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Rocky Mountain Power Inc. v. Marriott

Court of Appeals of Utah

November 29, 2018

Rocky Mountain Power Inc., Appellee and Cross-appellant,
v.
Randy E. Marriott, Edge Holdings LLC, Willard Land Holdings LLC, R&K Properties LC, Westside Investments LC, and Kami F. Marriott, Appellants and Cross-appellees.

          First District Court, Brigham City Department The Honorable Brandon J. Maynard No. 090100270

          Robert E. Mansfield, Steven J. Joffee, Megan E. Garrett, and Gregory H. Gunn, Attorneys for Appellants and Cross-appellees

          D. Matthew Moscon, Cameron L. Sabin, and R. Chad Pugh, Attorneys for Appellee and Cross-appellant

          Judge Kate A. Toomey authored this Opinion, in which Judges Gregory K. Orme and David N. Mortensen concurred.

          OPINION

          TOOMEY, JUDGE

         ¶1 This appeal stems from Rocky Mountain Power's (Rocky Mountain) condemnation to obtain easements across Randy E. Marriott's (Marriott)[1] property. Marriott appeals, arguing that the district court erred in excluding evidence of damages resulting from the easements' interference with potential mining. Rocky Mountain cross-appeals, asserting that the district court erred in granting Marriott partial summary judgment on a provision in Rocky Mountain's amended condemnation complaint. We affirm the district court's grant of partial summary judgment to Marriott. But we reverse the district court's ruling that excluded evidence of damages resulting from lost potential mining and remand to that court for further proceedings consistent with this opinion.

         BACKGROUND

         ¶2 Seeking to construct an electric transmission line (the New Line), Rocky Mountain filed a complaint for condemnation to obtain easements across approximately 453 acres of land (the Property) belonging to Marriott. Soon after, the parties stipulated to Rocky Mountain's occupancy of the easements, and Rocky Mountain began construction on the New Line. Marriott then requested that a jury determine the appropriate amount of "just compensation."

         ¶3 At the time of the condemnation, Marriott possessed two small mining permits, which authorized him to mine for sand and gravel aggregate on a ten-acre portion of the Property. Although the mining operation was relatively small, Marriott had applied for a large mining permit from the Division of Oil, Gas and Mining (DOGM). In the application (the Proposed Permit), Marriott provided plans to mine 145 acres of the Property in two phases. Phase one consisted of 35 acres, and phase two consisted of 110 acres. The Proposed Permit estimated that it would take "between 8 and 15 years" to complete phase one and did not include a time frame for phase two. DOGM had indicated to Marriott that the Proposed Permit would be approved.

         ¶4 To support his proposed "just compensation," Marriott provided evidence of the market value of the land supporting the New Line. That evidence included lost value because of the New Line's interference with potential mining on the Property. Marriott asserted that the New Line "greatly diminishes the ability to mine gravel products not only directly beneath the [New Line] . . . but also the areas surrounding [it]." Although the land supporting the New Line was not included in the Proposed Permit, Marriott asserted that he planned to eventually exploit "all mineable areas of the [P]roperty." Accordingly, Marriott argued that the loss of potential mining should be included in his award of just compensation.

         ¶5 Rocky Mountain disagreed with Marriott's proposed damages. It asserted that damages should be based solely on uses to which the Property could have been put at the time of the condemnation. Rocky Mountain pointed to various preexisting encumbrances on the Property, which created legal barriers to Marriott's proposed mining development. Given those legal barriers, Rocky Mountain believed that Marriott's alleged mining plans were speculative, and therefore the lost value of that potential mining should not be considered in determining Marriott's award of just compensation.

         ¶6 For example, the Property was bisected by an irrigation canal (the Canal), which the federal government owned in fee. Although Marriott conceded he did not have the unilateral right to relocate the Canal, he asserted that he always planned to move the Canal and believed a relocation was possible. Thus, Marriott included losses of potential mining that would have required the Canal's relocation.

