GOD'S CENTER FOUNDATION, INC. v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT
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RENDERED: NOVEMBER 8, 2002; 10:00 a.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2001-CA-000982-MR
GOD'S CENTER FOUNDATION, INC.
APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE GARY D. PAYNE, JUDGE
ACTION NO. 97-CI-01593
v.
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
DYCHE, HUDDLESTON AND JOHNSON, JUDGES.
JOHNSON, JUDGE:
God’s Center Foundation, Inc., has appealed from
the findings of fact, conclusions of law, and order entered by
the Fayette Circuit Court on April 13, 2001, which held that the
Lexington-Fayette Urban County Government (LFUCG) properly
exercised its power of eminent domain in seeking condemnation of
the Lyric Theatre property for a valid public purpose.
Having
concluded that the factual findings made by the circuit court in
support of its rulings were supported by substantial evidence and
that the circuit court did not err in its legal conclusions that
the LFUCG did not act arbitrarily or in excess of its authority
in seeking condemnation of the Lyric Theatre, we affirm.
This case has a long, combative history centering on
the preservation and operation of the Lyric Theatre located on
East Third Street in Lexington, Kentucky.
The Lyric Theatre
opened in 1948 and served as the primary entertainment venue for
African-Americans in the city with performances by major black
artists and movies at a time of segregation in other theaters.
As a result, the Lyric Theatre developed significant cultural
importance and became a symbol of pride to the African-American
community in the city.
As its business declined, the Lyric
Theatre closed in 1963 and fell into serious disrepair until it
was acquired in 1984 by Larry Huffman.
Huffman serves as the
Chairman of the Board of God’s Center, and he deeded the property
to God’s Center.
God’s Center is a non-profit, religious-based
organization, which is self-described as an “educational
foundation dedicated to restoring ethical values and moral
education among the populace.”
God’s Center made some repairs to
the building, and it hoped to conduct educational and cultural
instruction, but it has not reopened the facility to the public.
Due to the historic importance of the Lyric Theatre, in
the mid to late 1990's, the LFUCG developed a plan to preserve
the building and to restore it for use as an African-American
cultural center in conjunction with an overall redevelopment plan
for the downtown area.
In January 1997 the LFUCG entered into a
Memorandum of Understanding (MOU) with the Commonwealth of
Kentucky to settle a lawsuit in which the LFUCG agreed to invest
approximately $930,000.00 in an African-American cultural project
centered on the Lyric Theatre including any necessary renovation
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of the building.1
The MOU obligated the LFUCG to “use its best
efforts to obtain all necessary titles or rights of entry for the
construction of this project including taking any necessary
eminent domain actions, within a reasonable time from the
execution of the Memorandum of Understanding.”
Shortly thereafter, the LFUCG entered into negotiations
with God’s Center for purchase of the Lyric Theatre.
The LFUCG
offered to purchase the property for $59,000.00 based on the
higher of two appraisal reports it had obtained.2
God’s Center
proposed a cooperative arrangement whereby it would retain
ownership and primary control and operation of the building with
the LFUCG providing input on possible events and some resources
for renovation.
LFUCG would receive an easement in the building.
Unable to reach an agreement with God’s Center and
following a vote by the LFUCG Council authorizing legal action,
the LFUCG filed a petition on April 30, 1997, pursuant to the
Eminent Domain Act3 and KRS Chapter 67A, to condemn the Lyric
Theatre and surrounding property located on East Third Street in
Lexington.
The petition alleged that the property was “necessary
for an African-American cultural project as agreed in a
1
The MOU also involved the funding and development of
several other art and cultural projects including the Civic
Center Expansion, Embry/Lowenthall Theatre, State Theatre
Renovation, the History Museum, the U.K. Basketball Museum, and
the Lexington Children’s Theatre. The lawsuit involved a breach
of contract by the LFUCG for failure to build a single large art
and cultural center on the Ben Snyder block for which the city
had received state funds.
2
The LFUCG had received appraisals of $54,000.00 and
$59,000.00 from two private appraisers using different valuation
methodologies.
