Clarence Smith v. City of Fort Smith

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April 7, 2004








John F. Stroud, Jr., Chief Judge

Appellant Clarence Smith appeals the judgment of the Sebastian County Circuit Court on a jury verdict awarding appellant $35,000 as just compensation for the appellee City of Fort Smith's taking of appellant's property for use in a park project. Appellant contends that the trial court erred in not dismissing the condemnation action pursuant to Ark. R. Civ. P. 12(b)(6) because the City failed to state facts concerning the public purpose of the taking; that the trial court erred in finding that the City had met its burden of proving a public purpose for the taking; that the trial court erred in granting the City's motion in limine to prevent appellant from presenting evidence of severance damages; and that the eminent-domain statutes were unconstitutional because they violate due process and do not provide for the timely payment of just compensation. The City cross-appeals and argues that the trial court erred in allowing appellant's expert, Leo Faulkner, to testify concerning the value of the property taken. We find no error and affirm on both direct appeal and on cross-appeal.

Appellant, individually, owned five adjacent lots, lots 26 through 31. A building was situated on parts of lots 29, 30, and 31, and the remainder of the lots were being used for parking and storage. Appellant also owned all of the stock in a now defunct corporation, Tire World, Inc., that owned lots 1 through 13, which were separated from the lots at issue by an alley, and lots 32 through 36. The City filed its application for condemnation on April 3, 2001, alleging that the Martin Luther King Park project required the acquisition of lots 26 through 31 in order to improve a blighted area by demolishing the existing building and constructing park facilities. Appellant responded with a motion to dismiss, alleging that the City had failed to state sufficient facts upon which to grant relief. The trial court denied appellant's motion to dismiss for failure to state facts, stating that the City's complaint clearly stated the parties to the action, the purpose for the taking, the legal description of the property, the extent of the taking, and the estimated just compensation. Appellant then answered, alleging that the statutory scheme for eminent-domain proceedings was unconstitutional and denying the material allegations of the complaint. Appellant amended his answer to allege that the park was under-utilized and that the City had an improper purpose and was abusing its discretion and acting in bad faith in seeking condemnation. The trial court entered an order granting the City possession of the property upon the City's deposit of $100 with the clerk.

Appellant filed a motion for bifurcated trial seeking a hearing on the issue of the purpose of the taking. The motion repeated the allegations made in appellant's answer and amended answer concerning the constitutionality of the eminent-domain statutes and the improper purposes for the taking. The trial court found that Ark. Code Ann. § 18-15-301 (2003) specifically grants municipalities the power to condemn property for parks and, therefore, the City could take the property.

The City filed a motion in limine seeking to prevent appellant from testifying that other property near the subject property was owned by Tire World, Inc., in order to prove severance damages. The trial court granted the City's motion in limine and prohibited appellant from offering testimony concerning the ownership of the other property. The City also filed a second motion in limine seeking to prevent appellant from offering the testimony of Leo Faulkner, a licensed real-estate broker, concerning the value of the property. The City alleged that Faulkner was not a certified appraiser and therefore not qualified to render an opinion.

Appellant testified that he had owned the property for twenty years and that his father had owned the property before him. He testified that he was using the building, which formerly housed, among other things, a grocery store, a salvage warehouse, and a furniture factory, for storage. Appellant testified that the Tire World property was used for storage.

Matt Jennings, the director of Community Economic Development for the City, testified that he administers the Community Block Grant Program whereby the federal government provides monies to cities for various developments, especially in lower economic areas. He also testified that appellant's property was considered as a potential development site for an earlier project but was not chosen. Jennings testified that, in the year 2000, the City's parks commission made a proposal concerning appellant's property being suitable for the possible expansion of the Martin Luther King Park. A copy of the resolution by the City's board of directors authorizing the city to proceed with acquisition of the property necessary for expansion of the park was introduced.

Jennings stated that he contacted appellant and obtained appellant's permission to conduct an environmental review and appraisal of the property. He testified that he wrote appellant, indicating his willingness to negotiate the purchase of appellant's property, but was unable to reach an agreement with appellant. Jennings also testified that a master plan had been prepared showing possible expansion of the park, including appellant's property. He also testified that a soccer field had been built in the park but admitted that there were no bleachers or seating facilities in the park. He stated that restrooms had been constructed but that a softball field and a skate park had not yet been developed. He testified that appellant's property would contain a 25-meter swimming pool.

Jennings admitted that the application for block-grant funding contained a statement that the city was trying to eliminate a blighted area for park purposes. He admitted that the general consensus in his department and in the parks department was that Mayor Ray Baker wanted this property as a priority because the mayor had received complaints about the property being used for illegal dumping.

