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COMMONWEALTH PENNSYLVANIA v. MICHAEL C. DIFURIO (03/17/89)

decided: March 17, 1989.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION, APPELLANT
v.
MICHAEL C. DIFURIO, APPELLEE. MICHAEL C. DIFURIO AND EXXON COMPANY, U.S.A. V. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION. EXXON COMPANY, U.S.A., APPELLANT



Appeals from the orders of the Court of Common Pleas of Delaware County in the case of Michael C. DiFurio and Exxon Company, U.S.A., Unwilling petitioner v. Commonwealth of Pennsylvania, Department of Transportation, No. 86-11560, dated September 29, 1987 and December 18, 1987.

COUNSEL

William J. Cressler, Assistant Counsel, with him, Spencer A. Manthorpe, Assistant Chief Counsel, and John L. Heaton, Chief Counsel, for appellant, Department of Transportation.

Richard C. Biedrzycki, Of Counsel: Phillips and Phelan, for appellant, Exxon Company, U.S.A.

George D. Harwood, with him, Murray S. Eckell, Of Counsel: Eckell, Sparks, Levy, Auerbach, Monte & Moses, for appellee, Michael C. DiFurio.

Judges Doyle and Colins, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Senior Judge Barbieri. Dissenting Opinion by Judge Doyle.

Author: Barbieri

[ 124 Pa. Commw. Page 274]

The Department of Transportation (DOT) and Exxon Company, U.S.A. (Exxon) appeal the order of the Court of Common Pleas of Delaware County dismissing their preliminary objections to a petition for the appointment of a board of viewers filed by Michael DiFurio (Appellee) alleging a de facto taking of his leasehold interest pursuant to Section 502(e) of the Eminent Domain Code

[ 124 Pa. Commw. Page 275]

(Code), Act of June 22, 1964, P.L. 84, as amended, 26 P.S. ยง 1-502(e). We affirm.

Appellee operated the Rolling Green Exxon Service Station under a lease from Exxon located at the corner of Springfield and Sproul Roads in Broomall, Pennsylvania. Appellee's leasehold interest was situated in the path of Legislative Route 1010, popularly known as the Blue Route, pursuant to a plan of development first recorded in 1969. In March of 1985, Appellee was notified that the frequently delayed construction of the Blue Route was set to resume. A plan authorizing the condemnation of Appellee's property for a section of the Blue Route was filed on August 9, 1985. Appraisal activity for the section of the highway in question began during June of 1986.

On August 1, 1986, Exxon and DOT notified Appellee that "the Blue Route was coming through" and that his leasehold would be terminated in the near future. A DOT relocation advisor was appointed on this date and a DOT right of way agent visited Appellee's service station on August 14, 1986. DOT sent Appellee a ninety day letter asserting that the right of way would be cleared by December of 1986. DOT did not formally condemn the property in December of 1986, but instead sent Appellee another ninety day letter, followed by a thirty day letter. Appellee continued to operate his service station until DOT filed a formal declaration of taking condemning the entire property on April 14, 1987.

On August 28, 1986, Appellee filed this instant petition for an appointment of a board of viewers asserting that DOT's pre-condemnation proceedings coupled with twenty-five years of publicity concerning the path of the Blue Route had deprived Appellee of the use and enjoyment of his tenancy and substantially undermined and interfered with his business. Appellee's petition was amended on November 14, 1986, and Exxon was added as an unwilling petitioner.

[ 124 Pa. Commw. Page 276]

Both DOT and Exxon filed preliminary objections to Appellee's petition. DOT asserted that since Appellee remained in possession and continued to operate his service station right up until the date of the formal taking on April 14, 1987, no de facto taking occurred. Exxon joined in DOT's argument and also contended that Appellee had no compensable right to damages because paragraph thirteen of Appellee's lease with Exxon contained a termination on condemnation clause that assigned all Appellee's rights on condemnation to Exxon. The trial court concluded that a de facto taking had occurred and that the terms of the lease did not bar Appellee from recovering damages to his leasehold interest. We will consider these issues seriatim.

