Properties v. City of Avondale
| Decision Date | 29 June 2010 |
| Docket Number | 1 CA-CV 09-0301 |
| Parties | MCDOWELL RESIDENTIAL PROPERTIES, L.L.C., an Arizona limited liability company; 12 0TH AVENUE AND MCDOWELL INVESTMENTS, L.L.C., an Arizona limited liability company; and MARK DOERFLEIN, Plaintiffs/Appellants, v. CITY OF AVONDALE, Defendant/Appellee. |
| Court | Arizona Court of Appeals |
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Jennings Strouss & Salmon PLC
By Douglas G. Zimmerman
and Ronald D. Roach
Attorneys for Plaintiffs/Appellants
Phoenix
Gust Rosenfeld, PLC
By Wendy N. Weigand
and David A. Pennartz
and Andrew J. McGuire
Attorneys for Defendant/Appellee
NORRIS, Judge ¶1 The issue in this appeal is whether McDowell Residential Properties and the other appellants (collectively, "MRP") have standing to assert an inverse condemnation claim against the City of Avondale when, at the time of the alleged taking, it owned the property, but then sold it to a third party.
¶2 On October 31, 2006, MRP entered into an agreement to sell the property to P.B. Bell Commercial Acquisitions, LLC. Bell intended to construct an apartment complex on the property. On December 17, 2007, the Avondale City Council approved the final plat for Bell's apartment project, 1 but conditioned its approval on the dedication of an additional ten feet of the property to an existing 65 foot right-of-way on the south side of McDowell Road and the movement of a utility tower owned by Salt River Project located on the property (collectively, the "required dedications"). MRP's sale of the property to Bell closed on or about January 18, 2008.
¶3 Subsequently, MRP sued the City for "Inverse Condemnation-Unlawful Exaction" and contended the required dedications constituted a taking under Article 2, Section 17, ofthe Arizona Constitution, thereby entitling it to just compensation. In making this claim, MRP also alleged that under its sale agreement with Bell, it had assumed the costs for the City's "dedication, including the lands to be dedicated and the costs for relocating the SRP tower."
¶4 The City moved to dismiss MRP's complaint for failure to state a claim under Arizona Rule of Civil Procedure 12(b)(6). Because MRP no longer owned the property, a fact it had acknowledged in its complaint, the City argued MRP did not have standing to raise claims under Arizona Revised Statutes ("A.R.S.") sections 12-1134 (Supp. 2009) and 9-500.12 (2008). As we explain below, § 12-1134 allows a real property owner to recover "just compensation" under certain circumstances if a "land use law" reduces the fair market value of the property, see infra 55 17-19, and § 9-500.12 creates an administrative appeal process whereby a property owner may appeal certain municipal "actions relating to the owner's property," see infra 5 20. The City also essentially argued, even if MRP had standing to assert claims under these statutes, it had lost its right to do so because it had failed to exhaust its administrative remedies.
¶5 The superior court granted the City's motion. "Interpret[ing] the statutes literally," the court ruled MRP "lack[ed] standing to pursue [its] claims for relief," because it was not the owner of the property. The court did not address the City's exhaustion argument. MRP timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).
¶6 The dispositive issue here is whether the superior court properly dismissed MRP's state constitutional inverse condemnation claim for lack of standing. Although standing is a question of law we review de novo, Strawberry Water Co. v. Paulsen, 220 Ariz. 401, 405, 5 7, 207 P.3d 654, 658 (App. 2008), in reviewing a grant of a motion to dismiss a complaint, "we assume the facts alleged in the complaint to be true and give plaintiffs the benefit of all inferences arising from those facts." Capitol Indem. Corp. v. Fleming, 203 Ariz. 589, 590, 5 2, 58 P.3d 965, 966 (App. 2002). We will uphold the dismissal
only if the plaintiff is not entitled to relief "under any facts susceptible of proof under the claims stated." Id. (quoting Linder v. Brown & Herrick, 189 Ariz. 398, 402, 943 P.2d 758, 762 (App. 1997) (internal citation omitted).
