Some states (mostly in the Midwest, to our knowledge) don't really recognize inverse condemnation" claims, at least as we in other jurisdictions use that term. Instead of recognizing a direct cause of action for compensation and damages when government has taken property physically or by regulation without first instituting an eminent domain case, these jurisdictions require a property owner to sue in mandamus, to compel the government to formally condemn the property and pay. Minnesota is one of those jurisdictions.
Property owners better follow that mandamus process strictly, at least according to the Eighth Circuit in American Family Ins. v. City of Minneapolis, No. 15-3216 (Sep. 6, 2016). Wait, you say, what's this -- an inverse condemnation/takings case in federal court ... how can that be?
The case -- a claim by insurance companies on behalf of their insureds after the city's water main broke and flooded a condo -- did start in state court. The insurance companies did as Williamson County instructs, and filed their inverse condemnation action for damages in Minnesota's courts. It was the city which removed the case to federal court.
But the plaintiffs didn't call it "mandamus." They thought that filing a mandamus action would have been futile because the city had already denied them compensation through its administrative claims process. So they pitched their state claim as one arising directly under the Minnesota Constitution "because private property was damaged by the water-main break." Slip op. at 8. Relying on a 1991 opinion of the Minnesota Supreme Court as authority, the insurance companies argued that they could seek damages directly, and didn't need to go the mandamus route.
The district court disagreed, and dismissed, and the Eighth Circuit affirmed. The plaintiffs needed to call it mandamus, because "a Minnesota state court hearing such as a mandamus action has the ability to not only determine whether a taking occurred under the state constitution, but also to determine the monetary value of the harm inflicted by the taking." Slip op. at 8 (citing City of Minneapolis v. Meldahl, 607 N.W.2d 168, 172 (Minn. Ct. App. 2000)). Interestingly, the opinion cited only that court of appeals decision, and not controlling authority from the Minnesota Supreme Court (suggesting, perhaps, that there isn't any?).
And what about that 1991 Supreme Court case which the plaintiffs said gave them the green light to bring a damages claim directly? The Eighth Circuit concluded that the case didn't apply because the taking in that case was for a public use, and "here the damage caused by the water-main break was clearly not for a public use." Slip op. at 9. After that gem, the opinion slips into incoherence:
Thus, we conclude that Appellants’ reliance on Wegner is misplaced, and a state takings claim, under these facts, may not be pursued directly under the Minnesota Constitution in federal court. Because Appellants failed to pursue the available mandamus action in state court, both the state and federal takings claims are not ripe for review by the federal district court.
Slip op. at 9.
First, the plaintiffs didn't pursue their state claims in federal court, they pursued them in state court. The case was removed to federal court by the city. Which in any rational world means that the court can't now say that the case isn't ripe because it wasn't brought in state court. Note that the court concluded that both the state and federal takings claims were not ripe. How can that be?
Second, what does public use vel non have to do with whether under Minnesota law, a property owner has a direct claim for damages under the state constitution? It's kind of hard to see a distinction between the government action in the 1991 Wegner case (police busting down doors while apprehending a suspect) and the water main break in this case, at least from the standpoint of the public use: we want police to apprehend bad guys, and we want water. As the court held in Wegner:
We believe the better rule, in situations where an innocent third party's property is taken, damaged or destroyed by the police in the course of apprehending a suspect, is for the municipality to compensate the innocent party for the resulting damages. The policy considerations in this case center around the basic notions of fairness and justice. At its most basic level, the issue is whether it is fair to allocate the entire risk of loss to an innocent homeowner for the good of the public. We do not believe the imposition of such a burden on the innocent citizens of this state would square with the underlying principles of our system of justice. Therefore, the City must reimburse Wegner for the losses sustained.
We fail to see how the difference relied on by the Eighth Circuit is a valid way to distinguish that case.
And finally, what of the Eighth Circuit's reliance on Meldahl, the Minnesota Court of Appeals' opinion which the Eighth Circuit said allowed damages claims under the constitution to be determined in an inverse condemnation mandamus action? Not being aware of Minnesota practice in these type of cases, we're not sure if that's correct, or even whether the issue has been determined by Minnesota's highest court. Any local practitioners want to weigh in?
American Family Ins. v. City of Minneapolis, No. 15-3216 (8th Cir. Sep. 6, 2016)
