Dissenting, Klaphake, Judge

Hennepin County District Court

File No. CD 2113

Robert J. Hajek, John A. Warchol, Warchol, Berndt & Hajek, P.A., 3433 Broadway Street Northeast, Suite 110, Minneapolis, MN 55413-1783 (for appellant Golden Spike, Inc.)

Wayne G. Popham, Steven A. Kaye, Popham, Haik, Schnobrich & Kaufman, Ltd., 222 South Ninth Street, Suite 3300, Minneapolis, MN 55402 (for respondent Minneapolis Community Development Agency)

Considered and decided by Schumacher, Presiding Judge, Klaphake, Judge, and Forsberg, Judge.

Appellant challenges the district court's dismissal of its claim against respondent Minneapolis Community Development Agency (MCDA) for loss of going concern damages resulting from the condemnation of property leased by appellant for an adult bookstore. Because the district court erred in considering issues outside its scope of review for an appeal from the appointed commissioner's award of damages, we reverse and remand.

FACTS

Respondent MCDA brought an action in eminent domain to quick-take possession of a city block located in downtown Minneapolis. Appellant Golden Spike then brought a claim for loss of a going concern based on a bookstore it operated in one of the condemned buildings. The court referred the matter to a panel of commissioners "for consideration as to whether or not [appellant] * * * suffered any loss of going concern, and, if so, in what amount."

The commissioners awarded appellant $125,000 for its loss of a going concern. Both MCDA and appellant filed notice in the district court for de novo review of the commissioners' award. The reviewing court determined that the prior order for the commissioners' hearing and the resulting damage award had been premature. The court ordered an evidentiary hearing on the issues of whether a going concern value had been destroyed as a result of the condemnation, and whether the business either could not have been relocated as a practical matter, or relocation would have resulted in irreparable harm.

Appellant moved to dismiss based on a lack of subject matter jurisdiction, alleging that neither party properly served notice upon all interested parties when they sought de novo review of the commissioners' award. When the district court denied the motion, appellant brought a challenge to this court. This court affirmed the district court's order and determined the parties had satisfied the statutory notice requirements for subject matter jurisdiction. See Minneapolis Community Dev. Agency v. Golden Spike, 536 N.W.2d 30 (Minn. App. 1995) review denied (Minn. Oct. 18, 1995).

In February 1996, the district court conducted an evidentiary hearing. The court determined that the bookstore operation could have relocated, and appellant did not suffer any loss of going concern value as a direct result of the condemnation. The court dismissed appellant's claims with prejudice. Appellant contests the decision.

D E C I S I O N

In a condemnation proceeding, once the district court determines that a proposed taking is necessary and authorized by law, the court appoints a panel of commissioners to ascertain the amount of damages. Minn. Stat. § 117.075 (1994). Any party to a condemnation proceeding may appeal a damages award made by the commissioners to the district court. Minn. Stat. § 117.145 (1994). On such an appeal, the party is entitled to a jury trial. Minn. Stat. § 117.165, subd. 1 (1994).

In State by Lord v. Pearson, 260 Minn. 477, 489-90, 110 N.W.2d 206, 215 (1961) the supreme court clarified the jurisdiction of the district court in hearing appeals from commissioners' awards, stating:

The proceedings prior to the award of the commissioners, including the petition and evidence thereon, are not before the court for review. The jurisdiction of the district court is appellate and the whole scope of that appeal is to secure a full trial de novo before a jury on the question of damages, involving basically the same matters submitted to and passed upon by the commissioners in the first instance. In the end, the sole issue before the district court and jury is the amount of damages to be awarded.

While Pearson involved different issues than those disputed in the instant case, the court's analysis clearly limits the district court's scope of review and entitles appellant to a jury trial on the issue of damages.[1] See id.

In City of Mankato v. Hilgers, 313 N.W.2d 610, 612 (Minn. 1981), the supreme court stated

when the district court is reviewing a commissioners' award in the form of a trial de novo before a jury, its jurisdiction is appellate and the only issue is the amount of damages necessary to make just compensation.

Id. The court also explained that "[t]he question of whether land has been damaged so as to require condemnation is a question of law which the trial court must decide before submitting the damage question to the commissioners in the first instance." Id. at 612-13. Therefore, the court held that the lower court lacked the authority to modify the property included in the petition at the time of appeal from the commissioners' award. Id. at 613. Thus, the supreme court reversed the district court's award of damages for the property that was added to the petition at the time of appeal to the district court. Id.

These cases clearly limit the scope of inquiry for review of commissioners' awards. In the instant case, the district court went beyond its authority to review the commissioners' award and, instead, conducted a full evidentiary hearing on issues already decided by the district court. Upon hearing the appeal from the commissioners' award, the district court did not have the authority to review the prior orders that referred the matter to the commissioners.

