Mayer Usd v. Mark Winkleman ( 2009 )

SUPREME COURT OF ARIZONA
En Banc
MAYER UNIFIED SCHOOL DISTRICT ) Arizona Supreme Court
and GADSEN ELEMENTARY SCHOOL ) No. CV-08-0225-PR
DISTRICT, )
) Court of Appeals
Plaintiffs/Appellants, ) Division Two
) No. 2 CA-CV 07-0126
v. )
) Maricopa County
MARK WINKLEMAN, in his capacity ) Superior Court
as State Land Commissioner; THE ) No. CV2004-020078
ARIZONA STATE LAND DEPARTMENT; )
THE STATE OF ARIZONA; APACHE )
COUNTY; COCHISE COUNTY; COCONINO )
COUNTY; GRAHAM COUNTY; GREENLEE ) O P I N I O N
COUNTY; MARICOPA COUNTY; MOHAVE )
COUNTY; NAVAJO COUNTY; PIMA )
COUNTY; PINAL COUNTY; SANTA CRUZ )
COUNTY; YAVAPAI COUNTY; YUMA )
COUNTY; MARICOPA COUNTY FLOOD )
CONTROL DISTRICT; ARIZONA )
DEPARTMENT OF TRANSPORTATION; )
TOWN OF CAREFREE; CITY OF )
TUCSON; CITY OF FLAGSTAFF; TOWN )
OF GILA BEND; CITY OF GLENDALE; )
CITY OF GLOBE; MAGMA FLOOD )
CONTROL DISTRICT; TOWN OF )
MARANA; CITY OF PEORIA; CITY OF )
PHOENIX; CITY OF SCOTTSDALE; )
CITY OF SIERRA VISTA; and CITY )
OF TEMPE, )
)
Defendants/Appellees. )
_________________________________ )
)
MAYER UNIFIED SCHOOL DISTRICT )
and GADSEN ELEMENTARY SCHOOL )
DISTRICT, )
)
Plaintiffs/Appellants/ )
Cross-Appellees, )
)
v. )
CITY OF PEORIA and CITY OF )
SCOTTSDALE, )
)
Defendants/Appellees/ )
Cross-Appellants. )
_________________________________ )
Appeal from the Superior Court in Maricopa County
The Honorable Ruth Harris Hilliard, Judge
AFFIRMED
________________________________________________________________
Opinion of the Court of Appeals, Division Two
___ Ariz. ___, ___ P.3d ___ (App. 2008)
2008 WL 2128064 (May 19, 2008)
VACATED
________________________________________________________________
ARIZONA CENTER FOR LAW IN THE PUBLIC INTEREST Phoenix
By Timothy M. Hogan
Joy E. Herr-Cardillo Tucson
Attorneys for Mayer Unified School District and
Gadsen Elementary School District
TERRY GODDARD, ARIZONA ATTORNEY GENERAL Phoenix
By Kenneth D. Nyman, Assistant Attorney General
William A. Richards, Assistant Attorney General
Patrick B. Sigl, Assistant Attorney General
Attorneys for Mark Winkleman, Arizona State Land Department,
and State of Arizona
GALLAGHER & KENNEDY, P.A. Phoenix
By Mark A. Fuller
Kevin E. O’Malley
Kiersten A. Murphy
C. Lincoln Combs
Attorneys for Arizona Department of Transportation
MOYES SELLERS & SIMS, L.T.D. Phoenix
By C. Brad Woodford
Jeffrey T. Murray
Rebecca N. Lumley
Attorneys for Town of Carefree, City of Flagstaff, Town of
Gila Bend, City of Glendale, City of Globe, Town of Marana,
City of Phoenix, City of Sierra Vista, and City of Tempe
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STEPHEN M. KEMP, PEORIA CITY ATTORNEY Peoria
