State v. foothills/hanke, CV-23-0292-PR

The Foothills Reserve Community HOA represented 589 homeowners whose properties included appurtenant positive and negative easements (rights to use and restrict development on common areas).
The State of Arizona condemned these easements (but not the homeowners’ physical property) to build the Loop 202 Freeway, compensating the HOA for the lost common areas.
The HOA pursued compensation for the loss in property value due to the freeway’s proximity (“proximity damages”) under Arizona’s eminent domain statute.
The trial court awarded the HOA proximity damages; the court of appeals reversed, holding that such damages apply only to direct takings of land, not easements.
The Arizona Supreme Court granted review to decide whether proximity damages are available for the taking of appurtenant easements under A.R.S. § 12-1122(A)(2).
The Supreme Court examined whether an appurtenant easement is considered “part of a larger parcel” such that its condemnation can support an award of severance damages.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are proximity damages available when appurtenant easements are condemned?	Easements are part of the larger parcel; condemning them entitles owners to severance (proximity) damages under the statute.	Proximity damages only apply to physical land takings, not nonpossessory interests like easements.	Yes. Condemned appurtenant easements are part of the 'larger parcel,' so owners are entitled to proximity damages.
Does the term 'parcel' in § 12-1122(A)(2) include nonpossessory interests like easements?	Yes. 'Parcel' encompasses all estates, interests, and rights, including easements under Arizona law.	No. 'Parcel' means only physical land, not nonpossessory interests, so easements are excluded.	Yes. 'Parcel' includes nonpossessory interests such as appurtenant easements.
Is an appurtenant easement considered part of the dominant estate for severance damage purposes?	Yes. An appurtenant easement runs with the dominant estate and is unified for compensation.	No. Only physical land is relevant, not appurtenant easements.	Yes. An appurtenant easement is part of the dominant estate for compensation.
Should 'severance damages' apply when only easements, not land, are condemned?	Yes, to prevent undermining just compensation required by constitution.	No, because the statute’s wording implies land must be taken.	Yes. Severance damages apply to the condemnation of appurtenant easements.

City of Phoenix v. Wilson, 200 Ariz. 2 (Arizona Supreme Court defines just compensation for property takings)
State ex rel. Miller v. Wells Fargo Bank of Ariz., N.A., 194 Ariz. 126 (Arizona Court of Appeals discusses proximity damages in severance damage context)
Catalina Foothills Unified Sch. Dist. No. 16 v. La Paloma Prop. Owners Ass’n, Inc., 238 Ariz. 510 (Arizona Court of Appeals on compensating HOA for condemnation of common area interests)
State ex rel. LaPrade v. Carrow, 57 Ariz. 429 (Arizona Supreme Court defines "larger parcel" and unity of use principle in eminent domain)
Solana Land Co. v. Murphey, 69 Ariz. 117 (Arizona Supreme Court distinguishes appurtenant from in gross easements and their property character)
State ex rel. Larson v. Farley, 106 Ariz. 119 (Arizona Supreme Court on construing related eminent domain statutes together)
Recreation Ctrs. of Sun City, Inc. v. Maricopa County, 162 Ariz. 281 (Arizona Supreme Court addresses valuation of dominant estate with easements)