This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Appeal of Chelloy, Inc.

(Golden Valley Laundry)
Under the Relocation Grievance Policy.


Filed December 10, 2002


Peterson, Judge


Housing and Redevelopment Authority


Paul V. Kieffer, Kieffer & Associates, LLC, 701 Fourth Avenue South, Suite 901, Minneapolis, MN  55415 (for Chelloy)


Allen D. Barnard, Best & Flanagan LLP, 225 South Sixth Street, Suite 4000, Minneapolis, MN  55402 (for Housing and Redevelopment Authority)


            Considered and decided by Hudson, Presiding Judge, Peterson, Judge, and Anderson, Judge.

U N P U B L I S H E D   O P I N I O N


In this appeal from a benefits determination under the Minnesota Uniform Relocation Assistance Act, relator argues that (1) the city erroneously denied it benefits and (2) it was denied due process of law because (a) the city official that heard appellant’s claims was not a neutral decision maker; and (b) the city precluded it from entering certain evidence.  We affirm.



            Relator Chelloy, Inc., leased space to operate a laundry and dry-cleaning business in a building owned by Maren, Inc. In September 1993, respondent Housing and Redevelopment Authority in and for the City of Golden Valley (HRA) acquired the building from Maren, Inc., through condemnation.[1]  Chelloy remained in the building pursuant to a month-to-month lease until May 1999, when it was asked to vacate.

            The HRA paid Chelloy $45,444 for immovable fixtures in the vacated premises, $10,000 for business re-establishment costs, $1,000 to search for a new location, and $4,405 in moving and storage expenses.  Chelloy told the HRA that it also expected to be reimbursed for sewer and water access charges that would be required to reopen its business and for plumbing, ventilating, and electrical work to be done at its new premises.  The HRA told Chelloy that it would not reimburse any sewer and water access charges because those amounts were included in the price the HRA paid Maren, Inc., when it acquired the condemned property.  The HRA told Chelloy that it would pay to connect Chelloy’s machinery to utilities in a new location, but the HRA denied that it was obligated to re-establish the plumbing, electrical, and ventilation systems at a new location.

            Chelloy initiated a declaratory judgment action seeking a declaration of its rights to reimbursement under Minn. Stat. §§ 117.50-.56 (2000), the Minnesota Uniform Relocation Assistance Act (MURAA), and 42 U.S.C. §§ 4621-4625 (1995), the federal Uniform Relocation Assistance Act (URAA).  The HRA moved to dismiss, alleging lack of jurisdiction and failure to state a claim.  The district court dismissed Chelloy’s action.  The court determined that under the doctrine of primary jurisdiction, Chelloy must first obtain a decision from the HRA; then Chelloy must exhaust its administrative remedies under the HRA’s grievance procedure before seeking review by this court.

            Chelloy then filed a claim with the HRA requesting $1,239 for additional storage expenses, an additional $55,370 to be used to pay for work on the plumbing, electrical, and air-handling systems in a building where Chelloy’s business would be operated, and an unspecified amount for sewer and water access permits at the new business location.  Chelloy acknowledged in its request that it had not reopened the laundry and dry-cleaning business and that it could not reopen the business unless it received the amounts it was requesting. 

Chelloy’s claim for additional storage expenses was denied because Chelloy did not submit cancelled checks or receipts to support the claimed expenditures, and its claims for work on the plumbing, electrical, and air-handling systems and for sewer and water access permits were denied because Chelloy had not actually incurred those expenses.  In addition, even if the costs for the items other than storage were incurred, they would not be reimbursed because they were re-establishment costs, not moving costs, and therefore were limited to the $10,000 already paid to Chelloy.

Chelloy appealed the denial of its claim pursuant to the HRA’s grievance policy, and a hearing was held before the director of the HRA.  The director denied Chelloy’s claim for plumbing, electrical, and air-handling systems work and for sewer and water access permits because those costs were hypothetical, and “relocation benefits are payable only as reimbursements for actual costs incurred by the displacee.”  The director also determined that the costs are re-establishment expenses, not moving expenses, and therefore, they are “limited to the $10,000 already paid Chelloy.”


            Our review on writ of certiorari is limited to an inspection of the record to determine the propriety of the agency’s jurisdiction and procedures and, with respect to the merits, to determine whether its decision was arbitrary, oppressive, unreasonable, fraudulent, or unsupported by evidence or applicable law.  Senior v. City of Edina, 547 N.W.2d 411, 416 (Minn. App. 1996).  As a reviewing court, we will not retry the facts or make credibility determinations.  Id.  The decision will be upheld if the agency “furnished any legal and substantial basis for the action taken.”  Id. (quotation omitted).

