Zografos v. Mayor and City Council of Baltimore

BARBERA, Judge. This appeal arises from the filing of a “quick-take” condemnation petition in the Circuit Court for Baltimore City by appellee, the Mayor and City Council of Baltimore (the “City”), pursuant to § 21-16 of the Code of Public Local Laws of Baltimore City (“CPLBC”). 1 In the petition, the City condemned a portion of waterfront property located in the ⁸⁸ “Fells Point” section of Baltimore City, also known as Miller’s Pier and Jackson’s Wharf (“the Property”). The Property had been owned by appellants, Fotis Zografos, et al. 2 The City paid into the registry of the court the sum of $260,000.00, representing the higher of two appraisals of fan-market value the City had obtained. The case proceeded to trial.

A jury found the fair market value of the Property to be $300,000.00, and returned an inquisition in that amount. Appellants noted this timely appeal and present the following questions for our review, which we have reordered: 1. Whether the circuit court erred as a matter of law when it ignored the express language of Maryland Code (1974, 2003 Repl. Vol.), § 12-105(b) and (c) of the Real Property Article (“RP”), and refused to admit evidence of the State tax assessments issued December, 1987 (effective July 1, 1988), and January, 2003 (effective July 1, 2003), even though each assessed value was substantially greater than the appraised value placed on the [Pjroperty by the City. 2.

Whether the circuit court erred as a matter of law when it admitted testimony of a City witness, and refused to strike the opinions of the City’s two appraisers after each testified that the highest and best use of the [Pjroperty was affected by the public project, thereby allowing the jury to consider evidence of value based upon the effect of the taking involved. 3. Whether the circuit court erred as a matter of law when it refused to instruct the jury that, in determining the highest and best use of the [Pjroperty, and in settling upon the fair market value of that property, they were to assume that [ ] Ordinance [89-412] had not been enacted, and to ignore the associated restrictions precluding any development but a public park. ⁸⁹ We conclude that the circuit court committed prejudicial error when it refused to permit appellants to introduce the 1988 tax assessment as evidence of a diminution in the value of the Property caused by the 1989 ordinance authorizing the taking of it. We therefore shall vacate the judgment on that basis and remand for a new trial. We shall address the remaining issues, as they may arise on retrial.

FACTS AND PROCEEDINGS Appellants owned three waterfront parcels of property located at 910 South Bond Street, which together comprise the Property. The Property is approximately half an acre in size and is zoned M-3. 3 On October 14, 1975, by Ordinance No. 999, the City approved an “Urban Renewal Plan” for Fells Point (the “Plan”). 4 The Plan has been amended several times over the years. Of importance to this case, on November 17, 1989, the City approved Ordinance No. 412, amending the Plan by authorizing the City to acquire the Property in fee simple “by purchase or by condemnation, for urban renewal purposes .... ” Ordinance 412 designated the Property “for public park use” only. On November 21, 2002, thirteen years after Ordinance 412 was approved, the City instituted condemnation proceedings in the Circuit Court for Baltimore City pursuant to its quick-take authority.

On that date, the City deposited into the registry of the court the sum of $260,000.00, representing the higher of two fair market value appraisals of the Property. Also on that ⁹⁰ date, the City petitioned for immediate possession and fee simple title of the Property. By order entered on November 27, 2002, the court granted the City’s petition for possession of the property. The City and appellants could not agree on the fair market value of the Property.

Therefore, on June 9, 2004, the case came on for what would be a four-day jury trial to determine the fair market value of the Property. 5 After opening statements, the jury visited and viewed the Property, which by that time the City had converted into a public park. The City then began its case-in-chief. Kimberly Clark, the Baltimore Development Corporation’s East Team Director for Economic Development, testified to the location of the Property and areas surrounding it. She also described some improvements that were made to the Property after the institution of condemnation proceedings.

C. Gordon Gilbert, Jr. testified as an expert in commercial real estate appraisals. He testified that he inspected the Property in May 2002 and saw that its southeastern edge looked as if it had been “unprotected by any coherent bulkhead” and that the water had eroded some of that edge. He testified that he compared the sales of eight properties similar to the Property to determine its fair market value. His June 12, 2002 appraisal report was received in evidence.

