Department of Transportation Ex Rel. People v. Hunziker

796 N.E.2d 122, 342 Ill. App. 3d 588, 277 Ill. Dec. 407

• Court: Appellate Court of Illinois
• Decided: September 10, 2003
• Docket: 3-02-0525, 3-02-0553 cons.
• Status: Published

Opinions

JUSTICE SLATER

delivered the opinion of the court:

Plaintiff Department of Transportation (the Department) filed complaints for condemnation of two contiguous parcels of property (the property) owned by defendant Dale Hunziker. The other defendants also have an ownership or other interest in the property. Hunziker filed a traverse and motion to dismiss each complaint, which the trial courts denied. On appeal Hunziker contends that the Department was required to disclose the appraisal reports that it used to determine the amount of compensation offered for the property. We agree.

Facts

In February of 2002, the Department notified Hunziker that its plans to widen Interstate 74 made it necessary to acquire his property. A separate letter was sent for each parcel. The letters set forth the amount of compensation that had been established by the Department and included a document entitled “Basis for Computing Total Approved Compensation and Offer to Purchase” (the basis document). Because the information contained in the basis document is critical to our resolution of this case, the relevant parts of one of those documents is set forth below:

“1. Existing Property:

Total area 31,467 square feet, more or less. Highest and best use as appraised, Fast food restaurant

2. Land to be Acquired as Premanent Right of Way:

Estate or interest to be acquired fee simple.

additional right of way

Existing right of way (when applicable)

Total right of way

3. Improvements and/or Fixtures to be Acquired:

Removal of a portion of the asphalt paving, concrete curbing, and landscaping, along with removal of two parking lot light fixtures mounted on light poles with concrete bases, an on-premise advertising sign, and elimination of 12 parking spaces.

4. Compensation for Permanent Right of Way: Fair market value of the 1,443 square feet to be acquired including all improvements as part of the whole property, based on an analysis of market data in the vicinity of the acquisition.

Damage to the remaining property as a result of the acquisition

(Relocation of sign, loss of parking)

Total compensation for permanent right of way

Less cost of construction to be offset against total compensation Net Compensation

1.443 square feet 0 square feet

1.443 square feet

$35,000.00

$35,000.00

$70,000.00

$0.00

$70,000.00

Benefits in the amount of $ NONE have been estimated to the remaining property. These benefits have been offset against any possible damages but have not been offset against any part of the compensation for the part acquired.

5. Compensation for the Removal of Signs Located on the Proposed Right of Way:

A description of the sign to be removed by

the owners $ 0

Total compensation for sign removal $ 0

6. Compensation for Temporary Construction Easements:

7. Parcel No. 415P023TE ~ 355 square feet for grading, shaping, and sidewalk construction Parcel No. Total compensation for easements Total Compensation for Entire Acquisition, which includes all interests in the land required for the highway improvement and damages to the remainder, if any. (sum of 4+5+6)

$ 2,000.00

$ 0

$ 2,000.00

$ 72,000.00.”

In response to the Department’s offers, Hunziker requested copies of the appraisal reports on which the offers had been based. The Department refused, stating that it was its policy not to release appraisals except in response to an appropriate discovery request. On May 9, 2002, the Department filed its complaints for condemnation, along with motions for immediate vesting of title under the “quick-take” provisions of the Eminent Domain Act (the Act) (735 ILCS 5/7 — 103 (West 2002)). Hunziker filed a traverse and motion to dismiss each case, along with a motion for expedited discovery. The discovery motion was granted and plaintiff thereafter furnished Hunziker with the appraisal reports for the property. Following a hearing on June 12, 2002, Hunziker’s traverses and motions to dismiss were denied. In each case the trial judge found that plaintiff was not required to furnish Hunziker with copies of its appraisals during negotiations, although one judge noted his belief that plaintiffs actions “smack[edj of arrogance” and were contrary to the spirit of sections 7 — 102 and 7 — 102.1 of the Act. 735 ILCS 5/7 — 102, 7 — 102.1 (West 2002). Hunziker now appeals, and we reverse.

