1-6220-16363-3

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE HENNEPIN COUNTY TRANSPORTATION DEPARTMENT

 

In the Matter of the Application for Relocation Benefits for P. Heck Design, Inc.

ORDER ON MOTION FOR SUMMARY DISPOSITION

         

The above-entitled matter is before Administrative Law Judge George A. Beck, serving as a hearing officer for the Hennepin County Transportation Department.  On February 4, 2005 Hennepin County filed a Motion for Summary Disposition in this matter.  Claimant, P. Heck Design, Inc. filed a Memorandum in Opposition to the Motion on February 18, 2005.  A reply was filed by Hennepin County on February 28, 2005.  The Motion was the subject of oral argument at the Office of Administrative Hearings on March 2, 2005.

John J. March, Assistant Hennepin County Attorney, C-2000 Government Center, 300 South 6^th Street, Minneapolis, MN  55487 appeared representing the Hennepin County Transportation Department.  Jon W. Morphew, Esq. and Kirk A. Schnitker, Esq. of the firm of Schnitker & Associates, P.A., 2300 Central Avenue NE, Minneapolis, MN  55418 appeared representing the claimant.

This Order is the final administrative decision.[1]  Judicial review of this order may be had by certiorari to the Minnesota Court of Appeals.[2]

Based upon the Memoranda filed by the parties, the oral argument, and for the reasons set out in the following Memorandum,

IT IS HEREBY ORDERED: 

(1)            That the Motion for Summary Disposition is GRANTED.

(2)            Claimant’s appeal is DISMISSED.

Dated this

9th

day of

March

2005.

 

s/George A. Beck

GEORGE A. BECK

Administrative Law Judge

 

MEMORANDUM

          P. Heck Design, Inc. (“PHD”) is a commercial art studio owned and operated by Peggy Heck.  PHD was a tenant in a strip mall located at 2240 Commerce Boulevard in Mound, MN.  A construction project involving the realignment of County State Aid Highway 15 in Mound required the total acquisition of the strip mall.  Because of this, PHD had to move and was therefore eligible for relocation assistance under the Minnesota Uniform Relocation Assistance Act (MURA).  The MURA was enacted to make public funds available to reimburse relocation costs incurred by businesses displaced by public acquisitions of property where there is no federal financial participation.[3]  The MURA requires an acquiring authority to provide all relocation assistance services, payments and benefits required by Federal law.[4]

          Hennepin County contracted with Conworth Incorporated to assist tenants in the strip mall in filing relocation assistance claims.  Ken Helvey of Conworth met with Peggy Heck on November 12, 2002.  Mr. Helvey advised Ms. Heck that he would assist her in locating a new location for her business, that he would get at least two move bids for the cost to move her business, and that he would be available to answer any questions she had regarding relocation.  Mr. Helvey provided her with a two-page document that set out relocation and re-establishment expenses that are reimbursable and explained the option of requesting a fixed payment in lieu of filing an actual cost claim.[5]

          On March 10, 2003, Mr. Helvey’s assistant met with Ms. Heck at the site of her business to facilitate obtaining an estimate from a moving company for the cost of moving PHD.  The claimant believes there was only one estimate obtained while Mr. Helvey states that two were obtained in the amount of $4,256.06 and $5,676.00.  Mr. Helvey and Ms. Heck spoke about the claim again in April, 2003 and in May, 2003.  In June of 2003, Ms. Heck faxed estimates that she had received for various electrical work and move related expenses to Mr. Helvey.  In her fax Ms. Heck noted that Mr. Helvey already had the moving quote.  She asked Mr. Helvey to look over the estimates she was sending and let her know how they should proceed.  She also stated “perhaps we should discuss the fixed payment option.”[6] 

In a conversation with Mr. Helvey on July 9, 2003, Ms. Heck decided that she wanted to go forward with a fixed payment claim.  Mr. Helvey forwarded a fixed payment claim to Ms. Heck on July 24, 2003.  She signed it the next day and it was submitted to Hennepin County.  Hennepin County sent a check for $20,000 to Ms. Heck on October 7, 2003 and it was cashed on October 14, 2003.  PHD moved from the strip mall in January of 2004.

