803 P.2d 1241 (Utah 1990)
FARMERS NEW WORLD LIFE INSURANCE COMPANY, Plaintiff and Appellant,
v.
BOUNTIFUL CITY; McNeil Construction; Sharp, Sorensen and
Associates; Interwest Construction; Fashion Village
Shopping Center, a partnership; The Fashion Village Group;
Merrill W. Beck; William Compton; and John Does 1 through
5, Defendants and Appellees.
No. 890012.
Supreme Court of Utah.
December 31, 1990
James L. Christensen, Paul D. Newton, Mark J.
Morrise, Salt Lake City, for Farmers New World Life Ins.
Co.
Stanley J. Preston, Allen L. Larson, Robert C. Keller,
Jody K. Burnett, Salt Lake City, for Bountiful City.
Gregory J. Sanders, J. Mark Whimpey, Salt Lake
City, for McNeil Const.
Keith W. Meade, Salt Lake City, for Sharp, Sorensen
& Associates.
Robert F. Babcock, Salt Lake City, for Interwest
Const.
W. Durrell Nielsen, Salt Lake City, for Fashion
Village Group.
Darwin C. Hansen, Salt Lake City, for Merrill W.
Beck.
DURHAM, Justice:
Farmers New World Life Insurance Company
(Farmers) brought this action against Bountiful City (the
City) and a number of other defendants to recover
damages to a commercial mall owned by Farmers. The
original complaint included claims against the City for
(1) breach of contract, and (2) inverse condemnation
under article I, section 22 of the Utah Constitution. The
City moved for summary judgment on all claims, and the
trial court granted that motion (the first ruling). Farmers
then amended its complaint, adding inverse
condemnation claims against Bountiful under the fifth
amendment of the United States Constitution. The City
moved to dismiss the amended complaint, and the trial
court again granted the motion (the second ruling),
treating the motion to dismiss as a motion for summary
judgment pursuant to rule 12(b) of the Utah Rules of
Civil Procedure. Farmers appeals both the first and
second rulings.
Farmers is the owner of a commercial mall located in
Bountiful. Bordering the south wall of the mall is a
natural waterway known as Mill Creek. In 1983, after a
period of flooding, mall representatives requested that the
City make improvements to the creek channel at the mall
site in order to improve the flood capacity of the creek. In
1985, the City obtained from Farmers a deed granting an
easement that allowed the City to construct and maintain
a concrete culvert. The City contracted for the design,
construction, and financing of the culvert and funded the
project with county flood control funds as well as state
disaster relief funds. Diversion of the creek during the
construction of the culvert caused physical damage to the
mall due to a loss of lateral support and water seepage.
In reviewing the trial court's rulings, we must review
the facts and inferences in the light most favorable to
Farmers. Because summary judgment is granted as a
matter of law, we can reappraise the trial court's legal
conclusions. Atlas Corp. v. Clovis Nat'l Bank, 737 P.2d
225, 229 (Utah 1987).
I. INVERSE CONDEMNATION CLAIM UNDER
ARTICLE I, SECTION 22
Article I, section 22 of the Utah Constitution
provides, "Private property shall not be taken or damaged
for public use without just compensation." Prior to the
construction of a public improvement, property can be
taken and the owner compensated under the eminent
domain power authorized by Utah Code Ann. §§ 78-34-1
to -20. In the event private property is taken or damaged
for public use without a formal exercise of the eminent
domain power, the property owner may bring an inverse
condemnation action under article I, section 22 to recover
the value of the property. [1] For purposes of that
constitutional provision, an inverse condemnation action
requires (1) property, (2) a taking or damages, and (3) a
public use.
A. Nature of Property
Farmers has alleged damage to a building which it
owns. In Lund v. Salt Lake County, 58 Utah 546, 200 P.
510 (1921), considering an inverse condemnation claim
for the contamination of a pond and the destruction of
fish, this court stated, "The kinds of property subject to
the [eminent domain] right ... is practically unlimited."
Id., 200 P. at 512. Under general principles of eminent
domain, "property" includes but is not limited to land and
improvements subject to the substantive law of real
property. 2 Nichols on Eminent Domain, § 5.45 (3d ed.
