Robert B. Barton et al. v. City of Norwalk (2013)

MEMORANDUM OF DECISION AFTER TRIAL

I. Background

This civil action was commenced in 2003 by Robert Barton the then owner of a four-story, walk-up, commercial building located at 70 South Main Street in Norwalk, which Barton had purchased with his wife in 1981.¹  Shortly after that purchase, Barton also acquired a vacant lot diagonally across the street at 65 South Main Street because the City of Norwalk required additional parking for the 70 South Main Street property.   Ex. 7. Eventually, 65 South Main Street was configured for 44 parking spaces and a certificate of zoning compliance was issued for both properties in 1984.   Ex. 26.

Barton initially used a substantial part of 70 South Main for his sail making business, but sold that business in 1985.   Subsequently, the building was leased to a number of tenants, and Barton testified without contradiction that for most of the next fifteen years the building was 95%–100% occupied.   Tr., 2–13–13, 60.

On January 11, 2002, Norwalk exercised its power of eminent domain, and a statement of compensation for both 70 South Main Street and the parking lot at 65 South Main Street was filed as part of project to relocate the main police station to the South Norwalk area.   Less than a week later, Norwalk amended its statement of compensation, excluding the building at 70 South Main Street from condemnation, and a certificate of taking of 65 South Main Street only was filed February 23, 2002.   A civil action was commenced by Barton to determine the value of the condemned property at 65 South Main. City of Norwalk v. Barton, Superior Court, judicial district of Stamford–Norwalk at Stamford, CV 02 0187554.   In that case, Barton twice attempted to amend his pleadings to reflect claimed losses to the 70 South Main Street property resulting from the condemnation of the 65 South Main Street property.   Norwalk successfully objected to these proposed amendments.   Thereafter, Barton commenced the present action claiming inverse condemnation of the property at 70 South Main Street.   Specifically, Barton alleged, in his amended complaint, that Norwalk's taking of 65 South Main has damaged his interest in 70 South Main due to loss of “required off-street parking for 70 South Main ․ result[ing] in a substantial partial defacto taking of 70 South Main.” Dkt. Entry 198.00, ¶¶ 8–9.   This is recognized as a claim for “inverse condemnation” which has been described as:

a cause of action against a governmental defendant to recover the value of property which has been taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been attempted by the taking agency ․ An inverse condemnation claim accrues when the purpose of government regulation and its economic effect on the property owner render the regulation substantially equivalent to an eminent domain proceeding ․ Accordingly, an inverse condemnation action has been aptly described as an eminent domain proceeding initiated by the property owner rather than the condemnor.

Bristol v. Tilcon Minerals, 284 Conn. 55, 83 (2007) [quoting Cumberland Farms, Inc. v. Groton, 262 Conn. 45, 73 (2002) ].   The amended answer of Norwalk denied the material allegations of a defacto taking, asserted special defenses of res judicata, collateral estoppel, judicial estoppel and asserted counterclaims seeking title to 70 South Main and an accounting, if the court found that there had been an inverse condemnation.

The condemnation case was resolved in 2009 when the Superior Court found the value of 65 South Main Street to be $310,000.  Barton v. Norwalk, supra, (January 27, 2009, Tierney, J.) 2009 WL 323785.   Also, in 2009 Norwalk moved for summary judgment seeking to dismiss this case.   The motion was denied and that disposition was upheld by the Appellate Court.  131 Conn.App. 719 cert. denied, 303 Conn. 906 (2011).

The trial of this case occurred before the court over four days in February 2013.   Barton testified at some length about the history of his ownership and management of the 70 South Main Street building, the changes in, and development of that area of Norwalk, the history of the parking lot at 65 South Main Street, his relationship with the Norwalk Zoning authorities, and the effect of the condemnation of 65 South Main Street on his building across the street.   One tenant and one former tenant of 70 South Main testified, and the plaintiffs' real estate appraisal expert also testified.   The City of Norwalk, although given an adjournment for the purposes of allowing a witness to be available, finally chose not to call any witnesses, although its counsel cross examined all of the plaintiffs' witnesses.

II. Facts

The following facts are found based on the exhibits admitted into evidence and the credible testimony presented at trial.   The court will note, as necessary, where the evidence is contested.   Subsequent to Barton's purchase of 70 South Main Street, mainly as a location for his sail making business, he cooperated with the City authorities so that the building would have off-site parking available, in addition to the single parking space on the site itself.   Working with the City Redevelopment Authority and the Planning and Zoning Commission, a plan to provide such parking on the lot across the street—65 South Main—was developed.   Exhibits 1, 4, and 6;  Tr., 2–13–13, 38–44.   That lot was purchased later in 1981, and a site plan for 70 and 65 South Main was approved by the Zoning Commission calling for 44 parking space on the latter property.   Ex. 6. Although Barton testified he did not think so much parking was required for 70 South Main, he appears to have readily acquiesced to the City's requirements.   Tr., 2–13–13, 32–33;  Ex. 3.

