Opinion ID: 1213853
Heading Depth: 3
Heading Rank: 1

Heading: The Directed Verdict on Lakeview's Inverse Condemnation Claim

Text: Government actions become takings under principles of inverse condemnation when a private landowner is forced to bear an unreasonable burden as a result of the government's exercise of power in the public interest. Anchorage v. Sandberg, 861 P.2d 554, 558 (Alaska 1993). A property owner may recover damages for inverse condemnation where the state's activities deprive the owner of the economic advantages of ownership. Homeward Bound, Inc. v. Anchorage Sch. Dist., 791 P.2d 610, 614 (Alaska 1990). In order to have a legally cognizable claim of inverse condemnation, the property owner must show that his property has diminished in value because of the state's action. State v. Doyle, 735 P.2d 733, 738 (Alaska 1987). The trial court considered the basis for Lakeview's inverse condemnation action to be the incremental increase in the amount of garbage deposited at the landfill. [4] The trial court reasoned that Lakeview could prove a taking by showing quantitative or qualitative change attributable to the Borough's non-negligent interference which results in a measurable loss of market value sustained during the ten years preceding commencement of the suit. (Footnote omitted.) Lakeview filed suit on April 18, 1989. Having previously determined that the ten-year statute of limitations barred claims for any takings prior to April 18, 1979, the trial court directed a verdict on Lakeview's inverse condemnation claim because the court found that Lakeview failed to establish that the Borough's non-negligent actions during the statutory period caused compensable damage to Lakeview's property. [5] Lakeview attacks the directed verdict on several grounds. It argues that the trial court erred by applying the ten-year statute of limitations to Lakeview's inverse condemnation claims. Lakeview also claims that the trial court erred in excluding portions of its expert's testimony. Lakeview also seems to contend that it presented sufficient evidence at trial to support its inverse condemnation claim. Finally, Lakeview claims that the trial court erred in restricting Lakeview's inverse condemnation claims to damages resulting from the Borough's non-negligent actions. [6]
The initial summary judgment order implied that the Borough had to establish each of the elements for adverse possession to time-bar Lakeview's claims. [7] The trial court later ruled that AS 09.10.030 barred all inverse condemnation claims for damages arising prior to 1979. [8] Alaska Statute 09.10.030 is the ten-year statute of limitations for real property disputes. [9] Lakeview argues that the ten-year limitations statute does not bar its inverse condemnation claims for injury occurring more than ten years before the suit was filed unless all the requirements for establishing adverse possession are satisfied. Lakeview relies on the following passage to support its contention that the Borough was obliged to prove the elements of adverse possession to time-bar Lakeview's claims. When there is no special statute of limitations applicable to condemnation proceedings the condemnor cannot rely on a general statute of limitations. Eminent domain proceedings are not sufficiently analogous to suits at law or equity to fall under provisions intended to apply to ordinary private controversies. But it is held that after the expiration of the period necessary to acquire by adverse possession, the owner who has tolerated such occupancy without applying for payment has lost his rights. 1A Nichols on Eminent Domain § 4.102[5] at 4-78-80 (3d ed. 1990) (emphasis added, footnotes omitted). On its face, this statement does not help Lakeview because it indicates that only the prescriptive period need expire before a condemnation proceeding is barred. We also note that Lakeview's argument is contrary to the position it took when it opposed the Borough's effort to assert a third-party claim against the City. Lakeview then argued that it had not sued the City because the statute of limitations would have barred any claim against the City, which had last operated the landfill in 1973. In City of Kenai v. Burnett, 860 P.2d 1233, 1240 (Alaska 1993), we rejected the City's assertion the Burnetts' 1988 inverse condemnation claim for a 1985 taking was time-barred. We approvingly cited City of Anchorage v. Nesbett, 530 P.2d 1324, 1336 (Alaska 1975), for the proposition that inverse condemnation claims are subject to the limitations periods for adverse possession or ejectment, whichever applies. 