Hall v. State Ex Rel. South Dakota Department of Transportation

#25769-rev & rem-SLZ
2011 S.D. 70IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
PATRICK R. HALL, MARLYN G.
ERICKSON and FUEL FOOD MART, INC.,
A SOUTH DAKOTA CORPORATION, Plaintiffs and Appellants,
v.
STATE OF SOUTH DAKOTA, by and
through the SOUTH DAKOTA
DEPARTMENT OF TRANSPORTATION
and the SOUTH DAKOTA DEPARTMENT
OF TRANSPORTATION COMMISSION, Defendants and Appellees.
****
APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
****
THE HONORABLE JOHN J. DELANEY
Judge
****
BRIAN W. BLAESSER of
Robinson & Cole, LLP
Boston, Massachusetts
and
JEFFREY G. HURD of
Bangs, McCullen, Butler, Foye
& Simmons, LLP
Rapid City, South Dakota Attorneys for plaintiffs
and appellants.
KARLA L. ENGLE of
South Dakota Department
of Transportation
Pierre, South Dakota Attorney for defendants
and appellees.
****
ARGUED ON MAY 24, 2011
OPINION FILED 10/26/11
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ZINTER, Justice
[¶1.] Patrick Hall, Marlyn Erickson, and Fuel Food Mart, Inc.
(“Landowners”) own property abutting former Exit 66 on Interstate 90 (I-90), a
controlled-access highway that passes by Ellsworth Air Force Base. A part of
Landowners’ property was taken by condemnation in 1961 for the construction of I-
90 and Exit 66. In that condemnation proceeding, the State mitigated the
severance damages for the property not taken because of the “special benefit” the
remaining property would receive from access that was designated to be provided at
Exit 66. However, in 2003, the State removed the Exit 66 interchange to enhance
the viability of the Air Force Base. Landowners subsequently filed this suit for
inverse condemnation based on the closure of Exit 66. The circuit court granted
summary judgment for the State, concluding that Landowners never possessed any
property right that could have been taken. We reverse and remand for a trial on
damages.
Facts and Procedural History
[¶2.] Landowners own two parcels of land (the “Property”) that abut North
Ellsworth Road (a north-south conventional highway), I-90 (an east-west controlled-
access highway), and the former location of Exit 66 (the former interchange on I-90
for North Ellsworth Road). From 1962 until October 1, 2003, the Property enjoyed
indirect access to and from I-90 via Exit 66.
[¶3.] Landowners operated a Flying J Truck Stop on the Property. The
truck stop business was uniquely dependent upon the access provided at Exit 66.
The sale of gasoline, diesel fuel, and convenience store items specifically catered to
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travelers on I-90. On October 1, 2003, the State closed Exit 66 and removed all
access to I-90 at that location. As a result of the State’s removal of Exit 66, the
Flying J suffered an immediate loss of business and was forced to cease operations
on October 23, 2003.
[¶4.] In 1961, the State obtained the right-of-way for I-90 and the northeast
and northwest quadrants of the Exit 66 interchange by condemnation. At that
time, there was no east-west highway where I-90 was to be constructed. The South
Dakota Department of Transportation’s I-90 construction plans were referenced in
the option agreement by which the State obtained its right-of-way in the
condemnation proceedings. The plans indicated that the Property would have
indirect access to I-90 through the interchange that became Exit 66. Therefore, in
calculating the just compensation due for acquisition of its easement on the
Property, the State’s appraisal noted that “the presence of the interchange” would
be a “significant” and “special benefit” to the Property. The appraisal concluded
that “the increase in [the remaining Property’s] land values next to the interchange
would more than offset the severance damages on the [Property not taken].”
Consequently, the State offset severance damages for the Property remaining after
the condemnation. Of the forty properties taken in this five-mile section of the
interstate project, Landowners’ Property was the only property that the State
determined to be specially benefitted.
[¶5.] There is no dispute that the State’s 2003 closure of Exit 66 was
unrelated to road design, traffic safety, or interstate travel. The Exit was closed to
eliminate land uses at Exit 66 that were deemed “incompatible” with the continued
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viability of Ellsworth Air Force Base.1 To remove the threat that incompatible uses
posed to the continued operation of Ellsworth, the State closed Exit 66 and replaced
it with a new exit approximately one mile to the east.2
[¶6.] On August 1, 2001, prior to the closure of Exit 66, Landowners filed a
complaint seeking monetary damages and a declaratory judgment. Landowners
contended that the closure would constitute an inverse condemnation of the
Property. The circuit court granted summary judgment for the State. We reversed
1. One of the criteria used to evaluate air force base closures is the presence of
incompatible uses. The Flying J was considered an incompatible use because
it was within Ellsworth’s Accident Protection Zone (APZ), an area close to the
takeoff and landing threshold of the main runway.
