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3-6020-19240-3 |
STATE
OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE CITY OF
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In the Matter of the Relocation Benefits Claim of Benz Auto |
FINDINGS
OF FACT, CONCLUSIONS
OF LAW AND
ORDER |
The above-entitled matter
came on for hearing before Administrative Law Judge Kathleen D. Sheehy at 9:30
a.m. on April 10, 2008, at the Office of Administrative Hearings,
Jon Morphew, Attorney at Law, Schnitker & Associates, P.A.,
This order is the final administrative decision.[1] Judicial review of this decision may be had by writ of certiorari to the Minnesota Court of Appeals.
STATEMENT OF ISSUES
1. Did the Claimant provide reasonable documentation of his ownership of personal property (a paint spray booth) located at the displacement site?
2. If so, what amount of relocation benefits is the Claimant entitled to receive for purchase of “substitute personal property” at the replacement site under the Minnesota Uniform Relocation Act and 49 C.F.R. § 24.301(g)(16)?
The Administrative Law Judge concludes that the Claimant failed to provide reasonable documentation that he owns the paint spray booth at the displacement site, and accordingly the claim for relocation benefits related to the purchase of a substitute spray booth at the replacement site must be denied.
Based upon all of the proceedings in this matter, the Administrative Law Judge makes the following:
FINDINGS OF FACT
1.
Rick
Anderson is one of the owners of Ray Anderson & Sons Companies, Inc., a
dumpster box services company. The
company is located in a large building at
2.
The
first tenant in Section 8-B of the property, which has a street address of 933
3.
The
spray booth is essentially a large metal shed constructed inside the leased
space. It is nine ft wide by 40 ft long
by seven ft high, with a slanted roof.
The interior has banks of fluorescent lights, two cross-draft filter
columns, and six ceiling-mounted powder dispensing heads for the fire
suppression system. At the south end of
the roof of the booth is a large ventilation duct with a fan that exhausts
paint fumes through the roof of the building.
The air system for painting inside the booth consists of a hole in the
wall through which an air hose is placed.[5]
4.
When the
owner of P & R Auto Body retired, Section 8-B was leased to TNT Auto
Body. TNT Auto Body did not allow other
tenants to use the spray booth, which caused the other tenants to complain to
Ray Anderson & Sons. Rick Anderson
was reluctant to become involved in these disputes; he preferred that tenants
work these issues out for themselves.[6]
5.
Mohammed
(Adam) Zalloum is the owner of Benz Auto.
His business involves buying used cars at auction, repairing them, and
selling them to dealers and others for resale.
He buys between three and 15 cars per week and has two employees who do
the repair work necessary to sell the cars to others.[7]
6.
On
January 14, 2004, Benz Auto purchased certain equipment from TNT Auto Body for
$24,000.[8] According to the Purchase Agreement, the equipment
to be purchased was listed on an attached Addendum A. The Claimant is unable to locate Addendum A.[9]
7.
On
January 15, 2004, Benz Auto executed a two-year lease with Rick Anderson for
Section 8-B, the premises formerly occupied by TNT Auto Body.[10] The lease is in the name of Adam Benz, d/b/a Benz
Auto. The lease term was for the period
from February 1, 2004, through February 1, 2006. The rent was $21,000 per year, payable in
monthly installments of $1,750. Benz
Auto moved into the premises on or about February 1, 2004.[11]
8.
Paragraph
3 of the lease provides, in relevant part, as follows:
By occupying
the leased premises, Tenant shall be deemed to have accepted the same AS IS and
to have acknowledged that the leased premises are in good and sanitary
condition, and in good repair, and the equipment, plumbing, drains, fixtures,
appliances and machinery therein, at the time of so taking possession, are in
good, clean, sanitary and tenantable condition and in all respects satisfactory
and acceptable to Tenant and in condition in which they were represented to
Tenant to be and agreed to be put in by Landlord.[12]
9.
