Marx Stationery & Printing Co. v. Redevelopment Authority of Philadelphia

Citations: 675 A.2d 769; 1996 Pa. Commw. LEXIS 178

Court: Commonwealth Court of Pennsylvania; April 30, 1996; Pennsylvania; State Appellate Court

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Marx Stationery, Printing Company and several other tenants appeal alongside the Redevelopment Authority of the City of Philadelphia (RDA), which cross-appeals from a February 3, 1995 order by the Court of Common Pleas of Philadelphia County that denied both parties’ post-trial relief motions. The case stems from a 17-year eminent domain proceeding involving the Harrison Building at 1001-23 Filbert Street, initiated by the building's owners on February 16, 1979, claiming a de facto taking due to RDA and City activities related to the Gallery East and Center City Rail Tunnel Projects. The tenants did not join the owners’ petition but later sought damages through their own petition filed on November 8, 1982. This petition was held in abeyance while appeals from earlier orders were considered. A settlement agreement involving the RDA, the City, and the owners was reached without tenant knowledge, leading to a 1983 order by Judge Forer that dismissed the owners’ action and vacated prior orders. The tenants submitted an amended petition in 1984, which was ultimately granted after Judge Forer ruled that the RDA was collaterally estopped from contesting the earlier orders. The 1986 ruling stated these orders were final, but upon appeal, the court found the trial court lacked jurisdiction to act after the appeals were filed, rendering the 1983 order invalid.

The court affirmed Judge Forer's May 1986 order that established a Board of Viewers to assess damages, confirming that a taking had occurred. The RDA's request for reargument and subsequent petitions for allocatur to the Supreme Court were denied. On April 3, 1990, the Board convened to evaluate tenants' claims for damages, during which the tenants' counsel and RDA's counsel Dona Kahn entered stipulations. The tenants viewed these as judicial admissions regarding the damages owed, while the RDA saw them as procedural agreements to streamline the hearing. The Board awarded tenants a total of $992,838.11 in damages, with all but Berben Insignia, Inc. receiving general damages under the Assembled Economic Unit Doctrine (AEUD) and all receiving special damages under section 601A of the Eminent Domain Code. Both parties appealed the Board's decision, leading to a trial set for January 6, 1992, which resulted in jury verdicts totaling $431,509.14 for the tenants, with only S. S Hat Company receiving general damages under AEUD.

Subsequent motions for recovery of fees and costs under section 609 of the Code were filed by the tenants, with the RDA also submitting post-trial motions. On February 3, 1995, the trial court denied both parties’ post-trial motions and awarded costs and fees only to S. S Hat Company, adjusting the verdict accordingly. Appeals from both parties were consolidated for review. The tenants raised several issues for consideration, including the binding nature of stipulations at trial, scope limitations regarding AEUD applicability, jury instruction errors related to fair market value, qualifications of the RDA’s expert witnesses, denial of section 609 costs and fees, calculation of delay damages, and the lack of prejudgment interest on special damages.

The primary issue to resolve is the binding nature of stipulations agreed upon by the parties before the Board on the trial court. The stipulations include: (a) all appellants were tenants at the Harrison Building under leases at the time of a de facto taking; (b) specific occupancy dates for various tenants, with some remaining until late October 1982 with landlord consent; (c) acknowledgment of machinery and equipment values and appraisal fees by the appellants' appraiser; and (d) recognition of claimed special damages except for business dislocation claims from certain tenants, which were contested by the RDA regarding amounts. The tenants assert these stipulations are authorized under section 501 of the Code and are binding for the RDA in the de novo trial, referencing the case Commonwealth v. Yudacufski, which established that such stipulations can be binding unless withdrawn by consent. The RDA counters that the stipulations were limited and made to streamline proceedings, arguing that if a final settlement had been reached, it would have been documented in the Board’s report. The RDA distinguishes Yudacufski by noting that there, the stipulation was included in the Board’s report and not objected to on appeal, implying that the current case lacks similar binding characteristics.

Section 501 of the Code permits the condemnor and condemnee to agree on any part of the damages at any stage of the proceedings, allowing the condemnor to pay for those agreed-upon items. However, an examination of the April 3, 1990 hearing notes indicates that the parties did not intend to settle the matter entirely through stipulations. RDA's counsel, Dona Kahn, repeatedly reserved the right to contest the tenants' entitlement to damages, agreeing only to a specific amount for certain tenants' business relocation damages under 601A, while insisting that proof of loss be required for others. Consequently, it is concluded that the stipulations were not intended to constitute a binding settlement, and thus, were not binding in the subsequent trial de novo.

