NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

STATE OF ARIZONA, et al., Plaintiffs/Appellees,

v.

FOOTHILLS RESERVE MASTER OWNERS ASSOCIATION, INC., 

Defendant/Appellee.

______________________________________________________________

DIETMAR HANKE, et al., Intervenors/Appellants

No. 1 CA-CV 22-0216 

FILED 3-7-2023

Appeal from the Superior Court in Maricopa County

No. CV2017-010359

The Honorable Timothy J. Thomason, Judge

AFFIRMED

COUNSEL

Dietmar and Linda Hanke, Phoenix

Intervenors/Appellants

Arizona Attorney General’s Office, Phoenix

By Michelle Burton, Joe Acosta, Jr.

Counsel for Plaintiffs/Appellees

Zeitlin & Zeitlin, P.C., Phoenix

By Dale S. Zeitlin, Casandra C. Markoff

Counsel for Defendant/Appellee
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in 

which Judge Cynthia J. Bailey and Vice Chief Judge David B. Gass joined.

T H U M M A, Judge:

¶1 Appellants Dietmar and Linda Hanke appeal from the grant 

of the State of Arizona’s motion for summary judgment on their claim for 

severance damages involving the State’s condemnation of neighboring 

land. Because the Hankes have shown no error, the judgment is affirmed. 

FACTS AND PROCEDURAL HISTORY 

¶2 In 2017, the Arizona Department of Transportation (ADOT)

filed this action to condemn land to extend the 202 freeway. ADOT sought 

to condemn land owned by the Foothills Reserve Master Owners’ 

Association, Inc. (HOA). Under the HOA’s Covenants, Conditions, and 

Restrictions (CC&Rs), the HOA board represented HOA members in 

condemnation proceedings. The Hankes, who are HOA members and own 

one of the nearly 600 units in the Foothills Reserve, later intervened as 

defendants. The Hankes argued that the condemnation was not for a public 

need or use and was improper, and that the HOA could not represent their 

interests. 

¶3 By mid-2018, the HOA stipulated that the State could obtain 

immediate possession of the land being taken and that the taking was 

necessary and for a proper public use. The Hankes were not a party to this 

stipulation. Over the Hankes’ objection, the court entered the stipulated 

order for immediate possession in July 2018. 

¶4 In 2019, the superior court determined that the CC&Rs

authorized the HOA to represent all homeowners for their damages claims 

in the condemnation. When the Hankes objected, the court allowed the 

Hankes to represent themselves, meaning the HOA no longer represented 

their interests.

¶5 Although stating severance damages totaled $204,000, the 

Hankes sought “substitute facilities” damages totaling nearly $1.5 million 

and punitive damages. On motion, the court ruled that “substitute 

facilities” damages were not recoverable and that, at most, the Hankes were 
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

3

entitled to severance damages, representing “the difference between the 

market value of the remainder before and after the taking.” See State ex rel. 

Ordway v. Buchanan, 154 Ariz. 159, 164 (1987). Given statutory immunity, 

see A.R.S. § 12-820.04 (2023),

1 the court also rejected the Hankes’ punitive 

damage claims.

¶6 The State and the HOA, on behalf of all unit owners other 

than the Hankes, reached a settlement that the court approved over the 

Hankes’ objection. The State moved for summary judgment against the 

Hankes, seeking a determination they were owed $5,000 in severance 

damages and arguing the Hankes failed to dispute the $5,000 amount with 

admissible controverting evidence. The Hankes opposed the motion, 

arguing existing eminent domain law was unjust. The Hankes stated that 

the proper valuation date was in 2005, when ADOT made the “unofficial 

announcement” of the project, resulting in a claim for $204,000 in severance 

damages. In doing so, the Hankes stated the $204,000 severance claim was 

“insufficient to make” them whole. The Hankes’ damages opinion largely 

focused on their “substitute facilities” claim for nearly $1.5 million that the 

court previously rejected.

¶7 The State’s reply argued the Hankes did not dispute genuine 

issues of material fact sufficient to defeat the motion for summary 

judgment. The State argued the Hankes admitted in their response that they 

will not “comply with Arizona law regarding the computation of 

damages,” that their damages claim did not comply with Arizona law 

regarding severance damages and that, instead, they disagreed with 

eminent domain law. Accordingly, the State repeated its request that the 

court grant summary judgment requiring it to pay the Hankes $5,000 in 

severance damages plus interest.