3
Kentucky Revised Statutes (KRS) 416.540 et seq.
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Memorandum of Understanding between the Commonwealth of Kentucky
and the Lexington-Fayette Urban County Government . . . .”
On
May 1, 1997, an order was entered appointing three commissioners,
who assessed the property with a fair market value of
$113,400.00.
In opposing the condemnation, God’s Center alleged
that the LFUCG had acted in bad faith during negotiations; the
LFUCG had instituted the proceedings to fraudulently and
illegally deprive God’s Center of its private property rights and
to assist political allies; and the LFUCG had acted arbitrarily
and in excess of its lawful authority.
God’s Center asserted
that a taking by eminent domain was neither necessary nor for a
public need.
On October 22, 1997, the LFUCG filed a motion for an
interlocutory summary judgment pursuant to KRS 416.610(4).
On
November 6, 1997, God’s Center filed a response in which it
alleged that the condemnation was not necessary and in bad faith
because it was part of a self-enrichment scheme to legitimize
payment of monies to political allies of the LFUCG.
God’s Center
stated that the LFUCG had discriminated against it; and the LFUCG
did not need a fee title interest in the property for the public
purpose that the LFUCG had asserted as justification for the
condemnation.
God’s Center claimed that there were numerous
disputed genuine issues as to material facts which precluded
summary judgment.
On December 6, 1997, the circuit court entered
an order and opinion granting the LFUCG’s motion for summary
judgment.
Subsequently, on February 26, 1998, the circuit court
entered an interlocutory order and judgment of condemnation
pursuant to KRS 416.610(4), which was appealed by God’s Center.
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On July 23, 1999, this Court rendered an Opinion
reversing the trial court’s interlocutory judgment and remanding
the case for a trial on the issue of the LFUCG’s right to condemn
the disputed property.4
After reviewing the law governing
eminent domain and summary judgment, this Court held that God’s
Center was entitled to an evidentiary hearing on its factual
allegations challenging the legality of the LFUCG’s actions.
Following this Court’s Opinion, the parties conducted further
discovery and God’s Center filed a motion for leave to file a
counterclaim and a third-party complaint based on the federal
Racketeer Influenced and Corrupt Organizations Act (RICO).5
The
LFUCG opposed the motion by arguing that it was untimely and that
it alleged no new facts.
The circuit court denied the motion in
part because it would have introduced additional defendants not
otherwise involved in the eminent domain action which was the
primary focus of the litigation.6
The circuit court conducted a bench trial on March 5,
6, and 7, 2001, with 14 witnesses testifying for God’s Center and
six witnesses for the LFUCG.
When God’s Center attempted to
introduce several letters discussing settlement of the lawsuit,
the trial court granted the LFUCG’s motion to exclude evidence of
negotiations between the parties that occurred after the
4
God’s Center Foundation, Inc. v. Lexington-Fayette Urban
County Government, 1998-CA-000701-MR (unpublished opinion).
5
18 U.S.C. § 1961 et seq. God’s Center alleged a conspiracy
between members of the LFUCG and several individuals to take its
property and to convert it to the personal use of these
individuals.
6
God’s Center has not appealed this issue, so we will not
address it in this Opinion.
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condemnation action was filed.
Following the trial, the circuit
court on April 13, 2001, entered its findings of fact,
conclusions of law, and order granting the LFUCG’s petition to
acquire the Lyric Theatre property through eminent domain.
The
trial court ruled that the LFUCG did not act arbitrarily or abuse
its discretion in seeking a fee simple title through condemnation
of the property.
The judgment reserved the issue of the
appropriate fair market value to be paid God’s Center for title
to the property, but it was made final for the purpose of
appeal.7
This appeal followed.
