Rocky Mountain v. Marriott , 437 P.3d 653 ( 2018 )

2018 UT App 221THE UTAH COURT OF APPEALS
ROCKY MOUNTAIN POWER INC.,
Appellee and Cross-appellant,
v.
RANDY E. MARRIOTT, EDGE HOLDINGS LLC,
WILLARD LAND HOLDINGS LLC, R&K PROPERTIES LC,
WESTSIDE INVESTMENTS LC, AND KAMI F. MARRIOTT,
Appellants and Cross-appellees.
Opinion
No. 20160956-CA
Filed November 29, 2018
First District Court, Brigham City Department
The Honorable Brandon J. Maynard
No. 090100270
Robert E. Mansfield, Steven J. Joffee, Megan E.
Garrett, and Gregory H. Gunn, Attorneys for
Appellants and Cross-appellees
D. Matthew Moscon, Cameron L. Sabin, and R. Chad
Pugh, Attorneys for Appellee and Cross-appellant
JUDGE KATE A. TOOMEY authored this Opinion, in which
JUDGES GREGORY K. ORME and DAVID N. MORTENSEN concurred.
TOOMEY, Judge:
¶1 This appeal stems from Rocky Mountain Power’s (Rocky
Mountain) condemnation to obtain easements across Randy E.
Marriott’s (Marriott) 1 property. Marriott appeals, arguing that
1. The appellants include Randy E. Marriott, Kami F. Marriott,
Edge Holdings LLC, Willard Land Holdings LLC, Westside
Investments LC, and R&K Properties LC. For the reader’s
convenience, we refer to them collectively as “Marriott.”
Rocky Mountain v. Marriott
the district court erred in excluding evidence of damages
resulting from the easements’ interference with potential mining.
Rocky Mountain cross-appeals, asserting that the district court
erred in granting Marriott partial summary judgment on a
provision in Rocky Mountain’s amended condemnation
complaint. We affirm the district court’s grant of partial
summary judgment to Marriott. But we reverse the district
court’s ruling that excluded evidence of damages resulting from
lost potential mining and remand to that court for further
proceedings consistent with this opinion.
BACKGROUND
¶2 Seeking to construct an electric transmission line (the
New Line), Rocky Mountain filed a complaint for condemnation
to obtain easements across approximately 453 acres of land (the
Property) belonging to Marriott. Soon after, the parties
stipulated to Rocky Mountain’s occupancy of the easements, and
Rocky Mountain began construction on the New Line. Marriott
then requested that a jury determine the appropriate amount of
“just compensation.”
¶3 At the time of the condemnation, Marriott possessed two
small mining permits, which authorized him to mine for sand
and gravel aggregate on a ten-acre portion of the Property.
Although the mining operation was relatively small, Marriott
had applied for a large mining permit from the Division of Oil,
Gas and Mining (DOGM). In the application (the Proposed
Permit), Marriott provided plans to mine 145 acres of the
Property in two phases. Phase one consisted of 35 acres, and
phase two consisted of 110 acres. The Proposed Permit estimated
that it would take “between 8 and 15 years” to complete phase
one and did not include a time frame for phase two. DOGM had
indicated to Marriott that the Proposed Permit would be
approved.
20160956-CA 2 2018 UT App 221Rocky Mountain v. Marriott
¶4 To support his proposed “just compensation,” Marriott
provided evidence of the market value of the land supporting
the New Line. That evidence included lost value because of the
New Line’s interference with potential mining on the Property.
Marriott asserted that the New Line “greatly diminishes the
ability to mine gravel products not only directly beneath the
[New Line] . . . but also the areas surrounding [it].” Although the
land supporting the New Line was not included in the Proposed
Permit, Marriott asserted that he planned to eventually exploit
“all mineable areas of the [P]roperty.” Accordingly, Marriott
argued that the loss of potential mining should be included in
his award of just compensation.
