2013 Appellate Roundup

A few 2013 cases from other states are summarized here.  These cases are classified as follows:

Authority to exercise eminent domain,

Damaging property for a public use, 

Exactions and impact fees, 

Just compensation,

Other damages and compensation, 

Land use regulation, and 

Takings.

The summaries include a comparison to Utah law.

These cases are presented for information only,and they may shed some light on eminent domain, takings, or land use issues.  The reader should remember that cases from other states are not binding on Utah courts.  Unfortunately, links to these cases are not available.

AUTHORITY TO EXERCISE EMINENT DOMAIN

Alliance Pipeline LP v. Smith, 833 N.W.2d 464 (N.D. 2013).

To obtain a court order allowing entry onto private property for examination or a survey, a condemnor was only required to show that it was entitled to acquire the property using eminent domain.  It does not need to establish a public use.

In Utah, condemnors have authority to examine or survey property proposed for taking using eminent domain, but it is not clear what the agency must establish before entering private property.  See Utah Code Ann. § 78B-6-506.

Community Youth Athletic Center v. National City, 220 Cal. App. 4th 1385 (Cal. Ct. App. 2013).

A city did not have a sufficient basis to declare a neighborhood “blighted” under California statutes governing redevelopment.

The Utah Code has specific guidelines on when a property may be declared “blighted” under a redevelopment plan.  See Title 17C of the Utah Code.

Domaschko v. State, 983 N.E.2d 182 (Ind. Ct. App. 2013).

The Indiana DOT acquired a “buffer zone” along with property for a road.  The property owner objected, arguing that the buffer zone was not necessary for the road project.

Necessity under Indiana’s eminent domain statutes is not limited to the absolute or indispensable needs of the State, but is considered to be that which is reasonably proper and useful for the purpose sought. Moreover, Indiana’s policy should not be such as to place an undue burden upon the State in acquiring land for such public improvements as highway construction when such improvements are considered to be in the public interest. All issues concerning the expediency and necessity of the taking of private property are exclusively for the Indiana Legislature.

This is essentially the approach taken in Utah.  See UDOT v. G. Kay, 2003 UT 40.

McEwen v. MCR, LLC, 291 P.3d 1253 (Mont. 2013).

A gas company’s authority to use eminent domain for gas pipelines reasonably included the authority to condemn land for a compressor station to operate a gas pipeline, even though compressors are not specifically listed.  Eminent domain authority is strictly construed, but absurd results should be avoided.  The Court concluded that it would be absurd that a company could construct a gas pipeline, but not have authority to construct the facilities needed to operate the pipeline.

Utah law specifically authorizes condemnation of easements for gas pipelines. See Utah Code Ann. § 78B-6-501(6).  In Utah, the eminent domain statute is strictly construed against the condemning agency, and in favor of the property owner.  See Marion Energy Corp. v. KFJ Ranch Partnership, 2011 UT 50.

Norfolk Southern Railway Co. v. Intermodal Properties, LLC, 71 A.3d 830 (N.J. 2013).

The New Jersey Supreme Court considered a challenge that a property taking was not a sufficient “public use.”  A railroad company initiated a suit to obtain property to expand its rail facilities.  The railroad could exercise eminent domain to acquire property.  The expansion was proposed to be completed in about five years. The property owner argued that its current use, as a parking facility, was a “more appropriate” public use than future expansion of the rail facility.

The railroad’s proposed use for future expansion met the requirement of that the taking not be incompatible with the public interest.

The property owner could not invoke the prior public use doctrine because it lacked the power to condemn and its proposed use was neither prior nor public.

Under New Jersey’s Statutes, “exigencies of business” was held not to necessitate an urgent need for land in order to justify a taking.

Utah, like New Jersey, reads the “public use” requirement fairly broadly.  Expansion of a rail facility would very likely be found to be an acceptable public use.  The Utah Supreme Court recently discussed the “prior public use doctrine,” which applies when property being used for a public use is proposed for another public use.  (See Schroeder Investments LC v. Edwards, 2013 UT 25).  Under Utah’s Eminent Domain Statute, the use of the property being taken must “commence within a reasonable time.”  Utah Code Ann. § 78B-6-504(1)(c).

PKO Ventures, LLC v. Norfolk Redevelopment & Housing Authority, 747 S.E.2d 826 (Va. 2013).

This Virginia case dealt with a redevelopment authority’s attempt to condemn property.  A new statute prohibited such condemnations, and the Virginia Supreme Court rejected an argument that the RDA had a vested right to condemn the property.