After Barton sold his sail making business in 1985, the buyers continued to use the building space for another year or so.   Tr., 2–13–13, 58–59.   Following that, the entire building was available for lease with the major lessees being Macedonia Church on the second floor, a photo-gift business on the third floor, certain crafts persons each with their individual space on the fourth floor, and several ground floor tenants including a barbershop operated by Lover Thomas and a neighborhood housing services office.   Tr., 2–13–13, 59–60.

There was testimony and evidence, essentially uncontradicted, that beginning around 1990 the amount of on-street parking in the area of 70 South Main became steadily more limited.   This condition resulted from several factors, including an enlargement of no parking zones in the 1990s;  e.g. Hanford Street abutting the south side of Barton's building changed from unrestricted parking to a prohibition on parking when it was converted into a through street;  Day Street, a block away, also changed to no parking;  and the addition of metered parking, (mostly two hours) on South Main Street in 2003.   Ex. 69,² p. 84;  Exs. 75–77;  Tr., 2–13–13, 46–47, 60–61, 100–06.

As early as 1996 Barton learned of the City's interest in 65 South Main as part of a parcel of land for locating a new police headquarters.   The proposed project was in the news media by 2000, and both Barton and some tenants at 70 South Main became concerned about the loss of parking if 65 South Main was condemned, and this concern was expressed to city officials.   See Exs. 41–43, Tr., 2–13–13, 62–65.   A lease of parking spaces at the South Norwalk railroad station was proposed, but not accepted by Barton or his tenants as being too far away, unpleasant and possibly dangerous.   Exs. 46, 75 and 69, p. 80;  Tr., 2–13–13, 71–75, 128–31.

The condemnation took place in February 2002, and the record is quite convincing that the economic fortunes of 70 South Main took a considerable turn for the worse thereafter, a result that Barton had accurately predicted and described in communications to Mayor Frank Esposito of Norwalk and his successor Mayor Alex Knopp.   Exs. 43, 48, 55–56.

Following the departure of the sail making business the largest tenant of 70 South Main was Macedonia Church, which since 1987 occupied all of the second floor, parts of the third floor and at times part of the fourth floor.   Prior to the taking of 65 South Main, but in light of its future effect on parking for its membership, Macedonia Church notified Barton that it would be looking for an alternative location, and allowed its lease to expire.   Ex. 41, Tr., 2–13–13 116.   Since the taking Macedonia Church has benefitted from an arrangement with Norwalk for its members to park at a City-owned area off Hanford Street, about 300 feet from 70 South Main. Id., 118 The church has been looking for another suitable site since 2000, without success.  Id., 119, but having the free parking has allowed the church to stay at 70 South Main on the month-to-month basis that exists today.  Id.

Immediately after the taking of 65 South Main, 70 South Main lost the tenants who leased the fourth floor and part of the third;  they cited the loss of parking as reason not to renew.   Tr., 2–13–13, 89.   The Family and Children's Aid Society of Fairfield County announced they would leave at the expiration of their lease because of lack of parking;  that lease covered about three quarters of the space on the ground floor.  Id. There was evidence that the fourth floor space could not be rented to prospective tenants who found the space attractive and suitable, but were discouraged by the lack of parking.   Ex. 58.

Barton prepared and had admitted into evidence two exhibits in graph form tracing the amount of rentable space at 70 South Main actually under lease at the beginning of each July for the years 2001 through 2011, showing a severe decrease in leased space from 87% in 2001 to a low of about 5% in 2006.   Ex. 71.   The graph itself does not depict the fact that Macedonia Church continued occupancy in the building during this period and paying rent, but this fact is noted on the above exhibit.   Tr., 2–13–13, 113–20.   A similar graph presentation shows a loss of $40–50,000 in annual operating profit.   Ex. 72 (showing decrease from $94,080 to $20,661 from 2001 to 2006);  Tr., 2–13–13, 122.   At the present time, the tenants are Macedonia, a bail bondsman (Bail King) and a cell phone store (Cell Touch), the latter two each occupying one of the six ground level retail areas.   Tr., 2–14–13, 96–97, 711–78, 183.   Barton testified that at one point his son lived in and provided repair and maintenance services to the building to reduce costs.   Tr., 2–13–13, 123.

Although arguably not directly relevant to the signal issue in this case—inverse condemnation—it is worth noting the difficulties encountered by Barton and his tenants and raised by City agencies in the years following the taking of 65 South Main. Barton testified, without contradiction, that contractors hired to make repairs to the 70 South Main building's roof and windows to correct leaks and repair the heating system, were unable to obtain the appropriate permits because the building was deemed not to be in zoning compliance.   Tr., 2–13–13, 136–45.   The lack of zoning compliance and parking also prevented a new tenant from obtaining a certificate of occupancy.  Id., 142–43;  Tr., 2–14–13, 171;  Ex., 65;  Ex. DD. Indeed, the record is replete with responses from municipal authorities that nothing can be done because of the parking issue and pending litigation.   Tr., 2–14–13, 184 (responses from zoning office are “no parking, no permits,” or “there's pending litigation;  we can't talk to you”).

