Starkville Lodging LLC v. Mississippi Transportation Commission ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2018-CA-01405-COA
STARKVILLE LODGING, LLC APPELLANT
v.
MISSISSIPPI TRANSPORTATION APPELLEE
COMMISSION
DATE OF JUDGMENT: 09/17/2018
TRIAL JUDGE: HON. LEE SORRELS COLEMAN
COURT FROM WHICH APPEALED: OKTIBBEHA COUNTY SPECIAL COURT
OF EMINENT DOMAIN
ATTORNEYS FOR APPELLANT: JAMES W. NOBLES JR.
TRAVIS T. VANCE JR.
ATTORNEYS FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: MORRIS C. PHILLIPS JR.
BILLY HALL
NATURE OF THE CASE: CIVIL - EMINENT DOMAIN
DISPOSITION: AFFIRMED - 08/27/2019
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE BARNES, C.J., McDONALD AND C. WILSON, JJ.
C. WILSON, J., FOR THE COURT:
¶1. The Mississippi Transportation Commission (the Commission) initiated this eminent
domain proceeding in the Special Court of Eminent Domain of Oktibbeha County,
Mississippi, on December 17, 2017. Starkville Lodging subsequently filed a combined
answer and motion to dismiss pursuant to Mississippi Code Annotated section 11-27-15
(Rev. 2004), which the Special Court of Eminent Domain denied on September 17, 2018.
Starkville Lodging appeals the denial of its motion to dismiss, seeking review of (1) whether
there is a public necessity for taking Starkville Lodging’s property; and (2) whether the
Commission’s contemplated use of the condemned property is in law a public use for which
Starkville Lodging’s property may be taken.
¶2. Finding the Special Court of Eminent Domain had a sufficient basis for its decision
to deny Starkville Lodging’s motion to dismiss, we affirm.
FACTS
¶3. Eight years prior to the initiation of this proceeding, the Mississippi Department of
Transportation (MDOT) deeded a parcel of land it no longer needed for drainage or
transportation purposes to Starkville Lodging. A portion of this 2.45-acre parcel comprises
the disputed property in this eminent domain proceeding.
¶4. On December 1, 2015, the City of Starkville (the City) authorized the sale of
approximately 20.34 acres of city-owned property, formerly used by the City as a sewage
lagoon, that was no longer needed or used in the operation of the municipality. The City
determined that the sale of the sewage lagoon property would promote and foster the
development, improvement, and economic welfare of the community. This property is
located to the southwest of Starkville Lodging’s disputed tract.
¶5. On the same day, the City entered into a contract for the sale and purchase of the
abandoned sewage lagoon property with Dr. Bennett York, an oral surgeon and real estate
developer from Hattiesburg, Mississippi. Due to the landlocked nature of the sewage lagoon
property, the contract for the sale and purchase of the sewage lagoon was conditioned on the
“State allowing access to [the] property for [the] intended use [of the] Buyer.” The contract
provided that Dr. York could extend the closing if needed to ensure that access was granted.
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According to Dr. York, “[a]ccess was always the problem.” In all, approximately six
contract extensions were made for “the purpose of [the eminent domain] proceeding being
decided in favor of MDOT and providing [Dr. York] access to the abandoned sewage
lagoon[.]”1
¶6. On August 12, 2016, the Commission and the City authorized and executed a
memorandum of agreement for the “acquisition of [a] right[-]of[-]way” to provide for “the
construction and maintenance of interconnections between the state[-]designated highway
system and [the] streets of the municipalit[y][.]” The stated purpose of the memorandum of
agreement was to correct an oversight by the Commission in acquiring a portion of an
easement owned by the City during the Commission’s earlier acquisition of right-of-way to
“expand and relocate State Route 12 from the MSU campus to the U.S. Highway 82
bypass[.]” The property to be acquired by the Commission pursuant to the memorandum of
agreement was the parcel owned by Starkville Lodging at issue here.
