L. E. Munoz, et al. v. City of Phila., et al. (Majority Opinion)

Annotate this Case

Download PDF

IN THE COMMONWEALTH COURT OF PENNSYLVANIA Luis E. Munoz and Deborah N. Munoz (as former owners of 4401 Castor Avenue, Philadelphia, Pa 19124) and Luis E. Munoz and Deborah N. Munoz as Debtors in Bankruptcy (as Former Owners of 4401 Castor Avenue, Philadelphia, PA 19124), Appellants v. City of Philadelphia and Philadelphia Redevelopment Authority BEFORE: : : : : : : : : : : : : : : No. 806 C.D. 2007 Argued: March 10, 2008 HONORABLE BERNARD L. McGINLEY, Judge HONORABLE ROCHELLE S. FRIEDMAN, Judge HONORABLE JOSEPH F. McCLOSKEY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE McGINLEY FILED: April 30, 2008 Luis E. Munoz and Deborah N. Munoz (collectively, Petitioners) appeal from an order of the Court of Common Pleas of Philadelphia County (common pleas court) that denied Petitioners petition for appointment of a Board of View. On May 18, 2006, Petitioners petitioned for a Board of View and alleged: 8. Luis and Deborah Munoz purchased a going business in the Juniata section of Philadelphia in August 2001, known as Nino s Farmer s Market ( Nino s ) located at 4401 Castor Avenue, Philadelphia, PA 19124, including the land, equipment, inventory, buildings and goodwill thereof. 9. Mr. and Mrs. Munoz formed General Farmers Market, Inc. to operate Nino s. 10. To purchase Nino s, the Munozes obtained two loans from Sovereign Bank, in the total approximate amount of $1,000,000. (emphasis added). 11. The Munozes operated Nino s as a going concern from August 2001 until approximately April 2004, when they were forced to close Nino s due to losses incurred as a result of a steadily declining customer base and business. (emphasis added). 12. For a substantial time before May 2002 and possibly as early as 1999, the City, through OHCD [Office of Housing and Community Development], was working with Frankford Community Development Corporation ( FCDC ) with regard to FCDC s proposed plan for the redevelopment of the area, which it called The Twins at Frankford Creek ( The Twins Project ), involving the construction of approximately 50 homes on the site. (emphasis added) .... 14. In November 2002, the Philadelphia Planning Commission certified the area . . . as a blighted area. 15. The Plaintiffs [Petitioners ] property, located at 4401 Castor Avenue, is within the area certified by the Planning Commission as a blighted area. 16. Upon information and belief, during 2002 and 2003, and possibly earlier, FCDC was actively disseminating information concerning its proposed plan (which included the City s plan and the RDA s [Philadelphia Redevelopment Authority] plan) to construct The Twins Project on the property that included or adjoined the plaintiffs [Petitioners ] property. (emphasis added). .... 18. Throughout 2002, 2003 and into 2004, there was a decline in the Munozes business that they attributed to 2 the general awareness in the neighborhood and among their existing and prospective customers and vendors that Nino s would eventually be closing due to the redevelopment project. (emphasis added). .... 21. By the time the City and/or the RDA got around to taking the preliminary stages toward purchasing or taking the Munozes property, Nino s had suffered an irreversible and fatal decline in its business. (emphasis added). 22. As a result of the irreversible decline in their business, the Munozes were unable to remain current on the repayment of their business loans to Sovereign Bank. (emphasis added). 23. As a result of their inability to repay their business loans, on November 28, 2003, Sovereign Bank initiated legal proceedings to foreclose on the Munozes business and personal property. (emphasis added). .... 25. The actions and omissions of the RDA and/or the City constituted a de facto taking of the Munozes property by the RDA and/or the City, both of which have the power of eminent domain. (emphasis added). 26. The decline in the Munozes business resulted from the de facto taking of the Munozes property by the RDA and/or the City. (emphasis added). 27. The damages and losses the Munozes sustained resulted from the de facto taking of the Munozes property by the RDA and/or City. (emphasis added). 28. As a result of the irreversible decline in their business, and their inability to repay their business loans, the Munozes were forced to file for bankruptcy protection on May 28, 2004. 29. The RDA first sent notice to the Munozes on May 28, 2004, that an ordinance had been introduced in the Philadelphia City Council that would authorize the RDA 3 to acquire their property, and that a hearing on such ordinance was scheduled for June 9, 2004. 30. The RDA first sent a Notice of Interest to the Munozes on July 8, 2004, stating that the RDA was considering purchasing the Munozes property as part of the Frankford Creek Town Homes project. (emphasis added). 31. The RDA never made an adequate offer of just compensation to the Munozes to purchase their property. 