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Housing Authority of Birmingham Dist. v. Logan Properties, Inc.

Supreme Court of Alabama

December 7, 2012

HOUSING AUTHORITY OF THE BIRMINGHAM DISTRICT
v.
LOGAN PROPERTIES, INC., and Alamerica Bank.

Page 1170

James A. Bradford and Ed R. Haden of Balch & Bingham LLP, Birmingham; and Marshell R. Jackson, Housing Authority of the Birmingham District, Birmingham, for appellant.

Jesse P. Evans III and Michael B. Odom of Haskell Slaughter Young & Rediker, LLC, Birmingham; and Dawn Stith Evans and David R. Donaldson of Donaldson & Guin, LLC, Birmingham, for appellee Logan Properties, Inc.

Guy V. Martin, Jr., of Martin, Rawson & Woosley, P.C., Birmingham, for appellee Alamerica Bank.

STUART, Justice.

The Housing Authority of the Birmingham District (" HABD" ) appeals the judgment

Page 1171

entered by the Jefferson Circuit Court awarding Logan Properties, Inc., $350,000 on its inverse-condemnation claim against HABD, as well as an additional $100,000 for litigation expenses, and awarding the intervening plaintiff Alamerica Bank $10,000 for litigation expenses. We reverse and remand.

I.

Logan Properties is a real-estate and property-management company that purchases, renovates, rents, and maintains single-family and multi-family residences in the Birmingham area. In January 2002, Logan Properties purchased Patio Court, a 30-unit apartment complex in the Ensley neighborhood in Birmingham for approximately $101,000. Logan Properties began renovating the vacant units in the complex with the plan of transferring current tenants into the newly renovated units until the entire complex was eventually renovated and leased. Logan Properties financed the purchase and rehabilitation of Patio Court by obtaining a construction loan from Alamerica Bank.[1] In February 2003, Logan Properties obtained an adjacent parcel of property including a triplex unit with the same goal of renovating and leasing the units.

Sometime in 2004, Logan Properties learned that HABD had obtained a federal grant to redevelop Tuxedo Court, a multi-block public-housing complex located across 22nd Street from Patio Court. That project, referred to by the parties as the Hope VI project, entailed the demolition of the existing Tuxedo Court housing complex and the construction of new housing in its place. At trial, Logan Properties' officers testified that, after the plans for the Hope VI project were made public, tenants started leaving Patio Court, telling Logan Properties that HABD was going to condemn Patio Court as part of the Hope VI project. As residents in Tuxedo Court left as well, the general area deteriorated, and the vacant Patio Court apartments became the subject of theft and vandalism. Although Logan Properties had completely renovated 18 of the units, it eventually stopped renovation work, and, during the 2011 trial, it was conceded that the entire property had become unlivable.[2]

In September 2005, the Boulevard Group, which was hired by HABD to be the project manager for the Hope VI project, offered to buy Patio Court, but not the triplex, from Logan Properties for $200,000. Logan Properties rejected the offer but, in November 2005, made a counteroffer to sell Patio Court and the triplex for $415,000. That offer was not accepted.

It is not clear exactly what transpired over the next 18 months, but it appears that there were at least some ongoing negotiations between Logan Properties and HABD while Patio Court continued to deteriorate. On May 15, 2007, Logan Properties received an appraisal report it had commissioned, placing the fair market value of Patio Court and the adjacent triplex on September 1, 2005— " the date the owners state the property was in livable condition" — at $425,000. On June 18, 2007, HABD sent Logan Properties a letter formally offering to buy Patio Court and the triplex for $104,200, the amount those properties had been appraised for in an independent appraisal commissioned by HABD. The letter also advised Logan Properties that if it did not accept the offer, " it will be necessary for HABD to file suit to acquire the property by condemnation

Page 1172

under its power of eminent domain." See § 24-1-28, Ala.Code 1975 (providing that a municipal housing authority may " acquire by eminent domain any property, real or personal, which it may deem necessary to carry out the purposes of [the Housing Authorities Law, § 24-1-20 et seq., Ala.Code 1975]" ). Logan Properties did not accept the offer and, in accordance with § 18-1A-270 et seq., Ala.Code 1975, HABD subsequently initiated, on September 26, 2007, condemnation proceedings in the Jefferson ...


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