Marshall Municipal Utilities, petitioner, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-0267

Marshall Municipal Utilities, petitioner,
Respondent,

vs.

Donald J. DeLanghe, et al.,
Appellants.

Filed November 27, 2017
Affirmed
Reilly, Judge

Lyon County District Court
File No. 42-CV-13-269

Peter G. Mikhail, Elizabeth C. Brodeen-Kuo, Kennedy & Graven, Chartered, Minneapolis,
Minnesota (for respondent)

Court J. Anderson, Benjamin J. Hamborg, Henson & Efron, P.A., Minneapolis, Minnesota
(for appellants)

Considered and decided by Jesson, Presiding Judge; Reilly, Judge; and Reyes,
Judge.
U N P U B L I S H E D O P I N I O N
REILLY, Judge

In this condemnation action, appellant-lan downers argue that the district court
clearly erred in assessing the fair market value of appella nts’ land and in rejecting
appellants’ damages claim. We affirm.

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FACTS
Appellants Donald J. DeLanghe et al. are the owners of real property located south
of the City of Marshall and us ed for family farming and cattle feeding. The property sits
above two water aquifers, one of which is identified as the Marshall Aquifer. The Marshall
Aquifer extends beyond the borders of appellants’ property.
Respondent Marshal Municipal Utilities ( MMU) is a governmental agency with
condemnation authority whose purpose, in part , is to provide wate r utility services for
Marshall residents. MMU owns ten high- capacity wells on properties accessing the
Marshall Aquifer, including four well sites on appellants’ property. MMU has a water
appropriation permit from the Minnesota Depa rtment of Natural Resources (DNR) to
withdraw water from the Marshall Aquifer at a rate not to exceed 4,020 gallons per minute,
or 1,065 million gallons per year.
MMU and the City of Marshall have experienced difficulty locating a water source
sufficient to supply water to satisfy public demand. In an effort to meet consumer demand
and secure its ability to provide a high-quality water source to the public, MMU exercised
its eminent-domain powers to take certain la nds for public water utility purposes. MMU
acquired 50-foot strips of land around eight of its ten wells, including the four wells on
appellants’ property. MMU filed a conde mnation petition under Minnesota Statutes
section 117.042 (2016) to acquire fee title to property surrounding the four existing well
sites in order to obtain the statutorily requ ired 50-foot buffer strips. Based upon a
stipulation of the parties, the district court granted MMU’s co ndemnation petition and
immediately transferred fee title to the real estate to MMU, along with the right of

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immediate possession. The district court foun d that, prior to the taking, appellants used
the buffer strips for crop farming and that, bo th prior to and after the taking, new high-
capacity wells could not be in stalled on the buffer strips. As part of the condemnation
process, MMU obtained a property appraisal to determine the valu e of the condemned
property. The appraiser determined that the fair market value of the property was $21,160,
and MMU deposited funds with the county ad ministrator. Appellants contested the fair
market value of the property, and the district court reserved the issue of damages for further
determination.
The district court appointed three commiss ioners to make a fair and impartial
assessment of damages sustained by appellants by reason of the condemnation. Following
an evidentiary hearing, the commissioners determined that the amount of damages
sustained by appellants as a result of the taking was $250,000. MMU appealed the decision
and requested trial de novo.
The district court held a trial de novo to determine damages. The crux of the dispute
centered on the highest and best use of the property, before acquisition. The experts agreed
that the highest and best use of the property , post-condemnation, wa s agricultural. The
experts also came to similar conclusions regarding the range of values for agricultural land
after the date of the taking, and concluded that the appropriate fair market value was
between $10,500 and $11,500 per acre. However, the experts disagreed about the highest
and best use of the property before acquisition: MMU’s experts concluded that the highest
and best use of the property before condemnation was agricultural, while appellants’ expert

