DEPT OF TRANSPORTATION V LAWRENCE P GILLING
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STATE OF MICHIGAN
COURT OF APPEALS
MICHIGAN DEPARTMENT OF
TRANSPORTATION,
FOR PUBLICATION
July 15, 2010
9:00 a.m.
Plaintiff-Appellant,
v
No. 285369
Lapeer Circuit Court
LC No. 05-036453-CC
LAWRENCE P. GILLING, MARGARET
GILLING, STEPHEN L. GILLING, DONNA
GILLING, ROBERT L. GILLING, CONNIE
GILLING, GILLING’S NURSERY &
LANDSCAPING, INC., and GILLING’S
ARTISTIC LANDSCAPING, INC.,
Defendants-Appellees.
MICHIGAN DEPARTMENT OF
TRANSPORTATION,
Plaintiff-Appellant,
v
No. 287552
Lapeer Circuit Court
LC No. 05-036453-CC
LAWRENCE P. GILLING, MARGARET
GILLING, STEPHEN L. GILLING, DONNA
GILLING, ROBERT L. GILLING, CONNIE
GILLING, GILLING’S NURSERY &
LANDSCAPING, INC., and GILLING’S
ARTISTIC LANDSCAPING, INC,
Defendants-Appellees.
Before: SAAD, C.J., and WHITBECK and ZAHRA, JJ.
SAAD, C.J.
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These consolidated appeals arise out of a condemnation proceeding brought by plaintiff
Michigan Department of Transportation (MDOT) to acquire a multi-acre parcel located on
highway M-24 (also known as Lapeer Road) in Lapeer County as part of a road-widening
project. In Docket No. 285369, plaintiff MDOT appeals the trial court’s judgment on the jury
verdict in favor of defendants Lawrence P. Gilling, Margaret Gilling, Stephen L. Gilling, Donna
Gilling, Robert L. Gilling, Connie Gilling, Gilling’s Nursery & Landscaping, Inc., and Gilling’s
Artistic Landscaping, Inc. (collectively, “Gilling”). In Docket No. 287552, MDOT appeals the
trial court’s post-judgment order that awarded Gilling attorney fees and costs under MCL
213.66.
I. CONDEMNATION: MOVING AND RELOCATION EXPENSES1
The trial court ruled that business interruption damages include moving and relocation
expenses.
The trial court further held that the statutorily authorized administrative
reimbursement proceedings is a supplementary scheme for the recovery of moving and
relocation expenses not otherwise fully compensable under state condemnation law. MCL
252.143; MCL 213.328(1); MCL 213.355. We agree in part. First, we hold that claims for
business interruption damages do not allow for lost profits, but permit recovery of moving and
relocation expenses. However, although moving and relocation expenses can include expenses
for moving trade fixtures, we hold that the trial court erred in classifying defendants’ nursery
stock as trade fixtures. We also hold that the trial court abused its discretion when it excluded
key expert testimony that supported MDOT’s position that Gilling was unreasonable in moving
to an interim location before moving to its final destination. Finally, we hold that administrative
recovery schemes supplement rather than supplant a property owner’s constitutional right to
recover “just compensation” for moving and relocation expenses as part of a business
interruption. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.
II. FACTS AND PROCEEDINGS
In September 2005, MDOT filed a complaint under the Uniform Condemnation
Procedures Act (UCPA), MCL 213.51 et seq., to acquire a multi-acre parcel, which was owned
by members of the Gilling family and two corporate entities and was used to operate a retail
nursery and landscaping businesses. MDOT acquired the property to implement a roadwidening project on M-24. Gilling did not challenge the necessity or public use supporting the
taking. Therefore, the primary issue was and is the amount of just compensation to which
Gilling is entitled. In September 2005, Gilling relocated its business to a leased property site that
Gilling found unsuitable as a permanent location.
In January 2006, Gilling submitted to MDOT its claims for compensable items. Under
MCL 213.55(3), the property owner submits a written claim with MDOT that details the nature
and substance of property damage caused by the taking, apart from the value of the property
taken, and not described in the good faith written offer. MCL 213.55(1). An underlying premise
of Gilling’s claim is its assertion that the entire business had to be relocated to an alternate site
1
Docket No. 285369.
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because the partial taking left only a “small, inadequate remainder.” MDOT reimbursed Gilling
approximately $147,000 for moving and relocation expenses for the move to the interim site
pursuant to this administrative proceeding.