The Utah Eminent Domain statute lists several acceptable public uses, including private economic development, such as railroads, mining, etc.  Under Utah’s Community Development and Renewal Agencies Act, eminent domain may be used to acquire property in limited situations to accomplish an urban renewal project.  See Title 17C of the Utah Code.

Seabaugh v. Dolan, 398 S.W.3d 472 (Mo. 2013).

Missouri Statutes prohibit condemnation of property solely for economic development.  A local Port Authority sought to condemn property to expand a rail facility, which would be used by private rail carriers.  The Missouri Supreme Court held that the proposed use was economic development, meaning that eminent domain could not be used.  The Port Authority argued that expansion of the rail facility was a valid public use, because it was an improvement to river commerce, but the court concluded that the primary purpose was economic development.

In Utah, eminent domain may only be exercised for the public uses listed in the Utah Code.  See Marion Energy, Inc. v. KFJ Ranch Partnership, 2011 UT 50; see also Utah Code Ann. § 78B-6-501.

State ex rel. DOT v. Metcalf, 298 P.3d 550 (Okla. Civ. App. 2013).

Under Oklahoma statutes, a condemning agency must make a bona-fide offer to purchase property before initiating an eminent domain action.  However, the wording of the statute indicates that other “prerequisites,” including good-faith negotiation are actually policies, not requirements. Since an offer was made, the DOT met the only prerequisite.  Furthermore, an analysis provided for the DOT was a sufficient valuation for the offer, even though it was not a full appraisal of the property being taken.

In Utah, a condemning authority must show that it made reasonable efforts to negotiate a sale of the property before eminent domain may be used.  See Utah Code Ann. § 78B-6-505.

Telford Lands LLC v. Cain, 303 P.3d 1237 (Idaho 2013).

Irrigation is a beneficial use of water, and an easement for a pipeline to convey irrigation water is a valid public use under Idaho statutes.

Under the Utah Code, eminent domain may be exercised to acquire easements to convey irrigation water.  See Utah Code Ann. § 78B-6-501(5).

DAMAGING OF PROPERTY FOR A PUBLIC USE

Henderson v. City of Columbus, 827 N.W.2d 486 (Neb. 2013). 

The Takings Clause of the Nebraska Constitution is very similar to Utah’s.  It states that “[t]he property of no person shall be taken or damaged for public use without just compensation therefor.”  Neb. Const. art. I, § 21.  This case addressed an inverse condemnation claim, that private property was damaged for a public use.  After a heavy rainstorm, the city’s sewer system backed up into private homes, causing extensive damage.

The landowners failed to establish that they were entitled to just compensation from the city. Regardless of whether the city’s actions proximately caused their damages, the landowners failed to establish the threshold element that their property was taken or damaged for public use by the city in the exercise of its power of eminent domain.

Utah has a similar provision regarding “damaging” of private property for a public use.  (Utah Const., art. I, § 22).  The outcome would probably have been the same, because the “damage” has to be a permanent or recurring entry onto private property.  In the Nebraska case, the sewage was a temporary entry due to extraordinary circumstances, and was not part of the “normal” operation of the sewer.  Utah cases make a similar distinction.  See Farmer’s New World Life Insurance Co. v. Bountiful, 803 P.2d 1241 (Utah 1990); Hamblin v. Clearfield, 795 P.2d 1133 (Utah 1990).

Keene Valley Ventures, Inc. v. Richland, 298 P.3d 121 (Wash. Ct. App. 2013).

In an inverse condemnation action, a city was found to have damaged property by diverting water onto it.  However, the property owner was granted only a nominal award, because no actual damages were proven.

Utah allows an inverse condemnation action for water diverted onto property by a public agency.  See Hamblin v. Clearfield, 795 P.2d 1133 (Utah 1990).

Rupert v. Rapid City, 827 N.W.2d 55 (S.D. 2013).

A property owner was awarded inverse condemnation damages when a city’s snow removal efforts deposited an unusual amount of de-icer on the property, killing 42 mature pine trees.  The property owner showed that the city’s de-icer invaded the property, and that the damage (loss of the trees) was unique from damage suffered by the public at large.  The amount of de-icer on the property was significantly higher than that deposited on other properties.

In Utah, a property owner may receive compensation for damage caused by a physical invasion caused by a government activity, if the damage is unique to the property.  See Colman v. Utah State Land Board, 795 P.2d 622 (Utah 1990).

