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                                                              No. 00-283

                    IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                            2001 MT 26N



                                  HAROLD ENGLIN and MARY A. BROWN,

                                                   Plaintiffs and Appellants,

                                                                      v.

                                   BOARD OF COUNTY COMMISSIONERS,

                                    YELLOWSTONE COUNTY, MONTANA,

                                                 Defendant and Respondent.

                 APPEAL FROM: District Court of the Thirteenth Judicial District,

                                         In and for the County of Yellowstone,

                                The Honorable G. Todd Baugh, Judge presiding.

                                                  COUNSEL OF RECORD:

                                                           For Appellants:

Kelly J. Varnes, Hendrickson, Everson, Noennig & Woodward, P.C., Billings, Montana

                                                          For Respondent:

   Dennis Paxinos, Yellowstone County Attorney; Mark English, Deputy Yellowstone
                         County Attorney, Billings, Montana

                                         Submitted on Briefs: August 24, 2000
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                                                  Decided: February 15, 2001

                                                                    Filed:

                              __________________________________________

                                                                    Clerk

Justice Jim Regnier delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal Operating
Rules, the following decision shall not be cited as precedent but shall be filed as a public
document with the Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number, and result to the State Reporter Publishing Company and to
West Group in the quarterly table of noncitable cases issued by this Court.

¶2 Harold Englin and Mary A. Brown ("Appellants") appeal from the Judgment entered by
the Thirteenth Judicial District Court, Yellowstone County, granting summary judgment in
favor of the Board of County Commissioners, Yellowstone County, Montana ("Board").
The Appellants contend that the District Court erred when it granted summary judgment in
favor of the Board. We affirm in part, reverse in part, and remand.

                                                          BACKGROUND

¶3 The Appellants are owners of three acres of land located at 1442 Ethelyn Avenue,
Billings, Montana. The Appellants acquired the property by inheritance in 1982, at which
time the property was zoned as "Residential-9600." This zoning classification permits,
among other things, single family residences with lot sizes not smaller than 9600 square
feet. The property is bordered on the north by Beall Trucking which is zoned "Highway
Commercial." To the south, the property is bordered by a single family residence and
vacant lot, both zoned Residential-9600. To the east, the property is bordered by a storage
barn for a local limousine service zoned "Controlled Industrial." To the west, the property
is bordered by the Lockwood Evangelical Church which is zoned Residential-9600.

¶4 In December 1989 the Appellants applied for a zone change of the property from
Residential-9600 to Highway Commercial. Highway Commercial zoning classification
permits commercial and service businesses intended to provide services to the traveling

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public. The Yellowstone County Zoning Commission recommended that Appellants'
application for a zone change be granted. On December 21, 1989, the Board denied
Appellants' application.

¶5 In November 1997 Appellants again applied for a zone change of the property from
Residential-9600 to Highway Commercial. The zoning commission recommended
denying Appellants' application. In a letter dated December 2, 1997, the Board informed
Appellants that it had denied Appellants' application for a zone change.

¶6 On December 29, 1997, Appellants filed a complaint in the District Court in which they
contended that the Board's denial of their 1997 zone change application was arbitrary and
capricious and that it constituted a taking by inverse condemnation. The Appellants sought
an order requiring the Board to grant their zone change application.

¶7 On October 8, 1999, the Board filed a motion for summary judgment. The District
Court held a hearing on the Board's motion for summary judgment on February 4, 2000, at
the conclusion of which it granted summary judgment in favor of the Board.

                                                  STANDARD OF REVIEW

  ¶8 We review a district court order granting summary judgment de novo applying the
      same evaluation as the district court pursuant to Rule 56, M.R.Civ.P. Bruner v.
  Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903. In Bruner, we set
                                      forth our inquiry:

        The movant must demonstrate that no genuine issues of material fact exist. Once
        this has been accomplished, the burden then shifts to the non-moving party to prove,
        by more than mere denial and speculation, that a genuine issue does exist. Having
        determined that genuine issues of fact do not exist, the court must then determine
        whether the moving party is entitled to judgment as a matter of law. We review the
        legal determinations made by a district court as to whether the court erred.

Bruner, 272 Mont. at 264-65, 900 P.2d at 903 (citations omitted).

                                                              ISSUE ONE

¶9 Whether the District Court erred when it granted summary judgment in favor of the
Board on Appellants' substantive due process claim?
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¶10 Count I of Appellants' complaint alleged that the Board acted arbitrarily and
capriciously in denying Appellants' application for a zone change from Residential-9600
to Highway Commercial. Upon the Board's motion for summary judgment, the court
concluded that no genuine issues of material fact existed and held that the Board did not
act arbitrarily when it denied Appellants' application for a zone change nor did its denial
constitute an abuse of discretion.

