Opinion ID: 2516837
Heading Depth: 4
Heading Rank: 1

Heading: Landowners' Ehrlander/Lange/Homeward Bound theory

Text: The landowners' main argument on appeal is that under existing Alaska law, the state is constitutionally required to compensate them because, by publishing an unequivocal pre-condemnation intent to appropriate their properties, it deprived them of the economic advantages of ownership. They rely on two Alaska cases Ehrlander v. State, Department of Transportation, [11] and Homeward Bound, Inc. v. Anchorage School District [12] as well as a Washington case Lange v. State [13] which we approvingly discussed in Ehrlander. [14] Before discussing the legal issues presented, we note the factual posture of this case. It involves the state's pre-condemnation publication of notices, information, plans, and proposals pertaining to a road improvement project component that, as of the time the parties sought summary judgment, might or might not be built. This component of the overall project had not became final, and its scope was uncertain. Its impact on the landowners' parcels was consequently uncertain, and the publications attributed to the state reflect this uncertainty. Likewise, there was uncertainty about what specific parcels or portions thereof might be acquired. We also note that these properties were improved with commercial buildings and that there is no evidence the state actively interfered with the beneficial use of these properties by (1) limiting their development, improvement, or occupancy; (2) denying the landowners any permits needed to develop, improve, or use these properties; (3) notifying tenants they would have to vacate or would be compensated for vacating; or (4) informing the owners that in event of condemnation, they would not be compensated for maintaining or improving their properties. Instead, the common thread in the landowners' superior court affidavits is that they are unable to sell their properties and that they lost rental income because pre-condemnation announcements discouraged buyers and renters and made improvements infeasible or economically imprudent. The Alaska Constitution provides that private property shall not be taken or damaged for public use without just compensation. [15] Private property is taken or damaged for constitutional purposes if the government deprives the owner of the economic advantages of ownership. [16] Once private property is taken or damaged, the owner is entitled to be placed in the same position as he would have occupied absent the governmental interference. [17] We have held that under some circumstances landowners may be entitled to compensation from government entities whose activities diminish the value of their properties even though the government never actually condemns the properties. Thus, in Homeward Bound, we stated: [I]n cases such as this one where the alleged taking is based on precondemnation decisions concerning the subject property, the objective manifestations of the government's intention to take the property are critical to the decision whether there was a taking. This is because the government's indications of its intention to condemn the property are the source of the owner's claimed damages. [18] Homeward Bound claimed that the municipality and the school district had inversely condemned its unimproved property by designating it as a potential school site, temporarily diminishing its value. [19] In discussing cases where the alleged taking is based on precondemnation decisions concerning the subject property, we referred in Homeward Bound to California law, originating in Klopping v. City of Whittier, [20] that allows landowners to recover for loss in the value of their properties due to governmental pre-condemnation activity. The California Supreme Court held in Klopping: [A] condemnee must be provided with the opportunity to demonstrate that (1) the public authority acted improperly either by unreasonably delaying eminent domain action following an announcement of intent to condemn or by other unreasonable conduct prior to condemnation; and (2) as a result of such action the property in question suffered a diminution in market value. [21] We then held in Homeward Bound that to recover for damages caused by pre-condemnation governmental activities that do not otherwise amount to a de facto taking, an Alaska plaintiff must show a concrete indication that the state intended to condemn the property. [22] Approvingly citing one of Klopping's early progeny, we explained: Later, in Selby Realty, Co. v. City of San Buenaventura [10 Cal.3d 110, 109 Cal.Rptr. 799, 514 P.2d 111 (1973)], the [California Supreme Court] held that the mere enactment of a general plan showing proposed streets extending through private property did not constitute a taking because there was no present concrete indication that the county either intends to use plaintiff's property for the proposed streets or that it intends to acquire the property by condemnation. The court distinguished Klopping on the ground that the adoption of a general plan is several leagues short of a firm declaration of an intention to condemn property. [23] In considering the claims of the Jackovich landowners, the superior court characterized Alaska takings law as requiring a public statement of `concrete' intention to acquire specific property before a Klopping claim will lie. [24] Applying this