12/31/2024
DA 24-0233
Case Number: DA 24-0233
IN THE SUPREME COURT OF THE STATE OF MONTANA
2024 MT 323
FLATHEAD PROPERTIES, L.L.C., a WA L.L.C.,
Plaintiff and Appellant,
v.
FLATHEAD COUNTY, a POLITICAL SUBDIVISION
OF THE STATE OF MONTANA,
Defendant and Appellee.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-21-817
Honorable Dan Wilson, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Charles W. Schuyler, Charles W. Schuyler, P.C., Missoula, Montana
For Appellee:
James H. Goetz, Trent M. Gardner, Henry J.K. Tesar, Goetz, Geddes &
Gardner, P.C., Bozeman, Montana
Submitted on Briefs: October 23, 2024
Decided: December 31, 2024
Filed:
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__________________________________________
Clerk
Justice Ingrid Gustafson delivered the Opinion of the Court.
¶1 Flathead Properties, L.L.C. (Appellant) appeals the April 3, 2024 Order of
Dismissal with Prejudice entered by the Eleventh Judicial District Court, Flathead County.
The Order granted Flathead County’s M. R. Civ. P. 12(b)(6) motion to dismiss.
¶2 We restate the issue on appeal as follows:
Whether the District Court erred by granting Flathead County’s M. R. Civ. P.
12(b)(6) motion to dismiss.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Appellant owned a peninsula-shaped tract of land along the shoreline of Flathead
Lake. During a few months of the year, the water level would rise and cut off the end of
the peninsula from the rest attached to shore, creating an island. In 2011, Appellant applied
for, and was granted, a permit from the Flathead County Planning and Zoning Office to
construct a bridge to connect the island to the peninsula. The bridge would only be used
during those months the water level rose to create the island.
¶4 The Community Association for North Shore Conservation (C.A.N.S.C.) filed an
action against the County in the District Court asking the court to void approval of the
permit. The group alleged the permit did not take into consideration the Montana
Lakeshore Protection Act. Appellant intervened in the action and continued to build the
bridge. The District Court held the permit was void ab initio. The court ordered Appellant
to remove the bridge and restore the area to its natural state. On appeal to this Court, we
upheld the District Court’s Order in Cmty. Ass’n for N. Shore Conservation, Inc. v.
Flathead Cnty., 2019 MT 147,
396 Mont. 194,
445 P.3d 1195.
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¶5 After this Court’s decision, Appellant asserted a claim for inverse condemnation
against the County. Appellant claimed it had a vested property interest in the bridge once
it was built, pursuant to § 75-7-206, MCA, and the Court could not retroactively take away
its vested right. Appellant asserted removal of the bridge by court order amounted to a
taking, and the County owed Appellant reasonable compensation.
¶6 The County filed a 12(b)(6) motion to dismiss for failure to state a claim. The
County argued that because the District Court found the permit was void ab initio,
Appellant never had a vested property interest to begin with. Additionally, the County
asserted inverse condemnation does not apply to this situation because Appellant cannot
prove the County acted to take or damage Appellant’s property for public use. The County
asserts the bridge removal was not for public use nor a public improvement, rather it was
to comply with the Montana Lakeshore Protection Act.
¶7 The District Court granted the County’s motion dismiss on April 3, 2024, agreeing
with the County that as the permit was void ab initio, it was as if the permit never existed
and therefore could never have given Appellant a property interest in the bridge.
STANDARD OF REVIEW
¶8 This Court reviews a district court’s ruling on a M. R. Civ. P. 12(b)(6) motion to
dismiss de novo. Marshall v. Safeco Ins. Co., 2018 MT 45, ¶ 6,
390 Mont. 358,
413 P.3d
828. When reviewing an order dismissing a complaint under M. R. Civ. P. 12(b)(6), we
construe the complaint in the light most favorable to the plaintiff. Marshall, ¶ 6. The
district court must not dismiss a complaint for failure to state a claim, “unless it appears
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beyond doubt the plaintiff can prove no set of facts in support of his claim that would entitle
him to relief.” Marshall, ¶ 6.
¶9 “A motion to dismiss under M. R. Civ. P. 12(b)(6) has the effect of admitting all
well-pleaded allegations in the complaint.” Puryer v. HSBC Bank USA, N.A., 2018 MT
124, ¶ 10,
391 Mont. 361,
419 P.3d 105. When considering the motion, “all allegations of
fact contained therein are taken as true.” Puryer, ¶ 10. “Dismissal is proper under M. R.