32. The RDA never issued a Declaration of Taking while the Munozes were the owners of the property. 33. The actions of the RDA and/or the City constituted a taking of the Munozes property. (emphasis added). Petition For Appointment Of A Board Of View, May 18, 2006, Paragraphs 8-12, 14-16, 18, 21-23, and 25-33 at 2-7; Reproduced Record (R.R.) at 321-326a. On June 6, 2006, the City preliminarily objected1 to the Petition and asserted: 17. . . . It is denied that the FCDC was working with Respondent City officials concerning the project, creating and refining plans, holding and/or attending public meetings, and otherwise promoting the Twins Project, with the knowledge, support and encouragement of the respondent City. (emphasis added). .... 19. . . . It is denied that the Respondent City failed to move quickly to purchase and/or take petitioners property by eminent domain. Averred that defendant RDA first contacted petitioners about their property on March 9, 2004, and defendant RDA sent the plaintiffs 1 The City s answer to Petitioners petition was in the form of preliminary objections. The RDA filed an answer to Petitioners petition. 4 [Petitioners] a Notice of Interest on July 9, 2004. (emphasis added). .... 21. . . . It is denied that the actions of the respondent City caused any decline in petitioners business. It is further denied that the petitioners suffered irreversible and/or a fatal decline in their business because of the actions and/or inactions of respondent City. (emphasis added). .... II. Legal Objections .... 1. As a matter of law, the factual allegations, even taken as true, are insufficient to state a cause of action for a de facto condemnation against the respondent under the Eminent Domain Code; (emphasis added). .... 3. As a matter of law, factual allegations, even if taken as true, do not establish exceptional circumstances which substantially deprived petitioners of the beneficial use and enjoyment of their property and business; (emphasis added). .... 6. Neither the petitioners nor their business customers were deprived of access to petitioners property; 7. Respondent City did not condemn, nor did any of their actions touch or affect, any of the property owned or leased by petitioners, while petitioners owned the property; (emphasis added). 8. At no time did respondent City act or purport to act pursuant to their eminent domain powers while petitioners owned the property; (emphasis added). 9. Petitioner owns no property interest in the land in question, and is therefore not entitled to any compensation under the Eminent Domain Code; 10. As a matter of law, the factual allegations, even if taken as true, do not establish that petitioner is entitled to recover damages, compensation or expenses of the type described under §§ 609 and 611 of the Eminent Domain Code, 26 P.S. §§ 1-609, 1-611; 5 .... 12. Respondent City incorporates all preliminary objections raised by defendant RDA by reference as though fully set forth herein. (emphasis added). Respondent City Of Philadelphia s Preliminary Objections To Petition For Appointment Of A Board Of Viewers Pursuant To § 502(e) Of The Eminent Domain Code, June 6, 2006, Paragraphs 17, 19, 21 and 1, 3, 6-10, 12 at 3-6. On August 10, 2006, the common pleas court entered the following order: Upon consideration of Plaintiffs [Petitioners ] motion to appoint a Board of View, and any response thereto, it is hereby ordered and decreed that a factual record be made by deposition or other means consistent with the rules of evidence within forty-five (45) days of the docketing of this order on the factual issues presented in Plaintiffs [Petitioners ] Motion . . . . (emphasis added). Common Pleas Court Order, August 10, 2006, at 1. To support the appointment of a Board of View, Luis Munoz stated that before he bought Nino s he was never involved in a retail grocery, produce, and delicatessen business. Deposition of Luis E. Munoz (L. Munoz Deposition), October 11, 2006, at 10; R.R. at 1764a. Luis stated that a review of Nino s 199598 tax returns indicated a decrease in business. L. Munoz Deposition at 19; R.R. at 1766a. Although Nino s was losing business, Luis signed an agreement of sale in January of 2000, to buy the business at the purchase price of $1,000,000. Luis obtained a loan from Sovereign Bank for the full purchase amount of $1,000,000. The final sale was delayed until August of 2001, because of environmental issues and excuses such as that he [Nino] couldn t find anybody to do the dig-up, to get the tanks out . . . [e]verybody was busy . . . [h]e was just stalling 6 continuously . . . [h]e made excuses. L. Munoz Deposition at 126-27; R.R. at 1792a. Luis contributed the loss of his business to a number of other additional factors: Q: So those factors, the Acme, the hospital closing, Nino not being truthful, 9/11, you being hospitalized, the delay in getting title, those things all caused