¶7. The memorandum of agreement provided in relevant part:
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The City conveyed the sewage lagoon to Dr. York via warranty deed in May 2018,
shortly after Dr. York was “forced to gain access [through] another source at great
expense[.]” In exchange for the easement obtained from this “source,” Dr. York agreed to
several restrictive covenants that would curtail Dr. York’s intended use and/or development
of the sewage lagoon. For example, as a part of this easement agreement, Dr. York agreed
never to develop certain developments on the sewage lagoon property including grocery
stores, pharmacies, dollar stores, gas stations, and/or low-income housing projects. Further,
in exchange for the easement and in addition to the restrictions agreed to, Dr. York agreed
to bear all costs of constructing a road on the easement. The easement agreement provided
that, upon termination of the easement, Dr. York would regain all rights to the future
development of the sewage lagoon property. Thus, if Dr. York obtained alternate access to
the sewage lagoon, he could terminate the private easement and develop his property
restriction-free.
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[The Commission shall] . . . commence acquisition of right[-]of[-]way to
provide for a connection from the current location of Pat Station Road east of
State Route 12 outside the state-maintained limits of the intersection to the
easement rights which extend from the southerly border of the intersection of
State Route 12 and Pat Station Road to the sewage lagoon located to the south
thereof.
Upon successful acquisition of the right-of-way, the Commission was to “convey title to the
City by execution of a quitclaim deed provided by MDOT at its cost and expense.” In return,
the City was to accept conveyance of Starkville Lodging’s condemned property and bear
responsibility for any pavement or other improvements. The City, however, had no duty or
obligation under the memorandum of agreement to pave or otherwise improve the deeded
property—any decision to pave or improve the property was left to the City’s sole discretion.2
¶8. On June 27, 2017, the Commission, unable to reach an agreement with Starkville
Lodging for the acquisition of the parcel, ordered Starkville Lodging’s parcel condemned.
The Commission determined it “to be in the best interest of the motorists and taxpayers of
Mississippi to locate, relocate, construct and/or reconstruct a segment of MS Highway 12
Access Road, a part of the Mississippi State Highway System[.]” The Commission
accordingly found it “necessary to acquire for public use certain property belonging to
2
As mentioned, the City did not obligate itself to pave or otherwise improve the
condemned parcel of Starkville Lodging’s property. Nor did the City obligate itself to
provide a bridge connecting the sewage lagoon to the right-of-way envisioned for the
condemned parcel. At the eminent domain hearing, Dr. York testified he planned to
privately fund and construct both the road and the bridge connecting the future right-of-way
on Starkville Lodging’s property to his future development of the sewage lagoon property.
In response to the trial court’s question regarding whether Dr. York would be the owner of
the condemned parcel, Starkville Lodging conceded that, although privately funded and
constructed by Dr. York, the right-of-way would remain the property of the City as provided
in the memorandum of agreement. Thus, once built, the road and related infrastructure
would remain public.
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[Starkville Lodging], or their successor in title[.]” And on December 16, 2017, the
Commission reflected its decision to condemn Starkville Lodging’s property on its minutes,
as required by state law.
¶9. Two days later on December 18, 2017, the Commission filed its complaint in the
Special Court of Eminent Domain of Oktibbeha County, Mississippi. The Commission
thereby asserted its authority under the laws of the State of Mississippi to “locate, relocate,
widen, alter, change, straighten, construct, or reconstruct any and all highways of the State
Highway System” via its right to acquisition through condemnation. The Commission
reiterated that it found it necessary to obtain rights-of-way from Starkville Lodging and that
Starkville Lodging’s property was to be used “in the relocation and reconstruction of
Mississippi Highway 12 access road and as a part of and for the construction of same[.]”
¶10. Starkville Lodging filed a combined answer and motion to dismiss on July 6, 2018,
asserting that the taking of its property was in fact “for the purpose of accommodating a
private landowner whose property is adjacent to that of [Starkville Lodging]” and “to provide
access to the adjacent landowner’s property.” Thus, Starkville Lodging moved the Special
Court of Eminent Domain to dismiss the eminent domain proceeding on the grounds that the
proposed condemnation and taking was neither a public necessity nor for a public use.