2. In 1995, representatives from Ellsworth, Box Elder, Rapid City, Pennington
County, and Meade County commissioned a Joint Land Use Study (JLUS) to
“guide the political bodies of the communities surrounding Ellsworth Air
Force Base towards mitigating the incompatible land uses.” To best achieve
the desired result of relocating incompatible land uses, the JLUS
recommended that Exit 66 be closed and a new interchange be constructed
one mile to the east.
A year after the JLUS report, the South Dakota Department of
Transportation (DOT) and the Rapid City Area Metropolitan Planning
Organization hired a firm to complete a Justification Study (JS) to provide
remedies for the incompatible land use problem. The JS concluded that Exit
66 was a lynchpin to existing commercial development, noting that “[b]ecause
of the volume of traffic that uses the Exit 66 interchange, its immediate
vicinity (within the APZ 1 and 80 DNL noise contour) has become a natural
magnet for commercial development that has occurred over a long period of
time.” The JS recommended that closing Exit 66 and constructing a new
interchange one mile to the east “relocates incompatible development.”
Dennis Landguth, then deputy secretary of the DOT, testified that the
process that initiated the closure of Exit 66 and the construction of the new
Exit 67 was the JLUS. Landguth also testified that the purpose of closing
Exit 66 and constructing the new exit was to eliminate those businesses that
were incompatible with the APZs around the runway at Ellsworth Air Force
Base.
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and remanded to consider whether compensable damages were incurred in light of
the purpose of the closure, the extent of access denied, and the reasonableness of
the closure. Hall v. State ex rel. S.D. Dep’t of Transp. (Hall I), 2006 S.D. 24, 712
N.W.2d 22. At the time we decided Hall I, discovery had not disclosed that the
State had offset severance damages in the 1961 condemnation because of the special
benefit the Property would receive from the State’s designated access to I-90 at Exit
66. On remand, Landowners raised a new takings argument based on the special
benefit and offset of severance damages disclosed in discovery.
[¶7.] The circuit court granted summary judgment in favor of the State
without addressing the new argument. The circuit court concluded that
Landowners suffered no loss of right of access to or from I-90 because, in the court’s
view, a controlled-access highway statute prevented abutting property owners from
ever obtaining any right of egress and ingress to a controlled-access highway. The
court relied on Darnall v. State, 79 S.D. 59, 67, 108 N.W.2d 201, 205 (1961)
(concluding that no just compensation was due for a loss of access to a highway
because there was no “unrestricted right of direct access to [a landowner’s] business
establishment” from a newly created controlled-access highway). The court
distinguished Hurley v. State, 82 S.D. 156, 143 N.W.2d 722 (1966) (allowing just
compensation when a controlled-access highway is created from a conventional
highway to which the landowners enjoyed access predating the change). The court
concluded that there was no deprivation of a right of access, and therefore no
compensable taking or damage could follow.
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[¶8.] Landowners raise several issues on appeal. We conclude that the
dispositive question is whether Landowners’ Property was subject to a second
taking or damage as a result of the State’s 2003 change in access that had been
designated in the 1961 condemnation and used to reduce severance damages to the
Property.
Decision
[¶9.] This Court reviews a grant of summary judgment “to determine
whether the moving party has demonstrated the absence of any genuine issue of
material fact and entitlement to judgment on the merits as a matter of law.” DRD
Enterprises, LLC v. Flickema, 2010 S.D. 88, ¶ 10, 791 N.W.2d 180, 183-84. There
are no genuine issues of material fact on the issue we address.3 The “circuit court’s
conclusions of law are reviewed de novo.” Id.[¶10.] Article VI, § 13 of the South Dakota Constitution provides: “Private
property shall not be taken for public use, or damaged, without just
compensation[.]” This provision requires the State to compensate a property owner
not only when private property is taken, but also when it has been damaged, an
additional protection not contained in the U.S. Constitution. Krier v. Dell Rapids
3. At oral argument, Landowners’ counsel contended that there were genuine
issues of material fact remaining for trial. However, those disputes related
primarily to the issues on which we originally remanded. We are deciding
this case under the Landowners’ new argument. We see no genuine issues of
material fact relating to liability under that new argument. Disputes of fact
are not material unless they change the outcome of a case under the law.
Jerauld Cnty. v. Huron Reg’l Med. Ctr., Inc., 2004 S.D. 89, ¶ 41 n.4, 685
N.W.2d 140, 149 n.4.
