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STATE OF MICHIGAN COURT OF APPEALS

COUNTY OF LENAWEE, Plaintiff-Appellant, v DAVID WAGLEY, BARBARA WAGLEY, and BANK OF LENAWEE, Defendants-Appellees, and PAVILLION MORTGAGE, Defendant.

UNPUBLISHED December 20, 2011

No. 302533 Lenawee Circuit Court LC No. 05-001960-CC

COUNTY OF LENAWEE, Plaintiff-Appellant, v ROBERT D. GARDNER, MICHELE A. GARDNER, and SKY BANK, Defendants-Appellees, and UNITED BANK & TRUST, Defendant. No. 302534 Lenawee Circuit Court LC No. 05-001961-CC

COUNTY OF LENAWEE, Plaintiff-Appellant,

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v PHILLIP HALSTEAD, MARY HALSTEAD, LENCO CREDIT UNION, and ALDEN STATE BANK, Defendants-Appellees.

No. 302535 Lenawee Circuit Court LC No. 05-001962-CC

COUNTY OF LENAWEE, Plaintiff-Appellant, v ROBERT L. SELLERS, SR., and UNITED MORTGAGE COMPANY, Defendants-Appellees. No. 302537 Lenawee Circuit Court LC No. 05-002000-CC

COUNTY OF LENAWEE, Plaintiff-Appellant, v RICHARD F. BARON and MARY SHARON BARON, Co-trustees of the BARON FAMILY LIVING TRUST, Defendants-Appellees. No. 302538 Lenawee Circuit Court LC No. 05-002001-CC

Before: MURPHY, C.J., and JANSEN and OWENS, JJ. PER CURIAM. These appeals involve five condemnation actions initiated by plaintiff Lenawee County (the "county") concerning five different parcels of property near the Lenawee County Airport. Defendants consist of the individual property owners and entities holding mortgage interests in the properties. The county appeals by leave granted in each of the five cases, challenging two separate interlocutory orders entered by the trial court in January 2011. The county argues that the trial court erred with respect to an order denying the county's motion in limine "to preclude defendants from introducing any evidence that residential use of their property after the taking is prohibited based upon FAA [Federal Aviation Administration] regulations that prohibit -2-

residences within the Runway Protection Zone [RPZ]." The county further contends that the trial court erred with respect to an order granting defendants' motion in limine to "exclude inadmissible hearsay relied upon by [the county's] expert witnesses." Finally, the county maintains that the case should be remanded to a different judge, given that the trial judge has displayed bias against the county. We reverse the trial court's order denying the county's motion in limine regarding FAA regulations, we affirm the order granting defendants' motion in limine, and we reject the county's request to have the case reassigned to a different judge on remand. The county filed these actions in 2005. The complaints similarly described that the county intended to undertake an airport expansion and improvement project that necessitated its acquisition of avigation easements1 over the five involved properties. The complaints further indicated that defendants had rejected the county's good-faith offers of compensation. In January 2006, the trial court entered an order requiring a total taking. In the order, the trial court ruled in part: The Court has reviewed the briefs and materials submitted by the parties and entertained oral argument. The Court has determined that the [FAA] regulations required the removal of Defendants' home as a result of its location in a[n] [RPZ] as a matter of law. Therefore, no issue of fact exists because the acquisition of the portion of the parcel of property actually needed by Plaintiff destroys the practical value or utility of the remainder of the parcel, requiring Plaintiff to acquire and pay just compensation for the whole parcel pursuant to MCL 213.54(1). This passage reflects that the trial court was of the opinion that there could be no residential occupancy of a structure located in the RPZ, and, therefore, because a property within the RPZ could not be used for residential purposes, the practical value or utility of the property was effectively destroyed, resulting in the need to pay just compensation for a total taking of the whole property. In other words, because the landowners were left with parcels upon which they could not have a house for residential use, the property was essentially rendered worthless, thereby requiring the county to "pay just compensation for the whole parcel," and giving the county the opportunity to "elect whether to receive title and possession of the . . . parcel." MCL 213.54(1).2

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Black's Law Dictionary (7th ed), p 527, defines an "avigation easement" as "[a]n easement permitting unimpeded aircraft flights over the servient estate." MCL 213.54(1) provides: If the acquisition of a portion of a parcel of property actually needed by an agency would destroy the practical value or utility of the remainder of that parcel, the agency shall pay just compensation for the whole parcel. The agency may elect whether to receive title and possession of the remainder of the parcel. The question as to whether the practical value or utility of the remainder of the parcel -3-

