The South Dakota Supreme Court's opinion in Montana-Dakota Utilities Co. v. Parkshill Farms, LLC, No. 28174 (Dec. 13, 2017), resolved both a public use question, and one of compensation. In other words, something for every takings maven, no matter your interest. Read on!
This was a taking of permanent easements by publicly-regulated but privately-owned utilities. The owner asserted that just compensation and damages was $840,000. The condemnors valued the take at "only $73,097." Slip op. at 3. The jury awarded $95,046.
The power-to-take question was whether the condemnation of private property by the power companies was "for public use" because the land taken was not going to be open to the public, nor were the transmission lines. Under South Dakota law, a taking is for public use when the property itself is going to be used by the public. But this was not as simple as the property owners made it out to be, according to the court, which concluded that "[i]n essence, the [owners] argue that in order to satisfy the public-use clause, the general public must be entitled to use the condemned property in the same manner as the condemning authority." Slip op. at 5 (emphasis original).
The court rejected the argument as "untenable," holding instead that it was enough that the public had the right to make use of the service which the utilities would provide. The court compared the utility companies to railroads, and held that it was sufficient under existing South Dakota law that trains be open to the public, and not the land on which the tracks are located. Thus, because the public has the right to the services which the utilities would provide, the taking was for a public use:
In this case, the nature of the proposed use of the easements is public. The circuit court found that the Utilities are public utilities. As such, they are required by law to “furnish adequate, efficient, and reasonable service.” SDCL 49-34A-2. The Utilities may not, “except in cases of emergency, fail to provide, discontinue, reduce or impair service to a community, or a part of a community, except for nonpayment of account or violation of rules and regulations, unless permission has been first obtained from the Public Utilities Commission to do so.” SDCL 49-34A-2.1. And as noted above, federal regulations require the Utilities to provide open access to their transmission lines under nondiscriminatory rates to others in the market. Because the Utilities are required to provide nondiscriminatory, government-regulated service to the general public, the easements at issue were taken for public use.
Slip op. at 7-8.
The court also rejected the owners' necessity challenge, concluding that whether taking these easements in perpetuity (rather than for a 99 year term, as in neighboring North Dakota) is "a legislative question, [and] it will continue to be a legislative question 99 years from now." Slip op. at 9. No surprise there.
But the owners did get some love from the court, in the just compensation portion of the opinion, which begins on page 12. The owners asserted the trial court wrongly refused to give this jury instruction:
The Landowners’ damages in this case include damages for all rights taken under the easement, not just those arising from the project proposed by the Plaintiffs. In considering damages for the rights taken under the easement, you must consider all damages, present and prospective, that will accrue reasonably from the taking of the easement, and in doing so must consider the most injurious use of the property reasonably possible under the easement.
Slip op. at 13. The court agreed, rejecting the utilities' argument that the instructions which the jury received were adequate. Although they were accurate statements of the law "the jury instructions were inadequate as a whole." Slip op. at 14. Before-and-after, check. Value of the property taken, plus damage to the remainder, check. But these formulations didn't account for another element of damage: the potential, but presently un-exercised rights which the easements granted to the utilities. This included the right to install guy wires on certain portions of the easement, a right which the jury instructions did not account for.
The court didn't quite buy the owners' jury instruction 100%, concluding that it was a bit too broad, since future damages must be "reasonable," and the instruction quoted above could be read to charge the jury with awarding money for future damage, even if not foreseeable. Slip op. at 15. Thus, the court sent the case back down to the trial court for another trial on compensation:
The circuit court is not required to adopt the specific language in the Parkses’ requested instruction. The Utilities may propose their own version for consideration. But whatever instruction is given must be consistent with our holding in JB Enterprises that a property owner is entitled to compensation for any right explicitly taken by a condemning authority, regardless of whether the condemning authority ever uses such right.
Slip op. at 16.
It may not have been a total win for the property owners, but we bet they are probably okay with living to fight another day and getting another crack at the jury.
Montana-Dakota Utilities Co. v. Parkshill Farms, LLC, No. 28174 (S.D. Dec. 13, 2017)
