Inverse condemnation occurs when the government takes private property for public use and doesn’t pay for it. Simple definition, tough application. The Supreme Court of Virginia offers guidance on how to make such claims in AGCS Marine Insurance v. Arlington County.  Government attorneys and officials take note. Even while focusing on procedure (i.e., how to plead an inverse condemnation case), the Supreme Court provides an instructive background on how it views the “implied constitutional promise of compensation.”
Here was the problem: a Harris Teeter grocery store sustained almost two million dollars in damages when a county sewer line failed, resulting in raw sewage flowing into the store. The grocer’s insurance carriers cleaned up the mess and sued the county for inverse condemnation under Article 1, Section 11 of the Virginia Constitution. The circuit court sustained the county’s demurrer with prejudice because the insurers alleged only negligence—not contract—and denied their motion to amend the complaint. The Supreme Court agreed with the unremarkable concept that “[t]ortiuous or wrongful conduct by a government official, acting outside of his or her lawful authority, can never be a sufficient ground, in itself, for an inverse condemnation award,” but concluded that the proposed amended complaint was sufficient to infer a claim that the county intentionally used the grocery store as its dumping ground.
In summarizing its jurisprudence on inverse condemnation claims, the Supreme Court explained that “[t]he common thread . . . is that the purposeful act or omission causing the taking of, or damage to, private property was for a public use.” Further, “[i]n none of the[] scenarios was private property taken or damaged through the mere negligence of a governmental actor incident to, or while participating in, a public function.  Rather . . . the government asked private property owners . . . to bear the cost of a public improvement.  This element distinguishes an inverse condemnation claim from a mere tort claim alleging negligence, nuisance, trespass, or other common-law theories of recovery.” In other words, you can’t shift the burden/cost for a public use onto a private owner without paying him for it. If your plan is to dump sewage in a grocery store, you have to be prepared to pay the clean-up costs.
While many would focus on the Supreme Court’s decision to let the insurers have their day in court, there is plenty of good news for governments.
First, it is clear that inverse condemnation claims rise and fall on very factually specific allegations that must definitively explain how it is that the action (or inaction) of a governmental actor intentionally damaged private property for a public use. Legal conclusions are not good enough. Attorneys should focus on challenging “evidence” that the government knowingly adopted a plan that would damage the property owner. Nothing changes the Supreme Court’s 2012 pronouncement in Livingston v. Va. Dep’t of Transp. that “[w]hen the government constructs a public improvement, it does not thereby become an insurer in perpetuity against flood damage to neighboring property.”
Second, attention should be given as to whether the allegations satisfy the “prerequisite” “for-public-use” requirement. Carelessness and negligence are not enough.  As the Supreme Court noted, if the insurers can “prove that the policies, procedures, and practices of the County consisted of a plan or design to use the [grocery store’s] property in this manner [i.e. knowing that a sewage back-flow onto the property of others would occur], they may have an inverse condemnation claim.” In other words, bad things happen to good people; but that does not mean that the government intended for it to happen. And the landowner needs to particularize its claims in the complaint.
Third, the mere existence of property damage does not by itself create a cause of action for inverse condemnation. Indeed, “the doctrine of sovereign immunity is alive and well in Virginia and the complexity that exists in the law of sovereign immunity cannot be eliminated by the simple expedient of doing away with the doctrine by judicial fiat.” Again, negligence is not sufficient.
In Part Two, we will review what the Supreme Court had to say about damage to “personal” property and whether the county has to pay for food contaminated by raw sewage….