Summary
In Collier v. City of Oak Grove, WD 65355 (Mo.App.W.D. Oct. 31, 2006), we held that the trial court had erred as a matter of law by adding prejudgment interest to a jury's verdict in an inverse condemnation action.
Summary of this case from RANDOLPH v. MO HIGHWAYS AND TRANS. COMM.Opinion
No. WD 65355
October 31, 2006
Appeal from the Circuit Court of Jackson County, Hon. Michael W. Manners.
Counsel for Appellant: Steve Majors.
Counsel for Respondent: William L. Carr.
Spinden, J. concurs in separate concurring opinion.
Newton, J. concurs with majority opinion.
Opinion:
This case presents two issues: (1) whether a municipality is subject to an action in inverse condemnation for its failure to correct a city sewage system that causes continued and substantial backup into its citizens' homes; and (2) if the city is liable, whether it be subject to having an award rendered against it for prejudgment interest. A Jackson County jury awarded a homeowner property damages ($200,000) for her home, and the court ordered the city to pay prejudgment interest ($139,528.76).
Facts
The respondent, Donna Collier ("Collier"), bought a newly built house in Oak Grove, a suburb of Kansas City, in September 1972. Sometime prior to 1992, Collier finished the basement and furnished the space with carpet, a couch, a television, and a fireplace to use as a family room. In 1992, Collier was single, retired, and living in her home alone, her children having both moved out of the home.
In March 1992, Collier's basement flooded after a heavy rainstorm. A black, slimy, watery mixture backed up into her basement through the drain in the floor. Collier testified that the mixture was ankle deep, smelled of feces, and made her physically ill. Collier rented a carpet cleaner and cleaned the walls and furnishings with Clorox, Lysol, and vinegar water. She later made a claim against the city, and Oak Grove (hereinafter "the City") compensated her for the damage.
In the summer of 1993, after a heavy rain, sewage again backed up into Collier's basement. She suffered recurrent backups in June 1995, June 1999, June 2001, and May 2002. Collier characterized each backup as becoming worse than the preceding event and that the smell intensified with each flood. After each backup she contacted the City by either phone or letter. The City did not respond to the contacts until June 2001 when two public works employees came out to the home. The workers said they would get back to her. The City later disclaimed any responsibility for the backups.
Collier characterized the backup of May 2002 as much worse than the previous events. Sewage flowed into Collier's basement and covered the entire floor. After that backup, Collier was forced to remove the carpet. She discovered feces and waste under the pad. She removed her shoes when she was in the basement, her feet began to burn and she couldn't breathe. The fire department and an ambulance were called.
After the magnitude of the 2002 backup, Collier contacted her city councilman. Two city employees again visited her home and viewed the damage. She was again told that the City would get back to her. In September 2002, she received a letter in which the City claimed that the damage arose when the volume of surface water from a rainstorm overwhelmed the sewer system. The City again disclaimed responsibility.
The pattern of recurrent backups after heavy rains continued over the next two years. In fact, the frequency of the backups increased. Collier's basement flooded in April 2003, August 2003, and on two occasions in March 2004. The backups continued in June 2004, July 2004, and August 2004. Collier continued to contact the City after each backup, but she did not receive any relief from the pattern of flooding. In September 2004, Collier received a letter saying that the City had "videotaped" the sewers near her home and that the "lines were clear."
During this time, Collier began to experience headaches, nausea, bronchitis, and trouble breathing from continuous congestion. Her symptoms began as early as 1999 but became markedly worse in 2001. Her doctor prescribed rounds of antibiotics. In 2003, Collier met with Dr. Kanarak, an allergist, who informed her home was infested with mold and her health complaints likely arose from her exposure to the environmental mold. He recommended that she should move out of her home. Collier was reluctant to leave her home of thirty years; but after she was hospitalized in August 2004, she agreed to leave. The allergist recommended that she leave everything in her home to avoid contaminating another environment and that she would likely need to discard everything in her home. He told her to wear a mask and gloves if she ever went into the house.
At the time of trial, Collier was alternately staying with a neighbor or her children. Although the City began work on the sewer outside her home in September 2004, her home remained empty with the utilities turned off as of February 2005.
II. Procedural posture
Collier brought claims for negligence, nuisance, and inverse condemnation against the City of Oak Grove seeking damages arising from the repeated backups of the City's sewer into her home. Oak Grove moved to dismiss the claims for negligence and nuisance. The court denied the motion and the trial proceeded.
At the close of plaintiff's evidence, Oak Grove moved for a directed verdict. The motion was denied and Oak Grove presented its evidence. At the close of all evidence, Collier's claims were submitted to the jury in two packages of instructions. The first claim was for property damage arising in an inverse condemnation claim. The second claim was for personal injury arising for the City's negligent operation of its sewers.
The jury returned a $60,000 award for personal injury damages. The City does not appeal the personal injury damages award. The jury also awarded Collier $200,000 for property damage on her inverse condemnation claim. After the jury returned its verdict, but before judgment was entered, Collier filed a motion for prejudgment interest. Oak Grove objected to the motion but did not file suggestions in opposition. The court granted Collier's motion for interest and awarded her another $139,528.76, finding that the date of taking was June 30, 1993. The trial court denied Oak Grove's motion for a new trial or, in the alternate, a grant of remittitur.
Oak Grove now appeals the judgment entered by the court. Oak Grove assigns as error (1) the trial court's denial of its motion for new trial claiming that Collier did not make a submissible case for inverse condemnation; (2) the measure of damages was excessive and this court should grant Oak Grove's request for remittitur; and (3) the trial court erred as a matter of law in awarding Collier interest on her inverse condemnation claim. This court will first address Oak Grove's claim of error as to whether the trial court erred in submitting Collier's claims to the jury. The court will then address the award of interest and, finally, the request for remittitur is discussed.
