Phillips v. Montgomery Cnty.

• Decision Date: 18 August 2014
• Docket Number: No. M2012–00737–SC–R11–CV.,M2012–00737–SC–R11–CV.
• Parties: Mack PHILLIPS et al. v. MONTGOMERY COUNTY, Tennessee et al.
• Court: Tennessee Supreme Court

442 S.W.3d 233

Mack PHILLIPS et al.

v.MONTGOMERY COUNTY, Tennessee et al.

No. M2012–00737–SC–R11–CV.

Supreme Court of Tennessee, at Nashville.

Feb. 5, 2014 Session.¹

Aug. 18, 2014.

Stanley M. Ross and Steven T. Atkins, Clarksville, Tennessee, for the appellants, Mack Phillips and Leann Phillips.

Erik Fuqua, Austin Peay VII, and Dan L. Nolan, Jr., Clarksville, Tennessee, for the appellees, Montgomery County, Tennessee and Clarksville Montgomery County Regional Planning Commission.

OPINION

CORNELIA A. CLARK, J., delivered the opinion of the Court, in which GARY R. WADE, C.J., and JANICE M. HOLDER, WILLIAM C. KOCH, JR., and SHARON G. LEE, JJ., joined.

CORNELIA A. CLARK, J.

We granted permission to appeal to determine whether article I, section 21 of the Tennessee Constitution requires a government to compensate a property owner for a regulatory taking of private property. We hold that article I, section 21 encompasses regulatory takings in the same manner as the Takings Clause of the Fifth Amendment to the United States Constitution. Accordingly, we reverse the judgment of the Court of Appeals dismissing the property owners' complaint alleging a state constitutional regulatory takings claim and remand this matter to the trial court for further proceedings consistent with this decision.

I. Factual and Procedural History

This interlocutory appeal began as a claim for a regulatory taking under article I, section 21 of the Tennessee Constitution, for which compensation was sought pursuant to the inverse condemnation statute. Tenn.Code Ann. § 29–16–123 (2012).² Mack and Leann Phillips (the “Property Owners”) own approximately 15.62 acres in Montgomery County, Tennessee. The Property Owners submitted a preliminary subdivision plat to the Clarksville Montgomery County Regional Planning Commission (the “Planning Commission”) pursuant to the county zoning resolution.³ The Planning Commission held a public hearing on the matter on October 27, 2010, and there is no allegation that any member of the community opposed the plat. Nevertheless, the Planning Commission denied the proposed plat, citing the following reasons:

1. Under Article V, General Provisions, Item Three⁴ states: “All proposed subdivision of land shall conform to the applicable portion of the comprehensive plan for the Clarksville Montgomery County Regional Planning Commission.”

Under Article V, General Provisions, Item Five states: “The Planning Commission shall not approve the subdivision of land if from adequate investigations conducted by all agencies concerned it has been determined that in the best interest of the public the site is not suitable for platting and development purposes of the kind proposed.”

On December 20, 2010, the Property Owners filed a petition for a writ of certiorari in the Chancery Court for Montgomery County, seeking review of the Planning Commission's denial of their subdivision plat. This matter was still pending in the Chancery Court at the time the parties presented oral argument before this Court.

On October 24, 2011, the Property Owners filed this action against the Planning Commission and the County (collectively, the “County”) in the Circuit Court for Montgomery County, asserting a claim of a regulatory taking under article I, section 21 of the Tennessee Constitution,⁵ for which they sought compensation pursuant to the inverse condemnation statute. Tenn.Code Ann. § 29–16–123. In their complaint, the Property Owners alleged that the Planning Commission's denial of their plat was based solely upon the fact that their land lies in the path of a potential future extension of State Highway 374 and that there are no current plans to begin construction or condemnation proceedings for the highway extension.

The County filed a motion to dismiss under Tennessee Rule of Civil Procedure 12.02(6), arguing that the Property Owners' complaint failed to state a claim upon which relief could be granted because this Court had not yet recognized regulatory takings under the Tennessee Constitution. After a hearing on February 17, 2012, the trial court denied the County's motion to dismiss.

The County sought and obtained the trial court's permission to seek an interlocutory appeal pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure. The Court of Appeals granted the interlocutory appeal and reversed in part the trial court's judgment, holding that the regulatory takings claim should be dismissed because article I, section 21 had not been construed as encompassing regulatory takings. The Court of Appeals nonetheless held that the Property Owners had alleged facts sufficient to state a claim for inverse condemnation and remanded to the trial court for further proceedings on that claim. Phillips v. Montgomery Cnty., No. M2012–00737–COA–R9–CV, 2013 WL 3378952, at *3, *5 (Tenn.Ct.App. June 28, 2013).

