735 P.2d 733 (Alaska 1987), S-1002, State v. Doyle

• Citation: 735 P.2d 733
• Opinion Judge: RABINOWITZ, Chief Justice.
• Party Name: STATE of Alaska, Appellant, Cross-Appellee, v. Anthony D.M. DOYLE; Lowell Thomas, Jr.; Tay Thomas; Rodman Wilson; Gwynneth Wilson; John Overbey; Susan Overbey, Appellees, Cross-Appellants.
• Attorney: Ross A. Kopperud, Asst. Atty. Gen., Anchorage, Harold M. Brown, Atty. Gen., Juneau, for appellant, cross-appellee. James N. Reeves, Bogle & Gates, Anchorage, for appellees, cross-appellants.
• Judge Panel: Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.
• Case Date: March 27, 1987
• Court: Alaska Supreme Court

Page 733

735 P.2d 733 (Alaska 1987)

STATE of Alaska, Appellant, Cross-Appellee,

v.

Anthony D.M. DOYLE; Lowell Thomas, Jr.; Tay Thomas;

Rodman Wilson; Gwynneth Wilson; John Overbey;

Susan Overbey, Appellees, Cross-Appellants.

Nos. S-1002, 1035.

Supreme Court of Alaska

March 27, 1987

Page 734

Ross A. Kopperud, Asst. Atty. Gen., Anchorage, Harold M. Brown, Atty. Gen., Juneau, for appellant, cross-appellee.

James N. Reeves, Bogle & Gates, Anchorage, for appellees, cross-appellants.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.

OPINION

RABINOWITZ, Chief Justice.

This appeal and cross-appeal involve claims brought by owners of residential properties for damages allegedly sustained as a result of airplane noise attributable to the construction and operation of a new runway at Anchorage International Airport. The state, which owns and operates the airport, appeals from the judgment of the superior court rendered in favor of the homeowners on their inverse condemnation claims. The homeowners cross-appeal, challenging primarily the superior court's order of partial summary judgment which dismissed their nuisance and trespass claims and the award of attorney's fees.

1. Facts and Proceedings Below.

The State of Alaska constructed a new north-south runway ("the runway") at Anchorage International Airport, which was commissioned for use on October 29, 1980. Use began in November 1980. Anthony Doyle, Lowell and Tay Thomas, Rodman and Gwynneth Wilson, and John and Susan Overbey ("homeowners") own residential real properties in the Tanaina Hills subdivision, situated approximately one mile south of the southern end of the runway. The homeowners contend, and the superior court found, that aircraft taking off toward the south from the runway and landing from the south on the runway pass over the area in which their properties are located at extremely low altitudes, thereby causing adverse effects (the most significant of which is noise) which have diminished the values of their properties. The state denies that the homeowners have been damaged because the southern takeoffs and landings are infrequent, and because the subject properties have not decreased in value.

In October 1982, the homeowners filed a complaint seeking compensation on theories of inverse condemnation of their properties, nuisance, and trespass. The superior court granted the state's motion for partial summary judgment, dismissing the nuisance and trespass claims on the ground that the complaint did not sufficiently state independent claims for relief under either of these theories. The court also denied the state's motion in limine, which sought to restrict the homeowners' evidence to the preliminary appraisal report and deposition answers furnished to the state before trial. The matter was then tried to the court without a jury on the inverse condemnation claims.

At the close of the evidence, the superior court denied the state's motion for a directed

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verdict, entered judgment for the homeowners, and awarded them damages in the amount of $488,000, plus prejudgment interest, for a total of $715,000.22 exclusive of costs. In finding for the homeowners, the superior court essentially adopted their theory of the case: it held that a taking of an avigation easement occurred on October 29, 1980, and found the homeowners' valuation evidence more credible than that of the state. The court also denied the homeowners' motion to award prejudgment interest compounded on an annual basis, ordering computation at the simple interest rate of 10.5% from October 29, 1980 until the date of judgment.

Subsequent to the filing of this appeal, the superior court entered an order awarding attorney's fees of $76,786.00 to the homeowners pursuant to Alaska Rule of Civil Procedure 72(k).

A. Did the Superior Court Err in Concluding That a Claim for Inverse Condemnation is Legally Cognizable When Governmental Action Adversely Affected the Rate of Appreciation of Property But Did Not Cause Its Market Value to Decrease?

