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Cass County Joint Water Resource District v. Erickson

Supreme Court of North Dakota

October 9, 2018

Cass County Joint Water Resource District, a North Dakota Political Subdivision, Plaintiff, Appellee, and Cross-Appellant
Curtis W. Erickson, Karen S. Erickson, Defendants, Appellants, and Cross-Appellees and Choice Financial Group, Defendant

          Appeal from the District Court of Cass County, East Central Judicial District, the Honorable John C. Irby, Judge.

          Christopher M. McShane (argued) and Andrew D. Cook (on brief), Fargo, ND, for plaintiff, appellee, and cross-appellant.

          Michael T. Andrews, Fargo, ND, for defendants, appellants, and cross-appellees.


          McEvers, Justice.

         [¶ 1] Curtis and Karen Erickson appeal and the Cass County Joint Water Resource District cross-appeal from a judgment entered after the district court ordered condemnation of the Ericksons' properties, determined the amount of just compensation, and awarded the Ericksons' attorney fees and costs. We conclude the court's damage award is not clearly erroneous and the court did not abuse its discretion by awarding fees and costs. We affirm the judgment.


         [¶ 2] In 2005, the Ericksons purchased two adjoining lots, lots 39 and 40, in Oxbow Country Club and Estates located in Cass County. Both lots have views of the Red River and lot 40 has river frontage. The Ericksons paid a total of $150, 000 for the two lots. In 2006 or 2007, the Ericksons listed the lots for sale, asking approximately $100, 000 for each lot. They did not receive an acceptable offer to purchase either lot.

         [¶ 3] In 2009, significant flooding occurred in portions of the Red River Valley, including the Oxbow area. Red River Valley governmental authorities, including the District, designed a flood control and protection project referred to as the Diversion Project, which included the creation of the Oxbow Hickson Bakke Ring Levee ("OHB Ring Levee"). The Ericksons' properties would have to be acquired to construct the OHB Ring Levee.

         [¶ 4] In a March 2015 letter, the District offered to acquire both properties from the Ericksons for $48, 200 based on an appraisal by GE Bock Real Estate, LLC. Although the Ericksons rejected the offer, in May 2015 they reached an agreement with the District for entry and construction. The parties agreed the District would have the right to enter and access the properties for construction of the OHB Ring Levee, the parties would continue to negotiate the amount of compensation for the properties, and the District would start an eminent domain action if the parties were unable to reach an agreement on the amount of compensation. The parties also agreed the only issue that would be resolved in an eminent domain action would be the amount of compensation owed to the Ericksons. In a February 3, 2016 letter, the District stated it was making its "final offer" and offered the Ericksons $150, 000 for both lots. The Ericksons rejected the offer.

         [¶ 5] The parties were unable to reach an agreement on the amount of compensation, and the District brought an eminent domain action. Before trial, the parties entered a stipulation agreeing the date of taking was May 14, 2015. A bench trial was held. Each party presented evidence about the value of the properties, including testimony from appraisers. The district court found the Ericksons were entitled to just compensation for the properties in the amount of $48, 200. The Ericksons moved for attorney fees and costs under N.D.C.C. § 32-15-32. The District opposed the request, arguing the requested amount of attorney fees and costs was unreasonable. The court granted the Ericksons' motion and ordered the District to pay the Ericksons $114, 346.47 in fees and costs.


         [¶ 6] The Ericksons argue the district court erred in determining the amount of just compensation. They contend the court failed to properly compensate them for the properties' "highest and best use."

         [¶ 7] Under N.D.C.C. § 32-15-01(2), "Private property may not be taken or damaged for public use without just compensation first having been made to or paid into court for the owner." An owner whose property has been taken by condemnation is entitled to the fair market value of the property taken. See City of Devils Lake v. Davis, 480 N.W.2d 720, 725 (N.D. 1992). This Court has defined "fair market value" as "the highest price property can be sold for in the open market by a willing seller to a willing purchaser, neither acting under compulsion and both exercising reasonable judgment." City of Hazelton v. Daugherty, 275 N.W.2d 624, 627 (N.D. 1979). "For the purpose of assessing compensation and damages, the right thereto shall be deemed to have accrued at the date of the taking and its actual value at that date shall be the measure of compensation for all property actually to be taken...." N.D.C.C. § 32-15-23.

         [¶ 8] The amount of damages in an eminent domain action is a question of fact, subject to the clearly erroneous standard of review. City of Jamestown v. Leevers Supermarkets, Inc., 552 N.W.2d 365, 374 (N.D. 1996). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if this Court is left with a definite and firm conviction that a mistake has been made. Id. The evidence is viewed in the light most favorable to the verdict, and generally a compensation or damages award will be sustained if it is within the range of evidence presented to the trier of fact. Davis, 480 N.W.2d at 725. The trial court has discretion in deciding the admissibility of evidence about the value of the land, including determining the relevance of evidence about the value and comparability of other properties. See Minot Sand & Gravel Co. v. Hjelle, 231 N.W.2d 716, 727 (N.D. 1975).

         [¶ 9] The district court considered the evidence the parties presented at trial, including the appraisals and testimony from both parties' appraisers. The court found the District received three different appraisals from Gerald Bock of GE Bock Real Estate Company, LLC. Bock's first appraisal dated March 9, 2015, appraised the properties at $48, 200 for both properties after deciding that the highest and best use of the properties was for a vacant residential lot that had a high flood risk. The court also noted the appraisal stated the properties were appraised as if the highest and best use was for open space or seasonal recreational use. The second appraisal was dated January 11, 2017, and resulted in a lower valuation of $37, 100 based upon information from a soil report commissioned and supplied by the District, which the parties refer to as the Barr report. On May 31, 2017, Bock appraised the properties a third time and concluded the value of the properties was $37, 100 based on the highest and best use as vacant for open space or recreational use, the appraisal also referenced the Barr report and stated the properties may be affected by adverse soil conditions. The court found the Ericksons provided an appraisal from James J. Wise, an appraiser for EB Herman Companies. The Ericksons' appraisal determined the properties' total market value was $456, 000 based on the highest and best use of development with single family residential uses on each lot. The court noted the appraiser used flood protected properties as comparable sales and the properties in this case are not flood protected.

         [¶ 10] The district court found the market value of the two properties as of the date of the taking, May 14, 2015, was $48, 200 based on the first Bock appraisal. The court found the highest and best use would be for a modest home on one of the lots. The court found the Ericksons did not meet the burden of showing a valuation greater than $48, 200. The court found the Ericksons' appraiser revealed through his testimony that he was not as knowledgeable about real estate sales in the Red River Valley as he should be and he used flood protected properties as comparables when the properties in question were not flood protected. The court found the generally known conditions of the lots and past flooding greatly reduced the value of the properties from the date the Ericksons acquired the lots to the date of the taking. The court stated its valuation was not based on any enhancement or reduction in value attributable to the project. The court explained it did not base its decision on Bock's second or third appraisals because those appraisals were based on information about soil stability from the Barr report. The court found soil stability was a concern from the time the Ericksons purchased the lots but it was unlikely a buyer would have commissioned a report similar to the Barr report, and therefore it was not acceptable to use the report to diminish the value of the properties.


         [¶ 11] The Ericksons argue the district court failed to properly compensate them for their properties' "highest and best use." They contend the court erred by determining the level of compensation based on a "recreational" value because the lots were zoned for residential construction with no prohibitions, the lots were "adaptable" to residential construction, the Bock appraisal concluded the lots were adaptable to ...

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