III. Discussion
A. Inverse Condemnation — Preservation of Error
Oak Grove argues in its first point of error that the trial court erred in submitting Collier's case to the jury as she failed to prove a submissible case of inverse condemnation. In determining whether the plaintiff has made a submissible case, this court will review the evidence in the light most favorable to the plaintiff and accord the plaintiff all favorable inferences that can be reasonably drawn from the evidence. Polovich v. Sayers, 412 S.W.2d 436, 437 (Mo. 1967). Moreover, this court will disregard defendants' evidence that does not support the plaintiff's case. Feely v. City of St. Louis, 898 S.W.2d 708, 709 (Mo.App. 1995).
Error raised on appeal must be properly preserved at trial. Drury v. Mo. Pac. R.R. Co., 905 S.W.2d 138, 148 (Mo.App. 1995). Thus, preliminary to discussing the merits of Oak Grove's argument, this court must address whether Oak Grove properly preserved the submissibility claim for appellate review.
The proper procedure for preserving submissibility error in a jury-tried case is clear. A motion for a directed verdict at the close of plaintiff's case is required. Goede v. Aerojet Gen. Corp., 143 S.W.3d 14, 18 (Mo.App. 2004); Rule 72.01. The defendant must renew the motion for directed verdict at the close of all evidence. Goede, 143 S.W.3d at 18. If the jury returns an adverse verdict, the defendant's motion for judgment notwithstanding the verdict assigns as error the trial court's failure to grant defendant's motion for directed verdict at the close of all evidence. Millar v. Berg, 316 S.W.2d 499, 502 (Mo. 1958).
A motion for directed verdict at the close of plaintiff's evidence without a subsequent motion for directed verdict at the close of all evidence is insufficient to preserve the issue of submissibility. Defendant waives any claim of error in the denial of the directed verdict at the close of plaintiff's case if, after the denial, the defense proceeds to present evidence. Browning v. Salem Mem'l Dist. Hosp., 808 S.W.2d 943, 948 (Mo.App. 1991). When the court denies the motion for directed verdict at the close of all evidence, "the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion." Rule 72.01(6). If the defendant does not make the motion for directed verdict, no legal questions remain for the court to determine when the defendant makes a motion for judgment notwithstanding the verdict. Moreover, the motion for judgment notwithstanding the verdict asks the court to enter judgment in accordance with the motion for directed verdict made at the close of all evidence. Goede, 143 S.W.3d at 18. If the defendant fails to make such a motion, the court cannot enter judgment in accord with a nonexistent motion for directed verdict.
In failing to move for directed verdict at the close of all the evidence, a defendant has "in effect, requested the court to submit the case to the jury, and he may not thereafter complain of that which he voluntarily requested the court to do." Millar, 316 S.W.2d at 502. "The neglect to move for a directed verdict at the close of all evidence waives any contention that the plaintiff failed to prove a submissible case or that the court erred in the denial of the motion for judgment notwithstanding the verdict." Ball v. Am. Greetings Corp, 752 S.W.2d 814, 819 (Mo.App. 1988) ( citing Grindstaff v. Tygett, 655 S.W.2d 70, 75 (Mo.App. 1983)). See also Polovich v. Sayers, 412 S.W.2d 436, 438 (Mo. 1967) (contention that trial court erred in denying the motion for directed verdict at the close of plaintiff's evidence was waived when defendant presented evidence); Pope v. Pope, 179 S.W.3d 442, 451 (Mo.App. 2005). ("Failure to move for a directed verdict at the close of all the evidence waives any contention that plaintiff failed to prove a submissible case"); Goede, 143 S.W.3d at 18 ("a sufficient motion for directed verdict at the close of all the evidence is required to preserve the motion for judgment notwithstanding the verdict for appeal"); Browning, 808 S.W.2d at 949 ("Failure of a defendant to move for directed verdict at the close of all the evidence waives any contention the plaintiff failed to prove a submissible case.")
In this case, Oak Grove moved for a directed verdict at the close of plaintiff's evidence. The trial court denied the motion and Oak Grove presented evidence. In doing so, Oak Grove waived any claim of error in denying the motion for directed verdict at the close of plaintiff's case. Oak Grove did not move for a directed verdict at the close of all evidence even after being asked by the court if the parties wished to present any motions at that time. The City did not move for judgment notwithstanding the verdict after the jury returned with an adverse verdict. Rather, Oak Grove moved for a new trial and predicated their argument on plaintiff's failure to make a submissible case, an argument the City essentially waived when it did not move for a directed verdict at the close of all evidence. As discussed above, the failure to move for a directed verdict at the close of all evidence invites the court to submit the case to the jury. Oak Grove cannot now claim on appeal that the trial court erred in accepting that invitation.
In failing to move for a directed verdict at the close of all evidence, Oak Grove did not preserve the issue of submissibility for appellate review. Oak Grove's contention that Missouri courts have "taken a more conservative and reasonable approach when reviewing motions and pleadings since the Polovich case 29 years ago" is misplaced. While courts may look beyond errors in caption to the substance of a motion, the complete failure to make any motion to preserve error is something more than form over substance. The trial court did not err in denying Oak Grove's motion for a new trial based on Collier's failure to make a submissible case for inverse condemnation. The first point of error is denied.
B. Merits of an Action for Inverse Condemnation
1. Background — Action for Nuisance
Even if Oak Grove had preserved the submissibility issue, the City's arguments are without merit. As discussed in this section, Collier made a submissible claim for inverse condemnation against Oak Grove for its failure to maintain and repair its sewer system such failure leading to the repeated backups in her basement and subsequent damage to her property.
Traditionally, a landowner has an action in nuisance to recover for damage to real property from the unreasonable operation of a sewer system or sewage treatment facility. See Scantlin v. City of Pevely, 741 S.W.2d 48 (Mo.App. 1987); Fletcher v. City of Independence, 708 S.W.2d 158 (Mo.App. 1986); Anello v. Kansas City, 286 S.W.2d 49 (Mo.App. 1955). The facts in the case at bar are strikingly similar to those in a nuisance case, Fletcher v. City of Independence. 708 S.W.2d 158 (Mo.App. 1986).
