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Another Podcast On The Judicial Takings Case (Stop The Beach Renourishment v. Florida)

You may have missed the live program, but it's still not too late to get the podcast of a recent discussion of Stop the Beach Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (June 17, 2010), the Supreme Court case about judicial takings and beachfront property. Here's the course description from ALI-ABA:

In an unusual takings case, Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, the Florida Supreme Court relied on state real property law to conclude that the objecting beachfront property owners lacked a valid property right, and thus the state could "renourish" the beaches. The beachfront owners appealed to the U.S. Supreme Court, asking it to recognize a new doctrine of judicial takings.

On June 17, 2010, the Supreme Court issued its opinion, which may be a partial victory for property-rights advocates. Chief Justice Roberts, and Justices Scalia, Thomas, and Alito all endorsed the idea that the Takings Clause applies to all three branches of government. But the case leaves significant questions about the broader concept of judicial takings. These questions are either unanswered or under-analyzed, and there does not appear to be a consensus about how to go forward.

Join our panel of experts as they explore the questions arising from the decision. Registrants will have the opportunity to submit questions to the faculty prior to and during the program.

James Burling (Pacific Legal Foundation), Richard Frank (U.C. Davis), and Steven Eagle (George Mason) were on the panel.

Note: at the ABA Annual Meeting in August in San Francisco, we put on a live program which included Mr. Burling and Professor Frank (in addition to Professor John Echeverria and Dan Stengle, Esq., counsel for the petitioners). We are in the process of repeating the session in a teleconference. Stay tuned for more about that.

Call For Eminent Domain Photos For Upcoming ABA Book

Here's your chance to be a well-known "eminent domain photographer."

The ABA Section of State and Local Government Law will soon be publishing a Handbook on Eminent Domain, and is need of photographs to illustrate it. We're looking for high resolution, not copyrighted pictures for the various chapters to illustrate “public purpose,” “inverse condemnation,” “pre-trial,” “trial,” “flooding and erosion,” “valuation,” and “damages.”

We've thought of appropriate illustrations for some on that list – e.g., a ball stadium for “public purpose, ” a limited-access highway under construction for “damages,” but the creative readers of this blog may have others. Illustrations from projects that you might have been involved in are one possible source (maps, plans, aerials, so it doesn't necessarily have to be a photograph); high reso and not copyrighted are the primary criteria.

If you have material you'd be willing to share, send it to the book's editor, Bill Schiederich at bscheiderich [at] ci.beaverton.or.us.

Seventh Circuit: Threat Of Eminent Domain No "Sword Of Damocles," So Declaratory Judgment Suit Premature

We all live under the threat the government may exercise eminent domain and take our property, and must live with that cloud, unless the threat becomes more concrete. Only then can we run to court to complain about it. While the U.S. Court of Appeals for the Seventh Circuit didn't expressly hold so, that idea underlay its decision in Rock Energy Cooperative v. Village of Rockton, No. 10-1106 (Aug. 10, 2010) (sounds like something out of "The Flintstones," no?).

In that case, Rock Energy sought a declaratory judgment from the federal district court that the Village does not have the authority to purchase or condemn its property. We leave the details for you to review, but here is the most interesting part of the decision in our view:

We begin with Rock Energy’s eminent-domain theory. The company would like us to believe that its Alliant assets are likely to be taken by the Village at any moment. As we held in Shannon, it continues, it is "no bar to ripeness if the government has only threatened enforcement, rather than actually brought a lawsuit." 539 F.3d at 760. But this record is startlingly devoid of evidence that the Village is waiting to pounce with an eminent domain action. The ordinance about which Rock Energy complains was passed five years ago; Rock Energy has had a contractual right to own the assets for the same five years; and it has actually held them for more than three years. That does not sound like imminence to us. What Rock Energy does not like is living, as it might put it, under the Sword of Damocles, knowing that its property rights can be cut off by the Village’s eminent domain power at any moment

This case does not look like some of the other Illinois cases on which Rock Energy relies, where the unrealized threat of eminent domain was well on the road to fulfillment. For example, in Davis v. Brown, 827 N.E.2d 508 (Ill. App. Ct. 2005), the state authorities had an elaborate plan in place to take the plaintiffs’ property, and the ordinance in question restricted their use of the property during the lead-up to the taking. Id. at 511-13. In Philip v. Daley, 790 N.E.2d 961 (Ill. App. Ct. 2003), the city was in the midst of executing a detailed plan to take the plaintiffs’ property. Id. at 963-64. As far as this record shows, during the years since the ordinance was passed, the Village has done nothing other than write a letter or two indicating that condemnation was on the table.

Slip op. at 7-8.

Why Isn't This A "Judicial Taking?" Washington Supreme Court Orders Property Owner To Sell To Neighbor

Courts have equitable powers to fashion remedies that the law may not account for, but does a state's judicial power stretch so far as to allow it to order a property owner to sell an acre of property (at fair market value) to a neighbor who had built an encroaching structure over the property line due to the erroneous words of a surveyor, even though the neighbor could not prove adverse possession or any other theory that would entitle its building to continue to encroach?

In Proctor v. Huntington, No. 82326-0 (Aug. 19, 2010), a deeply divided (5-4) Washington Supreme Court held that even though the encroaching property owner was not entitled to adversely possess the property, the court would order an appraisal of the property, and force the owner to sell it. Our thanks to the Supreme Court of Washington Blog and to our colleagues at the Eminent Domain Law Blog for bringing this case to our attention (note: the Washington court web site is hosed up, so we can't provide a link to the slip opinion, but we will once the court site unsticks itself - update: opinion is posted here). Read the story from the Seattle Times (Oops! The House in on the Wrong Lot) for more, including the judicial intrigue that apparently is involved.

The majority agreed that the encroaching owner did not meet Washington's 10-year adverse possession requirements, but that it would be "unfair" to order the owner of the encroaching structure to remove it:

We recognize the evolution of property law in Washington away from rigid adherence to an injunction rule and toward a more reasoned, flexible approach. Nothing in our holding today undermines fundamental property rights: it remains true that a landowner may generally obtain an injunction to eject trespassers. Proctor does not forfeit the right to his land, nor do the Huntingtons get something for nothing.

Slip op. at 13. The four dissenting justices were hearing nothing of it:

A fundamental aspect of private property is the landowner's right to choose if he or she will sell the property and, if so, for how much. The majority cannot simply stroll through Sherwood Forest, redistribute property, and say any harm is slight if the victims are paid what the court determines is fair market value. If Proctor really valued his property only at the market value, he would have sold it already.

Dissent at 6. In other words, the five-justice majority of the Washington Supreme Court ordered the owner of the property -- against his will -- to sell it to a neighbor for fair market value.

But read the quote from the majority again: "Proctor does not forfeit the right to his land." Say what? You bet he did: it was a forced sale, albeit for value. That seems a lot like eminent domain, doesn't it? In Stop the Beach Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (June 17, 2010), six Justices agreed that in certain circumstances, a state supreme court’s recharacterization of property from private to public would violate the Constitution; the four-justice Scalia-led plurality concluded it would be a Takings Clause problem, while Justice Kennedy, joined by Justice Sotomayor, saw it as involving the legitimacy of the state court’s action – in other words, substantive due process. Justice Breyer, joined by Justice Ginsburg agreed there was no judicial taking in the case, but demurred on expressing any opinion of when there would be.

In our recent draft article on judicial takings, my colleagues and I argue that a state supreme court decision takes property when it when it changes state law and, in doing so, interferes with an "essential use or economic value of the property." The Washington Supreme Court's decision in Proctor seems to fit the bill on both counts. First, despite the majority's assertions otherwise, it does change Washington law in that ownership (real or adverse) or property is no longer a necessary element in a defense to a trespass or ejectment claim. Second, the right to exclude others -- including the right to force a trespasser off your land -- is one of the core elements of property that should be protected by the Fourteenth Amendment from state interference, or, in this case, actual deprivation. The majority's notion of "no harm, no foul" by ordering an appraisal and the payment of fair market value only seems to underline the condemnation-esque result of its decision.

In the Washington case, the state supreme court did not recharacterize the property from private to public, but ordered it transferred from one private owner to another with no apparent public benefit (other than keeping the two neighbors from dueling it out with pistols at high noon on the disputed land). Thus, it is arguably not only a judicial taking, but a judicial taking that violates the public use clause, because the only beneficiary of the Washington Supreme Court's judicial largess is the encroaching owner. Under the Kennedy/Sotomayor view in Stop the Beach Renourishment, this might not be a legitimate function of the state supreme court, even when it is exercising its equitable powers.

Will there be a cert petition, asking the other "Washington" Supreme Court to revisit the issue in Stop the Beach Renourishment? Stay tuned.

Matt Fellerhoff Appointed To The Ohio Bench

It's always a pleasure when a gifted colleague is recognized, perhaps more so when they are called to public service. Comes word that Cincinnati attorney Matt Fellerhoff has been appointed by Ohio governor Strickland to the state trial bench. Congratulations, Matt!

While we lament his loss to the private bar (Matt has an enviable record in defending property owners in eminent domain cases), we know that the citizens of Ohio are gaining a judge who will render justice impartially and with a strong dose of common sense. We last worked with Matt presenting a session at February's ALI-ABA eminent domain conference, "Winning Arguments in Challenging the Right to Take and Public Use." We're going to miss you, but wish you well on your new venture (and in the upcoming retention election)!

Missouri Federal Court: No Compensation Owed When Property Is Taken By The Tax Power

Yes, the government took your property. But it wasn't an exercise of its eminent domain authority. When you don't pay your tax bills, the government can foreclose on your property, and sell it. Which it did. Inverse condemnation complaint dismissed.

Epice Corp. v. Land Reutilization Auth. of the City of St. Louis, No. 4:07CV00206 (E.D. Mo., Aug. 17, 2010) ("The Court agrees with these courts in finding that the foreclosure of a tax lien
involves the taxing power, not the eminent domain of the government.").

Wisconsin App: When Statute Requires "Jurisdictional Offer" As Prerequisite To An Award Of Expenses, You Must Have A Jurisdictional Offer

In Klemm v. American Transmission Co., No. 2009AP2784 (Aug. 10, 2010), the Wisconsin Court of Appeals held that in order to obtain litigation expenses under a state statute which provides that a property owner may recover expenses if a condemnation award exceeds the "jurisdictional offer" by at least $700 and at least 15%, there must be a "jurisdictional offer" made. Seems simple enough, right?

The property owner and the trial court didn't think so, and here's why: ATC wanted to place an electricity transmission line across the Klemm's land. Rather than fight the taking, the Klemms "agreed to the $7,750 compensation ATC offered in negotiations, with the understanding they had the right to appeal the amount." Slip op. at 1. They did, and the condemnation commission awarded them $10,000. They asked for, and were awarded, litigation expenses pursuant to a statute which provides that litigation expenses shall be awarded if:

[t]he award of the condemnation commission under ... [Wis. Stat. §] 32.06(8) exceeds the jurisdictional offer or the highest written offer prior to the jurisdictional offer by at least $700 and at least 15%

Wis. Stat. § 32.28(3)(d). Wisconsin eminent domain procedure has a two-fold path, one of which results in a "jurisdictional offer," and the other a negotiated settlement. Either path can end up before the condemnation commission. The trial court concluded that "because either route leads to a commission hearing," if the property owner is successful in obtaining more compensation from the commission even though no jurisdictional offer was made, "the phrase 'the highest written offer prior to the jurisdictional offer' does not require that a jurisdictional offer actually be made." Slip op. at 5.