you to close your business in April of 2004 as well? (emphasis added). A: And the city s actions, yes. (emphasis added). Q: So all those things caused it? (emphasis added). A: Yes. (emphasis added). .... Q: Would you agree with me that when you first took over the business in August of 2001, because of Nino s actions and because of delay, you were sort of behind the eight ball at that point? .... A: You know, I suppose part, its [sic] part of the equation. . . . .... Q: What damages do you believe you ve suffered by the three defendants in this law suit? .... A: To lose my home, to put my family through what they have gone through, what I ve been through is not right because of the ineptness of some people in the city or the Housing Authority, of the RDA. And not being forward, letting us know what was going on in terms of our property. They ve ruined my life. That s all I have to say in that regard, sir. L. Munoz Deposition at 168-69 and 178-79; R.R. at 1803a and 1805a. Deborah Munoz stated she became active in the operation of Nino s when her husband became ill in October 2002. Deposition of Deborah Munoz (D. 7 Munoz Deposition), October 26, 2006, at 19-20; R.R. at 2080a. Deborah stated that she first became aware that there might be a condemnation in the area within a few months of purchasing the business . . . from customers. D. Munoz Deposition at 29; R.R. at 2083a. Deborah stated that she inquired in 2003 as to whether their property was subject to condemnation. D. Munoz Deposition at 5960; R.R. at 2090a. Deborah met with Steven Culbertson2 (Culbertson) and he informed her that Petitioners property was not included in the Twins Project at the time. D. Munoz Deposition at 62; R.R. at 2091a. Deborah said that [t]here wasn t a single person who was slightly interested in the dilemma . . . [a]nd if they heard the word eminent domain, the phone was immediately hung up on me and the conversation ceased. D. Munoz at 64; R.R. at 2091a. Deborah stated that she received a notice of intent to condemn Petitioners property in June or July of 2004, but that they no longer owned the property. D. Munoz Deposition at 101-02; R.R. at 2101a. Michael Baranowsky (Baranowsky), a CPA, stated that I helped Ed [Luis] in analyzing the business [Nino s] and prepare projections to determine if the business was viable for him to purchase. Deposition of Michael Baranowsky (Baranowsky Deposition), October 6, 2006, at 6; R.R. at 1617a. Baranowsky continued that in doing the analysis, Nino s gross percentage was about twentythree percent . . . [w]e determined, according to Robert Morris3, [the profit 2 Steven Culbertson, the former Executive Director of Frankford Community Development Corporation (FCDC), was responsible for the development of the Twins Project that resulted in the eventual condemnation of property located at Frogmoor St., E. Wingohocking St., E. Cayuga St. and Castor Avenue where Nino s was located. 3 Robert Morris Associates is a study relied on by banks in determining lending ability, current margins, certain financial ratios that banks look at in determining whether a business in a (Footnote continued on next page ¦) 8 percentage] should be about thirty-five . . . [w]hen we prepared the projections for the bank . . . we said . . . we ll go with thirty as reasonable and that even at Nino s reported twenty-three percent, there s still enough cash flow to sustain the debt and to pay Ed a salary that he can live on, and that s how we went about it. Baranowsky Deposition at 12; R.R. at 1618a. Baranowsky figured that the assets of the business to be approximately $225,000 which meant Petitioners paid $775,000 for the good will of the business. Baranowsky Deposition at 41; R.R. at 1626a. In opposition, Deborah McColloch (McColloch), Director of the OHCD, stated the FCDC submitted a proposal to develop at that time . . . more than 50, I think it was 52 or 54 townhomes on the . . . site adjoining the Frankford Creek at Castor Avenue . . . . Deposition of Deborah McColloch (McColloch Deposition I), June 27, 2006, at 35; R.R. at 337a. The first site plan labeled Site Plan I is a site plan for the Twin Homes at Frankford Creek [Twins Project] . . . [i]t does not include the, the eastern parcel at Castor and Cuyahoga . . . [a]nd the second plan labeled Site Plan 2 is a revised site plan that includes that area at the east end of the site. McColloch Deposition I at 38-39; R.R. at 337a-38a. McColloch acknowledged that the application submitted in June of 2003 included Site Plan I, and not, Site Plan II which included Petitioners property. Deposition of Deborah McColloch (McColloch Deposition II), July 7, 2006, at 235; R.R. at 400a. McColloch concluded that at the January 04 meeting . . . we (continued ¦) given industry is reasonable compare to the industry. Baranowsky Deposition at 10-11; R.R. at 1618a. 9 decided that it made more sense to expand the parcel to include Petitioners property. McColloch Deposition