EXACTIONS/IMPACT FEES

Alpine Village Co. v. City of McCall, 303 P.3d 617 (Idaho 2013); and Hehr v. City of McCall, 305 P.3d 536 (Idaho 2013).

These two Idaho cases arose from a city’s ordinance requiring developers to reserve housing units for lower income individuals.  In both cases, the property owners objected, but failed to file their claims within 180 days, as required by Idaho statutes.  Thus, both cases were dismissed.  The court did not decide on whether the requirements were allowable or not.

In Utah, a claimant must file in a timely manner, and must exhaust all administrative remedies before pursuing litigation.  See Wintergreen Group, LC v. UDOT, 2007 UT 75.  Exactions must satisfy “rough proportionality” analysis.  See Utah Code Ann. §§ 10-9a-508 and 17-27a-507; see also B.A.M. Development, LLC v. Salt Lake County, 2008 UT 74

Buckskin Properties v. Valley County, 300 P.3d 18 (Idaho 2013).

Developers signed a development agreement in which they agreed to pay for road improvements. They paid for the improvements under the first phase, but objected when the payments were increased for the second phase.  They claimed that the county was charging illegal impact fees.  The Idaho Supreme Court held that the agreement was valid, and that the developers had voluntarily agreed to pay the road fees.  Since the fees were voluntary, they could not be considered illegal exactions.

Development agreements are allowed in Utah.  See Utah Code Ann. § 10-9a-102 and 17-27a-102.  As long as the agreements are voluntary and are a fair exchange of value, they should be valid.

Cedar River Water & Sewer Dist. v. King County, 178 Wn.2d 763 (Wash. 2013).

This case concerned a new sewage treatment facility built by King County, but located in an adjoining county (Snomish). The decision covers several aspects of the project and the agreements between the counties, including the use of sewer impact fees to fund the new facility.  King County agreed to pay mitigation funds to Snomish County.  The court ruled that impact fees could be used to pay the mitigation obligation, because there was a nexus between the facility and the mitigation.

Utah’s impact fee act requires that fee revenues be spent on the capital facilities justifying the fees.  The extent of allowable costs that can be paid for by impact fees is not clear, however.  See Chapter 11-36a of the Utah Code.

Cresta Bella, LP v. Poway Unified School District, 218 Cal.App.4th 438 (Cal. Ct. App. 2013).

A developer demolished an apartment complex, and built a new one with more units.  The school district calculated a school impact fee based on the total area of the new complex.  The California Court of Appeals held that the fee should have been based only on the “new” area (i.e, the additional area of the new complex), and that an area equal to that of the original complex should have been excluded.  The impact was attributable to the additional units being built, but there was no impact caused by replacing the original number of units.

Although Utah does not have a school impact fee, a similar logic should apply to impact fees.  An impact fee is intended to help offset the impact of new development.  If an existing development is being replaced, the impact fee should only be based on the extent that the new development exceeds the old.  See Chapter 11-36a of the Utah Code.

Mira Mar Development Corp. v. City of Coppell, 2013 Tex. App. LEXIS 12521.

The Texas Court of Appeals concluded that impact fees charged by a city bore an essential nexus to legitimate governmental interests.  Under rough proportionality analysis, the city showed that the fees were permissible.

In Utah, local governments may charge impact fees, if they comply with the Impact Fees Act.  See Chapter 11-36a of the Utah Code.

Sterling Park, LP v. City of Palo Alto, 310 P.3d 925 (Cal. 2013).

The Supreme Court of California held that a city’s requirements that a developer set aside 10 of 96 condominiums as low-income housing—reserving to the city an option to purchase those units—along with a cash payment to a city fund, were “other exactions,” even if they were not defined as “fees.”

In Utah, a development exaction is a government-mandated contribution of property imposed as a condition of approving a developer’s project.  See B.A.M. Development LLC v. Salt Lake County, 2012 UT 26. The contribution may be in the form of land, construction of public improvements, or cash payments.   Exactions must satisfy “rough proportionality” analysis.  See Utah Code Ann. §§ 10-9a-508 and 17-27a-507; see also B.A.M. Development, LLC v. Salt Lake County, 2008 UT 74.

JUST COMPENSATION

Barlow Ranch, LP v. Greencore Pipeline Co. LLC, 301 P.3d 75 (Wyo. 2013).

This Wyoming case discussed how value for a pipeline easement may be determined.  The decision discusses the comparability of easements for other types of pipelines, and whether those easements were truly the result of “arms-length” transactions.  The other easements were comparable, and could be used to establish the fair market value.   The court held that the measure of compensation is the fair market value, measured as the value given up by the property owner.  It does not include the economics of the proposed use, or the value to the condemnor.