No dice, held the court of appeals, the statute's requirement of a "jurisdictional offer" means just that: a jurisdictional offer must be made, and if the path chosen does not include such, the property owners are not entitled to litigation expenses.

Land Use Institute - ALI-ABA Program - Aug. 25, 2010, Santa Fe

Mark you calendars: from August 25-28, 2010 in Santa Fe, New Mexico, ALI-ABA is putting on the annual program, Land Use Institute: Planning, Regulation, Litigation, Eminent Domain, and Compensation.

We won't be able to attend this year, but we have in the past, and the program and the faculty is first-rate. Go here for details, agenda, faculty list, and registration information.

Minn Supremes: Property Can Be Taken To "Reawaken The Spirit And Vitality" Of City Without Statutory Development Agreement In Place

This just in: the Minnesota Supreme Court has issued an opinion in a case we've been watching, Eagan Economic Development Authority v. U-Haul Co. of Minnesota, No. A08-767 (July 29, 2010). This is the case in which the Court of Appeals invalidated a quick-take because the redevelopment authority -- which attempted to take property to "reawaken the spirit and vitality of [that] part of Eagan" (and, less soul-stirringly, to "replac[e] a market obsolete regional shopping center") -- could not condemn property without first having a binding development agreement in place. 

The Supreme Court reversed. The court held:

The Eagan Economic Development Authority is bound by the prohibitions and requirements of the "Redevelopment Plan for the Establishment of the Cedar Grove Redevelopment Project Area" it prepared, adopted, and submitted to the Eagan City Council for approval, which approval was granted.

Subsection 1-8 of the "Redevelopment Plan for the Establishment of the Cedar Grove Redevelopment Project Area," which deals with the proposed reuse of property, does not require the Eagan Economic Development Authority to have a binding development agreement before it can condemn private property in this circumstance.

More, after we've had a chance to digest the opinion. Our summary of the court of appeals' opinion is here.

Wisconsin Ct App: Property Owner's "Check" Is Subject To Town's Condemnation "Checkmate"

There are a host of issues in DSG Evergreen v Town of Perry, No. 2009AP727 (Wis. Ct. App. July 22, 2010) (the appellant raised seven grounds for appeal in this condemnation case), but this is the one that caught our eye. The property owner claimed that the town could not condemn its 1.5 acre parcel because it would create a lot that violated the county's minimum lot size for agriculture-exclusive parcels. Under the county land use ordinance, unless an ag parcel fronts a public road, it must be at least 35 acres. See slip op. at 12. The court held that yes, the parcel did fall below the 35-acre minimum size because it did not front a public road, but that it was the property owner who created the problem with it "swapped property with its neighbor after the appraisal." Id. at 13. Thus, the court concluded, the issue the property owner raised was "of its own making." 

We observe that, to the extent that the size of this lot may be a problem, it is plainly a problem of DSG’s own making.  It is undisputed that the 1.5-acre lot at issue did not exist when the Town had the proposed condemnation project appraised.  Shortly thereafter, however, DSG swapped property with a neighbor who owned adjoining land, thereby eliminating the access easement the Town had provided DSG, creating the possibility that if the condemnation project was successful, it would create an illegal 1.5-acre parcel.  The clear evidence is that DSG was fully aware of the property the Town wished to condemn for the Hauge Church project, but swapped the parcel with its neighbor anyway just before negotiations were to commence.  A reasonable inference from this transaction at this time in the condemnation process is that DSG was aware that through this land swap, the condemnation would result in creating a lot that did not comply with the minimum size lot ordinance. The equities of the case call for relief to the Town by not holding the Town to the alleged problem of creating a lot in an agricultural-exclusive zoned area that is less than 35 acres.

Id. The property owner tried to pull a fast one in the court's view, and the eminent domain gods won't be cheated from their due quite so easily.

The court added: "In any event, we agree with the Town that DSG lacks standing to challenge the Town’s creation of a lot of less than 35 acres in violation of Dane County ordinances. It is for Dane County to raise the challenge DSG makes here, not DSG.  DSG does not cite to any part of the Dane County zoning ordinances that permits a private citizen to enforce the minimum lot size ordinance, and we are not aware of such an ordinance." Note that this is likely a different result than would have been reached in Hawaii, since the Hawaii Supreme Court recently held that state land use statutes are "environmental" statutes that may be enforced by private party lawsuits.

The court also rejected the property owner's claim that the town did not prepare an adequate Agricultural Impact Statement. See slip op. at 8-12.

New Book: Property Rights - Eminent Domain and Regulatory Takings Re-Examined (2010)

I recently picked up a copy of Property Rights - Eminent Domain and Regulatory Takings Re-Examined (Bruce L. Benson, ed., Independent Institute 2010), available on-line here.

At 299 pages and with 13 entries, I haven't had a chance to read the whole thing yet. But after an initial skim, a few of the chapters stand out: Steven Eagle on Assembling Land for Urban Development - The Case for Owner Participation, Ilya Somin on The Limits of Backlash - Assessing the Political Response to Kelo, and Scott Bullock on The Inadequacy of the Planning Process for Protecting Property Owners From the Abuse of Eminent Domain for Private Development. 

We will post more as we get further into the book, but for now, here's the publisher's summary: 

The U.S. Supreme Court decision, Kelo v. New London, has become a dramatic focal point for the broad use of eminent domain by the government, and has resulted in a widespread backlash. State legislatures all over the country have responded to the backlash by considering, and often attempting to impose, new constraints on the ability of local governments to take property from one private party and transfer it to another. There has also been a revival of academic interest in the issues of eminent domain and of takings. Property Rights explores the uses and abuses of eminent domain and regulatory takings in four areas: proposed constraints on the use of eminent domain, compensation issues in theory and practice, eminent domain from a public choice perspective, and the spillover costs of takings. This comprehensive book brings together a diverse group of scholars and experts to explain the implications of this decision. Contributors include the attorney who represented Susette Kelo before the U.S. Supreme Court, the legal scholar who wrote Regulatory Takings, and experts on land value determination, land-use policy, environmental regulation, regulatory policy, entrepreneurial activities, and economic behavior.

Worth reading.

Headlines No Condemnor Likes To See

We have no idea what these cases might be about, or whether there is any substance behind the property owners' objections, but these are headlines no condemnor could possibly like:

• Bedford County Widow Sued (via wjactv.com) - "A Bedford County widow is being sued for trying to keep Columbia Gas Transmission off her property. The Texas-based company is using eminent domain to gain access to 67-year-old Mary Ellen McConnell's 125-acre farm."

• Granny Vows To Fight For House (via wyff4.com) - "On the other side of Stenhouse Rd, 85-year-old Juanita Sullivan worries about eminent domain."

Might as well say they're trying to take property from cute, fluffy kittens.

Curb Appeal In South Dakota: No Special Benefit To Property Means That Special Assessment Is A Taking

A rule of law set out over 100 years ago and which remains (as we say) good law qualifies as "well-established" by any standard. Village of Norwood v. Baker, 172 U.S. 269 (1898) set forth the rule that a special assessment for municipal improvements is only constitutional if the improvements result in the property being assessed enjoying special benefits, and then only to the extent of the benefit. If the benefits are merely those which inure to the public at large, or if the assessment exceeds the benefit conferred, the assessment is invalid.

Think of it as an "anti-givings" requirement: the cost of public benefits get absorbed by the public as a whole, but if property gets some benefit over and beyond those public benefits, it is fair to ask the property owner to pay. Otherwise, it's a no-go.

In Hubbard v. City of Pierre, No. 25312-a-JKM (June 30, 2010), the South Dakota Supreme Court applied the well-established rule of Village of Norwood to invalidate a special assessment as a taking under the U.S. and S.D. constitutions.

The city replaced water mains, resurfaced streets, and replaced portions of curbs, gutters, and driveways. The city proposed levying a special assessment to cover the cost of the curb, gutter, and driveway work. Owners whose properties were on the streets objected, arguing that the assessment was a taking since the assessment exceeded the benefits received.

After the city completed the project and assessed the property owners for "the per linear foot cost for curb and gutter replacement and per square foot for driveway replacement," slip op. at 2, the property owners sought a declaratory and injunctive relief in state court. The court prohibited the city from collecting the assessment, and the city appealed.

The South Dakota Supreme Court noted that municipalities have the authority to assess property owners for local improvements pursuant to two state statutes. One statute allows a "front footage" method, and another based on "accrued benefits." The front footage statue does not require a showing of benefits, while the accrued benefits statute does. The city "primarily used the front foot method of apportionment." Slip op. at 5. The court rejected the city's claim that the statute's silence regarding special benefits meant that no showing of benefit was required because the benefit requirement is based in the constitution.

The court held that the property owners met their burden of showing by "strong, clear and positive" evidence, slip op. at 10, that their properties were not benefited by the curb work. Even though the city's findings were presumed correct, the court concluded that the property owners overcame the presumption of validity. One owner testified that the curb work added no value to his property because his existing curbs and gutters were in good condition and would last another 3 years. Slip op. at 13. The county assessor testified that replacing the existing curbs and gutters did not increase the assessed value of the properties. Id. A real estate agent and an appraiser similarly testified.

The remainder of the opinion is devoted to an evaluation of the other evidence of benefit and value, with the court affirming the trial court's conclusion "that, based on the evidence, the Petitioners had shown that replacement curb and gutter did not provide a measurable benefit to abutting property." Slip op. at 17. The court refused to reweigh the trial court's factual determinations on appeal:

The City claims the circuit court incorrectly weighed the evidence and should have given more weight to the City’s testimony and evidence. It is not our role on appeal to retry this case or substitute our judgment as to credibility and weight of the evidence. This Court defers to the circuit court because of its ability to observe the witnesses. The circuit court was persuaded by the credibility and weight of the Petitioners’ evidence. The circuit court was unable to conclude from the evidence that the replaced curb, gutter, and driveways provided “actual, physical, material and quantifiable special benefits” to the property assessed. The most that could be determined from the City’s evidence was that replacing the curb and gutter extended its useful life by varying estimates and in some cases may have improved the flow of water away from the property. The City’s quantification of the benefits, however, was ambiguous and conclusory in that the City assumed the benefits equaled the cost. The circuit court determined that the Petitioners’ evidence demonstrated that the replaced curb, gutter, and driveway did not provide a benefit above and beyond or differing from the benefit enjoyed by the rest of the community. Because the circuit court’s findings of fact are based on the evidence and not clearly erroneous, we decline to substitute our judgment as to the weight and credibility of the evidence, as urged by the City. The circuit court applied the correct law regarding the question whether the special assessments were constitutional.

Slip op. at 19.

Background on the case in Supreme Court rules for homeowners in curb and gutter case from the Pierre Capital Journal.

Book Review: Federal Land Use Law and Litigation, 2010 edition

I've just received my copy of the 2010 revision of Federal Land Use Law & Litigation by Brian W. Blaesser and Alan C. Weinstein (West, $225).

Here's the description of the book from West's site:

Examines all federal, constitutional, and statutory limitations on local land use controls, discussing cases, regulations, liability, defense strategies, doctrines, and antitrust restrictions. Comprehensively reviews Supreme Court and lower federal court decisions that consider the constitutionality of land use regulations. Discusses complicated free speech issues affected by federal land use law, and municipalities exercising home rule powers. Examines issues such as: constitutional and statutory limits, First Amendment limitations on land use controls, federal remedies and attorney's fees, liability and immunity issues, litigation guidelines, zoning, subdivision controls, growth management, model complaints, and selected constitutional and statutory decisions.