The claimant filed an actual cost claim for the move from the strip mall sometime prior to May, 2004.  This appeal proceeding was initiated by Hennepin County after a request for a hearing by the claimant on May 3, 2004.  On November 9, 2004 Ms. Heck submitted a detailed actual cost claim to Hennepin County in the amount of $36,116.47 for her relocation expenses in moving from the strip mall.[7]  Ms. Heck states that she would not have accepted the fixed payment if Mr. Helvey had appropriately advised her of the full amount of relocation benefits for which PHD was eligible.  Ms. Heck states that Mr. Helvey did not provide her with any referrals to replacement locations for her business and often failed to return her phone calls for days, if not weeks.  She believes that Conworth failed to provide any meaningful assistance or advice for the relocation of her business. 

Under the MURA an acquiring authority has a mandatory duty to provide certain relocation advisory services and claim assistance.  These include an explanation of the relocation payments and other assistance for which the business might be eligible; reasonable assistance necessary to complete and file a claim for payment; and information regarding the documentation required to support a claim for relocation benefits.[8]  PHD argues that it is the job of the relocation counselor to minimize the harm suffered by a displaced business and that informed consent is necessary for a decision on payments.

          In its Motion for Summary Disposition Hennepin County argues that the claimant cannot file an actual cost claim after having accepted a fixed payment.  Summary Disposition is the administrative equivalent of Summary Judgment.[9]  Summary Disposition is appropriate when there is no genuine dispute about the material facts, and one party must necessarily prevail when the law is applied to those undisputed facts.[10]  When considering a Motion for Summary Disposition the decisionmaker must view the facts in the light most favorable to the non-moving party.[11]  The moving party, Hennepin County, carries the burden of proof and persuasion to establish that no genuine issues of material fact exist.[12]  The non-moving party cannot rely upon general statements or allegations but must show the existence of specific material facts which create a genuine issue.[13]

 

          The Federal regulation authorizing a hearing on a claim allows any “aggrieved person” to file an appeal with the agency that it believes has failed to properly consider an application for assistance.[14]  Hennepin County first argues that the claimant is not an aggrieved party because it submitted a claim for fixed payment and that claim was paid in full.  Hennepin County believes that there is nothing to appeal because PHD was paid the full amount of assistance it requested.  The claimant argues, however, that it is an aggrieved party because Hennepin County failed to properly consider its application for reimbursement of actual relocation expenses.  It also suggests that only the substantive and not the procedural provisions of the federal law have been adopted in Minnesota.

          MURA does not specifically import the federal relocation law in full, but states that an acquiring authority must provide all relocation assistance, services, payments and benefits required by federal law.  And the Minnesota Court of Appeals has expressed doubt that all of the federal act’s procedural provisions are incorporated into Minnesota law. [15]  Additionally, PHD has filed a second claim that is entitled to consideration and analysis under MURA.  It would therefore be inappropriate to dismiss this appeal because the claimant is not “aggrieved” within the meaning of the federal regulation.  The question is more squarely addressed by deciding if an actual cost claim can be made following a fixed payment award.

          Secondly, Hennepin County suggests that the claimant’s acceptance of a fixed payment is analogous to a settlement agreement in a lawsuit and should be enforceable absent fraud.  The claim submitted by Ms. Heck did state that “I, the undersigned do hereby certify that the above information is correct, and agree to accept the amount of $20,000 in lieu of moving and related expenses.”[16]  Hennepin County suggests that the claimant received a definite offer and her acceptance is proved by executing a claim and accepting the $20,000 check.

          The claimant argues, however, that a fixed payment in lieu is not a negotiated settlement but is in fact an alternative way to document expenses actually incurred by a displaced business.  In order to receive a fixed payment a displaced business must still move and incur expenses related to the move.[17]  The claimant argues that, in any event, there was no meeting of the minds in this case since Ms. Heck was induced to accept the fixed payment by the representations of Mr. Helvey.

          Hennepin County has presented no precedent that would indicate that the law governing the settlement of lawsuits should be applied to claims for relocation benefits under MURA.  Again, the appropriateness of an appeal in this situation is more properly decided by interpretation of MURA and the federal law that it incorporates.  To construe the fixed payment as a settlement agreement inappropriately avoids any analysis of the application of the statutes and regulations.