Analysis

Jurisdiction

The Department has raised the issue of this court’s jurisdiction over this appeal in light of Southwestern Illinois Development Authority v. National City Environmental, L.L.C., 304 Ill. App. 3d 542, 710 N.E.2d 896 (1999), aff’d, 199 Ill. 2d 225, 768 N.E.2d 1 (2002). In Southwestern, the Fifth District Appellate Court held that the issue of whether the condemning authority had made a good-faith attempt to negotiate could not be considered in an interlocutory appeal brought pursuant to Supreme Court Rule 307(a)(7) (166 Ill. 2d R. 307(a)(7)) and section 7 — 104(b) of the Act (735 ILCS 5/7 — 104(b) (West 2002)). Southwestern relied on Southwestern Illinois Development Authority v. Vollman, 235 Ill. App. 3d 32, 600 N.E.2d 926 (1992), which held that an interlocutory appeal pursuant to section 7 — 104 of the Act was limited to the three issues delineated in subsection 7 — 104(b), which states in part:

“(b) At the [quick-take] hearing, if the court has not previously, in the same proceeding, determined [1] that the plaintiff has authority to exercise the right of eminent domain, [2] that the property sought to be taken is subject to the exercise of such right, and [3] that such right is not being improperly exercised in the particular proceeding, then the court shall first hear and determine such matters. The court’s order thereon is appealable, and an appeal may be taken therefrom by either party within 30 days after the entry of such order, but not thereafter ***.” 735 ILCS 5/7— 104(b) (West 2002).

We believe that the Southwestern court construed subsection 7 — 104(b) too narrowly. One of the findings that is expressly appeal-able is whether the right of eminent domain is “being improperly exercised in the particular proceeding.” 735 ILCS 5/7 — 104(b) (West 2002). Since good-faith negotiation by the condemnor is a condition precedent to exercising that right (see Department of Transportation ex rel. People v. 151 Interstate Road Corp., 333 Ill. App. 3d 821, 777 N.E.2d 369 (2002), appeal allowed, 202 Ill. 2d 669, 787 N.E.2d 172 (2003) (and cases cited therein)), review of the good-faith issue is proper as part of the larger issue of the propriety of exercising the power of eminent domain. 151 Interstate, 333 Ill. App. 3d 821, 777 N.E.2d 369. In the same manner, the question of whether the Department must disclose its appraisal reports is appealable because of its relationship to the issue of good-faith negotiations. We find no jurisdictional impediment to this appeal.

Standard of Review

Generally, a trial court’s ruling on a traverse and motion to dismiss is subject to a manifest weight standard of review. See, e.g., 151 Interstate, 333 Ill. App. 3d 821, 777 N.E.2d 369; City of Naperville v. Old Second National Bank of Aurora, 327 Ill. App. 3d 734, 763 N.E.2d 951 (2002). More particularly, the manifest weight standard has been applied to a trial court’s finding that the condemnor acted in good faith. See 151 Interstate, 333 Ill. App. 3d at 834, 777 N.E.2d at 381. However, while this case involves the question of good-faith negotiations by the Department, it does not involve a factual dispute. The sole issue is whether the Department is required, as part of its obligation to negotiate in good faith, to disclose its appraisal reports to property owners. The resolution of that issue requires interpreting section 7 — 102.1 of the Act. Statutory interpretation is a question of law (Branson v. Department of Revenue, 168 Ill. 2d 247, 659 N.E.2d 961 (1995)), and questions of law are reviewed de novo (151 Interstate, 333 Ill. App. 3d at 833, 777 N.E.2d at 380).

We now consider the substantive issue presented by this case: Must the Department, as part of its duty to negotiate in good faith, disclose the appraisal reports it uses in determining the amount of compensation offered to a property owner? We believe that it must.

