Opinion ID: 4568765
Heading Depth: 2
Heading Rank: 3

Heading: Whether the division effected a total taking

Text: {¶ 43} We start our analysis of AWMS’s total-takings claim with the rule espoused in Lucas, which applies to the “relatively rare situations where the government has deprived a landowner of all economically beneficial uses.” 505 U.S. at 1018, 112 S.Ct. 2886, 120 L.Ed.2d 798. Under Lucas, the “determinative factor” is whether the regulation effects a “complete elimination of a property’s value.” Lingle, 544 U.S. at 539, 125 S.Ct. 2074, 161 L.Ed.2d 876. See also R.T.G., Inc., 98 Ohio St.3d 1, 2002-Ohio-6716, 780 N.E.2d 998, at ¶ 39 (plurality opinion) (“Lucas applies where the regulation has deprived the property of all economic value”). {¶ 44} AWMS supports its argument that it suffered a total taking with the report of its expert witness, Dr. William W. Wade, who determined, using a netpresent-value calculation that AWMS had lost 99.4 percent of its investment by September 2015 and 101.5 percent of its investment by June 2017. Dr. Wade determined that the division’s continued enforcement of its suspension order for well #2 created a situation in which AWMS could not cover its operating costs despite any operating revenues generated by well #1. As he explained, “operations without Well #2 are not economically viable” because “Well #2 is essential to the business operations.” {¶ 45} The state’s expert witnesses faulted Dr. Wade’s analysis as relying on an overly optimistic projection of the volume of wastewater that AWMS’s wells would have accepted. In their view, the well-capacity limitations of AWMS’s 16 January Term, 2020 wells, not the division’s suspension order, had been one of the leading culprits for AWMS’s decline in operating revenues. Had Dr. Wade accounted for those limitations, the state says, he would not have concluded that AWMS suffered a total taking. {¶ 46} We need not decide which expert witness was right, for a court may not weigh competing expert-witness opinions at the summary-judgment stage. Miller, 80 Ohio St.3d at 613, 687 N.E.2d 735. We hold, however, that these differences of opinion are enough to establish a genuine issue of material fact concerning whether AWMS suffered a total taking under Lucas. For that reason, we reverse the Eleventh District’s judgment granting summary judgment to the state and remand to that court for further proceedings on AWMS’s total-takings claim. {¶ 47} In reaching this decision, we reject the state’s argument that AWMS did not suffer a total taking because AWMS used and could continue to use its site after the division suspended operations at well #2. The state emphasizes that AWMS could use the site to (1) conduct saltwater-injection operations at well #1, (2) store, recycle, and treat wastewater, and (3) sell byproducts of the wastewater. According to the state, nothing prevents AWMS from continuing those uses. Our concern here, however, is not whether AWMS’s property is capable of being used, but whether it is capable of being used in an “economically beneficial or productive” manner. Lucas, 505 U.S. at 1015, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 798. As Dr. Wade opined, the uses to which the state refers yield monthly net losses. For the purposes of summary judgment, his opinion is enough to establish a genuine issue of material fact sufficient to withstand the state’s claim that AWMS did not suffer a total taking. {¶ 48} We also reject the court of appeals’ conclusion that AWMS did not suffer a total taking because AWMS could have sublet its property to a third party. 2019-Ohio-923, 132 N.E.3d 1151, at ¶ 16. The Federal Circuit addressed a similar 17 SUPREME COURT OF OHIO argument in Lost Tree Village Corp. v. United States, 787 F.3d 1111 (Fed.Cir.2015). In that case, the government argued that an owner’s ability to sell an affected parcel of land constituted an economically beneficial use under Lucas. In rejecting that argument, the court explained that “[t]ypical economic uses enable a landowner to derive benefits from land ownership rather than requiring a landowner to sell the affected parcel.” Id. at 1117. By analogy, AWMS’s subletting the property, which would transfer away its right to directly use the property, also does not rise to the level of an economically beneficial use under Lucas. Moreover, any sublessee of the property would encounter the same problem as AWMS because it would inherit AWMS’s leasehold rights, which, as noted above, extend no further than saltwater-injection-well operations. {¶ 49} It is doubtful that AWMS’s subletting the property would even be a viable option here. “[A] proposed ‘use’ requires a showing of reasonable probability that, at the time of the taking, the land was both physically adaptable for such use and that there was a need or demand for such use in the reasonably near future.” Bd. of Cty. Supervisors of Prince William Cty. v. United States, 276 F.3d 1359, 1365 (Fed.Cir.2002). The court of appeals observed that third parties had expressed interest in using AWMS’s property but that no agreement had been finalized. 2019-Ohio-923, 132 N.E.3d 1151, at ¶ 16. In support, it relied on the deposition testimony of Kilper, AWMS’s vice president, who explained that two potential buyers had contacted him and expressed interest in possibly buying out AWMS’s interest in the property. The record does not disclose the details of those conversations, but Kilper explained that at some point in the negotiations the potential buyers stopped returning AWMS’s telephone calls. The evidence, therefore, does not show a legitimate demand for AWMS’s interest in the property. {¶ 50} The court of appeals also relied on the report of Andrew Adgate, ODNR’s underground-injection-control manager, id. at ¶ 17. In his report, Adgate suggested alternative ways in which AWMS could use the property. But because 18 January Term, 2020 we conclude that Dr. Wade’s opinions in his report are enough to create a genuine issue of material fact regarding whether AWMS suffered a total taking, we need not consider the substance of Adgate’s report.
