Alabama Dept. of Transp. v. LAND ENERGY

• Decision Date: 06 February 2004
• Citation: 886 So.2d 787
• Parties: ALABAMA DEPARTMENT OF TRANSPORTATION v. LAND ENERGY, LTD.
• Court: Alabama Supreme Court

886 So.2d 787

ALABAMA DEPARTMENT OF TRANSPORTATION v. LAND ENERGY, LTD.

1020393.

Supreme Court of Alabama.

February 6, 2004.

Rehearing Denied March 12, 2004.

Isaac P. Espy, deputy atty. gen., and Bradley M. Hale of Espy, Nettles, Scogin & Brantley, P.C., Tuscaloosa, for appellant.

Charles A. Hardin of Watson, deGraffenreid, Hardin & Tyra, LLP, Tuscaloosa; and Matthew H. Lembke and Scott Burnett Smith of Bradley Arant Rose & White, LLP, Birmingham, for appellee.

Fournier J. Gale III of Maynard, Cooper & Gale, P.C., Birmingham; and Edward A. "Ted" Hosp of Maynard, Cooper & Gale, P.C., Montgomery, for amici curiae Alabama Coal Association, Drummond Company, Inc., Alabama Power Company, Jim Walter Resources, Taft Coal & Associates, and U.S. Steel Mining Co., LLC, in support of the appellee.

HARWOOD, Justice.

Land Energy, Ltd. ("LE"), brought an inverse-condemnation action against the Alabama Department of Transportation ("ADOT").¹ After court-ordered mediation was unsuccessful, the case proceeded to a jury trial. ADOT moved for judgment as a matter of law ("JML") at the close of LE's case and again at the close of all of the evidence. The trial judge denied both motions. The jury found ADOT liable for inverse condemnation and awarded LE $650,000 in compensatory damages; the court entered a judgment on the verdict. Pursuant to Rule 50, Ala.R.Civ.P., ADOT renewed its motion for a JML and moved, alternatively, for a new trial; LE responded to ADOT's motion, and also filed a motion to have the trial court take judicial notice of certain deeds in its chain of title to the condemned property. In an order entered November 8, 2002, the trial court declined to take judicial notice of the requested documents to the extent requested by LE and denied ADOT's renewed motion for a JML or for a new trial; that order stated, in pertinent part:

"MOTION TO TAKE JUDICIAL NOTICE

"[LE] moved for the Court to take judicial notice of certain certified public records consisting of real property deeds filed in the Probate Court of Marion County, Alabama.

"....

"Inasmuch as there was no evidence presented at trial of any special covenant in the deeds showing [LE's] chain of title and rights, the Court will only accept the certified deeds as being true and correct copies of public record but does not take judicial notice of them for adjudicative purposes.

"....

"MOTION FOR JUDGMENT AS A MATTER OF LAW OR IN THE ALTERNATIVE FOR A NEW TRIAL

"....

"[ADOT] again argues that there was no taking of [LE's] property. Ala.Code, § 18-1A-3(16), defines property, in part, as an interest in real property. Under the commentary to this section, the terminology `an interest' in real property is to be given a broad interpretation so as to include such interests as subsurface rights. Furthermore, in Alabama, a mineral interest is considered to be real property. Dauphin Island Property Owner's Ass'n v. Callon, 519 So.2d 948 (Ala.1988); Nelson v. Teal, 293 Ala. 173, 301 So.2d 51 (1974).

"Clearly, the `taking' of a mineral interest constitutes the taking of real property. `Taking' of property occurs when one is denied the right of commercial use of its land or, as here, the right to mine its coal. See Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 535 U.S. 302, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002); Pennsylvania Coal Company v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922).

"The issue of whether or not there was a `taking' was a fact for the jury to decide. The jury obviously found that there was a taking of property for which [LE] was entitled to just compensation. That there was a taking of property was supported by the undisputed evidence that [LE] is now unable to access the coal.

"[ADOT] also argues that [LE's] evidence [as to the] method of valuation should not have been allowed and that the Court improperly charged the jury on damages. More specifically, [ADOT] argues that pursuant to Ala.Code § 18-1A-170(b), compensation should be based on the `fair market value of the entire property before the taking and the fair market value after the taking.' However, this rule is only applicable when there is a partial taking and the property is acquired by eminent domain. § 18-1A-170(a), Code. Of course, this action was an inverse condemnation proceeding and the property of [LE] was not acquired by eminent domain and there was not a partial taking. Therefore, this Court is of the opinion that the provisions of § 18-1A-170 are not applicable to this case.

"....

