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Conlee Engine Rebuilders, Inc. v. City of Memphis
Citation: Not availableDocket: W2003-0216-COA-R3-CV
Court: Court of Appeals of Tennessee; November 16, 2004; Tennessee; State Appellate Court
Original Court Document: View Document
Conlee Engine Rebuilders, Inc. filed an inverse condemnation action against the City of Memphis, challenging the city's rezoning of their property from light industrial to residential duplex as per City Ordinance 3828, enacted on December 13, 1988. The City moved to dismiss the case, claiming it was time-barred under the applicable statute of limitations. The trial court agreed, stating that the limitations period began upon the ordinance's passage, which was more than a year prior to Conlee's complaint filed on April 20, 1994. Conlee disputed whether it was aware of the rezoning when it purchased additional property in 1989 and when it applied for a building permit in 1992. After exhausting administrative remedies, Conlee's complaint was initially dismissed, but on appeal, the Court of Appeals of Tennessee reversed the trial court's decision, allowing Conlee to proceed with its claim. The appellate court's opinion was delivered by Judge Alan E. Highers, with Judges David R. Farmer and Holly M. Kirby concurring. The case highlights issues of notice regarding zoning changes and the commencement of the statute of limitations for inverse condemnation claims. Conlee appeals the trial court's determination that his complaint did not state a claim for relief, specifically concerning the one-year statute of limitations for inverse condemnation actions. The appellate court reverses the trial court's decision and remands for further proceedings. The appeal centers on whether the City of Memphis's statement, suggesting that a new building was constructed on land purchased by Conlee in 1989, supports his claim. The Tennessee Supreme Court’s standard of review for a motion to dismiss under Rule 12.02(6) emphasizes that the court must assess the legal sufficiency of the complaint without considering external evidence and must interpret the complaint liberally, presuming the truth of all factual allegations. A complaint should only be dismissed if the plaintiff cannot prove any facts that could support their claim. The appeal does not challenge the validity of City Ordinance 3828 but rather examines the restrictions it imposed on Conlee and whether his complaint was timely under the statute of limitations for inverse condemnation, which allows property owners to seek compensation for property taken by governmental entities without formal eminent domain proceedings. Zoning and land-use ordinances in Tennessee fall under the police power of municipal corporations, generally not constituting a taking under eminent domain or retrospective legislation, as stated by the Tennessee Supreme Court in Draper v. Haynes. A taking can occur without complete deprivation of property use; any significant restriction or interruption may qualify. The court emphasized that if regulation deprives an owner of beneficial property use, it may be deemed confiscatory, violating due process (Bayside Warehouse Co. v. City of Memphis). Tennessee Code Annotated § 29-16-124 specifies a twelve-month statute of limitations for inverse condemnation claims, starting from actual possession or knowledge of property injury, with provisions for unknown owners and individuals under legal disabilities. The Tennessee Supreme Court has clarified that property owners must act within one year after realizing a permanent injury. The initiation of such claims often presents factual, not legal, questions. In this case, the appellant contended that the trial court wrongly determined that the limitations period began with the enactment of City Ordinance 3828 in December 1988. The court found it illogical for a taking to be recognized while the appellant acquired property in August 1989. Consequently, it ruled that the lower court improperly established the limitations period based solely on the ordinance's enactment date, contradicting the precedent set in Osborne Enterprises, Inc. v. City of Chattanooga. The statute of limitations for property injury claims begins when a complainant realizes or should reasonably realize that their property has suffered a permanent injury. In this case, the Appellant was unaware of City Ordinance 3828 at its enactment and did not realize the rezoning of his property when he purchased adjacent lots in August 1989. He remained unaware during the application for a building permit on December 21, 1992, until he was issued a “stop work” order while constructing a new facility on the rezoned property. The Appellee's challenge regarding the timing of the Appellant's knowledge is insufficient to justify a motion to dismiss. Consequently, the appellate court reversed the trial court's grant of the motion to dismiss and remanded for further proceedings, imposing costs of the appeal on the Appellee, the City of Memphis.