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Barton v. City of Norwalk

Appellate Court of Connecticut

February 23, 2016

ROBERT BARTON
v.
CITY OF NORWALK

         Argued October 28, 2015.

Page 712

          Action to recover damages for, inter alia, the defendant's alleged taking by inverse condemnation of certain of the plaintiff's real property, brought to the Superior Court in the judicial district of Stamford-Norwalk, where the court, Mintz, J., granted the plaintiff's motion to cite in Sonoson, LLC, as a party plaintiff; thereafter, the defendant filed a counterclaim; subsequently, the matter was tried to the court, Hon. Taggart D. Adams, judge trial referee; judgment for the plaintiffs on the complaint and counterclaim, from which the defendant appealed to this court; thereafter, the court, Hon. Taggart D. Adams, judge trial referee, denied the plaintiffs' motion to award prejudgment interest, and the plaintiffs appealed to this court; subsequently, this court granted the plaintiffs' motion to consolidate the appeals.

          SYLLABUS

         The plaintiff B brought this action to recover damages for the defendant city's inverse condemnation of a commercial building he owned with the plaintiff S Co., a partnership he and his family owned, in which certain tenants continued to lease space. The plaintiffs claimed that the defendant had inversely condemned the building when, nearly two years before, it took by eminent domain and paid B compensation for a parking lot that he had owned across the street from the building, which had provided parking spaces for tenants of the building and their customers. B thereafter appealed to the trial court, challenging the defendant's statement of compensation. B had claimed that the parking lot was worth more than the defendant had paid him in compensation. Although both parties' experts in that litigation had agreed that the parking lot's highest and best use was as a mixed use development, the defendant urged the court to value the property as a parking lot and reduce its value accordingly on the ground that there was no evidence that B intended to convert it from its use as a parking lot. The court thereafter rendered judgment for B and calculated the property's value as a parking lot. The plaintiffs subsequently brought this inverse condemnation action to recover for losses related to the building as a result of the defendant's prior taking of the parking lot. The trial court concluded that the defendant had inversely condemned the building when it took the parking lot by eminent domain. The court also rejected the defendant's special defense that the plaintiffs were judicially estopped from bringing the inverse condemnation action because B's position in the eminent domain litigation that the highest and best use of the parking lot was as a mixed use development was inconsistent with the plaintiffs' position in the inverse condemnation action that B would have continued using the parking lot as a parking lot. The defendant claimed that the plaintiffs' inconsistent positions gave them the unfair advantage of being able to bring the inverse condemnation action to recover losses related to the building. The trial court rendered judgment for the plaintiffs, from which the defendant appealed to this court. Thereafter, the trial court denied the plaintiffs' motion for statutory (§ 52-192a) prejudgment offer of compromise interest, and the plaintiffs appealed to this court, which thereafter consolidated the appeals. On appeal, the defendant contended that the trial court improperly rejected its claim of judicial estoppel and improperly determined that the building had been inversely condemned, and the plaintiffs claimed that the trial court erred in denying them prejudgment offer of compromise interest. Held :

         1. The trial court did not abuse its discretion in rejecting the defendant's claim of judicial estoppel, as the plaintiffs' positions in the eminent domain litigation and the inverse condemnation action were not clearly inconsistent and, thus, the plaintiffs derived no unfair advantage from asserting them: although the valuation of a property according to its highest and best use is potentially counterfactual, the law does not require that the owner actually devote the property to that use and, thus, B's valuation of the parking lot in the eminent domain litigation as a mixed use development was not an assertion that he would have stopped actually using the property as a parking lot; moreover, B's argument in the eminent domain proceeding that the highest and best use of the parking lot standing alone was as a mixed use development did not contradict his argument in the inverse condemnation action that the highest and best use of the parking lot and the building together was as a parking lot and an office building; furthermore, the plaintiffs derived no unfair advantage from having taken the two positions simultaneously in that they recovered once for the parking lot and once for the building.