By Stephen M. Kemp, City Attorney
Attorneys for City of Peoria
DEBORAH W. ROBBERSON, SCOTTSDALE CITY ATTORNEY Scottsdale
By Robert Bruce Washburn,
Senior Assistant City Attorney
Attorneys for City of Scottsdale
COOPER & RUETER, L.L.P. Casa Grande
By Stephen R. Cooper
Attorneys for Magma Flood Control District
TERENCE C. HANCE, COCONINO COUNTY ATTORNEY Flagstaff
By Jean E. Wilcox, Deputy County Attorney
Attorneys for Coconino County
GUST ROSENFELD, P.L.C. Phoenix
By Richard A. Segal
Richard B. Hood
Craig A. McCarthy
Attorneys for Maricopa County and Flood Control
District of Maricopa County
________________________________________________________________
B E R C H, Vice Chief Justice
¶1 We have been asked to decide whether suit will lie
under the Arizona-New Mexico Enabling Act for the State Land
Commissioner’s failure to require compensation for easements and
rights of way over state trust lands conveyed between 1929 and
1967. We hold that the claims are time-barred.
I. FACTUAL AND PROCEDURAL BACKGROUND
¶2 The Arizona-New Mexico Enabling Act granted nearly ten
million acres of land to the State of Arizona to be held in
trust for the support of public schools. See Act of June 20,
1910, ch. 310, §§ 24, 28, 36 Stat. 557, 572-74 (“Enabling Act”).
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The State Land Commissioner administers the school land trust.
Forest Guardians v. Wells, 201 Ariz. 255, 257, ¶ 2, 34 P.3d 364,
366 (2001). He serves as the trustee of the land trust and must
“manage the trust lands for the benefit of the trust and trust
beneficiaries.” Berry v. Ariz. State Land Dep’t, 133 Ariz. 325,
327, 651 P.2d 853, 855 (1982).
¶3 Beginning in 1929, the Commissioner granted easements
over some of these trust lands to various government entities,
for roads and other public purposes, without requiring
compensation to the school land trust.1 This practice continued
until 1967, when the United States Supreme Court ruled that the
Enabling Act requires compensation to the trust for the full
value of any easements or uses of trust lands. Lassen v. Ariz.
ex rel. Ariz. Highway Dep’t (Lassen II), 385 U.S. 458, 469 &
n.22 (1967).
¶4 Between 1929 and 1967, the Department conveyed more
than nine hundred such easements (the “09 easements”) to
government entities without receiving compensation. Many of
these easements remain in effect, although the trust has never
been compensated for many of them.
¶5 On June 4, 2003, counsel for Plaintiffs Mayer Unified
1
For convenience, we use the term easements to encompass
both easements and rights of way. These easements became known
as the “09 easements” based on the Land Department’s
classification number.
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School District and Gadsen Elementary School District (the
“Districts”) sent a letter to the Commissioner alleging that the
school land trust had received no consideration for these
easements and requesting further information regarding them.
The Commissioner responded that he needed to review the easement
records before answering. Discussions ensued, but the parties
failed to resolve the issue. The plaintiffs then filed a
complaint on October 15, 2004, more than one year after they
sent the June 4th letter to the Commissioner inquiring about the
status of the easements.2 The complaint named as defendants the
Land Department and its Commissioner and the State of Arizona.
Twenty-eight easement holders were later joined as additional
defendants.
¶6 Various defendants filed motions to dismiss on several
grounds, including laches, nonjusticiability, the statute of
limitations, and lack of standing. They also claimed that
Lassen II should not apply retroactively. The superior court
granted the defendants’ motions to dismiss based on laches. The
court of appeals reversed the superior court’s laches
determination, but affirmed the dismissal on the alternative
ground that Lassen II applied prospectively only, and therefore
2
The original complaint named several parents of Arizona
public school children as plaintiffs, but they were later
dismissed from the action. An amended complaint, filed in
January 2005, added the Districts as additional plaintiffs.
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the Districts were not entitled to relief. Mayer Unified Sch.
Dist. v. Winkleman, ___ Ariz. ___, ___, ¶¶ 65, 77-78, ___ P.3d
___, ___, 2008 WL 2128064 (App. May 19, 2008).
¶7 We granted review of the issues raised in the
Districts’ petition for review and two issues raised in the
State’s cross-petition to decide questions of statewide
importance. See ARCAP 23(c)(3). We have jurisdiction pursuant
to Article 6, Section 5(3) of the Arizona Constitution and
Arizona Revised Statutes (“A.R.S.”) section 12-120.24 (2003).
