MERKUR STEEL SUPPLY INC V CITY OF DETROIT
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
MERKUR STEEL SUPPLY, INC.,
FOR PUBLICATION
March 9, 2004
9:00 a.m.
Plaintiff-Appellee,
v
No. 241950
Wayne Circuit Court
LC No. 99-928001-CC
CITY OF DETROIT,
Defendant-Appellant.
Updated Copy
May 21, 2004
Before: Murray, P.J., and Gage and Kelly, JJ.
GAGE, J.
Plaintiff Merkur Steel Supply, Inc., leases a parcel of property of approximately eleven
acres in the city of Detroit. The property is adjacent to Detroit City Airport. The property
contains a 188,000 square foot building and several acres of the property are vacant. For
approximately ten years before this lawsuit, plaintiff attempted to expand its operations to no
avail. The plans for expansion were repeatedly thwarted by city action.
Plaintiff initiated the present action against defendant city of Detroit for inverse
condemnation. A jury trial resulted in a verdict in favor of plaintiff for approximately $7
million. The city now appeals as of right. We affirm.
I. FACTUAL BACKGROUND
To fully understand the nature of the cause of action, we must thoroughly review the
relationship between the parties before us and the allegations set forth against the city.
Sometime in 1987, the city started its efforts to expand Detroit City Airport. In that year,
the city signed an agreement with Southwest Airlines for Southwest to provide jet service to the
airport. The agreement obligated the city to undertake a capital improvement at the airport.
Apparently during this time, the city was not complying with existing Federal Aviation
Administration (FAA) regulations, as some of the buildings near the airport, including plaintiff 's,
were too close to the existing runway. However, it appears the FAA granted temporary waivers
to the city for the noncompliance.
Beginning in 1988, the city accepted grant money from the FAA and the state of
Michigan to maintain and expand the airport. The grants all contained the condition that the city
-1-
agree to prohibit the construction of new improvements and remove any existing hazards on the
property near the airport.1
Around 1989, Karl Thomas and Hein Rusen, owners of plaintiff company, began
contemplating constructing a 40,000 square foot addition to the existing building on their
property in order to expand their business. The addition would be located on five acres that are
vacant. In June 1990, plaintiff filed a notice of construction with the FAA. On December 19,
1990, the director of Detroit City Airport wrote a letter to the FAA objecting to plaintiff 's
building of the proposed structure. But in January 1991, the FAA issued a determination that
construction of the proposed addition would not be a hazard to aviation; this determination was
set to expire on August 24, 1992. In the meantime, the city filed an airport layout plan in April
1992, which put plaintiff 's property directly in the way of the proposed airport expansion. In
July 1992, plaintiff applied to the FAA for an extension determination, but in August 1992, the
FAA revoked its "no hazard" determination because of the city's airport layout plan. Also during
this time plaintiff applied for a building permit from the city, but it was denied.
In 1996, the city filed a revised layout plan showing the new airport runway going right
through plaintiff 's property. Apparently, because the city took no further action to condemn
plaintiff 's property, in September 1997, plaintiff wrote to then City Airport Director Suzette
Robinson to inform her that it wished to proceed with its development. After receiving no
response, plaintiff sent Robinson a second letter in October 1997, informing her that it would
proceed with construction unless the city advised it that no building would be approved. Plaintiff
again received no response. Thereafter, in November 1997, plaintiff hired an architectural firm
to prepare plans for construction.
On July 2, 1999, the FAA issued a determination that the new building would be a hazard
to aviation. On July 26, 1999, the Michigan Aeronautics Bureau issued a tall structure permit to
plaintiff but attached certain conditions. The permit recognized that while the forty-foot building
would not interfere with aviation, it could interfere with the city's plans to expand the airport. It
issued the permit with the condition that the proponent or any subsequent owners of the proposed
building would not receive reimbursement for the building or any businesses associated with the
building if the property was acquired for expansion. At this point, plaintiff alleges it considered
its project dead.
Plaintiff filed the present lawsuit for inverse condemnation against the city in September
1999. In part, plaintiff alleged that the city's filing of an airport layout plan constituted a taking
of plaintiff 's property without just compensation. The city filed a motion for summary
disposition, arguing that plaintiff 's complaint failed to state a claim on which relief could be
granted and that the complaint stated claims against the state and federal governments that were
beyond the circuit court's jurisdiction. The trial court denied the motion for summary disposition
on September 5, 2001.