Mr. Gilbert opined, consistently with his report, that the Property had a fair market value of $260,000.00 in 2002. Mr. Gilbert agreed that the Property is situated in an area that is “one of the hottest locations in” Baltimore. He testified that, as of the date of taking, other properties around the Property were zoned for certain commercial uses and that there was “a very high probability of th[e] [Pjroperty being rezoned to” such commercial uses. ⁹¹ During Mr. Gilbert’s testimony, the parties stipulated that, as of the date of taking, November 21, 2002, the Property had “frontage” on South Bond Street. After Mr. Gilbert’s testimony was concluded, appellants moved to strike all of it.

Appellants argued, inter alia, that Mr. Gilbert’s appraisal should have ignored the public park project, as required by RP § 12-105. The court denied the motion. Calvin Thomas also testified for the City as an expert commercial real estate appraiser. Mr. Thomas testified that he visited the Property, which he described as “unimproved” and “eroding away into the water.” Mr. Thomas’s January 2002 appraisal report was received into evidence.

Mr. Thomas testified, consistently with his report, that the fair market value of the Property was zero. Mr. Thomas also testified that, when he conducted his appraisal report, he assumed that the Property was landlocked. At the conclusion of Mr. Thomas’s testimony, appellants moved to strike Mr. Thomas’s opinion of the fair market value of the Property. Appellants argued that it should be stricken because, inter alia, it was not given to a reasonable degree of certainty; he improperly considered the public park project; and he assumed that the Property was landlocked.

The court denied the motion. Laurie Feinberg, an employee in the Baltimore City Department of Planning, testified that one of the goals of the Plan is to ensure public access to the waterfront. Ms. Feinberg testified that, under the Plan, as amended in 1989, the Property could not be used to develop condominiums. She explained that, before development of condominiums on the Property could begin, the City would have to pass an ordinance authorizing such development.

Ms. Feinberg also testified that the 900 block of South Bond Street was a “paper street.” She explained that a “paper street” “doesn’t function as a street in that cars [do not drive on it,] but it’s never been legally closed.” She stated that, as far as she knew, the 900 block had “not been open to traffic.” ⁹² Ms. Feinberg testified that an approximately twelve-foot frontage on the 900 block of South Bond Street would not comply with fire department requirements that a right of way be at least twenty feet in width to allow for fire truck traffic. Nor would the frontage comply with City requirements that a road handling vehicular traffic be at least forty feet in width. Road improvements allowing for any vehicular traffic, according to Ms. Feinberg, would have to be borne by the property owner. Ms. Feinberg also testified that the Plan mandated a twenty-foot waterfront promenade, meaning that anything done with the Property would have to account for twenty feet of open space for a public promenade.

The court accepted Ms. Feinberg as an expert in municipal planning. She opined, to a reasonable degree of certainty, that road improvements needed to comply with access requirements in this case could cost between $800,000.00 and $2,000,000.00. Ms. Clark was then recalled to testify on behalf of the City. Over appellants’ objection, she testified that the City spent approximately $2,600,000.00 to build the public park on the Property.

The court received in evidence a document prepared by the Department of Transportation reflecting that cost. After Ms. Clark’s testimony, the City rested its case, and appellants began their case. Alfred W. Barry, III testified as an expert in land planning. Mr. Barry testified that he had been employed in the City’s Planning Department from 1972 until 1995, the last eight years of which he served as Assistant Planning Director.

Mr. Barry was familiar with the Plan and the Property. He testified that the highest and best use of the Property was to build up to eighteen townhouses and eighteen marina slips. He opined, to a reasonable degree of certainty as an expert land planner,- that, “had the City not ... designated th[e] [PJroperty to be acquired for a park, [ ] a development scheme for 18 houses ... would have been rezoned by the City and approved by the City.” He further opined that it would have taken about six to nine months for the City to approve such a ⁹³ development plan, and that a potential developer would think this amount of time reasonable. Terry Duncan testified as an expert real estate appraiser.

Mr. Duncan testified that, in consultation with Mr. Barry, he determined that the highest and best use of the Property would involve the development of eighteen town homes on it. He factored into his analysis a discount of fifteen percent based on the risk associated with real estate. He therefore determined that fifteen units and fifteen boat slips, rather than eighteen, would be a more appropriate estimate of what a developer could expect for the highest and best use. Mr. Duncan opined, to a reasonable degree of certainty as an expert real estate appraiser, that the fair market value of the Property as of the date of taking, ignoring the public project, was $1,950,000.00.

