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Certiorari Granted, August 29, 2014, No. 34,834

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2014-NMCA-093

Filing Date: June 30, 2014 

Docket No. 30,930

SANTA FE PACIFIC TRUST, INC.,

a Florida corporation, 

Plaintiff-Appellant,

v.

CITY OF ALBUQUERQUE, a municipal

corporation,

Defendant-Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY

Nan G. Nash, District Judge

Chappell Law Firm, P.A.

Bill Chappell, Jr.

Michael Hoeferkamp

Albuquerque, NM

for Appellant

City of Albuquerque

David J. Tourek, City Attorney

Robert I. Waldman, Assistant City Attorney

Albuquerque, NM

Lorenz Law

Alice T. Lorenz

Albuquerque, NM

Campbell & Wells, P.A.

John S. Campbell

Albuquerque, NM
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for Appellee

Jones, Snead, Wertheim & Clifford, P.A.

Carol A. Clifford

Santa Fe, NM

for tw telecom of N.M., LLC
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OPINION

FRY, Judge.

{1} Plaintiff Santa Fe Pacific Trust (SFPT) owned property in downtown Albuquerque,

New Mexico (the Property), which two mayors targeted as a potential location for an events

arena. Because of considerable publicity surrounding the proposed condemnation, which

never came to fruition, and because of various concrete steps taken by the administration of

the City of Albuquerque (the City) to see the arena project through, SFPT claims that it lost

potential sales and leases of the Property. It filed a complaint against the City asserting,

among other things, claims for inverse condemnation and deprivation of due process.

{2} We affirm summary judgment entered in favor of the City on these claims. We hold

that SFPT failed to demonstrate entitlement to an inverse condemnation claim under federal

law, which provides that “[m]ere fluctuations in value during the process of governmental

decision[-]making . . . are incidents of ownership [that] cannot be considered as a taking in

the constitutional sense.” Agins v. City of Tiburon, 447 U.S. 255, 263 n.9 (1980) (internal

quotation marks and citation omitted), abrogated on other grounds by Lingle v. Chevron

U.S.A., Inc., 544 U.S. 528 (2005). We further adopt a means for assessing whether precondemnation planning and publicity can constitute an unconstitutional “taking” under our

state laws regarding inverse condemnation and conclude that, while SFPT established the

City’s present concrete intention to condemn, SFPT failed to show that the City took any

action that substantially interfered with the use and enjoyment of the Property. We also

conclude that SFPT failed to establish its substantive due process claim.

BACKGROUND

Factual Background

{3} Although SFPT maintains that there are disputed facts regarding the City’s intent

during the time leading up to this lawsuit, most of the operative facts are undisputed. SFPT

purchased the Property in 1997 and, in 2000, it began a business known as Bigbyte.cc on the

Property for disaster recovery, data storage, and co-location. SFPT and Bigbyte.cc are

related entities, with the same shareholders, directors, and corporate officers. Beginning in

2003, Bigbyte.cc leased approximately 66.26 percent of the leasable space in the building

on the Property.

{4} At about this same time, in articles published in late 1998 and early 1999, Mayor Jim

Baca began to publicly express interest in developing a downtown arena. In 1999, Mayor

Baca informed SFPT’s principals that the Property was the best site for an arena project and

that the Property would be taken for that purpose.

{5} In May 2000, the City adopted the 2010 Downtown Development Plan that included

the goal of constructing an events arena on a proposed site that included the Property.
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Before anything definitive was done in furtherance of this goal, in September 2003, SFPT

and the City entered into an agreement (Exchange Agreement), which recited that the City

wanted to obtain title to a parcel owned by SFPT (SFPT tract) on the southeast corner of the

Property and that SFPT wanted to obtain title to a parcel owned by the City (City tract) on

the northeast corner of the Property. The Exchange Agreement provided that SFPT would

grant the City a permanent roadway easement covering the SFPT tract and that the parties

would then exchange title to their respective tracts. The Exchange Agreement contemplated

that the City and SFPT would share the cost of certain improvements to the City tract before

the exchange would take place. SFPT conveyed the easement to the City, but the exchange

of title did not take place. The Exchange Agreement did not say anything about the main

portion of the Property, which contained the building that housed Bigbyte.cc and office

space that SFPT wanted to lease to other commercial entities. Therefore, in this Opinion,

we use the term “the Property” to denote the property owned by SFPT that did not include

either the SFPT tract or the City tract.

