Case Title: State ex rel. R.T.G., Inc. v. State

Citation: 2002-Ohio-6716

Docket Number: 20010748

State: ohio

Court: Ohio Supreme Court

Date: 2002-12-18T00:00:00Z

Document:
[Cite as State ex rel. R.T.G., Inc. v. State, 98 Ohio St.3d 1, 2002-Ohio-6716.] 
 
 
THE STATE EX REL. R.T.G., INC. ET AL., APPELLEES AND CROSS-APPELLANTS, 
v. THE STATE OF OHIO ET AL., APPELLANTS AND CROSS-APPELLEES. 
THE STATE EX REL. R.T.G., INC., APPELLANTS, v. THE STATE OF OHIO ET. AL., 
APPELLEES. 
[Cite as State ex rel. R.T.G., Inc. v. State, 98 Ohio St.3d 1, 2002-Ohio-6716.] 
Mineral rights — Regulatory takings — Six-year limitation period of R.C. 
2305.07 applicable to mandamus action to compel state to begin 
appropriation proceedings — In determining the relevant parcel 
for a takings analysis, pursuant to the Takings Clause of the Ohio 
Constitution, coal rights are severable and may be considered as a 
separate property interest, when. 
(Nos. 2001-0748 and 2001-0976 — Submitted March 27, 2002 — Decided 
December 18, 2002.) 
APPEALS AND CROSS-APPEAL from the Court of Appeals for Franklin County, No. 
98AP-1015, 141 Ohio App.3d 784, 2001-Ohio-4267, 753 N.E.2d 869. 
__________________ 
SYLLABUS OF THE COURT 
In determining the relevant parcel for a takings analysis, pursuant to the Takings 
Clause of the Ohio Constitution, Section 19, Article I, coal rights are 
severable and may be considered as a separate property interest if the 
property owner’s intent was to purchase the property solely for the 
purpose of mining the coal.  (Moore v. Indian Camp Coal Co. [1907], 75 
Ohio St. 493, 80 N.E. 6, applied.) 
__________________ 
LUNDBERG STRATTON, J. 
 
I. Introduction 
SUPREME COURT OF OHIO 
2 
{¶1} 
This is a regulatory-takings case.  Regulatory-takings issues are 
complex and difficult and have defied attempts to provide a simple solution.  
Even the United States Supreme Court “quite simply, has been unable to develop 
any ‘set formula’ for determining when ‘justice and fairness’ require that 
economic injuries caused by public action be compensated by the government, 
rather than remain disproportionately concentrated on a few persons.”  Penn Cent. 
Transp. Co. v. New York City (1978), 438 U.S. 104, 124, 98 S.Ct. 2646, 57 
L.Ed.2d 631. 
{¶2} 
R.T.G., Inc. (“RTG”), is a coal-mining company that began 
surface-mining land located in eastern Ohio in the 1980s.  This property consisted 
of tracts of land that RTG owned in fee and tracts of land in which RTG owned or 
leased coal rights only.  Ultimately, the state of Ohio determined that RTG’s 
surface mining of this property could adversely affect the aquifer that supplied 
water wells for the village of Pleasant City.  Therefore, pursuant to R.C. 
1513.073, the state designated 833 acres of property in Guernsey County as 
unsuitable for mining (“UFM”), including a substantial portion of RTG’s 
property. 
{¶3} 
RTG filed a complaint seeking a writ of mandamus to compel the 
state to appropriate the coal that the state’s UFM designation prevented RTG from 
mining.  The appellate court held that imposition of the UFM regulation resulted 
in a taking of the coal that lies under the tracts of land that are located within the 
UFM-designated area and in which RTG owned coal rights only.  However, the 
court held that the UFM designation did not result in a taking of the coal that lies 
under the tracts of land that RTG owned in fee.  We reverse the judgment of the 
court of appeals in part and hold that the UFM regulation resulted in a taking of 
RTG’s coal that lies under the tracts of land in which RTG owned only coal rights 
and that are located within the UFM-designated area, as well as the coal rights 
January Term, 2002 
3 
that lie under the tracts of land that RTG owned in fee and that are located in the 
UFM-designated area. 
{¶4} 
In a separate entry, the court of appeals denied RTG’s motion for 
attorney fees and costs.  We also reverse this judgment and hold that RTG is due 
reasonable attorney fees and costs. 
 