Federal Land Use Law & Litigation is an eminently useful single-volume research and reference guide. It's well-organized, and although it is a specialty book and it is helpful to have a base understanding of the topics, it covers the most frequently-occurring issues in land use litigation in an understandable and easy-to-follow fashion. Chapter 3 on Regulatory Takings contains a particularly good summary of the current state of doctrine, and a concise chronological overview of the critical cases, beginning with the foundation cases in the early 20th century (Hadacheck, Mahon, Euclid) and continuing to the present.

This is one that will continue to have a place on my back bookshelf, along with other such must-haves as Steven Eagle's Regulatory Takings, the latest "green book" (Patricia Salkin's yearly Zoning and Planning Law Handbook), and Norman Matteoni's Condemnation Practice in California.

Federal Land Use Law & Litigation is available for purchase via West here.

New Jersey Monday

Two unreported opinions arising out of cases from New Jersey. We won't be reviewing them  (they are not precedential after all), but you may want to check them out if you are interested in public use and redevelopment (case #1), or inverse condemnation by permit denial (case #2):

• RLR Investments, LLC v. Town of Kearny, No 09-3100 (3d Cir., July 2, 2010) ("This appeal is centered on the “public use” requirement for the governmental taking of private property. The appeal presents a number of overlapping and interrelated claims set out in a ten count complaint. We conclude that the District Court’s judgment in favor of the governmental entry should be affirmed.").

• NJ Capital Partners, LLC v. Oakland Planning Board, No. A-2354-08T1 (N.J. Super. App. Div., July 2, 2010) ("Plaintiff NJ Capital Partners, LLC, appeals from a series of orders entered by the Law Division that limited its recovery of attorneys' fees and costs in this inverse condemnation action against defendant Borough of Oakland (Oakland) to $50,000. We have considered the arguments raised on appeal in light of the record and applicable legal standards. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.").

Friday Round-Up: Kagan On Property, RLUIPA, Second Amendment, CEQA, And Title VII (Yes, Title VII)

What we're reading today - not all of it property or land use law related:

• SCOTUS Nominee Kagan on Property Rights (The Eminent Domain Law Blog)

• River of Life Kingdom Ministries v. Villlage of Hazel Crest, No. 08-2819 (7th Cir., July 2, 2010) (en banc) - the Seventh Circuit details the proper standard for applying the equal-terms provision of RLUIPA.

• The paradox of McDonald v. City of Chicago (SCOTUSblog) - yes, the Second Amendment applies to the states, but how and why is anyone's guess.

• Torrey Hills Community Coalition v. City of San Diego, No. D055579 (Cal. Ct. App. July 2, 2010) - for you CEQA mavens: time limitations for serving summons and for a request of a hearing.

• Alvarez v. Royal Atlantic Developers, Inc., No. 08-15358 (11th Cir., July 2, 2010) - a Title VII employment discrimination case, notable for its opening: "Some people are impossible to please. No one can meet their standards and no matter how hard anyone tries, they find fault, criticize, and are unhappy with the result. They demand continuous perfection, which is more than any human being can deliver. The evidence in this Title VII case indicates that Heidi Verdezoto is one of those people. She is the Chief Financial Officer of two closely related, family-owned companies in Miami. As CFO, she supervises the controller of the companies and passes judgment on the performance of the person in that position. And it seems that the judgment she passes is always unfavorable." Slip op. at 2 Ouch.

Are Property Rights A "Conservative" Issue?

Think property rights are a "conservative" issue? To challenge that notion, read Black Landowners Fight to Reclaim Georgia Home in today's New York Times. It tells the story of African-American property owners whose homes were condemned years ago, who now may have a second chance:

In 1942, Harris Neck, a thriving community of black landowners who hunted, farmed and gathered oysters, was taken by the federal government to build an airstrip. Now, the elders — who remember barefoot childhoods spent climbing trees and waking to watch the Canada geese depart in formation — want to know why they cannot have it back.

....

Harris Neck was deeded by a plantation owner to a former slave in 1865. Black families who settled there built houses and boats and started crab and oyster factories. But the community, many descendants suspect, was too independent for the comfort of McIntosh County’s whites.

During World War II, when federal officials were looking for a site for an Air Force base, the county’s white political leaders led them past thousands of uninhabited acres to Harris Neck. The government condemned the land and ordered the families to clear out with the promise, some residents recall, that they could come back after the war. Blacks received an average of $26.90 per acre for the land, while whites received $37.31, according to a 1985 federal report. In 1962, the wildlife refuge was established.

....

Evelyn Greer, 82, recalls the forced move out of Harris Neck in vivid detail: residents lugging furniture by hand or mule cart, leaving jars of preserved food and livestock behind. On the morning their house was to be demolished at 6 a.m., she and her mother woke early to retrieve a treasured phonograph and its two records. On the path, her mother froze.

"I heard the fullness in her voice," Ms. Greer recalled. "She said, 'We in plenty of time, but we’re too late.'" The house was in flames.

The family moved into a barn owned by the white man her mother worked for.

Might this story be different if years ago these homeowners had "property rights" lawyers to argue their cause?

Wednesday Potpourri: Inverse Condemnation And Beaches, Rail Takings, And More "Adult-Oriented" Land Use

Here are items we're reading today, in no particular order:

• Bill Ward's thoughts on Klumpp v. City of Avalon, the recent New Jersey Supreme Court case about inverse condemnation and beach restoration. Our take here.

• From Honolulu Civil Beat comes Michael Levine's recent three-part series on the multi-billion dollar Honolulu rail project. Start with Honolulu Rail Heading Right at Them (which includes some of our thoughts on the condemnation issues ("'At the end of the day, at least the way it's shaping up now, the taking of property for public transportation purposes is generally seen as one of those classic uses for eminent domain, provided there's no pretext for private business,' Thomas said."), then continue with Rail Could Force Out Church, Homes After 50 Years in Pearl City, then finish up with Aiea Businesses Unknowingly in the Path of the Train. Note that much of the content is behind a paywall, but that there are several levels of "membership."

• Continuing with this week's apparent theme "adult-oriented" land use issues (e.g., the porn dorm postings here and here), see Madain v. City of Stanton, No. G042218 (Cal. Ct. App. June 23, 2010). In that case, the City denied an application to operate an "adult-oriented cabaret," because it was near a "planned church." More from the Orange County Register here.

They Really Are Moving Father's Grave To Build ... An Airport

Here's the latest development in the ongoing life imitating art saga of the the use of eminent domain to take property in St. Johannes Cemetery for the expansion of O'Hare airport.

Appellate court hears arguments in O'Hare cemetery case is a short news report about last week's oral argument in the appeal by the "living relatives" from an Illinois state court's judgment dismissing their claims.

Listen to the argument recording here (be warned if you aren't streaming the file, it's a massive 140mb mp3).

The issues, as framed by the living relatives, are two-fold: first, whether the religion-based claims were barred by res judicata, and second, whether the taking is for a public use. It's often very difficult to discern the scope of the issues from oral argument, so we're not sure what the specific questions presented are. Nonetheless, the argument is worth a listen.

Friday's Columbia "Blight" Case (Kaur) Links

Here's a round-up of reports and analysis of yesterday's opinion by the New York Court of Appeals in the "Columbia U. blight" case, Kaur v. New York State Urban Development Corp., No. 125:

• "Judicial review of eminent domain in New York is fundamentally broken" - Damon W. Root (Reason blog)

• Court of Appeals, citing precedent in Atlantic Yards case, overturns lower court ruling blocking eminent domain for Columbia expansion - Norman Oder (Atlantic Yards Report)

• New York Court of Appeals Backs Eminent Domain Use in Columbia Expansion (WSJ Law Blog)

• New York High Court Upholds Columbia University Takings - Ilya Somin (The Volokh Conspiracy)

• NY Court of Appeals decides Columbia U. Eminent Domain case - Matthew Festa (Land Use Prof Blog)

• N.Y. Court of Appeals Reverses Appellate Division and Says Columbia University Condemnation May Proceed (New York Zoning and Municipal Law Blog)

• Universities and Eminent Domain - Ilya Somin (The Volokh Conspiracy)

• New York's Eminent Domain "Blight" Grows - Jonathan Tobin (Contentions)

• Columbia Expansion Backed by New York's Top Court (Bloomberg)

New York Still Has "Unfrozen Caveman Judges" Who Are "Frightened And Confused" By Eminent Domain Blight

More on today's opinion in the "Columbia U. blight" case, Kaur v. New York State Urban Development Corp., No. 125.

As we noted in our critique of the Atlantic Yards case (Goldstein), New York judges apparently are too "frightened and confused" by allegations that property is not truly "substandard or unsanitary," so must defer to the agency's finding:

The term "substandard or insanitary area" is defined as "a slum, blighted,  deteriorated or deteriorating area, or an area which has a blighting influence on  the surrounding area" (Uncons Laws § 6253 [12]). Here, the two reports prepared by ESDC consultants -- consisting of a voluminous compilation of documents and photographs of property conditions -- arrive at the conclusion that the area of the Project site is blighted. Just as in Matter of Goldstein, "all that is at issue is a reasonable difference of opinion as to whether the area in question is in fact substandard and insanitary," which is "not a sufficient predicate . . . to supplant [ESDC's] determination" (13 NY3d at 528).

Thus, given our precedent, the de novo review of the record undertaken by the plurality of the Appellate Division was improper.

Slip op. at 18. In other words, "blight" is whatever the agency says it is. Just drum up a "study" or two, and you're insulated from judicial review.

On top of that, the court included benefit to a private educational institution as a "civic purpose" that is also insulated from judicial review, and used the Atlantic Yards project as the examplar:

Moreover, consonant with the policy articulated in the UDC Act, ESDC has a history of participation in civic projects involving private entities. The most recent example of a civic project is the Atlantic Yards project, which authorized a private entity to construct and operate an arena for the Netsprofessional basketball franchise (see Matter of Develop Don't Destroy (Brooklyn) v Urban Dev. Corp., 59 AD3d 312 [1st Dept 2009], lv denied 13 NY3d 713 [2009]). The petitioners in that case argued that the project did not qualify as a "civic project" because the arena would be used by a professional basketball team and operated by a private profit-making entity. In rejecting that argument, the Appellate Division explained, "that a sports arena, even one privately operated for profit, may serve a public purpose" (id. at 325). Looking to the plain language of the UDC Act (see Uncons Laws § 6260 [d]), the court observed that "the proposed arena will serve a public purpose by providing a needed recreational venue in the area of the project" (id.).

The proposed Project here is at least as compelling in its civic dimension as the private development in Matter of Develop Don't Destroy (Brooklyn). Unlike the Nets basketball franchise, Columbia University, though private, operates as a non-profit educational corporation. Thus, the concern that a private enterprise will be profiting through eminent domain is not present.

Slip op. at 24-25. At least New Yorkers love their schools as much as their sports.

There Really Are No Limits To Eminent Domain In New York - Court Of Appeals Reverses The Columbia Case (Kaur)

The New York Court of Appeals today reversed the Columbia "blight" case, Kaur v. New York State Urban Development Corp., No. 125 (June 24, 2010). The unanimous opinion came swiftly (oral arguments were just under a month ago), suggesting it was not a close call for the court. Here's the Appellate Division's opinion.

