Sanitary & Improvement Dist. No. 67 of Sarpy Cnty. v. Neb. Dep't of Rds.

• Decision Date: 25 June 2021
• Docket Number: No. S-20-659.,S-20-659.
• Court: Nebraska Supreme Court
• Parties: SANITARY AND IMPROVEMENT DISTRICT NO. 67 OF SARPY COUNTY, Nebraska, appellant, v. State of Nebraska DEPARTMENT OF ROADS and Sarpy County, Nebraska, appellees.

309 Neb. 600

961 N.W.2d 796

SANITARY AND IMPROVEMENT DISTRICT NO. 67 OF SARPY COUNTY, Nebraska, appellant,

v.State of Nebraska DEPARTMENT OF ROADS and Sarpy County, Nebraska, appellees.

No. S-20-659.

Supreme Court of Nebraska.

Filed June 25, 2021

Dean J. Jungers, of Hascall, Jungers & Garvey, Bellevue, for appellant.

Douglas J. Peterson, Attorney General, and Matthew F. Gaffey, Lincoln, for appellee Nebraska Department of Roads.

John W. Reisz, Deputy Sarpy County Attorney, for appellee Sarpy County.

Heavican, C.J., Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Heavican, C.J.

INTRODUCTION

This is an inverse condemnation action, brought by a sanitary and improvement district (SID) seeking compensation from the State. The district court dismissed the action on the pleadings, finding the SID lacked standing.

We agree. The SID is a political subdivision of the State, created by and subject to the State. As such, it is not a "person" having "private property" and is thus incapable of bringing an inverse condemnation action against the State. We affirm.

BACKGROUND

The appellant in this case is Sanitary and Improvement District No. 67 of Sarpy County, Nebraska (SID 67). Formed according to Nebraska statutes,¹ SID's are units of local government.² Their primary function is to install and maintain public improvements such as streets, sewers, utility lines, and other improvements associated with residential and commercial subdivisions.³

SID 67 serves Normandy Hills, a subdivision of more than 340 residences and several commercial properties near Bellevue, Nebraska. According to SID 67, it has maintained the "streets and roads" in the subdivision using funds raised "through the use of bonded indebtedness and general levy of taxes." Normandy Hills is located just east of Highway 75.

For much of the subdivision's history, Normandy Hills’ roads provided residents easy access to Highway 75 via either of two routes. From the subdivision's northwest corner, residents could travel about 500 feet west along Grenoble Drive to reach the highway. Alternatively, residents could enter the highway from the subdivision's southwest corner by driving some 500 feet west along Normandy Boulevard. Both routes connected by direct intersections to Highway 75.

But in 2003 and 2004, the State of Nebraska Department of Roads, now known as the Nebraska Department of Transportation (NDOT), agreed with Sarpy County to jointly reconstruct Highway 75. To do so, they blocked the two previous access routes between the subdivision and Highway 75 and instead rerouted such access via an alternative route.

Rather than leading directly west to Highway 75, the alternative route detoured north. Grenoble Drive was blocked near the highway's shoulder, and drivers were rerouted north along South Fort Crook Road, a frontage road that ran parallel with the highway. From South Fort Crook Road, drivers could turn west onto Fairview Road, which ultimately connected with Highway 75.

In a petition for compensation in the county court for Sarpy County, SID 67 claimed this rerouting had effected a "tak[ing] or damag[ing]" of its property. SID 67 alleged it was "the owner of the streets and roads located within the [SID] by reason of the dedication set forth in the plat of Normandy Hills, recorded October 18, 1972 at Book 5 of the Plat Records of Sarpy County Register of Deeds, at Page 82." The alleged dedication instrument, however, was not attached to SID 67's petition.

Although acknowledging the alternative route still afforded highway access from its streets and roads, SID 67 alleged it had been damaged by NDOT and Sarpy County's "terminat[ion]" of the two previously direct access routes. According to SID 67, the alternative route was an insufficient replacement, because it was indirect. SID 67 also claimed that the alternative route failed to comply with Bellevue's fire code and that its sharp turns and steep grade altogether prevented certain vehicles’ passage, particularly during severe weather or congested traffic.

As a result of the rerouting, SID 67 asserted that it would

be forced to acquire right of way and construct a new fire apparatus access road to serve the residents of the District, as well as reconstruct the intersection and approach at Grenoble Drive and the new access road to better serve the residents of the District and make the flow of traffic at said intersection passable during inclement weather.