Section 7 — 102 of the Act enables a public body to initiate condemnation proceedings when “the compensation to be paid for or in respect of the property to be appropriated *** cannot be agreed upon by the parties.” 735 ILCS 5/7 — 102 (West 2002). “Thus, the attempt to reach an agreement with a property owner is a condition precedent to the exercise of the power of eminent domain.” 151 Interstate, 333 Ill. App. 3d at 834, 777 N.E.2d at 380; see also City of Naperville, 327 Ill. App. 3d 734, 763 N.E.2d 951; Department of Transportation ex rel. People v. Brownfield, 221 Ill. App. 3d 565, 582 N.E.2d 209 (1991); Department of Transportation v. Walker, 80 Ill. App. 3d 1039, 400 N.E.2d 956 (1980). The attempt to agree must be made in good faith. 151 Interstate, 333 Ill. App. 3d 821, 777 N.E.2d 369; City of Naperville, 327 Ill. App. 3d 734, 763 N.E.2d 951.

Of course, a good-faith attempt to agree may arguably take many forms. For example, in County Board of School Trustees v. Boram, 26 Ill. 2d 167, 170, 186 N.E.2d 275, 277-78 (1962), our supreme court held that an attempt to agree does not necessarily require the condemnor to make an offer for the property:

“The statute does not require an offer but only requires that before exercising the right of eminent domain the authorities shall first attempt to agree on the amount of compensation. The making or not making of an offer is an important factor in determining whether a bona fide attempt to agree had been made, but an offer is not necessary where, as here, it is clear from the acts of the parties that it would be futile.”

Boram was decided, however, long before the legislature codified the duties imposed on a state agency prior to initiating condemnation proceedings. Effective January 1, 1992, section 7 — 102.1 provides in part:

“(d) At least 60 days before filing a petition with any court to initiate a proceeding under this Article, a State agency shall send a letter by certified mail, return receipt requested, to the owner of the property to be taken, giving the property owner the following information:

(1) The amount of compensation for the taking of the property proposed by the agency, and the basis for computing it.

(2) A statement that the agency continues to seek a negotiated agreement with the property owner.

(3) A statement that in the absence of a negotiated agreement it is the intention of the agency to initiate a court proceeding under this Article.” (Emphasis added). 735 ILCS 5/7 — 102.1(d) (West 2002).

As the language emphasized above indicates, the Department is required to not only make an offer, but it must also provide the property owner with “the basis for computing” the offer. The Department argues that the “basis documents” it provided to Hunziker satisfied its statutory obligation and therefore it did not have to provide the underlying appraisals. We disagree.

The basis document provides the following information: (1) the square footage of the entire properly and a determination of its highest and best use; (2) the square footage of the land to be acquired and a description of any improvements or fixtures; and (3) the amount of compensation, broken down into various components such as value of the property, damage to the remainder, and the value of easements. While the Department is correct in asserting that a properly owner could use this information to compute the price per square foot of the offer (e.g., $35,000 divided by 1,443 square feet equals $24,255 per square foot), what is missing is how that price was determined. Section 7 — 102.1(d)(1) requires the Department to provide the basis for computing the amount of compensation. The term “basis” is defined as the “[fundamental principle; groundwork; support; the foundation or groundwork of anything.” Black’s Law Dictionary 151 (6th ed. 1990). It has also been defined as “the principle component parts of a thing.” Black’s Law Dictionary 151 (6th ed. 1990). The latter definition is fairly descriptive of the basis document, while the former definitions are, we believe, more akin to what an appraisal would provide. Which definition should we adopt? We find that established principles of statutory construction, as well as sound public policy considerations, compel us to hold that section 7 — 102.1(d)(1) requires the Department to provide a property owner with an appraisal where one has been performed.

Statutes authorizing the taking of property through eminent domain are in derogation of individual rights (Village of Bolingbrook v. Citizens Utilities Co. of Illinois, 267 Ill. App. 3d 358, 642 N.E.2d 182 (1994)) and must be strictly construed to protect the rights of property owners (Village of Cary v. Trout Valley Ass’n, 282 Ill. App. 3d 165, 667 N.E.2d 1082 (1996)). See also Village of Round Lake v. Amann, 311 Ill. App. 3d 705, 723 N.E.2d 35 (2000). Construing the term “basis” to include an appraisal where one has been performed protects the rights of property owners by providing full access to the information underlying the Department’s compensation offer.