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Twp., 2006 S.D. 10, ¶ 21, 709 N.W.2d 841, 846. Damage to property is compensable
if the injury is peculiar to the land:
[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. Thus the question is whether the closure of Exit 66 caused compensable
damages that were peculiar to the Property and not of a kind suffered by the public
as a whole. The compensable damage element of this question requires us to first
determine whether Landowners were deprived of any property right.
[¶11.] Generally, a property owner has no right of access to a newly-
constructed controlled-access highway where there was no pre-existing highway.
8A Nichols on Eminent Domain § G16.03[2][a][iii] at G16-26 (3d ed. 2007) (“It has
been held that where there was no pre-existing road, the owner had no access to
begin with, and was therefore not deprived of any rights.”)4 We have followed this
rule, concluding that a landowner abutting one conventional highway does not have
a right to compensation for not being given initial access to a new controlled-access
highway where the new controlled-access highway did not interfere with the
4. See State v. McDonald, 352 P.2d 343, 350 (Ariz. 1960); Schnider v. State, 241
P.2d 1, 2-3 (Cal. 1952); Dep’t of Transp. v. Hardin, 231 Ga. 359, 361, 201
S.E.2d 441, 443 (1973); Lehman v. Iowa State Highway Comm’n, 99 N.W.2d
404, 406 (Iowa 1959); Riddle v. State Highway Comm’n, 339 P.2d 301, 309
(Kan. 1959); D’Arago v. State Roads Comm’n, 180 A.2d 488, 491 (Md. 1962);
Morris v. Mississippi, 129 So. 2d 367 (Miss. 1961); State v. Clevenger, 291
S.W.2d 57, 62 (Mo. 1956); Morehead v. State Dep’t of Roads, 236 N.W.2d 623,
626 (N.D. 1975); State v. Calkins, 314 P.2d 449 (Wash. 1957); 3 Nichols on
Eminent Domain § 10.03[6][d], at 10-132 (3d ed. 1994).
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landowners’ access to the abutting conventional highway. See Darnall, 79 S.D. at
70, 108 N.W.2d at 207. On the other hand, we have recognized a right to
compensation for damages occasioned by the loss of access to a conventional
highway that was converted to a controlled-access highway, a ruling consistent with
most states. See Hurley, 82 S.D. at 163-64, 143 N.W.2d at 726.
[¶12.] Today’s case is different than both Darnall5 and Hurley.6 We have not
had occasion to consider Landowners’ new argument that an abutting property
owner is entitled to compensation for damages when the initial compensation for a
physical taking is offset because of the special benefit of access the State indicates
the remaining property will be afforded, but that access is later removed. We also
previously declined to address the State’s argument that controlled-access highway
statutes like SDCL 31-8-6 prevent a landowner from ever obtaining access rights.
We declined to address the State’s argument in Hall I because the argument had
not been presented to the circuit court. 2006 S.D. 24, ¶¶ 11-12, 712 N.W.2d at 26-
27. Both arguments are now squarely presented for review.
5. The Darnalls’ property was not taken to construct a controlled-access
highway, and no access had ever been contemplated to the new controlled-
access highway. Darnall, 79 S.D. at 69-70, 108 N.W.2d at 206-07. In this
case, the State mitigated the severance damages it owed for the abutting
Property in the 1961 taking because the State designated that access would
be provided to the remaining Property via Exit 66.
6. In Hurley, the state converted an existing conventional highway into a
controlled-access highway. 82 S.D. at 159, 143 N.W.2d at 724. In the
process, the state erected a barrier impairing the landowners’ pre-existing
right of access to the highway. The state was required to compensate the
landowners because they had a pre-existing right of access to the highway.
Id. at 164, 143 N.W.2d at 726.
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[¶13.] The Legislature has limited the right of access to controlled-access
highways. SDCL 31-8-1 provides that an owner of land abutting a controlled-access
highway has “no right or easement or only a controlled right or easement of access .
. . by reason of the fact that their property abuts upon [a] controlled-access
facility[.]”7 The “controlled right” of access is defined in SDCL 31-8-6: “No person
has any right of ingress or egress to, from or across any controlled-access facility to
or from any abutting land, except at any designated point at which access may be
permitted.”8
[¶14.] States with statutes similar to SDCL 31-8-6 have concluded that a
landowner abutting a new controlled-access highway, where no road had previously
been located, does not have the right of access possessed by a landowner abutting a
conventional highway. See Dep’t of Transp. v. Hardin, 231 Ga. 359, 361, 201 S.E.2d
7. The full text of SDCL 31-8-1 provides:
For the purposes of this chapter, a controlled-access facility is
defined as 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.