{6} In January 2004, the City administration began a process to determine the feasibility

of its goal to construct the arena, issued a request for information (RFI) to interested

developers, and publicly announced the proposed project. Arena Management and

Construction, LTD (AMC) responded to the RFI and proposed financing for the arena

without the need for public guarantee or subsidy. The city council approved a memorandum

of understanding (MOU) with AMC regarding AMC’s financing commitment. The City

then conducted preliminary negotiations with SFPT to determine whether the Property could

be acquired by purchase agreement.

{7} Ultimately, however, AMC could not provide a commitment for the financing

proposed by the MOU. The City administration, as a result of its negotiations with SFPT,

then submitted to the city council a proposed purchase agreement and an option agreement

to buy the Property. The city council did not approve either agreement.

{8} The City administration in September 2006 issued a request for proposal (RFP) on

the arena project that included the Property, and ABQ Downtown Development Team

(ADDT) submitted a proposal. The City administration recommended that ADDT be

awarded a contract under the RFP, but the city council did not approve the recommendation.

{9} The City administration continued to explore the possibility of purchasing the

Property from SFPT. In 2008, ADDT submitted a proposal for the arena that included an

alternate location at Central and Broadway, and the city council approved the proposal that

ADDT submit a viability assessment study for the arena at the Central and Broadway

location. As of the date the City filed its motion for summary judgment in this case, the

arena project continued to be a planning goal of the City administration, and the proposed

site for the arena included the alternate Central and Broadway location.

{10} From 1999 through 2007, local newspapers published many articles about the

proposed arena project, and several articles mentioned the Property as a potential site for the
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arena. One article labeled a diagram of the Property with the phrase, “To be condemned,”

and another article labeled a photo of the Property with “slated for condemnation.” Many

City-generated documents also showed potential placement of the arena on the Property and

expressed the City’s desire to acquire the Property. Mayor Baca’s successor, Mayor Martin

Chávez, held press conferences at which he indicated that the Property was the potential

location for the arena project. In January 2004, Mayor Chávez announced that construction

on the arena was expected to begin in late spring. Subsequent announcements indicated the

imminent beginning of construction. However, the city council never approved the

acquisition or condemnation of the Property or appropriated funding for construction of an

arena.

{11} SFPT submitted evidence that during this period of time from 2004 to 2008, several

entities considered buying or leasing part or all of the Property and then declined to do so.

While some potential buyers and tenants indicated that they lost interest in the Property

because of the City’s threatened condemnation, others had different reasons for declining

to buy or lease the premises or they did not state why they opted not to buy or lease. For

whatever reason, it is undisputed that as of August 2009, SFPT had been unable to lease the

third floor of the Property despite there being interested parties. Also during that time, SFPT

would have operated at a loss if not for leases to related companies, such as Bigbyte.cc.

Proceedings

{12} SFPT filed suit against the City in October 2006 and asserted claims for inverse

condemnation (alleging that the City’s publicizing its plan to condemn the Property caused

the loss of tenant leases), deprivation of due process (alleging deprivation of tenant leases

without due process), tortious interference with contractual relations (related to loss of tenant

leases), and breach of contract (related to the Exchange Agreement).

{13} On the City’s motion, which SFPT did not oppose, the district court dismissed

SFPT’s claim of tortious interference. The City then filed a motion for summary judgment

on SFPT’s claims for inverse condemnation and deprivation of due process. While that

motion was pending, the City filed a condemnation complaint against SFPT seeking to

acquire SFPT’s interest in the Exchange Agreement and in both the SFPT tract and the City

tract that were the subjects of the Exchange Agreement. The district court consolidated

SFPT’s action against the City with the City’s action against SFPT.

{14} The district court entered summary judgment in favor of the City on SFPT’s claims

of inverse condemnation and deprivation of due process. This left unresolved SFPT’s claim

against the City for breach of the Exchange Agreement and the City’s condemnation claim

(related to the exchange property) against SFPT. The parties ultimately settled these

outstanding claims, and the district court dismissed them.

{15} SFPT appeals the summary judgment in favor of the City and the district court’s

order quashing subpeonas issued to two non-parties, TW Telecom of New Mexico, LLC, and
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Prism Technologies, LLC. Because we affirm the district court’s summary judgment on

SFPT’s claims for inverse condemnation and deprivation of due process, we need not

address the order quashing the subpoenas. This is because the information sought by the

subpoenas related to potential lessees lost as a result of the City’s pre-condemnation

planning and publicity, and we conclude that the loss of lessees does not constitute damage

to or taking of property under the circumstances of this case.

DISCUSSION

A. Summary Judgment

{16} We review an order granting summary judgment de novo. Self v. United Parcel

Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. “Summary judgment is

appropriate where there are no genuine issues of material fact and the movant is entitled to

judgment as a matter of law.” Id. In addition, whether the facts are enough to constitute a

taking is a question of law. 11 Eugene McQuillin, The Law of Municipal Corporations, §

32.26 at 521-23 (2010).

