A quick one from the Virginia Supreme Court, on pleading inverse condemnation in flooding cases. Or in any inverse case, actually.
In AGCS Marine Insurance Co. v. Arlington County, No. 1160221 (June 15, 2017), the court held that the insurance company (which paid off the property owner after a county sewer line flooded its store, and exercised its subrogation rights by bringing an inverse claim against the county) initially didn't plead the claim adequately. But its proposed amended complaint fixed the pleading defects and made out a valid claim.
The case started when a county sewer line backed up, which caused raw sewage to flow into a neighboring grocery store. The insurance company paid the policy limits, and brought suit against the county. Here's how the plaintiff initially pleaded the inverse claim:
The original complaint stated that the sewer line and the sewage treatment plant for the sewer line “were maintained for the public purpose of supplying Arlington County with water and sewage disposal services.” J.A. at 3. The sewage backup, the complaint alleged, “was caused by the failure of Arlington County to properly maintain and operate the sewage treatment plant.” Id. The complaint provided several specific examples of this overall failure, including that the County (1) failed to “properly operate, inspect, maintain and test” the sewer system; (2) failed to maintain and repair the pumps in the plant; (3) failed to supervise its employees at the treatment plant; (4) “ignored warnings from its employees” about the equipment; (5) “bypassed safety features of the equipment”; and (6) neglected necessary repairs. Id.
Slip op. at 2. But the complaint didn't allege or imply that the County did this intentionally.
The County responded by arguing that these allegations were really about the tort of negligence, not inverse condemnation (from which the County was immune). The trial court agreed, and dismissed over the plaintiff's proffer of an amended complaint that alleged purposeful County action.
The Supreme Court agreed that the plaintiff's original allegations were not sufficient to plead a case of inverse condemnation, which requires an allegation that the defendant/inverse condemnor acted purposefully: "[t]he common thread in each of these cases is that the purposeful act or omission causing the taking of, or damage to, private property was for a public use." Slip op. at 12. "[M]ere negligence," was not enough:
The complaint asserted that the County’s sewage treatment plant and underground sewer lines existed “for the public purpose of supplying Arlington County with water and sewage disposal services.” J.A. at 3. From that premise, the insurers alleged several ways in which the County failed “to properly maintain and operate the sewage treatment plant.” Id. These failures, the insurers concluded, “resulted in a taking and/or damaging of the private property of Harris Teeter, without just compensation, in violation of Article I, § 11.” Id. at 5.These allegations simply proved too much, and thus, proved nothing. They presupposed that inverse condemnation principles can provide a remedy for property damage of any nature, whether intentional, negligent, or wholly innocent, caused by a governmental entity.
Slip op. at 13. The original complaint didn't do this:
The original complaint did not satisfy this prerequisite. Nothing in it expressly alleged or reasonably implied that the County purposefully damaged the Harris Teeter grocery store for a public use. No allegation suggested that the County planned or designed its system to allow the backflow in an effort to keep the entire county sewer system operating for all other users.10 Simply alleging that damage occurred incident to the operation of the public sewage system is insufficient to state a claim for inverse condemnation under Article I, Section 11 of the Constitution of Virginia.
Slip op. at 15.
But the trial court should have let the plaintiff amend its complaint, which did adequately plead an inverse condemnation cause of action. "[S]everal allegations in the amended complaint assert or at least imply that the County purposefully took or failed to take certain actions that, when combined, intentionally caused the sewer line at Harris Teeter to back up so that the entire system could continue to operate." Slip op. at 16 (emphasis in original).
Several thoughts:
- Check out pages 4-6, a good run down of the property rights principles behind inverse condemnation claims. Good history, worth reading.
- The court also held that the "'self-executing character" of the Virginia Constitution's takings clause means that private personal property (not only real property) is included, because when the text of the provision says "property," it didn't limit it to real property. Slip op. at 19-21. Thus, a taking of personal property is a taking, even if the property has not become a "fixture." Very critical, for those of you in Virginia. The court made it a point to distinguish its 2011 decision in Taco Bell, which set out the standards for when personal property has become a "fixture," and thus a part of the real estate which was condemned. But, the court noted, "[w]e never once suggested, as the County seems to inter that Taco Bell would not have had a valid claim in the Commissioner had actually taken equipment that had never become fixtures annexed to the realty." Slip op. at 25.
- In other words, just because something isn't a "fixture," doesn't mean that if it is taken or damaged that the condemnor doesn't have to pay for it.
The entire opinion is worth a read.
AGCS Marine Insurance Co. v. Arlington County, No. 1160221 (Va. June 15, 2017)
