reversing denial of award of costs and attorney fees in a mandamus case
How later courts described this case
- reversing denial of award of costs and attorney fees in a mandamus case
Written by the judges who cited it.
The opinion
[This decision has been published in Ohio Official Reports at 98 Ohio St.3d 1.]
THE STATE EX REL. R.T.G., INC. ET AL., APPELLEES AND CROSS-APPELLANTS,
v. THE STATE OF OHIO ET AL., APPELLANTS AND CROSS-APPELLEES.
THE STATE EX REL. R.T.G., INC., APPELLANTS, v. THE STATE OF OHIO ET. AL.,
APPELLEES.
[Cite as State ex rel. R.T.G., Inc. v. State, 2002-Ohio-6716.]
Mineral rights—Regulatory takings—Six-year limitation period of R.C.
2305.07 applicable to mandamus action to compel state to begin
appropriation proceedings—In determining the relevant parcel for
a takings analysis, pursuant to the Takings Clause of the Ohio
Constitution, coal rights are severable and may be considered as a
separate property interest, when.
(Nos. 2001-0748 and 2001-0976—Submitted March 27, 2002—Decided
December 18, 2002.)
APPEALS AND CROSS-APPEAL from the Court of Appeals for Franklin County, No.
98AP-1015, 141 Ohio App.3d 784, 2001-Ohio-4267, 753 N.E.2d 869.
__________________
SYLLABUS OF THE COURT
In determining the relevant parcel for a takings analysis, pursuant to the Takings
Clause of the Ohio Constitution, Section 19, Article I, coal rights are
severable and may be considered as a separate property interest if the
property owner’s intent was to purchase the property solely for the purpose
of mining the coal. (Moore v. Indian Camp Coal Co. [1907], 75 Ohio St.
493, 80 N.E. 6, applied.)
__________________
SUPREME COURT OF OHIO
LUNDBERG STRATTON, J.
I. Introduction
{¶1} This is a regulatory-takings case. Regulatory-takings issues are
complex and difficult and have defied attempts to provide a simple solution. Even
the United States Supreme Court “quite simply, has been unable to develop any ‘set
formula’ for determining when ‘justice and fairness’ require that economic injuries
caused by public action be compensated by the government, rather than remain
disproportionately concentrated on a few persons.” Penn Cent. Transp. Co. v. New
York City (1978), 438 U.S. 104, 124, 98 S.Ct. 2646, 57 L.Ed.2d 631.
{¶2} R.T.G., Inc. (“RTG”), is a coal-mining company that began surface-
mining land located in eastern Ohio in the 1980s. This property consisted of tracts
of land that RTG owned in fee and tracts of land in which RTG owned or leased
coal rights only. Ultimately, the state of Ohio determined that RTG’s surface
mining of this property could adversely affect the aquifer that supplied water wells
for the village of Pleasant City. Therefore, pursuant to R.C. 1513.073, the state
designated 833 acres of property in Guernsey County as unsuitable for mining
(“UFM”), including a substantial portion of RTG’s property.
{¶3} RTG filed a complaint seeking a writ of mandamus to compel the state
to appropriate the coal that the state’s UFM designation prevented RTG from
mining. The appellate court held that imposition of the UFM regulation resulted in
a taking of the coal that lies under the tracts of land that are located within the UFM-
designated area and in which RTG owned coal rights only. However, the court held
that the UFM designation did not result in a taking of the coal that lies under the
tracts of land that RTG owned in fee. We reverse the judgment of the court of
appeals in part and hold that the UFM regulation resulted in a taking of RTG’s coal
that lies under the tracts of land in which RTG owned only coal rights and that are
located within the UFM-designated area, as well as the coal rights that lie under the
2
January Term, 2002
tracts of land that RTG owned in fee and that are located in the UFM-designated
area.
{¶4} In a separate entry, the court of appeals denied RTG’s motion for
attorney fees and costs. We also reverse this judgment and hold that RTG is due
reasonable attorney fees and costs.
II. RTG’s Efforts to Mine Its Property
{¶5} James Rossiter is the president, CEO, and controlling shareholder of
RTG. RTG is a coal-mining company. In 1982, RTG began investigating the
viability of surface-mining coal in Valley Township, Guernsey County, just to the
northwest of the village. RTG conducted extensive test drilling, which indicated
the presence of high quality coal in this area. Consequently, RTG began acquiring
property in this area for the purpose of mining coal. In all, RTG acquired
approximately 500 acres of property through purchases in fee or purchases or leases
of coal rights in sections 5, 7, and 8 of Valley Township. Approximately 200 acres
of this property consisted of several tracts of property that RTG owned in fee
(surface and coal rights). Approximately 300 acres consisted of several tracts of
property in which RTG leased or owned coal rights only.1 Rossiter testified that
RTG spent over $250,000 to acquire these property rights, to test-drill, and to
prepare the mine permit applications.