I. De Facto Taking

Under review is the period of time from August 1, 1986 until April 14, 1987, when Appellee's service station designated for formal condemnation, and indeed formally condemned on the latter date, experienced a decline in business allegedly due to pre-condemnation activity and publicity. Generally, the adverse interim consequences caused to a property by the prospect of condemnation will not constitute a de facto taking unless the owner can show "exceptional circumstances" which substantially deprive him of the use and enjoyment of the property and such deprivation is the immediate consequence of the condemnor's power. Conroy-Prugh Glass Co. v. Commonwealth, 456 Pa. 384, 321 A.2d 598 (1974); In Re: Filbert Limited Partnership Appeal, 64 Pa. Commonwealth Ct. 605, 441 A.2d 1345 (1982).

Appellee's evidence in support of his petition was exhaustively summarized by the trial court. The onward march of the Blue Route after twenty-five years of infighting had been extensively publicized by the press. On

[ 124 Pa. Commw. Page 277]

March 4, 1987, an article appeared in the local newspaper which publicized the impending "demolition" of Appellee's service station. Neighbors and loyal customers could see with their own eyes the trail of condemnations leading up to Appellee's station and a number of them declined to have Appellee fix their cars because they did not know how long Appellee would be in business.

It is to be noted that DOT did not help the situation by repeatedly issuing Appellee notices of imminent condemnation and then postponing the date of formal taking. This left Appellee in limbo as to exactly when the condemnation ax would fall. On September 4, 1986, DOT's relocation advisor visited Appellee's premises and began speaking to Appellee's employees without his knowledge regarding the imminence of condemnation. Afterwards, six out of twelve of Appellee's full time employees quit, including Appellee's station manager. Appellee had difficulty hiring new employees with the prospect of condemnation hanging over his head at some unspecified date. Appellee suffered from not being able to order gasoline or service products on a long term bulk quantity basis because he could not verify how long his service station would be in existence.

Appellee lost two of his five commercial accounts and his gasoline sales and repair business significantly declined after August of 1986. The trial court's decision not to permit DOT to introduce evidence of a decline in gasoline sales of other service stations in the area is within its discretion. Appellee was able to specifically tie the decline in his business to the prospect of imminent condemnation.

DOT did not formally condemn Appellee's property until nine months and three successive postponements after DOT's first ninety day notice of condemnation letter dated August 1, 1986 was sent. The trial court analogized

[ 124 Pa. Commw. Page 278]

Appellee's plight to a property owner "just waiting for the wrecking ball of societal improvement, at the hands of the Commonwealth, while the recipient of the blow trying to operate a sinking business despite having no idea of the time the wrecking ball will strike." DiFurio v. Department of Transportation (No. 86-11560, filed December 24, 1987), slip. op. at 14.

The trial court's conclusion that the combination of factors in this case constitutes "exceptional circumstances" is supported by substantial evidence. See Department of Transportation v. Lawton, 50 Pa. Commonwealth Ct. 144, 412 A.2d 214 (1980). DOT's argument based on Department of Transportation v. Steppler, 114 Pa. Commonwealth Ct. 300, 542 A.2d 175 (1988) and Gamma Swim Club, Inc. v. Department of Transportation, 95 Pa. Commonwealth Ct. 167, 505 A.2d 342 (1986) that as a matter of law a decline in business revenues is insufficient to constitute a de facto taking as long as the business can cover its expenses is misplaced.

In both Steppler and Gamma Swim Club the petitioners owned the property in question. It is true that a decline in the value of real estate or rental income to the owner of real estate does not by itself constitute a de facto taking as long as the remaining real estate remains usable and has value. Appellee owns no real estate. Appellee is being compensated solely for the taking of a leasehold interest whose only value is the business income it produces. Loss of business income destroys the value of Appellee's leasehold. A substantial loss deprives Appellee of the use and enjoyment of the leasehold. Conroy-Prugh. If DOT's actions "take" a ...


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