Opinion ID: 2493631
Heading Depth: 1
Heading Rank: 21

Heading: Whether the trial court erred in denying Dedeaux's request for declaratory judgment on its inverse-condemnation claim.

Text: ¶ 47. On April 30, 2008, Dedeaux filed a Motion to Dismiss, or, Alternatively, for Declaratory Judgment on the Issue of Contributions in Aid of Construction After December 3, 1996, and Other Matters Constituting Inverse Condemnation in the trial court. [17] The motion provided, in pertinent part, that: [i]f this [c]ourt does not allow future [CIAC] to be recovered as an element of damage, [Gulfport], who took control of the Dedeaux system on December 20, 2004, will be allowed to recover and receive assets of Dedeaux ([CIAC] from December 1996 to December 2004) without paying any compensation for such assets. This amounts to an inverse condemnation of Dedeaux assets. ¶ 48. The trial court denied Dedeaux's motion as procedurally untimely under Rule 4.03 of the Uniform Circuit and County Court Rules (URCCC). See URCCC 4.03(5.) ([A]ll dispositive motions shall be deemed abandoned unless heard at least ten days prior to trial.). Addressing the substantive merits, the trial judge acknowledged that the biggest problem I've always had with this case is that it got delayed[,] but nonetheless, the trial court prohibited the introduction of any evidence of actual development after the date of taking. ¶ 49. As noted in paragraph 5 supra, following the trial court's ruling, Dedeaux filed a separate inverse-condemnation action in chancery court. According to Dedeaux, that action was premised on Gulfport's assertion in the eminent domain action that a claim of inverse condemnation is a separate cause of action that must be initiated by the property owner and that the [trial court] lacked subject matter jurisdiction to hear Dedeaux's claim.... But according to Gulfport, it never asserted in any pleading that the [trial court] did not have jurisdiction of Dedeaux's inverse condemnation claim.... As the parties do not dispute the trial court's jurisdiction over Dedeaux's inverse-condemnation claim, this Court concludes that the chancery court reached the correct result in granting Gulfport's Motion to Dismiss. Accordingly, regarding consolidated Cause No. 2010-CA-00290-SCT, this Court affirms. ¶ 50. Dedeaux asserts that Mississippi Code Section 77-3-21 imposed the responsibility to accept and maintain improvements to its water and sewer system when such work was necessary to maintain reasonably adequate service to the citizenry within Dedeaux's certificated area. See Miss.Code Ann. § 77-3-21 (Rev.2009). As such, Dedeaux argues that Section 11-27-19, which provides that fair-market value is established as of the date of the filing of the complaint[,] is unconstitutional when applied to the condemnation of assets of a privately owned public utility because it ... does not afford just compensation for [CIAC] that it must receive and maintain as a matter of state law during the pendency of the eminent domain proceeding until the final judgment. Miss.Code Ann. § 11-27-19 (Rev.2004) (emphasis added). According to Dedeaux, settled law must yield to Dedeaux's unassailable and fundamental constitutional right to reimbursement for assets that it must receive and maintain as a matter of state law during the pendency of the eminent domain proceeding until final judgment. ¶ 51. Gulfport responds that Dedeaux is procedurally barred from raising this issue. First, Gulfport argues that Dedeaux raised the constitutionality of Section 11-27-19 in its April 11, 1997, Answer to the eminent-domain petition, its July 2, 1997, Motion to Dismiss, and a pleading filed April 30, 2008, but gave no notice to the Attorney General until it filed its appellate brief on September 30, 2009. Second, Gulfport contends that Dedeaux failed to preserve its inverse-condemnation claim for appeal because it never made a proffer regarding the items of property donated to it after December 3, 1996, or the alleged value of any such donated property. Substantively, Gulfport maintains that, because the date of filing is the proper date to be used in determining land values in eminent domain cases[,] then: [a]ny property received by Dedeaux by donation, if any, after the date of taking could not be taken by [Gulfport] as of the filing of the eminent domain petition. If an inverse condemnation occurred relating to property donated to Dedeaux after the date of taking, it occurred in December 2004 when [Gulfport] took possession of the Dedeaux water and sewer system. ¶ 52. Preliminarily, this Court finds the trial court's denial of Dedeaux's motion on the procedural basis of Uniform Circuit and County Court Rule 4.03(5.) to be in error. The motion hearing was conducted on May 28, 2008, while trial did not commence until September 22, 2008. As such, the motion was heard at least ten days prior to trial. URCCC 4.03(5.). ¶ 53. Regarding notice to the Attorney General, Mississippi Rule of Civil Procedure 24(d)(2) states that: [i]n any action ... (2) for declaratory relief brought pursuant to Rule 57 in which