Leo Faulkner, a licensed real-estate broker, testified as appellant's expert. He testified that he was familiar with the subject property and the building located on the property. He also testified that he was familiar with building costs. He admitted that he had been semi-retired for the last three or four years. He also admitted that he had not become a certified appraiser or testified in court with reference to the valuation of property in the last seven or eight years. Faulkner testified that, in the last five years, he had done market analyses for buyers only when he was selling property. He stated that he had done one appraisal within that time, which was for appellant's attorney. Faulkner testified that he decided to use Marshall's Valuation Service - a service that appraisers use to value property in certain parts of the country. He stated that he did not apply the locality factor of 86% for Fort Smith in determining his valuation. He stated further that he did not consider either the cost approach or the income approach in arriving at the fair-market value. Rather, he testified that he relied on comparable sales. He admitted that there had not been much demand for property in this area. Faulkner stated that he formed an opinion as to the value of the property and the building. He testified that he had not looked at other properties on a similar street or determined the value of the property exclusive of the building. He testified that, based on his appraised value of $1 per square foot, the land was worth $21,000. He also discounted its value for being a small part of a larger tract. He also admitted that he had not inspected the building to make his determination, stating that it had been over twenty years since he had been in the building.

Faulkner testified that he believed that the replacement costs of a new building, built in the year 2000, would be $242,651. He admitted that this was an estimate because he was not allowed to see the property and the building no longer existed. His opinion was that the value of the property was $48,526 for the building and $21,000 for the land, for a total of $69,526.

Faulkner testified that a Mexican retail outlet was sold approximately twelve years earlier for $85,000 and that building and property were two-thirds the size of appellant's property. Faulkner testified that he did not know that appellant's building had been vacant from the end of 1997 to early 2001. He also testified that he did not know that there had not been utilities in the building in 1999, 2000, or 2001, that the ceiling sheet rock had been removed, or whether there was any tile on the concrete floor. He admitted that his 80% depreciation figure was an estimate because he did not have any information to base it on. He testified that the figure used for his estimate of $51.42 per square foot was taken from Marshall's Valuation Service for an "average" Class "C" building, but he then admitted that he should have used the "low" figure as better describing the building.

A jury was empaneled to decide the issue of the amount of compensation and returned a verdict fixing appellant's compensation at $35,000. Judgment was entered accordingly, and this appeal and cross-appeal followed.

For his first point, appellant contends that the trial court erred in denying his Arkansas Rule of Civil Procedure 12(b)(6) motion to dismiss for failure to state facts. Our supreme court has held that an order denying a motion to dismiss is ordinarily not appealable because it is not a final judgment. See Cigna Ins. Co. v. Brisson, 294 Ark. 504, 744 S.W.2d 716 (1988). However, we have not found any Arkansas cases in which the denial of a motion to dismiss for failure to state a claim has been reviewed after entry of a final judgment. Other states have held that the denial of a motion to dismiss for failure to state a claim is not reviewable, even after a final judgment. Technical Computer Servs., Inc. v. Buckley, 844 P.2d 1249 (Colo. Ct. App. 1992); Stanton & Assocs., Inc. v. Bryant Constr. Co., 464 So. 2d 499 (Miss. 1985); Concrete Serv. Corp. v. Investors Group, Inc., 340 S.E.2d 755 (N.C. Ct. App. 1986). As the Mississippi Supreme Court said in Bryant:

More specifically, the refusal of the trial judge to grant a Rule 12(b)(6) motion made on grounds the complaint is just too sketchy, its allegations too vague, is never appealable. Faced with such a complaint, the defendant has several options (other than appeal). He may move for a more definite statement. Rule 12(e), Miss. R. Civ. P. Ordinarily, it will be more practicable for the defendant to utilize discovery to unveil the details of the plaintiff's claim. Rules 26-37, Miss. R. Civ. P. A defendant may insist on a more precise statement of the plaintiff's claim at a pretrial conference, Rule 16, Miss. R. Civ. P., for ordinarily the allegations and denials of pleadings ought to be deemed merged into the pre-trial order. Finally, a defendant may lie in wait for the plaintiff to offer at trial evidence deemed beyond the scope of the pleadings and spring forward with an appropriate objection (which, ordinarily, will be overruled by the trial judge who thought the complaint sufficient in the first place, or at best will be met by plaintiff's motion to amend, Rule 15, Miss. R. Civ. P., which generally will be - and ought to be - granted).

464 So. 2d at 505 (emphasis in original). Both Buckley and Bryant point out that a motion for a directed verdict would also preserve the issue raised in the motion to dismiss. Also, as pointed out in Concrete Service Corp, supra, reviewing a Rule 12(b)(6) motion after a jury verdict may implicate constitutional issues concerning the right to a jury trial.

