State v. Miller

2016 S.D. 88

STATE OF SOUTH DAKOTA, by and through the Department of Transportationand the South Dakota Transportation Commission, Plaintiffs and Appellants, v. ROBERT L. MILLER and THOMAS P. WALSH, Defendants and Appellees.

#27198

SUPREME COURT OF THE STATE OF SOUTH DAKOTA

ARGUED ON SEPTEMBER 2, 2015

December 7, 2016

#27198-rev & rem-JMK & GAS

APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA

THE HONORABLE SUSAN M. SABERS Judge

KARLA L. ENGLE

Special Assistant Attorney General

Department of Transportation

Office of Legal Counsel

Pierre, South Dakota

and

ANTHONY M. HOHN

Special Assistant Attorney General

Davenport, Evans, Hurwitz

& Smith, LLP

Sioux Falls, South Dakota

Attorneys for plaintiffs

and appellants.

MARK V. MEIERHENRY

CLINT SARGENT

CHRISTOPHER HEALY of

Meierhenry Sargent, LLP

Sioux Falls, South Dakota

Attorneys for defendants

and appellees.

KERN and SEVERSON, Justices

[¶1.] Justice Kern delivers the opinion of the Court on Issue One, Issue Two, and Issue Three. Justice Severson delivers the opinion of the Court on Issue Four.

[¶2.] KERN, Justice, writing for the Court on Issue One, Issue Two, and Issue Three.

[¶3.] The State reconstructed the interchange at Interstate 90 and Cliff Avenue in Sioux Falls, South Dakota. Prior to the project, the State instituted a quick-take condemnation action against landowners Robert Miller and Thomas Walsh and effected a partial taking of their real property south of the interchange on-ramp. Miller and Walsh and the State disputed the amount of compensation due. After a four-day trial, the jury awarded Miller and Walsh $551,125. The State appeals.

BACKGROUND

[¶4.] In 2012, the State planned to reconstruct part of the South Dakota state trunk highway system pursuant to a federal aid project. Particular to this appeal is the State's reconstruction of the interchange at Interstate 90 and Cliff Avenue. Miller and Walsh owned real property 100 feet from the east-bound on-ramp to Interstate 90, namely Lots 5, 6, 7, 8, and 15 of North Side Gardens (the Property). Lots 5, 6, 7, and 8 are vacant and contiguous. Lot 15 sits directly across from Lot 6, abutting 63rd Street. Lot 15 is vacant except for a storage shed in the southwest corner of the lot. The Property is zoned for commercial use. None ofthese lots abut Cliff Avenue or have direct access to Interstate 90. Direct access to the Property exists via 63rd Street.

[¶5.] Before the public improvement, Miller and Walsh accessed the Property by traveling on Cliff Avenue, turning east onto 63rd Street, and proceeding a short distance to the Property. Prior to the public improvement, 63rd Street was a narrow gravel road that ended approximately 280 feet east of the Property. During the public improvement, the State built a 300-foot asphalt extension connecting 63rd Street with another segment of 63rd Street farther to the east. This extension also connected 63rd Street to National Avenue. National Avenue runs north and south through an industrial park and connects with East 60th Street. Gulby Avenue also runs north and south and intersects with 63rd Street. After the State constructed the extension on 63rd street, it closed the intersection at Cliff Avenue and 63rd Street (the Intersection), cutting off Miller and Walsh's access to the Property from Cliff Avenue. To access the Property, Miller and Walsh now have to come from 60th Street and travel north on National Avenue or north on Gulby Avenue and then turn west on 63rd Street.

[¶6.] To complete the public improvement, the State required a temporary easement and permanent easement over Lots 6, 7, and 8. It also condemned a triangular-shaped piece of land from the northern portion of these lots. The State adopted a resolution declaring the necessity of the taking and instituted a quick-take condemnation action against Miller and Walsh. See SDCL ch. 31-19. The State did not dispute the compensability of the taking and deposited $20,100 cash with the Minnehaha County Clerk of Courts. On May 21, 2012, the State filed asummons, petition, and declaration of taking pursuant to SDCL 31-19-3 and SDCL 31-19-23. Miller and Walsh did not contest the taking under SDCL 21-35-10.1 and requested that a jury determine damages.

