McCarran International Airport v. Sisolak
Cite as: 122 Nev. Adv. Op. No. 58
SUPREME COURT OF THE STATE OF NEVADA
MCCARRAN INTERNATIONAL AIRPORT AND CLARK COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF NEVADA,
STEVE SISOLAK, Respondent.
July 13, 2006
Appeal from an inverse condemnation judgment. Eighth Judicial District Court, Clark County; Mark R. Denton, Judge.
BECKER, J., dissented in part and MAUPIN, J., dissented.
David J. Roger, District Attorney, and E. Lee Thomson, Deputy District Attorney, Clark County; Jones Vargas and R. Douglas Kurdziel, Kirk B. Lenhard, and Scott M. Schoenwald, Las Vegas, for Appellants.
Law Offices of Laura Wightman-FitzSimmons and Laura Wightman-FitzSimmons, Las Vegas, for Respondent.
Law Offices of Thomas D. Beatty and Thomas D. Beatty, Las Vegas; Foley & Lardner and Christi R. Adams and John R. Hamilton, Orlando, Florida, for Amicus Curiae Airports Council International.
Lewis & Roca and Martha J. Ashcraft, Las Vegas; Community Rights Counsel and Timothy J. Dowling and Douglas T. Kendall, Washington, D.C., for Amicus Curiae American Planning Association.
Lionel Sawyer & Collins and E. Leif Reid, Reno; David A. Berg, Washington, D.C.; Beveridge & Diamond, P.C., and Gus Bauman, Thomas Richihi, and Justin A. Savage, Washington, D.C., for Amicus Curiae Air Transport Association of America, Inc.
Woodburn & Wedge and John F. Murtha, Reno, for Amicus Curiae Airport Authority of Washoe County.
BEFORE THE COURT EN BANC.
By the Court, HARDESTY, J.:
In this appeal, we determine whether the district court properly concluded that a county height restriction ordinance effected a “per se” taking of the airspace above private land that is located within the departure critical area of an airport approach zone. Appellant Clark County operates McCarran International Airport, the primary commercial airport serving southern Nevada. The County adopted height restriction ordinances limiting the development of respondent Steve Sisolak’s airspace. The district court concluded that the height restriction ordinances effectuated a per se taking, and a jury awarded Sisolak compensatory damages of $6.5 million. Thereafter, the district court awarded Sisolak attorney fees, costs and prejudgment interest. Because the height restriction ordinances authorize airplanes to make a permanent, physical invasion of the landowner’s airspace, we conclude that a Loretto-type regulatory per se taking occurred, requiring an award of just compensation. Accordingly, we affirm the district court’s judgment.
Since 1955, the County has restricted the height of buildings on property in the vicinity of its public use airports. The County’s height restriction ordinances are designed to avoid air navigation hazards that could endanger the lives and property of airport users and nearby property occupants.
During the 1980s, Sisolak bought three adjacent parcels of land for investment purposes, which were each zoned for the development of a hotel, a casino, or apartments. Located on the southwest corner of South Las Vegas Boulevard and Arby Avenue in Las Vegas, the parcels lie 5,191 feet from the west end of a McCarran International Airport runway.
If a property owner desired to exceed the height restriction, Ordinance 728 required the owner to provide notice to the Federal Aviation Administration (FAA) and the Clark County Director of Aviation for a determination that the proposed building was situated or marked so as not to constitute an aircraft navigation hazard. Further, the ordinance required the property owner to apply for a variance with the Clark County Planning Commission. The Planning Commission could grant a variance when
First, the County adopted Ordinance 1221, amending Ordinance 728, in response to the changes in the runway’s use. Ordinance 1221 placed Sisolak’s property in the precision instrument runway approach zone, which subjected the property to a 50:1 slope restriction. On Sisolak’s property, this resulted in an actual height restriction between 41 and 51 feet. However, regardless of the height restrictions for a particular zone, nothing in the Ordinance could be construed as prohibiting the construction or maintenance of any structure to a height up to thirty-five feet above the surface of the land in any zone.
