HRT Enterprises v. Detroit, City of

Filing 63

MEMORANDUM AND ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT ON LIABILITY (Doc. 26). Signed by District Judge Avern Cohn. (MVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

HRT ENTERPRISES,
Plaintiff,
v.

Case No. 12-13710

CITY OF DETROIT,

HON. AVERN COHN

Defendant.
______________________________________/
MEMORANDUM AND ORDER GRANTING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON LIABILITY (Doc. 26)
I. INTRODUCTION
A.
This is a Fifth Amendment takings case. Plaintiff HRT Enterprises (“HRT”) owns
an eleven-acre parcel of land (the “property”) in the City of Detroit (the “City”) located
directly across French Road from the Coleman A. Young International Airport, formerly
the Detroit City Airport (the “airport”).1 HRT says that because the property lies inside
the airport’s building restriction line2 and runway visibility line,3 HRT has been deprived
of all economically viable use of the property.
B.
1

Attached, as Exhibit A, is a map displaying the property and its relationship to the
airport and to the other properties at the corner of Lynch Road and French Road.
Exhibit B is a map showing a close-up view of the properties surrounding the property.
2
The “building restriction line” is an imaginary line imposed under Federal Aviation
Administration (“FAA”) regulations that identifies a clear area extending 750 feet from an
airport’s runway.
3
The “runway visibility line” is an imaginary line enclosing a triangular area within
which there can be no buildings under FAA regulations.
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HRT says that the proposed 2009 Airport Layout Plan (the “2009 Plan”)
contemplates an enlarged airport, and includes the HRT property as designated for
acquisition by the City in the event the development goes forward. HRT says that the
City has inversely condemned the property by delaying its acquisition, and by taking
actions that substantially reduce the property’s value and deprive the property of any
viable use.
The complaint is in four counts:
Count I

Inverse Condemnation—De Facto Taking

Count II

Inverse Condemnation—City of Detroit’s Unreasonable Delay in
Acquiring Property

Count III

Inverse Condemnation—Regulatory Taking

Count IV

Substantive Due Process
C.

In 2005, HRT initially sued the City in state court for inverse condemnation;
however, a jury determined that the City’s actions did not amount to a taking of the
property. In this case, HRT seeks a determination that the City’s actions since 2005
amount to a taking of the property.
In March of 2013, the Court denied the City’s motion for summary judgment
(Doc. 22). The Court explained in its decision that the additional facts that HRT says
occurred after a state court jury reached an unfavorable verdict in 2005 “might lead a
jury to conclude that today, in 2013, a taking of [the] property has occurred.” (Id. at 13).
In May 2013, HRT filed a Motion for Summary Judgment on Liability (Doc. 26).
During the pendency of the Detroit bankruptcy the case was administratively stayed.
(Doc. 42) After the bankruptcy proceedings ended the stay was lifted and the case

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reopened in January 2015. (Doc. 48) In May 2015, the Court held a hearing to clarify
the status of the 2009 Plan.
Now before the Court for decision is HRT’s motion for summary judgment. For
the reasons that follow, HRT’s motion is GRANTED.
II. BACKGROUND
A. The Property
In 1983, fifty-six years after the airport was opened, HRT purchased the property
eleven acres in size. To the east, the property is bordered by French Road. On the
opposite side of French Road is the airport.

Airport-owned land also borders the

property to the north and to the west. To the south are commercial parcels owned by
the Chrysler Corporation and MichCon (a subsidiary of DTE Energy) and consisting of
approximately 20 acres collectively. See Exhibits A &B.
The property “contain[ed] an existing building that is approximately 188,000
square feet in size.” HRT Enters. v. City of Detroit, No. 268285, 2007 WL 2118867, at
*1 (Mich. Ct. App. July 24, 2007). The property was operated as a steel service center.
The front of the building is approximately 525 feet from the centerline of the airport’s
existing Runway 15/33.

Id. at *1.