¶8 The court granted summary judgment for the State and 

against the Hankes, with the resulting partial final judgment directing the 

State to pay the Hankes $5,000 plus interest. The State timely paid that 

amount and the Hankes timely appealed. This court has jurisdiction 

pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 

12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

1 Absent material revisions after the relevant dates, statutes cited refer to 

the current version unless otherwise indicated.
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

4

¶9 The Hankes argue three general issues on appeal: (1) the 

State’s taking of the land for the freeway was improper; (2) the State and 

the HOA could not properly stipulate to the taking; and (3) the superior 

court erred in granting the State’s motion for summary judgment. The court 

addresses these issues in turn.

I. The Hankes Have Not Shown the State’s Taking of the Land for 

the Freeway Was Improper.

¶10 The State has the power of eminent domain to take private 

property for a necessary public use upon paying just compensation. See, 

e.g., Ariz. Const. art. 2, § 17; A.R.S. §§ 12-1112; 12-1131; Bailey v. Myers, 206 

Ariz. 224, 228 ¶ 14 n.1 (App. 2003). Whether a taking is for a public use is 

“a judicial question.” Ariz. Const. art. 2, § 17; A.R.S. § 12-1132(A). The issue 

of necessity, by contrast, is deferential, giving “great weight” to assertions 

of necessity. Bailey, 206 Ariz. at 228 ¶ 14 n.1. To defeat a necessity claim, the 

party opposing the taking must show by clear and convincing evidence it 

is “unnecessarily injurious.” See Queen Creek Summit, LLC v. Davis, 219 Ariz. 

576, 580 ¶ 16 (App. 2008) (citation omitted). 

A. Public Use. 

¶11 Public use includes “[t]he possession, occupation, and 

enjoyment of the land by the general public, or by public agencies.” A.R.S. 

§ 12-1136(5)(a)(i). Although agreeing “the freeway is a public use,” the 

Hankes argue the freeway was built for the purpose of “general economic 

health,” which is expressly excluded from the statutory definition of 

“public use.” See A.R.S. § 12-1136(5)(b). Contrary to that assertion, freeways 

have long been understood to serve a public use under eminent domain 

law. See, e.g., Calmat of Ariz. v. State ex rel. Miller, 176 Ariz. 190, 191 (1993); 

State ex rel. Herman v. Schaffer, 105 Ariz. 478, 479 (1970); State ex rel. Morrison 

v. Thelberg, 87 Ariz. 318, 324 (1960). The Hankes have cited no authority for 

the proposition that a public freeway is not a public use and have not shown 

the superior court erred in considering the public use issue. 

B. Public Need and Necessity. 

¶12 The Hankes argue there was “no public need” for the 

freeway. The State may exercise eminent domain for roads so long as it 

benefits the county, city or inhabitants and is authorized by statute. A.R.S. 

§ 12-1111. The Legislature has delegated to ADOT the power to acquire real 

property by condemnation that it “considers necessary for transportation 

purposes.” A.R.S. § 28-7092(A). Land for “transportation purposes” 

includes land needed to build highways. See A.R.S. § 28-7092(B). The 
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

5

Hankes have not shown how the taking here failed to comply with these 

requirements or was undertaken for any improper purpose. 

¶13 The Hankes argue other land could have been taken to build 

the freeway instead of the HOA common area. Although perhaps true, the 

Hankes cite no authority for the proposition that the availability of 

alternatives defeats the taking of specific land. Moreover, the availability of 

alternative land does not mean the taking was unnecessary. See, e.g.,

Chambers v. State ex rel. Morrison, 82 Ariz. 278, 280–83 (1957) (rejecting 

argument that the taking was not necessary because the State could have 

condemned other land). The Hankes have failed to show there was not a

public need for the taking or that it was not necessary.

II. The State and the HOA Properly Could Settle Their Dispute.

¶14 The Hankes argue the HOA was not the proper party to 

represent the homeowners, and, as a result, the settlement between the 

State and the HOA was improper because it did not properly include the 

Hankes. The Hankes also argue the superior court “force[d]” the settlement 

between the State and the HOA on the Hankes and that they should have 

been able to object to the settlement. 

A. The HOA Properly Could Represent the Homeowners. 

¶15 The HOA’s CC&Rs expressly provide the unit owners 

appoint the Board [of the HOA] to represent the owners “in connection with 

the taking” of any common area, adding that “[t]he Board shall act in its 

sole discretion” in that representation. The CC&Rs designate the HOA to 

represent unit owners in a condemnation action. See also Catalina Foothills 

Unified Sch. Dist. v. La Paloma Prop. Owners Ass’n, Inc., 238 Ariz. 510, 517–18 

¶ 28–30 (App. 2015) (holding the HOA may represent the homeowners in a 

condemnation action of a subdivision’s common areas when authorized by 

the CC&Rs). The court correctly determined the HOA was the proper party 

to represent the homeowners.

B. The State and the HOA Could Settle Their Disputes 

Without Participation or Approval by the Hankes. 