{¶ 51} Under Lucas, even if a governmental regulation completely deprives an owner of all economically beneficial use of its property, just compensation is not required if the government can show that background principles of property and nuisance law proscribe the owner’s use of the property. Lucas, 505 U.S. at 1029, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 798. To take an example from Lucas, the corporate owner of a nuclear generating plant [would not be entitled to just compensation] when it is directed to remove all improvements from its land upon discovery that the plant sits astride an earthquake fault. Such regulatory action may well have the effect of eliminating the land’s only economically productive use, but it does not proscribe a productive use that was previously permissible under relevant property and nuisance principles. Id. at 1029-1030. Courts have interpreted Lucas’s background-principles-ofproperty-and-nuisance-law passage as creating a defense that the government can raise in a regulatory-takings action. See, e.g., Rith Energy, Inc. v. United States, 247 F.3d 1355, 1361 (Fed.Cir.2001); Palm Beach Isles Assocs. v. United States, 231 F.3d 1354, 1357 (Fed.Cir.2000). We must consider whether, as AWMS argues, the state waived its nuisance defense. {¶ 52} “Unlike lack of subject matter jurisdiction, other affirmative defenses can be waived.” State ex rel. Jones v. Suster, 84 Ohio St.3d 70, 77, 701 N.E.2d 1002 (1998). “[I]t is well settled that ‘[a] party who fails to raise an argument in the court below waives his or her right to raise it here.’ ” (Second 19 SUPREME COURT OF OHIO bracket sic.) Niskanen v. Giant Eagle, Inc., 122 Ohio St.3d 486, 2009-Ohio-3626, 912 N.E.2d 595, ¶ 34, quoting State ex rel. Zollner v. Indus. Comm., 66 Ohio St.3d 276, 278, 611 N.E.2d 830 (1993). {¶ 53} AWMS argues that the state waived its nuisance defense because the state did not raise it in the court of appeals. The state’s second amended answer to AWMS’s complaint clearly sets forth the defense, but whether the state did so in its summary-judgment motion presents a closer question. {¶ 54} In its motion for summary judgment, the state briefly analogized the facts of this case to the hypothetical used by the court in Lucas in which the government could raise a nuisance defense in a situation in which a nuclear-powergeneration plant sits astride an earthquake fault. In making that analogy, the state claimed that AWMS’s facility was located near “a previously unknown earthquake fault.” {¶ 55} At first blush, it would appear that the state did not waive its nuisance defense. The problem, however, is that Lucas requires a government-defendant to ground its nuisance defense in principles of its state’s property and nuisance law. Lucas, 505 U.S. at 1029-1030, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 798. Here, the state did not ground its nuisance defense in principles of Ohio property and nuisance law. We have held that waiver will apply when a litigant supplies no argument “regarding whether the relevant case law, applied to the facts of th[e] case, justifies a decision in [the litigant’s] favor.” Util. Serv. Partners, Inc. v. Pub. Util. Comm., 124 Ohio St.3d 284, 2009-Ohio-6764, 921 N.E.2d 1038, ¶ 53. We find that principle dispositive here and hold that the state waived its nuisance defense for purposes of this appeal. {¶ 56} In summary, we conclude that there is a genuine issue of material fact concerning whether the state’s suspension of operations at well #2 deprived AWMS of all economically beneficial use of its leasehold. We further conclude that the state waived its nuisance defense. We therefore reverse the Eleventh 20 January Term, 2020 District’s judgment granting summary judgment to the state on AWMS’s totaltakings claim. On remand, the court of appeals must weigh the parties’ evidence relating to AWMS’s total-takings claim and disregard the state’s nuisance defense.