1
The record indicates that in 1991, the Detroit city council approved acquisition of the land
surrounding the airport and the city did in fact condemn some of the properties in the area.
-2-
Trial was bifurcated into two phases, liability and damages. At the conclusion of
plaintiff 's proofs, the city filed a motion for a directed verdict, arguing in part that the filing of
an airport layout plan could not constitute a taking per se; that there was no evidence that any
regulation imposed by the airport layout plan denied plaintiff all economically viable use of its
land; that the court must apply a balancing test to determine whether a taking occurred; and that
it was improper to segment the property and determine whether only the five acres on which
plaintiff planned to build was taken. The trial court denied the motion.
At the conclusion of the liability phase of trial, the jury was asked to decide whether the
city inversely condemned plaintiff 's property and, if so, on what date the inverse condemnation
occurred. The jury determined that the city's conduct amounted to a taking and that the taking
occurred in December 1990. During the damages phase of trial, the jury was asked to determine:
(1) whether plaintiff suffered damages, (2) the amount of just compensation to which plaintiff is
entitled to date from January 1, 1991, (3) plaintiff 's future damages, and (4) the amount of just
compensation each month for which plaintiff is entitled to in the future. Following this phase of
trial, the city again sought a directed verdict, arguing that plaintiff failed to establish the value of
its property. The trial court denied the motion.
On March 7, 2002, the jury determined that plaintiff had suffered damages in the amount
of $6.8 million and would continue to suffer damages in the amount of $3,800 each month. The
city filed a motion for judgment notwithstanding the verdict (JNOV) or, in the alternative, a new
trial. The trial court again denied the motion.
II. STANDARD OF REVIEW
The city raises issues dealing with the trial court's rulings on several motions below as
well as various other aspects of the trial. In its brief on appeal, the city erroneously states that
the standard of review for this case is the plain error standard set forth in People v Carines, 460
Mich 750; 597 NW2d 130 (1999). Despite the city's erroneous assertion, we will lay out the
appropriate standards of review for the issues raised.
Part III(A) of this opinion addresses the city's argument that the trial court erred in
denying its motion for summary disposition. While the city brought its motion for summary
disposition under MCR 2.116(C)(8), the trial court reviewed the motion under both MCR
2.116(C)(8) and (10). A motion brought under MCR 2.116(C)(8) tests the legal sufficiency of a
claim by the pleadings alone. Beaudrie v Henderson, 465 Mich 124, 129; 631 NW2d 308
(2001). All factual allegations in support of the claim are accepted as true, as well as any
reasonable inferences or conclusions that can be drawn from the facts, and must be construed in
the light most favorable to the nonmoving party. Maiden v Rozwood, 461 Mich 109, 119; 597
NW2d 817 (1999). A motion brought under MCR 2.116(C)(10) tests whether there is factual
support for a claim. Spiek v Dep't of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998).
When deciding this motion, the court must consider the pleadings, affidavits, depositions,
admissions, and other documentary evidence submitted in the light most favorable to the
nonmoving party. Ritchie-Gamester v City of Berkley, 461 Mich 73, 76; 597 NW2d 517 (1999).
On appeal, the trial court's decision is reviewed de novo. Dressel v Ameribank, 468 Mich 557,
561; 664 NW2d 151 (2003).
-3-
Parts III(B) and III(F) primarily address the city's motion for directed verdict and JNOV.
A directed verdict is appropriate only when no material factual questions exist on which
reasonable minds could differ. Cacevic v Simplematic Engineering Co (On Remand), 248 Mich
App 670, 679-680; 645 NW2d 287 (2001). The trial court's decision on a motion for directed
verdict is reviewed de novo. Sniecinski v Blue Cross & Blue Shield of Michigan, 469 Mich 124,
131; 666 NW2d 186 (2003). Judgment notwithstanding the verdict should be granted only when
there was insufficient evidence presented to create an issue for the jury. Craig v Oakwood Hosp,
249 Mich App 534, 547; 643 NW2d 580 (2002) (opinion by Cooper, P.J.). When deciding a
motion for JNOV, the trial court must view the evidence and all reasonable inferences in the
light most favorable to the nonmoving party and determine whether the facts presented preclude
judgment for the nonmoving party as a matter of law. Id. A trial court's decision on a motion for
JNOV is also reviewed de novo. Sniecinski, supra.