8. The 2001 version of SDCL 31-8-6 that was in effect at the time of the Exit
closure provided: “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.” The parties do not
contend there is any substantive difference between that version and the
current version of the statute.
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441, 443 (1973) (construing former Ga. Code Ann. § 95-1703a9 now Ga. Code Ann. §
32-6-113); State Highway Comm’n v. McDonald’s Corp., 509 So. 2d 856, 861 (Miss.
1987) (construing Miss. Code Ann. § 65-5-710). A controlled-access highway is
designed to facilitate rapid movement and heavy traffic and is “not intended to give
adjoining property owners access to the highway except at limited points.” Hardin,
231 Ga. at 361, 201 S.E.2d at 443. See also Ray v. State Highway Comm’n, 196
Kan. 13, 26, 410 P.2d 278, 287 (1966) (Fatzer, J., concurring) (“These [controlled-
access] highways were to be free from abutter’s access except at designated
interchange areas or crossovers, and were designed primarily to serve the traveling
public and only secondarily the land over which they pass.”). Therefore, the general
language in statutes like SDCL 31-8-6 “has the effect of preventing a property right
of access from arising for the benefit of contiguous landowners in a newly created
limited access highway.” Hardin, 231 Ga. at 361, 201 S.E.2d at 443.
[¶15.] An abutting landowner may, however, obtain a right of access to a
controlled-access highway when a state’s highway authority grants a right of access.
“There is no right of access to [a controlled-access highway] thoroughfare, except
that specifically granted by the Highway Department.” McDonald’s Corp., 509 So.
9. Georgia Code § 95-1703a provided: “No person shall have any right of ingress
to or egress from or passage across any limited-access highway to or from
abutting lands except at the designated points to which access may be
permitted[.]”
10. Mississippi Code § 65-5-7 provided in pertinent part: “No person shall have
any right 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.”
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2d at 861 (emphasis added). See also SDCL 31-8-6 (generally prohibiting a right of
access “except at any designated point at which access may be permitted”). The
question then, is whether the State granted a right of access for this Property.
Landowners contend that such a right arose from the 1961 condemnation when the
State reduced the just compensation it paid because the State designated that
access would be provided this property at Exit 66. The State disagrees.
[¶16.] Although the State relies heavily on SDCL 31-8-6, that statute does
not prevent a property from acquiring a right of access in the course of a
condemnation proceeding creating a controlled-access highway. On the contrary,
SDCL 31-8-6 provides that the State may designate a point at which access may be
permitted. Furthermore, a number of courts have recognized a constitutional right
to compensation for the loss of access to a controlled-access highway under facts
quite similar to the case we consider today. See Alsop v. State, 586 P.2d 1236(Alaska 1978); Johnson Bros. Grocery v. State, Dep’t of Highways, 304 Minn. 75, 229
N.W.2d 504 (1975); Filler v. City of Minot, 281 N.W.2d 237 (N.D. 1979).
Notwithstanding the existence of statutes like SDCL 31-8-1 and 31-8-6,11 those
11. The Alaska statute provided: “No person has the right of ingress or egress to,
from, or across controlled-access facilities to or from abutting land, except at
designated points at which access is permitted, upon the terms and
conditions specified from time to time.” Alaska Stat. § 19.20.030.
The Minnesota statute provided: “No person shall have any rights of ingress
or egress to, from, or across controlled-access highways to or from abutting
lands, except at the designated points or roadways thereof where access is
permitted by such road authorities upon such terms and conditions as such
road authorities specify.” Minn. Stat. Ann. § 160.08. In Hendrickson v. State,
267 Minn. 436, 439, 127 N.W.2d 165, 169 (1964), the court recognized that
Minnesota Statute § 160.08 “prohibit[ed] ingress to and egress from, or travel
(continued . . .)
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courts recognized a landowners’ constitutional right to compensation for a loss of
indirect access to controlled-access highways. The right to compensation arose
because, in the course of prior condemnation proceedings, the states indicated that
those landowners would have access at designated points, but the states
subsequently removed that access. The courts concluded that the designation of
access in the prior proceedings created a subsequent right to compensation because
the landowners had not been fully compensated at the time of the initial takings. A
close examination of those cases is instructive.
