Northern States Power v. Metropolitan, No. C4-03-67.

• Decision Date: 05 August 2004
• Docket Number: No. C4-03-67.
• Citation: 684 N.W.2d 485
• Parties: NORTHERN STATES POWER COMPANY, d/b/a Xcel Energy, Respondent, v. MINNESOTA METROPOLITAN COUNCIL, Appellant, Minnesota Department of Transportation, et al., Appellants.
• Court: Minnesota Supreme Court

684 N.W.2d 485

NORTHERN STATES POWER COMPANY, d/b/a Xcel Energy, Respondent, v. MINNESOTA METROPOLITAN COUNCIL, Appellant, Minnesota Department of Transportation, et al., Appellants.

No. C4-03-67.

Supreme Court of Minnesota.

August 5, 2004.

Timothy R. Thornton, Edward Stringer, Thomas J. Basting, Jr., Bryant D. Tchida, Briggs & Morgan, Minneapolis, MN, for Respondent.

Lewis A. Remele, Jr., Charles E. Lundberg, Andrew L. Marshall, Bassford Remele, P.A., Minneapolis, MN, for Appellant Minnesota Metropolitan Council.

Mike Hatch, Attorney General, David M. Jann, Stuart Alger, Assistant Attorneys General, St. Paul, MN, for Appellant Department of Transportation.

Thomas L. Grundhoefer, St. Paul, MN, Jay Heffern, Minneapolis City Attorney, Corey M. Conover, Assistant City Attorney, Minneapolis, MN, Manuel Cervantes, St. Paul City Attorney, Gerald T. Hendrickson, Deputy City Attorney, St. Paul, MN, for Amicus Curiae League of Minnesota Cities and City of St. Paul.

Heard, considered, and decided by the court en banc.

OPINION

PAGE, Justice.

This case arises out of the construction of the Hiawatha Light Rail Transit line (LRT), which will eventually connect downtown Minneapolis with the Minneapolis-St. Paul International Airport and the Mall of America.¹ The Minnesota Department of Transportation (MnDOT) is responsible for the line's construction. Upon completion, the line will be owned and operated by the Minnesota Metropolitan Council (Met Council).

On April 2, 2002, respondent Xcel Energy filed a verified petition for an alternative writ of mandamus in Hennepin County District Court seeking to compel MnDot and the Met Council to initiate inverse condemnation proceedings.² The petition alleges that the "LRT route * * * will block access necessary to maintain, repair, and service Xcel Energy's downtown electrical substation." Xcel claims that it has a property interest in reasonable access to the substation, which MnDOT and the Met Council unconstitutionally took by blocking access to the substation and "refus[ing] to enter into an enforceable access agreement resolving Xcel Energy's right of access."³ The petition further alleges that the failure of MnDOT and the Met Council to provide an affirmative guarantee of access caused Xcel to suffer a "substantial and measurable decline" in the value of its downtown substation. Xcel seeks compensation both for the claimed loss of access to the substation and for the claimed diminution in the substation's market value.

In lieu of filing an answer, MnDOT and the Met Council each moved to dismiss the petition pursuant to Minn. R. Civ. P. 12.02. Accompanying the motions was an affidavit from Edward Hunter, the project director for the Hiawatha Corridor Light Rail Transit Project. The affidavit is dated April 19, 2002. According to the affidavit, Xcel provided MnDOT "specific vehicle weights, crane lifting clearances, substation weights, and point-load requirements for future removal of transformers from the substation." In the affidavit, Hunter asserts that the LRT was designed to "allow the overhead structures of the light rail system to be taken down * * * to allow cranes to access the substation," and "so that the weights and loading requirements provided by Xcel could be accommodated without damage to the [LRT] system."

Xcel urged the district court not to consider Hunter's affidavit or, alternatively, to allow it additional opportunity to conduct discovery to respond to the affidavit. The district court did not grant Xcel additional time to conduct discovery.⁴ Subsequent to the Hunter affidavit, Xcel did, however, submit an affidavit dated May 15, 2002, from James Kucera, its project director for LRT. In his affidavit, Kucera stated, among other things, that the LRT would "prevent access from Fifth Street necessary in order to remove, repair, and replace" Xcel's transformers. Aside from stating that the overhead wires are too low to allow the cranes to access the substation, the Kucera affidavit did not otherwise describe how the LRT would block Xcel's access. Taking the Hunter and Kucera affidavits into consideration, the district court issued an order dated October 28, 2002, dismissing Xcel's petition. The district court found that MnDOT and the Met Council's actions did not amount to a taking of reasonable access to Xcel's substation and that, in any case, such a claim was premature and speculative. In dismissing the petition, the district court applied Minn. R. Civ. P. 12.02.