¶5 Rocky Mountain disagreed with Marriott’s proposed
damages. It asserted that damages should be based solely on
uses to which the Property could have been put at the time of the
condemnation. Rocky Mountain pointed to various preexisting
encumbrances on the Property, which created legal barriers to
Marriott’s proposed mining development. Given those legal
barriers, Rocky Mountain believed that Marriott’s alleged
mining plans were speculative, and therefore the lost value of
that potential mining should not be considered in determining
Marriott’s award of just compensation.
¶6 For example, the Property was bisected by an irrigation
canal (the Canal), which the federal government owned in fee.
Although Marriott conceded he did not have the unilateral right
to relocate the Canal, he asserted that he always planned to
move the Canal and believed a relocation was possible. Thus,
Marriott included losses of potential mining that would have
required the Canal’s relocation.
¶7 Rocky Mountain attempted to avoid these potential
damages by amending its condemnation complaint. It added a
provision (the Canal Provision), which provided that, if Marriott
received written approval from the federal government to
20160956-CA 3 2018 UT App 221Rocky Mountain v. Marriott
relocate the Canal, Marriott had the right to request that Rocky
Mountain relocate portions of the New Line to allow mining
operations on the Property. If that happened, Rocky Mountain
would be obligated either to relocate the New Line at its own
expense or pay Marriott “the fair market value of the Deposits
that would otherwise be made accessible for mining by the
relocation of the [New Line].”
¶8 In response to the amendment, Marriott filed a motion for
partial summary judgment, asking the court to strike the Canal
Provision. That motion first cited the Utah Code, stating that
“damages shall be considered to have accrued at the date of the
service of summons,” see Utah Code Ann. § 78B-6-512(1)
(LexisNexis 2012), and that the condemnor “shall, within 30 days
after final judgment, pay the sum of the money assessed,” see id.
§ 78B-6-514. Marriott then asserted that the Canal Provision was
impermissible because it “propose[d] that some of the damages
will only be calculated and paid in the future.”
¶9 After reviewing the arguments, the district court granted
Marriott’s motion for partial summary judgment. It found that
there were no disputes of material fact, and that the Canal
Provision was “not permissible under Utah Law for the reasons
stated in” Marriott’s motion. The court therefore struck the
Canal Provision from the condemnation complaint.
¶10 Apart from the Canal, two more preexisting
encumbrances created legal barriers to potential mining on the
Property. These encumbrances included a fifty-foot-wide
easement owned by Rocky Mountain that contained an electric
transmission line, and a thirty-foot-wide easement owned by
Questar Gas that contained a natural gas pipeline (collectively,
the Utility Lines). Marriott did not have the unilateral right to
relocate the Utility Lines. The relocation process involved formal
procedures, including the proposal of alternate routes and the
payment of assessment fees. Further, whether to grant relocation
20160956-CA 4 2018 UT App 221Rocky Mountain v. Marriott
requests was within the discretion of Rocky Mountain and
Questar, and their decisions were not subject to review or
appeal. But Marriott nonetheless claimed he intended to relocate
the Utility Lines to facilitate his mining plans. And he claimed
damages for the lost value of potential mining that depended on
their relocation.
¶11 Rocky Mountain opposed Marriott’s proposed damages
by filing two motions to exclude evidence (the Motions to
Exclude). In the first motion, Rocky Mountain asked the court to
exclude evidence of losses that depended on Marriott’s ability to
relocate the Utility Lines. That motion asserted that Marriott’s
“position that the Utility Lines . . . could be relocated is not a
‘reasonable certainty.’ It is fantasy.” Rocky Mountain noted that
Marriott has “no unilateral right to relocate the Utility Lines and
never obtained consent from [Rocky Mountain] or Questar to
relocate those lines.” Further, Marriott had “never asked [Rocky
Mountain] or Questar to move the Utility Lines or the
Easements” and “it is impossible to know how that request
would have been received.” Before approving such a request,
Rocky Mountain and Questar “would need to consider many
factors, including . . . the proposed new locations and
replacement routes of the easements, whether other third parties
would have to approve the relocations and whether such
approvals had been obtained, . . . the cost of relocating the lines
and the future maintenance costs,” etc. The first motion also
noted that Rocky Mountain and Questar had complete discretion
to grant or deny relocation requests. In sum, Rocky Mountain
argued that the “hypothetical relocation of the [Utility Lines] . . .
cannot be a factor in determining the amount of reasonable
compensation to which [Marriott is] entitled.”