860 P.2d at 1240 n. 13. We stated: In City of Anchorage v. Nesbett, 530 P.2d 1324, 1336 (Alaska 1975), we rejected an argument that inverse condemnation actions may be time barred either through laches or a limitations period shorter than the statutory period provided for adverse possession. We reaffirm our holding in Nesbett that such actions are subject to the limitations periods established for adverse possession or ejectment, whichever applies. Under AS 09.10.030, the limitations period for ejectment is ten years. Under AS 09.25.050, a seven year period applies when the adverse possessor acquires possession under color and claim of title. Burnett, 860 P.2d at 1240 n. 13 (emphasis added). [10] According to Lakeview, Nesbett supports the proposition that an inverse condemnation claim can only be barred if the government proves that it adversely possessed the complainant's property. In Nesbett the owner sued to compel the City to remove a power line from his property and to pay reasonable rental value for the use of the property. Alternatively, the owner sought damages because the power lines impaired the economic use of the land. 530 P.2d at 1327. The City claimed it had a prescriptive easement for the power lines across the owner's property. Id. at 1327-28. We upheld the trial court's determination that the City's use of the property was permissive rather than adverse. Id. at 1330-32. We did not rule that proof of all elements for adverse possession is necessary to time-bar an inverse condemnation suit. Expiration of the statute of limitations is a distinct defense, and can be asserted separately from the defense that the defendant has adversely possessed the plaintiff's property. We hold that Lakeview was obliged to file its inverse condemnation claim within the ten-year period prescribed by AS 09.10.030. Therefore, the trial court did not err in limiting recovery on that claim to any new or additional injury occurring within the ten years before Lakeview filed its complaint.
Lakeview argues that the Borough was equitably estopped from asserting that the statute of limitations barred inverse condemnation claims pre-dating 1979. Lakeview's argument is without merit because critical prerequisites for equitable estoppel are absent. Lakeview relied on Urban Rahoi's affidavit to support its estoppel claim. That affidavit does not allege fraudulent conduct nor does it indicate that Lakeview resorted to legal action within a reasonable period after the circumstances ceased to justify the delay. Gudenau & Co. v. Sweeney Ins., Inc., 736 P.2d 763, 769 (Alaska 1987). Likewise, the record does not permit a conclusion that Lakeview's reliance on the Borough's promises to clean up the landfill was reasonable. [11] Id. The trial court properly rejected Lakeview's equitable estoppel argument. [12]
Lakeview has not adequately briefed the issue of whether the admitted evidence was sufficient to prevent a directed verdict. Lakeview essentially argues only that [e]ven if the 1979 cut-off were applied, the directed verdict was still in error... . Dr. Mundy's analyses did not include pre-1979 damages. Dr. Mundy was Lakeview's expert appraiser. Our independent review of the record indicates that the evidence was not sufficient to avoid a directed verdict. Because the statute of limitations barred recovery for harm predating April 18, 1979, to prevail on its inverse condemnation claim, Lakeview had to prove the Borough caused economic loss that exceeded the impairment predating April 18, 1979. Consequently, Lakeview had to prove that odors, flies and other effects from the landfill caused additional decline in the value of its property in the ten years preceding its April 18, 1989 complaint. [13] Phillip Rahoi testified that the landfill's impacts on the Lakeview property worsened after 1979. For example, Phillip testified that there were more rats, flies and gulls on the Lakeview property after 1979. Nonetheless, Lakeview offered no evidence of the value of these increased impacts and did not otherwise quantify any incremental impact on the value of its property. [14] The only valuation evidence Lakeview presented to support its inverse condemnation claim was the testimony of Dr. Mundy, its expert appraiser. However, as counsel for Lakeview candidly conceded at oral argument, Mundy calculated Lakeview's damages by comparing the value of a totally unimpaired trailer park with the value of the Lakeview property at the time of trial. Mundy did not compare the value of the Lakeview property at the time of trial with its value on April 18, 1979, when it was already impaired, and thus did not quantify the incremental impact for the relevant period. The admitted evidence was insufficient to require the court to submit the inverse condemnation claim to the jury.
