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BNSF Railway Co. v. Grohne

Court of Appeals of Illinois, Third District

July 3, 2019

BNSF RAILWAY COMPANY, a Delaware Corporation, Plaintiff-Appellee and Cross-Appellant,
DAVID F. GROHNE, as Trustee Under the David F. Grohne Revocable Trust Dated February 14, 1996; NONRECORD CLAIMANTS; UNKNOWN OWNERS; ndCHICAGO TITLE AND TRUST COMPANY, as Trustee Under Trust No. 8002346417 Defendants David F. Grohne and Chicago Title and Trust Company, Defendants-Appellants and Cross-Appellees.

          Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois. Circuit Nos. 14-ED-65 14-ED-66 14-ED-67 Honorable Roger D. Rickmon, Judge, Presiding.

          PRESIDING JUSTICE SCHMIDT delivered the judgment of the court, with opinion. Justice McDade concurred in the judgment and opinion. Justice Wright concurred in part and dissented in part, with opinion.



         ¶ 1 Plaintiff-appellee and cross-appellant, BNSF Railway Company (BNSF), filed three eminent domain lawsuits for the condemnation of tracts of land owned in trust by defendants-appellants and cross-appellees, David F. Grohne and Chicago Title and Trust Company (collectively, Grohne). Plaintiff sought to build an intermodal railway facility along BNSF's main rail line in Will County, Illinois, using the condemned land. After the trial court's ruling on the pending traverse actions, the court held a jury trial for the valuation of Grohne's tracts of land for purposes of exercising eminent domain. The jury awarded Grohne compensation for all three takings.

         ¶ 2 Grohne appeals, claiming the trial court erred by (1) limiting his cross-examination of experts on a comparable land sale contract at the valuation hearing pertaining to Will County case No. 14-ED-65, (2) denying his traverse and motions to dismiss in Will County case Nos. 14-ED-66 and 14-ED-67, and (3) misinterpreting section 10-5-110 of the Eminent Domain Act (Act) (735 ILCS 30/10-5-110 (West 2014)) pertaining to Will County case No. 14-ED-67.

         ¶ 3 BNSF cross-appeals, raising the following issues regarding the compensation awards: (1) whether, absent a substantial and material change, the trial court erred in granting a new valuation date for the properties pertaining to Will County case Nos. 14-ED-66 and 14-ED-67 and (2) whether the final judgment orders should have been entered based upon the parties' stipulations of value as of October 20, 2014, rather than the jury's verdicts as of July 21, 2017.

         ¶ 4 I. BACKGROUND

         ¶ 5 On October 20, 2014, BNSF filed three eminent domain lawsuits to condemn three separate, but closely located tracts of land in Will County case Nos. 14-ED-65, 14-ED-66, and 14-ED-67. The complaints in the first two cases named David F. Grohne, as trustee of the David F. Grohne Revocable Trust, as defendant. The third lawsuit, Will County case No. 14-ED-67, named David F. Grohne, as well as Chicago Title and Trust Company, as holder of a land trust with David F. Grohne named as the beneficiary, as defendants.

         ¶ 6 BNSF intended to build an intermodal facility along its main line near Interstate 55 and Lorenzo Road in Will County, Illinois.[1] The northernmost tract (Grohne North), the subject of case No. 14-ED-65, consists of 81.251 acres. BNSF sought 51.872 acres. The two tracts to the south, the subjects of case Nos. 14-ED-66 (Grohne South) and 14-ED-67 (CTT), consist of 73.118 and 72.717 acres, respectively. BNSF sought 11.733 and 59.316 acres of these tracts, respectively. The BNSF main line splits the Grohne tracts subject to taking in all three cases.