Civ. P. 12(b)(6) if the plaintiff would not be entitled to relief based on any set of facts that
could be proven to support the claim.” Puryer, ¶ 10 (citation omitted).
DISCUSSION
¶10 Whether the District Court erred by granting Flathead County’s M. R. Civ. P.
12(b)(6) motion to dismiss.
¶11 A claim is subject to dismissal if it is insufficient as pled to state a cognizable claim
entitling the claimant to relief. M. R. Civ. P. 12(b)(6). “A claim is subject to dismissal
only if it either fails to state a cognizable legal theory for relief or states an otherwise valid
legal claim but fails to state sufficient facts that, if true, would entitle the claimant to relief
under that claim.” Puryer, ¶ 12. M. R. Civ. P. 8(a) and 12(b)(6) have liberal pleading
requirements, but they do not excuse the omission of material and necessary facts that
entitle relief. Puryer, ¶ 12. The complaint must state more than facts that “would breed
only a suspicion” that the claimant is entitled to relief. Jones v. Mont. Univ. Sys., 2007 MT
82, ¶ 42,
337 Mont. 1,
155 P.3d 1247.
¶12 Because this case comes to us following a M. R. Civ. P. 12(b)(6) dismissal, the
factual record is not developed, and we take all well-pled allegations from Appellant’s
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complaint as true. We make no judgments on whether Appellant’s claims could win at
trial or survive a motion for summary judgment after further development of the factual
record. This Court has not yet considered whether reliance on a faulty permit allows
recovery under § 75-7-206, MCA, as Appellant asserts. With that in mind, we consider
whether Appellant’s claims, as pled, are sufficient to survive a 12(b)(6) motion to dismiss.
¶13 Article II, Section 29, of the Montana Constitution states “[p]rivate property shall
not be taken or damaged for public use without just compensation to the full extent of the
loss having been first made to or paid into court for the owner.” A condemnation occurs
when the government, via its eminent domain powers, first initiates proceedings to take
property and compensate the owner. Hamlin Constr. & Dev. Co. v. Mont. DOT, 2022 MT
190, ¶ 17,
410 Mont. 187,
521 P.3d 9. Inverse condemnation refers to a legal action brought
by a property owner after the government has impinged upon the plaintiff’s property
interests, even without a formal exercise of the power of eminent domain. Hamlin, ¶ 17.
“A plaintiff’s success on an inverse condemnation claim depends upon whether the
plaintiff can show that the challenged government action amounts to a taking or damaging
in the constitutional sense.” Hamlin, ¶ 17.
¶14 The initial consideration for an inverse condemnation claim is whether the
government’s actions constituted the taking or damaging of property for public use.
Wittman v. City of Billings,
2022 MT 129, ¶ 16,
409 Mont. 111,
512 P.3d 1209. “[A]
property owner may recover in an inverse condemnation action where actual physical
damage is proximately caused to his property by a public improvement as deliberately
planned and built.” Wittman, ¶ 17 (internal quotations omitted.) Thus, in an inverse
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condemnation claim, a plaintiff must prove: (1) the public improvement was deliberately
planned and built; and (2) the public improvement proximately caused damage to the
plaintiff’s property. Wittman, ¶ 17; Deschner v. State, 2017 MT 37, ¶ 22,
386 Mont. 342,
390 P.3d 152.
¶15 Generally, government licenses or permits do not give rise to a protected property
interest, and a lost opportunity to obtain a permit does not amount to a taking of
compensable property. Helena Sand & Gravel, Inc. v. Lewis & Clark County Planning &
Zoning Comm’n,
2012 MT 272, ¶ 45,
367 Mont. 130,
290 P.3d 691. However, a
constitutionally protected property interest exists where property is owned in fee and the
citizen has the right to use, exclude, transfer, or dispose of the property. Helena Sand &
Gravel, ¶ 46.
¶16 Here, Appellant’s complaint asserted it obtained a vested property right in the bridge
as a physical structure under § 75-7-206, MCA, which states “[w]ork or development
authorized or approved under this part shall not create a vested property right in the
permitted development other than in the physical structure, if any, so developed.”