[¶17.] In Filler, the landowners’ predecessor owned property that abutted
and had direct access to a conventional highway. 281 N.W.2d at 239. While
converting a portion of the highway into a four-lane controlled-access highway in
1961, North Dakota acquired a thirty-foot strip of the predecessor’s property
abutting the highway. The right-of-way plat filed in the condemnation proceeding
indicated the state would provide three access points to the new controlled-access
highway through a new frontage road abutting the landowners’ property. The
landowners used those designated access points until 1976, when the state closed
________________________
(. . . continued)
across, controlled-access highways except at points designated by appropriate
authorities.” The court in Johnson Bros., 304 Minn. at 77-78, 229 N.W.2d at
505, relied on Hendrickson in making its decision.
The North Dakota statute provided: “No person has any right 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.” N.D. Cent.
Code § 24-01-31.
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them. After 1976, the landowners could only gain access to the controlled-access
highway by means of a circuitous route.
[¶18.] Like our case today, North Dakota took the position that when it
acquired the property from the landowners to create the controlled-access highway,
it also acquired the right under N.D. Cent. Code § 24-01-31, see supra note 11, to
subsequently eliminate access points along the controlled-access highway.
Although the right-of-way plat showed the access points, North Dakota argued that
it had not given up its right-of-access control pursuant to the controlled-access
highway statutes.
[¶19.] The North Dakota Supreme Court rejected the state’s argument
because there was no indication that the initial access points designated by the
state were not relied upon in mitigating the landowners’ damages in the prior
condemnation settlement. Filler, 281 N.W.2d at 240-41. The court held that
because the landowners’ ability to access the controlled-access highway was used as
a mitigating factor in the original condemnation, the later removal of the
designated access points created a new compensable injury to the landowners’
property. The court observed that “the State does not necessarily acquire the right
to indiscriminately alter or eliminate access at future dates without payment of
compensation.” Id. at 241. “Where . . . access control is subsequently modified to
the extent that access is no longer reasonable or is substantially more
unreasonable, the abutter has suffered a new injury for which he has never been
compensated and is thus entitled to compensation at this later date.” Id.
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[¶20.] In Johnson Bros., Johnson’s predecessor owned property abutting and
having direct access to Hudson Road, which was at the time designated as Highway
No. 12. 304 Minn. at 76, 229 N.W.2d at 504. In the 1940s, Highway No. 12 became
a controlled-access highway and was shifted to a new permanent location
paralleling Hudson Road. See Courteaus, Inc. v. State, Dep’t of Highways, 268
N.W.2d 65, 66 (Minn. 1978) (clarifying that the new Highway No. 12 in Johnson
Bros. was a controlled-access highway). Hudson Road was included within the
right-of-way of Highway No. 12, and the state instituted condemnation proceedings
for a partial taking of Johnson’s property to accomplish construction on Hudson
Road. After the construction, a driver could access the controlled-access highway
from the Johnson property by crossing Hudson Road and entering either the
westbound lane or a crossover to the eastbound lane of the controlled-access
highway.
[¶21.] In 1973, the state closed access from Johnson’s property across Hudson
Road to the controlled-access highway. Only a circuitous route from Johnson’s
property to the controlled-access highway remained. Thereafter, Johnson
successfully pursued an action for inverse condemnation. The Minnesota Supreme
Court concluded that a second compensable taking occurred in 1973 when Johnson’s
access to the controlled-access highway was closed because the state had failed to
compensate the landowner in the condemnation for the removal of the access that
was available until the state removed it. Johnson Bros., 304 Minn. at 78, 229
N.W.2d at 505.
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[¶22.] In Alsop, Alaska condemned part of Alsop’s property to construct a
controlled-access highway (the New Seward Highway) where no pre-existing
highway had been located. 586 P.2d 1236. Alsop’s remaining property abutted the
New Seward Highway and was in the vicinity of 76th Avenue. Alsop testified that
the state’s agreement to build an intersection on the New Seward Highway at 76th
Avenue was crucial to the settlement of his condemnation claim.
[¶23.] The New Seward Highway was built with an intersection at 76th
Avenue providing access to Alsop’s property. In reliance on the 76th Avenue
intersection, Alsop developed his property. Three years later, the state upgraded
the New Seward Highway and in the process closed the 76th Avenue intersection
and replaced it with an overpass. Alsop claimed that he incurred compensable
damages for a second taking as a result of “a loss of access due to closure of the 76th
Avenue intersection.” Id. The Alaska Supreme Court agreed, recognizing a taking
of a right of access from property abutting a controlled-access highway under the
following conditions:
[A landowner] must demonstrate that he or a predecessor in
interest had a portion of his property taken for the original
construction project, that he or his predecessor relied on
construction of an [access point] in settling or receiving an
award for [his] condemnation claims, and that his remaining
property has decreased in value as a result of the highway
modifications.
Id. at 1240 (footnote omitted).