The court received Mr. Duncan’s appraisal report in evidence, but, at the City’s behest and over appellants’ objection, redacted two pages of the report that discussed a 2003 Maryland State Department of Assessment and Taxation (“SDAT”) tax assessment. Appellants then moved into evidence an SDAT tax assessment for 1988, which was in effect at the time Ordinance 412 was passed. The court refused to receive the tax assessment in evidence. The court did receive into evidence a copy of Ordinance 412. 6 In lieu of calling Mr. Zografos to testify, the parties stipulated that if he were to testify, he would state “that he does not have any opinion as to the fair market value of the ⁹⁴ [P]roperty other than what Mr. Duncan [ ] testified to.” Appellants then concluded their case.

The jury returned an inquisition awarding $300,000.00 to appellants as just compensation for the Property. We shall add facts as they become pertinent to our discussion. DISCUSSION I. The City’s Eminent Domain Authority We begin our analysis of appellants’ claims by reviewing the City’s power of eminent domain and its authority in quick-take condemnation proceedings. The City’s eminent domain authority in this case is derived from Article III, § 40A of the Maryland Constitution, Title 12 of the Real Property Article, the Charter of Baltimore City, and CPLBC § 21-16. “Eminent domain, in its simplest terms, is the Inherent power of a governmental entity to take privately owned property ... and convert it to public use....’” J.L. Matthews, Inc. v. Maryland-National Capital Park & Planning Comm’n, 368 Md. 71, 87 , 792 A.2d 288 (2002) (quoting BLACK’S LAW DICTIONARY 541 (7TH ed. 1999)); see also County Comm’rs of Frederick County v. Schrodel, 320 Md. 202, 215 , 577 A.2d 39 (1990) (stating that the sovereign needs no constitutional authority to enjoy the power of eminent domain).

A governmental entity’s power of eminent domain is subject to limitations under “Article III, § 40 of the Maryland Constitution, together with the Fifth and Fourteenth Amendments to the United States Constitution .... ” J.L. Matthews, 368 Md. at 87 , 792 A.2d 288 . 7 These provisions limit ⁹⁵ the sovereign’s authority “by requiring that the taking of private property by governmental entities ‘be for public use and that just compensation be paid.’ ” Id. (citations omitted). See also Schrodel, 320 Md. at 215 , 577 A.2d 39 . Moreover, the General Assembly has exclusive discretion over “[t]he mode and manner of the exercise of the power of eminent domainf.]” J.L. Matthews, 368 Md. at 87 , 792 A.2d 288 (citations and internal quotation marks omitted).

II

Diminution in Value Evidence Before trial, the City filed a motion in limine to preclude appellants from introducing two tax assessments from SDAT: one performed in December 1987 and effective July 1, 1988, seventeen months before the City approved Ordinance 412 in 1989; and one performed in January 2003 and effective July 1, 2003, several months after the City instituted condemnation proceedings in November 2002. The City argued that appellants could introduce evidence of the SDAT tax assessment in effect on the date of the taking, ie., November 21, 2002, but not any other tax assessment, because no other assessment was relevant to the fair market value of the Property as of the date of taking. Appellants countered that RP § 12-105(c) explicitly authorizes a property owner, in certain circumstances, to introduce an SDAT tax assessment. They argued that the statute does not limit a property owner to use of only the tax assessment in effect on the date of taking.

They argued, moreover, that the ⁹⁶ 1989 and 2008 tax assessments are relevant to the determination of whether Ordinance 412 caused a diminution in the value of the Property. The court granted the City’s motion in limine. The court determined that, although the statute did not identify which tax assessments are relevant, the statute implies that the only relevant assessment is the one in effect on the date of taking, because that date is the only date relevant to a jury’s determination of just compensation. During trial, the court denied appellants’ attempt to elicit from their expert appraisal witness, Mr. Duncan, evidence of a diminution in the value of the Property proximately caused by Ordinance 412: [Appellants’ counsel:] Okay.

