#25769-rev & rem-SLZ

2011 S.D. 70

                           IN THE SUPREME COURT
                                   OF THE
                          STATE OF SOUTH DAKOTA

                                  ****
PATRICK R. HALL, MARLYN G.
ERICKSON and FUEL FOOD MART, INC.,
A SOUTH DAKOTA CORPORATION,                Plaintiffs and Appellants,
      v.
STATE OF SOUTH DAKOTA, by and
through the SOUTH DAKOTA
DEPARTMENT OF TRANSPORTATION
and the SOUTH DAKOTA DEPARTMENT
OF TRANSPORTATION COMMISSION,              Defendants and Appellees.

                                  ****

                  APPEAL FROM THE CIRCUIT COURT OF
                    THE SEVENTH JUDICIAL CIRCUIT
                  PENNINGTON COUNTY, SOUTH DAKOTA

                               ****
                    THE HONORABLE JOHN J. DELANEY
                               Judge

                                  ****
BRIAN W. BLAESSER of
Robinson & Cole, LLP
Boston, Massachusetts
and
JEFFREY G. HURD of
Bangs, McCullen, Butler, Foye
 & Simmons, LLP
Rapid City, South Dakota                   Attorneys for plaintiffs
                                           and appellants.

KARLA L. ENGLE of
South Dakota Department
 of Transportation
Pierre, South Dakota                       Attorney for defendants
                                           and appellees.

                                  ****
                                           ARGUED ON MAY 24, 2011
                                           OPINION FILED 10/26/11
#25769

ZINTER, Justice

[¶1.]        Patrick Hall, Marlyn Erickson, and Fuel Food Mart, Inc.

(“Landowners”) own property abutting former Exit 66 on Interstate 90 (I-90), a

controlled-access highway that passes by Ellsworth Air Force Base. A part of

Landowners’ property was taken by condemnation in 1961 for the construction of I-

90 and Exit 66. In that condemnation proceeding, the State mitigated the

severance damages for the property not taken because of the “special benefit” the

remaining property would receive from access that was designated to be provided at

Exit 66. However, in 2003, the State removed the Exit 66 interchange to enhance

the viability of the Air Force Base. Landowners subsequently filed this suit for

inverse condemnation based on the closure of Exit 66. The circuit court granted

summary judgment for the State, concluding that Landowners never possessed any

property right that could have been taken. We reverse and remand for a trial on

damages.

                            Facts and Procedural History

[¶2.]        Landowners own two parcels of land (the “Property”) that abut North

Ellsworth Road (a north-south conventional highway), I-90 (an east-west controlled-

access highway), and the former location of Exit 66 (the former interchange on I-90

for North Ellsworth Road). From 1962 until October 1, 2003, the Property enjoyed

indirect access to and from I-90 via Exit 66.

[¶3.]        Landowners operated a Flying J Truck Stop on the Property. The

truck stop business was uniquely dependent upon the access provided at Exit 66.

The sale of gasoline, diesel fuel, and convenience store items specifically catered to


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travelers on I-90. On October 1, 2003, the State closed Exit 66 and removed all

access to I-90 at that location. As a result of the State’s removal of Exit 66, the

Flying J suffered an immediate loss of business and was forced to cease operations

on October 23, 2003.

[¶4.]        In 1961, the State obtained the right-of-way for I-90 and the northeast

and northwest quadrants of the Exit 66 interchange by condemnation. At that

time, there was no east-west highway where I-90 was to be constructed. The South

Dakota Department of Transportation’s I-90 construction plans were referenced in

the option agreement by which the State obtained its right-of-way in the

condemnation proceedings. The plans indicated that the Property would have

indirect access to I-90 through the interchange that became Exit 66. Therefore, in

calculating the just compensation due for acquisition of its easement on the

Property, the State’s appraisal noted that “the presence of the interchange” would

be a “significant” and “special benefit” to the Property. The appraisal concluded

that “the increase in [the remaining Property’s] land values next to the interchange

would more than offset the severance damages on the [Property not taken].”

Consequently, the State offset severance damages for the Property remaining after

the condemnation. Of the forty properties taken in this five-mile section of the

interstate project, Landowners’ Property was the only property that the State

determined to be specially benefitted.

[¶5.]        There is no dispute that the State’s 2003 closure of Exit 66 was

unrelated to road design, traffic safety, or interstate travel. The Exit was closed to

eliminate land uses at Exit 66 that were deemed “incompatible” with the continued


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viability of Ellsworth Air Force Base.1 To remove the threat that incompatible uses

posed to the continued operation of Ellsworth, the State closed Exit 66 and replaced

it with a new exit approximately one mile to the east.2

[¶6.]         On August 1, 2001, prior to the closure of Exit 66, Landowners filed a

complaint seeking monetary damages and a declaratory judgment. Landowners

contended that the closure would constitute an inverse condemnation of the

Property. The circuit court granted summary judgment for the State. We reversed



1.      One of the criteria used to evaluate air force base closures is the presence of
        incompatible uses. The Flying J was considered an incompatible use because
        it was within Ellsworth’s Accident Protection Zone (APZ), an area close to the
        takeoff and landing threshold of the main runway.