In September 2007, Gilling purchased another site that was better suited to its purpose,
and relocated to the new, permanent location. In the condemnation proceedings before the trial
court, Gilling claimed that it was entitled to compensation for its business interruption damages,
including the costs and expenses of relocating its business. During Gilling’s subsequent motion
to exclude MDOT’s business valuation expert witness from trial, MDOT admitted that it was
statutorily required to reimburse an owner for actual moving and relocation expenses. MCL
252.143. But MDOT pointed out that it had already reimbursed Gilling approximately $147,000
for moving and relocation expenses for the move to the interim site in an administrative
proceeding. MDOT argued that the types of “business interruption” expenses sought by Gilling
were actually moving and relocation expenses. MDOT contended that such expenses were
properly sought administratively rather than in condemnation proceedings.
In response, Gilling asserted that MDOT’s prior administrative payment was “totally
irrelevant to MDOT’s duty to appraise, and pay, the Gillings’ constitutional business interruption
damages.” In other words, Gilling contended that any statutory moving and relocation
allowances did not limit a landowner’s constitutional business interruption damages. It asserted
that “an owner’s statutory moving allowance, and constitutional business interruption damages,
are distinct.” According to Gilling, under the UCPA, “any amounts that MDOT already paid in
statutory moving costs are subtracted from the just compensation estimate for business
interruption.” Gilling pointed out that its business interruption appraisal already made an
adjustment for the prior payment. Therefore, according to Gilling, it was not seeking a double
payment. After reviewing the facts and proceedings, the trial court denied Gilling’s motion to
exclude MDOT’s expert. The trial court found that “relocation costs are compensable under
MCL 252.143 and are not part of the condemnation proceedings” but that “business interruption
damages are part of these proceedings so long as they do not duplicate the relocation costs.”
In a later motion in limine to prohibit MDOT from presenting issues of law to the jury,
Gilling explained that its actual costs substantially exceeded MDOT’s administrative payments.
Therefore, Gilling contended, it was not seeking double payment. Rather, according to Gilling,
it was merely seeking additional payment for its business interruption costs caused by the need to
relocate. Gilling claimed that due to the inadequacy of MDOT’s just compensation payment,
Gilling was unable to initially secure a permanent location and would therefore incur additional
costs in relocating again. Gilling stated that its interim site was not appropriate for use as a
permanent site because of limited frontage, poor soil, and inadequate storage. MDOT responded
and said that Gilling improperly attempted to “‘lump’ all of [Gilling’s] moving, re-establishment
and relocation costs under the heading of ‘Business Interruption Damages.’” Although MDOT
acknowledged that some of Gilling’s claimed damages could be considered business interruption
damages, it maintained that business interruption damages did not include moving and relocation
expenses.
MDOT then moved in limine to strike all of Gilling’s moving and relocation expenses. It
argued that MCL 252.143 specifically excluded such expenses from condemnation actions.
MDOT recognized that there can be business interruption expenses that do not involve moving
or relocation, which would be compensable as just compensation. But MDOT contended that
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any moving and relocation expenses were not compensable in that same manner. MDOT
asserted that if Gilling believed that the original administrative payment was insufficient to
reimburse it for the move to the interim site, then Gilling could administratively appeal that
decision. Likewise, MDOT stated that Gilling could seek administrative payment of its moving
and relocation expenses for the second move.
In a written opinion, the trial court addressed both Gilling’s motion in limine to prohibit
MDOT from presenting issues of law to the jury and MDOT’s motion in limine to strike all of
Gilling’s moving and relocation expenses. According to the trial court, the primary question
before it was whether Michigan’s administrative procedures were a property owner’s exclusive
remedy to claim moving and relocation expense reimbursement or whether those procedures
were optional and in addition to the statutory condemnation and common law remedies. The
trial court noted that the answer to this question required interpretation of MCL 252.143, which
states:
Relocation and financial assistance allowed under this act are independent of and
in addition to compensation for land, buildings or property rights and shall not be
the subject of consideration in condemnation proceedings.
The trial court noted that the parties agreed that a property owner could not claim
damages in a condemnation proceeding that duplicated his or her administrative claims. And the
trial court acknowledged that Michigan case law made clear that business interruption damages
are compensable in condemnation proceedings, separate from administrative proceedings,
provided that damages could be proven with a reasonable degree of certainty. Therefore,
according to the trial court, the issue boiled down to whether moving and relocation expenses
could legitimately be part of business interruption damages.
Noting a lack of Michigan precedent on point, the trial court looked to guidance from
other jurisdictions. The trial court determined that the case that appeared most directly on point
was Oklahoma v Little, 100 P3d 707 (Okla, 2004). Indeed, after quoting the Oklahoma Supreme
Court’s reasoning in that case, the trial court adopted its reasoning that administrative
reimbursement proceedings were “a supplementary scheme of recovery under which . . . funds
can be used to reimburse a person displaced from a home, business, or farm by a [government] . .