In Fletcher, homeowners brought claims of negligence and nuisance against the City of Independence after eleven years of recurrent sewer backups into the basement of their home. In 1972, one year after the homeowners bought the home, raw sewage backed up into the basement leaving a residue of slime and feces. The sewer backed up regularly and intermittently between 1972 and 1983, especially during heavy rain events.
References herein are to Fletcher v. City of Independence, 708 S.W.2d 158, 158-164 (Mo.App. 1986).
The homeowners reported the sewer backups to city officials and appeared before the Independence City Council to discuss the problem two years after the first backup. In 1977, five years after the first backup, the city sent out two municipal employees to investigate. Ultimately, the city recommended that the homeowners bring an action in small claims court. The homeowners filed in small claims court in 1979 but after backups in 1980, 1981, 1982, and 1983, they voluntarily dismissed that action and brought a nuisance action for damage to their person and property.
The homeowners presented evidence that that the backups were caused by storm water infiltration into the sewer system. Water can penetrate a sewer system through two processes: infiltration and inflow. Infiltration occurs when storm or ground water enters the sewer system through joints that separate due to long use or damage to the pipes from tree roots. Inflow occurs when water enters the system through unplanned sources, such as sump pumps or down spouts that hook into the sewer. The homeowners provided evidence that the backups were caused by storm water infiltration into the sewer system, straining the lines' capacity, and leading to water and sewage backing up their service line and into the home.
The homeowners established that the city was familiar with the inflow and infiltration problem and had developed a plan to correct the sewer dysfunction. City employees testified that Independence had taken steps to correct problems that led to the backups but these steps had been ineffective. The homeowners also provided testimony that the city could have solved the problem as early as 1972 through the installation of a larger outflow line.
Construction to correct the problem had not begun as of the time of trial.
The jury returned an award of damages for the homeowners and the city appealed. This court held that a "municipal corporation which lays out a system of sewers and drains exercises a proprietary function and owes a duty of reasonable care in its construction and maintenance not to injure private property." Id. at 167. The city is responsible for correcting problems with the system within a reasonable time after it receives notice of the problem. The opinion noted that if "the sewer was allowed to become and remain defective, and this condition actively caused the damage, then the city was liable, even though there may have been extraordinary rains which joined with [the municipal conduct] in producing the damage." Id. at 169 ( quoting Geiger v. City of St. Joseph, 198 S.W. 78, 79 (Mo.App. 1917)).
Like the plaintiffs in Fletcher, Collier experienced recurrent backups almost yearly between 1992 and 2004. A mixture of "black, slimy, watery stuff," sometimes containing raw sewage, spewed into her finished basement. The sickening smell caused Collier to become physically ill. Collier walked in the basement after a backup in 2002; her feet began to burn, she had difficulty breathing and an ambulance had to be called.
After each backup, Collier contacted city employees by phone or letter. Although the City paid for damage after the first backup in 1992, the City's uniform response to all subsequent backups was that it "wasn't their problem." Even after two employees visited the home in 2002, the City claimed her backups were caused by the volume of surface water and that Oak Grove was not responsible.
Collier presented evidence at trial that, despite the Oak Grove's denial of responsibility, City officials were well aware of the problem with its sewer system. Charles Nebgen, a former supervisor of public works for Oak Grove testified that he noticed problems with the sewer system from the first day he arrived on the job in 1996, specifically problems with the design of the sewer system near Collier's home. Nebgen also testified that the sewer system experienced serious problems with inflow and infiltration and was not designed to accommodate wet weather events. He stated that the City spent substantial time and money on the issue but did not act to correct the problems.
Nebgen specifically mentioned a portion of the sewer in the southeast part of the city where two twelve-inch lines spilled into a single twelve-inch line, described as "trying to put two feet into one shoe," that could cause backups in the sewer lines.
Collier's expert witness, Gerald Menafee, corroborated Nebgen's opinion that the sewer system had problems with infiltration and inflow. Menafee testified that sewer systems must be designed to handle inflow and infiltration and that cities have a duty to maintain the sewers so as to avoid cracks and wear that allow infiltration. Menaffee also testified that the Oak Grove sewer was not designed to meet the requirements of wet weather events and that sewage was coming into the Collier home because the City had not properly maintained its sewers.
Evidence of deterioration of the sewers near the Collier home was provided by Kevin Coggin, an Oak Grove public works employee responsible for video taping and conducting regular maintenance on the City's sewer lines. Coggin testified that he videotaped the line in front of the Collier home in September of 2004. At that time he discovered a crack and deformation sixty feet north of her home.
James Dent, former mayor of Oak Grove, testified that the sewer system had already reached its design capacity primarily due to development. The City attempted three times to pass bond issues to support construction of a sewage treatment facility and repair of the sewer system. Dent also testified that based on an engineering study of the sewers commissioned by the City, "the overflows [were] entirely related to inflow and infiltration." The City had produced a brochure that stated "many areas of Oak Grove are potentially subject to sewer backup and overflow." This brochure was also entered into evidence.
Finally, Collier presented evidence that not only were public works officials aware of the backup phenomena and problems associated with the sewers, the issue had been discussed at an Oak Grove Board of Alderman meeting in August 2002. At that meeting, then City Administrator Ken Hammond stated, "Basically the idea is to fix the sewer line so that the water does not flow into the lines through any breaks. And we found a couple of breaks up near Linda Lucas' house, and we found one down near Donna Collier we need to fix." Evidence exists in the record that not only was the City aware of the general problems with the sewer system, officials were also aware of the specific problem that caused the backups into the Collier home.