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concluded that the highest and best use of th e property was a combin ation of agricultural
use and as potential sites to drill for high-capacity wells.
The district court found that the highest and best use of the property, both pre- and
post-condemnation, was and is agricultural. Th e district court valued the land at $11,500
per acre, and found that the loss of value to the property as a result of the taking was
$21,160. The district court ordered the county administrator to remit that sum of money to
appellants upon entry of judgment. The parties filed cross-motions for amended findings.
The district court denied appellants’ motion in its entirety, but amended the order to correct
certain errors identified by MMU.
This appeal follows.
D E C I S I O N
“Findings of fact . . . shall not be set aside unless clearly erroneous, and due regard
shall be given to the opportunity of the trial court to judge the credibility of the witnesses.”
Minn. R. Civ. P. 52.01. “A finding of fact is clearly erroneous if [the appellate court is]
left with the definite and firm conviction that a mistake has been made.” In re Distrib. of
Attorney’s Fees, 870 N.W.2d 755, 759 (Minn. 2015) (quotation omitted). “[W]hether the
findings of fact support a district court’s conclusions of law and judgment is a question of
law, which we review de novo.” Ganje v. Schuler , 659 N.W.2d 261, 266 (Minn. App.
2003) (quotation omitted).

5
I. The district court did not clearly err in determining the highest and best use of
the pre-condemned property.

a. Standard of review
The United States and Minnesota Constitutions provide that private property shall
not be taken for public use without just compensation. U.S. Const. amend. V; Minn. Const.
art. I, § 13. To determine the appropriate amount of just compensation for a partial taking,
the Minnesota Supreme Court applies the following standard: “[T]he measure of damages
is the difference between fair market value of the entire piece of property immediately
before the taking and the fair market value of the remainder of the property after the
taking.” City of Moorhead v. Red River Valley Coop. Power Ass’n, 811 N.W.2d 151, 156
(Minn. App. 2012) (alteration in original) (quotation omitted), aff’d, 830 N.W.2d 32 (Minn.
2013). “To determine fair mark et value, any competent evidence may be considered if it
legitimately bears upon the market value.” Id. (quotation omitted). Appellants, as
landowners, bear the burden of proof respecting damages. Minneapolis-St. Paul Sanitary
Dist. v. Fitzpatrick, 201 Minn. 442, 460, 277 N.W. 394, 403 (1937).
b. MMU is the only entity permitted to draw water from the Marshall Aquifer
Appellants argue that, prior to condemnation, the land could be used for agricultural
purposes or for well-drilling purposes. The parties do not dispute that the land is suitable
for agricultural purposes. However, appellants argue that there is a commercial market for
well sites in the Marshall area from commercial enterprises that require large quantities of
water for their operations. Appellants clai m that these commercia l entities are “public
competitor[s] of MMU for the acquisition of well sites and water.” Our highest-and-best-

6
use analysis therefore begins with a consideration of whether other potential purchasers
could acquire a well permit from the DNR to drill water wells in the Marshall Aquifer.
Generally, “the state, a person, partners hip, or association, private or public
corporation, county, municipa lity, or other political subdiv ision of the state may not
appropriate or use waters of the state w ithout a water-use permit from the commissioner
[of natural resources].” Minn. Stat. § 103G .271, subd. 1 (2016). Any water-use permit
issued under section 103G.271, must be “consistent with stat e, regional, and local water
and related land resources management plans.” Id., subd. 2. The statute requires a water-
use permit for wells withdrawing more than 10,000 gallons of water per day. Id., subd. 4.
Minnesota established water-allocation prior ities, directing the commissioner to adopt
rules for allocating waters based on the following priorities “for the consumptive
appropriation and use of water:”
(1) first priority, domes tic water supply, excluding
industrial and commercial uses of municipal water supply, and
use for power production . . . ;
(2) second priority, a use of water that involves
consumption of less than 10, 000 gallons of water per day;
(3) third priority, agricultural irrigation, and processing
of agricultural products invol ving consumption in excess of
10,000 gallons per day;
(4) fourth priority, power production in excess of the
use provided for in the contingency plan . . . ;
(5) fifth priority, uses, othe r than agricultural irrigation,
processing of agricultural pr oducts, and power production,
involving consumption in excess of 10,000 gallons per day;
and
(6) sixth priority, nonessential uses.

Minn. Stat. § 103G.261(a) (2016).