The Property Owners filed a Tennessee Rule of Appellate Procedure 11 application to this Court, which we granted.

II. Standard of Review

A motion to dismiss based upon Tennessee Rule of Civil Procedure 12.02(6) requires a court to determine if the pleadings state a claim upon which relief may be granted. Tenn. R. Civ. P. 12.02(6) ; Cullum v. McCool, 432 S.W.3d 829, 832 (Tenn.2013). A Rule 12.02(6) motion challenges “only the legal sufficiency of the complaint, not the strength of the plaintiff's proof or evidence.” Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 426 (Tenn.2011). A defendant filing a motion to dismiss “admits the truth of all the relevant and material allegations contained in the complaint, but ... asserts that the allegations fail to establish a cause of action.” Id. (quoting Brown v. Tenn. Title Loans, Inc., 328 S.W.3d 850, 854 (Tenn.2010) ) (alteration in original) (internal quotation marks omitted). The resolution of such a motion is determined by examining the pleadings alone. Id.

In adjudicating such motions, courts “must construe the complaint liberally, presuming all factual allegations to be true and giving the plaintiff the benefit of all reasonable inferences.” Id. (quoting Tigg v. Pirelli Tire Corp., 232 S.W.3d 28, 31–32 (Tenn.2007) ); Cullum, 432 S.W.3d at 832. A motion to dismiss should be granted only if it appears that “ ‘the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief.’ ” Webb, 346 S.W.3d at 426 (quoting Crews v. Buckman Labs. Int'l, Inc., 78 S.W.3d 852, 857 (Tenn.2002) ). Tennessee jurisprudence on this issue “reflects the principle that this stage of the proceedings is particularly ill-suited for an evaluation of the likelihood of success on the merits....” Cullum, 432 S.W.3d at 832 (quoting Webb, 346 S.W.3d at 437 ). We review a lower court's decision on such a motion de novo without any presumption of correctness. Id.

III. Analysis

The Property Owners argue that the denial of their subdivision plat constitutes a regulatory taking for which article I, section 21 of the Tennessee Constitution requires compensation pursuant to the inverse condemnation statute, Tennessee Code Annotated section 29–16–123.⁶ They base their argument upon the plain language of the Tennessee Constitution, its similarity to the United States Constitution, and thus, the application of federal, as well as state, decisional law precedents.

The County asserts that this Court has not previously interpreted article I, section 21 as encompassing regulatory takings and should not do so now, even though the United States Supreme Court has interpreted the Takings Clause of the Fifth Amendment as contemplating such claims. The County asserts that, because article I, section 21 does not encompass regulatory takings, the Property Owners have failed to allege a governmental taking of property for which compensation may be sought pursuant to an inverse condemnation claim. Thus, the County asserts that the Court of Appeals should have dismissed the Property Owners' entire complaint rather than remanding the inverse condemnation claim to the trial court for further proceedings.⁷

A. Federal Regulatory Takings Law

The Fifth Amendment to the United States Constitution declares that no person shall “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” U.S. Const. amend. V. The latter clause, known as the “Takings” or “Compensation” clause, applies to the States through the Fourteenth Amendment. See Chicago, B. & Q. R.R. Co. v. City of Chicago, 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979 (1897). The Takings Clause does not prohibit the government from taking private property “ ‘but instead places a condition on the exercise of that power’ ” by requiring the government to pay just compensation for any property taken. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 536, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005) (quoting First English Evangelical Lutheran Church of Glendale v. Cnty. of Los Angeles, 482 U.S. 304, 314, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987) ). The requirement of “just compensation” prevents the government from “ ‘forcing some people alone to bear burdens which, in all fairness and justice, should be borne by the public as a whole.’ ” Tahoe–Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 535 U.S. 302, 320–21, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002) (quoting Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960) ); Palazzolo v. Rhode Island, 533 U.S. 606, 617–18, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001).

The concept of a regulatory taking first emerged almost a century ago in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415–16, 43 S.Ct. 158, 67 L.Ed. 322 (1922). While recognizing that government could not function if it had to pay every time regulations diminish land values, id. at 413, 43 S.Ct. 158, the Court held that a taking occurs “if regulation goes too far,” id. at 415, 43 S.Ct. 158. With this “storied but cryptic formulation,” the Court first declared...