Chenoweth v. City of New Brighton

• Citation: 655 N.W.2d 821
• Decision Date: 28 January 2003
• Docket Number: No. C0-02-945.,C0-02-945.
• Parties: CHENOWETH, et al., Petitioners, Appellants, v. CITY OF NEW BRIGHTON, Respondent.
• Court: Court of Appeals of Minnesota

655 N.W.2d 821

CHENOWETH, et al., Petitioners, Appellants, v. CITY OF NEW BRIGHTON, Respondent.

No. C0-02-945.

Court of Appeals of Minnesota.

January 28, 2003.

Eric J. Magnuson, Timothy J. Nolan, Peter Gray, Rider, Bennett, Egan & Arundel, L.L.P., Minneapolis, for appellants.

George C. Hoff, Kimberly B. Kozar, Hoff, Barry & Kuderer, P.A., Eden Prairie, for respondent.

Considered and decided by STONEBURNER, Presiding Judge, G. BARRY ANDERSON, Judge, and WRIGHT, Judge.

O P I N I O N

STONEBURNER, Judge.

Joseph and Vickie Chenoweth, and Creative Growth, Inc., a Minnesota corporation, d/b/a Chenoweth Floral and Greenhouses, appeal the denial of their petition for a writ of mandamus to compel the City of New Brighton to initiate condemnation proceedings to compensate them for damage to their property caused by city-facilitated private development on adjacent property. Because the city's involvement in the development does not constitute state action for purposes of stating a claim for inverse condemnation, we affirm.

FACTS

Appellants Joseph and Vickie Chenoweth, and Creative Growth, Inc., a Minnesota corporation, d/b/a Chenoweth Floral and Greenhouses (Chenoweths), are the owners of real property located at 563 Old Highway 8, New Brighton, Ramsey County, state of Minnesota (parcel 563). For over 25 years, Chenoweths maintained their residence and have operated a flower business, as a nonconforming use, on parcel 563, which has been zoned "industrial" since 1972. Office and retail space, showrooms, greenhouses and the Chenoweths' residence are located on parcel 563. Construction of a large warehouse on adjacent parcel 577 has significantly damaged Chenoweths' business and otherwise interfered with their use and enjoyment of their property.

The City of New Brighton (the city) was substantially involved in facilitating the development that has damaged Chenoweths' use and enjoyment of parcel 563. In its quest for development of the property surrounding and including parcel 563, the city established a development plan and tax-increment financing districts that include parcels 563 and 577, and entered into a Contract for Private Development (contract) with Industrial Equities Group, Inc., (IEG), for a three-phase development of the property surrounding parcel 563. Development of parcel 577 occurred pursuant to the third phase of development and required extensive assistance from the city to facilitate development. The city acquired the land through condemnation and sold it to IEG on very favorable terms. The city paid for certain site improvements and constructed necessary public improvements without assessing IEG for these costs. The contract between the city and IEG required construction of "an office/warehouse/manufacturing facility * * * containing not less than 40,000 square feet." Pursuant to the contract, IEG had to submit construction plans to the city for approval and the city was required to approve the plans if they conformed to the contract and "all applicable federal, state and local laws, ordinances, rules and regulations." Chenoweths had numerous communications with representatives of the city and IEG and objected to plans that would interfere with operation of their greenhouses. The city ultimately approved, over Chenoweths' objections, a plan for construction of a 30-foot-high, 200-foot-long warehouse, located approximately 15 feet to the south of Chenoweths' main greenhouse. The loading dock area of the warehouse is approximately 25 feet from Chenoweths' residence. Chenoweths requested that the city take their property as part of the development project, but the city declined despite contemplated future expansion onto parcel 563. The proposed warehouse was constructed and Chenoweths allege that the resulting blockage of sunlight and air circulation, use of artificial lights and other changes to parcel 577 have essentially destroyed their business and substantially interfered with their use and enjoyment of parcel 563. Chenoweths petitioned for a writ of mandamus to compel the city to initiate condemnation proceedings on parcel 563. In an initial hearing to determine whether Chenoweths' petition stated a viable claim for inverse condemnation against the city, the district court construed the city's motion to dismiss as a motion for summary judgment. The district court granted summary judgment to the city and dismissed Chenoweths' petition. The district court determined that the facts, as alleged in the petition, constituted a `taking,' noting that Chenoweths had "produced considerable evidence to show that the use of their property as a wholesale flower business has been substantially harmed." The district court concluded, however, that as a matter of law, Chenoweths had not established a "taking by the state." Additionally, the district court concluded that, because Chenoweths failed to show they were denied all reasonable economic use of their property, they had not established a taking sufficient to support their inverse condemnation claim. This appeal followed.