{17} In its motion for summary judgment, the City argued that its activities with respect

to the Property amounted to nothing more than planning and publicity surrounding the

proposed arena project and that planning and publicity do not constitute a “taking” under

either New Mexico or federal condemnation law. In response to the motion, SFPT generally

argued that New Mexico law recognizes that damage to property—without a physical

invasion of property—can give rise to a claim for inverse condemnation. SFPT further

argued that the City’s activities, which included mayoral press conferences and other

publicity specifically targeting the Property, damaged SFPT’s interest in the Property and

therefore constituted a taking. SFPT also maintained that the City’s failure to convey its

tract as required by the Exchange Agreement deprived SFPT of the physical use of that tract,

and that this deprivation informed the analysis of whether a taking had occurred.

{18} In its letter decision granting the City’s motion for summary judgment, the district

court determined that the City’s pre-condemnation planning and publicity regarding the

Property was not a taking for purposes of inverse condemnation. Relying on an Alaska case

with similar facts, the court concluded that “the City’s publicity does not show a present

concrete intention to acquire the Property. Additionally, [SFPT] has not shown that the City

substantially interfered with [its] property rights by denying a permit or otherwise

prohibiting [SFPT] from using the [P]roperty beneficially.” The court also concluded that

“[t]he facts of the Exchange Agreement . . . are not sufficiently tied to the Property claims

to defeat [the] City’s motion.” As for SFPT’s claim of a due process deprivation, the court

determined that the claim was subsumed into its inverse condemnation claim and that

“[w]ithout a taking, the [c]ourt cannot find that [SFPT]’s due process rights were violated.”

{19} On appeal, SFPT makes nine arguments challenging the summary judgment in favor

of the City, which we combine into five. SFPT argues that: (1) the district court erroneously
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applied the Alaska and federal standards regarding what constitutes a taking and that under

the proper standards, the City’s activities constituted a taking as a matter of law; (2) the

district court erroneously determined that SFPT had no claim for deprivation of due process;

(3) alternatively, the City’s breach of the Exchange Agreement constituted a physical taking

that resulted in injury to the Property, which was adjacent to the tracts covered by the

Exchange Agreement; (4) disputed issues of fact regarding the City’s intent to condemn the

Property precluded summary judgment; and (5) the district court erroneously ruled on two

preliminary issues by improperly fixing the date of the alleged taking and by failing to allow

a complete deposition of Mayor Chávez.

1. Applicable Standards

{20} SFPT’s inverse condemnation claim relied on both federal law and state law. SFPT

contends that the district court applied erroneous standards in rejecting both aspects of its

claim.

a. Federal Law

{21} The district court rejected SFPT’s claim of inverse condemnation under the takings

clause of the Fifth Amendment to the United States Constitution as applied to the states

through the Fourteenth Amendment. In doing so, the court relied in part on Agins, in which

the United States Supreme Court stated that a city’s pre-condemnation activities did not “so

burden[] the appellants’ enjoyment of their property as to constitute a taking.” 447 U.S. at

263 n.9. The Court in Agins also stated that “[m]ere fluctuations in value during the process

of governmental decision[-]making, absent extraordinary delay, are incidents of ownership.

They cannot be considered as a taking in the constitutional sense.” Id. (internal quotation

marks and citation omitted). The district court also mentioned First English Evangelical

Lutheran Church v. County of Los Angeles, which discussed Agins and another United States

Supreme Court decision, and stated that “these cases merely stand for the unexceptional

proposition that . . . depreciation in value of the [condemned] property by reason of

preliminary activity is not chargeable to the government.” First English Evangelical

Lutheran Church, 482 U.S. 304, 320 (1987), holding limited on other grounds by TahoeSierra Preservation Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302 (2002).

{22} SFPT challenges the district court’s reliance on Agins and First English because “the

Agins decision was overruled in Lingle.” In addition, SFPT argues that the district court

should have applied the balancing test in Penn Central Transportation Co. v. City of New

York, 438 U.S. 104, 122-23 (1978). We do not agree with SFPT’s argument regarding Agins

and, even if the Penn Central test is applied, it does not support SFPT’s contention that the

City’s planning and publicity in this case constituted a taking under the United States

Constitution.