We haven't had time to digest it, and there certainly will be a round of analysis and opinion on the case, but here's the introductory paragraph of the court's opinion:

In this appeal, we are called upon to determine whether respondent's exercise of its power of eminent domain to acquire petitioners' property for the development of a new Columbia University campus was supported by a sufficient public use, benefit or purpose (see New York Const art I, § 7 [a]; Eminent Domain Procedure Law 207 [C] [4]). We answer this question in the affirmative and conclude, pursuant to our recent holding in Matter of Goldstein v New York State Urban Dev. Corp. (13 NY3d 511 [2009]), that the Empire State Development Corporation's ("ESDC") findings of blight and determination that the condemnation of petitioners' property qualified as a "land use improvement project" were rationally based and entitled to deference. We also conclude that the alternative finding of "civic purpose," likewise, had a rational basis.

Slip op. at 1-2.

The court's recent opinion in the Atlantic Yards case (Goldstein) was always going to be this case's biggest hurdle. But Kaur's posture and the developed record were thought to perhaps distinguish it from Goldstein. Not so.

You've got to wonder whether there are any limits on eminent domain in New York. Today, it looks like there are not.

U.S. Supreme Court Declines Review Of Wisconsin's Application Of The Undivided Fee Rule

Today, the U.S. Supreme Court denied review in City of Milwaukee Post No. 2874 Veterans of Foreign Wars of the United States v. Redevelopment Agency of the City of Milwaukee, No. 09-1204 (cert. petition filed Apr. 2, 2010).

This is the case challenging the constitutionality of the "undivided fee rule" as applied by the Wisconsin Supreme Court. That court concluded the rule requires a leasehold interest -- which would be worth over $1 million if condemned separately -- be valued at zero. [Disclosure: we filed an amicus brief for the National Association of Home Builders and the Wisconsin Builders Association in the case, supporting the VFW.]

More about the case, including the cert petition, BIO, and amicus briefs here. The Court's docket entry is here.

A Regulatory Takings Glossary (or, How to Translate Property Rights Lawyerspeak)

The WMA Reporter, the monthly publication of the Western Manufactured Communities Housing Association has published A Regulatory Takings Glossary (or, How to Translate Property Rights Lawyerspeak), my short article that attempts to deconstruct some of the more common terms property lawyers toss about. Here's the Introduction:

One of my law school professors once remarked (hopefully in jest) "if it ain’t Latin, it ain't the law." While thankfully we have moved away from the days when Latin and Norman French were the languages of the law, those of us who regularly represent property owners defending their rights sometimes toss about terms that, although they purport to be standard English, often make normal people look at us askance.

We may forget that not everyone might understand what we mean when we say, for example, "The court dismissed the regulatory takings claim on ripeness grounds under Williamson County because the property owner had not exhausted her administrative remedies. That left for the state court to decide whether the claim was a per se Lucas taking, or whether to apply the ad hoc Penn Central analysis."

If you know what that means, congratulations, you don’t need this guide. However, for those of you not yet familiar with the lingua franca of regulatory takings and eminent domain lawyers, here’s a crash course of some of the more common terms.

Download the full article pdf here.

Cal. Ct. Appeal: Nominal Compensation In Takings Of Railroad Property

In City of Oakland v. Schenck, 197 Cal. 456 (1925), the California Supreme Court held that when a railroad's property is being taken, nominal compensation and not fair market value may be the appropriate measure of "just compensation."

Schenck held that "where a street is opened across a railroad right of way, the rule as to the amount of compensation to be allowed the railroad company is different from the rule which prevails in the case of the taking of the property of an individual for like uses." Schenck, 197 Cal. at 460-61. Nominal compensation may be due if the property's use as a railroad will not be greatly impacted by placing a road across it. In other words, putting a road across railroad tracks don't substantially impact the value of the railroad tracks.

In City of San Jose v. Union Pacific Railroad Co., No. H033503 (June 11, 2010), the California Court of Appeal (Sixth District) applied the Schenck rule to a condemnation by the City of easements over the railroad's property in order to widen an existing road across the tracks. The trial court concluded that the taking of the portions of the railroad's property within the "Necessary Track Clearance Width" resulted in nominal compensation under Schenck, while the taking of the railroad's property outside that area was not subject to the Schenck rule because Union Pacific did not use that property for its tracks. Both parties appealed. The court of appeals summed up the case:

At the heart of the dispute is whether City of Oakland v. Schenck (1925) 197 Cal. 456 (Schenck), is controlling authority. We conclude that it is. We therefore affirm the judgment.

Slip op. at 1. Union Pacific conceded the facts were indistinguishable from Schenck but argued that the case had been decided under a statute which was later superceded by the 1975 Eminent Domain Code (Cal. Code. Civ. P. § 1230.010 et seq.). The court rejected the argument and concluded that the result in Schenck was compelled by the "constitutional concept of reasonable compensation rather than the condemnation statute then in effect." Slip op. at 6. The court continued:

Schenck made this point in the language we emphasized earlier by explaining that the rule as to the amount of compensation to be allowed a railroad company for a public crossing is different from the ordinary rule because one of the incidents of the public use to which a railroad company dedicates its property used as a right of way is the right of the public to construct street crossings wherever and whenever reasonably necessary. Thus, in condemning an easement for a street across a railroad right of way, the inquiry must be directed to ascertaining the extent to which the value of the company‟s right to use the land for railroad tracks will be diminished by the opening of the street across it.

Slip op. at 7-8. The City's taking of an easement within the Necessary Track Clearance Width to widen a road no different, and the court applied the nominal compensation rule.

The court, however, also rejected the City's claim that the same rule applied to the Union Pacific land outside of the Necessary Track Clearance Width. The court held that on that land, the taking would have more than a nominal impact on Union Pacific's right to use the land for railroad tracks (since it did not have tracks there).

Video Of Columbia Blight Case Oral Arguments (NY Court Of Appeals)

Launch in external player

Missed our live blog of the the New York Court of appeals oral arguments in Kaur v. New York State Urban Development Corp. the case in which the Appellate Division struck down an attempt to take property north of Columbia University in New York City because of the record reflected overwhelming private benefit and lack of "blight?"

Well, you're in luck -- the court has archived the video.

Launch the live blog and start the video at the same time and you can follow along with Timothy Sandefur, Mark Murakami, and me as we provide commentary.

To launch the video in a separate window, go here.

Norman Oder has posted an excellent summary of the arguments on Atlantic Yards Report. Worth reading, especially as you follow along with the video.

You Take It, You Bought It

Comes news that the State Land Use Commission has reclassified a large portion of state-owned land in east Oahu from "urban" to "conservation." See Ka Iwi shoreline area reclassified as conservation land (via Hawaii News Now) and Ka Iwi coast gets added protection (via the Honolulu Advertis...Honolulu Star-Advertiser). The reports state the "reclassification should make the development of the makai [seaward] area of the coastline 'a remote possibility'" (quoting the governor's press release).

The reclassification from urban to conservation means that instead of the City and County of Honolulu's zoning regulating the land, the State Department of Land and Natural Resources will exercise exclusive regulatory control. (Land classified urban is zoned and primarily regulated by the counties, whereas under Haw. Rev. Stat. § 205-5, the DLNR exclusively regulates conservation-designated land.)

But we're not quite sure what we're missing here, since it seems the fact the state owns the land -- having acquired it by condemnation a few years ago -- is the much more determinative fact insulating it from private development. Put another way, the State "rezoning" its own land should not have been the critical missing piece in preserving it unless the State were planning to develop it (very unlikely politically), or sell it (also unlikely, given the State condemned to prevent its development). Thus, the story leaves us wondering whether something else is afoot. 

The governor's press release also notes "[t]he Governor noted the battle to preserve Ka Iwi for future generations is not over. The mauka [landward] area is not designated conservation, and the potential development of this land remains of paramount concern to the community." The press release does not mention that much of the "mauka area" land remains in private ownership. As the newspaper reported:

Still, there is privately owned land in the area — above the Hawai'i Kai golf course and mauka of the state land above Queen's Beach — that could potentially be developed.

Developers controlling the 181-acre site in 2007 announced plans to build 180 large cabins and recreational amenities. The property is in the state's urban district and zoned for preservation by the county, which in some cases allows recreational-type uses on such land. Though an initial application to develop the site was rejected by the county, the potential remains for the land to be developed.

Here's where it gets interesting. As long as that property remains privately owned, preventing development won't be as simple as down-zoning or down-designating the land, because the government has a constitutional obligation to pay for private land if zoning or other use regulations restrict it to the point where it has no "economically beneficial" use. This is your classic "Lucas wipeout."

The government may be further liable for a regulatory taking even if zoning does not completely destroy use if, after balancing a number of factors, the regulation can be said to be the equivalent of an exercise of eminent domain. This is the Penn Central test, recently reaffirmed in Lingle.

The overarching concern in both circumstances is that the Fifth Amendment prohibits the government from using its regulatory power to force "some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40 (1960). In other words, because the right to make reasonable use of property is a constitutional right, zoning regulations must leave an owner with some reasonable use, and cannot be imposed as a substitute for condemnation or to flatly prohibit development.

The city understands this only too well. When it repeatedly attempted to prohibit the development of two nearby parcels by downzoning them -- rather than condemn them for a public park -- it ended up costing the city $85 million. [Disclosure: my Damon Key colleagues and I represented the property owner in that case.] The court ruled this a regulatory taking, and facing damages that could have exceed the entire annual fire and police protection budgets, the city settled.

This legal reality hasn't stopped calls for the city or the State to try and leverage their regulatory powers to prohibit development of the private property within "Ka Iwi" instead of using their eminent domain powers to take and pay for it. In A new victory in efforts to save the Ka Iwi coast of Oahu, business reporter Howard Dicus asserts that the fact the public has long opposed development means a property owner who attempts to make reasonable and allowable use is "speculating" -- 

If you buy land in a scenic area where you know there is a grass roots movement to bar development, you run the risk that they will fail to lose their battle.

A landowner can argue that its "appropriate" profit is clearly indicated by the zoning of the land before it is downzoned. But a reasonable judge should agree that all the "Save Sandy Beach" bumper stickers constitute evidence that it has been known for a quarter century that any development potential east of Hawaii Kai has been a matter of speculation.

This is a common misperception -- that somehow, as long as advance notice is provided, any owner or purchaser of property loses their right to make use of the property. In 2001, however, the U.S. Supreme Court refuted the "notice" defense to a taking, rejecting the argument that regulation (or public opinion) can "define property rights and reasonable investment-backed expectations" such that an owner cannot claim any injury from lost value. Ownership and the right to make use property do not become "speculation" simply because people think an owner should not develop their land.

Bumper stickers or no, a property owner has a right to make use of her land. If it is in the public interest interest to prohibit development, it is only fair (and constitutional) that the entire public, and not a single property owner, should bear the cost.

BIO And Reply In SCOTUS Eminent Domain Case: Is Wisconsin's Application Of The Undivided Fee Rule Unconstitutional?

Here are the final briefs in City of Milwaukee Post No. 2874 Veterans of Foreign Wars of the United States v. Redevelopment Agency of the City of Milwaukee, No. 09-1204 (cert. petition filed Apr. 2, 2010). That's the case in which the U.S. Supreme Court is being asked whether the "undivided fee rule," as applied by the Wisconsin Supreme Court, violates the Fifth Amendment's Just Compensation Clause because it requires that a leasehold interest -- which would be worth over $1 million if condemned separately -- be valued at zero.

More on the case here. [Disclosure: we filed an amicus brief for the National Association of Home Builders and the Wisconsin Builders Association in the case, supporting the VFW.]