2.      In 1995, representatives from Ellsworth, Box Elder, Rapid City, Pennington
        County, and Meade County commissioned a Joint Land Use Study (JLUS) to
        “guide the political bodies of the communities surrounding Ellsworth Air
        Force Base towards mitigating the incompatible land uses.” To best achieve
        the desired result of relocating incompatible land uses, the JLUS
        recommended that Exit 66 be closed and a new interchange be constructed
        one mile to the east.

        A year after the JLUS report, the South Dakota Department of
        Transportation (DOT) and the Rapid City Area Metropolitan Planning
        Organization hired a firm to complete a Justification Study (JS) to provide
        remedies for the incompatible land use problem. The JS concluded that Exit
        66 was a lynchpin to existing commercial development, noting that “[b]ecause
        of the volume of traffic that uses the Exit 66 interchange, its immediate
        vicinity (within the APZ 1 and 80 DNL noise contour) has become a natural
        magnet for commercial development that has occurred over a long period of
        time.” The JS recommended that closing Exit 66 and constructing a new
        interchange one mile to the east “relocates incompatible development.”

        Dennis Landguth, then deputy secretary of the DOT, testified that the
        process that initiated the closure of Exit 66 and the construction of the new
        Exit 67 was the JLUS. Landguth also testified that the purpose of closing
        Exit 66 and constructing the new exit was to eliminate those businesses that
        were incompatible with the APZs around the runway at Ellsworth Air Force
        Base.

                                           -3-
#25769

and remanded to consider whether compensable damages were incurred in light of

the purpose of the closure, the extent of access denied, and the reasonableness of

the closure. Hall v. State ex rel. S.D. Dep’t of Transp. (Hall I), 2006 S.D. 24, 712

N.W.2d 22. At the time we decided Hall I, discovery had not disclosed that the

State had offset severance damages in the 1961 condemnation because of the special

benefit the Property would receive from the State’s designated access to I-90 at Exit

66. On remand, Landowners raised a new takings argument based on the special

benefit and offset of severance damages disclosed in discovery.

[¶7.]        The circuit court granted summary judgment in favor of the State

without addressing the new argument. The circuit court concluded that

Landowners suffered no loss of right of access to or from I-90 because, in the court’s

view, a controlled-access highway statute prevented abutting property owners from

ever obtaining any right of egress and ingress to a controlled-access highway. The

court relied on Darnall v. State, 79 S.D. 59, 67, 108 N.W.2d 201, 205 (1961)

(concluding that no just compensation was due for a loss of access to a highway

because there was no “unrestricted right of direct access to [a landowner’s] business

establishment” from a newly created controlled-access highway). The court

distinguished Hurley v. State, 82 S.D. 156, 143 N.W.2d 722 (1966) (allowing just

compensation when a controlled-access highway is created from a conventional

highway to which the landowners enjoyed access predating the change). The court

concluded that there was no deprivation of a right of access, and therefore no

compensable taking or damage could follow.




                                          -4-
#25769

[¶8.]          Landowners raise several issues on appeal. We conclude that the

dispositive question is whether Landowners’ Property was subject to a second

taking or damage as a result of the State’s 2003 change in access that had been

designated in the 1961 condemnation and used to reduce severance damages to the

Property.

                                        Decision

[¶9.]          This Court reviews a grant of summary judgment “to determine

whether the moving party has demonstrated the absence of any genuine issue of

material fact and entitlement to judgment on the merits as a matter of law.” DRD

Enterprises, LLC v. Flickema, 2010 S.D. 88, ¶ 10, 791 N.W.2d 180, 183-84. There

are no genuine issues of material fact on the issue we address.3 The “circuit court’s

conclusions of law are reviewed de novo.” Id.

[¶10.]         Article VI, § 13 of the South Dakota Constitution provides: “Private

property shall not be taken for public use, or damaged, without just

compensation[.]” This provision requires the State to compensate a property owner

not only when private property is taken, but also when it has been damaged, an

additional protection not contained in the U.S. Constitution. Krier v. Dell Rapids




3.       At oral argument, Landowners’ counsel contended that there were genuine
         issues of material fact remaining for trial. However, those disputes related
         primarily to the issues on which we originally remanded. We are deciding
         this case under the Landowners’ new argument. We see no genuine issues of
         material fact relating to liability under that new argument. Disputes of fact
         are not material unless they change the outcome of a case under the law.
         Jerauld Cnty. v. Huron Reg’l Med. Ctr., Inc., 2004 S.D. 89, ¶ 41 n.4, 685
         N.W.2d 140, 149 n.4.