In support of their inverse condemnation claim, the plaintiffs presented the testimony and written report of Michael McGuire, a commercial real estate appraiser for about thirty years, knowledgeable about real estate values and trends in the Norwalk area and presently, since 1996, a principal of Austin McGuire Co, a real estate appraisal firm in Norwalk.   McGuire's testimony and report centered on the combined value of the 70 and 65 South Main properties, just before the condemnation of 65 South Main, and the value of the 70 South Main property alone after the February 2002 taking.   Ex. 70, p. 2;  Tr., 2–15–13, 71.

McGuire's report expressed the opinion that the before taking value of the two properties was $1.1 million, and the after taking value of 70 South Main alone was $180,000, a diminution in value of 83.6%. Ex. 70, p.2. Tr., 2–15–13, 6–7.   The after taking value was adjusted during McGuire's testimony at trial, when he corrected the figure for required parking from 48 spaces to 44.   Tr., 2–15–13, 7. This increased McGuire's after taking value of 70 South Main to $200,520, a decrease of 81.77% from the $1.1 million before taking value.   According to McGuire, the pre-taking value was arrived at through the income valuation approach and confirmed by a sale of comparable buildings valuation.   Ex. 70, p. 2, 37–45;  Tr., 2–15–13, 10–38.   The after taking value was primarily based on the income valuation method because McGuire testified there were no comparable sales or even comparable rental data.   Tr., 2–15–13, 38–40.   The McGuire report and testimony did not employ the third of three “classical” means of appraisal, replacement cost, because of lack of relevance and the building's age and depreciation.   Ex. 70, p. 3. In arriving at an after taking value McGuire made certain assumptions as to how to obtain zoning compliance including a fee in lieu of parking of $15,000 per required, but unavailable, parking space, a total of $330,000.   Ex. 70, 48–50.   The lack of parking after the taking of 65 South Main devalued 70 South Main in other ways, such as a lower than usual rental rate, $10.00 per square foot.   Ex. 70, p. 47.   In place of a sales comparison approach, McGuire used an “alternative” valuation approach which he described as “unique”;  this method is set forth at Ex. 70, p. 51 and established an after taking value of $177,113.   McGuire revised this number at trial by substituting the actual amount received in the 65 South Main condemnation ($310,000) for the figure $350,000 used in the report.   The revision increased the after taking value of 70 South Main to $217,113.   McGuire did not rely on the alternative value for his final opinion as to the after taking value of $200,520.   He testified he had never previously used the alternative method in circumstances similar to this case.   Tr., 2–15–13, 136.   McGuire testified that a primary driver of the pre-taking valuation of 70 Main Street was the availability of dedicated parking on 65 South Main because in a suburban market, “parking is the lifeline of [a] building.”   You take the parking away;  you've gutted the building—the value of a building.   Tr., 2–14–13, 210–11;  see also Ex. 70, p. 1 (“As a result of owner's loss of 44 parking spaces at 65 South Main Street, the subject building at 70 South Main Street has been operating very inefficiently ․ The only way to rejuvenate this property is by providing adequate parking”).

III. Discussion

A. Subject Matter Jurisdiction

Norwalk has raised the issue of the plaintiffs' standing to pursue the inverse condemnation claim in its post-trial memorandum of April 16, 2013, Dkt. Entry 227.00.   As far as this court is aware, the issue was not raised in any prior pleading or motion.   Nevertheless, it is axiomatic that challenges to a court's subject matter jurisdiction must be resolved, and standing implicates a trial court's subject matter jurisdiction over a case.  Bateson v. Woddle, 306 Conn. 1, 8 (2012);  Town of New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 511, 518 (2009).

Norwalk contends that the plaintiffs lack standing in this case because title to 70 South Main Street was transferred from the initial plaintiff Barton to Sonoson, LLC and therefore the initial plaintiff is not in a position to convey title to Norwalk if they prevail.   Norwalk further contends that Sonoson was not the owner of the property in 2002, and did not incur damage then and there is no evidence that Barton assigned his money claims to Sonoson.

This argument is contrived and without a factual basis.   Barton testified he became an owner of 70 South Main in 1981 and a deed admitted into evidence supports this testimony.   Tr., 2–13–13, 26, 152;  Ex. 5. Barton's interest in the property was transferred to Sonoson, LLC by quit claim deed in 2005.   Ex. 59, Tr., 2–13–13, 26.   Barton also testified that Sonoson holds the right to receive whatever compensation is received by means of this action.   Tr., 2–14–13, 91–96.   Norwalk has presented no evidence to contradict this testimony.   A recipient of a quit claim deed is entitled to all rights and benefits accruing to the former owner.  Hoyt v. Kethan, 54 Conn. 60 (1886).   Sonoson has been made a plaintiff in this case.   Dkt. Entry 197.00, 197.86.   The court holds the plaintiffs have standing to pursue this claim, and that the court has subject matter jurisdiction to hear and decide this case.