II at 270; R.R. at 409a. When Culbertson testified, he stated the Twin Homes project was conceived by me and that the proposal included building fifty-four townhouses. Deposition of Steven Culbertson (Culbertson Deposition), September 26, 2006, at 35 and 70; R.R. at 1000a and 1008. In the original plan we had never contemplated taking those . . . other two properties . . . because we felt that Nino s Farmer s Market [Petitioners property] was a community landmark . . . and that City Councilman Rick Mariano [Councilman Mariano] would never never even think of it. Culbertson Deposition at 106-07; R.R. at 1018a. Culbertson met with Councilman Mariano in the spring of 2003 to discuss whether he would object to the additional acquisition of Nino s for the Twins Project and that Councilman Mariano was indifferent concerning the proposal.4 Culbertson stated that in April of 2003, I believe Mr. Koonce had a conversation with Walt DeTreux, who was the Councilman s chief of staff, and then Walt called me and said, it s a go. Culbertson Deposition at 109; R.R. at 1018a. 4 Culbertson elaborated: And when we put it to him [Councilman Mariano], like this was a theoretical discussion, well would it be possible for us to go about possibly taking these properties [Clearkin Construction and Nino s], he [Councilman Mariano] said you know . . . I don t feel one way or the other. It s a pretty deteriorated property [Nino s] and you know, from my perspective you could go ahead and do that. So that was really the inception of really thinking about, okay, this project could possibly include these properties. Culbertson Deposition at 107; R.R. at 1018a. 10 Culbertson later met with Petitioners for the first time in August of 2003 and then again on two different occasions. Culbertson Deposition at 186-87; R.R. at 1038. Culbertson discussed with Petitioners what the project encompassed, what was going on with their land, was their land included in the project. Culbertson Deposition at 187-88; R.R. at 1038a. Culbertson responded to their inquiries that [c]urrently your land is not being taken, which was the truth . . . [i]t was not in a condemnation process at that point. Culbertson Deposition at 190; R.R. at 1039a. Culbertson said that after he met with members of the Juniata Park Civic Association concerning a newspaper article . . . for the Twin City project he again talked to Debbie and basically . . . I was saying the same thing . . . [i]t is not currently in the . . . process of being taken under eminent domain. Culbertson Deposition at 191-92; R.R. at 1039a. Robert Labrum (Labrum), Project Manager for RDA, stated that RDA s role in the project was to acquire the land . . . [o]bviously they [Frankford] . . . will help identify properties . . . [w]e will basically act as an agent for the developer and for the City of Philadelphia to acquire and dispose of the properties. Deposition of Robert Labrum (Labrum Deposition), September 29, 2006, at 42-43; R.R. at 1097a. Labrum prepared a December 2, 2005, memorandum for a declaration of taking of Petitioners property. Labrum Deposition at 99-100; R.R. at 1111a. Melvis Dunbar (Dunbar), Director of Relocation and Property Management for the RDA, described that [t]he Notice of Interest says that we are considering the acquisition of your property . . . [t]he Notice of Intent, I believe 11 says that we intend to take your property. Deposition of Melvis Dunbar (Dunbar Deposition), October 3, 2006, at 27; R.R. at 1146a. Dunbar stated that he never talked to Petitioners about the relocation of their business. However, Dunbar mentioned that Mr. Ciaorolo attempted to talk to them at their place of business but after he had gone out to the site he came back and said that they were no longer in business and he wouldn t be doing any relocation because they were no longer in business. Dunbar Deposition at 43; R.R. at 1150a. After review of the record, the common pleas court dismissed the petition and concluded that the decrease in Petitioners business was unrelated to the City s and RDA s proposed condemnation and was the result of a steady decline in business which had begun before they bought Nino s. Order and Opinion of the Common Pleas Court, March 27, 2007, at 4. I. Whether The Common Pleas Court Erroneously Applied The Motion For Summary Judgment Standard When It Denied The Petition? Initially, Petitioners contend5 that the City s and the RDA s preliminary objections were more in the nature of a motion for summary judgment and as a result the common pleas court was required to follow that standard of review and place the burden on the City and the RDA, not Petitioners.6 This Court rejects this argument. 5 Where the common pleas court sustains preliminary objections to a petition for appointment of a Board of View, this Court s review is limited to a determination of whether the common pleas court s findings are supported by competent evidence in the record and whether the common pleas court abused its discretion or committed legal error. Elser v. Department of Transportation, 651 A.2d 567 (Pa. Cmwlth. 