                                           -5-
#25769

Twp., 2006 S.D. 10, ¶ 21, 709 N.W.2d 841, 846. Damage to property is compensable

if the injury is peculiar to the land:

               [I]t is a basic rule of this jurisdiction governing compensation for
               consequential damages that where no part of an owner’s land is
               taken[,] but because of the taking and use of other property so
               located as to cause damage to an owner’s land, such damage is
               compensable if the consequential injury is peculiar to the
               owner’s land and not of a kind suffered by the public as a whole.

Id. ¶ 23. Thus the question is whether the closure of Exit 66 caused compensable

damages that were peculiar to the Property and not of a kind suffered by the public

as a whole. The compensable damage element of this question requires us to first

determine whether Landowners were deprived of any property right.

[¶11.]         Generally, a property owner has no right of access to a newly-

constructed controlled-access highway where there was no pre-existing highway.

8A Nichols on Eminent Domain § G16.03[2][a][iii] at G16-26 (3d ed. 2007) (“It has

been held that where there was no pre-existing road, the owner had no access to

begin with, and was therefore not deprived of any rights.”)4 We have followed this

rule, concluding that a landowner abutting one conventional highway does not have

a right to compensation for not being given initial access to a new controlled-access

highway where the new controlled-access highway did not interfere with the



4.       See State v. McDonald, 352 P.2d 343, 350 (Ariz. 1960); Schnider v. State, 241
         P.2d 1, 2-3 (Cal. 1952); Dep’t of Transp. v. Hardin, 231 Ga. 359, 361, 201
         S.E.2d 441, 443 (1973); Lehman v. Iowa State Highway Comm’n, 99 N.W.2d
         404, 406 (Iowa 1959); Riddle v. State Highway Comm’n, 339 P.2d 301, 309
         (Kan. 1959); D’Arago v. State Roads Comm’n, 180 A.2d 488, 491 (Md. 1962);
         Morris v. Mississippi, 129 So. 2d 367 (Miss. 1961); State v. Clevenger, 291
         S.W.2d 57, 62 (Mo. 1956); Morehead v. State Dep’t of Roads, 236 N.W.2d 623,
         626 (N.D. 1975); State v. Calkins, 314 P.2d 449 (Wash. 1957); 3 Nichols on
         Eminent Domain § 10.03[6][d], at 10-132 (3d ed. 1994).

                                            -6-
#25769

landowners’ access to the abutting conventional highway. See Darnall, 79 S.D. at

70, 108 N.W.2d at 207. On the other hand, we have recognized a right to

compensation for damages occasioned by the loss of access to a conventional

highway that was converted to a controlled-access highway, a ruling consistent with

most states. See Hurley, 82 S.D. at 163-64, 143 N.W.2d at 726.

[¶12.]         Today’s case is different than both Darnall5 and Hurley.6 We have not

had occasion to consider Landowners’ new argument that an abutting property

owner is entitled to compensation for damages when the initial compensation for a

physical taking is offset because of the special benefit of access the State indicates

the remaining property will be afforded, but that access is later removed. We also

previously declined to address the State’s argument that controlled-access highway

statutes like SDCL 31-8-6 prevent a landowner from ever obtaining access rights.

We declined to address the State’s argument in Hall I because the argument had

not been presented to the circuit court. 2006 S.D. 24, ¶¶ 11-12, 712 N.W.2d at 26-

27. Both arguments are now squarely presented for review.




5.       The Darnalls’ property was not taken to construct a controlled-access
         highway, and no access had ever been contemplated to the new controlled-
         access highway. Darnall, 79 S.D. at 69-70, 108 N.W.2d at 206-07. In this
         case, the State mitigated the severance damages it owed for the abutting
         Property in the 1961 taking because the State designated that access would
         be provided to the remaining Property via Exit 66.

6.       In Hurley, the state converted an existing conventional highway into a
         controlled-access highway. 82 S.D. at 159, 143 N.W.2d at 724. In the
         process, the state erected a barrier impairing the landowners’ pre-existing
         right of access to the highway. The state was required to compensate the
         landowners because they had a pre-existing right of access to the highway.
         Id. at 164, 143 N.W.2d at 726.

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#25769

[¶13.]         The Legislature has limited the right of access to controlled-access

highways. SDCL 31-8-1 provides that an owner of land abutting a controlled-access

highway has “no right or easement or only a controlled right or easement of access .

. . by reason of the fact that their property abuts upon [a] controlled-access

facility[.]”7 The “controlled right” of access is defined in SDCL 31-8-6: “No person

has any right of ingress or egress to, from or across any controlled-access facility to

or from any abutting land, except at any designated point at which access may be

permitted.”8

[¶14.]         States with statutes similar to SDCL 31-8-6 have concluded that a

landowner abutting a new controlled-access highway, where no road had previously

been located, does not have the right of access possessed by a landowner abutting a

conventional highway. See Dep’t of Transp. v. Hardin, 231 Ga. 359, 361, 201 S.E.2d




7.       The full text of SDCL 31-8-1 provides:

               For the purposes of this chapter, a controlled-access facility is
               defined as a highway or street especially designed for through
               traffic, and over, from, or to which owners or occupants of
               abutting land or other persons have no right or easement or only
               a controlled right or easement of access, light, air, or view by
               reason of the fact that their property abuts upon such controlled-
               access facility or for any other reason.