• Brief for Respondent in Opposition (Redevelopment Authority of the City of Milwaukee)

• Reply in Support of Petition for Writ of Certiorari (Petitioner VFW)

Here are the petition and the amicus briefs, including NAHB's:

• Cert petition

• Institute for Justice's amicus brief

• NAHB and WBA's amicus brief

The VFW's cert petition presents the following questions:

When the Milwaukee Redevelopment Authority took by eminent domain the 11-story downtown building that housed the offices of Post 2874 of the Veterans of Foreign Wars (VFW) as a long-term lessee, the Wisconsin Supreme Court held 4 to 3 that—as a matter of law—the VFW was not entitled to present any evidence of value, nor entitled to recover any compensation whatever for its concededly valuable long-term leasehold.

The questions presented are:

1. Does it violate the 5th and 14th Amendments for Wisconsin—like some jurisdictions, but in conflict with others and with this Court’s repeated insistence that the appropriate question in an eminent domain proceeding is "what has the owner lost, not what has the taker gained"—to apply its "undivided fee rule" in such circumstances?

2. Did the court below violate VFW’s constitutional right to due process of law by precluding it, as the owner of a valuable interest in property being taken through eminent domain, from introducing any evidence of the value of its leasehold property?

The case is on the Court's calendar for the June 17, 2010 conference. Stay tuned for the results.

Columbia Oral Argument Recap - Blight, Civic Purpose, And Bad Faith

We've been busy filing an appellate brief and drafting another, so until now, haven't had the chance to post up links about Tuesday's New York Court of Appeals oral argument in Kaur v. New York State Urban Development Corp.

We live blogged the arguments, following along on the court's video webcast. The court usually posts an archived video of oral arguments, which we expect next week.

Until then, check these out:

• New York High Court Oral Argument in Columbia Eminent Domain Case - lawprof Ilya Somin, via Volokh Conspiracy

• Columbia eminent domain case draws heated arguments, frequent references to Atlantic Yards - Norman Oder via his indispensable blog Atlantic Yards Reports

• Court of Appeals state on M'ville blight, civic purpose of expansion - the Columbia Spectator's summary

Any predictions? The only thing we're going to predict publicly is that the opinion should be issued by the end of the summer - the Court of Appeals usually hands out opinions pretty quickly.

As background to the arguments, you may also want to check these reports out:

• Legal briefs shed light on eminent domain argument - Columbia Spectator

• After long battle, eminent domain to be scrutinized in highest state court - Columbia Spectator

• Columbia eminent domain appeal today in Albany; Atlantic Yards decision invoked regularly; will Court of Appeals revise NY's role as national outlier? - Atlantic Yards Report

• Court date set for Columbia eminent domain case - Crain's New York Business

• The Blight Stops Here - Damon Root, via reason.com

2pm ET Today: Live Blog Of Columbia Eminent Domain Arguments (NY Court Of Appeals)

Today, starting at 2:00 p.m. ET, the New York Court of Appeals will hear oral arguments in Kaur v. New York State Urban Development Corp. In that case, the New York Supreme Court, Appellate Division (First Department) struck down the attempted taking of land north of Columbia University in New York City because of the record reflected overwhelming private benefit and lack of "blight." We analyzed the Appellate Division's opinion here.

The Court of Appeals webcasts oral arguments, so we will be able to follow along and live blog the event in the window below. Joining me will be eminent domain scholar and property owners' advocate Tim Sandefur, and my Damon Key colleague and fellow condemnation law attorney Mark Murakami.

The briefs are posted below the live blog window.

Here are the briefs in the Court of Appeals:

• Brief for the New York State Urban Development Corporation d/b/a Empire State Development Corporation

• Brief for the Petitioners-Respondents (the property owners)

• Brief amicus curiae of NY State Senator Bill Perkins (Sen. Perkins represents Harlem, the Upper West Side, and Washington Heights)

Reminder: June 1 NY Court Of Appeals Oral Agument In Columbia "Blight" Case

A reminder: on Tuesday, June 1, 2010 at 2:00 p.m. ET, we will be live blogging the oral arguments in Kaur v. New York State Urban Development Corp.

In that case, the New York Supreme Court, Appellate Division (First Department) struck down the attempted taking of land north of Columbia University in New York City because of the record reflected overwhelming private benefit and lack of "blight." The agency appealed to the Court of Appeals.

The Court of Appeals webcasts oral arguments, so we will be able to follow along and live blog the event. Joining me will be eminent domain scholar and property owners' advocate Tim Sandefur, and my Damon Key colleague and fellow condemnation law attorney Mark Murakami. Sign up here for email notification, then on Tuesday, follow along and join in the discussion.

Here are the briefs in the Court of Appeals:

• Brief for the New York State Urban Development Corporation d/b/a Empire State Development Corporation

• Brief for the Petitioners-Respondents (the property owners)

• Brief amicus curiae of NY State Senator Bill Perkins (Sen. Perkins represents Harlem, the Upper West Side, and Washington Heights)

Arkansas Supreme Court: Pipeline Taking Not A Private Use

In Smith v. Ark. Midstream Gas Servs, No 09-1186 (May 27, 2010), the Arkansas Supreme Court concluded that a taking for a natural gas pipeline by a private, for-profit utility company was not a violation of the state constitution's public use clause.

Arkansas law delegates the power of eminent domain to certain pipeline companies and deems them to be "common carriers" -- 

All pipeline companies operating in this state are given the right of eminent domain and are declared to be common carriers, except pipelines operated for conveying natural gas for public utility service.

Ark. Code Ann. § 23-15-101. The public use clause in the Arkansas Constitution isn't that much different than similar provisions in other constitutions:

The right of property is before and higher than any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation thereof.

Ark. Const. art. 2, § 22. The Smiths argued that the taking of a 60 foot right of way over their land for the natural gas pipeline was a private, not public, use because the pipeline is for use by less than the public, and the public at large is not able to ship materials through the pipeline. Slip op. at 6. The court rejected the argument because as a common carrier, the pipeline company is required by law to allow public access to the pipeline, even if the public does not actually use the pipeline. It is the right of the public to use the pipeline that makes the taking public, not the present actual use. Slip op. at 7 ("Again, the character of a taking, whether public or private, is determined by the extent of the right to use it, and not the extent to which that right is exercised.") (citing Ozark Coal Co. v. Pennsylvania Anthracite Co., 134 S.W. 534 (1911)).

The court also rejected the property owner's argument that the statutory delegation is unconstitutionally vague. Because the statute does not guide the property owner's conduct, the owner has no standing to challenge the statute. A statute is void for vagueness if it does not provide a discernible standard to which a person may conform their conduct. Since the delegation statute does not require the property owner to do (or not do) anything, he could not challenge the law.

How Remedying Blight "Pays For Itself"

Here's a case, issued yesterday by a California Court of Appeal, that is not directly about the use of eminent domain for redevelopment purposes to remedy "blight," but is nonetheless worth reviewing since it shows how redevelopment supposedly "pays for itself" (in the words of a court) through tax increment financing:

Under the [California Redevelopment Law (Cal. Const. art. XVI § 16], redevelopment is financed through tax increment financing. In essence, a redevelopment agency, which is not empowered to tax, but which is empowered to acquire debt through loans or the sale of bonds (§ 33601), finances a redevelopment project through borrowing. When the redevelopment results in increased property values in the redevelopment area, the tax attributable to the increase in value -- the tax increment -- is distributed by the taxing authority to a special fund of the redevelopment agency, to pay the principal of and interest on its debt. (§ 33670, subd. (b).) "'This way, the redevelopment project in effect pays for itself.' [Citations.])" (City of Dinuba v. County of Tulare, supra, 41 Cal.4th at pp. 865-866; Community Development Com'n of City of Oxnard v. County of Ventura (2007) 152 Cal.App.4th 1470, 1475-1476.)

Glendale Redevelopment Agency v. County of Los Angeles, No. B212718 slip op. at 3-4 (May 25, 2010). Couple tax increment financing with California's notoriously loose standards for defining "blight," and you can see why there is little disincentive to designating property as blighted. For additional background and commentary, see A Tiff Over TIF In Northern California and In Pursuit of the Free Lunch on Professor Kanner's blog.

Update: some additional thoughts on counties vs redevelopment agencies in Grab redevelopment cash from Cal Watchdog.

The dispute in the Glendale case involved whether the redevelopment agency was permitted to submit a revised request to the County for its share of the tax increment. The court held the statute permitted the redevelopment agency to amend its request after the annual deadline in order to correct an error in the original request, even though the statute did not expressly permit the County to accept it after the deadline.

We're "Activists!" Who Knew?

According to the Daily Reporter (Wisconsin), that is. If it's on the internet, it must be true, right?

Activists want U.S. Supreme Court to rule on eminent domain case summarizes the background in City of Milwaukee Post No. 2874 Veterans of Foreign Wars of the United States v. Redevelopment Agency of the City of Milwaukee, No. 09-1204 (cert. petition filed Apr. 2, 2010):

National organizations that focus on eminent domain law are urging the U.S. Supreme Court to rule on a lawsuit over the vacant property at 27th Street and Wisconsin Avenue in Milwaukee.

The Redevelopment Authority of the City of Milwaukee acquired the property in 2001 from Maharishi Vedic University Inc. by declaring the land blighted. The authority paid $140,000 to the university and $300,000 to the City of Milwaukee Veterans of Foreign Wars Post No. 2874, which held a long-term lease for space in a vacant hotel on the site.

We we filed an amicus brief on behalf of the National Association of Home Builders and the Wisconsin Building Association in support of the VFW's cert petition. The Institute for Justice (the people that represented Mrs. Kelo) also filed an amicus brief, available here.

The issue in the case is the constitutionality of the "undivided fee" rule. The Wisconsin Supreme Court applied the rule to prohibit the jury from hearing evidence regarding the value of the VFW's long-term low rent lease. The court concluded that the VFW's lease could not be valued separately because the fee simple interest was condemned, and that the VFW was not entitled to any compensation for its leasehold interest. 

The case is getting nationwide attention because it is an example of a legal dispute that has come up in other U.S. lawsuits, said Dana Berliner, senior attorney for the Institute for Justice, an Arlington, Va.-based law firm that takes on cases that affect eminent domain law. In the Milwaukee case, the VFW stands to get no compensation for its lease, based on a 2009 Wisconsin Supreme Court ruling.

"This situation showed so clearly the results of the rule that the Wisconsin Supreme Court applied," Berliner said. "The result was so extreme."

The origin of the case dates to 1961, when the VFW, which owned the site, agreed to sell it to Towne Metropolitan Inc., Milwaukee, to develop a hotel. In exchange for the land, the VFW received a 99-year lease to use space in the building as a VFW hall. In 2003, the VFW had 67 years left on its lease with the option to extend the lease another 99 years.

"It is completely impossible that just compensation for a 50-year or 60-year lease is zero," Berliner said.

The core question is whether governments, when using eminent domain, base their payments to the owner on the value of the land acquired or the value of the assets lost, such as the VFW’s long-term lease.

More about the case and the issue here. Thanks to the folks at California Eminent Domain Report for the heads up.

"Unpublished" Opinion Round-Up

Appellate courts issue opinions and orders to decide cases. The opinions and orders in many cases get "published," meaning that they end up in the bound reporters (the U.S., Federal, Federal Supplement, the official state reports, and in West's Regional Reports, for example) and become precedential and set forth a rule of law governing future litigation.