Finally, Hennepin County points out that the Federal regulation relating to fixed payments states that “[a] displaced business may be eligible to choose a fixed payment in lieu of the payments for actual moving and related expenses, and actual reasonable reestablishment expenses provided by Sections 24.303 and 24.304.”[18]  The relevant federal statute states that any displaced person “may elect to accept” a fixed payment “in lieu of” a payment based upon actual expenses.[19]  Hennepin County argues that allowing the claim would allow the claimant to pursue an actual cost claim with a $20,000 fixed payment as a fall back.  Hennepin County suggests that this interpretation renders the language of the regulation meaningless.  It suggests that “in lieu” means “in the place of” and therefore means that a displaced business must choose either an actual cost claim or a fixed payment.

          The claimant argues, to the contrary, that there is no specific provision in the law that forces a displaced business to make a choice as to whether it wants to pursue an actual cost claim or a payment in lieu claim.  It argues that if a displaced business is able to demonstrate at the end of the claim process that it is eligible for relocation benefits in excess of $20,000 it should be allowed to make an actual cost claim and, failing to establish a claim in excess of $20,000, it should be allowed to shift to a fixed payment.

          The question of the adequacy of relocation services provided to the claimant is not a material fact that must be determined for the purposes of this motion, and does not preclude an order for summary disposition.  There is no consequence in the statute or regulations for a failure to comply with requirements for providing assistance to a displaced person.  A decision on the legal issue of whether the actual cost claim can proceed rests upon the interpretation of the federal statute and regulation cited above and what case law is available.  There are no material facts in dispute.  Nonetheless, the facts most favorable to the claimant do not appear likely to establish a violation of the federal requirements since the consultant’s handout to Ms. Heck closely tracks the federal agency’s suggested material.

          The most helpful decision found by the parties is Lickteig v. Iowa Dept. of Transportation.[20]  In that case, the claimant argued that his fixed payment for relocation was improperly calculated and that he was also entitled to an actual cost award in addition to the fixed payment.  The Iowa Court held that since the claimant had claimed both fixed and actual cost benefits he would be allowed recovery under the subsection that provided the greatest benefit.  However, the court interpreted the requirement to elect a fixed payment in lieu of an actual cost payment to mean that a displaced person could not recover both.[21] 

          The claimant believes this case makes it clear that a displaced business is not required to select one option at the onset of the claim process.  It suggests that forcing such an election is contrary to the intent of MURA to minimize hardship to displaced businesses and to fully compensate them.  Hennepin County emphasizes that the case requires an election by a business seeking benefits and argues that the claimant made its election in 2003 and received payment as required by MURA.

          Lickteig makes it clear that a displaced business can pursue both types of claims but must elect between them at some point.  A claimant is not required to make that election when it is advised that it is being displaced.  Rather, the process contemplates providing information and assistance to the claimant followed by the gathering of move estimates to arrive at a determination of the cost of the move.  That is what occurred in this case.  Although Ms. Heck believes she did not receive adequate assistance, she was free to complain to Mr. Helvey or Hennepin County or to seek other assistance before making an election.  The record does not indicate that she did either.  Rather, after gathering estimates, she elected to file a fixed payment claim in July of 2003 and was paid the fixed payment of $20,000 in October, 2003, prior to moving her business the following January.  She was not required to file her claim or make an election at that point.  She then filed notice of a new claim prior to May of 2004 and a detailed actual cost claim for approximately $36,000 in November, 2004.

          If a claimant can file an actual cost claim several months after receiving a fixed payment, there would seem to be little meaning attached to the word “elect” or the phrase “in lieu of” in the federal statute.  “Election” implies a choice, and “choice” involves a selection.  “In lieu of” means “in place of.”[22]  Ms. Heck, a small business owner, knowingly and in writing gave up a claim for actual expenses.  She made her selection and chose a fixed claim instead of the actual cost claim.  This case is distinguishable from Lickteig where the claimant had made no election between an actual cost claim or a fixed payment claim.  Here Ms. Heck elected the fixed payment in place of the actual cost claim and was paid. 

Although it is possible Ms. Heck may not be compensated for all the expenses she incurred,[23] it is not unusual for benefit claims to the government to be limited by requirements such as the election required here.  While the overall intent of MURA is to ensure that displaced businesses do not suffer disproportionate injuries as a result of public projects, it appears that the legislative intent was to require a choice to be made by a claimant between the two remedies.  To allow this claim would be to allow a second election to be made – something that is not authorized by the statute.  Accordingly, it is concluded that having made its election to receive a fixed payment claim and receiving the payment, PHD cannot later file an actual cost claim.

                                                                                G.A.B.