From the Ninth Circuit, a published opinion in a case challenging a Napa Valley city's mobilehome rent control ordinance, Rancho de Calistoga v. City of Calistoga, No. 12-17749 (Sep. 3, 2015). Here's a complete summary of the issues in the case, along with the Ninth Circuit merits and amici briefs. We've been following it because we filed an amicus brief in support of the property owner's argument that it pleaded enough to get by a motion to dismiss for failure to state a claim.
The Ninth Circuit didn't agree, and affirmed the District Court's dismissal. The panel concluded the case was ripe under Williamson County (an issue that seemed to occupy a lot of the judges' time at oral arguments), but that the owner's theory that "even if the taking is for a public purpose, the rent subsidy should be paid by the government if the rent is neither excessive nor the result of monopoly power" didn't pass Penn Central because the City's failure to raise the rent to the level requested by the owner only resulted in a "mere diminution in the value of the property" (in this case, the owner alleged it lost a "mere" $4.73 million), and because the owner had no investment-backed expectation to be "free of government regulation," even though it purchased the property before the imposition of rent control:
Rancho argues that because, unlike in Guggenheim, 638 F.3d at 1120-21, and MHC, 714 F.3d at 1128, it has owned the Park since before the City imposed a rent control ordinance, it had an investment-backed expectation to be free from rent control. This temporal difference does not give Rancho a valid investment-backed expectation of owning a mobile home park unencumbered by government regulation. Simply put, when buying a piece of property, one cannot reasonably expect that property to be free of government regulation such as zoning, tax assessments, or, as here, rent control. Rancho’s argument is tantamount to saying that a homeowner can reasonably expect that the tax assessment or rate of taxation on her home will not increase from the time of purchase.
Slip op. at 13.
First, we thought the ruling in Guggenheim was based on the idea that in that case, the owners purchased their mobilehome park after the City adopted its rent control ordinance. The court concluded that was "fatal" to their takings claim. The Rancho panel has now concluded that it is similarly "fatal" to buy a mobilehome park even before an ordinance is adopted. When you buy it doesn't matter, because, you know, it's all subject to regulation, even if the specific regulation you challenge isn't adopted until later. Which is just bizarre to us, given that the Penn Central test focuses on an owner's expectations. But to the Ninth Circuit, it just isn't reasonable to expect that everything won't eventually be regulated, because it already is regulated. To which we respond: if that is the case, then why bother with this prong of Penn Central at all?
Second, any prediction of which Supreme Court decision is notably missing from the Rancho opinion? You guessed it, Palazzolo v. Rhode Island, 533 U.S. 606, 626 (2001). In that case, the Court rejected the proposition that "postenactment purchasers cannot challenge a regulation under the Takings Clause[.]" Our read of Palazzolo is that a property owner's right to make reasonable use of her land does not evaporate simply because restrictive regulations predate her acquisition. Purchasers of property subject to restrictive regulations maintain all of the rights protected by the Fifth Amendment and may assert a takings claim, and regulations do not become part of a parcel’s "background principles." As the Court put it, the government cannot “put an expiration date on the Takings Clause." Id. at 627.
Our read is that the Ninth Circuit panel thought it could avoid Palazzolo because the Calistoga property had been used as a mobilehome park before Rancho bought it. And as a consequence, Rancho should have darn well known that "those who buy into a regulated field such as the mobilehome park industry cannot object when regulation is later imposed." Slip op. at 13. In other words, even though the park was free of rent control when Rancho bought it, the determinative fact was that it was a highly-regulated park when Rancho bought it. Just what those regulations were (they were not rent control, obviously) the opinion doesn't tell us. And remember, to the regulators everything is highly regulated, not just mobilehome parks -- it's their world, we just live in it. We suppose if the property was not a mobilehome park when Rancho bought it, and Rancho then developed it into a park before imposition of rent control, that might be the only situation where the panel would say that the owner had reasonable investment-backed expectations (as long as the prior use wasn't also some "highly regulated" use). Good luck with that one.
Finally, the panel rejected the owner's "private regulatory takings" claim, which asserted "that the application of Ordinance 644 to rent increases constitutes an unconstitutional private taking because any purported 'public use' is pretextual." Slip op. at 16. In the MHC case, the Ninth Circuit "assumed without deciding" that such a claim was possible and held against the owner on the merits. The Rancho panel closed that door, holding that no such claim is possible. You either have a challenge to public use in eminent domain, or a regulatory takings case. This seems about right in our view, and the only thing missing from the panel opinion is that a challenge to the purpose of a regulation (even if it results in a regulatory taking) is a due process claim, something which we've suggested before.
By the way, the California Court of Appeal recently issued a similar -- but unpublished -- opinion in a companion state law challenge (our summary here). Pretty much the same result as the Ninth Circuit.
Finally, we have this to add. The Ninth Circuit opinion started off with a bit of judicial snark ("Quoting Yogi Berra, we have previously characterized these claims as 'deja vu all over again.'") (we generally appreciate judicial snark, even when directed our way), and then took the property owner to task for continuing to challenge rent control:
Each time a court closes one legal avenue to mobile home park owners seeking to escape rent control regimes, the owners, undaunted, attempt to forge a new path via another novel legal theory.
Slip op. at 2. To which we reply "what's wrong with that?" Yes, rent control is here, and it's been here for a while, and mostly survived legal challenges. If you want a flavor of why that is so, you need look no further than Judge Kleinfield for the en banc majority in Guggenheim, where he wrote:
The people who really do have investment-backed expectations that might be upset by changes in the rent control system are tenants who bought their mobile homes after rent control went into effect. Ending rent control would be a windfall to the Guggenheims, and a disaster for tenants who bought their mobile homes after rent control was imposed in the 70’s and 80’s. Tenants come and go, and even though rent control transfers wealth to "the tenants," after a while, it is likely to affect different tenants from those who benefitted from the transfer.So there you have it: the cement has hardened on rent control, and it's just too established to do anything about it. And that may be true, even though it is not legal reasoning, just a policy choice. But it is one of the reasons why we always say that the results in certain classes of cases are not really too difficult to predict.But although some things may be just "too big to fail," that doesn't mean they do not rest on shaky legal footing. Which means that courts shouldn't criticize people for continuing to object. After all, 200+ years of constitutional common law experience has shown that the law today isn't necessarily what the law will be tomorrow or a decade from now, and continual challenges are the means by which the law evolves.
No, it's not the latest economic development project, but an item we've reported on earlier: Jeff Benedict's "Little Pink House" book about the Kelo case is being turned into a movie. Here's a Reason interview with one of the movie's producers explaining why the story attracted them, and what we can expect from the film.
Biggest question we have is the casting. Here are our earlier suggestions.
Here's an article by IJ's Dana Berliner, a retrospective on public use in eminent domain and where the decade since Kelo has left us.
It is a sign of the constitutional damage Kelo caused that these two related features of the opinion—blind deference and the refusal to engage with facts—have marked post-Kelo jurisprudence.
Berliner, Looking Back Ten Years After Kelo, 125 Yale L.J.F. 82 (2015).
A quick and worthy read.
The Solicitor General of South Carolina has issued this opinion letter, answering the following three questions about a state statute which "purports to confer all rights, powers, and privileges given to telegraph and telephone companies" to pipeline companies:
- Since S.C. Code § 58-7-10 et seq. appears to mainly concern waterworks, sewage disposal, and natural gas lines, do its provisions also apply to oil and gasoline pipelines and extend to them the public power of eminent domain?
If your answer to Question 1 is "yes," then why isn't an extension of eminent domain power to a private, for-profit pipeline company unconstitutional under S.C. Article 1, § 13(A)?
If an oil and gas pipeline company has eminent domain authority, and this authority is not unconstitutional, must an oil or gasoline pipeline company follow all regulations, rules, legal requirements, or other policies or procedures that are applicable to telephone and telegraph companies when they acquire property or easements to run lines?
Short answers: (1) probably not; (2) it probably is unconstitutional under the South Carolina Constitution; and (3) not sure, but the usual process for challenging public use in the Court of Common Pleas should be followed.
Not binding on anyone, mind you, but an interesting analysis of South Carolina's law for those of us outside the Palmetto State.
The Land Use Institute, a program that for many years has been planned by co-chairs Frank Schnidman and Gideon Kanner, has found a new home with the American Bar Association's Section of State and Local Government Law as the main sponsor. It also has a new Planning co-chair, Dean Patty Salkin of Touro Law School, who has stepped in for Professor Kanner.
This program is designed for attorneys, professional planners, and government officials involved in land use planning, zoning, permitting, property development, conservation and environmental protection, and related litigation. It not only addresses and analyzes the state-of-the-art efforts by government to manage land use and development, but also presents the key issues faced by property owners and developers in obtaining necessary governmental approvals.
This year, the one-day program is being held in conjunction with the ABA Annual Meeting in Chicago. It will be held on Thursday, July 30, 2015, the day before the Annual begins, in the same hotel as the State and Local Section meeting, which will make it easy to attend both.
The program brochure has all of the information you need, including tuition (register by July 17, 2015 to receive a discount), agenda, and faculty. Topics covered include: updates on the hot topics, key land use and eminent domain decisions from the past year, the law of sharing transportation and residential properties, fracking, ethics, urban agriculture, drone regulations, and the annual Richard F. Babcock Faculty Keynote Address, "From the Group Up: Unshared Assumptions in Law and Planning." We're on the faculty, and will be providing updates on eminent domain, federal water law, and will be moderating the panel on ride sharing issues.
In addition, you may also want to attend the additional Friday modules (separate registration fee), "The 2014 Supreme Court Term in Review" (with a panel of Supreme Court advocates and journalists), and "Looming Land Use Constitutional Issues," a panel of experts speaking about compensation for owners whose property is taken for environmental protection, the Horne v. USDA case (presented by one of the attorneys for the Hornes), medical marijuana for land use lawyers, and the law of exactions and affordable housing.
Download the brochure for all the information or to register, or visit www.landuseinstitute.org (which will redirect to the ABA's registration link page).
Hope to see you in Chicago in a few weeks.
Posted on July 3, 2015 in ▪ Agriculture, ▪ Court of Federal Claims | Federal Circuit, ▪ Eminent Domain | Condemnation, ▪ Environmental law, ▪ Inverse condemnation, ▪ Just Compensation | Appraisal, ▪ Land use law, ▪ Municipal & Local Govt law, ▪ Nollan/Dolan | Exactions, ▪ Property rights, ▪ Public Use | Kelo, ▪ Redevelopment, ▪ Regulatory takings, ▪ Rent Control, ▪ RLUIPA | religious land use, ▪ Seminars, ▪ Water rights | Public trust, ▪ Zoning & Planning | Permalink | 0 Comments
Here's your chance -- for a very reasonable tuition fee -- to get updated on what's happened in the ten years since the U.S. Supreme Court's controversial eminent domain decision in Kelo v. City of New London, 545 U.S. 469 (2005).
On July 23, 2015, the Counselors of Real Estate and the Owners' Counsel of America are jointly sponsoring a webinar, "Kelo v. New London: The Grasping Hand and Its Legacy."
I'll be introducing and moderating a distinguished panel of speakers:
As the brochure notes, "This panel of eminent domain experts will discuss the effect of this landmark decision – one that that changed how citizens and courts viewed these types of cases. How does this affect your clients and developments?"
- Professor Ilya Somin, author of the recently-published book on Kelo.
- Anthony DellaPelle (McKirdy & Riskin) and Jack Sperber (Faegre Baker Daniels), my OCA colleagues from New Jersey and Colorado, respectively.
We're going to cover a lot of ground, including the legislative and judicial responses to Kelo, practical and doctrinal tips for how to navigate the current public use landscape, and maybe a few predictions for the future.
Hope you can join us.
The hotel reservations link for the 2016 ALI-CLE Eminent Domain and Land Valuation and Condemnation 101 Conference is now live.
Reserve your hotel room now, via this link to ensure that you have a spot in the conference hotel. [note: link updated 7/8/2015]
We're still working on the agenda and faculty, but here are the details thus far:
Date: January 28-30, 2016 (Thursday - Saturday)Location: Hotel Van Zandt, Austin Texas
The Hotel Van Zandt is a new hotel (not even opened as of the date of this post), but our Austin sources tell us that it's centrally located, close to everything that Austin is known for. More about the annual conferences -- the premiere CLE programming on the subject, in our opinion -- here.
Stay tuned for more information. We'll continue to keep you posted, and when the registration page at ALI-CLE is up and ready to take reservations. In the meantime, save the spot on your calendar so you can join us in Austin.
Attend any talk by a judge which includes legal writing tips, and there's sure to be this one: keep it as short as is necessary to make your points. Justice Kennedy's remark that "I never read a brief I couldn't put down in the middle" and Chief Justice Roberts noting "I can’t recall ever being sorry to see a brief end," for example. Good advice. But what judges may not realize is that it is very often a two way street, and we consumers of judicial opinions also appreciate brevity. (With the exception of opinions in cases we win; in those circumstances, please do drone on Your Honors.)
Well, here's one that is somewhat lengthy at 49 pages, but is the exception to the rule and that we think more than a few readers will enjoy for their weekend reading: the concurring opinion in a case decided by the Texas Supreme Court yesterday.
You can read about the court's majority ruling here (via Tim Sandefur at PLF's Liberty Blog), in this case about whether Texas' licensing requirements for the profession of "commercial eyebrow threaders" survive a rational basis challenge under Texas' Due Course of Law provision, or are as ridiculous as they sound.
