PATRICK R. HALL and MARLYN G. ERICKSON and FUEL FOOD MART, INC., a South Dakota Corporation v. STATE OF SOUTH DAKOTA, by and through the South Dakota Department of Transportation and the South Dakota Department of Transportation Commission
#23465-rev & rem-JKM
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
2006 SD 24, OPINION FILED 03/15/06
HONORABLE JOHN J. DELANEY, Judge
ARGUED ON NOVEMBER 8, 2005
Plaintiffs and Appellants,
v.
Defendant and Appellee.
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APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA
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JEFFREY G. HURD of Bangs, McCullen, Butler, Foye & Simmons Rapid City, South Dakota
BRIAN W. BLAESSER of Robinson & Cole, LLP Boston, Massachusetts
Attorneys for plaintiffs and appellants.
KARLA L. ENGLE Department of Transportation Pierre, South Dakota
Attorneys for defendant and appellee.
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[¶1.] The owners of the Flying J Truck Stop (Flying J) claim that the closing of the Exit 66 interchange on Interstate 90 (I-90) by the South Dakota Department of Transportation (SDDOT) constitutes an inverse condemnation entitling them to compensation. The trial court granted summary judgment against the owners. We reverse and remand.
FACTUAL AND PROCEDURAL BACKGROUND
[¶2.] Patrick R. Hall, Marlyn G. Erickson, and Fuel Food Mart, Inc. (Owners) own land which abuts both I-90, an east-west road, and Ellsworth Road, a north-south road, near Box Elder, South Dakota. On that property, Owners operate the Flying J, a convenience store and filling station. Originally, Exit 66 served as the interchange between I-90 and Ellsworth Road. That exit connected I-90 to Ellsworth Road, the main north-south route between I-90 and the main entrance to Ellsworth Air Force Base (Ellsworth) and the city of Box Elder.
[¶3.] Originally, Pennington County, the governmental body with jurisdiction over the area, prohibited development around the Exit 66 interchange. Subsequently, the city of Box Elder added the area to its jurisdiction and allowed development. In the 1970‘s, however, the development around the Exit 66 interchange became a concern. That development encroached upon the “Accident Potential Zone” (APZ) off the main runway of Ellsworth. An APZ is an area at the end of a runway at an air force installation which is exposed to possible aircraft accidents. Encroachments into an APZ are generally referred to as “incompatible land uses.”
[¶5.] The second study was commissioned by the Rapid City Area Metropolitan Planning Organization and the SDDOT. It was entitled Exit 67/I-90 Interchange Justification Study (IJS) and sought to assess “the need for the new interchange, the best design for the interchange, and its effects on the surrounding roadway system and community.” The IJS also provided several alternative recommendations and ultimately recommended closing Exit 66 and constructing a new interchange one mile to the east. Like the JLUS, all of the IJS alternatives considered the effect on incompatible development.
[¶6.] In light of these studies, SDDOT constructed Exit 67 one mile east of Exit 66. On October 1, 2003, Exit 66 was closed and all access to I-90 was removed at that location. As a result, Flying J suffered drastic drops in sales. On October 21, 2003, Owners closed Flying J indefinitely.
[¶7.] Owners then brought this inverse condemnation claim against the SDDOT and the Department of Transportation Commission (collectively State) alleging that the relocation of Exit 66 was a taking of private property requiring
DECISION
[¶8.] We review the trial court‘s grant of summary judgment as follows:
Summary judgment is authorized “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” All reasonable inferences derived from the facts are viewed in the light most favorable to the nonmoving party. However, the nonmoving party must present facts showing that a genuine and material issue for trial exists. Once we determine that the material facts are undisputed, our review is limited to whether the law was correctly applied. We will affirm the trial court if there is any legal basis to support its ruling. Id.
Krier v. Dell Rapids Twp., 2006 SD 10, ¶12, 709 NW2d 841, 844-45 (citations omitted). If the material facts are undisputed, whether a taking occurred is a question of constitutional law which we review de novo. See State v. Stanga, 2000 SD 129, ¶8, 617 NW2d 486, 488.
[¶9.] Our first inquiry is whether the material facts are undisputed. Unfortunately, the parties did not indicate in the record what they considered as
access from Ellsworth Road to and from I-90 was lost; (9) Owners’ access to Ellsworth Road remained unchanged. Additionally, at the summary judgment hearing, the trial court surmised that “probably the purpose of closing the exit [was] to eliminate or radically reduce the commercial value; and therefore, the co-exploitation of those lands,” with “the ultimate expectations [that] the businesses would diminish if not vacate entirely.” The trial court further stated:
[A]t this stage it appears that that goal has been largely accomplished with the closure of the exit. Those businesses have no direct access to the interstate. They abut a road running north and south from Box Elder to the air base. And that road, the road which they abut, has had access to the interstate at the interchange which was closed; that the closure of that interchange has a significant adverse impact on the traffic flow past those businesses.