¶11. After conducting a hearing on July 19, 2018, the Special Court of Eminent Domain
denied Starkville Lodging’s motion to dismiss and ordered the parties to proceed to trial by
jury to determine the damages due to Starkville Lodging. Specifically, the trial court found
(1) that the Commission satisfied its burden of proving a public use for the condemned
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property—i.e., for access to a state highway; and (2) that Starkville Lodging failed to satisfy
its burden of proving a lack of public necessity for the taking with proof of fraud or abuse
of discretion. Starkville Lodging appealed the denial of its motion to dismiss via a timely
notice of appeal.3
STANDARD OF REVIEW
¶12. The Special Court of Eminent Domain is the finder of facts in determining whether
to grant a motion to dismiss a petition for eminent domain. Ford v. Destin Pipeline Co. LLC,
809 So. 2d 573, 575 (¶4) (Miss. 2000) (citing American Tel. & Tel. Co. v. Purcell Co., 606
So. 2d 93, 95-96 (Miss. 1990)). The standard of review of a denial of a motion to dismiss
an eminent domain petition is whether the Special Court of Eminent Domain had a sufficient
basis for its decision. Id. (citing Mayor v. Thomas, 645 So. 2d 940, 941-42 (Miss. 1994)).
ANALYSIS
¶13. Mississippi Code Annotated section 11-27-15 provides in relevant part that any
defendant in an eminent domain action may file a motion to dismiss on the following
grounds:
(1) [T]hat the plaintiff seeking to exercise the right of eminent domain is not,
in character, such a corporation, association, district or other legal entity as is
entitled to the right; (2) that there is no public necessity for the taking of the
particular property or a part thereof which it is proposed to condemn; or (3)
that the contemplated use alleged to be a public use is not in law a public use
for which private property may be taken or damaged.
¶14. It is not disputed that the Commission is a legal entity that is entitled to exercise the
3
“[A]n appeal may be taken immediately from a ruling on a motion to dismiss an
eminent domain petition.” Winters v. City of Columbus, 735 So. 2d 1104, 1106 (¶4) (Miss.
Ct. App. 1999) (applying Miss. Code Ann. § 11-27-15 (Rev. 2015)).
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right of eminent domain. See Miss. Code Ann. §§ 65-1-8; 65-1-47 (Rev. 2012). As such,
we limit our review to (1) whether there is a public necessity for taking Starkville Lodging’s
property; and (2) whether the Commission’s contemplated use of the condemned property
is in law a public use for which Starkville Lodging’s property may be taken.
A. Public Necessity
¶15. The question of public necessity for a taking has consistently been held to be a
legislative question that courts should not disturb absent fraud or abuse of discretion. Morley
v. Jackson Redevelopment Auth., 632 So. 2d 1284, 1288 (Miss. 1994) (citing Governor’s
Office v. Carter, 573 So. 2d 736, 739 (Miss. 1990)).
The burden of proof on the issue of necessity is on the landowner who seeks
to show a lack of necessity. Whether the taking is necessary is within the
discretion of the condemnor and the courts will interfere with the exercise of
such discretion only when abuse of discretion or fraud is shown.
Paulk v. Housing Auth. of City of Tupelo, 195 So. 2d 488, 491 (Miss. 1967) (emphasis
added). Accordingly, the burden of proof on this issue lies with Starkville Lodging to prove
either fraud or abuse of discretion on the behalf of the Commission, which “[found] it
necessary to acquire for public use certain property belonging to [Starkville Lodging]” in
order to accomplish the “locat[ion], relocat[ion], construct[ion] and/or reconstruct[ion]” of
a segment of the Mississippi Highway 12 Access Road.
¶16. Starkville Lodging asserts that the specific purpose for which the Commission seeks
to condemn its property is to provide access to the abandoned sewage lagoon that the City
of Starkville agreed to sell to a private individual—Dr. Bennett York. In support of this
contention, Starkville Lodging references the contract for the sale and purchase of the
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sewage lagoon entered into between the City and Dr. York. That contract conditions the sale
of the sewage lagoon to Dr. York on the “State allowing access to [the] property for intended
use [of the] Buyer.” According to Starkville Lodging,
[s]ince the City of Starkville was prohibited from taking [its] property by
Section 110 of the Mississippi Constitution of 1890, there was a large legal
impediment which required the City to resort to trying to utilize MDOT’s
eminent domain powers of condemnation to provide access to the abandoned
property it had agreed to sell to Dr. York.
Starkville Lodging summarizes that the City and the Commission effected a “scheme or
workaround to provide Dr. York with access to the sewage lagoon,” and that this “scheme
or workaround” equates to an abuse of the Commission’s statutorily granted powers to
condemn private property for private use.