Justice Willett's concurring opinion joins the majority's conclusion that the Texas rational basis test isn't the same as the "aliens might have conceivably done it" federal rational basis test, but is really about whether there's a rational basis in the record that the regulation advances a legitimate government interest. So at least in Texas, they can't make stuff up and the reasons must be in the record, and not be irrational or work an irrational result. But what makes the concurring opinion an enjoyable read is the Justice's long discussion of why courts should not just sit by and rubber stamp anything the legislature labels "economic" regulation. We like this part, about eminent domain, also:
But “economic” and “noneconomic” rights indisputably overlap. As the U.S. Supreme Court has recognized, freedom of speech would be meaningless if government banned bloggers from owning computers. Economic freedom is indispensable to enjoying other freedoms—for example, buying a Facebook ad to boost your political campaign. A decade (and three days) ago in Kelo v. City of New London, the landmark takings case that prompted a massive national backlash, Justice Thomas’s dissent lamented the bias against economic rights this way: “Something has gone seriously awry with this Court’s interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not.”
Kelo is indeed illustrative, as the rational-basis test applies in eminent-domain cases, too, notwithstanding the assurance in footnote four of Carolene Products that alleged violations of the Bill of Rights deserve heightened scrutiny. Even though the Fifth Amendment explicitly protects property, the U.S. Supreme Court has supplanted the Carolene Products bifurcation with rational-basis deference in takings cases. The Kelo Court stressed its “longstanding policy of deference to legislative judgments,” and its unwillingness to “second-guess” the city’s determination as to “what public needs justify the use of the takings power.” Justice O’Connor’s scathing dissent, her final opinion on the Court, forcefully accused her colleagues of shirking their constitutional duty.
I would not have Texas judges condone government’s dreamed-up justifications (or dream up post hoc justifications themselves) for interfering with citizens’ constitutional guarantees. As in other constitutional settings, we should be neutral arbiters, not bend-over-backwards advocates for the government. Texas judges weighing state constitutional challenges should scrutinize government’s actual justifications for a law—what policymakers really had in mind at the time, not something they dreamed up after litigation erupted. And judges should not be obliged to concoct speculative or far-fetched rationalizations to save the government’s case.
Opinion at 35-36 (footnotes omitted).
Check it out.
In case you somehow missed it, takings junkies, today, June 23, 2015, is the tenth anniversary of the U.S. Supreme Court's excreable 5-4 decision in Kelo v. City of New London, 545 U.S. 469 (2005), and just about anyone who is anyone in our field has weighed in with a retrospective. We don't have much to add, since wiser minds than ours have some very cogent thoughts.
But here's how we view the decision, ten years on:
- Still stinks. A decade has not lessened the odor.
- We filed an amicus brief in Kelo explaining why economic development wasn't enough to support New London's taking of a perfectly good home, and we still think we're right.
- Many states and local jurisdictions reacted and adopted legislative reforms. Some helpful, many not. Guess which state did nothing, despite several proposals made over several legislative sessions? Hawaii, where we say we like the little guy, but in reality we love government power.
- Not all doom and gloom locally, however: the Hawaii Supreme Court, ironically relying on language in Kelo, held in a case in which we represented the property owner that a condemnor cannot merely rely on its own claim of public use, and that "although our courts afford substantial deference to the government's asserted public purpose for a taking in a condemnation proceeding, where there is evidence that the asserted purpose is pretextual, courts should consider a landowner's defense of pretext." County of Hawaii v. C&J Coupe Family Ltd. P'ship, 119 Haw. 352, 198 P.3d 615 (2008).
- So thank you, Suzette Kelo and IJ for taking up the fight: the first two posts on this blog were about the decision (see "Eminent Domain: The Offer You Can't Refuse," and "Kelo Exposes Deeper Problems With Eminent Domain"), and writing those convinced me to keep blogging.
- In the next few days we'll post up some of the more interesting items we have gathered on the Kelo anniversary, but in the meantime if you want the one-stop-shop, buy this book: lawprof Ilya Somin's "The Grasping Hand: Kelo v. City of New London and The Limits of Eminent Domain. We're reading it now and will have a review when we're done. But man, it's good.
- Finally, one of these days, the Supreme Court is going to take up another Public Use Clause case. We tried to convince them that one of our cases was The One (cert petition here), but to no avail. But we'll collectively keep on trying, and one day we'll have happy news to report.
Update: here's more Horne talk, in addition to our own initial thoughts in the above video and this post ("Magna Raisins: 8-1 SCOTUS Says There's A Taking, But Not All Agree On Remedy"):
- "Today's Other Supreme Court Property Rights Decision" (our post about City of Los Angeles v. Patel, No. 13-1175, in which the Court held that hotel owners need to have the opportunity to require the police to obtain a warrant before they can inspect the hotel registry)
- "Supreme Court decision on federal raisin rules likely to reshape industry" (McClatchy)
- "Prepare for Life After the National Raisin Reserve" (Bloomberg)
- "Supreme Court Sides With Raisin Farmers in Property Rights Case" (Adam Liptak at the New York Times)
- "The Government Has to Pay for the Raisins It Confiscates" (Ilya Shapiro at Cato)
- "Victory Over The Raisin Administrative Committee: The New Deal Case That Took 80 Years To Bring" (Trevor Burris at Forbes)
- "Of Raisins and Property Rights" (Roger Pilon at Cato)
- "United States Supreme Court Finds for Raisin Farmers in Takings Case" (Texas A&M AgriLife)
- "'Raisin Case' Could Have Broad Impact" (Holland & Knight regulatory litigation blog)
Here's what everyone's saying about today's Supreme Court decision in Horne v. Dep't of Agriculture, No. 14-275.
- "SCOTUS sides with raisin farmers in just compensation case" (The Hill)
- "In Major Victory for Property Rights, SCOTUS Strikes Down USDA Seizure of California Raisins" (Reason.com blog)
- "Breaking News: Supreme Court Rules Federal Agricultural Program a Taking" (lawprof Richard Frank at LegalPlanet blog)
- "Raisin the Bar" (Wall Street Journal)*
- "Supreme Court routs raisin racket" (USA Today)
- "Supreme Court Rules For California Farmer Over Government Raisin Program" (Huffington Post)
- "Raisin Farmers defeat Feds at Supreme Court" (Legal Insurrection)**
- "High court strikes down raisin program as unconstitutional" (Associated Press)
- "The right to use your property isn’t a privilege the government can force you to pay for" (Tim Sandefur at PLF's Liberty Blog)
- "Property owners prevail in raisin takings case" (lawprof Ilya Somin at Volokh)
- "Horne Decided. California Raisins – 2. Government – 0" (lawprof Gideon Kanner)
- "Slam dunk win for plaintiffs in Horne (raisin Takings case)–but I don’t fully agree" (lawprof David Bernstein at Volokh)
- "Rebel Raisin Farmer Wins Supreme Court Battle" (Sky News)
- "Supreme Court sides with Fresno farmer in raisin dispute" (Los Angeles Times)
- "Supreme Court Rules in Favor of Fresno Raisin Grower" (AgNetWest)
- "High court strikes down raisin program as unconstitutional" (PBS)
- "Supreme Court rules in favor of dissident raisin growers" (Fresno Bee)
* This case surely will be a boon to law review authors and editors, working up those title puns. E.g., "Raisin Cane," "Raisin the Bar," "fruitful decision," and the like (for example, see this Daily Show video).
** See, we told you: the lede on this story: "The wrath of grapes is on the government."
Posted on June 22, 2015 in ▪ Agriculture, ▪ Appellate law, ▪ Court of Federal Claims | Federal Circuit, ▪ Eminent Domain | Condemnation, ▪ Environmental law, ▪ Inverse condemnation, ▪ Just Compensation | Appraisal, ▪ Land use law, ▪ Municipal & Local Govt law, ▪ Nollan/Dolan | Exactions, ▪ Penn Central, ▪ Property rights, ▪ Public Use | Kelo, ▪ Regulatory takings, ▪ Zoning & Planning | Permalink | 0 Comments
Mark your calendars, and reserve your spots: The dates and location for the 2016 ALI-CLE Eminent Domain and Land Valuation, and the Condemnation 101 programs have been set. We're still working on the agenda and faculty, but here are the details thus far:
Date: January 28-30, 2016 (Thursday - Saturday)Location: Hotel Van Zandt, Austin Texas
Yes, a new venue city for us, and we're in a centrally located, brand new hotel, close to everything that Austin is known for. More about the annual conferences -- the premiere CLE programming on the subject, in our opinion -- here.
Stay tuned for more information. We'll let you know when the registration page at ALI-CLE is up and ready to take reservations. In the meantime, save the spot on your calendar so you can join us in Austin.
Hardly seems like a decade ago that the Supreme Court gave us eminent domain lawyers something to talk about at cocktail parties: the Court's infamous and widely-hated decision in Kelo v. City of New London.
Find out about what the intervening ten years has brought us from the Cato Institute, which is sponsoring a program later this week about "Property Rights on the 10th Anniversary of Kelo v. City of New London."
Featuring Ilya Somin, Author, The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain, and Professor of Law, George Mason University School of Law; Scott Bullock, Senior Attorney, Institute for Justice and Plaintiffs’ Counsel, Kelo v. City of New London; Wesley W. Horton, Partner, Horton, Shields & Knox, P.C. and Defendants’ Counsel, Kelo v. City of New London; Dana Berliner, Director of Litigation, Institute for Justice; Jeremy Hopkins, Waldo & Lyle, P.C.; moderated by Ilya Shapiro, Senior Fellow, Cato Institute; and Roger Pilon, Vice President for Legal Affairs, Cato Institute.
A typically short and cryptic one from the Appellate Division, New York Supreme Court. But at least there's not a lengthy opinion standing between you and weekend.
In J. Owens Building Co., Inc. v. Town of Clarkstown, No. D45488 (May 27, 2015), the court concluded the town improperly divided up its downtown revitalization project into too many pieces before determining that it would not have an environmental impact. The court held that the town should not have looked only at the drainage and storm water management part of that plan, but should have considered it as part of the larger project. Consequently, the condemnation was invalid.
A good reminder that there's more than one way to skin a cat when it comes to challenging the power to take, and that we aren't limited to traditional "public use/purpose" theories.
Those of you who have followed the blog for a while know that we're big fans of the documentary film about the Atlantic Yards eminent domain fight in New York, "Battle for Brooklyn." See our review here, for example.
If you haven't had a chance to see it, or just want to see it again, the filmmakers have made it available for streaming.
No spoiler alert because you already know the result of that case. But as we wrote in our review on why the film is very worthwhile, "Battle For Brooklyn explains why property owners fight the taking of their homes and businesses, even when that fight is uphill."
In a case we've been following, the Kentucky Court of Appeals has affirmed a trial court ruling which held that a pipeline company could not exercise the power of eminent domain.
The Bluegrass Pipeline is a 1,100+ mile private pipeline that would deliver natural gas from the Marcellus and Utica shale formations to the Gulf Coast. It is planned to run through 13 Kentucky counties, although there are no "offramps" for the natural gas actually in Kentucky.
In Bluegrass Pipeline Co., LLC v. Kentuckians United to Restrain Eminent Domain, No. 2014-CA-000517 (May 22, 2015), the Court of Appeals concluded that the pipeline company did not have eminent domain power because it was not regulated by the Public Service Commission, and therefore was not "in public service" as required by Kentucky eminent domain statutes. See Ky. Rev. Stat. § 278.502 ("Any corporation or partnership organized for the purpose of ... operating oil or gas wells or pipeline for transporting or delivering oil or gas, including oil or gas products, in public service, may ... condemn the land and material or the use and occupation of the lands...").
The trial court concluded that this means that a private entity like Bluegrass must be regulated by the PSC and "in public service." Slip op. at 12. Even though the plain text of the statute does not limit it to PSC-regulated entities, the court concluded that the legislative history made it clear the legislature intended it to be so, and that Bluegrass cannot "circumvent the statutory protections for landowners to take advantage of the right of eminent domain." The Court of Appeals agreed, holding:
the legislature only intended to delegate the state’s power of eminent domain to those pipeline companies that are, or will be, regulated by the PSC. In addition, the NGLs in Bluegrass’s pipeline are being transported to a facility in the Gulf of Mexico. If these NGLs are not reaching Kentucky consumers, then Bluegrass and its pipeline cannot be said to be in the public service of Kentucky.
Slip op. at 9.
More on the decision from Central Kentucky News: "Kentucky Court of Appeals upholds eminent domain decision on pipeline."
A big win for those who oppose these pipelines. Will other jurisdictions follow suit? Stay tuned.
The ABA-Real Property, Probate and Trust Section Legal Education and Uniform Laws Group’s Legal Education Committee is putting on a program next Wednesday, May 13, 2015, that may be of interest to you who are members of the American Bar Association.
This is FREE webinar and attendees need not belong to the RPTE Section. No CLE credit, but man, it's FREE.
WEDNESDAY, May 13 - FREE Professors’ Corner Webinar
“Municipal Eminent Domain of Utilities”
A FREE monthly webinar featuring a panel of law professors,
addressing topics of interest to practitioners of real estate and trusts/estates
This is a One Hour WEBINAR
Wednesday, May 13, 2015
12:30 pm Eastern / 11:30 am Central
10:30 am Mountain / 9:30 am Pacific
6:30 am Hawaii
Register online at http://ambar.org/professorscorner
Program Agenda: There is general agreement as to the legitimacy of municipal use of eminent domain authority for traditional public uses (roads, parks, etc.). Yet, as the fallout over theKelodecision proved, nontraditional use of eminent domain authority remains quite controversial. In that light, this month’s speakers will discuss how municipalities are employing expansive eminent domain powers to take local utilities and other going concerns, for a variety of nontraditional purposes, including environmental goals.