{23} First, as SFPT itself acknowledges, the United States Supreme Court in Lingle did

not overrule or abrogate the statement in Agins to the effect that pre-condemnation
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governmental activities do not constitute a taking. Instead, the Court eliminated one of the

methods of identifying regulatory takings that was announced in Agins. See Lingle, 544 U.S.

at 545 (explaining that “the ‘substantially advances’ formula announced in Agins[, which

held that the application of a zoning law to a property is a taking if the law does not

substantially advance legitimate state interests,] is not a valid method of identifying

regulatory takings for which the Fifth Amendment requires just compensation”). Thus, the

undisturbed portion of Agins is persuasive authority for the proposition that federal law

would not recognize the City’s planning and publicity in the present case as a taking under

the United States Constitution.

{24} Second, the balancing test of Penn Central does not support SFPT’s position in this

case. Penn Central involved the question whether New York City’s historic preservation

restrictions, which culminated in a prohibition against specific development schemes for

Grand Central Terminal, constituted a taking under the Fifth Amendment. 438 U.S. at 115-

18. In answering the question in the negative, the Court reviewed the ad hoc factors that

may inform the determination of what constitutes a taking, including (1) the economic

impact of the government regulation on both the claimant and “investment-backed

expectations,” id. at 124, (2) the character of the government action (i.e., physical invasion

versus burdening economic interests “to promote the common good”), id., and (3) whether

the government action acquires “resources to permit or facilitate uniquely public functions.”

Id. at 128. The problem with application of these factors to the circumstances in the present

case is that the Court in Penn Central drew the factors from cases where there was either a

concrete government action, such as a regulation or the acquisition of resources that

“interfere[d] with interests that were sufficiently bound up with the reasonable expectations

of the claimant to constitute ‘property’ for Fifth Amendment purposes.” Id. at 125; see id.

124-28 and cases cited therein. Here, SFPT has not shown the existence of such concrete

government action or acquisition of resources; it has shown nothing more than “[m]ere

fluctuations in value during the process of governmental decision[-]making,” which are

“incidents of ownership” that “cannot be considered as a taking in the constitutional sense.”

Agins, 447 U.S. at 263 n.9 (internal quotation marks and citation omitted). We therefore

conclude that the district court properly granted summary judgment to the City on SFPT’s

federal inverse condemnation claim.

b. State Law

{25} In rejecting SFPT’s state law claim, the district court’s letter decision cited Joseph

M. Jackovich Revocable Trust v. State Department of Transportation, 54 P.3d 294 (Alaska

2002), which, like the present case, involved pre-condemnation activities of a governmental

entity that allegedly resulted in reduced values for targeted properties. Id. at 295. The

Alaska Supreme Court in Jackovich relied on a two-part inquiry to determine whether precondemnation publicity and planning constitute a taking and concluded that a court must ask

(1) whether the government had “publicly announced a present intention to condemn” the

property in question and (2) whether the government had “done something that substantially

interferes with the landowners’ use and enjoyment of [its] propert[y].” Id. at 300-01. The
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district court in the present case concluded that the City’s planning and publicity failed to

satisfy either requirement.

{26} SFPT challenges the district court’s reliance on Jackovich, arguing that requiring a

claimant to show the government’s actual intent to condemn property and its substantial

interference with property interests is contrary to New Mexico law. We are not persuaded.

While SFPT is correct that New Mexico law permits an inverse condemnation action even

if the government’s proposed damage to property is not a certainty and even if there is no

actual physical taking of property, we nonetheless conclude that in circumstances like those

before us, the Jackovich inquiries are useful and consistent with New Mexico precedent.

{27} We begin with New Mexico’s pertinent constitutional and statutory provisions.

Article II, Section 20 of the New Mexico Constitution states, “Private property shall not be

taken or damaged for public use without just compensation.” The applicable statute

provides:

A person authorized to exercise the right of eminent domain who has taken

or damaged or who may take or damage any property for public use without

making just compensation or without instituting and prosecuting to final

judgment in a court of competent jurisdiction any proceeding for

condemnation is liable to the condemnee . . . for the value thereof or the

damage thereto at the time the property is or was taken or damaged[.]

NMSA 1978, § 42A-1-29(A) (1983). Case law interpreting these provisions establishes that

a potential condemnor’s damage to property is compensable for purposes of inverse

condemnation and that an actual physical taking of property is not required. See Bd. of Cnty.

Comm’rs v. Harris, 1961-NMSC-165, ¶ 5, 69 N.M. 315, 366 P.2d 710 (stating that “in order

for an owner to be entitled to compensation a taking is not required—it being sufficient if

there are consequential damages”); see also City of Santa Fe v. Komis, 1992-NMSC-051,

¶ 11, 114 N.M. 659, 845 P.2d 753 (explaining that “[the] objective in a condemnation case

is to compensate the landowner for damages actually suffered. . . . [I]f loss of value can be

proven, it should be compensable regardless of its source.”).