Lakeview argues that the trial court erred in limiting Mundy's expert testimony and that consequently a new damages trial is required. The court limited Mundy's opinions following a prolonged dispute about the adequacy of Lakeview's pretrial disclosure of Mundy's opinions and proposed testimony. The trial court did not abuse its discretion. To understand why, it is necessary to review the dispute in some detail. Lakeview filed its lawsuit on April 18, 1989, and ultimately sought over thirty-two million dollars in damages. The Borough sent discovery requests to Lakeview in December 1990 seeking an explanation of Lakeview's damage calculations and production of supporting documents. The requested information was potentially relevant to the condemnation claim with respect to the date of taking, the limitations defense, and the amount of damages. Lakeview did not respond; the Borough moved to compel. The parties initially stipulated to hold the motion in abeyance until the Borough could examine Lakeview's records. Lakeview understood the Borough's first discovery requests to encompass appraisals of Lakeview's property. When Lakeview failed to provide relevant documents as promised, the Borough renewed its motion to compel. The trial court granted the motion on September 12, 1991, ordered production, and also ordered Lakeview to pay $270 in attorney's fees. On October 13 the Borough served a second, more detailed, request for production seeking appraisals, economic reports and other documents reflecting a landfill-caused diminution in the value of Lakeview property. In March 1992 the trial court issued a pretrial order requiring that expert witnesses be listed and their opinions disclosed by August 28. The order specified that general discovery would close August 31 and that experts could be deposed no later than October 16. Trial was to begin the week of May 3, 1993. The Borough had difficulty obtaining the documents sought in its second request for production and in June 1992 again moved to compel. It also moved to bar Lakeview from presenting evidence that Lakeview had failed to produce in discovery. Those motions were unresolved as of August 26, 1992, when the Borough deposed Mundy. Mundy testified at his deposition that he had not yet calculated damages but had performed a preliminary analysis of the unimpaired value of the Lakeview property. Lakeview gave Mundy's preliminary analysis to the Borough at the Mundy deposition. Mundy had transmitted his preliminary analysis to Lakeview's attorneys by letter of September 10, 1991, nearly one year before it was first produced to the Borough on August 26, 1992. As the pretrial order required, Lakeview disclosed Mundy's anticipated opinions on August 28. The outline contained specific damages calculations. In September 1992 the Borough moved to preclude Mundy's testimony on the ground Lakeview failed to produce his 1991 appraisal until the day of his August 26 deposition, although the appraisal was encompassed by the Borough's December 1990 request and the court's September 12, 1991 order compelling discovery. Two days after the Borough filed its motion, Lakeview gave the Borough a letter from Mundy to Lakeview's counsel. The letter was dated August 28, 1992 and contained an opinion that differed from Mundy's 1991 analysis. On October 5 the trial court sua sponte scheduled a hearing to address discovery problems. At the hearing the court again instructed Lakeview to produce immediately all previously-requested documents and ordered it to produce within forty-eight hours all documents relied upon or created by Mundy that were previously identified as being located in Mundy's office. The court ordered Lakeview to make Mundy and another witness available for redeposition and required Lakeview to pay all costs and attorney's fees associated with the redepositions and the Borough's September motion to compel. The trial court warned Lakeview of the danger of a preclusion order: If there's any further difficulty in obtaining information from Mr. Mundy, a preclusion order will enter. The plaintiffs are about one centimeter away from a preclusion order at this point. Mundy was to be redeposed October 9, 1992. On October 8 the Borough received from Mundy all documents he relied upon in reaching the opinions disclosed in Lakeview's August 28 outline. The Borough's attorney and appraiser reviewed the documents in preparation for the Mundy redeposition. Before Mundy's October 9 redeposition began, however, Lakeview's counsel told the Borough's attorney that Mundy had prepared yet another set of documents that were essentially a tabular presentation of