[¶24.] Although this issue has not been extensively litigated, these cases
demonstrate that an abutting property owner may acquire a compensable right of
access to a controlled-access highway when access is designated and used to settle
or mitigate damages in a condemnation, but that access is later removed. The
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State, however, argues that Filler and Johnson Bros. are distinguishable because
those landowners originally possessed the right of direct access to conventional
highways. The State points out the Landowners in this case had no pre-existing
right of access to a conventional highway where I-90 was constructed. Therefore,
the State argues that because Landowners had no pre-existing right of access to a
conventional highway, and because they can generally not acquire rights of access
to controlled-access highways, they had no property right of access to I-90 that could
have been taken. We disagree with the State’s reading of these cases.
[¶25.] Filler and Johnson Bros. both involved compensation for loss of
indirect access to controlled-access highways and neither of the courts’ rationales
was predicated upon the right of access to the original conventional highways. The
highway in Filler had been converted to a controlled-access highway, and in that
process, the landowners had been given access to the controlled-access highway.
281 N.W.2d at 239. In Johnson Bros., a new controlled-access highway was created
paralleling a conventional highway and the landowner had access to the controlled-
access highway through the conventional highway. 304 Minn. at 76-77, 229 N.W.2d
at 504-05. In both cases, the courts found a right to compensation not because of a
loss of access to the conventional highways. The right to compensation was
recognized because there was a second, uncompensated taking occasioned by a
change in access to the controlled-access highways that had previously been
permitted. Moreover, the State has not attempted to distinguish Alsop. In that
case there was no pre-existing conventional highway. 586 P.2d at 1237.
Nevertheless, a second taking was recognized because the state had designated
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access to the new controlled-access highway, the landowner had relied on that
access in developing his property, and Alaska subsequently removed the designated
access.
[¶26.] This type of second taking is recognized in another analogous situation
described as the “change of plans doctrine.” See Olson v. State, 12 Ariz. App. 105,
107-08, 467 P.2d 945, 947-48 (Ariz. Ct. App. 1970). Under the change of plans
doctrine:
A change of plans may give rise to a cause of action (1) where
the circumstances are such that the change results in
construction of some feature that would have caused some
compensable damage not included in the original award, or (2)
where the change results in elimination of some feature which,
although itself non-compensable, was considered in mitigation of
some compensable element of damage.
Id. at 108, 467 P.2d at 948 (emphasis added). See also State ex rel. Herman v.
Schaffer, 105 Ariz. 478, 467 P.2d 66 (1970); State ex rel. Herman v. Tucson Title Ins.
Co., 101 Ariz. 415, 420 P.2d 286 (1966); De Alfy Prop. v. Pima Cnty., 195 Ariz. 37,
41, 985 P.2d 522, 526 (Ariz. Ct. App. 1998) (“[R]ecovery may be had in a subsequent
action where the construction plans admitted into evidence in the condemnation
suit provided mitigating features as against an item of compensable damage.”);
Feuerborn v. State, 59 Wash. 2d 142, 367 P.2d 143 (1961).
[¶27.] In Tucson Title, Arizona sought to acquire the landowner’s property at
29th Street to create the Tucson Control Access Highway. 101 Ariz. at 416, 420
P.2d at 287. A state agent showed the landowner a map indicating that an
interchange would be constructed at 29th Street, so the landowner’s remaining
property would have access to the Tucson Highway through the 29th Street
interchange. However, after settlement of the condemnation proceeding, the state
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changed its construction plans and eliminated the 29th Street interchange. The
Arizona Supreme Court concluded: “While it is true that the Highway Department
has the right and power to abandon or change any part of the state highway system,
the state must respond in damages if it acquires property in consideration of an
agreement to construct an interchange and thereafter fails to construct such
interchange.” Id. at 417, 420 P.2d at 288 (internal citation omitted).
[¶28.] We find Filler, Johnson Bros., Alsop, Olson, and Tucson Title
persuasive. We do so because the State designated access for the remaining
Property at Exit 66 and used that designation to mitigate the original takings
damages. Thereafter, the State removed that designated access causing the
remaining Property to suffer a new injury for which constitutionally required
compensation was never paid. We also note that the Legislature has specifically
embraced the right to additional compensation when the State’s construction plans
mitigating initial takings compensation change causing additional takings or
damage.12
12. SDCL 31-19-23(6) requires that in a so-called “quick take” condemnation
proceeding, the state must file its plans setting forth in detail the “features as
pertain to the adjacent landowner’s access to, and means of crossing over and
under the proposed highway, together with a description of any additional
factors which the State . . . intends to rely upon in mitigation of damages.”
