Cardiff Wales, LLC v. Wash. Cnty. Sch. Dist.

511 P.3d 1155

CARDIFF WALES, LLC, Petitioner,

v.WASHINGTON COUNTY SCHOOL DISTRICT, Respondent.

No. 20210221

Supreme Court of Utah.

Heard February 7, 2022

Filed May 26, 2022

Justin P. Matkin, Robert A. McConnell, Jeffery A. Balls, Salt Lake City, for petitioner

Russell S. Mitchell, St. George, for respondent

Justice Pearce authored the opinion of the Court in which Chief Justice Durrant, Justice Petersen, Judge Brown, and Judge Howell joined.

Justice Pearce, opinion of the Court:

INTRODUCTION

¶1 Cardiff Wales, LLC claims that it sold a parcel of land to Washington County School District to avoid an eminent domain lawsuit the School District had threatened to pursue if Cardiff Wales did not agree to the sale. Several years after the sale, the School District decided it did not need the land and sold it to a third party. Cardiff Wales, who did not learn of the resale until after the sale had closed, protested and claimed that the School District had failed to offer it the right of first refusal to repurchase its former property. Utah law requires a government entity to offer property acquired through condemnation or a threat of condemnation to the original owner before disposing of it.

¶2 Cardiff Wales filed suit against the School District arguing that the School District acquired its property under a "threat of condemnation." Utah law provides that a threat of condemnation occurs when "an official body of the state or a subdivision of the state, having the power of eminent domain, has specifically authorized the use of eminent domain to acquire the real property." UTAH CODE § 78-34-20(1)(b) (2007), replaced by UTAH CODE § 78B-6-521(1)(a)(ii) (2022). The district court concluded that Cardiff Wales never experienced a threat of condemnation and dismissed the suit for failure to state a claim. Cardiff Wales appealed.

¶3 The court of appeals affirmed, concluding that a government entity does not "specifically authorize" the use of eminent domain until it approves an eminent domain lawsuit in an open meeting. Cardiff Wales LLC v. Wash. Cnty. Sch. Dist. , 2021 UT App 21, ¶¶ 12–13, 483 P.3d 1262. We agree with the court of appeals that property is not taken under a threat of eminent domain until a government entity specifically authorizes the taking. But the statute does not support the court of appeals’ narrow interpretation of what it means to be specifically authorized. We reverse and remand.

BACKGROUND

¶4 Cardiff Wales owned a piece of property in Washington City (City) that it wanted to develop.¹ Cardiff Wales began working with the City to obtain the permits it needed to get its development underway. During this process, the City informed Cardiff Wales that the School District might be interested in constructing a new high school on the property. Cardiff Wales reached out to the School District, which confirmed its desire to purchase the land or take it through condemnation if necessary.

¶5 Cardiff Wales elected to negotiate with the School District. But throughout the negotiation process, the School District reminded Cardiff Wales that if voluntary negotiation was not successful, a condemnation action was "imminent." Cardiff Wales ultimately agreed to sell the property to the School District to avoid losing the parcel through eminent domain.

¶6 As part of the transaction's closing, the School District sent Cardiff Wales a letter. It stated:

This letter is to serve as written confirmation that earlier this year the Washington County School District informed you that it wished to acquire property from Cardiff Wales, LLC, for the construction of two schools. The District informed you, in accordance with Utah State law, that if agreeable terms could not be reached with Cardiff Wales, LLC for the purchase of the property, the District would be forced to use eminent domain powers to acquire the property. However, over the course of the past several months the parties were able to reach a mutual agreement for the sale of approximately 24.28 acres of property from Cardiff Wales to the District, which transaction closed on the date hereof. We appreciate your cooperation in working with the District to conclude this transaction and avoid the eminent domain process.

¶7 The School District never built a school on the property. Instead, approximately a decade after the School District acquired the property, it sold it to a third party.

¶8 After Cardiff Wales learned that the School District had sold the parcel, the company filed a complaint alleging that the School District had violated its statutory obligation by not first offering to sell the property back to Cardiff Wales. Cardiff Wales directed the court to the section of the Utah Code that requires a subdivision of the state to grant a right of first refusal to the property's seller if that property was acquired under threat of eminent domain. UTAH CODE § 78-34-20(2) (2007), replaced by UTAH CODE § 78B-6-521(1)(a)(ii) (2022).² The School District insisted that it had not acquired the property by threatening eminent domain and moved to dismiss the complaint.

