NO. 93-046
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
DON KUDLOFF,
Plaintiff and Appellant,
"y.:,
-v- T,~,?.e!3\ 7: 'y ':~: ! Y:,!; .,
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CITY OF BILLINGS, a political L.\ :: ,: ':< ~j, ,\!,;‘jj
subdivision of the State of Montana;
and BILLIE KRENZLER, MARION DOZIER,
BETTY MILLER, DAN FARMER, JOHN j i .,_.,i :. ;
MICHUNOVICH, CHARLES TOOLEY, OWEN
NEITER, RALPH STONE, RICHARD E. CLARK, y~;:,:~~, : ~,
and NORM KOLPIN, all members of the
City Council for the City of Billings,
Montana; and JAMES VAN ARSDALE, Mayor
of the City of Billings, Montana,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Maurice R. Colberg, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
;z",;;;,L. Stephens, R. L. Stephens, P.C., Billings,
For Respondents:
Leo S. Ward, Browning, Kaleczyc, Berry &
Hoven, Helena, Montana
Submitted on Briefs: August 26, 1993
Decided: September 21, 1993
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
This is an appeal from two Memoranda and Orders of the
Thirteenth Judicial District Court granting summary judgment to the
defendants. We affirm.
We restate the issues on appeal as follows:
1. Did the plaintiff have standing to maintain a "wrongful
annexation" action after he sold the real property at issue?
2. Has there been a violation of plaintiff's constitutional
rights which would support a 42 U.S.C. 5 1983 action?
The plaintiff, Don Kudloff (Kudloff), filed a complaint on
March 2, 1990, alleging that the City and its city council members
and mayor annexed his real property in violation of state statute.
9;
Kudloff also alleged that, in the process of annexing his property,
the defendants violated his constitutional rights, giving rise to
a claim under 42 U.S.C. 5 1983 (5 1983 claim). In his prayer for
relief, Kudloff requested that the annexation be set aside and
sought his attorney's fees and costs and $50,000 for emotional and
physical pain and suffering.
The defendants denied the allegations of Kudloff's complaint
and asserted a number of affirmative defenses, including immunity.
After preliminary discovery, the City filed a motion for summary
judgment based on its asserted immunity defense. In addition, the
City argued that the mayor and city council members were entitled
to absolute legislative immunity or, alternatively, qualified good
faith immunity. Kudloff also filed a motion for summary judgment,
alleging that immunity was not available for a § 1983 claim and
2
that he was entitled to judgment as a matter of law under the facts
of the case.
After some further discovery, briefing, and oral argument, the
District Court entered its Memorandum and Order on December 13,
1991, granting summary judgment to the city council members and the
mayor, on all counts, on the basis of immunity. The District Court
also granted summary judgment to the City on Kudloff's § 1983
claim, but denied summary judgment to the City on the issue of the
legitimacy of its annexation of Kudloff's property, treating
Kudloff's complaint as a petition for court review under § 7-Z-
4741, RCA. Kudloff's motion for summary judgment was denied.
Thereafter, some additional discovery was conducted. On June
2, 1992, the City filed a second motion for summary judgment. The
basis for this motion was that Kudloff had sold the real property
and no longer had standing to maintain the lawsuit. On November
17, 1992, the District Court granted the City's motion for summary
judgment, finding that Kudloff had no standing to attack the
validity of the annexation procedures because he had sold the real
property which was the subject of the pending action. From these
summary judgments, Kudloff appeals.
Our standard in reviewing a grant of summary judgment is the
same as that initially utilized by the district court. McCracken
v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894.
Summary judgment is proper when there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a
matter of law. Rule 56(c), M.R.Civ.P.
3
I- DISMISSAL OF WRONGFUL ANNEXATION" CLAIM
In Kudloff's complaint, he alleged that he owned the real
property which the City annexed, and he requested that the
annexation be set aside as void. A party vested with legal title
is the real party in interest in a dispute involving real property.
Blakely v. Kelstrup (1985), 218 Mont. 304, 306, 708 P.2d 253, 255.
Clearly, at the time Kudloff filed his complaint, he was the real
party in interest entitled to bring the action under Rule 17(a),
M.R.Civ.P., which states that Il[e]very action shall be prosecuted
in the name of the real party in interest."