Speakers:Professor Richard B. Collins, Professor of Law and former Director of the Byron R. White Center for the Study of American Constitutional Law at the University of Colorado Law School
Professor Shelley Ross Saxer, Vice Dean and Laure Sudreau-Rippe Endowed Professor of Law at Pepperdine School of Law.
Professors’ Corner: A monthly webinar (on the second Wednesday of each month) featuring a panel of law professors, discussing recent cases or issues of interest to real estate or trust and estate practitioners and scholars.
Register for this FREE program at http://ambar.org/professorscorner, and join us on Wednesday, May 13!
Even though it is a trial court decision, the opinion in Township of Readington v. Solberg Aviation Co., No. HNT-L-486-06 (May 4, 2015), is well worth reading, because we think the judge gets the process for how courts evaluate claims of pretext correct.
We posted about this case a few years ago, after the Appellate Division remanded the case with instructions to the trial court to take an objective view of the Township's claim that the taking of Solberg's airport was to preserve open space, and not, as Solberg claimed, to thwart Solberg's plans to expand its facilities and to allow the Township to take control of the enterprise.
The trial court did so, and after a long bench trial, it concluded:
In fine, an objective scrutiny of the collective testimony of the elected officials involved in the architecture and implementation of the eminent domain ordinance concerning the SHA property reveals a studied attempt to obscure the true purpose of the condemnors in the instant taking. The Court finds this testimony, as a whole, to be un-forthright, evasive, untrustworthy, argumentative, lacking credibility and therefore unworthy of belief. Moreover, the resultant lack of transparency in governmental actions of Readington Township has subverted an open political process thus weakening the protection of all its citizens’ private property rights including the Solberg family. That is to say the condemnation was singularly initiated to secure Township control over airport operations. This objective evidence conclusively establishes that the taking was in direct response to Solberg’s airport development proposal and only ostensibly part of some environmental protection plan dependent upon the condemnation of the subject property. Such behavior undermines the integrity of the municipal government’s stated public purpose behind Ordinance 25-2006 and demonstrates bad faith. Accordingly, the taking is invalid in its entirety.
Slip op. at 31.
The court found particularly troublesome the involvement of a P.R. firm, concluding that its efforts to keep the politicians "on message" to their narrative that the taking was for open space "does not escape the attention of this Court."
At this point CN, sensing public disquiet with the Township’s first time use of eminent domain, devised a different strategy to provide to press and public. Now the emphasis would be a detailed history of the Township’s efforts to preserve open space and farmland dating back to 1978, explaining that the Township had been interested in acquiring the Solberg property for preservation purposes since at least 1999. Officials were now schooled to avoid the contentious eminent domain process and to retreat to a rich history of extraordinary open space preservation. The base tactical dichotomy of this ploy does not escape the serious attention of this Court.
Slip op. at 27. The officials who adopted the resolution of taking were also put on the stand, and the court found many of them unpersuasive. See slip op. at 29 (finding the testimony of the official who "manned the laboring oar" on the taking to be "un-forthright, evasive, and nonresponsive to both counsel and Court and thus dispositively lacking in credibility.").
The court invalidated the taking "in its entirety as a manifest abuse of the power of eminent domain." Slip op. at 54.
More on the case here ("Solberg Airport Prevails in Landmark Eminent Domain Case") and here ("Judge slams Readington's Solberg Airport takeover plan as 'abuse of power'').
If you have plans to be in Wisconsin or environs in June, the Wisconsin chapter of the Appraisal Institute is putting on its 12th annual Condemnation Appraisal Symposium at the Marquette Law School on Wednesday, June 3, 2015.
One of the featured speakers is Mike Berger on "Current National Eminent Domain Issues," and there will also be presentations about power to take challenges, and thorny appraisal issues, among others.
Here's the description from the event flyer:
The Condemnation Appraisal Symposium is the go-to event of the year for those real estate and legal professionals who are currently engaged, or who wish to be more involved, in eminent domain matters. This high-level program provides the latest information and open debate on condemnation case law, appraisal techniques and other timely topics presented by attorneys, appraisers, educators, and government officials, while again offering valuable networking opportunities with those practitioners active in this specialty area.
Sounds like a great one-day program. Check it out if you can.
In Town of Matthews v. Wright, No. COA14-943 (Apr. 21, 2015), the North Carolina Court of Appeals invalidated a taking, the stated purpose of which was to make a portion of a private road into a public street.
A taking to open a private road to the public? That sure does sound like a public use or purpose, no? And had the court of appeals stopped there and not delved deeper, and had the case not had the history which it did, the result might have been different.
The facts which led the court to that conclusion are worth reading for yourself, but here's the summary: the homes of the Wrights and five neighbors are located on a dead-end street, Home Place, which connects to the public street system at Revedery Lane. Home Place was originally a private street, but the Town believed there was an implied dedication, and treated Home Place like a public street. It even paved it. The Zoning Board of Adjustment concluded that it was public. Litigation ensued. Lots of litigation. This entailed several trips to the court of appeals.
After that court concluded there was no implied dedication, in 2006 the Town adopted a resolution adding Home Place to the register of public streets "nunc pro tunc" (that's a fancy way of saying "retroactively" to all you non-lawyers) to 1985. More litigation. More trips to the court of appeals. Pretty much the same result as the first time: no implied dedication by the Wrights.
Not to be deterred, the Town threw down what it thought was its trump card: it brought its power of eminent domain to bear to take the Wrights' portion of the private road, and make it public. The Wrights, after all, "might eventually block" the road (see slip op. at 7, emphasis original). After some amusing insider machinations (see slip op. at 7-9), the Town condemned the Wrights' interest in the road, just comp set at $1,500. It took only the Wrights' interest, and not those of their four neighbors.
This, of course, was not the end of the fight. The Wrights argued that the taking was invalid, and not accomplished for a public use or purpose. The trial judge agreed. Usually, a taking to make a private street public would be fine, but here, the Town was simply trying to accomplish what the its earlier thwarted actions could not.
The court of appeals affirmed, holding that under the Fifth Amendment and the North Carolina Constitution's due process clause (remember, N.C. has no express "takings clause" in its constitution), the Wrights met their burden of proof that the taking was not for a public use or benefit. There would be a right of public use of the road, but the public benefit wasn't there (the test is conjunctive, and there must be both use and benefit). The court concluded that the Town's stated purpose (to keep the Wrights from maybe blocking the road in the future) didn't wash because the Wrights had never blocked the road. Slip op. at 14 ("The predicate to “opening” Home Place is that it must have previously been “closed” in some way."). Plus, the Town wasn't condemning the other four homeowners' private rights in Home Place, which would remain private, and "[i]t defies reason that the Town would need to condemn only the Wrights’ portion of Home Place in order to 'open' the street." Slip op. at 15.
The fact that the Town left the other four owners unmolested meant that its other purported public benefits (allowing neighbors to access their land, utility access, and the fire department's access to water) were also illusory. Slip op. at 15 ("Rather, condemnation of the Wrights’ portion of Home Place would only allow for those public benefits on the Wrights’ portion of Home Place, which is at a dead end and landlocked by other individuals’ portions of Home Place.").
The court was also influenced by the case's long history, and the Town's serial failed efforts to make the road public:
The sequence of events leading up to the condemnation bolsters our conclusion that no public use or benefit is served by the condemnation. The evidence shows that the Town was motivated by considerations irrelevant to the public benefit. The evidence shows that Mayor Taylor and some of the Commissioners considered personal conflicts between the Town and the Wrights in making the decision to condemn—rather than considering the public use or benefit of the condemnation.
Slip op. at 16.
Has the Town finally received the Wrights' message?
The first sign that the opinion wasn't going the way of the Golden State Water Company -- a private utility that provides water to the City of Ojai, California -- was right there in the first paragraphs, which contain the one-two punch of labeling the company both a monopolist, and one that price gouges about California's most sensitive subject these days, water.
The opinion is infused with the flavor that Golden State positively deserved to have its property taken by eminent domain:Monopolists have long been unpopular in this country. When King George III's choke hold on government led to intolerable levels of taxation, he was forced to divest his holdings. At the end of the nineteenth century, Congress passed the Sherman Antitrust Act with only a single dissenting vote. (26 Stat. 209, as amended, 15 U.S.C. §§ 1-7.) Introducing his landmark bill, Senator Sherman summed up the prevailing sentiment: "If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life." (21 Cong. Rec. 2457 (1890).)Nothing is more necessary to life than water. Residents of Ojai, fed up with sky high water bills, voted to oust appellant Golden State Water Company (Golden State), the private utility that monopolizes water service to their city, and replace it with respondent Casitas Municipal Water District (Casitas), a municipal utility that they hope will be more responsive to their concerns. They plan to finance this transaction by selling bonds pursuant to the Mello-Roos Community Facilities Act of 1982 (Mello-Roos Act or Act). (Gov. Code, § 53311 et seq.)
Golden State Water Co. v. Casitas Municipal Water District, No. B255408 (Apr. 14, 2015).
From that inauspicious piece of judicial advocacy (Professor Shaun Martin, who pens the California Appellate Report blog wrote, "It's almost as though [the justice who authored the opinion] believes respondents' position even more than they do.... And Justice Perren seems affirmatively enthusiastic about it."), the opinion goes on to analyze the issue of whether California's "Mello-Roos" statute, which enables "Communities Facilities Districts" (special taxation districts) to be formed by local governments to set up funding for public works and public service projects, prohibited the voters of Ojai from forming such a district to pay the just compensation for the taking of Golden State's rights for transfer to the Casitas Municipal Water District.
The court's short answer: no.
The statute allows funding for "purchases," and eminent domain qualifies even if it is not a voluntary transaction. Slip op. at 8 ("The Mello-Roos Act ... authorizes a public agency to 'purchase' real property in order to construct and develop government facilities. Given the obvious practical need in certain circumstances of using eminent domain power to acquire property for this purpose, the word 'purchase' should be construed in its broadest sense, which includes a taking by eminent domain in exchange for just compensation.").
More details on the case here ("Mello-Roos may be used to fund condemnation action of private utility provider") from Brad Kuhn and Rick Rayl of the California Eminent Domain Law Report.
In 2011, Missouri adopted a statute that looks to us like a slightly modified "right to farm" law:
The statute supplants the common law of private nuisance in actions in which the "alleged nuisance emanates from property primarily used for crop or animal production purposes." Unlike a common law private nuisance action, section 537.296 precludes recovery of non-economic damages for items such as loss of use and enjoyment, inconvenience, or discomfort caused by the nuisance. Instead, the statute only authorizes the recovery of economic damages in the form of diminution in the market value of the affected property as well as documented medical costs caused by the nuisance.
Under Missouri common law, nuisance claims arising from farming activities are considered temporary nuisances. A few days after the statute went live in 2011, Bohr Farms fired up what is known in the business as a "CAFO" (Concentrated Animal Feeding Operation). As you might expect, its neighbors were none too happy about the appearance of 4,000 hogs and the CAFO which "includes an on-site sewage disposal system as well as a system for composting deceased hogs."
They filed suit claiming the CAFO allowed odors, flies, and manure to enter their properties, and was a temporary nuisance. As the plaintiffs' counsel labeled it at oral argument, "the worst smell you have ever smelled in your entire life ... now imagine you cannot get away from it." The suit sought damages for the loss of the plaintiffs' use and enjoyment of their land, but did not seek recovery for the two forms of damages allowed by the statute.
The trial court granted summary judgment to the CAFO based on the statute, over the plaintiffs' objections that the legislature's taking away of common law elements of nuisance damages was a taking (among other things).
In Labrayere v. Bohr Farms, LLC, No. SC93816 (Apr. 14, 2015), the Missouri Supreme Court affirmed. The statute wasn't a "private taking" of the plaintiffs' rights to use and enjoyment of their land. In other words, the plaintiffs asserted the statute took their rights and gave them to another private party, Bohr Farms. The court concluded that although there was some private benefit, any taking was still public because the statute didn't delegate the power to create a nuisance to a private party. "To the contrary, the statute provides that a nuisance is unlawful and authorizes the party suffering a nuisance to recover damages." Slip op. at 7. The statute was designed to promote the agricultural industry, and this is like "economic development," a purpose which the Missouri courts have upheld as a public use.
The court also held that the statute wasn't a temporary regulatory taking. While it specifies the damages which plaintiffs can recover for a nuisance, it doesn't entirely eliminate the cause of action and allows recovery of rental value, which is how just compensation is measured for temporary takings:
By authorizing a plaintiff to recover the diminution in rental value in a temporary nuisance, section 537.296.2(2) provides for the constitutionally required just compensation in the event that the alleged temporary nuisance amounts to a temporary taking of private property. Therefore, Appellants have not met their burden of demonstrating that section 537.296.2(2) constitutes a taking for public use without just compensation.
Slip op. at 12 (footnote omitted).
The court also rejected the plaintiffs' due process, equal protection, separation of powers, and "special law" arguments.
A couple of noteworthy points, for those of us who deal with right to farm statutes and agricultural law:
- The opinion of the concurring judge cited Harry S. Truman: "'No man [or woman] should be allowed to be the [judge] who does not understand hogs, or hasn’t been around a manure pile.' I do, I have, and I concur in the principal opinion. Assuming the State has taken property by enacting § 537.296.2,2 it did so for public use and provided just compensation. But in my view, there has been no taking."
- At the 9:20 mark in the oral arguments, in response to the plaintiffs' lawyer's noting that one of the Supreme Court judges had grown up on a farm and thus understood about the smell from a hog farm, the judge noted that she had raised dairy cattle, "and they smelled like money."
