This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C4-00-2063

 

 

Kick's Liquor Store, Inc., d/b/a Broadway Avenue Liquor Outlet,

Respondent,

 

vs.

 

City of Minneapolis,

Appellant.

 

 

Filed May 15, 2001

Affirmed

Hanson, Judge

 

Hennepin County District Court

File No. AP97-10330

 

 

Daniel N. Rosen, Rosen & Rosen LLC, 150 South Fifth Street, Suite 3250, Minneapolis, MN 55402 (for respondent)

 

Jay M. Heffern, City Attorney, William C. Cunning, Assistant City Attorney, Suite 300, 333 South Seventh Street, Minneapolis, MN 55402 (for appellant)

 

 

            Considered and decided by Hanson, Presiding Judge, Crippen, Judge, and, Harten, Judge.

 

 

 

U N P U B L I S H E D  O P I N I O N

HANSON, Judge

Respondent Kicks Liquor Store, Inc., sued appellant City of Minneapolis, seeking mandamus to compel inverse condemnation.  Respondent alleged the city’s closing of a street (and the resulting diminished access to the store) deprived respondent of its property.  Respondent initially prevailed on summary judgment, but this court reversed and remanded for trial on whether a compensable taking had occurred.  Kick’s Liquor Store, Inc. v. City of Minneapolis, 587 N.W.2d 57, 60 (Minn. App. 1998) (“Kicks’ I”).  On appeal after remand, the city argues that the district court erred in finding that a taking had occurred, because (a) the closure to traffic in just one direction did not eliminate reasonable access to the store; (b) the failure of the city to provide a turn-around at the cul-de-sac created by the closure, and the consequent use of the store’s parking lot as a turn around, is not a compensable injury; and (c) the award to respondent of  attorney fees under Minn. Stat. § 117.045 is excessive.  We affirm.

FACTS

            Respondent Kick’s Liquor Store operates the Broadway Liquor Outlet in North Minneapolis.  The store has a customer parking lot to the rear of the building which is accessible from McNair Avenue.  In the summer of 1997, the city erected a barrier on McNair just beyond the entry to the store’s parking lot.  This barrier allows traffic to enter McNair from Broadway Avenue to reach the store’s parking lot, but closes McNair to traffic from the opposite direction, creating a cul-de-sac.

The city also erected a pylon sign with a concrete base in the middle of the opening to McNair at the intersection of Penn Avenue and Broadway Avenue, instructing drivers as follows: “Road Open to Broadway Liquor Outlet.”  The city does not deny that this pylon sign does not conform with its own standards.  Further, because the city turned McNair into a dead-end street, vehicles that mistakenly turn on McNair and confront the barrier drive into the store’s parking lot in order to safely turn around.

In Kick’s I, this court reversed the grant of summary judgment and remanded the matter for trial to determine, consistent with Hendrickson v. State, 267 Minn. 476, 127 N.W.2d 165 (1964), whether a compensable taking had occurred; that is, whether (1) the closure substantially impaired the right to reasonably convenient access; (2) the closure created a special injury different in kind from that suffered by the general public; and (3) the closure caused a diminution in the market value of the property.  Kick’s I, 587 N.W.2d at 59, 60.

Upon remand, the district court found that respondent “has suffered harm unique from that suffered by the general public as a result of the closure of McNair Avenue” and respondent’s “property has been diminished in value as a result of the closure of McNair Avenue.”  The district court concluded that the city’s actions

constitute a taking or damaging of [respondent’s] property for which just compensation must be paid as required by the Constitution of the State of Minnesota, Article 1, § 13. 

 

Accordingly, the district court ordered the city to initiate condemnation proceedings to determine just compensation.  In a Corrected Memorandum Order Determining Legal Fees, the district court ordered the city to pay respondent attorney’s fees and costs of $58,180 pursuant to Minn. Stat. § 117.045.

ANALYSIS

I.

            The city challenges the district court’s judgment, claiming that it erred in concluding that the city’s act of closing McNair Avenue constituted a compensable taking. 

On appeal from a judgment, this court's scope of review is limited to deciding whether the district court's findings are clearly erroneous and whether it erred in its legal conclusions.  * * *  When the district court's findings are reasonably supported by the evidence, they are not clearly erroneous and must be affirmed.