. project for that person’s moving and related expenses where such expenses are not otherwise
fully compensable under state condemnation law.” Id. at 716 (emphasis added). The trial court
further noted that courts in Florida and Mississippi had reached similar conclusions. Malone v
Florida Dep’t of Transportation, 438 So2d 857 (Fla App, 1983); Mississippi State Hwy Comm v
Rives, 271 So2d 725 (Miss, 1972). Accordingly, the trial court granted Gilling’s motion to
prohibit MDOT from raising Gilling’s failure to present its claims under the administrative
proceedings and denied MDOT’s motion to exclude evidence of Gilling’s moving and relocation
expenses, provided it did not duplicate expenses previously reimbursed.
The parties agreed on the record to a just compensation award in the amount of
approximately $736,000 for the building, fixtures, and other site improvements on the property.
Therefore, the jury was only required to determine the just compensation for the land and, in
keeping with the trial court’s ruling, the amount to be awarded for the moving and relocation
expenses. The jury awarded Gilling a total of $1,104,550: $585,000 in compensation for
Gilling’s land and an additional $519,550, including compensation for Gilling’s “printed
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materials at original location[,]” “time and costs[,]” “first move costs[,]” “interim costs[,]”
“second move costs[,]” “reestablishment costs[,]” and “property tax increase[.]” MDOT now
appeals the trial court’s judgment on the verdict.
III. MOVING AND RELOCATION EXPENSES AND JUST COMPENSATION
A. STANDARD OF REVIEW
MDOT does not challenge the $736,000 awarded in just compensation for the building,
fixtures, and other site improvements on the property. Indeed, MDOT has already paid that
amount to Gilling. Further, MDOT does not challenge the jury’s award of $585,000 in
compensation for Gilling’s land. MDOT contends, however, that the trial court erred in allowing
the jury to award $519,550 in moving and relocation expenses as just compensation. According
to MDOT, case law has authorized recovery of “business interruption damages” as part of just
compensation. But, according to MDOT, except for detach and reattach expenses for fixtures,
“business interruption damages” does not include incidental expenses for moving personal
property and other relocation expenses. MDOT argues that evidence of indirect expenses of a
business taking is nothing more than an attempt to recover lost profits, which Michigan courts
have made clear are explicitly excluded from just compensation. MDOT states that recovery of
moving and relocation expenses is statutorily provided as an administrative remedy, separate
from just compensation. We review de novo questions of statutory and constitutional
interpretation. Dep’t of Transportation v Tomkins, 481 Mich 184, 190; 749 NW2d 716 (2008);
Cardinal Mooney High School v Michigan High School Athletic Ass’n, 437 Mich 75, 80; 467
NW2d 21 (1991).
B. CONSTITUTIONAL JUST COMPENSATION PRINCIPLES
(1) OVERVIEW
“Private property shall not be taken for public use without just compensation therefore
being first made or secured in a manner prescribed by law.” Const 1963, art 10, § 2. “[T]he goal
of just compensation is to ensure that the injured party is restored, at least financially, to the
same position it would have been in if the taking had not occurred.” DOT v Frankenlust
Lutheran Congregation, 269 Mich App 570, 578; 711 NW2d 453 (2006). “‘The constitutional
provision entitling the owner of private property, taken for public use, to just compensation, has
uniformly been construed to require full and adequate compensation.’” In re Grand Haven Hwy,
357 Mich 20, 31; 97 NW2d 748 (1959), quoting Commissioners of Parks & Boulevards v
Moesta, 91 Mich 149, 154; 51 NW 903 (1892).
Gilling cites four primary cases in support of its argument that a business owner may
receive business interruption damages, including moving and relocation expenses, as
constitutional just compensation. They are: Grand Rapids & I R Co v Weiden, 70 Mich 390; 38
NW 294 (1888), In re Grand Haven Hwy, 357 Mich 20, Detroit v Hamtramck Community
Federal Credit Union, 146 Mich App 155; 379 NW2d 405 (1985), and Michigan State Highway
Comm v Great Lakes Express Co, 50 Mich App 170; 213 NW2d 239 (1973). MDOT attempts to
distinguish and discount these cases and argues that, except for expenses related to fixtures,
incidental expenses for moving and relocation are not part of constitutionally required just
compensation. Although we conclude that case law, including the cases on which Gilling relies,
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establishes that a property owner is allowed to recover moving and relocation expenses as
business interruption damages, the trial court erred in ordering MDOT to compensate Gilling for
the cost of relocating nursery stock, as these expenses are properly classified as lost profits
resulting from the interruption of business, and not expenses caused by a business interruption.