Here are the briefs if you want more detail on each party's arguments:
- Plaintiffs' brief
- Bohr Farm brief
- Plaintiffs' reply brief
- AG's amicus brief
- Pork Producers and Missouri Farmers amicus brief
For more background on how this issue has played out in Missouri and why the legislature adopted the statute, see "Hog-farm lawsuits raise stink in Missouri."
To put on your to-buy, to-read list: lawprof Ilya Somin's forthcoming book about the Kelo case and the aftermath, available on June 5, 2015. (We're in the process of organizing some book talk events with Prof Somin in the fall, and if you have suggestions for venues or want to host one, let us know.)
Pre-order from Amazon here. The reviews are very good:
"Somin's thorough rebuttal of the constitutional reasoning and philosophical implications of the Supreme Court's Kelo decision demonstrates why that ruling was a constructive disaster: It was so dreadful it has provoked robust defenses of the role of private property in sustaining Americans' liberty."(George F. Will, journalist and Pulitzer Prize winner)
“By dint of his uncommon thoroughness, Ilya Somin has become the leading and most persuasive critic of the Supreme Court’s ill-fated 2005 Kelo decision. His close examination of the case’s factual backdrop offers chilling confirmation of his central thesis: weak constitutional protection of property rights opens the door to political intrigue that exacts its greatest toll on the poor and vulnerable in society. Somin’s gripping account of the Grasping Hand confirms your worst fears about big government.”
(Richard A. Epstein, NYU School of Law, author of Takings: Private Property and the Power of Eminent Domain)
“The Grasping Hand is likely to be the definitive analysis of the Supreme Court’s controversial decision in the Kelo case. But Somin attends to much more than that. He sets out the political and doctrinal history that led up to Kelo and critiques the legislative and judicial developments provoked by the reaction to it. Somin has long been a champion of strong property rights. What he has to say will be of value to those who share that commitment and perhaps even more to those who don’t.”
(James E. Krier, University of Michigan Law School)
"Ilya Somin is one of the world's leading scholars on property rights... his legal analysis of... eminent domain and the Kelo decision is extremely thorough and insightful. But The Grasping Hand has something more than just solid legal history and reasoning..... [U]nlike virtually all other scholarly works on eminent domain, [it] compellingly communicates the human... cost of governments teaming up with private interests to take the homes, small businesses, and other property of Americans."
(Dana Berliner & Scott Bullock, co-counsel for the homeowners in Kelo v. City of New London)
"For anyone interested in the Kelo case, I recommend Somin’s book. It is the first book-length discussion of the Kelo appellate proceedings by a legal scholar. It is also by far the most exhaustively researched history of the public use doctrine in the state and federal courts before and since Kelo. While I do not share his opposition to the Kelo decision, I welcome his good scholarship on the subject."
(Wesley Horton, counsel for the City of New London in the US Supreme Court phase of the Kelo case)
"In this carefully researched and convincingly argued volume, Ilya Somin provides a powerful critique of the Supreme Court’s “public use” jurisprudence and the controversial Kelo decision. He also gives careful attention to the hostile public reaction to the ruling, and points out that much of the post-Kelo reform legislation is inadequate to prevent future eminent domain abuse. This insightful book belongs on the shelf of anyone interested in the place of property rights in constitutional law."
(James W. Ely, Jr., Vanderbilt Law School, author of The Guardian of Every Other Right: A Constitutional History of Property Rights)
Reserve your copy today.
Here's one that just rolled in, from the Iowa Supreme Court. In Clarke County Reservoir Comm'n v. Edwin D. & Deloris A. Robins Revocable Trust, No. 14-0774 (Apr. 10, 2015), the court held that the Commission did not have the power of eminent domain because several of its members were private actors. The court also concluded that the post-judgment withdrawal of those members did not moot the property owner's appeal.
Property owners are entitled to strict compliance with legal requirements when a government entity wields the power of eminent domain. These legal requirements help protect against abuse of the eminent domain power. We strictly construe statutes delegating the power of eminent domain and note the absence of a clear legislative authorization for a joint public-private entity to condemn private property.For the reasons elaborated below, we hold a 28E commission with members lacking the power of eminent domain cannot itself exercise the power of eminent domain or serve as an acquiring agency seeking a declaratory judgment under section 6A.24(2). We determine the postjudgment withdrawal of the private members did not render this appeal moot because the district court erred by entering judgment in favor of an improper acquiring agency.
Slip op. at 203.
"Liberty requires accountability," noted the court, and "[a] contrary holding would effectively enable private entities to exercise eminent domain powers through a 28E entity. Private entities are not accountable to voters." Slip op. at 18.
The court sent the case back to the trial court, and one justice dissented because he found the remand unnecessary, and would have simply entered judgment for the property owner and made the Commission start over again, this time with no private members.
A good case, and one worth reading. But since this is the view out of our window on a mid-afternoon Friday, we're not going to be spending a whole lot of time now writing about the opinion.
A few years ago, in Gallenthin Realty Development, Inc. v Borough of Paulsboro, 191 N.J. 344 (2007), the New Jersey Supreme Court held that in order to target property for redevelopment as "blighted," the government must show that it is in such condition that it "negatively affects surrounding areas" by promoting conditions that can develop into blight. In that case, the targeted property was mostly undeveloped wetlands, and the "blight" of which it stood accused was the owner's failure to put it to a more intensive economic use. But that was not sufficient to support a blight finding, and the court held that the government must have done more than simply recited the standards for blight redevelopment, and declare they were met.
We were going to do a complete write-up of the New Jersey court's latest foray into blight and redevelopment, 62-64 Main Street LLC v. City of Hackensack, No. A-19/20-13 (Mar. 23, 2015), but wanted to hold off until the "local knowledge" -- Anthony Della Pelle, our colleague at the New Jersey Condemnation Law blog -- weighed in. He now has, and in "Will the Latest New Jersey Supreme Court Property Rights Decision Revive the Redevelopment Market?," writes:
Last week, a divided New Jersey Supreme Court ruled that condemning agencies do not have to prove that properties within an area "in need of redevelopment" have a deleterious effect on the surrounding area in order for those properties to be taken via eminent domain. The 3-2 majority opinion, authored by Justice Barry Albin, concluded that, so long as there is substantial evidence in the record that the legislative definitions set forth in New Jersey’s Local Redevelopment and Housing Law ("LHRL") are met, a court is bound to affirm a local government’s redevelopment designation. The decision has stirred debate in the legal community as to whether the criteria for condemning property for redevelopment purposes has been eased, and whether it represents a departure from the Court’s landmark 2007 decision in Gallenthin Realty Development, Inc. v Borough of Paulsboro, 191 N.J. 344 (2007).
One big difference between this latest case and Gallenthin was that here, the properties declared blighted were actually "boarded up" and displayed "prominent signs of structural deterioration," and not simply economically underutilized. Moreover, according to the dissenting Chief Justice, the surrounding area is a "thriving, commercial area that is home to a newly built CVS, Auto Zone and branch of TD Bank." Slip op. at 37. So it seems that this is the reverse of the classic Berman situation, where the court held it was okay to blight the baby (well-maintained property) if the legislature says the bathwater (the surrounding area) was dirty. The Hackensack majority, however, based its decision in the fact that the blight designation in Gallenthin was based on the criteria in subsection (e) of New Jersey's Blighted Areas statute (the property negatively affects other areas), while Hackensack's designation was based on subsections (a), (b), and (d) (which relate to the conditions of the property itself).
Read Tony's post for more details on the case, and links to further analysis to make your own decision about whether you find that convincing. The dissenting Chief Justice didn't think so, and wrote:
Today, the majority takes a step backward from Gallenthin. In assessing different sections of the same law, N.J.S.A. 40A:12A-5(a), (b), and (d), the majority concludes that when the government designates an area to be “in need of redevelopment” -- a critical step in the takings process -- it need not affirmatively prove both elements set forth in Gallenthin to show that a property is “blighted.” Instead, the majority permits the designation of private land for redevelopment even when government officials have not shown a decadent effect on surrounding properties.
Dissent at 2-3.
It's not often that we say a law review article is a "must-read." But this one definitely is, especially for all you regulatory takings mavens: David L. Callies, Through a Glass Clearly: Predicting the Future in Land Use Takings Law, 54 Washburn L. Rev. 43 (2014). A pdf of the article is posted here.
From the Introduction:
The subject of takings—the government taking of an interest in real property, either through eminent domain or through the exercise of the police power—has been the subject of continuous litigation for nearly a century. The past ten years have been particularly fruitful, as litigants struggle with the meaning and extent of the Fifth Amendment’s Public Use Clause and the extent to which the overzealous exercise of the police power can sufficiently deprive a landowner of rights in property so that the property has been “taken” by regulation, ever since Justice Holmes opined in Pennsylvania Coal Co. v. Mahon that a regulation that goes “too far” is a constitutionally-proscribed taking. Thus, in the area of physical taking, we have the expansion of public use—use by the public—to include public purpose (Kelo v. City of New London and Hawaii Housing Authority v. Midkiff), leaving very little room for landowner defense unless the physical taking can be proven “pretextual.”. . .This article explores some of the recent case law in these areas of takings, both physical and regulatory, and makes some predictions about the direction of takings law, bearing in mind Professor Lawrence Tribe’s admonition that those who attempt to thus use a crystal ball may run the risk of later having to eat ground glass.
Among Professor Callies' predictions: (1) exactions are going to receive more scrutiny from the courts; (2) development agreements will be used more in the place of exactions; (3) Kelo is ripe for revisiting; (4) government will try to expand the public trust, "custom" and "background principles" to avoid takings liability; and (5) Williamson County is ripe for reexamination.
Check this one out for sure.
Posted on April 2, 2015 in ▪ Articles and publications, ▪ Eminent Domain | Condemnation, ▪ Inverse condemnation, ▪ Land use law, ▪ Municipal & Local Govt law, ▪ Nollan/Dolan | Exactions, ▪ Penn Central, ▪ Property rights, ▪ Public Use | Kelo, ▪ Regulatory takings, ▪ Water rights | Public trust, ▪ Williamson County | Ripeness, ▪ Zoning & Planning | Permalink | 0 Comments
We can't reproduce the entire interview, and the link to the online version is behind a partial paywall, but here are the highlights of a recent interview, where A. Kam Napier, the Editor-in- Chief of Pacific Business News, came by and chatted with us about eminent domain, property rights, and the Honolulu rail project.
- "Robert H. Thomas thinks it’s no accident that the Fifth Amendment in the Bill of Rights protects not only the right to due process for people accused of a crime but also the same rights for people who own property the government would like to take. The right of the people to be secure in their private property was that essential to the Founders.
- “'The Kelo decision was a direct result of the Midkiff decision, where essentially any public purpose that the government advances is going to be enough [to take the property] as long as there’s some way to tie it in to a public benefit,' Thomas said. 'Ironically, Justice Sandra Day O’Connor wrote the Midkiff decision [upholding the taking], it was her very first case as a justice. Her very last case before she retired 21 years later in 2005 was her dissent in Kelo [rejecting New London’s taking].'”
- "How fair is Hawaii’s eminent domain law, this being a famously liberal state with a professed concern for the little guy? 'I think our law is one of the most unfair in the country. They’re all generally unfair to the property owner. There are some, New York for instance, that are worse.'"
- "And yet eminent domain court battles are pretty rare in Hawaii. Why is that? 'Land is expensive and in an eminent domain taking, the government doesn’t just pay current value, it has to pay based on the best and highest use of the property so [local government typically avoids having to take private property because of the cost]. Then, on the property owner side, defending a condemnation suit has to pencil out — owners have to pay their own way for attorneys and appraisers if they think the government is undervaluing their land, even if the government loses and the jury awards a higher value.'"
- "People don’t realize, eminent domain is one of the few times where you can get sued for doing nothing wrong other than owning land the government wants."
Check out the entire interview here. "Robert Thomas on eminent domain" is the title, and a subscription is necessary to view the entire piece, sorry, although if you are in Honolulu, come on, you really should have a subscription to PBN.
A couple of noteworthy conferences upcoming, one in-person, the other a "webinar" format:
- The first is "Kelo: A Decade Later" at the U. Connecticut Law School, Friday, March 20, 2015, from 8:30 am - 4:30 pm. The conference promises to "look back at the decision and its repercussions," and includes the lawyers for Ms. Kelo and the City of New London. "The conference will then explore the role of eminent domain in government planning generally. What role does and should eminent domain play in economic development? What is the impact of post-Kelo changes to state law? Does eminent domain have distinctive impacts on low income communities? Leading scholars and practitioners in law, planning, sociology, and economics will explore these questions." We note that our Connecticut Owners' Counsel colleague Dwight Merriam is one of those "leading practitioners," and will be moderating a panel entitled "Eminent Domain and Economic Development" with a bunch of professor types.
- The webcast is more for you land-user and planner types, but still sounds worthy: "Lessons from the Sage Grouse: Impacts of the Endangered Species Act on Local Land Use Planning" from the American Planning Association's Planning and Law Division. Tuesday, March 31, 2015, 3:30 - 5:30pm, ET. "This webinar will start by discussing planning and land use impacts from the listing and potential listing of the sage grouse as an endangered species. The discussion of the sage grouse will be an introduction to broader topics applicable to planners and local governments throughout the country, including what an ESA listing may mean for local governments, and how local or regional efforts can be incentivized to cooperate with state or federal policy." There's a minimal registration fee.
