When Is an Unenforceable Contract to Condemn, Enforceable?

            Back in the old days, when your faithful servant was but a wet-behind-the-ears whippersnapper learning the legal ropes, the respected Associate Justice of the California Court of Appeal, Roy Gustafson, wrote to the state Law Revision Commission (which was then considering revisions in the law of eminent domain) and observed in haec verba that the law in this field is a hopeless mess and that one can find authority for any proposition in it if one looks long enough. As time went on we came to realize just how true that unkind assessment was – and still is. Case in point the recent decision of the 9th Circuit in Matsuda v. Honolulu, No. 06-15337, Jan. 14, 2008.

 

The issue was whether a city could be forced to perform its contract to condemn land for condominium dwellers under a city ordinance. At first blush you might think that the judge’s proper reaction to an action to enforce such a contract would be the line of that curmudgeonly judge on Law and Order, who asks counsel: “What kind of turnip wagon do you think I just fell off?” If there is anything in the law of eminent domain that seems (make that seemed) long and well settled, it is that a legislature may not contract away its power to exercise or not to exercise the power of eminent domain. See e.g., In re Condemnation of 110 Washington Street, 767 A.2d 1154 (Pa. Cmwlth. Ct. 2001), City of Glendale v. Superior Court, 23 Cal.Rptr.2d 305 (Cal.App. 1995). Thus, the byways of eminent domain law are littered with bleached bones of litigants who made deals with government entities not to condemn their land, only to see the folks in City Hall reneg on their promises. We even have a song for that occasion – an old vaudeville gem that goes “How could you believe me when I said ‘I love you,’ when you know I’ve been a liar all my life?” So when Honolulu made a deal with some local lessees to condemn for them their lessor’s interest in condominium units, but then changed its mind and adopted an ordinance repealing its authority to condemn for this purpose, any lawsuit by those tenants to enforce the contract would seem to be a non-starter. As the trial judge put it in Matsuda “[a} contract requiring a sovereign to exercise the power [of eminent domain] is just as limiting as a contract prohibiting it from doing so.” And just as invalid, he thought. Sounds right to us, but what do we know?

We always thought that legislatures can adopt statutes and ordinances and then repeal them, and one legislature may not tie the hands of future legislatures, nor indeed its own. And condemnation statutes, ordinances  and resolutions are legislative acts, as the courts never tire of telling us when the issue of right-to-take arises. Which is why the courts show so much deference to condemnation resolutions. So maybe when a municipality breaches its contract to buy a carload of paper clips, that breach of contract may be a proper subject of a lawsuit. But when it adopts or repeals ordinances, that would clearly seem to be legislative action beyond the reach of courts. To put it plainly, courts may not tell legislative bodies what statutes or ordinances to pass or repeal.  At least that is what our kindly old professor taught us in law school; he called it “separation of powers,” or something like that.

But the 9th Circuit thought otherwise and ruled for the plaintiffs on the theory that under the impairment of contracts clause of the Constitution this was an actionable controversy. Why? Because this contract did not actually require the city to condemn the subject property but only to use its best efforts to condemn it – a distinction that, frankly, eludes us. So read the Matsuda opinion yourself and you tell us if you can figure out how a city’s promise to use its best efforts with itself isn’t the same as its promise to condemn.

So is that all? Not on your life. Turning to the plaintiffs’ substantive due process theory, the Court also held that “we express no opinion as to whether our decision in Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996) (en banc), precludes Lessees from asserting a substantive due process claim in this case, where the Contracts Clause provides a specific source of constitutional protection…” Say what? Wasn’t it only yesterday (November 1, 2007, to be exact) that another panel of the 9th Circuit held in Crown Point Development, Inc. v. City of Sun Valley, 2007 US Lexis 25511, 2007 WL 319704, that Armendariz was history, gone, kaput, because in Lingle v. Chevron the U.S. Supreme Court expressly disapproved the theory on which Armendariz had been based?

It will take someone smarter than us to figure it all out. All we can do now is assume the lotus position and meditate on all the money lawyers are going to make trying to unravel all that, though it also seems proper to share with our readers the wisdom of an old British appellate lawyers’ joke about an apocryphal exchange between a Lord Justice on the Court of Appeal and a barrister arguing a case:

Lord Justice: Counsel, isn’t your submission contrary to controlling law?

               Barrister: It wasn’t M’Lord, until you spoke.

 

Update: On that Armendariz business, we recomment that you read Robert Thomas’ inversecondemnation.com blog, specifically the post entitled You’re Dead, Son. Get Yourself Buried.

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