8.       The 2001 version of SDCL 31-8-6 that was in effect at the time of the Exit
         closure provided: “No person shall have any rights of ingress or egress to,
         from or across controlled-access facilities to or from abutting lands, except at
         such designated points at which access may be permitted, upon such terms
         and conditions as may be specified from time to time.” The parties do not
         contend there is any substantive difference between that version and the
         current version of the statute.


                                            -8-
#25769

441, 443 (1973) (construing former Ga. Code Ann. § 95-1703a9 now Ga. Code Ann. §

32-6-113); State Highway Comm’n v. McDonald’s Corp., 509 So. 2d 856, 861 (Miss.

1987) (construing Miss. Code Ann. § 65-5-710). A controlled-access highway is

designed to facilitate rapid movement and heavy traffic and is “not intended to give

adjoining property owners access to the highway except at limited points.” Hardin,

231 Ga. at 361, 201 S.E.2d at 443. See also Ray v. State Highway Comm’n, 196

Kan. 13, 26, 410 P.2d 278, 287 (1966) (Fatzer, J., concurring) (“These [controlled-

access] highways were to be free from abutter’s access except at designated

interchange areas or crossovers, and were designed primarily to serve the traveling

public and only secondarily the land over which they pass.”). Therefore, the general

language in statutes like SDCL 31-8-6 “has the effect of preventing a property right

of access from arising for the benefit of contiguous landowners in a newly created

limited access highway.” Hardin, 231 Ga. at 361, 201 S.E.2d at 443.

[¶15.]         An abutting landowner may, however, obtain a right of access to a

controlled-access highway when a state’s highway authority grants a right of access.

“There is no right of access to [a controlled-access highway] thoroughfare, except

that specifically granted by the Highway Department.” McDonald’s Corp., 509 So.



9.       Georgia Code § 95-1703a provided: “No person shall have any right of ingress
         to or egress from or passage across any limited-access highway to or from
         abutting lands except at the designated points to which access may be
         permitted[.]”

10.      Mississippi Code § 65-5-7 provided in pertinent part: “No person shall have
         any right of ingress or egress to, from, or across controlled-access facilities to
         or from abutting lands except at such designated points at which access may
         be permitted, upon such terms and conditions as may be specified from time
         to time.”

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#25769

2d at 861 (emphasis added). See also SDCL 31-8-6 (generally prohibiting a right of

access “except at any designated point at which access may be permitted”). The

question then, is whether the State granted a right of access for this Property.

Landowners contend that such a right arose from the 1961 condemnation when the

State reduced the just compensation it paid because the State designated that

access would be provided this property at Exit 66. The State disagrees.

[¶16.]         Although the State relies heavily on SDCL 31-8-6, that statute does

not prevent a property from acquiring a right of access in the course of a

condemnation proceeding creating a controlled-access highway. On the contrary,

SDCL 31-8-6 provides that the State may designate a point at which access may be

permitted. Furthermore, a number of courts have recognized a constitutional right

to compensation for the loss of access to a controlled-access highway under facts

quite similar to the case we consider today. See Alsop v. State, 586 P.2d 1236

(Alaska 1978); Johnson Bros. Grocery v. State, Dep’t of Highways, 304 Minn. 75, 229

N.W.2d 504 (1975); Filler v. City of Minot, 281 N.W.2d 237 (N.D. 1979).

Notwithstanding the existence of statutes like SDCL 31-8-1 and 31-8-6,11 those



11.      The Alaska statute provided: “No person has the right of ingress or egress to,
         from, or across controlled-access facilities to or from abutting land, except at
         designated points at which access is permitted, upon the terms and
         conditions specified from time to time.” Alaska Stat. § 19.20.030.

         The Minnesota statute provided: “No person shall have any rights of ingress
         or egress to, from, or across controlled-access highways to or from abutting
         lands, except at the designated points or roadways thereof where access is
         permitted by such road authorities upon such terms and conditions as such
         road authorities specify.” Minn. Stat. Ann. § 160.08. In Hendrickson v. State,
         267 Minn. 436, 439, 127 N.W.2d 165, 169 (1964), the court recognized that
         Minnesota Statute § 160.08 “prohibit[ed] ingress to and egress from, or travel
                                                              (continued . . .)
                                             -10-
#25769

courts recognized a landowners’ constitutional right to compensation for a loss of

indirect access to controlled-access highways. The right to compensation arose

because, in the course of prior condemnation proceedings, the states indicated that

those landowners would have access at designated points, but the states

subsequently removed that access. The courts concluded that the designation of

access in the prior proceedings created a subsequent right to compensation because

the landowners had not been fully compensated at the time of the initial takings. A

close examination of those cases is instructive.