Second, the County enacted Ordinance 1599, which adopted “Airspace Zoning Maps,” including an Aircraft Departure Critical Area Map for McCarran Airport. According to the map, Sisolak’s property was located in the departure critical area and was therefore placed under an 80:1 slope restriction (limiting an owner’s use of airspace one foot above ground level for every 80 feet from the runway), resulting in height restrictions of 3 to 10 feet above ground level. Ordinance 1599 provided for a variance procedure similar to that in Ordinance 1221. In addition to the height restrictions created by the Ordinances, Sisolak’s property was burdened by a perpetual avigation easement granted by Sisolak’s predecessor in interest in response to a demand by the County in approving a development application. The easement authorized aircraft flights over one half of the property  and provided that the County would have
 An avigation easement is “a signed, acknowledged recognition of the right of overflight from any
airport, including the right to make the noise necessary to operate the aircraft operating from such an airport.” Clark County, Nev., Code § 30.08.030 (2005).
 Only the second five-acre parcel acquired by Sisolak was proposed for development by the
predecessor in interest. Therefore, the easement encumbered only half of Sisolak’s property.
 Only the second five-acre parcel acquired by Sisolak was proposed for development by the predecessor in interest. Therefore, the easement encumbered only half of Sisolak’s property.
Sisolak’s property had always been vacant land. In 1991, Sisolak listed the property for sale. In the following years, he received multiple offers, ranging from $4,752,000 to $7,000,000. However, no sales were completed.
In 2000, one of the potential developers submitted proposed building plans to the FAA and the County for approval. The developer wanted to build “Forbidden City,” a four-story, 600-room resort hotel and casino. The developer requested a variance from the height restrictions to build up to 70 feet.
During the negotiations, a realtor informed Sisolak of the height restrictions on his property. Following up on this information, Sisolak spoke with Bill Keller, a principal planner with the Clark County Department of Aviation. Sisolak testified that Keller explained the height restrictions on the property and told Sisolak about the variance process. Sisolak claimed that Keller told him not to bother asking for a variance to build to more than 75 feet because the County would not approve it. Keller testified that, while he did not have an independent recollection of a conversation with Sisolak, he normally informs a potential developer of the variance procedure. Keller stated that any height estimates he would have given Sisolak would have been in response to hypothetical situations, not specific to Sisolak’s property. The FAA granted the variance, in part, and approved building Forbidden City up to a height of 66 feet, concluding that such a building would not constitute an airport obstruction. The Planning Commission also approved the proposal. However, the approval lapsed because the developer failed to commence construction within the required one-year period. Sisolak did not complete the sale, and no other variance applications were submitted.
Shortly after the attempted sale, Sisolak filed a complaint against the County for inverse condemnation. Sisolak complained that the height restrictions constituted a per se taking of his property under the United States and Nevada Constitutions. Further, Sisolak alleged that low and frequent flights over his property from McCarran Airport devalued the property by subjecting it to noise, dust, and fumes and constituted a compensable taking. The County denied Sisolak’s allegations.
Sisolak then filed a motion for summary judgment on the liability issue, in which he asserted that, under state and federal law, he had a property interest in the airspace up to 500 feet. He argued that the County, by passing various ordinances, denied him the use of the airspace above the property by appropriating it for public use, which constituted a per se taking. Claiming that the occupancy of his airspace substantially decreased the value of his land, Sisolak demanded just compensation.
Opposing Sisolak’s motion, the County filed a countermotion for summary judgment, arguing that Sisolak did not have a vested property interest in the airspace over his land. According to the County, Sisolak had failed to demonstrate a per se taking because he had not shown that the flights over his land were so low and so frequent as to deprive him of the existing use of the property. Further, the County contended, the Ordinances did not require Sisolak to acquiesce to a physical invasion of the property and, in any case, Sisolak’s claim was not ripe because he had never been denied a variance.
After a hearing, the district court denied Sisolak’s motion, finding that genuine issues of material fact remained regarding whether Sisolak was injured by the County’s use of the airspace. Although the district court agreed with Sisolak regarding the inverse condemnation law, it could not discern from the evidence whether the County unequivocally agreed that aircraft flew through Sisolak’s airspace at altitudes lower than 500 feet. Subsequently, the district court indicated that the flights would constitute a per se taking if Sisolak showed that his property was subject to overflights at altitudes lower than 500 feet.