Furthermore, the tenants contended that the trial court erred by not limiting the trial's scope to the applicability of the AEUD to their claims. RDA countered that this argument was not raised during the trial, rendering it waived. The tenants claimed they raised this issue in their amended petition and through jury instructions, but the record does not reflect a specific request to limit the trial scope regarding AEUD applicability. Thus, this issue is also deemed waived.

Tenants claim the trial court erred by not instructing the jury that their appraisal expert's definition of fair market value was correct. RDA contends this issue was not raised as framed at trial and is therefore waived. Additionally, RDA asserts that the jury has the discretion to weigh expert testimony. The tenants' requested jury instruction 6A stated that George Sinclair's definition of fair market value was correct for the condemnation case. The trial court, however, refused this instruction, implying it effectively sought directed verdicts. The court concluded it did not commit reversible error in this decision.

Furthermore, the tenants argue the trial court wrongly admitted testimony from RDA's experts, Alfred Sundberg and Robert Jones, claiming they lacked qualifications in condemnation appraisals. RDA counters that the tenants did not raise this issue in their post-trial motions, thus waiving it. However, the court found that tenants preserved this objection during trial by moving to strike the experts' testimonies. Despite acknowledging the preservation of the issue, the court concluded no reversible error occurred, emphasizing the trial court's discretion in admitting expert testimony, which is only reversible in cases of clear abuse of discretion.

The expert qualification threshold is intentionally low, allowing witnesses with reasonable specialized knowledge to testify, while the jury determines the weight of that testimony. Mr. Jones, a machinery and equipment appraiser with 29 years of experience, including significant work for condemnation purposes, had conducted thousands of appraisals but had not been previously qualified as an expert in the AEUD. Mr. Sundberg, a senior member of the American Society of Appraisers, also provided testimony based on his extensive experience in appraising machinery for various purposes, including work for the RDA and qualifications as an expert in the Court of Common Pleas. The trial court found no error in allowing both Mr. Jones and Mr. Sundberg to testify as experts.

The tenants argued that the trial court erred by not awarding them costs and attorneys' fees under section 609 of the Code, as they were condemnees deprived of a real property interest. The RDA contended that only S. S Hat Company, which received general damages, was entitled to such reimbursement. Section 609 states that a judgment in favor of a condemnee must include reasonable costs incurred in the process. Although the trial court acknowledged all tenants as condemnees, it concluded that only S. S Hat Company was entitled to reimbursement because it was the only party that received a taking award. This conclusion was supported by precedent, indicating no compensation for personal property where no real estate was taken. The trial court found that the tenants could claim two property interests— the bonus value of their remaining lease term and the value of their machinery and fixtures. However, since no claims were made for the lease's bonus value, the jury determined that only S. S Hat Company was entitled to general damages based on its machinery, equipment, and fixtures that were part of the condemned property.

Section 609 costs and fees are awarded only to condemnees who have received damages for property takings, leading to the trial court’s denial of the tenants’ claims under this section. The tenants contended that the trial court incorrectly denied them delay compensation at prevailing commercial loan rates, citing Hughes v. Department of Transportation (1987) as precedent. The trial court recognized the inadequacy of a 5% delay compensation awarded by the jury but adhered to Wasserott v. PennDOT (1991), which applied Pennsylvania Rule of Civil Procedure No. 238 rates instead. Consequently, the trial court erred by not awarding delay compensation at the higher commercial loan rates during the detention period. 

Regarding prejudgment interest on special damages, the Redevelopment Authority (RDA) argued that section 601A does not allow for such interest, referencing Redevelopment Authority of the City of Philadelphia v. Associated Retail Stores (1979). The court confirmed that unlike section 611, which mandates delay compensation, section 601A does not provide for it, thereby supporting the trial court’s decision not to award prejudgment interest.

