CITY OF ALBUQUERQUE A municipal corporation, Petitioner-Appellee,
SMP PROPERTIES, LLC. and R. MICHAEL PACK, Respondents-Appellants, and MODERN WOODMEN OF AMERICA; SAIA MOTOR FREIGHT LINE, LLC; UNITED PARCEL SERVICE, INC.; COUNTY OF BERNALILLO; TAXATION AND REVENUE DEPARTMENT FOR THE STATE OF NEW MEXICO AND ANY AND ALL UNKNOWN CLAIMANTS FOR THE PROPERTY INVOLVED, Respondents.
FROM THE DISTRICT COURT OF BERNALILLO COUNTY Nancy J.
Franchini, District Judge
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
MICHAEL E. VIGIL, JUDGE
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.
The Hawkins Property and The City's Precondemnation
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.
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.
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
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.
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
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.
The Hawkins Property Condemnation Litigation
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.
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.
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."
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."
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 ...