II. DISCUSSION
A. Enabling Act Background
¶8 The Enabling Act created the school land trust and
provides detailed instructions for disposing of trust lands.
Enabling Act § 28. For example, trust lands must be “appraised
at their true value” and cannot be sold for less than the
appraised amount. Id. Nor may the State sell or lease trust
lands “except to the highest and best bidder at a public
auction.” Id. Disposal of any trust land in a manner not
substantially conforming to the provisions of the Enabling Act
constitutes “a breach of trust” that renders the disposition of
trust lands “null and void.” Id.3
3
For a more detailed exploration of the history of the
Enabling Act and its provisions, see Kadish v. Arizona State
Land Department, 155 Ariz. 484, 486-88, 747 P.2d 1183, 1185-87
(1987), aff’d sub nom. Asarco Inc. v. Kadish, 490 U.S. 605- 6 -
¶9 The Enabling Act’s disposition provisions have been
the subject of recurring litigation with respect to easements
granted to public entities. In Grossetta v. Choate, we were
asked to decide whether the Land Department could grant
easements over trust lands in the absence of specific
authorization in the Enabling Act. 51 Ariz. 248, 250-51, 75
P.2d 1031, 1032 (1938). We held that the Enabling Act did not
limit the Legislature’s power “to grant rights of way easements
over the public lands for public highways.” Id. at 254, 75 P.2d
at 1033. Grossetta, however, did not address whether easement
holders had to compensate the school land trust for the
easements.
¶10 We answered that question seven years later in State
ex rel. Conway v. State Land Department, 62 Ariz. 248, 156 P.2d
901 (1945). Conway involved an order by the Commissioner
requiring the State Highway Department to surrender all
easements it held over trust lands. Id. at 249-50, 156 P.2d at
902. These easements would be reissued, at the Commissioner’s
option, as leases. Id. The Highway Department sought a
declaratory judgment that the Commissioner lacked the authority
to issue the order. Id. at 249, 156 P.2d at 901. We agreed and
held that the Highway Department was “not required to pay . . .
(1989), and Murphy v. State, 65 Ariz. 338, 344-53, 181 P.2d 336,
340-46 (1947).
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for the taking or use” of trust lands for building and
maintaining state highways. Id. at 255-56, 156 P.2d at 904.
¶11 The compensation issue came before this Court once
again in 1965. In State ex rel. Arizona Highway Department v.
Lassen (Lassen I), we addressed whether the Commissioner could
adopt a rule requiring compensation for public highway rights of
way and material sites on trust lands. 99 Ariz. 161, 162, 407
P.2d 747, 747-48 (1965), rev’d 385 U.S. 458 (1967). We
prohibited adoption of the rule and held that the Commissioner
must grant material sites and easements to the Highway
Department without requiring compensation for the public use of
the trust lands. Id. at 168, 407 P.2d at 752.
¶12 The United States Supreme Court granted certiorari and
reversed. Lassen II, 385 U.S. at 470. The Court held that the
Highway Department must pay for the use of the trust lands, even
though it was building and maintaining highways for the public’s
benefit. Id. at 466. After examining the Enabling Act’s
valuation and fund-usage provisions, as well as its background
and legislative history, the Court concluded that Congress
intended the school land trust to “derive the full benefit of
the [federal land] grant.” Id. at 466-68 (citation omitted).
To further this purpose, it held that the Highway Department
must “compensate the trust . . . for the full appraised value of
any material sites or rights of way which it obtains on or over
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trust lands.” Id. at 469 (footnote omitted).
¶13 The Court therefore permitted the Commissioner to
issue the rule requiring compensation for public highway rights
of way and material sites on trust lands. It explicitly
declined, however, to decide whether compensation was owed for
the more than nine hundred 09 easements that had been granted
between 1929 and the date of its opinion in 1967.4 It is those
easements for which the Districts now seek compensation.
B. Statute of Limitations
¶14 The defendants assert that the statute of limitations
bars the Districts’ claims for compensation for easements
granted between 1929 and 1967. They reason that the Districts’
cause of action accrued in 1967 when the Supreme Court published
its opinion in Lassen II declaring that compensation was
required for the easements.