{¶6} In 1984, RTG filed an application to mine 21.8 acres of the property
that it had acquired. Because the area subject to the permit application was within
three-quarters of a mile of a well field that provided water to the village, the Ohio
Department of Natural Resources, Division of Reclamation (“DOR”), required
1. The record is unclear regarding the exact amount of RTG’s property that is held in fee versus the
amount of coal rights that RTG owns apart from ownership of the surface. The record is also unclear
regarding the exact amount of RTG’s property that is located outside the regulated area versus the
exact amount of its property that is located inside the regulated area. Accordingly, while the
acreages that we cite throughout this opinion are substantially supported by the record and are
sufficiently accurate to support the analysis that we perform, they are nonetheless estimates.
3
SUPREME COURT OF OHIO
RTG to install monitoring wells between the area to be mined and the village’s
water wells to determine whether that mining would interfere with the village’s
water supply. A pump test indicated that the monitoring wells were in a different
aquifer from the village’s wells. Accordingly, on May 20, 1986, the state issued
permit D-578, which allowed RTG to begin mining the 21.8 acres.
{¶7} After receiving the D-578 permit, Rossiter testified, RTG paid
$100,000 to prepare the land for mining, including building a sediment pond,
establishing drainage controls, removing and segregating topsoil, and building
roads and ramps into the excavation.
{¶8} On June 5, 1987, pursuant to permit D-578-1, the permit area was
revised to include an additional 77.2 acres adjacent to the original permit area. The
DOR found that “[g]round water supplies monitored up to the date of this written
finding have not displayed any significant changes in the quality and quality [sic]
to the Village of Pleasant City’s well field.”
{¶9} On September 10, 1987, the aquifer that served the village’s water
supply was designated a sole-source aquifer by the United States Environmental
Protection Agency.
{¶10} On September 21, 1988, pursuant to R.C. 1513.073, the village filed
a petition with the DOR that sought to designate 833 acres in Valley Township that
lie below 820 feet in elevation as UFM because mining in this area would adversely
affect the aquifer that supplies the village’s wells.
{¶11} On October 6, 1989, the chief of the DOR designated approximately
275 of the requested 833 acres as UFM. The chief determined that mining in this
area could reduce the long-term productivity of the village’s water wells. The UFM
designation affected property that RTG sought to mine. RTG and the village
appealed from the chief’s decision to the Ohio Reclamation Board of Review
(“board”).
4
January Term, 2002
{¶12} Before the appeal was decided, the area subject to the permit was
increased by 8.4 acres. The board found that “[b]ased on the monitoring data
collected by the Division of Water it is not anticipated that the quantity of water to
the Village of Pleasant City’s well field will be jeopardized by the proposed mining
operation, application # D-0578-2.”
{¶13} Ultimately, however, on June 16, 1994, the board issued an order that
designated as UFM the entire 833 acres, which consisted of all lands in Sections 7
and 8 of Valley Township that lie below 820 feet. The UFM designation prevented
RTG from mining much of its property.
III. RTG’s Mandamus Proceedings
{¶14} On September 21, 1994, RTG filed a complaint in the Franklin
County Court of Common Pleas seeking a writ of mandamus to compel the state to
appropriate the coal located within the UFM-designated area. RTG alleged that the
UFM designation was a taking of its coal rights by regulation.
{¶15} On April 22, 1996, the trial court dismissed RTG’s complaint. On
appeal, the Tenth District Court of Appeals reversed the trial court’s judgment and
remanded the matter for a hearing and a determination whether a taking had
occurred. State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural Resources (Mar. 31,
1997), Franklin App. No. 96APE05-662, 1997 WL 142363. The state filed a
discretionary appeal with this court, which was not allowed. State ex rel. R.T.G.,
Inc. v. Ohio Dept. of Natural Resources (1997), 79 Ohio St.3d 1482, 683 N.E.2d
787. On remand to the trial court, RTG dismissed its complaint.
{¶16} On August 6, 1998, RTG filed a complaint in the Tenth District Court
of Appeals seeking a writ of mandamus to compel the state to initiate appropriation
proceedings. State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural Resources, 141
Ohio App.3d 784, 2001-Ohio-4267, 753 N.E.2d 869.
5
SUPREME COURT OF OHIO
{¶17} The case was referred to a magistrate. In March 2000, RTG amended
its complaint to add James and Phyllis Rossiter and the Myron Fishel Scholarship
Trust as additional relators.2
{¶18} On April 13, 2000, the state filed a motion for judgment on the
pleadings against the Rossiters and the trust, alleging that their claims were barred
by the statute of limitations. The magistrate denied the state’s motion, finding that
a 21-year statute of limitations applied.
