Dos Picos owned a large tract of land west of Tucson which was surrounded on three sides by the Tucson Mountain Park, a mountain preserve owned by Pima County. During the 1990s, Pima County and Dos Picos negotiated the possible sale of the land but ultimately Dos Picos did not want to sell. Later, Dos Picos sought a “special use permit” from Pima County to build a road across a protected ridge which divided Dos Picos’s property; the road would have given access to the southern portion of the land. Pima County denied the request. Dos Picos later asked Pima County to build a roadway across county land. The county denied that request also.
Dos Picos subsequently sued the county for inverse condemnation, arguing that the county’s denials and other action resulted in a taking of private property. Ultimately, Dos Picos was awarded approximately $1.5 million plus interest and attorney’s fees under A.R.S. § 11-972(B). Pima County appealed the award of fees and the calculation of interest.
In a unanimous opinion, the Court of Appeals vacated the order granting fees and interest. The Court held that the award of fees was inappropriate because A.R.S. § 11-972(B) did not apply. That section allows an award of attorney’s fees when there is a “physical taking of property.” Because it applied to “physical takings,” the statute could not also apply to regulatory takings. A physical taking is one involving “direct governmental appropriation or physical invasion of private property.” A regulatory taking does not involve physical invasion and instead occurs when government regulations deprive an owner the economic benefit of the property.
In the Court’s view, the taking here was plainly not physical and thus fees were improperly awarded under A.R.S. § 11-972(B). Dos Picos argued that the County’s refusal to give a permit to build a road or to build a road accomplished a physical taking because those denials cut off all access to a portion of the land, effectively incorporating the cut-off area into Tucson Mountain Park. The Court rejected this argument, reasoning that Dos Picos was not prevented from refusing public access to its land. The Court also rejected the argument that a particularly egregious regulatory taking is equivalent to a physical taking. A regulatory taking, the Court explained, is not defined differently because it is less intrusive; it is different because it is a “distinct method” by which a government deprives an owner of property rights. That is, regulatory and physical takings are different in kind, not degree. Because the taking in question was regulatory, A.R.S. § 11-972(B) did not apply.
As to the calculation of interest, the Court held that the lower court used an improper calculation and remanded for a new calculation. Under A.R.S. § 44-1201(A), interest on a civil judgment is ten percent from the date damages are liquidated. Under A.R.S. § 11-269.04(1), the rate for “direct” condemnation judgments is the prime rate from the date of the taking. Pima County argued that the lower court improperly applied a mix of the two, awarding ten percent from the date of the taking – the higher interest rate and the earlier accrual date.
Pima County argued that the legislature intended Section 11-269.04’s lower rate to apply to both “direct” and “inverse” condemnation judgments. The Court found that neither statute clearly applied. Forced to choose between the two statutes, the Court elected to apply A.R.S. § 11-269.04, reasoning that the Section 11-269.04’s rate best served legislative intent to treat condemnation judgments differently.
Judge Espinosa authored the opinion; Judges Howard and Kelly concurred.
Posted By: Joseph N. Roth