After the commencement of this action, Kudloff sold the
subject real property. On June 24, 1992, in his response to the
City's second motion for summary judgment, Kudloff stated that he
"[did] not seek a judgment or injunction on annexing the property
and clearly, based upon the relinquishment of the property, that is
outside his scope of available remedies." Rather, Kudloff claimed
that he sold the real property in order to mitigate his damages,
and expressed his intent to seek damages for losses he alleged
resulted from the "forced sale" of the real property,
However, Kudloff at no time amended his complaint to reflect
his new intentions. In this case, an amended complaint was
required when the theory of Kudloff's case and his alleged damages
changed. The purpose of a complaint, and subsequent amendments, is
to provide adequate notice to the defendants of the nature of the
actions they must defend against and the remedy which is sought.
Here, more than two years after the original complaint was filed,
4
Kudloff changed entirely the nature of the action without providing
the required notice to the defendants. Therefore, the District
Court properly dismissed the "wrongful annexation" action.
II - ALLEGED CONSTITUTIONAL VIOLATIONS
Kudloff also appeals the District Court's dismissal of his 5
1983 claim. In order to support a claim under 42 U.S.C. 5 1983, a
constitutional right must have been violated by a person acting
under color of state law. A threshold requirement is that a
requisite violation has occurred. In this case, Kudloff alleges
that, in the process of annexing his property, the defendants
violated a number of his constitutional rights. We will address
each in turn.
A. "TAKING" WITHOUT COMPENSATION
Kudloff alleges that the annexation of his real property
represented an unconstitutional taking because the extension of
services under 9 7-2-4732, MCA, was impractical and unfeasible, and
because no cost-benefit analysis was performed. However, a
regulatory taking of property by a municipality is allowed even if
the value of that property and its usefulness is diminished. Penn
Central Transp. Co. v. New York City (1978), 438 U.S. 104, 131, 98
S.Ct. 2646, 2662-63, 57 L.Ed.Zd 631, 652-53. It is only when the
owner of the real property has been called upon to sacrifice all
economically beneficial use of that property in the name of the
common good that a constitutionally-protected taking has occurred.
Lucas v. South Carolina Coastal Council (1992), - U.S. -I -...,,-I
112 S.Ct. 2886, 2895, 120 L.Ed.Zd 798, 815.
5
In Penn Central, New York City enacted a Landmarks
Preservation Law (Landmarks Law) to protect historic landmarks and
neighborhoods from destruction or alteration. Pursuant to this
Landmarks Law, the Landmark Preservation Commission (Commission)
designated the Grand Central Terminal (Terminal), which was owned
by Penn Central Transportation Company (Penn Central), a landmark.
Thereafter, Penn Central entered into a lease with UGP Properties
(UGP), allowing UGP to construct a multistory office building over
the Terminal. Pursuant to the Landmarks Law, the parties submitted
their building plan to the Commission, which rejected the plan for
the building as destructive of the Terminal's historic and
aesthetic features. Penn Central, 438 U.S. at 109-17. Penn
Central and UGP filed suit, claiming that the application of the
Landmarks Law had "taken" their property without just compensation.
The trial court granted injunctive relief to the plaintiffs. That
judgment was reversed by the New York Supreme Court, Appellate
Division, which held that there was no taking because there was no
proof that the regulation deprived the plaintiffs of all reasonable
beneficial use of the property. Penn Central, 438 U.S. at 119.
The New York Court of Appeals affirmed, summarily rejecting the
claim that the Landmarks Law had taken property without just
compensation. Penn Central, 438 U.S. at 120-21. On certiorari,
the United States Supreme Court stated that land-use regulations
which adversely affect recognized real property interests, such as
zoning regulations, are commonly upheld. Penn Central, 438 U.S. at
125. The Supreme Court further stated that any interference with
6
the property at issue was not of such a magnitude that compensation
was required to sustain it. Penn Central, 438 U.S. at 137. The
Supreme Court, in affirming the appellate courts, held that the
restrictions imposed were substantially related to the promotion of
the general welfare while permitting reasonable beneficial use of
the Terminal to the plaintiffs. Penn Central, 438 U.S. at 138.
In Lucas, the petitioner purchased two residential lots on a
South Carolina barrier island, intending to build single-family
homes, in 1986. In 1988, the South Carolina legislature enacted
the Beachfront Management Act (Act), which barred Lucas from
building any permanent structures on his land. Lucas, -U.S. at
-, 112 S.Ct. at 2889. He filed suit in the South Carolina Court
of Common Pleas, contending that the Act effected a taking of his
property without just compensation. The court agreed, finding that
the Act rendered Lucas' property valueless. The Supreme Court of
South Carolina reversed, holding that, because the Act was designed
to prevent serious public harm, no compensation was owed to Lucas.