Approximately two months later, the parties provided three items of evidence regarding the flight of aircraft below 500 feet. First, the parties filed a portion of the deposition of a McCarran Airport employee, in which the employee testified that it was “more likely than not” that, on occasion, aircraft flew over Sisolak’s property at altitudes lower than 500 feet, but that he was unable to specify the exact altitudes. Second, they supplied a map depicting flight tracks for McCarran Airport that indicated that a flight track went over Sisolak’s property. Third, the parties presented the County’s response to Sisolak’s first set of interrogatories in which the County acknowledged that “[u]pon visual observation, defendants believe that aircraft have flown over the subject property at an altitude lower than 500 feet.”
The district court found that the evidence established that airplanes were flying through Sisolak’s airspace at an altitude lower than 500 feet. Accordingly, the district court held that Sisolak had established a prima facie case for a per se taking, relying on Loretto v. Teleprompter Manhattan CATV Corp., Kaiser Aetna v. United States, and Nollan v. California Coastal Commission.
 444 U.S. 164 (1979).
 483 U.S. 825 (1987).
Alternatively, the County argued that if the district court did not amend its order, it should dismiss Sisolak’s complaint on ripeness grounds. Citing Pennsylvania Coal Co. v. Mahon, the County argued that a regulatory takings case is only ripe for adjudication when the landowner exhausts all administrative remedies. According to the County, Sisolak had never applied for a variance; therefore, Sisolak’s takings claim was not ripe for review. Sisolak opposed the motion, claiming that his argument had always been that the effect of the Ordinances was a physical invasion of his airspace, resulting in a per se takings claim and that, therefore, exhaustion of administrative remedies was not necessary. The district court denied the motion to amend.
After the district court held that the Ordinances effected a per se taking of Sisolak’s private property, the matter proceeded to trial for the determination of just compensation due. The parties stipulated to dismiss all claims raised in the complaint concerning noise, dust, fumes, fuel, particles and/or vibrations caused by or resulting from the operation of aircraft over Sisolak’s property.
One of Sisolak’s experts testified regarding devaluation of Sisolak’s property caused by the Ordinances. This expert appraised the property for its highest and best use at $10,890,000, as of May 2001, taking into account Ordinance 728, but not Ordinances 1221 and 1599. According to this expert, the property’s best use in the “before condition” would be a hotel or timeshare with a height of approximately 110-180 feet. To determine the extent of the taking, the expert subtracted the value in the “before condition” from the property’s value in the “after condition,” the highest and best use of the property after taking into account the height restrictions. Despite the fact that, if strictly enforced the Ordinances prevented Sisolak from building any structure exceeding 3 to 10 feet on his property, Sisolak only sought damages for the area above 66 feet, the extent of the variance previously granted by the County for the proposed Forbidden City project. As a result, the expert, working under the assumption that a developer could build to a height of 66 feet, calculated that Sisolak’s property was worth $4,791,000 in the “after condition.” Therefore, Sisolak’s first expert concluded that the taking was worth $6,980,000.
Sisolak’s second expert also concluded that the highest and best use of the property, without considering Ordinances 1221 and 1599, would be a hotel, casino or timeshare, since that was the trend in the surrounding area, and that the property was worth $12,200,000 for these uses. After appraising Sisolak’s property at $5,230,000 in the “after condition,” with the assumption that Sisolak could build to 66 feet, this expert concluded that the taking resulted in a loss to Sisolak of $6,970,000.
With respect to the Ordinances’ impact, the County expert stated that they did not negatively influence Sisolak’s property. After the enactment of Ordinance 1221, according to this expert, property values in the area had continued to increase and property development had commenced. Taking into consideration that more regulated property is less desirable than property with fewer restrictions, the County’s expert appraised Sisolak’s property at $6,535,000 in the after condition, thus estimating a loss of $200,000.
Over the County’s objection, the district court instructed the jury that it “must determine the fair market value of Mr. Sisolak’s property after the imposition of Ordinances 1221 and 1599, under the condition that a variance would be granted to construct a building no higher than 66 feet above ground level.” The jury then returned a verdict in Sisolak’s favor for $6,500,000. Subsequently, the district court entered a judgment in inverse condemnation and awarded Sisolak a total of $16,617,730.68, reflecting the $6,500,000 jury award, $107,730.68 in costs, $1,950,000 in attorney fees, and $8,060,000 in interest.