The state argues that the homeowners cannot claim inverse condemnation of their properties because they did not prove that the fair market value of their properties decreased as a result of the noise attributable to the operation of the new runway. ¹ More particularly, the state asserts that the superior court erred in concluding that a claim for inverse condemnation is legally cognizable in the circumstance "where competent proof establishes that the rate of appreciation of property value has been adversely affected by governmental action," even though the property's market value has not decreased. ² The state further argues that the homeowners are not entitled to any damages under the takings clause of the Alaska Constitution because they have failed to prove any reduction in the fair market value of their properties attributable to the operation of the runway. We reject these contentions.

It is established that the proper measure of damages in an eminent domain proceeding in Alaska is the difference in the fair market value of the property before and after the taking. Gackstetter v. State, 618 P.2d 564, 565 (Alaska 1980). ³ Article I, section 18 of the Alaska Constitution provides that: "Private property shall not be taken or damaged for public use without just compensation." [Emphasis added.]

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We have held that this clause should be liberally interpreted in favor of the property owner, see Also p v. State, 586 P.2d 1236, 1239 & n. 7 (Alaska 1978), and that the inclusion of the term "damage" affords the property owner broader protection than that conferred by the fifth amendment of the federal constitution. See State v. Hammer, 550 P.2d 820, 823-24 (Alaska 1976). We have also stated: "The term just compensation implies full indemnification to the owner for the property taken. In other words the property owner should be placed as fully as possible in the same position as he was in prior to the taking of his property." Ketchikan Cold Storage Co. v. State, 491 P.2d 143, 150 (Alaska 1971) (emphasis added). See also Lange v. State, 86 Wash.2d 585, 547 P.2d 282, 285 (1976) (en banc); Defnet Land & Inv. Co. v. State ex rel. Herman, 103 Ariz. 388, 442 P.2d 835 (1968) (en banc); J. Sackman, 4 Nichols' The Law of Eminent Domain § 12.1 (rev. 3d ed. 1979).

Other courts have concluded that damages awarded to property owners should include compensation for a loss of appreciation caused by the governmental impairment. In Steiger v. City of San Diego, 163 Cal.App.2d 110, 329 P.2d 94 (1958), significant appreciation in land values created problems in valuation of the subject property before and after the government impairment. The California court justified the inclusion of loss of appreciation in the damages award on the grounds that the award reflected the difference between the value of the property after the impairment and what the value would have been if the impairment had not occurred:

The trial judge, as the measure of damages, used the difference in the reasonable market value of the property before and after the injury. Neither party quarrels with this rule of damages but, in effect, defendant city says there was no evidence on which the court could apply this rule and there was no difference in the reasonable market value because the evidence reflects the reasonable market value was greater than it had been before the drainage installations. Defendant city does not contend the installations enhanced the market value but does insist that since there was evidence that the value of the property was greater in later years the court had no right to award damages. Defendant city's position would require a court to hold that where there is a general economic inflationary period causing an increased price, and damage is sustained during that period of time, there can be no dollar recovery. We do not believe this position is sound. In the instant case there is substantial evidence that the land without the damage was worth $131,800 and with the damage, $83,500. Further, there was evidence that property in the area had appreciated in value.... It is common knowledge that land in California, and particularly southern California, has had a heavy appreciation in market price and value during the time period here in question.... Under the evidence in this case the court was justified in making an award of $20,000....

Id. 329 P.2d at 98-99. See also State ex rel. Herman v. Southern Pacific Co., 8 Ariz.App. 238, 445 P.2d 186, 189 (1968) (fair market value is not the only means for determining just compensation).

In a recent inverse condemnation decision involving airport noise, the Washington Supreme Court similarly recognized the importance of taking into account the factor of appreciation and adjusting the "loss of market value" measure accordingly:

In inverse condemnation actions ... the landowner is entitled to full and fair compensation for the loss of his property rights. In many instances this measure is the difference between the market value of the land before the injury and the

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value immediately after the injury. Where the injury is permanent but also increases over time, the full measure of damages is the total loss of market value traceable to the interference. Thus a landowner's recovery will not be diminished by the appreciation of value in the general real estate market, if any. Otherwise, if an unadjusted market value measure were applied, in a period of increasing property values the appreciation during a ten-year period of continuing interference conceivably could offset the loss of value inflicted by the interference. Highline School Dist. No. 401 v. Port of Seattle, 87 Wash.2d 6, 548 P.2d 1085, 1090 n. 5 (1976) (en banc) (citations omitted). ⁴

We find the foregoing authorities persuasive. A claim for loss of appreciation of property...