Clark Cnty. v. HQ Metro, LLC , 422 P.3d 1243 ( 2018 )

134 Nev., Advance Opinion 5,
IN THE SUPREME COURT OF THE STATE OF NEVADA
CLARK COUNTY, A POLITICAL No. 71877
SUBDIVISION OF THE STATE OF
NEVADA,
Appellant,
HIED
vs. AUG 0 2 2018
HQ METRO, LLC, AN ARIZONA 2ROWN
LIMITED LIABILITY COMPANY; :11T
BYA
PROJECT ALTA, LLC, A NEVADA HIE
LIMITED LIABILITY COMPANY;
PROJECT ALTA II, LLC, A NEVADA
LIMITED LIABILITY COMPANY;
PROJECT ALTA III, LLC, A NEVADA
LIMITED LIABILITY COMPANY; AND
PROJECT ALTA LIQUIDATING TRUST
U/A/D 12/31/09, BY AND THROUGH
MARK L. FINE & ASSOCIATES, A
NEVADA CORPORATION,
INDIVIDUALLY AND AS TRUSTEE,
Respondents.
Appeal from a final judgment in an action for eminent domain.
Eighth Judicial District Court, Clark County; Ronald J. Israel, Judge.
Affirmed.
Steven B. Wolfson, District Attorney, and Leslie A. Nielsen and Laura C.
Rehfeldt, Deputy District Attorneys, Clark County,
for Appellant.
Law Offices of Brian C. Padgett and Amy L. Sugden, Brian C. Padgett, and
Jeremy B. Duke, Las Vegas,
for Respondents.
SUPREME COUPE
OF
NEVADA
(0) I997A 29(032--
BEFORE THE COURT EN BANC.'
OPINION
By the Court, CHERRY, J.:
This appeal challenges a district court order apportioning just
compensation proceeds in an action for eminent domain. Nevada Power
Company, d/b/a Nevada Energy (NV Energy), filed a complaint in eminent
domain to obtain an easement for the installation of electrical transmission
lines on property owned by respondent HQ Metro, LLC, and leased to
appellant Clark County. In October 2013, the district court entered an
order allowing NV Energy to occupy the easement area and construct the
transmission lines. Before NV Energy physically entered the property to
begin construction, however, HQ Metro sold the property to Clark County.
The district court concluded that HQ Metro was entitled to compensation
for the permanent easement because it was the owner at the time of the
order granting occupancy, and the court apportioned the proceeds
accordingly. On appeal, HQ Metro and Clark County dispute which one is
entitled to compensation for the permanent easement.
We conclude that the right to compensation vested when the
district court entered the order granting immediate occupancy in October
2013, which permitted NV Energy to permanently occupy the easement
area and to construct and maintain the transmission lines. Thus, the
district court properly concluded that HQ Metro, as the property's owner at
the time of the taking, was entitled to compensation for the permanent
easement.
'The Honorable Ron D. Parraguirre, Justice, voluntarily recused
himself from participation in the decision of this matter.
SUPREME COURT
OF
NEVADA
(0) 1947A
2
FACTS AND PROCEDURAL HISTORY
In May 2013, NV Energy filed a complaint in eminent domain
to acquire certain easements to construct, operate, and maintain electrical
transmission lines on property located at 400 S. Martin Luther King
Boulevard in Las Vegas, Nevada. NV Energy sought both a temporary
construction easement of 36,863 square feet and a permanent easement of
16,861 square feet for the transmission lines across the property. HQ Metro
was named in the complaint as the property's record owner. The complaint
also named Clark County as a tenant based on a recorded memorandum of
lease and purchase option with four Project Alta entities. 2 The lease
provided for the development and 30-year lease of office space and a parking
garage on the property to Clark County for sublease to the Las Vegas
Metropolitan Police Department (LVMPD). The lease also gave Clark
County the option to purchase the property three years after LVMPD
commenced operations on the property.