1994). 6 In Horne v. Haladay, 728 A.2d 954 (Pa. Super. 1999), the Pennsylvania Superior Court noted the proper standard of review in a motion for summary judgment: (Footnote continued on next page ¦) 12 In Re: Condemnation By the City of Coatesville, 898 A.2d 1186, 1189 n.7 (Pa. Cmwlth. 2006), this Court again reiterated that [p]reliminary objections in the context of eminent domain actions serve a different purpose than preliminary objections filed in other civil actions and that the Rules of Civil Procedure are not applicable to eminent domain proceedings . . . . Pursuant to City of Coatesville, because eminent domain cases are not analogous to regular legal proceedings under the Pennsylvania Rules of Civil Procedure, the summary judgment disputed issue of fact standard does not apply. Here, the issue as to the proper party shouldered with the burden of proof that an alleged de facto taking has occurred was previously addressed by this Court. In Shaner v. Perry Township, 775 A.2d 887 (Pa. Cmwlth. 2001), Susan Shaner, Terry Shaner, Terry Shaner Jr., and Stephanie Shaner (Shaner) had petitioned for an appointment of viewers and had alleged that the action of . . . [Perry] Township in filing the second equity action and thereafter refusing to issue occupancy permits for the building on Lot 6204, resulted in a temporary de facto (continued ¦) Summary judgment is proper when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits demonstrate that there exits no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Pa.R.C.P. 1035.2, 42 Pa.C.S.A. In determining whether to grant summary judgment, a trial court must resolve all doubts against the moving party and examine the record in, a light most favorable to the non-moving party. Id. Summary judgment may only be granted in cases where it is clear and free from doubt that the moving party is entitled to judgment as a matter of law. Id. at 955. 13 taking in that the Township s actions caused them the loss of two tenants and several prospective tenants. Id. at 889. The Court of Common Pleas of Berks County (trial court) granted the petition and the Township filed preliminary objections and alleged that the facts failed to state a claim for a de facto taking. The trial court then ordered the parties to take depositions of individuals to obtain evidence to either support or refute the issues raised by the petition and the preliminary objections. (emphasis added). Id. at 889. The trial court overruled the Township s preliminary objections and concluded that Shaner made out a claim for a de facto taking in that it was substantially deprived of the use of its property so as to warrant the appointment of a board of view to determine the amount of just compensation owing. Id. at 889-90. On appeal, this Court rejected the Township s argument that the trial court had utilized the wrong standard of review because it applied the Pennsylvania Rules of Civil Procedure7: We disagree with the Township that the trial court erred in using the above [the Pennsylvania Rules of Civil Procedure] as this court has previously stated, a court confronted with a petition for an appointment of viewers 7 The trial court noted that when ruling upon preliminary objections the Pennsylvania Rules of Civil Procedure state that: All material facts alleged in the petition as well as all inferences reasonably deducible therefrom are admitted as true. The question presented by a demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Where doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it (Trial court opinion at p.5). Shaner, 775 A.2d at 890. 14 alleging a de facto taking, which is objected to, must first decide as a matter of law, whether the averments of the petition taken as true, are sufficient to state a cause of action. . . . . Thereafter, [i]f the averments might establish a de facto taking, the trial court must then take evidence by deposition or otherwise, in order that a judicial determination can be made. . . . . Here the trial court, accepting the averments of the petition as true, determined that Shaner stated a cause of action. The trial court then proceeded as it was required to do and took evidence by deposition, in order that a judicial determination could be made. In determining whether a de facto taking occurred the trial court recognized that [a] landowner alleging a de facto taking is under a heavy burden to establish that such a taking occurred. . . . . A de facto taking occurs whenever the entity clothed with the power of eminent domain substantially deprives an owner of the use and enjoyment of his property. . . . . (Trial court opinion at 6.) Thus, contrary to the assertion made by the Township, the trial court did recognize that Shaner possessed a heavy burden of proof to show that the Township s actions constituted a de facto taking. (citations omitted and emphasis added). Shaner, 775 A.2d at 890. Like in Shaner, here, the common pleas court ordered the parties to create an evidentiary record that resulted in a jointly produced three-volume 2133 page record, which included the depositions of Petitioners, Baranowsky, McColloch, Culbertson, Labrum, and Dunbar. The common pleas court reviewed the record and determined that Petitioners, as the burdened property owners, failed to establish that the damages sustained by them were the immediate, necessary and unavoidable consequence of the City s and the RDA s exercise of eminent 15 domain.8 Hill v. City of Bethlehem, 909 A.2d 439, 444 (Pa. Cmwlth. 