¶11 Appellants argue that genuine issues of material fact exist with regard to their
substantive due process claim which preclude summary judgment. First, Appellants
observe that Michael Mathew, a member of the Board, Bill Kennedy, the Board Chairman,
and Kerwin Jensen, the county senior planner, all felt that the current zoning, Residential-
9600, was an inappropriate zone classification for the property. Second, Appellants claim
that the Board did not make a finding which justified its denial of their application for a
zone change. Lastly, Appellants note that the zoning commission planning staff
recommended approving their application in 1989 and recommended denying their
application in 1997. Appellants contend that there is no reason why their property was
acceptable for Highway Commercial zoning in 1989 and not acceptable in 1997 when
none of the uses of the adjoining properties changed. Appellants insist that the denial of
their application was arbitrary and capricious because it had no relation to public health,
safety, or morals.

¶12 The Board contends that summary judgment was proper because its denial of
Appellants' zone change application was not arbitrary and capricious. First, the Board
maintains that the zoning commission recommendation addressed all of the necessary
statutory criteria pursuant to § 76-2-203, MCA. Second, the Board insists that its denial of
Appellants' application was related to the legitimate interest of preventing an increase in
noise and air pollution.

¶13 The Fourteenth Amendment to the United States Constitution and Article II, Section
17 of the Montana Constitution protect persons from being deprived of life, liberty or
property by state governmental action without due process of law. The guarantee of due
process has both a procedural and a substantive component. Determining whether a
person's right to substantive due process has been violated requires that we decide whether
the challenged governmental act is reasonably related to a legitimate governmental
objective. See Plumb v. Fourth Judicial Dist. Court, Missoula County (1996), 279 Mont.
363, 372, 927 P.2d 1011, 1016.

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¶14 We must determine whether Appellants' have raised a genuine issue of material fact
which precludes summary judgment. We note that in a summary judgment proceeding, the
evidence must be viewed in the light most favorable to the nonmoving party, and all
reasonable inferences will be drawn therefrom in favor of the party opposing summary
judgment. Brandt v. Sande, 2000 MT 98, ¶ 18, 299 Mont. 256, ¶ 18, 1 P.3d 929, ¶ 18.

¶15 We do not believe that statements made by members of the Board to the effect that the
current zoning of Appellants' property was inappropriate are sufficient to raise a material
issue of fact regarding whether the refusal to rezone Appellants' property was arbitrary or
capricious. The fact that members of the Board felt that the current zoning of Appellants'
property was inappropriate could not establish that the zone change requested by
Appellants' was appropriate and therefore should not have been denied. As the District
Court observed, there are a range of zoning classifications between the current zone
classification of Appellants' property and the zone classification which they requested. The
Board could have reasonably determined that neither the current zone classification nor
the zone classification requested by the Appellants was appropriate.

¶16 We do believe, however, that the lack of findings justifying the Board's refusal to
rezone Appellants' property precludes awarding summary judgment in favor of the Board.
Appellants note that the zoning commission recommended rezoning Appellants' property
to Highway Commercial in 1989 and recommended denying Appellants' request to rezone
in 1997. With regard to the zoning commission's change of mind, Appellants contend that
no relevant facts, such as the uses of the adjoining properties, changed during the interim
between their two conflicting decisions. The Board notes that regardless of the zoning
commission's changing recommendations it has consistently denied Appellants' requests.

¶17 The consistency of the Board's denial of Appellants' requests is clearly not based on
the conflicting recommendations of the zoning commission. Without any separate findings
made by the Board in support of its denial of Appellants' zone change request, we are
unable to determine the basis of the Board's consistent denial. It is possible to infer that the
members of the Board accepted the zoning commission's recommendations or thought that
the complaints of neighboring property owners had merit. However, it is also possible to
infer that the Board has consistently denied Appellants' requests because the Board simply
does not like the Appellants. See Brandt, ¶ 18 (stating that in a summary judgment
proceeding all reasonable inferences will be drawn from the evidence in favor of the party
opposing summary judgment).


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¶18 We are unable to conclude as a matter of law that, on the basis of the record before us,
the Board's denial of Appellants' zone change request was a reasonable and legitimate
exercise of its police power. We reverse the dismissal of Appellants' substantive due
process claim and remand to the District Court.

                                                              ISSUE TWO

¶19 Whether the District Court erred when it granted summary judgment in favor of the
Board on Appellants' takings claim?

¶20 With regard to Appellants' takings claim, the District Court ruled that the Board's
denial of Appellants' zone change application did not constitute a taking by inverse
condemnation. The basis of this ruling appears to be the District Court's conclusion that
the Board did not evince a complete unwillingness to make any zone change but rather
was unwilling to grant Appellants' application to change from a Residential-9600
classification to a Highway Commercial classification.

