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Gity of Albuquerque A Municipal Corp. v. SMP Properties, LLC

Court of Appeals of New Mexico

September 26, 2018

CITY OF ALBUQUERQUE A municipal corporation, Petitioner-Appellee,


          Esteban A. Aguilar, City Attorney Kevin A. Morrow, Assistant City Attorney William W. Zarr, Assistant City Attorney Albuquerque, NM for Appellee

          Dubois, Cooksey & Bischoff, P.A. William J. Cooksey George A. Dubois Albuquerque, NM for Appellants



         {¶1}This is a condemnation case brought by the City of Albuquerque (City) to acquire a thirty-foot wide strip of land to build a road on property operated as a freight truck terminal by tenants. The issues are (1) whether lease payments from a tenant may be considered in computing just compensation when the City's precondemnation actions caused the tenant not to renew its lease with the property owner and the lease term had ended when the condemnation action was filed; and (2) whether those same actions by the City may give rise to a claim for inverse condemnation and damages. The district court granted the City summary judgment on both questions, and the property owner appeals. After first determining that the property owner has a right to appeal, we conclude that the rulings of the district court were in error and reverse.


         I. The Hawkins Property and The City's Precondemnation Actions

         {¶2} We refer to the property in question as the Hawkins Property, which is owned by SMP Properties, LLC (SMP) and Michael Pack, the owner and manager of SMP (collectively, Defendants). The undisputed facts are as follows. The Hawkins Property houses a sixty-five-door freight truck terminal on approximately 9.859 acres of land at 3700 Hawkins Street, in Albuquerque, New Mexico. At the pertinent time, SMP leased twenty-nine doors to SAIA Motor Freight Line, LLC (SAIA), a motor trucking company, and thirty-six doors to UPS. SAIA's lease was for a three-year term beginning on March 1, 2003. The lease contained two three-year options to renew, and SAIA exercised both options. Each time the lease was renewed, Thomas Davis, the property manager for SAIA, and Pack first discussed and agreed on any changes they wanted, such as the lease amount. Davis would then draft a letter incorporating the agreed upon changes, and after the letter was reviewed by SAIA's attorneys, it was sent to Pack, who signed the letter on behalf of SMP and faxed it back to Davis. Each letter was considered an addendum to the original lease. The lease with the options ended on February 28, 2012.

         {¶3} Davis testified that because bulk fuel is cheaper than purchased fuel, SAIA embarked on a project to install fuel tanks in a number of its terminals, including its terminal on Hawkins Property. Sometime in mid-2009, he asked Pack if SAIA could install a fuel tank on the facility, and Pack agreed. After securing Pack's permission, Davis started the installation, which was completed in August 2010-during the last lease renewal period and at a cost of $180, 000. SAIA installed two above-ground, 6, 000-gallon tanks connected by a transfer pump.

         {¶4} SAIA was willing to spend the $180, 000 in the last lease term because SAIA had every intention of staying on the property. At the time SAIA sought permission from Pack to install the tanks, Pack was aware that SAIA was going to stay for another three years with two additional three-year options. Further, SAIA's policy was not to install a tank at a location where it did not have the ability or intention of staying less than eight years, and SAIA never violated that policy.

         {¶5} In early December 2011, Davis and Pack agreed to renew the lease for another three-year term. Mr. Pack asked Mr. Davis about sending him a letter as he had in the past to memorialize the new lease, and Mr. Davis replied that there was no problem and that he was having SAIA's attorney review the letter before signing it and sending it as he had in the past. However, the lease extension was never sent. Instead, SAIA, suddenly and without notice, sent SMP a letter on March 30, 2012, terminating its lease and immediately started looking for a new location to operate.