Part III(D) of this opinion addresses the city's argument that the trial court erred in
allowing evidence of lost profits. This Court reviews a trial court's decision to admit evidence
for an abuse of discretion. Chmielewski v Xermac, Inc, 457 Mich 593, 613-614; 580 NW2d 817
(1998). As to the remaining claims, which are addressed throughout this opinion, questions of
law are reviewed de novo by this Court, Armstrong v Ypsilanti Charter Twp, 248 Mich App 573,
582-583; 640 NW2d 321 (2001), while factual findings are reviewed for clear error,
Christiansen v Gerrish Twp, 239 Mich App 380, 387; 608 NW2d 83 (2000).
III. ANALYSIS OF THE CITY'S CLAIMS
At the outset, we note that the city appears to minimize and mischaracterize plaintiff 's
claims in this case. This is not simply a case where a company's attempt to expand its business
interferes with the city's management of its airport. Instead, this is essentially a case of blight by
planning. In this case, the city of Detroit wanted to expand Detroit City Airport and it needed to
condemn the properties around the airport. However, the city's plans were not concrete and, for
over a decade, the city has failed to actually expand the airport. While the city has condemned
some of the surrounding area and has viewed it as practically uninhabited or vacant, the city has
failed to formally condemn plaintiff 's property. However, although the city has never formally
condemned plaintiff 's property, it has made it virtually impossible for plaintiff to expand its own
business. Essentially, the city, in over ten years, has thrown "roadblock" after barrier to
discourage the expansion of plaintiff 's business.
A. THE TRIAL COURT DID NOT ERR IN DENYING THE CITY'S MOTION FOR
SUMMARY DISPOSITION
According to the city, it played no role in the FAA's determination of hazard against
plaintiff 's proposed building or in creating the condition in the state's tall structure permit. Thus,
the city argues that the Wayne Circuit Court lacked jurisdiction over plaintiff 's claims because
the claims are actually claims against the state and federal governments.
Plaintiff in this case alleges a de facto taking. A de facto taking occurs when a
governmental agency effectively takes private property without a formal condemnation
proceeding. See Detroit Bd of Ed v Clarke, 89 Mich App 504, 508; 280 NW2d 574 (1979).
-4-
Inverse condemnation can occur without a physical taking of the property; a diminution in the
value of the property or a partial destruction can constitute a "taking." Id. Thus, for purposes of
a de facto taking, all of the city's actions in the aggregate, as opposed to just one incident, must
be analyzed to determine the extent of the taking.
Here, the city minimizes plaintiff 's claims. According to the city, the circuit court lacked
jurisdiction to rule that the FAA determination of hazard constituted a taking because FAA
determinations are governed exclusively by federal law. The city relies on the case of Flower
Mills Associates v United States, 23 Cl Ct 182 (1991), for its contention that an FAA
determination of hazard does not constitute a taking of property.
In this case, however, plaintiff did not bring suit against the federal government strictly
on the basis of the FAA's determination of a hazard. Plaintiff brought suit against the city
because of the city's filing of the airport layout plan with the FAA, as well as other acts plaintiff
contends were taken in order to obtain the property near the airport. These other acts in part
include the acquisition of properties surrounding the area and the promise, in exchange for grant
money, to the FAA and the state that the city would not allow any new construction in the area.
Plaintiff 's primary contention was that the city wanted to acquire plaintiff 's property but did not
do so legally because of the significant cost, and instead condemned much of the surrounding
properties and made it impossible for plaintiff to expand its business. Because plaintiff did not
bring suit against the federal government strictly on the basis of the FAA's determination of a
hazard, the city's reliance on Flower Mills is misplaced. Further, because of the city's
misconceptions, its argument that the Wayne Circuit Court lacked jurisdiction is also misplaced.