"[LE] does not [sell] its property, it leases mineral rights, which is usually a particular seam of coal for a certain period of time. The amount paid for the lease is determined by taking the number of tons of coal multiplied by the royalties. In this case, there was evidence of the standard minimum royalties received by [LE] for leasing its mineral rights to miners which is the standard practice used in the coal business to value coal. There was also evidence of the amount of recoverable coal reserves on this property.

"....

"Although there was no evidence as to the price of property offered for [sale] by a willing seller to a willing buyer, there was evidence of price, or value of leases including royalties, that [LE] was willing to enter into with willing miners."

ADOT appeals. ADOT argues to this Court that it did not "take" LE's mineral estate, and, therefore, that its motion for a JML should have been granted, or, alternatively, that a new trial should be ordered because the trial court erred in various evidentiary rulings allowing or disallowing certain testimony or evidence. We affirm.

I. Facts

ADOT needed to acquire certain rights in various parcels of privately owned property to complete a highway project known as Corridor X, designed to link Birmingham, Alabama, and Memphis, Tennessee. The parcel involved in this case contains approximately 120 acres and is located in Marion County, Alabama. The "Pearce Estate" owned the surface of the land; LE, an investment group that owns property consisting of both surface land and mineral rights, owned the mineral estate to the 120 acres. LE's mineral estate, which the parties stipulated contains 374,000 tons of surface coal, is the subject of this dispute.

ADOT hired Dr. Henry McCarl, a licensed geologist and the owner of a geological consulting firm, to investigate whether the recovery of the coal contained within LE's mineral estate was economically feasible. Dr. McCarl went to the area, took measurements and studied data contained in various "drill logs," and then reported that there was coal under the surface but that it was not economically recoverable. Based on that report, ADOT elected to acquire only the surface rights to a portion of the property owned by the Pearce Estate, specifically the surface rights to 34.08 acres of the 120-acre tract, through a condemnation action filed September 23, 1999, forgoing any attempt to condemn LE's mineral estate. ADOT ultimately paid the Pearce Estate $31,000 for the condemned surface acreage. LE was aware of the proposed Corridor X, but did not know the route ADOT had planned for it. ADOT had obtained permission from Howard Graham, LE's property manager, some four or five years before the September 1999 condemnation action, "to go on" or "cross" the Pearce Estate's land to conduct core-drilling operations. ADOT never informed LE of the results of those drilling operations or that the condemnation action had been instituted. The first time LE became aware that Corridor X would cross a portion of the 120-acre tract was when Graham and John Oliver, an owner of LE, were touring the property in February 2000 and saw construction of the highway underway. LE then asked ADOT if it could get permission for a mining company to remove the coal on the property before the highway was completed. That request was refused.

The only disputed issues presented to the jury were whether by condemning the 34.08 acres ADOT had "taken" LE's coal reserves, i.e., (1) whether those reserves were economically recoverable, (2) whether the surface owner would have consented to surface mining, and, (3) if there was a taking, what compensation LE was due based on the value of those reserves.

II. Standard of Review

"When reviewing a ruling on a motion for a JML, this Court uses the same standard the trial court used initially in granting or denying the motion. Palm Harbor Homes, Inc. v. Crawford, 689 So.2d 3 (Ala.1997). Regarding questions of fact, the ultimate issue is whether the nonmovant has presented sufficient evidence to allow the case or issue to be submitted to the jury for a factual resolution. Carter v. Henderson, 598 So.2d 1350 (Ala.1992). In an action filed after June 11, 1987, the nonmovant must present substantial evidence to withstand a JML. See § 12-21-12, Ala.Code 1975; West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). A reviewing court must determine whether the party who bears the burden of proof has produced substantial evidence creating a factual dispute requiring resolution by the jury. Carter, 598 So.2d at 1353. In reviewing a ruling on a motion for a JML, this Court views the evidence in the light most favorable to the nonmovant and entertains such reasonable inferences as the jury would have been free to draw. Id. If the question is one of law, this Court indulges no presumption of correctness as to the trial court's ruling. Ricwil, Inc. v. S.L. Pappas & Co., 599 So.2d 1126 (Ala.1992)."

Ex parte Alfa Mut. Fire Ins. Co., 742 So.2d 1237, 1240 (Ala.1999).

"[T]he ruling on a motion for new trial is within the discretion of the trial court[,] and ... the trial court's decision carries a strong presumption of correctness. Gold Kist, Inc. v. Tedder, 580 So.2d 1321, 1322 (Ala.1991). The decision of the trial court should not be disturbed on appeal unless the record plainly and palpably shows that the trial court erred and that some legal right

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