2007 in Review: Post-Kelo Claims of Pretext

In 2007, the courts started to apply the U.S. Supreme Court's decision in Kelo v. City of New London, 545 U.S. 469 (2005), especially how to mesh the Court's deferential standard of review with property owner claims of pretext. 

Kelo left intact the standard that a determination that a taking will be for public use is measured by whether the legislature "conceivably" could have believed it would result in economic benefit, while leaving open the possibility that certain takings would not pass judicial review.  Justice Kennedy elaborated on that issue, and provided the roadmap for how a court should deal with a claim of pretext:

A court applying rational-basis review under the Public Use Clause should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits, just as a court applying rational-basis review under the Equal Protection Clause must strike down a government classification that is clearly intended to injure a particular class of private parties, with only incidental or pretextual public justifications.

Kelo, 545 U.S. at 491 (Kennedy, J., concurring).  Justice Kennedy added:

A court confronted with a plausible accusation of impermissible favoritism to private parties should treat the objection as a serious one and review the record to see if it has merit, though with the presumption that the government’s actions were reasonable and intended to serve a public purpose.

Id. After Kelo, property owners and property takers were left with the question of what would qualify as a "pretext" sufficient to overcome a claim by government that a condemnation was supported by a public purpose.  Several post-Kelo cases addressed the pretext issue, with varying results, and methods of analysis. 

• In 49 Wb, LLC v. Village of Haverstraw, 2007 NY Slip Op 05506 (Jun. 19, 2007), a New York state court invalidated a taking because the evidentiary record in the case demonstrated the government was attempting to take property for the sole purpose of benefiting private, not public, interests. 

• In Goldstein v. Pataki, however, a New York federal court dismissed a property owner challenge to a taking because the property owner's complaint did not allege enough facts to show a private benefit (Goldstein was appealed to the Second Circuit where it awaits a ruling). 

• Didden v. Village of Port Chester, 173 Fed. Appx. 931, 2006 WL 898093 (2d Cir. Apr. 5, 2006) held the property owner's claim that a private developer demanded cash in return for not exercising eminent domain was not actionable under the Public Use Clause.

• In Franco v. National Capital Revitalization Corp., No. 06-CV-645 (July 12, 2007), the District of Columbia Court of Appeals reinstated a pretext claim that had been dismissed by the trial court, holding that the trial court should have undertaken a factual inquiry "to determine that the legislation had 'an overriding public purpose' and 'will provide substantial benefits to the public'" as claimed by the condemnor.  The court held that the trial court's "discussion suggests that, once the legislature has declared that there is a public purpose for a condemnation, an owner is foreclosed as a matter of law from demonstrating that the stated reason is a pretext.  We do not interpret Kelo so broadly."

• In MiPro Homes, LLC v. Mount Laurel Township, 878 A.2d 38 (N.J. Super. 2005), aff'd 910 A.2d 617 (N.J.) (per curiam), cert. denied, ___ U.S. ___ (2007), the New Jersey state courts held that evidence the government was taking property to stop development and preserve open space was a public use and not pretextual. 

• In Western Seafood Co. v. United States, No 04-41196 (5th Cir., Oct. 11, 2006), the court held that a private-to-private transfer for economic development that was accomplished as part of a "carefully considered development plan" passed muster.