We note that even though the FAA's determination of a hazard does contribute to
plaintiff 's problems with its attempt to expand its operations, it is only one factor to be
considered. As the city itself notes from Flower Mills, supra, the FAA's hazard finding is not
legally enforceable. This is why plaintiff 's claim of a de facto taking cannot and does not rest
merely on the FAA's determination of a hazard. Instead, plaintiff 's claims are against the city for
the filing of the airport layout plan, and they rest on the city's agreement to condemn the
property, its condemning of some of the surrounding area, and its making it impossible for
plaintiff to expand its business until the city decides whether to actually expand the airport and
formally condemn plaintiff 's property.
We come to a similar conclusion with regard to the city's claim that because state law
regulates the issuance of tall structure permits, the condition contained in the tall structure permit
issued to plaintiff cannot be imputed to the city. According to the city, plaintiff is essentially
bringing suit against the state for a taking of plaintiff 's property and therefore must bring suit
against the state in the Court of Claims. The city is correct in its argument that the issuance of
tall structure permits is regulated by the Tall Structure Act, MCL 259.481 et seq. This act
requires a person seeking to build a structure in a runway or landmark area to obtain a permit.
However, where the city's argument is misguided is in its claim that the trial court had to
determine that the tall structure permit issued to plaintiff constituted a taking of its property.
Plaintiff does not claim that the condition contained in the tall structure permit
constituted a taking of its property. Instead, plaintiff claims that the city's actions, in conjunction
with the city's filing of the airport layout plan, constitute a taking of plaintiff 's property by the
-5-
city. Plaintiff alleged that in order to gain grant money, the city agreed that it would condemn
the area near the airport and prohibit any persons from building in the area. It is this act that
plaintiff argues contributes to a finding that the city inversely condemned plaintiff 's property,
not the mere fact that a condition was placed in the tall structure permit. Again, the city's
argument that the Wayne Circuit Court lacked jurisdiction is misplaced.
Finally, the city claims that the mere filing of an airport layout plan, by itself, cannot
constitute a taking of plaintiff 's property. The city is correct in that the mere promulgation and
publication of plans does not constitute a taking of property. See City of Muskegon v DeVries,
59 Mich App 415, 419; 229 NW2d 479 (1975). The threats must be coupled with affirmative
action, such as unreasonable delay or oppressive conduct. Id. Our courts have held that a city
cannot deliberately act to reduce the value of private property. Detroit Bd of Ed, supra at 508,
citing In re Urban Renewal, Elmwood Park Project, 376 Mich 311, 317; 136 NW2d 896 (1965).
Actions found to be deliberate have included the published threat of condemnation, mailing
letters concerning the project to area residents, refusing to issue building permits for
improvements coupled with intense building inspection, reductions in city services to the area,
and protracted delay and piecemeal condemnation. Id. at 509.
Again, in this case, plaintiff 's claim does not rest on the city's publication of its plan.
Plaintiff 's claim rests on the fact that the city publicized its plans, started condemning the
properties around plaintiff 's, closed roads in the area,2 and took action to prevent plaintiff from
expanding its business. In essence, plaintiff argues that over a period of ten years, the city took
steps to inhibit plaintiff 's expansion of its business because the city wanted to expand the airport
without having to legally and formally acquire plaintiff 's property. Plaintiff argues that the city's
failure to formally condemn its property constituted a taking. Plaintiff also argues that the city's
failure to respond to plaintiff 's inquiries and notice that it wished to proceed with its construction
when the city took no action, particularly after 1996, constituted a taking. Under the
circumstances, the trial court did not err in denying the city's motion for summary disposition.
B. THE TRIAL COURT DID NOT IMPROPERLY FAIL TO APPLY THE BALANCING
TEST TO DETERMINE WHETHER A TAKING HAD OCCURRED
According to the city, plaintiff 's claim alleges a regulatory taking and, thus, the court was
required to apply the balancing test set forth in K & K Constr Inc v Dep't of Natural Resources,
456 Mich 570; 575 NW2d 531 (1998). In its argument, the city rather conclusorily states that
plaintiff 's claim is one of a regulatory taking, but under the facts, we cannot so conclude.
Eminent domain is an inherent right of a state to condemn private property for public use.
In re Acquisition of Land—Virginia Park, 121 Mich App 153, 158; 328 NW2d 602 (1982).
2
Evidence indicates that in 1987, the city approved the temporary closing of a road in the area of
the airport, and while the closing was supposed to be temporary, the road remained closed
indefinitely.