         {¶6} The reason for SAIA's sudden departure was that one day a man from City planning or zoning showed up at the office of SAIA's terminal manager, Kevin Russell, and said the City was going to cut a road through part of the Hawkins Property. Jeffrey Willis, the City's right of way coordinator, said that although he knew who the owner of the property was, he decided not to contact the owner. Instead, he went to the Hawkins Property and informed the tenant about the City's condemnation plan. Russell said the man from the City showed him where the road was going to be cut, and the road was going to go through the property right where SAIA's fuel tanks were located. Moreover, according to Russell, the location of the road prohibited SAIA from operating out of four doors that it needed at the north end of the terminal because the trucks would not have enough room to turn into the doors. Russell called Davis, and told him what the City was doing.

         {¶7} Davis said that Russell was very agitated when he learned of the City's planned condemnation. Davis immediately called Pack who said he was not aware of any condemnation by the City, and this was the first he had heard anything of the sort. The thirty-foot strip to be condemned went right through the middle of the fuel tanks, which required their removal at a cost of $50, 000 to $60, 000. This made SAIA's operation on the Hawkins Property untenable, solidifying SAIA's decision to leave. SAIA remained at the Hawkins Property on a month-to-month basis until it found a new site and vacated the premises on April 30, 2012-two months after the lease expired.

         II. The Hawkins Property Condemnation Litigation

         {¶8}The City filed its complaint for condemnation on July 10, 2013, to acquire the thirty-foot strip of land and a construction easement along the northern boundary line of the Hawkins Property to construct a road, together with a jury demand. After the City deposited $143, 850 with the clerk of the district court, which it asserted was just compensation for the taking, the City was granted "full possession and occupancy and the right to ... work on the property[, ]" with the district court further ruling that "the only remaining issue is the just compensation due to Defendants." Defendants' answer denied that $143, 850 was just compensation, and affirmatively asserted, in part, that the City's condemnation actions proximately caused SAIA not to renew its lease with SMP, resulting in an inverse condemnation and consequential damages in a sum to be proven at trial.

         {¶9} The City filed a motion for summary judgment on two grounds. First, that Defendants' expectation that the SAIA lease would be renewed did not constitute a compensable property right. Associated with this motion, the City also filed two motions in limine: (1) to prohibit Defendants' expert, Brian Godfrey, from including the value of the SAIA lease in his calculation of Defendants' damage claim; and (2) to prohibit Pack as the principal of SMP from testifying on the value of the SAIA lease as an element of damages or the economic loss to the freight truck terminal building, which resulted from losing the SAIA lease. Second, the City contended that its precondemnation actions did not substantially interfere with SMP's use of the Hawkins Property and, therefore, there was no inverse condemnation. The district court granted the City's motions.

         {¶10} The order granting the City's motion for summary judgment was subsequently amended to add that SMP conceded "for purposes of summary judgment only," pursuant to a concurrently filed judgment, that $149, 850 was "just compensation" for the City's taking. The order provided further that SMP made the concession "only for the purpose of obtaining a final judgment, under a full reservation of rights to contest and appeal the [district c]ourt's grant of summary judgment."

         {¶11} A stipulated final judgment for condemnation was filed concurrently with the amended order on the City's motion for partial summary judgment. In the stipulated final judgment for condemnation, the district court made a finding that SMP had fully reserved its rights to appeal from the amended order on the City's motion for partial summary judgment, that the parties had "reached a settlement of the remaining disputes in [the] case[, ]" and that judgment should be entered on the stipulation of the parties in favor of SMP in the amount of $149, 850, and in favor of the City condemning and appropriating the thirty-foot wide strip of land from the northern edge of the Hawkins Property. Judgment was entered accordingly "subject to the reservation of rights to appeal set forth above." Defendants appeal.


         {¶12} This appeal raises the following issues: (1) whether an appeal lies from the stipulated final judgment; (2) whether the district court erred in granting the City summary judgment in ruling that the value of the SAIA lease is not an element of damages, and whether as a result, the district court erred in precluding the testimony of Godfrey and Pack; and (3) whether the district court erred in granting the City's motion for partial summary judgment on Defendants' claim for inverse condemnation.

          I. Appeal From the ...

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