Armour and Co., Inc. v. Inver Grove Heights

• Decision Date: 06 August 1993
• Docket Number: No. 92-2801,92-2801
• Citation: 2 F.3d 276
• Parties: ARMOUR AND COMPANY, INC., an Arizona corporation, Appellant, v. INVER GROVE HEIGHTS, a Minnesota municipal corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 276

2 F.3d 276

ARMOUR AND COMPANY, INC., an Arizona corporation, Appellant, v. INVER GROVE HEIGHTS, a Minnesota municipal corporation, Appellee.

No. 92-2801.

United States Court of Appeals Eighth Circuit.

Submitted May 14, 1993.

Decided Aug. 6, 1993.

James Bruce Fleming, Minneapolis, MN, argued, for appellant.

John Michael Baker, Minneapolis, MN, argued (Clifford M. Greene and Suesan Pace-Shapiro, on the brief), for appellee.

Before LOKEN, Circuit Judge, ROSS, Senior Circuit Judge, and MORRIS SHEPPARD ARNOLD, Circuit Judge.

ROSS, Senior Circuit Judge.

Appellant Armour and Company, Inc. (Armour) owns 32 acres of undeveloped land in the city of Inver Grove Heights, Minnesota (the city). This 32-acre tract of land is part of a larger 300-acre tract known as the southeast quadrant in Inver Grove Heights. As early as 1986, proposals had been made for development of the area as a discount shopping mall. The city actively and publicly pursued this proposal. The Armour tract of land has increased in value over the years as adjacent tracts have enjoyed public improvements, including the construction of interstate highways.

On May 30, 1991, the city formally entered into a development agreement with Minnesota Powerpark Limited Partnership (the developer) for the development of a shopping mall in the southeast quadrant, including Armour's tract of land. In this agreement, the city agreed to provide the developer with tax increment financing and utilization of the municipal power of eminent domain. The development agreement provided that if the developer was unable to acquire certain property within the development district, and the developer had fulfilled certain conditions precedent, the city would exercise its power of eminent domain to acquire specific parcels of property. The city retained the right to issue planning approvals and building permits to other parties.

Contrary to Armour's wishes, the agreement did not obligate the city to condemn any land until a series of preconditions for development were satisfied, including acceptance by the Metropolitan Council of comprehensive plan amendments and the resolution of serious traffic problems. The agreement also set forth other contingencies upon the occurrence of which the agreement would fail, such as failure to obtain approval for environmental impact statements, permits, variances and rezoning applications. Armour participated in the public debate prior to the city's execution of the development agreement and did not oppose the proposal. However, Armour admonished that the agreement should include the necessary financial guarantees to ensure condemnation of the property before the end of 1991.

Less than three months after execution of the development agreement, and prior to its termination, Armour filed this action contending that the agreement had already resulted in a temporary and permanent taking of its property under both the federal and Minnesota state constitutions. Upon the termination of the agreement, the permanent takings claim became moot and Armour now relies exclusively on a temporary takings claim. Armour does not contend that the city interfered with its legal right to sell, use or dispose of its land. Instead, Armour's takings claim is based on its contention that the development agreement and the concomitant planning activities between the city and the developer made the property less attractive to potential purchasers and hindered Armour's ability to sell its land for its full value.

I.

The Fifth Amendment provides that "private property [shall not] be taken for public use without just compensation." The essential purpose of this clause is to "bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Penn Central Transp. Co. v. New York, 438 U.S. 104, 123-24, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978) (quoting Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960)).

The Takings Clause originally was applied only to physical appropriations of property, but in 1922 the Supreme Court recognized that regulations on property will also be considered takings if they go "too far." Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322 (1922). Just how far a regulation must go before it will be considered "too far" under the Fifth Amendment has not been specifically defined by formula or rule. Penn Central, 438 U.S. at 124, 98 S.Ct. at 2659. Consequently, judicial determinations have relied on ad hoc factual inquiries and case-specific weighing of the competing public and private interests. Id. Resolution of each case "ultimately calls as much for the exercise of judgment as for the application of logic." Andrus v. Allard, 444 U.S. 51, 65, 100 S.Ct. 318, 327, 62 L.Ed.2d 210 (1979).

The Supreme Court has identified factors to guide courts in ad hoc factual inquiries. The factors include: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the government regulation. Penn Central, 438 U.S. at 124, 98 S.Ct. at 2659. See also Parranto Bros. v. New Brighton, 425 N.W.2d 585, 591-92 (Minn.Ct.App.1988). "In deciding whether a particular governmental action has effected a taking, this Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole." Penn Central, 438 U.S. at 130, 98 S.Ct. at 2662.

When reviewing land-use regulations that are reasonably related to promotion of the general welfare, it is uniformly established that "diminution in property value, standing alone, [cannot] establish a 'taking.' " Id. at 131, 98 S.Ct. at 2663. "Even if the appellants' ability to sell their property was limited during the pendency of the condemnation proceeding, ... [m]ere fluctuations in value during the process of governmental decisionmaking, absent extraordinary delay, are 'incidents of ownership. They cannot be considered as a 'taking' in the constitutional sense.' " Agins v. Tiburon, 447 U.S. 255, 263 n. 9, 100 S.Ct. 2138, 2143 n. 9, 65 L.Ed.2d 106 (1980).

In Kirby Forest Indus. v. United States, 467 U.S. 1, 104 S.Ct. 2187, 81 L.Ed.2d 1 (1984), the owner's land was targeted in 1967 by the National Park Service for a new national park. In 1974, "[a]fter seven years of desultory consideration of the matter," id. at 7, 104 S.Ct. at 2192, Congress finally passed a statute directing the Secretary of the Interior to acquire an area, including Kirby's tract, for a national preserve. In 1978, the government finally commenced a condemnation action, filed a notice of lis pendens, and publicized the condemnation proceeding. The government did not compensate the landowner for the value of its property...