{28} But this does not mean that any and all consequential damage to property arguably

caused by the pre-condemnation activity and publicity of a potential condemnor is

compensable in a claim for inverse condemnation. Our Supreme Court clarified in Public

Service Co. of New Mexico v. Catron that “[m]erely rendering private property less desirable

for certain purposes . . . will not constitute the damage . . . but the property itself must suffer

some diminution in substance, or be rendered intrinsically less valuable, by reason of the

public use.” 1982-NMSC-050, ¶ 7, 98 N.M. 134, 646 P.2d 561 (internal quotation marks

and citation omitted). Thus, the Court in Catron concluded that owners of property adjacent

to property condemned for installation of a high voltage transmission line were not entitled

to compensation for the loss in property value resulting from the transmission line’s noise

or from its interference with the view and radio/TV reception. Id. ¶¶ 8-15.
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{29} Similarly, our Supreme Court stated in Estate and Heirs of Sanchez v. County of

Bernalillo that a property owner’s right to the use and enjoyment of his or her property “does

not entitle an owner to use property for all economically viable purposes, and governmental

actions imposing an incidental economic loss will be upheld.” 1995-NMSC-058, ¶ 11, 120

N.M. 395, 902 P.2d 550. In that case, the Court affirmed summary judgment in favor of the

county, which had denied the plaintiff’s application for a special use permit in order to

develop its property into a mobile home park. Id. ¶ 4.

{30} These cases teach that in order to be compensable, a taking of or damage to property

must invade some substantive or intrinsic aspect of a landowner’s right to the use and

enjoyment of its property. An incidental economic loss is not sufficient. The current case

presents the question whether pre-condemnation publicity and planning can give rise to a

cognizable action for inverse condemnation, a question our appellate courts have never had

the opportunity to address. Courts in other jurisdictions have considered similar situations,

and their reasoning is consistent with the general principles of New Mexico’s law regarding

inverse condemnation.

{31} The Jackovich case is instructive. In that case, the state of Alaska had developed

plans for a road extension project that would ultimately be built on or near property owned

by the plaintiffs. 54 P.3d at 295. The state held public hearings on the location of the

project and revised the project’s design over a period of fifteen years. Id. Over the years,

the state notified landowners that would be impacted by the project as to the project’s

progress. Id. The landowners filed an inverse condemnation action “alleging de facto

takings of and damage to their properties.” Id. at 296. The Alaska Supreme Court affirmed

summary judgment in favor of the state. Id. at 304.

{32} The Jackovich court summarized the facts of the case as involving “precondemnation publication of notices, information, plans, and proposals pertaining to a road

improvement project component that . . . might or might not be built.” Id. at 297. Like

SFPT in the present case, the landowners in Jackovich complained that all of these activities

caused them to be “unable to sell their properties” and to “[lose] rental income because precondemnation announcements discouraged buyers and renters and made improvements

infeasible or economically imprudent.” Id. at 298. And, like the New Mexico Constitution,

Alaska’s constitution prohibits the taking of or damage to property for public use without

just compensation. Id. In determining whether pre-condemnation planning and publicity

can constitute a taking or damage in an inverse condemnation case, the Jackovich court

adopted the two-part inquiry previously mentioned. Id.

{33} The two-part Jackovich inquiry makes sense. As for the first requirement—a present

intention to condemn specific property—it would be imprudent to allow compensation in an

inverse condemnation case if the condemning entity did not have such a present intention.

For example, if the mayor of Albuquerque announced that the city was considering the

possibility of condemning certain property, at the earliest, twenty years from now, any

damage to the condemnee’s property would be purely speculative. With respect to the
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second requirement—action that substantially interferes with the use and enjoyment of the

potential condemnee’s property—policy considerations support this requirement. The mere

planning or plotting of a public improvement cannot alone be enough to suffice, even if the

publicity surrounding the planning results in economic damage to the owner of the targeted

property. “If the rule were otherwise, it would encourage [condemning entities such as]

municipalities to operate secretively and to act as quickly as possible which would inhibit

free discussion of the merits of a project. It would also discourage a municipality from

considering alternative sites, since that would just add to the municipality’s potential

liability.” McQuillin, supra, § 32.37 at 626 (footnotes omitted).

{34} These requirements are also consistent with the teachings of New Mexico case law.

Our Supreme Court in Electro-Jet Tool and Manufacturing Co. v. City of Albuquerque stated

that “[t]he damage must be the result of the public entity’s deliberate taking or damaging of

the property in order to accomplish the public purpose[,]” 1992-NMSC-060, ¶ 9, 114 N.M.