Frequent readers know that we just love the Australian comedy film "The Castle," which tells the tale of one man's legal fight to save his family's home from the abusive exercise of eminent domain power. (See "Kelo Down Under," our review.) The case is played for laughs and in the end, the homeowner naturally prevails, the private benefit is quashed by Australia's High Court, and all's well that ends well.
Those of us who practice this kind of law understand that real life doesn't always -- or even often -- work out the way it does in the movies: the good guys may not always prevail, and even when things are looking up, the road ahead may be filled with many unexpected bumps and turns.
So it is in "Leviathan," the latest film from Russia's Andrey Zvyagintsev.
Not that we would expect a film set in a bleak fishing village in the country's starkly beautiful far north to be quirky and upbeat like The Castle. Especially where the trigger setting the events in motion is a thoroughly corrupt mayor's abuse of the municipality's eminent domain power to confiscate the home that Kolya built with his own hands, for a use that isn't revealed until the final frames, but which we presume is far from a public good ("your palace," spits Kolya to the Mayor).
He vows to stay and fight, while the Mayor covets the property because it's "[a] spot with great potential, close to the center, by the sea." He promises to crush the "louse" Kolya with the power of the state, all the while being counseled by the parish priest that he is doing God's work. The title refers to both the biblical Leviathan (Kolya's problems, like Job's, only worsen as the film progresses), and Hobbes' book justifying the all-powerful state. Kolya, an iconoclast in land of odd and damaged characters, is committed to resisting the powers of God and the oppressive Russian state.
The film opens with Kolya's former army buddy Dmitriy, now a smooth Moscow lawyer, arriving in town to argue his case, and who -- knowing how things really work -- brings along more in his attache case than just legal briefs. He understands that in post-Soviet Russia, the law only goes so far, and that raw power must still be met with raw power. He counsels Kolya and his wife Lilya that although he doesn't expect to win the appeal in the local courts, he has the goods on the Mayor. After his prediction comes to pass in one of the most absurdly comic courtroom scenes in recent memory -- the judge reads aloud the appellate court's judgment affirming the taking and the meager compensation in a nonstop spiel seemingly without pausing for breath, impressing upon Kolya, Lilya, and us that resistance is futile -- Dmitriy and the Mayor meet, the goods are revealed, and the Mayor agrees to up the compensation.
But unlike The Castle, Leviathan doesn't finish on that upbeat note. We won't reveal the remainder, but suffice it to say that Kolya's eminent domain problems are supplanted by additional travails, and before the film has ended, we understand his despair, as well as that of Lilya and Dmitriy.
Leviathan confirms Hobbes' observation that the life of man is "solitary, poor, nasty, brutish, and short," but leaves little doubt that the filmmaker hardly agrees with Hobbes' conclusion that the supremacy of the state is the answer, even if the cost of fighting it is dear.
But if the bulldozing of Kolya and Lilya's home and the crushing of their spirits is the price of "reawakening the soul of the Russian people" as the priest sermonizes, Leviathan also leaves little doubt that the price may be too great to bear.
Leviathan. Directed by Andrey Zvyagintsev. With Aleksey Serebryakov, Elena Lyadova, and Roman Madyanov. 140 minutes.
Weird headline from KITV. No, owners whose property is taken for the rail aren't "profiting" if they are able to get more for their land than what the condemning agency offered; "just compensation and damages" are required by the constitution, and if they are able to obtain more, in many cases that still leaves them undercompensated and simply means the condemnor's offer was inadequate.
But besides the headline, KITV does a good report on last night's community forum on property owners' rights in eminent domain which we sponsored.
Metropolitan St. Louis Sewer District v. City of Bellefontaine, No. ED101713 (Feb. 24, 2015), is another one of those cases where construction by a city resulted in damage to property. The water district sued for inverse condemnation, among other things. Only twist here was that it wasn't exactly "private" property, but property owned by another municipality, a water district. The City responded by arguing that hey man, the water district's property is already devoted to public use, and the prohibition against takings only applies to private property, so no standing.
Short story: the Missouri Court of Appeals punted the case up "because of the importance of this question, we transfer to the Missouri Supreme Court." Slip op. at 7. The interesting thing, especially for those of us who also practice in jurisdictions where a case before an intermediate appeals court can be moved up to the supreme court by transfer, is that the court of appeals first rendered its opinion about whether the water district had standing to assert the inverse condemnation claim. In our experience, when a case is transferred up, the intermediate court doesn't usually reveal what it is thinking about a case, as the transfer takes place before the court of appeals weighs in. Apparently, Missouri procedure is different, and allows the case to be transferred after argument and opinion.
The court of appeals, by the way, concluded (we will not say "held," because in light of the the transfer, this appears to be just an advisory opinion), that the water district did not have standing because it did not own private property. The court would have allowed the water district's tort claims against the city to go forward, however.
Next stop Missouri Supreme Court, we presume.
The State of New York wants to build the Bronx River Greenway, a "23-mile-long ribbon of green with a multi-use path that will extend along the full length of the river in Westchester County and the Bronx." Who could argue with that?
Amtrak, that's who. After failing to acquire 6 parcels along the river owned by the "private corporation created by the Rail Passenger Service Act of 1970, 49 U.S.C. § 24101," in 2008, the state filed notices of appropriation and maps with the county clerk, and title to the land vested in the state. They kept trying to work things out, apparently, but to no avail and in 2012, Amtrak sued in federal court, arguing that the takings were invalid under the Supremacy Clause because they were expressly or impliedly preempted by federal law.
In National Railroad Passenger Corp. v. McDonald, No. 13-4161-cv (Feb. 24, 2015), the Second Circuit never reached the merits of Amtrak's preemption claim, concluding instead that Amtrak waited too long to raise it. The court applied New York's six-year statute of limitations, and detailed the series of events that convinced the court that Amtrak knew or should have known about the injury:
We do not pause to determine the precise date on which NYSDOT knew, or had reason to know, because both possible dates are well beyond six years from the date this action was brought. In 2005, when Weld sent the email informing Amtrak that NYSDOT would hold a May 2005 public hearing on the subject of condemning Amtrak’s land, Amtrak arguably had reason to know of the alleged Supremacy Clause violation that is the basis of its present claim. Eminent domain proceedings cloud title, and Amtrak concedes that it suffered not merely potential, but actual injury once its property became the subject of EDPL proceedings. At the very latest, Amtrak had notice of this harm in August 2005, when NYSDOT announced its findings.
Slip op. at 9.
But wait, you say, the takings actually didn't take place until 2008, and since Amtrak sued in 2012, it was okay. Not so held the court, the "completion of the takings was merely the final act of the intrusion on Amtrak's alleged Supremacy Clause rights that accrued in 2005 at the outset of the condemnation proceedings." Slip op. at 10.
It would make no sense to begin the limitations period -- or restart it -- when title to the real estate actually vests in the state, an act that occurs only after notice to interested parties and the requisite findings have been made. Indeed, Amtrak's proposed rule would leave the validity of a condemnation of its property in doubt for some six years after title has passed. Common sense, not to mention the record of Amtrak's failure to take any of the obvious protective measures, directs otherwise.
Slip op. at 10 (footnote omitted).
In other words, don't wait for the final hammer to fall before formally objecting. We're not sure we agree with the court's analysis here, because before the 2008 notices of appropriation and filing of the maps and vesting of the title in the state, nothing was written in stone, and it appears to us that there was some chance the state and Amtrak would reach an agreement. "Common sense" tells us that it would have tainted the negotiations were Amtrak to have thrown down a lawsuit at that point, and perhaps the reasons it didn't file then wasn't that it was idly sitting on its rights, but rather (1) its property was still its property because the state had not taken the final act to vest title, and (2) it hoped that the ongoing negotiations might be successfully concluded short of a taking.
But the Second Circuit thought otherwise, so the prudent course is to file early and perhaps often. Landowners in these situations are put in a tough spot because invariably, if they do file suit as the Second Circuit requires, either for inverse condemnation or to stop a taking, the condemnor will argue that the case isn't ripe.
Sidebar: for an Amtrak-related post, see "'Shoot, Move & Communicate' En Route To The ABA Annual Meeting" about our adventures traveling cross-country on the train.
A short one from the Texas Court of Appeals. As we noted in this post recently, Texas has bifurcated its eminent domain process. After a petition in condemnation is filed in court, in the "administrative" phase, the court appoints commissioners whose job it is to hold a hearing and render an opinion on value. If any party doesn't like commissioners' decision, the "judicial" phase commences and the more familiar process begins.
In In re Tarrant Regional Water District, No. 12-14-00329 (Feb. 11, 2015), the question was whether the court, in the administrative phase, has the obligation to appoint commissioners even where the court might agree with the property owner's contention that its property was immune from condemnation. The trial court refused to appoint commissioners, holding it would only do so after a hearing on whether the condemnor could legally take the property.
The court of appeals granted the condemnor's petition for a writ of mandamus, and held that during the administrative phase of an eminent domain case, the trial court has no power to not appoint commissioners. It ordered the trial court to appoint the commissioners and get out the way.
Like that earlier case we mentioned (which is now pending review by the Texas Supreme Court), the court of appeals concluded that during the administrative phase, the only duty or power of the trial court is to appoint commissioners. It can't make any determination about the power to take. Even, apparently, in cases like this where the property owner may have a good claim that the taking should not even be occurring.
The court of appeal shrugged off the argument that the condemnor lacked authority to take, and held it's not a judicial problem, at least not yet. So appoint the commissioners and let them have their hearing on value, and then if a party objects (what do you think the chances of the property owner here objecting to whatever value the commissioners assign, given that it doesn't even think its property should be taken at all, maybe 100%?) who then have a hearing on value. And only then does the trial court have jurisdiction to determine whether the condemnor can take the property.
That doesn't seem very efficient, nor does it square with our understanding that courts are not just potted plants when it comes to cases that are on their docket, and always have some kind of power to control them.
But what do we know - we're not from Texas.
[To reserve your space, please email your RSVP to me or Mark, or call either of us at (808) 531-8031.]
On Thursday, March 5, 2015, from 6:00 - 7:15 p.m. at the Farrington High School Cafeteria (1564 North King Street, Honolulu, Hawaii), we're inviting property owners, businesses, and residents whose rights may be impacted by the Honolulu rail project to join us for an informational meeting about the rights of property owners when their property is targeted for acquisition for public transit projects, and how to protect those rights.
Here's the invite which we sent out:
Hawaii’s Constitution requires “just compensation” and monetary damages be paid if private property is taken for a public use such as the Honolulu rail project. The Honolulu Authority for Rapid Transit has already begun acquiring privately-owned property it needs for the rail corridor from the airport to Ala Moana, as shown in the video below.Landowners along the rail route have substantial rights that may be impacted. For background and a FAQ on Honolulu's rail project, see Clearing Up Myths About Hawaii Eminent Domain Law and the Rail. More here: All Aboard? Honolulu Rail is Coming.HART initially attempts to purchase property and other rights needed for the project by negotiation, but in the event it cannot reach an agreement with an owner about the compensation and damages it owes, HART has the authority to force immediate surrender of property by filing an eminent domain lawsuit against the owner, which allows a jury or a judge to determine the property’s value.
Please join Mark Murakami and Robert Thomas for an informational town hall meeting at which we will discuss the rail project, your rights as a property owner under Hawaii’s eminent domain law, and how you can protect your rights during the acquisition process. Here’s the location, date, and time:
- Location: Farrington High Cafeteria
- Address: 1564 North King Street (free parking)
- Date: Thursday, March 5, 2015
- Time: 6:00 – 7:15 p.m.
Topics we will cover will include:
- Can I prevent HART from taking my property?
- What rights do I have if HART wants to enter my property to survey and drill for soil testing?
- The valuation process: how is “just compensation” and damages calculated by the courts?
- HART’s offer does not adequately compensate me – do I have to wait for HART to sue?
- What are my rights as a landlord, a tenant, or a business owner whose property is taken by HART?
- I have a mortgage on my property. Does the lender have any claim?
- What are my rights if HART takes less than 100% of my parcel?
- What does the law require if my home or my business must be relocated as a result of the project?
We have also invited an appraiser to attend to discuss the appraisal process.
We and our law firm currently represent several landowners whose property is targeted by HART for the rail. We have also represented property owners in eminent domain and similar matters for many years. Mark was Best Lawyers' in America's "Best Lawyer of the Year in Eminent Domain and Condemnation Law" for Honolulu in 2013, and Robert shared this designation in 2014. Mark and Robert and their partner Ken Kupchak are listed in Honolulu Magazine's "Best Lawyers in Hawaii" and in Hawaii SuperLawyers in Eminent Domain and Condemnation Law.
While the format of the meeting will not lend itself to individual consultations, there will be a short session after our presentation to respond to general questions. Light refreshments will be provided. We hope you or a representative are able to join us.
Here's the latest pipeline takings case from Texas.
This one has been to the Texas Supreme Court before (see our post "'Common Carrier' Claim Subject To Actual Judicial Review"). That decision required trial courts to make an actual and factual inquiry into a claim that a pipeline company is a common carrier with the power of eminent domain, and not just accept the fact that the company registered as a common carrier as conclusive. The court sent the case back down, but the trial court concluded that the pipeline operator was a common carrier because after the pipeline's construction, the operator had the intent to move some CO2 belonging to another entity through the pipeline. It granted the pipeline company summary judgment on the common carrier issue.