7
In this case, MMU is a first priority domestic water supplier and has a water
appropriation permit to withdraw up to 4, 020 gallons per minute from the Marshall
Aquifer. Further, MMU is the only entity with a DNR permit to draw high-capacity lines
from this aquifer.
c. Highest-and-best-use analysis
Appellants challenge the district court’s determination that the highest and best use
of the pre-condemned property was agricultural. “The highest and best use of a property
is the one that is physically possible, lega lly permissible, financially feasible, and
maximally productive.” Menard, Inc. v. County of Clay , 886 N.W.2d 804, 811 (Minn.
2016) (citing County of Aitkin v. Blandin Paper Co., 883 N.W.2d 803, 810 (Minn. 2016)).
“Property is appraised at its highest and best use, which is the most profitable, competitive
use to which the subject property can be put.” Macy’s Retail Holdings, Inc. v. County of
Hennepin, 899 N.W.2d 451, 453 n.1 (Minn. 2017) (quotation omitted).
The parties’ experts disagreed as to the hi ghest and best use of the property before
it was condemned. Prior to the taking, appellants used the condemned land for crop
farming. MMU solicited opinions from two ex perts, both of whom concluded that the
highest and best use of the property before condemnation was agricultural. MMU offered
expert testimony from a real estate appraiser, who testified that “the highest and best use
was for agriculture,” and that “none of the other potential uses had a legal permissibility or
a financial[ly] feasible use.” MMU’s sec ond expert also performed an appraisal and
concluded that the highest and best use of the land was agricultural.

8
Appellants’ expert disagreed, opining that the “highest and best use of the [property]
is for a combination of agricultural use and as potential well sites.” Appellants argue that
if MMU had not acquired buffer strips around eight of its ten we lls, it would have
“eventually lost the ability to operate wells on t hose sites,” leaving water available for
appellants or for private purchasers. Theref ore, appellants claim that the pre-condemned
land “had the economic potential to be sold as well sites to private purchasers” because
MMU could not sustain the wells in their present condition indefinitely. The district court
rejected appellants’ argument, finding that:
a. Such a use was not legally permissible. No third
party had or was in the proce ss of obtaining a DNR permit to
access the Marshall Aquifer.
b. There is no reasonable likelihood that such a permit
would be granted due to the de pleted nature of the Marshall
Aquifer, MMU’s withdrawals from the Marshall Aquifer . . . ,
the continuing need for water from MMU by the public, and
the prioritization of access to water for public use.
c. [Even assuming a theoretical possibility of future
drilling], the financial feasibility of such a use is extremely
limited, if not absent altogether.
d. There was no evidence of a prospective purchaser
who would have been interested in purchasing a portion of the
[property] for the purpose of drilling a hi gh capacity well
(a) when and if MMU’s wells accessing the Marshall Aquifer
ceased withdrawing their permit ted amount and (b) with the
uncertainty (indeed, unlikelihood) that the DNR would issue a
permit to the prospective purchaser. . . .
e. It is not reasonably probable that it would be legally
permissible or financially feasible for [appellants] to have used
the [property] for high capacity well sites prior to the taking.

9
The district court did not credit the tes timony of appellants’ expert; it found the
testimony presented by MMU mo re persuasive. The weight and credibility given to an
appraiser’s expert valuation is an issue for the district court to determine. DeSutter v.
Township of Helena , 489 N.W.2d 236, 240 (Minn. App. 1992), review denied (Minn.
Sept. 30, 1992). The district court discredited appellants’ expert’s testimony, finding that
the expert’s testimony regarding the pre-co ndemnation value of appellants’ land was
“flawed” and “not credible.”
For example, appellants’ expert testifie d that it was both physically possible for
appellants to drill for water in the Marshall Aq uifer and legally permissible for them to
acquire a permit to drill. MMU’s expert di sagreed and testified that “none of the other
potential uses had a legal permi ssibility or a financial[ly] feasible use.” MMU’s expert’s
testimony was informed in part by a technical memorandum, which stated that:
Potential use of the 50 foot buffer strips for construction
of wells and new water appr opriation by MMU would not
comply with [Minnesota Depart ment of Health] regulations.
Potential use of the 50 foot bu ffer strips for construction of
wells and new water appropria tion by any other entity would
be practically impossible based on limited ability of the aquifer
to supply additional volumes of water in addition to DNR
permitting requirements.
Appellants’ expert conceded that he had not reviewed this report before trial and did
not incorporate its findings into his highest-and-best-use analysis. The report—including
the finding that new wells could not be dr illed on the property pre-condemnation—was
undisputed. At trial, the author of the t echnical memorandum reit erated that the buffer
strips did not give MMU “any additional rights to take any more water.” The witness

