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Sokol v. Metropolitan Airports Comm

Minnesota Court of Appeals
Mar 11, 2003
No. C9-02-1284 (Minn. Ct. App. Mar. 11, 2003)

Opinion

No. C9-02-1284.

Filed: March 11, 2003.

Appeal from the Metropolitan Airports Commission.

Michael B. Sokol, Law Office of Michael B. Sokol, and Steven L. Gawron, Gawron Associates, P.A., (for relator)

Walter J. Duffy, Jr., Eleasalo V. Ale, Faegre Benson, LLP, (for respondent)

Considered and decided by Hudson, Presiding Judge, Halbrooks, Judge, and Forsberg, Judge.

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.


This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).


UNPUBLISHED OPINION


By writ of certiorari, relator challenges the denial of his claim for a fixed-payment relocation benefit under the Uniform Relocation Assistance and Real Property Acquisition Policies Act, 42 U.S.C. § 4601-55 (2000) and 49 C.F.R. § 24.306 (2001), arguing that the hearing officer erred in concluding that relator did not own or rent sufficient personal property for which moving expenses would be incurred and that relator's business could be relocated without a substantial loss of patronage. Because we conclude that the hearing officer's decision was not arbitrary and was supported by the evidence, we affirm.

FACTS

In February 1997, relator Michael Sokol entered into an unwritten arrangement with Peter Timmons to sublease a portion of the office space in suite 321 at 2850 Metro Drive in Bloomington. Suite 321 consisted of a reception area and two offices, one occupied by Peter Timmons and the other by Richard Hendrickson. Timmons, Hendrickson, and Sokol are all attorneys. Sokol did not have a separate office but had access to the computer, copy and fax machines; occasionally received mail at the office; met with clients in the office or in the building's public conference rooms; and stored client files and two computer-processing units in a two-drawer filing cabinet. He paid the receptionist by the hour to answer the telephone, schedule appointments, and provide paralegal services, and Sokol's name appeared on the building directory in the lobby.

Sokol also maintained an office in his home, for which he claimed a home-office tax deduction. The evidence was that Sokol prepared documents and client billing statements at his home office and transported work back and forth between his home office and suite 321.

In November 1997, respondent Metropolitan Airports Commission (MAC) purchased the building located at 2850 Metro Drive in preparation for the construction of a new airport runway. The MAC hired W.D. Schock Company to provide relocation assistance to building tenants pursuant to the Uniform Relocation Act (URA).

The MAC was required to comply with the requirements of the Uniform Relocation Act to have access to federal funds.

In January 2001, W.D. Schock notified Timmons and Hendrickson, the individuals named on the lease for suite 321, of the availability of relocation benefits under the URA. Representatives from W.D. Schock inspected suite 321 and met with Timmons and Hendrickson, who told the representatives that they were the only tenants in the suite. W.D. Schock subsequently determined that Timmons and Hendrickson each qualified for a fixed-payment relocation benefit of $20,000.

Two months after Timmons and Hendrickson were advised of their benefits, Sokol initiated a claim. W.D. Schock sent Sokol a formal relocation-assistance notice along with general information on relocation. In response, Sokol submitted a letter to W.D. Schock, claiming that he qualified for a fixed-payment relocation benefit of $20,000.

Although Sokol qualified for payment of his actual relocation expenses under the statute, he never made a claim for his actual expenses and only asserted a claim for a fixed-payment relocation benefit.

In order to evaluate Sokol's claim, a W.D. Schock representative made an unannounced visit to suite 321 in March 2001. The representative's notes indicate that he found that Sokol kept no personal property in the suite, that Sokol used the Metro Drive address to receive mail and for an occasional meeting, and that another attorney in the suite indicated that Sokol did not office there. W.D. Schock denied Sokol's claim for a fixed-payment relocation benefit on the grounds that Sokol did not fall within the definition of "displaced person" under 49 C.F.R. § 24.2 (2001) and because Sokol did not have sufficient property on the premises for which a moving expense would be incurred under 49 C.F.R. § 24.306(a)(1) (2001).

Sokol challenged the denial of relocation benefits, submitting affidavits from Timmons, Hendrickson, the receptionist, and himself in support of his claim. W.D. Schock again denied Sokol's claim, giving four reasons: (1) after repeated requests, Sokol did not provide W.D. Schock with an opportunity to inspect suite 321 and to inventory Sokol's personal property; (2) there was no evidence that Sokol kept personal property in suite 321, there was no space for another attorney to office in the suite, and the other occupants of the suite stated that they did not share the space; (3) Sokol took a home-office deduction on his 1998 and 1999 income tax returns; and (4) the landlord indicated that anyone, tenant or not, could use the building conference room and that tenants of the building could list anyone they wanted on the office directory. Pursuant to his rights under the statute, Sokol requested a level II appeal hearing.

An independent hearing officer determined that Sokol was a "displaced person" under 42 U.S.C. § 4601(6) (2000) and 49 C.F.R. § 24.2, but that he did not qualify for a fixed-payment relocation benefit under 49 C.F.R. § 24.306 (2001) because he had not incurred any cost to move his personal property and would not incur a substantial loss of patronage. This appeal follows.

DECISION

This court issued an earlier order limiting the scope of review in this matter as a result of Sokol's failure to provide a transcript of the audiotape of the administrative hearing. Without a transcript, our review is limited to consideration of whether the hearing officer's conclusions of law are supported by the findings of fact in the written agency record. On appeal, we determine whether the agency acted within its jurisdiction and whether its decision "was arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of law or without evidence to support it." In re Application for Relocation Benefits of James Bros. Furniture, Inc., 642 N.W.2d 91, 100 (Minn.App. 2002) (quotation omitted).