The trial court asked the State, “If there was no threat of Ellsworth being closed or subject to closure, would anybody have addressed the public safety issue?” The State‘s lawyer answered, “I can‘t speak on behalf of all of the entities that made up the joint land use study that came up with the recommendations. I think I can safely say that the Department of Transportation would not have on its own acted to close exit 66 and build exit 67.”
[¶10.] Based on the above facts, the trial court concluded as a matter of law “that since [Owners] did not have a property interest in the continued flow of traffic past [their] business, there has been no taking or damaging of [Owners‘] property that is compensable.” The trial court relied exclusively on Darnell v. State, 79 SD 59, 108 NW2d 201 (1961), in support of its ruling. The trial court noted that the maintenance of heavy traffic in the APZ posed a threat to the economic viability of Ellsworth. The court further stated, “In any event, where access is going to be
[¶11.] On appeal, the State asserted and argued for the first time that Owners had no right of access to the interstate and interchange at Exit 66 because I-90 is a controlled-access highway. In support of its argument, the State pointed to
whether the businesses had a right to the continued flow of traffic and whether closing the exit was a proper exercise of police power.
[¶12.] We have repeatedly stated that we will not address for the first time on appeal issues not raised below. See, e.g., Action Mech., Inc. v. Deadwood Historic Pres. Comm‘n, 2002 SD 121, ¶50, 652 NW2d 742, 755 (“An issue not raised at the trial court level cannot be raised for the first time on appeal.“); Sedlacek v. S.D. Teener Baseball Program, 437 NW2d 866, 868 (SD 1989) (stating that where a party “failed to develop the record” on an issue “we deem that issue abandoned“); Fortier v. City of Spearfish, 433 NW2d 228, 231 (SD 1988) (“Since this issue was not framed in the pleading and was not addressed by the affidavits in support of or resistance to the motion for summary judgment, we do not believe the issue was properly before the trial court. Therefore, we will treat the issue as not being properly before us . . . .“). To raise a legal argument on appeal in an answering brief without first addressing it below puts the adverse party at an extreme disadvantage. Had the issue been raised below, the parties would have had an opportunity to consider whether additional evidence was needed to decide the issue and certainly would have had an opportunity to brief the issue for the trial court‘s consideration. Likewise, the trial court would have been made aware of the issue and given an opportunity to rule on it. Moreover, since the argument was first raised by the State in its answering brief to this Court, the opposing parties’ ability to respond was limited to its reply brief. For these reasons, we decline to review this particular argument proffered by the State. Cf. William v. Maulis, 2003 SD 138, ¶¶25-28, 672 NW2d 702, 707-08 (refusing to review an issue properly noticed
[¶13.] The
[I]t is a basic rule of this jurisdiction governing compensation for consequential damages that where no part of an owner‘s land is taken but because of the taking and use of other property so located as to cause damage to an owner‘s land, such damage is compensable if the consequential injury is peculiar to the owner‘s land and not of a kind suffered by the public as a whole.
Id. ¶23, 709 NW2d at 847 (citing State Hwy. Comm‘n v. Bloom, 77 SD 452, 461, 93 NW2d 572, 577 (1958)) (emphasis added).
[¶14.] Accordingly, the damage clause of the
[¶15.] In two of our prior cases, we have specifically considered the right of access in the context of interstate highways. See Hurley, 82 SD at 158, 143 NW2d at 722; Darnall, 79 SD at 61, 108 NW2d at 202. In Darnall, the facts did not support a compensable claim. 79 SD at 70, 108 NW2d at 207. In that case, the plaintiffs owned property which abutted the west side of State Highway 79, which ran north and south. 79 SD at 61, 108 NW2d at 202. The State constructed a controlled-access interstate highway on the east side of Highway 79. Id. A newly constructed curb separated the interstate and Highway 79 in order to prevent traffic on the interstate from directly entering Highway 79 and the plaintiffs’ property. Id. The only access from the interstate to Highway 79 was either an interchange one mile north or an interchange one mile south of plaintiff‘s property. Id. On appeal, we reversed the jury verdict for the landowner and remanded for dismissal. 79 SD at 70-71, 108 NW2d at 207. Although recognizing the plaintiffs’ right of access to the abutting highway, we noted that no part of that highway was
[¶16.] Shortly after the Darnall decision, in a case involving a slightly different fact scenario, we concluded that a taking had occurred. Hurley, 82 SD at 164, 143 NW2d at 726. In Hurley, the plaintiffs’ property was located on the corner of two streets. 82 SD at 159, 143 NW2d at 724. Omaha Street bordered the property on the south, while West Boulevard bordered the property on the east. Id. While the plaintiffs were negotiating with oil companies to build a service station on the property, West Boulevard was converted from a conventional street into part of a controlled-access interstate highway. 82 SD at 159, 164, 143 NW2d at 724, 726. To accomplish the conversion, the state erected a steel barrier along the entire eastern edge and for a short distance on the southern edge of the property. 82 SD at 159, 143 NW2d at 724. The barrier precluded access to West Boulevard from the plaintiffs’ property leaving access only to west-bound traffic on Omaha Street. Id.
