Opinion
No. CV 99 0366777 S
February 11, 2004
MEMORANDUM OF DECISION
The subject of this condemnation appeal is that piece or parcel of land with the buildings and improvements thereon located in the City of Bridgeport, County of Fairfield and State of Connecticut and known as 54 Golden Hill Street and bounded and described as follows:
Sometimes referred to as 54-60 Golden Hill Street or by old time Bridgeporters as "Dolans Corner."
NORTHERLY: by land now or formerly of the Coulter and McKenzie Machine Company, 93 feet, more or less;
EASTERLY: by land now or formerly of The Couleter and McKenzie Machine Company, by a line which passes through the center of a party wall, 62 feet, more or less;
SOUTHERLY: by Golden Hill Street, 101 feet, more or less;
WESTERLY: by Middle Street, 50.5 feet, more or less.
Together with all those rights, privileges and easements appurtenant to the premises, as are set forth in that certain deed which is recorded in Volume 237, page 499 of the Bridgeport Land Records.
The property was taken by the Bridgeport Redevelopment Agency (Agency), as the agent for the City of Bridgeport, pursuant to Chapter 130 of the Conn. General Statutes on December 3, 1999. The owners, Carmelina and Jack Silva, had purchased the property for $125,000 on February 2, 1999 only ten months prior to the taking date. After they took title a much needed renovation and remodeling of the building on the property was commenced. By December 3, 1999, the stipulated taking date, there existed on the subject property a newly renovated, relatively attractive building which housed a functioning, refurbished bar and restaurant on the ground floor and a two-bedroom apartment on the second floor. The Silvas ran the bar and restaurant and lived in the apartment There was a small parking lot adjacent to the building. The statement of compensation served on the Silvas set the taking price at $191,000. That sum was deposited with the Clerk of the Bridgeport Superior Court and eventually disbursed.
The Silvas were dissatisfied with the amount of compensation and applied for a review of the agency's figure pursuant to Conn. General Statutes § 8-132. The review was conducted by the undersigned Judge Trial Referee.
When the Silvas purchased the Golden Hill Street property on February 2, 1999 the condition of the building was deplorable and required extensive demolition, repairs, alterations and renovations before it could be occupied. Jack Silva, who was an experienced restaurateur, testified he purchased the property despite the dilapidated condition of the building because he thought the property's location was the best spot in the Bridgeport downtown area for the type of establishment he intended to operate.
The extensive amount of work necessary to make the building functional and suitable for its intended use was supervised by Manuel Moutinho who acted as the general contractor. Moutinho is an established contractor who has been in business in this area doing heavy construction, demolition and residential and commercial building and building repair in his own right or by entities in which he is the principal for over three decades. (Transcript p. 78.)
Moutinho and Silva are long-time close personal friends. In fact, it was Moutinho who first brought Silva's attention to the fact that 54 Golden Hill Street was for sale and might be of interest to Silva as a restaurant location. Both Moutinho and Silva testified that because of their friendship, past business relationships and mutual trust no written contract was entered into between the two for the required work, and Moutinho did not seek any payment for work done or materials furnished as the project progressed but was content to wait until it was finished. Moutinho asserts that he expended $278,244.29 for work and the materials he supplied for the renovation of the building. At trial he produced the paperwork to substantiate his testimony.
Moutinho noticed a prominent "For Sale" sign on the subject property when he was walking to his office in downtown Bridgeport.
Moutinho at some point commenced a law suit against the Silvas and filed a mechanic's lien. The present status of either the law suit or the lien is unclear from the record. I had the definite impression that neither was being aggressively pursued.
Moutinho testified that one of his entities, Mark IV Construction Co., did demolition and concrete work on the building and filled in the basement. He produced Mark IV's invoice in the amount of $42,591.63 for that work. Moutinho also produced his own invoice as the general contractor for $249,612.66, which evidenced among other things his payments for labor and material to the subcontractors on the job. Both invoices were admitted into evidence as full exhibits. I realize that the total of these figures exceeds the amount noted in the text. That is because Moutinho later deducted the charge for two items amounting to $13,960 from the original invoices that totaled $292,204.29 reducing the amount charged to $278,244.29 as stated in the text.
The Agency demonstrated to the Court that both Jack Silva and Moutinho were aware as early as June of 1999, when relatively little work had been done, that the building was to be taken by the Agency by eminent domain but they continued work on the project anyway thereby requiring the Agency unnecessarily to pay greater damages when the property was taken. It appears to be the Agency's position that the work should have stopped early on to minimize the Silvas' damages. In so far as it is relevant, I believe that there was enough confusion concerning the ultimate fate of 54 Golden Hill Street to justify the continuation of the building renovations even though that decision may not have been a wise one.
