Vaughn v. City of Muskogee

Decision Date10 February 2015
Docket Number111,065., Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2.
Citation2015 OK CIV APP 76,359 P.3d 192
PartiesDeary VAUGHN and Esther Vaughn d/b/a Broadway Apartments, a limited partnership, Petitioners/Appellees/Counter–Appellants, v. CITY OF MUSKOGEE, Respondent/Appellant/Counter–Appellee.
CourtUnited States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

David E. Anderson, Miami, Oklahoma, for Petitioners/Appellees/Counter–Appellants.

Betty Outhier Williams, Betty Outhier Williams Law Office, Muskogee, Oklahoma, for Respondent/Appellant/Counter–Appellee.

Opinion

JOHN F. FISCHER, Presiding Judge.

¶ 1 The City of Muskogee appeals the district court's judgment in this inverse condemnation proceeding finding in favor of Deary and Esther Vaughn and awarding them $1,952,682.00. The Vaughns appeal the district court's denial of their request for prejudgment interest and that part of the judgment granting title to their real property to the City. Because the issue of a condemnatory taking has not been resolved, the judgment appealed is reversed, and this case is remanded for further proceedings consistent with this Opinion.

BACKGROUND

¶ 2 In May 2005, the City completed the administrative process authorized by its municipal code to abate a nuisance and declared certain structures located on real property owned by the Vaughns to be a danger to the public. In September 2006, the City entered the Vaughns' property, demolished and removed those structures and any personal property located therein. On October 2, 2007, the Vaughns filed this inverse condemnation proceeding. In their petition, the Vaughns alleged that they were the owners of real property located in the City of Muskogee, and that the City entered their real property without permission and “demolished and destroyed certain structures thereon and their contents, plus fixtures, improvements and personal property thereon.” The Vaughns alleged that the actions of the City constituted a “taking” of their property for which they were entitled to just compensation pursuant to Article II, section 24 of the Oklahoma Constitution. Commissioners were appointed who determined that the value of the property at issue was $1,952,682.00. The Vaughns' inverse condemnation claim was tried to the district court on June 15, 2011.

¶ 3 At the beginning of the trial, the parties stipulated that the Vaughns were the owners of the property in question and that the City had demolished the structures and removed personal property located on the Vaughns' real property. The district court determined that because it was undisputed that the City had exercised “dominion and control” over the Vaughns' property, no additional evidence was necessary to establish that a compensatory taking had occurred. The court granted the Vaughns' motion for directed verdict but then allowed the parties to make offers of proof as to evidence they would have presented if the trial had proceeded. The City's offer would have shown that the demolition and removal of the Vaughns' structures was a proper exercise of the City's police power and that the Vaughns had received the required statutory notice prior to the demolition. The Vaughns' offer would have shown that the Vaughns did not know of the demolition until after it had been completed and that the City did not follow the proper procedures before removing the structures.

¶ 4 At the conclusion of the proffered evidence, the district court found in favor of the Vaughns. The formal judgment subsequently entered awarded the Vaughns $1,952,682.00, certain costs and interest, but denied their request for pre-judgment interest. The judgment also awarded title to the Vaughns' real property to the City on payment of the judgment. Both the City and the Vaughns appeal.

STANDARD OF REVIEW

¶ 5 The City appeals the procedure used by the district court at the trial of the Vaughns' inverse condemnation claim. The Vaughns appeal that part of the judgment awarding title to their real property to the City and denying their request for pre-judgment interest. Inverse condemnation proceedings “do not involve a tort and are not civil actions at law or suits in equity, but are special statutory proceedings.” Oxley v. City of Tulsa, By and Through Tulsa Airport Auth., 1989 OK 166, ¶ 11, 794 P.2d 742 (Opinion on Rehearing). Inverse condemnation proceedings are “strictly controlled by the constitution and statutes.” Carter v. City of Oklahoma City, 1993 OK 134, ¶ 12, 862 P.2d 77, 80 (footnote omitted). Statutory interpretation involving condemnation law raises legal issues which are subject to the de novo standard of review. State ex rel. Dep't of Transp. v. Little, 2004 OK 74, ¶ 10, 100 P.3d 707, 711. De novo review is “plenary, independent and nondeferential.” Id. (footnote omitted).