Thereafter, the abutting landowner is entitled “to proceed against the state or
municipality for additional compensation” where there is a “substantial
deviation” from any “written memoranda or agreement, plans and
descriptions” filed with a declaration of taking “which amounts to an
additional taking or damage.” Id. Although these statutes were enacted
shortly after the 1961 condemnation in this case, they reflect legislative
intent to pay additional compensation when the State’s designated right-of-
way plans change. Moreover, in the past we have relied on “construction
plans referred to in the Right Of Way Agreement” to determine the extent of
(continued . . .)
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[¶29.] In accordance with Filler, Johnson Bros., Alsop, Olson, and Tucson
Title, we hold that a landowner’s compensation for loss of access may arise when: (1)
property abuts a proposed controlled-access highway; (2) the state takes a portion of
the property in a condemnation proceeding for the highway; (3) the state mitigates
some compensable element of damage based on the state’s designation of a feature
of the project; (4) the state subsequently eliminates that feature; and (5) like any
other claim for damages under Article VI, § 13 of the South Dakota Constitution,
the landowner can prove special damages. See Hurley, 82 S.D. at 161, 143 N.W.2d
at 725 (providing “the landowner is entitled to compensation under the taking and
damaging clause of our constitution 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’”) (quoting State Highway
Comm’n v. Bloom, 77 S.D. 452, 461, 93 N.W.2d 572, 577 (1958)).
[¶30.] In this case, there is no dispute that: Landowners’ Property has always
abutted the controlled-access highway; part of the Property was taken in a
condemnation proceeding in 1961 to construct the highway; the State offset
compensable severance damages for the Property not taken in the original
condemnation proceeding because of the interchange that the State designated; the
State subsequently eliminated all access through that designated interchange; and,
in the 1961 condemnation proceedings, the State indicated that it was providing a
“special benefit” to the Property through its designation of access at Exit 66. We
________________________
(. . . continued)
an initial taking. Larsen v. State, 90 S.D. 146, 150, 238 N.W.2d 684, 686-87
(1976).
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therefore agree with Landowners that the subsequent removal of that access is
damage for which compensation is due. Indeed, without a right to compensation in
this type of case, the State could use a particular feature of a public improvement in
a condemnation as mitigation or partial compensation for the initial taking and
later fail to construct the mitigating feature at all.
[¶31.] The State, however, argues that Landowners’ loss of access claim was
released by Landowners’ predecessor in the original option agreement and deed.
The State contends that subparagraph seven of the option agreement released any
claim of access from adjoining real property; subparagraph five waived any access to
the interstate from abutting, adjacent or adjoining lands; and subparagraphs two
and three acknowledged the agreed compensation was in exchange for release of
any and all claims, including claims for compensation due to the controlled-access
nature of the highway. The warranty deed also stated: “‘CONTROLLED ACCESS’
in accordance with Chapter 155 of the 1953 Session Laws of the State of South
Dakota. No access.”
[¶32.] However, both the introductory clause and subparagraph three of the
option indicated that the release of the condemnation claim was “by reason of the
proper and legal construction, operation and maintenance of a controlled-access
highway and facilities in accordance with the plans on file in the office of the
Department of Highways” – plans explicitly designating access at Exit 66.
(Emphasis added.) We have previously recognized that construction plans referred
to in the right-of-way agreement may determine the nature of the property rights
originally taken. See Larsen, 90 S.D. at 150, 238 N.W.2d at 687. Therefore, when
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all relevant provisions are read together, we conclude that the deed and option
agreement cannot be considered to have contracted away the constitutional right to
compensation for damages resulting from the construction, operation, and
maintenance of I-90 in a manner contrary to the manner specifically designated in
the option agreement. Stated differently, Landowners’ predecessor did not contract
away the constitutional right to compensation unmitigated by the State’s
designation in the option agreement that it would provide indirect access at Exit 66.
When all language of the documents is considered in its totality, the release clauses
are best read as releasing claims of general access to I-90 rather than the right of
indirect access specifically designated. As Olson explained, a “condemning
authority may contract away its right to exercise its police powers. A subsequent
change of plans, therefore, becomes compensable as a breach of contract.” 12 Ariz.
App. at 108, 467 P.2d at 948.