¶12 In the second motion, Rocky Mountain asked the court to
exclude evidence of losses that depended on Marriott’s ability to
obtain authorization to mine areas where mining was not
permitted at the time of the condemnation. To support that
20160956-CA 5 2018 UT App 221Rocky Mountain v. Marriott
request, Rocky Mountain noted “it was impossible to know”
whether DOGM would approve the Proposed Permit. Further,
even if the Proposed Permit were approved, Marriott sought
compensation for lost mining in areas the Proposed Permit
would not cover. Rocky Mountain stated, “[Marriott’s] claim
that [he] would have received DOGM’s approval to revise a
non-existent mine permit is too speculative.” Thus, it asked the
district court to exclude evidence of damages from potential lost
mining in areas that would be authorized only if the Proposed
Permit was approved. In the alternative, it asked the court to
exclude evidence of damages from lost mining in areas that were
not covered by the Proposed Permit.
¶13 When Rocky Mountain filed the Motions to Exclude, the
parties had not concluded fact discovery, and expert discovery
had not begun. Fact discovery was scheduled to end the
following month, initial expert disclosures were due
approximately four months later, expert rebuttal reports were
due approximately five months later, and the deadline for expert
depositions was approximately six months later.
¶14 Marriott opposed the Motions to Exclude. In his
memorandum in opposition, he noted that “just compensation”
is not measured by the actual use of the property at the time of
the condemnation, but rather by the property’s highest and best
use. Further, he argued that the district court could not yet
properly determine whether it was feasible to remove the legal
barriers that prevented mining on the Property. Such a
determination “would require the [c]ourt to consider evidence
and expert testimony relating to several factors,” which Marriott
intended to obtain and “submit . . . at the appropriate time.”
Essentially, Marriott asserted that granting the Motions to
Exclude at that time would deny him “a full and fair
opportunity to obtain or offer evidence” that supports or relates
to his position.
20160956-CA 6 2018 UT App 221Rocky Mountain v. Marriott
¶15 The district court granted the Motions to Exclude. It first
stated, “[C]ourts have an obligation to act as a gatekeeper to
screen irrelevant evidence from the jury” and that “motions in
limine may be used early in the litigation process to narrow the
issues and reasonably limit discovery.” (Quotation simplified.)
Accordingly, the court determined it was “well within its
authority to address the substantive issues of the [Motions to
Exclude].”
¶16 The court then addressed the substantive arguments. It
first determined that mining in areas covered by the Proposed
Permit was legally feasible because the Proposed Permit had
been submitted and there was reason to believe it would actually
be approved. But the court also determined that Marriott’s plans
to mine in areas that would require him to relocate the Utility
Lines or obtain a mining permit for areas not covered by the
Proposed Permit were conjectural or speculative potential uses
that were not legally feasible. The court therefore ordered that
“any evidence of alleged losses or valuation theories premised
upon” those two development plans “are excluded from and
shall not be introduced in this matter.”
¶17 Following the district court’s ruling, the parties entered a
settlement agreement, reserving the right to appeal the district
court’s previous rulings. After that, the district court entered a
final judgment of condemnation. Marriott now appeals and
Rocky Mountain cross-appeals.
ISSUES AND STANDARDS OF REVIEW
¶18 Marriott argues that the district court erred in granting
the Motions to Exclude on two grounds. First, he asserts that the
court “adopted and applied an incorrect legal feasibility
analysis” by ruling that “condemnees must request and receive
permission from the entity with authority to approve or deny a
20160956-CA 7 2018 UT App 221Rocky Mountain v. Marriott
proposed use for [that] use to be considered legally feasible.”