         ¶7 Rocky Mountain attempted to avoid these potential damages by amending its condemnation complaint. It added a provision (the Canal Provision), which provided that, if Marriott received written approval from the federal government to relocate the Canal, Marriott had the right to request that Rocky Mountain relocate portions of the New Line to allow mining operations on the Property. If that happened, Rocky Mountain would be obligated either to relocate the New Line at its own expense or pay Marriott "the fair market value of the Deposits that would otherwise be made accessible for mining by the relocation of the [New Line]."

         ¶8 In response to the amendment, Marriott filed a motion for partial summary judgment, asking the court to strike the Canal Provision. That motion first cited the Utah Code, stating that "damages shall be considered to have accrued at the date of the service of summons," see Utah Code Ann. § 78B-6-512(1) (LexisNexis 2012), and that the condemnor "shall, within 30 days after final judgment, pay the sum of the money assessed," see id. § 78B-6-514. Marriott then asserted that the Canal Provision was impermissible because it "propose[d] that some of the damages will only be calculated and paid in the future."

         ¶9 After reviewing the arguments, the district court granted Marriott's motion for partial summary judgment. It found that there were no disputes of material fact, and that the Canal Provision was "not permissible under Utah Law for the reasons stated in" Marriott's motion. The court therefore struck the Canal Provision from the condemnation complaint.

         ¶10 Apart from the Canal, two more preexisting encumbrances created legal barriers to potential mining on the Property. These encumbrances included a fifty-foot-wide easement owned by Rocky Mountain that contained an electric transmission line, and a thirty-foot-wide easement owned by Questar Gas that contained a natural gas pipeline (collectively, the Utility Lines). Marriott did not have the unilateral right to relocate the Utility Lines. The relocation process involved formal procedures, including the proposal of alternate routes and the payment of assessment fees. Further, whether to grant relocation requests was within the discretion of Rocky Mountain and Questar, and their decisions were not subject to review or appeal. But Marriott nonetheless claimed he intended to relocate the Utility Lines to facilitate his mining plans. And he claimed damages for the lost value of potential mining that depended on their relocation.

         ¶11 Rocky Mountain opposed Marriott's proposed damages by filing two motions to exclude evidence (the Motions to Exclude). In the first motion, Rocky Mountain asked the court to exclude evidence of losses that depended on Marriott's ability to relocate the Utility Lines. That motion asserted that Marriott's "position that the Utility Lines . . . could be relocated is not a 'reasonable certainty.' It is fantasy." Rocky Mountain noted that Marriott has "no unilateral right to relocate the Utility Lines and never obtained consent from [Rocky Mountain] or Questar to relocate those lines." Further, Marriott had "never asked [Rocky Mountain] or Questar to move the Utility Lines or the Easements" and "it is impossible to know how that request would have been received." Before approving such a request, Rocky Mountain and Questar "would need to consider many factors, including . . . the proposed new locations and replacement routes of the easements, whether other third parties would have to approve the relocations and whether such approvals had been obtained, . . . the cost of relocating the lines and the future maintenance costs," etc. The first motion also noted that Rocky Mountain and Questar had complete discretion to grant or deny relocation requests. In sum, Rocky Mountain argued that the "hypothetical relocation of the [Utility Lines] . . . cannot be a factor in determining the amount of reasonable compensation to which [Marriott is] entitled."

         ¶12 In the second motion, Rocky Mountain asked the court to exclude evidence of losses that depended on Marriott's ability to obtain authorization to mine areas where mining was not permitted at the time of the condemnation. To support that request, Rocky Mountain noted "it was impossible to know" whether DOGM would approve the Proposed Permit. Further, even if the Proposed Permit were approved, Marriott sought compensation for lost mining in areas the Proposed Permit would not cover. Rocky Mountain stated, "[Marriott's] claim that [he] would have received DOGM's approval to revise a non-existent mine permit is too speculative." Thus, it asked the district court to exclude evidence of damages from potential lost mining in areas that would be authorized only if the Proposed Permit was approved. In the alternative, it asked the court to exclude evidence of damages from lost mining in areas that were not covered by the Proposed Permit.

         ¶13 When Rocky Mountain filed the Motions to Exclude, the parties had not concluded fact discovery, and expert discovery had not begun. Fact discovery was scheduled to end the following month, initial expert disclosures were due approximately four months later, expert rebuttal reports were due approximately ...


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