Here's an issue that we've been following for a while. What will a court do when a condemnor is ordered to pay (the property owner has a judgment in hand), but the condemnor says "no thanks"?
The latest incarnation is the U.S. Court of Appeals' opinion in Ariyan, Inc. v. Sewerage & Water Board of New Orleans, No. 21-30335 (Mar. 21, 2022). There, a group of property owners successfully brought Louisiana law takings claims against the Board after its flood control project caused "property damage and economic loss." In the various cases, verdicts were rendered, and judgments were issued from 2018 through 2020.
Well, you know what is supposed to happen next. Judgment debtors are supposed to pay up, or else the judgment creditor may satisfy the judgment by other means.
But when the government is the judgment debtor, the creditor can't just put a lien on City Hall, or go and levy the government's account at the local bank. No can do. Sovereign immunity and all that. In most jurisdictions, a governmental judgment debtor must secure the legislature's approval via an appropriation before it pays a judgment. Even a judgment that it has taken property without compensation. And there's not a lot a property owner can do if the governmental debtor doesn't lift a finger. So even though the government does not enjoy sovereign immunity from takings liability, it does enjoy it when it comes to, you know, actually paying just compensation.
What is a property owner to do in a case where the government simply says "no thanks" (such as this recent case from Florida), or does nothing at all (like this case from the Commonwealth of the Northern Marianas Islands, where the government just went silent for nearly two decades). It can sue, arguing that the refusal to satisfy the takings judgment is itself a taking of a new property interest.
Those claims have met with mixed success and a variety of judicial responses. Much of the time is a flat no. That's what the Fifth Circuit held in Ariyan:
More than a century ago, the Supreme Court decided the case of a pair of litigants in a similar situation as the Plaintiffs here. In Folsom v. City of New Orleans, 109 U.S. 285 (1883), two relators had obtained state court judgments against the City of New Orleans for property damage caused by riots in 1873. In 1879, a new state constitution limited the taxes New Orleans could levy to just enough to cover the City’s budget. Id. at 287. The effect was that the relators were prevented from collecting on their judgments. Id. The relators argued that this state constitutional change deprived them of property without due process of law in violation of the Fourteenth Amendment. Id. The Supreme Court rejected the argument, agreeing that the judgments were property, but holding that “the relators cannot be said to be deprived of them so long as they continue an existing liability against the city.” Id. at 289. In dissent, Justice Harlan wrote that an unenforceable judgment is no judgment at all. “Since the value of the judgment, as property, depends necessarily upon the remedies given for its enforcement, the withdrawal of all remedies for its enforcement, and compelling the owner to rely exclusively upon the generosity of the judgment debtor, is, I submit, to deprive the owner of his property.” Id. at 295.
Slip op. at 5. We guess this isn't surprising given the Fifth Circuit's read of Folsom, plus the fact that the same court rejected a similar claim just a couple of years ago.
Before we proceed, a disclosure: we (along with our law firm colleague Kady Valois) filed an amicus brief in support of the property owner, arguing that "[t]he Takings Clause does not permit the Sewerage Board to take property and hand the owner an IOU the Board might pay sometime in the future if and when it feels like it. Instead, it requires the Sewerage Board to pay the court ordered just compensation without 'unreasonable delay.'"
And that, we continue to think, is the heart of the issue. Instead of a blanket rule that just compensation judgments are not property protected by the Fifth and Fourteenth Amendments and thus cannot be the subject of federal claims (especially in federal court!) this claim should be resolved on the factual merits of whether the delay in payment is unreasonable. An issue that cannot be determined by a categorical "no liability" rule in a motion to dismiss. After all, are there not some some circumstances in which the delay in providing just compensation is unreasonable and therefore not just compensation at all? Yeah, they may get compensation somewhere down the road if the government wants to provide it and actually gets around to asking the legislature for the money.
Under the Fifth Circuit's categorical rationale, however, the Constitutional requirement of just compensation is merely a suggestion. After all, the property owners here have undoubtedly had their property taken, and just as surely have not been provided just compensation. The Fifth Amendment provides that "nor shall private property be taken for public use, without just compensation," not that it shall not be taken without an I-O-U.
Stay tuned.
Ariyan, Inc. v. Sewerage & Water Board of New Orleans, No. 21-30335 (5th Cir. Mar. 21, 2022)