II. RTG’s Efforts to Mine Its Property 
{¶5} 
James Rossiter is the president, CEO, and controlling shareholder 
of RTG.  RTG is a coal-mining company.  In 1982, RTG began investigating the 
viability of surface-mining coal in Valley Township, Guernsey County, just to the 
northwest of the village.  RTG conducted extensive test drilling, which indicated 
the presence of high quality coal in this area.  Consequently, RTG began 
acquiring property in this area for the purpose of mining coal.  In all, RTG 
acquired approximately 500 acres of property through purchases in fee or 
purchases or leases of coal rights in sections 5, 7, and 8 of Valley Township.  
Approximately 200 acres of this property consisted of several tracts of property 
that RTG owned in fee (surface and coal rights).  Approximately 300 acres 
consisted of several tracts of property in which RTG leased or owned coal rights 
only.1  Rossiter testified that RTG spent over $250,000 to acquire these property 
rights, to test-drill, and to prepare the mine permit applications. 
{¶6} 
In 1984, RTG filed an application to mine 21.8 acres of the 
property that it had acquired.  Because the area subject to the permit application 
was within three-quarters of a mile of a well field that provided water to the 
village, the Ohio Department of Natural Resources, Division of Reclamation 
                                                          
 
1. 
The record is unclear regarding the exact amount of RTG’s property that is held in fee 
versus the amount of coal rights that RTG owns apart from ownership of the surface.  The record 
is also unclear regarding the exact amount of RTG’s property that is located outside the regulated 
area versus the exact amount of its property that is located inside the regulated area.  Accordingly, 
while the acreages that we cite throughout this opinion are substantially supported by the record 
and are sufficiently accurate to support the analysis that we perform, they are nonetheless 
estimates. 
SUPREME COURT OF OHIO 
4 
(“DOR”), required RTG to install monitoring wells between the area to be mined 
and the village’s water wells to determine whether that mining would interfere 
with the village’s water supply.  A pump test indicated that the monitoring wells 
were in a different aquifer from the village’s wells.  Accordingly, on May 20, 
1986, the state issued permit D-578, which allowed RTG to begin mining the 21.8 
acres. 
{¶7} 
After receiving the D-578 permit, Rossiter testified, RTG paid 
$100,000 to prepare the land for mining, including building a sediment pond, 
establishing drainage controls, removing and segregating topsoil, and building 
roads and ramps into the excavation. 
{¶8} 
On June 5, 1987, pursuant to permit D-578-1, the permit area was 
revised to include an additional 77.2 acres adjacent to the original permit area.  
The DOR found that “[g]round water supplies monitored up to the date of this 
written finding have not displayed any significant changes in the quality and 
quality [sic] to the Village of Pleasant City’s well field.” 
{¶9} 
On September 10, 1987, the aquifer that served the village’s water 
supply was designated a sole-source aquifer by the United States Environmental 
Protection Agency. 
{¶10} On September 21, 1988, pursuant to R.C. 1513.073, the village 
filed a petition with the DOR that sought to designate 833 acres in Valley 
Township that lie below 820 feet in elevation as UFM because mining in this area 
would adversely affect the aquifer that supplies the village’s wells. 
{¶11} On October 6, 1989, the chief of the DOR designated 
approximately 275 of the requested 833 acres as UFM.  The chief determined that 
mining in this area could reduce the long-term productivity of the village’s water 
wells.  The UFM designation affected property that RTG sought to mine.  RTG 
and the village appealed from the chief’s decision to the Ohio Reclamation Board 
of Review (“board”). 
January Term, 2002 
5 
{¶12} Before the appeal was decided, the area subject to the permit was 
increased by 8.4 acres.  The board found that “[b]ased on the monitoring data 
collected by the Division of Water it is not anticipated that the quantity of water 
to the Village of Pleasant City’s well field will be jeopardized by the proposed 
mining operation, application # D-0578-2.” 
{¶13} Ultimately, however, on June 16, 1994, the board issued an order 
that designated as UFM the entire 833 acres, which consisted of all lands in 
Sections 7 and 8 of Valley Township that lie below 820 feet.  The UFM 
designation prevented RTG from mining much of its property. 
 
III. RTG’s Mandamus Proceedings 
{¶14} On September 21, 1994, RTG filed a complaint in the Franklin 
County Court of Common Pleas seeking a writ of mandamus to compel the state 
to appropriate the coal located within the UFM-designated area.  RTG alleged that 
the UFM designation was a taking of its coal rights by regulation. 
{¶15} On April 22, 1996, the trial court dismissed RTG’s complaint.  On 
appeal, the Tenth District Court of Appeals reversed the trial court’s judgment 
and remanded the matter for a hearing and a determination whether a taking had 
occurred.  State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural Resources (Mar. 31, 
1997), Franklin App. No. 96APE05-662, 1997 WL 142363.  The state filed a 
discretionary appeal with this court, which was not allowed.  State ex rel. R.T.G., 
Inc. v. Ohio Dept. of Natural Resources (1997), 79 Ohio St.3d 1482, 683 N.E.2d 
787.  On remand to the trial court, RTG dismissed its complaint. 
{¶16} On August 6, 1998, RTG filed a complaint in the Tenth District 
Court of Appeals seeking a writ of mandamus to compel the state to initiate 
appropriation proceedings.  State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural 
Resources, 141 Ohio App.3d 784, 2001-Ohio-4267, 753 N.E.2d 869. 
SUPREME COURT OF OHIO 
6 
{¶17} The case was referred to a magistrate.  In March 2000, RTG 
amended its complaint to add James and Phyllis Rossiter and the Myron Fishel 
Scholarship Trust as additional relators.2 
{¶18} On April 13, 2000, the state filed a motion for judgment on the 
pleadings against the Rossiters and the trust, alleging that their claims were barred 
by the statute of limitations.  The magistrate denied the state’s motion, finding 
that a 21-year statute of limitations applied. 
{¶19} For purposes of applying the takings analysis, the magistrate 
divided RTG’s land into two parcels.  The first parcel consisted of the tracts of 
land that RTG owned in fee located within the UFM-designated area.  The second 
parcel consisted of the tracts of land in which RTG owned or leased only coal 
rights located within the UFM-designated area. 
{¶20} As to the property owned in fee, the magistrate applied the Penn 
Cent. takings test (applied when the regulation deprives the property of less than 
100 percent of its economic value).  The magistrate determined that the UFM 
designation did not result in a taking because, even though the designation 
prevented RTG from mining any coal, the surface estate still had value. 
{¶21} As to the coal rights, the magistrate applied the takings test of 
Lucas v. South Carolina Coastal Council (1992), 505 U.S. 1003, 112 S.Ct. 2886, 
120 L.Ed.2d 798 (applied when the regulation deprives the property of 100 
percent of its economic value).  The magistrate determined that the UFM 
designation did result in a taking because it deprived RTG of all value of its coal 
rights (i.e., the ability to excavate and sell the coal), but ultimately determined 
that no compensation was due because mining would constitute a nuisance.  See 
id. at 1027-1030, 112 S.Ct. 2886, 120 L.Ed.2d 798.  Accordingly, on October 30, 
                                                          