And additionally, Mr. Duncan, ... are you aware of the definition of fair market value that provides for a consideration of diminution in value between the date of legislative enactment and the date of take? [Mr. Duncan:] Yes, I am. [Appellants’ counsel:] And briefly what is your understanding of that provision? [Mr. Duncan:] Well, basically what it provides for is if there’s a, an announcement of the public.project and the property is not taken until sometime later, that if the property deteriorates in value, deteriorates in some form or fashion, that the property owner’s entitled to compensation for that. [Appellants’ counsel:] And, and based on your investigation of the subject property and knowing what you, and knowing that the announcement [of the public park project] and the effective legislation was in 1989, did you find there to be any evidence of a diminution in value between 1989 and November of 2002? [The City’s counsel]: Objection. The Court: Sustained. ⁹⁷ The court received Mr. Duncan’s appraisal report, but, over appellants’ objection, redacted the references in it to the 2003 property tax assessment. The court also refused to admit the 1988 property tax assessment, when offered by appellants. Appellants challenge the court’s exclusion of the 1988 and 2003 tax assessments as well as Mr. Duncan’s expected testimony on diminution of value.

They argue that both tax assessments and Mr. Duncan’s testimony are relevant to establish that the value of the Property diminished as a result of the enactment of Ordinance 412. Appellants did not proffer what Mr. Duncan’s testimony would have been. Generally, “the question of whether the exclusion of evidence is erroneous and constitutes prejudicial error is not properly preserved for appellate review unless there has been a formal proffer of what the contents and relevance of the excluded testimony would have been.” Mack v. State, 300 Md. 583, 603 , 479 A,2d 1344 (1984). The City makes no argument that appellants have not properly preserved for appellate review the admissibility of Mr. Duncan’s diminution-of-value testimony.

At oral argument before us, appellants’ counsel stated that he had made plain to the circuit court exactly what Mr. Duncan’s testimony on the issue would have been. The record does not support that representation, however. We shall not speculate about all of what Mr. Duncan might have said on the subject of diminution in value. Nevertheless, given that the City makes no argument of non-preservation and that the record indicates that Mr. Duncan would have testified, at the least, about the 2003 tax assessment and likely about the 1988 assessment as well, we shall address whether the court committed prejudicial error by precluding evidence of both assessments, whether through Mr. Duncan, his report, or the assessments themselves.

We begin by recognizing that the jury’s role in condemnation cases is to “resolve[ ] factual disputes relating only to just compensation and [to] fix[ ] the amount of compensation.” Utilities, Inc. of Maryland v. Washington Suburban ⁹⁸ Sanitary Comm’n, 362 Md. 37, 48 , 763 A.2d 129 (2000) (emphasis added). This task requires the jury to determine the “fair market value” of property in a quick-take condemnation proceeding. Bern-Shaw Ltd. P’ship v. Mayor & City Council of Baltimore, 377 Md. 277, 288 , 833 A.2d 502 (2003); see also RP § 12-104(a) (providing that “[t]he damages to be awarded for the taking of land is its fair market value”). RP § 12-105(b) defines fair market value as follows: The fair market value of property in a condemnation proceeding is the price as of the valuation date for the highest and best use of the property which a vendor, willing but not obligated to sell, would accept for the property, and which a purchaser, willing but not obligated to buy, would pay, excluding any increment in value proximately caused by the public project for which the property condemned is needed.

In addition, fair market value includes any amount by which the price reflects a, diminution in value occurring between the effective date of legislative authority for the acquisition of the property and the date of actual taking if the trier of facts finds that the diminution in value teas proximately caused by the public project for which the property condemned is needed, or by announcements or acts of the plaintiff or its officials concerning the public project, and was beyond the reasonable control of the property owner. (Emphasis added.) Under RP § 12-105(b), two dates are relevant to the question of diminution in value. The first is “the effective date of legislative authority for the acquisition of the property,” which, under RP § 12-105(a), “means, with respect to a condemnor vested with continuing power of condemnation, the date of specific administrative determination to acquire the property.” The second is the “valuation date” for establishing fair market value. Ordinance 412, approved on November 17, 1989, authorized the taking of the Property for the purpose of building a public park.

Ordinance 412 provides, moreover, that it was ⁹⁹ passed to authorize the City to acquire the Property in fee simple “by purchase or by condemnation, for urban renewal purposes ____” Plainly, the date of approval of Ordinance 412, November 17, 1989, constitutes the effective date of legislative authority for the acquisition of the Property. The “valuation date” for purposes of determining fair market value of the Property is November 21, 2002. That is the date the City commenced formal quick-take condemnation proceedings in the circuit court and deposited $260,000.00 into the court’s registry. See Bern-Shaw, 377 Md. at 282 , 833 A.2d 502 ; RP §§ 12-102, 12-103.