Second, he argues that the court erred in granting the Motions to
Exclude before he had a “full and fair opportunity to complete
fact and expert discovery.” “We review the legal questions
underlying the admissibility of evidence for correctness and the
district court’s decision to admit or exclude evidence for an
abuse of discretion.” Blackhawk Townhouses Owners Ass’n Inc. v.
J.S., 2018 UT App 56, ¶ 17, 420 P.3d 128.
¶19 Rocky Mountain cross-appeals. It contends that the
district court erred in granting Marriott partial summary
judgment on the Canal Provision. “We review a district court’s
decision to grant summary judgment for correctness, with no
deference to the district court’s conclusions.” School
& Institutional Trust Land Admin. v. Mathis, 2009 UT 85, ¶ 10, 223
P.3d 1119.
ANALYSIS
I. Legal Feasibility of Potential Mining
¶20 Marriott argues that the district court erred in granting
the Motions to Exclude. We agree. To show that a proposed
“highest and best use” of condemned land is legally feasible, a
landowner “must offer the testimony of a properly qualified
expert.” City of Hildale v. Cooke, 2001 UT 56, ¶ 25, 28 P.3d 697(quotation simplified). Although “admission of such evidence is
within the sound discretion of the [district] court,” State ex rel.
Road Comm’n v. Jacobs, 397 P.2d 463, 464 (Utah 1964), the court
abuses its discretion when it denies the landowner a fair
opportunity to develop the essential elements of his claim.
Because Rocky Mountain filed the Motions to Exclude before the
close of fact discovery and before expert discovery began, the
court erred in ruling on the legal feasibility of Marriott’s
proposed “highest and best use” at that time.
20160956-CA 8 2018 UT App 221Rocky Mountain v. Marriott
¶21 Municipalities in Utah have authority to condemn
property for public use. See Utah Const. art. XI, § 5. And for
certain uses, “the legislature has delegated its power of eminent
domain to public utilities.” Williams v. Hyrum Gibbons & Sons Co.,
602 P.2d 684, 686 (Utah 1979). For example, a public utility may,
under the proper circumstances, condemn private property for
the construction of “electric power lines.” Utah Code Ann.
§ 78B-6-501(8) (LexisNexis 2012). But the authority to condemn
private property for public use is constrained by Article I,
Section 22 of the Utah Constitution. See City of Hildale, 2001 UT
56, ¶ 18. Article I, section 22 states, “Private property shall not be
taken or damaged for public use without just compensation.”
Utah Const. art. I, § 22.
¶22 In condemnation proceedings, the “just compensation”
requirement is satisfied by putting the landowner “in as good a
position money wise as [he] would have occupied had [his]
property not been taken.” City of Hildale, 2001 UT 56, ¶ 19
(quotation simplified). That is, the “compensation must reflect
the fair value of the land to the landowner.” Utah Dep’t of Transp.
v. Admiral Beverage Corp., 2011 UT 62, ¶ 28, 275 P.3d 208(quotation simplified). Generally, the landowner is entitled to
damages equal to the “fair market value” of the condemned
land. State ex rel. Road Comm’n v. Noble, 305 P.2d 495, 497 (Utah
1957) (quotation simplified). And “[w]hen the land that is
condemned constitutes only a portion of a larger parcel, a
landowner may [also] be entitled to . . . ‘severance damages’ for
any diminution in the value of the remaining portion of the
landowner’s property, as long as the landowner can demonstrate
that the diminution in value was caused by the taking.” Utah
Dep’t of Transp. v. Target Corp., 2018 UT App 24, ¶ 15, 414 P.3d
1080, cert. granted, 425 P.3d 800 (Utah 2018). Severance damages
are “determined by comparing the market value of the portion
of property not taken with its market value before the taking.”
Admiral Beverage Corp., 2011 UT 62, ¶ 30.