Insofar as general principles of valuation are concerned, this decision would probably be treated the same under Utah laws.

Borough of Harvey Cedars v. Karan, 70 A.3d 524 (N.J. 2013).

A city acquired a portion of a parcel, for use in a shoreline preservation project.  The constructed improvements would help protect the remaining property, although it would restrict the owner’s view of the beach.  The New Jersey Supreme Court held that the benefits to the remaining property from the public project could be considered when determining just compensation for the taking.

Utah has a similar rule for severance damages.  See Utah Code Ann. § 78B-6-511.

Savage v. American Transmission Co., 828 N.W.2d 244 (Wis. Ct. App. 2013).

A just compensation determination is based on the fair market value of the land as a whole, which is not obtained by adding up a number of separate items, but by taking a comprehensive view of each and all of the elements of property, tangible and intangible, including property rights, and considering them all not as separate things, but as inseparable parts of one harmonious entity.

This is essentially the approach to valuation used in Utah.  See Utah Code Ann. 78B-6-511; see also. UDOT v. Admiral Beverage Corp., 2011 UT 62.

St. Louis County v. River Bend Estates Homeowners’ Ass’n, 408 S.W.3d 116 (Mo. 2013). 

Missouri statutes provide for “heritage value,” which is additional compensation for properties which have been owned by a single person for a long period of time.  The Missouri Supreme Court upheld the concept of “heritage value,” explaining that it was within the power of the state’s legislature to define just compensation, giving an additional payment to certain property owners.

Utah does not have a “heritage value” provision.  Just compensation is based on the market value of the property taken.  See Utah Code Ann. § 78B-6-511.

City of Wichita v. Denton, 294 P.3d 207 (Kan. 2013).

In a Kansas case, a city acquired property for a road project.  A billboard company leased a small portion of the property.  The billboard company appealed, claiming that it should be entitled to more compensation.

The billboard structure was a noncompensable item because it was the personal property of the tenant, which had the right to remove it at the termination of the lease; therefore, evidence of the billboard and its advertising income was properly excluded.

The rent generated by the leasehold was a necessary part of the valuation of the property owner’s interest, but the advertising income generated by the tenant was business profits and not derived from the land and was not relevant to the valuation.

Under Utah’s laws, this holding on the valuation of the billboard interest might have been different.  However, the Kansas court’s approach is comparable to the Utah Supreme Court’s rulings in UDOT v. Admiral Beverage Corp., 2011 UT 62; and UDOT v. FPA West Point, LLC, 2012 UT 79.

OTHER DAMAGES & COMPENSATION

Bray v. DOT, 2013 Ga. App. LEXIS 838 (Ga. Ct. App. 2013).

A property owner claimed damage due to improper design or construction of a road project.  The property was acquired in an eminent domain action, and the owner was compensated.  Later, the owner claimed damages to the remaining property, because the road was not designed or constructed properly.  The Georgia court stated that the compensation was for the property and all damages arising from the proper construction of the road.  The owner’s claim arose due to improper or negligent design and construction. The case language indicates that the damage was not known until after the project was completed.

Damage to remaining property caused by negligent or improper construction in the course of a prior eminent domain project may be recovered from the condemnor by a separate “inverse condemnation” proceeding, and the condemnor cannot escape the constitutional duty to compensate the property owner for the damage by claiming that the negligent party was an independent contractor rather than the condemnor’s agent or employee.

There does not appear to be a Utah case or statute that addresses this situation. It is possible that an owner could have a claim, but would probably need to show special damages that were not compensated.  See Utah Code Ann. § 78B-6-511(3).

California DOT v. McNamara, 218 Cal. App. 4th 1200 (Cal. Ct. App. 2013).

This matter concerned “precondemnation damages” (sometimes referred to as “condemnation blight”)  In California, a property owner may be entitled to precondemnation damages if the owner demonstrates that (1) the public authority acted improperly either by unreasonably delaying eminent domain action following an announcement of intent to condemn or by other unreasonable conduct prior to condemnation; and (2) as a result of such action, the property in question suffered a diminution in market value.

In this case, it was shown that the loss of property value was due to market declines, and not because of the agency’s action.

There is currently no provision for “precondemnation damages” in Utah.

Waller v. American Transmission Co., 833 N.W.2d 764 (Wis. 2013).