Paragraph
4 of the lease provides in part:
The leased
premises shall be used and occupied by Tenant for Auto Body purposes only and
uses and purposes incidental thereto and for no other purpose.[13]
10. With regard to repair obligations, the lease provides in
paragraph 7 that the Tenant “shall take good care of the leased premises and
all improvements erected therein and shall keep the same in good order and
condition[.]” Alterations and
improvements to the property are prohibited by paragraph 9 without the written
consent of the Landlord. With regard to
surrender of possession, paragraph 16 of the lease provides in relevant part:
On or before
the last day of the term or the sooner termination thereof, Tenant shall, at
its expense, remove its trade fixtures, personal property and equipment and
signs from the leased premises and any property not removed shall be considered
abandoned. . . . All alterations,
additions, improvements and fixtures (other than Tenant’s trade fixtures and
equipment) which shall have been made or installed by either Landlord or Tenant
upon the leased premises and all flooring shall, at the Landlord’s option,
remain upon and be surrendered with the leased premises as a part thereof,
without disturbance, molestation or injury, and without charge, at the
expiration or termination of this Lease.[14]
10.
On April
15, 2004, the Claimant signed an additional lease term, which is attached to
the previously executed document. The
additional term provides as follows:
Part of Lease
Agreement with Adam Benz
Adam Benz does
agree to allow other body shops in the building to use the paint booth. Adam Benz and other body shops must agree on
a price set year to year for the use of the booth. If any problem[,] Ray Anderson & Sons has
the right to overtake the use of the paint booth and settle the dispute.[15]
11.
During
the term of the lease, the Claimant acted in accordance with the April 15,
2004, provision. He allowed the owners
of other body shops in the building to use the paint spray booth. He set the price at approximately $30 - $50
per car, depending on the amount of paint needed. He controlled the use of the booth and
retained all payments made by other renters.[16]
12.
After
the two-year lease expired in February 2006, Benz Auto remained in the space on
a month-to-month basis.
13.
At some
point in late 2005 or early 2006, the City of
14.
The
Claimant began looking for a new location.
The search took approximately 16-18 months. In April 2007, he leased space at
Paint Booth $55,000.00
Ai[r] compressor $4,800.00
Office $1,000.00
Tools $2,500.00
Total: $63,600.00[18]
15.
The Claimant
testified that the purchase price was paid with a combination of cash, money
orders, and bartered vehicles (a 2003 Land Rover and 2001 BMW).[19] The Claimant has receipts for $13,800 in cash
payments made to Refaya between April and August of 2007.[20] There are no receipts for money orders. The vehicles are not registered with the
Department of Public Safety as being owned by Refaya, and Refaya did not
testify at the hearing.[21]
16.
The City
does not dispute that the Claimant is the owner of the spray booth at
17.
Benz
Auto submitted a claim for relocation benefits that included $10,000 in
re-establishment expenses, $2,500 for time spent searching for a new location
for the business, $7,372 in moving expenses, and $55,000 for substitute
personal property pertaining to the purchase of a new paint spray booth at the
new location of Benz Auto.[23]
18.
Sometime
in May 2007, the Claimant asked Rick Anderson for a letter that he could give
to the City in connection with his claim for relocation benefits.
19.
After providing
the letter, one of Anderson’s employees reminded him that Ray Anderson &
Sons had become the owner of the spray booth many years previously, and
Anderson reviewed the written lease with Benz Auto, and in particular, the
clause regarding use of the paint booth signed by the Claimant on April 15,
2004.
20.
By
letter dated June 12, 2007,
21.