20160956-CA 9 2018 UT App 221Rocky Mountain v. Marriott
¶23 To calculate “fair market value,” the jury is asked to
determine what a willing buyer would have paid to a willing
seller, see Salt Lake City Corp. v. Utah Wool Pulling Co., 566 P.2d
1240, 1242 (Utah 1977), on “the date of the service of summons,”
see Utah Code Ann. § 78B-6-512(1) (LexisNexis 2012) (“[T]he
right to compensation and damages shall be considered to have
accrued at the date of the service of summons.”). But fair market
value is not determined “by taking a temporal snapshot of the
land’s value according to its use at” the date of the
condemnation. City of Hildale, 2001 UT 56, ¶ 22. Instead, the
calculation is “based upon the highest and best use” to which the
land could have been put at that time. See Jacobs, 397 P.2d at 464.
To that end, the jury must consider “all factors . . . that a prudent
and willing buyer and seller, with knowledge of the facts, would
take into account, including any potential development that
could be performed on the property.” City of Hildale, 2001 UT 56,
¶ 22 (quotation simplified).
¶24 Not every proposed “highest and best use” alleged by a
landowner should be considered by the jury. See Jacobs, 397 P.2d
at 464 (determining that whether to admit evidence of a
“projected use, affecting value,” is “within the sound discretion
of the [district] court”). Only potential uses that are likely to
have an “appreciable influence upon the market value of the
property” are relevant. Id. at 465 (quotation simplified). Because
a prudent buyer or seller would not consider “totally conjectural
or speculative potential uses,” City of Hildale, 2001 UT 56, ¶ 23,
the district court should exclude evidence of such uses, see Jacobs,
397 P.2d at 465.
¶25 The jury’s determination should “reflect only potential
development that could with reasonable certainty be expected with
respect to the property.” City of Hildale, 2001 UT 56, ¶ 23
(quotation simplified). It is insufficient to show that a potential
use is merely possible because “the land is adaptable to a
particular use in the remote and uncertain future.” Id. (quotation
20160956-CA 10 2018 UT App 221Rocky Mountain v. Marriott
simplified). Instead, a landowner must show that the proposed
use is actually “feasible.” Id. And to prove a proposed use is
feasible, a landowner must establish “three specific elements.”
Id. ¶ 24. Those elements are physical feasibility, legal feasibility,
and economic feasibility. See id.
¶26 Here, Marriott’s proposed “highest and best use” of the
relevant land was mining sand and gravel aggregate. The district
court found that Marriott established both the physical and
economic feasibility of that use. But it determined that the
potential mining was not legally feasible because of various legal
barriers. Thus, we limit our discussion to legal feasibility.
¶27 To establish legal feasibility, the landowner must prove
that “the land is legally available for the potential use, or that
any legal restrictions currently preventing the potential use have
a reasonable probability of being modified so that they no longer
pose a barrier.” Id. When a legal barrier prevents a proposed use,
the jury should consider the value of that use only if the prospect
of removing the barrier “is sufficiently likely as to have an
appreciable influence upon . . . the market value of the property
at the time of the [condemnation].” See Jacobs, 397 P.2d at 465
(determining that the probability of a zoning restriction being
repealed or amended so as to permit the use in question may be
considered if “such repeal or amendment is sufficiently likely as
to have an appreciable influence upon present market value”
(quotation simplified)). Simply put, the jury should consider
only potential uses that would be relevant to prudent sellers and
purchasers on the open market. See City of Hildale, 2001 UT 56,
¶ 22 (“[C]onsideration must be given to all factors bearing upon
such value that a prudent and willing buyer and seller, with
knowledge of the facts, would take into account, including any
potential development that could be performed on the
property.” (quotation simplified)). And when removing a legal
barrier to a proposed use is reasonably probable, such a potential
use may enter that equation. See id. ¶¶ 23–24.
