A federal jury’s $3.6 million award to a Frankenmuth family that lost out on a deal to sell its land to Wal-Mart has been reversed by the 6th U.S. Circuit Court of Appeals.
As reported in Lawyers Weekly, the plaintiffs in May 2005 signed an agreement to sell 37 1/2 acres of their land to Wal-Mart for $4 million. But seven months later, the city passed an ordinance restricting the size of buildings inside the zoning area that their land sits on to 65,000 square feet. As a result, Wal-Mart backed out.
The 6th Circuit panel determined that there were problems with the jury verdict form, in that the jury was instructed it could find the city of Frankenmuth liable for the deal falling through under either the no-conceivable-basis or animus theory of liability:
But … only the no-conceivable-basis theory was properly submitted to the jury. Because nothing on the verdict form indicated which theory formed the basis for the jury’s decision, the question is whether we may presume that the jury found for the Loesels under the factually sufficient no-conceivable-basis theory or whether we must vacate the verdict and remand for a new trial.
In addition, the panel took issue with the damages awarded:
[It] strikes us as excessive, in large part because the verdict itself renders the zoning ordinance unconstitutional and unenforceable. Had the jury verdict been upheld, the Loesels would have retained their property unencumbered by the zoning ordinance and been awarded $3.6 million, which is 90% of the full purchase price from Wal-Mart. This outcome would have let the Loesels recover twice, an impermissible result. …
So, the panel said that, should the case go back to the trial court, the damages should have a specific formula: the amount the plaintiffs would have received from Wal-Mart had the ordinance never been enacted minus the property’s value unencumbered by the zoning ordinance:
Although the jury was instructed by the district court to “award [the Loesels] such a sum as you find by the preponderance of the evidence will fairly and justly compensate them for actual losses you find they have suffered as a direct result of the defendant’s conduct,” we believe that this instruction was overly vague.
The plaintiffs said the city’s action violated their 14th Amendment equal protection rights by improperly rezoning land they owned (north of the downtown area), and that the city manager conspired to come up with justified ordinance options to prevent Wal-Mart from building a store in the city.
The city, meanwhile, said that its future-land-use master plan for its Commercial Local Planned Unit Development zone never called for large-format retailers to be built at the plaintiffs’ site. Also, because Wal-Mart never asked for injunctive relief or for the ordinance to be struck down upon its passing, the city said the retailer didn’t take the matter seriously enough to fight for it.