ANALYSIS

¶ 6 When private property is taken for a public purpose pursuant to the government's power of eminent domain, the property owner is entitled to “just compensation” for the property taken and damage to any portion of the property not taken. Okla. Const. art. 2, § 24 ; 27 O.S.2011 § 16. “The term property ... includes not only real estate held in fee, but also easements, personal property and every valuable interest which can be enjoyed and recognized as property.” Graham v. City of Duncan, 1960 OK 149, ¶ 18, 354 P.2d 458, 461. Where no physical taking of property has occurred, the property owner is still entitled to just compensation if the government's actions constitute such a “substantial interference” with the use of the property that a de facto taking of the owner's property occurs. Mattoon v. City of Norman, 1980 OK 137, ¶ 11, 617 P.2d 1347, 1349.1

¶ 7 If the government does not institute condemnation proceedings, the property owner can file an inverse condemnation proceeding to recover for the property taken. State Highway Comm'n v. Smith, 1930 OK 480, 146 Okla. 243, 293 P. 1002.2 “Inverse condemnation is ‘a shorthand description of the manner in which a landowner recovers just compensation for a taking of his property when condemnation proceedings have not been instituted.’ Stewart v. Rood, 1990 OK 69, n. 32, 796 P.2d 321, 335 n. 32, overruled on other grounds (citing Agins v. Tiburon, 447 U.S. 255, 258 n. 2, 100 S.Ct. 2138, 2140 n. 2, 65 L.Ed.2d 106 (1980) ). Statutory recognition of a property owner's right to file an inverse condemnation proceeding is found in Title 27 O.S.2011 § 12 of the eminent domain statutes: “Where an inverse condemnation proceeding is instituted by the owner of any right, title or interest in real property because of use of his property in any public program or project....” See also, 66 O.S.2011 § 53 (providing that in railroad condemnation proceedings commissioners may be appointed and just compensation determined “upon the application or petition of either party). However, a property owner is entitled to no compensation unless property is actually taken and/or damaged, or the condemning authority exercises such “dominion and control” over the owner's property as to constitute a de facto taking. State ex rel. Dep't of Highways v. Cook, 1975 OK 153, ¶ 7, 542 P.2d 1405, 1407.

¶ 8 Most of the relevant facts in this case are undisputed. The City has eminent domain authority by which it could have condemned all or part of the Vaughns' property. “Any ... city ... shall have power to condemn lands in like manner as railroad companies, for highways, rights-of-way, building sites, cemeteries, public parks and other public purposes.” 27 O.S.2011 § 5.3 However, the City did not institute condemnation proceedings before entering the Vaughns' real property. According to its offer of proof, a condemnation proceeding was unnecessary because the City was exercising its police power to abate a public nuisance when it demolished the structures located on the Vaughns' real property.4

¶ 9 One year after the City removed the structures, the Vaughns filed their petition alleging that the City's action constituted a taking. The Vaughns sought damages for the diminished value of their property. Commissioners were appointed and instructed “to view and appraise the property of the Plaintiffs described in their Petition and in the attached Exhibit ‘A’ incorporated herein and made a part hereof.” Exhibit A contains the legal description of the Vaughns' real property and was also attached to their petition.

¶ 10 The Commissioners filed their Report on February 11, 2008, stating that the just compensation due to the Vaughns was $1,952,682.00. The Vaughns filed an objection to the Report arguing, in substance, that (1) the Commissioners did not have the training and experience necessary to appraise property that is unique because it is located adjacent to the Inland Waterway System; (2) the Commissioners failed to consider the highest and best use for their property; and (3) the Commissioners failed to follow the district court's instructions. The objection also included a demand for jury trial. On April 15, 2008, the last day for filing a timely objection to the Commissioners' Report or a demand for a jury trial on the issue of damages, the Vaughns withdrew both their objection to the Commissioners' Report and demand for jury trial. The following day, the City filed its own objection to the Commissioners' Report and demand for jury trial on the issue of damages.

¶ 11 The City's fillings were the subject of an original action filed in the Oklahoma Supreme Court, Case No. 105,848. The Vaughns filed that action contending the City's objection and demand had been filed out of time and should not be considered. On June 9, 2008, the Supreme Court assumed jurisdiction and issued a writ of prohibition precluding the district court from considering the City's objection and demand for jury trial. The writ concludes by stating that it should not be “construed as an impediment to the district court's exercise of its power to resolve any controversy...

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