Case Title: Mazza v. Agency of Transportation

Citation: 168 Vt. 112, 716 A.2d 817

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1998-06-19T00:00:00Z

Document:
Mazza v. Agency of Transportation  (97-130); 168 Vt. 112; 716 A.2d 817

[Filed 19-Jun-1998]

       NOTICE:  This opinion is subject to motions for reargument  under
  V.R.A.P. 40 as well as formal revision before publication in  the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions, 
  Vermont Supreme Court, 109 State Street,  Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 No. 97-130

Samuel and Annette Mazza                    Supreme Court

                                            On Appeal from
    v.                                      Chittenden Superior Court

Vermont Agency of Transportation            December Term, 1997

Shireen Avis Fisher, J.

       Thomas  P.  Aicher of David L. Cleary Associates, P.C.,  Rutland, for
  Plaintiffs-Appellees.

       William  H.  Sorrell,  Attorney General, and  Scott  A.  Whitted,
  Assistant Attorney General, Montpelier, for Defendant-Appellant.

PRESENT: Dooley,  Morse, Johnson and Skoglund, JJ.,  and  Martin,
         Supr. J., Specially Assigned

       DOOLEY,  J.  The State of Vermont appeals from a Chittenden Superior 
  Court  condemnation award  in  favor  of  Samuel  Mazza arguing  that  the
  amount awarded for business loss was  improper because  the  business was
  incorporated and, therefore,  was  not owned   by  the  landowner.   The 
  landowner  has  cross-appealed claiming: (1) the amount awarded for the
  land was inadequate as a matter of law; (2) the amount awarded for business
  loss was  also inadequate  as  a  matter of law; and (3) the  jury  should 
  have awarded additional damages for relocation of an irrigation  line. We
  affirm.

       The land in question, approximately 7.3 acres, lies in  the proposed 
  path of the Chittenden County Circumferential  Highway, and about half of
  it, 3.9 acres, is used to grow pumpkins as part of  a  truck  farm 
  operation.   In March  1993,  the  Chittenden Superior  Court  found 
  necessity  for  the  Vermont  Agency   of Transportation  to  take  the
  land by  eminent  domain  from  its owners,  Samuel  and Annette Mazza.  At
  the time, the  landowners conducted  the  farm  operations  on  the 
  property  as  a   sole proprietorship.

 

       Shortly thereafter, in May 1993, landowners formed a family
  corporation known as S. Mazza Farmstand and Greenhouses, Inc.  to carry  on 
  their farm business.  The corporation was  established for estate and tax
  planning purposes.  Title to the land remained in  the  name of the
  individuals, but the land was leased to  the corporation pursuant to a
  written lease.

       Following  a hearing, the Vermont Transportation  Board  on September 
  9,  1994  set the value of the condemned  property  at $60,100,  and  did
  not include in that amount any business  loss. Landowners  appealed to the
  Chittenden Superior  Court.   Annette Mazza  died  before the trial,
  leaving Samuel Mazza as  the  sole landowner.

       The  main  issue  at the November, 1996 trial  was  whether landowners 
  were  entitled to business loss damages.   The  State argued they were not
  because the business was being conducted  by a  corporation which did not
  own the land, and because the  value of a farming business is necessarily
  included in the value of the land.   Landowner  argued that the nature  of 
  the  truck  garden operation was such that the value of the land did not
  reflect the value  of  the business.  Landowner also argued that he  and 
  his wife  owned  the  business at the time of the  taking,  which  he
  claimed was the date of the necessity determination, and, in  any event,  
  the   corporate  form  of  ownership   should   not   be determinative in a
  family business.

       The court submitted the issue of business loss to the jury, which 
  came  back  with  a verdict of $150,000  --  $140,720  for business loss,
  $5,850 for the tillable land, and $3,430  for  the non-tillable  land.  The
  court denied landowner's  motion  for  a judgment  as  a  matter of law
  which argued that  the  undisputed evidence  required the jury to set
  higher values on the land  and the business.

       On  appeal,  the  State  argues that  the  court  erred  in submitting 
  the  issue of business loss to the jury  because  the landowner  did not
  own the business.  The State has not  appealed the  court's decision that
  the value of the farm business is  not included  in  the value of the land,
  and we do not consider  that question.

       The  briefing  on  this  issue  has  centered  on  whether landowners
  owned the business on the date of taking, whether  the corporation's 
  leasehold interest was sufficient  to  support  an award  

 

  to  it,  and whether the court could pierce the  corporate form  for a
  family business.  We conclude that we need not  reach these arguments
  because we do not believe the applicable statutes require   that  the 
  landowner  own  the  business  as   a   sole proprietorship in order to
  recover business loss.

       "Vermont is one of the few states to recognize business loss as  an
  item of damage in a condemnation proceeding."  Raymond  v. Chittenden
  County Highway, 158 Vt. 100, 105, 604 A.2d 1281,  1284 (1992).   The
  authorization for this item of damages is contained in 19 V.S.A.  501(2)
  which provides, in part:

          Damages resulting from the taking or  use  of
          property under the provisions of this chapter
          shall  be  the value for the most  reasonable
          use of the property or right in the property,
          and  of the business on the property, and the
          direct and proximate decrease in the value of
          the   remaining  property  or  right  in  the
          property and the business on the property.
          
  Although  the statute does not state that the landowner must  own the 
  business outright in order to recover business  losses,  the State  argues
  that this requirement must be implied  because  the statutes  would not
  allow a business-owner who is not a landowner to  participate  in  a
  condemnation proceeding.   See  19  V.S.A. 501(3) (person interested in
  lands must have "a legal interest of record"); id.  511 (Cum. Supp. 1997)
  ("person having an  interest in   the   land"   may  participate  in 
  hearing   to   determine compensation).

       For  three  major reasons, we reject the State's  argument. First, 
  the  condemnation proceeding in  the  superior  court  is essentially  an
  in rem action with respect to the property.   See City of Winooski v. State
  Highway Bd., 124 Vt. 496, 498,