676, 845 P.2d 770 (emphasis added), which is similar to the requirement in Jackovich for

a present concrete intention to condemn. And, as we have already observed, New Mexico

law requires the condemning authority to take some action that substantively invades the

potential condemnee’s intrinsic use and enjoyment of its property, which is similar to the

Jackovich requirement that the public entity must do something that substantially interferes

with the landowner’s use and enjoyment.

{35} We are not persuaded by SFPT’s argument that Electro-Jet supplies a different

standard for the public entity’s intentions. In Electro-Jet, our Supreme Court addressed the

meaning of the phrase “for public use” in the condemnation provisions of our constitution

and statutes. 1992-NMSC-060, ¶ 1 (internal quotation marks omitted). The Court concluded

that a property owner seeking damages for inverse condemnation must prove more than

negligence on the part of the public entity. Id. ¶ 22. This is entirely consistent with a

requirement that the property owner prove a present concrete intention to condemn.

{36} Nor are we persuaded that a present concrete intention to condemn is “tantamount

to an actual condemnation,” as SFPT maintains. In keeping with our case law,

“condemnation” is synonymous with both a taking of and damage to property. Therefore,

a present concrete intention to condemn is an intention to take or to damage the landowner’s

property.

{37} We conclude that the district court’s reliance on Jackovich was not misplaced, and

we adopt the Jackovich two-part inquiry for determining whether planning and publicity

related to a potential condemnation establish a public entity’s liability for inverse

condemnation. The inquiry is consistent not only with existing New Mexico law but also

with the leading authorities on the subject. For example, Nichols on Eminent Domain

mirrors the second Jackovich inquiry and states that of the bundle of rights or “sticks” that

comprise the concept of property, “[o]nly certain sticks—e.g., the right of possession—are

afforded full protection by the [laws requiring compensation for public takings]. Under that

analysis certain other ‘sticks’—e.g., the right to use and develop property—are afforded
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significantly less protection.” 2A Julius L. Sackman, Nichols on Eminent Domain, ch. 6,

§ 6.01[8] at 6-19 (MB 3d ed. 2013) (footnotes omitted). Thus, the public entity in question

must take some action that substantially interferes with the landowner’s use and enjoyment.

Similarly, the McQuillin treatise states that the “mere manifestation of intent to take or a

threat to condemn does not constitute condemnation blight warranting recovery for reduction

in value of property.” McQuillin, supra, § 32.37 at 624. There must also be “some direct

restriction on the use of the property.” Id. at 626.

{38} We are further unpersuaded by SFPT’s argument that New Mexico law has adopted

a “reasonableness” standard that is applicable in the present case. Even if SFPT is correct

that reasonableness governs the assessment of damages in a condemnation case, there must

first be damage to or taking of property before the assessment of damages comes into play.

See § 42A-1-29(A) (stating that liability for damage to property occurs when a condemnor

“has taken or damaged or . . . may take or damage any property for public use without

making just compensation”).

{39} Having established the state law standards for determining whether precondemnation planning and publicity constitute damage to or taking of property, we now

apply these standards to the circumstances in the case before us. We conclude that SFPT

established only one of the two Jackovich requirements that we have adopted. SFPT’s

evidence showed that the City—at least the City’s administration—intended to condemn the

Property as soon as it was able to obtain financing, an agreement with a developer, and,

importantly, approval of everything by the city council. However, SFPT failed to establish

that the City’s actions substantially interfered with SFPT’s use and enjoyment of the

Property.

{40} Regarding the present concrete intention to condemn the Property, SFPT’s evidence

showed that the City’s administration publicly announced its desire to condemn the Property

and took significant steps demonstrating its intention by issuing the RFI, by obtaining city

council approval of the MOU with AMC, and by issuing the RFP. We emphasize the

importance of the steps the administration took beyond simply announcing a desire to

explore the arena project and vetting that proposal publicly. As we have already mentioned,

a city’s public airing and exploration of possible development plans are to be encouraged

and cannot, by themselves, give rise to a claim of inverse condemnation. Here, the RFI, the

MOU, and the RFP went beyond the planning and publicity stage and demonstrated a

committed, substantive intention to condemn the Property if means could be found to do so.