2006). The common pleas court followed the appropriate procedure and placed the burdens where the law provides. Crediting the evidence produced by all parties, the Petitioners failed to establish a de facto taking. II. Whether The Evidence Established A De Facto Taking By The City And The RDA? Petitioners next contend that they have established a de facto taking based upon the following: 1) that the evidence if believed, established that the City, the RDA, and the FCDC planned from as early as September of 2002, or certainly by April of 2003, to take their property as part of the Twins Project; 2) that the publicity concerning the Twins Project caused a loss of customers and a decline in 8 Petitioners also contend that they were entitled to have a jury determine whether a de facto taking occurred. As noted above, the common pleas court was first required to determine as a matter of law whether the averments and the record evidence were sufficient to establish a de facto taking. If not, the preliminary objections must be sustained. Second, assuming the averments do state a cause action, the common pleas court must take evidence by depositions or otherwise which the common pleas court did here. Therefore, Petitioners were not entitled to a jury trial on the issue of whether a de facto taking occurred. Finally, any reference by Petitioners to their federal jury trial which included the testimony of Petitioners, McColloch, Culbertson, Labrum, and Dunbar, the same parties who were presently deposed, will not be reviewed by this Court: [I]t appearing that attachments to a brief were not part of the jointly reproduced record and that the materials filed in the federal district court were not made part of the record, the Chief Clerk shall mark pages 2134a-2146a of the reproduced record as attachments to appellants supplemental memorandum filed in the trial court and remove pages 2150a-2179a from the reproduced record because they are not reproduction of parts of the certified record. It appearing that pages 16, 17 and 20 of appellants brief rely on material that is not part of the record, those pages are stricken. Order of the Commonwealth Court, August 31, 2007, at 1. 16 business which resulted in foreclosure of Nino s; and 3) that the common pleas court failed to consider evidence that established a causal connection between the City s and the RDA s actions and the failure of Petitioners business. This Court shall address each of Petitioners arguments seriatim. A. Did The Evidence Establish That The City And The RDA Planned To Condemn Petitioners Property As Early As September of 2002 Or As Late As April Of 2003? Petitioners contend that McColloch s September 2002, handwritten note that there was a need to acquire the entire triangle which included Petitioners property supports their argument of the imminent condemnation of their property. See R.R. at 476a and McColloch s Deposition at 70; R.R. at 346a. A review of McColloch s testimony indicates that she was referring to FCDC s inquiry concerning whether there was a need to acquire all the property and not the City s and the RDA s intention to condemn Petitioners property under the power of eminent domain. The RDA first raised the question of the possibility of condemning Nino s on March 30, 2004.9 9 Mr. Golden to McColloch: Q: I also want to call your attention to Exhibit 5. These are your handwritten notes of September 2002; is that right? A: Yes. Q: And there you have written, Need to acquire entire triangle; is that right? A: Yes. .... Q: Exhibit 20 is a letter dated March 30, 2004 from Michael Koonce of the Redevelopment Authority addressed to the City Planning Commission . . . either from your recollection or from any pieces of paper that you have in front of you, do you know why it was requested by the RDA that the City Planning (Footnote continued on next page ¦) 17 Second, Petitioners also contend that the inverse condemnation was a fait accompli in April of 2003, when Culbertson met with Councilman Mariano to determine if the Councilman objected to the inclusion of Nino s in the development of the Twins Project. As noted earlier, Culberson stated that Councilman Mariano was indifferent but that Chief of Staff DeTreux later informed him that it s a go. This