NO. 93-046

IN THE SUPREME COURT OF THE STATE OF MONTANA

1993

DON KUDLOFF,

Plaintiff and Appellant,

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CITY OF BILLINGS, a political ~;;;::‘.q ,~

subdivision of the State of Montana; L.\

and BILLIE KRENZLER, MARION DOZIER,

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BETTY MILLER, DAN FARMER, JOHN

MICHUNOVICH, CHARLES TOOLEY, OWEN

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NEITER, RALPH STONE, RICHARD E. CLARK,

and NORM KOLPIN, all members of the

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City Council for the City of Billings,

Montana; and JAMES VAN ARSDALE, Mayor

of the City of Billings, Montana,

Defendants and Respondents.

APPEAL FROM: District Court of the Thirteenth Judicial District,

In and for the County of Yellowstone,

The Honorable Maurice R. Colberg, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

;z",;;;,L. Stephens, R. L. Stephens, P.C., Billings,

For Respondents:

Leo S. Ward, Browning, Kaleczyc, Berry &

Hoven, Helena, Montana

Filed:

Submitted on Briefs: August 26, 1993

Decided: September 21, 1993
Justice James C. Nelson delivered the Opinion of the Court.

This is an appeal from two Memoranda and Orders of the

Thirteenth Judicial District Court granting summary judgment to the

defendants. We affirm.

We restate the issues on appeal as follows:

1 . Did the plaintiff have standing to maintain a "wrongful

annexation" action after he sold the real property at issue?

2. Has there been a violation of plaintiff's constitutional

rights which would support a 42 U.S.C. 5 1983 action?

The plaintiff, Don Kudloff (Kudloff), filed a complaint on

March 2, 1990, alleging that the City and its city council members

and mayor annexed his real property in violation of state statute.

9;

Kudloff also alleged that, in the process of annexing his property,

the defendants violated his constitutional rights, giving rise to

a claim under 42 U.S.C. 5 1983 (5 1983 claim). In his prayer for

relief, Kudloff requested that the annexation be set aside and

sought his attorney's fees and costs and $50,000 for emotional and

physical pain and suffering.

The defendants denied the allegations of Kudloff's complaint

and asserted a number of affirmative defenses, including immunity.

After preliminary discovery, the City filed a motion for summary

judgment based on its asserted immunity defense. In addition, the

City argued that the mayor and city council members were entitled

to absolute legislative immunity or, alternatively, qualified good

faith immunity. Kudloff also filed a motion for summary judgment,

alleging that immunity was not available for a § 1983 claim and

2
that he was entitled to judgment as a matter of law under the facts

of the case.

After some further discovery, briefing, and oral argument, the

District Court entered its Memorandum and Order on December 13,

1991, granting summary judgment to the city council members and the

mayor, on all counts, on the basis of immunity. The District Court

also granted summary judgment to the City on Kudloff's § 1983

claim, but denied summary judgment to the City on the issue of the

legitimacy of its annexation of Kudloff's property, treating

Kudloff's complaint as a petition for court review under § 7-Z4741, RCA. Kudloff's motion for summary judgment was denied.

Thereafter, some additional discovery was conducted. On June

2, 1992, the City filed a second motion for summary judgment. The

basis for this motion was that Kudloff had sold the real property

and no longer had standing to maintain the lawsuit. On November

17, 1992, the District Court granted the City's motion for summary

judgment, finding that Kudloff had no standing to attack the

validity of the annexation procedures because he had sold the real

property which was the subject of the pending action. From these

summary judgments, Kudloff appeals.

Our standard in reviewing a grant of summary judgment is the

same as that initially utilized by the district court. McCracken

v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894.

Summary judgment is proper when there is no genuine issue as to any

material fact and the moving party is entitled to a judgment as a

matter of law. Rule 56(c), M.R.Civ.P.

3
I- DISMISSAL OF WRONGFUL ANNEXATION" CLAIM

In Kudloff's complaint, he alleged that he owned the real

property which the City annexed, and he requested that the

annexation be set aside as void. A party vested with legal title

is the real party in interest in a dispute involving real property.

Blakely v. Kelstrup (1985), 218 Mont. 304, 306, 708 P.2d 253, 255.

Clearly, at the time Kudloff filed his complaint, he was the real

party in interest entitled to bring the action under Rule 17(a),

M.R.Civ.P., which states that Il[e]very action shall be prosecuted

in the name of the real party in interest."