¶16 The Hankes were allowed to intervene as parties to represent 

their separate interests. The Hankes then moved to sever their case before 

the State and the HOA reached a settlement, asserting they “are pursuing 

an entirely different remedy than the HOA.” The superior court granted the 

Hankes’ motion to sever. Additionally, the court made clear the HOA was 

not representing the Hankes, the Hankes were not bound by any settlement 
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

6

or resolution of the dispute between the State and the HOA and, similarly, 

could not object to any such settlement or resolution. The Hankes, however, 

seek to challenge the settlement between the HOA and the State. 

¶17 The Hankes were not bound by, or parties to, the settlement 

agreement between the State and the HOA. Accordingly, the Hankes have 

not shown how they have standing to object to or appeal from that

settlement agreement. Dowling v. Stapley, 221 Ariz. 251, 273-74 ¶¶ 72-76

(App. 2009). The superior court made clear the Hankes were representing 

themselves in their claim for damages from the State. Because they were not 

parties to the settlement agreement, the court could not “force” a settlement 

on the Hankes. For these reasons, the State and the HOA could settle their 

disputes without participation by the Hankes. 

III. Summary Judgment was Proper Because the Hankes Did Not 

Show a Genuine Dispute of Material Fact.

¶18 The Hankes argue summary judgment was improper because 

the superior court erred in limiting their recovery to severance damages, 

not using 2005 for the “before” date for severance damages, and not

allowing them to recover substitute facilities and punitive damages.

¶19 “The court shall grant summary judgment if the moving party 

shows that there is no genuine dispute as to any material fact and the 

moving party is entitled to judgment as a matter of law.” Ariz. R. Civ. P. 

56(a). When the movant shows that no genuine issue of material fact exists, 

the opposing party has the burden to produce sufficient competent 

evidence to show such an issue exists. E.g., Kelly v. NationsBanc Mortg. Corp., 

199 Ariz. 284, 287 ¶ 14 (App. 2000). “If the opposing party does not so 

respond, summary judgment, if appropriate, shall be entered against that 

party.” Ariz. R. Civ. P. 56(e). This court reviews de novo a grant of summary 

judgment. Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12 (2003).

¶20 Here, the State condemned a common area of land owned by 

the HOA. The Hankes, however, had a claim for severance damages for any 

diminution of value of their unit. See State ex rel. Ordway v. Buchanan. 154 

Ariz. 159, 164 (1987) (“Severance damages are proper when the land 

condemned is part of a larger parcel.”); accord A.R.S. § 12–1122(A).

Severance damages are measured by “comparing the worth of the 

remaining property before and after the taking.” City of Phoenix v. Wilson, 

200 Ariz. 2, 9 ¶ 18 (2001). Applying this law, the superior court properly 

concluded the Hankes both were entitled to severance damages and had 

the burden to prove their severance damages. Buchanan, 154 Ariz. at 164.
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

7

¶21 Although typically the date of the summons is used to 

determine severance damages, at times, the date may be the order of 

immediate possession, particularly when the value of the property has 

increased. See City of Scottsdale v. CGP-Aberdeen, L.L.C., 217 Ariz. 626, 634 ¶ 

36 (App. 2008). Here, the order for immediate possession was issued in July 

2018. The State’s expert used July 2018 to determine the “before” and 

“after” market value to calculate severance damages to the Hanke’s unit.

Looking at the difference between those values, the State’s expert opined 

that the Hankes incurred $5,000 in severance damages. The State relied on 

this value in seeking summary judgment. In opposing the State’s motion, 

the Hankes did not dispute, as a factual matter, the $5,000 in damages. 

Instead, the Hankes claimed far higher damages based on different legal 

concepts.

¶22 First, the Hankes used November 2005 as the “before” date, 

claiming ADOT first informally announced the freeway project then.

Although conceding the State did “nothing” on the project for at least a 

decade after November 2005, the Hankes claim their unit decreased in value 

“well over $100k” during that decade. But planning is not a taking for 

purposes of determining severance damages. City of Scottsdale, 217 Ariz. at 

634 ¶ 34; see also Weintraub v. Flood Control Dist. of Maricopa Cnty., 104 Ariz. 

566, 571 (1969) (“[N]otice of preliminary proceedings of proposed actions 

which may result in taking land for public use is not a damaging of a 

property which would entitle the owner to compensation therefor.”); State 

ex rel. Herman v. Larriva’s Ace Elec. Co., 11 Ariz. App. 452, 454 (1970) (“The 

fact that a resolution has been passed does not necessarily mean that the 

property will ever be condemned.”). Accordingly, the Hankes have not 

shown the court erred in using the July 2018 order of immediate possession 

as the proper date for severance damages. 