20160956-CA 11 2018 UT App 221Rocky Mountain v. Marriott
¶28 Landowners may attempt to show that removing a legal
barrier is reasonably probable by detailing the steps they have
taken to remove it. See id. ¶ 25. But the landowner’s testimony
alone is legally insufficient. See id. ¶¶ 25, 28 (determining that,
without expert testimony regarding condemned land’s highest
and best use, the landowners’ testimony that “they were in the
process of obtaining the legal permissions needed to proceed”
with their proposed development was “conjectural and
speculative”). Ultimately, “the landowner must [first] offer the
testimony of a properly qualified expert.” Id. ¶ 25; see also Utah
Dep’t of Transp. v. Jones, 694 P.2d 1031, 1036 (Utah 1984)
(determining that “highest and best use” is a term of art and
“[t]estimony regarding it must come from properly qualified
experts”).
A. Relocation of the Utility Lines
¶29 Marriott argues that the district court erred in ruling,
before the close of fact and expert discovery, that he could not
establish the legal feasibility of potential mining that depended
on his ability to relocate the Utility Lines. We agree.
¶30 It is undisputed that, at the time of the condemnation,
Marriott did not have the legal right to relocate the Utility Lines.
But Marriott was not required to show that obtaining relocation
was certain, only that it was reasonably probable. See City of
Hildale v. Cooke, 2001 UT 56, ¶ 24, 28 P.3d 697. The record
established that, under certain circumstances, Rocky Mountain
and Questar agreed to relocate their utility lines. Both companies
allowed servient landowners to submit relocation requests and
decided to grant or deny those requests according to established
procedures. To show the legal feasibility of his proposed
potential mining, Marriott was required to show that, given
those procedures and all other relevant factors, the prospect of
relocating the Utility Lines to develop the mining operation was
reasonably probable at the time of the condemnation. See id.20160956-CA 12 2018 UT App 221Rocky Mountain v. Marriott
¶31 In its ruling, the district court noted that Marriott never
initiated the relocation process. To the extent the court
determined this was dispositive, that ruling was erroneous. In
fact, any steps Marriott had taken to relocate the Utility Lines
were necessarily insufficient. See id. ¶ 25 (“[A] landowner may
testify concerning the individual elements of feasibility, but that
landowner must offer the testimony of a properly qualified
expert to prove the actual feasibility of a potential use.”).
Marriott was required to first present testimony from a qualified
expert that the potential mining was the relevant land’s “highest
and best use.” See id. (quotation simplified). And an expert could
testify that the potential mining was the “highest and best use”
only by testifying to the legal feasibility of that use. See id. That
is, that relocating the Utility Lines was reasonably probable. See
id. When Rocky Mountain filed the Motions to Exclude, the time
for expert disclosure and discovery had not yet started. Thus,
Marriott was denied a fair opportunity to obtain and present
evidence that was essential to his claim. 2
2. We note that although our rules establish no firm deadline for
filing motions in limine, such motions are typically filed after
discovery has concluded and before trial. Had these issues been
presented in the context of a motion for partial summary
judgment, Marriott easily could have filed an affidavit under
Utah Rule of Civil Procedure 56(d) asking the court to delay its
decision until further discovery had been conducted, and, in this
case, expert disclosures and discovery undertaken. We do not
think district courts should easily allow parties to avoid the
strictures of summary judgment procedures by presenting
dispositive issues in motions in limine. Here, the Motions to
Exclude were employed in lieu of a motion for summary
judgment without the safeguards offered by that rule to ensure
that the case was decided on its merits.
20160956-CA 13 2018 UT App 221Rocky Mountain v. Marriott
¶32 Marriott asserts on appeal, as he did below, that he
intended to retain expert witnesses who would testify to the
likelihood, under the circumstances, that Rocky Mountain and
Questar would have granted his relocation requests. To that end,
he requested production of documents that referenced instances
in which Rocky Mountain approved or rejected a third party’s
request to relocate power lines, but Rocky Mountain refused to
produce those documents based on the pendency of the Motions
to Exclude. This evidence was essential to establishing that
mining was the land’s “highest and best use.” We therefore
conclude Marriott did not have a fair opportunity to develop his
claim that relocating the Utility Lines was reasonably probable.