Lucas, _ U.S. at __, 112 S.Ct. at 2890. On certiorari, the
United States Supreme Court stated that "while property may be
regulated to a certain extent, if regulation goes too far it will
be recognized as a taking." Lucas, _ U.S. at _, 112 S.Ct. at
2893. Here, Lucas was required to sacrifice & economically
beneficial uses in the name of the common good by leaving the
property in its natural state. Lucas, - U . S . a t - , 112 s.ct.
at 2895. The state is required to compensate a property owner only
if it seeks to sustain a regulation that deprives the property
owner of all economically beneficial uses of his property. That
rule, however, does not apply if the use or interest the state is
attempting to regulate was not part of the owner's original estate
or title. Under the latter circumstances, the state is not
required to compensate the property owner. Lucas, - U . S . at-,
112 S.Ct. at 2899. According to that case:
[a]ny limitation so severe cannot be newly legislated or
decreed (without compensation)., but must inhere in the
title itself, in the restrrctions that background
principles of the State's law of property and nuisance
already place upon land ownership. . . . It seems
unlikely that common-law principles would have prevented
the erection of any habitable or productive improvements
on petitioner's land: they rarely support prohibition of
the essential use of land. . . The question, however, is
one of state law to be dealt with on remand.
Lucas, _ U.S. at __, 112 S.Ct. at 2900-01. On that basis, the
Supreme Court reversed and remanded the case.
The case at hand is similar to Penn Central in that the
annexation of the property may have diminished the value and
usefulness of the property. However, any effect the annexation had
on the value of the property does not rise to the level of Lucas
which would require compensation. As stated in Lucas, "the
property owner necessarily expects the uses of his property to be
restricted, from time to time, by various measures newly enacted by
the State in legitimate exercise of its police powers. . . .I'
Lucas, - U.S. at-, 112 S.Ct. at 2899.
In 1974, Kudloff had been granted a special exception allowing
ski-related uses of the real property. The record in this case
indicates that this special exception remained effective after the
City annexed Kudloff's property. In addition, there is no evidence
8
in the record that Kudloff ever requested a zoning change or
special variance for ski-related uses after the annexation took
place. Kudloff is hard-pressed to argue that a "taking" occurred
when he never attempted to ascertain whether he could use the
property for ski-related purposes. For the above reasons,
Kudloff's allegation that an unconstitutional taking has occurred
is without merit.
B. FAILURE TO GRANT EXEMPTION
The annexation by the City was conducted under sg 7-2-4501, et
seq., MCA, which allow a city to annex wholly surrounded land.
Kudloff claims that his constitutional rights were violated when
the defendants annexed his real property without granting him a
statutory exemption under this part. Kudloff bases this assertion
on § 7-2-4503, MCA, which states:
Land shall not be annexed under this part whenever the
land is used: . . . (2) for the purpose of maintaining or
operating . . . a place for public or private outdoor
entertainment or any purpose incident thereto.
Fatal to Kudloff's argument is the fact that Kudloff was not
"maintaining or operating" a ski area or any place of public or
private outdoor entertainment. Over a period of years, Kudloff had
taken some steps to develop a ski area; however, he was far from
completing his project, and was certainly not maintaining or
operating such an area. Therefore, this statutory exemption is not
available to Kudloff, and his claim of a constitutional violation
based upon this statute is also without merit.
c. INCREASED TAX BURDEN
Lastly, Kudloff claims that the increased tax burden imposed
9
by the annexation of his real property violated his constitutional
rights. Montana law is clear that the levying of future taxes
after an annexation does not constitute a taking of property.
Harrison v. City of Missoula (1965), 146 Mont. 420, 425, 407 P.2d
703, 706. Kudloff's claim of a constitutional violation on this
basis is without merit.
Because there has been no violation of any of Kudloff's
constitutional rights by any of the defendants, the District Court
properly dismissed the § 1983 claims. We do not need to address
the District Courtrs holding that the doctrine of immunity barred
these claims. This Court will uphold the result reached by the
district court if its decision was correct, regardless of the
reasons given by the district court for its conclusion. Shimsky v.
Valley Credit Union (1984), 208 Mont. 186, 190, 676 P.2d 1308,
1310.
Affirmed.
September 21, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
Robert L. Stephens, Jr.
R.L. Stephens, P.C.
P.O. Box 1438
Billings, MT 59103-1438
Richard J. Carstensen
Attorney at Law
P. 0. Box 2093
Billings, MT 59103-2093
Jim Tillotson
City Attorney’s Office
P.O. Box 1178
Billings, MT 59103
Leo S. Ward
Browning, Kaleczyc, Berry & Hoven
P. 0. Box 1697
Helena, MT 59624
ED SMITH
CLERK OF THE SUPREME COURT