 
2. 
The Rossiters and the trust were the named lessees on several of the coal leases at issue 
herein but were not included as relators in RTG’s initial complaint. 
January Term, 2002 
7 
2000, the magistrate issued findings of fact and conclusions of law that denied the 
writ. 
{¶22} Both RTG and the state filed objections to the magistrate’s 
decision.  The appellate court held that the magistrate erred in applying a 21-year 
statute of limitations to the claims filed by the relators.  However, it held that even 
in applying the more appropriate four-year statute of limitations, R.C. 
2305.09(D), the relators’ claims were not time-barred. 
{¶23} On the remaining issues, the appellate court adopted the 
magistrate’s decision in its entirety except with regard to the magistrate’s 
conclusion that RTG’s mining constituted a nuisance.  The appellate court held 
that RTG’s mining was not a nuisance.  Thus, the appellate court issued a writ of 
mandamus that compelled the state to appropriate the tracts of land in which RTG 
owned coal rights only and that were located within the UFM-designated area. 
{¶24} On April 9, 2001, RTG moved the appellate court for an award of 
attorney fees and costs with regard to the mandamus action.  The appellate court 
denied the motion. 
{¶25} The state filed an appeal and RTG filed a cross-appeal of the 
judgment granting a writ of mandamus to compel the state to initiate 
appropriation proceedings.  RTG also filed a separate appeal of the judgment 
denying RTG attorney fees and costs.  We consolidated these appeals. 
{¶26} There are several issues for this court to address.  The first is 
whether the applicable statute of limitations expired before RTG moved to add the 
Rossiters and the trust as parties.  The second is whether the state’s UFM 
designation resulted in a regulatory taking of RTG’s property.  In order to answer 
this question, we must first determine the relevant parcel to which the takings 
analysis is applied.  The third is whether RTG can recover attorney fees and costs. 
 