Although portions of the building have been

demolished, the remaining portion of the building, consisting of office space, is within
the FAA’s standard building restriction line.
Since 1972, the FAA has granted design waivers, allowing the airport to operate
with a smaller safety area than FAA standards require. As explained by the Michigan
Court of Appeals:
The waivers were renewed in 1988, but the city was
expected to take appropriate action by “removing, lowering,

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relocating, marking or lighting, or otherwise mitigating these
airport hazards. . .” The city proposed to acquire properties
and eliminate structures to clear an area 750 feet from the
existing runway centerline when it acquired FAA funds to do
so. According to the FAA, applications to fund such a
proposal are considered “on a priority needs basis.”
Id. at *1.
B. The City’s Airport Expansion Plans
1. The 1996 Plan
In 1991, the Detroit City Council “approved acquisition of land surrounding the
airport to remove any existing hazards on the property near the airport.” Id. From time
to time, the City then acquired by purchase or by condemnation some of the land in the
surrounding area. Id. The area is collectively known as the “Mini-Take Area.” The
Mini-Take is comprised of an area east of French Road, extending north of the property
to McNichols Road. The Mini-Take Area consists exclusively of residential property.
HRT’s property—as well as the properties owned by Chrysler and MichCon—lays
outside and to the south of the Mini-Take Area. See Exhibits A &B.
The FAA, however, “did not provide federal funds to the project in an amount
sufficient to allow the city to condemn [the] property.” HRT Enters., 2007 WL 2118867,
at *1. Although the property was in close proximity to the airport and to other land within
the Mini-take Area, it was not included in the Mini-Take Area. In 1992, the City advised
HRT that it should continue to operate its normal business. Id.
In 1996, the City filed with the FAA and the State the Airport Layout Plan. The
plan detailed the expansion of the airport, including plans for a new runway. The City
relied on the plan to request federal funding. However, by 2005, “[t]he airport expansion
did not occur, nor did funding for acquisition of the property.” Id.

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Since 2005, the City has acquired approximately a third of the residential
properties within the Mini-Take area.

Additionally, the airport owns approximately

another third. All of the remaining residential property in the Mini-Take Area is either
owned or is being acquired by the City through federal funding.
2. The 2009 Plan
The 2009 Plan was drafted in contemplation of a large expansion of the airport
than the 1996 plan, and designates for acquisition the HRT property. If the airport is
expanded as contemplated in the 2009 plan, Lynch and French Road will no longer
exist. In addition, the 2009 Plan calls for a new runway and a new taxiway that will pass
directly through the property. When the 2009 Plan is implemented, the City will be
required to acquire the property.
The 2009 plan is not on official plan. Currently, the only approved Airport Layout
Plan on file with the FAA and the State is the 1996 Plan.
C. Previous Cases Relating to the Property
1. The 1999 and 2005 State Court Cases
In September 1999, because of the City’s acquisition policies, Merkur Steel, one
of HRT’s tenants, filed a takings suit against the City in Wayne County Circuit Court
(Doc. 22 at 2). In 2002, a jury found in favor of Merkur Steel, that the City’s acquisition
efforts amounted to a de facto taking of Merkur Steel’s leasehold interest in the
property. (Id.) The Court of Appeals of Michigan affirmed in a 2004 decision. See
Merkur Steel Supply Inc. v. City of Detroit, 261 Mich. App. 116, 680 N.W.2d 485 (2004).
Merkur Steel’s sub-tenant Steel Associates, Inc. (Steel Associates) filed a
separate action in Wayne County Circuit Court against the City claiming a de facto

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taking of its leasehold interest. (Id.) In 2003, a jury found in favor of Steel Associates.
(Id.)

The Court of Appeals of Michigan affirmed in a 2005 decision.

