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The Minnesota Court of Appeals has affirmed a landowner’s constitutional right to judicial review of the public purpose and necessity of a taking prior to the actual condemnation and taking. The litigation was the result of the City of St. Paul’s attempted acquisition of temporary and permanent easements from a Sinclair gas and convenience station for a roadway project. 

In March of 2000, the city instituted condemnation proceedings. Rather than proceed under the state statutory eminent domain procedures, the city chose to commence proceedings pursuant to the less onerous provisions of Chapter 13 of the St. Paul City Charter. On April 5, 2000, the city council, after required notice to affected landowners, held a public hearing on the acquisitions for the roadway project. Despite objection by Sinclair, the city council approved the final condemnation order. Then, as required by the city charter provisions, the city made a determination as to the value of the property taken. On December 20, 2000, the city council held another public hearing to confirm and ratify the taking and valuation. 

While the condemnation was proceeding according to the city charter provisions, the Minnesota Court of Appeals reviewed the constitutionality of a similar state statute that granted counties authority to condemn property for highway purposes. On January 16, 2001, the Minnesota Court of Appeals handed down its decision in In Re Rapp, 621 N.W.2d 781 (Minn.App. 2001). The statutory condemnation procedure at issue in the Rapp case only allowed landowners to appeal the award of damages as determined by the county, but failed to provide a procedure that allowed landowners to challenge the propriety of the taking. The Court of Appeals held that the statute violated the takings clause of the United States and State Constitutions because the statute did not provide for judicial review of the public purpose and necessity of the condemnation prior to the actual taking of the property. 

Because of the similarity of the statute at issue in the Rapp case and the St. Paul City Charter condemnation procedure, Sinclair immediately sent a copy of the Rapp decision to the City. In doing so, Sinclair placed the city on notice that, based on the Rapp decision, Sinclair intended to challenge the constitutionality of the city charter condemnation proceedings for failing to provide for judicial review if the City did not commence condemnation proceedings pursuant to Minnesota Statute Chapter 117. Despite Sinclair’s notice, on February 7, 2001, the city adopted a resolution ratifying and confirming the condemnation and award of damages under the city charter and proceeded with the acquisition.

On March 13, 2001, Sinclair commenced two separate district court actions. First, Sinclair commenced an inverse condemnation action by serving and filing a petition for alternative writ of mandamus requesting the district court to compel the city to commence condemnation pursuant to Minnesota Statutes Chapter 117. Second, pursuant to St. Paul City Charter Chapter 13, Sinclair filed a notice of appeal of the city’s condemnation resolution that confirmed and ratified the condemnation and award. Sinclair commenced this second action in order to meet the 30-day limitation period for appeal as set forth in the city charter and protect its right to appeal the award. During this time period, the city commenced construction of the project, physically appropriated Sinclair’s property, and on August 9, 2001, the project was completed. 

The inverse condemnation action was presented to the district court on Sinclair’s motion for summary judgment. On November 26, 2001, the district court ruled in favor of Sinclair, determining that the St. Paul City Charter condemnation procedure was unconstitutionally void because it failed to provide for judicial review of the public purpose and necessity of the taking prior to the condemnation and actual taking of property. The district court ordered the city to commence condemnation proceedings pursuant to Minnesota Statutes Chapter 117. The city appealed this decision to the Minnesota Court of Appeals.

In analyzing the constitutionality of the relevant charter provision, the district court emphasized the long held principle that a condemnation must satisfy the public-use requirement imposed by the constitution. Article I, §13 of the Minnesota Constitution guarantees that “Private property shall not be taken, destroyed or damaged for public use without just compensation therefore, first paid or secured.” In order to meet this requirement, the condemning authority must establish that the condemnation of is for a valid public use. Furthermore, Minnesota has the additional requirement that the condemning authority must also establish the necessity of the condemnation. The court concluded therefore, that when a condemning authority acquires private property, the landowner is entitled to judicial review in order to determine whether the condemnation is for a public purpose and is necessary. 

The court also emphasized the Rapp court holding that there is a temporal requirement to judicial review in a condemnation proceeding. Specifically, the Sinclair court relied heavily upon the Rapp court’s conclusion that “Land may be condemned only after a determination of public purpose and necessity. Therefore, a property owner is entitled to judicial review of the public purpose and necessity of a taking prior to the actual taking of property.” Rapp, 612 N.W.2d at 785.

The court then analyzed the relevant portion of the city charter provision in order to determine if it complied with the constitutional and temporal requirements. St. Paul City Charter §13.03.5(1) states, “Any person whose interest is property has been condemned or taken may appeal, or an appeal may be taken on his or her behalf, from the ratification and confirmation of the condemnation or from the award of damages or both.” Like the statute analyzed by the Rapp court, the St. Paul City Charter allows the City to condemn or take the property without providing for judicial review of public purpose and necessity.

The city’s condemnation provisions also allow the condemning authority to acquire the property and commence construction even if an appeal has been filed. The city attempted to justify the constitutionality of the provision by arguing that so long as just compensation is paid or secured prior to the taking, the charter provision meets the constitutional requirements. However, the court held that the language of the ordinance “does not prevent the taking from occurring until after the court reviews the public purpose and necessity of the taking; it simply requires that money be paid into court.” Under the ordinance, once payment is made, title to the property immediately transfers to the city and, unless the owner retains a right to continued possession, the city may immediately enter upon the property and commence construction . This clearly does meet the constitutional requirement of judicial review of public purpose and necessity prior to the taking of private property.

In addition to attempting to defend the constitutionality of its charter proceeding, the city made several other arguments. First, the city argued that Sinclair, by conceding during a public hearing before the City Council that the project was for a public purpose, had waived its right to challenge the public purpose of the taking in any subsequent proceeding. However, the Court of Appeals held that the city had presented no evidence that Sinclair voluntarily and intentionally waived its right to challenge the necessity of the taking.

The City also argued that as a result of Sinclair’s acquiescence in the construction of the project, Sinclair was estopped from challenging the public purpose of the project. The Court of Appeals found to the contrary and held that Sinclair, by commencing the two district court actions, provided the city with ample notice that it was indeed challenging the propriety of the taking before construction began.

Finally, the city claimed that Sinclair could not obtain effectual relief on its claim that it was entitled to judicial review of the public purpose and necessity of the taking prior to the taking. The city argued that because the project had already been completed, the issue was moot. Again relying on the decision in Rapp, the court concluded that even though the property had been taken and the project constructed upon the property, Sinclair was entitled to relief in the form of the return of its property. The conclusions reached by both this court and the Rapp court with respect to mootness may have a profound impact on the nature of acquisitions for public projects. A condemning authority could find itself in a difficult and expensive situation if a court failed to find requisite public purpose and necessity to support the condemnation after the project has already been constructed.

The Minnesota Court of Appeals ultimately affirmed the district court’s declaration that the St. Paul City Charter condemnation procedure was unconstitutional because it failed to provide for judicial review of the public purpose and necessity of a taking prior to the actual taking. The Minnesota Supreme Court denied the City’s Petition for Review. The case is currently proceeding under the constitutionally valid provisions of Minnesota Statute Chapter 117, and the district court has under advisement Sinclair’s motion for attorney an award of attorneys’ fees in the successful inverse condemnation case. This case is Sinclair Oil Corporation v. City of St. Paul, 2002 WL 1902920 (Minn. App. August 20, 2002).

 

*The author, Tonetta Dove, is an attorney at Levander, Gillen & Miller in St. Paul.

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