Portersville Bay Oyster Co. v. Blankenship

Citation: 275 So. 3d 124Docket: 1161101

Court: Supreme Court of Alabama; August 29, 2018; Alabama; State Supreme Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Portersville Bay Oyster Company, LLC, along with its members Troy and Rebecca Cornelius, is pursuing a civil lawsuit against 4H Construction Corporation, Greystone Industries, LLC, and Christopher Blankenship, the Commissioner of the Alabama Department of Conservation and Natural Resources, in the Montgomery Circuit Court. The trial court has certified the dismissal of certain claims as a final judgment under Rule 54(b) of the Alabama Rules of Civil Procedure, leading to an appeal that is now reversed and remanded.

The Oyster Company, which operates in Mobile County, has exclusive rights to grow, harvest, process, and sell oysters, holding leases from Tensaw Land and Timber Company that permit them to cultivate oysters on submerged lands. Additionally, the Corneliuses obtained a shellfish aquaculture easement from the Department, allowing them to raise oysters in cages within the lease area, although they face restrictions regarding harvesting within 600 yards of the shoreline.

The case arose following the commencement of construction on the Marsh Island project by 4H Construction, which was intended for public benefit but resulted in sediment and silt deposits harming the oyster beds covered by the easement and leases. The Oyster Company filed suit alleging negligence, wantonness, and nuisance against 4H Construction, as well as inverse condemnation claims against Commissioner Guy related to the easement. Following a motion to dismiss by Commissioner Guy citing venue issues and failure to state a claim, the parties agreed to transfer the case to Montgomery County, though the motion to dismiss remained unresolved.

The Oyster Company filed an amended complaint against Commissioner Guy, which was dismissed by the trial court on June 2, 2017, for failing to state a claim. Subsequently, the Oyster Company filed a second amended complaint adding the Corneliuses as plaintiffs. Commissioner Blankenship also moved to dismiss the counts against him on June 27, 2017, leading to a judgment of dismissal on June 28, 2017. Motions to reconsider both dismissals were filed by the oyster farmers but were denied on August 31, 2017.

The second amended complaint details the Department's role in the "Marsh Island Restoration Project," aimed at restoring 50 acres of salt marsh to compensate for habitat loss from the Deepwater Horizon Oil Spill. It also outlines the Department's management of Alabama's shellfish industry, including the granting of aquaculture easements for cultivating shellfish on state-owned submerged lands. The plaintiffs, oyster farmers cultivating in Portersville Bay, hold leases from Tensaw, a landowner with rights to plant and gather oysters in state waters. The first lease, effective from July 8, 2015, to July 7, 2018, and the second lease, from August 1, 2015, to July 31, 2020, allow the Oyster Company to grow oysters. Additionally, a shellfish aquaculture easement granted to the Corneliuses on November 20, 2014, permits aquaculture activities on submerged lands covered by the June 19, 2015 lease.

4H Construction entered into a contract with the Department to undertake the Marsh Island Project, aimed at constructing a breakwater and marsh for coastal protection in Mobile Bay, which commenced around January 2016. The project involved the operation of heavy machinery to remove underwater sediment, with specific contractual obligations to prevent sediment release, create containment berms, and maintain turbidity levels within 200 feet of the site. However, by May 2016, sediment and silt began accumulating on the oyster farmers’ leases, resulting in significant ecological harm. The oyster farmers reported an alarming increase in oyster mortality rates, escalating from a normal range of 3-5% to 40-50% for oysters in elevated cages, and even up to 100% in bottom cages. The influx of sediment contaminated oyster spat and larvae, which are particularly sensitive to suspended sediments, leading to widespread mortality.

Both the Department and 4H Construction were aware during the bidding phase that the project could result in substantial sediment release affecting the oyster farmers' operations. They had a duty to exercise reasonable care to safeguard the oyster beds from contamination and to avoid unreasonable interference with the farmers' use of their leases. The ongoing deposition of silt and sediment constitutes a permanent issue, as removal may be unfeasible. On August 14, 2017, the oyster farmers filed a third amended complaint, substituting Commissioner Blankenship for Commissioner Guy and including Greystone Industries, a subcontractor of 4H Construction, as a defendant. The complaint asserted claims of negligence, wantonness, and nuisance against the State contractors, along with claims of inverse condemnation against Commissioner Blankenship.

On August 31, 2017, the trial court consolidated and denied motions for reconsideration filed by oyster farmers, ruling they did not present a valid inverse-condemnation claim, thus granting Commissioner Blankenship immunity in his official capacity. Following the finalization of the judgment under Rule 54(b), Ala. R. Civ. P., the oyster farmers appealed. 

The standard of review for the dismissal of Commissioner Blankenship as a defendant is de novo, meaning the appellate court does not presume the trial court's decision was correct. Under Rule 12(b)(6), Ala. R. Civ. P., the appellate court assesses whether the complaint's allegations, taken in the most favorable light to the pleader, could potentially support a claim for relief. A dismissal is warranted only if it is clear that no set of facts could support the claim.

The analysis section clarifies that riparian landowners do not hold title to submerged lands adjacent to their property but possess the right to harvest oysters up to 600 yards from shore, barring exceptions. While they cannot use cages above submerged surfaces without state authorization, the Oyster Company has leased harvesting rights from Tensaw, the landowner, and obtained a shellfish aquaculture easement for cage use. The oyster farmers allege that sediment and silt from state contractor activities have obstructed their harvesting activities, leading to claims for monetary damages. Nonetheless, the trial court dismissed claims against Commissioner Blankenship, citing a failure to state a claim for relief under Rule 12(b)(6).