¶17. The Special Court of Eminent Domain, however, summarily disagreed with Starkville
Lodging’s contentions finding “the proof presented . . . is insufficient to establish an abuse
of discretion or fraud by the [Commission].” We agree with the trial court. Whether the
taking is necessary is within the discretion of the Commission. Starkville Lodging offered
no concrete proof of an abuse of discretion on the Commission’s behalf, let alone alleged
fraud that satisfies our heightened pleading standards. See M.R.C.P. 9(b). Starkville
Lodging failed to satisfy its burden of proving lack of public necessity, and our review of the
record demonstrates that the Special Court of Eminent Domain had a substantial basis for
denying Starkville Lodging’s motion to dismiss on this ground.
B. Public Use
¶18. Mississippi Constitution, Article 3, Section 17 (1890) provides:
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Private property shall not be taken or damaged for public use, except on due
compensation being first made to the owner or owners thereof, in a manner to
be prescribed by law; and whenever an attempt is made to take private property
for a use alleged to be public, the question whether the contemplated use be
public shall be a judicial question, and, as such, determined without regard to
legislative assertion that the use is public.
The Mississippi Supreme Court has ruled that the burden of proving a taking is for a public
use is on the condemnor. Morley, 632 So. 2d at 1289.
¶19. Here, the Special Court of Eminent Domain found that “the Commission’s proof that
the proposed taking is for access to a state highway is sufficient to meet its burden of proof.”
Thus, the trial court found that, as a matter of law, the contemplated use of Starkville
Lodging’s property for access to a public highway is sufficient to prove a public use. On
appeal, we are tasked with determining whether the Special Court of Eminent Domain, as the
finder of facts in determining whether to grant Starkville Lodging’s motion to dismiss, had
a sufficient basis for its decision. And, since the burden of proving a public use is on the
condemnor—here, the Commission—we must review the proof offered by the Commission
in support of public use.
¶20. Like the Special Court of Eminent Domain, we find that the Commission satisfied its
burden of proving a public use. In its order to condemn, dated June 27, 2017, the
Commission provided:
[T]his Commission has determined it to be in the best interest of the motorists
and taxpayers of Mississippi to locate, relocate, construct and/or reconstruct
a segment of MS Highway 12 Access Road, a part of the Mississippi State
Highway System. . . . To accomplish this project, the Commission finds it
necessary to acquire for public use certain property belonging to Starkville
Lodging Partners, LLC, or their successor in title . . . . [T]his Commission does
hereby declare said property necessary for public use and orders that it be
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condemned.
Likewise, the memorandum of agreement provides that the taking is necessary to “expand
and relocate State Route 12”:
[A] portion of an easement owned by the City of Starkville that extends from
the 1962 location of Pat Station Road southerly to the parcel of property
known as the Starkville sewage lagoon was not acquired by the Commission
during the acquisition of right[-]of[-]way to expand and relocate State Route
12 from the MSU campus to the U.S. Highway 82 bypass; and . . . , the parties
wish to correct the matter . . . .
¶21. This unrebutted proof, when coupled with the Commission’s complaint, trial
testimony, minutes, and answers to requests for admissions—each of which supports the
Commission’s designation of Starkville Lodging’s property as necessary for construction of
a state highway access road—provided the Special Court of Eminent Domain a sufficient
basis for its decision.4 As such, we find that the Commission satisfied its burden of proving
that the contemplated use of the property to be taken is in law a public use for which private
property can be taken.
¶22. AFFIRMED.
BARNES, C.J., CARLTON AND J. WILSON, P.JJ., GREENLEE,
WESTBROOKS, TINDELL, McDONALD, LAWRENCE AND McCARTY, JJ.,
CONCUR.
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We acknowledge that the Special Court of Eminent Domain erred when it stated,
“In the instant case the property to be taken will remain the property of the Mississippi
Transportation Commission . . . .” This statement is contrary to the memorandum of
agreement executed by the Commission and the City, which provides that the City will
accept conveyance of the condemned property upon successful acquisition of the right-of-
way. Notwithstanding, we find this error is harmless. Although the record indicates that the
infrastructure is to be privately financed and constructed, Starkville Lodging’s condemned
property is to remain in the hands of a public entity—the City of Starkville—for public use.
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