rule, the superior court dismissed the landowners' claim on summary judgment. It concluded that even Klopping the most expansive holding this court has been able to identify in terms of affording compensation to disadvantaged property ownersdoes not reach the facts of the present case, which contain no allegation of any public expression of intent to use a specific piece of property. The Jackovich landowners do not ask us to adopt Klopping, which they say may have adopted a requirementthat the government have acted improperlythat is foreign to established inverse condemnation law in Alaska. [25] They instead assert that in Ehrlander we adopted a broad doctrine of compensability by relying on principles discussed by the Washington Supreme Court in Lange v. State. [26] Our Ehrlander opinion approvingly discussed as follows the reasoning of the Washington court in Lange: In our view this reasoning should be applicable not merely when a condemnation action is formally begun, but whenever a property owner is, by reason of an impending condemnation, deprived of the economic advantage of ownership. That was the rationale of the Washington court in Lange: Once the state manifested its unequivocal intent to appropriate the Lange property, appellants were precluded from exercising their business judgment and selling the property before the market fell further. Moreover, appellants were precluded from taking any steps to counteract the market decline by making improvements on the land or otherwise changing its use. Thus appellants were deprived of the most important incidents of ownership, the rights to use and alienate property. 547 P.2d at 288. We thus agree with Lange and believe that its holding should be applicable here. As the Lange test does not require either extraordinary delay or a bad faith motive to depress land prices, the state's argument that the absence of these factors means that Ehrlander has not made a prima facie case of an imputed taking must fail. [27] Ehrlander, like Lange, asserted claims that the government engaged in pre-condemnation activity that caused his unimproved real property to decline in value before the state began condemnation proceedings to acquire the land. Ehrlander claimed that the state's unreasonable delay in bringing the condemnation proceedings after it announced its intention to use his property for a highway project resulted in an imputed taking. [28] The superior court granted summary judgment to the state because the state did not unreasonably delay or have a bad faith motive to depress land prices. Holding that those were not requirements for a claim under Lange, we reversed and remanded for consideration of Ehrlander's imputed taking claim and for application of the four-element test set out in Lange. [29] Lange filed his inverse condemnation claim about one year before the state filed an eminent domain action to acquire land he had purchased to develop and sell. [30] The Washington Supreme Court applied a four-element test to decide in the formal condemnation proceeding whether to advance the date of valuation. [31] Lange is properly regarded, like Ehrlander, as an example of an early valuation eminent domain case. The four-element Lange test does not expressly apply to or encompass the claims of the Jackovich landowners. Rather than trying to advance the date of taking for valuation purposes where it is undisputed that the state has taken the property, they are trying to establish that there was a taking; it is the taking that is disputed, not the date when it occurred. And the Jackovich landowners do not hold unimproved property which they had acquired to develop and sell; their property was income producing and continued to produce at least some income at pertinent times. If the state cancels the Illinois Street part of the project without acquiring their properties, the prospect of condemnation will no longer arguably affect the income their properties generate. On its face, the Lange test does not appear to apply to an inverse condemnation claim where the state never acquires the property. [32] Nonetheless, we recognized in Homeward Bound that pre-condemnation governmental activity could in theory amount to a temporary taking that would entitle an owner to compensation even if the plan to condemn were abandoned. [33] One can imagine that pre-condemnation publicity could depress income actually realized from improved commercial property, leading to a temporary taking that requires compensation. But it is not so obvious what standards should be applied to such a claim. How long must an owner endure such publicity before it becomes a compensable temporary taking? What decline in value is large enough to be cognizable? Our decisions do not answer those questions. We do not need to explore those issues here, nor others that may arise from permitting an inverse condemnation claim based on pre-condemnation publicity where no eminent domain condemnation has yet occurred and may never occur. We think that at a minimum in such a case, the government must have publicly announced a present intention to condemn specific properties, [34] and it must have done something that substantially interferes with the landowners' use and enjoyment of their properties. [35] These minimal requirements present two insurmountable obstacles to the claims of the Jackovich landowners in this case as it is presented to us.