-6-
When exercising its power of eminent domain, the state, or those to whom the power has been
lawfully delegated, must pay the owner just compensation. Id. Where the property has been
damaged rather than completely taken by governmental actions, the owner may be able to
recover by way of inverse condemnation. Id. An inverse condemnation suit is one instituted by
a private property owner whose property, while not formally taken for public use, has been
damaged by a public improvement undertaking or other public activity. Id. Inverse
condemnation is "'a cause of action against a governmental defendant to recover the value of
property which has been taken in fact by the governmental defendant, even though no formal
exercise of the power of eminent domain has been attempted by the taking agency.'" Id. at 158159 (citation omitted).
When the government takes property by formal condemnation, it must follow the
procedures set out in the Uniform Condemnation Procedures Act (UCPA), MCL 213.51 et seq.
However, no exact formula exists concerning a de facto taking; instead, the form, intensity, and
the deliberateness of the governmental actions toward the injured party's property must be
examined. In re Virginia Park, supra at 160, citing Heinrich v Detroit, 90 Mich App 692, 698;
282 NW2d 448 (1979). The plaintiff has the burden of proving causation in an inverse
condemnation action. In re Virginia Park, supra at 160-161, quoting Heinrich, supra at 700. A
plaintiff may satisfy this burden by proving that the government's actions were a substantial
cause of the decline of its property. Id. The plaintiff must also establish that the government
abused its legitimate powers in affirmative actions directly aimed at the plaintiff 's property. Id.
Not all government actions may amount to a taking for public use. Heinrich, supra at 698. The
mere threat of condemnation and its attendant publicity, without more, is insufficient. Id.
Before a court may conclude that a taking occurred, it must examine the totality of the acts
alleged to determine whether the governmental entity abused its exercise of eminent domain to
plaintiff 's detriment. Id.
In contrast, a regulatory taking is one in which the government effectively "takes" a
person's property by overburdening it with regulations. K & K Constr, Inc, supra at 576. Land
use regulations effectuate a taking in two general situations: (1) where the regulation does not
substantially advance a legitimate state interest, or (2) where the regulation denies an owner
economically viable use of his land. Id., citing Keystone Bituminous Coal Ass'n v DeBenedictis,
480 US 470, 485; 107 S Ct 1232; 94 L Ed 2d 472 (1987). The second type of taking is further
subdivided into two situations: (a) a "categorical" taking, where the owner is deprived of "all
economically beneficial or productive use of land," or (b) a taking recognized on the basis of the
application of the traditional "balancing test" established in Penn Central Transportation Co v
New York City, 438 US 104; 98 S Ct 2646; 57 L Ed 2d 631 (1978). K & K Constr, supra at 576577. For a categorical taking, a reviewing court need not apply a case-specific analysis; instead,
the owner should automatically recover for the taking of its property. Id. at 577, citing Lucas v
South Carolina Coastal Council, 505 US 1003, 1015; 112 S Ct 2886; 120 L Ed 2d 798 (1992).
The person may recover for a physical invasion of his property by the government, or where a
regulation forces an owner to "'sacrifice all economically beneficial uses [of his land] in the
name of the common good.'" Id., quoting Lucas, supra at 1019. In regulatory takings other than
categorical takings, the court must apply a "balancing test." With regard to this balancing test, a
reviewing court must engage in an "ad hoc, factual inquiry," centering on three factors: (1) the
character of the government's action, (2) the economic effect of the regulation on the property,
-7-
and (3) the extent by which the regulation has interfered with distinct, investment-backed
expectations. Id., citing Penn Central, supra at 124.
In this case, the city's actions cannot be definitively categorized as a regulatory taking.
The city did not "take" plaintiff 's property by overburdening it with regulations. Instead, the city
wanted to expand the airport and inhibited plaintiff 's construction because of the contemplated
expansion of the airport. Here, the city actually intended to acquire plaintiff 's property.
Essentially, the city wanted plaintiff 's property without having to pay for it through the
institution of formal condemnation proceedings. Thus, we decline to categorize the city's actions
as a strict regulatory taking. Instead, under the circumstances, plaintiff had to prove a de facto
taking through inverse condemnation.
