American Family Insurance, et al., Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-1962

American Family Insurance, et al.,
Appellants,

vs.

City of Minneapolis,
Respondent.

Filed June 25, 2018
Affirmed
Ross, Judge

Hennepin County District Court
File No. 27-CV-16-16920

Steven L. Theesfeld, Yost & Baill, LLP, Minneapolis, Minnesota (for appellants)

Susan L. Segal, Minneapolis City Attorney, Gregory P. Sautter, Assistant City Attorney,
Brian S. Carter, Assistant City Attorney, Minneapolis, Minnesota (for respondent)

Considered and decided by Ross, Presiding Judge; Peterson, Judge; and Worke,
Judge.
U N P U B L I S H E D O P I N I O N
ROSS, Judge
A Minneapolis water main ruptured and flooded several units of a residential
condominium building. Liberty Mutual Insurance covered the claims of individual
condominium owners, American Family Insurance covered the claim of the condominium
association, and the City of Minneapolis reimbursed uninsured condominium owners. The
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insurers sued the city. The district court dismissed the insurers ’ Minnesota takings claim,
reasoning that the flooding lacked the frequency, regularity, and permanency to constitute
a confiscatory taking by invasion and that a takings claim cannot rest solely on property
damage. Although the Minnesota Constitution expressly contemplates takings based on
property damage alone, a damage-only taking requires proof that the damage resulted from
an intentional governmental act designed to achieve a public purpose. Because the insurers
did not allege that the water-main rupture or the flooding resulted from the city’s
intentional act toward some public purpose, we affirm the dismissal.
FACTS
A Minneapolis water main under Portland Avenue ruptured in October 2013 ,
flooding a nearby residential condominium building with three feet of water . The flood
quickly receded but caused extensive property damage. Liberty Mutual Insurance insured
two unit owners and paid them $45,000 to cover their claims. American Family Insurance
insured the condominium association and paid in excess of $75,000 for its claim. The City
of Minneapolis reimbursed u ninsured condominium owners for the ir damages. The
insurers then unsuccessfully requested the city to reimburse them for their payments to the
insureds, and the companies initiated a subrogation action in state district court alleging
negligence, trespass, and an equal -protection violation. The city removed the action to
federal district court , where the insurers added takings claims under the federal and
Minnesota Constitutions. Am. Family Ins. v. City of Minneapolis , 129 F. Supp. 3d 674,
677–78 (D. Minn. 2015).
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The federal district court dismissed the trespass and equal -protection claims at
summary judgment and held that it lacked subject -matter jurisdiction over the unripe
takings claims because the insurers had not exhausted state-law remedies by bringing a
takings claim under the Minnesota Constitution in state court. Id. at 679, 681 –82. The
Eighth Circuit affirmed. Am. Family Ins. v. City of Minneapolis, 836 F.3d 918, 920–24 (8th
Cir. 2016).
The insurers filed another complaint in state court. In it, they asked the district court
to ord er the city to commence inverse -condemnation proceedings and enter judgment
against the city for just compensation for the alleged taking of the insureds’ property. They
sought “compensatory damages, cost of repair damages, diminution in value damages, loss
of use damages and other damages.” The city again removed the case to federal district
court. The federal court dismissed the federal takings claim as unripe and remanded the
case to the state district court to resolve the state takings claim.
Back in state court, the city successfully moved the district court to dismiss the state
takings claim. The district court reasoned that the Minnesota Constitution allows a property
owner to recover damages from a flood in a takings action only if the flooding is “of such
frequency, regularity, and permanency as to constitute a taking” as an invasion, and it held
that the record demonstrates that the flooding was instead merely a temporary invasion that
ended within 12 hours. The district court also rejected the insurers’ argument that, even if
the property owners suffered no permanent invasion, Minnesota law allows a takings claim
to rest on damage to property alone.
The insurers appeal.
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D E C I S I O N
Liberty Mutual and American Family challenge the district court’s dismissal order.
We review a district court’s rule-12 dismissal de novo by determining whether the
complaint presented a legally sufficient claim for relief. Bahr v. Capella Univ., 788 N.W.2d
76, 80 (Minn. 2010). We accept as true the facts alleged in the complaint , construing all
reasonable inferences to favor the nonmoving party, and we will affirm a dismissal i f no
facts could be introduced to achieve the relief sought. Id. Our de novo review here leads us
to affirm.
The insurers reasonably concede that they have alleged only a temporary invasion
rather than a permanent invasion or confiscation of property and that this temporary
invasion cannot establish a taking under the state constitution in the usual confiscation or
invasion sense of a “taking.” A clear line of caselaw establishes that a flood can constitute
a taking as an invasion only if the flooding is more or less permanent. The supreme court
has said that “[w]hether occasional flooding is of such frequency, regularity, and
permanency as to constitute a taking and not merely a temporary invasion . . . is a question
of degree, and each case must stand on its own peculiar facts.” Nelson v. Wilson, 239 Minn.
164, 172, 58 N.W.2d 330, 335 (1953); see also Nolan and Nolan v. City of Eagan , 673
N.W.2d 487, 493 (Minn. App. 2003) ( observing that intermittent flooding does not
constitute a “taking”), review denied (Minn. Mar. 16, 2001); Blaine v. City of Sartell, 865
N.W.2d 723, 729 (Minn. App. 2015) (holding that twice flooding a basement with up to
seven feet of water is not of “such frequency, regularity, and permanency as to constitute
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a taking”). The district court properly rejected the takings claim on the traditional invasion
theory.
The insurers argue that the taking-by-flooding caselaw does not apply here because,
unlike the plaintiffs in those cases, they are seeking compensation on the theory that the
city’s actions caused a flood that damaged, rather than permanently invaded, the owners’
property. The language of the constitutional takings provision and the history behind it
support the insurers’ argument.
The operative clause provides, “Private prop erty shall not be taken, destroyed or
damaged for public use without just compensation therefor, first paid or secured.” Minn.
Const. art. I, § 13 (emphasis added). The phrase “destroyed or damaged” was not in either
the republican or democratic version of the original constitution. Before 1896, the just -
compensation clause read only, “Private property shall not be taken for public use without
just compensation therefor, first paid or secured.” Minn. Const. art. I, § 13 (18 57). Based
on that original provision, a plaintiff owning land that abutted a public street lost his claim
to just compensation for an alleged taking. Henderson v. City of Minneapolis , 32 Minn.
319, 20 N.W. 322 (1884). The Minneapolis city council had authorized the railroad to erect
a bridge to carry a city street over railroad tracks. 32 Minn. at 321, 20 N.W. at 322. The
resulting construction raised the street 15 feet, making the plaintiff’s abutting property
inaccessible. Id. The supreme court rejected the plaintiff’s just -compensation claim,
however, reasoning that his now-inaccessible property had not been physically taken. Id.
at 323, 20 N.W. at 323–24.
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About a decade after the supreme court’s decision in Henderson, the state amended
the takings provision to add the “destroyed or damaged” language that remains today. The
supreme court recognized that the added “destroyed or damaged” phrase directly responded
to its decision in Henderson:
When this amendment was proposed by the legislature, and
when adopted by the people, it was well known that the rule
which had been laid down by this court [in Henderson] . . .
respecting damages to lot owners arising from a change of
grade, had caused gre at hardships, and was an exceedingly
unfair and unjust rule. No man was safe, when improving his
property, by building in conformity with an established grade
line, for he was at the mercy of the city authorities, who might
practically confiscate his prope rty by raising or lowering the
surface or grade line of the street. In such cases, while there
was no taking of property for public use, as the fundamental
law was construed, there was a taking in fact, amounting, in
many cases, to complete destruction and confiscation.