B. Inverse Condemnation:  Legal Standard

The appellate courts of this state have employed somewhat varying descriptions of the proof plaintiffs must show to establish that an inverse condemnation has occurred.   In Citino v. Hartford, 51 Conn.App. 262 (1998) overruled on other grounds, Kaczynski v. Kaczynski, 294 Conn. 121, 139 n.10 (2008) the Appellate Court said “[e]njoyment and use of the entire property need not be completely destroyed for land to be deemed taken ․ There need be only a near destruction of the land's prior use and a marked depreciation in value ․ The test is whether the property no longer has any reasonable and proper use and whether the economic utilization of the land has been, for all practical purposes destroyed.”  Citino, supra, 51 Conn.App. 280.³

More recently, in Sinotte v. Waterbury, 121 Conn.App. 420, cert. denied, 297 Conn. 921 (2010) the Appellate Court affirmed a trial court decision that a series of sewage backups at the plaintiffs' residence did not arise to a constitutional taking noting that various real estate appraisals “clearly showed the property retained economic value.”  Sinotte, supra, 121 Conn.App. 437.   The trial court had stated that the subject property “still has economic value, and ․ plaintiffs are still able to use the property as a residence.”   Sinotte v. Waterbury, Superior Court, judicial district of Waterbury, CV 04 4001115 (Upson, J., March 10, 2008).  (45 CLR 204).   While the reported opinions do not reflect to what extent the Sinotte residence's appraisals reflected reduced value, an examination of the Superior Court file reveals that three trial exhibits (Exs. R, S and 5) were appraisals of the residence between 2002 and 2006 indicating a value between $110,000 and $145,000.   Two of the appraisals estimated that the sewage problem had decreased the residence value by less than 40%.  Id., Exs. 5, R.

In Bristol v. Tilcon Minerals, Inc., supra, the City of Bristol had condemned outright almost 25 acres of land owned by Tilcon to remediate potentially contaminated groundwater emanating from a city landfill.   Tilcon made a claim of inverse condemnation of an additional 19.85 acres of its property claimed to be contaminated by the landfill.   At trial, the Superior Court found in favor of Tilcon on its inverse condemnation claim, finding that the groundwater under the entire 19.85 acres was contaminated by leachate from the landfill creating a stigma that substantially interfered with Tilcon's right to use the property, but did not destroy the marketability of proposed residential lots on the land, and determined that the stigma reduced the lots' value by one-half.

The Connecticut Supreme Court reversed the trial court's inverse condemnation determination, stating, among other things, that the determination that the value of the 19.85 acres had only been reduced by half suggested that the trial court did not find that the property could not be utilized “for any reasonable and proper purpose.”  Bristol, supra, 284 Conn. 84–85 [quoting Tamm v. Burns, 222 Conn. 280, 284 (1992) (emphasis in original) ].   The Bristol decision stated “Connecticut law on inverse condemnation requires total destruction of a property's economic value or substantial destruction of an owner's ability to use or enjoy the property;” 284 Conn. 85;  and found Tilcon's inverse condemnation claim was not even a “close” case, because the groundwater had no effect on its present mining-related activities and introduced no evidence that residential development could not occur simply because of the stigma.  Id.⁴

C. Plaintiffs' Claim of Inverse Condemnation and Defendant's Motion and Defense that Plaintiffs Failed to Make Out a Prima Facie Case and Failed to Establish a Viable Inverse Condemnation Claim

After the plaintiffs rested, Norwalk moved for judgment of dismissal for failure to make out a prima facie case.   That motion was taken under advisement;  Norwalk chose not to present any witnesses, and the evidence was closed.   The motion to dismiss, plaintiffs' arguments for a finding of inverse condemnation and the defendants' arguments against such a finding, including their special defenses, comprise the major issues before the court, and will be discussed herein in what is hoped to be some kind of rational order.

The plaintiffs' contention that they have proven their claim of inverse condemnation rests on exhibits and testimony as to the effects the taking of the parking area across the street had on the leaseability of the space at 70 South Main and the economic consequences thereof.   As noted above, the loss of parking had serious immediate and enduring adverse effects.   Rental space under lease fell from over 90% in 2001 to about 5% in 2006 and 10% today.   Ex. 71.   In August 2002, only six months after 65 South Main Street was taken, Barton's real estate broker described the major issue preventing leasing space at 70 South Main Street was “the lack of on-site or close to the building parking” and predicted without a solution to the parking problem “the future tenancy of 70 South Main Street looks very bleak at present.”   Ex. 58.   This prophecy has been borne out.   For example, a long time lessee (since 1989), the barber Lover Thomas, testified that his customers had parked at 65 South Main Street until it was taken.   Tr., 2–14–13, 6–7, 10.   After the taking he lost 25% of his customers and any of those that stayed got tickets forcing him to close his shop.  Id., 7. In a letter at that time, Mr. Thomas explained:  “It just doesn't pay to open anymore ․ the parking situation has just killed us ․ Nobody wants to pay a $15 or $25 fine to get a $12 haircut ․” Ex. 60.

A large tenant Macedonia Church refused to renew its lease after it learned about the proposed loss of parking at 65 South used by its members since the church moved in in 1987.   Tr., 2–14–13, 114–16.   Deacon (now Reverend) George Cromwell wrote Barton that the church would be looking for alternative locations to 70 South Main Street.   Ex. 41.   That search has not been fruitful to date, and Macedonia Church has remained a month-to-month tenant at 70 South Main. Through direct negotiations with Norwalk, Macedonia members have been permitted to park on a dirt lot owned by Norwalk at no cost.   Tr., 2–14–13, 118.   If this free lot were not available, Reverend Cromwell said the church would be in extreme difficulties and would have to look for alternative, even if temporary, accommodations.  Id., 120.   The lot available to the church is not available to other tenants of 70 South Main Street.   Tr., 2–13–13, 68–69.   As noted earlier, supra, 6, the third, and fourth floor tenants and a significant tenant on the ground level departed because of the lack of parking.