The project was substantially completed in the fall of 1999.
Both the Silvas and the Agency presented the reports and expert testimony of licensed real estate appraisers as to the value of 54 Golden Hill Street on the taking date of December 3, 1999. The Silvas' expert Thomas E. Gallagher utilized both the income capitalization method and the comparable sales method to appraise the property. Using the income capitalization approach he valued the subject property at $310,000. Using the comparable sales approach he valued the subject property at $350,000. He testified that he believed that the comparable sales method was the better of the two methods of appraisal in this instance and valued the property at $350,000 as of December 3, 1999.
The Agency offered the report and expert testimony of Fred Locke. Locke also employed the income capitalization and comparable sales methods of appraisal. Using the income capitalization method he calculated the value of the property to be $300,000. Using the comparable sales method he concluded the value to be $316,000. He testified that he believed that the income capitalization approach was the better method and valued the subject property as of December 3, 1999 at $300,000.
Because of the fact that the Agency's own expert appraiser found the fair market value of the Silvas' Golden Hill Street property on December 3, 1999 to be at least $300,000, counsel for the Agency at trial disavowed the Agency's original offer to the Silvas of $191,000 and indicated that the Agency was now willing to pay $300,000, the amount determined by its expert Fred Locke to be the fair market value of the subject property as of December 3, 1999.
After hearing the testimony offered by both parties, reviewing the exhibits and appraisal reports and inspecting the property in question and noting its location, I find the parties' appraisals to be reasonable despite some problems I have with the comparables and the capitalization rates used by the appraisers. I believe, however, that the Agency's appraisal is on the low side and the Silvas' a bit high. Taking all the evidence into consideration as well as my personal inspection I conclude that as of December 3, 1999 the fair market value of the land and building located at 54 Golden Hill Street in Bridgeport was $328,000.
In their brief, however, the Silvas argue that "fair market value" should not be the criteria used to compensate them in this case. They argue that theirs is a unique situation because the property had been purchased such a short time prior to the taking, because the building on the property had just been completely redone at great expense and because they had no intention to sell but intended to make the property their home and their livelihood. Therefore, they assert they should be fully reimbursed not by receiving the fair market value of the property but by recouping the $125,000 purchase price and the $278,244.26 cost of the reconstruction and renovation of the building on the property as well. Consequently, they claim they should be compensated for the taking in the amount of $403,244.26 plus interest and costs. I disagree.
Although at one point counsel for the Silvas did argue that the cost of the renovations should be considered in arriving at any award the court was under the impression that the entire case was tried on the theory that the Silvas were entitled to fair market value for the taking of their property and both appraisers testified only as to fair market value. This particular argument was raised for the first time in the Silvas' post-trial brief.
Our Supreme Court has repeatedly stated that "the amount that constitutes just compensation is the market value of the condemned property when put to its highest and best use at the time of taking." Northeast Ct. Economic Alliance v. ATC Partnership, 256 Conn. 813 (2001). (Citations omitted.) Certainly the price of the recent purchase and the expenditure of money to renovate the building can be and was considered in arriving at market value in this instance but those factors do not require sui generis treatment. "When the land and buildings taken have a market value, that must serve as the measure of damages." Commissioner of Transportation v. Towpath Associates, 255 Conn. 529, 542 (2001). The Silvas themselves presented an expert witness who testified as to their property's fair market value. There is nothing unique about this situation that would warrant departure from the standard method of compensating condemnees in eminent domain proceedings, i.e., the award of the fair market value of their condemned property. The amount that constitutes just compensation is the fair market value of the condemned property when put to its highest and best use at the time of the taking. Minicucci v. Commissioner of Transportation 211 Conn. 384; Cappiello v. Commissioner of Transportation, 203 Conn. 675, 681, 525 A.2d 1348 (1987); Budney v. Ives, 156 Conn. 83, 88, 239 A.2d 482 (1968) (quotations omitted).
I realize that although market value is ordinarily the appropriate measure of damages "other measures may be appropriate when the fair market value measure of damages does not fully compensate the owner." Commissioner Of Transportation v. Towpath Associates, 255 Conn. 529, 542 (2001) (internal quotation marks omitted). It is my understanding, however, that statement applies to unusual situations, e.g., where property has no market value or where the property is so seldom exchanged that it lacks a ready market value. From my research it would appear that statement would not apply to property that has a readily ascertainable market value and the owner has simply overbuilt the neighborhood.