a declaration or adjudication of the unconstitutionality of any statute of the State of Mississippi is among the relief requested, the party asserting the unconstitutionality of the statute shall notify the Attorney General of the State of Mississippi within such time as to afford him an opportunity to intervene and argue the question of constitutionality. Miss. R. Civ. P. 24(d)(2). Mississippi Rule of Appellate Procedure 44(a) provides, in pertinent part, that: [i]f the validity of any statute ... is raised in the Supreme Court ... and the state ... which enacted or promulgated it is not a party to the proceeding, the party raising such question shall serve a copy of its brief, which shall clearly set out the question raised, on the Attorney General.... Miss. R.App. P. 44(a). To comply with these rules, a party challenging the constitutionality of a legislative enactment must serve a copy of his or her brief on the Attorney General. Oktibbeha County Hosp. v. Miss. State Dep't of Health, 956 So.2d 207, 211 (Miss.2007). But this Court has stated further that a claim which does not seek to invalidate a statute, but only challenges the constitutionality of its application, does not require Rule 24(d)(2) notification. See Aarco Oil & Gas Co. v. EOG Resources, Inc., 20 So.3d 662, 665 (Miss. 2009). ¶ 54. This Court finds that Dedeaux does not assert that Section 11-27-19 is per se unconstitutional, but only unconstitutional as applied to privately owned, public-utility companies like itself. As such, this Court finds that no Rule 24(d)(2) notification was required. See id. Moreover, there is no dispute that Dedeaux provided Rule 44(a) notice to the Attorney General in its Appellant's Brief. Accordingly, this Court finds this procedural bar inapplicable. ¶ 55. Finally, Mississippi Rule of Evidence 103(a) provides that [e]rror may not be predicated upon a ruling which ... excludes evidence unless a substantial right of the party is affected and an offer of proof is made. Miss. R. Evid. 103(a). But Rule 103(d) adds that [n]othing in this rule precludes taking notice of plain errors affecting substantial rights although they were not brought to the attention of the court. Miss. R. Evid. 103(d). Based upon the plain error rule, this Court finds that even in the absence of a proffer of post-eminent-domain-complaint CIAC, etc., by Dedeaux, its constitutional right to just or due compensation mandates this Court's consideration of the substantive merits of this claim. [18] U.S. Const. amend. V; Miss. Const. art. III, § 17 (1890). ¶ 56. [T]his Court applies de novo review to matters regarding statutory interpretation. Austin v. Wells, 919 So.2d 961, 964 (Miss.2006) (citations omitted). Dedeaux has a constitutional right to just or due compensation. U.S. Const. amend. V; Miss. Const. art. III, § 17 (1890). But Section 11-27-19 clearly fixes fair-market value as of the date of the filing of the complaint. Miss.Code Ann. § 11-27-19 (Rev.2004). See also Brown, 182 So.2d at 385-86. Moreover, in inverse-condemnation proceedings, this Court also has stated that the amount of the compensation should be determined as of the date of taking. Wright, 232 So.2d at 715. ¶ 57. Here, it is undisputed that between December 3, 1996, when Gulfport filed its complaint of eminent domain, and December 20, 2004, when Gulfport physically took over the assets and assumed operation of the utility system, Dedeaux continued to operate the utility. Under Section 77-3-21, Dedeaux had a duty to rende[r] reasonably adequate service during this period. Miss.Code Ann. § 77-3-21 (Rev.2009). That statute adds: [i]n the event the commission finds that such utility is not rendering reasonably adequate service the commission may enter an order specifying in what particulars such utility has failed to render reasonably adequate service and order that such failure be corrected within a reasonable time, such time to be fixed in such order. If the utility so ordered to correct such a failure fails to comply ... its certificate for the area affected may be revoked and cancelled by the commission. Id. (emphasis added). ¶ 58. Fair-market value is `not an absolute standard nor an exclusive method of valuation.' ... The constitutional requirement of just compensation derives as much content from the basic equitable principles of fairness ... as it does from technical concepts of property law. United States v. Fuller, 409 U.S. 488, 490, 93 S.Ct. 801, 803, 35 L.Ed.2d 16 (1973) (quoting United States v. Virginia Elec. & Power Co., 365 U.S. 624, 633, 81 S.Ct. 784, 790, 5 L.Ed.2d 838 (1961)). As such, [c]ourts have had to adopt working rules in order to do substantial justice in eminent domain proceedings. Fuller, 409 U.S. at 492, 93 S.Ct. 801 (quoting Miller, 317 U.S. at 375, 63 S.Ct. 276). In one such case, the Illinois Supreme Court addressed a situation where statutory law required the value of condemned property [to be] fixed as of the date the condemnation is filed, but ... being a public utility [the water company] is required by the Illinois Commerce Commission to expend thousands