10
testified that given “the proximity to a pub lic supply well and the hi erarchy of water use
. . . it’s just not available for anyone else to . . . put a well on either.” Appellants did not
present evidence countering the testimony that it was not legally permissible to construct
new wells on the site. See Menard, Inc., 886 N.W.2d at 811 (requiring legal permissibility
of use).
It is further uncontested that the water in the aquifer is owned by the state, which
establishes water-level thresholds for an a quifer to serve the purpose of protecting the
aquifer from over pumping. A highest-and-best-u se analysis requires a showing that the
use is legally permissible. Id. Appellants’ expert testif ied that it would be legally
permissible for appellants to “obtain a permit” for water from the Marshall Aquifer, or to
sell a high-capacity well to someone else. But during cross-examination, MMU’s attorney
inquired: “[O]n the date of the taking, no one else had the legal right to drill well sites into
that aquifer. Isn’t that true?” Appellants’ expert responded: “That is true.” MMU’s expert
testified that “it does not appear that [MMU] could get a permit for additional well or any
other entity . . . would be granted a permit,” a nd therefore the legal-permissibility test is
not satisfied. The district court weighed the testimony regarding the legal permissibility of
the use and found that:
On the date of the taking, [appellants] could not sell a
portion of the [property] to a third party [to drill wells] because
no third party had a permit to do so. [And even though it was
highly unlikely that the DNR would issue new permits, the
expert] testified that his appraisal was based upon the premise
that, prior to the taking, [app ellants] could have sold high
capacity well rights for immediate operation.

11
Appellants’ expert agreed that his analys is on the legal-permissibility prong rested
on his understanding that the public does not have priority on municipal water supplies
over other users. The expert acknowledged that if that assumption was incorrect, his legal-
permissibility conclusion could be invalid. Minnesota prioritizes water use, and the
“number one priority is . . . public water su pply for domestic consumption.” Minn. Stat.
§ 103G.261(a)(1) (“The commissioner shall adopt rules for allocation of waters based on
the following priorities for the consumptive appropriation and use of water: (1) first
priority, domestic water supply. . . .”). In its factual findings, the district court found that
appellants’ expert’s testimony was not credible because he “testified that he believed that
[the] public water supply did not have priority over other uses for a DNR permit and, that
if this belief was incorrect, his conclusions may be invalid. [But] public water supply has
priority over all other uses.”
Ample evidence in the record supports the district c ourt’s factual findings that
MMU has the only DNR permit fo r a well on the site and that no third party was in the
process of obtaining a permit to access the Marshall Aquifer to draw additional supplies of
water, that MMU and the City of Marshall have experienced difficulty locating a water
source sufficient to supply water to meet the public’s needs, that there is a continuing need
for water from MMU to supply the public, and th at the public has pr iority on the water
supply over other users. The record supports the conclusion that the highest and best use
of the pre-condemned land was agricultural. On this record, we determine that the district
court did not clearly err in determining that the highest and best use of the property, prior
to condemnation, was agricultural.

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d. We decline to extend the project-influence rule to the facts of this case
Appellants argue that MMU’s acquisition of buffer strips around its well sites was
part of an overall project to secure water s ources and the district court erred by failing to
apply the project influence rule. The proj ect-influence rule articulates that an
“enhancement in value caused by a proposed or constructed governmental improvement is
not to be included in determ ining the fair market value of the land to be taken for the
improvement.” State by Head v. Anderson , 293 Minn. 458-59, 197 N.W.2d 237, 240
(1972); see also Hous. & Redevelopment Auth. v. Minneapolis Metro. Co., 273 Minn. 256,
260, 141 N.W.2d 130, 135 (1966) (“[A]ny increase or decrease in market value due to the
proposed improvement may not be considered in determining market value.”).
Minnesota courts have generally applied this rule where the success of an overall
project was contingent upon the challenged taking. See, e.g., Regents of the Univ. of Minn.
v. Hibbing , 302 Minn. 481, 483-86, 225 N.W. 2d 810, 811-13 (1975) (considering
application of rule when condemnor previ ously acquired five other properties on same
block as condemned property for university expansion); Anderson, 293 Minn. at 460, 197
N.W.2d at 241 (determining that condemned pr operty due to street extension was within
scope of original condemnations arising from highway-interchange project). But evidence
is inadmissible under the pr oject-influence rule when the evidence serves “no useful
purpose” and has “no bearing on, or relevancy to, the only issue for trial”—a determination
of the fair market value of a landowners’ property. Hibbing, 302 Minn. at 484-85, 225
N.W.2d at 812.