In addition, the primary rule of statutory construction is to ascertain and give effect to the intent of the legislature. In determining that intent, courts must read the statute as a whole, giving consideration to all relevant parts. Village of Cary, 282 Ill. App. 3d 165, 667 N.E.2d 1082. A review of the provisions of the Eminent Domain Act leads us to conclude that the Act “evidences a clear public policy to encourage voluntary acquisitions of property and to discourage forced appropriations through the exercise of the right of eminent domain.” Patrick Media Group, Inc. v. Du Page Water Comm’n, 258 Ill. App. 3d 1068, 1076, 630 N.E.2d 958, 964 (1994). In our opinion, section 7 — 102.1 is intended to further that policy and our interpretation is consistent with that aim. As Hunziker points out, withholding the appraisals left him with no basis to negotiate and forced him to either obtain his own appraisal or litigate the condemnation case. Forcing a property owner to make such a choice does nothing to encourage voluntary acquisition. On the contrary, the Department’s policy would likely increase the volume of condemnation litigation because, as Hunziker notes, an offer to pay compensation coupled with a refusal to disclose the appraisal on which the offer is based implies that the condemnor is attempting to acquire the property for less than fair market value. This practice invites litigation which, assuming the condemnor has offered the appraised value, is wholly unnecessary and avoidable.

Finally, requiring the Department to disclose its appraisal reports helps to level the playing field between the condemnor and the properly owner. As the court noted in City of Naperville:

“The negotiations that precede a condemnation proceeding cannot be viewed in the same manner as negotiations between a private buyer and seller. In a private negotiation, either parly can walk away from the negotiation if the price is not right. However, in a condemnation proceeding, the property owner does not have the same luxury. If the property owner cannot agree to compensation with the condemning authority, he will incur the cost and expense of defending against a condemnation proceeding in order to secure the payment of the fair market value of the property. It is for this reason that the condemning authority must make a good-faith effort to negotiate prior to filing suit.” 327 Ill. App. 3d at 740-41, 763 N.E.2d at 956.

Requiring appraisal disclosure as part of that good-faith effort enables the property owner to assess the reasonableness of the Department’s offer without incurring the expense of hiring his own appraiser. This increases the likelihood of an amicable agreement between the parties. Nondisclosure, on the other hand, forces the property owner to either hire an appraiser and litigate the condemnation case, or blindly accept the offer.

The Department argues that the property owner does not benefit from disclosure of the Department’s appraisal because most citizens, lacking the knowledge or expertise to value real estate, will still have to hire their own appraiser to evaluate the Department’s offer. We disagree. Many adults have gained at least some familiarity with appraisal reports when obtaining a mortgage, a not uncommon occurrence. While appraisals can be complex, the frequently employed method of using comparable properties to ascertain value is not highly technical and can provide useful information even to the unsophisticated property owner. In any event, even if only a few property owners decide to accept the Department’s offer because they have reviewed an appraisal report, those few have been spared the cost and inconvenience of litigation, as has the Department. Indeed, the Department has offered only two reasons to justify its policy of nondisclosure. The first, additional administrative costs, seems fairly insignificant in view of the fact that the Department is already required to send property owners a “60 day letter” prior to filing a condemnation action. See 735 ILCS 5/7 — 102.1(d) (West 2002). The second justification offered by the Department for refusing to disclose its appraisal reports is that the Eminent Domain Act does not require it. On the contrary, as we have explained, section 7 — 102.1(d)(1) mandates disclosure of the basis for computing the amount of the Department’s offer, which includes an appraisal where one has been prepared. Accordingly, because the Department refused to disclose the appraisal reports to Hunziker prior to filing its condemnation actions, the Department failed to negotiate in good faith, and Hunziker’s traverses and motions to dismiss should have been granted.

For the reasons stated above, the judgments of the circuit court are reversed. We remand these causes with directions to the trial courts to vacate the orders finding preliminary just compensation and vesting title in the Department. The courts may also consider the issue of defendant’s fees and costs as provided in the Act.

Reversed and remanded with directions.

McDADE, EJ., concurs.