See Steel

Associates, Inc. v. City of Detroit, No. 254025, 2005 WL 2656648 (Mich. Ct. App. Oct.
18, 2005).
Subsequently in 2005, Merkur Steel, Steel Associates and HRT collectively filed
suit in Wayne County Circuit Court against the City for inverse condemnation. (Id.) The
parties alleged “that the filing of the airport layout plan and the threat of potential
condemnation of the property affected its property so adversely as to amount to [a]
taking without just compensation.” HRT Enters., 2007 WL 2118867, at *1.
After the trial court granted HRT’s motion to proceed to trial on HRT’s claims
alone, the case was tried to a jury in September of 2005. The jury returned a no cause
of action verdict, rejecting HRT’s claim of inverse condemnation. The Michigan Court of
Appeals affirmed the verdict in 2007, stating that there was “competent evidence to
support a finding that the city’s actions were not a substantial cause of the decline of
HRT’s property and that the [C]ity did not abuse its legitimate powers in affirmative
actions directly aimed at HRT’s property.” Id. at *7. In 2008, the Michigan Supreme
Court denied leave to appeal. HRT Enters. v. City of Detroit, 480 Mich. 1134 (2008).
2. 2008 Federal Court Case
In 2008, HRT sued the City for inverse condemnation in this court based on
additional events that occurred since the 2005 trial. HRT Enters. v. City of Detroit, No.
08-14460 (E.D. Mich. 2008). The court dismissed the case without prejudice, finding
that because HRT did not seek compensation through state procedures based on the

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new facts, the case was unripe for federal review under Williamson County Regional
Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 195-97 (1985).
3. 2009 State Court Case
In 2009, following the dismissal of the federal court case, HRT again sued the
City for inverse condemnation in state court. The trial court dismissed HRT’s inverse
condemnation claims based on res judicata grounds, and, in 2012, the Michigan Court
of Appeals affirmed the dismissal. HRT Enters. v. City of Detroit, No. 09-016475-CC,
2012 WL 3055221 (Mich. Ct. App. July 26, 2012). HRT did not seek leave to appeal to
the Michigan Supreme Court.
D. The Present Case
After the state court dismissed HRT’s claims as described above, HRT filed this
case. In November 2012, the City filed the motion for summary judgment (Doc. 9). The
Court denied the motion. (Doc. 22) In its decision denying the City’s motion, the Court
concluded that
[t]he overwhelming additional events that have occurred
since 2005, when a state court jury determined that HRT did
not have a takings claim, present a question of fact as to
whether a taking has now occurred. The City has continued
its acquisition efforts in the Mini-Take Area for eight years
since the 2005 jury trial. There is an abundance of facts of
which a jury may now find amount to a taking of [the]
property.
(Id. at 14).
E. The May 2015 Hearing
In the May 2015 hearing, the Court heard testimony from two witnesses proffered
by the City. First witness was Michael Borta, the airport’s Chief Consultant for planning,
design, and construction engineering services. The second witness was Jason Watts,

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Director of the airport. (See Hearing Transcript, Doc. 60) These witnesses clarified the
current state of the airport:
(1) HRT’s property lies outside the FAA-waived building-restriction line. (See id
at 17-18; Exhibit 1 to the Miscellaneous Hearing, Doc. 60 Ex. 1) However, if the airport
is to meet FAA standards, the airport’s primary surface will extend to the property line,
and the building-restriction zone will extend approximately one-third into the eastern
boundary of the property. (Id. at 21) At the building-restriction line, a building can not
be constructed higher than 35 feet. (Id.) Further, as the distance from the runway
decreases, the allowable height decreases at a set rate. (Id. at 22) Watt testified that
HRT would be “very limited” in its ability to use its property within the standard building
restriction line. (Id. at 38)
(2) The City has been acquiring property within the Mini-Take Area in order to
cure the technical violations that form the basis for the FAA waivers. Currently, all of
the residential property in the Mini-Take Area is either owned or being acquired by the
City.