The record indicates that Collier presented substantial evidence at trial that: (1) sewage and water was entering her home through the drain in her basement floor; (2) the sewage and water were coming from the Oak Grove sewer system; (3) Oak Grove failed to maintain the sewer line in front of her home resulting in deterioration leading to infiltration of storm water causing the backup into her home, and design defects in the sewer led to overflow from lack of capacity; (4) Oak Grove officials had actual or constructive knowledge of the problems in the sewer system that led to the sewage backups but failed to correct the problems or repair the broken lines; (5) Oak Grove's design, construction, ownership, and failure to maintain and repair the sewer lines caused damage to Collier's property. Under the facts and reasoning of Fletcher, Collier would clearly have anuisance claim for damage to her home against Oak Grove. However, a recent line of cases hold that a landowner's sole action for damages to private property against an entity with the power of eminent domain is in inverse condemnation.
2. Action for Inverse Condemnation
At the heart of the City's argument is its proposition that for a municipality to be susceptible to an action for inverse condemnation, the landowner must show an affirmative act by the municipality from which the damage arises. To put an even finer point on the appellant's theory is to posit that a submissible claim for inverse condemnation cannot be made merely by proving the public entity failed to act or fix its own property or properly provide a city service.
In Heins v. Missouri Highway Transportation Commission, landowners brought negligence, nuisance, and inverse condemnation claims against the state highway commission that had constructed an overpass allegedly causing water to run off and flood their property. 859 S.W.2d 681, 684 (Mo. banc 1993). The trial court entered summary judgment for the contractor on the nuisance and negligence claims. Id. In affirming the trials court's summary judgment, the Supreme Court of Missouri held that "when private property is damaged by a nuisance operated by an entity having the power of eminent domain, the proper remedy is an action ininverse condemnation." Id. at 693 (emphasis added).
This court, following the reasoning in Heins, rejected any contention that a municipality can be sued for nuisance, even a temporary nuisance, in George Ward Builders, Inc. v. City of Lee's Summit. 157 S.W.3d 644 (Mo.App. 2004). The plaintiff in Ward argued that the effect of Heins was specifically limited to permanent nuisances. However, this court held that Heins made no distinction between permanent and temporary nuisances. Id. at 650. "Under Heins and Byrom [v. Little Blue Valley Sewer District, 16 S.W.3d 573 (Mo. banc 2000)], a nuisance claim for injury to property, whether the nuisance is temporary or permanent, may not be substituted for a claim of inverse condemnation, as long as the complained of entity is one having the power of eminent domain." Id. at 650-51.
Because Oak Grove has the power of eminent domain, Collier's claims of property damage are limited to inverse condemnation. The issue then becomes whether Collier made a submissible case for inverse condemnation against Oak Grove.
Oak Grove points to two factual situations that can give rise to a claim of inverse condemnation:
One situation is where the authority, having condemnation power, does not condemn a parcel of property but, nevertheless, through mistake or design, actually appropriates the property to public use, i.e., the highway commission constructs a road over land, part of which was not taken in the condemnation case. Another situation is where the condemning authority does not actually appropriate the property itself but, as a direct consequence of the improvement, the land which has not been condemned nor taken is damaged.
State ex rel. State Highway Comm'n v. Swink, 537 S.W.2d 556, 558 (Mo. banc 1976).
The Supreme Court of Missouri held that an inverse condemnation claimant need not show a physical taking, but rather there must be an invasion or appropriation of a valuable property right legally held by the landowner. Hamer v. State Highway Comm'n., 304 S.W.2d 869, 871 (Mo. 1957). See also Harris v. Mo. Dep't of Conservation, 755 S.W.2d 726, 729 (Mo.App. 1988); Roth v. State Highway Comm'n of Mo., 688 S.W.2d 775, 777 (Mo.App. 1984). "[I]t must appear that there has been some direct disturbance of a right which the plaintiff enjoys in connection with his property and which gives to it an additional value, and that by reason of the disturbance of that right he has sustained special damage with reference to his property. . . ." Hamer, 304 S.W.2d at 871 ( quoting Eckhoff v. Forest Preserve Dist. of Cook County, 36 N.E.2d 245, 247 (Ill. 1941)).
Oak Grove proposes a very narrow reading of the factual situations described in Swink and Hamer. The City concludes from these cases that a landowner must show an affirmative act by the municipality before a claim of inverse condemnation is established. Because a landowner must show an affirmative act that caused the damage, an inverse condemnation claim cannot be predicated on a government entity's failure to act. Oak Grove's argument is not well taken.
"Providing for sewerage is a governmental function and an exercise of the police power of the state." Joseph v. Marriott Int'l., Inc., 967 S.W.2d 624, 627 (Mo.App. 1998). Where a municipality exercises that police power to construct, manage and maintain that sewer, that exercise of its governmental function, of necessity, constitutes an affirmative act by that government entity.
A municipality cannot be held liable for a failure to act if the municipality does not have a duty to act. However, once a municipality acts to design, construct, operate, and maintain a sewer system, the city has a duty to maintain and repair any inadequacies in that system that causes damage to its citizens' real property. Fletcher v. City of Independence, 708 S.W.2d 158, 167. A city that fails to do so is held liable. Id.
If this court were to accept Oak Grove's argument, a municipality could not be held liable for its inaction; i.e., allowing its municipal sewer system to deteriorate until it routinely damages its citizens' property. The city could ignore the sewer systems' defects and deficiencies and hide behind the "affirmative act" argument proposed by Oak Grove.
From another perspective, Oak Grove's deliberate choice not to address the cracks and deformations in its sewer system that led to the backups into Colliers home could constitute the "affirmative act" they claim a landowner must show to make a claim for inverse condemnation. Not only were Oak Grove officials aware of the problem, they discussed the issue at a public city meeting. Oak Grove knew about the deficiencies in their sewer system and the damage the sewer system was causing to the Collier home. Rather than act to resolve the issue, City officials made an affirmative choice to stonewall, deny responsibility, and allow an intolerable condition to persist. Such a choice arguably constitutes the affirmative act required under Oak Grove's argument.
