Court Opinion

ID: 8245316
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:30:20.251027+00
Date Added: 2024-06-11T16:42:41.415513
License: Public Domain

DIETZEN, Justice
(concurring in part, dissenting in part).
In this consolidated proceeding, the Moorhead Economic Development Authority (MEDA) brought a contamination liability action involving two parcels of land adjacent to property owned by Roger Anda (Parcels I and II), and a condemnation action to acquire a parcel of land owned by Anda (Anda property). In the contamination, liability action, MEDA asserts that Anda is liable for the contamination of Parcels I and II. The majority concludes, and I agree, that the jury verdict finding Anda liable for the contamination of Parcels I and II should be affirmed, but that a new trial is required on the issue of damages.
The majority concludes that justice requires the case be remanded for a new trial to determine just compensation due Anda for the taking of Anda’s property. In so doing, the majority adopts a new rule that the costs of remediation of contaminated property generally are not admissible in a condemnation proceeding and that condemned property must be valued as remediated. Because I conclude that the new rule of exclusion adopted by the ma*895jority is contrary to existing law, I respectfully dissent.
Whether the costs of remediation of environmental contamination are admissible requires consideration of the measure of damages in a condemnation proceeding, and analysis of the type of evidence relevant to determine fair market value of the property. The Minnesota Constitution provides that “[pjrivate property shall not be taken, destroyed or damaged for public use without just compensation therefor, first paid or secured.” Minn. Const, art. I, § 13. The intent of Minnesota law is to provide property owners “just compensation” for property taken by the government through the power of eminent domain. Id. Just compensation includes all elements of value of the property, but “it does not exceed market value fairly determined.” Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 78 L.Ed. 1236 (1934); Minneapolis-St. Paul Sanitary Dist. v. Fitzpatrick, 201 Minn. 442, 449, 277 N.W. 394, 398-99 (1937). The “equivalent” of just compensation is the fair market value of the property at the time of the taking. See Hous. & Redevelopment Auth. of St. Paul v. Kieffer Bros. Inv. & Constr. Co., 284 Minn. 516, 520, 170 N.W.2d 862, 864 (1969); Fitzpatrick, 201 Minn. at 449, 277 N.W. at 398-99; see also 4 Minn. Dist. Judges Ass’n, Minnesota Practice—Jury Instruction Guides, Civil, CIVJIG 52.35 (5th ed.2006) (stating that “just compensation” is the fair market value of the property that was taken).
Thus, the measure of damages for the taking of the Anda property is the fair market value of the property as of the date of taking. Our case law is clear that fair market value is the equivalent of just compensation. See City of St. Paul v. Rein Recreation, Inc., 298 N.W.2d 46, 49 (Minn.1980). The majority erroneously concludes that “just compensation” is not the same as fair market value in this case. The majority has not articulated any basis for overruling our precedent or indicated why fair market value is not the proper measure in this case.
It is well established that in determining fair market value, “ ‘[a]ny competent evidence may be considered if it legitimately bears upon the market value’ ” of the property. State by Humphrey v. Strom, 493 N.W.2d 554, 558 (Minn.1992) (quoting Ramsey County v. Miller, 316 N.W.2d 917, 919 (Minn.1982)); accord Rein Recreation, 298 N.W.2d at 50. In Rein Recreation, we stated the general rule is that evidence of any matter that would influence a prospective purchaser and seller in fixing the price at which a sale of the property could be consummated may be considered. 298 N.W.2d at 50.
The majority of those jurisdictions that have considered the issue have concluded that the costs of remediation affect fair market value and therefore are admissible. See generally 4 Julius L. Sackman, Nichols on Eminent Domain § 13.10 (3d ed.2009). For example, the Connecticut Supreme Court has held that the costs of remediation of contaminated property are relevant to determine the value of property taken by eminent domain because such evidence would impact a market transaction between a willing buyer and seller. Ne. Conn. Econ. Alliance, Inc. v. ATC P’ship, 256 Conn. 813, 776 A.2d 1068, 1080 (2001). The court observed that “[i]t blinks at reality to say that a willing buyer would simply ignore the fact of contamination” and specifically the costs of remediation in determining the value of the property. Id.; see also Redevelopment Agency v. Thrifty Oil Co., 4 Cal.App.4th 469, 5 Cal.Rptr.2d 687 (1992); Nat’l Compressed Steel Corp. v. Unified Gov’t of Wyandotte Cnty./Kansas City, 272 Kan. 1239, 38 P.3d 723, 735 (2002); City of Olathe v. Stott, 253 Kan. 687, 861 P.2d 1287, 1290 (1993); Ten*896nessee v. Brandon, 898 S.W.2d 224 (Tenn.Ct.App.1995); cf. Finkelstein v. Dep’t of Transp., 656 So.2d 921, 922 (Fla.1995) (holding that admissibility of contamination evidence is limited to those cases where “there is a sufficient factual predicate upon which to conclude that the contamination does affect the market value of the property taken”).1
In my view, the costs of remediation of contaminated property are admissible in a condemnation proceeding provided that the costs directly impact the value of the property. Two reasons support my conclusion. First, Minnesota’s condemnation jurisprudence favors the admissibility of any competent evidence that legitimately bears upon the fair market value of the property. It is not disputed that the costs of remediation bear upon the fair market value of the property. Therefore, the costs of remediation are admissible, provided that the condemning authority establishes that the costs directly impact the value of the property.
Previously, we affirmed the decision of the Minnesota Tax Court that the subject property had zero market value due to environmental contamination. Westling v. County of Mille Lacs, 543 N.W.2d 91, 93 (Minn.1996). In Westling, the tax court accepted appraiser expert testimony that the costs of remediation and stigma of the contamination reduced the market value of the property. Id. at 93. In doing so, we accepted the conclusion that environmental contamination is relevant to determine market value.