1.         Chelloy argues that the HRA misinterpreted the MURAA and the URAA when it denied Chelloy relocation benefits.  The purpose of the MURAA is to make public funds available to reimburse relocation costs incurred by businesses displaced by public acquisitions of property where there is no federal financial participation.  See Minn. Stat. § 117.52 (stating purpose of act).  Under the MURAA, an “acquiring authority”[2] must “provide all relocation assistance, services, payments and benefits required” by the federal URAA and related regulations.  Id

49 C.F.R. § 24.303(a) (2001) provides:

Any business or farm operation which qualifies as a displaced person * * * is entitled to payment for such actual moving and related expenses, as the Agency determines to be reasonable and necessary.


(Emphasis added.)

49 C.F.R. § 24.304 (2001) provides:

            In addition to the payments available under § 24.303 of this subpart, a small business, * * * farm or nonprofit organization is entitled to receive a payment, not to exceed $10,000, for expenses actually incurred in relocating and reestablishing such small business, farm or nonprofit organization at a replacement site.


Chelloy argues that the costs for work on the plumbing, electrical, and air-handling systems at a new site and for sewer and water access charges at a new site are moving expenses, not re-establishment expenses, and therefore, reimbursement for these expenses is not subject to the $10,000 limit.  But it is not necessary for us to determine whether these expenses are moving expenses or re-establishment expenses.

It is undisputed that Chelloy has already been paid the $10,000 maximum permitted for re-establishment expenses.  Therefore, if the expenses Chelloy now claims are determined to be re-establishment expenses, Chelloy is not entitled to further reimbursement because it has already received the maximum amount permitted.  It is also undisputed that Chelloy has not actually incurred the expenses for work on the plumbing, electrical, and air-handling systems at a new site or for sewer and water access charges at a new site.  Therefore, because a business is entitled to payment only for “actual moving and related expenses,” Chelloy is not entitled to payment if the expenses it claims are determined to be moving expenses.

            Citing 42 U.S.C. § 4621, Chelloy argues that it should be put in the same position after the move as it was prior to the move, without any additional expense, and if it is not, the HRA has essentially taken its property without just compensation.  42 U.S.C. § 4621 states the findings and policy of Congress and declares “minimizing the adverse impact of displacement is essential to maintaining the economic and social well-being of communities.”  42 U.S.C. § 4621(a)(4).  Chelloy provides no legal authority for its interpretation of section 4621.  Absent some authority to the contrary, we conclude that “minimizing the adverse impact of displacement” does not mean that costs that could be associated with a displaced business, but that have not been incurred, must be paid. 

Chelloy also argues that under the Minnesota Constitution, “Private property shall not be taken, destroyed or damaged for public use without just compensation therefore, first paid or secured.”  Minn. Const. art. I, § 13.  Under Minn. Stat. § 117.025, subd. 1 (2000), “taking” means “every interference, under the right of eminent domain, with the possession, enjoyment, or value of private property.”  Chelloy contends that this means that the intent of Minnesota law is to fully compensate its citizens for losses incurred because of redevelopment.  However, Chelloy fails to cite any authority for its contention that “just compensation” includes costs associated with a displaced business that have not actually been incurred.         

2.         Chelloy argues that its procedural due process rights were violated because the hearing officer was the city manager for the city of Golden Valley and the executive director of the HRA, and therefore, he was not an impartial decision maker.  The hearing officer, appropriately, did not rule on Chelloy’s constitutional claims.  The HRA lacks subject matter jurisdiction to decide constitutional issues; those questions are within the exclusive province of the judicial branch.  Neeland v. Clearwater Mem’l Hosp., 257 N.W.2d 366, 368 (Minn. 1977).

            Constitutional due process requires a decision by an impartial official; an official who has been involved in the particular aspect of a case under review should not also participate in the decision-making process.  Goldberg v. Kelly, 397 U.S. 254, 271, 90 S. Ct. 1011, 1022 (1970); Ginsberg v. Minn. Dep’t of Jobs & Training, 481 N.W.2d 138, 141 (Minn. App. 1992), review denied (Minn. Apr. 9, 1992).