The Connecticut Constitution requires “just compensation” be paid to the former owner when property is taken for public use.  Conn. Const. art I, § 11.   If the claimed taking is partial, as alleged by the plaintiffs, “the usual measure of damages is the difference between the market value of the [property] before the taking, and the market value of [the property] thereafter.”   Bristol v. Tilcon Minerals, Inc., supra, 284 Conn. 71.   The amount that constitutes just compensation is the “market value of the condemned property when put to its highest and best use at the time of the taking.”  Northeast Ct. Economic Alliance, Inc., v. ATC Partnership, 272 Conn. 14, 25 (2004).   The court presumes as well that whether a claimed loss amounts to a constitutional taking at all, may be determined based on the same information.   The only evidence on this subject in this case is the testimony of McGuire, on both direct and cross examination, and his written report.   Ex. 70.

The parties have focused their arguments on the claimed merits or deficiencies of that evidence.   Norwalk vigorously contests the findings and expert opinions rendered by McGuire.   At the outset of McGuire's cross examination by Norwalk, credible evidence was submitted that a certain number of the parking spaces at 65 South Main had been leased to tenants of affordable housing units nearby owned and financed by Barton through a program supported by the City. Exs. C through S. The City claims these leases negate the claim that 65 South Main was for the exclusive use of 70 South Main tenants, and then mocks Barton's testimony that the effect of these leases was negligible because few, if any, of the housing tenants had cars.   Def. Memo., April 16, 2013, 8 and n.9. The fact is, however, the leases expired in 1996 (Tr., 2–14–13, 165) a fact unchallenged by the City, and the evidence shows that all the parking at 65 South Main was available to 70 South Main tenants.  Id., 166.

Norwalk also sharply questions McGuire's subtraction of $330,000 from the “after taking” value of 70 South Main Street stating that McGuire made no attempt to verify that amount as the required “fee in lieu” of parking.   Def. Memo, April 16, 2013, 20.   As set forth in his report, such fees are payable if a change in building use requires more parking than is actually available.   Ex. 70, p. 49.   McGuire arrived at this cost by determining that the best possible use of 70 South Main Street after the 2002 taking did not include having Macedonia Church as a tenant, but substituting higher paying regular office tenants.   Since that use required, according to McGuire's calculations, an additional 22 spaces that were not available, 70 South Main Street would be required to pay the $15,000 per space “fee in lieu.”  Id., 48–49.   There was no evidence presented that McGuire, who had recent expertise in dealing with parking rules in Norwalk (Tr., 2–15–13, 66–71), was incorrect in his calculations, and Norwalk presented no zoning official to contradict McGuire's conclusion that a fee in lieu of parking would be assessed against 70 South Main.

The “fee in lieu” arguments (the City opposing the deductions of such fees from the “after” valuation of 70 South Main, the plaintiffs supporting it) involve several issues.   As noted, McGuire's after taking analysis included all of the second floor space and some of the third floor as rentable at $10.00 per square foot, whereas Macedonia Church presently pays considerably less than that ($6.77 per square foot) on a month to month basis.   Norwalk points out that the church has been a tenant continuously since 2002, but McGuire responds that it has just as continuously stated it is looking for different space since 2000.   McGuire testified, without any contradiction, that it would be “absurd” in considering highest and best use for a prudent owner to accept a lease for $6.77 per square foot, effectively a net rent of a little over $2.00 per square foot.   Tr., 2–15–13, 85–86.   On the whole, the court accepts McGuire's analysis as consistent with commercial real estate appraisal purposes and an appropriate means to ascertain market value.   Norwalk appears to quibble with McGuire's finding that the change of use would involve having to pay for 22 new spaces, but it offered no competing expert analysis or factual testimony to the considered testimony and report of McGuire.   It should also be noted that by replacing the church's $6.77 per square foot rent with a $10.00 rate substantially increased the appraised “after” taking value, although certainly not enough to offset the fee in lieu of parking charge.   The court also notes that the $10.00 rate is lower than market rates reflecting the effect lack of parking per se has on the building's commercial appeal.   Ex. 70, p. 47.

Norwalk also contends that McGuire's testimony and report incorrectly fail to take into account the $310,000 received by Barton as a result of the appeal of the eminent domain case for 65 South Main Street.   In essence, this is an argument that whatever diminution in the value of 70 South Main occurred as a result of the condemnation of 65 South Main should be reduced by the amount Barton received for 65 South Main, i.e. $310,000.   While this argument has a superficial attraction, it assumes that offsetting the $310,000 from the loss to 70 South Main will prevent a double recovery.   That is an incorrect assumption, as pointed out by the Appellate Court which stated:

[T]he losses suffered by the plaintiff are in fact two separate and distinct losses ․ The court in the eminent domain proceeding did not consider, nor should it have considered, information about damages to 70 South Main Street that were irrelevant to 65 South Main Street.

