02/28/2017
DA 15-0683
Case Number: DA 15-0683
IN THE SUPREME COURT OF THE STATE OF MONTANA
2017 MT 37
JANE DESCHNER and JON LODGE,
Plaintiffs and Appellants,
v.
STATE OF MONTANA, DEPARTMENT
OF HIGHWAYS,
Defendant and Appellee.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and For the County of Yellowstone, Cause No. DV 10-1800
Honorable Michael G. Moses, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Kenneth D. Tolliver, Joshua P. Oie, Tolliver Law Firm, P.C., Billings,
Montana
For Appellee:
Calvin J. Stacey, Bryan M. Kautz, Stacey, Funyak & Kautz, Billings,
Montana
Submitted on Briefs: December 7, 2016
Decided: February 28, 2017
Filed:
__________________________________________
Clerk
Justice James Jeremiah Shea delivered the Opinion of the Court.
¶1 Jane Deschner and Jon Lodge (Deschner and Lodge), appeal the October 6, 2016
judgment by the Thirteenth Judicial District Court, Yellowstone County. Deschner and
Lodge challenge the District Court’s jury instruction on inverse condemnation. We
address the following issue:
Whether the District Court’s jury instruction on inverse condemnation was
erroneous.
¶2 We affirm.
PROCEDURAL AND FACTUAL BACKGROUND
¶3 This case concerns a rockfall that damaged Deschner and Lodge’s residence at
1313 Granite Avenue, Billings, Montana, near the Billings Rimrocks (Rims). Originally
constructed in the 1970s, Deschner and Lodge bought the house in 1996. On October 9,
2010, a sandstone slab fell from the Rims that weighed roughly two million pounds and
measured approximately sixty feet long, thirty feet wide, and eight feet deep. The fallen
slab displaced the home and rendered it uninhabitable.
¶4 The City of Billings owns the property from which the slab fell. The State of
Montana constructed and maintains Montana State Highway 3, known locally as Airport
Road, that runs on top of the Rims north of Deschner and Lodge’s property. Originally
constructed in 1936 over a commonly used route, the State improved Highway 3 in 1963,
rerouting it roughly 170 feet south and installing culverts underneath the new roadway to
facilitate water runoff. Deschner and Lodge sued the City of Billings, the State of
Montana, and various insurance entities. On the inverse condemnation claim, the District
2
Court granted summary judgment to the City but denied summary judgement to the State.
The only remaining defendant in this appeal is the State of Montana, Department of
Highways.
¶5 At trial, Deschner and Lodge contended that the State’s construction and
placement of Highway 3 and Culvert 239 caused an unnatural increase in the amount of
water that ran off the highway onto the rockfall site, ultimately causing the slab to fall
onto their home. Deschner and Lodge called two experts who concluded that Culvert 239
increased the amount of water at the fall site, causing the slab to fall.
¶6 The State presented testimony from various Montana Department of
Transportation (MDT) employees, engineers, hydrologists, geologists, and water resource
specialists that contradicted Deschner and Lodge’s experts. The State presented evidence
that pieces of the Rims fall off naturally and will continue to fall off as a result of natural
geologic processes; Deschner and Lodge were aware that pieces of the Rims fall off
naturally; the State placed Culvert 239 in a natural drainage; construction of Highway 3
lessened the amount of water that historically reached the area above Deschner and
Lodge’s property; Culvert 239 was plugged and did not allow moisture to be discharged
through it for the majority of its existence; and that any water that did flow through
Culvert 239 when it was not plugged during infrequent rain events did not pool behind
the slab that fell on Deschner and Lodge’s house. Eight of the State’s experts opined that
the placement of Culvert 239 was not a substantial factor in causing the rockfall.
¶7 Deschner and Lodge proposed two jury instructions on inverse condemnation.
Proposed Instruction No. 12 stated:
3
For Plaintiffs’ claim of inverse condemnation against the State of Montana,
you are instructed as follows:
(1) The Court has determined that Culvert 239 was placed according to
the plans for the reconstruction of Highway 3 in 1963.
(2) For you to determine is whether the water flowing from Culvert 239
proximately caused Plaintiffs’ damages.