1990). Buildings attached to land are considered
"property" for which the taking or damaging must be
paid. Id. In O'Neill v. San Pedro, L.A. & S.L.R.R., 38
Utah 475, 114 P. 127 (1911), the court indicated that
article I, section 22 damages property included injuries to
a house caused by the vibrations, smoke, and cinders of a
nearby railroad. Here, assuming that Farmers has a legal
right in the building it says was damaged, Farmers has
alleged a property interest protected by article I, section
22 of the Utah Constitution.
B. Existence of Taking or Damage
In the usual eminent domain setting, property is
completely taken or destroyed for a public use, rendering
it valueless to the owner. In addition, however,
"severance damages" may be recoverable where property
not actually taken is damaged by the construction or use
of the improvement. See Utah Code Ann. § 78-34-10(3).
Generally, all unavoidable injuries arising out of the
proper construction of a public use which directly affect
the market value of the abutting property may be
considered in calculating damages. See Morris v. Oregon
Short Line R.R., 36 Utah 14, 102 P. 629, 631 (1909).
Farmers alleges damages which include (1) loss of
income, (2) diminution in value of the mall, and (3) cost
of repair to the mall's roof, floors, walls, plumbing,
sewer, and fill. These damages were allegedly caused by
a loss of lateral support and the seepage of water through
spaces in the wall panels.
In Board of Education v. Croft, 13 Utah 2d 310, 373
P.2d 697 (1962), this court struck down a property
owner's damage award, holding that an owner is entitled
to compensation only for injuries that "would be
actionable at common law" or for injuries where there is
"a definite physical injury cognizable to the senses with a
perceptible effect on the present market value." Id. at 699.
The court went on to state that the requisite physical
injury may include "destroying lateral supports" and
"running surface waters onto adjacent lands." Id.
Recently, in Rocky Mountain Thrift Stores, Inc. v.
Salt Lake City Corp., 784 P.2d 459 (Utah 1989), this
court denied a business owner's inverse condemnation
action against a city for injuries resulting from the city's
interference with access to the owner's store. The
damages occurred as a result of the operation and
maintenance of a drainage system during and after a
flood. This court held that article I, section 22 did not
apply because the damages resulted from a "temporary,
one-time occurrence" rather than a "permanent,
continuous, or inevitably recurring interference with
property rights." Id. at 465.
Under the foregoing definitions, damages protectible
under article I, section 22 must be physical and
permanent, continuous, or recurring. The diminution of
value and cost of repairs to the mall which Farmers has
alleged constitute damages within the guarantee of article
I, section 22.
C. Presence of a "Public Use"
The Utah legislature has authorized the state land
board to construct any projects it considers necessary for
the control or prevention of floods, granting that agency
eminent domain power to acquire lands necessary for that
purpose. Utah Code Ann. § 65-1-75. This authorization is
based on the concept that a taking of private property in
support of a flood control program is for a public use. 2A
Nichols on Eminent Domain, § 7.41 (3d ed. 1990). It is
universally conceded that the government has the power
to take private property in the interest of the public health
and safety, id. at § 7.36, and flood control falls within this
governmental purpose. This court has impliedly
recognized flood control as a public use for purposes of
article I, section 22. See Colman v. Utah State Land Bd.,
795 P.2d 622 (Utah 1990); Rocky Mountain Thrift Stores,
Inc. v. Salt Lake City Corp., 784 P.2d 459 (Utah 1989).
In the instant case, the City's construction of the
culvert was in support of a flood control program and
therefore was a public use within the meaning of article I,
section 22. All damages necessarily resulting from the
construction of that improvement and not otherwise paid
for would be recoverable in an inverse condemnation
action as damages incurred for a public use under the
terms of the constitutional provision. In Utah, however,
under the statutes and case law, damages which are not a
direct and necessary consequence of the construction or
operation of a public use are not recoverable in an inverse
condemnation action.