¶15 The parties do not dispute that A.R.S. § 12-821 states
4
Immediately following its holding, the Supreme Court noted
the following:
We are informed by counsel that over a period of
years Arizona has obtained the use of large areas of
trust lands on bases that may not have accorded with
those set forth in this opinion. We wish to make it
plain that we do not reach either the validity of any
such transfers or the obligations of the State, if
any, with respect thereto.
Lassen II, 385 U.S. at 469 n.22.
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the applicable limitations period.5 Section 12-821 requires that
actions against a government entity “be brought within one year
after the cause of action accrues and not afterward.” A.R.S.
§ 12-821 (2003) (current version of statute). “[A] cause of
action accrues when the damaged party realizes he or she has
been damaged and knows or reasonably should know the cause,
source, act, event, instrumentality or condition which caused or
contributed to the damage.” Id. § 12-821.01(B). The Districts
filed their complaint on October 15, 2004. Therefore, the
complaint is not timely unless the Districts’ cause of action
accrued after October 15, 2003.
C. When the Districts’ Cause of Action Accrued
¶16 The Districts’ cause of action stems from the
uncompensated conveyance of easements over trust lands between
5
We assume, therefore, that § 12-821 applies. We note,
however, that the current version of that section was first
enacted in 1994. See 1994 Ariz. Sess. Laws, ch. 162, § 1 (2d
Reg. Sess.). But limitations statutes with similar provisions
were in effect at all times relevant to this action, alleviating
any harm in applying the terms of § 12-821. See, e.g., A.R.S.
§ 12-821 (1992) (repealed 1993) (twelve month statute of
limitations for claims against a public entity); § 12-550 (1956)
(four year general limitations period when no limitation is
otherwise prescribed). In any event, once the new limitations
statute became effective, the Districts had at most one year
thereafter to bring their claims. See A.R.S. § 12-505(B)
(2003); see also City of Tucson v. Clear Channel Outdoor, Inc.,
209 Ariz. 544, 554, ¶ 42, 105 P.3d 1163, 1173 (2005). Finally,
the Districts have not questioned the applicability of the
statute of limitations to them. Cf. Tucson Unified Sch. Dist.
v. Owens-Corning Fiberglas Corp., 174 Ariz. 336, 337, 849 P.2d
790, 791 (1993) (exempting school district from limitations
period).
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1929 and 1967. Because this Court had held that no compensation
was owed for the 09 easements, however, the Districts had no
reason between 1929 and 1967 to know that the school trust had
been damaged. See Lassen I, 99 Ariz. at 166, 168, 407 P.2d at
750, 752; Conway, 62 Ariz. at 255-56, 156 P.2d at 904.6
¶17 But the Districts should reasonably have known that
compensation for the easements was required and had not been
paid by January 10, 1967, when the Supreme Court issued its
opinion in Lassen II, 385 U.S. 458, which held that government
entities that acquire trust lands, even for uses that benefit
the public, must compensate the school trust. Id. at 468-69.
Our opinions in Grossetta, 51 Ariz. at 254, 75 P.2d at 1033,
Conway, 62 Ariz. at 251, 255-56, 156 P.2d at 902, 904, and
Lassen I, 99 Ariz. at 168, 407 P.2d at 752, should have alerted
the Districts that the Commissioner had granted easements to
public entities without requiring compensation to the school
trust between 1929 and 1965. These opinions put all trust
6
Indeed, in Lassen I, we suggested that the highways built
on the easements enhanced the value of the trust lands:
Certainly, if the highways had not been established
the values of these lands would have been much less.
Nor does [the Commissioner] state whether the values
estimated are those when the easements were first
granted or as of the present time, after the values
have been enhanced by the building of a highway system
throughout this state.
99 Ariz. at 166, 407 P.2d at 750.
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beneficiaries, including the Districts, on notice that unpaid-
for easements existed.
