A05-127

The Dullea Land Company, petitioner,

Appellant,

vs.

Minnesota Pollution Control Agency,

Respondent.

Filed August 16, 2005

Affirmed

Willis, Judge

Clay County District Court

File No. C6-03-1136

Todd W. Foss, Stefanson Law, 403 Center Avenue, Suite 302, P.O. Box 1287, Moorhead, MN 56561-1287 (for appellant)

Mike Hatch, Attorney General, Robert B. Roche, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, MN 55101 (for respondent)

Considered and decided by Willis, Presiding Judge; Klaphake, Judge; and Shumaker, Judge.

U N P U B L I S H E D O P I N I O N

WILLIS, Judge

In this appeal from summary judgment on a petition for a writ of mandamus compelling the commencement of condemnation proceedings, appellant argues that the district court erred by finding that appellant lacked standing and by granting respondent’s motion for summary judgment. Although we conclude that the district court’s standing determination is erroneous, appellant’s asserted property interests are not protected by the Takings Clause, and we affirm the summary judgment.

FACTS

In 1946, the Dullea family purchased farmland on the Buffalo River in Clay County on which they subsequently operated a farm and a feedlot. The Dullea family incorporated their farming operations; appellant Dullea Land Company (DLC) owned the farmland, and Dullea Company operated the farm and feedlot. The feedlot was located on a peninsula, surrounded by the Buffalo River on three sides.

In 1996, the Minnesota Pollution Control Agency (MPCA) discovered that Dullea Company was operating an unlicensed feedlot and illegally discharging manure from the feedlot onto the banks of and into the Buffalo River. Daniel Dullea, the president of Dullea Company, was charged with several violations of state law, including felony operation of an unlicensed feedlot and improper waste disposal. In exchange for a suspension of the criminal proceedings, Dullea agreed to shut down the feedlot operation. Dullea Company then applied for a permit to operate the feedlot as it had done before the MPCA discovered the violations. The MPCA made a preliminary decision to deny the permit application, and Dullea Company requested a contested-case hearing.

In 2003, when the MPCA issued its final decision denying Dullea Company’s application for a permit to operate the feedlot, DLC no longer owned the farmland, but Dullea Company still ran the farm. In 2004, DLC filed a petition for a writ of mandamus compelling the commencement of condemnation proceedings. DLC alleged that the MPCA committed a regulatory taking by shutting down the feedlot and denying the application for a permit. Without the operating feedlot, the value of the farmland was diminished, and DLC sought compensation for that loss of value.

The MPCA moved for summary judgment, arguing, inter alia, that DLC lacked standing to bring suit. The district court determined that DLC did not have standing and granted the MPCA’s motion. DLC’s appeal follows.

D E C I S I O N

On an appeal from summary judgment, this court asks two questions: (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law. Olmanson v. LeSueur County, 693 N.W.2d 876, 879 (Minn. 2005). The district court granted summary judgment for the MPCA because it determined that DLC lacked standing to bring the lawsuit. The facts relating to standing are not in dispute, and we review de novo whether the district court erred as a matter of law. Conant v. Robins, Kaplan, Miller & Ciresi, L.L.P., 603 N.W.2d 143, 146 (Minn. App. 1999), review denied (Minn. Mar. 14, 2000).

“Mandamus is the proper vehicle to assert a claim for inverse condemnation.” Vern Reynolds Constr., Inc. v. City of Champlin, 539 N.W.2d 614, 616 (Minn. App. 1995), review denied (Minn. Dec. 20, 1995). Inverse condemnation is an “action against a governmental defendant to recover the value of property which has been taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been attempted by the taking agency.” N. States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 487 n.2 (Minn. 2004) (quoting Alevizos v. Metro. Airports Comm’n, 298 Minn. 471, 477, 216 N.W.2d 651, 657 (1974)). To have standing to pursue an action for inverse condemnation, an individual must show an “injury to some interest, economic or otherwise, which differs from injury to the interests of other citizens generally.” Vern Reynolds Constr., 539 N.W.2d at 617.

DLC’s petition alleges that the MPCA committed a taking by depriving DLC “of all reasonable use and enjoyment of [its] property.” As the owner of the farmland on which the feedlot had operated when it was shut down, DLC had an economic interest in the value of the farmland. It is undisputed that without an operating feedlot, the value of the farmland was diminished.

But the district court determined that DLC did not have standing because the MPCA’s regulatory action affected Dullea Company, not DLC. The district court concluded that DLC, as a third party, cannot assert the rights of the Dullea Company. The district court also concluded that DLC lacked standing because by the time the MPCA arrived at its final decision to deny the application for a permit to operate the feedlot, DLC no longer owned the farmland on which the feedlot had operated.

We conclude that both of the district court’s reasons for granting the MPCA’s motion for summary judgment are based on misapplications of the law. As noted above, DLC’s economic interest in the farmland and feedlot was affected by the MPCA’s regulatory action. DLC need not assert the rights of Dullea Company to bring an action for inverse condemnation. And the fact that DLC no longer owned the farmland when Dullea Company’s permit application was denied does not affect DLC’s standing to bring an inverse-condemnation action because the right to compensation for a taking “vests in the person owning the property at the time of [government] interference.” See Brooks Inv. Co. v. City of Bloomington,305 Minn. 305, 315, 232 N.W.2d 911, 918 (1975).

Although we find that the district court’s reasons for granting the MPCA’s motion for summary judgment are not supported by law, we will affirm a summary judgment if it can be sustained on any ground. Winkler v. Magnuson, 539 N.W.2d 821, 828 (Minn. App. 1995), review denied (Minn. Feb. 13, 1996). A property interest in an illegal activity is not protected under the Takings Clause. See Zeman v. City of Minneapolis, 552 N.W.2d 548, 554 (Minn. 1996) (“If the state regulation appears genuinely designed to prevent harm to the public and is likely to achieve that goal and the harm suffered by the property owner does not appear to be one that should be borne by the entire community, we will not find a taking.” (citing Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 488–93, 107 S. Ct. 1232, 1243–46 (1987); Mugler v. Kansas, 123 U.S. 623, 661–62, 8 S. Ct. 273, 297 (1887))). Although the MPCA’s regulatory action affected the value of DLC’s farmland, the feedlot was shut down because it violated state law. See Minn. Stat. § 609.671 (2004) (prohibiting unlicensed feedlot operations, regulating solid-waste disposal, and providing other environmental regulations). DLC does not argue that the feedlot operation was in compliance with state law, and because DLC’s asserted property interest is in an illegal feedlot operation, the Takings Clause provides no basis for a claim.

Nor does the Takings Clause protect DLC’s interest in Dullea Company obtaining a permit to operate the feedlot along the Buffalo River. Assuming that DLC has an interest in the success of Dullea Company’s permit application, that interest would “implicate[] constitutional restraints, such as procedural due process and equal protection,” but it would not constitute private property for Takings Clause purposes. See Hay v. City of Andover, 436 N.W.2d 800, 804 (Minn. App. 1989) (holding that an applicant’s interest in a special-use permit is not “private property and therefore not subject to a taking claim”). Because neither DLC’s interest in the feedlot operation nor its interest in the permit application provides a viable takings claim, we conclude that the district court did not err by granting the MPCA’s motion for summary judgment.

Affirmed.