State ex rel. Herman v. Mestas

• Decision Date: 25 May 1970
• Docket Number: No. 1,CA-CIV,1
• Citation: 469 P.2d 855,12 Ariz.App. 289
• Parties: STATE of Arizona, ex rel., Justin HERMAN, Director, Arizona Highway Department, Appellant, v. Pete MESTAS, a single man, Appellee. 940.
• Court: Arizona Court of Appeals

Page 855

469 P.2d 855

12 Ariz.App. 289

STATE of Arizona, ex rel., Justin HERMAN, Director, Arizona Highway Department, Appellant, v. Pete MESTAS, a single man, Appellee.

No. 1 CA-CIV 940.

Court of Appeals of Arizona, Division 1, Department B.

May 25, 1970.

Rehearing Denied June 22, 1970.

Gary K. Nelson, Atty. Gen., Phoenix, by James R. Redpath, Asst. Atty. Gen., for appellant.

Standage, Allen & Phelps, by Gove L. Allen, Mesa, for appellee.

JACOBSON, Acting Presiding Judge.

This appeal requires us to determine whether or not the language contained in a right-of-way contract is a bar to a subsequent action by the landowner in inverse eminent domain.

Plaintiff-appellee, Pete Mestas, brought an action in inverse eminent domain against the defendant-appellant, State of Arizona ex rel., Justin Herman, Director, Arizona Highway Department, seeking damages for an alleged change of grade and resulting impairment of access to plaintiff's business property located on U.S. Highway 66 in Seligman, Arizona. The matter was tried to a jury which returned a verdict in plaintiff's favor for the sum of $11,000.00. Judgment was entered for plaintiff and against defendant for this amount, together with interest at 6 per cent per annum from April 4, 1966, until paid, and costs in the sum of $141.70.

The following recitation of facts follow our oft-stated rule that the evidence will be viewed in a light most favorable to supporting the jury's verdict.

In late 1962 or early 1963, plaintiff acquired the ownership of a corner lot in Seligman, Arizona, fronting on U.S. Highway 66, at that time a two-lane highway. In August or September, 1963, plaintiff was approached by George Lauman, a representative of the Arizona Highway Department concerning the acquisition by defendant of twenty feet of plaintiff's property in order to widen U.S. 66 to a four-lane highway. The plaintiff's property at this time was unimproved, and he was offered the sum of $715 based upon the taking by defendant of 2,000 square feet of his property valued at the rate of 35 3/4 cents per foot, the same amount being offered to plaintiff's neighbors. Plaintiff at this time informed Lauman of his proposed plan of building a service station on this corner lot and declined the offer. Plaintiff's lot is located on the north side of U.S. 66 and the natural terrain in this area slopes from the north or rear of plaintiff's lot to the south where plaintiff's lot fronts on U.S. 66. Subsequent meetings took place between plaintiff and Lauman during which time plaintiff made inquiries concerning any grade changes which would result to U.S. 66 by reason of the proposed construction. Both plaintiff and Lauman testified that plaintiff was shown construction plans of the project. It is apparent, at least as between the plaintiff and representatives of the defendant to whom plaintiff talked, that these plans did not show the elevation of the gutter of the new U.S. 66 in relation to the property line of plaintiff after the twenty foot taking by defendant. Plaintiff testified that Lauman advised him the new widened highway would be six inches higher at his new property line than the existing highway. Lauman on the other hand testified that he informed plaintiff the new center of the new highway would be six inches lower than the existing highway. Since the new highway would be 'crowned', the gutter line of plaintiff's property would be considerably lower than six inches. During the subsequent discussions with Lauman, the new proposed right-of-way line as it affected plaintiff's property was established and plaintiff was told to place his gasoline pumps at least twelve feet back from this new line. In September, 1963, plaintiff commenced construction of his new service station in compliance with defendant's instructions concerning setback. In order to level his lot, and as he testified to compensate for the added height of the new highway, he placed between eight and ten inches of fill dirt on the front of his property. The construction was completed in December, 1963, and open for business on January 2, 1964. The completed station, insofar as pertinent here, consisted of a cement block service station with four gas pumps in front sitting on a cement slab, approximately four inches thick.