Dr. Mundy's earlier analysis, with one substantive change. These new documents were then faxed to the Borough's attorney while he was redeposing Mundy. During a deposition recess, the Borough's appraiser advised the Borough's attorney that the documents contained a significantly different valuation analysis from that used in either the August 28 opinion or the Mundy letter previously provided to the Borough. The unimpaired value of the land changed by more than two million dollars and the damages calculation changed by more than three million dollars. The Borough then suspended Mundy's deposition and filed a motion to preclude Mundy's testimony because it violated the court's pretrial and October orders, even though Lakeview offered to reschedule the deposition. In moving for preclusion, the Borough argued that for more than a year it had unsuccessfully tried to obtain evidence of Lakeview's economic damages claims. Lakeview responded that the pretrial order and the October 1992 order did not preclude Mundy from refining his opinion after the August 28 disclosure. The trial court was not persuaded that the changes simply refined or modified Mundy's previously-disclosed opinion and found Lakeview's explanation disingenuous. The court entered an order October 30, stating in part: The deadline for disclosure of the expert's opinion is just that. It does not contemplate disclosure of only preliminary material, a preliminary estimation, initial findings, or an initial draft. It does not contemplate subsequent substantial elaboration, refinements of analyses, modifications, newly disclosed development plans, or changes in the size and scope of these new plans. Lakeview must be held to these deadlines. It cannot be rewarded for its abuse of the discovery process or the inexcusable tardiness of its expert. It must be stripped of any advantage it might gain by these practices. And, its attorneys must be deterred from engaging in or facilitating these practices. IT IS THEREFORE ORDERED that the Borough's motion is granted, in part. Lakeview, at the Borough's option, will be precluded from using any opinions or materials inconsistent with the opinion on damages and the supporting facts as they were provided to the Borough on August 28, and September 24, 1992, or the materials produced on October 8, 1992... . If the Borough wishes, it may re-depose Mr. Mundy. All expenses associated with the re-taking of the deposition shall be borne by Lakeview.[ [15] ] The Borough also filed a separate motion in October to preclude Mundy's testimony because his opinion was erroneously based on a 1989 taking date. Lakeview acknowledged in response that Mundy's previously-expressed opinions were erroneous and advised the Borough that Lakeview would provide still another analysis, this one using an April 19, 1979 taking date. The court denied the Borough's motion in December, but did not address the propriety of any subsequent revised analysis by Mundy employing a 1979 taking date. In March 1993 Lakeview produced a revised Mundy analysis. It was also flawed. The calculations for the 1979 impaired versus unimpaired analysis that were omitted from the earlier opinions were again omitted. This omission was in part due to a clerical mistake and in part because Lakeview's attorney appears to have not yet communicated the necessity of this analysis to Lakeview's expert. The revised report again failed to take into account the existence of the landfill prior to April 19, 1979. According to Mundy, the unfortunate thing is, ... [the 1979 calculations] ... didn't get into the report. I was not at my office when the final report was put together, and the 1979 information inadvertently was left out. The trial court indicated it would exclude the 1993 analysis produced in March because it did not comply with the October 30, 1992 order. As Lakeview admitted, the 1993 analysis was inconsistent with the court's 1991 ruling that Lakeview was barred from recovering based on the existence and location of the landfill, conditions that predated the complaint by more than ten years. At trial, Mundy attempted to testify to a still different valuation. For the first time, Mundy attempted to determine damages by subtracting the pre-1979 damages. [16] Mundy admitted the report produced in March 1993, and by implication each of his earlier reports, did not take into account the property's impaired, as opposed to unimpaired, value in 1979. Therefore, when Mundy attempted to testify at trial about the 1979 value, the court ordered that testimony stricken. Lakeview contends that it was faced with a Hobson's choice. It either had to use an incorrect