 

Citizens State Bank of Hayfield v. Leth, 450 N.W.2d 923, 925 (Minn. App. 1990).

A.                Special Injury

To establish a taking, the property owner must first show special injury due to the government’s action.  Kick’s I, 587 N.W.2d 57, 60 (Minn. App. 1998).  Special injury is “one different in kind from that suffered by the general public as the result of the city's action.”  Id.; see also Hendrickson v. State, 267 Minn. 442, 467, 127 N.W.2d 165, 170 (1964).  This is a question of fact.  Kick’s I, 587 N.W.2d at 60.

The district court concluded that the store suffered a special injury due to the city’s decision to block the south entrance to McNair Avenue.  The district court found that (1) the city closed the south entrance to McNair, which is adjacent to respondent’s property, (2) as a result of the closure, the liquor store can only be accessed from the north end of McNair; (3) prior to closure, 22.5% of the liquor store’s patrons accessed the property from the south; (4) vehicles approaching from the south of McNair that intend to go to the store must take an alternative route; and (5) vehicles who mistakenly turn onto McNair must drive through the store’s parking lot in order to safely turn around.  None of those findings was clearly erroneous.

B.            Diminution in Market Value

To establish a taking, the property owner must also show that actual damage has occurred in the form of a measurable diminution of the market value of the property.  Kick’s I, 587 N.W.2d at 60.  The district court concluded that “actual damage to the [respondent] has been proven in the form of a measurable diminution of the market value of [respondent’s] property.”[1]  The district court based that conclusion upon the expert real estate appraisal testimony presented by respondent, finding respondent’s expert to be more credible than the expert presented by the city.  Respondent’s expert performed a full appraisal of the property and opined that the highest and best use of the property had been negatively affected by the closure.  This testimony supports the district court’s findings, which are not clearly erroneous.  See Minn. R. Civ. P. 52.01 (this court shall not set aside the district court’s findings of fact unless they are clearly erroneous); Lino Lakes Econ. Dev. Auth. v. Reiling, 610 N.W.2d 355, 359 (Minn. App. 2000) (same).

The city argues that the district court’s reliance upon respondent’s expert testimony was misplaced because that expert “improperly focused upon loss of customers and profits to the business not on the market value of the real estate.”  The city cites Hendrickson for the proposition that

no damages as such may be assessed for diversion of traffic or for the loss of customers, business, good will, income, or profits since the latter depend not only on location of access but on such complex and intangible variables as the initiative and industry of the proprietors. 

 

267 Minn. at 446, 127 N.W.2d at 173.  The city’s argument is misplaced.  Respondent’s expert did not use evidence of the loss of customers and profits as a direct measure of diminution of the market value, but only as an ingredient of the “income approach” to determining the market value of the real estate.  This income approach is standard in the valuation of commercial properties.  See Marquette Bank Nat’l Ass’n v. County of Hennepin, 589 N.W.2d 301, 306 (Minn. 1999) (acknowledging the importance of the income approach to valuation of commercial properties in the twin-cities’ area).  Moreover, respondent’s expert combined that approach with other standard approaches to arrive at his ultimate opinion on diminution of value.

Because the record supports the district court’s findings that the liquor store suffered a special injury, and that there was a diminution in the value of the property as a result of the city’s actions, we determine that the district court did not err in concluding that there was a taking by the closure of the road.

C.            Reasonably Convenient and Suitable Access

Such a taking through loss of access is compensable, however, only when the owner is left without reasonably convenient and suitable access to the main thoroughfare in at least one direction.  Hendrickson, 267 Minn. at 445-46, 127 N.W.2d at 172-73.  The city claims that because (1) the north entrance of McNair Avenue remains open and is accessible from the major arterial roads in the area and (2) the city has put a sign on the intersection of Penn Avenue, Broadway Avenue and McNair, instructing motorists that McNair leads to the liquor store, respondent still enjoys access to its store in at least in one direction.  However, to avoid a taking, the access has to be reasonably convenient and suitableId. at 446, 127 N.W.2d at 173.  Whether the one remaining access is reasonably convenient and suitable is a fact question.  Id. at 445, 127 N.W.2d at 172.  The district court determined that the one remaining access was not reasonably convenient when it found that

The city has obstructed the sole remaining opening to McNair Avenue with a non-standard, pylon sign [‘Road Open to Broadway Liquor Outlet’] at the intersection of McNair Avenue with Broadway Avenue and Penn Avenue.  Traffic which cannot easily see the pylon sign until after it begins to turn into McNair Avenue from north bound Penn Avenue, has collided with the pylon sign on more than on occasion since its placement.