Most appellate courts also issue opinions and orders that are not "published" in the sense referred to above, even though they are "published" meaning they are made available to the public. Generally speaking, these are cases presenting more routine issues. Unpublished decisions may be designated as unpublished opinions, memorandum opinions, summary disposition orders, "per curiam" opinions, or simply may bear the notation "Not For Publication." The rules vary by jurisdiction on whether unpublished opinions are precedential, and even whether they can be cited in a brief. [Barista's note: we are of the school believing that nearly everything an appellate court does is important (even if it may not think so), and should be both available and citeable. The published vs unpublished distinction may have made sense when we were dealing with actual books and shelf space in the law library, but in the days of ubiquitous pdf's, we don't think this is such an issue.]

On this blog, we mostly focus on "published" opinions. That is a function both of the relative importance of published opinions vs unpublished, but also of the sheer volume of unpublished material produced by many courts. For example, compare the product of California's appellate courts: here are the published opinions from the last 100 hours, and here are the unpublished opinions from the same time frame. On most days, there's a huge difference in appellate court output, and we simply don't have the time to comb through the unpublished opinions looking for interesting items.  

So in the interest of equal time, we bring you a sampling of "unpublished" opinions for your reading pleasure. Are these cases interesting, controversial, and otherwise blogworthy?

• Karim v. City of Pomona, No. B210049 (Cal. Ct. App., May 18, 2010) (inverse condemnation, nuisance, damages, attorneys' fees).

• Avery v. County of Santa Clara, No. H033049 (Cal. Ct. App. May 18, 2010) (revocation of use permit, vested rights, regulatory takings).

• Palermo v. Town of North Reading, No. 09-1049 (5th Cir., Apr. 9, 2010) (takings, §1983)

• Howard v. County of San Diego, No. D055419 (Cal. Ct. App., Apr. 29, 2010) (inverse condemnation, denial of permit, exhaustion of administrative remedies).

Georgia SCT: Lack Of Prosecution Time Limit Applies To Condemnees

The first line of this opinion issued today by the Georgia Supreme Court got us all excited:

The trial court dismissed this condemnation case for lack of prosecution pursuant to OCGA § 9-2-60 (b).

Windsor f/k/a Bank v. City of Atlanta, No. S10A0102 (May 17, 2010). Was it a case where a condemnor sat on its rights? Started to take property then did nothing? Alas, it was not quite as dramatic.

The city needed a 29-foot subsurface easement to address a substandard sewer line. The city offered $180 for the easement but Windsor declined, at which point the city instituted a "declaration of taking" action and put $400 into court as the estimated compensation. The trial court vested title in the city. Slip op. at 3.

Windsor challenged the taking, including with its claims a challenge to the constitutionality of the declaration of taking procedure. The issues were briefed and evidence presented, but the trial court denied Windsor's motion to annul the taking. The Georgia Supreme Court declined interlocutory review, and left the case with the trial court.

"For the next five years, nothing happened in the case, aside from the occasional filing of a notice of a leave of absence by one of the attorneys." Slip op. at 4. After Windsor filed a motion to have the case placed on the trial court's calendar, the court dismissed under Georgia's code section which provides "[a]ny action or other proceeding filed in any of the courts of this state in which no written order is taken for a period of five years shall automatically stand dismissed with costs to be taxed against the party plaintiff."

The Georgia Supreme Court affirmed, holding this is a "bright line rule." Slip op. at 5. Certain trial court orders will reset the five-year clock, but in this case, Windsor did not argue the trial court had entered such an order.

It appears to us that the Supreme Court's ruling turned on Georgia's process for property owner challenges to declaration of taking condemnations. In order to contest the taking under Georgia law, Windsor was required to file a notice of appeal with the trial court, at which point it became a "plaintiff," it appears, for purposes of the five year prosecution statute:

If the owner, or any of the owners, or any person having a claim against or interest in the property is dissatisfied with the amount of compensation as estimated in the declaration of taking and deposited in court, as provided for in Code Section 32-3-7, such person or persons, or any of them, shall have the right, at any time subsequent to the filing of the declaration and the deposit of the fund into court, but not later than 30 days following the date of the service as provided for in Code Sections 32-3-8 and 32-3-9, to file with the court a notice of appeal, the same to be in writing and made a part of the record in the proceedings.

OCGA § 32-3-14. We can't quite square this with the court's conclusion that Windsor could not avail itself of a code provision that allows a "plaintiff" to reboot:

When an action is dismissed under this Code section, if the plaintiff recommences the action within six months following the dismissal then the renewed action shall stand upon the same footing, as to limitation, with the original action.

OCGA § 9-2-60(c). The court concluded "the property owner in a condemnation case is neither the plaintiff nor a counter-claimant and so cannot take advantage of the renewal provisions." Slip op. at 6. If someone has a way to address our dissonance, comment away.

Briefs And Live Blog Of June 1 New York Court Of Appeals Oral Argument In Kaur v. NY State Urban Dev Corp. (Columbia "Blight" Case)

On June 1, 2010, starting at 2:00 p.m. ET, the New York Court of Appeals will hear oral arguments in Kaur v. New York State Urban Development Corp. In that case, the New York Supreme Court, Appellate Division (First Department) struck down the attempted taking of land north of Columbia University in New York City because of the record reflected overwhelming private benefit and lack of "blight." We analyzed the Appellate Division's opinion here.

Here are the briefs in the Court of Appeals:

• Brief for the New York State Urban Development Corporation d/b/a Empire State Development Corporation

• Brief for the Petitioners-Respondents (the property owners)

• Brief amicus curiae of NY State Senator Bill Perkins (Sen. Perkins represents Harlem, the Upper West Side, and Washington Heights)

The Court of Appeals webcasts oral arguments, so we will be able to follow along and live blog the event. Joining me will be eminent domain scholar and property owners' advocate Tim Sandefur, and my Damon Key colleague and fellow condemnation law attorney Mark Murakami.

Sign up below for email notification. Then on the day of the argument follow along and join in the discussion.

Missouri Court Of Appeals: Good Faith Negotiation Statute Requires Appraisal Using "Generally Accepted Appraisal Practices"

After Kelo v. City of New London, 545 U.S. 469 (2005), many state and local governments adopted measures designed to limit exercises of the power of eminent domain. Some jurisdictions went for substantive limits. For example, Nebraska adopted a statute prohibiting takings that are "primarily" for economic development. Other jurisdictions took the procedural route, and adopted procedural limits on the exercise of the eminent domain power.

Missouri is one of the latter jurisdictions. It adopted Missouri Rev. Stat. § 532.256 which requires a condemor to engage in "good faith negotiations" before filing an eminent domain action:

Before a court may enter an order of condemnation, the court shall find that the condemning authority engaged in good faith negotiations prior to filing the condemnation petition. A condemning authority shall be deemed to have engaged in good faith negotiations if:

(1) It has properly and timely given all notices to owners required by this chapter;

(2) Its offer under section 523.253 was no lower than the amount reflected in an appraisal performed by a state-licensed or state-certified appraiser for the condemning authority, provided an appraisal is given to the owner pursuant to subsection 2 of section 523.253 or, in other cases, the offer is no lower than the amount provided in the basis for its determination of the value of the property as provided to the owner under subsection 2 of section 523.253;

(3) The owner has been given an opportunity to obtain his or her own appraisal from a state-licensed or state-certified appraiser of his or her choice; and

(4) Where applicable, it has considered an alternate location suggested by the owner under section 523.265.

If the court does not find that good faith negotiations have occurred, the court shall dismiss the condemnation petition, without prejudice, and shall order the condemning authority to reimburse the owner for his or her actual reasonable attorneys' fees and costs incurred with respect to the condemnation proceeding which has been dismissed.

In Planned Industrial Expansion Authority of Kansas City v. Ivanhoe Neighborhood Council, No. WD70655 (Apr. 27, 2010), the Missouri Court of Appeals (Western District) held that pursuant to subsection (2) (which incorporates by reference section 523.253), a court must invalidate a taking if the condemnor hasn't made a good faith offer. A "good faith offer" means that it must be supported by an appraisal by a state licensed or certified appraiser, "using generally accepted appraisal practices." The issue in the case wa whether the Expansion Authority's appraisal was valid under these standards.

The trial court determined "the appraisal fell short of a good faith appraisal" because it did not find the appraiser's testimony credible. Slip op. at 11. On appeal, the Expansion Authority argued that sections 532-256 and 532-253 did not give the trial court the power to question the credibility of the appraiser, but that it must accept the appraiser's direct testimony that he used a generally accepted appraisal practice. The court of appeals rejected the argument:

The Expansion Authority argues that the 2006 amendments to chapter 523 do not affect a condemning authority's requirement to negotiate in good faith. We disagree. The legislature enacted the 2006 amendments to chapter 523 in response to Kelo v. City of New London, 545 U.S. 469 (2005), which held that it did not violate the United States Constitution when private property was taken and given to another private entity for public development purposes even when the property was not located in a blighted area. Dale A. Whitman, Eminent Domain Reform in Missouri: A Legislative Memoir, 71 Mo. L. Rev. 721, 723 (Summer 2006). Thus, the legislature‟s aim was to strengthen the rights of landowners in eminent domain actions. Id. The precise language at issue here—the requirement that any appraisal be conducted using generally accepted appraisal practices—was inserted "to prevent condemnors from providing the landowner with slipshod or incompetent appraisals." Id. at 749.

Thus, section 523.253 gave landowners the added protections that an appraisal (or an explanation with supporting financial data) be included in the condemning party's good faith offer and that any appraisal be made using generally accepted appraisal practices.

Slip op. at 12-13 (footnote omitted). In short, a trial court is not required to take an appraiser's claim that his method is generally accepted at "face value." Slip op. at 15.

While the court held that the post-Kelo amendments permit a trial court to measure the credibility of an appraiser to determine whether she used generally accepted appraisal practices, "[w]e stress that section 523.253 does not contemplate a full determination of the fair market value of the subject property at the initial hearing." Slip op. at 14. It looks like the court is contemplating a procedure similar to the typical voir dire examination of expert witnesses to determine they are qualified.

Finally, the court awarded attorneys' fees, holding that the term "owner" in section 532.256 includes the owner and holder of a note secured by a deed of trust upon the property because the note is "property" subject to condemnation. Slip op. at 15-16. The court also awarded attorneys' fees incurred in the appeal, and remanded the case to the trial court for a determination of the award.

Ely On "Stevens, Kagan and Property Rights"

Vanderbilt lawprof James Ely (if you haven't read his book The Guardian of Every Other Right: A Constitutional History of Property Rights (1998), you really should) writes on the topic du jour, the nomination of SG Elena Kagan to the Supreme Court in Stevens, Kagan and property rights.

Most of the article focuses on Justice Stevens' record in property cases:

However, in at least one important area of constitutional law - the rights of property owners - Justice Stevens' record fell woefully short of protecting the interests of average citizens. In fact, Justice Stevens consistently dismissed property rights claims and voted to strengthen government control over the lives of individuals.

He concludes with this:

Hopefully Elena Kagan, Mr. Obama's nominee to replace Justice Stevens, holds a more balanced view of the importance of property rights in the American constitutional order. As in many other fields of law, however, Ms. Kagan's record with respect to property rights is a blank slate. It certainly would be appropriate for senators at Ms. Kagan's confirmation hearing to ask about her thoughts on this subject.

Will they, and more importantly, will she respond with anything more than a the claim that judges are "umpires?"