After filing the complaint, NV Energy moved for immediate
occupancy under NRS 37.100. Negotiations ensued and the parties entered
into a stipulation and order for immediate occupancy, conditioned on NV
Energy depositing $281,000 with the district court. The stipulation
provided that NV Energy was acquiring the easements for public use and
authorized NV Energy to immediately occupy both the temporary and
2 The Project Alta entities identified in the complaint included
respondents Project Alta, LLC; Project Alta II, LLC; Project Alta, III, LLC;
and Project Alta Liquidating Trust U/A/D 12/31109, by and through Mark
L. Fine & Associates. Although the nature of their interest in the property
is not entirely clear from the record, they moved collectively with HQ Metro
for summary judgment as the prior landowners entitled to the
condemnation proceeds. Therefore, we refer to the prior landowners
collectively as HQ Metro.
SUPREME COURT
OF
NEVADA
(0) I947A
3
It I
permanent easement areas for the purposes of permitting, construction,
operation, and maintenance of the transmission lines and associated
facilities on the property. The stipulation further restrained and enjoined
HQ Metro from interfering with NV Energy's occupancy and performance
of the work required for the easements. On October 15, 2013, the district
court filed an order granting immediate occupancy pursuant to the
stipulation's terms. Shortly thereafter, NV Energy deposited the sum with
the court, and the order granting immediate occupancy was recorded
against the property.
About a year after the order granting immediate occupancy was
entered, but before NV Energy began construction on the project, HQ Metro
sold the property to Clark County for $205 million. The September 2014
purchase and sale agreement transferred from HQ Metro to Clark County
the real property together with "any and all of [HQ Metro's] rights,
easements, licenses and privileges presently thereon or appertaining
thereto." Attached to the agreement was a list of title exceptions that
included the order granting occupancy, but the agreement did not mention
the compensation from the condemnation case or who was entitled to it. The
grant, bargain, and sale deed, recorded in October 2014, conveyed title to
Clark County subject to an attached list of exceptions, which also included
the order granting occupancy to NV Energy.
In January 2015, NV Energy entered the property to begin
construction of its facilities. Construction of the transmission lines was
completed four months later in May 2015.
SUPREME COURT
OF
NEVADA
(0) 1947A Me
4
HQ Metro and Clark County each moved for summary
judgment and claimed entitlement to the just compensation proceeds. HQ
Metro argued that it was entitled to the proceeds as the landowner at the
time NV Energy obtained the order granting immediate occupancy on
October 15, 2013. Conversely, Clark County asserted that the right to
compensation did not vest until NV Energy physically entered the property
to install the transmission lines in January 2015.
The district court entered a summary judgment order
determining that HQ Metro was entitled to damages for the permanent
easement because it owned the property when the permanent construction
easement was granted in October 2013. The court also determined that
LVMPD was entitled to damages under the temporary construction
easement. Thereafter, the parties reached a global settlement for the total
amount of $850,000 as compensation due for both the temporary and
permanent easements. Consistent with its summary judgment order, the
district court apportioned $775,000 to HQ Metro as damages for the
permanent easement. Clark County filed this appeal.
DISCUSSION
Under both the Nevada and United States Constitutions, the
government may not take private property for public use without the
payment of just compensation. Nev. Const. art. 1, § 8(6) ("Private property
shall not be taken for public use without just compensation having been
first made."); see also U.S. Const. amend. V ("[N]or shall private property
be taken for public use, without just compensation."). The parties agree
that the owner of the property at the time of the taking is entitled to the
compensation proceeds but they disagree as to the event that constituted
the taking. HQ Metro argues that the taking occurred when the court
SUPREME COURT
OF
NEVADA
(fp 1947A ve 5
t
entered the order granting immediate occupancy in October 2013, whereas
Clark County argues that the taking did not occur until NV Energy entered
the property to begin construction in January 2015.
Whether a taking has occurred presents a question of law that
we review de novo. See City of Las Vegas v. Cliff Shadows Prof 1 Plaza, LLC,
129 Nev. 1, 11, 293 P.3d 860, 866 (2013). "A taking can arise when the
government regulates or physically appropriates an individual's private
property. Physical appropriation exists when the government seizes or
occupies private property or ousts owners from their private property."