The county court appointed three appraisers to assess the value of SID 67's damages, if any. However, after considering the evidence at a hearing, the appraisers issued a final report concluding "[SID 67's] damages suffered by reason of the taking of the access to the property described in the Petition, including interest, total $0.00."

SID 67 next sought review in the district court for Sarpy County. There, SID 67 again alleged inverse condemnation. NDOT and Sarpy County moved to dismiss, alleging lack of standing and failure to state a claim upon which relief can be granted.⁴

The district court dismissed the action on the pleadings for lack of standing. According to the district court, SID 67 was not the real party in interest, because its pleadings had alleged neither that "[its] property ha[d] been taken" nor that it "[wa]s an ‘abutting landowner’ " to highway accesses that had been blocked. Contrary to SID 67's claim that it owned the streets and roads within Normandy Hills as the result of a dedication, the district court found:

The October 18, 1972 dedication ... did not grant SID 67 an ownership interest in this property; quite the contrary, it divested SID 67 from any ownership interest it may have had and transferred ownership to the public[,] thereby converting the private roads constructed by SID 67 into public roads.

Thus, despite observing that the motions had equally alleged failure to state a claim, the district court concluded it needed only to rely on lack of standing to determine that dismissal was appropriate.

After the action was dismissed, SID 67 appealed. We removed the case to our docket on our own motion.

ASSIGNMENTS OF ERROR

SID 67 assigns five errors, which we consolidate and restate as two: The district court erred in (1) declining to admit evidence offered in opposition to dismissal and (2) dismissing the action on the pleadings for want of the real party in interest.

STANDARD OF REVIEW

The question of whether a plaintiff is the real party in interest and therefore has standing is a question of the court's subject matter jurisdiction.⁵ Accordingly, either a litigant or the court can raise standing at any time, including on appeal.⁶ The plaintiff bears the burden to establish standing to bring the suit.⁷

A district court's grant of a motion to dismiss on the pleadings is reviewed de novo by an appellate court, accepting the factual allegations in the complaint as true and drawing all reasonable inferences of law and fact in favor of the non-moving party.⁸ However, an appellate court reviewing a dismissal on the pleadings is not obliged to accept as true legal conclusions couched as factual allegations or threadbare recitals of the elements of a cause of action supported by mere conclusory statements.⁹

ANALYSIS

We agree with the district court that the real party in interest doctrine is dispositive in this case. However, before we discuss that issue, we must first characterize the stage of litigation during which standing was challenged, for that affects whether evidence should have been allowable.¹⁰

FACIAL , NOT FACTUAL , CHALLENGE

If a motion challenging standing is filed after the pleadings stage and the court holds an evidentiary hearing and reviews evidence outside of the pleadings, the motion is considered a "factual challenge."¹¹ The party opposing a factual challenge must offer evidence to show its entitlement to bring the suit.¹² But if standing is challenged at the pleadings stage, before an evidentiary hearing and before any evidence outside of the pleadings is admitted, it is deemed a "facial challenge."¹³ In considering a facial challenge, the trial court will typically review only the pleadings to determine whether the plaintiff has therein alleged enough facts to establish standing.¹⁴

Here, NDOT's and Sarpy County's motions to dismiss were filed at the pleadings stage of litigation. No evidentiary hearing was held; nor was evidence admitted. The district court then dismissed the action for lack of standing, apparently without consulting evidence outside of the pleadings. It acknowledged considering only the "[p]etition and [a]ppeal" for purposes of its order. The motions were thus treated as presenting a facial challenge, and as the party opposing the challenge, SID 67 had no entitlement to offer evidence in its defense.

SID 67 argues that ownership of the roads in Normandy Hills was at issue and that this involved "a question of fact which required the court to consider the case as a motion for summary judgment rather than a motion on jurisdiction."¹⁵ SID 67 thus insists that the plat allegedly showing its ownership of the roads should have been considered.

But that argument misapprehends the nature of a facial challenge. Jurisdiction was at issue, having been facially challenged by NDOT's and Sarpy County's motions to dismiss. To prevail against that facial challenge, it was SID 67's burden to allege adequate facts in its pleadings showing that it had standing to bring the suit. And in assessing whether SID 67 had met that burden, the district court was not required to consider evidence outside of the pleadings. SID 67's first assignment of error is accordingly without merit.

WANT OF REAL PARTY IN INTEREST

Having characterized the stage of litigation below and determined that SID 67's first assignment of error is without merit, we turn next to SID 67's second assignment of error. SID 67 assigns that the district court erred in finding that it lacked standing because it was not the real party in interest to this action.

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