         2. The trial court did not err in concluding that the defendant had inversely condemned the plaintiffs' property when it deprived the building of parking because the result was to substantially destroy the plaintiffs' ability to use and enjoy the office building: although certain tenants continued to lease office space at the building, the court found that 90 percent of the building was effectively unleasable and that the lack of parking had substantially destroyed the plaintiffs' ability to operate it as a leasable facility; moreover, the building's economic value had dropped by 81.77 percent, which may have been lower than the value of the land if it were vacant and available for development, and contrary to the defendant's claim, a finding of inverse condemnation does not require a complete taking of the building but rather, as the trial court found here, government action substantially equivalent to a complete taking.

         3. The trial court did not err in denying the plaintiffs prejudgment offer of compromise interest under § 52-192a, which required that they recover an amount that was equal to or greater than the sum certain in their offer of compromise: contrary to the plaintiffs' claim, their offer of compromise was not for a sum certain, as certain of their demands were variable and vague, contained a monetary cap, and sought nonmonetary relief; moreover, the amount they recovered, although greater than the sum they had requested, differed from their demands in the offer of compromise in that they did not recover certain permits they had requested.

         Daniel J. Krisch, with whom were Mario F. Coppola, corporation counsel, and Carolyn M. Colangelo, assistant corporation counsel, for the appellant in AC 36040 and the appellee in AC 36270 (defendant).

         Elliott B. Pollack and Tiffany K. Spinella, for the appellees in AC 36040 and the appellants in AC 36270 (plaintiffs).

         Gruendel, Prescott and Pellegrino, Js. GRUENDEL, J. In this opinion the other judges concurred.

          OPINION

Page 713

         [163 Conn.App. 193] GRUENDEL, J.

         The defendant, the city of Norwalk, appeals from the judgment of the trial court awarding the plaintiff Robert Barton[1] $899,480 in damages plus $543,384.49 in prejudgment interest for his claim that the defendant inversely condemned his building at 70 South Main Street in Norwalk (70 South Main) when it took the building's parking lot across the street at 65 South Main Street (65 South Main) by eminent domain. On appeal, the defendant raises two claims: (1) that the plaintiff was judicially estopped from asserting that the value of 70 South Main prior to the inverse condemnation should be calculated on the assumption that it had parking across the street at 65 South Main because--when the defendant took 65 South Main in the prior eminent domain proceeding--the plaintiff valued it and received just compensation for it, not as a parking lot, but according to its " highest and best use" as a mixed use development; and (2) that 70 South Main was not inversely condemned because the plaintiff's use and enjoyment of it had not been totally destroyed. The [163 Conn.App. 194] plaintiff cross appeals, arguing that the court improperly denied him offer of compromise interest. We affirm the judgment of the trial court.

         The court found the following facts, which are unchallenged on appeal. In 1981, the plaintiff purchased the four story walk-up commercial building at 70 South Main as an office for his sail-making business. There was a single parking space at 70 South Main. The defendant told the plaintiff that he needed more parking for 70 South Main to comply with zoning regulations. The defendant approved a site plan for 70 South Main that involved the plaintiff buying the vacant lot across the street at 65 South Main and creating forty-four

Page 714

parking spaces there. The plaintiff did so, and the defendant issued a certificate of zoning compliance in 1984 for both properties.

         In 1985, the plaintiff sold his sail-making business but kept the building. The buyers remained at 70 South Main for one year before moving out. When they did, the plaintiff began leasing space at 70 South Main to a number of commercial tenants. Lessees included a barbershop and a housing services office on the first floor, Macedonia Church on the second floor as well as parts of the third and fourth floors, a photo-gift business on the third floor, and several crafts persons on the fourth floor. The court did not expressly find but it is undisputed that there was also a residential apartment on the fourth floor. For most of the next fifteen years, the building was 95 to 100 percent occupied.

         When the plaintiff bought 70 South Main, there was abundant on-street parking nearby. Beginning in 1990, however, the defendant enlarged no-parking zones and converted several side streets into through streets. As a result, on-street parking grew steadily more limited. In 1996, when the plaintiff learned of the defendant's interest in building a new police headquarters on land [163 Conn.App. 195] that included his parking lot at 65 South Main, he and his tenants grew concerned that they and their customers would have nowhere to park. They expressed this concern to city officials, who offered the plaintiff and his tenants forty parking permits at the South Norwalk train station, which would expire after ten years, as a compromise. The plaintiff and his tenants rejected this offer because they asserted that those spaces were far away, unpleasant, and possibly dangerous. The plaintiff stressed in his talks with two subsequent mayors of Norwalk that, if the defendant condemned his parking lot at 65 South Main, it would cripple operations at 70 South Main.