IV. Statute of Limitations 
SUPREME COURT OF OHIO 
8 
{¶27} Appropriation cases “shall be governed by the law applicable in 
civil actions.”  R.C. 163.22.  Unless a particular statute contains a limitation, a 
civil action must be commenced within a period prescribed in R.C. 2305.03 to 
2305.22.  R.C. 2305.03.  Neither R.C. Chapter 163 nor Chapter 2731 (mandamus) 
contains a statute of limitations.  Therefore, we must examine R.C. 2305.03 to 
2305.22 to determine the most appropriate limitation to apply in this case. 
{¶28} This court has previously held that where a landowner sought to 
compel a railroad to commence an appropriation action for property that it had 
taken from the landowner pursuant to R.S. 3283, a predecessor of R.C. 4955.02, 
the appropriate statute of limitations was 21 years.  Lawrence RR. Co. v. O’Harra 
(1891), 48 Ohio St. 343, 28 N.E. 175, paragraph one of the syllabus; see, also, 
Fries v. Wheeling & Lake Erie Ry. Co. (1897), 56 Ohio St. 135, 46 N.E. 516.  In 
applying a 21-year limitation, this court stated, “The remedy in [an appropriation 
case] is a substitute for an action to recover the possession, and we fail to perceive 
why it should be barred in any shorter period than an action for such purpose; 
particularly, as it would seem that * * * a proceeding to compel condemnation is 
the only remedy of the landowner.”  O’Harra, 48 Ohio St. at 353, 28 N.E. 175. 
{¶29} We now disagree with the reasoning in O’Harra.  We do not 
believe that an appropriation case “is a substitute for an action to recover the 
possession” of real estate. O’Harra, 48 Ohio St. at 353, 28 N.E. 175.  An 
appropriation case seeks monetary compensation for real property that was taken 
from the property owner and for damages to the residue remaining with the 
property owner.  Actions to recover possession of real estate traditionally have 
had a longer statute of limitations than actions for damages, which simply seek 
monetary recovery.  Therefore, to the extent that O’Harra and Fries hold that a 
21-year statute of limitations (now R.C. 2305.04) applies to an action to compel 
appropriation proceedings, we overrule those cases. 
January Term, 2002 
9 
{¶30} We also disagree with the appellate court’s finding that the 
limitation in R.C. 2305.09(D) applies to the claims filed by the Rossiters and the 
trust.  R.C. 2305.09(D) provides a limitation “[f]or an injury to the rights of the 
plaintiff not arising on contract nor enumerated in sections 2305.10 to 2305.12[,] 
2305.14 and 1304.35 of the Revised Code.”  While none of the limitations listed 
in R.C. Chapter 2305 is a perfect fit for an action to compel appropriation 
proceedings, we find that the most appropriate statute of limitations is set out in 
R.C. 2305.07.  It provides that “an action upon a contract not in writing, express 
or implied, or upon a liability created by statute * * * shall be brought within six 
years after the cause thereof accrued.”  (Emphasis added.)  R.C. 2305.07. 
{¶31} A contract implied in fact is “a contract that the parties presumably 
intended, either by tacit understanding or by the assumption that it existed.”  
Black’s Law Dictionary (7th Ed.1999) 322.  In an appropriation action, although 
the amount may be in dispute, when the state takes property, it is impliedly 
contracting that it will pay the property owner just compensation. See, e.g., 
Yearsley v. W.A. Ross Constr. Co. (1940), 309 U.S. 18, 21, 60 S.Ct. 413, 84 L.Ed. 
554 (if a regulation is determined to be a taking, the government has impliedly 
promised to pay compensation).  Accordingly, we hold that the statute of 
limitations applicable to a mandamus action to compel the state to begin 
appropriation proceedings is the six-year limitation set out in R.C. 2305.07. 
{¶32} In this case, the cause of action accrued when the board issued its 
final decision on June 16, 1994, which designated RTG’s property as unsuitable 
for mining.  RTG filed its complaint on August 6, 1998.  RTG moved to amend 
its complaint to add the Rossiters and the trust on March 7, 2000.  Accordingly, 
the addition of the Rossiters and the trust was within six years of the date the 
action accrued.  Thus, we affirm the appellate court’s determination that the 
Rossiters’ and the trust’s claims are not barred by the statute of limitations, albeit 
for different reasons. 
SUPREME COURT OF OHIO 
10 
 
V. Regulatory-Takings Law 
{¶33} Both the United States and the Ohio Constitutions provide that 
private property shall not be taken for public use without just compensation.  Fifth 
and Fourteenth Amendments to the United States Constitution; Section 19, Article 
I, Ohio Constitution; see, also, R.C. Chapter 163.  The purpose of the Takings 
Clause is to prevent government from “forcing some people alone to bear public 
burdens which, in all fairness and justice, should be borne by the public as a 
whole.”  Armstrong v. United States (1960), 364 U.S. 40, 49, 80 S.Ct. 1563, 4 
L.Ed.2d 1554. 
{¶34} It was Justice Holmes who first recognized that “while property 
may be regulated to a certain extent, if regulation goes too far it will be 
recognized as a taking.”  Pennsylvania Coal Co. v. Mahon (1922), 260 U.S. 393, 
43 S.Ct. 158, 67 L.Ed. 322.  However, it was not until 1978 that the United States 
Supreme Court formulated a test to help define when a regulation “goes too far” 
and results in a compensable taking.  See Penn Cent. Transp. Co. v. New York 
City (1978), 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631.  “Penn Central does 
not supply mathematically precise variables, but instead provides important 
guideposts that lead to the ultimate determination whether just compensation is 
required.”  Palazzolo v. Rhode Island (2001), 533 U.S. 606, 634, 121 S.Ct. 2448, 
150 L.Ed.2d 592 (O’Connor, J., concurring).  The three criteria that Penn Cent. 
identified to be examined in regard to a regulatory taking are (1) the nature of the 
governmental regulation, (2) the economic impact of the regulation on the 
claimant, and (3) the extent to which the regulation interfered with distinct 
investment-backed expectations.  Penn Cent. at 124, 98 S.Ct. 2646, 57 L.Ed.2d 
631. 
{¶35} Penn Cent. provides the proper taking test when the regulation 
deprives the property of less than 100 percent of its economically beneficial use.  
Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency 
January Term, 2002 
11 
(2002), 535 U.S. 302, ___, 122 S.Ct. 1465, 1483, 152 L.Ed.2d 517, 545, see, also, 
Palazzolo v. Rhode Island, 533 U.S. at 617, 121 S.Ct. 2448, 150 L.Ed.2d 592. 
{¶36} In 1992, the Supreme Court again visited the regulatory-takings 
law in Lucas.  The court acknowledged the Penn Cent. ad hoc balancing test, but 
recognized two situations in which a regulation results in a taking “without case-
specific inquiry into the public interest advanced in support of the restraint.”  
Lucas, 505 U.S. at 1015, 112 S.Ct. 2886, 120 L.Ed.2d 798.  The first is where a 
regulation requires a physical invasion of property.  E.g., Loretto v. Teleprompter 
Manhattan CATV Corp. (1982), 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 
(New York law that required landlords to permit cable television companies to 
place cable facilities in their buildings constituted a taking even though the 
intrusion, one and one-half cubic feet, was minimal).  The second is “where 
regulation denies all economically beneficial or productive use of the land.”  
Lucas at 1015, 112 S.Ct. 2886, 120 L.Ed.2d 798.  However, even if a regulation 
results in categorical taking, no compensation is due if the claimant’s use of the 
land violates “restrictions that background principles of the State’s law of 
property and nuisance already place upon land ownership.”  Lucas, 505 U.S. at 
1029, 112 S.Ct. 2886, 120 L.Ed.2d 798. 
{¶37} The rule in Lucas, recognizing these categorical takings, applies 
only “when a regulation deprives an owner of ‘all economically beneficial uses’ 
of his land.”  (Emphasis in Lucas.)  Tahoe-Sierra Preservation Council, 535 U.S. 
302, ___, 122 S.Ct. 1465, 1483, 152 L.Ed.2d 517, 545, quoting Lucas, 505 U.S. at 
1019, 112 S.Ct. 2886, 120 L.Ed.2d 798. 
{¶38} Thus, under Lucas, if a regulation deprives the property of all of its 
economic value, there is no need to examine the policy behind the regulation, and 
a compensable taking results, unless the regulation merely prevents use of the 
property in a manner that creates a nuisance under state law. 
SUPREME COURT OF OHIO 
12 
{¶39} Accordingly, the United States Supreme Court has created a 
dichotomy in regulatory takings.  Lucas applies where the regulation has deprived 
the property of all economic value, and Penn Cent. applies where the regulation 
deprives the property of less than all economic value. 
 
