CITY OF BOWLING GREEN, KENTUCKY v. SPECIALTY CONCRETE COMPANY, INC.; TRANS FINANCIAL BANK, N.A.; JAMES HARMON and CAROLYN HARMON
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RENDERED: AUGUST 4, 2000; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-001002-MR
CITY OF BOWLING GREEN, KENTUCKY
APPELLANT
APPEAL FROM WARREN CIRCUIT COURT
HONORABLE THOMAS R. LEWIS, JUDGE
ACTION NO. 97-CI-00695
v.
SPECIALTY CONCRETE COMPANY, INC.;
TRANS FINANCIAL BANK, N.A.;
JAMES HARMON and CAROLYN HARMON
APPELLEES
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE:
COMBS, KNOPF, and TACKETT, Judges.
COMBS, JUDGE:
This is an appeal from a judgment in a
condemnation case determining just compensation for property
taken.
The City of Bowling Green (the "City") argues that the
judgment must be vacated because inadmissible testimony pervaded
the valuation proceedings and because the jury's verdict was not
supported by the evidence.
Having considered the record, the
arguments of counsel, and the applicable law, we vacate and
remanded for further proceedings.
On June 20, 1997, the City initiated an action to
acquire by eminent domain property owned by the appellee,
Specialty Concrete Company, Inc., ("Specialty Concrete").
The
property was sought by the City for the purpose of widening
Dishman Lane in anticipation of further growth in this largely
industrial part of town.
The commissioners' report, filed
September 22, 1997, valued the property interests being taken at
$25,751.22.
The parties rejected this figure and, on October 14,
1997, Specialty Concrete filed its response to the City's
petition to condemn.
On November 10, 1997, appellee James Harmon, a
shareholder of Specialty Concrete, and his wife, appellee Carolyn
Harmon, intervened in the action.
Prior to 1996, the Harmons had
occupied a single-family residence located on the property of
Specialty Concrete.
They alleged that agents and employees of
the City had advised them that the Dishman Lane project was going
to begin in the spring of 1996 and that their home would be
demolished at that time.
They claimed that City officials
instructed them to vacate the residence.
As a result of the
City's representations, they had been forced to incur moving
expenses and to pay a mortgage long before condemnation
proceedings actually began.
More significantly, since they had
moved out of the house nearly two years before it was taken by
the City, their home's value had deteriorated significantly.
The
City argued that the Harmons' claims should be summarily
dismissed since the damages alleged by them were not recoverable
in a condemnation action.
On December 10, 1997, an interlocutory judgment
granting the City the right to condemn the property was entered.
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At that time, the appellees were ordered to vacate and deliver
possession of the premises to the City.
On March 9 and 10, 1999, a jury trial was held to
determine the amount of compensation owed to the appellees.
The
City made a pre-trial motion to exclude testimony of the Harmons
and of Jim Pinkerton (the other shareholder of Specialty
Concrete) on the basis that it was unfairly prejudicial and
immaterial to valuation of the condemned property.
The motion
was denied, and the trial proceeded with the court noting the
City's standing objection to any testimony related to the
Harmons' concerns about being forced to move to another
residence, the expenses they incurred as a result, and the
deterioration of the residence caused by its untimely
abandonment.
In addition to each party's appraisal witnesses, the
jury heard from Pinkerton and the Harmons.
Jim Harmon testified
that he had kept abreast of the City's plans with respect to the
Dishman Lane project since 1995.
He indicated that a City
official had advised him that his home would be razed in March
1996 and that he should not make any improvements to the
property.
Recanting his previous claim, however, Harmon admitted
that no one had advised him to vacate the property before
December 1997.
Carolyn Harmon corroborated her husband's
testimony and also stated that their little girl had been
devastated by the move.
In closing, the Harmons argued that the
City was trying to take advantage of the fact that their house
had been allowed to deteriorate since early-1996 and emphasized
that they had been traumatized by the forced move.
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Despite having allowed the Harmons' contested
testimony, the court declined to permit the jury to make an award
to them individually.
Accepting the opinion of the landowners'
appraiser in toto, the jury determined that Specialty Concrete
was entitled to recover $62,000.00, for the property taken.
The
City's subsequent motion for a new trial was denied, and this
appeal followed.
On appeal, the City argues that the trial court erred
by permitting the Harmons' testimony.
It maintains that the
testimony was immaterial to establishing the property's value at
the time of its taking and that it was otherwise unfairly
prejudicial.
We agree.
The provisions of KRS 416.660 set forth the standards
to be used for determining just compensation.
The statute
provides that the landowners shall be awarded as compensation
such a sum as will fairly represent the difference between the
fair market value of the tract immediately before the taking and
its fair market value immediately after the taking.