{¶19} For purposes of applying the takings analysis, the magistrate divided
RTG’s land into two parcels. The first parcel consisted of the tracts of land that
RTG owned in fee located within the UFM-designated area. The second parcel
consisted of the tracts of land in which RTG owned or leased only coal rights
located within the UFM-designated area.
{¶20} As to the property owned in fee, the magistrate applied the Penn
Cent. takings test (applied when the regulation deprives the property of less than
100 percent of its economic value). The magistrate determined that the UFM
designation did not result in a taking because, even though the designation
prevented RTG from mining any coal, the surface estate still had value.
{¶21} As to the coal rights, the magistrate applied the takings test of Lucas
v. South Carolina Coastal Council (1992), 505 U.S. 1003, 112 S.Ct. 2886, 120
L.Ed.2d 798 (applied when the regulation deprives the property of 100 percent of
its economic value). The magistrate determined that the UFM designation did
result in a taking because it deprived RTG of all value of its coal rights (i.e., the
ability to excavate and sell the coal), but ultimately determined that no
compensation was due because mining would constitute a nuisance. See id. at
1027-1030, 112 S.Ct. 2886, 120 L.Ed.2d 798. Accordingly, on October 30, 2000,
the magistrate issued findings of fact and conclusions of law that denied the writ.
2. The Rossiters and the trust were the named lessees on several of the coal leases at issue herein
but were not included as relators in RTG’s initial complaint.
6
January Term, 2002
{¶22} Both RTG and the state filed objections to the magistrate’s decision.
The appellate court held that the magistrate erred in applying a 21-year statute of
limitations to the claims filed by the relators. However, it held that even in applying
the more appropriate four-year statute of limitations, R.C. 2305.09(D), the relators’
claims were not time-barred.
{¶23} On the remaining issues, the appellate court adopted the magistrate’s
decision in its entirety except with regard to the magistrate’s conclusion that RTG’s
mining constituted a nuisance. The appellate court held that RTG’s mining was not
a nuisance. Thus, the appellate court issued a writ of mandamus that compelled the
state to appropriate the tracts of land in which RTG owned coal rights only and that
were located within the UFM-designated area.
{¶24} On April 9, 2001, RTG moved the appellate court for an award of
attorney fees and costs with regard to the mandamus action. The appellate court
denied the motion.
{¶25} The state filed an appeal and RTG filed a cross-appeal of the
judgment granting a writ of mandamus to compel the state to initiate appropriation
proceedings. RTG also filed a separate appeal of the judgment denying RTG
attorney fees and costs. We consolidated these appeals.
{¶26} There are several issues for this court to address. The first is whether
the applicable statute of limitations expired before RTG moved to add the Rossiters
and the trust as parties. The second is whether the state’s UFM designation resulted
in a regulatory taking of RTG’s property. In order to answer this question, we must
first determine the relevant parcel to which the takings analysis is applied. The
third is whether RTG can recover attorney fees and costs.
IV. Statute of Limitations
{¶27} Appropriation cases “shall be governed by the law applicable in civil
actions.” R.C. 163.22. Unless a particular statute contains a limitation, a civil
action must be commenced within a period prescribed in R.C. 2305.03 to 2305.22.
7
SUPREME COURT OF OHIO
R.C. 2305.03. Neither R.C. Chapter 163 nor Chapter 2731 (mandamus) contains a
statute of limitations. Therefore, we must examine R.C. 2305.03 to 2305.22 to
determine the most appropriate limitation to apply in this case.
{¶28} This court has previously held that where a landowner sought to
compel a railroad to commence an appropriation action for property that it had
taken from the landowner pursuant to R.S. 3283, a predecessor of R.C. 4955.02,
the appropriate statute of limitations was 21 years. Lawrence RR. Co. v. O’Harra
(1891), 48 Ohio St. 343, 28 N.E. 175, paragraph one of the syllabus; see, also, Fries
v. Wheeling & Lake Erie Ry. Co. (1897), 56 Ohio St. 135, 46 N.E. 516. In applying
a 21-year limitation, this court stated, “The remedy in [an appropriation case] is a
substitute for an action to recover the possession, and we fail to perceive why it
should be barred in any shorter period than an action for such purpose; particularly,
as it would seem that * * * a proceeding to compel condemnation is the only remedy
of the landowner.” O’Harra, 48 Ohio St. at 353, 28 N.E. 175.
{¶29} We now disagree with the reasoning in O’Harra. We do not believe
that an appropriation case “is a substitute for an action to recover the possession”
of real estate. O’Harra, 48 Ohio St. at 353, 28 N.E. 175. An appropriation case
seeks monetary compensation for real property that was taken from the property
owner and for damages to the residue remaining with the property owner. Actions
to recover possession of real estate traditionally have had a longer statute of
limitations than actions for damages, which simply seek monetary recovery.