valuation date or it had to change the analysis, contrary to the court's order precluding testimony inconsistent with Mundy's pre-October 9, 1992 analysis. Lakeview argues that the trial court erred by excluding the March 1993 report and by preventing Mundy from modifying his opinion at trial, and that the court effectively forced Mundy to testify to an erroneous opinion. Lakeview relies upon Grimes v. Haslett, 641 P.2d 813 (Alaska 1982), to support its contention that the trial court should have ordered a continuance to allow the Borough to defend against Mundy's modified opinion, instead of preventing him from changing his analysis. [17] Grimes is not dispositive; it supports the Borough's argument that the trial court did not abuse its considerable discretion in excluding or limiting Mundy's testimony. Another decision illustrates the trial court's discretion in excluding evidence following a discovery violation. In State v. Guinn, 555 P.2d 530 (Alaska 1976), we affirmed the trial court's exclusion of testimony after a party inadvertently failed to comply with a discovery order. The State there failed to produce the requested notebooks of a state trooper who investigated an accident; the trial court struck the trooper's testimony regarding accident measurements because the trooper had no independent recollection of the measurements contained in the unproduced notebook. We held that a showing of wilful disobedience was not required in order to preclude a witness' testimony. Id. at 543. In Guinn, we distinguished between a devastating establishment-preclusion order and the far less drastic remedy of precluding testimony. Id. We have previously noted the difference between the extreme sanction of striking an answer or complaint, and the sanction of limiting or excluding evidence as a result of a discovery violation. See Dade v. State, Child Support Enforcement Div. ex rel. Lovett, 725 P.2d 706, 708 (Alaska 1986). Here, the trial court did not impose litigation ending sanctions, but rather prevented Mundy from testifying in a manner inconsistent with his pre-October 1992 opinion. Likewise, in Drickersen v. Drickersen, 604 P.2d 1082 (Alaska 1979), we upheld the trial court's exclusion of an expert's new opinions offered for the first time at trial. In his pretrial deposition, the expert testified he had reached only preliminary conclusions that were subject to change. The opinion he proffered at trial had not previously been disclosed. Id. at 1087. Guinn and Drickersen support the exclusion of Mundy's post-October 1992 opinions and testimony. [18] The trial court did not abuse its discretion by excluding the March 1993 analysis and refusing to allow Mundy to change his opinion at trial. [19]
Lakeview claims that the trial court erred by refusing to consider inverse condemnation damages caused by the Borough's improper, unlawful, or negligent maintenance or operation of the landfill. According to the trial court, Lakeview must prove a taking in this regard by showing quantitative or qualitative change attributable to the Borough's non-negligent interference which results in a measurable loss of market value sustained during the ten years preceding commencement of the suit. It is not necessary to consider whether the trial court erred in concluding that only non-negligent activities can be considered in assessing an inverse condemnation claim. Any error was harmless. Cf. Poulin v. Zartman, 542 P.2d 251 (Alaska 1975), on rehearing, 548 P.2d 1299, disavowed on other grounds, State v. Alex, 646 P.2d 203, 208 n. 4 (1982). The trial court properly directed a verdict on the inverse condemnation claim in the absence of sufficient evidence to permit the jury to conclude the Borough impaired the value of the property after 1979. Further, by special verdict form, the jury found that the Borough was negligent between 1987 and the time of trial, but that the Borough's negligence did not cause Lakeview's injuries. That finding is necessarily conclusive regarding causation for a negligence-based inverse condemnation claim during the same time period. Further, Lakeview elicited evidence supporting its assertion that impacts on its property from the landfill worsened over time and that the effects were especially bad after 1987. Given that evidence, the jury which found that Borough negligence had caused Lakeview no damage from 1987 onward also would have been compelled to find a lack of causation regarding Borough negligence before 1987. [20] Consequently, any error in failing to allow the jury to consider Borough negligence in deciding Lakeview's inverse condemnation claim must be considered harmless. [21]