RAPID CITY — The South Dakota Supreme Court has turned back a lawsuit from homeowners in the Hideaway Hills subdivision near Black Hawk, concluding they did not show a constitutional basis for compensation after years of sinking ground and sinkholes.
In an opinion filed July 9, the court affirmed a lower court’s summary judgment for the State of South Dakota, rejecting an inverse condemnation claim brought by residents who say historic gypsum mining and later land-reclamation work led to cracking, settling and a large sinkhole that opened on East Daisy Drive in April 2020.
Why the court found in the state's favor
The homeowners, led by resident Andrew Morse, argued the state’s past activities effectively took or damaged private property without compensation — the legal heart of inverse condemnation under the South Dakota Constitution. But the Supreme Court said the mining and reclamation work occurred while the land was state-owned, and therefore the property at that time was not “private property,” a key constitutional requirement for an inverse condemnation claim.
The court also rejected a related argument that the state retained subsurface mineral rights when it later sold the land in the 1990s and should therefore be responsible. Justices found the homeowners did not demonstrate the state’s conduct amounted to a taking or damaging of property for a public use, another constitutional prerequisite.
- Homeowners' timeline: Cracking and settling first reported in 2008; a significant sinkhole prompted evacuations in April 2020.
- Plaintiffs' claim: State mining and reclamation work caused current instability.
- Court's holding: Activities happened while land was state property; inverse condemnation claim fails under constitutional standards.
What the ruling means for residents
The justices acknowledged the seriousness of the homeowners’ situation but concluded the constitutional route for compensation is not available under the facts presented. Because the court found no valid inverse condemnation claim, it did not consider other legal theories raised in the case, including strict liability, causation or whether the lawsuit was timely.
| Date | Issue | Court outcome |
|---|---|---|
| 2008 | Initial reports of cracking and settling | — |
| April 2020 | Large sinkhole on East Daisy Drive; evacuations | — |
| July 9, 2026 | Supreme Court opinion on inverse condemnation | Upheld summary judgment for State of South Dakota |
The ruling narrows a legal pathway for property owners seeking state compensation where land underwent industrial use while under state ownership. For Hideaway Hills residents, it leaves unresolved practical questions about safety, ongoing stability and potential remedies under other areas of law or through legislative action.
Local officials and homeowners will now have to weigh next steps outside inverse condemnation, whether pursuing alternate legal theories, seeking remediation through other agencies, or pressing policymakers for solutions. The decision underscores how the historical record of land ownership and use can shape modern claims — especially in communities built atop former mining operations.
For residents concerned about ground stability or immediate hazards, county emergency management and local public works remain primary contacts for reporting dangerous conditions and seeking guidance.