Therefore, to the extent that O’Harra and Fries hold that a 21-year statute of
limitations (now R.C. 2305.04) applies to an action to compel appropriation
proceedings, we overrule those cases.
{¶30} We also disagree with the appellate court’s finding that the limitation
in R.C. 2305.09(D) applies to the claims filed by the Rossiters and the trust. R.C.
2305.09(D) provides a limitation “[f]or an injury to the rights of the plaintiff not
arising on contract nor enumerated in sections 2305.10 to 2305.12[,] 2305.14 and
8
January Term, 2002
1304.35 of the Revised Code.” While none of the limitations listed in R.C. Chapter
2305 is a perfect fit for an action to compel appropriation proceedings, we find that
the most appropriate statute of limitations is set out in R.C. 2305.07. It provides
that “an action upon a contract not in writing, express or implied, or upon a liability
created by statute * * * shall be brought within six years after the cause thereof
accrued.” (Emphasis added.) R.C. 2305.07.
{¶31} A contract implied in fact is “a contract that the parties presumably
intended, either by tacit understanding or by the assumption that it existed.”
Black’s Law Dictionary (7th Ed.1999) 322. In an appropriation action, although
the amount may be in dispute, when the state takes property, it is impliedly
contracting that it will pay the property owner just compensation. See, e.g., Yearsley
v. W.A. Ross Constr. Co. (1940), 309 U.S. 18, 21, 60 S.Ct. 413, 84 L.Ed. 554 (if a
regulation is determined to be a taking, the government has impliedly promised to
pay compensation). Accordingly, we hold that the statute of limitations applicable
to a mandamus action to compel the state to begin appropriation proceedings is the
six-year limitation set out in R.C. 2305.07.
{¶32} In this case, the cause of action accrued when the board issued its
final decision on June 16, 1994, which designated RTG’s property as unsuitable for
mining. RTG filed its complaint on August 6, 1998. RTG moved to amend its
complaint to add the Rossiters and the trust on March 7, 2000. Accordingly, the
addition of the Rossiters and the trust was within six years of the date the action
accrued. Thus, we affirm the appellate court’s determination that the Rossiters’
and the trust’s claims are not barred by the statute of limitations, albeit for different
reasons.
V. Regulatory-Takings Law
{¶33} Both the United States and the Ohio Constitutions provide that
private property shall not be taken for public use without just compensation. Fifth
and Fourteenth Amendments to the United States Constitution; Section 19, Article
9
SUPREME COURT OF OHIO
I, Ohio Constitution; see, also, R.C. Chapter 163. The purpose of the Takings
Clause is to prevent government from “forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the public as a whole.”
Armstrong v. United States (1960), 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554.
{¶34} It was Justice Holmes who first recognized that “while property may
be regulated to a certain extent, if regulation goes too far it will be recognized as a
taking.” Pennsylvania Coal Co. v. Mahon (1922), 260 U.S. 393, 43 S.Ct. 158, 67
L.Ed. 322. However, it was not until 1978 that the United States Supreme Court
formulated a test to help define when a regulation “goes too far” and results in a
compensable taking. See Penn Cent. Transp. Co. v. New York City (1978), 438
U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631. “Penn Central does not supply
mathematically precise variables, but instead provides important guideposts that
lead to the ultimate determination whether just compensation is required.”
Palazzolo v. Rhode Island (2001), 533 U.S. 606, 634, 121 S.Ct. 2448, 150 L.Ed.2d
592 (O’Connor, J., concurring). The three criteria that Penn Cent. identified to be
examined in regard to a regulatory taking are (1) the nature of the governmental
regulation, (2) the economic impact of the regulation on the claimant, and (3) the
extent to which the regulation interfered with distinct investment-backed
expectations. Penn Cent. at 124, 98 S.Ct. 2646, 57 L.Ed.2d 631.
{¶35} Penn Cent. provides the proper taking test when the regulation
deprives the property of less than 100 percent of its economically beneficial use.
Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency
(2002), 535 U.S. 302, ___, 122 S.Ct. 1465, 1483, 152 L.Ed.2d 517, 545, see, also,
Palazzolo v. Rhode Island, 533 U.S. at 617, 121 S.Ct. 2448, 150 L.Ed.2d 592.