Alternatively, Deschner and Lodge’s proposed Instruction No. 12a stated:
For Plaintiffs’ claim of inverse condemnation against the State of Montana,
you as the jury must determine the following:
(1) Whether Highway 3 and its Culvert 239 was a public improvement
as deliberately planned and built.
(2) If Highway 3 and its Culvert 239 was a public improvement, was the
water that flowed from it the proximate cause of Plaintiffs’ damages.
The District Court rejected both of Deschner and Lodge’s proposed instructions, and
instead gave Instruction No. 29. Instruction No. 29 listed the Albers Factors that this
Court adopted in Rauser v. Toston Irrigation District, 172 Mont. 530, 565 P.2d 632
(1977). Instruction No. 29 stated:
In order to recover damages under their inverse condemnation claim against
the State of Montana, plaintiffs must show the following:
(1) The damage was reasonably foreseeable;
(2) The likelihood of public works not being engaged in because of
unforeseen and unforeseeable direct physical damage to real estate is
remote;
(3) That they, as property owners, suffered direct physical damage to
their properties as the proximate result of the works as deliberately planned
and carried out;
(4) The cost of such damage can better be absorbed, and with infinitely
less hardship, by the taxpayers as a whole, than by owners of the individual
parcels; and
(5) If they go uncompensated they would contribute more than their
proper share to the public undertaking.
4
Deschner and Lodge objected to Instruction No. 29, arguing the Albers Factors in Rauser
did not reflect current law regarding inverse condemnation in Montana.
¶8 The jury returned a Special Verdict. Pertinent to this appeal, the jury found: (1)
the State was not negligent; (2) Deschner and Lodge’s negligence was a substantial factor
in bringing about their own damages; (3) the State contributed 0% and Deschner and
Lodge contributed 100% to the cause of Deschner and Lodge’s damages; and (4) the
State did not inversely condemn Deschner and Lodge’s property.
STANDARDS OF REVIEW
¶9 We review for an abuse of discretion whether the district court correctly instructed
the jury. State v. Thorp, 2010 MT 92, ¶ 32, 356 Mont. 150, 231 P.3d 1096. The test for
an abuse of discretion is whether the district court acted arbitrarily without employment
of conscientious judgement or exceeded the bounds of reason resulting in substantial
injustice. Tarlton v. Kaufman, 2008 MT 462, ¶ 19, 348 Mont. 178, 199 P.3d 263.
¶10 In reviewing whether a district court properly gave a particular jury instruction, we
consider that instruction in its entirety in connection with the other instructions given and
in association with the evidence presented at trial. Busta v. Columbus Hosp., 276 Mont.
342, 359, 916 P.2d 122, 132 (1996). We review jury instructions in their entirety to
determine if the instructions given by a district court fully and fairly instruct the jury on
the law applicable to the case. Tarlton, ¶ 19. A district court’s refusal to give a proposed
jury instruction only constitutes reversible error when “such refusal affects the substantial
rights of the party proposing the instruction, thereby prejudicing [the party].” Busta, 276
Mont. at 360, 916 P. 2d at 133. The party assigning error must show prejudice to prevail,
5
and we will not find prejudice if the jury instructions in their entirety state the applicable
law of the case. Tarlton, ¶ 19.
DISCUSSION
¶11 Whether the District Court’s jury instruction on inverse condemnation was
erroneous.
¶12 Deschner and Lodge argue the District Court erred in giving Instruction No. 29
because it is not a full, fair, and accurate representation of inverse condemnation law in
Montana. Deschner and Lodge contend any test for inverse condemnation must be
evaluated for conformity with Article II, Section 29 of the Montana Constitution, which
provides: “Private property shall not be taken or damaged for public use without just
compensation to the full extent of the loss having been first made to or paid into court for
the owner.”