[¶17.]         In Filler, the landowners’ predecessor owned property that abutted

and had direct access to a conventional highway. 281 N.W.2d at 239. While

converting a portion of the highway into a four-lane controlled-access highway in

1961, North Dakota acquired a thirty-foot strip of the predecessor’s property

abutting the highway. The right-of-way plat filed in the condemnation proceeding

indicated the state would provide three access points to the new controlled-access

highway through a new frontage road abutting the landowners’ property. The

landowners used those designated access points until 1976, when the state closed




________________________
(. . . continued)
         across, controlled-access highways except at points designated by appropriate
         authorities.” The court in Johnson Bros., 304 Minn. at 77-78, 229 N.W.2d at
         505, relied on Hendrickson in making its decision.

         The North Dakota statute provided: “No person has any right of ingress or
         egress to, from or across controlled-access facilities to or from abutting lands,
         except at such designated points at which access may be permitted, upon
         such terms and conditions as may be specified from time to time.” N.D. Cent.
         Code § 24-01-31.

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them. After 1976, the landowners could only gain access to the controlled-access

highway by means of a circuitous route.

[¶18.]       Like our case today, North Dakota took the position that when it

acquired the property from the landowners to create the controlled-access highway,

it also acquired the right under N.D. Cent. Code § 24-01-31, see supra note 11, to

subsequently eliminate access points along the controlled-access highway.

Although the right-of-way plat showed the access points, North Dakota argued that

it had not given up its right-of-access control pursuant to the controlled-access

highway statutes.

[¶19.]       The North Dakota Supreme Court rejected the state’s argument

because there was no indication that the initial access points designated by the

state were not relied upon in mitigating the landowners’ damages in the prior

condemnation settlement. Filler, 281 N.W.2d at 240-41. The court held that

because the landowners’ ability to access the controlled-access highway was used as

a mitigating factor in the original condemnation, the later removal of the

designated access points created a new compensable injury to the landowners’

property. The court observed that “the State does not necessarily acquire the right

to indiscriminately alter or eliminate access at future dates without payment of

compensation.” Id. at 241. “Where . . . access control is subsequently modified to

the extent that access is no longer reasonable or is substantially more

unreasonable, the abutter has suffered a new injury for which he has never been

compensated and is thus entitled to compensation at this later date.” Id.




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[¶20.]       In Johnson Bros., Johnson’s predecessor owned property abutting and

having direct access to Hudson Road, which was at the time designated as Highway

No. 12. 304 Minn. at 76, 229 N.W.2d at 504. In the 1940s, Highway No. 12 became

a controlled-access highway and was shifted to a new permanent location

paralleling Hudson Road. See Courteaus, Inc. v. State, Dep’t of Highways, 268

N.W.2d 65, 66 (Minn. 1978) (clarifying that the new Highway No. 12 in Johnson

Bros. was a controlled-access highway). Hudson Road was included within the

right-of-way of Highway No. 12, and the state instituted condemnation proceedings

for a partial taking of Johnson’s property to accomplish construction on Hudson

Road. After the construction, a driver could access the controlled-access highway

from the Johnson property by crossing Hudson Road and entering either the

westbound lane or a crossover to the eastbound lane of the controlled-access

highway.

[¶21.]       In 1973, the state closed access from Johnson’s property across Hudson

Road to the controlled-access highway. Only a circuitous route from Johnson’s

property to the controlled-access highway remained. Thereafter, Johnson

successfully pursued an action for inverse condemnation. The Minnesota Supreme

Court concluded that a second compensable taking occurred in 1973 when Johnson’s

access to the controlled-access highway was closed because the state had failed to

compensate the landowner in the condemnation for the removal of the access that

was available until the state removed it. Johnson Bros., 304 Minn. at 78, 229

N.W.2d at 505.




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[¶22.]       In Alsop, Alaska condemned part of Alsop’s property to construct a

controlled-access highway (the New Seward Highway) where no pre-existing

highway had been located. 586 P.2d 1236. Alsop’s remaining property abutted the

New Seward Highway and was in the vicinity of 76th Avenue. Alsop testified that

the state’s agreement to build an intersection on the New Seward Highway at 76th

Avenue was crucial to the settlement of his condemnation claim.