{¶36} In 1992, the Supreme Court again visited the regulatory-takings law
in Lucas. The court acknowledged the Penn Cent. ad hoc balancing test, but
recognized two situations in which a regulation results in a taking “without case-
specific inquiry into the public interest advanced in support of the restraint.” Lucas,
10
January Term, 2002
505 U.S. at 1015, 112 S.Ct. 2886, 120 L.Ed.2d 798. The first is where a regulation
requires a physical invasion of property. E.g., Loretto v. Teleprompter Manhattan
CATV Corp. (1982), 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (New York law
that required landlords to permit cable television companies to place cable facilities
in their buildings constituted a taking even though the intrusion, one and one-half
cubic feet, was minimal). The second is “where regulation denies all economically
beneficial or productive use of the land.” Lucas at 1015, 112 S.Ct. 2886, 120
L.Ed.2d 798. However, even if a regulation results in categorical taking, no
compensation is due if the claimant’s use of the land violates “restrictions that
background principles of the State’s law of property and nuisance already place
upon land ownership.” Lucas, 505 U.S. at 1029, 112 S.Ct. 2886, 120 L.Ed.2d 798.
{¶37} The rule in Lucas, recognizing these categorical takings, applies only
“when a regulation deprives an owner of ‘all economically beneficial uses’ of his
land.” (Emphasis in Lucas.) Tahoe-Sierra Preservation Council, 535 U.S. 302,
___, 122 S.Ct. 1465, 1483, 152 L.Ed.2d 517, 545, quoting Lucas, 505 U.S. at 1019,
112 S.Ct. 2886, 120 L.Ed.2d 798.
{¶38} Thus, under Lucas, if a regulation deprives the property of all of its
economic value, there is no need to examine the policy behind the regulation, and
a compensable taking results, unless the regulation merely prevents use of the
property in a manner that creates a nuisance under state law.
{¶39} Accordingly, the United States Supreme Court has created a
dichotomy in regulatory takings. Lucas applies where the regulation has deprived
the property of all economic value, and Penn Cent. applies where the regulation
deprives the property of less than all economic value.
11
SUPREME COURT OF OHIO
A. Defining the Relevant Parcel, or The Denominator Problem
{¶40} The regulatory-takings analysis requires a court to compare the value
of the property that has been taken by the regulation against the value of the
property that remains. Keystone Bituminous Coal Assn. v. DeBenedictis (1987),
480 U.S. 470, 497, 107 S.Ct. 1232, 94 L.Ed.2d 472. “[O]ne of the critical questions
is determining how to define the unit of property ‘whose value is to furnish the
denominator of the fraction.’ ” Id., quoting Michelman, Property, Utility, and
Fairness: Comments on the Ethical Foundations of “Just Compensation” Law
(1967), 80 Harv.L.Rev. 1165, 1192. The denominator, or the “relevant parcel,” is
the property interest that is subject to the regulation. See The Relevant Parcel Issue
(1993), C872 ALI-ABA 167. The numerator of this fraction is the value of the
property that has been taken due to the regulation. Fee, Unearthing the
Denominator in Regulatory Takings Claims (1994), 61 U.Chi.L.Rev. 1535, 1536.
If this fraction equals one (i.e., the value of the property taken equals the value of
the relevant parcel), then there has been a categorical taking as defined in Lucas
and compensation is due unless the use of the property conflicts with background
principles of the state’s law of property and nuisance. Lucas, 505 U.S. at 1027,
1029, 112 S.Ct. 2886, 120 L.Ed.2d 798. But if the fraction equals anything less
than one, then there has been no categorical taking, and the Penn Cent. ad hoc
balancing test applies to determine whether a compensable taking has occurred.
{¶41} Determining the relevant parcel of the takings fraction is critical
because it usually determines the applicable takings test. In other words,
determining how broadly or narrowly the relevant parcel is defined will determine
whether there has been a complete deprivation of the economic value of the
property, or whether a taking of something less has occurred. The more broadly
the relevant parcel is defined, the less likely that a regulation will result in a
complete economic deprivation and that the Penn Cent. test will apply; conversely,
12
January Term, 2002
the more narrowly the relevant parcel is defined, the more likely that a regulation
will result in a complete economic deprivation and that the Lucas test will apply.
{¶42} Determination of the denominator of the takings fraction has been a
persistent and difficult issue. Palazzolo, 533 U.S. at 631, 121 S.Ct. 2448, 150
L.Ed.2d 592. The determination of the relevant parcel can include consideration of
the vertical divisions of property (e.g., surface rights, air rights, and mineral rights)
and horizontal divisions of property (e.g., surface divisions of property, such as can
be shown on a map). Fee, Unearthing the Denominator in Regulatory Takings
Claims, 61 U.Chi.L.Rev. at 1537, fn. 7 and 8.
1. The Appellate Court Erred in Defining the Relevant Parcel
{¶43} In defining the relevant parcel, “[t]he effort should be to identify the
parcel as realistically and fairly as possible, given the entire factual and regulatory
environment.” Ciampitti v. United States (1991), 22 Cl. of Ct. 310, 319. The
appellate court determined that RTG’s property consisted of two relevant parcels
for purposes of the takings analysis, one being all the tracts of land in which RTG
owned only coal rights, and the other being the tracts of land that it owned in fee.