         ¶ 7 On September 25, 2014, the BNSF Board of Directors (Board), with unanimous consent, signed a resolution outlining the details and necessity of an intermodal facility. Specifically, the resolution stated the following:

"[I]n order to alleviate congestion on the [BNSF main line], prevent blocking of the main line and facilitate the Company's ability to meet the current demands of its existing customers and the future demands of additional development in the area, the Company proposes to construct and operate a multimodal facility adjacent to the [BNSF main line]. The facility will operate as a freight terminal and intermodal facility and will start from a connection to the Chillicothe Subdivision just east of Lorenzo Road and extend that facility west to a second connection to the Chillicothe Subdivision at Murphy Road. The second connection at Murphy Road is required to provide access to the facility from both ends to facilitate safe and expeditious operation of the main line. The facility will consist of multiple tracks and related connections, paved parking for holding containers and trailers waiting for local delivery or for loading onto rail cars, cranes for handling the containers and trailers and support facilities. There will also be truck gate structures to facilitate entrance and exit of containers and trucks to and from the facility. Full build out of the facility will require between 300 and 450 acres[.]"

         The resolution also outlined in detail the property to be acquired, including 122.921 total acres from Grohne.

         ¶ 8 BNSF, in the complaints filed in these consolidated cases, restated the purpose it laid out in the Board's resolution. Further, the complaints stated, "[t]he multimodal facility, once constructed and open for operations, will be used for the benefit of all users of BNSF's railroad without discrimination."

         ¶ 9 On November 24, 2014, Grohne filed a traverse and motion to dismiss in each of BNSF's lawsuits. On April 6, 2015, the trial court consolidated the cases. Grohne subsequently withdrew the traverse with respect to Grohne North. Thus, the traverse hearing covered only the 71.049 acres comprising Grohne South and CTT.

         ¶ 10 With respect to Grohne South and CTT, Grohne argued BNSF sought to acquire his private property, in part, for the purpose of providing direct rail service to a private, neighboring industrial park, RidgePort Logistics Park (RidgePort). Specifically, Grohne maintained BNSF's conceptual plan for the intermodal facility included a private track, or spur track, designed to provide RidgePort and its attracted customers or tenants with direct access to the newly constructed southern switch on BNSF's main line.

         ¶ 11 In further support of the traverse, Grohne argued BNSF desired to acquire Grohne South for unstated or speculative future uses. BNSF did not specifically identify these uses in its conceptual plan. As such, Grohne claimed BNSF attempted to acquire "significantly more" than the amount of acreage necessary for the planned intermodal facility project.

         ¶ 12 On July 27, 2015, the trial court held a hearing on the traverse. James Ball, senior manager of real estate for BNSF, testified about the Board's plan for the construction of an intermodal facility. Ball was in charge of acquiring property for the benefit of BNSF. Ball discussed the purpose and nature of the operations of intermodal facilities in general. Ball also stated that in October 2014, BNSF made three separate offers for the acquisition of Grohne's 124 acres. Grohne rejected each offer.

         ¶ 13 John Hovland, director of marketing and facility development for BNSF, testified before the court. Hovland explained that his responsibilities included siting, developing, and maintaining intermodal and automotive facilities. Hovland was responsible for determining the specific land necessary to construct an intermodal facility. In this case, Hovland anticipated the ultimate size of the proposed intermodal facility would be within the standard size for constructing intermodal facilities, approximately 460 acres.

         ¶ 14 Hovland also described the operations and demand for the proposed intermodal facility. In particular, Hovland discussed how BNSF's four other intermodal facilities in the area were too small and had minimal expansion capabilities. The newly proposed intermodal facility would take three years to construct. BNSF needed the additional intermodal facility due to forecasted growth in the Chicago area over the next five years. Further, the proposed intermodal facility could include and/or require support tracks for trains entering and leaving the facility, support facilities, an administration building, repair facilities for instrumentalities and equipment, parking areas, an overpass, water retention/detention facilities, grade separations, emergency facilities, and relocated power lines.