In Texas Rice Land Partners, Ltd. v. Holland, No. 09-14-00176 (Feb. 12, 2015), the court of appeals disagreed after applying the test set out in the Supreme Court's decision, and concluded that reasonable minds could differ about whether the pipeline operator is or is not a "common carrier" as defined in Texas statutes. Under Texas law, a common carrier is defined as an entity that:
owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide or hydrogen in whatever form to or for the public for hire, but only if such person files with the commission a written acceptance of the provisions of this chapter expressly agreeing that, in consideration of the rights acquired, it becomes a common carrier subject to the duties and obligations conferred or imposed by this chapter[.]
In order to qualify under the Supreme Court's fact-based test, the entity must have the intent to be a common carrier at the time of its plans to construct the pipeline. The court of appeals focused on this language from the Supreme Court's opinion:
for a person intending to build a [carbon dioxide] pipeline to qualify as a common carrier under Section 111.002(6), a reasonable probability must exist that the pipeline will at some point after construction serve the public by transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier.
Slip op. at 9 (emphasis added) (quoting Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas LLC, 363 S.W.3d 192, 202 (Tex. 2014)). It didn't matter that after construction, the entity produced evidence that showed the gas of others would be transported:
The record demonstrates that the Green Line was first contemplated in 2008, but Airgas did not approach Denbury Green about transporting carbon dioxide until after the Green Line was completed. Tellingly, when Airgas raised the issue in an email sent after the Texas Supreme Court’s ruling, Airgas stated, “Given the recent ruling about your pipeline, I thought it might be advantageous for you to have another company transport some CO2 down this line.” As the Texas Supreme Court has noted, the professed use must be a public use in truth. Id at 202. We cannot say that the Airgas contract, reached after the Green Line’s completion, speaks to Denbury Green’s intent at the time of its plan to construct the Green Line.
Slip op. at 10. This makes sense to us, because the power of a private entity to take property as a common carrier should be determined by its intent at the time of the taking, not whether after acquisition it can devote the property taken to public use.
Because the common carrier issue turned on issues of fact (the entity's intent -- about which reasonable persons could differ -- the court concluded that summary judgment was not warranted. It sent the case back down for more.
This is the first of two posts today out of the Tar Heel State (here is the other one).
North Carolina lawyers no doubt knew this, but we can't say that we did: the North Carolina Constitution currently does not have a provision that mirrors the Fifth Amendment's Takings Clause.
According to these reports ("Eminent Domain bill passes committee" and "NC Lawmakers Look To Restrict Land Seizures With Constitutional Amendment"), the N.C. legislature is considering a measure to add the following text to the state constitution:
Sec. 19.1. Eminent domain.
Private property shall not be taken by eminent domain except for a public use. Just compensation shall be paid, and shall be determined by a jury at the request of any party."
See the entire bill, and the related proposed amendment to state statutes (which takes out the words "use or benefit" from the statute which grants condemnation power, so that instead of reading "public use or benefit," it will read "public use") here.
Now does this mean that public and private entities in North Carolina that wish to take property currently have a free hand, and that takings can be for private use,and that there's no requirement of just compensation? Of course not. North Carolina condemnors are bound by the Fifth Amendment, those statutes noted above, and common law inverse condemnation claims. We also understand that the "law of the land" provision, section 19 of the N.C. Constitution ("No person shall be taken, imprisoned, or disseized of his freehold, liberties, or privileges, or outlawed, or exiled, or in any manner deprived of his life, liberty, or property, but by the law of the land.") is read as limiting the power of eminent domain.
But it would be nice to get it in writing in the constitution, as they say.
More: "Another Way to Fight Eminent Domain Abuse" from the Carolina Journal.
Yesterday, we were able to attend the Ninth Circuit oral arguments in a case which we posted on last month, Rancho de Calistoga v. City of Calistoga, No. 12-17749.
In that case, the U.S. District Court for the Northern District of California dismissed the complaint filed by the owner of a wine country mobile home park subject to a municipal rent control ordinance which alleged that the city's hearing officer did not allow a fair return. The court concluded that the complaint did not adequately plead the claims for relief under a regulatory takings, private takings, due process, or equal protection theory.
We filed an amicus brief in the case on behalf of the Western Manufactured Housing Communities Association.
Much of the panel's time was spent questioning the park owner's counsel about whether the case was even ripe under Williamson County. Counsel responded that it would have been futile for the park owner to pursue compensation in state court, because the California Court of Appeal has recently concluded in a parallel case that no compensation is available. Watch the video or listen below for whether the court agreed.
The panel didn't have many questions for the city's counsel, and she did not use all of her allotted time. While we are loathe to predict the outcome based on oral arguments, the lack of questions posed to an appellee could be a sign that the panel is inclined to buy the city's arguments,
We obviously don't think that should be the result, as our amicus brief argued.
The Ninth Circuit's San Francisco courthouse is a wonderful building, full of grand details like the hallway below. Quite the "temple of justice."
We've now wrapped this year's ALI-CLE Eminent Domain and Land Valuation Litigation and Condemnation 101 Conference, and for those of you who were able to join us, thank you. We know that it is a large commitment of resources and time, and as your Planning Chairs, Joe Waldo and I appreciate you being here. We hope it was as useful and rewarding for you as it was for us. Of course, we also appreciate our expert faculty for their presentations and materials. It takes a lot of their time and resources -- none of it compensated -- to prepare and present at this conference. They are all, ultimately, volunteers.
Here's my own thoughts on the hits, the misses, and the near-misses. Highlights:
- Gideon Kanner and Michael Berger's one-hour retrospective on their careers and the state of eminent domain and inverse condemnation law, from a collective experience of over a century of scholarship and practice.
- The audience. We had a very good turnout, and it's always more exciting to have an energetic, knowledgeable, and engaged crowd. Let's keep our place as one of ALI's flagship conferences.
- Professor Herb Titus' keynote about Fourth Amendment searches and seizures, and how they relate to Fifth Amendment takings.
- The frozen yogurt machines at the afternoon break. Well played.
- The Nikko Hotel - we had pretty much the entire third floor, and the hotel facilities and staff were very good. Plus, the room commode has a remote (sorry, had to say that again).
- The collegiality: eminent domain lawyers in private practice and government service, appraisers, and other professionals getting together for two-and-a-half days to talk shop on the subjects that drive us. I love learning about the issues that all the various jurisdictions have ongoing. I'm always blown away by the collective expertise in the room at this conference, and come away feeling energized. This year is no exception.
Not-so-highlights (or, can we do better?):
One last thing before we get back to our usual programming. We'll start planning soon for next year's conference. Send me topics, issues, ideas of things you'd like to see on the agenda, or speakers that might be considered. Anything to make the program better.
- The ethics session. I understand I might have come on a bit strong and may have been off-putting, especially for those of you who don't exclusively represent property owners. Message received. Not my intention, of course, and we've already started thinking about next year's ethics component and how we can make it more useful for everyone. Stay tuned.
- Professor Kanner professed that this conference was his "swan song" (his words, not ours). Say it isn't so.
- The rain. We know California needs water, but it seems every time we come here, it pours. Ah well. At least it keeps us indoors.
Posted on February 7, 2015 in ▪ Court of Federal Claims | Federal Circuit, ▪ Eminent Domain | Condemnation, ▪ Inverse condemnation, ▪ Just Compensation | Appraisal, ▪ Nollan/Dolan | Exactions, ▪ Property rights, ▪ Public Use | Kelo, ▪ Regulatory takings, ▪ Seminars, ▪ Uniform Relocation Act, ▪ Williamson County | Ripeness | Permalink
Here are the links from our opening sessions this morning:
- "The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail — its roof may shake — the wind may blow through it — the storm may enter — the rain may enter — but the King of England cannot enter — all his force dares not cross the threshold of the ruined tenement." William Pitt (the Elder), on property.
- The Ninth Circuit video (and accompanying story from the LA Times (U.S. judges see 'epidemic' of prosecutorial misconduct in state')
- Gideon Kanner's Daily Journal article: "Misconduct of Government Counsel: It All Depends On Whose Ox Is Being Gored" (2012)
- The California Supreme Court in City of Los Angeles v. Decker, 558 P.2d 545, 551 (Cal. 1977):It seems clear that the city and its attorney committed misconduct in this case in its argument to the jury. Defendant focused her theory of valuation on the point that airport parking was the highest and best use of her land. Essential to that claim was the fact that there was a present need for airport parking and that her property was suitable for that purpose. The city, knowing that its own airport Board had determined that there was such a need and that defendant's property was suitable to fill it, committed misconduct when it improperly argued to the jury that there was no need for such airport parking and that the claim of such a need was speculative. (See fn. 1, ante.) Rule 7-105 of the Rules of Professional Conduct of the State Bar of California requires: "In presenting a matter to a tribunal, a member of the State Bar shall: (1) Employ, for the purpose of maintaining the causes confided to him such means only as are consistent with truth, and shall not seek to mislead the judge, judicial officer or jury by an artifice or false statement of fact or law." As suggested by the American Bar Association, a government lawyer may be under an even higher duty: "A government lawyer in a civil action ... has the responsibility to seek justice and to develop a full and fair record, and he should not use his position or the economic power of the government to harass parties or to bring about unjust settlements or results." (ABA Code of Prof. Responsibility, canon 7, ethical consideration 7-14.) Occupying a position analogous to a public prosecutor, he is "possessed ... of important governmental powers that are pledged to the accomplishment of one objective only, that of impartial justice." (Professional Responsibility: Report of the Joint Conference (1958) 44 A.B.A.J. 1159, 1218.)  The duty of a government attorney in an eminent domain action, which has been characterized as "a sober inquiry into values, designed to strike a just balance between the economic interests of the public and those of the landowner" (Sacramento etc. Drainage Dist. v. Reed (1963) 215 Cal. App. 2d 60, 69 [29 Cal.Rptr. 847]), is of high order. "The condemnor acts in a quasi-judicial capacity and should be encouraged to exercise his tremendous power fairly, equitably and with a deep understanding of the theory and practice of just compensation." (Hogan, Trial Techniques in Eminent Domain (1970) pp. 133, 135.)We are of the view that, under the circumstances detailed above, the city by improperly denying the need for airport parking, misled the jury, failed to develop a full and fair record, and breached its responsibility to arrive at just compensation. We hold that this constitutes misconduct requiring a new trial.
Federal Takings, a blog by colleague Thor Hearne and his Arent Fox team, wrote up some thoughts on yesterday's conference sessions, "Why We Need the Fifth Amendment: Lessons from the American Law Institute Eminent Domain Seminar"
Here's the "Eychaner and the Chocolate Factory" case which Dana Berliner discussed during our "Challenging the Taking" session - "The Chicago Way: City Taking Non-Blighted Property For Economic Development Was Not Pretextual Because ... Studies"
- The relevant parcel: Ocean Palm Golf Club Partnership v. City of Flagler Beach, No 5D12-4274 (Fla. App. 2014) (the case which Dwight Merriam discussed)
Finally, here's the recent order of the U.S. District Court for the District of Hawaii awarding a property owner a portion of her attorneys fees. This is the case about the "anti-eminent domain abuse" signs on property that was condemned.
Here are the cases which I spoke about this morning at the 2015 ALI-CLE Eminent Domain and Land Valuation Litigation conference:
- Brandt: Supreme Court benchslap on Rails-to-Trails
- Utah: You might have a public use problem if your only reason for taking excess property is that you wanted to avoid litigating severance damages
- Fourth Circuit: the Uniform Relocation Act is like the Pirate's Code: more like "guidelines" than actual rules
- More from the Fourth Circuit: Govt not necessarily off the hook for EAJA fees because it later upped its unreasonable pretrial offer
- Plaintiff: "Alliance for Property Rights and Fiscal Responsibility." Defendant: the City of Idaho Falls, Idaho. Court: Ninth Circuit. Any guesses who won?
- Pipeline through Kentucky is not a pipeline to Kentucky. If the Kentucky public doesn't benefit, maybe it's not for public use
Here is our annual "proof of life" photo, the view from the dais. Proof that despite the conference being held in beautiful San Francisco with its many distractions, we are all here (all 150+ of us) getting our eminent domain groove on.
Here are links to the cases and issues to watch:
- Horne v. USDA: California Raisins part II - the "world's most outdated law crashes headlong into takings (SCOTUS granted cert, merits briefing underway)
- Texas v. Clear Channel: is a billboard really "moveable" property? (case submitted to the Texas Supreme Court, decision pending)
- Property Reserve: pushing California's entry statutes too far (the merits briefing in the California Supreme Court has not been completed, but we will post the briefs filed so far in a separate post)
- Oregon: is common law highway access a property right, but one that's essentially worthless? (discretionary review pending in the Oregon Supreme Court)
- Hillcrest v. Pasco County: must a property owner challenge an illegal exaction for facial due process invalidity before he has standing to bring an as-applied challenge? (cert petition pending at SCOTUS)
One last photo: sitting on the dock of the Bay:
Here's one with a somewhat unusual twist: the condemnee objecting to the taking by a public utility district was the state.
In Public Utility Dist. No. 1 of Okanogan Cnty. v. State of Washington, No. 88949-0 (Jan. 29, 2015), the Washington Supreme Court affirmed the power of the county utility district to take an easement over "school trust lands" for the construction of an high-voltage, high-capacity transmission line and corridor. The land was owned by the public and held in trust for schools, was "a portion of the largest publicly owned tract of shrub-steppe habitat in the Methow Valley," and was being used for cattle grazing. The grazing leases generated $3,000 per year for the state's public schools, and also acknowledged that the land may be subject to easements and condemnation.