         In February, 2002, the defendant condemned the parking lot at 65 South Main and paid the plaintiff $127,000 as just compensation for it. Norwalk v. Barton, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-02-0187554-S, 2009 WL 323785, *2 (January 27, 2009) (judgment as to adequacy of compensation for 65 South Main). The plaintiff asked the Superior Court to review the defendant's statement of just compensation, arguing that 65 South Main was worth $350,000. Id. In addition, the plaintiff twice tried to amend his pleadings in that case to add a claim for losses to 70 South Main as a result of the taking of 65 South Main. The defendant successfully objected to both amendments.

         The parties' experts testified in that proceeding only to the fair market value of 65 South Main standing alone. [WL] *1. Specifically, both parties' real estate appraisers agreed that " the highest and best use" for 65 South Main--which is the standard measure of just compensation; Northeast Ct. Economic Alliance, Inc. v. ATC Partnership, 272 Conn. 14, 25, 861 A.2d 473 (2004)--would be " a mixed use development built to the maximum [163 Conn.App. 196] permitted by zoning containing one or more of the following three uses permitted by the current zoning regulations; a restaurant and taverns, multifamily dwellings, off-street parking, retail, personal and business services." Norwalk v. Barton, supra, 2009 WL 323785, *3. The defendant admitted that under the " highest and best use" test, 65 South Main was actually worth closer to $255,000. Id. Although both parties' experts agreed that the property's highest and best use was a mixed use development and although both experts valued it as such, at oral argument on the last day of trial, the defendant

Page 715

urged the court to value 65 South Main instead as a parking lot, since there was no evidence that the plaintiff intended to convert it from that use, and to reduce its value accordingly. [WL] *7.

         On January 27, 2009, the court rendered judgment in favor of the plaintiff in that case. The court found that 65 South Main was worth $310,000 as a mixed use development and awarded the plaintiff $310,000 in just compensation, minus the $127,000 that the defendant had already paid the plaintiff, plus interest, fees, and costs. [WL] *10. As the defendant had requested, the court also calculated 65 South Main's value as a parking lot and found it to be $334,000.[2] Id.

         Because the plaintiff could not recover for losses to 70 South Main in the action concerning 65 South Main, he filed a second action--the subject of this appeal--in November, 2003, in which he alleged that the defendant had inversely condemned 70 South Main when it took 65 South Main. A four day trial to the court occurred in February, 2013. The plaintiff called four witnesses, namely, himself, his expert real estate appraiser, a former tenant of 70 South Main, and a [163 Conn.App. 197] current tenant of 70 South Main. The defendant chose to call no witnesses. Instead, when the plaintiff rested, the defendant moved for a judgment of dismissal on the ground that the plaintiff had failed to make out a prima facie case. After the court took that motion under advisement, the defendant rested without presenting a case-in-chief.

         On August 28, 2013, the court rendered judgment in favor of the plaintiff on his claim for the inverse condemnation of 70 South Main. The court awarded him $899,480 in damages plus $543,384.49 in prejudgment interest. The court found that the lack of parking, caused by the taking of 65 South Main by eminent domain, " ha[d] substantially destroyed the [plaintiff's] ability to operate the property as a leasable facility and enjoy even a modicum of financial success. The evidence shows the lack of parking, which the [defendant] initially insisted upon, reduced the . . . [property's] chances of commercial success to negligible or nonexistent" and amounted to " a substantial destruction of the [plaintiff's] ability to enjoy or use the property . . . ." As such, the plaintiff " proved [his] claim of inverse condemnation."

         In concluding that the plaintiff's use of 70 South Main had been substantially destroyed, the court relied primarily on three categories of evidence: (1) evidence of the building's lease rate; (2) evidence of the building's income; and (3) evidence of the building's fair market value.