There is no analysis in the court’s decision as to how the court arrived at this
conclusion. For reasons made clear in our analysis below, we reject the appellate
court’s determination that there are two relevant parcels in this case.
2. The Relevant Parcel in the Vertical Context
{¶44} RTG argues that we should define the relevant parcel in the vertical
context as including only the coal rights that lie under RTG’s property to the
exclusion of any surface rights. The state asserts that coal rights cannot be severed
from surface rights for purposes of this analysis and thus the relevant parcel must
include both surface and coal rights. In this case, we agree with RTG.
{¶45} In Penn Cent., the court specifically declined to sever property rights
in the vertical context for purposes of a takings analysis. In Penn Cent., a regulation
prevented Penn Central from building a 55-story addition onto Grand Central
13
SUPREME COURT OF OHIO
Station. Penn Central argued that the regulation deprived it of its use of the air
rights over Grand Central Station. The court declined to consider Penn Central’s
air rights above Grand Central Station as a separate estate from the remainder of
the property pursuant to the parcel-as-a-whole rule. Penn Cent., 438 U.S. at 130,
98 S.Ct. 2646, 57 L.Ed.2d 631.
{¶46} Penn Central’s nonseverability rule was reaffirmed in Keystone
Bituminous Coal Assn., 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472. In
Keystone, the Bituminous Mine Subsidence and Land Conservation Act, Pa. Stat.
Ann., Title 52, Section 1406.1 et seq., required coal companies during subsurface
mining to leave certain amounts of coal in place to prevent subsidence of the surface
estate. Keystone alleged that the statute resulted in a regulatory taking of the coal
that was required to be left in place. Applying the parcel-as-a-whole rule, the court
held that the coal required to be left in place by the Subsidence Act did “not
constitute a separate segment of property.” Id. at 498, 107 S.Ct. 1232, 94 L.Ed.2d
472.
{¶47} However, subsequent to Penn Cent. and Keystone, some members of
the court have expressed misgivings about the parcel-as-a-whole rule. In Lucas,
the court discussed the uncertainty in determining the denominator and the resulting
inconsistent pronouncements by the court in that regard. Lucas, 505 U.S. at 1019,
112 S.Ct. 2886, 120 L.Ed.2d 798, fn. 8; see, also, Palazzolo, 533 U.S. at 631, 121
S.Ct. 2448, 150 L.Ed.2d 592 (recognizing the discomfort of some justices with the
parcel-as-a-whole rule). The majority in Lucas suggested that the solution to the
difficult issue of determining the denominator “may lie in how the owner’s
reasonable expectations have been shaped by the State’s law of property—i.e.,
whether and to what degree the State’s law has accorded legal recognition and
protection to the particular interest in land with respect to which the takings
claimant alleges a diminution in (or elimination of) value.” Lucas, 505 U.S. 1003,
112 S.Ct. 2886, 120 L.Ed.2d 798, fn. 7.
14
January Term, 2002
{¶48} That discussion in Lucas was merely dicta. However, property rights
are defined by state law. Webb’s Fabulous Pharmacies, Inc., v. Beckwith (1980),
449 U.S. 155, 161, 101 S.Ct. 446, 66 L.Ed.2d 358, citing Bd. of Regents of State
Colleges v. Roth (1972), 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548.
Furthermore, states are free to interpret their constitutions independently of the
United States Constitution so long as that interpretation affords, as a minimum, the
same protection as its federal counterpart. Arnold v. Cleveland (1993), 67 Ohio
St.3d 35, 616 N.E.2d 163, at paragraph one of the syllabus.
{¶49} We find that the criticism in Lucas regarding how to define the
relevant parcel for the takings analysis is particularly relevant to coal rights in Ohio.
Unlike other individual rights within the bundle of rights that make up a complete
property estate, mineral rights are recognized by Ohio law as separate property
rights. Moore v. Indian Camp Coal Co. (1907), 75 Ohio St. 493, 80 N.E. 6.
Therefore, because the ownership of the coal is “both severable and of value in its
own right, it is appropriate to consider the effect of regulation on that particular
property interest.” Keystone, 480 U.S. at 520, 107 S.Ct. 1232, 94 L.Ed.2d 472
(Rehnquist, C.J., dissenting). Accordingly, in determining the relevant parcel in a
takings analysis pursuant to the Takings Clause of the Ohio Constitution, Section
19, Article I, coal rights are severable and may be considered as a separate property
interest if the property owner’s intent was to purchase the property solely for the
purpose of mining the coal.