(2) GRAND RAPIDS & I R CO v WEIDEN
In Grand Rapids & I R Co v Weiden, 70 Mich at 395, the Michigan Supreme Court
pointed out that the appellant property owners were “using their property in lucrative business, in
which the locality and its surroundings had some bearing on its value.” Therefore, the Court
found that the appellants were entitled to compensation for their business loss in addition to the
value of the property itself:
Apart from the money value of the property itself, they were entitled to be
compensated so as to lose nothing by the interruption of their business and its
damage by the change. A business stand is of some value to the owner of the
business, whether he owns the fee of the land or not, and a diminution of business
facilities may lead to serious results. There may be cases when the loss of a
particular location may destroy business altogether, for want of access to any
other that is suitable for it. Whatever damage is suffered, must be compensated.
Appellants are not legally bound to suffer for petitioner’s benefit. Petitioner can
only be authorized to oust them from their possessions by making up to them the
whole of their losses. [Id. (emphasis added).2]
The Court then reversed the jury’s verdict because it failed to adequately compensate for
business damages:
It appeared affirmatively, and without contradiction, that the actual expenses of
moving [the] business reached within a few dollars of all that [the jury] awarded
for those purposes and for his buildings and improvements. The testimony shows
that the buildings and improvements were of considerable value. The verdict is
not only grossly unfair, but given without any reference to uncontradicted
testimony. Juries have no right to disregard facts, and follow their own caprices.
There is no reasonable ground on which the verdict . . . can be sustained.
[Weiden, 70 Mich at 395 (emphasis added).]
Therefore, Weiden made clear that an appellant could be compensated for the “actual expenses of
moving his business,” in addition to compensation for his buildings and improvements.
2
See also In re Slum Clearance, 332 Mich 485, 497; 52 NW2d 195 (1952) and In re Park Site on
Private Claim, 247 Mich 1, 3; 225 NW 498 (1929) (both stating that “the owner of property
taken may recover for interruption of business”); Moesta, 91 Mich at 154 (stating that in
condemnation cases the remedy afforded is similar to an action in tort “in which property rights
have been interfered with without the owner’s assent. In such cases damages for the interruption
of the owner’s business are allowed.”).
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(3) IN RE GRAND HAVEN HWY
In In re Grand Haven Hwy, 357 Mich at 24, the appellee corporation sought damages for
expenses occasioned by business interruption and the expense of relocating its machinery and
equipment when the state took its manufacturing property, thereby “forcing [the appellee] to
move its entire productive facility to a new location.” The state highway department, however,
argued that recent cases had denied recovery of losses due to interruption of business, thereby
repudiating former cases, like Weiden, that had allowed such damages. Id. at 31, citing In re
Condemnation for Battle Creek Park, 341 Mich 412, 422; 67 NW2d 49 (1954); In re Slum
Clearance, 332 Mich 485, 496; 52 NW2d 195 (1952); In re Edward J Jeffries Homes Housing
Project, 306 Mich 638; 11 NW2d 272 (1943); In re Park Site on Private Claim, 247 Mich 1, 3,
4; 225 NW 498 (1929). The Court then explicitly held that the cases cited by the state were
limited to repudiating recovery of lost profits, not any and all expenses related to business
interruption:
An examination of the . . . cases cited by appellant discloses that this Court held
that the property owner could not recover loss of profits because of damages
caused by business interruption, but did not repudiate Moesta or Weiden in
regards to expenses incurred by business interruption. To eliminate any doubt of
this Court’s position, we hold that the evidence introduced in this condemnation
proceeding showing expenses occasioned by business interruption was properly
introduced for consideration as to value and weight by the commissioners making
the award. [In re Grand Haven Hwy, 357 Mich at 31-32.]
The In re Grand Haven Hwy Court stated that the proof of business interruptions “must
not be speculative and must possess a reasonable degree of certainty.” Id. at 32. The Court then
examined the appellee’s evidence regarding the costs that it incurred by having to move to a new
site. Id. at 32, 33. The Court disagreed with the state that the appellee’s evidence was
speculative, noting that the appellee’s management had spent nearly a year engaging “in a largescale project to appraise various means of developing the new plant required by the loss of land
to the State” and that it had “carefully undertaken a program of projecting out-of-pocket costs . . .
for making” the move. Id. at 33. The Court then quoted with approval from the state’s own
expert witness that “the accompanying summary of estimated costs of relocating the productive
facilities of [appellee] constitutes a reasonable estimate of such costs on the basis of the various
assumptions made[.]” Id. at 34 (emphasis added). Therefore, the In re Grand Haven Hwy Court
made clear that a business owner was entitled to moving and relocation expenses as just
compensation as long as those expenses could be shown with a reasonable degree of certainty.