Moreover, as pointed out by Collier, acceptance of Oak Grove's argument would effectively foreclose any recovery for damage caused to real property from a municipal sewer system. Under the holding in Heins and George Ward Builders, a landowner cannot bring a nuisance claim against an entity with the power of eminent domain. Heins, 859 S.W.2d at 693; George Ward Builders, 157 S.W.3d at 650. A property owner's sole remedy for damage arising from the operation of a city's sewer system lies in inverse condemnation. George Ward Builders, 157 S.W.3d at 650. Most, if not all, claims for damage from sewer backups arise from a failure to maintain or reasonably operate an existing sewer or sewage treatment system. In requiring a showing of an affirmative act, Oak Grove would limit, if not eliminate, a property owner's remedy for damage to private property caused by an existing, aging, or deteriorating municipal sewer.
Although Oak Grove failed to preserve its assertion that inverse condemnation was not a submissible claim, the argument would still fail. In Missouri, a claim for damage caused by a municipal sewer is a constitutional takings claim of inverse condemnation. Collier presented a submissible case of inverse condemnation in demonstrating that Oak Grove's sewage invaded her property, disturbed her right to enjoy her basement family room, and created a mold infestation that drove her from her home. In so invading her property with sewage, Oak Grove became liable for damage to the Collier home. Oak Grove's first point of error is denied.
C. Prejudgment Interest
Oak Grove challenges the trial court's award of $139,528.76 in prejudgment interest. Oak Grove contends that the trial court erred as a matter of law in granting Collier's motion for prejudgment interest under Chapter 523.
The taking of private property for public use without just compensation is prohibited by the Fifth Amendment to the United States Constitution and made applicable to the states through the Fourteenth Amendment. Likewise, the Missouri Constitution provides that "private property shall not taken or damaged for public use without just compensation." Mo. Const. art. I, Section 26.
Just compensation requires the "`full and perfect equivalent in money of the property taken." Keeven v. St. Charles County Util. Co., 542 S.W.2d 349, 353 (Mo.App. 1976) ( quoting City of St. Louis v. Union Quarry Const'r. Co., S.W.2d 300, 305 (Mo. 1956)). When the state takes private property for public use, the government must put the landowner in the same position he or she would have been in had the property not been taken. Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 304 (1923). Moreover, the condemning authority is charged with paying the full value of such use paid contemporaneously with the taking. Phelps v. United State, 274 U.S. 341, 344 (1927). Where just compensation is not paid contemporaneously with the taking, Missouri courts have held that the landowner is entitled to interest to compensate for the delay in payment.
Where the payment of compensation does not accompany the taking of property for public use but is postponed to a later date, the owner of the property ordinarily is entitled to the award of an additional sum which will compensate for the delay, or which will, in other words, produce the full equivalent of the value of the property paid contemporaneously with the taking.
St. Louis Hous. Auth. v. Magfas, 324 S.W.2d 697, 699 (Mo. 1959) ( quoting 29 C.J.S. Eminent Domain Section 176(a), p. 1053). See also State ex rel. State Hwy. Comm'n v. Galloway, 292 S.W.2d 904, 910 (Mo.App. 1956) (stating that landowner was entitled to interest as part of the "just compensation" required by the Constitution).
Although the compensation for delay in payment has generally been termed "interest," this is not interest in the commonly accepted sense. Ark.-Mo. Power Co. v. Hamlin, 288 S.W.2d 14, 17 (Mo.App. 1956). Rather, the payment for delay is "but a substitute or means of measuring the value of the deprivation of the use of the property." Id. As an element of just compensation, the payment of interest compensates the landowner for the time value of money and acts as a rate of return on the money the landowner should have received had the payment for the property not been delayed. Sintra, Inc. v. City of Seattle, 935 P.2d 555, 563 (Wash.Ct.App. 1997). The landowner has had neither his land nor compensation as of the date of taking; therefore, to compensate for loss of use, an award of interest is required to make the landowner whole. Stewart v. City of Key West, 429 So.2d 784, 785 (Fla.Dist.Ct.App. 1983).
Although Missouri courts have held that "interest must be based upon either a statute or a contract, express or implied," these same courts have recognized that an award of interest may be allowed in equity. Boyle v. Crimm, 233 S.W.2d 149, 157 (Mo. 1952). Where the state appropriates private property for public use, the award of interest stems from the just compensation requirement of the United States and Missouri Constitution; the right to this interest is not a creation of the legislature. Interest is "a part and element of the just compensation required by constitutional provisions, which are self-enforcing, entirely independent of statute." Hamlin, 288 S.W.2d at 17. See also Magfas, 324 S.W.2d at 699 ("The right to such interest or damages is not dependent on statutory provision or special agreement.") Derived from the guarantee to just compensation, interest on a governmental taking does not need a statute to become effective.
"The theory of the law is that, when land is taken by eminent domain or when it is injured in damages, payment for the land thus affected should be coincident with the taking or injury, and if, for any reason payment is postponed, the right to interest from the time that payment ought to have been made until it is actually made follows as a matter of strict constitutional right."
Galloway, 292 S.W.2d at 910 ( quoting Nichols on Eminent Domain, Vol. 3, p. 104, Sec. 8.63).
An authority with the power of eminent domain may act directly or indirectly to appropriate private property. If the authority proceeds directly, a direct condemnation action is instituted under Chapter 523 and the landowner is afforded both the procedural and compensatory requirements of such an action. If, however, an authority with the power of eminent domain acts indirectly to appropriate private property without affording the landowner any of the procedural safeguards of Chapter 523, the landowner can seek compensation for the taking in an action for inverse condemnation. "The action for inverse condemnation was developed to provide the landowner a remedy when a condemnor physically accomplished a taking or damaging of private property carried out with none of the procedural or compensatory requirements of a regular eminent domain action." State ex rel. Chiavola v. Village of Oakwood, 931 S.W.2d 819, 824 (Mo.App. 1996). In direct condemnation, the condemning authority is the moving party; in inverse, or indirect, condemnation, the landowner is the moving party. Vick v. S.C. Dep't of Transp., 556 S.E.2d 693, 698 (S.C.Ct.App. 2001).