The purpose of pleadings is to notify the court and opposing party of the facts underlying the claim or defense asserted. Vincennes Steel Corp. v. Derryberry, 194 Ark. 37, 106 S.W.2d 571 (1937). If a defending party proceeds to trial after losing a motion to dismiss, it is hard to see the prejudice he suffers from not reviewing the denial of the motion. He has had notice of the facts supporting the claims made against him and could have utilized the other procedural devices available in preserving the issue. We affirm on this point.

As his second point, appellant argues that the trial court erred in finding that the city had established a public purpose for the taking. We find no error on this point.

The Arkansas Supreme Court has held that the need for taking for public use or purposes is a judicial question that the owner has a right to have determined by the courts. Pfeifer v. City of Little Rock, 346 Ark. 449, 57 S.W.3d 714 (2001); Arkansas State Highway Comm'n v. Alcott, 260 Ark. 225, 539 S.W.2d 432 (1976). In Pfeifer, the supreme court stated that the legislative determination of the necessity of the taking is subject to review in cases of fraud, bad faith, or gross abuse of discretion.

In City of El Dorado v. Kidwell, 236 Ark. 905, 370 S.W.2d 602 (1963), the court held that the landowner has the burden of proving that the taking was arbitrary or not for a public use. See also Gray v. Ouachita Creek Watershed Dist., 234 Ark. 181, 351 S.W.2d 142 (1961). The court in Kidwell said that the public purpose for the taking was accomplished by the statute under which the municipality proceeded and the city council resolution. Here, Ark. Code Ann. § 18-15-301(a)(1) (2003) confers upon a municipality the ability to condemn private property through eminent-domain proceedings for the creation of a park. The resolution of the City Board authorizing payment for the property was introduced. Appellant points to evidence that he believes shows an ulterior motive on the part of the city officials. However, as the supreme court stated in Pfeifer: "[w]hether [the landowner] thinks the property was necessary is not the issue. Rather, whether the City believes that the property is necessary to accomplish the purposes of creating a park area, which it may do, is the issue." 346 Ark. at 463, 57 S.W.3d at 723. The trial court found that the City could take the property, implicitly finding that there was a public purpose. We cannot say that the decision is clearly erroneous. See City of El Dorado v. Kidwell, supra (holding that issue of public purpose will be reviewed on appeal using equitable principles).

Appellant also asks this court to end the presumption in favor of the condemning authority's decision to condemn the property.1 However, that is something this court cannot do because that rule was established by the Arkansas Supreme Court and is for that court to decide.

In appellant's third point, he argues that the trial court erred in granting the City's motion in limine precluding appellant from introducing evidence of severance damages at trial. Ordinarily noncontiguous lands cannot be valued as a unit. The exception is upon a showing of a unity of use. See Arkansas State Highway Comm'n v. Lemley, 250 Ark. 186, 464 S.W.2d 605 (1971); Kansas City So. Ry. Co. v. Boles, 88 Ark. 533, 115 S.W. 375 (1908). Severance damages are compensation for the landowner's loss in having his property cut in two. Arkansas State Highway Comm'n v. Stanley, 234 Ark. 428, 353 S.W.2d 173 (1962). Severance damages are not separate damages but a proper element for consideration in determining just compensation. Arkansas State Highway Comm'n v. Lewis, 243 Ark. 943, 422 S.W.2d 866 (1968). The landowner has the burden of proof on the issue of just compensation, with severance damages being an element of that compensation. Arkansas State Highway Comm'n v. Post, 330 Ark 369, 955 S.W.2d 496 (1997); Property Owners Improvement Dist. No. 27 v. Williford, 40 Ark. App. 172, 843 S.W.2d 862 (1992).

We are precluded from addressing whether the trial court improperly restricted appellant from proving severance damages. To challenge a ruling excluding evidence, an appellant must proffer the excluded evidence so we can review the decision, unless the substance of the evidence is apparent from the context. Leaks v. State, 339 Ark. 348, 5 S.W.3d 448 (1999) (citing Ark. R. Evid. 103(a)(2)); Tauber v. State, 324 Ark. 47, 919 S.W.2d 196 (1996); Davis v. State, 319 Ark. 460, 892 S.W.2d 472 (1995). Certainly, appellant was allowed to testify at the hearing on the motion in limine about his ownership of the property and his ownership of the corporation owning the adjacent lots. However, appellant did not proffer, at either the motion hearing or at trial, his or his appraiser's testimony concerning the value of the property as a whole or the damages he suffered as a result of the City taking only part of the property. Because he failed to proffer the testimony he wished to present, appellant cannot now claim that the trial court erred by excluding it. Huddleston v. State, 339 Ark. 266, 5 S.W.3d 46 (1999) (citing McGehee v. State, 338 Ark. 153, 175, 992 S.W.2d 110, 124 (1999)).