Again, a de facto taking can occur without an actual physical taking of the property.
Detroit Bd of Ed, supra at 508. In terms of a de facto taking, the form, intensity, and the
deliberateness of the government actions toward the property must be examined. In re Virginia
Park, supra at 160. All actions by the city, in the aggregate, must be analyzed. Heinrich, supra
at 698.
Plaintiff presented evidence of a decline of its property through evidence that the city's
actions prevented plaintiff from building a new building for its business. Plaintiff also presented
evidence that the city had the intent to completely take plaintiff 's property but failed to take the
appropriate steps in over ten years. The city accepted money from the government with the
promise that it would prohibit any new construction and would remove any existing hazards,
which included plaintiff 's business. In 1991, the Detroit city council approved the condemnation
of the area around the airport. Further, there was testimony and exhibits admitted at trial that
showed city acknowledgment that the area around the airport was to be condemned. Thus,
plaintiff presented evidence that the city abused its legitimate powers in its actions aimed at
plaintiff 's property. Under the circumstances, the trial court used the correct test in determining
whether plaintiff presented evidence of a taking.
C. THE TRIAL COURT DID NOT IMPROPERLY ALLOW PLAINTIFF TO SEGMENT ITS
PROPERTY IN ORDER TO SHOW A TAKING
Without specifically stating the context in which it makes its argument, the city claims
that the trial court allowed plaintiff to segment its property. According to the city, allowing
plaintiff to segment its property violates the "nonsegmentation" rule recognized in Michigan.
"'Any injury to the property of an individual which deprives the owner of
the ordinary use of it is equivalent to a taking, and entitles him to compensation.
So a partial destruction or diminution of value of property by an act of
government which directly and not merely incidentally affects it, is to that extent
an appropriation.'" [Peterman v Dep't of Natural Resources, 446 Mich 177, 190;
521 NW2d 499 (1994), quoting Vanderlip v Grand Rapids, 73 Mich 522, 534; 41
NW 677 (1889), quoting Broadwill v City of Kansas, 75 Mo 213, 218 (1881).]
In the context of a regulatory taking, the Court in K & K Constr, supra at 578, explained, "One
of the fundamental principles of taking jurisprudence is the 'nonsegmentation' principle. This
-8-
principle holds that when evaluating the effect of a regulation on a parcel of property, the effect
of the regulation must be viewed with respect to the parcel as a whole." Id. "Courts should not
'divide a single parcel into discrete segments and attempt to determine whether rights in a
particular segment have been entirely abrogated.'" Id., quoting Penn Central, supra at 130.
Instead, the court must examine the effect of the regulation on the entire parcel, rather than just
the affected portion of the parcel. K & K Constr, supra at 578-579.
In K & K Constr, the parties dealt with property that was segmented into five different
parcels and the parties were claiming only the taking of some portions of several of the parcels
because of certain regulations placed on those parcels. This case is distinguishable. This case
involves a leasehold estate. Plaintiff claimed that the city "took" its property by precluding it
from building on several vacant acres of the property and further that the city intended to
eventually take plaintiff 's property in its entirety but was not willing to do so through the proper
avenues because of the expense. Plaintiff claimed a partial de facto taking. See Peterman,
supra. Under the circumstances, the trial court did not improperly allow plaintiff to segment its
property.
D. THE TRIAL COURT DID NOT IMPROPERLY ALLOW EVIDENCE OF SPECULATIVE
LOST PROFITS
The city argues that the trial court improperly allowed plaintiff to introduce evidence of
speculative lost profits as a separate and direct element of damages instead of as evidence
bearing on the value of the leasehold interest.
Recovery can be had for the taking of a leasehold estate. In re Widening of Gratiot Ave,
294 Mich 569; 293 NW 755 (1940). The purpose of just compensation is to put the property
owner in as good a position as it would have been in had its property not been taken. Miller Bros
v Dep't of Natural Resources, 203 Mich App 674, 685; 513 NW2d 217 (1994), citing State Hwy
Comm'r v Eilender, 362 Mich 697, 699; 108 NW2d 755 (1961). The public must not be enriched
at the property owner's expense, nor should the property owner be enriched at the public's
expense. Id. To prevent either party from being enriched at the other's expense, the nature of the
taking at issue must be considered. Id. at 685-686. "In a typical condemnation case, the state
takes some affirmative action to permanently deprive a property owner of the use of the property,
and, therefore, is required to pay compensation to the owner." Id. at 686.