A. Defining the Relevant Parcel, or The Denominator Problem 
{¶40} The regulatory-takings analysis requires a court to compare the 
value of the property that has been taken by the regulation against the value of the 
property that remains.  Keystone Bituminous Coal Assn. v. DeBenedictis (1987), 
480 U.S. 470, 497, 107 S.Ct. 1232, 94 L.Ed.2d 472.  “[O]ne of the critical 
questions is determining how to define the unit of property ‘whose value is to 
furnish the denominator of the fraction.’ ”  Id., quoting Michelman, Property, 
Utility, and Fairness: Comments on the Ethical Foundations of “Just 
Compensation” Law (1967), 80 Harv.L.Rev. 1165, 1192.  The denominator, or 
the “relevant parcel,” is the property interest that is subject to the regulation.  See 
The Relevant Parcel Issue (1993), C872 ALI-ABA 167.  The numerator of this 
fraction is the value of the property that has been taken due to the regulation.  Fee, 
Unearthing the Denominator in Regulatory Takings Claims (1994), 61 
U.Chi.L.Rev. 1535, 1536.  If this fraction equals one (i.e., the value of the 
property taken equals the value of the relevant parcel), then there has been a 
categorical taking as defined in Lucas and compensation is due unless the use of 
the property conflicts with background principles of the state’s law of property 
and nuisance.  Lucas, 505 U.S. at 1027, 1029, 112 S.Ct. 2886, 120 L.Ed.2d 798.  
But if the fraction equals anything less than one, then there has been no 
categorical taking, and the Penn Cent. ad hoc balancing test applies to determine 
whether a compensable taking has occurred. 
{¶41} Determining the relevant parcel of the takings fraction is critical 
because it usually determines the applicable takings test.  In other words, 
determining how broadly or narrowly the relevant parcel is defined will determine 
January Term, 2002 
13 
whether there has been a complete deprivation of the economic value of the 
property, or whether a taking of something less has occurred.  The more broadly 
the relevant parcel is defined, the less likely that a regulation will result in a 
complete economic deprivation and that the Penn Cent. test will apply; 
conversely, the more narrowly the relevant parcel is defined, the more likely that 
a regulation will result in a complete economic deprivation and that the Lucas test 
will apply. 
{¶42} Determination of the denominator of the takings fraction has been 
a persistent and difficult issue.  Palazzolo, 533 U.S. at 631, 121 S.Ct. 2448, 150 
L.Ed.2d 592.  The determination of the relevant parcel can include consideration 
of the vertical divisions of property (e.g., surface rights, air rights, and mineral 
rights) and horizontal divisions of property (e.g., surface divisions of property, 
such as can be shown on a map).  Fee, Unearthing the Denominator in Regulatory 
Takings Claims, 61 U.Chi.L.Rev. at 1537, fn. 7 and 8. 
 
1. The Appellate Court Erred in Defining the Relevant Parcel 
{¶43} In defining the relevant parcel, “[t]he effort should be to identify 
the parcel as realistically and fairly as possible, given the entire factual and 
regulatory environment.”  Ciampitti v. United States (1991), 22 Cl. of Ct. 310, 
319.  The appellate court determined that RTG’s property consisted of two 
relevant parcels for purposes of the takings analysis, one being all the tracts of 
land in which RTG owned only coal rights, and the other being the tracts of land 
that it owned in fee.  There is no analysis in the court’s decision as to how the 
court arrived at this conclusion.  For reasons made clear in our analysis below, we 
reject the appellate court’s determination that there are two relevant parcels in this 
case. 
 