131 Conn.App. 726–27.   The damages being claimed in this case are not the same as those claimed in the eminent domain case.   This case involves the diminution of the value of 70 South Main. The prior case involved the value of 65 South Main. Therefore, it would be inappropriate to offset the latter from the former.   The fact that diminution in the value of 70 South Main was due largely to the unavailability of 65 South Main does not mean that the diminution of the value of 70 South Main is the same thing as the value found for 65 South Main, or that the two numbers represent the same loss.

Norwalk also contends that the analysis of McGuire and his report is unfairly and fatally skewed by the fact that it compares the before taking value of 70 South Main and 65 South Main together with the after taking value of 70 South Main alone.   According to Norwalk, this apples and oranges comparison is not what this case is about.   The court disagrees.   The claim made here is that an inverse condemnation, or de facto partial condemnation, of 70 South Main Street occurred when the use of 65 South Main Street for parking was taken away.   That claim necessitates a comparison of the market value of 70 South Main with the use of 65 South Main available (before taking value) with the value of 70 South Main without the use of 65 South Main (after taking value).   As stated by the Appellate Court, the issue in this case “is what damage 70 South Main Street incurred as a result of losing the use of 65 South Main Street as a parking lot.”  131 Conn.App. 732.   That is the analysis provided by McGuire.

The court generally accepts the report and testimony of McGuire that the after taking value of 70 South Main is slightly over $200,000, a decrease of over eighty percent from before taking value.   Norwalk argues that the building can still be used as an office or commercial building, and that one large tenant (Macedonia Church) remains and two other tenants have moved in since 2002 (Bail King and Cell Touch).   Therefore, according to Norwalk, plaintiffs have not proved that there has been “total destruction of 70 South Main's economic value or substantial destruction of the owner's ability to use or enjoy the property.”  Bristol v. Tilcon, supra, 284 Conn. 85.

The court agrees that the first prong of the above formulation has not been proven.   Certainly the building still stands and the office and commercial spaces are available to rent.   But, the court finds the economic cost of no available parking has substantially destroyed the plaintiffs' ability to operate the property as a leasable facility and enjoy even a modicum of financial success.   The evidence shows the lack of parking, which the City initially insisted upon, reduced the ability of 70 South Main's chances of commercial success to negligible or non-existent.   Macedonia remains on a month-to-month basis, only because of three reasons:  it presently has nowhere else to go;  it pays far below market rent, and it gets free parking through the City's largesse.   If any of these three conditions cease in the future, Macedonia's month-to-month tenancy would end.   The two street level tenants lease small areas and are unlikely to expand.   The bail bond office, of course, has a unique situation being located literally across the street from the police station.   The cell phone store owner walks to work and the clientele is mostly walk-in.   Tr., 2 14–13, 177.   The remainder of the building will attract tenants only by rock bottom rents, and these will be tenants for which parking is not an issue, likely a small and transient group.⁵

Neither of the fact situations presented in Sinotte and Bristol presented a “close” case because there were findings of fact that the subject properties had lost half or less than half of their value.   This case, where the loss is considerably greater than those incurred by the owners in Bristol or Sinotte, is more comparable to the situation in Citino.   In that case the plaintiff Citino purchased property on Squire Street in Hartford, an area that was planned for redevelopment by the City of Hartford.   Owners of property in the area could retain their property if the property was rehabilitated.   Citino rehabilitated the building on Squire Street in conformance with Hartford's requirements with modern and updated appliances, incurring considerable expense and taking on a mortgage.   Using the powers of eminent domain, Hartford acquired all the properties in the surrounding area except Citino's.   The redevelopment plan was not implemented by Hartford at the time of the trial of Citino's inverse condemnation claim, and his property, surrounded by boarded up and abandoned structures and littered property, had only two of six apartments producing rent.  Citino, supra, 51 Conn.App. 265–69.   In these circumstances even though part of Citino's building continued to be rented, the court said the economic viability of his property was nonexistent.   The same analysis can be applied in this case.

The court has no doubt this is a close case.   Nevertheless, the only evidence in this case is that 70 South Main Street has substantially depreciated in value, by over eighty per cent, and this loss has been caused by the taking through eminent domain of the dedicated parking spaces across the street.   The court finds this circumstance to be a substantial destruction of the owner's ability to enjoy or use the property and that the loss of value is sufficient to be of constitutional dimension, so that the plaintiffs have proved their claim of inverse condemnation.

D. Special Defenses of Norwalk

Norwalk asserts that Barton's claim is precluded by the doctrine of judicial estoppel.   In Associate Resources, Inc. v. Wall, 298 Conn. 145 (2010) the Connecticut Supreme Court had its “first opportunity” to consider the judicial estoppel doctrine as a matter of law;  Id., 169;  and held that the doctrine could be applied by Connecticut courts in the exercise of judicial discretion.  Id., 171–72.   The doctrine was explained as follows:

“Typically, judicial estoppel will apply if:  1) a party's later position is clearly inconsistent with its earlier position;  2) the party's former position has been adopted in some way by the court in the earlier proceeding;  and 3) the party asserting the two positions would derive an unfair advantage against the party seeking estoppel ․ We further limit judicial estoppel to situations where the risk of inconsistent results with its impact on judicial integrity is certain.”  (Citation omitted;  internal quotation marks omitted.)  DeRosa v. National Envelope Corp., 595 F.3d 99, 103 (2d Cir.2010).   Thus courts generally will not apply the doctrine if the first statement or omission “was the result of a good faith mistake ․ or an unintentional error.”  (Citations omitted.)   Simon v. Safelite Glass Corp., supra, 128 F.3d 73.