 

That finding is not clearly erroneous.

 

            Moreover, the district court’s conclusion that a compensable taking had occurred was independently supported by its findings that (1) the city had to provide an adequate turn-around at the cul-de-sac and (2) the city has “taken no steps to acquire land for and/or construct an adequate turn-around.”  These findings are not clearly erroneous.

II.

            The city challenges the amount of attorney fees awarded by the district court under Minn. Stat. § 117.045 (2000).  The district court has wide discretion in awarding attorney fees, and will not be reversed unless the factual basis for the fees is clearly erroneous.  Spaeth v. City of Plymouth, 344 N.W.2d 815 (Minn. 1984). 

            Respondent requested attorney fees for seven different phases of work:  (1) Pre-street closure phase; (2) inverse condemnation pleading and discovery phase; (3) summary judgment phase; (4) first appeal phase; (5) remand/pretrial phase; (6) trial phase and (7) post-trial phase.  The district court awarded attorney fees for all the phases except the first appeal phase.

The city claims that the district court erred in awarding attorney fees for any proceedings prior to the remand.  Minn. Stat. § 117.045 authorizes an award of attorney’s fees only where the landowner is successful in the litigation:

Upon successfully bringing an action compelling an acquiring authority to initiate eminent domain proceedings relating to a person's real property which was omitted from any current or completed eminent domain proceeding, such person shall be entitled to petition the court for reimbursement for reasonable costs and expenses, including reasonable attorney, appraisal and engineering fees, actually incurred in bringing such action.

 

Minn. Stat. § 117.045.

 

A.                Pre-Street Closure Phase

            The district court awarded the respondent attorney fees for pre-street closure phase.  The city claims that this was improper because the respondent was unsuccessful in obtaining an injunction.  However, the affidavit of respondent’s attorney states that he is not seeking fees for the work performed on the injunction, but for the work he did in preparation of the inverse condemnation action.  He stated:

An example illustrative of the work done at the time of the injunction action that was essential to the inverse condemnation action is the research on cul-de-sac cases.  Those cases were turned up while researching the basis for an injunction and eventually became one of the important bases for the inverse condemnation action.

 

The pre-closure phase included many meetings with our client—all of which were essential to the inverse condemnation phase; meetings with city officials—all of which were in order to obviate the need for the inverse


condemnation action; court hearings—3—which at least in part led to a reduction of the time necessary for the hearing of the inverse condemnation phase of the action; and legal research and briefing (2 briefs)—the dual application of which is discussed above.  In addition to the foregoing, there was considerable time consuming correspondence, service and filing.  Considerable time was spent in strategic and tactical planning session between both counsel.  In that phase my father spent 40 hours ($15,000).  I spent 70 hours ($17,500).  I attribute 50% of that time to work spent in furtherance of the inverse condemnation action. 

 

This evidence was sufficient to support the district court’s award.

            B.            Summary Judgment Phase

The city claims that because in Kicks I this court reversed the district court’s decision on summary judgment that the creation of the cul-de-sac was a taking, respondent’s motion for summary judgment was unsuccessful and attorney’s fees attributable to it should not be allowed.

Respondent acknowledges that it was unsuccessful in its summary judgment request.  However, its claim for attorney’s fees was based upon the fees incurred to defend against the city’s cross-motion for summary judgment, which respondent successfully defeated.  In light of the broad discretion afforded to the district court in awarding attorney fees, we conclude that the district court’s award of attorney fees for expenses accrued during the summary judgment phase was not clearly erroneous.  Jadwin, 318 N.W.2d at 848 (providing that the district court has broad discretion in awarding attorney fees).

Affirmed.



[1]The only issue on appeal is whether there was a diminution in value of the property, not the amount.