The court first concluded that an environmental organization could intervene to address the power of the utility district to take the land. Although not an adjoining landowner (who, under prior decisions, have standing to intervene to challenge the power to take), the interest of the environmental organization was like that of an adjoining landowner, and the state might not adequately protect that interest -- the state was there to protect the lands as school lands, while the organization's interest was in protecting "wildlife sanctuaries and shrub steppe lands." Slip op. at 12. Thus, the trial court did not abuse its discretion when it allowed the environmental organization to intervene to challenge the power to take.
On that issue, however, the court sided with the utility-condemnor, and held that the state land was not immune from being taken. The utility has been delegated the power of eminent domain by statute, so the court viewed this issue as the scope of the delegation to a municipal corporation under the statute, which provides:
A district may take, condemn and purchase, purchase and acquire any public and private property, franchises and property rights, including state, county, and school lands, and property and littoral and water rights, for any of the purposes aforesaid, and for railroads, tunnels, pipe lines, aqueducts, transmission lines, and all other facilities necessary or convenient, . . .
Rev. Code Wash. 54.16.050 (emphasis added).
The state asserted that as trust land, its property was exempt, and that transfer to land would violate its fiduciary duties. When the state owns land in its "proprietary" capacity, it's enough that the enabling statute authorizes confers the power to take this type of land. By contrast, when the state owns land it its "governmental" capacity" (in trust), it can only be condemned when the statute authorizes condemnation of the land in that specific capacity. The court agreed with the state that it "indisputably" held the school lands in its trust capacity, meaning the question was "whether [the utility] is expressly authorized to condemn the subject school and turns on whether the term 'school lands' provided in RCW 54.16.050 refers to school trust land." Slip op. at 17.
We'll let you go through the court's statutory analysis (see pp. 16-19), but suffice it to say the opinion concluded that yes, "school lands" in the statute includes school trust lands: the legislature directed the courts to "liberally" construe the statute, and other, similar grants of power include the condemnation of trust lands.
As for the state's prior public use argument -- that the land was already being used to graze cattle -- the court held that the utility's proposed use was not incompatible with the state's use, and therefore the doctrine did not prohibit the taking. The court also rejected the state's constitutional argument:
PUD's condemnation of a right of way through school lands is consistent with these constitutional provisions because condemnation of an easement does not involve the sale of land in fee and requires payment of full market value. The plain language of section 2, when contrasted with that of section 1, strongly indicates that the drafters did not intend the sale of lesser land interests (e.g., easements) be subject to the public auction requirements of section 2. Had they so intended, they would have included similar "estate or interest" language in section 2 as appears in section 1. Because PUD is not attempting to condemn a fee interest, we need not consider whether the public auction requirements of section 2 would prohibit condemnation of a fee interest.
Slip op. at 27-28.
Finally, the court rejected the state's argument that condemnation of school trust lands violated the state's fiduciary duties as trustee . The fact that condemnation requires the payment of just compensation was not incompatible with the state constitution's prohibition on disposal of trust land, because that limitation is subject to the proviso that "unless the full market value of the estate or interest disposed of" is paid to the state.
The wheels of justice may grind slowly, but they do grind. Yesterday, the Ninth Circuit granted a motion we filed back in June 2013, and permitted us to file this amicus brief on behalf of the Western Manufactured Housing Communities Association in a case that is scheduled to be argued in mid-February 2015, Rancho de Calistoga v. City of Calistoga, No. 12-17749.
The case is a federal court challenge to a California wine-country municipality's decision to deny a rent increase for a mobilehome park subject to the city's rent control ordinance. The complaint alleged that the city's failure to allow the ground lease rent to increase to $624 violated the park owner's rights under the takings, due process, and equal protection clauses. The District Court eventually dismissed the complaint for failure to state a claim for relief under Rule 12(b)(6), because, among other things, the park owner did not file an inverse condemnation case in state court (Williamson County).
The park owner appealed the dismissal. The Opening Brief sets out the case in the Summary of Argument:
Under the Fifth and Fourteenth Amendments to the United States Constitution, a local government is prohibited from taking property for a private purpose. Because no amount of compensation can justify a private taking, a property owner is not required to seek compensation in the state courts before bringing such a claim. Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 543 (2005). Moreover, although an ordinance may survive a facial challenge if it is adopted for a public purpose, a property owner may attempt to demonstrate that the ordinance has been applied to effectuate an impermissible private taking. Armendariz v. Penman, 75 F. 3d 1311, 1321 (9th Cir. 1996).
The Parkowner has alleged that even if it was enacted for a valid public purpose, the hearing officer has applied the rent control ordinance in a manner that results in a private taking of property, because (1) the proposed rent increase is neither excessive, monopolistic nor in violation of any other public purpose, (2) it is not possible for a mobilehome park owner to exploit a tenant unless the rent is above market and (3) each and every tenant at the park has been awarded a significant discount in their monthly rent, regardless of whether they need it or not. Because the Parkowner alleged that the ordinance has been “applied” in a manner that results in a private taking of property, the District Court’s dismissal of that claim at the pleading stage must be reversed.
If this Court determines that it is not possible to allege that a rent control ordinance has been applied in a manner that results in a private taking, the Parkowner asserts that application of the ordinance nevertheless results in a regulatory taking, because it creates a burden which “in all fairness and justice, should be borne by the public as a whole.” Guggenheim v. City of Goleta, 638 F. 3d 1111, 1119-1123 (9th Cir. 2010). Although a property owner must normally exhaust any state court remedies that exist before attempting to establish a regulatory taking in federal court, that rule does not apply if it would be futile to proceed in state court. Manufactured Home Communities, Inc. v. City of San Jose, 420 F. 3d 1022, 1035-1036 (9th Cir. 2005).
In Besaro Mobile Home Park, LLC v. City of Fremont, 204 Cal. App. 4th 345, 356-361 (2012), a California court found that a parkowner could not establish an “as applied” regulatory taking under the California Constitution, even though the parkowner purchased the property prior to the adoption of rent control. By contrast, in Guggenheim v. City of Goleta, 638 F. 3d 1111, 1119-1123 (9th Cir. 2010), the Ninth Circuit left open the possibility of a successful “as applied” challenge, if the park was purchased prior to the adoption of rent control.
Because the Besaro Court found that it is not possible to establish a regulatory taking under the California Constitution even if the park was purchased prior to rent control, the Parkowner is not required to seek relief in the state courts before proceeding in federal court. Because the Parkowner purchased the park long before the City adopted rent control, the Parkowner must be allowed to demonstrate that its property has been taken under the standards established by the Ninth Circuit in Guggenheim.
Finally, as will be demonstrated below, the only legitimate reason for singling out mobilehome park owners for price controls is that an unscrupulous landlord may lure a prospective tenant into renting a space at a below market rate and raise the rent to an above market rate after the tenant has purchased the mobilehome. However, even if it is assumed that prospective tenants will repeatedly fall for such a ploy, that issue does not exist in this case, because the Parkowner does not seek to invalidate the City of Calistoga’s rent control ordinance. To the contrary, the Parkowner readily concedes that once the rent is raised to the non-excessive and non-monopolistic rate of $625 per month, it will not be allowed to increase the rents again, unless authorized by the ordinance to do so. Because all other businesses in the City of Calistoga are allowed to charge non-excessive and non-monopolistic prices for their good and services, the City’s refusal to allow the Parkowner to do the same is arbitrary and results in a violation of the equal protection and due process clauses of the United States Constitution.
Op. Br. at 5-9.
The city naturally doesn't see it that way, and its Answering Brief asserts that "[a]lthough Rancho denies it, its appeal presents simply another iteration of the argument that rent control is unconstitutional because it does not achieve its purpose—an argument that the Supreme Court and this Circuit have repeatedly rejected, whether phrased as a takings, a due process violation or an equal protection violation. See, Kelo v. City of New London, 545 U.S. 469, 488 (2005) (“Kelo”); Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 544 (2005) (“Lingle”); and Guggenheim, 638 F.3d at 1113-14. Ans. Br. at 2-3.
Our amicus brief argues that the labels placed on the park owner's claims are less important than their substance, and "[w]hether phrased as a regulatory taking, a private taking, or a due process violation, Rancho de Calistoga has plainly stated substantial claims for relief under the rationale of the U.S. Supreme Court’s unanimous opinion in Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005)."
Moreover, modern notice pleading does not focus on labels, but on whether the complaint gives the defendant notice of the claims asserted against it. We wrote that "Rancho’s amended pleading alleged that '[r]ent control also violates the due process, takings, and/or equal protection clauses of the United States Constitution if it [sic] ‘arbitrary, discriminatory or demonstrably irrelevant to the policy the Legislature is free to adopt.’' Id. ¶ 82, at 21. If this was not clear enough, Rancho’s legal theory and supporting facts were made plain in paragraph 83 [which asserts that the ordinance 'is being applied arbitrarily and impermissibly in order to provide each and every one of the 184 tenants with a monthly subsidy, whether they need it or not, all at the Petitioner's expense.'"].
Here are the parties' merits briefs:
Here are all of the amicus briefs:
- WMA's amicus brief (supporting the park owner)
- Pacific Legal Foundation's amicus brief (also supporting the park owner)
- California League of Cities amicus brief (supporting the city)
More, after the oral arguments.
This is a longer post, but since we think this case may be going further and is worth watching, we're going to hit it up in some detail.
In City of Chicago v. Eychaner, No. 05L050792 (Jan. 21, 2015), the Illinois Appellate Court upheld the taking of private vacant land near the Chicago Loop (Eychaner's Land on the map below) so that it could be transferred to the owners of a nearby chocolate factory (Blommer's Factory).
The court viewed this "A-to-B" taking as merely a part of an area redevelopment and tax increment finance plan, which would keep the chocolate factory from moving out as the area gentrified.
The opinion contains a long recitation of the reasons for the taking, how the Planned Manufacturing District (PMD) was designed to "protect the 2,800 industrial jobs located in the area, [to] prevent residential encroachment on the existing manufacturing facilities, and [to] encourag[e] manufactureres to invest in their facilities," and how the process ultimately resulted in Eychaner's land being transferred to Blommer. Slip op. at 3-4. In addition to the chocolate factory, the PMD area included 8 other "industrial firms" besides Blommer. But the opinion (and, apparently, the plan) focused on Blommer's chocolate factory. Ironically, Blommer didn't want to be included in the PMD either, because a property to its south was already scheduled for a "massive residential development," which meant there would be no buffer between Blommer's heavy industrial use and these future new residents, who would be sure to find "intolerable," the smell, noise, and traffic generated by the chocolate factory.
Because it wanted to avoid these future troubles, Blommer suggested that the city exclude it from the PMD, or prohibit the residential development. Otherwise, it might have to leave Chicago and convert its property to some other use.
Or ... maybe we could spread our campus north, suggested Blommer. Initially, these plans did not include Eychaner's land, but the very next month the city wrote to Blommer:
expressing "[w]e are committed to keeping quality manufacturing firms, such as [Blommer] in the City. To that end, we are very interested in helping your create a larger 'industrial campus' as a means to internalize your loading operations, limit traffic impacts on adjacent streets, and provide room to expand." The commissioner wrote that the Plan Commission would: (i) work on the possibility of closing parts of Hubbard Street and Jefferson Street; (ii) pursue the creation of a tax-increment finance district to finance public infrastructure improvements and "any potential acquisitions," which now included Eychaner's land; and (iii) defer approval of residential development south of Blommer's plant "to explore design, use and density issues." The PMD, the commissioner noted, would "ensure that properties to the north and east of [Blommer's] factory are not developed for residential use," and also made clear that Blommer's "public support for this action [was] crucial in getting this measure through the legislative process."
Slip op. at 8-9 (emphasis added). By the following month the plan was even more concrete, and "Blommer commissioned an architect to draw up a site plan for its expanded campus. That plan included Eychaner's land[,]" and proposed using the city's eminent domain power to take it and transfer it to Blommer for $1. Slip op. at 9.
Amazing how things just happen, isn't it? And who said San Francisco is "the city that knows how?"
The city complained that "Blommers seems to be negotiating as if they have us over [a] barrel," but ultimately a few months later, the city adopted the PMD, and began the tax increment financing scheme that would fund the thing. [Sidebar: for a very good primer on TIFs, you can't do better than the ABA book "Tax Increment Financing" (2012) by our ABA State and Local Government Law Section colleagues David Callies and Andy Gowder.] The city commissioned studies, and produced a 68-page report which concluded:
that tax-increment financing would induce private investment and arrest blighting factors in the area. Because the area had not been subject to growth and reinvestment, the study reasoned that property owners would not invest in their properties without tax-increment financing. The study anticipated benefits, including: (i) stronger economic vitality; (ii) increased construction and long-term employment opportunities; (iii) replacement of inappropriate uses, blight, and vacant properties with viable, high-quality developments; (iv) the elimination of physical impediments, such as roads in poor condition; (v) the construction of public improvements to attract private investment; (vi) job-training services to make the area more attractive to investors and employers; and (vii) opportunities for minority- and women-owned businesses to share in the redevelopment.
Slip op. at 13. Eychaner's land was not blighted, but there was some blight in the area, so Eychaner's land was soon placed into a "conservation area" because in the future it "may become a blighted area." Id. at 14. A few months later, Blommer submitted its proposal to redevelop the area around the factory, which included Eychaner's land, for all of the usual reasons that support an economic development taking: creating and retaining jobs, increased tax revenue, and to ensure that the plant stayed in the city.
When Eychaner refused to sell to Blommer, down came the city's eminent domain hammer.