It is undisputed that the LFUCG has the authority to
condemn property through the sovereign power of eminent domain of
the Commonwealth8 subject to the constitutional restriction that
the taking be for “public use” and the condemnee receive “just
compensation.”9
The taking of private property for a non-public
use may also offend due process and the prohibition on the
arbitrary exercise of power in Section 2 of the Kentucky
Constitution.10
7
Generally, the condemning body has broad
Kentucky Rules of Civil Procedure (CR) 54.02; KRS 416.610.
8
See, e.g., Boom v. Patterson, 98 U.S. 403, 25 L.Ed.2d 206
(1878)(the right of eminent domain is an attribute of sovereignty
and is not dependent on authority conferred by the Constitution);
United States v. 170.88 Acres of Land, 106 F.Supp. 623 (E.D.Ky.
1952); Decker v. City of Somerset, Ky.App., 838 S.W.2d 417, 423
(1992)(Legislature has delegated to cities same power to condemn
as that of the state); and KRS 82.082.
9
See Ky. Const. §§ 13, 242; The Eminent Domain Act, KRS
416.540-680; V.T.C. Lines, Inc. v. City of Harlan, Ky., 313
S.W.2d 573 (1957); and Barker v. Lannert, 310 Ky. 843, 222 S.W.2d
659, 663 (1949).
10
See City of Owensboro v. McCormick, Ky., 581 S.W.2d 3, 5-6
(1979); Sturgill v. Commonwealth, Department of Highways, Ky.,
(continued...)
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discretion in exercising its eminent domain authority including
the amount of land to be taken.11
A determination by the
condemnor that the taking is a necessity is ordinarily
conclusive,12 but the courts will review the condemning body’s
exercise of discretion for arbitrariness or action in excess of
its authority.13
The condemnor’s decision on the amount of land
to be condemned will be disturbed only if it is unreasonable in
relation to the public interest or welfare involved and the
condemnor may consider the future, as well as the present, needs
for the taking.14
Kentucky courts have also imposed a duty on
the condemnor to negotiate in good faith the acquisition of the
property prior to seeking condemnation.15
In City of Bowling
10
(...continued)
384 S.W.2d 89, 90 (1964); and Prestonia Area Neighborhood
Association v. Abramson, Ky., 797 S.W.2d 708 (1990).
11
See Commonwealth, Department of Highways
Ky., 388 S.W.2d 358, 360 (1964); Commonwealth,
Highways v. Burchett, Ky., 367 S.W.2d 262, 264
City of Williamstown, Ky., 308 S.W.2d 795, 797
Davidson v. Commonwealth ex rel. State Highway
Ky. 568, 61 S.W.2d 34, 37 (1933).
v. Vandertoll,
Department of
(1963); McGee v.
(1957); and
Commission, 249
12
See Idol v. Knuckles, Ky., 383 S.W.2d 910, 911 (1964); and
Spahn v. Stewart, 268 Ky. 97, 103 S.W.2d 651 (1937).
13
See Proffitt v. Louisville & Jefferson County Metropolitan
Sewer District, Ky., 850 S.W.2d 852, 854 (1993); and Vandertoll,
supra at 360.
14
See McGee, supra at 796-97; and Pike Co. Board of
Education v. Ford, Ky., 279 S.W.2d 245 (1955).
15
See Eaton Asphalt Paving Co. v. CSX Transportation, Inc.,
Ky.App., 8 S.W.3d 878, 883 (1999)(quoting Usher & Gardner, Inc.
v. Mayfield Independent Board of Education, Ky., 461 S.W.2d 560
(1970)). See also Coke v. Commonwealth, Department of Finance,
Ky., 502 S.W.2d 57 (1973).
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Green v. Cooksey,16 the Court stated:
“Under KRS 416.550, the
condemnor cannot acquire the property in fee simple if it can
obtain access or use of the property through other privileges or
easements.”17
The party challenging the condemnation, however,
bears the burden of establishing the lack of necessity or public
use and abuse of discretion.18
Since this case was tried before the circuit court
without a jury, we review the trial court’s factual findings
under a clearly erroneous standard and the legal issues de
novo.19
Factual findings are not clearly erroneous if they are
supported by substantial evidence.20
“Substantial evidence has
been conclusively defined by Kentucky courts as that which, when
taken alone or in light of all the evidence, has sufficient
probative value to induce conviction in the mind of a reasonable
person.”21
It is within the province of the trial court as the
fact-finder to determine the credibility of the witnesses and the
16
Ky.App., 858 S.W.2d 190 (1992).
