Calmat of Arizona v. State ex rel. Miller

• Decision Date: 16 September 1993
• Docket Number: No. CV-92-0173-PR,CV-92-0173-PR
• Citation: 176 Ariz. 190,859 P.2d 1323
• Parties: CALMAT OF ARIZONA, an Arizona corporation, Plaintiff-Appellant, Cross-Appellee, v. STATE of Arizona ex rel. Charles L. MILLER, Director of Transportation, Defendant-Appellee, Cross-Appellant.
• Court: Arizona Supreme Court

Page 1323

859 P.2d 1323

176 Ariz. 190

CALMAT OF ARIZONA, an Arizona corporation, Plaintiff-Appellant, Cross-Appellee, v. STATE of Arizona ex rel. Charles L. MILLER, Director of Transportation, Defendant-Appellee, Cross-Appellant.

No. CV-92-0173-PR.

Supreme Court of Arizona, In Banc.

Sept. 16, 1993.

[176 Ariz. 191] Grant Woods, Atty. Gen. by Joe Acosta, Jr., Asst. Atty. Gen., Phoenix, for defendant/appellee/cross-appellant.

Snell & Wilmer by Lonnie J. Williams, Jr. and Jeffrey Messing, Phoenix, for plaintiff/appellant/cross-appellee.

OPINION

CORCORAN, Justice.

This case arises from two separate condemnation proceedings, consolidated for trial, between the State of Arizona and Calmat of Arizona. We granted the state's cross-petition for review under rule 23, Arizona Rules of Civil Appellate Procedure, regarding one of these proceedings. The relevant proceeding involves the state's appropriation of 2 parcels of Calmat's land near Interstate 10 (I-10) and 24th Street in Phoenix. The issue is:

Where physical entry precedes the filing of a summons in an inverse condemnation case, should the date of valuation be the date of the physical entry or the later date that the summons is filed and the legal proceedings instituted?

We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3), and A.R.S. § 12-120.24.

FACTUAL AND PROCEDURAL BACKGROUND

Calmat's inverse condemnation action stems from the state's efforts to acquire its property. The state, planning to widen an I-10 bridge, filed a condemnation action in Superior Court (C-557965) on October 11, 1985. In December 1985, the state posted a bond, obtained an order of immediate possession, and erected permanent structures on the property, but took no further action to bring the case to trial. On November 5, 1986, the condemnation action was dismissed for failure to prosecute. The state filed a motion to reinstate its condemnation action on August 7, 1987, and the motion was denied on September 11, 1987. No appeal was taken.

In late June 1987, Calmat filed an inverse condemnation action (CV 87-17569) seeking compensation for its property. Calmat argued, in a motion in limine, that the property should be valued as of the summons' date in the inverse condemnation action. Calmat relied on A.R.S. § 12-1123(A), which provides:

For the purpose of assessing compensation and damages, the right to compensation and damages shall be deemed to accrue at the date of the summons, and its actual value at that date shall be the measure of compensation and damages.

(Emphasis added.)

The state argued that § 12-1123(A) was a direct condemnation statute and did not apply to an inverse condemnation action. It therefore contended that the property should be valued as of the date the state entered the property. The trial court ruled that § 12-1123, a general condemnation statute, presumptively applied to inverse condemnation actions and set the valuation date as of June 25, 1987, the summons' date in the inverse condemnation action.

The jury's verdict awarded Calmat $1,646,560 for the parcel located along I-10 and $55,625 for the adjoining parcel located in the river bottom. The parties also stipulated that Calmat would receive $546,000 in damages for its lost ability to lease two commercial billboards.

In reviewing the form of judgment to be entered and the objections, the trial court sua sponte questioned the propriety of its own ruling requiring the property to be valued as of the June 1987 summons' date. The court stated:

Having now seen the evidence, and now having a better sense of the extent of the windfall [to Calmat], the Court has serious doubts about the correctness and the justness of that later [June 1987] valuation date. The Court will expect to consider this matter in more detail after full briefing and argument on a Motion for New Trial that includes this issue.

The court later granted the state's motion for a new trial. The court found that when it granted Calmat's request for the June 1987 valuation date, it had mistakenly assumed Calmat was waiving any claim to back interest or rent. The court determined that Calmat was entitled to interest pursuant to § 12-1123(B), which provides:

If an order is made letting the plaintiff into possession prior to final judgment, the compensation and damages awarded shall draw legal interest from the date ... the order [is entered by the court]....

