Title: CITY OF MIDWEST CITY v. HOUSE OF REALTY, INC.
Citation: 198 P.3d 886, 2008 OK 28
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: April 1, 2008

CITY OF MIDWEST CITY v. HOUSE OF REALTY, INC. Annotate this Case CITY OF MIDWEST CITY v. HOUSE OF REALTY, INC. 2008 OK 28 198 P.3d 886 Case Number: 104349; Consol. w/104526 Decided: 04/01/2008 THE SUPREME COURT OF THE STATE OF OKLAHOMA City of Midwest City and Midwest City Urban Renewal Authority, Appellees, v. House of Realty, Inc., Appellant, and Robert J. Barton, Robert J. "Bob" Barton, Trustee, Pamela L. Barton-Stober, Douglas D. Stober, Kathy L. Givens, Sharlette R. Madison, Jeffrey C. Tackett, Harlan Drake, Phillis Casey, Larry Phillips, Iris Jones, Donna Gunter, Diane Frith, Richard Spriggs, Arthur Lewis and William Klukoske, Forrest Freeman, County Treasurer and Board of County Commissioners of Oklahoma County, Defendants. APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY ¶0 The companion cases arise from an ongoing dispute between the appellee, City of Midwest City (City), and the appellant, House of Realty (landowner), concerning the City's attempt to condemn the landowner's property. In City of Midwest City v. House of Realty, Inc. [Realty I], REQUEST FOR ORAL ARGUMENT DENIED; AFFIRMED. Terry Guy Shipley, Norman, Oklahoma, for Appellant. Katherine E.F. Bolles, City Attorney, City of Midwest City, Midwest City, Oklahoma, for Appellees, City of Midwest City and Midwest City Memorial Hospital Authority. Joseph H. Bocock, Spencer Taft, McAFEE & TAFT, Oklahoma City, Oklahoma, James R. Waldo, Mock, Schwabe, Waldo, Elder, Reeves & Bryant, Oklahoma City, Oklahoma, for Appellee, City of Midwest City. James Dan Batchelor, Leslie V. Batchelor, John C. McMurry, Emily K. Pomeroy, Oklahoma City, Oklahoma, for Appellee, Midwest City Urban Renewal Authority. WATT, J: ¶1 The companion appeals are considered together and consolidated for the sole purpose of promulgating one opinion ¶2 As to the first issue, we hold that the City complied with due process requirements in providing publication notice ¶3 Second, under the facts presented, it is clear that blight determinations were made before the urban renewal plan was adopted and the City renewed its attempt to condemn the property at issue after the plan's adoption. Therefore, we determine that the City complied substantially with the statutory requirements of ¶4 Finally, we may overturn the City's blight determinations only if, in making the findings, it acted arbitrarily or capriciously. FACTS AND PROCEDURAL HISTORY ¶5 In City of Midwest City v. House of Realty, Inc. [Realty I], ¶6 The companion appeals represent the third and fourth causes arising originally from a joint plan of the City and the Midwest City Memorial Hospital Authority (Hospital Authority) to redevelop approximately eighty acres on S.E. 29th Street (development area) in Midwest City. In these appeals, the only portion of the tract subject to condemnation is the landowner's one and one-forth (1 1/4) acre holding located near the northeast corner of S.E. 29th. ¶7 We recognized in Realty I that the City made a determination that the area at issue was blighted as early as May 28, 2002. ¶8 The original commissioners' report issued on March 15, 2002; and the assessed damages were deposited with the court clerk. Requests to stay Realty I and Realty II were denied both by the trial court and this Court in the spring of 2004. Following the issuance of mandate in Realty I, on April 29, 2004, the City took possession of the landowner's property, demolishing the structures on the tract. Except for the existence of one retail outlet, the entire project area was cleared by July of 2004. ¶9 On November 20th and 21st, 2006, a two day bench trial was held to resolve issues on remand from Realty II and in response to the City's declaratory judgment action requesting approval of the City's Urban Renewal Plan along with the renewed attempt to condemn the landowner's property. The trial court consolidated the two causes; sustained the City's findings of blight; found the City's urban renewal plan to have been validly adopted in accordance with the urban renewal laws, DISCUSSION ¶10 a. The City met due process requirements by providing publication notice of meetings at which blight determinations were made. ¶11 The landowner asserts that the City's blight determinations were judicial in that they were adjudications of the "character of the use" pursuant to the Oklahoma Constitution art. 2, §24. ¶12 1) Where, as here, the Legislature has provided the statutory standard for a finding of blight, the determination is legislative rather than judicial in nature. ¶13 The line between what is legislative and what is judicial is not always a clear one. We agree with the landowner that blight is the public purpose that constitutionally justifies the subsequent sale of property for private use. ¶14 The Court answered the question of whether a municipality's determination of blight under urban renewal statutes constituted a judicial determination in Isaacs v. Oklahoma City, ". . . The act does authorize the city to declare and identify blighted areas, but only according to the standards set forth in the act. Such determination is manifestly not an exercise of 'judicial' authority. There is no 'judicial authority' conferred upon the city by the act." Just as the Legislature set forth the standard necessary for a determination of blight in the urban renewal statute at issue in Isaacs, it has done so in "'Blighted area' shall mean an area in which there are properties, buildings, or improvements, whether occupied or vacant, whether residential or nonresidential, which by reason of dilapidation, deterioration, age or obsolescence, inadequate provision for ventilation, light, air, sanitation or open spaces; population overcrowding, improper subdivision or obsolete platting of land, inadequate parcel size; arrested economic development; improper street layout in terms of existing or projected traffic needs, traffic congestion or lack of