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State v. B & F Properties LLC

Court of Appeals of Minnesota

December 2, 2013

State of Minnesota, by its Commissioner of Transportation, petitioner, Respondent,
B & F Properties, LLC, et al., Appellants, City of Rochester, et al., Respondents Below.


Olmsted County District Court File No. 55C402004695

Lori A. Swanson, Attorney General, Jeffery S. Thompson, Assistant Attorney General, St. Paul, Minnesota (for respondent State)

Gary A. Van Cleve, Rob A. Stefonowitcz, Larkin, Hoffman, Daly & Lindgren, Ltd., Minneapolis, Minnesota (for appellants)

Kirk A. Schnitker, Jon W. Morphew, Schnitker Law Office, P.A., Spring Lake Park, Minnesota; and Bradley J. Gunn, Malkerson, Gunn, Martin, L.L.P., Minneapolis, Minnesota (for Amicus Curiae Minnesota Eminent Domain Institute)

Considered and decided by Schellhas, Presiding Judge; Stauber, Judge; and Bjorkman, Judge.


In this condemnation dispute, the appellant-landowners argue that the district court erred by not awarding them (1) interest on their condemnation award in an amount exceeding the statutory interest rate that would reflect a reasonable rate of return on the funds and (2) all their requested expert appraisal fees and costs. On its cross-appeal, respondent argues that the district court erred by considering evidence outside the record on a motion to amend, and by awarding appellants compound interest on their award. We affirm.


Appellants B & F Properties, Franklin P. Kottschade, Bonnie R. Kottschade, and SJC Properties LLC (collectively "appellants") owned vacant property located in the southwest quadrant of Highway 63 and 40th Street SW in the City of Rochester. Respondent Commissioner of Transportation (MnDOT) took portions of appellants' property, identified as Parcels 9, 10, and 11, by eminent domain for a roadway improvement project. On March 27, 2003, the date of the taking, MnDOT deposited payment with the Olmstead County Court Administrator pursuant to the "quick-take" statute. See Minn. Stat. § 117.042 (2002). In December 2006, a commissioners' meeting was held pursuant to Minn. Stat. § 117.075, subd. 2 (2006), to determine the amount of damages owed for the taking. In February 2007, the commissioners filed an award of $3, 265, 846. Both appellants and MnDOT appealed the award to the district court. And on March 28, 2007, MnDOT made an additional payment, which, together with the earlier quick-take deposit constituted its three-fourths payment pursuant to Minn. Stat. § 117.155 (2006).

Following a two-week trial, the jury returned a verdict awarding appellants $7, 845, 385. Appellants filed a post-trial motion seeking costs and interest on their judgment. Appellants submitted the affidavit of Christopher Glasoe, a financial consultant who opined that a reasonable interest rate would be 6.85%. MnDOT submitted the affidavit of Howard J. Bicker, the Executive Director of the Minnesota State Board of Investment (MSBI), who criticized Glasoe's investment proposal as impractical and risky, and concluded that the statutory rate of 4% was higher than what an investment likely would have earned between 2003 and 2011. The district court was persuaded by Bicker, and in its April 16, 2012 decision, ordered statutory simple interest on appellants' judgment. The district court also ordered costs for appellants' court fees and expert fees, but revised appellants' appraisers' fees down to reflect "Rochester-based" rates. At $200 per hour instead of the $375 and $410 per hour requested rate, appellants were awarded $62, 287.50 for one appraiser and $35, 435 for a second appraiser.

Appellants moved to amend the district court's determination of interest and costs pursuant to Minn. R. Civ. P. 52.02. In support of their motion, appellants submitted the affidavit of Thomas W. Hamilton, a commercial real estate and finance professor at the University of St. Thomas. Hamilton concluded that by investing in 20-year U.S. Treasury bonds, an investor could have earned a 6.48% rate of return between 2003 and 2012. But the district court was not persuaded, concluding that such long-term investments are not relevant to the facts of this case. The court was persuaded, however, by appellants' argument for compound rather than simple interest. Concluding that, had appellants been paid the damage award in March of 2003 when the taking occurred, appellants "could have earned money with that money, " "compound interest would have been available to the reasonable and prudent investor." And the court revised the number of hours one of appellants' appraisers was compensated for, but declined to increase the rate.

This appeal, and MnDOT's ...

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