This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
In the Matter of: Snake River PL-566 Project
Filed March 28, 2006
Affirmed in part, reversed in part, and remanded
Marshall County District Court
File No. CX-01-284
Eric A. Bartsch, DeAnne M. Hilgers, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellants)
Gerald W. Von Korff,
Considered and decided by Minge, Presiding Judge; Randall, Judge; and Collins, Judge.
U N P U B L I S H E D O P I N I O N
In this eminent domain proceeding, appellants argue that the district court erred by (1) dismissing their claim for severance damages and (2) failing to adjudicate their claim for rescission of assessed benefits. For lack of evidence of compensable severance damages, we affirm dismissal of that claim. But because neither the dismissal of the claim for severance damages, nor the agreement settling just compensation for the direct taking, resolves appellants’ claim for rescission of benefits, we reverse and remand for resolution of that claim.
In 2001, respondent Middle River-Snake River Watershed District (Watershed District) condemned certain lands to construct a flood-control reservoir and supporting infrastructure as part of Project PL-566. Appellants Loren and Deborah Zutz (the Zutzes) owned 160 acres and leased more than 400 acres of the condemned lands. Loren and his brother, Ron Zutz, worked these lands as part of their approximately 6,000-acre farm operation. Of the non-contiguous 6,000 acres, the Zutzes and Ron owned approximately 1,300 acres and leased the rest.
Zutzes appealed the order establishing the project to the district court,
alleging that the Watershed District failed to compensate them for severance
damages to the remainder lands in addition to the fair market value of their
interests in the lands taken. The Zutzes
further asserted that the Watershed District improvidently assessed benefits, based
on anticipated savings of flood insurance premiums, to their homestead in
On January 19,
2005, the Zutzes proposed a settlement agreement whereby the Watershed District
would pay them $687,674 for the taking of their fee simple and leasehold
interests, and severance damages to the remainder lands. The Watershed District countered by offering
the Zutzes $131,000 as just compensation for their fee simple and leasehold
interests in the lands taken, expressly rejecting the claim for severance
damages. The Zutzes conditionally accepted
the offer, “[p]roviding that the [Watershed District] agrees that these
settlements in no way compromise [the Zutzes’] claim . . . for
severance damages.” The Watershed District
responded that its $131,000 offer was intended to settle the entirety of the
Zutzes’ claims and that the Watershed District would not agree to settle the
fee simple and leasehold interests and reserve the issue of severance damages
for trial. The record of the
negotiations is silent as to the Zutzes’ claim that the Watershed District
overstated the benefits the project conferred to the Zutzes’ homestead in
Following a pre-trial conference on March 22, 2005, at which arguments were heard on the parties’ motions in limine, the district court (1) dismissed the Zutzes’ claim for severance damages; (2) determined that the parties had settled on the amount representing just compensation for the Zutzes’ fee simple and leasehold interests in the lands directly taken; and (3) concluded that the “settlement resolve[d] the case in its entirety,” in light of the dismissal of the claim for severance damages. Judgment was entered accordingly and this appeal follows.
D E C I S I O N
Both the state
and federal constitutions require that just compensation be paid to a landowner
whose property is taken by eminent domain. U.S. Const. amend. V;
has been a taking is a question of law vested in the district court. Hous. & Redev. Auth. of
When only part of
a landowner’s property is taken, the landowner is entitled to compensation for “severance
damages,” defined as the diminution in value of the land remaining. Strom,
493 N.W.2d at 558–59. In such case,
severance damages, if any, are measured by the “before and after” rule: “the
difference in market value of the land before the taking and the market value
of the remaining land after the taking.”
A landowner is
entitled to severance damages for the diminution in value of noncontiguous
tracts of land “provided that the use to which the tracts are applied is so
connected, that the taking from one in fact damages the other.” Minn. Stat. § 117.086, subd. 1
(2004). The district court must
determine “whether, as a matter of law, the landowner has suffered a taking of,
or damage to, noncontiguous tracts by reason of the eminent domain.”
The Zutzes claim severance damages for the diminution in value of their interests in the remaining noncontiguous tracts of farmland. They argue that the district court erred by not allowing them to present evidence of the diminution in value and by dismissing their claim for severance damages. The district court held that the Zutzes must show actual damage to the value of the land and that they have a compensable interest in that land. It determined that the Zutzes’ claim for severance damages failed as a matter of law because there was no evidence of compensable damages to the remaining noncontiguous tracts as a result of the taking.
The Zutzes offer no evidence that the severance damages they claim “arise from changes in the land actually taken.” See Blaine Bldg. Corp., 566 N.W.2d at 334. Rather, their theory is based on evidence that the remaining farmland yields a greater profit when it is part of a larger assemblage of parcels. This greater profit results from the increased efficiency of their farming operation. But this evidence does not show that the fair market values of the remaining tracts are less after than before the taking. Fair market value is the price that would be paid for the property “by a buyer who is willing, but not required to buy, to an owner who is willing, but is not required to sell.” Strom, 493 N.W.2d at 558 n.3 (quotation omitted). The Zutzes’ analysis focuses on the economic loss due to their overcapitalization in the after-situation and presumes that the hypothetical willing buyer has a farm operation of similar size to theirs. On this issue we conclude, as a matter of law, that the Zutzes failed to show that they have “suffered a taking of, or damage to, noncontiguous tracts by reason of the eminent domain,” as required by Minn. Stat. § 117.086, subd. 3, and that the district court did not err by dismissing the Zutzes’ claim for severance damages.
The Watershed District argues by notice of review that the district court erred by concluding that the Zutzes accepted the district’s settlement offer for the direct taking of the fee and leasehold interests. But the Watershed District notes that its cross-appeal need not be considered if we affirm the dismissal of the Zutzes’ claim for severance damages. Because we conclude that the district court did not err by dismissing the Zutzes’ claim for severance damages, the cross-appeal is effectively rendered moot. The parties’ settlement of just compensation for the direct taking of the Zutzes’ fee and leasehold interests is binding.
the Zutzes argue that the district court erred by concluding that dismissal of
the claim for severance damages resolved all of the claims between the
parties. In the order establishing Project
PL-566, the Watershed District determined that the project conferred benefits
to the Zutzes because they would no longer be required to purchase flood
insurance for their homestead in
settlement communications do not mention this claim, nor do they contemplate its
resolution. And nothing in the district
court’s findings and conclusions addresses this issue. Although not always required,
findings of fact “are necessary to permit meaningful appellate review; failure
to make adequate findings will result in remand.” Nat’l
Union Fire Ins. Co. v. Evenson, 439 N.W.2d 394, 398 (
Affirmed in part, reversed in part, and remanded.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.