parking or terminal facilities needed for existing or proposed land uses in the area, predominance of defective or inadequate street layouts; faulty lot layout in relation to size, adequacy, accessibility or usefulness; insanitary or unsafe conditions, deterioration of site or other improvements; diversity of ownership, tax or special assessment delinquency exceeding the fair value of the land, defective or unusual conditions of title; any one or combination of such conditions which substantially impair or arrest the sound growth of municipalities, or constitutes an economic or social liability, or which endangers life or property by fire or other causes, or is conducive to ill health, transmission of disease, mortality, juvenile delinquency, or crime and by reason thereof, is detrimental to the public health, safety, morals or welfare . . ." The combination of this Court's holding in Isaacs and the Legislature's establishment of a standard for the blight determination pursuant to ¶15 2) There is no statutory requirement for individual notice before a municipality may make a blight determination. Absent such a statutorily imposed standard, due process is not violated by lack of personal notice concerning a municipality's legislative actions. ¶16 Neither the Local Development Act, ¶17 3) The landowner became entitled to and was afforded the full range of due process protections in the condemnation proceedings. ¶18 Although necessity is not to be equated with public use or public purpose, ¶19 Under the reasoning in Pippin, due process protections do not arise at the stage where an initial determination of blight is considered by a governmental authority. The rights of personal notice, the opportunity to be heard, and to cross- examine witnesses are appropriate and must be afforded when a landowner's property becomes subject to forfeiture. Here, the landowner does not argue that he was denied due process in the condemnation proceeding. Indeed, he has exercised those rights vigorously over the last eight years. ¶20 b. The City complied substantially with the statutory requirements of ¶21 At issue are the procedural requirements of 11 O.S. 2001 §38-106(B) providing in pertinent part that: "A municipal governing body shall not approve an urban renewal plan for an urban renewal area unless such governing body, by resolution, has determined such area to be a blighted area and designated such area or portion thereof, as appropriate for an urban renewal project. . . . The Urban Renewal Authority or a municipality shall not acquire real property for an urban renewal project unless the municipal governing body has approved the urban renewal plan . . ." [Emphasis provided.] ¶22 The landowner's arguments regarding the City's failure to follow the urban renewal laws largely regard timing issues under 11 O.S. 2001 §38-106(B).30 The landowner asserts that, pursuant to the statute, blight determinations must precede the adoption of an urban renewal plan and that properties in the development area may not be acquired until after an urban renewal plan is adopted. The City does not dispute the landowner's contentions. Rather, it insists that it complied with the procedural requirements of the urban renewal laws by making valid blight determinations before the urban renewal plan was adopted in October of 2004. Furthermore, the City insists that any properties acquired before the adoption of the urban renewal plan were purchased, not in contemplation of urban renewal, but rather by the Hospital Authority pursuant to the Local Development Act. Finally, it contends that the property it is attempting to acquire pursuant to the urban renewal plan extends only to the landowner's real estate. We agree that the City complied substantially with the statutory requirements of 11 O.S. 2001 §38-106(B).31 ¶23 1) The City's blight determination, originally made on May 28, 2002, and subsequently reconfirmed on September 14, 2004, preceded the City's adoption of an urban renewal plan on October 12, 2004. ¶24 This Court recognized in Realty I that the City originally adopted a finding of blight in Resolution No. 2002-11 on May 28, 2002, for purposes of the Local Development Act.32 We also acknowledged that the presence of blight could be based upon a single factor when applying the urban renewal statutes and that the definition of blight included within the Local Development Act encompassed blighted areas as defined by the urban renewal laws.33 ¶25 On September 14, 2004, the City confirmed that the project area contained blighted areas as defined under the Urban Redevelopment Law in Resolution No. 2004-19 and readopted its earlier finding of blight of May 28th, 2002.34 Resolution 2004-25, adopted on October 12, 2004, also contained blight findings and referred to the original determination of blight made on May 28, 2002. This resolution also accepted the plan for urban renewal.35 Under these facts, the landowner's argument that there was no blight determination before the plan for urban renewal was adopted is unconvincing. ¶26 2) The City did not renew its attempt to acquire the landowner's property for urban renewal purposes until after the Urban Renewal Plan was adopted on October 12, 2004. ¶27 The Urban Renewal Plan was adopted on October 12, 2004, pursuant to Resolution No. 2004-25.36 Any properties acquired before that date were either purchased or condemned under the Local Development Act. They were not acquired for purposes of urban renewal. ¶28 Nothing in 11 O.S. 2001 §38-106(B)37 commands that all properties within an entire project area be acquired pursuant to the urban renewal plan. Rather, the statute merely provides that the project area have a blight determination before the adoption of an urban renewal plan and that "a portion thereof" be appropriate for urban renewal.38 The urban renewal plan acknowledged not only that some properties within the project had been acquired previously, but that only real property not previously obtained would be subject to acquisition pursuant to the urban renewal plan.39 ¶29 The landowner's real estate is the only property subject to acquisition under the urban renewal plan. It is the property identified in the urban renewal plans as the "real property not previously obtained." Only after adoption of the urban renewal plan did the City renew attempts to obtain the landowner's property through condemnation proceedings. ¶30 The facts demonstrate that there were blight determinations which preceded the City's adoption of an urban renewal plan and that the only property subject to condemnation under the plan was the landowner's real estate. Under these facts, the City complied substantially with the requirements of 11 O.S. 2001 §38-106(B).40 ¶31 c) The City did not act arbitrarily, capriciously or in bad faith in making its determinations of blight. ¶32 The landowner makes a final, catch all argument41 that the trial court erred in overruling its exceptions to the commissioners' report because the City acted arbitrarily, capriciously and in bad faith in making the blight determinations. The City asserts that the argument lacks all evidentiary support. The City's actions do not rise to a level warranting our intervention.42 ¶33 Because statements by City officials initially indicated that the revamping of downtown Midwest City was needed to improve the public image, the landowner is convinced that the City's utilization of blight to justify condemnation proceedings was in bad faith. The assertion in unconvincing. There is no question that one of the main goals when the project plan was initially considered was economic development. Nevertheless, the question presented in Realty I was: "[W]hether a municipality's authority to condemn property for economic redevelopment and blight removal is limited to special statutes expressly giving such authority, or in the alternative whether a municipality may condemn property for blight removal and economic development pursuant to a general power of eminent domain." [Emphasis added.] The language in Realty I makes it clear that, from the instigation of the City's first attempts to obtain properties in the project area, blight served as at least one basis for the City's actions. ¶34 The landowner relies upon statements by a City official and a council member as presenting evidence of the City's bad faith. The first was noted in Realty I and involved a statement by the City's Development Services Director that the City proceeded, initially, under the Local Development Act because it believed that the property didn't meet all the definitions of blighted conditions. The second concerned a statement by a council member regarding the September 14, 2004, council meeting. Evidently, the council member was asked whether the meeting would affect the landowner's property. The council member indicated the meeting would involve urban renewal but that it would not involve the landowner's property. Finally, the landowner takes exception to a statement made by the redeveloper indicating that the landowner's property was needed in 2004 to satisfy an anchor tenant rather than for the elimination of blight. ¶35 The governing body of a municipality is its city council. ¶36 Finally, the landowner points to evidence of bad faith in the 2004 blight determinations based on the fact that, by that point in time, the land had been cleared and some improvements were underway. The argument ignores the fact that the first blight determination was made in 2002, and that each of the subsequent determinations related back to the 2002 determination and to the factors which existed in 1999 when the original attempt to acquire the properties was initiated. ¶37 The record is replete with evidence to support the existence of blight in the project area. Along with structures which continued to deteriorate, ¶38 Courts may legitimately interfere in legislative functions of municipalities when the governmental authority has acted unreasonably, arbitrarily or in such a way as to constitute a violation of constitutional guarantees of equal protection or due process. ¶39 Once only his property rights were at issue, we agree with the landowner that the better practice would have been to give him individual notice of all proceedings which might have impacted his property or the ownership thereof. The cases here being the third and forth time that the matter appears before this tribunal is demonstration in and of itself that it would have been a saving to the litigants and to the judicial system if the City had proceeded originally under the laws governing urban renewal projects. We can understand the landowner's frustration with having received information from City employees and council members he believes to have been misleading. Nevertheless, under the facts presented, we hold that the City's actions were not so outrageous as to support our intervention for a third time in its attempts to revitalize the Midwest City downtown area. CONCLUSION ¶40 The legislative nature of the blight determination ends any argument that the landowner's due process rights were infringed. REQUEST FOR ORAL ARGUMENT DENIED; AFFIRMED. WINCHESTER, C.J., EDMONDSON, V.C.J., HARGRAVE, WATT, TAYLOR, COLBERT, REIF, JJ. concur. KAUGER, J. concurs in part and dissents in part. OPALA, J., with whom KAUGER, J., joins, dissenting ¶1 I am no longer able to accede to the view a municipality's declaration that an area of the city is affected by blight is a legislative act which need not be preceded by personal notice to land owners within the territory included in the area and by an opportunity to contest the new status sought to be imposed upon the property. Because the described municipal declaration immediately and directly subjects the property located within the declared blight-affected territory to a forced sale, it must be preceded by a meaningful opportunity to the owners to defend against and contest the action that will expose their land to immediate law-compelled alienation. ¶2 One's claim to the protection of due process will not be defeated by a clever use of word games. FOOT