Court Opinion

ID: 9459819
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:32:41.185731+00
Date Added: 2024-06-11T17:36:21.057980
License: Public Domain

JOHN W. PECK, Circuit Judge.
The history of this case stems back to a condemnation action begun by the City of Detroit in 1950. In that year, the City, preparatory to establishing a public housing project, filed a condemnation action in an area of the city designated “Mich. 1-11”; the appellant asked to be exempted from the condemnation pro*187ceedings. The city agreed upon the condition that the appellant purchase the remainder of the block upon which its church was situated, and the City agreed to give permission for the building of a new church building. Because of the exemption of this appellant from the condemnation proceedings, no notice of lis pendens was filed against the property, and the appellant was not required to and did not file a waiver of any requests for building permits. The appellant acquired the property, with the exception of two lots, and entered into a construction contract for a new church; construction on the new building began in 1958.
In 1960, the City discontinued the condemnation proceedings and in April of 1962 instituted a new condemnation suit for a federal urban renewal project. On November 22, 1961, a class action suit was brought by the affected residents against the City for losses sustained due to the way in which the area had been affected by the City’s action. The District Court dismissed the action, Foster v. Herley, 207 F.Supp. 71 (E.D. Mich.1962), and this Court reversed, holding that the plaintiff had stated a cause of action, Foster v. Herley, 330 F. 2d 87 (6th Cir. 1964). Subsequently, upon trial, the District Court found that damages had been sustained by the plaintiffs, and a Special Master was appointed to determine membership in the class and to determine the extent of damages, 254 F.Supp. 655 (E.D.Mich. 1967). This Court affirmed that decision, 405 F.2d 138 (6th Cir. 1968).
Pursuant to the decision of the District Court, this appellant filed a claim with the Master. The District Court affirmed the Master’s findings that the appellant was not a member of the class and that the claim for damages should be denied because a settlement had been reached between the appellant and the City in February, 1962, in the amount of $763,235.00. The appellant has perfected this appeal from that judgment.
As a preliminary matter, it must be determined whether this appellant is a member of the class as alleged in the original complaint. The class has been identified as “those property owners within the ‘Mich. 1-11’ area who have been subject to the dual condemnation actions here involved.” 405 F.2d at 146.
The reference to dual condemnation actions is to the 1950 public housing project and the 1961 federal urban renewal project. Foster, the nominal plaintiff in the class action, was included in the 1950 condemnation case and a notice of lis pendens was filed against his properties. In the beginning, he could not obtain a permit to make repairs. His tenants were advised to leave and his unprotected property was vandalized. He had to bear the cost of demolition when the City declared his structures dangerous. In order to get a building permit, he had to sign a “waiver of claim.” 254 F.Supp. at 662. In these respects, Foster is similar to Detroit v. Cassese, 376 Mich. 311, 136 N. W.2d 896 (1965), in which the Michigan Supreme Court relied upon similar affirmative acts by the City, including the filing of a notification of lis pendens, the sending of letters to tenants causing them to move, the making of intense building department inspections and citations against owners for any violations of the building code, the reduction of city services to the area, the razing of vacant and vandalized buildings, and the refusal to issue permits for substantial improvements, which were found to have constituted a “taking” of the property.
In this case, however, the appellant was exempted, at its own request, from the original 1950 condemnation action. There was no notice of lis pendens filed against its property, and the appellant had no trouble in obtaining building permits for the new church structure. And in spite of the fact that the area around was in a state of deterioration, the evidence indicated that the appellant’s income rose steadily during the same period when Foster’s property was being harmed (1958-60).
*188We are aware that an eminent domain taking can occur in the absence of formal procedures, such as the filing of a lis pendens and the formal notification of proposed condemnation actions, or without physical entry onto the land, Griggs v. Allegheny County, 369 U.S. 84, 90, 82 S.Ct. 531, 7 L.Ed.2d 585 (1962); United States v. Causby, 328 U.S. 256, 261, 106 Ct.Cl. 854, 66 S.Ct. 1062, 90 L.Ed. 1206 (1946); City of Cleveland v. Carcione, 118 Ohio App. 525, 190 N.E.2d 52, 57 (1963). In fact, it was the affirmative actions of the City in this regard which led this Court in the Foster decision to conclude that the point of the taking had occurred prior to the formal proceedings against Foster’s property had begun, a conclusion which has been characterized by some commentators as defining a “de facto” taking. E. g.: B. Adams, Eminent Domain, Police Power and Urban Renewal: Compensation for Interim Depreciation in Land Values, 7 Ga.L.Rev. 226, 234-36 (1973). And although it may be true that the actions taken by the City in regard to this appellant may have constituted a de facto taking, that is not the issue for our determination. In order to come within the ambit of this Court’s decision in Foster, the appellant must first establish his membership in the class represented by Mr. Foster. 405 F.2d at 142. The important distinction between the appellant’s alleged harm and the problems encountered by Mr. Foster is that all of Mr. Foster’s problems stemmed from his being subject to the 1950 condemnation action. See 330 F.2d at 88. The affirmative acts of the City which led the District Court to conclude that a taking had occurred prior to 1962 were all actions taken by the City in accordance with a condemnation action which it later abandoned, and including informing Mr. Foster that he would receive no compensation for improvements, advising him only to “keep the roof on and the water running”; requiring him to sign a waiver of claim for damages as a condition precedent to the issuance of a building permit (but waiving any claim to the increased value of the property as a result of the proposed improvements), completing the condemnation' and clearance of several blocks in the area, and keeping the notice of lis pendens in effect for five years after the issuance of the stop order on the project, while at the same time, telling those who inquired that the property would be condemned soon. 254 F.Supp. at 662.