If environmental contamination, including the cost of remediation, is admissible in a tax court proceeding, it ought to be admissible in a condemnation proceeding. The valuation question in a condemnation and tax court proceeding is identical— what is the market value of the property on the relevant valuation date. Compare Rein Recreation, 298 N.W.2d at 49 (just compensation is “measured by market value at the time of taking”), with Minn.Stat. § 278.01 (2008) (property owner may challenge property taxes on ground that assessed value is too high), and Minn.Stat. § 273.11 (2008) (subject to exceptions not applicable, all real property subject to taxation “shall be valued at its market value”). The result of the majority rule excluding the costs of remediation means that the market value of the same property would be significantly different in a condemnation proceeding under chapter 117 than in a tax court proceeding under chapter 278. Such a result is illogical and contradictory.2
Second, the Legislature has already determined that the costs of remediation are admissible in a condemnation proceeding. The last sentence of Minn.Stat. § 117.085 provides:
The commissioners shall, if requested by any party, make an express finding of the estimated cost of removal and remedial actions that will be necessary on the taken property because of existing environmental contamination.
*897This provision of the statute has been in effect since 1991. The premise of the statute is that the costs of remediation are admissible. Otherwise, the commissioners could not make the findings contemplated by the statute. Since the evidence is admissible in condemnation hearings, there is no basis to exclude it in the district court. Thus, the Legislature has already determined that the costs of remediation are admissible in a condemnation proceeding.
The majority raises general concerns over the “fairness” to a property owner of reducing a condemnation award for the costs of remediation, particularly when the property is not responsible for the contamination. But the majority’s “fairness” concerns conflate the issue of fair market value of the property in a condemnation proceeding with the issue of responsibility for the contamination in an environmental contamination action. The purpose of the condemnation proceeding, however, is to determine the fair market value of the subject property, not to determine which party is responsible for the contamination. Thus, the “fairness” issue is best resolved in an environmental contamination action.
Moreover, the majority’s new rule requires that the condemned property be valued as remediated, and not as it existed on the date of the taking. Of course, the difference between the value of the property as is, and as remediated, is the costs of remediation.3 Pursuant to the new rule, the condemning authority must pay a condemnation award that includes not only the market value of the property, but also the costs of remediation. Presumably, the condemning authority may bring a separate environmental contamination action (or pursue other remedies) to recover the costs of remediation. But just compensation does not require that the condemning authority pay more than the market value of the property. Requiring the condemning authority to pay the costs of remediation is outside the bounds of just compensation.
The majority contends that admitting the costs of remediation exposed the property owner to “double liability” — once in the condemnation proceeding by reducing the value of the property, and again as a responsible person under the Minnesota Environmental Response and Liability Act (MERLA), Minn.Stat. ch. 115B (2008), and the Petroleum Tank Release Cleanup Act (PTRCA), Minn.Stat. ch. 115C (2008). But the majority’s “double liability” theory did not occur in this case.4 Moreover, a double recovery is prohibited by statute. Minn.Stat. § 115B.13 (2008).5
*898Notably, the Legislature has provided protection to condemning authorities for contaminated property subject to MER-LA. See MinmStat. § 115B.03, subd. 1 (applies to the release or threatened release of a hazardous substance, or pollutant or contaminant as described in the statute). Specifically, a condemning authority is not “a responsible person” under MERLA for the contamination of property it seeks to condemn, and therefore is not liable for the costs of remediation of the condemned property. Id., subd. 5. By requiring the condemning authority to pay the value of the property as remediated, the majority imposes upon the condemning authority the initial obligation to pay the costs of remediation for the condemned property, and then seek to recover those costs through a contribution action. This result appears to contradict the protection given by the Legislature to condemning authorities.6
The majority suggests that the fair market value of contaminated property “is often very difficult to find.” This conclusion, however, is not based upon any evidence in the record. Moreover, the Appraisal Institute reaches the opposite conclusion. It concludes:
In recent years, contaminated properties have become more marketable and have begun to change hands with increasing frequency. Such transactions will usually provide sufficient basis for valuing or analyzing a site that may be impacted by environmental contamination.
Appraisal Institute, The Appraisal of Real Estate 226 (13th ed.2008).
The majority also argues that “due process concerns” require that costs of remediation not be admissible. But the majority’s argument misses the mark. The purpose of a condemnation proceeding is to determine the fair market value of the property condemned and not to determine liability for the contamination of the property.
Accordingly, Anda is not entitled to a new trial in the condemnation proceeding. Existing case law supports my conclusion. Moreover, the Legislature has already determined that such costs are admissible. It is not the province of this court to second-guess the policy judgments of the Legislature that condemning authorities should not be required to pay the costs of remediation, and that the costs of remediation are admissible in a condemnation proceeding.