The parties did not contest the fact that under all the circumstances the highest and best use of the property was the mixed use that existed on December 3, 1999. I so find.
It was conceded by the Silvas that subsequent to the date of taking that they continued to operate the restaurant and bar on the premises and to live in the upstairs two-bedroom apartment. They admit that they ran the restaurant and bar from December 3, 1999 through February 2002 and resided on the premises from December 3, 1999 through December 31, 2002 without paying a dime to the Agency or the City for use and occupancy. Moreover, it is clear that the Silvas were notified and knew that the Agency expected that they pay for use and occupancy subsequent to the taking. The Agency in its brief claims that a fair charge for the use and occupancy of the apartment for 37 months is $1,200 per month or $44,400 and that a fair charge for the restaurant was $2,000 per month for 27 months or $54,000 the sum of the two being $98,400. It is the Agency's position that $98,400 is presently due and owing and equitably should be withheld from any award to the Silvas in this eminent domain proceeding. The Silvas argue that this is the wrong forum for the Agency to litigate its claim for use and occupancy and that if the Agency wishes to pursue its claim it must do so in a separate action. I reluctantly agree with the Silvas.
Eminent domain and "Just compensation relates to the taking of property; the value of the use relates to the former owner's continued possession after the land is taken. If admissible in the condemnation proceedings, it would be as a cross demand, presented in an ordinary action by cross-complaint, and such a cross-complaint has no place in condemnation proceedings. Moreover, occupation and use is not in itself a basis upon which to find liability; there must be, as in the case of any implied contract, at least an intent by the condemnor to charge and an intent by the former owner to pay, or circumstances such that he ought reasonably to know the condemnor expected payment. Collver v. Collver, 113 N.Y. 442, 447, 21 N.E. 114, and see Merwin v. Beardsley, 134 Conn. 212, 56 A.2d 517. Therefore, where the former owner continues in possession after his property has been taken by the state pursuant to the statute, whether such occupancy be pursuant to an express agreement between him and the highway commissioner or to an implied agreement, the right of the state to recovery therefor can and should be determined in an independent proceeding brought in the name of the highway commissioner on its behalf." Clark v. Cox, 134 Conn. 226, 234 (1947).
"A condemnation proceeding is limited in scope." Rice v. Ives, 27 Conn. Sup. 23, 27 (1966). "[A] claim of the condemning authority for value of the use against an owner who remains in possession after the time of taking must be determined in an independent proceeding." Supra, 27-28.
In St. John v. Commissioner of Transportation, 172 Conn. 234, 240, 374 A.2d 190 (1977), the court recognized that the limited scope of an appeal from a statement of compensation in an eminent domain proceeding is "the reassessment of damages resulting from the taking . . ."
In Russo v. East Hartford, 4 Conn. App. 271, 493 A.2d 914 (1985), the Appellate Court noted that "there are circumstances which may warrant an independent action to determine questions which cannot be reached in [an appeal from a statement of compensation). An independent action is justified, for example, where the negligence of a contractor which is a necessary, natural and proximate result of the taking has caused damage to the property . . . or where there is a dispute over the payment of interest on funds deposited with the condemner prior to the date of the actual taking." (Citation omitted.) Id., 274 n. 2.
It is ironic that the Agency cites Redevelopment Agency of the City of Norwalk v. Norwalk Aluminum Foundry Corporation, 155 Conn. 397 (1967), as authority for the proposition that a Judge Trial Referee in an eminent domain proceeding has the authority to determine the value of use and occupancy, make an award and authorize its payment to the condeming authority when that case itself is an action independent of the eminent domain proceeding that spawned it. I agree that the Agency may well be entitled to the substantial sum due it for the Silvas' use and occupancy, this condemnation proceeding however, is simply the wrong forum to get it.
Because the collection of charges for use and occupancy does not affect the market value of the subject property, that issue falls into the category of matters which warrant an "independent action." See Russo v. East Hartford, 4 Conn. App. 271, 274, n. 2 (1985). Accordingly, the Agency's request to withhold and deduct $98,400 for use and occupancy from any additional award to the Silvas is denied.
Judgment may enter in favor of the Silvas whose property was taken by eminent domain in the amount of $328,000 less $191,000, the amount deposited with the court by the Agency and disbursed by the court plus interest on the difference of $137,000 at the rate of four percent per year from the date of taking. An appraisal fee of $1,500 plus costs is also awarded.
ROBERT J. CALLAHAN JUDGE TRIAL REFEREE