¶21 Appellants contend that the District Court ignored the affidavit of Englin which
establishes that the property as zoned Residential-9600 has no value because the cost to
develop residential lots conforming to the current zoning would exceed the lots' value.
Appellants claim that "it is hard to determine how a District Court could conclude that no
taking occurred when facts have been offered that the property is valueless under its
current zoning and the regulating entity has refused to change the zoning on two different
occasions, without rational explanation."

¶22 The Board maintains that if the imposition of Residential-9600 was a taking by way of
inverse condemnation, that taking occurred in 1973 when the Board imposed the
Residential-9600 zoning classification. Therefore, the Board maintains, the Appellants do
not have a valid takings claim because the applicable two-year statute of limitations has
expired and because the right to an inverse condemnation claim does not pass to
subsequent purchasers. The Board contends that what the Appellants really want is the
increase in value to their property that did not happen due to the denial of their requests
for zoning classification changes.

¶23 The Fifth Amendment of the United States Constitution and Article II, Section 29 of
the Montana Constitution provide that private property shall not be taken for public use
without just compensation. These provisions protect private property owners from


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absolute conversion, by way of condemnation, as well as uncompensated takings of
property by way of regulation. See Pennsylvania Coal Co. v. Mahon (1922), 260 U.S. 393,
415, 43 S.Ct. 158, 160, 67 L.Ed.2d 322.

¶24 With regard to regulatory takings, courts have had little success in devising any set
formula for determining when governmental regulation of private property amounts to a
taking. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (9th
Cir. 2000), 216 F.3d 764, 771-72. The Supreme Court has identified two specific
circumstances in which a government regulation is categorically a taking: (1) regulations
that compel a property owner to suffer a permanent physical "invasion" or "occupation" of
his or her property, see, e.g., Loretto v. Teleprompter Manhattan CATV Corp. (1982), 458
U.S. 419, 426, 102 S.Ct. 3164, 3171, 73 L.Ed.2d 868; and (2) regulations that deny "all
economically beneficial or productive use of land," see Lucas v. South Carolina Coastal
Council (1992), 505 U.S. 1003, 1015, 112 S.Ct. 2886, 2893, 120 L.Ed.2d 798. See
generally Tahoe-Sierra, 216 F.3d at 772-73.

¶25 The Appellants have not presented facts which could establish a categorical taking.
The Board's denial of Appellants' requested amendment obviously did not require
Appellants to suffer a permanent physical invasion nor did it deny Appellants "all
economically beneficial or productive use" of their property. The fact that Appellants'
property as currently zoned is allegedly valueless, as contended in an affidavit filed by
Appellants with the District Court, does not mean that when Board refused to rezone
Appellants' property a taking categorically occurred. Appellants property did not become
valueless as a result of the Board's denial of their zoning amendment. Rather, if the
property is valueless as it is currently zoned, it became valueless before the Board ever
acted on Appellants' application. Furthermore, Appellants' have not been deprived of all
use of their property. The Board's rejection of Appellants' proposed classification does not
necessarily mean that the Board will oppose any reclassification of their property nor does
it mean that Appellants cannot maintain their existing uses of the property.

¶26 In the absence of a categorical taking, the Supreme Court has repeatedly recognized
that "whether a particular restriction [amounts to a taking] depends largely 'upon the
particular circumstances [of each] case'." Penn Central Transportation Co. v. City of New
York (1978), 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631. In this regard, the
Supreme Court and lower courts have indicated that most regulatory takings cases should
be resolved by balancing the public and private interests at stake, with three primary
factors weighing in the balance: (1) the economic impact of the regulation on the claimant,

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(2) the extent to which the regulation has interfered with distinct investment-backed
expectations, and (3) the character of the governmental action. Tahoe-Sierra, 216 F.3d at
771-72 (citing Penn Central, 438 U.S. at 124, 98 S.Ct. at 2659).

¶27 We do not see how Appellants can establish a takings claim under these factual
circumstances. The Board's denial of Appellants' zoning amendment has had absolutely no
economic impact on Appellants nor has it interfered with Appellants' distinct investment-
backed expectations. When the Appellants acquired the property it was zoned as
Residential-9600 and so it remains. Furthermore, this is not a situation such as the one
presented in Loretto in which the character of the governmental action, a physical
occupation of private property, was sufficient on its own to effect a taking.