¶13 Although the District Court instructed the jury on the Albers Factors in its inverse
condemnation instruction, Deschner and Lodge note that this Court has only applied the
Albers Factors in Rauser, and our case law since Rauser reflects that recovery on an
inverse condemnation claim is appropriate when property owners can demonstrate that a
property incurred damage proximately caused by a public improvement that was
deliberately planned and built. See Rauser, 172 Mont. at 539, 565 P.2d at 638; see also
Kafka v. Mont. Dep’t of Fish, Wildlife & Parks, 2008 MT 460, 348 Mont. 80, 201 P.3d 8;
Buhmann v. State, 2008 MT 465, 348 Mont. 205, 201 P.3d 70; Knight v. City of
Missoula, 252 Mont. 232, 827 P.2d 1270 (1992); Thelen v. City of Billings, 238 Mont. 82,
776 P.2d 520 (1989); Adams v. Dep’t of Highways, 230 Mont. 393, 753 P.2d 846 (1988);
6
Knight v. City of Billings, 197 Mont. 165, 642 P.2d 141 (1982). Consistent with these
post-Rauser holdings, Deschner and Lodge contend that inverse condemnation claims
require satisfaction of only four elements: (1) a compensable property interest; (2)
damage to that property interest; (3) a public improvement; and (4) causation. Deschner
and Lodge assert that the first and third elements are questions of law, and as a matter of
law, their home is a compensable property interest and the Highway and Culvert are
public improvements. Thus, Deschner and Lodge contend that only the second and
fourth elements were issues for the jury to decide. Deschner and Lodge contend the
District Court erred when it rejected their instruction that provided they were entitled to
recover on their inverse condemnation claim if the jury found that the highway and
culvert were (a) deliberately planned and built and (b) the proximate cause of Deschner
and Lodge’s damages.
¶14 Deschner and Lodge argue in the alternative that if Rauser does define inverse
condemnation law in Montana, then Instruction No. 29 is inaccurate because it applied
the Albers Factors as elements, and not “guides.” See Rauser, 172 Mont. at 539, 398
P.2d at 638. Deschner and Lodge assert that the District Court’s instruction on inverse
condemnation misstated the law.
¶15 The State contends that Deschner and Lodge’s argument ignores that Rauser is
established case law and that the evidence testified to and admitted supports the jury’s
verdict. Because the District Court relied on established precedent, the State argues the
District Court did not abuse its discretion in instructing the jury on inverse condemnation.
Alternatively, the State argues that if the District Court did abuse its discretion in relying
7
on Rauser when instructing the jury, such error would be harmless because the jury found
that the State did not cause Deschner and Lodge’s alleged damages.
¶16 In Rauser, this Court addressed whether an inverse condemnation claim requires a
showing of negligence in design, construction, or operation of the public project. Rauser,
172 Mont. at 536, 565 P.2d at 636. We held: “Montana’s case law does not require a
showing of negligence or a theory of negligence when faced with deliberate or intentional
acts.” Rauser, 172 Mont. at 537, 565 P.2d at 637. We then went on to adopt, as guides,
the five Albers Factors:1
(1) the damage to this property, if reasonably foreseeable, would have
entitled the property owners to compensation; (2) the likelihood of public
works not being engaged in because of unforeseen and unforeseeable
possible direct physical damage to real estate is remote; (3) the property
owners did suffer direct physical damage to their properties as the
proximate result of the works as deliberately planned and carried out; (4)
the cost of such damage can better be absorbed, and with infinitely less
hardship, by the taxpayers as a whole, than by owners of the individual
parcels, and (5) “the owner of the damaged property, if uncompensated,
would contribute more than his proper share to the public undertaking.”
Rauser, 172 Mont. at 539, 565 P.2d at 638 (citing Albers, 398 P.2d at 136 (quoting
Clement v. State Reclamation Board, 226 P.2d 897, 905 (Cal. 1950))).
¶17 Our holding in Rauser is more noteworthy for establishing what is not required to
bring a claim for inverse condemnation—negligence—than what is required. Although
we adopted the Albers Factors as guides in an inverse condemnation claim, we did not
actually apply them in Rauser, nor have we applied them in any case since Rauser. As
Deschner and Lodge correctly point out, our subsequent case law only references Rauser
1
Adopted from Albers v. County of Los Angeles, 398 P.2d 129, 137 (Cal. 1965).
8
for the premise that: “A property owner may recover in an inverse condemnation action
where actual physical damage is proximately caused to his property by a public
improvement as deliberately planned and built.” Knight v. Missoula, 252 Mont. 232,
243, 827 P.2d 1270, 1276 (1992) (citing Rauser, 172 Mont. 530, 565 P.2d 632). We
agree with Deschner and Lodge that the test for inverse condemnation must be evaluated
within the context of Article II, Section 29 of the Montana Constitution, which our
subsequent case law provides. To the extent that the Albers Factors may be
incommensurate with Article II, Section 29, they should not be strictly applied as
elements of an inverse condemnation claim.