. Moreover, the Appraisal Institute has concluded that "the existence of one or more adverse environmental conditions can reduce the market value of real property interests in a site,” and therefore should be considered. Appraisal Institute, The Appraisal of Real Estate 224-25 (13th ed.2008); see also Appraisal Institute advisory opinion 9.

. The majority argues that different value determinations obtained in different forms are not "problematic." I disagree. Here, the jury found that the Anda property had a value as contaminated of zero and without contamination of $455,000. It is illogical and contradictory to have different market value determinations for the same property that depend solely on whether it was considered in a condemnation or tax court proceeding.

. For example, when the value of contaminated property as remediated is $1,000,000 and the costs of remediation are $500,000 the majority would require the condemning authority to pay $1,000,000 even though its fair market value is considerably less.

. MEDA asserted that the costs of remediation had a negative impact on the value of Anda's property in the condemnation proceeding; and MEDA sued Anda for negligence, nuisance, and strict liability to recover its costs of remediation only for the other parcels. Thus, MEDA did not seek to recover the same costs of cleanup twice.

. The majority suggests that Minn.Stat. § 115B.13 only prohibits a "double recovery” by a person who recovers response costs or damages pursuant to chapter 115B. I disagree. The second sentence of section 115B.13 broadly applies to the converse situation. Specifically, any person who recovers response costs pursuant to “any other state or federal law” may not recover for the same costs or damages under chapter 115B. Id. Thus, when a condemning authority recovers response costs or damages in the form of a reduced condemnation award under chapter 117, it may not seek a double recovery under chapter 115B. Additionally, the right of a property owner to recover the costs of remediation against other responsible parties is explicitly preserved. Minn.Stat. § 115B.12.

. It is not clear whether MERLA would apply to Anda’s property. But the majority's exclusionary rule does apply to the condemnation of all contaminated property.