to the private
property owner.
23
For these reasons, I conclude that the trial court did
not
abuse
its
discretion
in
admitting
evidence
of
the
posttaking rezoning.19
E. EVIDENCE
THAT
POSTTAKING REZONING
WAS
CAUSED
BY
TAKING
A posttaking rezoning is admissible only as evidence
that a “reasonable possibility” of a rezoning existed at
19
Although I conclude that evidence of a posttaking
rezoning is admissible, I would caution that in admitting
such evidence the trial court must carefully instruct the
jury, as it did here, that the jury is to determine the
market value at the time of the taking and that evidence of
a posttaking rezoning is to be used only for the purpose of
determining whether there existed at the time of the taking
a “reasonable possibility” of rezoning. That is, the trial
court must ensure that the jury does not “assign[] inflated
significance” to the posttaking rezoning. Ante at 22 n 36.
As the New Jersey Supreme Court has explained:
[A]n amendment of the ordinance which came
into being after the date of taking should not be
excluded solely because of the time sequence.
But such evidence should be carefully confined to
its proper role.
It may serve only to support
the reasonableness of the factual claim that on
the date of taking the parties to a voluntary
sale would have recognized and been influenced by
the probability of an amendment in the near
future in fixing the selling price.
The fact
would still remain that on the date of taking the
property was otherwise zoned, and the value as of
that date must still be reached on the basis of
facts as they then would have appeared to and
been evaluated by the mythical buyer and seller.
[Gorga, supra at 118.]
24
the time of the taking.20
taking
obviously
does
A rezoning that was caused by the
not
constitute
evidence
that
a
“reasonable possibility” of a rezoning existed at the time
of the taking.
In other words, a posttaking rezoning that
was caused by the taking is simply not relevant evidence in
support of fair market value at the time of the taking.
Therefore,
“[t]he
effect
on
market
value
of
the
condemnation proceeding itself may not be considered as an
element
of
value.”
Silver
Creek,
supra
at
379,
n
13,
citing MCL 213.70(1),21 and In re Urban Renewal, Elmwood
20
In determining the weight to be given to a
posttaking rezoning in considering whether there existed a
“reasonable possibility” of a rezoning at the time of the
taking, the jury should consider the totality of the
circumstances, including the time that has elapsed between
the taking and the rezoning, the complexity of the project
and the extent to which planning for such project must have
predated the taking, changed circumstances within the
jurisdiction creating or affecting the need for such
rezoning, the nature of changes in the composition of the
pertinent zoning body and within the relevant political
jurisdiction and the extent to which such changes were
foreseeable, the credibility of public authorities on the
circumstances surrounding a rezoning, the extent to which
the taking itself caused the rezoning, and any reasonable
inferences that can be drawn from the fact of an actual
rezoning.
21
MCL 213.70(1) provides, in pertinent part:
A change in the fair market value before the
date of the filing of the complaint which . . .
was substantially due to the general knowledge of
Footnotes continued on following page.
25
Park
Project,
376
Mich
311,
318;
136
NW2d
896
(1965).
“[A]n actual change in zoning cannot be taken into account
if it ‘results from the fact that the project which is the
basis
for
the
Redevelopment
taking
Auth,
was
381
impending.’”
Mass
135,
Roach
137;
v
Newton
407
NE2d
1251
(1980), quoting 4 Nichols, Eminent Domain (rev 3d ed), §
12.322[1], n 7.1.
See also State v Kruger, 77 Wash 2d 105,
108; 459 P2d 648 (1969); People ex rel Dep’t of Pub Works v
Arthofer, 245 Cal App 2d 454, 465; 54 Cal Rptr 878 (1966);
Williams v City & Co of Denver, 147 Colo 195, 202; 363 P2d
171 (1961).
posttaking
should
The trial court itself recognized that, if the
rezoning
not
considering
rezoning
instructed
was
consider
whether
existed
the
at
caused
the
a
the
taking,
posttaking
“reasonable
the
jury:
by
time
“if
of
there
the
jury
rezoning
possibility”
the
taking,
was
a
when
of
as
a
it
reasonable
possibility, absent the threat of this condemnation case,
that the zoning classification would have been changed, you
should consider this possibility in arriving at the value
of the property on the date of taking.”