As his fourth point, appellant argues that the statutory scheme governing the exercise of eminent-domain powers is unconstitutional in that it fails to provide due process and does not provide for an advance showing of public purpose or for the timely advance payment of just compensation to landowners. Both the United States Supreme Court and the Arkansas Supreme Court have held that the Fifth Amendment to the United States Constitution does not require payment prior to the taking nor does it necessarily require a pre-taking hearing. Williamson County Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985); Cowger v. Arkansas State Dep't of Aeronautics, 307 Ark. 92, 817 S.W.2d 427 (1991); Cannon v. Felsenthal, 180 Ark. 1075, 24 S.W.2d 856 (1930). All that is required is that a "reasonable, certain and adequate provision for obtaining compensation" exists at the time of the taking. Williamson County Reg'l Planning Comm'n, 473 U.S. at 194. Appellant has not suffered any injury in this regard. He was allowed a pre-taking hearing on the public purpose of the taking, as well as a hearing on the amount of compensation to be deposited by the City prior to trial, which was ordered increased from $100 to a total deposit of $5,410. Further he was allowed to withdraw the compensation deposits. We affirm on this point.

As its sole point on cross-appeal, the City argues that the trial court erred in allowing Leo Faulkner to testify as to the value of appellant's property. The City argues that Faulkner is not qualified to give an opinion as to the value of the property because he is not a certified appraiser, and the Arkansas Appraiser Licensing and Certification Act, Ark. Code Ann. §§ 17-14-101 through 17-14-305 (Repl. 2001), requires that only licensed persons perform appraisal services in connection with federally-related transactions. The trial court denied the motion and relied on section 17-14-104(a)(1), which provides:

This chapter shall not apply to a real estate broker or sales person licensed by this state who, in the ordinary course of his or her business, gives to a potential seller or third party a market analysis or broker's price opinion as to the recommended listing price of real estate or an opinion to a potential purchaser or third party as to the recommended price of real estate.

Further, section 17-14-104(d) provides that "[the Act] shall not preclude any person from testifying as an expert witness in any judicial proceeding where the value of real estate is in issue unless that person holds himself or herself out as a practicing real estate fee appraiser."

The trial court qualified Faulkner as an expert witness, based upon his experience as a licensed real-estate broker. The trial court struck part of Faulkner's testimony concerning his valuation of the land but permitted him to testify as to the value of appellant's building. The City, relying on Arkansas State Highway Commission v. Jensen, 256 Ark. 478, 508 S.W.2d 737 (1974), contends that Faulkner's testimony was fatally defective and should be stricken. In Jensen, the expert gave opinion evidence on the value of property and improvements but admitted on cross-examination that he had not inspected the improvements and was not familiar with the farm prior to the taking except by casually viewing it from the highway. The supreme court held that the expert's familiarity with the property was not sufficiently established to support his specific testimony.

We realize that Faulkner's opinion is not without shortcoming in that he conceded that he could have used other assumptions and methods in reaching his opinion, but all such shortcomings were fully probed on cross-examination. Faulkner testified that he had been familiar with the property for many years, but the building had been demolished by the City before the trial. The trial judge has the responsibility for determining, in his discretion, whether such a witness possesses sufficient familiarity with the affected property to make his opinion of values thereof proper as an aid to the jury in awarding just compensation. Arkansas State Highway Comm'n v. Pullen, 243 Ark. 759, 421 S.W.2d 890 (1967).

In Courteau v. Dodd, 299 Ark. 380, 773 S.W.2d 436 (1989), the supreme court, citing Ark. R. Evid. 702, held that, if there is a reasonable basis for saying that a witness knows more of the subject at hand than a person of ordinary knowledge, his evidence is admissible. Our courts have also stated that, if an expert's opinion is merely weak or questionable, that fact bears on the weight to be given the testimony and not on its admissibility. See Wolford v. St. Paul Fire & Marine Ins. Co., 331 Ark. 426, 961 S.W.2d 743 (1998); Ishie v. Kelley, 302 Ark. 112, 788 S.W.2d 225 (1990). We are unable to say that there has been an abuse of the trial judge's discretion in this case.

Affirmed on direct appeal; affirmed on cross-appeal.

Crabtree and Baker, JJ., agree.

1 One reason for the presumption is the separation-of-powers doctrine. See Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229 (1984).