In each case, therefore, the relative rights of the public and private interests must be considered and the reasonableness of the regulation and the degree of its interference with private property determined. If, after the construction of a public improvement an abutting landowner continues to have reasonable access to his property, he has no compensable complaint. But if the right of access is destroyed or materially impaired, the damages are compensable if the injury sustained is peculiar to the owner‘s land and not of a kind suffered by the public generally. In other words, police regulations must be reasonable, and the legislature cannot, under the guise of the police power, impose unreasonable or arbitrary regulations which go beyond that power, and in effect deprive a person of his property within the purview of the law of eminent domain, as by depriving the owner of all profitable use of the property not per se injurious or pernicious, restricting the lawful uses to which the property can be put and destroying its value, permanently so restricting the use of the property that it cannot be used for any reasonable purpose, or completely destroying the beneficial interest of the owner.
Id. (citing 29A CJS Eminent Domain § 6). Based on the facts, we held that the State‘s actions were compensable because the plaintiffs’ right of access was substantially impaired and “[t]heir damages were different in kind and not merely in degree from that experienced by the general public . . . .” 82 SD at 164, 143 NW2d at 726.
[¶18.] Although Hurley and Darnall reach different results, both cases apply the same legal principles. Hurley and Darnall recognize that a landowner‘s right of access and the state‘s police power to regulate highways often conflict. This conflict clearly manifests when the state eliminates an abutting landowner‘s highway access. As we said in Darnell, “‘[t]he line between those two concepts[-right of
[¶19.] Both Darnall and Hurley give guidance on the considerations which impact the relative rights of the public and private interests. One consideration when assessing the landowner‘s interest is the extent to which the landowner‘s access is diminished. In Darnall, we concluded that the access to the highway was “not unreasonably diminished or interfered with.” 79 SD at 70, 108 NW2d at 207. In Hurley, however, the landowner‘s access was “substantially impaired.” 82 SD at 164, 143 NW2d at 726. Another consideration is whether the landowner‘s damages are “different in kind and not merely in degree from that experienced by the general public.” Id. As we stated:
This basic rule has long been recognized in South Dakota, i.e., even though no part of private property is physically taken the landowner is entitled to compensation under the taking and damaging clause of our constitution (
§ 13, Art. VI ) when the construction of a public improvement causes damage to property “if the consequential injury is peculiar to the owner‘s land and not of a kind suffered by the public as a whole.”
82 SD at 161, 143 NW2d at 725 (citations omitted). Additionally, consideration must be given to the reasonableness of the exercise of the state‘s police powers. As we recognized in Hurley,
“[The state] cannot, under the guise of the police power, impose unreasonable or arbitrary regulations which go beyond that power, and in effect deprive a person of his property within the purview of the law of eminent domain, as by depriving the owner of all profitable use of the property not per se injurious or pernicious, restricting the lawful uses to which the property can be put and destroying its value, permanently so restricting the use of the property that it cannot be used for any reasonable purpose, or completely destroying the beneficial interest of the owner.”
82 SD at 163, 143 NW2d at 726 (quoting 29A CJS Eminent Domain § 6, p. 182).
[¶20.] Here, the trial court limited his analysis to whether the Owners had a property right to passing traffic. The trial court did not consider whether Owners still had reasonable access, whether their access was materially impaired, or whether their injury was peculiar to their land and not of a kind suffered by the public generally. Also, the court did not address whether the State‘s action was arbitrary or unreasonable. Undoubtedly, the trial court‘s analysis was hindered by the parties’ failure to thoroughly address the issues or offer sufficient evidence. In their brief, Owners stated only in passing that a loss of access caused their damages; they focused their argument on the State‘s intent to damage the economic value of their property. In response, the State focused its argument on the premise that Owners had no property right in passing traffic. It is clear from the record that the parties rushed to summary judgment. Even the trial court, at the summary judgment hearing, stated “I am comfortable in running a summary judgment up for the Supreme Court to rule because I think they are going to have to.”
[¶21.] This hurried effort was ill advised. The Owners’ complaint specifically challenged the loss of reasonable and convenient access to I-90, yet that particular issue was not addressed by the trial court‘s summary judgment decision. Further,
[¶22.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and ZINTER, Justices, concur.
Notes
Additionally,A highway or street especially designed for through traffic, and over, from, or to which owners or occupants of abutting land or other persons have no right or easement or only a controlled right or easement of access, light, air, or view by reason of the fact that their property abuts upon such controlled-access facility or for any other reason.
We have not had occasion to interpret or apply these laws since they were passed by the Legislature in 1953. Consequently, there is no settled law or authority interpreting these statutes to mean that a landowner whose property abuts a controlled-access highway is legally barred from claiming damages for inverse condemnation in circumstances where a previously controlled right of access is taken away.No person shall have any rights of ingress or egress to, from or across controlled-access facilities to or from abutting lands, except at such designated points at which access may be permitted, upon such terms and conditions as may be specified from time to time.