ASAP Storage, Inc. v. City of Sparks, 123 Nev. 639, 647, 173 P.3d 734, 740
(2007). When a condemnation proceeding is commenced, NRS 37.100 allows
the district court to permit a plaintiff, upon a deposit with the court, to
occupy the premises sought to be condemned pending the entry of judgment.
See NRS 37.100(2), (6). The court may "restrain the defendant from
hindering or interfering with the occupation of the premises and the doing
thereon of the work required for the easement, fee or property rights." NRS
37.100(8).
The owner of the property at the time of the taking is the one
entitled to compensation rather than a subsequent purchaser who owned
the property when compensation was paid. Argier v. Nev. Power Co., 114
Nev. 137, 139, 952 P.2d 1390, 1391 (1998). In Argier, the power company
filed a complaint to obtain an easement across land owned by the Argiers.
Id. at 138, 952 P.2d at 1390. The district court granted immediate
occupancy and the power company installed the power lines, but the Argiers
sold the property to the county before the court determined the value of the
easement and the amount of compensation. Id. at 138, 952 P.2d at 1390-
91, Consequently, the power company argued it no longer had a duty to
SUPREME COURT
OF
NEVADA
(0) 194Th
6
i aaardi
compensate the Argiers for the easement because the property was sold
before the taking occurred when the agency received title in the final order
of condemnation, whereas the Argiers argued that the taking occurred at
the point of physical occupation of the property, before it was sold. Id. at
138-39, 952 P.2d at 1391. We held that the power company "effected a
taking once it entered upon the land," and that equity mandates that the
right to compensation vests when the condemning agency enters into
possession of the landowner's property. Id. at 141, 952 P.2d at 1392-93.
Because the Argiers' right to compensation vested when the power company
entered their property, before the sale to the county, the Argiers were
entitled to compensation. Id. at 142, 952 P.2d at 1393.
The decision in Argier, however, is not directly dispositive of the
issue before us because, in that case, the power company physically entered
the property to install the power lines before the land was sold, and, thus,
the Argier court made no distinction between the order for immediate
occupancy and the physical entry onto the land. Nonetheless, the reasoning
in Argier is instructive. In particular, the Argier court explained that
because compensation for a taking is intended as a substitute for the
owner's lost interest in the property, the person who owns the property at
the time of the taking is entitled to the compensation:
When the government interferes with a person's
possession of his/her property, the owner loses an
interest in that property. The award of just
compensation is a substitute for that lost interest
in the property. When the owner sells what
remains of her property, she does not also sell the
right to compensation. If she did, the original
owner would suffer a loss and the purchaser would
receive a windfall.
SUPREME COURT
OF
NEVADA
(0) 1947A 4D. 7
AID
Id. at 140, 952 P.2d at 1392 (recognizing agreement amongst other
jurisdictions on the issue).
In this case, the order granting immediate• occupancy
constituted a substantial governmental interference with HQ Metro's
property rights. "The bundle of property rights includes all rights inherent
in ownership, including the inalienable right to possess, use, and enjoy the
property." ASAP Storage, 123 Nev. at 647, 173 P.3d at 740 (internal
quotations omitted). The order authorized NV Energy to permanently
occupy the easement area for the purpose of constructing and maintaining
the transmission lines and associated facilities on the property, and
restrained and enjoined HQ Metro from interfering with NV Energy's
occupation and performance of the work required for the easement. The
order restricted HQ Metro's full use and enjoyment of the property, and the
entitlement to compensation is a substitute for that lost interest. When HQ
Metro sold the property, it conveyed title subject to the occupancy order.