{41} But the publicity, the planning, the RFI, the MOU, and the RFP did not substantially

interfere with SFPT’s use and enjoyment of the Property. Indeed, SFPT acknowledged at

a hearing that it was not claiming that the Property had been “rendered totally useless and

that no tenants will continue [to] lease.” While the evidence demonstrated that some

potential tenants of the building on the Property were deterred by the possibility of imminent

condemnation, this is not the kind of interference that rises to the level of unconstitutional

damage to or taking of property. As our Supreme Court said in Catron, “[m]erely rendering
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private property less desirable for certain purposes . . . will not constitute the damage . . . but

the property itself must suffer some diminution in substance, or be rendered intrinsically less

valuable, by reason of the public use.” 1982-NMSC-050, ¶ 7 (internal quotation marks and

citation omitted). The City’s planning activities, which never came to fruition, did not

prevent SFPT from possessing the Property or from using it. The City never physically

appropriated the use of the Property, it never contacted existing or prospective tenants, it

never denied SFPT any use permits related to the Property, and it never enacted any

ordinances or regulations that changed the use of the Property. See Estate & Heirs of

Sanchez, 1995-NMSC-058, ¶¶ 7, 10 (explaining that a taking is not unconstitutional unless

the government’s action “deprives the [property] owner of all beneficial use of [the subject]

property”). 

{42} All government actions will have some incidental economic consequences, and

anyone owning property near the site of such activity will bear the risk of those

consequences. But unless the government’s actions directly restrict the use of that property,

the property owner is not entitled to compensation for those actions. See McQuillin, supra,

§ 32.37 at 625-26 (explaining that “[p]ublicly targeting a property for condemnation,

resulting in economic damage to the owner, is not a taking unless there is some direct

restriction on the use of the property”). Governmental entities, like the City, must be

encouraged to air their planning ideas in public so that they can be fully vetted, challenged,

improved, or rejected. We therefore conclude that the district court properly granted the City

summary judgment on SFPT’s claims for inverse condemnation under both federal and state

law.

2. Alleged Due Process Violation

{43} We also conclude that the district court correctly granted summary judgment on

SFPT’s claim that it was deprived of due process, albeit on slightly different grounds than

those relied on by the district court. While the district court determined that “[SFPT]’s due

process claim seems to be subsumed into their taking claims,” the federal circuit courts are

divided on this question, and the United States Supreme Court has not provided clear

direction. See Brian W. Blaesser & Alan C. Weinstein, Federal Land Use Law & Litigation,

§ 1:14 (2013) (explaining that “recent decisions by the Supreme Court may also limit

substantive due process claims in land use cases” and that the circuit courts are split on the

issue). But, in any event, it seems clear that federal law will not recognize a substantive due

process claim in the land use context unless there has been a government regulation

impacting the property owner’s use. See Blaesser & Weinstein, supra, Ch. 1 (stating that

“[f]ederal substantive due process in land use regulation refers to the right of a property

owner not to be subject to arbitrary or capricious regulatory action by a government

legislative or administrative body”). Here, the city enacted no ordinance or regulation

impacting SFPT’s use of the Property, and its activities planning and publicizing the idea of

the arena do not rise to the level of a regulatory action. As a result, SFPT’s claim of a due

process violation fails.
14

3. The Exchange Agreement Did Not Constitute a Taking

{44} SFPT appears to argue in the alternative that the City’s alleged breach of the

Exchange Agreement resulted in injury to the Property and therefore provided the basis for

SFPT’s inverse condemnation claim. We agree with the district court’s assessment that

“[t]he facts of the Exchange Agreement property are not sufficiently tied to the Property

claims to defeat [summary judgment].”

{45} The property involved in the Exchange Agreement—the City tract and the SFPT

tract—were adjacent to the Property itself. The agreement provided that SFPT would

convey a permanent roadway easement to the SFPT tract, the City and SFPT would share

the cost of improvements to the City tract, and then the City would exchange title to its tract

for title to SFPT’s tract. While SFPT conveyed the easement to the City, the ensuing

exchange had not taken place as of the time of the summary judgment motion.

{46} SFPT argues that the failed culmination of the Exchange Agreement damaged the

Property by eliminating its use of two access points on the City tract and by taking

possession of the SFPT tract by way of the easement. Yet SFPT fails to demonstrate how

the alleged loss of two access points and the SFPT tract negatively impacted the Property.

It does not show that the loss of either prevented its beneficial use of the Property.

{47} In fact, SFPT’s claim of damages was related to the loss of its ability to lease the

Property due to the publicity and planning surrounding the potential condemnation of the

Property, not due to any negative impact related to the tracts at issue in the Exchange

Agreement. SFPT’s complaint and amended complaint did not even mention the Exchange

Agreement in connection with its claims of inverse condemnation and deprivation of due

process. SFPT’s claims in connection with the Exchange Agreement were asserted in a

separate count for breach of contract, and the parties ultimately settled these claims.