The time period for purposes of diminution in value is the thirteen years between November 17, 1989, and November 21, 2002. Appellants maintain that both the 1988 and 2003 tax assessments were admissible under RP § 12-105(c), and that they were relevant to show a diminution in value, which was proximately caused by the approval in 1989 of Ordinance 412. Appellants argue that the General Assembly, by enacting RP § 12-105(c), intended that any SDAT tax assessment, without regard to its date, is admissible if offered by a defendant property owner, so long as the assessed value exceeds the condemning authority’s appraisal value. The City responds that RP § 12-105(c) only contemplates as relevant a tax assessment that is in effect as of the taking date.

At oral argument before us, however, the City conceded that a tax assessment for a time period before the taking date may be relevant to diminution in value. The City argued, however, that appellants did not establish the relevance of the 1988 and 2003 assessments. The City asserts, moreover, that the court properly refused to receive the 1988 SDAT tax assessment because the City did not have the benefit of deposing or cross-examining the official who conducted the assessment. The City also argues that, even if the court erred, appellants were not substantially prejudiced by the error; therefore, the jury’s inquisition should not be disturbed. ¹⁰⁰ The general rule in condemnation proceedings is that a property tax assessment “‘made by public authorities for purposes of taxation is not admissible in condemnation proceedings.’” E.L. Gardner, Inc. v. Bowie Joint Venture, 64 Md.App. 302, 308 , 494 A.2d 988 , cert, denied, 304 Md. 296 , 498 A.2d 1183 (1985) (quoting Baltimore City v. Himmel, 135 Md. 65, 75-76 , 107 A. 522 (1919)). 8 It has been said that “[a] common rationale for the [ ] rule ... is that it is common knowledge that [tax] assessors do not assess property at market value, and that such valuations are made for a purpose other than determination of true or market value.” C.C. Marvel, Valuation for taxation purposes as admissible to show value for other purposes, 39 A.L.R.2d 209 § 7 (1955) (footnote omitted).

RP § 12-105(c), however, explicitly provides for instances when a defendant property owner, in a condemnation proceeding, may present evidence of the assessed value of the condemned property. Subsection (c) states: The defendant property owner may elect to present as evidence in a condemnation proceeding, the assessed value of the property, as determined by the Department of Assessments and Taxation, if the assessed value is greater than the appraised value placed on the property by the condemning authority. We have found no cases interpreting the language of this subsection. We thus have the task of construing it. “ ‘[T]he cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the [legislative body].’ ” Motor Vehicle Admin. v. Jones, 380 Md. 164, 175 , 844 A.2d 388 (2004) (quoting Holbrook v. State, 364 Md. 354, 364 , 772 A.2d 1240 (2001)).

The analysis begins with the language of the statute itself. Western Corr. Inst. v. Geiger, ¹⁰¹ 371 Md. 125, 141 , 807 A.2d 32 (2002). We assign words in a statute their ordinary and natural meaning.

O’Connor v. Baltimore County, 382 Md. 102, 113 , 854 A.2d 1191 (2004). “[Statutory language is not read in isolation, but ‘in light of the full context in which [it] appear[s] ... ’ ” Knight v. Princess Builders, Inc., 162 Md.App. 526, 531 , 875 A.2d 771 (2005) (citations omitted). “If the plain language of the statute is unambiguous' and is consistent with the statute’s apparent purpose, we give effect to the statute as it is written.” Comptroller of the Treasuny v. Phillips, 384 Md. 583, 591 , 865 A.2d 590 (2005). The appellate court “will look ‘beyond the statute’s plain language in discerning the legislative intent’ only where the statutory language is ambiguous.” Jones, 380 Md. at 176 , 844 A.2d 388 (citation omitted). Language in a statute is ambiguous if there is more than one reasonable interpretation of it. Phillips, 384 Md. at 591 , 865 A.2d 590 . “If the statutory language is ambiguous or unclear, we look to legislative history, prior case law, and statutory purpose.” Id.

Applying these rules of construction, we note at the outset that subsection (c) does not expressly preclude a property owner from presenting evidence of a tax assessment other than the assessment in effect at the time of taking. Furthermore, when subsection (c) is read in the context of the remainder of RP § 12-105, it is plain that a property owner is not precluded from presenting other tax assessments, so long as the assessed value exceeds the condemning authority’s appraisal. RP § 12-105(b) states that fair market value of property in a condemnation proceeding “includes any amount by which the price reflects a diminution in value occurring between the effective date of legislative authority for the acquisition of the property and the date of actual