ISSUES

I. Was the private development of property adjacent to Chenoweths' property so entwined with government action as to constitute state action necessary to a claim of inverse condemnation?

II. Do Chenoweths' allegations of damage to their property constitute damage to a protected property interest?

ANALYSIS

Whether a taking has occurred is a question of law. Alevizos v. Metropolitan Airports Comm'n, 298 Minn. 471, 484, 216 N.W.2d 651, 660-61 (1974). On review, this court need not defer to the district court in reviewing questions of law because review is de novo. Fitger Brewing Co. v. State, 416 N.W.2d 200, 205 (Minn.App.1987), review denied (Minn. Feb. 23, 1988).

The Minnesota Constitution requires "[p]rivate property shall not be taken, destroyed or damaged for public use, without just compensation therefor first paid or secured." Minn. Const. art. I, § 13. The Takings Clause in the Minnesota Constitution ensures

that the government cannot force `some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.'

Zeman v. City of Minneapolis, 552 N.W.2d 548, 552 (Minn.1996) (citing Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960)). It is undisputed that the takings clause applies only to actions by the government that result in a compensable taking. The parties agree that a threshold issue in this case is whether the involvement of the city in this development project rises to the level of state action for purposes of the takings clause.

Case law establishes, and Chenoweths concede, that creation of the tax-increment financing districts and even more extensive interaction through funding, referrals, and regulation does not convert a private project into state action. See Brennan v. Minneapolis Soc'y for the Blind, Inc., 282 N.W.2d 515 (Minn.1979)

; Judd Supply Co. v. Merchants and Manufacturers Ins. Co., 448 N.W.2d 895, 899 (Minn.App.1989); State v. Wicklund, 589 N.W.2d 793, 802 (Minn.1999) (holding, in a case involving first amendment rights, that neither the presence of public financing alone nor public financing coupled with invitation to public to come onto property converts privately owned property into public property for purposes of state action). But Chenoweths assert that there is sufficient state action to support their claim for inverse condemnation because (1) the city retained sufficient direction and control over the development to make it liable for the resulting damage; (2) "but for" the city's substantial efforts, development of parcel 577 would not have occurred; and (3) the city approved a plan that violated Minn.Stat. § 561.01 (2002), Minnesota's private nuisance statute, despite ability to reject plans that did not conform to all applicable laws.

Chenoweths rely on three cases to support their claim that the city retained sufficient control over the project to make it liable. We conclude that, although the cases support the undisputed proposition that a municipality can be liable for a taking even though the work that causes damage to adjoining property is done on property not owned by the municipality and is performed by a private entity, the cases do not support Chenoweths' assertion that this particular city's involvement in this particular project rises to the level of state action.

Dickerman v. City of Duluth, 88 Minn. 288, 92 N.W. 1119 (1903), Maguire v. Village of Crosby, 178 Minn. 144, 226 N.W. 398 (1929), and Foss v. City of Montevideo, 178 Minn. 430, 227 N.W. 357 (1929) all involve the municipality's liability for damages caused by changes to a street grade. Dickerman holds that the 1896 amendment to article 1 § 13 of the state constitution abrogated the prior rule that an action will not lie against a municipality for consequential damages to property abutting a public street caused by change of an established grade. Dickerman, 88 Minn. at 293-94, 92 N.W. at 1120-21. The court also rejected the argument that the companies that did the work required by the grade change should be liable for any damages rather than the city.

This contention is also without merit. The city altered and raised the grade, and the companies built the viaduct, in conformity with the change. They acted for the city, and under its authority. Even if they could be held liable in damages, the primary liability for the injury is upon the city, and it is immaterial to plaintiff what the relations may be between it and the parties doing or directly causing the work to be done.

Id. 88 Minn. at 294, 92 N.W. 1119. Maguire involved the issue of whether the village could be liable for damages caused by a change of grade where the grade change was attributable to the state, but the village approved the construction plans. In concluding that the village was liable, the court depended on language in the applicable highway act...