Although the City initially paid for these acquisitions, the FAA has generally

reimbursed the City what it paid out. (Id. at 11-12)
(3) The property was not included in the Mini-Take Area because the FAA
instructed the City to acquire residential properties before commercial properties. The
City has submitted to the FAA an Airport Capital Improvement Plan, which includes
requests to the FAA for funds to acquire the property. These requests have been
“continually rejected.” (Id. at 19, 26-27) Nonetheless, the same building restrictions
apply to the property as to the residential properties within the Mini-Take Area. (Id. at
25-26) Other than the HRT property, the only commercial property outside the Mini-

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Take Area—and therefore not planned for acquisition by the City—are the two parcels
to the south of HRT, owned by Chrysler and MichCon.
(4) In 2010, the Capital Improvement Plan was revised to delete any funding
requests for a replacement runway. The current Capital Improvement Plan is therefore
geared toward rehabilitation of the existing runway and physical plant, rather than
toward a replacement runway.
(5) Contrary to recently published newspaper articles,4 the City has not
acquired—nor has requested funding from the FAA to acquire—land necessary to build
the new runway. (Id. at 12-13) Nor is it the City’s intention to build a new runway at the
airport at this time. (Id. at 31) Instead, FAA funds have been used to upgrade the
existing airport facilities and for reimbursement from Mini-Take acquisitions. (Id at 1314, 29)
III. STANDARD OF REVIEW
The standard for summary judgment is well known and is not repeated in detail.
“The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). Ultimately the district court must determine whether the
record as a whole presents a genuine issue of material fact drawing “all justifiable
inferences in the light most favorable to the non-moving party.” Hager v. Pike Cnty. Bd.
of Ed., 286 F.3d 366, 370 (6th Cir. 2002).
4

See City Airport Plain May Finally Lift Off, Detroit News (March 26, 2015),
http://www.detroitnews.com/story/news/local/detroit-city/2015/03/26/city-airport-planmay-finally-lift/70523064/; Detroit Bankruptcy Plan Calls for Revitalizing Detroit City
Airport, Detroit Free Press (April 4, 2014), http://archive.freep.com/article/
20140404/NEWS01/304040017/Detroit-bankruptcy-plan-calls-for-revitalizing-Detroitcity-airport.
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IV. DISCUSSION
A.
HRT says it is entitled to summary judgment on the issue of liability. HRT says
that there is no genuine issue of material fact that, based on the events that have
occurred since the 2005 state court jury verdict, the City has effectively condemned the
property and its actions amount to a taking without just compensation.
The City says that there has been no taking because the City has no plans to
acquire the property, has not imposed a moratorium on building on the property, and
has not sent notices that it intends to do so. The City further reiterates that it has no
current plan to change the layout of the airport as it now exists, or to extend its
boundaries, and that it does not need to acquire the property to comply with FAA
regulations. The City therefore argues that planning for the future of the airport cannot
constitute a taking. Further, the City says that because there is no moratorium on
building at the property, HRT is free to apply for a building permit.
B.
An inverse condemnation (or de facto taking) occurs when a government agency
does not purchase the plaintiff’s property rights, but effectively takes all or part of the
property through its actions. In First English Evangelical Lutheran Church of Glendale
v. Los Angeles Cnty., Cal., 482 U.S. 304 (1987), the U.S. Supreme Court explained that
[t]he general rule at least is, that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking.”
While the typical taking occurs when the government acts to condemn
property in the exercise of its power of eminent domain, the entire doctrine
of inverse condemnation is predicated on the proposition that a taking may
occur without such formal proceedings.

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Id. at 316 (quoting Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922))
(brackets in original); see also United States v. Clarke, 445 U.S. 253, 257 (1980) (noting
that a landowner may “recover[] just compensation for a taking of his property when
condemnation proceedings have not been instituted.”) “A landowner is entitled to bring
such an action as a result of the self-executing character of the constitutional provision
with respect to compensation.” Clarke, 445 U.S. at 257 (quotation marks and citations
omitted).
Whether a particular restriction will be considered a taking depends largely on
the particular circumstances of the case. See Penn Cent. Transp. Co. v. City of New
York, 438 U.S. 104, 124 (1978).