¶9 The district court granted the School District's motion to dismiss. The court opined that Cardiff Wales's right to repurchase "hinge[d] ... largely on the meaning of ‘threat of condemnation’ under the 2007 version of Utah Code § 78-34-20." And, according to the district court, because there was "no allegation before the court that the School [District] ‘specifically authorized the use of eminent domain’ to acquire the real property" under Utah Code section 78-34-20(1)(b) (2007), the sale could not have occurred under the threat of condemnation.

¶10 The court further explained that Cardiff Wales had failed to allege that the School District had held "a public meeting with the attendant required public notices, [and] statutory notices to [Cardiff Wales] ... and there [was] no claim of any vote to specifically approve the filing of an eminent domain action in court." The court concluded that because there had been "no allegation of specific or formal authorization for the use of eminent domain, the right of first refusal claimed by [Cardiff Wales] ha[d] not been triggered." Cardiff Wales appealed.

¶11 The court of appeals read the statute similarly to the district court. It held that a "threat of condemnation" arose only when a government entity has "specifically authorized the use of eminent domain to acquire real property." Cardiff Wales LLC v. Wash. Cnty. Sch. Dist. , 2021 UT App 21, ¶ 11, 483 P.3d 1262 (emphasis omitted). The court then concluded that Cardiff Wales "fail[ed] to give due meaning to the requirement that the use of eminent domain be ‘specifically authorized.’ " Id. ¶ 12 (quoting UTAH CODE § 78-34-20(1) ). The court of appeals opined that the 2007 version of the statute "governed the process to specifically authorize eminent domain's use." Id.

¶12 The court next defined "specifically authorized" by drawing from a separate section of the code which provides "that ‘[p]roperty may not be taken by a political subdivision of the state unless the governing body of the political subdivision approves the taking’ " and spells out the steps it must take for the use to be approved. Id. (quoting UTAH CODE § 78-34-4(2)(b) ) (alteration in original). One of those steps requires the entity's governing body to vote to approve the filing of an eminent domain complaint. Id.

¶13 The court of appeals concluded that "to survive the motion to dismiss under the theory that [the School District] acquired the Property by threat of condemnation, Cardiff [Wales] must allege that [the School District] voted and approved the use of its eminent domain power to acquire the Property." Id. ¶ 13. Accordingly, the court of appeals held that the district court correctly dismissed the complaint for failure to state a claim upon which relief could be granted because Cardiff Wales never alleged that the School District took a final vote to approve filing an eminent domain action. Id.

¶14 Cardiff Wales petitioned for a writ of certiorari.

STANDARD OF REVIEW

¶15 The court of appeals affirmed the district court's grant of a motion to dismiss for failure to state a claim. We review the court of appeals’ decision for correctness, granting no deference to the decision of the lower court. Amundsen v. Univ. of Utah , 2019 UT 49, ¶ 20, 448 P.3d 1224 (citation omitted). " ‘In so doing, we accept the plaintiff's description of the facts alleged in the complaint to be true’ and view all reasonable inferences from those facts in the light most favorable to the plaintiff." Id. (citation omitted).

¶16 Cardiff Wales asks us to consider whether the court of appeals erred in its construction and application of Utah Code section 78-34-20 when it concluded that the company did not face a threat of condemnation because it did not allege that the School District had taken a final vote to approve a condemnation action. This question requires us to interpret and apply the relevant statutes. "We review questions of statutory interpretation for correctness, affording no deference to the [lower] court's legal conclusions." State v. Gallegos , 2007 UT 81, ¶ 8, 171 P.3d 426.

ANALYSIS

I. THE COURT OF APPEALS ERRED IN ITS INTERPRETATION OF THE STATUTORY PHRASE "SPECIFICALLY AUTHORIZED"

¶17 The court of appeals held that under Utah Code section 78-34-20, a government entity must have "specifically authorized" the use of eminent domain before a "threat of condemnation" can exist. Cardiff Wales LLC v. Wash. Cnty. Sch. Dist. , 2021 UT App 21, ¶ 12, 483 P.3d 1262. The court then opined that the government entity specifically authorizes the use of eminent domain when it follows the requirements in Utah Code section 78-34-4 to approve the filing of a condemnation action. Id.

¶18 Cardiff Wales asserts that the court of appeals erred in two ways. It first contends that the court of appeals misread Utah Code section 78-34-20 when it defined a "threat of condemnation" as arising only when a...