(4) DETROIT v HAMTRAMCK COMMUNITY FEDERAL CREDIT UNION
In Detroit v Hamtramck Community Federal Credit Union, 146 Mich App at 157, the
state condemned the defendant credit union’s land, and a jury awarded the credit union $122,000
in business interruption damages. On appeal, the City of Detroit argued that the evidence
supporting those damages was too speculative and conjectural. Id. Citing Weiden and In re
Grand Haven Hwy, this Court noted that “[i]t has long been held that damages resulting from
business interruption are compensable in condemnation cases provided the damages can be
proven with a reasonable degree of certainty.” Id. at 158. The Court then ruled that the proofs
introduced to support the credit union’s claim for business interruption damages were not too
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speculative and conjectural. Id. More specifically, this Court explained that the credit union’s
proofs regarding their business interruption costs included evidence that it was required to make
two moves to relocate the business: once to move to a temporary trailer while a new building
was being constructed and then again when it moved into the new building. Id. at 160. The
manager of the credit union testified that “as a result of the double move, the credit union spent
substantial sums to relocate to the trailer and then to its new permanent location. These expenses
made up the bulk of the claims for business interruption damages.” Id. This Court found “no
error in the trial court’s refusal to strike [the credit union’s] claim for business interruption
damages.” Id. at 162-163. Therefore, by acknowledging that the credit union’s moving and
relocation expenses made up the “bulk” of its claims for business interruption damages, this
Court confirmed that such costs were, in fact, properly compensable business interruption
damages.
(5) MICHIGAN STATE HIGHWAY COMM v GREAT LAKES EXPRESS CO
In Michigan State Highway Comm v Great Lakes Express Co, 50 Mich App at 178, the
defendant trucking company sought business interruption damages (as distinct from its claims for
fixture damages), arguing that the state’s partial taking frustrated a needed expansion of its
terminal facilities to such an extent that it was necessary for the defendant to relocate its entire
business. This Court did not resolve the issue, but simply held that “[i]t was for the jury to
decide whether relocation was necessary in this situation where none of defendant’s facilities had
been physically damaged by the taking.” Id. at 178-179. Therefore, this Court again impliedly
recognized that moving and relocation expenses fall under the category of business interruption
damages.
(6) IN RE SLUM CLEARANCE
Despite these cases, MDOT submits that in In re Slum Clearance, the Michigan Supreme
Court “answered the question whether the jury should have been allowed to consider as business
interruption damages, business losses arising from expenses due to efforts to relocate.” MDOT
contends that any attempt to seek indirect or consequential damages in the form of moving and
relocation expenses is merely a disguised attempt to seek prohibited lost profits. In re Slum
Clearance, 332 Mich at 496 (concluding that the lower court “was not in error in refusing to
allow the jury to consider loss of profits as the ‘interruption of business’ in determining
compensation. Loss of profits is speculative, and not a proper element of pecuniary loss or
outlay.”).
However, contrary to MDOT’s interpretation, the appellant in In re Slum Clearance was
not seeking damages for its actual costs of relocating. Rather, the appellant sought lost profits
for the time during which it was constructing and relocating to its new building. Id. at 496.
Thus, In re Slum Clearance stands only for the established proposition that lost business profits
are not compensable as just compensation. See In re Grand Haven Hwy, 357 Mich at 32. It does
not “answer[] the question” whether a jury should be allowed to consider actual moving and
relocation expenses as business interruption damages. Contrary to MDOT’s contentions, lost
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profits are a category of claimed damages distinct from claims for business interruption damages.
Thus, we conclude that claims for business interruption damages do include actual moving and
relocating expenses, exclusive of claims for lost profits.3
(7) IN RE ACQUISITION OF LAND FOR CIVIC CENTER; IN RE CONDEMNATION FOR
BATTLE CREEK PARK
MDOT also relies on In re Acquisition of Land For Civic Center, 335 Mich 528; 56
NW2d 375 (1953), and In re Condemnation for Battle Creek Park, 341 Mich at 422, to argue
that, as opposed to expenses for moving fixtures, incidental expenses for moving and relocation
of personal property are not part of constitutionally required just compensation. However, we
find In re Acquisition of Land For Civic Center distinguishable: there, the Court did not address
the category of damages at issue in this case―business interruption damages. Further, this Court
in In re Slum Clearance established that “trade fixtures” can be distinguishable from traditional
fixtures that are actually attached or annexed somehow to the land and that such “trade fixtures”
include items that might otherwise be considered personal property.
In In re Slum Clearance, the appellant electroplating business sought to recover for the
cost of moving certain chemical solutions and molten metal as “part of the expense of moving its
trade fixtures.” 332 Mich at 489-490. The Court acknowledged that the chemical solutions and
molten metal were not actually annexed or affixed to the real property and that such attachment
was “obviously . . . not . . . possible.” Id. at 493. But, the Court stated, such actual physical
annexation is not a prerequisite to considering the removal of property in determining damages
as trade fixtures. Id. The Court explained that removal of the chemical solutions and molten
metal was essential to the appellant’s electroplating business, and, therefore, “they must be
considered as trade fixtures, constructively annexed to the real estate.” Id.