In 1987, after this cause of action arose, the
legislature enacted Utah Code Ann. § 63-30-10.5,
authorizing inverse condemnation actions against the
government. That statute waives governmental immunity
for the taking or damaging of private property without
just compensation and provides for the assessment of
compensation and damages under title 78, chapter 34
(enacted prior to this action). See Utah Code Ann. § 63-
30-10.5. Title 78 provides that property taken must be
"necessary" to a use authorized by law. Id. at § 78-34-4.
That title further provides that severance damages are to
be assessed in situations where property not actually
taken "will be damaged by the construction of the
proposed improvement." Id. at § 78-34-10(3) (emphasis
added). The use of the words "necessary" and "will" in
the statute limits its applicability to those damages which
are anticipated prior to the condemnation and are an
unavoidable consequence of the construction of the
improvement. Avoidable injuries not directly resulting
from the construction or operation of a public
improvement are not within the statute's protection. See
Thomas E. Jeremy Estate v. Salt Lake City, 87 Utah 370,
49 P.2d 405, 407 (1935) ("Damages arising out of the
carelessness or negligence or indifference in the
construction of a utility upon land taken for public use are
not damages contemplated by the statutes as recoverable
under the principles of law pertaining to eminent domain
proceedings.").
Consistent with the policy recently expressed by the
legislature, this court has in the past limited damages
recoverable under the Utah Constitution's eminent
domain provision to those injuries which are the direct
and unavoidable consequence of the construction or use
of the improvement. Other damages, it has been held, are
not incurred "for a public use" and are therefore outside
the contemplation and meaning of article I, section 22.
We briefly review that precedent.
In Morris v. Oregon Short Line Railroad, 36 Utah
14, 102 P. 629 (1909), this court considered an article I,
section 22 claim by a property owner for damages arising
as a result of the construction and operation of a railroad
on abutting land. The court stated that in such a case,
"everything which arises out of the proper construction
and proper operation of the railroad which directly affects
the salable value of the abutting property may ordinarily
be considered as elements in assessing damages." Id. 102
P. at 631. On similar facts, in O'Neill v. San Pedro, L.A.
& S.L. Railroad, 38 Utah 475, 114 P. 127, 130 (1911),
this court held that in an eminent domain setting under
the state constitution, recovery is allowed only for
injuries which necessarily arise from the "proper and
careful" operation of the improvement. Any damages
arising from the railroad's negligent operation of its trains
were recoverable only in a negligence action.
In Utah Lake Irrigation Co. v. Jensen, 49 Utah 19,
161 P. 677 (1916), an irrigation company condemned
land for a canal. After construction, the property owner
sought to recover damages for injuries caused by the
seepage of water from the canal. The parties agreed that
the property owner was not entitled to recover damages
for injuries resulting from improper or negligent
construction or operation of the canal. The question in the
case was, rather, whether the seepage occurred because of
negligence or, instead, was the necessary result of a
properly constructed and operated canal. That
determination, the court held, was not a question of law
and depended on the particular conditions and facts of the
case. Id. at 678.
In Lund v. Salt Lake County, 58 Utah 546, 200 P. 510
(1921), a property owner sought to recover damages for
injury to fish ponds and the destruction of fish caused by
contaminated water released into the ponds by Salt Lake
County. The court denied the inverse condemnation
claim, holding that "the damages for which compensation
is allowed under article I, § 22, of the state Constitution
are such as are the direct consequence of the lawful
exercise of the right of eminent domain, and ... ordinarily
such damages are unavoidable." Id. 200 P. at 513. The
court found that the property was not taken "for a public
use" for purposes of the constitutional provision. Id. at
513.
Finally, in two separate opinions Justice Wade, after
arguing that article I, section 22 was self-executing, wrote
that inverse condemnation damages are limited to those
necessarily arising out of the public use. In Springville
Banking Co. v. Burton, 10 Utah 2d 100, 349 P.2d 157
(1960), Justice Wade wrote that such damages must
"grow out of" a public use rather than being merely the
result of a negligent or wrongful government act. Id. 349
P.2d at 166 (Wade, J., concurring). That same year, in
Fairclough v. Salt Lake County, 10 Utah 2d 417, 354
P.2d 105 (1960), he noted that article I, section 22
"clearly requires the taking or damaging of tangible
private property, and that the public use must be
intentional and not merely accidental or negligently
caused." Id. 354 P.2d at 110 (Wade, J., dissenting)
(footnote omitted).