Yale Law Journal: Eminent Domain Due Process

A new article worth reading: Eminent Domain Due Process, 119 Yale L. J. 1280 (2010) by D. Zachary Hudson. Here's the abstract:

This Note analyzes the apparent disconnect between eminent domain doctrine and due process doctrine. Following Kelo, numerous states have reformed their eminent domain laws in an effort to ensure that the takings power is not abused. Whatever one makes of these legislative reforms, at an absolute minimum, the Due Process Clause should guarantee that landowners receive notice and an opportunity for some sort of judicial determination of the legality of the taking before the land is actually taken. After cataloging existing eminent domain laws, this Note traces the evolution of these laws over time in both the legislatures and the courts. In parallel, this Note analyzes the evolving circumstances driving the judicial perception of eminent domain. Examining these facts, the Note explains why courts have failed to rein in the eminent domain power with procedural protections. After establishing the appropriateness of applying modern due process principles to eminent domain actions, the focus of the inquiry shifts to what procedural due process demands. This colloquy explains what process is due, what the content and form of that process should be, and the likely effects of recognizing due process rights in the eminent domain context.

The article cites one of my home jurisdictions (Hawaii) as taking a "middle course" by providing "some process" before the taking:

Several other states require notice by statute prior to allowing the exercise of eminent domain authority, but do not specifically afford any form of precondemnation judicial process. Under Hawaii law, for example, a taking can be accomplished by a simple filing with the court, but the condemnor must also provide notice to the owner of the property it seeks to condemn. There is no specific judicial proceeding provided for under this statute, but by ensuring notice to the property owner, the statute at least gives the individual the opportunity to attempt to insert herself in the process by seeking an injunction or pursuing some other equitable remedy.

119 Yale L. J. at 1289 (citing Haw. Rev. Stat. § 101-28 (2006)).

Thanks to my colleague Dwight Merriam for the heads up on this article.

New York Appellate Division: Condemnation Must Proceed Under Eminent Domain Statutes, Not Highway Law

In County of Cortland v. Miller, No 507725 (Mar. 24, 2010), the New York Appellate Division (Third Department) held that when the county legislature authorized the condemnation of property for a road culvert pursuant to New York's Eminent Domain Procedure Law, the county highway department must condemn the property pursuant to the EDPL, and not the Highway Law.

Here, the County Legislature's resolution in August 2008 authorized the acquisition pursuant to the EDPL. Rather than adhering to the method for the taking directed in the resolution (i.e., the EDPL), petitioner instead attempted to use a procedure under a different statute (i.e., Highway Law § 120). This alone is reason enough to dismiss the petition. In addition, Highway Law § 120 is inconsistent with the EDPL in significant aspects relevant in this proceeding, including hearing requirements (see EDPL 201) and who determines compensation (see EDPL 501 [B]). Those aspects of Highway Law § 120 no longer govern a taking in this state and it was error to utilize procedures from Highway Law § 120 that were at odds with the EDPL.

Slip op. at 3-4.

Seems obvious, no?

More About The "Undivided Fee Rule" Cert Petition

A couple of links following up on our recent post about City of Milwaukee Post No. 2874 Veterans of Foreign Wars of the United States v. Redevelopment Agency of the City of Milwaukee, No. 09-1204 (cert. petition filed Apr. 2, 2010).

That's the case in which the Supreme Court is being asked to review a decision by the Wisconsin Supreme Court (768 N.W.2d 749 (Wis. 2009)) applying the "undivided fee" rule to conclude that a valuable long-term $1 per year lease was worthless as a matter of law. The VFW was prohibited by the trial court from introducing any evidence of value since under the undivided fee rule, the jury could only determine the value of the fictional fee simple interest. The sharply divided Wisconsin Supreme Court affirmed. [Disclosure: we filed an amicus brief, noted below.]

The cert petition is here. The amicus brief we filed for National Association of Home Builders and the Wisconsin Builders Association is here. The Institute for Justice's amicus brief is posted here.

• Lawprof Ilya Somin details the amicus brief he filed in the case, and the comments include a spirited debate on the workings and wisdom of the undivided fee rule (via the Volokh Conspiracy).

• The Eminent Domain Law Blog provides more information on the case here.

Links From WMA Presentation - Regulatory Takings, Rent Control, And Guggenheim

Yesterday, I had the pleasure of speaking to members of the Western Manufactured Housing Communities Association about some of the legal issues facing their businesses, and property owners in general. Here are the links I mentioned:

• Guggenheim v. City of Goleta, 582 F.3d 996 (9th Cir. 2009) (en banc review ordered Mar. 12, 2010). This is the very important case regarding the city's mobile home rent control ordinance, which the Ninth Circuit panel concluded worked a facial taking of property under Penn Central. We have the briefs which have been filed for en banc review, and will be posting them in the upcoming days. Most definitely a case to watch.

• Professor Richard Epstein's short article about Guggenheim, Takings Law Made Hard. 

• RS Radford's rejoinder to Professor Epstein, Takings victories made harder.

• A recent opinion from the California Court of Appeal in another rent control regulatory takings case, MHC Financing Ltd. P'ship v. City of Santee, No. D053345 (Mar. 15, 2010). The case illustrates well the procedural hurdles the courts have erected when property owners bring regulatory takings claims.

• Another recent decision in the same vein, this time from the federal courts: Knutson v. City of Fargo, No. 08-1894 (Apr. 12, 2010).

Home Builders' Amicus Brief In SCOTUS Eminent Domain Case: Is Wisconsin's Application Of The Undivided Fee Rule Unconstitutional?

Today, on behalf of the National Association of Home Builders and the Wisconsin Building Association, we filed this brief amici curiae in  City of Milwaukee Post No. 2874 Veterans of Foreign Wars of the United States v. Redevelopment Agency of the City of Milwaukee, No. 09-1204 (cert. petition filed Apr. 2, 2010).

The brief argues that the "undivided fee rule," as applied by the Wisconsin Supreme Court, violates the Fifth Amendment's Just Compensation Clause because it  requires that the value of a leasehold interest which would be worth over $1 million if condemned separately be valued at zero. Most eminent domain attorneys know about the infamous undivided fee rule (aka as the "unit rule" in some jurisdictions), a legal fiction which requires a trial court to calculate valuation of property as if a single owner possessed everything, even when it is held by more than one interest. Under the rule, the condemnor is not required to compensate each separate interest in the property, but treats the property as if it had one owner.

For example, if a condemned building is being leased to tenants, compensation is measured by the value of the undivided fee simple absolute value of the building, not the aggregate value of the building and the leases. The building owner and the tenants must divide up the condemnation award by contract. In many if not most cases, the rule is uncontroversial. But in a few cases its rigid application works very unusual and unfair results.

In City of Milwaukee Post No. 2874 Veterans of Foreign Wars of the United States v. Redevelopment Agency of the City of Milwaukee, 768 N.W.2d 749 (Wis. 2009), a sharply divided Wisconsin Supreme Court applied the rule to conclude first that a tenant who owned an admittedly valuable long term lease ($1 rent per year, plus goodies) was not entitled to any compensation because the value of the building was zero.We deconstructed the opinion in this post: Wisconsin Supreme Court: The Whole Is Lesser Than The Sum Of Its Parts.

The VFW's cert petition presents the following questions:

When the Milwaukee Redevelopment Authority took by eminent domain the 11-story downtown building that housed the offices of Post 2874 of the Veterans of Foreign Wars (VFW) as a long-term lessee, the Wisconsin Supreme Court held 4 to 3 that—as a matter of law—the VFW was not entitled to present any evidence of value, nor entitled to recover any compensation whatever for its concededly valuable long-term leasehold.

The questions presented are:

1. Does it violate the 5th and 14th Amendments for Wisconsin—like some jurisdictions, but in conflict with others and with this Court’s repeated insistence that the appropriate question in an eminent domain proceeding is "what has the owner lost, not what has the taker gained"—to apply its "undivided fee rule" in such circumstances?

2. Did the court below violate VFW’s constitutional right to due process of law by precluding it, as the owner of a valuable interest in property being taken through eminent domain, from introducing any evidence of the value of its leasehold property?

The petition points out the split of authority in the lower courts on the applicability of the undivided fee rule. Some twenty states (Hawaii included) apply the rule regardless of the circumstances. Seven other jurisdictions never apply the rule. Still others (eight states and several federal courts) apply the rule, but are willing to deviate from it when its application would deny just compensation. A split of authority is one of the surest tickets to Supreme Court review. To add to this case's chances, the Court has appeared to be interested in the question of just compensation recently. During the oral arguments in Kelo v. City of New London, for example, two Justices asked counsel about it, even though just compensation was not at issue in that case.

The petition sums up the basic issue, and the equities:

The question is whether valuation by this fictional technique satisfies the 5th and 14th Amendments’ guarantee that those whose property is commandeered for public use will receive just compensation, usually defined as fair market value. The result below speaks eloquently. The Veterans of Foreign Wars received $0 as compensation for a long-term lease, a lease that the majority opinion had to concede had value, even though application of the  undivided fee rule forbade the VFW from presenting any evidence as to that value or receiving any compensation from the Redevelopment Authority for its taking.

Petition at 4-5. Our amici brief argues:

The "undivided fee" rule – a rule of convenience under which a court will not value a leasehold interest separately if it is condemned along with the fee simple estate – cannot override the Fifth Amendment’s guarantee of just compensation when property is taken.

A uniform standard is sorely lacking and the Wisconsin Supreme Court’s rigid application of the undivided fee rule resulted in the literal evaporation of what was acknowledged by all parties to be a valuable property interest. The Private Property and Just Compensation Clauses require more.

Leaseholds are"property" protected from uncompensated takings by the Fifth Amendment, and if the VFW’s lease alone had been condemned, there would be no question it would be entitled to compensation and to have a jury determine the lease’s value. See, e.g., United States v. General Motors Corp., 323 U.S. 373, 380 (1945) ("The right to occupy, for a day, a month, a year, or a series of years, in and of itself and without reference to the actual use, needs, or collateral arrangements of the occupier, has a value."). The Wisconsin court’s application of the undivided fee rule to value that lease at zero as a matter of law simply because the fee simple interest was also being acquired – and to prohibit the VFW from presenting evidence of the lease’s actual value to the jury – ignored its status as  Fifth Amendment property, entitled to recognition independent of the fee simple interest, and separate valuation.

This Court should grant the writ of certiorari to review the Wisconsin Supreme Court’s conclusion that in eminent domain law, somehow the whole can be lesser than the sum of its parts.

Br. at 4-5 (emphasis original).  More to follow if and when a brief in opposition is filed.

Cal Ct App: "Substantially Impaired" Access Does Not Mean Reduced Access

We're still on the road so haven't had time to digest this eminent domain decision in more detail, but here's a short summary.

In an unpublished opinion in Council of San Benito County Governments v. McNamee, No. H033989 (Apr. 27, 2010, the California Court of Appeal (Sixth District) rejected the property owners' argument the trial court erroneously held they were not entitled to severance damages:

Defendants contend on appeal that the trial court erred in rejecting their claim that the taking of their property created a “substantial impairment” of access to the remainder parcel. They claim that the trial court’s statement of decision "demonstrates its failure to analyze correctly the issues and evidence in this case" and "shows that the trial court failed to consider the facts of this case."

Slip op. at 4. The court noted that under Cal. Evid. Code § 402, the hearing on the issue was not reported and there is no record of the testimony presented to the court at the hearing. Thus, "every presumption in favor of the validity of the judgment and all facts consistent with its validity will be presumed to have existed." The appellate court can reverse "only if the trial court's statement of decision itself demonstrates that it committed reversible error." Id. at 5.

