Monthly Archives: July 2013

Bubble, Bubble . . . (Cont’d.)

Possibly, old age is upon us, but we are ready to swear that this morning’s L.A. Times carried a front-page item delivering the news that house flipping is back in California big time, and big bucks are being made by the flippers. But when we sat down to write this post, and summoned the on-line version of that article, we couldn’t find it. We better get ourselves back to Starbuck’s and see if there is a hard copy of this morning’s paper still there.

Stand by.

Aha! Here it is:

 
http://www.latimes.com/business/la-fi-house-flips-20130729,0,6412098.story

 

More on Detroit, Except this is a Good One

We recommend that you read Come See Detroit, America’s Future, an op-ed in today’s New York Times, July 25, 2013, at p. A19, by Charlie LeDuff who is on the staff of WJBK Fox2 in Southfield (a suburb of Detroit). A good read that, with a bit of biting humor, that concludes:

“So come to Detroit, my fellow Americans. Come take a look at your future. Come give the tires a kick. And if you want your money back, come strip copper pipes and wiring from the abandoned buildings — if you can find any copper. Chances are, someone beat you to it.”

We tried to call Mr. LeDuff to deliver our “Atta boy!” in person, but nobody was answering the phone at WJBK Fox2. You don’t suppose this is a put on, do you?

The 4th Circuit Treats Property Owners the Same Way as All Other Constitutionally Aggrieved Plaintiffs

You just gotta read this! http://blog.pacificlegal.org/2013/fourth-circuit-crushes-williamson-county-removal-ripeness-gambit/ That is a post by the Pacific Legal Foundation describing the Fourth Circuit’s brand new decision in Sansotta v. Town of Nags Head.

In it David Breemer of the Pacific Legal Foundation gives us a concise analysis of the court’s holding in a taking case, which for once is perfectly logical. It holds that when a defendant-city removes a taking case from state court to federal court (as is its right under federal law — see Chicago v. International College of Surgeons)  that means that it chooses to litigate in federal court, and thereby waives its right to litigate in state court. Makes sense to us. You shouldn’t be able to manipulate the judicial process and blow hot and cold on the same issue. The notion that a defendant can remove a case from state to federal court against the plaintiff’s will, and then argue that the plaintiff should have litigated it in state court, is an outrageous bit of manipulation of the judicial process, so we are glad that at least the Fourth Circuit has recognized it and has a sufficient regard for the integrity of its own process, to say “no way!” to such intellectual jiggery-pokery.

To read the entire opinion (by Judge Shedd), if nothing else for the logic of its argument, go to Sansotta v. Town of Nags Head, 4th Cir., No. 12-1538, opinion filed July 25 1013.

It’s a good read. Go for it!

What Detroit Really Looks Like

We just got done reading the Bloomberg description of the Detroit bankruptcy mess and in the process looked at the pictures accompanying that article (and some others like it). If you do that, don’t believe what you see. If you want to see the real thing, what Detroit really looks like, go to Google and type in Ruins of Detroit for a selection of Yves Marchand and Romain Meffre photographs. There are other collections on Google. Give it a try, and you will see just how distorted press depictions can get. Click here — http://www.google.com/search?q=detroit+ruins&tbm=isch&tbo=u&source=univ&sa=X&ei=3zzsUfDiPMqFiAKC1IHABA&sqi=2&ved=0CDQQsAQ&biw=768&bih=878

That will give you an idea of the grim reality facing the would-be rescuers of the erstwhile Motor City.

 

 

Detroit Files for Bankrupcy, Fulfilling a 1944 Prophecy

 

The Huffington Post  reports and the National Review comments on the fact that at long last Detroit has formally filed for bankruptcy. Click here.

Now comes the best part. Back in 1944, Detroit’s Mayor Jeffries, speaking in a congressional hearing,  predicted that putting freeways into cities, specifically Detroit, would make it not only easier for suburbanites to come into the city to work, but also for city dwellers to move to the suburbs, with the result that this would lead to abandonment of Detroit by its residents, and be the “ruination of Detroit.” Mayor Jeffries’ quotation may be found in Robet M. Fogelson’s book, Downtown: Its Rise and Fall, 1880-1950, at p. 117.

So it was written, and so it has come to pass.

Follow up. The causes of Detroit’s downfall, according to the city’s 16-page filing involved several factors that contributed to the city’s financial woes, including a long-dwindling tax base, population flight, financial mismanagement and overall decay of a city that once had more than 2 million residents and was the world’s hub of auto manufacturing. Nobody seems to wonder out loud why that Detroit population fled in such enormous numbers, what role redevelopment (and its abuses at which Detroit has been a champion) played in destroying swaths of low-cost housing but not replacing them.* As for that “financial mismanagement and  overall decay” of the city, we must recommend that you read at least Chapter 6, the part devoted to Detroit and subtitled See the U.S.A. In Your Chevrolet, pp. 217-225, in Mark Steyn’s book, After America. Steyn is an insightful and devastatingly funny writer, and candidly a pessimist. Still, his depiction of Detroit on its way to its fall, and his thesis that Detroit did it to itself  is not to be missed.