After the commencement of this action, Kudloff sold the

subject real property. On June 24, 1992, in his response to the

City's second motion for summary judgment, Kudloff stated that he

"[did] not seek a judgment or injunction on annexing the property

and clearly, based upon the relinquishment of the property, that is

outside his scope of available remedies." Rather, Kudloff claimed

that he sold the real property in order to mitigate his damages,

and expressed his intent to seek damages for losses he alleged

resulted from the "forced sale" of the real property,

However, Kudloff at no time amended his complaint to reflect

his new intentions. In this case, an amended complaint was

required when the theory of Kudloff's case and his alleged damages

changed. The purpose of a complaint, and subsequent amendments, is

to provide adequate notice to the defendants of the nature of the

actions they must defend against and the remedy which is sought.

Here, more than two years after the original complaint was filed,

4
Kudloff changed entirely the nature of the action without providing

the required notice to the defendants. Therefore, the District

Court properly dismissed the "wrongful annexation" action.

II - ALLEGED CONSTITUTIONAL VIOLATIONS

Kudloff also appeals the District Court's dismissal of his 5

1983 claim. In order to support a claim under 42 U.S.C. 5 1983, a

constitutional right must have been violated by a person acting

under color of state law. A threshold requirement is that a

requisite violation has occurred. In this case, Kudloff alleges

that, in the process of annexing his property, the defendants

violated a number of his constitutional rights. We will address

each in turn.

A. "TAKING" WITHOUT COMPENSATION

Kudloff alleges that the annexation of his real property

represented an unconstitutional taking because the extension of

services under 9 7-2-4732, MCA, was impractical and unfeasible, and

because no cost-benefit analysis was performed. However, a

regulatory taking of property by a municipality is allowed even if

the value of that property and its usefulness is diminished. Penn

Central Transp. Co. v. New York City (1978), 438 U.S. 104, 131, 98

S.Ct. 2646, 2662-63, 57 L.Ed.Zd 631, 652-53. It is only when the

owner of the real property has been called upon to sacrifice all

economically beneficial use of that property in the name of the

common good that a constitutionally-protected taking has occurred.

Lucas v. South Carolina Coastal Council (1992), - U.S. -I -...,,-I

112 S.Ct. 2886, 2895, 120 L.Ed.Zd 798, 815.

5
I n Penn Central, New York City enacted a Landmarks

Preservation Law (Landmarks Law) to protect historic landmarks and

neighborhoods from destruction or alteration. Pursuant to this

Landmarks Law, the Landmark Preservation Commission (Commission)

designated the Grand Central Terminal (Terminal), which was owned

by Penn Central Transportation Company (Penn Central), a landmark.

Thereafter, Penn Central entered into a lease with UGP Properties

(UGP), allowing UGP to construct a multistory office building over

the Terminal. Pursuant to the Landmarks Law, the parties submitted

their building plan to the Commission, which rejected the plan for

the building as destructive of the Terminal's historic and

aesthetic features. Penn Central, 438 U.S. at 109-17. Penn

Central and UGP filed suit, claiming that the application of the

Landmarks Law had "taken" their property without just compensation.

The trial court granted injunctive relief to the plaintiffs. That

judgment was reversed by the New York Supreme Court, Appellate

Division, which held that there was no taking because there was no

proof that the regulation deprived the plaintiffs of all reasonable

beneficial use of the property. Penn Central, 438 U.S. at 119.

The New York Court of Appeals affirmed, summarily rejecting the

claim that the Landmarks Law had taken property without just

compensation. Penn Central, 438 U.S. at 120-21. On certiorari,

the United States Supreme Court stated that land-use regulations

which adversely affect recognized real property interests, such as

zoning regulations, are commonly upheld. Penn Central, 438 U.S. at

125. The Supreme Court further stated that any interference with

6
the property at issue was not of such a magnitude that compensation

was required to sustain it. Penn Central, 438 U.S. at 137. The

Supreme Court, in affirming the appellate courts, held that the

restrictions imposed were substantially related to the promotion of

the general welfare while permitting reasonable beneficial use of

the Terminal to the plaintiffs. Penn Central, 438 U.S. at 138.

In Lucas, the petitioner purchased two residential lots on a

South Carolina barrier island, intending to build single-family

homes, in 1986. In 1988, the South Carolina legislature enacted

the Beachfront Management Act (Act), which barred Lucas from

building any permanent structures on his land. Lucas, -U.S. at

-, 112 S.Ct. at 2889. He filed suit in the South Carolina Court

of Common Pleas, contending that the Act effected a taking of his

property without just compensation. The court agreed, finding that

the Act rendered Lucas' property valueless. The Supreme Court of

South Carolina reversed, holding that, because the Act was designed

to prevent serious public harm, no compensation was owed to Lucas.