The In re Slum Clearance Court did go on to point out that, in other cases, items
“‘specially adapted to the full enjoyment of the realty’” were considered as fixtures. Id., quoting
Detroit Trust Co v Detroit City Service Co, 262 Mich 14, 30; 247 NW 76 (1933). We note that
3
See Detroit/Wayne Co Stadium Authority v Drinkwater, Taylor & Merrill, Inc, 267 Mich App
625, 658; 705 NW2d 549 (2005), stating:
“Damages resulting from business interruption are compensable in condemnation
cases, provided the damages can be proven with a reasonable degree of certainty.
But damages related to lost profits are not recoverable in a business interruption
case. The stadium authority does not dispute that relocation costs are proper
business interruption damages.” [Emphasis added; internal citations omitted.]
See also Detroit v Larned Assocs, 199 Mich App 36, 42; 501 NW2d 189 (1993), stating:
“We hold only that to the extent this case is retried on a business-interruption
theory, damages for lost profits will not be allowed. With respect to the
remainder of [the] testimony (e.g., that concerning rental expenses, advertising
expenses, and the like), the jury was free to either accept or reject it.” [Internal
citation omitted.]
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in Detroit Trust Co v Detroit City Service Co, 262 Mich at 29-30, for example, the Court held
that an ice and fuel business’s trade fixtures included “ammonia compressors, aerating
equipment, boilers, motors and refrigerating units, freezing tanks, air compressors, condensers,
engines, oil tanks and pumps, platform scales, scorching machines, . . . other machinery for
manufacturing ice[,] . . . spare motors, parts, machinery, [and] equipment[.]” But the Detroit
City Service Co Court notably distinguished these items from horses, wagons, trucks,
automobiles, office furniture and equipment, and other movable property, which “are of such a
character that they can be transported from place to place without impairing their value[.]” Id. at
31. And we note that in Colton v Michigan Lafayette Bldg Co, 267 Mich 122, 127; 255 NW 433
(1934), the Court held that a company that owned an office building’s trade fixtures included
“repair parts to elevator switchboard, elevator rugs, window shades, awnings, double doors and
trim, base and shoe, red gum partitions, storm doors, elevator uniforms, window curtains, rubber
matting, entrance mats, chain falls, Minneapolis thermostats and clock, wall case and mirror,
[and] pump tanks for elevator[.]” Despite the apparent movable quality of things like uniforms
and rugs, the Colton Court explained that “[t]hese articles could not be removed from the
building or transported from place to place without impairing their value as well as the value of
the building. This building was erected for the purpose of renting stores and offices to the public
and in order to be rentable must have various articles or accessories such as those listed above.”
Id. Like the Detroit City Service Co Court, the Colton Court went on the clarify that “unused
supplies consisting of such articles as paper towels, soap, paint, . . . electric light bulbs, . . . pails,
mops, vacuum cleaners, ladders, electric grinder, [and] drill press” could not “be classed as
fixtures or improvements but are clearly personal property.” Id.
This body of case law distinguishes loss of profits resulting from damages caused by
business interruption from expenses incurred by business interruption. Grand Haven Hwy, 357
Mich at 31-32; In re Slum Clearance, 332 Mich at 32. Only the latter expenses are compensable.
The cost of moving trade fixtures constitutes an expense incurred by business interruption.
At issue here is whether the trees, bushes, and the like, that make up the inventory of a
nursery business are trade fixtures. We hold that they are not. A nursery might successfully
argue that unattached water pumps, chemical fertilizers and fertilizing equipment are trade
fixtures because they are used to produce or maintain the products of the business, or it might
establish that, in operating the business, flower display racks and free-standing counters designed
for the space are trade fixtures. Those items, while not necessarily attached to the land or
building, could be considered “constructively annexed” to the property because they are intended
to be permanent, they would lose value if removed from the building, and they enable and are
essential to the business of keeping and selling plant material. Id. at 493. In contrast, Gilling’s
inventory of trees and bushes are the products of the business, they are specifically intended to
be sold and removed from the property, and their removal does not impair their value or the
value of the property. See Detroit Trust Co v Detroit City Service Co, 262 Mich 14; 247 NW 76
(1933). This moveable inventory does not fall within the definition of a “trade fixture” under
any of the aforementioned cases and, because it is more akin to personal property, Gilling was
not entitled to recover for the expense of moving inventory.
The trial court should not have ruled that Gilling had the right to recover for the cost of
moving inventory in the form of trees, shrubbery, etc. These plants are not trade fixtures. Any
losses arising from the movement of the nursery products fall within the category of non-10-
compensable lost profits. We hold that Gilling was entitled to just compensation for its business
interruption damages, which included its actual moving and relocation expenses that could be
proven with a reasonable degree of certainty,4 but which did not include expenses for the moving
of nursery stock.