2. The Relevant Parcel in the Vertical Context 
{¶44} RTG argues that we should define the relevant parcel in the 
vertical context as including only the coal rights that lie under RTG’s property to 
SUPREME COURT OF OHIO 
14 
the exclusion of any surface rights.  The state asserts that coal rights cannot be 
severed from surface rights for purposes of this analysis and thus the relevant 
parcel must include both surface and coal rights.  In this case, we agree with RTG. 
{¶45} In Penn Cent., the court specifically declined to sever property 
rights in the vertical context for purposes of a takings analysis.  In Penn Cent., a 
regulation prevented Penn Central from building a 55-story addition onto Grand 
Central Station.  Penn Central argued that the regulation deprived it of its use of 
the air rights over Grand Central Station.  The court declined to consider Penn 
Central’s air rights above Grand Central Station as a separate estate from the 
remainder of the property pursuant to the parcel-as-a-whole rule.  Penn Cent., 438 
U.S. at 130, 98 S.Ct. 2646, 57 L.Ed.2d 631. 
{¶46} Penn Central’s nonseverability rule was reaffirmed in Keystone 
Bituminous Coal Assn., 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472.  In 
Keystone, the Bituminous Mine Subsidence and Land Conservation Act, Pa. Stat. 
Ann., Title 52, Section 1406.1 et seq., required coal companies during subsurface 
mining to leave certain amounts of coal in place to prevent subsidence of the 
surface estate.  Keystone alleged that the statute resulted in a regulatory taking of 
the coal that was required to be left in place.  Applying the parcel-as-a-whole rule, 
the court held that the coal required to be left in place by the Subsidence Act did 
“not constitute a separate segment of property.”  Id. at 498, 107 S.Ct. 1232, 94 
L.Ed.2d 472. 
{¶47} However, subsequent to Penn Cent. and Keystone, some members 
of the court have expressed misgivings about the parcel-as-a-whole rule.  In 
Lucas, the court discussed the uncertainty in determining the denominator and the 
resulting inconsistent pronouncements by the court in that regard.  Lucas, 505 
U.S. at 1019, 112 S.Ct. 2886, 120 L.Ed.2d 798, fn. 8; see, also, Palazzolo, 533 
U.S. at 631, 121 S.Ct. 2448, 150 L.Ed.2d 592 (recognizing the discomfort of 
some justices with the parcel-as-a-whole rule).  The majority in Lucas suggested 
January Term, 2002 
15 
that the solution to the difficult issue of determining the denominator “may lie in 
how the owner’s reasonable expectations have been shaped by the State’s law of 
property—i.e., whether and to what degree the State’s law has accorded legal 
recognition and protection to the particular interest in land with respect to which 
the takings claimant alleges a diminution in (or elimination of) value.”   Lucas, 
505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798, fn. 7. 
{¶48} That discussion in Lucas was merely dicta.  However, property 
rights are defined by state law.  Webb’s Fabulous Pharmacies, Inc., v. Beckwith 
(1980), 449 U.S. 155, 161, 101 S.Ct. 446, 66 L.Ed.2d 358, citing Bd. of Regents 
of State Colleges v. Roth (1972), 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 
548.  Furthermore, states are free to interpret their constitutions independently of 
the United States Constitution so long as that interpretation affords, as a 
minimum, the same protection as its federal counterpart.  Arnold v. Cleveland 
(1993), 67 Ohio St.3d 35, 616 N.E.2d 163, at paragraph one of the syllabus. 
{¶49} We find that the criticism in Lucas regarding how to define the 
relevant parcel for the takings analysis is particularly relevant to coal rights in 
Ohio.  Unlike other individual rights within the bundle of rights that make up a 
complete property estate, mineral rights are recognized by Ohio law as separate 
property rights.  Moore v. Indian Camp Coal Co. (1907), 75 Ohio St. 493, 80 N.E. 
6.  Therefore, because the ownership of the coal is “both severable and of value in 
its own right, it is appropriate to consider the effect of regulation on that particular 
property interest.”  Keystone, 480 U.S. at 520, 107 S.Ct. 1232, 94 L.Ed.2d 472 
(Rehnquist, C.J., dissenting).  Accordingly, in determining the relevant parcel in a 
takings analysis pursuant to the Takings Clause of the Ohio Constitution, Section 
19, Article I, coal rights are severable and may be considered as a separate 
property interest if the property owner’s intent was to purchase the property solely 
for the purpose of mining the coal. 
SUPREME COURT OF OHIO 
16 
{¶50} It is undisputed that RTG is a company that surface-mines coal.  It 
is also undisputed that RTG acquired all the property at issue herein, whether in 
fee or through coal leases or purchases, for the sole purpose of surface-mining the 
coal from these properties.  The surface rights served as nothing more than an 
impediment to acquiring the coal.  Thus,  the right to mine coal “is what, and only 
what, this suit is all about.”  Whitney Benefits, Inc. v. United States 
(C.A.Fed.1991), 926 F.2d 1169, 1174.  Therefore, we hold that the relevant parcel 
for the takings analysis in the vertical context is the coal rights. 
 