(Emphasis added.)
the imminence of the acquiring by the agency
. . . shall be disregarded in determining fair
market value. Except as provided in section 23,
the property shall be valued in all cases as
though the acquisition had not been contemplated.
26
However, the trial court, for reasons that are unclear,
refused
to
allow
MDOT
to
present
evidence
that
the
posttaking rezoning may have been a result of the taking.22
The Court of Appeals dissent relied on MCL 213.73 to
conclude that the trial court did not abuse its discretion
in
excluding
evidence
caused by the taking.23
that
the
posttaking
rezoning
was
MCL 213.73 provides, in pertinent
part:
22
The plurality concludes that the trial court erred
in admitting evidence of the posttaking rezoning and that
this error was not harmless because: (1) “the jury no doubt
believed that the fair market value of the property on the
date of the taking was to be calculated as if rezoning were
a fact,” ante at 30 (emphasis in the original), a curious
conclusion
given
that
the
trial
court
specifically
instructed the jury that it was to determine what the fair
market value of the property was “as of the date of taking”
and the jury was made well aware that the rezoning did not
take place until 2 1/2 years after the taking; and (2) “the
trial court sorely compounded the error by refusing to
allow
MDOT
to
rebut
the
posttaking
evidence
by
demonstrating that the rezoning was directly attributable
to the condemnation itself.”
Ante at 30.
As explained
above, I agree with the majority that the trial court
abused its discretion in refusing to admit MDOT’s evidence.
However, I disagree with the majority that the appropriate
resolution is to remand for a new trial in which both
defendants’ and plaintiff’s evidence is excluded. Instead,
I would remand for a new trial in which both plaintiff’s
and defendants’ evidence is admitted.
23
The Court of Appeals majority did not address this
issue, concluding that “[i]n light of our ruling [that the
trial court abused its discretion in admitting evidence of
the posttaking rezoning], we need not address whether the
trial court abused its discretion in prohibiting plaintiff
Footnotes continued on following page.
27
(1) Enhancement in value of the remainder of
a parcel . . . shall be considered in determining
compensation for the taking.
(2) When enhancement in value is to be
considered
in
determining
compensation,
the
agency shall set forth in the complaint the fact
that
enhancement
benefits
are
claimed
and
describe the construction proposed to be made
which will create the enhancement.
The dissent concluded that because MDOT “did not plead in
its complaint any benefit to defendants’ remaining property
as a result of its construction project,” the trial court
did not abuse its discretion “when it prevented [MDOT] from
presenting evidence that the rezoning occurred as a result
of its construction project . . . .”
respectfully disagree.
Slip op at 4.
I
MCL 213.73 is applicable where the
condemning agency attempts to reduce the amount of “just
compensation” on the basis that the condemnation actually
increased the value of the remaining property that was not
condemned.
MDOT attempted to introduce evidence here that
the rezoning was the result of the condemnation, not to
show that defendants’ remaining property was enhanced by
the condemnation, but to show that when the taking occurred
there was not a “reasonable possibility” of a rezoning.
In
other words, MDOT did not contend that it should pay less
from introducing evidence establishing that the rezoning
was caused by the condemnation.” Slip op at 3 n 3.
28
for the fifty-one acres taken because the remaining 284
acres will be worth more than before the taking.
MDOT does
not contend that “enhancement in value is to be considered
in
determining
compensation.”
MCL
213.73.
To
the
contrary, MDOT is arguing that enhancement in value, i.e.,
the
subsequent
rezoning,
is
determining compensation.
not
to
be
considered
in
Therefore, in my judgment, MCL
213.73 simply does not apply here.
III. CONCLUSION
Because
I
believe
that
evidence
of
a
posttaking
rezoning is admissible to demonstrate that a “reasonable
possibility” of rezoning existed on the date of the taking,
I do not believe that the trial court abused its discretion
in admitting such evidence.
However, I do believe that the
trial court abused its discretion in prohibiting plaintiff
from introducing evidence that the posttaking rezoning was
caused
by
the
taking.
Therefore,
I
would
vacate
the
decision of the Court of Appeals and remand this case for a
new
trial,
in
which
defendants
would
be
allowed
to
introduce evidence of the posttaking rezoning and plaintiff
would be allowed to introduce evidence that this posttaking
rezoning was the result of the taking.
Stephen J. Markman
29
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