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REDEVELOPMENT AUTHORITY CITY ERIE v. ACHILLES C. PULAKOS AND PULAKOS (01/14/75)

decided: January 14, 1975.

REDEVELOPMENT AUTHORITY OF THE CITY OF ERIE, APPELLANT,
v.
ACHILLES C. PULAKOS AND PULAKOS, INC., APPELLEES



Appeal from the Order of the Court of Common Pleas of Erie, County in case of Redevelopment Authority of the City of Erie v. Achilles C. Pulakos and Pulakos, Inc., No. 1121-A-1968.

COUNSEL

John M. Quinn and Caroll F. Purdy, with them Quinn, Gent, Buseck & Leemhuis, Inc. and Metzger, Hafer, Keefer, Thomas & Wood, for appellant.

John M. Wolford, with him William R. Brown and MacDonald, Illig, Jones & Britton, for appellees.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Kramer. President Judge Bowman dissents. Dissenting Opinion by Judge Rogers. Judge Crumlish, Jr., joins in this dissent.

Author: Kramer

[ 17 Pa. Commw. Page 253]

This is an appeal filed by the Redevelopment Authority of the City of Erie (Condemnor) from an order of the Court of Common Pleas of Erie County dated October 30, 1973, denying the Condemnor's motion for a new trial, and the entering of judgment on a jury verdict in favor of Achilles C. Pulakos (Condemnee) against the Condemnor in the amount of $399,100 arising out of the condemnation of property. Although it is tempting to accept in toto the excellent opinion of the court below, we believe it will be beneficial to all concerned to file this more definitive opinion because of the importance of the issues involved.

This case had its genesis when the City Planning Commission of the City of Erie, by resolution dated October 30, 1962, certified a portion of the City's downtown section as a blighted area, and set out on a course of urban development. The Condemnee's property, known as 926 State Street, was located within the blighted area. This building had been used by the Condemnee and his immediate family for about 60 years for the retail and wholesale sale of candy, for the manufacture of ice

[ 17 Pa. Commw. Page 254]

    cream, candies and related products, and as a soda fountain-restaurant. The Condemnee's ancestors had commenced the candy business in Philadelphia circa 1889 before moving to Erie in 1903. The subject building had been acquired by the Condemnee's grandfather in 1916, and, shortly thereafter, had been gutted and rebuilt for the various business usages mentioned hereinbefore.

On June 8, 1968, the Condemnor filed its declaration of taking. It should be noted here the Condemnee filed preliminary objections contesting the validity of the Condemnor's acquisition, but they were overruled by the lower court in a prior non-related action, and eventually an appeal to the Pennsylvania Supreme Court was denied on procedural grounds. See Erie Redevelopment Authority v. Pulakos, 439 Pa. 157, 267 A.2d 873 (1970) cert. denied 400 U.S. 991 (1971). The Condemnor obtained possession of the subject property on February 12, 1971.

Prior to January 1961, the Condemnee used the building on the property in the combined manufacturing and sales business described above. The first floor of the building was utilized for retail sales of candy, ice cream and bakery products, as well as a combined soda fountain-restaurant and kitchen. In January of 1961, while the Condemnee was in the process of remodeling his soda fountain-restaurant and kitchen, he was advised by certain named officials of the Condemnor "to hold down expenses" because of a possible condemnation by the Condemnor. As a result, the Condemnee stopped remodeling and did not reopen his restaurant and soda fountain. The Condemnee did, however, continue the manufacture and sale of candy and related products.

Because the ownership of the property has been raised as an issue by the Condemnor, we set forth that the record discloses beyond doubt that title to all of the real property and all of the machinery and equipment contained within the condemned building was in the name of Achilles C. Pulakos. The record also indicates

[ 17 Pa. Commw. Page 255]

    that for business or tax reasons Pulakos organized a Pennsylvania corporation known as Pulakos, Inc. which operated the various businesses and utilized the building, machinery and equipment in those businesses. Although the Condemnee did not specifically set forth in his testimony the ownership of Pulakos, Inc., he did set forth in his verified petition for the appointment of viewers that "99%" of that corporation is owned by Achilles C. Pulakos. Furthermore, throughout this long record there are many statements made by Condemnor's counsel, its witnesses and others, whereby there can be no doubt that everyone concerned with this case, including the trial judge, assumed from the evidence that Pulakos, Inc. and Achilles C. Pulakos are one and the same. This point will become important later in this opinion.

The condemned lot is approximately 20 feet wide and 147 feet long. The building thereon had a finished basement and three floors, totaling 11,807.52 square feet. The building contained custom-made and installed facilities, machinery and equipment including specialized cooling equipment, air-conditioning equipment, equipment to control temperature and humidity, assembly line equipment, cooling tunnels, ovens, ventilating equipment, dumb waiters, a freight elevator, and many feet of specially wrapped and protected pipes and electrical lines. Some of the electrical fixtures were explosion-proof. Over the years, rooms within rooms with thick cork insulation and specialized air-treatment equipment used in the manufacture of candy had been installed. The front of the building was faced with four to six-inch thick, highly decorative terra cotta facing in a gothic design laid in thick mortar and laced with lead spacers at the mortar joints. The record clearly shows that the facing of this building was highly decorative and difficult to reproduce. The record permits us to conclude that the facing was unique.

[ 17 Pa. Commw. Page 256]

Subsequent to the filing of the declaration, attempts were made by the Condemnee to relocate his manufacturing and sales business. The Condemnee has two other retail sales stores located in the Erie area. The Condemnee was restricted in moving his business because of zoning restrictions of the City of Erie and because, in the business judgment of the Condemnee, the proffered sites were not adaptable. As a result of the condemnation proceedings, the Condemnee made alterations to one of his other retail sales stores and moved part of his machinery and equipment to the new location. The record indicates, however, that some of the equipment located in the condemned building could not be moved, either because of the size limitations of the new location or because it could not be removed from the building without damage.

Following the denial of certiorari to the United States Supreme Court, viewers were appointed, hearings were held, and the viewers issued an adjudication on January 14, 1972, awarding damages to the Condemnee in the amount of $150,000 with credit in the amount of $110,300 which had been paid on account by the Condemnor on February 12, 1971. In addition, other damages were awarded for removal expense and business dislocation which are not the subject of this appeal. Subsequent to the viewers' adjudication, the Condemnor demolished the building and disposed of the machinery and equipment remaining therein to permit the construction of a new hotel as a part of its overall redevelopment plan. On February 1, 1972, the Condemnee filed an appeal with the court below. At the jury trial, the Condemnee testified that the fair market value of his property taken amounted to $550,000. His real estate appraisal expert testified that the Condemnee's building was unique and that the Condemnee's business, at the time of taking, was an assembled economic unit. This expert used the reproduction cost less depreciation method of valuation and stated that in his opinion the fair market value of all of

[ 17 Pa. Commw. Page 257]

    the property condemned (including an itemized list of 65 items of machinery and equipment and the unusual terra cotta facing) amounted to $340,000.

The expert testimony offered by the Condemnor included the following valuations:

1. $201,000 as replacement cost of the building only (using modern, commonly used materials), without any machinery, equipment or specialized facilities.

2. $220,950 as the replacement cost of the building alone.

3. $70,924 as the fair market value of the machinery and equipment including both that forming a part of the realty and that ...


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