Determining Eminent Domain Pretext In Serial Takings

As reported in this story from West Hawaii Today, a Hawaii trial court is considering whether a second attempt to condemn property ostensibly for a road is pretextual when it determined the first attempt was unconstitutional. Disclosure: we represent the property owner in this case.

"Classic" Uses Not Immune

In County of Hawaii v. C&J Coupe Family Ltd. P’ship, 198 P.3d 615 (Haw. Dec. 24, 2008) (posted here), the Hawaii Supreme Court held that even when a taking appears to be for a public purpose, the government's assertions "need not be taken at face value where there is evidence that the stated purpose might be pretextual," Id. at 644. The court held that courts should consider a landowner’s defense of pretext even when a "classic" use such as a road is involved, and "the single fact that a project is a road does not per se make it a public road."  Id. at 643 (emphasis original) (quoting City of Novi v. Robert Adell Children’s Funded Trust, 701 N.W.2d 144, 150-51 (Mich. 2005)).

The Hawaii Supreme Court remanded the case to the trial court for consideration of pretext and private benefit in light of all the circumstances.

Examine Circumstances For Private Benefit, Not Just Government's Claims of Public Benefit

Those circumstances include a final decision by the trial court invalidating the earlier attempt to take the property. The trial court declared that a condemnation was not for public use because it was the product of a development agreement between the County and a luxury developer which provided among other things that the developer had the "sole discretion" to control condemnation, would take possession of the property after the taking, would determine the location of the road and what property was needed, and controlled when the property would be taken. The developer also provided the appraisals and the compensation, and the developer's attorneys threatened property owners that if they didn't "voluntarily" sell their land, it would be taken. The first condemnation action was filed in 2000, and was based on a resolution of taking which expressly noted the taking was instituted in furtherance of the development agreement.

Rebooting As Cure?

While the trial court was considering the property owners' objections to that taking, the County filed a second taking against the same property owners in 2005 to take the same property it was already trying to take in the 2000 action (plus 1/2 acre more that the developer determined it needed). The resolution of taking in the second case, however, unlike the first resolution, did not mention the development agreement. The County has never explained why the second condemnation was necessary. See Coupe, 198 P.3d  at 623 (The Hawaii Supreme Court only noted that County adopted the second resolution of taking "[f]or unstated reasons."). Given that the 2000 condemnation appeared to be in trouble because of the resolution's express recognition of the development agreement, it was apparent that the second condemnation try was an attempt to "reboot" a floundering case, and cure the legal defects that were stalling the first condemnation. 

Eventually, after a consolidated trial in the two condemnations, the court entered two judgments. First, it held that the 2000 condemnation was not for public use and the County illegally delegated its eminent domain power to the developer. Second, the court held the 2005 condemnation was valid since the resolution did not mention the development agreement and was adopted by a county council comprised of several different members. The first judgment was not appealed by the County or the developer. As noted above, the Hawaii Supreme Court reversed the second judgment and remanded for further consideration.

Pretext: One-to-One Transfers To Identified Parties Outside a Carefully Considered Plan

The issue now before the trial court is whether the 2005 condemnation is essentially a sham, and in reality was for the same purpose as the invalid 2000 condemnation. Yesterday was the date for all parties to submit their proposed factual findings and legal conclusions; the proposed findings we submitted are available here (1.5mb pdf).

Pretext may be present in at least three situations: (1) when eminent domain is used to transfer the private property of one party to another private party where the magnitude of public benefits outweighs the private benefit; (2) when eminent domain is used for a one-to-one transfer of private property without a comprehensive, integrated, and carefully considered development plan; and (3) where a particular private party is identified before the taking. See Kelo v. City of New London, 545 U.S. 469, 478 & n.6 (2005). 

Two and three are the critical points. The 2005 taking was for a specific party, the developer, and was a one-to-one transfer, and the County didn't have any plan to take the property independent of the development agreement condemnation plan. 

• As in the 2000 condemnation, in the 2005 condemnation, the County did not follow the usual condemnation procedure such as independent appraisal, survey and land agent. The developer determined the property to be taken, and the amount of compensation offered.

• Although the County knew that land values had increased in the area over the years since the filing of the 2000 condemnation, it did not increase either the value of the compensation or make any effort to increase the deposit. The complaint in the second condemnation listed the same value used five years before in the first.  

• The County made no effort before filing the 2005 condemnation to negotiate an acquisition based upon the then-current value.

• As in the 2000 condemnation, the property description was provided by the developer, which increased the area of land to be taken by approximately 1/2 acre to coincide with the land that the developer had selected. The County never verified the accuracy of the survey or the extent of alteration.

• When it filed the 2005 condemnation, the County did not dismiss or amend the 2000 condemnation, and prosecuted both simultaneously. 

Serial Condemnations Especially Problematic

In a forthcoming article, Daniel Kelly points out that serial condemnations in which an attempt to take property is invalidated are particularly susceptible to pretextual government actions:

Futility refers to a court’s inability to prevent governmental actions that are based on impermissible motivations because of the government’s ability to circumvent judicial scrutiny. For example, government officials can hide their actual motivations, including pretextual ones.  Moreover, even if a court detects an impermissible motivation and invalidates a governmental action on that basis, officials may decided to take the same action without disclosing their actual motivation, thereby circumventing the judicial test.

See Pretextual Takings: Of Private Developers, Local Government, and Impermissible Favoritism at 7.