[¶23.]       The New Seward Highway was built with an intersection at 76th

Avenue providing access to Alsop’s property. In reliance on the 76th Avenue

intersection, Alsop developed his property. Three years later, the state upgraded

the New Seward Highway and in the process closed the 76th Avenue intersection

and replaced it with an overpass. Alsop claimed that he incurred compensable

damages for a second taking as a result of “a loss of access due to closure of the 76th

Avenue intersection.” Id. The Alaska Supreme Court agreed, recognizing a taking

of a right of access from property abutting a controlled-access highway under the

following conditions:

             [A landowner] must demonstrate that he or a predecessor in
             interest had a portion of his property taken for the original
             construction project, that he or his predecessor relied on
             construction of an [access point] in settling or receiving an
             award for [his] condemnation claims, and that his remaining
             property has decreased in value as a result of the highway
             modifications.

Id. at 1240 (footnote omitted).

[¶24.]       Although this issue has not been extensively litigated, these cases

demonstrate that an abutting property owner may acquire a compensable right of

access to a controlled-access highway when access is designated and used to settle

or mitigate damages in a condemnation, but that access is later removed. The
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State, however, argues that Filler and Johnson Bros. are distinguishable because

those landowners originally possessed the right of direct access to conventional

highways. The State points out the Landowners in this case had no pre-existing

right of access to a conventional highway where I-90 was constructed. Therefore,

the State argues that because Landowners had no pre-existing right of access to a

conventional highway, and because they can generally not acquire rights of access

to controlled-access highways, they had no property right of access to I-90 that could

have been taken. We disagree with the State’s reading of these cases.

[¶25.]       Filler and Johnson Bros. both involved compensation for loss of

indirect access to controlled-access highways and neither of the courts’ rationales

was predicated upon the right of access to the original conventional highways. The

highway in Filler had been converted to a controlled-access highway, and in that

process, the landowners had been given access to the controlled-access highway.

281 N.W.2d at 239. In Johnson Bros., a new controlled-access highway was created

paralleling a conventional highway and the landowner had access to the controlled-

access highway through the conventional highway. 304 Minn. at 76-77, 229 N.W.2d

at 504-05. In both cases, the courts found a right to compensation not because of a

loss of access to the conventional highways. The right to compensation was

recognized because there was a second, uncompensated taking occasioned by a

change in access to the controlled-access highways that had previously been

permitted. Moreover, the State has not attempted to distinguish Alsop. In that

case there was no pre-existing conventional highway. 586 P.2d at 1237.

Nevertheless, a second taking was recognized because the state had designated


                                         -15-
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access to the new controlled-access highway, the landowner had relied on that

access in developing his property, and Alaska subsequently removed the designated

access.

[¶26.]       This type of second taking is recognized in another analogous situation

described as the “change of plans doctrine.” See Olson v. State, 12 Ariz. App. 105,

107-08, 467 P.2d 945, 947-48 (Ariz. Ct. App. 1970). Under the change of plans

doctrine:

             A change of plans may give rise to a cause of action (1) where
             the circumstances are such that the change results in
             construction of some feature that would have caused some
             compensable damage not included in the original award, or (2)
             where the change results in elimination of some feature which,
             although itself non-compensable, was considered in mitigation of
             some compensable element of damage.

Id. at 108, 467 P.2d at 948 (emphasis added). See also State ex rel. Herman v.

Schaffer, 105 Ariz. 478, 467 P.2d 66 (1970); State ex rel. Herman v. Tucson Title Ins.

Co., 101 Ariz. 415, 420 P.2d 286 (1966); De Alfy Prop. v. Pima Cnty., 195 Ariz. 37,

41, 985 P.2d 522, 526 (Ariz. Ct. App. 1998) (“[R]ecovery may be had in a subsequent

action where the construction plans admitted into evidence in the condemnation

suit provided mitigating features as against an item of compensable damage.”);

Feuerborn v. State, 59 Wash. 2d 142, 367 P.2d 143 (1961).

[¶27.]       In Tucson Title, Arizona sought to acquire the landowner’s property at

29th Street to create the Tucson Control Access Highway. 101 Ariz. at 416, 420

P.2d at 287. A state agent showed the landowner a map indicating that an

interchange would be constructed at 29th Street, so the landowner’s remaining

property would have access to the Tucson Highway through the 29th Street

interchange. However, after settlement of the condemnation proceeding, the state
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changed its construction plans and eliminated the 29th Street interchange. The

Arizona Supreme Court concluded: “While it is true that the Highway Department

has the right and power to abandon or change any part of the state highway system,

the state must respond in damages if it acquires property in consideration of an

agreement to construct an interchange and thereafter fails to construct such

interchange.” Id. at 417, 420 P.2d at 288 (internal citation omitted).