¶33 Rocky Mountain argues that expert testimony would not
have been helpful. It notes, “[B]ecause [Questar and Rocky
Mountain] were never asked to assess a potential relocation, they
did not know whether a relocation . . . would even have been
possible, let alone approved.” Further, it notes that “merely
because a utility has granted or denied a relocation in one
instance . . . does not mean that the same utility will agree to
relocate another line” under different circumstances.
¶34 Rocky Mountain’s arguments are mistaken because they
assume an incorrect legal standard. The uncertainty regarding
the relocation of the Utility Lines created a legal feasibility issue,
but it should not have determined the outcome. When a legal
barrier prevents a proposed “highest and best use,” the ability to
remove that barrier will always be uncertain to some degree. But
a landowner need not show that a legal barrier will certainly be
removed, he must show only that its removal is reasonably
probable. See City of Hildale, 2001 UT 56, ¶ 24. The jury should
consider potential uses that would be relevant to prudent sellers
and purchasers on the open market. See id. ¶ 22. And when the
ability to engage in a proposed use is feasible because removing
a legal barrier is reasonably probable, such a potential use enters
that equation.
20160956-CA 14 2018 UT App 221Rocky Mountain v. Marriott
¶35 Here, a properly qualified expert might have testified to
the probability, given the circumstances, that requests to relocate
the Utility Lines would have been granted. Marriott was entitled
to present such evidence to the district court. Because he was
denied that opportunity, we conclude the district court erred in
ruling, before the close of fact and expert discovery, that
Marriott could not establish the legal feasibility of mining that
depended on relocating the Utility Lines.
B. Mining in Unpermitted Areas
¶36 Marriott argues the district court erred in ruling, before
the close of fact and expert discovery, that he could not establish
the legal feasibility of mining in areas that were not permitted
under the Proposed Permit. We agree.
¶37 In its ruling, the district court first found that Marriott
had established the legal feasibility of mining areas covered by
the Proposed Permit because the Proposed Permit had been
submitted and there was reason to believe it would actually be
approved. But as to areas outside the Proposed Permit, the court
stated that “it appears uncertain as to when or if any application,
revision[,] or amendment” to allow mining outside the Proposed
Permit would be made. The court continued, “[I]t is uncertain
how DOGM would respond to such a request or whether it
would approve additional areas on [the Property] for mining.”
Based on these observations, the court concluded, “[P]lans to
mine currently unpermitted areas [are] conjectural or speculative
potential uses that are not legally feasible.”
¶38 The court’s analysis was misguided. As with relocating
the Utility Lines, the uncertainty of obtaining authorization to
mine outside the Proposed Permit created a legal feasibility
issue, but that uncertainty should not have determined the
outcome. To show that mining in unpermitted areas was legally
feasible, Marriott did not need to have the legal right to mine
20160956-CA 15 2018 UT App 221Rocky Mountain v. Marriott
those areas, nor was he required to start the process of obtaining
that right. Instead, he was required to show that the likelihood of
obtaining approval to mine those areas was reasonably probable
so as to have an appreciable influence upon market value. See
State ex rel. Road Comm’n v. Jacobs, 397 P.2d 463, 465 (Utah 1964).
¶39 As explained above, see supra ¶ 28, expert testimony was
essential to show that mining of gravel and sand aggregate was
the relevant land’s highest and best use, City of Hildale v. Cooke,
2001 UT 56, ¶ 25, 28 P.3d 697. And to show that mining was the
highest and best use, an expert was required to testify that
mining was legally feasible, i.e., that obtaining the proper
permits was reasonably probable. See id. ¶¶ 24–25. And if
obtaining those permits was reasonably probable, the proposed
mining development was likely relevant to the market value of
the Property. See Cornish Town v. Koller, 817 P.2d 305, 313–14
(Utah 1991) (determining that, although uncertain and
speculative, the potential to exploit “in-place minerals” has a
market value and is thus admissible to determine just
compensation).
