It's 2020, so out with the old, in with the new.
We like any opinion that starts off with "[t]he facts giving rise to this appeal are complicated but do not require a lengthy recitation." Because that signals the opinion writer has done the hard work, because in order to explain complicated facts in a simpler way, the writer must have focused only on the critical facts (unlike a lot of brief and opinion writers). For that reason, we started off the New Year diving into the Supreme Court of Kansas' opinion in GFTLenexa LLC v. City of Lenexa, No. 119278 (Dec. 6, 2019). It's about the old problem of who is entitled to be compensated when property subject to multiple interests is taken.
Here are the "complicated" facts: Oak Park owned land. It leased it to Centres. Centres, in turn, subleased it to Bridgestone for a tire shop. Later, Centres assigned its rights to GFTLenexa, which became the (sub)landlord to the tire shop. The city condemned a portion of the property for a road project, and compensated Oak Park alone. Centres notified GFTLenexa of the pending condemnation, but GFTLenexa did not intervene to assert a right to compensation.
Later, the tire shop sued GFTLenexa for a reduction in rent: the partial condemnation reduced the size of the leased property, and the lease provided that if the size of the property was reduced, the tenant would be entitled to a proportional reduction in rent. The court eventually rejected GFTLenexa's argument that since it didn't get any portion of the condemnation proceeds, it was not required to reduce the rent.
GFTLenexa then sued the city for inverse condemnation and due process violations, claiming that the condemnation took its property and it was entitled to compensation and damages (the rent reduction and damages). The court agreed that the city should have notified GFTLenexa of the partial condemnation. When there's an exercise of eminent domain, every owner of an interest in the property is entitled to notice. But, the court concluded, GFTLenexa did actually know about the condemnation action, because its assignor, Centres, told GFTLenexa about it.
The court concluded that GFTLenexa "had an interest in the property, and could have asserted whatever right it wanted to protect by intervening and arguing for a different appraised value or a different apportionment of the award." Slip op. at 1. No harm, no foul.
As for the phrase "whatever right it wanted to protect," the court noted that the terms of the lease showed that "GFTLenexa bargained away its right to claim any part of an eminent domain compensation." Id. In other words, the "condemnation clause" apportioned the entire award to the owner, not any lesser interest.
The court also noted (in dicta) that the "undivided fee rule" affirmed the process: the condemnor city was only required to pay the owner of the property, leaving for later any apportionment between the owner and any lesser interests. Kind of like interpleader:
Thus, in an eminent domain proceeding, the duty of the condemning authority is to make payment for the property that it has taken, not to account for the diversity of interests in the property. The public pays what the land is worth, and the amount to be paid is divided among the various claimants according to the nature of their interests.
Slip op. at 13.
"You snooze, you lose," the court essentially held, concluding that GFTLenexa "essentially abandoned any claim to compensation when it elected not to intervene i the eminent domain proceeding[.]" Id. "While GFTLenexa tries to argue that it has separate property rights as a lessee and sublessor, the proper venue to assert those rights was in the eminent domain proceeding, even if it could not have successfully asserted them there because it voluntarily surrendered those rights through its contractual obligations." Slip op. at 15.
GFTLenexa, LLC v. City of Lenexa, No. 119278 (Kan. Dec. 6, 2019)