With that, the court reviewed the trial court's findings, and concluded it was fine:

The question before the trial court was whether access to the remainder parcel was substantially impaired, not whether the parcel’s original access had been reduced by the taking. Substantially impaired does not mean the same as reduced. The relevant meaning of “substantial” is "essential." (Merriam-Webster’s Collegiate Dict. (10th ed. 1999) p. 1174.) "Impaired" has a qualitative import and means "handicapped or functionally defective," while "reduce" is merely quantitative and simply means "diminish in size." (Merriam-Webster’s Collegiate Dict. (10th ed. 1999) pp. 581, 980) Thus, even a taking that significantly reduces the access to a parcel may not result in a substantial impairment of the remainder parcel’s access if the remaining access is not functionally defective.

Slip op. at 7. That's about it for the opinion.

On further review, maybe we did have time to digest it.

Latest Eminent Domain Ruling From The California Court of Appeal

I'm on the road so haven't had the opportunity to digest this one in more detail.

In an unpublished opinion in Community Redevelopment Agency of the City of Los Angeles v. Kramer Metals, No. B208726 (Apr. 23, 2010, the California Court of Appeal (Second District) held:

Kramer Metals, a California partnership, Stanley J. Kramer, as its general partner, and Stanley J. Kramer and Susan M. Kramer, husband and wife, as joint tenants, (collectively, Kramer) appeal from the judgment in condemnation following: (1) a court trial determining Kramer's entitlement to just compensation from the Community Redevelopment Agency of the City of Los Angeles, California (CRA) for taking Kramer's property (Kramer Property or 1000 Property); (2) a jury trial resulting in an award of $4,830,000 as just compensation; and (3) a jury trial resulting in a verdict that Kramer "suffered no loss of goodwill as a result of the taking."

On appeal, Kramer contends that: (1) the trial court erred in failing to dismiss the condemnation action, because the Resolution of Necessity (RON) did not contain a determination that the public interest and necessity required the project, a jurisdictional defect; (2) the requisite owner participation process was a sham; (3) CRA violated the Ralph M. Brown Act (Gov. Code, § 54950, et seq.; Brown Act) in adopting the amended RON; (4) CRA's pre-determination to acquire the Kramer Property violated Kramer's due process right to notice and opportunity to be heard; (5) the amended RON lacked a renewed parcel-specific blight finding; (6) the court abused its discretion in excluding evidence of precondemnation damages and in admitting the testimony of CRA's goodwill expert; and (7) the judgment must be amended to include an award of interest on the probable compensation deposited. We affirm the judgment.

Slip op. at 2 (footnote omitted).

Was It "All About The Money?" Hardly.

According to this City Room blog post at the New York Times, Daniel Goldstein, the "last Atlantic Yards holdout" and the driving force behind Develop Don't Destroy Brooklyn, has agreed to cease his objections to the taking of his family home in return for $3 million. For a statement from Mr. Goldstein, see here.

We say good for him.

Browse through some of the comments on the post, however, and you will note that others view this through more jaded lenses: "We knew it was all about the money in the end," "I guess it was about money all along, eh?," "Moral of the story: He who holds out longest, gets the biggest check. No good guys in this one." Similar charges were leveled against Susette Kelo when she eventually settled her case.

These comments are unfair, and reflect a gross lack of understanding of what it really means to be on the business end of eminent domain, especially in a situation such as this where Goldstein and his neighbors have been forced to move from their unblighted homes and businesses to make way for luxury residences and a new arena for the New Jersey Nets basketball team. All he and his neighbors were asking was that their properties not be seized and turned over to another private party, and that the government actually prove their homes and businesses were "blighted" as claimed.

New York's federal courts didn't even want to hear their claims, while the highest state court concluded the question of whether their properties are really "blighted" as the city and the developer claim is an issue so complicated that it's beyond the ability of judges to grasp.

To characterize Goldstein as "folding" or as a sellout is to imply that he presently has options other than to go down in a blaze of righteous glory. To suggest he was bought is the height of cynicism. He pretty much lost at every step, but continued his uphill struggle long after most people of less stout fabric would've folded up and quit. Yet he went forward, with nothing more than the hope that the courts might listen. These comments also overlook the personal, financial, and emotional toll a battle like this can take.

If someone actually believes that Goldstein's dogged opposition to the project and the taking of his property was simply an angle to squeeze more money out of the developer, remind us never to take a trip to Vegas with that person, because from the start, the odds were against Goldstein and his neighbors getting anything truly satisfactory. As property owners trying to preserve their homes and businesses against a taking by an influential city insider, the legal decks -- especially because this is New York -- were always stacked against them. 

For a more realistic perspective on Goldstein's action, see Norman Oder's post on the subject at the Atlantic Yards Report:

While some online commenters have lauded him for fighting the good fight against a government and developer with enormous resources, some sneer that he was in it for the money. That's hard to believe, given the amount of work he put in.

Some may think he should've held out to the bitter end. He might've gotten far less money in the legal process--and, I'd add, it's hardly comfortable for someone with a wife and child living alone in a building next to a construction site.

Goldstein told Crain's "there was nothing more I could possibly do to fight this project." Given that he did more than anyone, it's hard to fault his decision, but the settlement, as noted, likely weakens pending litigation that already faced an uphill battle.

For more reports on these events, go here.

Upcoming: Land Use Hot Topics Program (In Person And Online)

On Friday, April 30, 2010, as part of the Spring Meeting of the ABA's Section of State and Local Government Law, I'll be presenting a paper Recent Developments in Challenging the Right to Take in Eminent Domain (SSRN posting here) during the "Land Use Hot Topics" program.

If you are in South Florida, the in-person program will be at Holland & Knight, 701 Brickell Avenue, Miami, from 12:30 - 2:00pm. If you can't be there in person, you can sign up for the "virtual" meeting (a teleconference and live audio webcast) here. Either way, hope you can join us.

The program will also cover such topics as Religious Land Use Update, Recent Developments in Comprehensive Planning, The Miami Beach Art Deco District, Official Immunity in Making Local Zoning Decisions, and Uses and Limits of the Fair Housing Act and the Americans With Disabilities Act. Registration also includes two additional programs on Governmental Operations Hot Topics and Current Issues in Bilingual Education and English as a Second Language Instruction.

Sunday Eminent Domain Round-Up

What we're reading today:

• Curbing abuse of eminent domain - A Denver Post editorial on a new Colorado statute designed to limit the power of the government to declare farmland "blighted" ("The new law says land that has been classified by the county assessor as agricultural land cannot be condemned for urban renewal. However, it makes an exception for agricultural land that is an enclave within cities and has had development around it for at least three years. We will have to see how the law shakes out in the coming years, but that seems to be an awfully big exception. That's exactly the kind of land that usually needs the most protection from government.").

• Court of Appeals eminent domain case set for June - The Columbia Spectator reports that oral argument in the Kaur case is set for June 1, 2010, at 2 pm ET. In that case, the New York Supreme Court, Appellate Division (First Department) struck down the attempted taking of land north of Columbia University in New York City because of the record reflected overwhelming private benefit. Here is the Court of Appeals' oral argument calendar. Our schedule and technology permitting, we will be live blogging the oral arguments like we did for the Atlantic Yards case.

• Book Review: Jeff Benedict's 'Little Pink House:' The Back Story of the Kelo Case - Lawprof George Lefcoe has published a book review of LPH in the Connecticut Law Review, which is posted on SSRN.  

Little Pink House is a fast paced account by Jeff Benedict of the events surrounding the 2005 U.S. Supreme Court decision in Kelo v. City of New London. Along with tracking Benedict’s story line, this review also highlights some of the core legal and policy issues that are an important part of the story for law-trained readers. At the core of the tale is how Kelo and a handful of her neighbors challenged the New London Development Corporation’s (NLDC) use of eminent domain for the economic redevelopment of the Fort Trumbull neighborhood. A libertarian-inspired public interest law firm named the Institute for Justice (IJ) agreed to represent the beleaguered property owners.

Our shorter and much less academic review of Little Pink House is here.

• J. David Breemer, Ripeness Madness: The Expansion of Williamson County's Baseless "State Procedures" Takings Ripenss Requirement to Non-Takings Claims, 41 Urban Lawyer 615 (2009). .  

  In this article, David Breemer critically examines the extension of Williamson County’s state procedures ripeness requirement to claims beyond takings claims. Breemer argues that the extension is improper given the origin and limited scope of the state procedures requirement, precedent establishing critical differences between the standards, injuries and remedies relevant to a takings claim and those applicable to other claims, and precedent allowing multiple causes of action from the same facts. Ultimately, Breemer concludes, the state procedures ripeness requirement must be abandoned because it is doctrinally bankrupt and dysfunctional in practice. In the meantime, courts must cease applying this takings ripeness doctrine to due process and equal protection property claims because there is no authority for this trend, and its amounts to a jurisdictional coup d’état that illegally rescinds 42 U.S.C. § 1983 for property owners.

  ABA members can access the full article pdf here.

New Jersey Appellate Division: For Property To Be Blighted, City Must Do More Than Say It Is Blighted

In Cottage Emporium, Inc. v. Broadway Arts Center, L.L.C., No. A-0048-97T2 (Apr. 16, 2010) (per curiam), the New Jersey Superior Court (Appellate Division) struck down the city of Long Branch, New Jersey's declaration that properties located in an area of the city known as the "Broadway Corridor" are blighted. The court held that the city must do more than recite the statutory criteria for blight and then assert the properties met the criteria.

The city determined the properties were in "poor" condition using only "cosmetic and superficial" criteria, and by visually inspecting the buildings' exteriors. Nor did the city attempt "even in small part to establish what Gallenthin [Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007)] requires, namely a degree of 'deterioration or stagnation that negatively affects surrounding areas' by promoting conditions that can develop into blight." Slip op. at 36.

Although a city's blight determination is presumed valid and challengers have the burden of overcoming the presumption by demonstrating that the determination was not supported by "substantial evidence," the appellate division noted that in Gallenthin, the New Jersey Supreme Court held that the "substantial evidence" standard required that the city do more than recite the "applicable statutory criteria [regarding blight] and a declaration that those criteria are met." Slip op. at 27.

The court contrasted Long Beach's blight determination with the survey taken in Lyons v. City of Camden, 52 N.J. 89 (1968), where the city looked at the exterior and interior of each structure, and three engineers and an architect evaluated each building's deficiencies before a structure was declared to be substandard. Slip op. at 37. Long Branch's blight report, by contrast, concluded the Broadway Corridor properties were blighted because "[t]he generality of the buildings are substandard, unsafe, unsanitary, dilapidated or obsolescent, or possess any of such characteristics." Slip op. at 38. The court held this was a "bland recitation of statutory criteria" that failed to explain its basis.

The court concluded:

We conclude that the City's designation of the study area properties as in need of redevelopment does not satisfy the heightened standard made applicable to such determinations by the Supreme Court's decision in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007). Therefore, because the record does not contain substantial evidence to support the City's findings under any of the subsections upon which it relied, we reverse the judgment appointing condemnation commissioners and vacate the declarations of taking.

Slip op. at 5. The court remanded the case to the trial court to allow the city to make a better record, if possible. More on the decision here from NJ.com. According to the story:

[Long Branch] Mayor Adam Schneider said he does not see the point in pursuing an appeal given the way courts have ruled in recent eminent domain cases.

"I think eminent domain is a dead issue in New Jersey and Long Branch at this point," he said, adding he would no longer propose using eminent domain — the seizing of private property by governments for public projects — for any redevelopment in the city.

Thanks to Robert Poliner for the heads up on this decision.