A property owner was left with an “uneconomic remnant” after a utility company acquired an easement.  Under Wisconsin statutes, the remaining property was “uneconomic” because of restrictions imposed by the easement.  Therefore, the company was required to buy the entire parcel.

The Utah Code does not specifically address “uneconomic remnants,” but a property owner could argue that additional compensation was due if a property taking created an economically unusable portion of property, possibly by claiming severance damages.  See Lucas v. South Carolina Coastal Comm’n, 505 U.S. 1003 (1992).

LAND USE REGULATION

Moretco, Inc. v. Plaquemines Parish Council, 112 So.3d 287 (La. Ct. App. 2013). 

The Louisiana Court of Appeals upheld a moratorium on a retail development project, so that a parish could conduct additional studies on the project’s impact.  Louisiana does not have the early vesting rule that Utah has, so the parish’s ordinances could change even though the application was pending.  The court discussed when zoning are arbitrary and capricious.

Under Utah’s early vesting rule, it is at least arguable that the studies called for would constitute a compelling, countervailing public interest that would allow the ordinance change.  See Western Land Equities v. Logan, 617 P.2d 388 (Utah 1980); see also Utah Code Ann. § 10-9a-509 and 17-27a-508.

Spokane County v. Eastern Washington Growth Management Hearings Bd., 293 P.3d 1248 (Wash. Ct. App. 2013).

The Washington Court of Appeals upheld a decision to rezone property, because the zoning proposal was consistent with the county’s goals and policies.

In Utah, zoning decisions are given deference, and are usually left undisturbed if the local government had a rational reason to make the decision.  See Smith Investment Co. v. Sandy, 958 P.2d 245 (Utah Ct. App. 1998).

Wolk v. Seminole County, 117 So.3d 1219 (Fla. Ct. App. 2013). 

The Florida Court of Appeals described this case as “very unusual.”  The county’s Board of Adjustment denied a variance application to adjust a fence requirement, because the application did not meet the six standards for a variance.  The property owners appealed that decision to the County’s Commissioners (as provided in Florida law).  The commission granted the variance, even though it decided that one was not necessary. The County Commissioners did not evaluate the application under the six criteria.  The county eventually characterized the action as a “variance in name only,” and the property owner evidently could construct the fence as desired.

On appeal, the court concluded that the county had granted a variance, but that it did not consider the six variance criteria as it should have done.  The variance was thus illegal.

In Utah, a variance may only be granted after consideration of five statutory criteria (which are fairly similar to Florida’s).  See Save Our Canyons v. Salt Lake County, 2005 UT App 285.  Appeals of variance applications are not taken to a legislative body, but directly to a district court.  See Utah Code Ann. §§ 10-9a-70 and 17-27a-70  This case demonstrates the problems that can occur when a local government attempts to circumvent statutory requirements in order to appease constituents.

TAKINGS

Durrett Investment Co. v. Clarksville, 2013 Tenn. App. LEXIS 110.

The Tennessee Court of Appeals reversed an order dismissing a property owner’s claims for inverse condemnation.  The court did not discuss the merits of the argument, but remanded the matter for consideration.  The property owner claimed a taking of his property because the city imposed an 8-month moratorium on all development, evidently to protect a highway corridor.  Essentially, the court concluded that the property owner’s claims for inverse condemnation (or regulatory taking) should have been heard by the trial judge.

The Utah Code allows temporary zoning regulations, including a moratorium on all development. See Utah Code Ann. §§ 10-9a-504 and 17-27a-504. There has been no case claiming a taking of property due to a moratorium.

Las Vegas v. Cliff Shadows Professional Plaza, 293 P.3d 860 (Nev. 2013).

A city showed that it owned an easement across private property, stemming from a federal land patent.  Since the city owned the easement, there was no taking.

In Utah, if a condemning agency shows that it owns a property interest, or has rights to use the property, there is no taking of that property interest.  In order to claim a taking, a person must have a property interest.  See Bingham v. Roosevelt City, 2010 UT 37.

Smith v. Park County, 291 P.3d 947 (Wyo. 2013).

The Wyoming Supreme Court reversed a dismissal of an inverse condemnation suit which arose when a county claimed ownership of a private roadway.  The court held that inverse condemnation claims are not barred by government immunity, and that the applicable statute of limitations was 8 years.

The Utah Code includes a provision that a public roadway may be created by longstanding use of private property.  See Utah Code Ann. § 72-5-104.  There has been no specific decision from a Utah Court concerning what the statute of limitations would be for a takings claim.

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