¶18 Although Deschner and Lodge’s argument concerning the applicability of the
Albers Factors is well taken, our analysis cannot end there. How the Albers Factors
should be or were applied is not the dispositive issue in this case. All parties agree that in
order to recover on their inverse condemnation claim, Deschner and Lodge must establish
that the State caused their damages. Because the jury did not find that the State inversely
condemned Deschner and Lodge’s property, it did not reach the issue of causation within
the context of the inverse condemnation claim. It did, however, answer this question as it
pertained to Deschner and Lodge’s negligence claim. Specifically, question six on the
special verdict form asked the jury: “What percentage, if any, do you find each party
contributed to the cause of Plaintiffs’ damages?” The jury answered the question: “State
of Montana 0% at fault.”
¶19 Although this question was asked in the context of Deschner and Lodge’s
negligence claim, causation of damages was a contested issue that was common to both
9
the negligence and inverse condemnation claims. The damages that may have been
caused by a potential inverse condemnation are indistinct from the damages that may
have been caused by any potential negligence on the part of the State. The distinction
between the two claims lies in the basis for imputing liability to the State, not in the
damages resulting from that liability.
¶20 Deschner and Lodge contend that the jury’s answer to Question 6 was, in fact, an
allocation of negligence. But that is not what Question 6 explicitly asked; it asked the
jury to allocate the parties’ respective contributions to “the cause of Plaintiffs’ damages.”
Further belying Deschner and Lodge’s contention is that questions as to whether the State
was negligent and, if so, whether its negligence was a substantial factor in bringing about
Deschner and Lodge’s damages, were already submitted to the jury as Questions 1 and 2.
¶21 In Baldauf v. Arrow Tank & Eng’g Co., we held:
The use of a special verdict form is left to the discretion of the trial court.
“While it is within the trial court’s discretion to structure the form and
frame the questions of a special verdict, the interrogatories must be
adequate to enable the jury to determine the factual issues essential to
judgment.” We use a three-part standard to determine the adequacy of a
special verdict form:
(1) whether, when read as a whole and in conjunction with the general
charge, the interrogatories adequately presented the contested issues to the
jury;
(2) whether the submission of the issues to the jury was fair; and
(3) whether the ultimate questions of fact were clearly submitted to the
jury.
Baldauf, 1999 MT 81, ¶ 49, 294 Mont. 107, 979 P.2d 166 (internal citations omitted)
(quoting Kinjerski v. Lamey, 194 Mont. 38, 41, 635 P.2d 566, 568 (1981)). As noted
10
above, Instruction No. 29 incorrectly required Deschner and Lodge to prove elements to
their inverse condemnation claim beyond that which Article II, Section 29 of the
Montana Constitution and our case law subsequent to Rauser require. Nevertheless,
when read in the context of the given instructions in their entirety, in connection with the
evidence presented at trial, and in light of the jury’s answer regarding causation on the
special verdict form, we conclude that the District Court’s refusal to give Deschner and
Lodge’s proposed jury instruction does not constitute reversible error because Deschner
and Lodge failed to establish that the State caused their damages. Therefore, Deschner
and Lodge’s substantial rights were not affected and they were not prejudiced by the
given instruction and the District Court’s refusal of their alternative instructions.
CONCLUSION
¶22 Both the District Court’s inverse condemnation instruction, as well as the
alternative instructions offered by Deschner and Lodge, required Deschner and Lodge to
prove that the State was the proximate cause of their damages. The elements a plaintiff
must prove in an inverse condemnation claim are (1) that the public improvement was
deliberately planned and built; and (2) that, as planned and built, the public improvement
proximately caused damage to the plaintiff’s property. Juries should be so instructed.
Nevertheless, irrespective of the other elements of inverse condemnation on which the
jury was instructed in this case, Deschner and Lodge failed to prove the essential element
of causation. Therefore, the District Court’s refusal of their proposed instruction in lieu
of Instruction No. 29 did not affect their substantial rights, and did not prejudice them.
11
¶23 Affirmed.
/S/ JAMES JEREMIAH SHEA
We Concur:
/S/ MIKE McGRATH
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ MICHAEL E WHEAT
/S/ DIRK M. SANDEFUR
/S/ JIM RICE
12