¶7 Under the Arizona Constitution, property shall not be "taken or damaged" without just compensation. Ariz. Const. art.2, § 17. In inverse condemnation cases, Arizona law "has only recognized a 'taking' of property where the government either assumes actual possession of the property or places a legal restraint upon the property that substantially diminishes or destroys the owner's right to, and use and enjoyment of, the property." State v. Mabery Ranch, Co., 216 Ariz. 233, 242, 5 35, 165 P.3d 211, 220 (App. 2007) (quoting DUWA, Inc. v. City of Tempe, 203 Ariz. 181, 184, ¶ 16, 52 P.3d 213, 216 (App. 2002)). Our supreme court has described Article 2, Section 17, as "self-executing." Calmat of Ariz. v. State ex rel. Miller, 176 Ariz. 190, 192, 859 P.2d 1323, 1325 (1993) ().
¶8 In its complaint, consistent with these authorities, MRP plead a constitutional claim for inverse condemnation. It identified the property underlying the required dedications, described the City's actions it asserted gave rise to the alleged taking, and specified the legal basis for its claim-the taking of property "pursuant to Article 2, Section 17 of the Arizona Constitution." See Ariz. R. Civ. P. 8(a).
¶9 Having asserted a constitutional inverse condemnation claim, MRP argues it has standing to assert this claim despiteits subsequent sale of the property to Bell, and therefore the superior court should not have dismissed its claim. On this record, we agree.
¶10 In Arizona and other jurisdictions, it is well settled that in a direct condemnation action, the right of damages is personal to the owner at the time of the taking and does not pass with a deed to a subsequent owner absent express provisions to the contrary. Boyd v. Atchinson, T. & S. F. Ry., 39 Ariz. 154, 158-59, 4 P.2d 670, 671 (1931); see also Kindred v. Union Pac. R. Co., 225 U.S. 582, 596-97, 32 S. Ct. 780, 782, 56 L. Ed. 1216 (1912); see generally Nichols on Eminent Domain § 5.02[3], at 58-60 (Matthew Bender, 3rd Ed. 2006) (citing cases; if parcel of land is sold after taken/injured, right to compensation does not run with land but remains a personal claim in hands of vendor unless assigned by special assignment or provision in deed).
¶11 Although we have found no Arizona case applying this rule in an inverse condemnation action, other courts have applied this principle in such cases. See State ex rel. City of Blue Springs v. Nixon, 250 S.W.3d 365, 370 (Mo. 2008) (); see also Ex parte Simpson, ____ So.3d ____, 2009 WL 3335899 at *6 (Ala. 2009) (citingCity of Blue Springs); City of Los Angeles v. Ricards, 515 P. 2d 585, 587 (Cal. 1973) (); Brooks Inv. Co. v. City of Bloomington, 232 N.W.2d 911, 918 (Minn. 1975) (); Dep't of Forests, Parks & Recreation v. Town of Ludlow Zoning Bd., 869 A.2d 603, 607 (Vt. 2004) () (internal citation omitted).
¶12 In Brooks, the Minnesota Supreme Court described the rationale for applying this rule in inverse condemnation cases as "simple and logical." It explained:
When the government interferes with a person's right to possession and enjoyment of his property to such an extent so as to create a 'taking' in the constitutional sense, a right to compensation vests in the person owning the property at the time of such interference. This right has the status of property, is personal to theowner, and does not run with the land if he should subsequently transfer it without an assignment of such right. The theory is that where the government interferes with a person's property to such a substantial extent, the owner has lost a part of his interest in the real property. Substituted for the property loss is the right to compensation. When the original owner conveys what remains of the realty, he does not transfer the right to compensation for the portion he has lost without a separate assignment of such right. If the rule were otherwise, the original owner of damaged property would suffer a loss and the purchaser of that property would receive a windfall. Presumably, the purchaser will pay the seller only for the real property interest that the seller possesses at the time of the sale and can transfer.
¶13 We agree with the rationale given by the Minnesota Supreme Court for applying this rule in inverse condemnation cases. Applying the rule recognized by that court and the other authorities cited above, we hold MRP has standing to assert an inverse condemnation claim against the City.
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