[¶28.]         We find Filler, Johnson Bros., Alsop, Olson, and Tucson Title

persuasive. We do so because the State designated access for the remaining

Property at Exit 66 and used that designation to mitigate the original takings

damages. Thereafter, the State removed that designated access causing the

remaining Property to suffer a new injury for which constitutionally required

compensation was never paid. We also note that the Legislature has specifically

embraced the right to additional compensation when the State’s construction plans

mitigating initial takings compensation change causing additional takings or

damage.12



12.      SDCL 31-19-23(6) requires that in a so-called “quick take” condemnation
         proceeding, the state must file its plans setting forth in detail the “features as
         pertain to the adjacent landowner’s access to, and means of crossing over and
         under the proposed highway, together with a description of any additional
         factors which the State . . . intends to rely upon in mitigation of damages.”
         Thereafter, the abutting landowner is entitled “to proceed against the state or
         municipality for additional compensation” where there is a “substantial
         deviation” from any “written memoranda or agreement, plans and
         descriptions” filed with a declaration of taking “which amounts to an
         additional taking or damage.” Id. Although these statutes were enacted
         shortly after the 1961 condemnation in this case, they reflect legislative
         intent to pay additional compensation when the State’s designated right-of-
         way plans change. Moreover, in the past we have relied on “construction
         plans referred to in the Right Of Way Agreement” to determine the extent of
                                                                (continued . . .)
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[¶29.]       In accordance with Filler, Johnson Bros., Alsop, Olson, and Tucson

Title, we hold that a landowner’s compensation for loss of access may arise when: (1)

property abuts a proposed controlled-access highway; (2) the state takes a portion of

the property in a condemnation proceeding for the highway; (3) the state mitigates

some compensable element of damage based on the state’s designation of a feature

of the project; (4) the state subsequently eliminates that feature; and (5) like any

other claim for damages under Article VI, § 13 of the South Dakota Constitution,

the landowner can prove special damages. See Hurley, 82 S.D. at 161, 143 N.W.2d

at 725 (providing “the landowner is entitled to compensation under the taking and

damaging clause of our constitution when the construction of a public improvement

causes damage to property ‘if the consequential injury is peculiar to the owner’s

land and not of a kind suffered by the public as a whole’”) (quoting State Highway

Comm’n v. Bloom, 77 S.D. 452, 461, 93 N.W.2d 572, 577 (1958)).

[¶30.]       In this case, there is no dispute that: Landowners’ Property has always

abutted the controlled-access highway; part of the Property was taken in a

condemnation proceeding in 1961 to construct the highway; the State offset

compensable severance damages for the Property not taken in the original

condemnation proceeding because of the interchange that the State designated; the

State subsequently eliminated all access through that designated interchange; and,

in the 1961 condemnation proceedings, the State indicated that it was providing a

“special benefit” to the Property through its designation of access at Exit 66. We

________________________
(. . . continued)
         an initial taking. Larsen v. State, 90 S.D. 146, 150, 238 N.W.2d 684, 686-87
         (1976).

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therefore agree with Landowners that the subsequent removal of that access is

damage for which compensation is due. Indeed, without a right to compensation in

this type of case, the State could use a particular feature of a public improvement in

a condemnation as mitigation or partial compensation for the initial taking and

later fail to construct the mitigating feature at all.

[¶31.]       The State, however, argues that Landowners’ loss of access claim was

released by Landowners’ predecessor in the original option agreement and deed.

The State contends that subparagraph seven of the option agreement released any

claim of access from adjoining real property; subparagraph five waived any access to

the interstate from abutting, adjacent or adjoining lands; and subparagraphs two

and three acknowledged the agreed compensation was in exchange for release of

any and all claims, including claims for compensation due to the controlled-access

nature of the highway. The warranty deed also stated: “‘CONTROLLED ACCESS’

in accordance with Chapter 155 of the 1953 Session Laws of the State of South

Dakota. No access.”

[¶32.]       However, both the introductory clause and subparagraph three of the

option indicated that the release of the condemnation claim was “by reason of the

proper and legal construction, operation and maintenance of a controlled-access

highway and facilities in accordance with the plans on file in the office of the

Department of Highways” – plans explicitly designating access at Exit 66.

(Emphasis added.) We have previously recognized that construction plans referred

to in the right-of-way agreement may determine the nature of the property rights

originally taken. See Larsen, 90 S.D. at 150, 238 N.W.2d at 687. Therefore, when


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all relevant provisions are read together, we conclude that the deed and option

agreement cannot be considered to have contracted away the constitutional right to

compensation for damages resulting from the construction, operation, and

maintenance of I-90 in a manner contrary to the manner specifically designated in

the option agreement. Stated differently, Landowners’ predecessor did not contract

away the constitutional right to compensation unmitigated by the State’s

designation in the option agreement that it would provide indirect access at Exit 66.

When all language of the documents is considered in its totality, the release clauses

are best read as releasing claims of general access to I-90 rather than the right of

indirect access specifically designated. As Olson explained, a “condemning

authority may contract away its right to exercise its police powers. A subsequent

change of plans, therefore, becomes compensable as a breach of contract.” 12 Ariz.

App. at 108, 467 P.2d at 948.

