This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Leon S. DeCook, et al.,
Rochester International Airport Joint Zoning Board,
Filed July 31, 2007
Reversed and remanded
Olmsted County District Court
File No. 55-CV-06-3803
Corson, Corson Law Offices, 206 Centertown Plaza,
Mills, Clifford M. Green, Greene Espel, P.L.L.P.,
Considered and decided by Peterson, Presiding Judge; Lansing, Judge; and Harten, Judge.*
U N P U B L I S H E D O P I N I O N
This appeal is from a summary judgment dismissing appellant-landowner’s regulatory-taking claim. We reverse and remand.
Appellants, Leon S. DeCook, et al., own 240 acres of land
just north of the
The property is subject to the zoning regulations of
Appellants brought an action against the board alleging that Ordinance No. 4 amounts to a regulatory taking of their property. The complaint asked the district court to either enjoin enforcement of the ordinance or order the board to initiate condemnation proceedings. The district court granted the board’s motion for summary judgment and dismissed appellants’ complaint. This appeal follows.
D E C I S I O N
On appeal from summary judgment, we
consider (1) whether there are any genuine issues of material fact for trial
and (2) whether the district court erred in applying the law.
The Minnesota Constitution requires that
“[p]rivate property shall not be taken, destroyed or damaged for public use
without just compensation therefore, first paid or secured.”
The Minnesota Supreme Court has
recognized that a taking may occur when the government adopts a land-use
regulation designed to benefit a specific public or governmental
enterprise. McShane v. City of
The Faribault-Rice County Joint
Airport Zoning Board adopted an ordinance that created two safety zones on
property near the airport.
In determining whether the ordinance
effected a taking of the plaintiffs’ property without just compensation, the Minnesota
Supreme Court explained that in Penn Cent.
Transp. Co. v. City of New York, 438 U.S. 104, 98 S. Ct. 2646 (1978), the
United States Supreme Court had recognized a distinction between “arbitration” regulations,
which are designed to effect a comprehensive plan, and “enterprise” regulations,
which are related to a specific governmental enterprise. McShane,
292 N.W.2d at 257-58. The supreme court
determined that “the ordinance was not an ‘arbitration’ of competing land uses
but a regulation for the sole benefit of a governmental enterprise the
In granting summary judgment to the
board in the present case, the district court agreed with respondent that doubt
has been cast on the continuing vitality of McShane
concerning substantive regulatory-taking law, but the district court applied McShane and concluded that there was no
taking as a matter of law. In reaching
this conclusion, the district court reasoned that because Ordinance No. 4 states
that its purposes are “the protection of the public health, safety, order,
convenience, prosperity, and general welfare,” and “to prevent creation,
establishment, or maintenance of airport hazards,” and there is no factual
dispute that the ordinance was designed to safeguard both users of the airport
and occupants near the airport, the ordinance fulfills an arbitration function,
which should be analyzed under the Penn
Central test, and appellants failed to show how the McShane test for analyzing enterprise regulations applies.
Because Penn Central was decided two years before McShane, and the supreme court cited Penn Central in McShane and concluded that “the ordinance was not an ‘arbitration’ of competing land uses but a regulation for the sole benefit of a governmental enterprise,” McShane, 292 N.W.2d at 258, and because the ordinance at issue in McShane was virtually identical with the ordinance in the present case, we see no basis for concluding that appellants failed to show how the McShane test for analyzing enterprise regulations applies. With respect to the purposes and effect of Ordinance No. 4, we see no basis for distinguishing it from the ordinance in McShane. In both cases, enacting the ordinance permitted specific activity to occur at an airport, and although the ordinances addressed potential conflicting land uses, they did so by subordinating the use of non-airport property to activity at the airport.
Respondent argues that “it is likely
that the Minnesota Supreme Court would now discard the distinct theoretical
framework described by McShane.” But this court is “not in position to
overturn established supreme court precedent.”
Appellants submitted an appraisal to the district court that showed that the value of the 80-acre parcel that contains the land affected by Ordinance No. 4 decreased from $1,320,000 to $860,000. Comparing this case with McShane, in which there was evidence that the ordinance caused a 67% diminution in property value, 292 N.W.2d at 256, the district court determined that the approximately 35% decrease in the value of appellants’ 80 acres was not substantial. But because all parties in McShane conceded that the ordinance caused a substantial diminution in the value of the landowners’ property, McShane did not address whether the ordinance caused a substantial and measurable decline in value, and, therefore, the 67% diminution shown by the evidence in McShane should not be regarded as a minimum diminution that must be shown before a change in property value can be considered to be substantial. See McShane, 292 N.W.2d at 256-57 (noting that parties conceded diminution in value was substantial and that appellants did not challenge finding that ordinance caused substantial diminution in value).
Instead, the McShane court explained that property owners cannot be paid for the
undesirable effects created by conveniences such as an airport “‘unless those
effects adversely affect their property so directly and so substantially that
it is manifestly unfair to require them to sustain a measurable loss in market
value which the property-owning public in general does not suffer.’”
The district court also noted that the fact that appellants had realized a 28% annual return on their investment in their land supported the conclusion that appellants did not suffer a substantial diminution in property value. But it appears that the district court determined this rate of return based on the change in property value during the entire period that appellants owned the property. Considering the entire ownership period fails to address whether Ordinance No. 4 caused a reduction in property value because the ordinance could only have caused a reduction in value during the period that it existed. Therefore, the district court should only have considered changes in value that occurred after the ordinance was adopted.
When determining whether there was a substantial decline in the market value of appellants’ property, the district court considered the change in value of only 80 of the 240 acres that appellants own. Respondent argues that the “parcel-as-a-whole” rule required the district court to consider the value of the entire 240 acres. But respondent did not file a notice of review to preserve this issue for appeal as required under Minn. R. Civ. App. P. 106. Furthermore, although the district court considered the change in value of only 80 acres of appellants’ land, it stated in its memorandum that it agreed with respondent that the parcel-as-a-whole rule applied in this case, and it chose not to address the issue because its conclusion would be the same whether it considered the 80-acre parcel or the entire 240 acres. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that reviewing court must limit itself to consideration of only issues that record shows were presented and considered by district court in deciding matter before it).
We reverse the district court’s order granting summary judgment and remand for further proceedings consistent with this opinion.
Reversed and remanded.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 The ordinance appears to be virtually identical with the ordinance adopted by the board in the present case.
 In an opinion released after oral argument in this appeal, the supreme court stated that it did
not view the McShane analysis as different from or inconsistent with the flexible approach to takings adopted by the Supreme Court in Penn Central. Any unfairly unequal distribution of the regulatory burden may be considered in appropriate cases under the character factor of the Penn Central approach and then balanced along with the other relevant factors.
Wensmann Realty, Inc. v. City of Eagan, ___ N.W.2d ___, ___, 2007 WL 2003396 ___, at *15, n.14 (Minn. July 12, 2007).