argument must also fail. First, FCDC did not have the authority to exercise the power of eminent domain such as the City or the RDA. Therefore, even though FCDC wished to include Petitioners property in the Twins Project in the Spring of 2003, only the City and the RDA had the authority to condemn Nino s under the Eminent Domain Code.10 Second, as late as May 19, 2003, Lynda McClary wrote to Culbertson and stated that [t]he Redevelopment Authority . . . is currently working to acquire twenty-three properties on behalf of your organization for the development of fifty-four new homes . . . . Letter of May 19, 2003, at 1-2; R.R. at 235a-36a. Pertinently, the letter did not mention Petitioners property at 4401 Caster Avenue. Letter of May 19, 2006, at 1-2; R.R. at 235a-36a. Last, Labrum, employed by the RDA, stated that he prepared a (continued ¦) Commission approve an amended redevelopment proposal and an amended urban renewal plan? (emphasis added). A: Yes. Because we added additional properties to the site. (emphasis added). Q: And what were the additional properties? (emphasis added). A: The two that we added were the Clearkin site and the Munoz site . . . . (emphasis added). McColloch Deposition II at 160 and 169-70; R.R. at 381a and 384a. 10 Act of June 22, 1964, Sp. Sess., P.L. 84, as amended, 26 P.S. §§ 1-101-1-903. 18 declaration of taking on December 2, 2005, which included Petitioners property. Labrum Deposition at 99-100; R.R. at 1111a. B. Critically, Did The Publicity Concerning The Twins Project Cause A Loss In Customer Business Which Resulted In The Foreclosure Of Petitioners Business? Petitioners contend that the City s and the RDA s intention to condemn their property for the development was widely publicized and directly resulted in the decline of their business. In Conroy-Prugh Glass Company v. Pennsylvania Department of Transportation, 456 Pa. 384, 321 A.2d 598 (1974), the Conroy-Prugh Glass Company (Conroy-Prugh) had owned two four-story buildings located near the northern end of the West End Bridge on Pittsburgh s Northside. The proposed extension of the Ohio River Boulevard has been widely publicized in the Pittsburgh papers because it seriously affects the economic future of Pittsburgh s Northside area. (emphasis added). Id. at 386, 321 A.2d at 599. In 1960, 1961 and 1962, Conroy-Prugh had received rental income in excess of $30,000 with a seventy percent occupancy rate. After the publication of the Pennsylvania Department of Transportation s (DOT) plans to extend Ohio River Boulevard, Conroy-Prugh began to lose tenants at an accelerated rate so that during the years 1966 and 1967, only fifty percent of the useable floor space was occupied and, in the years 1968, 1969 and 1970, occupancy was so diminished that rentals did not cover taxes and operating expense. Id. at 386, 321 A.2d at 599. Conroy-Prugh filed a petition for the appointment of viewers and DOT preliminarily objected. The Court of Common Pleas of Allegheny County sustained the preliminary objections and this Court affirmed. 19 Our Pennsylvania Supreme Court reversed and concluded, among other things: According to appellant s [Conroy-Prugh s] averments, the Commonwealth s publicity about the imminence of condemnation has caused appellant [Conroy-Prugh] to lose tenants at such an accelerating rate that rental income from the property is no longer sufficient to cover the taxes on the property . . . . Recognizing, as we do, that the Commonwealth is required to publicize and hold hearings in advance of the initiation of formal condemnation proceedings, we still believe that when these hearings and this publicity cause the owner of a commercial property to lose tenants to such an extent that the property no longer generates sufficient income to pay the taxes, which, in turn, leads to a threatened loss of property, that property owner has a right to the appointment of viewers to award it compensation for its property. (emphasis added). Id. at 393, 321 A.2d at 602. Unlike in Conroy-Prugh, Petitioners failed to submit any evidence that either McCulloch s September 2002, notes or Walter DeTreux s April 23, 2003, statement was publicly disseminated. Also, unlike in Conroy-Prugh, there were no public hearings or widespread publicity involved. Petitioners cite to one news article concerning the Twins Project which appeared in the August 5, 2003, Juniata News, a weekly newspaper dedicated to the people of Juniata Park . . . . In that article, a photo of Culbertson appeared as well as a condemnation plan that did not include Petitioners property. See R.R. at 524a. There is no evidence of widespread publicity that dissuaded potential customers from frequenting Nino s. See also Lehigh Northampton Airport Authority v. WBF Associates, L.P., 728 A.2d 981 (Pa. Cmwlth. 