17
Id. at 192.
18
See, e.g., Embry v. City of Caneyville, Ky., 397 S.W.2d
141, 143 (1965); McGee, supra at 797; and Decker, supra at 422.
19
See Carroll v. Meredith, Ky.App., 59 S.W.3d 484, 489
(2001); Commonwealth, Transportation Cabinet, Dept. of Highways
v. Taub, Ky., 766 S.W.2d 49 (1988); and CR 52.01.
20
Id.
21
Bowling v. Natural Resources & Environmental Protection
Cabinet, Ky.App., 891 S.W.2d 406, 409 (1994)(citing Kentucky
State Racing Commission v. Fuller, Ky., 481 S.W.2d 298, 308
(1972); and Blankenship v. Lloyd Blankenship Coal Co., Inc., Ky.,
463 S.W.2d 62 (1970)).
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weight given to the evidence.22
Although the factors of
necessity and public use associated with condemnation are
ultimately legal issues, resolution of those issues encompasses
factual matters subject to deferential review on appeal.
God’s Center challenges several factual findings and
legal conclusions of the trial court concerning the LFUCG’s
decision to obtain a fee simple title interest in the Lyric
Theatre through its power of eminent domain.
It criticizes the
trial court’s evaluation of and the weight given various portions
of the evidence.
As an initial matter, we note the evidence
unambiguously reveals and there is little disagreement that the
Lyric Theatre has historical and cultural significance to the
African-American community of the city.
It is the only remaining
structure in the area formerly centered along Deweese Street that
represented the major economic and cultural center for AfricanAmericans between 1900 and 1970.
Clearly, the LFUCG’s
represented purpose for the condemnation in order to preserve the
Lyric Theatre structure and to utilize it for African-American
cultural projects is a valid “public use” that would benefit both
the public at large and the African-American community in
particular.23
22
See Uninsured Employers’ Fund v. Garland, Ky., 805 S.W.2d
116, 118 (1991); and Cole v. Gilvin, Ky.App., 59 S.W.3d 468, 473
(2001).
23
Cf. Coke, supra (purchase and maintenance of Mary Todd
Lincoln Home as part of state park was valid public use and
proper subject for condemnation); and Decker, supra at 421
(condemnation of property for conference and exhibit center with
auditorium, theater, and office complex was valid public use by
“creating or increasing the public recreational, cultural and
related business facilities of a community”).
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Despite the recognized public significance of
preserving the Lyric Theatre, God’s Center questions the
sincerity of the LFUCG’s stated purpose and it asserts that
LFUCG’s predominant intent was to benefit a small group of
individuals.
God’s Center alleges “the motives and the reasons
for Appellee (LFUCG) taking the subject property was, in fact,
not for a public purpose, but was a mere scheme to turn the
property over to [Robert] Jefferson, [George] Brown, [Julian]
Jackson, and others who had a vested personal interest in
acquiring the property for their exclusive use and control.”
This allegation concerns the role of the Lyric Heritage
Foundation (Lyric Foundation) and the Second District Retirees.
The Second District Retirees was a group of retired persons
formed to discuss and to act upon issues affecting the AfricanAmerican community.
The Lyric Heritage Foundation was created in
the early 1990's in order to promote the preservation of the
cultural heritage of the City of Lexington with its primary
objective being restoration of the Lyric Theatre.
The Lyric
Foundation presented its concerns to officials in the LFUCG and
cooperated in the selection and retaining of the architectural
firm of Brazley & Brazley by the LFUCG, which produced a
feasibility study in 1993 for the renovation of the Lyric
Theatre.
At some point, the Second District Retirees joined with
the Lyric Foundation in promoting restoration of the Lyric
Theatre.