         First, as to the building's lease rate, the court found that the percentage of leased space in 70 South Main had declined from more than 90 percent in 2001 to 5 percent in 2006, and had rebounded slightly to 10 percent in 2011. After the taking of 65 South Main in February, 2002, the Family and Children's Aid Society of Fairfield County, which leased three quarters of the [163 Conn.App. 198] first floor of 70 South Main, told the plaintiff that it would leave as soon as its lease expired due to the lack of parking. The building's largest tenant--Macedonia Church, on the second floor and parts of the third and fourth floors--let its lease lapse and began looking for alternative locations, citing parking concerns.[3] Immediately

Page 716

after the taking of 65 South Main, the plaintiff lost the third and fourth floor tenants, who also cited the lack of parking as their reason not to renew. One longtime lessee who operated a barbershop on the first floor of 70 South Main explained: " It just doesn't pay to open any more . . . the parking situation has just killed us. . . . Nobody wants to pay a $15 or $25 fine to get a $12 haircut."

         The plaintiff tried to rent space to new tenants. Although prospective tenants found 70 South Main attractive and otherwise suitable, they were dissuaded by the lack of parking. By the time of trial, only two [163 Conn.App. 199] tenants leased space at 70 South Main--a bail bond office and a cell phone store, both of which " lease[d] small areas and [were] unlikely to expand. The bail bond office, of course, ha[d] a unique situation being located literally across the street from the [new] police station. The cell phone store owner walk[ed] to work and the clientele [was] mostly walk-in." Together, these two tenants occupied only 10 percent of the building. The court found that the " remainder of the building will attract tenants only by rock bottom rents, and these will be tenants for which parking is not an issue, likely a small and transient group."

         Second, as to the building's annual operating income, the court found that it had declined from $94,080 in 2001 to $20,661 in 2006, and rebounded slightly to $29,221 in 2011.[4]

         Third, as to the building's fair market value, the court found that it had declined from $1.1 million before the taking to $200,520 after the taking. At trial, the plaintiff's expert real estate appraiser testified that in a suburban market, " parking is the lifeline of [a] building. You take the parking away; you've gutted the building--the value of a building." That expert's appraisal report, which the plaintiff submitted into evidence, noted that 70 South Main's value as an office building after the taking " may be lower than the value of the land at 70 S. Main Street as if vacant and available for development." The plaintiff's expert also testified that the value was " getting so low, it's virtually a

Page 717

tear-down at this point. . . . [W]e're pretty close to tear-down value." [5]

          [163 Conn.App. 200] Finally, in addition to these three primary categories of evidence, the court found that the building's upkeep had been affected. Contractors that the plaintiff hired to repair the roof, windows, leaks, and heating system of 70 South Main were stymied by the defendant's refusal to issue the necessary permits on the ground that 70 South Main no longer had adequate parking and so was not zoning compliant. Consistently, when the plaintiff inquired of the defendant's zoning officials in the years after the taking of 65 South Main, he was told either, " no parking, no permits," or, " there's pending litigation; we can't talk to you." This created difficulties for the plaintiff and his tenants.[6]

         In short, the court found that " the record [was] quite convincing that the economic fortunes of 70 South Main took a considerable turn for the worse . . . a result that [the plaintiff] had accurately predicted," and that this record established an inverse condemnation.

         As to the defendant's various counterclaims and special defenses, the court found in favor of the plaintiff on those as well. One such special defense was judicial estoppel. The defendant had argued that the plaintiff was judicially estopped from bringing an action for the inverse condemnation of 70 South Main because: (1) the plaintiff's position in the previous litigation that 65 South Main's highest and best use was as a mixed use [163 Conn.App. 201] development was " completely inconsistent" with his position in this litigation that he would have continued using 65 South Main as a parking lot; and (2) his inconsistent positions gave him the unfair advantage of being able to bring the inverse condemnation action for losses to 70 South Main. The court disagreed, finding that the positions were consistent and that the plaintiff derived no unfair advantage.

         The defendant appealed from the judgment to this court, arguing that: (1) judicial estoppel barred the plaintiff's recovery for losses to 70 South Main; and (2) in any case, the interference with the plaintiff's use of 70 South Main was not so substantial as to be an inverse condemnation. While that appeal was pending, the plaintiff moved for offer of compromise interest pursuant to General ...


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