A claim of regulatory taking under federal law is

therefore “characterized by ‘essentially ad hoc, factual inquiries.’” Taho-Sierra Pres.
Council, Inc. v. Taho Reg’l Planning Agency, 535 U.S. 302, 322 (2002) (citing Penn
Central Transp. Co., 438 U.S. at 124). Factors generally considered to be significant
include: (1) the economic impact on the property owner; (2) the extent to which the
regulation interferes with investment backed expectations in the land; and (3) the
character or extent of the government action. See Penn Central Transp. Co., 438 U.S.
at 124. This analysis “does not divide a single parcel into discrete segments,” but
instead focuses “both on the character of the action and on the nature and extent of the
interference with rights in the parcel as a whole.” Id. at 130-31.
C.
Based on the undisputed facts described above, the Court finds that summary
judgment in HRT’s favor is appropriate.

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The Court acknowledges that the record as it stands supports the City’s
contention that there are no current plans to fund a new runway at the airport, and that
the current Capital Improvement Plan is limited to maintaining and upgrading the
existing runways and physical plant and to reimbursing the City for the Mini-Take
acquisitions.
However, the record also establishes that the City’s acquisitions in the Mini-Take
Area is intended to bring the airport in compliance of FAA safety standards—in
particular, the standard building restriction line. This line extends approximately onethird into the property, and limits buildings within it to 35 feet high or less, depending on
the distance from the airport runway. In addition, there is no dispute that the runway
visibility line extends into the southeast corner of the property, and that the existing
building requires an FAA waiver.

At the May Hearing, Watt conceded that it was

“probably not” possible to get a permit to build a 40-foot high building on the property
within this building restriction line. (Doc. 60 at 31) This directly contradicts the City’s
position that HRT is “free to apply for a building permit.” (Doc. 28 at 19)
Even if there is not a current plan to add new runway, the City has expressed its
clear intention to bring the airport within FAA standards. Contrary to the City’s position,
bringing the airport to within FAA standards would directly involve HRT’s property. The
City’s goal of bringing the airport to full FAA standards would consequently severely
limit HRT in the use of its property and/or necessitate the City’s acquisition of the
property.
In addition, the City has stated that the HRT property has not been acquired
because, in significant part, the FAA has not provided funding for the purchase.

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Although the City has not formally included a replacement runway in the official plan,
the City has indicated that it looks favorably on a replacement runway that would go
through the property, should the FAA approve funding. Finally, Watt conceded that if
the FAA were to withdraw its waivers, the airport would have no choice to but to acquire
the property or cease operations.
For these reasons, the City has effectively taken HRT’s property.

The City

concedes that it has requested funds from the FAA to acquire the property, which has
not been approved. Thus, although there are no approved plans to expand the airport
or acquire the property, the City has effectively placed a hold on the property with no
compensation to HRT.
V. CONCLUSION
A.
The circumstances of the case call to mind what Supreme Court Justice Stephen
Johnson Field said when sitting on the Circuit Court, D. California in Ho Ah Kow v.
Nunan, 12 F. Cas. 252, 255 (C.C.D. Cal. 1879):
When we take our seats on the bench we are not struck with blindness,
and forbidden to know as judges what we see as men . . .
One has only to look at Exhibits A and B (the layout of the City airport), the surrounding
properties owned by the City, and the FAA-regulated boundaries+ to know that, for all
practical purposes, the City has effectively acquired HRT’s property. The property is not
commercially useable, and the City has not paid for its “ownership.” It has inversely
condemned the property.
B.

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For the reasons stated above, HRT’s motion for summary judgment on liability is
GRANTED. The issue of damages shall proceed to trial. The case manager will set a
date for a status conference to chart the future course of the case.
SO ORDERED.
s/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: August 13, 2015

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