Allianz Global Risks U.S. Ins. Co. v. State

• Decision Date: 10 November 2010
• Docket Number: No. 2009–745.,2009–745.
• Citation: 13 A.3d 256,161 N.H. 121
• Parties: ALLIANZ GLOBAL RISKS U.S. INSURANCE CO. and anotherv.The STATE of New Hampshire and another.
• Court: New Hampshire Supreme Court

161 N.H. 121

13 A.3d 256

ALLIANZ GLOBAL RISKS U.S. INSURANCE CO. and another

v.The STATE of New Hampshire and another.

No. 2009–745.

Supreme Court of New Hampshire.

Argued: June 15, 2010.Opinion Issued: Nov. 10, 2010.

Campbell Campbell Edwards & Conroy, of Boston, Massachusetts (Adam A. Larson on the brief) and Denenberg Tuffley, PLLC, of Southfield, Michigan (Charles R. Tuffley and another on the brief, and Jeffrey R. Learned orally), for the plaintiffs.Michael A. Delaney, attorney general (Kevin H. O'Neill, assistant attorney general, on the brief and orally), for defendant State of New Hampshire.Ransmeier & Spellman, P.C. of Concord (Daniel J. Mullen on the memorandum of law and orally) and Ronald F. Kehoe, assistant attorney general, of Boston, Massachusetts, on the memorandum of law, for defendant Commonwealth of Massachusetts.CONBOY, J.

The plaintiffs, Allianz Global Risks U.S. Insurance Company (Allianz) and Henkel Corporation (Henkel), appeal a ruling of the Superior Court ( McHugh, J.) denying their motion for summary judgment and granting summary judgment to the defendants, the State of New Hampshire and the Commonwealth of Massachusetts. We affirm.

The following facts were either found by the trial court or are undisputed by the parties. Henkel, a manufacturer of adhesives and related products, owns a sixteen-acre parcel of land in Seabrook that abuts Interstate Route 95 (I–95) near the New Hampshire–Massachusetts border. At all relevant times, Allianz insured the property. Beginning on May 13, 2006, the area experienced extraordinary rainfall of up to ten inches. Henkel's property was flooded, causing extensive damage to Henkel's personal and real property. As a result, Allianz paid Henkel in excess of two million dollars, while Henkel remained responsible for its insurance policy's $500,000 deductible. The building that houses Henkel's operations had flooded once before, during a hurricane in October 1996.

The pertinent portion of I–95 was constructed in 1948 and was widened in 1967. The defendants shared responsibility for building a deceleration lane near the Henkel property in 1998.

The plaintiffs commenced this action in July 2007, alleging one count of inverse condemnation.

In their claim against the State of New Hampshire, they contend that, but for the design and construction of I–95, Henkel's property would not have flooded. As to the Commonwealth of Massachusetts, they allege that construction of the deceleration lane contributed to the conditions that caused the flood.

The plaintiffs rely on the report of their expert geoscientist, Dr. Theodore Hromadka, who concluded that the highway embankment acted as a dam, forcing excessive amounts of water to be deposited on Henkel's property. He identified two factors that contributed to the 2006 flood damage: (1) the size and location of a culvert running under I–95, which caused a ponding of water on the Henkel property; and (2) the construction of the deceleration lane that reduced culvert flow, raising ponding elevations on the property.

In contrast, the State's expert identified the inadequacy of a culvert under Henkel's building as the cause of the 2006 flood damage. That culvert is Henkel's responsibility and is much smaller than the I–95 culvert. Both experts agreed that the rainfalls which caused both the 1996 and 2006 floods, in which some ten inches of rain fell over a one or two day period, were rare and unusual events. The State's expert described both storms as “100 year occurrences.”

The trial court ruled that, as a matter of law, the plaintiffs' inverse condemnation claim failed for three reasons. First, “the loss of use of the Henkel Corporation property was temporary, not permanent, and therefore did not result in a ‘taking.’ ” Second, damage to the Henkel property during the 2006 flood was caused by an act of God. Third, no reasonable jury could have found that an act or omission on the part of either of the defendants caused or contributed to the flood.

On appeal, the plaintiffs argue that, contrary to the trial court's ruling, a temporary taking of real property is compensable under New Hampshire law. They further allege that, apart from a taking of Henkel's real property, there was also a $1 million permanent taking of Henkel's personal property which was destroyed in the flood. The plaintiffs further maintain that summary judgment was not warranted because genuine issues of material fact remained as to whether the flood damage resulted from an act of God and whether acts or omissions of the defendants caused or contributed to the flood damage.

“In reviewing the trial court's grant of summary judgment, we consider the affidavits and other evidence, and all inferences properly drawn from them, in the light most favorable to the non-moving party.” Big League Entm't v. Brox Indus., 149 N.H. 480, 482, 821 A.2d 1054 (2003). “If our review of that evidence discloses no genuine issue of material fact, and if the moving party is entitled to judgment as a matter of law, we will affirm the grant of summary judgment.” Id. “We review the trial's court's application of the law to the facts de novo.” Id.

“Inverse condemnation occurs when a governmental body takes property in fact but does not formally exercise the power of eminent domain. Inverse condemnation may be effected through either physical act or regulation. We look to the individual circumstances of each case to determine whether there is an unconstitutional taking.” Pennichuck Corp. v. City of Nashua, 152 N.H. 729, 733, 886 A.2d 1014 (2005) (citations omitted).

The plaintiffs are correct that temporary takings of property are compensable in New Hampshire. See Smith v. Town of Wolfeboro, 136 N.H. 337, 615 A.2d 1252 (1992); Burrows v. City of Keene, 121 N.H. 590, 432 A.2d 15 (1981); Sundell v. Town of New London, 119 N.H. 839, 409 A.2d 1315 (1979). “Governmental action which substantially interferes with, or deprives a person of, the use of his property in whole or in part, may ... constitute a taking, even if the land itself is not taken.” Sundell, 119 N.H. at 845, 409 A.2d 1315 (upholding an inverse condemnation claim for injury to the property rights of landowners where algae blooms caused by the defendant's intentional discharge of effluent had polluted waters adjacent to plaintiffs' shoreline, but would dissipate over time).

To prevail on an inverse condemnation claim, however, a plaintiff “must establish that treatment under takings law, as opposed to tort law, is appropriate under the circumstances.” Ridge Line, Inc. v. United States, 346 F.3d 1346, 1355 (Fed.Cir.2003). First, “a property loss compensable as a taking only results when the government intends to invade a protected property interest or the asserted invasion is the direct, natural, or probable result of an authorized activity and not the incidental or consequential injury inflicted by the action.” Id. (quotation and citation omitted; emphasis added). Second, the court must “consider whether the government's interference with any property rights of [the plaintiff] was substantial and frequent enough to rise to the level of a taking.” Id. at 1357; Cary v. United States, 552 F.3d 1373, 1376–77 (Fed.Cir.2009).

“[I]solated invasions, such as one or two floodings, do not make a taking, but repeated invasions of the same type have often been held to result in an involuntary servitude.” Ridge Line, 346 F.3d at 1357 (quotation omitted). “Generally speaking, property may be taken by the invasion of water where subjected to intermittent, but inevitably recurring, inundation due to authorized Government action.” Barnes v. United States, 538 F.2d 865, 870 (Ct.Cl.1976) (finding a taking of plaintiffs' land which was flooded on an intermittent, but sustained basis as a result of intentional releases...