            Federal regulations provide that appeals concerning the URAA should be reviewed “in accordance with the requirements of applicable law and this part.”  49 C.F.R. § 24.10(a) (2001).  The regulations also require:

The Agency official conducting the review of the appeal shall be either the head of the Agency or his or her authorized designee.  However, the official shall not have been directly involved in the action appealed.


49 C.F.R. § 24.10(h) (2001).  Consistent with this regulation, the HRA’s grievance policy provides:

The review will be conducted by the director of the Housing and Redevelopment Authority or his or her designee.  In any case, the reviewer shall not have been directly involved in the action being appealed.


Golden Valley HRA Relocation Grievance Policy, § 4 (a).


Chelloy contends that the hearing officer cannot be an impartial decision-maker because he is reviewing his own decision.  Chelloy alleges that because the hearing officer is the Golden Valley city manager, and because all of the city’s departments, including the HRA, report to the hearing officer as city manager and are subject to his supervision and direction, the hearing officer was directly involved in the action appealed.  See Golden Valley, City Code §2.30, subd. 1, 2 (2001) (establishing department organization).  As evidence that the hearing officer was directly involved in the action, Chelloy cites correspondence that was copied to the hearing officer during the negotiations between the parties before the appeal occurred.  Although the correspondence indicates that the hearing officer was aware of Chelloy’s claims, it does not demonstrate that he was directly involved such that he could not be an impartial decision-maker. 

Chelloy also argues that it was deprived of due process when it was denied the opportunity to present the testimony of Ken Helvey, the person who handled reimbursement claims for the HRA in 1992 and 1994.  Chelloy contends that in 1992 and 1994 respectively, the city paid Simeks Meats and Avestapolis Tailors and Cleaners for expenses similar to the expenses that Chelloy now seeks to have reimbursed.  Helvey apparently would appear only if subpoenaed, and the appeals process does not provide for subpoenas. 

            Constitutional procedural due-process protections include an opportunity to present evidence and argument and the right to a reasonable decision based solely on the record.  Humenansky v. Minn. Bd. of Med. Exam’rs, 525 N.W.2d 559, 565 (Minn. App. 1994), review denied (Minn. Feb. 14, 1995).  The record reveals that Chelloy submitted the information relating to the Simeks and Avestapolis relocation costs to the hearing officer.  The HRA’s grievance policy requires the hearing officer to “consider all pertinent justification and other materials submitted by the appellant.”  Golden Valley HRA Relocation Grievance Policy § 4(b).  The fact that the hearing officer did not rule in favor of Chelloy does not demonstrate that he did not consider the information.  The record demonstrates that Chelloy was afforded an opportunity to present evidence sufficient to satisfy due-process requirements. 

3.         Chelloy argues that it is entitled to legal fees under 49 C.F.R. § 24.304(a)(12) (2001), which states that a small business is entitled to payment for expenses actually incurred for “[o]ther items that the Agency considers essential to the reestablishment of the business.”  Chelloy argues that because it was required to expend legal fees in order to re-establish its business, it is entitled to reimbursement of those fees.

            This court has previously determined that attorney fees are re-establishment expenses.  In re Reloaction Benefits of Wilkins Pontiac, Inc., 530 N.W.2d 571, 575 (Minn. App. 1995), review denied (Minn. June 23, 1995).  But because Chelloy has already been paid the maximum amount allowed for re-establishment expenses, it cannot receive additional reimbursement for attorney fees.

4.         Citing Minn. Stat. § 549.211 (2000), the HRA argues that the frivolous nature of Chelloy’s legal claims require that the HRA be awarded its legal fees for this appeal and for defending Chelloy’s declaratory judgment action in the district court.  However, the HRA did not comply with the requirements of Minn. Stat. § 549.211, subd. 4(a), which states:

            A motion for sanctions under this section must be made separately from other motions or requests and describe the specific conduct alleged to violate subdivision 2.  It must be served as provided under the Rules of Civil Procedure, but may not be filed with or presented to the court unless, within 21 days after service of the motion, or another period as the court may prescribe, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.


Rather than complying with these requirements, the HRA simply requested in the final paragraphs of its brief that this court impose sanctions under Minn. Stat. § 549.211.  Therefore, we will not consider the request for sanctions.  See Minn. R. Civ. App. P. 139.06 (addressing process for seeking attorney fees on appeal).



[1] The condemnation proceedings are not in dispute.

[2] An acquiring authority is defined as “the state and every public and private body and agency thereof which has the power of eminent domain.”  Minn. Stat. § 117.50, subd. 5(a) (2000).  The parties do not dispute that respondent is an acquiring authority.