¶40 A properly qualified expert might have testified to the
probability, given the circumstances, that a request to mine the
unpermitted areas would have been granted. Marriott asserts on
appeal, as he did below, that he intended to retain expert
witnesses to establish the legal feasibility of receiving permission
to engage in the proposed mining. But because Rocky Mountain
filed the Motions to Exclude before fact discovery concluded and
before expert discovery began, Marriott was denied the
opportunity to present this essential evidence.
¶41 We therefore conclude that the district court erred in
ruling, before the close of fact and expert discovery, that
Marriott did not establish the legal feasibility of mining areas
that were not included in the Proposed Permit.
20160956-CA 16 2018 UT App 221Rocky Mountain v. Marriott
II. The Canal Provision
¶42 Rocky Mountain cross-appeals, arguing that the district
court erred when it granted partial summary judgment to
Marriott on the Canal Provision. We disagree. Because the Canal
Provision was contrary to Utah condemnation law, we affirm the
district court’s decision to grant Marriott partial summary
judgment and strike the Canal Provision from the amended
condemnation complaint.
¶43 In condemnation cases, “the right to compensation and
damages shall be considered to have accrued at the date of the
service of summons.” Utah Code Ann. § 78B-6-512(1)
(LexisNexis 2012). And the condemning party “shall, within 30
days after final judgment, pay the sum of money assessed.” Id.
§ 78B-6-514.
¶44 The Canal Provision was at odds with the requirement
that condemning parties pay compensation and damages within
30 days after final judgment because it gave Rocky Mountain the
option to pay part of Marriott’s potential “just compensation” at
some time in the future. It provided that, if Marriott received
written approval from the federal government to relocate the
Canal, Marriott could request that Rocky Mountain relocate the
New Line to allow mining operations on the supporting land. If
that happened, Rocky Mountain would have been obligated to
either relocate the New Line at its own expense or pay Marriott
“the fair market value of the Deposits that would otherwise be
made accessible for mining by the relocation of the [New Line].”
¶45 Rocky Mountain disagrees with this interpretation. It
argues that, under the Canal Provision, “relocation would be at
the option of [Marriott], not [Rocky Mountain].” But the Canal
Provision clearly provided otherwise. It stated, “[Rocky
Mountain] shall have the option of paying [Marriott] the fair
market value of the Deposits that would otherwise be made
20160956-CA 17 2018 UT App 221Rocky Mountain v. Marriott
accessible for mining by the relocation of the [New Line]. This
option shall be in lieu of relocating the [New Line].” (Emphasis
added.) The Canal Provision’s language clearly gave Rocky
Mountain the option to pay part of Marriott’s potential “just
compensation” at a future, indefinite time.
¶46 Further, even if the Canal Provision required Rocky
Mountain to relocate the New Line according to Marriott’s
future needs, the Utah Supreme Court has disapproved of such
“floating” easements. See Jacobson v. Memmott, 354 P.2d 569, 571
(Utah 1960). That is because, in condemnation proceedings, we
attempt to compensate the landowner for all property rights
condemned. Id. And a relocation provision leaves the landowner
“with the uncertainty of not knowing, nor being able to prove,
the extent to which the [easement] will damage his property,
because of the difficulties in presaging what might later occur.”
Id. It is therefore “more practical and in conformity with
established patterns of law” to require condemning parties “to
make a definite designation of it so that the damages to the
[landowner] may be ascertained.” Id.¶47 We therefore conclude that the Canal Provision was
contrary to Utah law and affirm the district court’s grant of
partial summary judgment to Marriott on that provision.
CONCLUSION
¶48 We affirm the district court’s grant of partial summary
judgment to Marriott on the Canal Provision, but we reverse its
ruling on the Motions to Exclude and remand to the district
court for further proceedings consistent with this opinion.
20160956-CA 18 2018 UT App 221