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Moongate Water Co., Inc. v. City of Las Cruces

Citations: 6 N.M. 393; 2014 NMCA 075Docket: Docket 29,083

Court: New Mexico Court of Appeals; April 17, 2014; New Mexico; State Appellate Court

Original Court Document: View Document

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Moongate Water Company, Inc. (Moongate) appeals the district court's order that awarded costs to the City of Las Cruces (the City) as the prevailing party in an inverse condemnation case. The central issue is whether the Eminent Domain Code (NMSA 1978, 42A-1-1 to -33) allows for costs to be taxed against a property owner who seeks just compensation for property taken. The court affirms that such costs can be awarded, upholding the district court's decision.

Moongate, authorized since 1983 to supply water, sued the City after it annexed land within Moongate's service area, claiming a partial taking of property and regulatory taking under constitutional protections. The district court found that while a partial taking occurred, no damages were warranted. Following this, the City filed for costs, which Moongate contested, arguing that the Code’s specific provisions should take precedence over general cost rules. The district court ruled in favor of the City, awarding $138,170.58 in costs.

The Code defines 'condemnee' as a person with an interest in the property subject to condemnation and 'condemnor' as someone with the legal authority to condemn. The court had previously reversed a judgment that found the City had taken Moongate's property, affirming instead that Moongate did not possess exclusive rights against the City’s water utility. This appeal focuses solely on the cost award, which Moongate does not dispute in amount but opposes on principle.

The standard of review regarding the City’s entitlement to recover costs is a legal question interpreted independently of the district court's ruling. Statutory interpretation is conducted de novo, focusing on the Legislature’s intent as expressed in the plain language of the statute, which should be adhered to unless necessary to resolve ambiguities or conflicts. The prevailing party's right to recover costs is established by statutory authority or court rule. 

Moongate argues that the district court improperly awarded costs to the City, claiming the Code does not permit such costs against a property owner. However, the discussion clarifies that Moongate's interpretation is incorrect. The nature of the action is an inverse condemnation proceeding, initiated by the property owner when their property is taken for public use without formal condemnation, governed by the Rules of Civil Procedure. Specifically, Section 42A-1-29 states these proceedings are to follow these rules, and Rule 1-054(D) allows costs to the prevailing party unless otherwise directed. Thus, since the inverse condemnation action falls under the Rules of Civil Procedure and costs are authorized, the City is entitled to recover costs as the prevailing party. The interpretation aligns with the statutory language and recognizes the court's discretion in awarding costs.

Nothing in the Code prohibits or exempts the award of costs in inverse condemnation proceedings. If Moongate had succeeded, it would have been entitled to costs under Rule 1-054(D). The Legislature could have explicitly prohibited cost awards to prevailing defendants in inverse condemnation cases but chose not to. The statute's plain language indicates that once Moongate's complaint was dismissed, the City, as the prevailing party, was entitled to costs under Section 42A-1-29 of the Code.

Moongate presents three arguments against the award of costs. First, it claims the Code's language, history, and purpose are inconsistent with awarding costs against a condemnee, arguing that it allows costs to be shifted from a condemnee to a condemnor but not the reverse. Second, Moongate asserts that specific cost provisions in the Code take precedence over general provisions outside of it. Lastly, it contends that allowing costs to a prevailing party defendant would infringe on the constitutional right to seek just compensation for property takings.

These arguments overlook the applicability of Section 42A-1-29 and incorrectly apply unrelated statutory and constitutional principles. Moongate's first argument relies on the interpretation of "condemnee" and three specific Code sections dealing with costs. It asserts that since the Code does not distinguish inverse from direct condemnation actions, those sections limit cost allocation to the specified provisions and not to Rule 1-054(D). However, while both types of actions uphold the constitutional principle of just compensation, their procedures differ significantly, indicating that the Legislature does not treat them as synonymous.

Moongate's claim against the City is analyzed under Section 42A-1-29, which outlines procedures for property taken without compensation. The validity of the cost award to the City must be evaluated based on this specific provision. The interpretation of statutory provisions requires a contextual reading, which Moongate has overlooked. Other sections—42A-1-12, 42A-1-25, and 42A-1-32—detail costs for different types of condemnation actions but do not apply to inverse condemnation or mention cost awards to prevailing parties in such cases. Section 42A-1-29 governs inverse condemnation actions and incorporates the Rules of Civil Procedure, including Rule 1-054(D), without imposing limitations. Moongate's argument that specific cost provisions should prevail over general cost provisions is flawed, as the general provision is part of the Code and applicable to inverse condemnation. The principle that a specific statute takes precedence over a general one does not apply here, as there is no conflict; Section 42A-1-29 specifically adopts the applicable procedural rules for inverse condemnation.

Moongate argues that costs should not be awarded against property owners in inverse condemnation proceedings, citing relevant cases for support. It references *Landavazo* and *City of Sunland Park*, asserting that inverse condemnation is treated similarly to other condemnation actions under the Code, and that costs are only allowed according to specific statutory provisions (Sections 42A-1-12, 42A-1-25, and 42A-1-32). The text emphasizes that inverse condemnation involves distinct procedures with clear statutory guidance that should be followed. 

In *Landavazo*, the court allowed attorney fees for a successful inverse condemnation plaintiff, noting that the statute, while primarily aimed at direct condemnation, does not exclude inverse situations. However, this case specifically involved a governmental entity unlawfully taking property without compensation, prompting the landowner to incur legal costs. The court aimed to protect landowners from governmental overreach. In contrast, the current case presents different facts and does not address the awarding of costs against unsuccessful inverse condemnation plaintiffs.

Similarly, *City of Sunland Park* did not discuss costs against unsuccessful plaintiffs or the application of civil procedure rules regarding costs. Moongate's reliance on out-of-state authorities is deemed ineffective as these typically pertain to direct condemnation cases, reinforcing that costs in those contexts are borne by the condemnor. Overall, the cited cases do not support Moongate's position regarding cost awards in inverse condemnation proceedings.

Moongate cites the Supreme Court decision in *Koontz v. St. Johns River Water Management District*, which established that governmental actions can unduly burden a property owner's right to just compensation even without a compensable taking. Moongate argues that awarding litigation costs to a governmental entity under a general cost provision, such as Rule 1-054(D), could intimidate property owners from pursuing just compensation claims, but this assertion is deemed unfounded. In *Koontz*, a landowner's permit application was met with demands from the water district that violated the unconstitutional conditions doctrine, which requires a connection and proportionality between governmental demands and proposed land use effects. The Supreme Court expressed concerns over coercive government actions related to land-use permits, asserting that constitutional rights should not be burdened through coercive means. However, the current case focuses on whether a prevailing defendant in an inverse condemnation action can recover litigation costs under a procedural rule, without any coercive conduct like that in *Koontz*. The court interprets Section 42A-1-29 of the Code as permitting such cost awards, affirming the district court's decision to award costs to the City as the prevailing party. The judges concur with this ruling.