The evidence revealed that sometime between November and December of 1963, defendant caused a survey to be conducted to establish the grade of the new highway gutter at the point it touched plaintiff's property. A grade 'peg', a 4 by 4 block, was placed at this level on the property, which at the time of placement was approximately eight to ten inches below the natural level of the terrain. A member of the survey crew who placed this peg testified he called the peg to plaintiff's attention and advised him that this would be the new grade. Plaintiff denies he ever saw or was informed of this grade. Cross-examination of this witness developed uncertainty as to whether this grade stake should be the top of the proposed curb or bottom of the proposed gutter, a difference of approximately seven inches. It also appears that this grade peg was placed after plaintiff had poured the cement slabs for his gas pumps.

Subsequent to the building of the service station, numerous attempts were made by defendant to acquire the twenty foot right-of-way expansion for the original figure of $715.00. These contacts, after the plaintiff was advised that condemnation would have to be resorted to, culminated in the plaintiff executing a right-of-way contract on June 16, 1964 and receiving the sum of $715. Prior to execution of this contract and after construction of the service station, Lauman testified he told the plaintiff that in his opinion the proposed construction would leave him with 'good' access. He further testified that the appraisal upon which he based his offer to plaintiff did not include any damages for impairment of access. George Christenson, an engineer of the Arizona Highway Department in charge of field construction for this project, testified that he did not realize plaintiff would have any access problems until construction started.

The right-of-way contract signed by plaintiff contained the following clauses:

'In said instrument the consideration expressed, constitutes the full compensation due the grantor therein for the conveyance of the lands therein described and for the damages to any property of the grantor from which it was severed, or otherwise, due to the severance of said conveyed parcel or the manner of the construction of the improvement for which it was acquired as proposed by the State according to the maps and plans on file in the office of the Arizona State Highway Director in Phoenix, Arizona, except as stipulated hereinafter.

'Said conveyance and this instrument constitutes (sic) and contain the full agreement of the parties hereto pertaining to the lands acquired and damages to other land, if any, of the grantor therein.'

Construction of the widening process commenced in August, 1965, and terminated on April 4, 1966. After completion of the project, plaintiff's property was 27 inches higher than the level of U.S. 66, causing automobiles to 'high center' upon entering and leaving plaintiff's property.

Plaintiff testified that in his opinion this property had a value of $30,000.00 prior to the change of grade and a value of $12,000.00 after the change, resulting in damage to him in the sum of $18,000.00. Defendant's expert appraiser testified that in his opinion plaintiff's property had a value of $27,000.00 prior to the change in grade and a value of $18,000.00 after the change, resulting in damages to plaintiff in the sum of $9,000.00. Prior to the commencement of this action, plaintiff sold the property for $15,000.00, reserving in himself the cause of action for inverse eminent domain.

Defendant raises the following issues on appeal:

(1) Whether plaintiff must first prove elements entitling him to rescission of the contract of right-of-way before he could seek damages for inverse eminent domain.

(2) Whether the trial court erred in its instructions to the jury.

(3) Whether the evidence was sufficient to sustain the verdict.

(4) Whether plaintiff was entitled to proceed against the defendant without first complying with jurisdictional prerequisites for a contract action against the State of Arizona.

(5) Whether plaintiff is entitled to interest and costs against the State of Arizona.

Defendant's first contention, and to which it devotes the major portion of its opening brief, is based on the argument that since the right-of-way contract between the plaintiff and the defendant, by its express terms, sets the amount of damages to be paid by the defendant to the plaintiff, plaintiff must properly plead an action for the rescission or reformation of that contract before proceeding in an action for inverse eminent domain. As we understand defendant's argument, it contends that plaintiff cannot plead or prove an inverse eminent domain action until it has pled and proved a cause of action for rescission or reformation of the right-of-way contract, and having failed to plead such an action, the trial court erred in denying its motion for a directed verdict at the close of plaintiff's case. We do not believe such to be the case. Plaintiff properly pled, by his complaint, an action in inverse eminent domain. That an action in inverse eminent domain lies in Arizona for impairment of access is well settled. State v. Hillis, 93 Ariz. 200, 379 P.2d 750 (1963). Defendant's affirmative defense to such an action is its contract with the plaintiff.

As was stated in Sheridan Drive-In, Inc. v. State, 16 A.D.2d 400, 228 N.Y.S.2d 576 (1962):

"There is nothing either in the State statutes or decisions which requires a claimant in an appropriation case to first cause an 'Agreement of Adjustment' to be judicially cancelled as a condition precedent to the filing in the Court of...