Robert Jefferson was the LFUCG Council representative
for the Second District and George Brown was the representative
for the First District, where the Lyric Theatre was located.
Both men were also members of the Lyric Foundation/Second
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District Retirees, and they were active in seeking the LFUCG’s
involvement in preserving the Lyric Theatre.
God’s Center attempted to show that the LFUCG intended
to benefit these private groups through two letters between the
LFUCG Mayor Pam Miller and Brown/Jefferson/or Jackson, and one
letter from the latter to the other members of the Lyric
Foundation.24
In a June 1997 letter, Brown/Jefferson thanked
Mayor Miller for attending a May meeting with the Lyric
Foundation and stated, “The Lyric Foundation would coordinate the
restoration of the Lyric Theatre.”
In a July 1997 letter, Mayor
Miller wrote to Brown/Jefferson/Jackson stating, “We are
delighted to have you hosting the workshop and being the focal
point for community input on the Lyric restoration.”
In an April
1997 letter to the Second District Retirees, Jefferson/Jackson
stated that the Mayor had indicated that “our group was the
primary entity regarding the Lyric.”
God’s Center maintains that
these letters and the political connections of the individuals
involved show an intent by the LFUCG to allow the Lyric
Foundation to control use of the Lyric Theatre.
The trial court rejected God’s Center’s argument that
the LFUCG’s true intent was for a private, rather than public,
purpose or use.
The trial court found that God’s Center had
failed to produce any evidence beyond speculation that the LFUCG
intended to involve the Lyric Foundation/Second District Retirees
in any improper manner in the operation or management of a
24
See, e.g., Prestonia Area Neighborhood Association, supra
at 711 (“Kentucky law does not permit the taking of private
property for the purpose of transfer to another private
enterprise”).
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restored Lyric Theatre.
The trial court also found that God’s
Center failed to produce any evidence that the LFUCG had any
intent to convey ownership of the Lyric Theatre to any private
entity.
The evidence at trial indicated that the Lyric
Foundation/Second District Retirees actively pursued the
involvement of the LFUCG and sought to provide input into the
restoration of and use of the Lyric Theatre as a cultural center.
Robert Jefferson testified that the members of the Lyric
Foundation questioned God’s Center’s financial ability to conduct
such a project given its failure to restore the building since
purchasing it in 1984.
We cannot say that the trial court’s
finding which constituted a rejection of the evidence presented
by God’s Center on this issue was clearly erroneous.
Every
witness questioned on this issue stated the LFUCG never offered
to allow the Lyric Foundation to control either the restoration
or the subsequent use of the building.
Jefferson and Jackson
testified that the group was concerned with restoration of the
original facade and lobby of the theater building and had no real
interest in controlling its future use.
The LFUCG sought input
from the entire community by holding several open community
meetings in addition to the meetings with the Lyric Foundation.
In the April 1997 letter from Jefferson to the Second District
Retirees, he stated, “The Mayor attended our last meeting and
confirmed that our group was the primary entity regarding the
Lyric. . . .
Unfortunately, the Mayor now considers the project
to be a community wide project, and has discussed the formation
of a commission, in lieu of our group, to determine the future of
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the Lyric.”25
The conduct of the LFUCG with respect to the role
of the Lyric Foundation was not improper.
The trial court’s
factual findings on this issue were clearly supported by
substantial evidence, and God’s Center has failed to show that
the LFUCG’s primary purpose in seeking condemnation of the Lyric
Theatre was not for a public use.
God’s Center’s primary complaint concerns the necessity
for the LFUCG to acquire a fee simple title ownership in the
Lyric Theatre.
It asserts that the LFUCG’s stated public purpose
of historic preservation and use of the building as a cultural
center could be accomplished without title ownership, such as
through the granting of a historic easement and God’s Center’s
willingness to allow other groups to use the building.
God’s
Center maintains the LFUCG’s action is unreasonable and
excessively expensive citing Chesapeake & O. R. Co. v. Greenup
County,26 and Davidson, supra.