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The county filed a motion for reconsideration, and the trial court issued a written opinion denying the motion, stating as follows: All of [the county's] new evidence suggests that FAA regulations do not require a total taking; however, the regulations do "strongly request" absolute fee be taken. . . . Although this Court may not have been required to order a total taking, this Court stated on the record several reasons why it felt a total taking was necessary. Specifically, this Court held: "Land uses prohibited are residences and places of public assembly. I don't know how any rule can be clearer than that. . . . Now, I am presuming that there will be occasions when the winds are funny and people will actually be landing coming this way and they could skid off, or you know, heaven help us that we ever had a plane that would have a malfunction, say, in its landing gear. . . . And so here we are. We are expecting people to live under the threat of imminent danger in a house where the RPZ is, at the minimum point, is a matter of a few feet over their chimney. Now granted, planes normally come in at [a] different level, but I would suspect that if all airline pilots came in at the right level you wouldn't need an RPZ more than ten feet wide. They could fly right down that line. That isn't what happens in this world. People do make mistakes. . . . Here we are flying huge airplanes into an airport right over the top of people's heads. And I don't understand how anyone can be expected, unless they want to, to live in that kind of environment. . . . I think my view here, that the value of these homes, there may be residual value for some people who may want to live there, but I don't think these people have to live there. And I think these properties have to be taken, so I will order that." Obviously, this Court based its total taking on more than a single FAA regulation prohibiting residential homes in the RPZ. This Court believes forcing Defendants to remain in their home constitutes an unnecessary risk to their lives. Furthermore, pursuant to FAA Order 5100.38C, [the county] is "strongly urged" to acquire fee title of Defendants' property. [Omissions in original.] The county appealed the trial court's ruling, and this Court reversed and remanded for further proceedings. Lenawee Co v Wagley, unpublished opinion per curiam of the Court of Appeals, issued March 22, 2007 (Docket Nos. 268819, 268820, 268821, 268822 and 268823). This Court stated that the first argument posed by the county was "that the trial court erred in finding, as a matter of law, that FAA regulations preclude residences in RPZs." Id., slip op at 4. The panel noted that defendants had argued below that "their residences were located in a RPZ and that FAA regulations required that the homes be razed and the sites cleared, resulting in of property is in fact destroyed shall be determined by the court or jury and incorporated in its verdict. Here, the "acquisition of a portion of" any given property would relate to the county's acquisition of an avigation easement interest from the property owner.

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destruction of the value or utility of the remainder of the parcels." Id. at 3. Our review of defendants' appellate brief filed in the prior appeal reveals that they argued that the county "completely ignores the unqualified statement regarding the incompatibility of residential uses in an RPZ in its own FEA [Final Environmental Assessment]." Defendants also argued that any claim by the county that FAA regulations did not require the acquisition of fee simple ownership of property located in the RPZ was beside the point, where "[r]egardless of who owns the fee simple land after the taking, a prohibition against its use for residential purposes destroys the practical value of the remainder, thus requiring a total taking pursuant to MCL 213.54." Accordingly, squarely before this Court in the first appeal, at least in part, was the question whether FAA regulations allowed residential occupancy of structures in an RPZ. This Court first acknowledged that FAA Policy and Procedures Memorandum ("PPM") 5300.1B, issued in 1999, provided in part that RPZs must be cleared of "incompatible land uses," which included "residences," and that the governmental agency should acquire the fee relative to such properties. Lenawee Co, slip op at 4-5. Part of the PPM quoted by this Court provided, "`If fee acquisition is determined to be infeasible, for any part of the [RPZ], that portion of the [RPZ] must be protected by an avigation easement against incompatible land use restrictions listed in paragraph 3.b.(1),'" which included residences. Id. at 4. The PPM further provided that "`[t]his easement must prohibit incompatible land uses . . ., [and] [i]f the present land use on the proposed easement property is incompatible, it must be properly mitigated and approved by the FAA.'" Id. The panel found that, "[g]enerally speaking," a residence constituted an incompatible land use and the county "should" acquire a property in fee. Id. at 5. But the Court noted, however, that the plain language of the PPM indicated that "acquiring the properties in fee is not necessary, and that an alternative to a complete acquisition is obtaining an avigation easement." Id. This Court then held: [C]ontrary to the trial court's interpretation, FAA regulations do not require [the county] to acquire defendants' residences in fee as a matter of law simply as a result of their location within the RPZ. Rather, an avigation easement is an acceptable alternative if approved by the FAA. [Id.] We note that the trial court did not actually rule that FAA regulations required the county to acquire defendants' properties in fee. Rather, the trial court concluded that FAA regulations did not permit residential use in an RPZ, which had the effect of a total taking because the practical value of any given property was destroyed if residential use was barred.3 At first glance, and as argued by defense counsel at oral argument here, it appears that the prior panel did

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There is a difference between the proposition that FAA regulations require acquisition of a fee interest in RPZ property and the proposition that FAA regulations prohibit residential use of RPZ property; they are not one in the same. A total taking would obviously and definitively occur with an actual acquisition of property but would only potentially occur where property usage was merely limited, e.g., where a residence could not be maintained on the land. A parcel could still have some value despite the fact that the parcel could not be used as a residence. Farm land is a good example.