First, the public announcements attributable to the state, even taking all permissible factual inferences in the landowners' favor, fall short of permitting a finding that DOT expressed a present concrete intention to condemn specific property. The landowners argue that the superior court erred in reaching this conclusion. They point to maps and newsletters identifying their properties as land to be condemned under the Illinois Street project. They refer to the January 1993 DOT Newsletter passage we quoted above in Part II.A. The landowners also point to correspondence, contained in supplemental exhibits, discussing the possibility of condemnation. The supplemental exhibits included letters from DOT to the landowners addressing future acquisition of their specific properties. One letter stated that a portion of your property will be required for additional right-of-way for the referenced highway project, and another purported to announce our current schedule and expectations for this projectspecifically the acquisition of your property at 224 to 226 Illinois Street. As previously mentioned, the superior court refused to consider these letters at oral argument on the cross-motions for summary judgment pending an appropriate motion, and no such motion was ever brought. Read in the light most favorable to the landowners, the evidence (including the rejected supplemental exhibits) does not reasonably permit an inference that DOT had expressed a present concrete intention to condemn specific portions of the landowners' properties in the near future. First, the maps, newsletters, and any other general publicity produced by DOT indicating that the Illinois Street Extension would pass through certain private properties are insufficient to constitute the requisite present concrete intention to acquire specific property. In Selby Realty, the California Supreme Court held that adoption of a general plan is several leagues short of a firm declaration of an intention to condemn property. [36] The court explained that imposing liability on the basis of such publicity would either cause the process of community planning to grind to a halt, or else reduce such planning to vacuous generalizations regarding the future use of land. [37] This reasoning applies to all of the general publicity at issue in this case. DOT should be encouraged to provide meaningful notice to the public of major projects that will affect private development; imposing liability on the basis of such publicity would have exactly the opposite effect. Second, the specific letters from DOT to the landowners concerning future acquisition of their properties are likewise insufficient. Read in the light most favorable to the landowners, a fact-finder could reasonably conclude that DOT intended to acquire their property at some unspecified future time. But our intent test requires a present concrete intention to acquire property, and the letters cannot be fairly read to satisfy this test. None of the letters expresses an intent to initiate acquisition proceedings immediately. Indeed, the three letters that most clearly express DOT's intent to acquire specific properties all indicate that hazardous substances investigations must be performed before fair market valuations for the properties can be determined. One of the letters indicates that the right of way acquisition process for this project would not even begin for a full year from the date of the letter, and another letter advised the property owner to undertake planned improvements despite DOT's intention to acquire the property in the future due to anticipated complications with site contamination and obtaining approval to acquire the property via the advanced acquisition process. The Jackovich landowners have not pointed to any case supporting their claim that the letters in this case are sufficiently definite to satisfy the present concrete intention requirement, and we are aware of none. In Klopping, the California Supreme Court held that the city demonstrated a sufficiently specific intent to condemn property when it initiated condemnation proceedings, dismissed the action, but declared its intention to take the property in the future. [38] But in this case the state had not initiated condemnation actions regarding any of the properties at the time the superior court entered its final order. Conversely, in Homeward Bound we held there was no concrete indication to acquire specific land despite the fact that the Anchorage municipal assembly had passed two resolutions designating the owner's property as a school site, because the school district, which had final authority to approve the site, had not done so. [39] DOT's intention to acquire the Jackovich landowners' properties is at least as indefinite. The Illinois Street Project has gone through numerous changes, and there was no finalized plan at the time the superior court entered judgment in this case.
There is no indication the state did anything more than make announcements, prepare and publish plans, and provide publicity concerning the project. As noted above, there is no evidence that the state actively interfered with the landowners' beneficial use of their properties, such as by prohibiting them from using their properties beneficially or denying needed permits. [40]
The Jackovich landowners seem to imply that they have stated a legally sufficient claim under the rule of Lange, [41] which we applied in Ehrlander. [42] But in those cases the state ultimately condemned the claimant's property. [43] Lange and Ehrlander are therefore properly regarded as early valuation eminent domain cases; they do not establish the appropriate standard for reviewing the state's pre-condemnation conduct where condemnation proceedings are either abandoned or never initiated.