Date: 01-15-2002

Case Style: City of Tahlequah, Oklahoma v. Lake Region Electric Cooperative, Inc., et al.

Case Number: 2002 OK 2

Judge: Lavender

Court: Oklahoma Supreme Court

Plaintiff's Attorney: Lloyd E. Cole, Jr., Stilwell, Oklahoma, for the plaintiff/appellee.

Defendant's Attorney: Patrick D. Shore of Derryberry, Quigley, Solomon & Naifeh, Oklahoma City, Oklahoma and Nathan H. Young, III of Nathan H. Young, III, P.C., Tahlequah, Oklahoma, for the defendant/appellant.

Susan Stidham Brandon, Muskogee, Oklahoma, for the defendant/United States of America, ex rel. Rural Electrification Administration.

Description: Defendant, Lake Region Electric Cooperative, Inc. [Lake Region] had part of its electric facilities condemned on February 29, 2000 by the City of Tahlequah [City] pursuant to 18 O.S.1991 § 437.2's terms. City initiated condemnation proceedings in the Cherokee County District Court on May 18, 1998 against Lake Region and the United States of America, ex rel. Rural Electrification Administration [United States]. United States removed the case to federal district court on June 19, 1998. Title 11 O.S.1998 § 21-222 – effective June 10, 1998 – imposed a "prospective and retroactive" moratorium on municipal condemnation of rural electrification systems instituted before July 1, 2002 under § 437.2's provisions. Lake Region moved to dismiss City's condemnation proceeding. The motion to dismiss was denied after the federal district court ruled that giving effect to the § 21-222 moratorium would – as to City's applied-for condemnation – violate Okla. Const. art. V, § 52 which denies the Legislature the power to abate a "cause of action" once brought. The United States Court of Appeals for the Tenth Circuit certified a question of unsettled state law concerning whether City's condemnation proceeding was a "cause of action" protected from legislative abolition by Okla. Const. art. V, § 52's provisions.

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On May 15, 1998 the City of Tahlequah [City] offered to purchase all of Lake Region Electric Cooperative, Inc.'s [Lake Region]1 electric facilities and service rights within City's corporate limits.2 Three days later City instituted a proceeding in the District Court of Cherokee County, Oklahoma to condemn the sought-after interests from Lake Region under the applicable provisions of 18 1991 § 437.2(k).3 The United States of America, ex rel. Rural Electric Administration, [REA] was named as party-defendant because it owns a security interest in the property sought to be condemned. On June 19, 1998 REA removed the case to the United States District Court for the Eastern District of Oklahoma.

Upon removal Lake Region moved for the condemnation proceeding's dismissal asserting the statutory moratorium provided for by the terms of 11 1998 § 21-222. The pertinent statutory language is:

There is hereby declared a moratorium on all municipal condemnation proceedings instituted pursuant to Section 437.2 of Title 18 of the Oklahoma Statutes, initiated prior to July 1, 2002. The moratorium shall also apply to all municipalities or public trusts thereof which attempt to condemn the facilities of electric public utilities or rural electric cooperatives for the purpose of utilizing such facilities for the delivery of electric power and energy. If full consumer choice in the supply of electric power and energy is implemented in this state on or before July 1, 2002, the municipal condemnation provisions authorizing municipalities with electric utilities to condemn the facilities of rural electric cooperatives contained in Section 437.2 of Title 18 of the Oklahoma States is hereby repealed. If retail consumer choice is not implemented in this state on or before July 1, 2002, this moratorium shall become null and void. The moratorium provided for herein shall have prospective and retroactive application. [Emphasis added.]

The U.S. District Court denied Lake Region's motion, holding that because (1) the City-initiated condemnation proceeding is a "cause of action" brought before § 21-222's moratorium became effective and (2) Okla.Const. art V, § 524 denies the Legislature power to abridge a "cause of action" once instituted, the retroactive moratorium could not be asserted to stop City's condemnation of Lake Region's facilities.

The U.S. District Court appointed commissioners to determine just compensation for the condemned electric facilities. The appointed commissioners made their determinations and filed a report. Although Lake Region objected to the report, the same was confirmed on April 23, 1999. Lake Region next appealed [unsuccessfully] to the U.S. Circuit Court of Appeals for the Tenth Circuit. Lake Region then sought a jury trial. On February 29, 2000 an award of $3,746,222.00 was entered by the federal district court as just compensation for City's taking of Lake Region's property.

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The posited query essentially asks whether the municipal condemnation of part of an electrification system qualifies as a "cause of action" which is protected from legislative abrogation by the provisions of Okla.Const. art V, § 52, once the same is brought in the district court. Answered simply, a municipal condemnation of the type here in issue is a "special statutory proceeding" and not a "cause of action" as contemplated under art. V, § 52's provisions. Hence, the § 21-222 moratorium on municipal condemnations of electrification systems is not constitutionally infirm since it is outside the purview of the noted constitutional restriction on the Legislature's powers to affect a pending "cause of action."

Oklahoma's extant jurisprudence defines a condemnation proceeding – such as the one here in issue – as a special statutory proceeding designed to determine in a single action the damages for property taken from private persons for public use.6 The right of eminent domain or public taking of private property is a fundamental attribute of the sovereign state7 that is circumscribed by the provisions of Okla. Const. art. 2, § 24 which in essence provides that such takings can only be accomplished with just compensation. The power of condemnation lies dormant within the State until such time as the Legislature by specific enactment delineates the manner and through whom it may be exercised.8 Such legislative authorization was made by the provisions of 18 1991 § 437.29 which permitted municipalities to condemn electric transmission and distribution lines lying within their corporate limits. Since the Legislature is empowered to authorize municipal condemnations under prescribed guidelines, it can also impose a stay or moratorium on an earlier legislatively-granted condemnation right. As the challenged legislative act [18 1991 § 437.2] is facially regular and is a valid exercise of recognized legislative authority, compliance with the statutorily-authorized condemnation procedure will not generate a civil wrong. A cause of action only arises when a wrong or breach of duty by the defendant occurs. It is what produces the necessity of action.10 When one complies with statutory procedure, no breach of duty happens.

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Click the case caption above for the full text of the Court's opinion.

Outcome: The presence of a civil wrong is a critical identifying characteristic of a "cause of action" since "causes of action" are brought to remedy civil wrongs which are threatened or committed.11 Oklahoma's extant jurisprudence specifically holds that a condemnation proceeding "is a special proceeding and not a civil action. [Authorities omitted] Condemnation proceedings do not involve a tort and are not civil actions at law or suits in equity."12 Because a condemnation proceeding is a special statutory proceeding brought to determine just compensation for a public taking and is not a "cause of action" instituted to remedy a wrong, a legislatively-effected stay of such proceedings would neither implicate nor violate art. V, § 52's circumscription of legislative power to take away a cause of action – regardless of when the condemnation was instituted. The retroactive moratorium reflected in the terms of § 21-222 is an effective exercise of legislative power which is not constitutionally infirm.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: E-mail suggested corrections, comments and/or corrections to: Kent Morlan

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