Appellant asserted the statute protects one who builds a permitted physical structure, as
authorized under the Montana Lakeshore Protection Act, from a later adverse ruling that
revokes a permit. Appellant claims on appeal that § 75-7-206, MCA, provides relief for
loss of vested rights in a physical structure because otherwise “such a loss would always
happen due to a revocation/loss of permit as suffered by” appellant. Thus, according to
appellant, the remedial provision of § 75-7-206, MCA, applies even when the permit is
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later revoked. According to Appellant’s complaint, the forced removal of its bridge
resulted in a taking of its vested property right and requires just compensation.
¶17 We find there are sufficient facts and allegations to support a claim for inverse
condemnation to survive dismissal under a 12(b)(6) motion to dismiss. Appellant relied
on the County’s permit to construct its bridge. Once the bridge was constructed, Appellant
presumably owned the bridge in fee and had the right to use, exclude, transfer, or dispose
of the property; thus, when the facts in Appellant’s complaint are taken as true, Appellant
seemingly had a constitutionally protected property interest in the bridge itself. The
County’s failure to ensure the permit abided by the Lakeshore Protection Act resulted in
the District Court ordering Appellant to remove the bridge and restore the area to its natural
state—which Appellant did in 2023.
¶18 Appellant asserts on appeal that the first element of inverse condemnation is
satisfied because the County intentionally approved construction of the bridge, and in doing
so, created a public improvement. Appellant asserts the bridge was a public improvement
in that only permitted structures along the Montana Lakeshore are in the public interest.
Appellant also asserts the bridge increased the property’s value and tax base, which is a
recognized public goal. Thereby, the County created a public improvement through the
bridge via its increase in property values sufficient to establish a basis for the first element
of inverse condemnation.
¶19 Appellant also claims the removal of the bridge caused damages to its property,
which supports the second element of inverse condemnation. Without addressing the
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merits of the case, we conclude Appellant has sufficiently pled enough to withstand M. R.
Civ. P. 12(b)(6) standards for an inverse condemnation claim.
¶20 Although our case law has recognized a distinction between inverse condemnation
claims and takings claims,1 we address in the alternative whether appellant’s complaint
meets the 12(b)(6) requirements under a takings analysis as appellant briefly referenced a
taking in its complaint, albeit under the heading of its inverse condemnation claim. The
District Court ruled on the 12(b)(6) motion under the assumption the permit was void ab
initio, thus never reaching the complaint. As such, we find it relevant to address a takings
analysis as well.
¶21 “Where a regulation places limitations on land that fall short of eliminating all
economically beneficial use, a taking nonetheless may have occurred.” HS&G, ¶ 43. It
depends “on a complex of factors including the regulation’s economic effect on the
landowner, the extent to which the regulation interferes with reasonable investment-backed
expectations, and the character of the government action.” HS&G, ¶ 43.
¶22 Here, appellant’s complaint asserts it had a vested property right in the bridge, as
described above. Additionally, appellant asserted the bridge added value to its property
and the removal of the bridge thus deprived appellant of all use of the bridge. Appellant’s
complaint also asserts it relied on the County’s permit to expend money and construct its
1
See Egan Slough Cmty. v. Flathead Cnty. Bd. of Cnty. Comm’rs, 2022 MT 57, ¶ 82,
408 Mont.
81,
506 P.3d 996 (noting Appellant’s “reliance on Knight is misplaced. Knight is an inverse
condemnation case, not a regulatory takings case. Inverse condemnation occurs when a public
improvement, deliberately planned and built, proximately causes damage to the plaintiff’s
property.”) (referring to Knight v. Billings,
197 Mont. 165,
642 P.2d 141 (1982)).
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bridge. Finally, appellant asserts the County deliberately issued the permit which later
turned out to be faulty. As such, we find the facts asserted by appellant’s complaint are
also sufficient to withstand a 12(b)(6) dismissal under a regulatory takings analysis.
CONCLUSION
¶23 After reviewing the record, we find Appellant’s complaint contains sufficient facts
to support a claim of inverse condemnation, or in the alternative a regulatory takings claim,
at the M. R. Civ. P. 12(b)(6) stage. Accordingly, the District Court erred by granting the
County’s motion to dismiss.
¶24 Reversed.
/S/ INGRID GUSTAFSON
We Concur:
/S/ JAMES JEREMIAH SHEA
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ JIM RICE
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