State court sends U-Haul appeal into U-turn

Gary B. Gray • Feb 21, 2013 at 9:26 PM

U-Haul’s legal confrontation with Johnson City has been rerouted back to Washington County.

The Eastern Section of the Tennessee Court of Appeals in Knoxville has denied the company’s request to review a November decision by Washington County Circuit Court Judge Thomas Seeley that gave Johnson City the go-ahead to possess and demolish U-Haul’s downtown property for a flood mitigation project.

The case now is back in Seeley’s hands, and it will be up to a 12-person jury to determine what the city should pay to compensate the company for its property.

A three-judge panel concluded in its order that “this is not an appropriate case in which to exercise our discretionary jurisdiction at this time.”

Seeley ruled Johnson City did show the condemnation and flood remediation project intended for the downtown U-Haul site was meant for public use and not primarily to generate tax revenue through eminent domain.

“Judge Seeley was the first gatekeeper, but they had a second gatekeeper — the three judges,” said Erick Herrin, the attorney representing Johnson City. “They’ve decided it does not need to be addressed until the case is over in the trial court.”

U-Haul not only will have the right to appeal the jury decision, the company also can ask the Tennessee Court of Appeals to consider Seeley’s ruling and argue that the property at 114 W. King St. is being taken for “impermissible purposes,” Herrin said.

“They can still do this because there has never been a determination of Seeley’s original ruling on its merits,” he said. “Judge Seeley will conduct a scheduling conference, which could be done either in person or by telephone. He then will follow up by setting a trial date.”

This was the first case heard by a Tennessee appellate court involving state statutes regarding eminent domain since 34 states modified laws in 2008 in an attempt to ensure a city would not take property purely for the purposes of economic gain — an argument made by the company’s lead counsel, Thomas Peebles during a three-day hearing.

In June, the city issued about $6 million in debt to help pay for the first three phases, a debt to be repaid by taxpayers. The first three phases include Founder’s Park, the long-awaited $4.5 million project along West State of Franklin Road; the King Creek retention basin, which includes a swath of land where U-Haul now sits, where Cutshall’s Automotive has been demolished and a site vacated by WW Cab Co.; and a recently demolished area off West Market Street on which King Creek will be opened up and a retention basin will be built.

The city’s long-range flood mitigation plan is estimated to cost about $30 million. So far, land acquisition, environmental studies, design costs and the in-house McClure Street project near U-Haul’s property to make way for three of eight planned phases have been paid for by taxpayers through stormwater fees.

“If they appeal, we’ll be saying ‘enough’s enough,’ ” Herrin said. “My concern is we have $820,000 in that courthouse that isn’t drawing one penny of interest,” he added.

Johnson City had worked for more than a year to get U-Haul to accept that amount for the property, and to undergo negotiations to help the company relocate within Johnson City. But unlike other downtown property owners who accepted appraised amounts and went their way, U-Haul chose not to negotiate but to make a stand.

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