In this case, reviewing the facts and inferences in the
light most favorable to Farmers, we conclude that the trial
court properly granted summary judgment as to Farmers'
inverse condemnation claim against the City under article
I, section 22. There is no evidence that the injuries
incurred by Farmers were unavoidable or necessary to the
construction or use of the culvert. It would be
inconsistent with the language of the state constitution,
the policy expressed in the current eminent domain
statute, [2] and Utah case law to allow recovery under
eminent domain principles for indirect, avoidable injuries
which provide no benefit to the public. Farmers' recovery,
if there is to be one, must be under another theory.
The trial court incorrectly implied that intent is an
element of an inverse condemnation action. Intent is not
an element of such an action, and any indication to that
effect in our prior rulings should be disregarded.
Although the government's lack of intent to cause injuries
may be used as persuasive evidence that the injuries were
unnecessary to the public use and/or avoidable, the
presence or absence of intent is not dispositive on the
subject of the nature of the injuries.
In the instant case, the trial court correctly stated that
an inverse condemnation action does not "extend to
actions arising out of negligently tortious conduct." The
question of whether injuries are an avoidable or
unavoidable consequence of construction is one of fact.
See Utah Lake Irr. Co. v. Jensen, 49 Utah 19, 161 P. 677,
678 (1916).
II. FIFTH AMENDMENT CLAIMS
In its first amended complaint, Farmers asserts
several causes of action against the City under the fifth
amendment of the United States Constitution. The takings
clause of the fifth amendment provides, "[P]rivate
property [shall not] be taken for public use, without just
compensation." This language differs slightly from the
corresponding provision in the Utah Constitution, which
prohibits the taking and damaging of private property
without just compensation. Utah Const. art. I, § 22. Under
the facts of this case, however, the result is the same
under both constitutional provisions.
Under the United States Supreme Court's
interpretation of the fifth amendment, a "taking" does not
require complete destruction of the value of the property.
In United States v. Cress, 243 U.S. 316, 37 S.Ct. 380, 61
L.Ed. 746 (1916), the Court allowed property owners to
recover fifth amendment compensation for a depreciation
in value to their lands and water rights as a result of the
government's construction and maintenance of locks and
dams on a river. The Court stated: "[I]t is the character of
the invasion, not the amount of damage resulting from it,
so long as the damage is substantial, that determines ...
whether it is a taking." Id. at 328, 37 S.Ct. at 385.
Because there was a direct invasion of the property and
"inevitably recurring" flooding, recovery was allowed. Id.
In Sanguinetti v. United States, 264 U.S. 146, 44
S.Ct. 264, 68 L.Ed. 608 (1924), a canal constructed and
operated by the government was insufficient to carry
away flood waters. As a result, the canal overflowed and
damaged the abutting property owners' trees, crops, and
land. The Court denied compensation under the takings
clause, stating: "[I]n order to create an enforceable
liability against the government, it is, at least, necessary
that the overflow be the direct result of the structure, and
constitute an actual, permanent invasion of the land,
amounting to an appropriation of, and not merely an
injury to, the property." Id. at 149, 44 S.Ct. at 265. The
Court noted, "If the case were one against a private
individual, his liability, if any, would be in tort." Id. at
150, 44 S.Ct. at 265.
The Court's holdings in Sanguinetti and Cress have
been applied more recently by other federal courts. In
National By-Products, Inc. v. United States, 405 F.2d
1256, 186 Ct.Cl. 546 (1969), a property owner was
denied compensation under the fifth amendment for
flooding caused by the overflow of a government-
constructed levee. In that case, the court of claims found
that the floods were a result of unique physical conditions
and were not inevitably likely to recur. Id. 405 F.2d at
1274. Echoing the Supreme Court in Sanguinetti, the
court stated, "The essential inquiry is whether the injury
to the claimant's property is in the nature of a tortious
invasion of his rights or rises to the magnitude of an
appropriation of some interest in his property
permanently to the use of the Government." Id. 405 F.2d
at 1273-74. The court of claims and other federal courts
have applied the same reasoning in a number of
subsequent cases involving damage from the overflow
and seepage of water. See, e.g., Baird v. United States, 5
Cl.Ct. 324 (1984); Berenholz v. United States, 1 Cl.Ct.