Lucas, _ U.S. at __, 112 S.Ct. at 2890. On certiorari, the

United States Supreme Court stated that "while property may be

regulated to a certain extent, if regulation goes too far it will

be recognized as a taking." Lucas, _ U.S. at _, 112 S.Ct. at

2893. Here, Lucas was required to sacrifice & economically

beneficial uses in the name of the common good by leaving the

property in its natural state. Lucas, -U.S. at-, 112 s.ct.

at 2895. The state is required to compensate a property owner only

if it seeks to sustain a regulation that deprives the property
owner of all economically beneficial uses of his property. That

rule, however, does not apply if the use or interest the state is

attempting to regulate was not part of the owner's original estate

or title. Under the latter circumstances, the state is not

required to compensate the property owner. Lucas, -U.S. at-,

112 S.Ct. at 2899. According to that case:

[a]ny limitation so severe cannot be newly legislated or

decreed (without compensation)., but must inhere in the

title itself, in the restrrctions that background

principles of the State's law of property and nuisance

already place upon land ownership. . . . It seems

unlikely that common-law principles would have prevented

the erection of any habitable or productive improvements

on petitioner's land: they rarely support prohibition of

the essential use of land. . . The question, however, is

one of state law to be dealt with on remand.

Lucas, _ U.S. at __, 112 S.Ct. at 2900-01. On that basis, the

Supreme Court reversed and remanded the case.

The case at hand is similar to Penn Central in that the

annexation of the property may have diminished the value and

usefulness of the property. However, any effect the annexation had

on the value of the property does not rise to the level of Lucas

which would require compensation. As stated in Lucas, "the

property owner necessarily expects the uses of his property to be

restricted, from time to time, by various measures newly enacted by

the State in legitimate exercise of its police powers. . . .I'

Lucas, - U.S. at-, 112 S.Ct. at 2899.

In 1974, Kudloff had been granted a special exception allowing

ski-related uses of the real property. The record in this case

indicates that this special exception remained effective after the

City annexed Kudloff's property. In addition, there is no evidence

8
in the record that Kudloff ever requested a zoning change or

special variance for ski-related uses after the annexation took

place. Kudloff is hard-pressed to argue that a "taking" occurred

when he never attempted to ascertain whether he could use the

property for ski-related purposes. For the above reasons,

Kudloff's allegation that an unconstitutional taking has occurred

is without merit.

B. FAILURE TO GRANT EXEMPTION

The annexation by the City was conducted under sg 7-2-4501, et

seq., MCA, which allow a city to annex wholly surrounded land.

Kudloff claims that his constitutional rights were violated when

the defendants annexed his real property without granting him a

statutory exemption under this part. Kudloff bases this assertion

on § 7-2-4503, MCA, which states:

Land shall not be annexed under this part whenever the

land is used: . . . (2) for the purpose of maintaining or

operating . . . a place for public or private outdoor

entertainment or any purpose incident thereto.

Fatal to Kudloff's argument is the fact that Kudloff was not

"maintaining or operating" a ski area or any place of public or

private outdoor entertainment. Over a period of years, Kudloff had

taken some steps to develop a ski area; however, he was far from

completing his project, and was certainly not maintaining or

operating such an area. Therefore, this statutory exemption is not

available to Kudloff, and his claim of a constitutional violation

based upon this statute is also without merit.

c. INCREASED TAX BURDEN

Lastly, Kudloff claims that the increased tax burden imposed

9
by the annexation of his real property violated his constitutional

rights. Montana law is clear that the levying of future taxes

after an annexation does not constitute a taking of property.

Harrison v. City of Missoula (1965), 146 Mont. 420, 425, 407 P.2d

703, 706. Kudloff's claim of a constitutional violation on this

basis is without merit.

Because there has been no violation of any of Kudloff's

constitutional rights by any of the defendants, the District Court

properly dismissed the § 1983 claims. We do not need to address

the District Courtrs holding that the doctrine of immunity barred

these claims. This Court will uphold the result reached by the

district court if its decision was correct, regardless of the

reasons given by the district court for its conclusion. Shimsky v.

Valley Credit Union (1984), 208 Mont. 186, 190, 676 P.2d 1308,

1310.

Affirmed.
September 21, 1993

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following

named:

Robert L. Stephens, Jr.

R.L. Stephens, P.C.

P.O. Box 1438

Billings, MT 59103-1438

Richard J. Carstensen

Attorney at Law

P. 0. Box 2093

Billings, MT 59103-2093

Jim Tillotson

City Attorney’s Office

P.O. Box 1178

Billings, MT 59103

Leo S. Ward

Browning, Kaleczyc, Berry & Hoven

P. 0. Box 1697

Helena, MT 59624

ED SMITH

CLERK OF THE SUPREME COURT