In SCMIRF v. City of Myrtle Beach, the South Carolina Supreme Court considered whether an insurance policy provision covered claims or damages asserted by the class against the City (the damages were essentially refunding monies paid for water service).
The policy expressly provided that liability coverage would not apply "to inverse condemnation, condemnation, temporary taking, permanent taking, or any claim arising out of or in any way connected with the operation of the principles of eminent domain, adverse possession or dedication by adverse use."
In granting judgment to the plaintiffs in the class action and ordering the City to make refunds to the class members, the master concluded that requiring one person to pay another's water bill to obtain service amounted to a "taking of property which violates the United States and the South Carolina Constitutions." Although, the master also cited due process and equal protection as reasons to require the City to pay refunds to the plaintiffs in the class action, the heart of the controversy in that lawsuit was the taking by the City of the class members' money without just compensation.
According to the court, the violation of the class members' rights to due process and equal protection would not have occurred but for the wrongful exercise by the City of its eminent domain power. Hence, the policy exclusion applied.