         ¶ 15 Hovland clarified that the plans were conceptual and would be implemented in phases, rather than all at once. Since BNSF had not acquired the necessary tracts of land, final planning and permitting could not be completed. Completion of the plans required additional engineering, surveying, and geotechnical exploration. The Grohne South and CTT tracts would potentially become the site of lead outs for the intermodal tracks, parking areas, water retention/detention facilities, and a grade separation for nearby roads. BNSF would be unable to construct the proposed intermodal facility without Grohne South and CTT. In Hovland's view, the proposed intermodal facility would serve many customers, without discrimination.

         ¶ 16 Opposing counsel cross-examined Hovland about the proposed spur track directly linking RidgePort to the main line. Hovland averred that the spur track was necessary to provide rail service to the industries attracted by RidgePort and to distribute the products of RidgePort's customers or tenants. Hovland admitted the spur track was not necessary to the intermodal facility itself but was essential for the industrial track to be fully functional.

         ¶ 17 David Irving, a civil engineer and vice president for Trans Systems Corporation, directed the design of the proposed intermodal facility. Irving testified that the intermodal facility and spur track were separate projects. He also approximated the spur track would traverse four acres of Grohne South and CTT. BNSF intended the spur track to serve Ridgeport's customers with direct access to ship their goods via railway.

         ¶ 18 Irving agreed that the plans for the intermodal facility were conceptual. However, plans for the intermodal facility were difficult to conceive without Grohne South, as the project required 8000 feet of clear track. Further, additional tracks, water retention/detention areas, and parking, among other things, could encumber both tracts. The proposed intermodal facility did not yet include concrete plans for about 50% to 70% of Grohne South.

         ¶ 19 James Gordon, director of economic development for BNSF's northern lines, testified that BNSF entered a separate letter agreement with RidgePort outlining the parties' roles in constructing and paying for a spur track. Gordon explained that BNSF was to take on the task of using commercially reasonable efforts to acquire the land necessary for the construction of the spur track to link RidgePort's customers directly to the main line. RidgePort had begun advertising the spur track to potential private customers or tenants.

         ¶ 20 BNSF planned to construct the spur track in phases. One phase would include going south and west across CTT and Grohne South to BNSF's southern switch. Gordon stated BNSF was constructing the first phase of the spur track, but nothing else was contemplated until the Grohne tracts were available. He agreed BNSF desired the spur track for the purpose of providing RidgePort with direct access to the main line. If private customers or tenants were attracted, as planned, RidgePort, 1200 to 1500 acres in total size, would comprise 300 acres of rail-serviced property. BNSF had devoted approximately $20 million to the spur track project at the time of the traverse hearing.

         ¶ 21 Gordon clarified that as RidgePort attracted more rail-serviced customers across 300 acres, the spur track would be necessary for BNSF to manage increased traffic from RidgePort on what is already one of the busiest rail lines in North America. In particular, the spur track would provide a way for trains to enter and exit the main line from both directions without causing impediments to or congestion of the main line. The proposed design was the most effective way for BNSF to ensure this purpose, while also expanding its local operations, utilizing the acquired property, and serving customers located across RidgePort.

         ¶ 22 In closing arguments, Grohne argued the takings, namely for the spur track, were for a private purpose and excessive. Grohne also pointed out that BNSF's current plan did not include stated current uses for significant portions of the takings but, rather, mere speculative future uses. BNSF responded that it would not be serving merely one customer, RidgePort, with the side or spur track but potentially 300 acres of future rail-serviced customers. As such, BNSF maintained its takings were for the public, necessary, and not excessive.

         ¶ 23 On July 31, 2015, the trial court denied Grohne's traverse and motions to dismiss. The trial court stated that after reviewing the pleadings, suggestions, and arguments of the parties, it found that BNSF's takings were for a necessary, not excessive, public purpose.