Moreover, this court has recently clarified that a district court lacks the authority to reconsider a prior judge's orders beyond the very narrow grounds outlined in Minn. R. Civ. P. 60.02, which do not include judicial error. Carter v. Anderson, 554 N.W.2d 110, 114 (Minn. App. 1996), review denied (Minn. Dec. 23, 1996). Therefore, while MCDA may have had objections to the prior orders referring the case to the commissioners, the appeal to the district court was not the proper forum for resolution of those issues. Any appeal based on alleged errors in those prior orders determining necessity may be raised only after final judgment. See Alexandria Lake Area Serv. Region v. Johnson, 295 N.W.2d 588, 590 (Minn. 1980). We reverse the district court's order and remand for jury trial.

Reversed and remanded.

KLAPHAKE, Judge (Dissenting)

I respectfully dissent. Because the district court had authority to conclude that appellant suffered no "going concern" loss, I would affirm the judgment for MCDA.

The question of whether land has been damaged so as to require condemnation is a question of law which the district court generally decides before referring the matter to the commissioners. See City of Mankato v. Hilgers, 313 N.W.2d 610, 612-13 (Minn. 1981). And this question often requires the holding of an evidentiary hearing. See In re Condemnation by Minneapolis Community Dev. Ag., 488 N.W.2d 319, 320 (Minn. App. 1992), review denied (Minn. Sept. 15, 1992).

Here, however, the district court initially referred the matter to the commissioners without determining whether appellant was entitled to any damages for loss of going concern. The court appointed a panel of commissioners to consider "whether or not [appellant] * * * suffered any loss of going concern, and, if so, in what amount." On appeal from the commissioners' award, the district court noted that an evidentiary hearing had not been held. The court therefore decided to hold such a hearing to determine whether appellant was entitled to any damages for loss of going concern before submitting the matter to a jury. If no damages were compensable under the law, it would have been a waste of judicial resources to empanel a jury to review the damage award. Once the district court determined that appellant was not entitled to damages, the court properly dismissed the claim without a jury trial. See Minn. Stat. § 117.165, subd. 1 (1994) (claimant entitled to jury trial on appeal from commissioners' awards); id. § 117.175, subd. 1 (1994) (claimant has burden of proof on such appeal).

The majority cites language from prior case law to support its contention that the district court lacked authority for its actions. While the supreme court's language in State by Lord v. Pearson, 260 Minn. 477, 489-90, 110 N.W.2d 206, 215 (1961), limits the scope of review on appeals from commissioners' awards, it should not be taken out of context. This case is not a "review" of the prior proceedings as the Pearson language forbids. Id. This case involves a determination made by the district court that no compensable damages may be awarded to appellant as a matter of law.

Likewise, the supreme court's analysis in Hilgers, 313 N.W.2d at 612, does not prohibit the district court's action in this case. In Hilgers, the supreme court found the district court's expansion of the property included in a condemnation claim at the appellate stage was impermissible. Id. at 613. This case, however, involves the district court's determination that appellant's claim involved no recognizable damages and, therefore, a jury need not be empaneled to review the damages amount.

Nor does this court's analysis in Carter v. Anderson, 554 N.W.2d 110 (Minn. App. 1996), review denied (Minn. Dec. 23, 1996), preclude the district court's ability to make a legal determination on the issue of damages prior to entry of final judgment. After the district court entered summary judgment against him, Carter moved for reconsideration of the final judgment under Minn. R. Civ. P. 60.02. Id. at 112. This court determined that rule 60.02 was not intended to correct judicial error after entry of final judgment. Id. at 113-14. Carter does not stand for the proposition that a district court may not change its position prior to entry of final judgment.

The posture of this case is similar to that of a motion for a directed verdict at the close of the evidence; when no damages may be awarded as a matter of law, the case does not progress to a jury. See Minn. R. Civ. P. 50.01. When the district court here determined that a jury could not award damages, it had full authority to dismiss the claim.

There is no merit to appellant's contention that because MCDA did not appeal the original orders referring the matter to the commissioners, it was precluded from contesting those actions. Such orders are not appealable. See State by Burnquist v. Fuchs, 212 Minn. 452, 453, 4 N.W.2d 361, 362 (1942) (order appointing commissioners in eminent domain proceedings not final and not appealable); City of Duluth v. Stephenson, 481 N.W.2d 577, 578 (Minn. App. 1992), review denied (Minn. May 15, 1992) (order granting quick-take condemnation petition not appealable unless public necessity for taking challenged).

Loss of going concern damages may be awarded if a lessee can show (a) that its going concern value will be destroyed as a direct result of the condemnation, and (b) that its business either cannot be relocated as a practical matter, or that relocation would result in irreparable harm to the business. See City of Minneapolis v. Schutt, 256 N.W.2d 260, 265 (Minn. 1977). Appellant failed to establish direct injury to its going concern value and the district court concluded that appellant suffered no compensable loss. The district court also determined that appellant's bookstore operation could have been relocated. Because appellant failed to demonstrate error in the court's findings of fact or conclusions of law, I would affirm the judgment for MCDA.

[ ]^* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[ ]¹ Note that this rule does not preclude an appeal of these issues to this court after the district court conducts a proper jury trial.