Moreover,
the statute directs that any change in the fair market value of
the property prior to the date of condemnation (which the
condemnor or condemnee establishes to have occurred as a result
of the general knowledge of the imminence of condemnation or of a
construction project) shall be disregarded in determining fair
market value.
The "taking date" for valuation purposes is
designated as either the date on which the condemnor takes the
property or the date of the trial of the issue of just
compensation -- whichever occurs first.
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The Harmons contend that their testimony was relevant
to a determination of the fair market value of the property
before the taking.
They maintain that they made the decision to
vacate their house in early 1996 based upon a time-line provided
by City officials and that the City should not now be permitted
to benefit from the home's subsequent deterioration.
Although we
are terrifically sympathetic to the compelling logic and equity
of their argument, the law unfortunately dictates otherwise in
the clearest of terms.
In Ford v. City of Bowling Green, Ky., 780 S.W.2d 613
(1989), the court addressed a similar issue where it was asked to
determine whether the landowner or the condemnor would bear the
loss of property vandalized prior to the entry of the
interlocutory judgment authorizing the city to take possession.
The court determined that the diminution in value of the property
was not caused by the nature of the municipal project to be
constructed and thus could not be taken into account in
establishing a "before taking" value pursuant to statute.
Although the diminution in value was simply a result of damage to
a building upon the condemned property, the condemnor had no
right to take the landowner's property before the entry of the
interlocutory judgment.
The court concluded that the landowner
had to absorb and bear the loss caused by the vandals.
In this case, the Harmons have presented conflicting
evidence that the City had taken or had attempted to take their
property prior to the entry of the interlocutory judgment in
December 1997.
Jim Harmon testified and admitted that no one had
asked him to relinquish the property before that date.
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The
City's announcement of its prospective development plan and its
discussion of a projected time-line did not equate to a physical
taking.
Moreover, nothing in the record indicates that the
public officials acted fraudulently or in bad faith in dealing
with the Harmons or that they unreasonably delayed the
proceedings.
The Harmons were entitled to possess the property and
remained responsible for its condition until such a time as an
interlocutory judgment had been entered.
As a result, KRS
416.660 compels a finding that the Harmons’ testimony as it
related to the deterioration of the house following their move in
1996 was not relevant to establishing the fair market value of
the property before the taking in December 1997.
Consequently,
their testimony as it related to moving expenses and the stress
of relocation is also irrelevant to the proceedings.
Harmons' testimony was inadmissible into evidence.
Thus, the
There can be
little doubt that the sympathetic nature and the significant
volume of their testimony were so prejudicial as to sway the jury
to render a verdict in favor of the landowner.
We must vacate
the judgment in favor of the appellant as to the evidence, and
therefore we need not consider the appellant's remaining argument
on appeal.
For the foregoing reasons, the judgment of the Warren
Circuit Court is vacated and this matter is remanded for
additional proceedings.
TACKETT, JUDGE, CONCURS.
KNOPF, JUDGE, CONCURS IN PART AND DISSENTS IN PART.
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KNOPF, JUDGE, CONCURRING IN PART AND DISSENTING IN
PART: I agree with the majority opinion to the extent which the
majority opinion holds that the Harmons’ testimony as it related
to moving expenses and the stress of relocation was irrelevant
and improperly admitted into evidence.
However, because we are
remanding this case for a new trial, I believe that several of
the reasons why this evidence should have been excluded should be
clarified.
I entirely agree with the majority that a
considerable amount of the Harmons’ testimony was irrelevant to
the condemnation proceeding, and was unfairly prejudicial to the
City.
Both Jim and Carolyn Harmon testified regarding the stress
caused by being required to move.
They complained about the
uncertainty caused by their dealings with the City, and the
disruption which that uncertainty brought into their lives.
The
Harmons further expressed their feelings that they had been
mistreated by the City officials.
Both of the Harmons testified
at length concerning how happy their family was in their home on
Dishman Lane.
Most egregiously, Carolyn Harmon testified that
she did not feel as safe in her new neighborhood, and that she
was “afraid to let my little girl get out on the street with her
bicycle, because you never know who’s going to grab her and take
off with her”.
None of this evidence was remotely relevant to a
determination of the fair market value of the condemned property
immediately prior to the taking.
This testimony did not bolster
the credibility of the expert testimony regarding the value of
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the property, nor did it relate to the condition of the property
at the time of the taking.
Rather the Harmons’
testimony on
these matters was clearly calculated to prejudice the jury
against the City.
Consequently, I agree with the majority
opinion that the trial court erred in allowing this testimony,
and in denying the City’s motion for a new trial.