Missouri courts recognize that an action for compensation in inverse condemnation stems from the same constitutional guarantees of just compensation as direct condemnation. "The prohibition on taking private property for public use without compensation, and consequently an inverse condemnation action, is not based on any statute . . . but emanates from the Missouri and United States Constitutions." Shade v. Mo. Highway Transp. Comm'n, 69 S.W.3d 503, 512 (Mo.App. 2001). In both direct and inverse condemnation, the landowner is deprived of the beneficial use of his or her property, whether by an order of condemnation or by appropriation. Thus, in both cases, it is fair and just that, when the payment does not coincide with the taking, interest accrues from the time payment should have been made until the payment is actually made. Sullivan County v. Pope, 448 S.W.2d 666, 667 (Tenn. 1969). Thus, just compensation requires that a landowner recover interest on an inverse condemnation claim.
This conclusion is even more evident when the issue is approached practically. The law is well settled that an award of interest is proper in a direct condemnation action. Under Chapter 523, when a condemning authority acts directly to appropriate private property, the court will appoint three commissioners to value the property the authority seeks to take. Section 523.040. The commissioners view the property and determine the damages the authority must pay the landowner for the property. Id. The authority then pays that amount into court. Section 523.055. Upon that payment, the condemning authority may take possession of the property. Id.
If the landowner, or the condemning authority, is not satisfied with the amount of the award, exceptions are filed with the court and a trial is held to determine the value of the property taken. Section 523.060. If the verdict is greater than the commissioners' award, the judgment will include an amount for interest on the difference between the verdict and the commissioners' award. Section 523.045. Thus, the landowner is due a measure of interest on the damages not paid when the condemning authority took possession of the property.
In an inverse condemnation action, an authority with the power of eminent domain appropriates or damages property without a formal exercise of the power of eminent domain and without compensating the landowner for the taking. L T Inv. Co. v. State ex rel. Mo. Highway Transp. Comm'n, 927 S.W.2d 509, 510 (Mo.App. 1996). The landowner must file an inverse condemnation action and obtain a judgment to receive compensation for the taking or damaging of his property. As the constitutional underpinnings support both the direct condemnation and inverse condemnation actions, the two actions share the same basis for just compensation. Sullivan County v. Pope, 448 S.W.2d 666, 667 (Tenn. 1969). Just as a landowner should be compensated for the delay in the full damage payment in a direct condemnation action, a landowner should be equally compensated for that delay in an inverse condemnation action. As this court noted in Stewart v. City of Marshfield, "`no good reason, founded upon principle, can be assigned why the same rule should not be applied in both classes of cases" (condemnation and appropriation). The injury is the same; the damage is the same; and the compensation should be the same.'" 431 S.W.2d 819, 822 (Mo.App. 1968) ( quoting McReynolds v. Kansas City, Clinton, Springfield Ry. Co., 19 S.W. 824, 824 (Mo. 1892)).
To make the landowner whole, just compensation demands that the landowner receive interest from the date of taking in an inverse condemnation action. Money damages compensates the owner for the actual value of the property taken, the interest compensates the owner for loss of use of the property from the date of taking to the receipt of the judgment. City of Gary v. Belovich, 623 N.E.2d 1084, 1086 (Ind.Ct.App. 1993).
As the Tennessee Supreme Court noted in Sullivan County v. Pope, 448 S.W.2d 666, 668 (Tenn. 1969): "Suppose in this case the wheels of justice had ground exceedingly slow, and the case had not come on for trial for four or five years — and this is a distinct possibility with the crowded dockets of our courts today — did the plaintiff have to wait for Judgment Day for interest begin to run?"
Moreover, an award of prejudgment interest on an inverse condemnation claim running from the date of the taking is the majority rule generally followed throughout the United States. See, e.g., State ex rel. Herman v. Miestas, 469 P.2d 855 (Ariz.Ct.App. 1970) ("[T]he allowance of interest has also been made in inverse eminent domain cases on the theory that it is a property element in determining just compensation."); Stewart v. City of Key West, 429 So.2d 784, 785 (Fla. Dist. Ct. App. 1983) ("The full compensation required by the constitution in a direct condemnation action is equally required in inverse condemnation proceedings. . . ."); Coeur d'Alene Garbage Serv. v. City of Coeur d'Alene, 759 P.2d 879, 884 (Idaho 1988) ("In an inverse condemnation case a party whose property has been taken should be entitled to interest on the value of the property from the date of the taking.); Herman v. City of Wichita, 612 P.2d 558, 592 (Kan. 1980) ("in an inverse condemnation case, just compensation requires an allowance of interest from the date of the taking by the governmental body until payment is made where there is a lapse of time from the time of the taking until the time of payment"); Clark County v. Alper, 685 P.2d 943, 950 (Nev. 1984) (when property is taken for public use, owners are entitled to an award of prejudgment interest); Woodland Manor, III Associates, L.P. v. Reisma, No. C.A. PC89-2447, 2003 WL 1224248 at *19 (R.I.Super.Ct. Feb. 24, 2003) ("As the purpose of the interest rate to be applied under the eminent domain statute is to ensure the constitutional guarantee of just compensation for delay in payment, it follows that the rate of interest to be applied in inverse condemnation actions, where the application of interest into the award serves the exact same purpose, should parallel the rate used in eminent domain proceedings,"); Olympic Pipe Line Co. v. Thoeny, 101 P.3d 430, 439 (Wash.Ct.App. 2004) ("the rationale for awarding interest in an inverse condemnation proceeding, where a taking occurs before payment is made, applies here").