On appeal, the court of appeals concluded that the district court erred by considering the Hunter affidavit on a Rule 12 motion and therefore addressed the motions applying the Rule 56 standard for summary judgment. N.S.P. Co. v. Minnesota Metro. Council, 667 N.W.2d 501, 506 (Minn.App.2003). Applying the summary judgment standard, the court of appeals held that fact issues existed as to whether the LRT obstructed Xcel's access to its downtown substation and whether that obstruction rose to the level of a taking. Id. at 510. The court stated that, because the poles and tracks for LRT were in place, Xcel "suffered a real, substantial loss of access to its property" and therefore lacked an adequate legal remedy. Id. at 511. We granted MnDOT and the Met Council's petition for review and now reverse.

The LRT line runs east and west through downtown Minneapolis along Fifth Street. At the intersection of Fifth Street and the Nicollet Mall, the tracks for the LRT trains and the overhead catenary (power) lines that power the trains run in close proximity to Xcel's underground electrical substation. The substation consists of four four-story-tall electrical transformers, each weighing over 120 tons. The transformers lie in a vault underneath a plaza adjacent to Xcel's downtown Minneapolis offices. Eighty percent of the electrical power supplied to downtown Minneapolis passes through this substation.

Three of the transformers were installed in the 1960s and one was installed in the 1980s. At the time of Xcel's petition, the substation was operating at capacity. The four transformers are designed to be redundant, such that three would have to fail before the city experienced a disruption in its power supply. To date, none of the transformers have failed.

According to Xcel's petition, Xcel must have access to its downtown substation in order to repair or replace a transformer if one were to fail. A failed transformer cannot be repaired in place, but must be lifted out of the vault and repaired offsite. A temporary replacement transformer may be placed in the vault while the failed transformer is being repaired. Removal of a failed transformer requires the use of one or two 300-ton cranes that must be placed on Fifth Street. Placement of the cranes on Fifth Street will require the removal of the LRT trains' overhead catenary lines and support poles. It will also require the disruption of LRT service west of Nicollet Mall for the entire time the cranes are in place.⁵ Removal of the failed transformer and installation of a temporary replacement transformer take approximately 30 days. Once repaired, the same amount of time is required to remove the temporary replacement and reinstall the repaired transformer. Before placing its cranes on Fifth Street, Xcel must perform certain site preparation work. That work includes removal of the plaza's surface above the substation, removal of large concrete panels located above the transformers, and preparation of the failed transformer for removal. All of this preparation work would be performed on Xcel's property and would not require the removal of the catenary lines or placement of cranes on Fifth Street. The Hunter affidavit asserts, and nothing in the record contradicts, the fact that "[u]nder the shortest of the time periods provided by [Xcel], [MnDOT or the Met Council] could remove the overhead catenary in the area adjacent to the Fifth Street substation before [Xcel] was ready to move its crane into the area."

Xcel operates its substation and electrical grid pursuant to a franchise agreement with the City of Minneapolis. Under the agreement, Xcel may "construct, install, enlarge, operate, repair and maintain in, on, over, under and across the streets, alleys and public grounds of the City, an electric distribution system and electric transmission lines, including * * * transformers." Mpls. Ord. 93-Or-180, § 1. The agreement goes on to state that Xcel's use of the streets "shall be subject to reasonable regulations by the City Council and shall be consistent with the use of the streets for proper street purposes by the public." Id. According to the affidavit submitted by Deputy City Engineer Brian Lokkesmoe, the City of Minneapolis also requires that Xcel obtain an obstruction permit to divert traffic on Fifth Street, pay a fee for the obstruction of Fifth Street, and pay for any street restoration costs necessitated by Xcel's work in removing its transformers. See also Mpls. Ords. §§ 429, 430.⁶ The affidavit indicates that Xcel will have to follow the same permitting procedure when the LRT is operational. The record does not specify what, if any, permitting procedure Xcel would have to follow with the Met Council to obtain permission to place its cranes on that portion of the street on which the LRT's tracks lie. However, in its mandamus petition, Xcel alleges that it had been negotiating with MnDOT and the Met Council for over a year to obtain "assured access" to its downtown substation. The petition also alleges that those negotiations, up to the time of the petition, failed to produce an agreement.

I.

As a threshold matter, we must determine whether the district court erred when it considered the Hunter and Kucera affidavits in ruling on MnDOT and the Met Council's motions to dismiss. A Rule 12.02 motion to dismiss for failure to state a claim upon which relief can be granted will be denied "if it is possible on any evidence which might...