620 (1982), aff'd, 723 F.2d 68 (Fed.Cir.1983); Miller v.
United States, 583 F.2d 857 (6th Cir.1978); Hartwig v.
United States, 485 F.2d 615, 202 Ct.Cl. 801 (1973);
Harris v. United States, 467 F.2d 801 (8th Cir.1972), and
cases cited therein.
In the instant case, Farmers alleges a taking by virtue
of the City's diversion of Mill Creek and the resulting
seepage. That claim may not be sustained under the
foregoing cases, all of which specifically treat the issue of
damage to property caused by water. In addition, Farmers
seeks fifth amendment compensation for damage caused
by the City's unreasonable removal of lateral support, the
City's intentional and deliberate interference with
Farmers' use of its property and impairment of the value
of the property, and the City's failure to prevent or
remedy the tortious acts of the contractor. Although not
specifically involving damages caused by water, Farmers'
additional claims can also be denied under the principles
expressed in the foregoing cases.
All of the damages that Farmers has alleged are "in
the nature of a tortious invasion" of its rights rather than
rising "to the magnitude of an appropriation of some
interest in [its] property permanently to the use of the
Government." National By-Products, Inc. v. United
States, 405 F.2d at 1273-74. In this case, the "character"
of the damages does not meet the criteria established by
the Supreme Court as necessary to a fifth amendment
taking. In the language of the Court in Sanguinetti, the
damages alleged by Farmers are not the "direct result of
the structure," they do not "constitute an actual permanent
invasion of the land," nor do they amount to an
"appropriation" of Farmers' property interest. Sanguinetti
v. United States, 264 U.S. at 149, 44 S.Ct. at 265.
The injuries Farmers seeks to recover are properly
characterized as tortious and thus do not have
constitutional stature under the fifth amendment. The trial
court, therefore, properly granted the City's motion to
dismiss Farmers' inverse condemnation claims under the
United States Constitution. Even reviewing the facts and
inferences in the light most favorable to it, Farmers is not
entitled to relief under the fifth amendment of the federal
constitution.
III. CONTRACT CLAIM
Although flood control is clearly a public use, the
construction of the culvert in the instant case was not
conducted pursuant to the City's eminent domain power.
Rather, Farmers and the City entered into a right-of-way
agreement for a creek easement "for the purpose of
digging, laying concrete, connecting to and maintaining,
cleaning and operation [sic] a creek and drainage
facility." Farmers claims that the agreement was a
contract under which the City expressly and impliedly
agreed not to abuse the easement or unreasonably
interfere with Farmers' right to use the premises. We
agree with Farmers' assertion that the City does owe
certain obligations to Farmers under the contract and
under Utah law.
In denying that it had any obligations to Farmers
under the agreement, the City points out that it did not
sign the document. It did, however, accept and use the
easement, and acceptance makes a written contract
containing a grant binding upon the grantee. Bracklein v.
Realty Ins. Co., 95 Utah 490, 80 P.2d 471, 477 (Utah
1938). In addition, the agreement recites that it was
entered into "for valuable consideration." By virtue of the
consideration transferred and the City's acceptance of the
easement, enforceable contract rights and remedies were
formed. The resulting contract falls within the waiver of
governmental immunity for contractual obligations. See
Utah Code Ann. § 63-30-5. [3] Having determined that a
contract exists, we examine the nature of the respective
rights and duties of the parties.