We conclude that the trial court did not err in holding
that the LFUCG’s taking of a fee simple interest was necessary to
accomplish the public use.
The evidence indicated that the LFUCG
intended to expend approximately $1 million to $1.8 million to
renovate the property.
The LFUCG proposed establishing an
25
Pursuant to the LFUCG Council’s resolution authorizing
condemnation, Bob Ramsey, Director of the Division of Parks and
Recreation, along with an 11-member committee, prepared a
proposal in August 2000 to identify the best use of the Lyric
Theatre. It suggested a multipurpose renovation with a theater,
museum, meeting room, workshop areas, exhibition hall, and vendor
space. It also recommended that the LFUCG be responsible for
managing and maintaining the building under the auspices of the
Division of Parks and Recreation and/or Department of Social
Services.
26
175 F.2d 169 (6th Cir. 1949).
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auditorium/theater area, a museum/art exhibit area, meeting
hall/educational area, and vendor gift shop area.27
The LFUCG
estimated the total annual personnel and overhead costs in
managing the facility at approximately $221,500.00.
The trial
court’s determination that the LFUCG’s desire to acquire title
ownership in the property was not unreasonable given the
substantial funds to be expended on the project was supported by
the evidence and correct as a matter of law.
In addition, while
God’s Center expressed some flexibility in allowing other groups
to utilize the building, it admitted that its primary mission is
the promotion of Judeo-Christian values.
As the owner of the
building, God’s Center’s proposal would allow it to retain the
ultimate authority to control the type of groups and the nature
of the programs using the building.
While the goals and function
of God’s Center may be laudable, it is not unreasonable for the
LFUCG to seek the ability to control the Lyric Theatre for a more
diverse, broad-based public use free from potential repeated
conflicts that could arise from the need to gain God’s Center’s
approval.
God’s Center’s reliance on Chesapeake and Davidson is
misplaced.
In Chesapeake, the Court indicated that the judiciary
may look at the motives and reasons for the condemnation in
reviewing the condemning body’s determination of necessity.
Davidson, the Court stated that “necessity” with respect to
eminent domain means “a reasonable necessity, such as would
combine the greatest benefit to the public with the least
27
See supra note 25.
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In
inconvenience and expense to the condemning party and property
owners consistent with such benefit . . . .”28
Nevertheless,
both cases reiterate the established principle that judicial
review of necessity is extremely limited and the condemnor’s
determination of necessity will be respected unless the use is
“palpably private” or “plainly without reasonable foundation.”29
In the case before us, the trial court’s determination that the
taking was necessary for a valid public purpose was supported by
the evidence and correct as a matter of law.
God’s Center also challenges the trial court’s factual
finding that the LFUCG engaged in good faith negotiations prior
to filing the eminent domain petition.
A few months prior to
filing the condemnation action, Mayor Miller met with
representatives of God’s Center about possibly purchasing the
theatre property.
At the meeting, God’s Center’s representatives
expressed strong opposition to selling the property to the LFUCG;
but they expressed a willingness to discuss other options for the
property such as an easement to the LFUCG for the facade and a
leasehold agreement.
Based on God’s Center’s position, the LFUCG
obtained two independent appraisals that estimated the property
had a fair market of $50,000.00 and $59,000.00, respectively.
On
March 5, 1997, the LFUCG sent a letter and copies of the two
appraisals to God’s Center offering to purchase the property for
the higher appraisal of $59,000.00.
28
On March 25, 1997, God’s
Davidson, supra at 36.
29
Chesapeake, supra at 174 (quoting Louisville & N. R. Co.
v. City of Louisville, 131 Ky. 108, 118-19, 114 S.W. 743, 747
(1906)).
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Center sent a letter to the LFUCG rejecting the offer to purchase
the property “for any amount of money.”
It offered to discuss
granting the LFUCG an easement in the facade and stated “the city
needs to understand that the bottom line is that we are not
interested in selling or leasing this property to the city.”
Following receipt of this letter, the LFUCG filed the
condemnation petition on April 30, 1997.
