We all know the old rule that “interest follows principal,” which means that when a deposit on account is private property, so is the interest which that deposit earns.
Not according to the Florida Court of Appeals, however. In a 2014 decision, that court held that interest earned on quick-take deposits was not the private property of the owner whose land was taken, and thus the government could keep 90% of the money. After the Florida Supreme Court denied review, a cert petition was filed, asking the U.S. Supreme Court for review.
Tampa needed land, and filed quick-take actions. It deposited the funds which it estimated to be just compensation with the court clerk. That transferred title from the owner to the City. The parties negotiated a settlement, and agreed that the settlement amount was “full compensation” for the taking. Problem was, the owner didn’t know that the Clerk had invested the deposit, had earned interest, and kept the above-referenced 90%. It sued for a taking: interest follows principal, that interest was mine, and the City getting most of it instead of me was a taking.
The court of appeals concluded that interest only becomes private property after the funds are actually paid out. Yes, the property owner has a vested right to full compensation — especially in Florida, which is a true quick-take jurisdiction where title and not merely possession passes to the government upon the deposit — but “the making of the deposit vests the property owner an entitlement to be paid full compensation by the condemning authority, not an entitlement to those specific funds placed in deposit.” Slip op. at 11. You’ll get your money, just not this money. But wait — couldn’t the owner get that money, by withdrawing the deposit immediately?
This is the very same holding as a recent decision from a slightly different panel of the same court of appeals (authored by the same judge, but joined by two different judges).
That’s a pretty technical (and weak) argument in our view. True, the government had no obligation to invest the deposit (the statute which the government relied on here is not the same statute that entitles property owners to prejudgment interest on any difference between the deposit amount and the final award), but once it did, it couldn’t simply keep the funds that either outright belonged to — or were specifically earmarked for — the owner whose property was taken. Otherwise, wouldn’t the quick-take procedure be unconstitutional? If the owner could have withdrawn the deposit (which it apparently did not) and ran out and put the money in a bank, would not the interest belong to the owner? Just what are we missing here?
The court of appeals also found it dispositive that the eminent domain case was resolved by settlement, and the owner and the government agreed that “full compensation” was paid in that case (which did not include interest). This, in the court’s view, was res judicata as to the subsequent takings claim. In the cert petition, however, the owner asserts that it was not aware of the government’s investment of the deposit and keeping of the interest until after the settlement was complete, and that the owner’s claims in the eminent domain case were for different property (the land) than what it claimed in the subsequent takings case (the interest on its just comp award).
Here’s the Question Presented:
Florida’s eminent domain statutes provide a “quick-take” mechanism that permits the government to forcibly take immediate title and possession of private property the moment it deposits an amount specified in an Order of Taking into the court registry. A Florida statute gave clerks of the court the discretion to invest quick-take deposits and mandated that 90% of the interest earned on the deposits be paid to the condemning government authority. Here, the Hillsborough County Clerk of Court elected to invest the money deposited by the City of Tampa to immediately take title to Petitioner Livingston’s land and paid 90% of the interest actually earned on the deposit to the City, all of which occurred without Livingston’s knowledge. A Florida trial court ruled that even though the deposit effected an immediate transfer of title to the City, the registry funds did not belong to Livingston until final judgment. For that reason, the trial court concluded that paying the City the interest earned on the registry funds was not a taking under the United States and Florida Constitutions. The appellate court affirmed in a written opinion holding that eminent domain deposits are not private property until the money leaves the registry. The Supreme Court of Florida declined review. Livingston seeks to invoke the discretionary jurisdiction of the Supreme Court to review the appellate court’s decision.
The question presented is:
Are eminent domain funds deposited by the government into a court registry to take immediate possession and title to land prior to final judgment private property entitled to Fifth Amendment protection as set out in Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 163, 164 (1980), such that an unconstitutional taking of a protected property interest occurs when the clerk distributes 90% of the interest earned to the government rather than to the ultimate owner of the deposit?
There will be more, no doubt, and we will bring you those developments as they occur.
Petition for Writ of Certiorari, Livingston v. Frank, No. 15-470 (Oct. 9, 2015)