The court explained that had it realized that Calmat was seeking not only the 1987 valuation date but also interest on the 1987 valuation retroactive to 1985, it would have denied Calmat's request because of the windfall Calmat would receive. The court ruled:

[T]he [June] 1987 valuation date as it was given to the jury was wrong for both parties. The State was stuck with an artificial and later valuation date in a rising and improving real estate market and Calmat was deprived of back interest or back rent for the time between possession and the artificial valuation date. These two wrongs do not make a right, or a fair trial.... The error as to the State cannot be corrected without the grant of a New Trial.

Calmat appealed. The court of appeals determined that Arizona courts have consistently held that Arizona's direct condemnation statutes apply to inverse condemnation actions. Calmat of Arizona v. State ex rel. Miller, 172 Ariz. 300, 308, 836 P.2d 1010, 1018 (App.1992). It therefore held that the trial court's initial ruling had correctly fixed the property's value as of June 1987, the summons' date in the inverse condemnation action, and that the trial court had erroneously granted the state's motion for a new trial on the valuation issue. 172 Ariz. at 308-09, 836 P.2d at 1018-19. We disagree and find the property's value should be fixed as of December 1985, the date of the state's original entry.

DISCUSSION

The Arizona Legislature has enacted a statutory scheme designed to facilitate direct condemnation actions by condemning agencies. A.R.S. §§ 12-1111, et seq. The legislature, however, has not specifically addressed inverse condemnation actions by property owners; that authority stems directly from Ariz. Const. art. 2, § 17, which provides that private property shall not be taken without just compensation. State v. Hollis, 93 Ariz. 200, 203, 379 P.2d 750, 751 (1963); Pima County v. Bilby, 87 Ariz. 366, 370, 351 P.2d 647, 649 (1960). This constitutional provision is self-executing. Mohave County v. Chamberlin, 78 Ariz. 422, 429-30, 281 P.2d 128, 133 (1955). An injured party must therefore be compensated, even though no specific statutory procedure governs this recovery. Chamberlin, 78 Ariz. at 429-30, 281 P.2d at 132-33.

We held in Desert Waters, Inc. v. Superior Court that a property owner does not have the constitutional right to have his or her compensation fixed as of a particular date, and that "the legislature may establish some convenient time, as of which the value of the property will be assessed and the amount of compensation fixed." 91 Ariz. 163, 173, 370 P.2d 652, 659 (1962). In a direct condemnation action, the legislature has expressly set the valuation date as of the summons' date. See A.R.S. § 12-1123(A). The court of appeals, relying predominately on Hollis and Salaz v. City of Tucson, 157 Ariz. 251, 756 P.2d 348 (App.1988), determined that the direct condemnation statutes applied to all aspects of an inverse condemnation action. Calmat, 172 Ariz. at 308-09, 836 P.2d at 1018-19. It therefore held that the valuation date in an inverse condemnation action should also be the summons' date. Calmat, 172 Ariz. at 309, 836 P.2d at 1019. In so holding, the court of appeals expanded our holding in Hollis and misplaced its reliance on Salaz.

In Hollis, we held that the statutory provision governing venue in a direct condemnation action also applied to an inverse condemnation action. 93 Ariz. at 203, 379 P.2d at 751. We stated:

That the landowner, in default of proper condemnation action by the State, must himself institute proceedings to secure compensation does not change the essential nature of the cause of action. It is still in the nature of a condemnation of a private property right by the State under the sovereign right of eminent domain.

93 Ariz. at 203, 379 P.2d at 751. Thus, we recognized the similarities between direct and inverse condemnation actions and determined that in the specific area of venue, which involves a purely procedural matter, the direct condemnation statute logically applied. Hollis, however, does not stand for the proposition that the direct condemnation statutes apply to all aspects of an inverse condemnation action.

Salaz, which relied on Hollis, held that a plaintiff is not entitled to attorneys' fees in an inverse condemnation action where the direct condemnation statute does not provide for such a recovery. 157 Ariz. at 253, 756 P.2d at 350. The court of appeals in Salaz expanded Hollis well beyond its holding when it stated in dicta that "[a]n inverse condemnation action is governed by the same statutes as a direct condemnation action." Salaz, 157 Ariz. at 253, 756 P.2d at 350.

We do not believe, however, that the legislature intended the wholesale application of direct condemnation statutes to inverse condemnation actions. To determine legislative intent, we first review the statute's language. Kriz v. Buckeye Petroleum Co., 145 Ariz. 374, 377, 701 P.2d 1182, 1185 (1985). The eminent domain valuation statute specifically addresses only direct condemnation actions and is silent regarding inverse condemnation actions. Thus, we must look beyond the statutory language and consider the statute's effects and consequences, as well as its spirit and purpose. Kriz, 145 Ariz. at 377, 701 P.2d at 1185.

Eminent domain is the sovereign right of the state to appropriate private land for the public good, subject to the constitutional limitation that the property owner is justly compensated. See City of Scottsdale v. Municipal Court, ...