Commissioner Blankenship argues that a specific paragraph within the shellfish aquaculture easement prevents the oyster farmers from seeking a remedy through inverse condemnation. The paragraph states that the Grantee (oyster farmers) cannot claim title or interest in the easement premises due to their occupancy or use, and prohibits any claims of private ownership or sale of the land. The oyster farmers counter that this interpretation undermines their rights under the easement, clarifying that their claims arise from the granted easement for oyster farming, not from mere occupancy. Their issues stem from water quality disruptions, not claims of ownership.

The court agrees with the oyster farmers, noting that the first two sentences of the paragraph do not negate their claims, as they do not assert ownership but rather seek remedy for disruptions affecting their rights under the easement. The paragraph’s language aligns with legal principles that prevent a grantee from asserting fee simple title through mere occupancy based on an easement. The last sentence addresses the sale of submerged land, which is not relevant to the current case.

Commissioner Blankenship's interpretation, which suggests that the easement paragraph removes the oyster farmers' right to an inverse condemnation remedy, contradicts the clear language of the easement and would effectively nullify rights granted elsewhere in the document. The court emphasizes that unambiguous contracts must be enforced as written, dismissing Blankenship’s argument regarding state immunity from suit, as state officials sued in their official capacity also enjoy this immunity.

State immunity may protect Commissioner Blankenship from the oyster farmers' claims, as established in Lyons v. River Rd. Constr. Inc. However, Article I, Section 23 of the Alabama Constitution provides an exception regarding the taking of property for public use, which requires just compensation. Inverse condemnation occurs when a governmental entity effectively takes property without formal proceedings, as clarified in United States v. Clarke. This differs from formal condemnation, where the government actively initiates the process. Inverse condemnation allows property owners to seek compensation when their property is occupied or harmed, placing the burden on them to act once they discover the encroachment, as noted in Jefferson County v. Southern Natural Gas Co.

In the current case, the oyster farmers argue that no statutory procedure exists for the alleged taking due to the sediment from state contractors, which Commissioner Blankenship claims undermines their case, citing Ex parte Carter. The farmers have requested a reevaluation of Carter, which led to a further order for briefs. The court's earlier decision in Denson v. Alabama Polytechnic Institute acknowledged the state's inherent power to condemn property, indicating that inverse condemnation claims do not require specific legislative procedures. The court has overruled any implication from Carter that such procedures are necessary for inverse condemnation actions. Both parties reference Ex parte Alabama Department of Transportation, where an inverse condemnation claim was recognized due to the flooding of private property, which the oyster farmers liken to their situation involving the deposit of sediment and silt.

Commissioner Blankenship asserts that the Alabama Department of Transportation (ALDOT) requires direct State involvement in cases of flooding not caused by contractors. However, the ALDOT case is a non-dispositive plurality opinion with only three concurring Justices. The court finds it unnecessary to determine if contractor actions shield the State from inverse-condemnation claims, as the complaint alleges the State was aware that the Marsh Island project would likely cause sediment and silt to affect the oyster farmers' leased areas and easements. The court sees significant parallels between this situation and the act of pumping contaminated water in the ALDOT case. By interpreting the complaint favorably for the oyster farmers, the court concludes that State contractor actions foreseeably interfered with the farmers' property rights. The shellfish aquaculture easement granted by the State conferred private property rights that were disrupted by the sediment, which warrants compensation under Alabama's constitution. The court states that the nature of the rights affected—whether held under fee-simple title or leasehold—does not change the compensability of the taking. Since leasehold interests and easements can both be subject to eminent domain and inverse condemnation, the oyster farmers have adequately stated claims for inverse condemnation. The court rules that the State's immunity does not apply in this context. Consequently, it overturns the trial court's dismissal of Commissioner Blankenship as a defendant, remanding the case for further proceedings. Special Justice Jean Williams Brown dissents, arguing that the oyster farmers failed to preserve the issue of overruling Ex parte Carter for appellate review, as it was raised only during oral argument.

Canon 3.C of the Canons of Judicial Ethics mandates that a Justice must recuse themselves if their impartiality could reasonably be questioned. On January 11, 2018, the Chief Justice and Associate Justices recused themselves from this case, leading to the appointment of former Associate Justices and Appellate Judges as a special Supreme Court. A change in the Department's commissioner occurred during proceedings, with Commissioner Blankenship succeeding Commissioner Guy.

The dissenting opinion criticized the oyster farmers for not requesting that the trial court overrule a precedent set by the case Carter. Although historically, such requests were viewed as necessary for appellate review, recent rulings, including Ex parte Vanderwall, indicate that this is not a strict requirement. The court noted that it has not been asked to overrule Haston v. Transamerica Insurance Services, but stated that Haston is an outlier and does not influence subsequent decisions regarding a party's right to provide notice to an insurer post-default judgment.

The court indicated that it would be inappropriate to endorse a requirement for trial court requests to overrule precedent when existing case law does not necessitate such a request. The oyster farmers' oral argument requesting to overrule Carter, along with the court's solicitation for supplemental briefs on the matter, addressed due process concerns regarding notice to the parties. The court acknowledged stare decisis but recognized that its weight is less in constitutional matters, allowing for reconsideration of precedents in such contexts. The court clarified that it is not addressing a claim of taking oysters but is considering the oyster farmers' claims regarding interference with property rights.