Thus, we conclude that the order granting immediate occupancy constituted
a taking of property rights and the right to compensation vested at that
time. Because HQ Metro was the owner of the property, it was entitled to
compensation for the permanent easement. 3
County cites Buzz Stew, LLC v. City of North Las Vegas for the
3 Clark
holding that a former property owner had failed to establish that a taking
occurred while it owned the property, and therefore, a provision in the sales
contract retaining only the right to proceeds from a future condemnation
action reserved no property interest in the former owner. 131 Nev. 1, 7, 341
P.3d 646, 650 (2015). Buzz Stew is distinguishable, however, because here,
the parties entered into a stipulation and order providing that the
easements were being acquired for public use and establishing the date of
occupancy as October 15, 2013. Thus, a taking occurred and the right to
compensation vested while HQ Metro owned the property.
SUPREME COURT
OF
NEVADA
(0) I947A aIgea
8
•42
Clark County maintains that a taking did not occur until NV
Energy could no longer abandon the proceeding, when construction on the
project commenced. We reject this argument because the order granting
immediate occupancy constituted an injury to HQ Metro's property rights.
See Argier, 114 Nev. at 140, 952 P.2d at 1391 ("Damages for the taking of
land or for the injury to the land not taken belong to the one who owns the
land at the time of the taking or injury, and they do not pass to a subsequent
grantee of the land except by a provision to that effect in the deed or by
separate assignment." (quoting 29A C.J.S. Eminent Domain § 194 (1992))).
Although a plaintiff may abandon the proceeding at any time until 30 days
after the final judgment, if the plaintiff has been placed in possession of the
premises under NRS 37.100, the defendant is entitled to damages from
occupancy of the abandoned property. NRS 37.180(1), (2). Abandonment
"merely results in an alteration in the property interest taken—from full
ownership to one of temporary use and occupation." United States v. Dow,
357 U.S. 17, 26 (1958). Because the order granting occupancy constitutes
an injury to property rights, the right to compensation vested at that time.
See Argier, 114 Nev. at 141,952 P.2d at 1393 (holding that equity mandates
vesting occurs when the condemning agency enters into possession of the
landowner's property).
Finally, Clark County argues that allowing HQ Metro to keep
the condemnation proceeds will result in a windfall to HQ Metro because
there is no evidence that the purchase price was discounted for any taking
by NV Energy, and that an appraisal obtained by HQ Metro in 2013 did not
mention the condemnation proceeding or the easement. This court will not
speculate on whether the purchase price accounted for the property interest
taken by the condemnation proceeding as it has no bearing on the legal
SUPREME COURT
OF
NEVADA
CO) 1947K e 9
issue of whether the order granting immediate occupancy constituted a
taking of property rights. As we explained in Argier, the award of just
compensation is a substitute for the owner's loss occasioned by the taking,
and the owner sells what remains of her property. 114 Nev. at 140, 952
P.2d at 1392. "Presumably, the purchaser will pay the seller only for the
real property interest that the seller possesses at the time of the sale and
can transfer." Brooks Inv. Co. v. City of Bloomington, 232 N.W.2d 911, 918
(1975). Moreover, Clark County had notice of the condemnation proceeding
and stipulated to entry of the order granting immediate occupancy, and
Clark County could have contracted for the right to the just compensation
proceeds when it purchased the property from HQ Metro. See Dow, 357
U.S. at 27 (rejecting an equitable argument where the purchaser had full
notice of the condemnation proceeding and had "available contractual
means by which he could have protected himself vis-a-vis his grantors
against the contingency that• his claim" for compensation would be
subsequently invalidated under the law). Thus, the equities do not lie in
Clark County's favor.
SUPREME COURT
OF
NEVADA
(0)1947A a 10
9t
CONCLUSION
We conclude that the right to compensation vested when the
district court entered the order for immediate occupancy, permitting NV
Energy to occupy the permanent easement area and enjoining HQ Metro
from interfering with that occupancy. Consequently, HQ Metro as
landowner was entitled to compensation for the permanent easement, and
we affirm the district court's order apportioning the proceeds.
We concur:
Th
, C.J.
Douglas
J.
Pickering
Hardesty
144.1C44..0
J.
Stiglich
SUPREME COURT
OF
NEVADA
11
10) 1947A
11 °