Id., 170.

Norwalk contends that in the earlier eminent domain case, Barton sought to increase the amount of compensation due by presenting evidence as to the value of 65 South Main based on its highest and best use as a mixed use development, and that use is “completely inconsistent” with its claimed use here as a parking lot dedicated exclusively to tenants of 70 South Main Street.   Norwalk Memo., April 16, 2013, 27 n.18. However, as pointed out by the plaintiffs, in the initial condemnation case Judge Tierney found the value of 65 South Main Street to be almost the same whether valued as a parking lot or valued at the purported highest and best use as a mixed use development.  Barton v. City of Norwalk, supra, 2009 WL 323785 *7, *10.   Therefore, the factual predicates for judicial estoppel are missing in that the plaintiffs' positions are not clearly inconsistent, and they have not derived an unfair advantage.   The court also notes that it is standard appraisal methodology, and a legal requirement, that properties should be appraised for their highest and best use.   Northeast CT Economic Alliance, supra.

Norwalk has argued that the plaintiff's claims are barred by the doctrine of res judicata and collateral estoppel.   Indeed, prior to trial, Norwalk moved for summary judgment dismissing this case on these grounds.   When that motion was denied, Dkt. Entry 156.00, Norwalk appealed the denial to the Appellate Court which, in a comprehensive opinion, affirmed the trial court in all respects.  131 Conn.App. 719 (2011).

Notwithstanding that decision, Norwalk still contends that this case should be dismissed on either res judicata or collateral estoppel grounds, or both, because the Appellate Court decision cited above simply affirmed there were unresolved fact questions that must be tried with respect to the issues of res judicata and collateral estoppel.   This court finds the City's position to be based on a misreading of the Appellate Court's opinion which did not rest its affirmance on the existence of one or more unresolved questions of fact, but rather, on its considered determination that Norwalk's special defenses had no merit as a matter of law Id., 723–32.   Further, in its post-trial memoranda Norwalk fails to identify a single question of fact that requires resolution.   The res judicata and collateral estoppel arguments are found wanting.

Norwalk contends, as it did before the Appellate Court, that the prior eminent domain proceeding concerning 65 South Main Street provided, or could have provided, the plaintiffs with all the damages they now seek for the loss of 65 South Main. Def. Memo. April 16, 2013, 18.   This argument was soundly rejected by the Appellate Court;  131 Conn.App. 723–26;  and the recitation of cases in Norwalk's post-trial papers which were correctly distinguished by the Appellate Court carries no more weight now than it did earlier.

The City also argues that the plaintiffs' claims are barred by General Statutes § 8–132 which allows a person claiming to be aggrieved by the statement of compensation filed in connection with an eminent domain proceeding a period of six months after the statement has been filed to apply to the Superior Court for judicial review.   According to Norwalk, this action, filed more than six months after February 2002, is time barred.   This argument fails because this action is not one seeking judicial review of compensation for the taking of 65 South Main, but is a separate action seeking damages allegedly occurring to 70 South Main, and these latter damages were not considered in the earlier eminent domain case, although the plaintiffs tried to broaden that proceeding to include them, to no avail.

E. Norwalk's Counterclaims

In its first counterclaim, Norwalk alleges that if the plaintiffs' claim of inverse condemnation is sustained, the City is entitled to an order requiring the plaintiffs to transfer title to 70 South Main to it.   Norwalk references the statement in Citino that since the concepts of inverse condemnation and eminent domain were alike, the plaintiff was ordered to convey his Squire Street property to the defendant.   This was clearly the correct remedy in that case for two reasons:  the plaintiff was awarded $278,500, the full value of his property, as just compensation;  51 Conn.App. 283–84;  and, as pointed out by the plaintiffs, the Citino trial court noted the plaintiff specifically requested that the property be conveyed to the Hartford Redevelopment Agency.   Citino v. Hartford Redevelopment Agency, Superior Court, judicial district of Hartford, CV 95 0545209 (January 30, 1997, Sullivan, J.).   Neither of those factors are present in this case, and the court lacks authority to order the transfer of 70 South Main to the City for less than fair market value.

In its second counterclaim, Norwalk seeks an accounting.   There was no evidence presented during the trial to support a remedy of accounting, but in its post-trial papers Norwalk contends that an additional hearing is required to ascertain the amount of income plaintiffs earned from 70 South Main so that amount may be deducted from any award of interest.

