St. Paul Port Authority never paid for downtown parking ramp, but appeals court says seller can’t sue

Frederick Melo, Pioneer Press
·3 min read

A Minnesota Court of Appeals panel has affirmed a lower court decision and sided with the St. Paul Port Authority in a three-way dispute involving Wells Fargo Bank and the seller of a troubled downtown parking ramp.

The saga began in 1999 when the Port Authority made a deal to buy the Capital City Plaza parking ramp at 50 E. Fourth St. from Peter Luzaich and his company, Metro Real Estate Services, LLC for $1.5 million. The Port Authority pledged to make payments at 14 percent interest using a cash-flow note funded by ramp profits.

But because the ramp never made any money, the Port Authority never made any payments, according to the non-precedential appeals court opinion filed Tuesday.

Business at the ramp was so bad that the Port Authority couldn’t even keep up with payments to Wells Fargo, the construction bond holder, and defaulted in 2009.

Wells Fargo finally foreclosed on the property in December 2021, cutting off any chance of payment to Luzaich’s company. During the foreclosure proceeding, Metro Real Estate filed cross-claims against the Port Authority alleging fraud and other legal breaches. A Ramsey County District Court judge granted the Port Authority’s request to dismiss the claims, prompting Metro Real Estate to appeal.

Luzaich, in his legal filings, said he decided not to sell in 1999 but changed his mind after the Port Authority president threatened to exercise government powers of eminent domain — or the taking of private property for a necessary public purpose — to obtain the ramp. Luzaich recalled being told, “I will (vulgar expression) eminent domain you,” the appeals court wrote.

Luzaich filed legal claims of coercion, inverse condemnation and a government taking without renumeration. He also argued parking fees were set too low, against the advice of the Port Authority’s own financial controller.

Luzaich’s attorney, William Dickel, during oral arguments in March described the sale as a “crooked deal,” claiming the Port Authority made the purchase knowing the ramp wouldn’t make money.

In their 12-page opinion, a three-judge appeals court panel found Metro Real Estate “did not plead its fraud claims with sufficient specificity,” and that the Port Authority never actually resorted to using powers of eminent domain, making moot any allegations it misused its authority. A letter showing the Port Authority defending its threat of legal action by eminent domain was dated one year after the purchase agreement.

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“It is undisputed that Port Authority purchased the property from Metro Real Estate with the cash-flow note and never condemned the property via eminent domain,” the judges wrote. They also noted that even if the case were allowed to move forward, the types of claims cited by Metro Real Estate would be barred by the state’s six-year statute of limitations.

Still, the judges pointed out, the purchase agreement required annual payments and annual reports, and the Port Authority never delivered either.

Dickel said by phone Tuesday he would confer with his client before commenting on the case, except to say, “They didn’t pay my client a dime.”

Todd Hurley, the current Port Authority president, said by email Tuesday, “I applaud the Minnesota Court of Appeal’s decision to uphold the District Court’s ruling.”

For years, downtown property owner John Rupp had sought to lay claim to the ramp through repeated legal action but was eventually shut out. The ramp was purchased at a foreclosure sale in May 2022 for $7 million by Capital City Ramp, a limited liability corporation owned by downtown St. Paul developer Jim Crockarell and family.