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Moreover, Hibbing is factually distinguishable. In that case, the landowner’s
property was within the boun daries of the university’s expansion project, and the
university’s ability to e xpand rested on its ac quisition of the landown er’s property. 302
Minn. at 483, 486, 225 N.W.2d at 811, 813. Here, the court found that while each buffer-
strip acquisition was part of MMU’s larger goa l to ensure consistent and reliable water
access to the community, this goa l would not fail if a particul ar buffer strip could not be
acquired.1 These facts make this case distinguishable from Hibbing.
Further, the district court dete rmined that, as of the date of the taking, appellants
“could not sell a portion of the [p roperty] to a third party [t o drill wells] because no third
party had a permit to do so.” Because appellants lack a reasonable possibility of obtaining
well permits in the future, evidence that the MMU acquired buffer strips around several
wells as part of an overall “project” has li mited bearing on the main issue presented at
trial—the fair market value of the land as of the date of the taking. See Minneapolis Metro.
Co., 273 Minn. at 260-61, 141 N.W.2d at 135 ( noting that just compensation is based on

1 MMU performs regular maintenance on the wells, but eventually all wells become
unusable and need to be modified or redrilled. In order to redrill one of its wells in the
future, MMU must comply with the Minnesota Department of Health’s (MDH) permitting
process. MDH requires a 50-foot buffer around public water-supply wells. See Minn. Stat.
§ 103I.205, subd. 6 (2016) (sta ting that a person or entity ma y not “place, construct, or
install an actual or potential source of contamination any closer to a well than the isolation
distances prescribed by the commissioner [of health] by rule”); Minn. R. 4725.4450, subp.
1(E) (establishing 50-foot contamination buffer zone for water-supply well), .5850, subp.
3 (“A well for a community public water system must be located according to the distances
specified in part[] . . . 4725. 4450, but in no case less than 50 feet from a source of
contamination . . . .”) (2015).

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market value as of taking date and “any increa se or decrease in market value due to [a]
proposed improvement may not be considered in determining market value”).
Neither Hibbing nor Anderson compels a conclusion that the project-influence rule
should be expanded to the extent urged by appellants, and it is not the role of this court to
alter or modify existing law. See Sefkow v. Sefkow , 427 N.W.2d 203, 210 (Minn. 1988)
(“The function of the court of appeals is limi ted to identifying erro rs and then correcting
them.”); Tereault v. Palmer , 413 N.W.2d 283, 286 (Minn. App. 1987) (setting forth
principle that “the task of extending exis ting law falls to the supreme court or the
legislature, but it does not fall to this court”), review denied (Minn. Dec. 18, 1987).
II. The district court did not err in rejecting appellants’ damages claim.
Appellants argue that the district court erred by rejecting appellants’ damages claim,
as presented by their expert. We review the district court’s findings of fact for clear error
and defer to the district court’s credibility dete rminations. Minn. R. Civ. P. 52.01. “The
decision of a district court should not be reversed merely because the appellate court views
the evidence differently. Rather, the findings must be manifestly contrary to the weight of
the evidence or not reasonably supported by th e evidence as a whole” to merit reversal.
Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999) (quotation and citation omitted).
The estimate of damages varied greatly, with the MMU’s expert testifying that the
amount of damages was approximately $11,500 per acre and appellants’ expert testifying
that the amount of damages was $484,000, which he later adjusted downward to $386,763.
The district court did not find appellants’ e xpert credible, finding that he testified to
“substantially different opinions as to damages,” and “relied heavily, if not exclusively, on

15
a single lease agreement between [a neighboring property-owner] and [a commercial well-
driller],” which had “inhe rently limited reliability.” We d ecline to reweigh the district
court’s credibility determinations. Minn. R. Civ. P. 52.01. A review of the record, as a
whole, reveals that the district court’s factual findings and credibility determinations were
based on reasonable and substantial evidence, and we will not disturb the district court’s
factual findings or credibility determinations where there is reasonab le evidence in the
record to support them. Rogers, 603 N.W.2d at 656.
Affirmed.