¶28 Both parties spend considerable time arguing over the applicability of Knight v. City
of Billings (1982), 197 Mont. 165, 642 P.2d 141. We express no opinion on the continued
authority of the takings analysis in Knight, an opinion issued prior to a rash of significant
United States Supreme Court decisions on regulatory takings such as Lucas. We also note
that Knight is factually distinguishable. In Knight, we held that the City of Billings had
taken the plaintiffs' right to the "peaceful possession of residential property" by widening
an adjoining street, condemning real property on the other side of the street, installing high
intensity lights, and providing traffic signals which resulted in a twenty to thirty percent
reduction in the value of the plaintiffs' properties. Knight, 197 Mont. at 173, 642 P.2d at
145. In the instant case, Yellowstone County has not taken any actions which have
reduced the value of Appellants' property.

¶29 Accordingly, we affirm the dismissal of Appellants' action for inverse condemnation.
The Appellants' entitlement to relief depends on whether they can prove that the Board
acted arbitrarily in denying their zoning amendment.

¶30 Affirmed in part, reversed in part, and remanded.

                                                         /S/ JIM REGNIER

                                                               We Concur:

                                                      /S/ KARLA M. GRAY

                                               /S/ W. WILLIAM LEAPHART


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                                                /S/ TERRY N. TRIEWEILER

Justice James C. Nelson concurs and dissents.

¶31 I concur in the Court's discussion and decision as to Issue 1. I dissent from our
resolution of Issue 2.

¶32 The evidentiary record in this case reveals that Appellants established that
maintenance of the present Residential-9600 zoning classification for their property
effectively renders their land valueless. Appellants have shown that their property cannot
be developed in accordance with the R-9600 zoning classification because of its location
to nearby commercial businesses; because residential development of the property is not
compatible with the commercial uses of surrounding properties; and because the county
septic system requirements for residential lots preclude development of the property into a
sufficient number of lots to make such development economically viable.

¶33 On the other hand, as our discussion and decision on Issue 1 correctly reveal, the
County failed to affirmatively set out any legitimate basis justifying its refusal to rezone
Appellants' property. On that basis, we properly reverse the trial court's entry of summary
judgment in favor of the government, and we remand for further proceedings on this issue.

¶34 In our discussion of Issue 2, however, we affirm the dismissal of Appellants' inverse
condemnation claim. Our decision on Issue 2 is inconsistent with our decision on Issue 1.
As to Issue 2, we should also reverse and remand.

¶35 "Inverse condemnation" is simply a shorthand description of the manner in which a
landowner recovers just compensation for a taking of his property when condemnation
proceedings have not been instituted. United States v. Clarke (1980), 445 U.S. 253, 257,
100 S.Ct. 1127, 1130, 63 L.Ed.2d 373. It is settled law that the application of a general
zoning law to particular property effects a taking if the ordinance does not substantially
advance legitimate state interests or denies an owner economically viable use of his land.
A determination of whether there has been a taking (in the constitutional sense)
necessarily requires a weighing of the private and public interests at issue. Agins v. City of
Tiburon (1980), 447 U.S. 255, 260-61, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (citations
omitted).

¶36 In the case at bar, Appellants presented evidence that the County's actions have denied

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them any economically viable use of their land. Moreover, Appellants contend that the
County has failed to demonstrate any legitimate state interests justifying its refusal to
rezone Appellants' property so that development of the land can be accomplished in an
economically viable manner. In other words, Appellants have presented a prima facie case
for their inverse condemnation action.

¶37 On the other hand, the government has failed to articulate any facts demonstrating that
its refusal to rezone substantially advances legitimate state interests. Our decision on Issue
1 supports this conclusion. Under Issue 1, we have implicitly concluded that, as a result of
the government's failure, there is an insufficient basis for weighing the private and public
interests involved. Indeed, we state at ¶ 29 that Appellants' entitlement to relief on their
inverse condemnation action "depends" on the basis for the County's denial--a basis,
unfortunately, which the government has failed, thus far, to reveal.

¶38 In short, our remand on Issue 1 and our affirmance on Issue 2 are at odds with each
other. If Appellants prove at trial that they have been denied any economically viable use
of their land and if they prove that the County's articulated reasons for its refusal to
rezone--reasons which will be articulated as a result of our remand--do not substantially
advance state interests, then Appellants will have made their case for inverse
condemnation. Since the second prong of the Appellants' case cannot be proven until the
County complies with our remand order, a dismissal of Appellants' condemnation action at
this point is premature.

¶39 I would reverse the court's dismissal of the Appellants' inverse condemnation action
and remand for further proceedings. Any decision on Appellants' inverse condemnation
action must necessarily await the County's compliance with our decision on Issue 1. Once
the County has articulated the factual basis for not granting Appellants' rezoning request,
then the trial court will be in a position to determine whether the stated reasons
substantially advance the government's interests.

¶40 I dissent, therefore, from our decision on Issue 2 and would reverse and remand as to
that Issue.

                                                    /S/ JAMES C. NELSON




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