of dollars for extending and improving its service subsequent to said filing date. Ill. Cities Water Co. v. City of Mt. Vernon, 11 Ill.2d 547, 144 N.E.2d 729, 731 (1957). According to that court: [t]he whole purpose of the condemnation proceeding is to satisfy the constitutional and statutory requirements that property not be taken without due process of law and that just compensation be awarded therefor. ... As long as rules of law meet these constitutional tests they are of value and should be sustained, but this does not mean they are without exception. ... We believe the present situation is exceptional and that the value of all waterworks property, including that necessarily added subsequent to the date the condemnation petition is filed, may be determined in an eminent domain proceeding. Here we are not dealing solely with real estate which may be accurately described and inventoried at the time the petition is filed but largely with machinery, trucks, supplies, equipment, and other personal property, the number and description of which will change until such time as the transfer of ownership is accomplished. We must consider too that in order to comply with its certificate of convenience and necessity, [the water company] must constantly extend its service to those who need it. Because of these circumstances the ordinary rules of valuation must also change so as to put the [water company] in as good a financial condition after the transfer as it was before. Nothing short of such an amount conforms to the constitutional requirement of just compensation.... It is our opinion that ... the jury may consider not only the value of the property at the time the petition was filed but also the worth of all extensions, additions, and improvements of the waterworks property which were necessarily and in good faith subsequently made or commenced by [the water company] in accordance with its operating authority. Id. at 731-32 (emphasis added). See also Citizens Utils. Co. v. Superior Court, 382 P.2d 356, 361-62 (Cal.1963) (it would be unconstitutional to take a utility's property valued as of the date of the summons ... without compensating it for involuntary and compulsory improvements installed by it after such date that result in an increase of value of the system.); Iowa Elec. Light & Power Co. v. City of Fairmont, 243 Minn. 176, 67 N.W.2d 41, 47 (1954) ([T]he gas company should be properly compensated for any such betterments, extensions, or improvements it was required to make after the award was made but before relinquishing possession of the property, subject to setoffs arising out of its continued use of the property during that time.); Ariz. Corp. Comm'n v. Tucson Gas, Elec. Light & Power Co., 67 Ariz. 12, 189 P.2d 907, 911 (1948) (the condemnation statute, as a whole, is wholly inadequate, inappropriate, inapplicable, and insufficient as a means of assessing the compensation to be paid to a public utility for its physical properties and additions thereto made under compulsion of law); Passaic Consol. Water Co. v. McCutcheon, 105 N.J.L. 437, 144 A. 571, 573 (N.J.Err. & App.1929) ([F]ailure to provide a method by which the owner can be reimbursed for the extension and betterments it is obliged to make during the pendency of the proceedings is a serious matter, and deprives the water company of just compensation for its property if the statute cannot be so construed as to include such payments.). ¶ 59. It is undisputed that Dedeaux operated the utility between December 3, 1996, and December 20, 2004. During this period, Dedeaux had a statutory duty to rende[r] reasonably adequate service.... Miss.Code Ann. § 77-3-21 (Rev. 2009). As such, in the interest of doing substantial justice in the eminent-domain proceeding so as to provide Dedeaux with its constitutional right to just compensation, this Court finds that the ordinary rules of valuation must ... change.... Fuller, 409 U.S. at 492, 93 S.Ct. 801; Ill. Cities Water Co., 144 N.E.2d at 731-32. In short, regarding privately owned, public-utility companies, fair-market value shall not be limited to the date of taking. Rather, in these specific cases, the applicable date for purposes of determining due compensation is the actual date the property is transferred (here, December 20, 2004). Therefore, Section 11-27-19 is unconstitutional as applied to privately owned, public-utility companies. See Miss. Code Ann. 11-27-19 (Rev.2004). As the trial court held otherwise, this Court concludes that it erred. On remand, this Court instructs the trial court that: the jury may consider not only the value of the property at the time the petition was filed but also the worth of all extensions, additions, and improvements of the ... property which were necessarily and in good faith subsequently made or commenced by [Dedeaux] in accordance with its operating authority. Ill. Cities Water Co., 144 N.E.2d at 731-32. These figures should be subject to setoffs arising out of [Dedeaux's] continued use of the property during that time[,] including revenues earned. Iowa Elec., 67 N.W.2d at 47.