As discussed below, we remand for a new trial in which MDOT will have the opportunity
to present expert testimony concerning the necessity of Gilling’s temporary relocation to the
interim site before moving to its permanent site in 2007. On remand, the trial court should
exclude evidence of the cost of moving the nursery products that made up Gilling’s inventory.
C. SUPPLEMENTAL ADMINISTRATIVE RECOVERY PROVISIONS
MDOT nevertheless argues that state and federal statutes exclusively govern recovery for
moving and relocation expenses. But our reading of the statutory language, taken in light of the
numerous condemnation cases we have analyzed above, leads us to the conclusion that the
administrative recovery provisions supplement, rather than supplant, a property owner’s
constitutional right to receive “just compensation” for moving and relocation expenses as the
result of a business interruption.
The Relocation Assistance for Persons Displaced by Acquisition of Property for
Highways Act provides, “Relocation and financial assistance allowed under this act are
independent of and in addition to compensation for land, buildings or property rights and shall
not be the subject of consideration in condemnation proceedings.” MCL 252.143 (emphasis
added). Similarly, the Relocation Assistance Act provides, “Financial assistance and
reimbursement allowed under this act is independent of and in addition to compensation for land,
buildings or property rights and shall not be considered in condemnation proceedings.” MCL
213.328(1) (emphasis added). Additionally, the Allowances for Moving Personal Property from
Acquired Real Property Act provides, “Moving allowances are independent of and in addition to
compensation for land, buildings or property rights. The cost of moving personal property is not
subject to consideration in condemnation proceedings for the acquisition of land, buildings or
property rights.” MCL 213.355 (emphasis added).
A business owner’s right to engage in and continue his business has long been recognized
as a “property right.”5 Thus, each of these statutes makes clear that, while certain moving and
4
See In re Grand Haven Hwy, 357 Mich at 32; Detroit/Wayne Co Stadium Authority, 267 Mich
App at 658.
5
See e.g., People v Bennett, 442 Mich 316, 329 n 17; 501 NW2d 106 (1993) (referring to
“private institutions’ property rights in conducting their businesses.”); Bay City v State Bd of Tax
Admin, 292 Mich 241, 259; 290 NW 395 (1940) (“The Constitution vests in every citizen the
right to engage in business. Such right is a property right and is protected by the Constitution of
1908, art. 2, § 16.”); Glover v Malloska, 238 Mich 216, 220; 213 NW 107 (1927) (“It would
astound the business world to hold that an established business is barren of property rights of a
pecuniary nature.”).
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relocation expenses are statutorily recoverable in administrative proceedings, those supplemental
allowances are “independent of and in addition to” constitutional compensation.
Indeed, as the trial court explained, cases from other jurisdictions interpreting similar
administrative reimbursement schemes have held that such administrative reimbursement
proceedings were “a supplementary scheme of recovery under which . . . funds can be used to
reimburse a person displaced from a home, business, or farm by a [government] . . . project for
that person’s moving and related expenses where such expenses are not otherwise fully
compensable under state condemnation law.” Little, 100 P3d at 716. More specifically, the
Oklahoma Supreme Court in Oklahoma v Little, 100 P3d at 716-717, explained that “the
relocation assistance acts are not the exclusive remedy for reimbursement of moving and related
expenses in those jurisdictions where such expenses are recoverable in a condemnation
proceeding”:
[W]e find nothing in the [Uniform Relocation Assistance and Real Property
Acquisition Act of 1970 (FURA)] to indicate that the administrative scheme it
creates was designed to precede resort to the courts.
***
The federal regulations implementing the FURA recognize that compensation
made under traditional eminent-domain principles of state law may precede the
filing of a FURA claim and, when read in conjunction with 4631(b) of the FURA,
implicitly acknowledge that state law condemnation compensation may include
items that would also be compensable under the provisions of the FURA.
Courts in Florida6 and Mississippi7 have reached similar conclusions.
We acknowledge that the administrative reimbursement provisions state that statutory
relocation and moving allowances “shall not be the subject of consideration in condemnation
proceedings.” But this does not mean that constitutional moving and relocation expenses, as
business interruption damages, may not be considered in a condemnation proceeding. As Gilling
points out, “[N]o act of the Legislature can take away what the Constitution has given.” Silver
Creek Drain Dist v Extrusions Div, Inc, 468 Mich 367, 374; 663 NW2d 436 (2003). Moreover,
the UCPA, which “provides standards for the acquisition of property by an agency, the conduct
of condemnation actions, and the determination of just compensation[,]” MCL 213.52(1),
6
Malone, 438 So2d at 861 (The URAA was intended only as a supplementary measure enabling
recovery by displaced condemnees of expenses not otherwise compensable under traditional
eminent domain principles of state law.”).