The County appeals. The American Planning Association, Air Transport Association of America, Inc., Airports Council International-North America and the Airport Authority of Washoe County filed amicus curiae briefs in support of the County’s position on appeal.
We must determine whether Sisolak had a valid property interest in the airspace over his property; whether the height restrictions constituted a regulatory per se taking of the property, and whether the district court abused its discretion during trial and post-trial proceedings relating to the award of just compensation, attorney fees and costs, and prejudgment interest.
Sisolak has a valid property interest in the airspace above his land
An individual must have a property interest in order to support a takings claim. Accordingly, the court must first determine “whether the plaintiff possesses a valid interest in the property affected by the governmental action, [that is,] whether the plaintiff possessed a ‘stick in the bundle of property rights,’” before proceeding to determine whether the governmental action at issue constituted a taking. The term “property” includes all rights inherent in ownership, including the right to possess, use, and enjoy the property.
 Black’s Law Dictionary 1252 (8th ed. 2004).
The Supreme Court of the United States has recognized, in its seminal case involving airspace takings, that a landowner has an interest in at least some of the airspace above his or her land. In United States v. Causby, the Supreme Court reasoned that “[t]he landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land. The fact that he does not occupy it in a physical sense―by the erection of buildings and the like―is not material.”
 Id. (citation omitted).
 14 C.F.R. § 91.119 (2006).
 Ray S. Matson, et al., 145 Ct. Cl. 225 (1959).
 NRS 493.030 states:
“Sovereignty” is defined, in part, as “[s]upreme dominion, authority, or rule,” or “[t]he supreme political authority of an independent state.” Black’s Law Dictionary 1430 (8th ed. 2004).
The statutory construction, consistent with the assurances found in our Constitution, makes the lawful right to flight subordinate to the ownership of the space above the lands. Therefore, airplanes may fly over Sisolak’s property below 500 feet so long as they do not interfere with his current or future use of the property. While NRS 493.030, NRS 493.040, and NRS 493.050(1)(a) recognize lawful air flight over private property, those statutes ensure the landowners’ ownership and use of their airspace up to 500 feet. It is for that reason that NRS 37.010(14) recognizes that eminent domain may be exercised for “[a]irports, facilities for air navigation and aerial rights-of-way.” Thus, we conclude that Nevadans hold a property right in the useable airspace above their property up to 500 feet.
 The County argues that Sisolak never obtained a vested property right in his airspace because he failed to obtain zoning or use permit approvals to undertake a project to use the airspace, and thus his airspace was not constitutionally protected from uncompensated takings. This argument lacks merit because NRS 493.040 vests ownership in the space above land, up to 500 feet, in the owners of that property.
 S.O.C., Inc. v. The Mirage Casino-Hotel, 117 Nev. 403, 409, 23 P.3d 243, 247 (2001) (quoting Dixon v. City of Phoenix, 845 P.2d 1107, 1114 (Ariz. Ct. App. 1992)).
Although similar avigation easements are recorded against property throughout Clark County as a condition of building permits, requiring an uncompensated easement as a condition to development is improper and cannot be used by the County as a defense to the taking of a landowner’s airspace without compensation. The Supreme Court, in Nollan v. California Coastal Commission, reasoned that “to obtain easements of access across private property the State must proceed through its eminent domain power” because “requiring uncompensated conveyance of [an] easement outright would violate the Fourteenth Amendment.” Therefore, the district court did not err in instructing the jury that the perpetual avigation easement provided no defense to the taking of Sisolak’s airspace.
 Id. at 834.
The district court did not err when it found the County liable for a Loretto-type per se regulatory taking of Sisolak’s property
 U.S. Const. amend. V.
 260 U.S. 393, 415 (1922).
 Lucas, 505 U.S. at 1015.
 Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537 (2005).
 Id. We also recognized these categorical rules in Kelly v. TRPA, 109 Nev. 638, 648, 855 P.2d 1027, 1033 (1993).
 Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 322-23 (2002); Yee v. Escondido, 503 U.S. 519, 522-23 (1992).
 FCC v. Florida Power Corp., 480 U.S. 245, 252 (1987).
 Goldblatt v. Hempstead, 369 U.S. 590, 594 (1962).