In cases involving a temporary taking, "the best approach is a flexible approach that will
compensate for losses actually suffered while avoiding the threat of windfalls to plaintiffs at the
expense of substantial government liability." Id. at 687, citing Poirier v Grand Blanc Twp (After
Remand), 192 Mich App 539, 545; 481 NW2d 762 (1992). The best approach in that case is to
base the just compensation award on the fair market value of the property. Id. at 688. The Court
noted in Miller Bros that because the state is temporarily depriving plaintiffs of the use of their
property, much like a renter, the state should be required to pay "rent" to plaintiffs as
compensation for the temporary taking. Id.
"The determination of value is not a matter of formulas or artificial rules, but of sound
judgment and discretion based upon a consideration of all the relevant facts in a particular case."
-9-
In re Widening of Gratiot Avenue, supra at 574. In estimating the value of a lease, "it is proper
to consider the location of the premises, their special adaptability to the business there being
conducted, the length of time it has been established, its earnings and profits, the unexpired term
of the lease, and every other fact that may affect its value. All of these matters go to enhance the
value of the lease. They are not substantive damages in condemnation proceedings." In re Park
Site on Private Claim 16, City of Detroit, 247 Mich 1, 4; 225 NW 498 (1929).
"Damages will not be allowed in condemnation cases unless they can be proven with
reasonable certainty." Co of Muskegon v Bakale, 103 Mich App 464, 468; 303 NW2d 29 (1981).
"The loss of speculative profits, therefore, has been held not to be allowable as an element of
compensation." Id. But it is error to not allow a property owner to present evidence of "the most
profitable and advantageous use it could make of the land" even if the use was still in the
planning stages and had not been executed. Village of Ecorse v Toledo, C S & D R Co, 213
Mich 445, 447; 182 NW 138 (1921).
In denying the city summary disposition, the trial court ruled:
In the event it should be determined that Plaintiff is entitled to recover just
compensation for the de facto taking of its leasehold estate, evidence of lost
profits that would have been generated from Plaintiff 's development of the
property, but for a de facto taking, is admissible to establish circumstantially the
reasonable value of the leasehold estate wrongfully taken by Defendant.
Thus, the trial court allowed evidence of lost profits to establish the diminution in value of
plaintiff 's leasehold interest. This is acceptable. See, e.g., Miller Bros, supra. While the
evidence came in the form of direct numbers of lost profits, the evidence established how much
value of the leasehold was taken.
Furthermore, the evidence was not unduly speculative. Plaintiff wanted to build a new
building in order to expand its business. It must be kept in mind that plaintiff wished to utilize a
portion of its property that was vacant. The jury in this case visited the property site and heard
testimony from several witnesses regarding plaintiff 's plans to expand. Plaintiff 's owners
testified regarding the new operations that would be conducted in the new building as an
extension of the existing operation. Plaintiff 's expert witness testified regarding prices and costs.
Plaintiff 's president and vice-president of finance testified regarding the profitability of the
expansion and the profitability of the existing business and gave specific dollar amounts.
Plaintiff 's financial statements were also entered into evidence, as were its tax returns.
Moreover, the jury was instructed that it should not speculate. The city offered very little to
contradict plaintiff 's evidence. The city called one witness to testify regarding the damages issue
and while he criticized plaintiff 's damages projections, on cross-examination, he admitted that if
asked to make projections of lost profits of a business that is not in operation, he would do so in
a similar manner as plaintiff did. Because we are dealing with a business that has not come to
fruition, some degree of guesswork is necessary and the amount of damages cannot be
established for certain. The evidence was not unduly speculative.
E. THE JURY DID NOT ERR IN DETERMINING THE DATE OF TAKING
-10-
The city argues that the verdict establishing December 1990 as the date of taking is not
based on evidence in the record and fails as a matter of law.