[¶33.]       The State also argues that it has plenary power to change access

points on controlled-access highways. The State relies on 39 Am. Jur. 2d Highways,

Streets, and Bridges § 216 (2011) and 3 Nichols on Eminent Domain § 10.03[6][a],

at 10-110 (3d ed. 1994). But both authorities specifically note that the plenary

power to change access points does not apply to rights of access “specifically

granted.” 39 Am. Jur. 2d Highways, Streets, and Bridges § 216 (“Abutters do not

have access rights to a limited access highway, except those specifically granted.”); 3

Nichols on Eminent Domain § 10.03[6][a], at 10-110 (“Where an ordinary or

conventional road is built, there may be an intent to serve abutting owners, but

when a limited-access highway is established, the intent is just the opposite. No


                                         -20-
#25769

new rights of access can arise unless they are specifically granted.”) In this case

access was granted. It was granted when it was designated in the option agreement

and used to mitigate the constitutional damages due.

[¶34.]         The State further argues that Landowners did not satisfy the second

element of the compensability question, which requires proof of special damages.13

We disagree. Landowners suffered damages that are different in kind from that

sustained by the public generally. After all, there is no dispute that the State

mitigated its initial compensation award in return for what it indicated was the

“special benefit” only this abutting landowner would receive from the access at Exit

66. The State’s recognition of a special benefit from the access in 1961 belies its

current claim that the Property suffered no special damages from the removal of

that access. The term special benefit is something that follows the distinction

between general and special damages. State Highway Comm’n v. Emry, 90 S.D.

587, 596-97, 244 N.W.2d 91, 96 (1976). See also Hurley, 82 S.D. at 163-64, 143

N.W.2d at 725-26 (concluding that an abutting landowners’ loss of highway access

caused “damages [that] were different in kind and not merely in degree from that

experienced by the general public and their private property right of access was

taken in the constitutional sense requiring compensation to be paid therefor”).

Thus, under the unique facts of this case, special damages were proven.




13.      The State also contends that any alleged “inadequacy of consideration”
         suffered by Landowners’ predecessor cannot now be raised “to warrant
         rescission of the contract.” However, Landowners are not requesting
         rescission. They seek damages to their property under the South Dakota
         Constitution.

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#25769

[¶35.]       The State further contends that a subsequent landowner cannot bring

a cause of action for inverse condemnation based upon mitigation of a previous

landowner’s special benefit because a special benefit does not run with the land. In

Filler, the special benefit of access was used to mitigate the condemnation award of

the landowner’s predecessor. 281 N.W.2d at 240-41. Even though it was the

predecessor’s compensation that was mitigated, the current landowner was

permitted to pursue a cause of action for the subsequent loss of access. Similarly, in

Alsop a landowner was found entitled to compensation if either he or his

predecessor had relied on the construction plans in settling or receiving an award

for the prior condemnation. 586 P.2d at 1240. Those courts reached that result

because the law views the matter as a second taking or impairment of the property

occurring during the subsequent owner’s possession. See Filler, 281 N.W.2d at 241.

[¶36.]       The State finally argues that the grant of a special benefit at the time

of the initial taking does not prevent the government from discontinuing use of the

facility that provides that benefit to the property. See Reichelderfer v. Quinn, 287

U.S. 315, 53 S. Ct. 177, 77 L. Ed. 331 (1932). Reichelderfer was based on the theory

that any damage suffered, although greater in degree, was the same in kind as that

suffered by the public. Id. at 320, 53 S. Ct. at 179. But as previously noted, the

injury to this Property caused by the removal of access is different than the

inconvenience suffered by the traveling public and by other non-abutting owners

whose land was not taken under these circumstances. See Hurley, 82 S.D. at 161,

163-64, 143 N.W.2d at 725-26. Reichelderfer is inapposite.




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[¶37.]       “The underlying intent of the [damages] clause is to ensure that

individuals are not unfairly burdened by disproportionately bearing the cost of

projects intended to benefit the public generally.” DeLisio v. Alaska Super. Ct., 740

P.2d 437, 439 (Alaska 1987). “The tendency under our system is too often to

sacrifice the individual to the community; and it seems very difficult in reason to

show why the State should not pay for property which it destroys or impairs the

value, as well as for what it physically takes.” Bakke v. State, 744 P.2d 655, 657

(Alaska 1987); Liddick v. City of Council Bluffs, 232 Iowa 197, 218, 5 N.W.2d 361,

372-73 (1942). The facts of this case are unique. Just compensation due for an

initial physical taking of abutting property was mitigated because of a designated

special benefit of access the State indicated it would provide. But the State

subsequently eliminated that designated access. Landowners are entitled to

damages for inverse condemnation occasioned by the removal of the designated

access. We need not consider Landowners’ other constitutional arguments. The

matter is reversed and remanded for trial on damages.

[¶38.]       GILBERTSON, Chief Justice, and KONENKAMP, and SEVERSON,

Justices, and MEIERHENRY, Retired Justice, concur.

[¶39.]       WILBUR, Justice, not having been a member of the Court at the time

this action was submitted to the Court, did not participate.




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