During any new
trial, this testimony should be excluded in its entirety.
However, I disagree with the majority opinion that the
Harmons’ testimony regarding the deterioration of the house prior
to the entry of the interlocutory judgment is irrelevant as a
matter of law.
Although this testimony may be inadmissible
depending upon the totality of the evidence, I do not believe
that this Court can decide the issue at this point in the
proceedings.
As pointed out in the majority opinion, KRS
416.660(2) requires that any increase or decrease in the fair
market value of the property which the condemnor or condemnee
establishes was substantially due to the general knowledge of the
imminence of the condemnation or the construction of the project
shall be disregarded in determining fair market value.
Ford v.
City of Bowling Green, Ky., 780 S.W.2d 613 (1989) clarifies that
this rule applies only to changes in the fair market value of the
property prior to the taking which is caused by the anticipation
of the nature of the project.
Since the condemnor has no right
to take the condemnee’s property prior to the entry of the
interlocutory judgment, the condemnee has the responsibility for
maintaining the property until the entry of the interlocutory
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judgment.
Consequently, any damage to the property prior to
entry of the interlocutory judgment is the sole responsibility of
the condemnee.
Nonetheless, the decision in Ford is predicated on the
lack of evidence in that case that the condemnor attempted to
take the property prior to the entry of the interlocutory
judgment.
Id. at 615.
In this case, the majority points out
that there was conflicting evidence that the City had taken or
attempted to take the property prior to the entry of the
interlocutory judgment in December 1997.
If there actually was
conflicting evidence, then the Harmons’ reasons for failing to
maintain the property is admissible.
Jim Harmon’s testimony
concerning the representations made by the City officials would
be relevant to rebut the evidence presented by the City regarding
the dilapidated condition of the house.
On the other hand, Jim
Harmon also admitted that no one from the City asked him to
relinquish the property prior to the entry of the interlocutory
judgment.
Furthermore, the majority states that there was no
evidence that the City officials acted fraudulently or in bad
faith in dealing with the Harmons.
I would hold that the relevancy of this evidence is a
matter for the trial court to determine prior to the presentation
of this evidence to the jury.
It there was evidence that the
City officials discouraged the Harmons from maintaining the
property, then the testimony should be admitted to rebut the
City’s evidence regarding the deterioration of the house.
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The
City should not be permitted to benefit from such
misrepresentations by its agents.
However, this evidence may be
irrelevant if there was no evidence that the Harmons’ failure to
maintain the house was due to any conduct by the City.
In the
latter circumstance, the rule set out in Ford v. City of Bowling
Green, requires Specialty Concrete to bear the loss of value
caused by the house’s deterioration prior to the entry of the
interlocutory judgment.
Finally, since we are remanding this case for a new
trial, I feel the need to raise one additional issue which the
majority opinion does not address.
I entirely agree with the
majority that the central focus of any condemnation action must
always be a determination of the difference between the fair
market value of the property immediately before the taking and
the fair market value of the property immediately after the
taking.
KRS 416.660 This determination is a matter which is
within the province of the finder of fact.
KRS 416.620(1).
Furthermore, where exceptions are filed by both parties to the
report of the commissioners in a condemnation proceeding, the
burden of proof is on the condemnor. Commonwealth, Department of
Highways ex rel. v. Snyder, Ky., 309 S.W.2d 351, 352 (1958).
The City objects that Specialty Concrete’s expert
improperly excluded from his valuation of the property the
deterioration of the house during the two years it stood vacant.
As a result, the City also complains that this expert was not
qualified to give an opinion as to the value of the property.
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Likewise, Specialty Concrete complains that the City’s expert
used inappropriate comparable sales in reaching his valuation of
the property.
Nonetheless, the matter of evaluating the
probative effect of comparable sales is properly left to the
jury.
Commonwealth, Department of Highways v. Garrett, Ky., 447
S.W.2d 596, 597 (1969).
So long as the conclusions and opinions
of qualified expert witnesses are based upon facts and factors
generally acceptable in the industry, they are sufficient to form
the basis of a jury verdict.
437 S.W.2d 745, 749 (1968).
Caney Creek Coal Co. v. Ellis, Ky.,
On remand, it is the trial court’s
duty to determine the competency of the expert testimony.
If the
testimony of either expert is not competent, then a directed
verdict may be appropriate.
However, if the deficiencies in the
expert testimony relate only to the weight to be given to the
particular expert’s valuation, then the question of the fair
market value of the property to be condemned must be submitted to
the jury.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE SPECIALTY
CONCRETE COMPANY, INC.:
H. Eugene Harmon
Bowling Green, KY
Joseph R. Kirwan
Bowling Green, KY
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