         ¶ 24 The court set the trial for August 22, 2016, less than two years from the date BNSF filed its complaint for condemnation. In July 2016, Grohne filed a motion to reset the valuation date for the parcels. The court denied his first motion; it reset the jury trial for May 12, 2017. In April 2017, Grohne filed a motion to reconsider the court's denial of his motion for a new valuation date. The court, again, denied Grohne's motion. Instead of proceeding to trial in May, the parties entered into various stipulations regarding, inter alia, the 2014 value of the parcels. On May 30, 2017, Grohne once again filed a motion for a new valuation date. This time, the trial court granted Grohne's motion to reset the valuation date. It set the new values as of July 21, 2017. The court indicated it set a new valuation date to minimize error. It did not reach the issue of a substantial and material change but did state, "I would probably have found *** that there would be a substantial, material change." The court set the date for trial.

         ¶ 25 On September 27, 2017, Grohne offered to settle with BNSF on CTT. Grohne's proposed settlement included a joint stipulation that CTT was worth $3.9 million as of July 21, 2017, provided BNSF agreed to use the July date as the date of valuation. Additionally, Grohne's offer was only good so long as he retained the ability to appeal the trial court's denial of his traverse motion. BNSF rejected the offer.

         ¶ 26 The parties filed a variety of motions in limine. For the purpose of this appeal, our focus is on BNSF's motion to bar the use of comparable sales from before October 2014. The court denied BNSF's motion.

         ¶ 27 On October 16, 2017, the trial commenced. At trial, each party called two appraisers. For BNSF, Joseph Thouvenell opined that the values of the tracts of land were as follows: (1) $3, 371, 680 for Grohne North, (2) $645, 315 for Grohne South, and (3) $2, 965, 800 for CTT.

         ¶ 28 Prior to Thouvenell's cross-examination, BNSF argued that the trial court should limit Grohne's questioning on an unexercised option to buy additional land, contained within a comparable land sale contract for a property adjacent to the Grohne tracts and relied upon in valuing the Grohne tracts. Elion Partners, RidgePort's predecessor, owned the adjacent property. Elion sold it to Batory Foods. Grohne argued that the option showed how downward adjustments in value were calculated for tax increment finance benefits on the adjacent property.

         ¶ 29 The trial court barred discussion of the unexercised option provision, acknowledging that there were two parts to the comparable land sale contract for the adjacent property-an actual sale and an unexercised option. The court reasoned that questioning on the unexercised option was far more prejudicial than probative. The trial court found that Grohne could cross-examine BNSF's experts on their calculations for the actual sale but did not believe the jury could consider the value of an option that was, and might remain, unexercised.

         ¶ 30 Susan Enright, also for BNSF, opined that the values of the tracts of land were as follows: (1) $3.5 million for Grohne North and (2) $2.5 million for CTT. Enright did not give an opinion as to the value of Grohne South.

         ¶ 31 For Grohne, Michael MaRous opined that the values of the tracts of land were as follows: (1) $6, 095, 000, plus $225, 000 in damages to the remainder for Grohne North, (2) $880, 000 for Grohne South, and (3) $4, 210, 000 for CTT.

         ¶ 32 John Mundie, also for Grohne, opined that the values of the tracts of land were as follows: (1) $6, 485, 000, plus $100, 000 in damages to the remainder for Grohne North, (2) $1, 020, 000 for Grohne South, and (3) $4.5 million for CTT. Grohne requested the jury award amounts consistent with the appraisals of MaRous.

         ¶ 33 On October 20, 2017, the jury awarded the following amounts for the Grohne takings: (1) $4, 927, 840, plus $100, 000 in damages to the remainder for Grohne North, (2) $862, 375.50 for Grohne South, and (3) $4, 063, 146 for CTT. On October 24, 2017, the trial court entered judgment orders consistent with the jury's awards.

         ¶ 34 Both BNSF and Grohne filed posttrial motions. The trial court denied all posttrial motions. Grohne filed a notice of appeal. BNSF cross-appealed.

         ¶ 35 II. ANALYSIS

         ¶ 36 Grohne raised the following three issues on appeal: (1) whether prohibiting cross-examination about a comparable land sale contract constituted an abuse of discretion with respect to Grohne North, (2) whether denying the traverse and motions to dismiss pertaining to Grohne South and CTT was against the manifest weight of the evidence, and (3) whether the trial court's interpretation of ...

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