Oak Grove's contention that an award of prejudgment interest for an inverse condemnation award is not supported in law is without merit. As discussed above, the same constitutional underpinnings supporting an award of prejudgment interest in direct condemnation actions support such an award in inverse condemnation actions.
In order to be fully compensated for the appropriation of her home by the City of Oak Grove, Collier is due a measure of interest for the delay in payment. However, Collier made the request for prejudgment interest after the jury returned its verdict, and she made that request under Chapter 523. Both the claim for prejudgment interest under Chapter 523 and the addition of interest after the jury returned the damage award were improper.
As discussed above, a claim for interest in an inverse condemnation action is predicated on the just compensation clauses of the United States and Missouri constitutions. Such a claim does not require a statutory basis. Hamlin, 288 S.W.2d at 17. Even though Section 523.045 was enacted to address prejudgment interest in eminent domain actions, Section 523.045 did not create any new substantial rights but rather created a procedure by which interest could be applied to direct condemnation actions. State ex rel. Mo. Pac. R.R Co. v. Moss, 531 S.W.2d 82, 90 (Mo.App. 1975) (Simeone, J., dissenting). This statutory procedure was created in response to the holding of the Court in State ex rel. State Highway Commission v. Green, 305 S.W.2d 688, 694 (Mo. 1957).
In Green, the State instituted an eminent domain action to condemn a right of way for a portion of Highway 66 in Rolla, Missouri. Id. at 689. The landowners filed exceptions to the commissioners' report that did not award damages. Id. The jury returned a verdict for the landowners in the amount of $15,000. Id. The sole question on appeal to the Supreme Court of Missouri was whether the trial court could compute and add a measure of interest to the verdict of the jury, such interest running from the date of the taking. Id. at 692.
The Court acknowledged that a number of Missouri cases indicated that a landowner was entitled to interest, but the Court regarded this view as dicta. Id. at 694. The Court stated that it was not determining whether interest could be included in the verdict by the jury, but rather whether the trial court could add interest to the verdict returned by the jury. Id. A trial de novo in a eminent domain case is governed by the procedure applicable to ordinary civil cases. Id. As such, the "jury shall `assess the amount of recovery.'" Id. ( citing Section 510.270). A trial court is powerless to amend a verdict beyond that required for clerical errors made manifest by the record and may never amend "matters of substance required to be passed on by the jury, which, in their nature, are essential to the determination of the case." Id. ( quoting Meffert v. Lawson, 287 S.W. 610, 612 (Mo. 1926)). The court held that, given these limitations, "the courts do not have the power to add interest to the amount of the verdict." Id. at 695.
The response to the holding in Green was two-pronged. The courts responded by acknowledging the constitutional propriety of an award of interest in eminent domain actions but, constrained by Green, recognized that the court could not add the interest to a jury verdict. Thus, as an element of just compensation and, by extension, damages, the courts required the issue of interest be put to the jury and that the jury must compute the interest and add it to its verdict. City of St. Louis v. Vasquez, 341 S.W.2d 839, 848 (Mo. 1961). "When a jury trial is requested, all issues of damages must be tried together and not piecemeal, some by the court and some by the jury. Damages in a condemnation case are found as a unit. And after the verdict of the jury fixing the damages has been returned the judge has no power to add a further allowance for some item of damages not submitted by the jury." Id. The legislature took note of the Supreme Court's plea in Green that "[i]f called to its attention it may be that the legislature will conclude that the best method by which [addition of interest] may [be accomplished] is to provide statutory authority for the addition of the property amount by the trial judge." Green, 305 S.W.2d at 695. Section 523.045 was enacted in 1959 to provide a procedure by which interest could be calculated by the court and added to the verdict of the jury. However, Section 523.045 is specific to a direct condemnation action and is not applicable to an inverse condemnation action despite the similar constitutional bases for the claims. Moss, 531 S.W.2d at 91.
Section 523.045 provides that:
If, within thirty days after the filing of any condemnation commissioners' report under the provisions of section 523.040, the condemnor shall have neither paid the amount of the commissioners' award to the persons named in the petition as owning or claiming any property or rights or to the clerk of the court for such named persons nor timely filed its written election to abandon the proposed appropriation of said property or rights, then interest on the amount of any subsequent verdict for said named persons, or if there be no such verdict, then on the amount of the award, at the rate of six percent per annum from the date of filing the report shall be added to said verdict or award and paid to said named person or to the clerk for them. If, within thirty days after the filing of any such commissioners' report the condemnor shall have paid the amount of any commissioners' award to the persons named in the petition as owning or claiming any property or rights or to the clerk of the court for them and the amount of such award shall be superseded by a subsequent verdict or amount larger than the award paid, then interest on the amount by which such verdict exceeds the award, at the rate of six percent per annum from the date of filing the report, shall be added to the amount of the verdict; but if the amount of the award shall be superseded by a subsequent verdict or amount smaller than the award paid, then judgment shall be entered against said persons named to repay to condemnor the amount by which the award paid exceeds the amount of the verdict, with six percent interest on such excess payment from the date of the payment of the award. If, within thirty days after the filing of any such commissioners' report, the condemnor shall have neither paid the amount of the award to said persons or to the clerk for them nor filed its written election to abandon the appropriation, but shall thereafter timely file such written election to abandon, then the court may, upon motion filed by said persons within ten days after the filing of said election, assess against the condemnor six percent interest on the amount of the award from the date of the filing of the commissioners' report to the date of the filing of such election, enter judgment thereon and enforce payment thereof by execution or other appropriate proceeding.