God’s Center contends that the LFUCG acted in bad faith
in negotiating control over the Lyric Theatre by failing to
conduct discussions based on less than fee simple ownership by
the LFUCG.
This contention actually implicates two separate
issues: the actual negotiation process and the necessity for a
fee simple ownership interest.
The good faith negotiation
requirement concerns the negotiation process, rather than the
condemnor’s evaluation of the type of legal interest necessary to
carry out its public purpose.
The necessity requirement concerns
the right of the condemnor to exercise its authority as an
initial matter.30
In Coke, supra, the Court held that the condemnor is
not required to haggle in order to satisfy its obligation to
negotiate in good faith the purchase of property:
The judge found that there was an offer which
the landowners rejected. The evidence showed
that efforts to buy the property were made
over a substantial period of time, that the
state made a legitimate offer, and the
landowners flatly rejected it. The evidence
further showed that the landowners had stated
on several occasions that they would sell the
house alone but would never sell the lot on
which the house stood. The trial judge found
30
See, e.g., City of Bowling Green, supra.
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that the owners had “indicated that the
property was not for sale in fee.” It is our
opinion that there was a good faith effort
“to agree with the owner . . . on a price,”
which is what the statute, KRS 56.463(5),
requires.31
In the case sub judice, God’s Center’s
representatives expressed an unwillingness to sell the Lyric
Theatre property to the LFUCG in a meeting between the parties.
The LFUCG then offered to purchase the property at the higher
amount of two independent appraisals.
God’s Center rejected
the offer and stated it would not consider sale of the property
“for any amount.”
The LFUCG provided God’s Center an adequate
opportunity to discuss the sale of the property and to
negotiate the proper amount of compensation.
God’s Center’s
position clearly suggested that further negotiations would be
unproductive.
Further, the LFUCG’s refusal to accept a lesser
legal interest in the property did not constitute bad faith.
There is no evidence that the LFUCG actually believed that
anything less than fee simple title was necessary to carry out
its public purpose.
Thus, the trial court’s factual finding
that the LFUCG engaged in good faith negotiations prior to
filing the condemnation action was supported by substantial
evidence and was not clearly erroneous.
God’s Center also asserts the trial court erred by
granting the LFUCG’s motion to exclude evidence concerning
31
502 S.W.2d at 59. See also Usher & Gardner, Inc., supra
at 562-63 (indicating that a simple take-it-or-leave-it offer of
a manifestly inadequate amount “could evidence bad faith
negotiations”); and Eaton Asphalt Paving Co., supra (stating
condemnor was not required to accept condemnee’s position on its
interests with respect to compensation to satisfy its obligation
to negotiate in good faith).
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settlement negotiations between the parties that occurred after
the eminent domain petition was filed.
In response to the
trial court’s ruling, the parties prepared a set of
stipulations consisting of the evidence that would have been
offered including three letters dated September—November 1997.
In the negotiations, God’s Center presented various proposals
for a set number of days for exclusive use of the building by
the LFUCG, God’s Center, the “faith community,” and the
“general community.”
God’s Center also offered to grant the
LFUCG a historic preservation easement, sharing of maintenance
costs, expenditure of $930,000.00 by the LFUCG as set out in
the MOU, and $500,000.00 in funds to be provided by God’s
Center.
The parties also discussed a possible transfer of
other government-owned realty in exchange for the Lyric Theatre
property.
The proposal was abandoned when the building on the
other property was demolished.
While the LFUCG consistently
told God’s Center that it needed a fee simple interest in order
to serve the public purpose for the property, it encouraged
God’s Center to participate in determining the future use of
the building.
Traditionally, evidence of compromise and settlement
negotiations was not admissible based on a desire to encourage
settlement of disputes.32
to condemnation actions.33
This approach has been held to apply
Under KRE34 408, evidence of the
32
See, e.g., Wolf Creek Collieries Co. v. Davis, Ky., 441
S.W.2d 401 (1969); and Lawson, The Kentucky Evidence Law Handbook
§ 2.50 (3rd ed., 1993).