None of these factors pertain to this appellant, since this appellant was not subject to the 1950 condemnation action. Accordingly, the District Court correctly concluded that, other alleged damage notwithstanding, the appellant was not a proper member of the class and was not entitled to have his claim considered by the Master under the 1969 order of this Court.
In the alternative, the District Court adopted the finding of the Master that the two parties, the appellant and the City, entered into a mutually binding settlement of their dispute with full and complete knowledge of all the facts and circumstances while each was represented by competent counsel. When the City instituted the urban renewal condemnation action in 1961, the appellant had no objection to being included in the project, and the contractors were directed to stop construction on the new building. The City appraised the property (twice) and offered the appellant $463,238, which the appellant turned down. The City informed the appellant that it could not go beyond its two appraisals, and suggested that the appellant engage an engineer to appraise all the costs which the appellant had incurred, and that the appellant could present this appraisal to a jury for a final determination.
Accordingly, the appellant hired an appraiser who placed a value of $1,-219,000 upon the appellant’s property. When this appraisal was submitted to the City for consideration, the appellant was told that if the land had been worth that much, the City would have deleted them from the program and would have *189left them there. The appellant has characterized this response as a threat by the City to either accept the City’s offer or face the threat of being dropped out of the condemnation action. The Master and the District Court found that there was no evidence to support this interpretation, and that finding is not clearly erroneous. Negotiations were entered into, and eventually the parties settled the dispute for the amount of $763,238, or about $300,000 more than the City’s original offer and about $400,000 less than the appellant’s demand.
The appellant’s contentions are that the City forced them into accepting this offer by threatening to delete them from the condemnation action, that the award is insufficient because it does not take into consideration certain expenditures made by the appellant and because the law of Michigan was subsequently changed concerning the time of valuation. We have already noted that the appellant’s charge of a threat by the City was not substantiated. Similarly, the appellant’s contention concerning the amount of the settlement is not well taken.
Although the District Court and the Master referred to this agreement as an “accord and satisfaction,” it is more precisely a compromise and settlement, Bizzell v. Bizzell, 247 N.C. 590, 101 S.E.2d 668, 676, cert, denied, 358 U. S. 888, 79 S.Ct. 129, 3 L.Ed. 115 (1958), a method of resolving disputes which the law favors over litigation. Williams v. First National Bank, 216 U. S. 582, 595, 30 S.Ct. 441, 54 L.Ed. 625 (1910); Miller v. McGinnis. 285 Mich. 28, 280 N.W. 96, 100 (1938). Such a settlement is as binding, conclusive and final as if it had been entered in a judgment, Beauchamp v. Clark, 250 N.C. 132, 108 S.E.2d 535, 539 (1959); Galusha v. Sherman, 105 Wis. 263, 81 N.W. 495, 497 (1900); Theis v. Theis, 271 Minn. 199, 135 N.W.2d 740, 744 (1965), and the actual merits of the antecedent claims will not afterward be inquired into and examined. United States v. Child, 79 U.S. (12 Wall) 232, 244, 20 L. Ed. 360 (1870); Aviation Corp. v. United States, 97 Ct.Cl. 550, 46 F.Supp. 491, 496 (1942), cert, denied, 318 U.S. 771, 63 S.Ct. 759, 87 L.Ed. 1141 (1943), Bohlman v. Big River Oil Co., 124 N.W.2d 835, 837 (N.D. 1963). The appellant has failed to establish the existence of any of the traditional grounds in Michigan for setting aside such a valid contractual arrangement: mistake, fraud or unconscionable advantage, Miller, swpra, 280 N.W. at 100.
The evidence showed that the appellant’s appraiser took into account most if not all of the damages resulting from the City’s improper use of eminent domain, including all construction costs for the new church, the judgment against the appellant by the contractor for breach of contract, the.acquisition of the 26 parcels of land and the demolition of the houses thereon, and the higher mortgage rates which the appellant incurred because its credit standing had been harmed by the threat of urban renewal. Although the appraiser arrived at the sum of $1,219,000, he has since admitted to several mistakes, one of which was the including of an amount of $400,000 for work that was not done. When the original estimate is decreased by these amounts, the result is very close to the amount of the settlement, supporting ap-pellee’s argument that all of the factors which the appellant contends should have been considered by the Master were in fact included in the settlement figure.
The judgment of the District Court is affirmed.