{48} We are not persuaded by SFPT’s reliance on our Supreme Court’s decision in Komis,

which SFPT claims stands for the proposition that a partial taking of property can result in

damages for a “perceived loss” to the remaining property. SFPT reads too much into the

Komis opinion. Komis involved property partially condemned for construction of a highway

used in transporting nuclear waste to the Waste Isolation Pilot Project near Carlsbad, New

Mexico. 1992-NMSC-051, ¶¶ 2, 4. The jury awarded the property owners damages in

compensation for the property taken and for the perceived loss to the remaining property

“due to public perception of the effect of transporting radioactive waste material.” Id. ¶¶ 4-

5.

{49} We have no quarrel with SFPT’s contention that damages may be recoverable for

perceived loss to property remaining after a partial condemnation. But here there has been

no condemnation, and Komis does not change that fact. Komis addressed the measure of

damages, not what constitutes a taking. And, even if the City’s alleged non-compliance with

the Exchange Agreement could be deemed a taking, SFPT failed to tie this non-compliance
15

to any loss of use related to the Property. The alleged loss of two access points is

meaningless unless it can be established that the loss negatively impacted SFPT’s use of the

Property.

4. Alleged Disputed Issues of Fact

{50} SFPT argues that the evidence created disputed issues of fact regarding the City’s

intent to condemn and the reasonableness of the City’s pre-condemnation conduct. We have

already determined that SFPT established that the City had a present concrete intention to

condemn the Property, and we have rejected SFPT’s argument that reasonableness is the

standard by which pre-condemnation conduct is assessed. We therefore need not address

this contention further.

5. Preliminary Issues: Fixing the Date of the Alleged Taking and Restricting the

Scope of Mayor Chávez’s Deposition

{51} SFPT raises two final arguments, maintaining that the district court erroneously

required SFPT to commit to a date of the alleged taking and that the court improperly

restricted the scope of SFPT’s inquiry at the deposition of Mayor Chávez. We perceive no

error in either ruling.

{52} With regard to the date of the alleged taking, SFPT acknowledges that Section 42A1-29 contemplates a specific date in order to allow calculation of compensation that is due

when a taking occurs. But SFPT contends that the taking in this case occurred over a period

of time, and, therefore, the date of the taking was a factual issue for the jury to determine.

This argument is unavailing. Because we have determined that summary judgment was

appropriate, there is no need to calculate compensation, and the date of the alleged taking

is therefore irrelevant.

{53} As for the restriction on the scope of Mayor Chávez’s deposition, the district court

limited SFPT’s inquiry to dates occurring prior to January 7, 2004, the date of one of the

mayor’s press conference. We review orders regarding discovery matters for abuse of

discretion. See Estate of Romero ex rel. Romero v. City of Santa Fe, 2006-NMSC-028, ¶ 6,

139 N.M. 671, 137 P.3d 611.

{54} After SFPT gave notice that it intended to take Mayor Chávez’s deposition, the City

filed a notice of non-appearance and motion for protective order. In its pleadings related to

this motion, the City argued that SFPT already had all of the information it needed about the

City’s intentions regarding the Property via the publicity and other documents SFPT had

presented as exhibits to other pleadings. SFPT responded that it was important to depose the

mayor to discover the basis for his public statements about the Property, what instructions

he gave to staff about the proposed condemnation, and what communications he had with

the city council.
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{55} At the hearing on the motion, the City appeared to argue that the mayor did not do

anything after the date established for the taking, January 1, 2004, and, as a result, inquiry

into that time period would be irrelevant. SFPT responded that “the announcements and

activities that took place in January of 2004 and subsequently, went over the top” and that

SFPT needed to “go into the background of the—what justification, if any, there was for the

activities that started occurring in January of 2004.”

{56} Ultimately, the district court ruled that the dispositive date was January 1, 2004, the

date previously set for the taking, and that “things done after that are not relevant.” At

SFPT’s request, the court then amended the cutoff date to January 7, 2004, the date when the

public announcement of the proposed condemnation was made.

{57} We fail to see how inquiry into Mayor Chávez’s post-January 7, 2004 rationale for

public statements, instructions to staff, or communications with the city council would have

made any difference to SFPT’s claims. There was no dispute about the actions the City

actually took after January 7, 2004, and we have determined that none of those

actions—either before or after January 7, 2004—constituted damage to or taking of the

Property. Without an action that substantially interfered with SFPT’s beneficial use of the

Property, it is simply irrelevant to consider what motives lay beneath the surface. The

district court acted within its discretion in limiting SFPT’s questioning to events occurring

prior to January 7, 2004.

CONCLUSION

{58} For the foregoing reasons, we affirm the district court’s judgment in favor of the

City.

{59} IT IS SO ORDERED.

_____________________________________

CYNTHIA A. FRY, Judge

WE CONCUR:

____________________________________

MICHAEL E. VIGIL, Judge 

____________________________________

J. MILES HANISEE, Judge