{¶50} It is undisputed that RTG is a company that surface-mines coal. It is
also undisputed that RTG acquired all the property at issue herein, whether in fee
or through coal leases or purchases, for the sole purpose of surface-mining the coal
from these properties. The surface rights served as nothing more than an
impediment to acquiring the coal. Thus, the right to mine coal “is what, and only
what, this suit is all about.” Whitney Benefits, Inc. v. United States (C.A.Fed.1991),
15
SUPREME COURT OF OHIO
926 F.2d 1169, 1174. Therefore, we hold that the relevant parcel for the takings
analysis in the vertical context is the coal rights.
3. The Relevant Parcel in the Horizontal Context
{¶51} RTG urges us to define the relevant parcel in the horizontal context
as the property that is located within the UFM-designated area. The state urges the
court to find that the relevant parcel is all 500 acres of RTG’s property pursuant to
the parcel-as-a-whole rule. See Penn Cent. For the following reasons, we find that
the relevant parcel in the horizontal context is limited to RTG’s property that is
within the UFM-designated area.
{¶52} Although contiguous tracts of property are typically considered as a
single relevant parcel for purposes of a takings analysis, factual nuances may dictate
a more flexible approach. Loveladies Harbor, Inc. v. United States (C.A.Fed.1994),
28 F.3d 1171, 1181. These factual nuances may include the claimant’s investment-
backed expectations. Machipongo Land & Coal Co. v. Pennsylvania (Pa.2002),
569 Pa. 3, 799 A.2d 751, 768-769.
{¶53} Of the approximately 500 acres of contiguous property at issue herein
approximately 100 of these acres are located outside the UFM-designated area. The
state contends that these 100 acres of property are part of the relevant parcel because
this property includes coal rights.
{¶54} RTG has submitted evidence that of the approximately 500 acres at
issue herein, the state’s UFM designation prevented it from mining approximately
218 “coal acres,” or 1.3 million tons of coal. RTG has admitted that fringe amounts
of coal exist outside the regulated area. However, RTG’s mining of the coal was
dependent upon economies of scale. Therefore, when the UFM designation
prevented RTG from mining a majority of its coal reserves within the regulated
area, it made mining those minimal reserves outside the UFM-designated area
economically impracticable.
16
January Term, 2002
{¶55} Because there is no evidence that the coal outside the regulated area
can be economically mined independent of the reserves in the regulated area, we
hold that the relevant parcel in the horizontal context is limited on these facts to
RTG’s coal that is located within the UFM-designated area.
4. The Relevant Parcel
{¶56} Merging our analyses regarding the relevant parcel in vertical and
horizontal contexts, we hold that the relevant parcel in this case is the remaining
coal located within the UFM-designated area.
B. The UFM Designation Destroyed RTG’s Coal Rights
{¶57} “What makes the right to mine coal valuable is that it can be exercised
with profit.” Pennsylvania Coal, 260 U.S. at 414, 43 S.Ct. 158, 67 L.Ed. 322. The
UFM designation makes it impossible for RTG to mine coal, thereby depriving
RTG from exercising its coal rights for profit. Thus, imposition of the UFM
designation deprived RTG’s coal rights of all economic value. Accordingly,
applying Lucas, we hold that the UFM designation resulted in a categorical taking
of RTG’s coal rights.
C. Nuisance
{¶58} A categorical taking under Lucas is compensable unless the proposed
use of the property is a nuisance. Lucas, 505 U.S. at 1029, 112 S.Ct. 2886, 120
L.Ed.2d 798. We find that RTG’s actions herein did not constitute a nuisance for
the following reasons.
{¶59} In examining the nuisance element of Lucas, the appellate court
herein, citing Taylor v. Cincinnati (1944), 143 Ohio St. 426, 28 O.O. 369, 55
N.E.2d 724, paragraphs two and three of the syllabus, found that there are two types
of nuisance—absolute and qualified. An absolute nuisance is based on either
intentional conduct or an abnormally dangerous condition that cannot be
maintained without injury to property, no matter what care is taken. A qualified
17
SUPREME COURT OF OHIO
nuisance is essentially a tort of negligent maintenance of a condition that creates an
unreasonable risk of harm, ultimately resulting in injury.
{¶60} The appellate court then concluded that coal mining is not an absolute
nuisance, because it can be conducted safely when care is taken. The court
concluded that coal mining is also not a qualified nuisance, because coal mining
itself is not nuisance, but rather a lawful activity subject to permit. Finally, the
appellate court found that RTG had acted in a reasonable manner in mining the
property and, until the UMF designation was issued, was allowed to mine the
property pursuant to permits.
{¶61} After examining the law and the record in this case, we adopt the
appellate court’s analysis regarding the issue of nuisance in its entirety and
consequently find that RTG’s mining of its property did not constitute a nuisance
as a matter of law for purposes of the takings analysis. Accordingly, the UFM
designation resulted in a compensable taking of RTG’s coal.
VI. Attorney Fees
{¶62} RTG also sought an award of attorney fees and costs pursuant to R.C.
2335.39 and 2731.11, which was denied by the appellate court.
