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Kuchle Realty Co., LLC v. Commonwealth

Court of Appeals of Kentucky

June 1, 2018

KUCHLE REALTY COMPANY, LLC APPELLANT
v.
THE COMMONWEALTH OF KENTUCKY, TRANSPORTATION CABINET, DEPARTMENT OF HIGHWAYS; ANCHOR KENTUCKY PARTNERS, LLC; WALGREEN COMPANY; AND NATIONWIDE BANK, FSB APPELLEES

          APPEAL FROM KENTON CIRCUIT COURT HONORABLE GREGORY M. BARTLETT, JUDGE ACTION NO. 15-CI-01264

          BRIEFS FOR APPELLANT: Jacqueline S. Sawyers Bryan N. Bishop Ft. Mitchell, Kentucky.

          BRIEF FOR APPELLEE: Richard H. Deters Covington, Kentucky.

          BEFORE: CLAYTON, CHIEF JUDGE; DIXON AND THOMPSON, JUDGES.

          OPINION

          THOMPSON, JUDGE:

         The Commonwealth of Kentucky, Transportation Cabinet, Department of Highways (Transportation Cabinet) sought to acquire a portion of property owned by Kuchle Realty Company, LLC, to construct a right turn lane road improvement at the intersection of Dixie Highway and Kyles Lane (the intersection project) in Kenton County. Kuchle filed an objection to the Transportation Cabinet's petition for condemnation on the basis that the Transportation Cabinet failed to comply with federal and state laws and the Transportation Cabinet's policy manual during the condemnation process. The circuit court conducted a hearing and granted the Transportation Cabinet's petition.

         As early as 1986, plans were discussed to improve the intersection of Kyles Lane and Dixie Highway. A drawing depicting a turn lane at the intersection was generated by the Northern Kentucky Area Planning Commission (NKAPC) in 1986 and was part of a broader planning study by the OKI Regional Council of Government, [1] referred to as the "Dixie Fix."

         In an email submitted as an exhibit at the hearing, Roger Kuchle, an owner of Kuchle, acknowledged he attended planning meetings at OKI in 2007 and knew some of Kuchle's property would be involved in the Dixie Fix, whatever design was chosen.

         With the knowledge that a portion of Kuchle's property would be involved in the intersection project, in 2009-2010 Kuchle sought and obtained zoning approval for the construction of a Walgreens store on Kuchle's property. The approval required that Kuchle design the Walgreens store to comport with the intersection project plan.

         Walgreens subleased the property for a period of seventy-five years from Anchor Kentucky Partners, LLC, which has a ground lease for the property from Kuchle. Under the terms of the lease, if any property is taken by condemnation, the lease can be terminated at Walgreens' discretion upon sixty days' notice.

         In 2009, the design money for the intersection project was allocated and design began. In January 2014, a set of plans was completed and compensation for condemnation of part of Kuchle's property to facilitate the intersection project was calculated. There was evidence that a Transportation Cabinet representative met with Mr. Kuchle on June 2, 2014, and discussed the plans and that the property to be taken had been valued by the Transportation Cabinet at $23, 950 using a Minor Acquisition Review (MAR). The Transportation Cabinet offered that amount and Kuchle rejected the Transportation Cabinet's offer.

         Upon Kuchle's request, the Transportation Cabinet arranged an appraisal by a certified licensed appraiser, Brian Davis, who appraised the property at $41, 500 and the Transportation Cabinet offered that amount. Kuchle did not believe the appraisal was an accurate valuation of the property and rejected the Transportation Cabinet's offer. The Transportation Cabinet's record of contacts indicates that in January 2015, the Transportation Cabinet again offered $41, 500 and Kuchle counteroffered $66, 900. After fourteen months of negotiations failed, on July 7, 2015, the Transportation Cabinet filed a condemnation petition. Kuchle filed an objection to the petition.

         In August 2015, Mr. Kuchle sent a list to the Federal Highway Administration alleging twelve instances where the Transportation Cabinet violated federal law in the condemnation process. However, federal funding for the intersection project was not withdrawn.

         Following the hearing, the circuit court found there was no evidence that the Transportation Cabinet acted fraudulently, with bad faith or that it abused its discretion. It also found that the Transportation Cabinet substantially complied with state and federal laws regarding the condemnation of Kuchle's property. This appeal followed.

         The Transportation Cabinet sought to condemn Kuchle's property pursuant to the Eminent Domain Act of Kentucky, Kentucky Revised Statutes (KRS) 416.540 et seq. KRS 416.550 provides, in relevant part:

Whenever any condemnor cannot, by agreement with the owner thereof, acquire the property right, privileges or easements needed for any of the uses or purposes for which the condemnor is authorized by law, to exercise its right of eminent domain, the condemnor may condemn such property, property rights, ...

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