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Legal learning: The Silver Bay Spur Station case

When they bought the old Amoco station in Silver Bay, it seemed like an ideal location. Right on the corner of Outer Drive (the main entrance into town) and Highway 61 (the only highway along the North Shore). The buyers (Donna Knaffla McCurdy, Bobbi Boman, and Danny Knaffla) changed it to a Spur station and got off to a good start in 2002.

Then in 2006 the State of Minnesota Department of Transportation did some construction to improve Highway 61. They built a divider separating north-bound and south-bound traffic. They closed highway access to the Spur station. They built a new access road a couple of blocks north of the station. They installed a curb in the center of the entrance from Outer Drive, resulting in two smaller entry-ways. Now larger vehicles (RVs, trucks, vehicles towing a boat or camper) can't turn around and exit onto Outer Drive, and no one can exit directly onto Highway 61.

At first the folks in Silver Bay showed support for the owners and sales went up slightly. But tourists as well as locals eventually stopped patronizing the place and sales went down. And down. And last year the station closed.

The owners hired a lawyer and sued MnDOT. They claimed that their property had been "taken" since it could no longer be used as a gas station, and they asked for compensation. The judge in Two Harbors agreed in 2009 that there had been a "taking" and ordered MnDOT to begin a condemnation action so the amount of damages could be determined.

One of the issues in the case was whether the taking by the State has forced the owners to relocate in order to continue in business. If so, they are entitled under Minnesota law to damages at a minimum sufficient to buy a comparable property. MnDOT argued that relocation wasn't mandatory, so the Minnesota law doesn't apply.

At the trial this summer, the testimony showed that the new access road was difficult to use, especially by large vehicles. It is narrow and has two 90 degree turns. MN DOT refuses to plow or maintain the access road. There is no left turn lane for north-bound vehicles, which creates a traffic hazard. There are no signs at the entry to the access road. There is not even a written agreement allowing the owners to continue using this access, which is actually on land owned by North Shore Mining Company.

The testimony also showed that trucks delivering fuel to the station now have difficulty using the access road, often getting stuck in the snow, and being at risk of losing control because of the incline and 90 degree turns. The owners testified that, because of loss of tourism traffic and loss of revenue, they can no longer operate a gas station and convenience store at that location. Several witnesses testified that the site is no longer suitable for a gas station due to the redesigned access.

Judge Michael Cuzzo has now issued his decision. He ruled that "it is no longer financially feasible to operate a gas station" on the site, that they "must relocate", and that they are entitled to seek "minimum compensation" sufficient to buy a comparable property. The judge has scheduled a jury trial for March 26 to 28, 2014, to determine the amount of compensation to which the owners are entitled.

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James H. Manahan is a Harvard Law School graduate and was named one of Minnesota's Top Ten Attorneys. He now handles family law, wills, and probate in and around Lake County, and does mediation everywhere. The opinions expressed in this column are those of its author.