{¶63} Pursuant to R.C. 2335.39, the state must pay attorney fees if (1) the
state was not substantially justified in initiating the matter in controversy, (2) there
are no special circumstances that make the award unjust, (3) the moving party is
not the state but is a party to the legal action at issue, and (4) the moving party
prevailed in the legal action.
{¶64} The state argues that under R.C. 2335.39, fees are recoverable where
the state initiates the legal action in question, as opposed to the state initiating the
matter in controversy that resulted in the legal action. See Highway Valets, Inc. v.
Ohio Dept. of Transp. (1987), 38 Ohio App.3d 45, 526 N.E.2d 112.
{¶65} R.C. 2335.39(B)(2) states:
18
January Term, 2002
{¶66} “Upon the filing of a motion under this section, the court shall review
the request for the award of compensation for fees and determine whether the
position of the state in initiating the matter in controversy was substantially
justified, whether special circumstances make an award unjust, and whether the
prevailing eligible party engaged in conduct during the course of the action or the
appeal that unduly and unreasonably protracted the final resolution of the matter in
controversy.” (Emphasis added.)
{¶67} We construe this language to permit fees where the state initiates
either the conduct that gave rise to the litigation or initiates the litigation caused by
the controversy. Had the General Assembly intended to permit fees only where the
state initiates the litigation, then it could have indicated that fees would be awarded
only where the state initiated “litigation,” as opposed to the more general language
of “matter in controversy” that was actually used.
{¶68} Furthermore, to construe this language otherwise would lead to an
absurd result in this case. Clearly the purpose of R.C. 2335.39 is to protect citizens
from unjustified state action. If fees under R.C. 2335.39 were permitted only where
the state initiated the legal action, the protection that R.C. 2335.39 provides would
not be available where landowners, such as RTG in the instant case, were compelled
to initiate legal action to get relief from the state.
{¶69} The state also argues that it was substantially justified in not filing a
condemnation action against RTG’s property. The state has the burden of proving
that its position in initiating the matter in controversy was substantially justified.
R.C. 2335.39(B)(2). Clearly the state has the authority to regulate mining pursuant
to R.C. 1513.39. However, in this case, the regulation resulted in a taking of RTG’s
property. While the state would have had no obligation to compensate RTG if
RTG’s mining would have been a nuisance, the state still had the obligation to file
a condemnation action and have that issue determined by a court. Thus, we find
19
SUPREME COURT OF OHIO
that the state has failed to show that it was substantially justified in failing to file a
condemnation action in this case.
{¶70} Because we find that the state was not substantially justified in failing
to initiate appropriation proceedings, and RTG otherwise qualifies for attorney fees
under R.C. 2335.39, we hold that the appellate court erred in denying RTG attorney
fees and reverse the appellate court on that issue.
{¶71} Pursuant to R.C. 2731.11, where a complaint seeking a writ of
mandamus judgment is rendered in favor of the relator, the relator is entitled to
costs. Therefore, RTG is also entitled to costs.
VII. Conclusion
{¶72} We hold that the state’s UFM designation resulted in a categorical
taking of all of RTG’s coal rights pursuant to Lucas. Therefore, we reverse the
judgment of the court of appeals and issue a writ of mandamus to compel the state
of Ohio to appropriate the coal located within the UFM-designated area. In the
appropriations proceedings, the value of RTG’s coal within the UFM-designated
area will be the sole issue to be determined.
{¶73} We also reverse the judgment of the court of appeals that denied RTG
attorney fees and costs, and remand the cause for the appellate court to determine
RTG’s reasonable attorney fees and costs.
Judgments affirmed in part,
reversed in part,
writ issued
and cause remanded.
F.E. SWEENEY and PFEIFER, JJ., concur.
RESNICK, J., concurs in syllabus and judgment.
MOYER, C.J., and DOUGLAS, J., dissent and would affirm the court of
appeals in all respects.
COOK, J., dissents.
20
January Term, 2002
__________________
Porter, Wright, Morris & Arthur, L.L.P., Mark S. Stemm and J. Kenneth
Thien, for R.T.G., Inc. et al.
Betty D. Montgomery, Attorney General, Mark G. Bonaventura and John
P. Bartley, Assistant Attorneys General, for the state of Ohio et al.
R.S. Radford, for amicus curiae Pacific Legal Foundation in support of
R.T.G., Inc. et al.
Thomas P. Michael, for amicus curiae Ohio Coal Association in support of
R.T.G., Inc. et al.
Schottenstein, Zox & Dunn Co., L.P.A., and Kristopher M. Huelsman, for
amicus curiae Ohio Environmental Council in support of the state of Ohio.
Timothy J. Dowling, for amici curiae Pleasant City and Community Rights
Counsel in support of the state of Ohio.
__________________
21