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Ariz. Elec. Power Coop., Inc. v. DJL 2007 LLC - 5/9/2019

Arizona Court of Appeals Division One holds that a private corporation with statutory eminent domain authority only effectuates a taking after the jury determines damages and the corporation pays full compensation based on a valuation date of when payment is made.

A federal agency granted a right-of-way over its land to a power company for electric transmission lines in 1981; the grant expired in 2011.  During the life of the right-of-way, the agency transferred title to several private landowners, and the right-of-way was transferred to successor power companies.  When the right-of-way expired, the successor power companies continued to operate the transmission lines, and in January 2013, the landowners alleged the power companies were trespassing.  One of the successor power companies was a non-profit with statutory power to exercise eminent domain under A.R.S. § 10-2127(A)(11), and filed eminent domain actions to condemn the right-of-way for the transmission lines; the other successor intervened.  In the course of litigation, the parties disputed the date of valuation of the land for the purpose of calculating compensation.  The power companies argued the land should be valued as of May 2011, when they remained in possession following the expiration of the grant, and the landowners argued the land should be valued as of final judgment.  The superior court disagreed with both and ruled that the valuation date would be the date of the summons in the condemnation suit.

The Court of Appeals reversed that part of the lower court’s judgment.  The Arizona Constitution states that “no right of way shall be appropriated to the use of any corporation other than municipal, until full compensation therefore be first made in money, . . . which shall be ascertained by a jury, unless a jury be waived.”  Ariz. Const. art. 2 § 17[2].  While valuation in condemnation actions is generally presumed to be as of the date of the summons, A.R.S. § 12-1123(A), a private corporation with power of eminent domain regardless of whether it already possesses the right-of-way or not cannot effectuate a taking until after trial and payment under the Arizona Constitution, and therefore, the valuation date must be set at that time.  

Presiding Judge Cattani delivered the unanimous opinion of the court.  Judges Thompson and McMurdie joined.

Posted by: Emma J. Cone-Roddy

Posted On: 5/15/2019