In this case, the trial court granted Collier's request for prejudgment interest under Chapter 523. Statutory and case law on who is supposed to determine and calculate interest in an action for inverse condemnation is sketchy, at best. Interest under Section 523.045 is procedurally specific to direct condemnation and does not apply to inverse condemnation claims. Id. The differences between direct condemnation and inverse condemnation preclude the "mechanical application of [section] 523.045 to inverse condemnation cases." Id. Moreover, even though Collier's claim for interest is properly an element of just compensation, under the holding in Green, the trial court was powerless to calculate and add the interest to the jury's verdict. The award of interest and its calculation is the province of the jury as an element of damages. Vasquez, 341 S.W.2d at 848.
In order to return a verdict including interest, the jury must first determine the date of taking, determine the value of the property taken, calculate the interest to be awarded based upon these determinations, and include the interest in their damages award.
Requiring the jury to compute and add the interest to their verdict is an awkward solution at best. However, the award of interest to a landowner forced into a claim for inverse condemnation against a condemning authority arises from and is supported by the same constitutional underpinnings as an award of interest in a direct condemnation action. The legislature has seen fit to streamline the process for including interest in direct condemnation suits. This court can only echo the language of Green in appealing to the legislature to address the same issue with regard to inverse condemnation. As the Court in Green stated:
We recognize that there is much to be said in favor of the proposition that it is fair and just that a landowner be allowed interest . . . If called to its attention it may be that the legislature will conclude that the best method by which such may be accomplished it [sic] to provide statutory authority for the addition of the proper amount by the trial judge.
305 S.W.2d at 694-95. Here, too, the best method would be to provide statutory authority for the trial court to add in the interest for an inverse condemnation claim. Such a result would be consistent not only with the constitutional claim for just compensation but also the statutory scheme created to address direct, as opposed to inverse, condemnation.
Therefore, although interest was available to the Collier claim, the trial court erred as a matter of law in granting Collier's motion for interest under Chapter 523 and by adding that measure to the verdict returned by the jury.
D. Remittitur
Oak Grove assigns as error the trial courts denial of the City's motion for remittitur after the jury returned a $200,000 verdict for property damage against the City. Oak Grove argues that the damage award was grossly excessive and this court should intervene with an order of remittitur based upon the evidence in the record.
This court affords the trial court broad discretion in reviewing the denial of a motion for remittitur as the trial court is in the best position to weigh the evidence with regard to the motion. Magnuson by Mabe v. Kelsey-Hayes Co., 844 S.W.2d 448, 457-58 (Mo.App. 1992). The trial court reviews damages as an issue of law. Huffman v. Mercieri, 295 S.W.2d 27, 34 (Mo. 1956). This court will not reverse the trial court's ruling only upon a showing of an arbitrary abuse of discretion by either the trial court and the jury. Ince v. Money's Bldg. Dev. Inc., 135 S.W.3d 475, 478 (Mo.App. 2004). To warrant this court's intervention in granting remittitur, the verdict must be of "such magnitude that it shocks the conscience of the court." Jarrell v. Fort Worth Steel Mfg. Co., 666 S.W.2d 828, 840 (Mo.App. 1984).
Oak Grove now contends that the sole measure of damages in an inverse condemnation case is the diminution in value of the real property. At trial, Oak Grove's expert testified that the diminution was at most $9,000. Collier's expert testified that the diminution in value was $35,000. Therefore, Oak Grove argues, the measure of damages is limited to, at most, the $35,000 proposed by Collier's expert.
The appropriate Missouri Approved Instruction for an inverse condemnation claim is MAI 9.02. Stewart v. City of Marshfield, 431 S.W.2d 819, 823 (Mo.App. 1968). MAI 9.02 was the basis for Instruction 8. The instruction reads:
If you find in favor of plaintiff, you must award plaintiff such sum as you believe is the difference between the fair market value of plaintiff's whole property immediately before the sewer backup of 1993 and the value of plaintiff's remaining property as of the date of your verdict, which difference is the direct result of the backups and of the uses which defendant has the right to make of the property damaged, plus such sum as you may find from the evidence fairly and justly compensate plaintiff for loss of use during the time reasonably necessary for the property to be repaired or replaced.
The instruction was drafted by Collier and accepted by the Court. Oak Grove did not object to instruction at the instruction conference. The instruction provided for damages over and above the measure argued by Oak Grove on appeal. Oak Grove cannot now complain that the jury returned an excessive verdict when the instructions provided for the court, without objection from the City, provides just such a measure.
Moreover, evidence in the record supports the jury's damages award. The measure of damages is not so excessive as to shock this court's conscience or does the verdict demonstrate an abuse of discretion by both the court and the jury. Because Oak Grove did not object to the measure of damages provided to the jury, the City cannot claim on appeal that the self-same measure was excessive. The trial court did not err in denying Oak Grove's motion for remittitur and the City's final claim of error is denied.
IV. Conclusion
The trial court did not err in submitting Collier's claim for inverse condemnation to the jury. However, the trial court erred in awarding interest on the inverse condemnation claim after the jury had returned its verdict. An award of interest in an inverse condemnation claim is part and parcel of the determination of damages by the jury. The award of interest by the court is reversed. Finally, the trial court did not err in denying Oak Grove's request for remittitur as the jury's verdict does not indicate that the jury and the court abused its discretion. The damages award is affirmed.
In conclusion, this court renews its plea for legislative intervention with regard to the issue of prejudgment interest in an inverse condemnation claim. Interest in an inverse condemnation claim is supported by the same constitutional underpinnings as interest in a direct condemnation claim. However, the limitations placed upon the trial court in adding interest to a judgment absent statutory authority constrain this court to require both the applicability and the calculation of interest be put to the jury, an unsatisfying solution at best. The court should be statutorily empowered to add interest to the judgment based on a jury finding that interest is appropriate and a determination of the date of taking. This court again commends this issue to the legislature to address this problem statutorily.
The judgment is affirmed as to the amount of damages, and reversed only as to that portion awarding prejudgment interest. Costs are assessed against Oak Grove.
AFFIRMED IN PART, REVERSED IN PART.