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not reach the issue of whether FAA regulations prohibit residences in an RPZ. However, the panel proceeded to address whether there was evidence of FAA approval, and it indicated that the county had indeed provided evidence that the FAA had determined that the acquisition of avigation easements was appropriate. Id. This Court stated that the FAA itself had indicated that "FAA regulations do not prohibit the location of residences . . . within an RPZ." Id. According to the panel, the FAA had also stated in correspondence that, "`[p]er FAA standards, the residences are not obstructions to the approach surface or to air navigation'" and that "`[t]hese conditions are considered safe by FAA standards.'" Id. at 6. This Court concluded: [The county] presented documentary evidence that the avigation easements were "approved by the FAA." Thus, the trial court erred in determining that a total taking was required under FAA regulations "as a matter of law." [Id. (emphasis added).] This part of the panel's ruling did not frame its conclusion in terms of FAA regulations not requiring fee acquisition; rather, the opinion's language is framed in terms of FAA regulations not requiring a total taking within the context of the trial court's ruling, which ruling, as indicated above, found that FAA regulations prohibited residences in an RPZ. Accordingly, and importantly for purposes of our law of the case analysis below, we find that this Court's prior opinion effectively encompassed the question whether FAA regulations prohibit residential occupancy in RPZs, with the Court implicitly yet effectively ruling that such occupancy is permitted under an avigation easement so long as the FAA approved of the easement.4 As discussed in detail below, our focus, for purposes of the law of the case doctrine, must be on whether there has been a change in FAA regulations since the prior opinion was issued and

Obviously, this Court's prior opinion and holding would be entirely nonsensical if the avigation easements, for which the Court found evidence showing FAA approval, did not permit residential use. The avigation easements do "prohibit[] any ground structures . . . which encourage the congregation of people in the [RPZ]." This language is a bit vague, but arguably could preclude residences. However, the avigation easements also provide: "The GRANTOR shall not use nor permit construction on the GRANTOR's land . . ., any structure that is a hazard to the general public or air navigation including the construction of new residences, fuel handling and storage facilities, smoke-generating activities, or places of public assembly, such as churches, schools, office buildings, shopping centers, and stadiums." (Emphasis added.) Use of the term "new residences," when considered in conjunction with the nonexclusive list of prohibited structures, which does not include the basic structure of a home, house, or residence, suggests that existing residences are allowable. For the prior opinion to make any sense, we must necessarily assume that the panel was aware of the language in the easements and concluded that residences were not prohibited. We note that in December 2009, following the first appellate opinion, the parties entered into a stipulation permitting reconstruction or the rebuilding of residences, which resulted in an amendment of the easements. However, the stipulation also provided that entry of the order on the matter "shall not be deemed an acknowledgment by the Defendants that continued occupation of the residence is appropriate in the after taking scenario."

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whether facts subsequently developed showing that FAA approval of the avigation easements had been revoked or vacated in some manner. We must still discuss another aspect of this Court's earlier opinion. After addressing the matters and issues that we examined above, this Court proceeded to address, under MCL 213.54(1), the alternate reasons given by the trial court for finding a total taking, as set forth in the trial court's opinion on reconsideration. This Court held: The trial court's finding that a total taking was required was based not on evidence submitted by defendants, but, rather, on the court's subjective findings that there may be mistakes made, or unusual circumstances presented, that may endanger the lives of the persons in the homes. But the proper standard to be applied when determining whether an agency acquiring a portion of a parcel of property shall pay a property owner just compensation for a "total taking" is whether the partial acquisition would destroy the practical value or utility of the remainder of that parcel. Although the trial court stated that the avigation easements destroyed the practical value or utility of the properties, the court made no findings based on any evidence to support the statement. To the contrary, the trial court specifically found that "there may be some residual value for some people who want to live there." Indeed, [the county] presented evidence that "there are many airports which have obtained avigation easements in the RPZs which were acquired over existing residences" and that "These avigation easements include the same, or substantially the same conditions imposed by the avigation easements being acquired in this matter." [The county] also presented evidence that the new runway "is longer and further from the affected residences," and that this "will enable pilots to land further from the effected residences, thus reducing noise levels in comparison with the existing runway." [The county] also presented evidence that "the actual aircraft elevation above the houses will be higher," and that the State of Michigan and the FAA conducted "thorough environmental, noise, and safety reviews before construction," and that both entities issued a "joint Finding of No Significant Impact." This evidence suggests, from a practical standpoint, the easement may have little, if any, negative impact on the affected properties. [The county] also presented evidence that properties encumbered by avigation easements generally suffer an approximate 6% diminution in value. In light of the evidence presented by [the county] in response to defendants' motion, the trial court erred by finding as a matter of law that the avigation easements resulted in a total taking of defendants' properties. Whether defendants suffered a total taking

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