In the RDA’s cross-appeal, several issues were raised: 1) Whether the trial court erred in classifying the tenants as condemnees, 2) Whether George Sinclair’s testimony should have been struck for lacking certainty, 3) Whether his testimony used an impermissible valuation standard, 4) Whether 9 of 11 tenants could pursue AEUD damages post-relocation, 5) Whether tenants could seek AEUD damages after lease termination, 6) Whether tenants were limited to special damages for displacement per their leases, 7) Whether the trial court erred by allowing claims for fixtures that became RDA property, 8) Whether claims from India Overseas, Penn Dry Goods, and Supreme Suitcase should have been dismissed due to lack of standing, and 9) Whether Irving Wenger’s dislocation damages claim was valid given insufficient proof of substantial business loss.

The RDA contends that the tenants should be classified as 'displaced persons' instead of 'condemnees,' a classification the court previously settled in Marx Stationery I, affirming the tenants as 'condemnees' entitled to present damage claims under the Assembled Economic Unit Doctrine (AEUD). The RDA raises concerns about the tenants’ expert appraiser, George Sinclair, arguing he lacked appraisal certainty and used an improper valuation standard, but these issues are deemed waived as they were not brought up in earlier proceedings. The RDA also claims that nine of the eleven tenants, who relocated successfully, should be barred from pursuing AEUD damages, alleging they are 'double dipping' by claiming both general and special damages. The tenants counter that they did not double dip, as the items claimed were primarily immovable. The AEUD allows for compensation of machinery and equipment deemed part of the condemned property when no comparable relocation options are available. The court concludes that the applicability of the AEUD is a jury question, affirming the trial court’s decision on this matter. Other RDA issues have been waived, leading to the affirmation of the trial court’s denial of the RDA's post-trial motions. The order is upheld barring the award of delay damages to S. S Hat Company, which is remanded for a determination of the appropriate rate of such damages.

On April 30, 1996, the Court of Common Pleas of Philadelphia County vacated a February 3, 1995 order awarding $23,222.81 in delay damages to S. S Hat Company, remanding the case for further proceedings while affirming all other aspects of the order. Jurisdiction was relinquished. The Redevelopment Authority (RDA) acted as an agent for the City of Philadelphia in acquiring properties for the Center City/Market Street East rail tunnel project. Tenants of the Harrison Building claimed that the project severely isolated their building, infringing upon their commercial leasehold interests. Relevant case law includes Marx Stationery, Printing Co. v. City of Philadelphia, which addresses similar tenant issues. The RDA previously withdrew its appeal against Judge Forer’s orders from August 1981. Section 601A of the Code provides for moving and related expenses for displaced persons. The case, initially assigned to the late Judge Charles A. Wright, involved several hearings, culminating in a December 9, 1991 order denying the RDA's objections under sections 516(a)(4) and 517 of the Code. The RDA appealed this order, seeking a stay, but Judge Doyle quashed the motion on January 3, 1992. After delays, Judge Bernard J. Goodheart was appointed for post-trial matters on December 22, 1992. The court's review focused on whether there was an abuse of discretion or legal error, noting that the stipulations regarding damages were not included in the Board’s report. The RDA contested both the awarded damages and the tenants’ entitlement to damages under the Code. Additionally, the Assembled Economic Unit Doctrine was referenced, which determines if machinery and fixtures are part of condemned property, entitling owners to just compensation.

Section 601A outlines the compensation entitlements for displaced persons, including reimbursement for moving expenses and damages related to business or farm operations. Key provisions include: 

1. **Moving Expenses**: Displaced individuals are reimbursed for reasonable moving costs and the removal, transportation, and reinstallation of personal property.

2. **Business or Farm Displacement**: Those displaced from a business or farm are entitled to additional damages, which include:
   - Direct losses on personal property, capped at either the relocation expenses or the in-place value of non-movable property.
   - An alternative compensation option of up to $10,000 based on a percentage of the loss in value of personal property sold.
   - Reasonable expenses for searching for a replacement business or farm.
   - Expenses necessary for reestablishing a business, nonprofit, or farm at a new site, also capped at $10,000.
   - An alternative damages provision equating to average annual net earnings, with set minimum and maximum limits.

The document clarifies that a condemnee, defined as an owner of a property interest taken or injured, can include tenants. Notably, a party asserting a de facto taking must qualify as a condemnee to receive relocation damages. The court ruled that a condemnor waived its right to contest a landowner’s title by not filing preliminary objections, emphasizing that entitlement defenses should be raised at the outset through preliminary objection proceedings. The ruling also noted that there is no requirement for an appraiser to express opinions with a degree of certainty, distinguishing it from medical expert standards.