 438 U.S. 104, 124 (1978).
 Id. at 130-31 (“‘Taking’ jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, [the] Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole . . . .”); see also Tahoe-Sierra, 535 U.S. at 331 (district court erred by disaggregating property into a thirty-two month segment of time from the remainder of the property owner’s fee simple estate and considering whether property owners were deprived of all economically viable use during that period).
 See Euclid v. Ambler Co., 272 U.S. 365, 397 (1926) (regulations valid although they effected a seventy-five percent diminution in value of property); Hadacheck v. Los Angeles, 239 U.S. 394, 414 (1915) (ordinance prohibiting highest and best use of land as a brickworks was valid, although it reduced the value of property from $800,000 to $60,000); William C. Haas v. City & Cty. of San Francisco, 605 F.2d 1117, 1121 (9th Cir. 1979) (zoning regulations were not a taking although they reduced the value of property from $2,000,000 to $100,000).
 Yee v. Escondido, 503 U.S. 519, 522-23 (1992).
The matter is ripe for review under the regulatory per se takings analysis
As a preliminary matter, we address the County’s contention that this matter is not ripe for review because the County never denied a variance. The Supreme Court has required exhaustion of administrative remedies in cases where a regulation is alleged to have gone too far in burdening private property, “‘[insisting] on knowing the nature and extent of permitted development before adjudicating the constitutionality of the regulations that purport to limit it.’” However, the Supreme Court has reasoned that if a regulation effects an “unconditional and permanent” taking, the matter is ripe for the Court’s review. Further, in cases involving a physical occupation of private property, the government “has a categorical duty to compensate the former owner,” and the extent of the occupation is relevant only to determine the amount of compensation due, not whether the regulation effects a taking. Thus, Sisolak was not required to exhaust administrative remedies by applying for a variance before bringing his inverse condemnation action based on a regulatory per se taking of his private property.
 Id. at 1012 (also reasoning that the landowner did not have to pursue any subsequently created permit procedures before his takings claim would be considered ripe).
 Tahoe-Sierra, 535 U.S. at 322.
 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 437 (1982).
Sisolak did not have to prove low and frequent overflights to establish a regulatory per se taking
With respect to takings cases involving overflights, the Supreme Court has held that when low and frequent airplane overflights substantially devalue the current use and enjoyment of property, a compensable event occurs. In United States v. Causby, low and frequent overflights by military aircraft destroyed a chicken farming business because the noise from the overflights caused the chickens to reduce egg production and to die from fright. The Supreme Court noted that, if the flights rendered the farmer’s land uninhabitable, it would be as if the government “had entered upon the surface of the land and taken exclusive possession of it.” Because the limitation on the land’s utility profoundly diminished its value, the Court held that “[f]lights over private land are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land.”
 Id. at 261.
 Id. at 266.
 Id. at 89 (citation omitted) (quoting Causby, 328 U.S. at 265).
 Id. at 87.
 Id. at 90.
The ordinances effect a regulatory per se taking of Sisolak’s property under the United States and Nevada Constitutions
We agree with Sisolak that, under the United States and Nevada Constitutions, the ordinances authorize the permanent physical invasion of his airspace. The ordinances exclude the owners from using their property and, instead, allow aircraft to exclusively use the airspace as a critical departure area within an airport approach zone. The essential purpose of the ordinances adopted to facilitate flights through private property is to compel landowner acquiescence.
In contrast to Penn Central-type regulatory takings cases, regulatory per se takings cases “are relatively rare, easily identified, and usually represent a greater affront to individual property rights.” Before its seminal physical occupation takings case, Loretto v. Teleprompter Manhattan CATV Corp., the Supreme Court determined that the United States Government took private property when it attempted to create a public right of access to a pond that, until substantial improvements by its private landowners, was incapable of being used as a navigable waterway. In that case, Kaiser Aetna v. United States, the Court distinguished a taking “in which the Government is exercising its regulatory power in a manner that will cause an insubstantial devaluation of . . . private property,” from a physical invasion of private property. And the Court concluded that “the imposition of the navigational servitude in this context will result in an actual physical invasion of the privately owned marina.” The Court further concluded that “even if the Government physically invades only an easement in property, it must nonetheless pay just compensation.”
 458 U.S. 419 (1982).
 Kaiser Aetna v. United States, 444 U.S. 164, 178 (1979).
 Id. at 180.