The appellate court distinguished Southwest Illinois Dev. Auth. v. National City Environmental, LLC, 768 N.E.2d 1 (Ill. 2002), the case in which the Illinois Supreme Court invalidated a taking for private benefit, concluding that an A-to-B taking with "minimal public benefit" which "principally benefitted" a private party could not withstand public use scrutiny. See id. at 9 (citing Limits Industrial R.R. Co. v. American Spiral Pipe Works, 151 N.E. 567 (Ill. 1926)). Concluding that the taking of private property for an adjacent racetrack's parking lot was a "purely private benefit and lacks a showing of a supporting legislative purpose," the SWIDA court held that the "true beneficiaries of this taking are private businesses and not the public." SWIDA, 768 N.E.2d at 10.
The Eychaner court held SWIDA was different because they didn't have plans. In SWIDA the condemnor produced no studies, and thus the court was able to see through the pretext to the "sweetheart deal" to understand that the taking was not intended to benefit the public. Slip op. at 21. It didn't matter whether the public was allowed to access the property under its new ownership, because the key issue is the motive of the condemnor. Relying on Kelo, the Eychaner court concluded that the city had adequately documented that its motives were pure because it showed the taking of Eychaner's land was just part of a plan. A "carefully formulated" economic development plan, not a sweetheart deal. Thus, the court held the taking "unquestionably serves a public purpose of preventing blight, promoting economic revitalization, and protecting existing industry." Slip op. at 25.
The court rejected Eychaner's pretext arguments after acknowledging that "[r]ecognizing the difference between a valid public use and a sham can be challenging." Slip op. at 28. Boy howdy. But the existence of the plans made it much less challenging, indeed a foregone conclusion:
Recognizing the difference between a valid public use and a sham can be challenging. But a telling feature of sound public use in the context of economic redevelopment is the existence of a well-developed, publicly vetted, and thoughtful economic development plan. Such a plan was present in Kelo, 545 U.S. at 483-84, and Gutknecht, 3 Ill. 2d at 542-43, but absent in SWIDA, 199 Ill. 2d at 240 ("SWIDA did not conduct or commission a thorough study of the parking situation at [the racetrack]. Nor did it formulate any economic plan requiring additional parking at the racetrack."). A taking will likely pass constitutional muster where done in furtherance of a sound economic development plan, rather than the plan retroactively justifying the taking. Cf. Romeo v. Cranston Redevelopment Agency, 254 A.2d 426, 433 (R.I. 1969) ("governing bodies must either plan for the development or redevelopment of urban areas or permit them to become more congested, deteriorated, obsolescent, unhealthy, stagnant, inefficient and costly" (internal quotation marks omitted)).
Slip op. at 28. This was no "sham to take [Eychaner's] property." Slip op. at 30. The city had an economic revitalization plan, and the taking was but a part of it because it "aligned" with the city's stated goals to retaining existing industry (Blommer), prevents conflict beteween residential and industrial use (Blommer), and promotes investment and revitalization (Blommer's) in a conservation area. Id. at. 31.
Having found the taking constitutional, the court did have problems with the way the trial court handled the just compensation issue, concluding that the "scope of the project" rule should have resulted in the trial court excluding evidence of the PMD zoning. The court held that the "public improvement" (the project) "is Blommer's expanded industrial campus, the ultimate use of Eychaner's property."
The record indicates that the creation of the PMD, the River West TIF, and the taking of Eychaner's land were all a single project. The City began the process of creating the PMD in late 1999 with the goal of protecting industrial users like Blommer. The City's study regarding the River West TIF indicated that it was a "financial mechanism necessary to implement the goals and objectives of" the PMD. The taking of Eychaner's land was not only an integral part of creating the PMD, but also served to carry out the goals of PMD and River West TIF. Namely, the preservation of the City's industry, prevention of conflicts between industrial and residential uses, job creation, and increased tax revenue.
Slip op. at 34-35. Ah, the plan again. Note the irony in the city's argument: the "project" for purposes of the scope of the project rule -- supposedly the property owner's expectations of why its property was taken -- was not to give it to its neighbor, when that was exactly the city's argument supporting its claims of public use. The court rejected as "speculative" the city's argument that "Eychaner's land would have been included in the PMD even if it was not taken for Blommer's expansion." Id. at 35.
Points to the court for including several maps of the properties and the plans. We wish more opinions did this.
More on the story from Chicago Real Estate Daily: "Eychaner wins new trial on value of River West land."
There may be more on this case, so stay tuned.
Following up on our earlier post about anti-eminent domain signs are the below, courtesy Dwight Merriam, of the Kelo neighborhood in New London, Connecticut, during the time of the strife. See also the book Dwight edited for the ABA about the case.
The signs have long since been removed. Along with the properties themselves.
In Rutherford Elec. Membership Corp. v. 130 of Chatham, LLC, No. 13 SP 95 (Sep. 2, 2014), the North Carolina Court of Appeals reversed the dismissal of an eminent domain complaint filed by a private company that sought to take property located in two counties.
In cases where a private company seeks to condemn private property, North Carolina law allows the filing of a special proceeding in the county in which the property is located. The trial court dismissed the complaint because the property to be taken was partially located in the county of venue, and partially in another county, and the court concluded it lacked subject matter jurisdiction. The court refused to allow the condemnor to amend its petition to cover only the land located in the proper county
The court of appeals reversed, although it conceded that the process was "in conflict," and urged the legislature to fix it:
While there is apparent conflict between statutes in Chapter 40A on whether a multi-county private condemnation action may be filed, we reverse the trial court because the trial court very clearly did have subject matter jurisdiction over at least the portions of the Box Creek Wilderness that were in Rutherford County and did not grant Rutherford Electric’s motion to amend its pleading. See N.C. Gen. Stat. §§ 40A-20, 40A-21, 40A-25, 40A-28, 40A-67 (2013). This Court leaves to the General Assembly whether or not Chapter 40A contemplates a multi-county private condemnation action via the procedure that Rutherford Electric attempted here and would urge the General Assembly to clarify the procedure to avoid future issues of this type.
Slip op. at 7-8 (footnote omitted).What the trial court should have done was not dismiss the entire claim, and allow the petitioner to amend its pleadings to cover only the property in the right county.
Under Nebraska eminent domain law, the condemnor is required to make a "good faith" effort to negotiate with the property owner before it files an eminent domain action. See Neb. Rev. Stat. § 76-704.01(6).
In Camden v. Papio-Missouri River Natural Resources District, No. A-13-266 (Aug. 26, 2014), the court concluded that the condemnor had not made these efforts. Here's what occurred:
- The NRD contacted the property owners, and made an offer of $67k for the desired easements.
- The owner said "from now on, talk to my lawyer."
- The NRD did so, and sent the owners' lawyer a revised proposed purchase agreement.
- The owners, through their lawyer, rejected the offer. They valued the loss at $750k.
- The owners also proposed an alternative to only monetary compensation.
- The NRD responded that the counteroffer was unresonable, and thus stafff would not recommend the NRD board accept it, but suggested the owners appear at the next board meeting and make a presentation.
- The owners lawyer did appear, and "was allowed to briefly speak in front of the Board before being told to sit down." "One of the Board members testified that the Camdens’ proposal document was not physically presented at the subsequent closed session of the meeting. Nor, he testifed, was the Camdens’ counteroffer completely explained to the Board; instead, NRD management only informed the Board that the Camdens “gave a frivolous offer.” At the conclusion of the meeting, the Board adopted the condemnation resolution." Slip op. at 312.
- "No actual response to the Camdens’ counteroffer was given by the NRD, and no further effort was made to negotiate an agreement with the Camdens prior to commencement of the condemnation proceedings." Id.
- The NRD instituted eminent domain proceedings.
The trial court dismissed the action, concluding that the owners' counteroffer was not frivolous:The district court found that the NRD was under pressure to complete the project as quickly as possible to avoid losing federal stimulus funds. It found that because of this pressure, the NRD made a number of errors during the process, including having to initiate three separate condemnation proceedings in order to address legal description discrepancies. The court also concluded that the NRD did not negotiate in good faith, because it did not make a reasonable attempt to induce the Camdens to accept the offer.
Slip op. at 313.
The court of appeals affirmed. It agreed that the NRD had not made a good faith effort to negotiate, and that the owners' counteroffer was not frivolous.We conclude, as did the district court, that the NRD’s offer to the Camdens occurred on July 30, 2009. The NRD’s arguments that it made earlier design changes to the rehabilitation project in order to induce the Camdens to accept the offer are not convincing. Although the NRD did include the Camdens in initial discussions regarding the dam rehabilitation while the environmental impact was studied, at no time did the NRD convey to the Camdens that it was negotiating for easements on their property. Further, these discussions occurred before the Camdens were aware of the exact extent of the NRD’s taking. Additionally, the NRD never conveyed to the Camdens that it was changing the elevation of the spillway as part of the negotiations. Rather, the NRD stated that revisions to the offer were being made and a revised offer would be sent at some point. There is no evidence in the record that the Camdens were aware the NRD was lowering the spillway as part of the negotiations. Rather, the NRD made this change unilaterally.
We also reject the NRD’s claim that affording the Camdens an opportunity to present at the August 2009 meeting of the Board was a reasonable attempt to induce acceptance of the offer. The record shows that John had a brief opportunity to address the Board before and after the Board went into a closed executive session. There is no evidence in the record that the Board gave a formal response to the Camdens’ counteroffer, presented another offer in response to the Camdens’ counteroffer, or even retendered its original offer during that meeting. In fact, the only evidence in the record regarding this meeting demonstrates that the Board was simply informed during its executive session that the Camdens’ counteroffer was frivolous.
Finally, having independently analyzed the Camdens’ counteroffer, we cannot say the district court erred when it found the counteroffer was not unreasonable to the degree that would have excused the NRD from further negotiations. When the Camdens made their counteroffer, it was in response to the NRD’s revised offer which incorporated a design change in the spillway. The NRD never informed the Camdens that additional changes to the project could not be accommodated. Thus, the Camdens’ proposals for design changes were not unreasonable.
Slip op. at 318-19. The condemnor had not made a good faith offer and undertaken resonable efforts to induce the owners to accept it. You don't have to undertake "extensive negotiations," but you've got to make an effort.
The court also reaffirmed that these efforts are "mandatory and jurisdictional," meaning that in the absence of a showing of good faith effort, the condemnor lacks the authority to take the property. Id. at 315.
Being a short opinion (2 pages), you could read the entirety of the New York Appellate Division's decision in Eisenhauer v. County of Jefferson, No. 14-00510 (Nov. 14, 2014) more quickly than we could summarize it.
But yes, the taking of private property for expansion of the runway at a public airport is a public use.
W're not going to say much about the U.S. Court of Appeals for the Third Circuit's decision in Columbia Gas Transmission, LLC v. 1.01 Acres, No. 13-4458 (3d Cir. Sep. 26, 2014), since the opinion is not too long, and the court's conclusion is pretty "straightforward" as it noted:
The issue before us is straightforward: does Columbia Gas Transmission, LLC ("Columbia"), have the right of eminent domain to obtain easements over the land of objecting landowners, outside of the existing right of way, in order to replace deteriorating pipeline? The answer is equally straightforward and clear: yes.The regulatory authority given to natural gas companies such as Columbia actually anticipates replacement outside the existing right of way as we discuss below, and contains no adjacency requirement. The issue before us, then, whether Columbia has a right to replace the pipeline outside of the existing right of way, is actually a non-issue. But, the District Court put a peculiar “spin” on the regulations in question, finding them to be ambiguous by adopting its own definition of “replace” and concluding that a “notice” of “proposed rulemaking” for “Emergency Reconstruction of Interstate Natural Gas Facilities” promulgated by the Federal Energy Regulatory Commission (“FERC”) after 9/11 should somehow be viewed as resolving this ambiguity in the law. Our dissenting colleague adopts this argument. However, we suggest that the statute and regulations are clear and the case before us is easily resolved.
Slip op. at 5.
One big problem we have with this opinion is its loose use of the term "right of eminent domain." We see this a lot, and sometimes we are guilty of imprecise wording outsevles, referring to "the right to take," and the like.
But this case is a good reminder that even though it may have been delegated the power of eminent domain, a private company doesn't have any "right" of eminent domain. The same holds true, in our view, even when a government agency is taking property, because (as one of our favorite law profs used to remind us), "governments don't have rights, they exercise powers." Powers which have been delegated to those governments by the people. And even though eminent domain is an inherent power of the sovereign (it's good to be the king), ultimately under our system, the people are sovereign, and own that power. .
So yes, we're being persnickety about word choice here. But we think it's a point that bears repeating.
Here's the Washington Court of Appeals in City of Bellevue v. Pine Forest Properties, Inc., No. 71827-4-1 (Dec. 22, 2014):
Without question, condemnation of the property for construction of the East Link Project and the City's road improvement project is a public use.
Slip op. at 15. There's more detailed analysis in the court's 25 page opinion, of course, but you really didn't need to read more than the above, did you?
Continuing with our year-end opinion dump, here's the conclusion of the Texas Court of Appeals in City of Blue Mound v. Southwest Water Co., No. 02-13-00343-CV (Nov. 13, 2014):
Because as a matter of law the City is attempting to condemn Appellees’ water and wastewater system as a going concern, because as a matter of law Appellees are entitled to compensation for going-concern value as an element of this purported taking, because the general Texas condemnation statutes provide no mechanism for the awarding of going-concern value as held in Lone Star Gas Co., and because Lone Star Gas Co. remains binding precedent, we hold that Appellees conclusively established their entitlement to summary judgment on the ground that no statutory procedures exist authorizing the City’s condemnation suit in this case in district court.
Slip op. at 29.
He's also the Chair of the ABA State & Local Govt Law Section's Eminent Domain Committee
Twitter - @invcondemnation
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