Dickerman v. City of Duluth , 88 Minn. 288, 293, 92 N.W. 1119, 1120 (1903). And the
supreme court has explained that the “damaged or destroyed” language means what it says,
clarifying, “The purpose of the constitutional amendment was to give a landowner the right
to compensation if his land was damaged, even though there was no physical invasion or
appropriation of the land.” In re Hull, 163 Minn. 439, 451 , 204 N.W. 534, 539 (1925). A
party may therefore bring a “takings” claim without asserting an actual “taking” under the
Minnesota Constitution, based only on property damage.
A 1991 supreme court decision implicitly answer ed the next question of whether a
compensatory taking can arise from a purely temporary intrusion or act that causes property
damage, rather than from a permanent or nearly permanent intrusion or obstruction that
continually damages the property. In Wegner v. Milwaukee Mut. Ins. Co., the supreme court
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addressed a takings claim brought by a family whose home was severely damaged by
concussion grenades and tear-gas canisters that police discharged in the ir home to extract
a fugitive intruder who had barricaded himself inside. 479 N.W.2d 38, 38–40 (Minn. 1991).
The Wegner court held “that where an innocent third party’s property is damaged by the
police in the course of apprehending a suspect, that property is damaged within the meaning
of the constitution.” Id. at 41 –42. But i n this case, the district court seems to have
interpreted the disjunctive “or” in the just-compensation clause as conjunctive, saying “that
‘taken, destroyed, or damaged,’ all describe what must be done to a property to constitute
a taking.” In other words, the distri ct court treated the phrase “taken, destroyed or
damaged” to mean “taken, destroyed, and damaged.” This is not the law. We are satisfied
that a compensatory “taking” can arise from a purely temporary intrusion or act that causes
only property damage.
Although a compensatory taking can arise from a purely temporary intrusion or act
that causes only property damage, we nevertheless affirm here because the allegations fall
short on a different element. An act constitutes a compensable taking under the property -
damage theory only if it result ed from an intentional action that the government t ook to
meet a public purpose. The Wegner court held that the damage must result from an
intentional act designed to achieve some public purpose, concluding , in that case , that it
was “undisputed [that] the police intentionally fired tear gas and concussion grenades into
the Wegner house” and “that the damage inflicted by the police in the course of capturing
a dangerous suspect was for a public use within the meaning of the constitution.” Wegner,
479 N.W.2d at 41; see also State ex rel. Youngquist v. Hall , 195 Minn. 79, 85, 261 N.W.
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874, 877 (1935) (explaining that the “most that can be said against the state’s bridge” that
caused the plaintiff’s property to flood periodically during seasons of high water “is that it
is a negligent piece of construction,” which is not beyond remedy, but the “state should not
be compelled to buy what is neither needed nor wanted”). The insurers’ complaint falls
short here. It alleges only that the water main ruptured “as a direct or indirect result of
action or inaction on the part of the City.” The insurers have not alleged that the city
intentionally caused the rupture or the flooding, let alone that the rupture or flooding was
implemented to further some governmental purpose. Nor does the pleading reasonably
imply the missing allegations. The omission is fatal to the takings claim.
The parties also dispute whether the insurers properly styled their suit as a
mandamus action. See Wolfram v. State by Burnquist, 246 Minn. 264, 267 n.1, 74 N.W.2d
510, 512 n.1 (1956) (“When the state, as distinguished from a city or a county, has taken,
destroyed, or damaged private property without just compensation, the proper procedure is
mandamus . . . .”). We need not reach th is issue because, regardless of how it was styled,
the complaint plainly lacks the allegations necessary to state a claim on a property-damage
takings theory.
Affirmed.