1999) (where government conduct received widespread 20 publicity in the Morning Call , a newspaper of general circulation in Allentown and surrounding counties, and caused the loss of financing opportunities for WBF Associates); and Peter Roberts Enterprise, Inc. v. Pennsylvania Department of Transportation, 376 A.2d 1028 (Pa. Cmwlth. 1977) (where government conduct lasted nearly a decade and restricted the landowner s use of its property). C. Did The Common Pleas Court Fail To Consider Evidence That The City s And The RDA s Actions Were The Cause Of Petitioners Loss Of Business? To the contrary, the common pleas court reviewed the extensive record and determined: . . . During this same time period, Nino s experienced a decline in business which resulted in foreclosure on the business and bankruptcy declarations by petitioners. Petitioners allege that the decline in business was caused by respondents [the City and the RDA] extended publication of intent to condemn the property while at the same time not taking any action. In short, petitioners allege that combined actions of all respondents [the City and the RDA] resulted in a de facto taking. The property has now been condemned but it occurred after the bank had already foreclosed and acquired the property. Respondents [the City and the RDA] argue that the business was declining long before any condemnation plans were discussed. They argue that none of their actions contributed in any way to the foreclosure; therefore, no de facto taking occurred. .... In [In re Petition of 1301 Filbert Limited Partnership for the Appointment of Viewers, 441 A.2d 1345 (Pa. Cmwlth. 1982)], the petitioner [Filbert] purchased the run down Essex Hotel with hopes that it could be renovated and made profitable. At around the same time, the City of Philadelphia began seriously considering the construction of a tunnel between the Suburban Station and Reading Terminal. As the plans progressed, it 21 became clear that the Essex would be in the midst of a very intense construction project . . . . The city passed an ordinance authorizing but not requiring acquisition of the Essex. Still, despite pleas from petitioner [Filbert], the City refused to acquire the hotel. Because of the construction project, it was impossible for petitioner [Filbert] to obtain the financing necessary to carry out the Essex project and the mortgage went into default. In Filbert Ltd. P Ship, the trial court made two key determinations. First, the financial difficulties of the Essex were caused more by miscalculation and mismanagement than by the tunnel project . . . . Second, the petitioner [Filbert] failed to meet its burden of showing a causal connection . . . . In the instant case, the Petition fails in the same two respects. Here, as in Filbert Ltd. P Ship, there is significant evidence about the business financial problem prior to any condemnation publicity. Before petitioners purchased the business, sales had been declining for several years . . . . Additionally, problems were created by the previous owner, such as lack of a food stamp machine and removal of records pertaining to suppliers and products . . . . The prior owner also liquidated much of the supply before actually completing the sale . . . . Unfortunately, the petitioners did not have enough cash to restock the entire store . . . . Further, the business did poorly from the beginning . . . . Another hurdle occurred when Mr. Munoz experienced a severe illness and he was hospitalized for over a month . . . . The final straw came with the closing of other establishments in the area, including Acme Supermarket and Parkview Hospital . . . . These were important companies that drew people to the area and generated business . . . . In sum, given the facts of the case, value of petitioner s business and property decreased not because of the proposed condemnation but because it was imperiled from the start. None of the evidence presented ties the decline in sales to the publicity surrounding condemnation. Petitioners have failed to meet their high burden of showing that they suffered a deprivation which was the direct and necessary consequence of the actions 22 taken by respondents [the City and the RDA]. (citations omitted and emphasis added). Opinion and Order of the common pleas court at 1-2 and 4. This Court must agree. Accordingly, this Court affirms. ____________________________ BERNARD L. McGINLEY, Judge 23 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Luis E. Munoz and Deborah N. Munoz (as former owners of 4401 Castor Avenue, Philadelphia, Pa 19124) and Luis E. Munoz and Deborah N. Munoz as Debtors in Bankruptcy (as Former Owners of 4401 Castor Avenue, Philadelphia, PA 19124), Appellants v. City of Philadelphia and Philadelphia Redevelopment Authority : : : : : : : : : : : : : : No. 806 C.D. 2007 ORDER AND NOW, this 30th day of April, 2008, the order of the Court of Common Pleas of Philadelphia County, First Judicial District in the abovecaptioned matter is affirmed. ____________________________ BERNARD L. McGINLEY, Judge

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.