¶18 The Supreme Court confirmed the existence of such
easements in Lassen II, 385 U.S. at 469 n.22. Although Lassen
II required the Highway Department to compensate the trust for
future easements granted over trust lands, the Court refrained
from deciding whether compensation was required for the 09
easements. Id. Thus, the Lassen II opinion placed the
Districts on notice of past acquisitions of trust lands for
which compensation might be owed but had not been paid. The
repeated references by both this Court and the United States
Supreme Court to the existence of easements conveyed without
compensation lead us to conclude that reasonable persons either
knew or should have known of such easements at the time of the
Lassen II decision. The Districts’ cause of action thus accrued
at that time.7
¶19 The Districts maintain that their claim should
nonetheless not be barred because the Commissioner, as the
7
Although we conclude that the cause of action accrued in
1967, it is indisputable that the Districts had actual notice of
the 09 easements, and of the Commissioner’s failure to obtain
compensation for them, by June 2003, when the Districts’ counsel
sent a letter to the Commissioner stating his understanding that
“none of the 985 [09] easements and rights of way issued by the
Department to governmental and public entities were made in
exchange for any financial consideration.” Therefore, at the
very latest, the Districts’ cause of action accrued on June 4,
2003, more than one year before a complaint was filed.
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trustee of the school land trust, has an ongoing duty to remedy
violations of the Enabling Act. The Commissioner’s failure to
obtain compensation for the use of the easements constitutes a
continuing violation that renders the statute of limitations
inapplicable, the Districts assert, because a new claim arises
each moment that the Commissioner fails to obtain value for the
easements.
¶20 We disagree. We find persuasive the opinion in
Mitchell v. United States, 13 Cl. Ct. 474 (1987). In that case,
the court considered a similar “continuing violation” claim in
the context of a trustee’s duty to obtain adequate compensation
for the use of trust lands. Id. at 478. There, the Bureau of
Indian Affairs (the “BIA”) served as the statutory trustee of a
trust that benefited allottees of the Quinault Indian
Reservation. Id. at 476. The allottees alleged that the BIA
“collected inadequate fees from the logging companies for the
private use of roads crossing the allottees’ lands.” Id. Like
the Districts here, the allottees did not file suit within the
statutory limitations period. Id. at 478-79. In an attempt to
revive their time-barred claim, the allottees argued that even
if they had constructive notice of the inadequate compensation
claim, the statute of limitations should not preclude the claim
because the trustee had a continuing duty to collect adequate
compensation from the logging companies as timber was
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transported over rights of way on the allottees’ lands. Id. at
479. The court rejected the allottees’ continuing violation
theory, reasoning that “the duty to secure compensation for a
right-of-way arises only once – at the time the right-of-way is
granted.” Id. at 480. We agree that the violation here also
occurred once, when the 09 easements were granted, even though
the cause of action did not accrue until 1967.
¶21 Because the Districts filed their complaint more than
one year after their cause of action accrued, we hold that their
claims are time-barred.
III. CONCLUSION
¶22 For the foregoing reasons, we vacate the opinion of
the court of appeals and affirm the judgment of the superior
court.
_______________________________________
Rebecca White Berch, Vice Chief Justice
CONCURRING:
_______________________________________
Ruth V. McGregor, Chief Justice
_______________________________________
Michael D. Ryan, Justice
_______________________________________
W. Scott Bales, Justice
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H U R W I T Z, Justice, concurring in part and concurring in the
result
¶23 The majority concludes that the Districts’ cause of
action accrued when the Supreme Court of the United States
decided Lassen v. Ariz. ex rel. Ariz. Highway Dep’t (Lassen II),
385 U.S. 458 (1967). I do not doubt that the relevant statute
of limitations expired years before this suit was filed. But I
do not believe that we need to decide today that a “reasonable
person” would have received constructive notice of potential
claims on the very day Lassen II was decided from a footnote in
that opinion. As the Court notes, by June 4, 2003, the
Districts’ counsel had actual knowledge of the facts underlying
their claims. Op. ¶ 18 n.8. Because this suit was filed more
than a year later, I find it unnecessary to rely on a
constructive notice fiction to set a precise earlier date of
accrual. I therefore concur in ¶¶ 1-16 and 19-22 of the
majority opinion and in the result.
________________________________
Andrew D. Hurwitz, Justice
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