Claims under the Alabama Constitution Following Town ofGurley v. M&N Materials, Inc., 0115 ALBJ, 76 The Alabama Lawyer 22 (2015)

• Author: George W. Royer, Jr. and David J. Canupp.
• Position: Vol. 76 1 Pg. 22

“Regulatory Takings” Claims under the Alabama Constitution Following Town of Gurley v. M&N Materials, Inc.

Vol. 76 No. 1 Pg. 22

Alabama Bar Lawyer

January, 2015

George W. Royer, Jr. and David J. Canupp.

Prior to December 21, 2012, the Alabama Supreme Court had never addressed the issue of whether a regulatory taking-i.e., governmental action which operates by executive or legislative action to restrict the use of property-can constitute the basis for a cognizable claim of inverse condemnation under the Alabama Constitution of 1901. In the case of Town of Gurley v. M&N Materials, Inc., 143 So. 3d 1 (Ala. 2012) (as modified on denial of rehearing), the Alabama Supreme Court addressed for the first time the question of whether such a right of action exists. The authors of this article served as appellate counsel for the Town of Gurley in the M&N case.¹ This article will address the background of inverse condemnation in Alabama, the M&N opinion and the current status of regulatory takings claims under the Alabama Constitution.

Inverse Condemnation Under Alabama Law

Generally, the exercise of the power of eminent domain is accomplished through the statutorily regulated process of condemnation. See, e.g., State Dep't of Transp. v. Mclelland, 639 So. 2d 1370 (Ala. 1994). However, "inverse condemnation is the taking of private property for public use without formal condemnation proceedings and without just compensation being paid by a governmental agency or entity which has the right or power of condemnation." McClendon v. City of Boaz, 395 So. 2d 21, 24 (1981). In Ex parte Carter, 395 So. 2d 65, 67 (Ala. 1980), the Supreme Court of Alabama observed that "an action claiming inverse condemnation is very limited and [ ] all elements must be present."

The difference between formal condemnation proceedings and "inverse condemnation" was explained by the Alabama Supreme Court in Jefferson County v. Southern Natural Gas Co., 621 So. 2d 1282 (Ala. 1993), by reference to a United States Supreme Court decision on the subject, as follows: In United States v. Clarke, 445 U.S. 253, 100 S. Ct. 1127, 63 L.Ed. 2d 373 (1980), the United States Supreme Court explained the difference between formal condemnation proceedings and inverse condemnation proceedings. A formal condemnation proceeding is a legal action brought by a condemning authority, such as the Government, in the exercise of its power of eminent domain. "Inverse condemnation" refers to a legal action against a governmental authority to recover the value of property that has been taken by that governmental authority without exercising its power of eminent domain-it is a shorthand description of the manner in which a landowner recovers just compensation for a taking of his property when the taking authority has not initiated condemnation proceedings. Condemnation proceedings require affirmative "taking" action on the part of the condemning authority; the particular action required depends on the particular statute applicable. However, in inverse condemnation actions, a governmental authority need only occupy or injure the property in question; when that occurs and the property owner discovers the encroachment, the property owner has the burden of taking affirmative action to recover just compensation.

621 So. 2d at 1287.

The right of action for inverse condemnation is not found in the Alabama Code. Although inverse condemnation claimants frequently cite the Alabama Eminent Domain Code, Ala. Code § 18- 1A-1, et seq. (AEDC), as the source of the right to maintain an inverse condemnation action, it does not appear that the AEDC provides a basis for an inverse condemnation claim. The AEDC specifically states that it "does not confer the power of eminent domain" and, instead, provides only "standards for the acquisition of property by condemnors" and "supplements the law of this state relating to the acquisition of property and to the exercise of the power of eminent domain." Id. At § 18-1A-2. The commentary to Section 18-1A-2 of the AEDC specifically provides that the AEDC does not purport to regulate inverse condemnation actions in Alabama except to provide for the recovery of attorneys' fees for successful inverse condemnation claimants. Subsection (a) establishes that this Code is conceived primarily as a procedural statute....

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Subsection (b) makes it clear that this Alabama Eminent Domain Code (hereinafter referred to as "AEDC" or "this Code") is intended to supplement and not displace other provisions of law dealing with the substantive powers of land acquisition and eminent domain...

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This AEDC does not purport to supply rules for inverse condemnation actions (except as provided in section § 18-1A-32).² The extent to which its provisions may be applicable in inverse condemnation actions is intended to be determined by judicial construction in the light of other applicable state law.

(emphasis added). There are no appellate decisions in Alabama that have held that the AEDC provides a statutory basis of a claim for inverse condemnation.³

Most of the reported cases involving inverse condemnation claims against municipalities have been brought under § 235 of the Alabama Constitution of 1901, which provides in pertinent part as follows: Municipal and other corporations and individuals invested with the privilege of taking property for public use, shall make just compensation, to be ascertained as may be provided by law, for the property taken, injured, or destroyed by the construction or enlargement of its works, highways, or improvements, which compensation shall be paid before such taking, injury or destruction.

(emphasis added).

Section 235 thus has two principal clauses which materially restrict its scope of operation. In order for a governmental action to be compensable under § 235, two separate and distinct elements must both be present. The property must have been: (1) "taken, injured, [or] destroyed," and (2) the taking, injury or destruction must have been related to the governmental entity's "construction or enlargement of its works, highways, or improvements." Section 235 has also been restricted by judicial interpretation. For example, the supreme court has stated that a property owner "does not bring himself within the protection of § 235 of the Constitution of Alabama 1901, unless he shows that he is an 'abutting owner'" to the improvements under construction. Markstein v. City of Birmingham, 243 So. 2d 661, 662 (Ala. 1971) (quoting Hall v. Atlanta, B.&A.R.R. Co., 158 Ala. 271, 48 So. 365 (Ala. 1908)). The supreme court has further said that under § 235, "damages to be recoverable, must be to property, and not for a mere personal inconvenience or injury to business" Thompson v. City of Mobile, 199 So. 862, 865 (Ala. 1941) (emphasis supplied).

The supreme court has further made it clear that § 235 applies only to property taken or injured in connection with the "construction or enlargement" of a municipality's physical "public works, highways or improvements." On this point, the supreme court has stated:

The right of recovery of compensation by the property owner, under the provisions of Section 235 of the Constitution, is confined of course, to where the municipality is engaged in the construction or enlargements of the works, highways, or improvements of the City.

(emphasis supplied). City of Birmingham v. Graves, 76 So. 395, 395 (Ala. 1917) (emphasis supplied). The supreme court has noted this requirement in the context of the damages recoverable in an inverse condemnation action brought under § 235. See, e.g., City of Tuscaloosa v. Patterson, 534 So. 2d 283, 286 (Ala. 1988) (holding that in an inverse condemnation action under § 235, "[t]he burden is on the property owner to prove the existence and extent of the damage to his property...