"The determination of the date of taking and the ascertainment of value is a question of
fact for the jury." Detroit Bd of Ed, supra at 509. The jury determined the date of the taking to
be December 1990. The evidence established that on December 19, 1990, the city's airport
director wrote a letter to the FAA to object to plaintiff 's proposal to build. It appears that this
was one of the city's first outward acts at attempting to preclude plaintiff from building its new
business. And it was after this date that the city filed its airport layout plan. It was also after this
date that the city took further acts at attempting to preclude plaintiff from building.3 Although
plaintiff admits that it did not have concrete plans to build and it did not realize many damages in
December 1990, there is evidence in the record to support the jury determination of December
1990 as the date of taking or the date on which the taking began. "It is not within the province of
this Court to review questions of fact other than to ascertain the presence of evidence that can
support the verdict." Detroit Bd of Ed, supra at 510. "A verdict will not be disturbed so long as
it is within the fair range of the testimony." Id., citing Detroit v Sherman, 68 Mich App 494,
498; 242 NW2d 818 (1976), and St Clair Shores v Conley, 350 Mich 458, 463-464; 86 NW2d
271 (1957). The jury did not err in its determination of the date of the taking.
F. THE TRIAL COURT DID NOT ERR IN FAILING TO DIRECT A VERDICT IN THE
CITY'S FAVOR
The city finally argues that plaintiff presented no evidence of the value of the property
allegedly taken, and without such evidence, there is no foundation on which a verdict can be
based.
Again, "'[t]here is no formula or artificial measure of damages applicable to all
condemnation cases. The amount to be recovered by the property owner is generally left to the
discretion of the trier of fact after consideration of the evidence presented.'" Poirier, supra at
543 (citation omitted). A jury has broad discretion in determining the amount of compensation
in condemnation cases. "It is not within the province of the court on appeal . . . to review
questions of fact further than to see that the verdict is supported by the evidence. An appellate
court should not disturb a condemnation award which was within the maximum and minimum
appraisals presented by the witnesses." Sherman, supra at 498 (citations omitted).
At trial, the city argued for a verdict of no cause of action and damages of zero. Plaintiff
requested a verdict of nearly $17 million for past losses and $200,000 a month for future losses.
The jury awarded $6.8 million for past losses and $3,800 a month for future losses.
3
Some evidence in the record indicates that the city stopped services such as trash pickup around
the area and also began dumping trash on property the city acquired. Further, plaintiff suggested
that through condemnation, the city acquired some of the residential properties around the area,
but let those properties become run down.
-11-
As the trial court noted in its denial of the city's second motion for directed verdict, the
damages to which the witnesses testified related to the increased sales of plaintiff that would
result from being able to add another business on their land. Witnesses testified regarding
plaintiff 's productivity over the years, and its past financial statements were admitted into
evidence. Thus, there was evidence of how profitable plaintiff 's business was before any new
expansion, which equated to its market value. Witnesses then testified about what plaintiff 's
increased income and production would have been with the new business. This established the
diminution in value of plaintiff 's property. Under the circumstances, there was sufficient
evidence produced with which the jury could determine damages; thus, the trial court did not err
in denying directed verdict in the city's favor or in denying the city's motion for JNOV.
IV. CONCLUSION
Contrary to the city's assertion, plaintiff did not institute the present suit against the city
simply because the city filed an airport layout plan and the FAA determined plaintiff 's proposed
construction a hazard to aviation. Instead, plaintiff filed the present inverse condemnation suit
against the city for all of the city's acts that were taken in an attempt to thwart plaintiff 's efforts
at construction and for the city's attempt to "take" plaintiff 's property without formally
condemning it. The city approved the condemnation of the area and the area was in a state of
decline because of the lack of city services and the fact that the residents anticipated
condemnation. While the city intended to condemn the area, it had formally condemned few of
the properties and let the majority of the properties decline and await possible future formal
condemnation. In sum, this is a case of blight by planning. The city's plans to expand Detroit
City Airport, possibly sometime in the future, thwarted plaintiff 's attempts to run and expand its
business and significantly impaired the value of plaintiff 's property rights. The city made its
plans clear but never followed through with its plans and never attempted to legally obtain
plaintiff 's property. Under the circumstances, we affirm the trial court's rulings in all respects
and we affirm the jury's verdict.
Affirmed.
/s/ Christopher M. Murray
/s/ Hilda R. Gage
/s/ Kirsten Frank Kelly
-12-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.