7
Rives, 271 So2d at 728 (Miss, 1972) (“[T]he legislative intent as expressed in [the Relocation
Assistance Program Act] when considered in its entirety, was that the Act would provide
compensation for items not previously provable or recoverable as damages in an eminent domain
proceeding.”).
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protects the state from property owners seeking duplicative payments of moving and relocation
expenses:
A person is not entitled to a payment in connection with the acquisition of all or
part of that person’s property under this act if that payment would be duplicative
of any grant or other payment received under any state or federal statute or
regulation. [MCL 213.63a.]
Accordingly, we conclude that the trial court did not err in finding that the administrative
scheme is not the exclusive remedy for a business owner to recover moving and relocation
expenses necessitated by a taking. Michigan cases have repeatedly authorized a business owner
to receive business interruption damages, including moving and relocation expenses, as
constitutional just compensation.
IV. EVIDENCE REGARDING PERMANENT SITE
A. STANDARD OF REVIEW
MDOT argues that even if the moving and relocation expenses were properly considered
as part of just compensation, it was entitled to have just compensation determined fairly.
According to MDOT, the trial court abused it discretion in excluding MDOT’s relevant evidence
showing that the permanent site to which Gilling ultimately moved was available at the time that
Gilling first moved to the allegedly unnecessary interim site. MDOT argues that it was
improperly denied the opportunity to show that the costs for the second move were avoidable
and unnecessary when Gilling could have moved directly to its permanent site.
We review for an abuse of discretion a trial court’s decision to admit or exclude evidence.
Barrett v Kirtland Community College, 245 Mich App 306, 325; 628 NW2d 63 (2001). An
abuse of discretion occurs when the trial court’s decision results in an outcome falling outside
the range of principled outcomes. Woodard v Custer, 476 Mich 545, 557; 719 NW2d 842
(2006).
B. THE BOWMAN TESTIMONY
MDOT asserts that the trial court abused its discretion in precluding the testimony and
exhibits of Robert Bowman, a licensed real estate broker and sales agent, who was prepared to
testify that Gilling’s “permanent” site was available for sale both before, during, and after
Gilling’s move to its interim site. We agree. The trial court’s decision to exclude evidence
about the availability of the permanent site constituted an abuse of discretion and MDOT is
entitled to a new trial on this basis. MCR 2.613(A).
The question of whether the permanent site was available when Gilling moved to its
interim site is central to the issue of just compensation. Gilling sought expenses for both the
interim move and the move to the permanent site. If the permanent site was available at the time
it moved to the interim site, serious doubt is cast on the reasonableness of Gilling’s decision to
temporarily relocate to the interim site before permanently reestablishing business at the
permanent site. The trial court’s expressed concern that the evidence would require the jury to
consider the costs and efficacy of Gilling’s decision to move to a temporary site misses the point
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because this is precisely the kind of question the jury must consider when deciding whether
MDOT is obligated to compensate Gilling. Gilling sought over half a million dollars for twice
moving the business and it was, therefore, central to MDOT’s case that it have the opportunity to
show that at least some of that expense was unwarranted. Moreover, the trial court’s ruling
deprived MDOT of a vital defense because this evidence may could have persuaded the jury that
Gilling failed to mitigate its damages when it rented a temporary, but ultimately unsuitable site
while a suitable, permanent location was available. Though Gilling asserts that the permanent
site required renovation and rezoning, which would have made it less desirable at the time of the
taking, it was for the jury to weigh that evidence against Bowman’s testimony to determine how
to fairly compensate Gilling for the taking.
The trial court’s exclusion of Bowman’s evidence substantially prejudiced MDOT’s
ability to present its case and to present a valid defense to the jury, and thus undermined the
jury’s verdict. The trial court’s exclusion of MDOT’s proposed use of an expert on this vital
issue is an abuse of discretion because it unjustifiably robs MDOT of its most effective evidence
in a key point of the trial. Novi v Robert Adell Children’s Funded Trust, 473 Mich 242, 254; 701
NW2d 144 (2005). Therefore, a failure to grant a new trial would be inconsistent with
substantial justice. MCR 2.613(A). Accordingly, we reverse and remand for a new trial to allow
MDOT to introduce expert testimony on this issue and to ensure substantial justice.8
Affirmed in part, reversed in part, and remanded to the trial court for further proceedings
consistent with this opinion. We do not retain jurisdiction.
/s/ Henry William Saad
/s/ William C. Whitbeck
/s/ Brian K. Zahra
8
In Docket No 287552, MDOT challenges the trial court’s postjudgment award of attorney fees.
Our holding in Docket No 285369 obviates the need to address MDOT’s argument regarding the
trial court’s award of attorney fees.
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