[¶7.] Prior to the trial to determine damages, the State moved for partial summary judgment. It asserted that Miller and Walsh did not suffer a compensable taking or damaging to their property due to the closure of the Intersection. The State acknowledged that Miller and Walsh have a right to reasonable access to the streets abutting the Property but claimed that Miller and Walsh's remaining access was reasonable because their access to 63rd Street remained unchanged. Miller and Walsh responded that the closure of the Intersection destroyed the highest and best use of their property and, therefore, significantly reduced its value. They did not assert a special property right in the Intersection. Rather, Miller and Walsh claimed that the State impaired their right of reasonable access to the transportation "grid" when it closed the Intersection.

[¶8.] After a hearing, the circuit court issued an incorporated memorandum decision. It found no issue of material fact in dispute and held that the closure of the Intersection did not effect a compensable taking. The court wrote, "Although [Miller and Walsh] are entitled to severance and consequential damages for the taking of their properties, damages relating to the intersection closure may not be considered by the jury in awarding consequential damages." The court entered an order granting the State partial summary judgment, ruling that "[t]he parties are prohibited from presenting evidence and making arguments to the jury aboutdamages to Defendants' property as a result of the closure of 63rd Street and Cliff Avenue intersection."

[¶9.] The parties filed additional pretrial motions. Miller and Walsh filed a motion to allow evidence of damage to Lot 15 as part of the property damaged by the taking even though the State did not physically take any portion of Lot 15 and Lot 15 is not connected to Lots 6, 7, or 8. The State filed a motion in limine to prevent Miller and Walsh from presenting evidence "of any kind" relating to "an alleged loss of access to Cliff Avenue" or evidence relating to a "hotel project that Kelly Inns LTD proposed and then abandoned before the date of taking in either of these cases." Prior to the public improvement, Kelly Inns owned Lots 16 and 17. According to Miller and Walsh, Kelly Inns intended to construct a Kelly Inn hotel in conjunction with Miller and Walsh's plan to commercially develop the area. Miller and Walsh argued that the hotel project was relevant to establish the commercial viability of the Property. The State filed a second motion for partial summary judgment to prevent the admission of evidence relating to any loss allegedly suffered by Miller and Walsh because of the impact of the public improvement on property not owned by Miller or Walsh.

[¶10.] The court held a consolidated motions hearing. It granted Miller and Walsh's motion to present evidence of damage to Lot 15 as part of the "larger parcel." It also granted in part the State's second motion for partial summary judgment and ruled that Miller and Walsh "will not be permitted to make a separate and stand-alone claim for the closure of the intersection at 63rd Street North and Cliff Avenue and the [c]ourt will not instruct the jury on such a claim."

It also denied in part the State's second motion for partial summary judgment and ruled that Miller and Walsh "will be permitted to present evidence regarding the depreciation in value of their remaining property by reason of the diversion of travel caused by the taking that occurred, which is a proper factor that may be considered by the jury in determining the highest and best use of the property and its fair market value before and after the taking." The court denied the State's motion in limine to exclude evidence relating to the proposed and then abandoned construction of a Kelly Inn hotel.

[¶11.] A jury trial was held on June 24-27, 2014. Miller and Walsh presented evidence that, in 1990, Miller purchased Lots 18 and 19 with plans to purchase more land and develop the area commercially. In 1999, Miller purchased Lot 17 and in 2000, Lots 2, 3, and 4. In 2004, Miller and others acquired Lot 16, and Miller purchased Lots 5 and 6. Later Miller asked Walsh to join in ownership of Lots 5 and 6. Walsh shared Miller's vision to develop the area commercially. Walsh owned Lot 20, which a Burger King occupied. Miller, via JB Enterprises, Inc., owned a Perkins Restaurant on Lot 19, which lot abutted the Intersection.

[¶12.] Miller and Walsh presented evidence specifically related to the intended construction of a Kelly Inn hotel in North Side Gardens. Over the State's objection, Miller, Walsh, and several other witnesses testified that Kelly Inns did not build the hotel because of the State's public improvement. Miller and Walsh also presented evidence that had the hotel been built the Property would have enjoyed an alternative access over Lot 15 by an easement agreement that Miller and Walsh and Kelly Inns intended to execute. In response, the State emphasizedthat no easement in fact existed. The State presented evidence that Miller and Walsh's commercial development plans were in their infancy. Lots 5, 6, 7, and 8 did not have water or sewer service and the Property abutted a narrow dirt road, 63rd Street. The State further asserted that Kelly Inns abandoned its plan to build a hotel in 2010, which, in the State's view, makes the hotel project irrelevant in this case because the date of the "taking" was June 12, 2012.

[¶13.] Over the State's objection, Miller and Walsh presented evidence that the Property diminished in value because the State took a portion of their property to reconstruct the interchange, which public improvement as a whole eliminated the highest and best...