SRF
Consulting Group reviewed the claim for relocation benefits and by letter dated
June 21, 2007, recommended that the City pay the $10,000 maximum benefit for
re-establishment expenses, $2,457.50 in time spent searching for a new
location, and $7,372 in moving expenses (after confirmation of removal of all
of Benz’s personal property). The
consultant recommended that the City deny the substitute personal property
claim for the spray booth on the basis that Benz Auto had not adequately
documented either the cost of the substitute item or the proceeds of the sale
or trade of the old spray booth, which are necessary steps. More importantly, the consultant recommended
denial of the claim based on Ray Anderson’s assertion that Ray Anderson &
Sons owned the paint booth, which would make Benz Auto ineligible for any
relocation expense related to the spray booth.[27]
22.
Although
the Claimant may have moved his business to
23.
The
Claimant has taken no legal action against
Based upon the foregoing Findings of Fact, the Administrative Law Judge makes the following:
CONCLUSIONS
1. The Administrative Law Judge has jurisdiction to hear and decide this matter pursuant to Minn. Stat. § 117.52, subd. 4 (2006).
2. The Claimant received timely and appropriate notice of the hearing.
3. The purpose of the federal relocation assistance program is, in part, to insure that persons displaced as a direct result of federally assisted projects are treated fairly, consistently, and equitably so that such persons will not suffer disproportionate injuries as a result of projects designed for the benefit of the public as a whole.[31]
4. A tenant who is displaced from a business is entitled to payment of actual reasonable and necessary moving and related expenses.[32]
5. If an item of personal property, which is used as part of a business operation is not moved, but is promptly replaced with a substitute item that performs a comparable function at the replacement site, the displaced person is entitled to payment of the lesser of: (1) the cost of the substitute item, including installation costs at the replacement site, minus any proceeds from the sale or trade-in of the replaced item; or (2) the estimated cost to move and reinstall the replaced item.[33]
6. Any claim for relocation payment shall be supported by such documentation as may be reasonably required to support expenses incurred, such as bills, certified prices, appraisals, or other evidence of such expenses.[34]
7. The Claimant has the burden of proof to demonstrate entitlement to relocation benefits.[35]
8. The Claimant has failed to provide adequate documentation that he is the owner of the spray booth or that the City should be required to pay his claim for substitute personal property benefits.
Based upon the foregoing Conclusions of Law, the Administrative Law Judge makes the following:
IT IS HEREBY ORDERED that the claim for $55,000 in substitute personal property relocation benefits is DENIED.
Dated this 3rd day of June, 2008
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s/Kathleen D. Sheehy |
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KATHLEEN D. SHEEHY |
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Administrative Law Judge |
Reported: Digitally Recorded, no transcript prepared.
MEMORANDUM
The main issue in this case is whether the Claimant has
adequately documented his ownership of the paint spray booth located at
The Claimant argues that
the lease term dated April 15, 2004, should be disregarded because it was not a
valid amendment to the lease. The issue
here is not whether the April 15, 2004, lease term is valid or enforceable
between Anderson and the Claimant as a matter of contract law. The issue here is what evidentiary value the
term itself has concerning ownership of the spray booth. As noted above, the lease term does not
directly address ownership of the booth, but it does require the Claimant to
let other tenants use the booth, and it permits
Furthermore, the Administrative
Law Judge has found credible
The Claimant argues that
The Claimant also maintains that even without Addendum A to the purchase agreement with TNT Auto Body, his testimony, in conjunction with the Affidavit of Charles Tessier, dated June 28, 2007 (attached to his post-hearing memorandum) is sufficient evidence that he bought all assets of TNT Auto Body, including the spray booth. The Tessier Affidavit was neither offered nor received into evidence at the hearing, and it is not part of the evidentiary record in this case.[37] Because the Administrative Law Judge is obligated to base the decision in this matter only on evidence presented at the hearing, the Tessier Affidavit was not considered in reaching this decision. The agreement with TNT Auto Body references the purchase of specific equipment, which was to be identified in Addendum A. The Claimant cannot locate Addendum A or any other documentation that supports his claim of ownership. The only credible documentation that does exist is the written lease between the Claimant and Anderson, which suggests the Claimant does not own the spray booth. The MURA requires reasonable documentation that the Claimant is the owner of the personal property for which he has submitted a substitute personal property claim. The Claimant has failed to provide it, and his claim must accordingly be denied.