3. The Relevant Parcel in the Horizontal Context 
{¶51} RTG urges us to define the relevant parcel in the horizontal context 
as the property that is located within the UFM-designated area.  The state urges 
the court to find that the relevant parcel is all 500 acres of RTG’s property 
pursuant to the parcel-as-a-whole rule.  See Penn Cent.  For the following 
reasons, we find that the relevant parcel in the horizontal context is limited to 
RTG’s property that is within the UFM-designated area. 
{¶52} Although contiguous tracts of property are typically considered as 
a single relevant parcel for purposes of a takings analysis, factual nuances may 
dictate a more flexible approach.  Loveladies Harbor, Inc. v. United States 
(C.A.Fed.1994), 28 F.3d 1171, 1181.  These factual nuances may include the 
claimant’s investment-backed expectations.  Machipongo Land & Coal Co. v. 
Pennsylvania (Pa.2002), 569 Pa. 3, 799 A.2d 751, 768-769. 
{¶53} Of the approximately 500 acres of contiguous property at issue 
herein approximately 100 of these acres are located outside the UFM-designated 
area.  The state contends that these 100 acres of property are part of the relevant 
parcel because this property includes coal rights. 
{¶54} RTG has submitted evidence that of the approximately 500 acres at 
issue herein, the state’s UFM designation prevented it from mining approximately 
218 “coal acres,” or 1.3 million tons of coal.  RTG has admitted that fringe 
January Term, 2002 
17 
amounts of coal exist outside the regulated area. However, RTG’s mining of the 
coal was dependent upon economies of scale.  Therefore, when the UFM 
designation prevented RTG from mining a majority of its coal reserves within the 
regulated area, it made mining those minimal reserves outside the UFM-
designated area economically impracticable. 
{¶55} Because there is no evidence that the coal outside the regulated 
area can be economically mined independent of the reserves in the regulated area, 
we hold that the relevant parcel in the horizontal context is limited on these facts 
to RTG’s coal that is located within the UFM-designated area. 
 
4. The Relevant Parcel 
{¶56} Merging our analyses regarding the relevant parcel in vertical and 
horizontal contexts, we hold that the relevant parcel in this case is the remaining 
coal located within the UFM-designated area. 
 
B. The UFM Designation Destroyed RTG’s Coal Rights 
{¶57} “What makes the right to mine coal valuable is that it can be 
exercised with profit.”  Pennsylvania Coal, 260 U.S. at 414, 43 S.Ct. 158, 67 
L.Ed. 322.  The UFM designation makes it impossible for RTG to mine coal, 
thereby depriving RTG from exercising its coal rights for profit.  Thus, imposition 
of the UFM designation deprived RTG’s coal rights of all economic value.  
Accordingly, applying Lucas, we hold that the UFM designation resulted in a 
categorical taking of RTG’s coal rights. 
 
C. Nuisance 
{¶58} A categorical taking under Lucas is compensable unless the 
proposed use of the property is a nuisance.  Lucas, 505 U.S. at 1029, 112 S.Ct. 
2886, 120 L.Ed.2d 798.  We find that RTG’s actions herein did not constitute a 
nuisance for the following reasons. 
{¶59} In examining the nuisance element of Lucas, the appellate court 
herein, citing Taylor v. Cincinnati (1944), 143 Ohio St. 426, 28 O.O. 369, 55 
SUPREME COURT OF OHIO 
18 
N.E.2d 724, paragraphs two and three of the syllabus, found that there are two 
types of nuisance—absolute and qualified.  An absolute nuisance is based on 
either intentional conduct or an abnormally dangerous condition that cannot be 
maintained without injury to property, no matter what care is taken.  A qualified 
nuisance is essentially a tort of negligent maintenance of a condition that creates 
an unreasonable risk of harm, ultimately resulting in injury. 
{¶60} The appellate court then concluded that coal mining is not an 
absolute nuisance, because it can be conducted safely when care is taken.  The 
court concluded that coal mining is also not a qualified nuisance, because coal 
mining itself is not nuisance, but rather a lawful activity subject to permit.  
Finally, the appellate court found that RTG had acted in a reasonable manner in 
mining the property and, until the UMF designation was issued, was allowed to 
mine the property pursuant to permits. 
{¶61} After examining the law and the record in this case, we adopt the 
appellate court’s analysis regarding the issue of nuisance in its entirety and 
consequently find that RTG’s mining of its property did not constitute a nuisance 
as a matter of law for purposes of the takings analysis.  Accordingly, the UFM 
designation resulted in a compensable taking of RTG’s coal. 
 