¶23 Second, the Hankes used “the current date” as the “after” date 

when they calculated damages in 2020, adding “Proximity Damages are 

likely to continue to accrue.” But the “before” and “after” dates used to 

determine severance damages refer to the value of Hankes’ unit before and 

after the July 2018 immediate possession order, seeking to place them in the 

position they “would have occupied had no taking occurred.” See State ex 

rel. Miller v. Filler, 168 Ariz. 147, 149, 150 (1991). As a result, the Hankes

failed to disclose or show the court facts to dispute the severance damages 

calculation, looking at the “before” and “after” condition when the State 

took possession of the property in July 2018. Thus, the Hankes failed to 

show a genuine dispute as to any material fact as to severance damages. 
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

8

¶24 The Hankes argue they should have been able to recover 

“general, special, indirect, consequential, incidental, and hedonic damages” 

as well as punitive and substitute facilities damages, as they argued in 

opposing the State’s motion for summary judgment. The superior court 

properly concluded the Hankes cannot recover punitive damages from the 

State. See A.R.S. §§ 12-820.04 (establishing immunity for public entity and 

public employee acting with the scope of employment) & 28-7092(A)

(authorizing ADOT to use condemnation to acquire real property 

“necessary for transportation purposes”). Other than severance damages,

the Hankes have not shown a legal right to these other types of damages

claimed, and the superior court properly concluded the Hankes failed to do 

so. See Maricopa Cnty. v. Shell Oil Co., 84 Ariz. 325, 327 (1958) (explaining the 

property owner bears the burden to establish recoverable damages).

¶25 Finally, the Hankes have shown no entitlement to 

compensation for the State to pay them the costs of buying a different unit 

or house, what they call replacement cost or substitute facilities damages. 

They cite no authority on appeal supporting such a claim and no Arizona 

opinion has recognized the concept as a requirement for eminent domain. 

To the extent the Hankes rely on dicta in Brown v. United States, 263 U.S. 78 

(1923), the United States Supreme Court later made clear that the concept is 

not constitutionally required. See United States v. 50 Acres of Land, 469 U.S. 

24, 33 (1984); see also id. at 35 (noting the concept “diverges from the 

principle that just compensation must be measured by an objective 

standard that disregards subjective values which are only of significance to 

an individual owner.”). Nor have the Hankes shown that Arizona law fails 

to provide constitutionally required just compensation here. See Catalina 

Foothills Unified Sch. Dist., 238 Ariz. at 516 ¶ 21. For these reasons, the 

Hankes have shown no error in the superior court granting the State’s 

motion for summary judgment and awarding them $5,000 in severance 

damages.

IV. The Hanke’s Failure to Serve the HOA as Required by This Court’s 

Orders and Rules Entitles the HOA to Sanctions. 

¶26 The Hankes served their notice of appeal on both the State 

and the HOA, and the Hankes’ briefs on appeal criticize actions by both the 

State and the HOA. The Hankes, however, failed to serve the HOA with 

their opening brief on appeal when they filed it. But see ARCAP 4(f)

(requiring such service). This court then ordered the Hankes to serve the 

HOA by September 6, 2022, and to file a certificate of service. See ARCAP 

4(f) & (g). That order added the court “will consider imposing sanctions if 

appellants fail to serve Foothills [with] any additional documents filed in 
STATE, et al. v. FOOTHILLS/HANKE, et al.

Decision of the Court

9

this appeal.” The Hankes failed to serve their opening brief on the HOA by 

September 6, 2022. The HOA now seeks attorneys’ fees as a sanction, citing 

A.R.S. § 12-349.

¶27 Reasonable attorneys’ fees and expenses may be assessed 

against a party who unreasonably expands or delays the proceeding. A.R.S. 

§ 12-349(A)(3). The Hankes claim they did not serve their opening brief on 

the HOA as ordered by the court because they were “[l]acking support staff 

and having suffered several cyberattacks.” However, the Hankes filed 

numerous motions between the time the court first ordered them to serve 

the HOA with the opening brief and when the Hankes finally did so. This

conduct belies the claim that they were not able to serve the HOA. Because 

the Hankes unreasonably expanded and delayed the proceedings, the HOA 

is awarded its reasonable attorneys’ fees incurred on appeal that were 

caused by that sanctionable conduct. 

CONCLUSION 

¶28 The judgment is affirmed. Along with the award of sanctions 

for the HOA under A.R.S. § 12-349, the arguments asserted by the Hankes 

against the HOA arise out of contract. Accordingly, as the successful party 

on appeal, the HOA is awarded its reasonable attorneys’ fees and costs

incurred on appeal under A.R.S. §§ 12-341 and 341.01, contingent upon its

compliance with ARCAP 21.