33
See Commonwealth, Department of Highways v. Smith, Ky.,
(continued...)
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parties’ offering or accepting a valuable consideration in an
attempt to compromise or settle a disputed claim or evidence of
conduct or statements made in compromise negotiations is not
admissible to prove liability for or invalidity of the claim.
This rule further provides, however, that it does not require
exclusion when the evidence is offered for another purpose.
This rule is based in part on the general principle excluding
irrelevant evidence.35
Review of the trial court’s decision on
whether to exclude evidence based on relevancy is subject to
the abuse of discretion standard.36
God’s Center argued before the trial court that it
was offering the evidence on the post-filing settlement
negotiations as proof on the issue of whether the LFUCG had
negotiated in good faith.
First, we question the relevancy of
this evidence because the case law and KRS 416.550 appear to
impose a duty of good faith negotiations prior to seeking
condemnation by the filing of an eminent domain petition.
God’s Center has presented no case law supporting its position
and admitting such evidence could have a significant
detrimental affect on the settlement of condemnation lawsuits.
Nevertheless, even assuming this evidence should have
been admitted, God’s Center has not shown that it was
33
(...continued)
358 S.W.2d 487 (1962).
34
Kentucky Rules of Evidence.
35
See Green River Electric Corp. v. Nantz, Ky.App., 894
S.W.2d 643 (1995).
36
Id.; Love v. Commonwealth, Ky., 55 S.W.3d 816, 822 (2001);
Partin v. Commonwealth, Ky., 918 S.W.2d 219, 222 (1996).
-19-
prejudiced.
Errors in the exclusion of evidence are not
grounds for disturbing a judgment unless they affect the
substantial rights of the parties.37
While the evidence of the
post-filing negotiations provided some additional detailed
information on God’s Center’s proposals for use of the
property, it did not differ significantly from testimony by
God’s Center’s witnesses on its pre-filing negotiations.
Consequently, it was substantially cumulative of other
evidence.
God’s Center was allowed to offer testimony on its
proposed alternatives to condemnation and the LFUCG’s
insistence on a fee simple title, and the additional evidence
would not have resulted in a different outcome.
Thus, any
error in excluding the post-filing negotiation evidence was
harmless.
Finally, God’s Center argues that it was treated
disparately from other “litigants under similar facts and law”;
and the LFUCG’s action violated its various constitutional
rights under the First, Fifth, Ninth and Fourteenth Amendments
to the United States Constitution.
God’s Center alleges that
the LFUCG is using the eminent domain law to infringe on its
right of free exercise of its religious beliefs.
First, we
note that God’s Center has not explained how it was treated
differently or identified the “other litigants” similarly
situated that were accorded different treatment by the LFUCG.
As a result, it has not presented sufficient facts to allow
appellate review of its disparate treatment argument.
37
CR 61.01; KRE 103(a).
-20-
In
addition, God’s Center’s constitutional argument is not ripe
for review because it was not properly preserved.
This
argument was raised for the first time on appeal.
Generally,
this Court will review only issues raised in or decided by the
trial court.38
In conclusion, we hold that the factual findings of
the trial court were supported by substantial evidence and its
legal conclusions were correct as a matter of law.
God’s
Center has not shown that the taking of a fee simple interest
in the Lyric Theatre property by the LFUCG was not necessary
for a valid public use or that the LFUCG did not negotiate the
purchase of the property in good faith.
Because the LFUCG did
not act arbitrarily or in excess of its authority, the trial
court did not err in granting the LFUCG’s petition for eminent
domain.
For the foregoing reasons, the judgment of the
Fayette Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Gayle E. Slaughter
Lexington, Kentucky
Theresa L. Holmes
Rochelle E. Boland
Lexington, Kentucky
38
See Regional Jail Authority v. Tackett, Ky., 770 S.W.2d
225 (1989); and Swatzell v. Commonwealth, Ky., 962 S.W.2d 866
(1998).
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