The court denies this request.   While it is the court's intent to award interest pursuant to statute, there is no relationship between the amount of that interest award and income derived from 70 South Main since the date of the inverse condemnation, and no legal basis to offset the latter from the former.  General Statutes § 37–3c requires an award of interest in eminent domain cases.   The obvious intent is compensate the owner for the loss sustained from the date condemnation took place.   The court has found the loss that occurred in February 2002 to be almost $900,000.   Whatever income that might be attributable to 70 South Main in the period after February 2002, if any, it is income, derived from an asset that has been devalued by over 80% from its pre-taking worth.   In other words, the interest award compensates for the loss of value that took place over a decade ago.   It is not an award that can or should be reduced by any income earned in the intervening years from that diminished asset.

IV. Conclusion

A. The court finds for the plaintiffs and against the defendant on the inverse condemnation claim and awards just compensation of $899,480, the difference in the value of the subject property, 70 South Main Street before and after the taking of 65 South Main in February 2002.

B. The court shall include an award of interest in accordance with General Statutes § 37–3c.   The plaintiffs contend that the maximum interest rate allowable of 10% should be awarded based largely on the “highly questionable” actions of the City in relation to this proceeding.   Pl. Memo., April 16, 2013, 29.   Among others, the plaintiffs point to the following:  failure of the City to heed Barton's pleas before condemnation that the loss of 65 South Main would be very injurious to 70 South Main;  acknowledging the linkage of properties by initially condemning both and reversing itself and later taking only one property;  providing Macedonia free parking, but not affording other tenants the same relief, thereby assisting Macedonia to stay as a tenant, the only fact keeping 70 South Main from having no value;  the uncooperative “no parking no permits” attitude of the zoning officials, and the appeal of the denial of summary judgment which purportedly delayed the trial of this case for four years.   The court generally rejects this argument as being based largely on suspicion and conjecture, and only an iota or two of evidence.   While the unrebutted testimony as to the posture of the zoning officials is troubling, it is insufficient to impose a penal interest rate.

In the prior condemnation case involving 65 South Main, Judge Tierney, in a careful opinion, applied an interest rate of 6.25% from 2002 to 2009.   Because interests rates in recent years have been unusually low, the court concludes that a fair and just interest from February 23, 2002 to the date of judgment, should be calculated at 5.25%. See Alarmax Distributors, Inc. v. New Canaan Alarm Co., Inc., Superior Court, judicial district of Stamford–Norwalk at Stamford, CV 095 012255 (June 19, 2013, Adams, J.T.R.) [56 Conn. L. Rptr. 260].   Interest from February 23, 2002 to August 27, 2013 is $543,384.49.

C. The counterclaims of Norwalk are found not proven.

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. During the course of this case Robert Barton's interest in the property was acquired by Sonoson, LLC by means of a quit claim deed;  Exhibit (Ex.) 59;  and Sonoson was joined as a plaintiff.   Sonoson was described by Barton as a “family partnership.”   Tr. 2–13–13, 121.   He and his wife own the majority interest with their three children having smaller shares.   Tr., 2–14–13, 91.   The references to “Tr.” followed by numbers are to the transcripts of the trial proceeding in this case identified by the date in February 2013 and page numbers..  FN1. During the course of this case Robert Barton's interest in the property was acquired by Sonoson, LLC by means of a quit claim deed;  Exhibit (Ex.) 59;  and Sonoson was joined as a plaintiff.   Sonoson was described by Barton as a “family partnership.”   Tr. 2–13–13, 121.   He and his wife own the majority interest with their three children having smaller shares.   Tr., 2–14–13, 91.   The references to “Tr.” followed by numbers are to the transcripts of the trial proceeding in this case identified by the date in February 2013 and page numbers.

FN2. Ex. 69 is a “Final Report” on the “South Norwalk Railroad Station Area Transit Oriented Development Strategy.”   The cited portion is a map showing parking restrictions as of, presumably, 2011.   While the accompanying commentary in the report states “on-street parking is prevalent throughout South Norwalk” (Id., 83) the evidence relied on by the court shows conclusively that in the area of 70 South Main, such parking had markedly decreased and was not prevalent..  FN2. Ex. 69 is a “Final Report” on the “South Norwalk Railroad Station Area Transit Oriented Development Strategy.”   The cited portion is a map showing parking restrictions as of, presumably, 2011.   While the accompanying commentary in the report states “on-street parking is prevalent throughout South Norwalk” (Id., 83) the evidence relied on by the court shows conclusively that in the area of 70 South Main, such parking had markedly decreased and was not prevalent.

FN3. The Appellate Court noted that the question before it was whether anything less than total and permanent loss of property could constitute an inverse condemnation.   Id., 276 n.15..  FN3. The Appellate Court noted that the question before it was whether anything less than total and permanent loss of property could constitute an inverse condemnation.   Id., 276 n.15.

FN4. The Connecticut Supreme Court did not find the contaminated water to be a trespass.  Id., 86–91..  FN4. The Connecticut Supreme Court did not find the contaminated water to be a trespass.  Id., 86–91.

FN5. McGuire testified that using only a ten percent vacancy rate for the after taking valuation was very “generous” to the City. Tr., 2–15–13, 48..  FN5. McGuire testified that using only a ten percent vacancy rate for the after taking valuation was very “generous” to the City. Tr., 2–15–13, 48.

Adams, Taggart D., J.T.R.