Because the Administrative Law Judge has concluded the
Claimant failed to adequately document his ownership of the spray booth, it is not
necessary to address the second issue as to how much compensation he would be
entitled to receive for substitute personal property. The Administrative Law Judge is compelled to
note, however, that the documentation provided to support the alleged $55,000 cost
of the new spray booth is similarly insufficient. The Claimant has been in business for many
years, he has two employees, he buys and sells many cars each week, and he has
a bank and a line of credit for his business.
The Administrative Law Judge believes the Claimant knows how to
structure a transaction to establish what he actually paid for an asset, and he
did not do so here despite the fact that he had a pending claim for relocation
benefits. The documentation the Claimant
provided of $13,800 in cash payments, money orders lacking receipts, and bartered
vehicles is insufficient, in light of the record as a whole, to show that the
cost to purchase the spray booth in
K.D.S.
[1]Minn. Stat. § 117.52, subd. 4 (2006); Minn. Stat. § 14.62, subd. 4 (2006).
[2]
The building has two other street addresses:
931
[3] Testimony of Rick Anderson; Ex. C and attached floorplan (denoting different sections of leased space in the building).
[4] Ex. D.
[5] Ex. G.
[6] Test. of R. Anderson.
[7] Testimony of Adam Zalloum.
[8] Ex. 5.
[9] Testimony of Zalloum.
[10] Ex. 6.
[11] Test. of Zalloum.
[12] Ex. 6.
[13]
[14] Ex. 6.
[15]
[16] Test. of Zalloum.
[17] Ex. 7.
[18] Ex. 2; Ex. 9.
[19] Test. of Zalloum; Exs. 10 & 11. Exhibits 10 and 11 were not submitted to the City with the claim, but were produced for the first time when the parties exchanged exhibits before the hearing. The Certificate of Title (Ex. 10) for the Land Rover shows that Daimler Chrysler transferred ownership to A and K Auto on April 11, 2007; A & K Auto transferred ownership to Benz Auto on April 18, 2007; and Benz Auto transferred ownership to Mr. Refaya on April 25, 2007. The Certificate of Title (Ex. 11) for the BMW shows that Ford Motor Credit Co. transferred ownership to Automobile Giants on February 21, 2007; Automobile Giants transferred ownership to Benz Auto on March 2, 2007; and Benz Auto transferred ownership to Mr. Refaya on April 25, 2007.
[20] Ex. 12.
[21] According to records maintained by the Department of Public Safety, the vehicles in question were still registered to Daimler Chrysler and Ford Motor Credit Company, respectively, at the time of the hearing. See Ex. F.
[22] Ex. G.
[23] Ex. A.
[24] Ex. 3.
[25] Test. R. Anderson.
[26] Ex. D.
[27] Ex. A.
[28] Test. R. Anderson.
[29] Test. of A. Zalloum and R. Anderson.
[30] Ex. G.
[31] 42 U.S.C. § 4621(b); 49 C.F.R. § 24.1(b).
[32] 42 U.S.C. § 4622; 49 C.F.R. § 24.301(a)(1).
[33] 49 C.F.R. § 24.301(g)(16).
[34] 49 C.F.R. § 24.207(a).
[35]
[36]
The only issue decided here is that the Claimant has failed to adequately
document his ownership interest in the spray booth for purposes of receiving
relocation benefits. The Administrative
Law Judge would have no authority to decide that title to the spray booth
reverted to
[37] See Minn. R. 1400.7100, subp. 2 (2007) & Minn. R. 1400.7300, subp. 2 (2007). In any event, the Affidavit suffers from the same deficiency as does the Claimant’s evidence in the record: There is no documentation to support the claim of ownership.