NV Supreme Court Clarifies Inverse Condemnation And What Is “Substantial Government Involvement”

Editor’s Note: This posting appeared originally on the Inverse Condemnation Blog as is reposted with permission from Robert Thomas, Esq. See: http://www.inversecondemnation.com

To state a claim for inverse condemnation in Nevada, the property owner must allege that the government was “substantially involved” in activities that caused the taking of the property.

The Nevada Supreme Court addressed what constitutes substantial involvement. Does it require actual physical “involvement” in the actions which resulted in flooding, or is the government doing governmental things like approving applications enough? In the end, the court set out a test somewhere in between those two poles.

This is a flood case where the property owners alleged that the County approved plat maps and managed the drainage system which ultimately resulted in their property being inundated. As part of that process, the County accepted dedications, and worked with the Nevada DOT to direct where water coming down a mountain would flow. The County asserted the owners didn’t have standing because the majority of these actions by the government occurred before the plaintiffs purchased the property. The trial court agreed with the County, and entered summary judgment in its favor. Next stop, Nevada Supreme Court.

The court reversed, and applying a different analysis than below, concluded that the County’s approval of subdivision plats and acceptance of dedications — even if those actions occurred prior to the plaintiffs’ ownership — qualified as “substantial” government involvement. The court noted that “Nevada caselaw has not clearly and comprehensively set forth the elements of inverse condemnation, but we do so now.” Slip op. at 5. Here are your elements:

As the counterpart of eminent domain, inverse condemnation requires a party to demonstrate the following: (1) a taking (2) of real or personal interest in private property (3) for public use (4) without just compensation being paid (5) that is proximately caused by a governmental entity (6) that has not instituted formal proceedings.

Slip op, at 5. When a private party acts in concert with a government entity, “government responsibility may be established by demonstrating that the government entity was substantially involved ‘in the development of private lands for public use which unreasonably injure[d] the property of others.'” Slip op. at 6 (quoting Cty. of Clark v. Powers, 611 P.2d 1072, 1077 (Nev. 1980)).

Applying that test here, the court concluded that physical involvement isn’t a requirement. Yes, in Powers, the court held that because the government was actually involved in construction, that counted as “substantial involvement.” But the court clarified that isn’t the only situation where liability may attach. Slip op. at 7 (“We have not limited the range of actions that constitute substantial involvement to physical engagement in private activities.”). And while “mere planning” alone isn’t enough, further involvement may be. Here, although there was no involvement by the County in construction, it did more than mere planning.”

The Fritzes alleged that Washoe County did more than approve subdivision maps. The Fritzes provided evidence that, among other activities, Washoe County formally accepted dedications of the streets and developments and entered into an agreement with NDOT to direct water from the developments north into Whites Creek, rather than to allow the water to follow its natural path down Mount Rose Highway. Therefore, unlike the county in Ullery, Washoe County has taken actions beyond merely approving the subdivision maps, and the Fritzes’ inverse condemnation claim here is actionable.

Summary judgment reversed, case remanded for more.

Fritz v. Washoe County, 2016 WL 4140940 (NV 8/4/2016)