VI. Attorney Fees 
{¶62} RTG also sought an award of attorney fees and costs pursuant to 
R.C. 2335.39 and 2731.11, which was denied by the appellate court. 
{¶63} Pursuant to R.C. 2335.39, the state must pay attorney fees if (1) the 
state was not substantially justified in initiating the matter in controversy, (2) 
there are no special circumstances that make the award unjust, (3) the moving 
party is not the state but is a party to the legal action at issue, and (4) the moving 
party prevailed in the legal action. 
{¶64} The state argues that under R.C. 2335.39, fees are recoverable 
where the state initiates the legal action in question, as opposed to the state 
January Term, 2002 
19 
initiating the matter in controversy that resulted in the legal action.  See  Highway 
Valets, Inc. v. Ohio Dept. of Transp. (1987), 38 Ohio App.3d 45, 526 N.E.2d 112. 
{¶65} R.C. 2335.39(B)(2) states: 
{¶66} “Upon the filing of a motion under this section, the court shall 
review the request for the award of compensation for fees and determine whether 
the position of the state in initiating the matter in controversy was substantially 
justified, whether special circumstances make an award unjust, and whether the 
prevailing eligible party engaged in conduct during the course of the action or the 
appeal that unduly and unreasonably protracted the final resolution of the matter 
in controversy.”  (Emphasis added.) 
{¶67} We construe this language to permit fees where the state initiates 
either the conduct that gave rise to the litigation or initiates the litigation caused 
by the controversy.  Had the General Assembly intended to permit fees only 
where the state initiates the litigation, then it could have indicated that fees would 
be awarded only where the state initiated “litigation,” as opposed to the more 
general language of “matter in controversy” that was actually used. 
{¶68} Furthermore, to construe this language otherwise would lead to an 
absurd result in this case.  Clearly the purpose of R.C. 2335.39 is to protect 
citizens from unjustified state action.  If fees under R.C. 2335.39 were permitted 
only where the state initiated the legal action, the protection that R.C. 2335.39 
provides would not be available where landowners, such as RTG in the instant 
case, were compelled to initiate legal action to get relief from the state. 
{¶69} The state also argues that it was substantially justified in not filing 
a condemnation action against RTG’s property.  The state has the burden of 
proving that its position in initiating the matter in controversy was substantially 
justified.  R.C. 2335.39(B)(2).  Clearly the state has the authority to regulate 
mining pursuant to R.C. 1513.39.  However, in this case, the regulation resulted in 
a taking of RTG’s property.  While the state would have had no obligation to 
SUPREME COURT OF OHIO 
20 
compensate RTG if RTG’s mining would have been a nuisance, the state still had 
the obligation to file a condemnation action and have that issue determined by a 
court.  Thus, we find that the state has failed to show that it was substantially 
justified in failing to file a condemnation action in this case. 
{¶70} Because we find that the state was not substantially justified in 
failing to initiate appropriation proceedings, and RTG otherwise qualifies for 
attorney fees under R.C. 2335.39, we hold that the appellate court erred in 
denying RTG attorney fees and reverse the appellate court on that issue. 
{¶71} Pursuant to R.C. 2731.11, where a complaint seeking a writ of 
mandamus judgment is rendered in favor of the relator, the relator is entitled to 
costs.  Therefore, RTG is also entitled to costs. 
 
VII. Conclusion 
{¶72} We hold that the state’s UFM designation resulted in a categorical 
taking of all of RTG’s coal rights pursuant to Lucas.  Therefore, we reverse the 
judgment of the court of appeals and issue a writ of mandamus to compel the state 
of Ohio to appropriate the coal located within the UFM-designated area.  In the 
appropriations proceedings, the value of RTG’s coal within the UFM-designated 
area will be the sole issue to be determined. 
{¶73} We also reverse the judgment of the court of appeals that denied 
RTG attorney fees and costs, and remand the cause for the appellate court to 
determine RTG’s reasonable attorney fees and costs. 
Judgments affirmed in part, 
reversed in part, 
writ issued 
and cause remanded. 
 
F.E. SWEENEY and PFEIFER, JJ., concur. 
 
RESNICK, J., concurs in syllabus and judgment. 
January Term, 2002 
21 
 
MOYER, C.J., and DOUGLAS, J., dissent and would affirm the court of 
appeals in all respects. 
 
COOK, J., dissents. 
__________________ 
 
Porter, Wright, Morris & Arthur, L.L.P., Mark S. Stemm and J. Kenneth 
Thien, for R.T.G., Inc. et al. 
 
Betty D. Montgomery, Attorney General, Mark G. Bonaventura and John 
P. Bartley, Assistant Attorneys General, for the state of Ohio et al. 
 
R.S. Radford, for amicus curiae Pacific Legal Foundation in support of 
R.T.G., Inc. et al. 
 
Thomas P. Michael, for amicus curiae Ohio Coal Association in support of 
R.T.G., Inc. et al. 
 
Schottenstein, Zox & Dunn Co., L.P.A., and Kristopher M. Huelsman, for 
amicus curiae Ohio Environmental Council in support of the state of Ohio. 
 
Timothy J. Dowling, for amici curiae Pleasant City and Community 
Rights Counsel in support of the state of Ohio. 
__________________