[¶33.] The State also argues that it has plenary power to change access
points on controlled-access highways. The State relies on 39 Am. Jur. 2d Highways,
Streets, and Bridges § 216 (2011) and 3 Nichols on Eminent Domain § 10.03[6][a],
at 10-110 (3d ed. 1994). But both authorities specifically note that the plenary
power to change access points does not apply to rights of access “specifically
granted.” 39 Am. Jur. 2d Highways, Streets, and Bridges § 216 (“Abutters do not
have access rights to a limited access highway, except those specifically granted.”); 3
Nichols on Eminent Domain § 10.03[6][a], at 10-110 (“Where an ordinary or
conventional road is built, there may be an intent to serve abutting owners, but
when a limited-access highway is established, the intent is just the opposite. No
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new rights of access can arise unless they are specifically granted.”) In this case
access was granted. It was granted when it was designated in the option agreement
and used to mitigate the constitutional damages due.
[¶34.] The State further argues that Landowners did not satisfy the second
element of the compensability question, which requires proof of special damages.13
We disagree. Landowners suffered damages that are different in kind from that
sustained by the public generally. After all, there is no dispute that the State
mitigated its initial compensation award in return for what it indicated was the
“special benefit” only this abutting landowner would receive from the access at Exit
66. The State’s recognition of a special benefit from the access in 1961 belies its
current claim that the Property suffered no special damages from the removal of
that access. The term special benefit is something that follows the distinction
between general and special damages. State Highway Comm’n v. Emry, 90 S.D.
587, 596-97, 244 N.W.2d 91, 96 (1976). See also Hurley, 82 S.D. at 163-64, 143
N.W.2d at 725-26 (concluding that an abutting landowners’ loss of highway access
caused “damages [that] were different in kind and not merely in degree from that
experienced by the general public and their private property right of access was
taken in the constitutional sense requiring compensation to be paid therefor”).
Thus, under the unique facts of this case, special damages were proven.
13. The State also contends that any alleged “inadequacy of consideration”
suffered by Landowners’ predecessor cannot now be raised “to warrant
rescission of the contract.” However, Landowners are not requesting
rescission. They seek damages to their property under the South Dakota
Constitution.
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[¶35.] The State further contends that a subsequent landowner cannot bring
a cause of action for inverse condemnation based upon mitigation of a previous
landowner’s special benefit because a special benefit does not run with the land. In
Filler, the special benefit of access was used to mitigate the condemnation award of
the landowner’s predecessor. 281 N.W.2d at 240-41. Even though it was the
predecessor’s compensation that was mitigated, the current landowner was
permitted to pursue a cause of action for the subsequent loss of access. Similarly, in
Alsop a landowner was found entitled to compensation if either he or his
predecessor had relied on the construction plans in settling or receiving an award
for the prior condemnation. 586 P.2d at 1240. Those courts reached that result
because the law views the matter as a second taking or impairment of the property
occurring during the subsequent owner’s possession. See Filler, 281 N.W.2d at 241.
[¶36.] The State finally argues that the grant of a special benefit at the time
of the initial taking does not prevent the government from discontinuing use of the
facility that provides that benefit to the property. See Reichelderfer v. Quinn, 287
U.S. 315, 53 S. Ct. 177, 77 L. Ed. 331 (1932). Reichelderfer was based on the theory
that any damage suffered, although greater in degree, was the same in kind as that
suffered by the public. Id. at 320, 53 S. Ct. at 179. But as previously noted, the
injury to this Property caused by the removal of access is different than the
inconvenience suffered by the traveling public and by other non-abutting owners
whose land was not taken under these circumstances. See Hurley, 82 S.D. at 161,
163-64, 143 N.W.2d at 725-26. Reichelderfer is inapposite.
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[¶37.] “The underlying intent of the [damages] clause is to ensure that
individuals are not unfairly burdened by disproportionately bearing the cost of
projects intended to benefit the public generally.” DeLisio v. Alaska Super. Ct., 740
P.2d 437, 439 (Alaska 1987). “The tendency under our system is too often to
sacrifice the individual to the community; and it seems very difficult in reason to
show why the State should not pay for property which it destroys or impairs the
value, as well as for what it physically takes.” Bakke v. State, 744 P.2d 655, 657
(Alaska 1987); Liddick v. City of Council Bluffs, 232 Iowa 197, 218, 5 N.W.2d 361,
372-73 (1942). The facts of this case are unique. Just compensation due for an
initial physical taking of abutting property was mitigated because of a designated
special benefit of access the State indicated it would provide. But the State
subsequently eliminated that designated access. Landowners are entitled to
damages for inverse condemnation occasioned by the removal of the designated
access. We need not consider Landowners’ other constitutional arguments. The
matter is reversed and remanded for trial on damages.
[¶38.] GILBERTSON, Chief Justice, and KONENKAMP, and SEVERSON,
Justices, and MEIERHENRY, Retired Justice, concur.
[¶39.] WILBUR, Justice, not having been a member of the Court at the time
this action was submitted to the Court, did not participate.
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