If the headline of this post throws you off a bit, not to worry: it was designed to. Because the situation in the North Carolina Supreme Court's recent opinion in Wilkie v. City of Boiling Spring Lakes, No. 44PA17 (Mar. 2, 2018), turned the usual arguments on their heads.
In condemnation cases, if the owner objects on the grounds that is being accomplished for a private -- and not public -- use or benefit, the remedy they seek is to stop the taking or unwind it. We can't recall a case in which an owner sought compensation for what was claimed to be private taking. The question in the Wilkie case was whether that same approach applies in inverse condemnation cases -- those in which the owner alleges that some government act other than an affirmative exercise of the eminent domain power has taken private property.
In that case, the owners' land was partially flooded by the city when it (at the behest and for the benefit, in part, of the owners themselves) raised two pipes which drained a city-owned lake. Raising the drain pipes caused the lake's water level to rise, something the owners anticipated would be a good thing. But apparently not so; they had a change of heart and later asked the city to restore the pipes' original height. Eventually, the city did so, and the drain pipe modifications were removed. But this didn't immediately restore the lake's water to its pre-modification level. The owners sued for compensation for the temporary flooding, alleging that as a consequence of the pipe modification and temporary taking, they lost 15%-18% of their lakeside land, which was, for a time, lake-bottom land.
They sued under a North Carolina statute (N.C.G.S. § 40A-51) which recognizes inverse condemnation:
If property has been taken by an act or omission of a condemnor listed in G.S. 40A-3(b) or (c) and no complaint containing a declaration of taking has been filed the owner of the property, may initiate an action to seek compensation for the taking.
That section also sets out the procedure in these actions.
Here's the key trial court finding: it concluded that the taking by the city was for private benefit (in part, the plaintiffs themselves):
After conducting a hearing pursuant to N.C.G.S. § 40A-47 for the purpose of resolving all disputed issues between the parties other than the amount of damages, if any, to which plaintiffs were entitled, the trial court entered an order on 5 November 2015 determining that the installation of the elbows “for the benefit of, and at the sole request of, residents around the lake” elevated the lake level and “encroached upon and submerged” plaintiffs’ property and resulted in a “taking of [plaintiffs’] property without just compensation being paid.”
Slip op. at 4. The court concluded the owners were entitled to compensation under the statute.
But wait, the city argued, this is a private taking ... we don't owe compensation for a taking that is not for public use or benefit. Slip op. at 45 ("In seeking relief from the trial court’s order before the Court of Appeals, defendant argued that plaintiffs’ claims should be dismissed because a claim for inverse condemnation does not lie unless plaintiffs’ property is taken for a public use or public purpose."). The public use requirement is baked into the statute, the city claimed, so even if the statute doesn't require that an inverse taking be accomplished for public benefit, that's an inherent precursor to liability.
The trial court disagreed, but the N.C. Court of Appeals reversed, concluding that public use is a necessary prerequisite to a "taking," and "there can be no inverse condemnation when property is not taken for public use." The court analogized inverse condemnation to actions in eminent domain, and correctly noted that eminent domain can only be exercised for actions that result in the public use of private property. Slip op. at 6-7.
The N.C. Supreme Court granted discretionary review and reversed, relying on the fact that the statute never mentions public use or purpose as an element of an inverse taking claim. Notably, the opinion frames the issue purely in terms of the statute. See slip op. at 11 ("The essential issue before us in this case is whether a property owner seeking to assert a statutory inverse condemnation claim pursuant to N.C.G.S. § 40A-51 must show that the condemnor acted to further a public purpose."). The opinion stuck to the statute's plain text and the legislature's intent, focusing on the city's claim that liability is limited in the statute to entities which posses the power of eminent domain. In the city's view, if only entities with that power can be liable under the statute, and those entities can only exercise the power to take for a public use, then it follows that public use is an element of an inverse condemnation claim, QED.
Not so, held the court, the statute is only meant to identify which entities can be liable, "and nothing more." Slip op. at 15. The legislature's intent was to provide compensation when property had been taken, and "it seems to us that a decision to provide a claimant whose property has been taken for a public purpose with a statutory inverse condemnation remedy while depriving a claimant who has suffered the same injury for a non-public purpose of the right to utilize that statutory remedy," was not logical. Slip op. at 16. Seems inconsistent with the likely legislative intent.
Finally, the court rejected the city's argument that the term "taken" was used in the statute as a term of art, meaning a taking for public use or purpose:
Although this Court’s decisions sometimes utilize “taking” and “taken” in ways that are at variance from their ordinary meaning, this Court has never gone so far as to hold that “taken” invariably means “taken by the power of eminent domain” or that “taking” means nothing more or less than a “taking for the public use.”
Slip op. at 18 (citations and footnote omitted).
One caution. The court's analysis was solely under the North Carolina statute, and did not analyze directly whether an inverse claim under either the U.S. or N.C. constitutions would similarly not require public use as an essential element of a property owner's complaint. Other jurisdictions require it when constitutional claims are raised. See here and here, for example.
But even if you are in a jurisdiction without a similar statute, we recommend reading the entire opinion, as it is well worth your effort.
Wilkie v. City of Boiling Spring Lakes, No. 44PA17 (N.C. Mar. 2, 2018)