In Thomas E. Jeremy Estate v. Salt Lake City, 87
Utah 370, 49 P.2d 405 (1935), a property owner sought
recovery under eminent domain principles for damages
arising from the deposit on his property of material
excavated during the construction of a canal. The
landowner had granted the city a right-of-way for the
construction and use of the canal. Included in the contract
was a covenant by the city not to damage the adjoining
property. This court denied recovery, stating that as a
basic principle of contract law, in the absence of language
to the contrary the grantor was compensated for the
foreseeable damages by the consideration recited in the
contract. Id. 49 P.2d at 406-07. This court presumed that
the consideration had been accepted by the grantor as the
reasonable value of (1) the right granted and (2) the
reasonably foreseeable damage done to the remaining
land and improvements by the granting of the right-of-
way and its use and maintenance. Id. at 406.
In the instant case, the agreement expressly reserves
to Farmers the right "to fully use" the premises for all
purposes except that for which the easement was granted.
The agreement does not, however, contain an express
covenant by the City to compensate Farmers for damages
incurred in the construction or use of the culvert, even
though at the time of contracting, certain damages were a
foreseeable and necessary result of the granting of the
easement. Under Jeremy, the consideration recited in the
agreement is therefore presumptive compensation for
those damages so long as they were reasonable. Farmers,
however, would be entitled to compensation for
"unreasonable" injuries. This is consistent with Utah case
law.
Utah law provides that the rights of the dominant
owner of an easement are impliedly limited by the rights
of the servient owner. Big Cottonwood Tanner Ditch Co.
v. Moyle, 109 Utah 213, 174 P.2d 148, 158 (Utah 1946).
"[T]he use of an easement must be as reasonable and as
little burdensome to the servient estate as the nature of
the easement and its purpose will permit." Id. (quoting
Jenkins v. Depoyster, 299 Ky. 500, 186 S.W.2d 14, 15
(1945)). The servient owner may recover damages for
those injuries which are "over and above those embraced
within the framework of the easement itself." Big
Cottonwood, 174 P.2d at 158. In such a case, the record
must show that the dominant owner's exercise of the
easement is "unreasonable in that it will unnecessarily
damage the servient estate[ ]." Id. at 160; see also Salt
Lake City v. J.B. & R.E. Walker, Inc., 123 Utah 1, 253
P.2d 365 (1953); Stevens v. Bird-Jex Co., 81 Utah 355,
18 P.2d 292 (1933).
The City's right to use its easement to the detriment
of Farmers' estate did not include unforeseeable,
unreasonable damages over and above those necessary to
use the easement for the purposes for which it was
granted. The City is contractually obligated to
compensate Farmers for those damages and cannot
invoke governmental immunity because it was waived
under Utah Code Ann. § 63-30-5. The determination of
the unreasonableness of the City's actions is a question of
fact, Big Cottonwood, 174 P.2d at 159, and the trial
court's summary judgment on Farmers' contract claims
against the City was improper.
The trial court's order of summary judgment on the
contract claims is reversed, and this case is remanded for
a trial on those claims.
HALL, C.J., HOWE, Associate C.J., and
ZIMMERMAN, J., concur.
STEWART, J., concurs in the result.
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Notes:
[1] Recently, in Colman v. Utah State Land Board, 795
P.2d 622, 635 (Utah 1990), we held that article I, section
22 was self-executing. Accord Hamblin v. City of
Clearfield, 795 P.2d 1133 (Utah 1990); Hansen v. Salt
Lake County, 794 P.2d 838 (Utah 1990). An inverse
condemnation claim under that constitutional provision is
self-executing and not subject to the limitations found in
the Governmental Immunity Act. See Colman v. Utah
State Land Bd., 795 P.2d 622, 630-35 (Utah 1990).
[2] We acknowledge that the statute is inapplicable to this
case and cite it only as a reflection of current legislative
views on public policy.
[3] We note that this court has recently held in Hansen v.
Salt Lake County, 794 P.2d 838 (Utah 1990), that the
second paragraph of section 63-30-3 of the Utah
Governmental Immunity Act does not grant absolute
immunity to governmental entities for activities related to
flood control. We held that the various exceptions to
immunity invoked by the first sentence of the first
paragraph of section 63-30-3 are equally available for
claims arising out of flood control activities. Hansen, 794
P.2d at 844-46; accord Hamblin v. City of Clearfield, 795
P.2d 1133 (Utah 1990). Those exceptions include the
waiver of governmental immunity for contractual
obligations under section 63-30-5.
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