Federal law states that, when a federal program or project results in the displacement of a person, the displacing agency must provide payment to the displaced person for certain actual expenses involved in moving and relocating. 42 U.S.C. § 4622(a) (2000). A person who has been displaced from a business who qualifies for the payment of actual expenses under 42 U.S.C. § 4622(a) may elect to receive a fixed payment in lieu of the payment of actual expenses if the displaced person meets certain criteria. 42 U.S.C. § 4622(c) (2000). The criteria that must be met to qualify for a fixed-payment relocation benefit are set forth in 49 C.F.R. § 24.306(a) (2001), which states:

(a) Business. 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 §§ 24.303 and 24.304. Such fixed payment, except for payment to a nonprofit organization, shall equal the average annual net earnings of the business, as computed in accordance with paragraph (e) of this section, but not less than $1,000 nor more than $20,000. The displaced business is eligible for the payment if the Agency determines that:

(1) The business owns or rents personal property which must be moved in connection with such displacement and for which an expense would be incurred in such move; and, the business vacates or relocates from its displacement site.

(2) The business cannot be relocated without a substantial loss of its existing patronage (clientele or net earnings). A business is assumed to meet this test unless the Agency determines that it will not suffer a substantial loss of its existing patronage; and

(3) The business is not part of a commercial enterprise having more than three other entities which are not being acquired by the Agency, and which are under the same ownership and engaged in the same or similar business activities.

(4) The business is not operated at a displacement dwelling solely for the purpose of renting such dwelling to others.

(5) The business is not operated at the displacement site solely for the purpose of renting the site to others.

(6) The business contributed materially to the income of the displaced person during the 2 taxable years prior to displacement (see § 24.2).

It is undisputed on appeal that Sokol is a "displaced person" and that he meets the requirements set forth in 49 C.F.R. § 24.306(a)(3)-(6). But the hearing officer found that Sokol did not incur any costs to move his personal property under 49 C.F.R. § 24.306(a)(1) and would not incur a substantial loss of patronage under 49 C.F.R. § 24.306(a)(2). Sokol argues that the hearing officer's determination was arbitrary, capricious, and an abuse of discretion.

1. Personal Property Requirement

Sokol asserts that, although he had only a small amount of personal property in the suite, he would have incurred some expense to move the property and, therefore, he meets the requirement set forth in 49 C.F.R. § 24.306(a)(1). Sokol also asserts that he is being held to an arbitrary standard because others received a $20,000 fixed-payment relocation benefit even though they moved their personal property themselves and incurred no actual moving expense. The hearing officer found that the amount of Sokol's personal property in suite 321 was so minimal that it could be stored in a two-drawer filing cabinet and go unnoticed by W.D. Schock on its site inspection. The hearing officer also noted that appellant took his minimal personal items home, himself, and that he was unable to produce any evidence that he incurred an expense in moving his property. The hearing officer's determination that Sokol did not meet the personal-property requirement under the statute is supported by the record in this matter, including the evidence that Sokol had no furniture in the suite, no designated office space, and minimal supplies in storage, as well as the explanation provided by the building landlord as to how Sokol's name could appear on the building directory if he was not a tenant.

2. Substantial Loss of Existing Patronage

Sokol argues that the MAC waived the defense that he did not have a substantial loss of patronage under 49 C.F.R. § 24.306(a)(2) when the MAC failed to assert the defense in its denial letters. The MAC counters that Sokol's receipt of a copy of an e-mail message from an FAA representative to W.D. Schock, discussing the applicability of the substantial-loss-of-patronage defense, provided Sokol with sufficient notice of its intent to assert the defense. Because of Sokol's failure to provide a transcript of the appeal hearing, we are unable to determine to what extent Sokol was able to rebut the substantial-loss-of-patronage defense at the hearing and whether the FAA representative's e-mail provided Sokol with sufficient notice of the issue. Based on our limited scope of review, we are unable to conclude that the MAC waived its right to assert the substantial-loss-of-patronage defense.

Sokol also contends that, even if the MAC did not waive the defense, the hearing officer erred in concluding that he did not have a substantial loss of patronage as a result of his displacement. Sokol also argues that he was held to a different standard than other similarly situated tenants. The hearing officer found that Sokol's move did not have a substantial impact on his business because he already had an established office at his home and he was able to maintain the same telephone and fax numbers. The hearing officer also found that, because Sokol did not rely on walk-in business, his new office location in St. Paul, where he received calls and held meetings, would have little impact on his business.

Sokol claims that his move to St. Paul had a substantial impact on his business because he was no longer in the southern metro area where he had established his business. But the evidence was that Sokol first moved home, then moved back into a different suite in the Metro Drive building, and did not move to St. Paul until after the MAC had denied his claim for relocation benefits. Furthermore, there was no evidence that Sokol's move to St. Paul has had an adverse impact on his client base or earnings. On this record, the hearing officer's determination that Sokol would not have a substantial loss of patronage was not arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of law, or without evidence to support it.

Affirmed.


Summaries of

Sokol v. Metropolitan Airports Comm

Minnesota Court of Appeals
Mar 11, 2003
No. C9-02-1284 (Minn. Ct. App. Mar. 11, 2003)
Case details for

Sokol v. Metropolitan Airports Comm

Case Details

Full title:In re Application for Relocation Benefits of Michael B. Sokol, d/b/a Sokol…

Court:Minnesota Court of Appeals

Date published: Mar 11, 2003

Citations

No. C9-02-1284 (Minn. Ct. App. Mar. 11, 2003)