And last but not least, how can one mention the decline (and now fall) of Detroit without mentioning the assorted abuses of the city’s eminent domain power (e.g., Foster v. Detroit) and the wretched Poletown case** in which a divided Michigan Supreme Court approved the condemnation of a functioning, well maintained, and integrated community of Poletown in order to raze it and turn over the land to General Motors for a new Cadillac plant.*** Hundreds of homes, scores of businesses and churches and a major hospital were thus destroyed at a cost of some $200 million to state and federal taxpayers, to say nothing of years of tax abatement for GM. Ditto in the case of Detroit v. Vavro (same thing — what’s good for General Motors is good for Chrysler). But in spite of all that both General Motors and Chrysler, as well as Detroit went bankrupt, but nobody was held accountable for this disaster. As the inimitable Mark Steyn put it, if the British/Canadians were to cross the border, capture Detroit a la the War of 1812, and did to that unfortunate city what its duly elected Democratic and union functionaries had done, they’d be on trial in the Human Rights Court in the Hague. 

There is bound to be much ink spilled on the subject of Detroit’s decline and fall, and we are certain to revisit this subject in the future. So stand by, folks. There is more to come, although we have a hunch that you won’t hear much (anything?) from the media about Detroit’s misuse and abuse of eminent domain that contributed greatly to its woes.

Second Follow-up. We are confused. CNN reports that an effort was made to get a state court order to enjoin Detroit from filing for bankruptcy in federal court, on state constitutional grounds. But the request for the injunction came minutes too late — the federal bankruptcy case had already been filed, rendering the state proceeding moot. However, CNN also reports that Detroit was forbidden by a state court from filing for bankruptcy. So we propose to get a night’s sleep and hope that by tomorrow morning all this nonsense will be sorted out.

Third follow-up. It’s now “tomorrow morning” and we think we understand what happened. The city filed for bankruptcy first (if only by minutes) and once the federal bankruptcy court acquired jurisdiction we don’t see how a state judge could oust it of its constitutionally-based jurisdiction. Federal supremacy clause (Article VI, Clause 2 of the U.S. Constitution) — look it up. So what that state judge did was to order the city to withdraw its bankruptcy petition. Nice try. We are no bankruptcy maven, but it seems to us that once a federal petition for bankruptcy is filed, all lawsuits against the bankrupt entity are stayed, and we don’t see how a footling state court judge can rule otherwise and thereby de facto overrule the federal court applying federal bankruptcy law.

 Fourth follow-up. We hear that the federal bankruptcy court in Detroit has decided to proceed with the city’s bankruptcy action, notwithstandig a state trial court’s ruling that under the state constitution, the city could not seek the protection of federal bankruptcy law. So it would appear that, at least up to now, the federal court agrees with us. Stay tuned.

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*   This is no place to go into the demographics of this phenomenon, but we should mention that — though Detroit has been the “worst case scenario” as by degrees it slid into becoming America’s urban basket case, there are lots of other cities that have experienced similarly catastrophic declines in population and financial condition but have not [yet] filed for bankruptcy, and are not [yet] getting the ink they deserve.

**   To give the Michigan Supreme Court credit where credit is due, it eventually overruled the Poletown case in the more recent case of Wayne County v. Hathcock. But that, alas, turned out to be a case of too little – too late.

***   Full disclosure: your faithful servant was one of the lawyers representing the Sisters of Mercy whose Poletown hospital fell victim to Detroit’s bulldozers.

Bubble, Bubble . . . (Cont’d.)

The Los Angeles Times has once again turned its attention to the inflating housing bubble.

“The housing recovery is looking more like another housing boom, with prices rising at a record pace.

“The median home price in Southern California surged a stunning 28% in June compared with a year earlier — outpacing any month during last decade’s housing bubble. The gain puts the median at $385,000, up from $300,000 last June.” Andrew Khouri and Alejandro Lazo, House Price Rebound Has Look of a Boom, L.A. Times, July 17, 2013.

No comment appears necessary, except to note that should you be so fortunate as  to find a house in our neck of the woods (the San Fernando Valley) for anything resembling $385K, you wouldn’t want to live in it. Trust us.

More on the New Jersey Supreme Court and Offset of Benefits

If you are really interested in the subject of offsetting benefits that we treated rather superficially the other day, check out the McKirdy & Riskin blog. Click on   http://njcondemnationlaw.com/?utm_source=July+2013&utm_campaign=Property+Rights+Alert+Dec.+2012&utm_medium=email — for a thorough discussion of that legal development.

Among other things it will provide you with an after-condition picture, showing how that new dune obstructs the view of (and conversely from) the subject property. So would you grant the town the right to do that to your beachfront home for little or no money, but in exchange for the hope that if and when, in the sweet bye-and-bye a hurricane causes damage to beachfront homes, that dune would prevent or greatly diminish the damage to your abode? And what if it fails to do so? Would you then be entitled to your full severance damages that you gave up in exchange for those projected benefits of protection from hurricanes? As far as we are concerned, it’s strictly up to you. But should the government be able to force you to accept those projected — and conjectured — benefits instead of paying cash?

Our observation has been that when the offset benefits don’t materialize or materialize but are later removed, and at the time of the original taking the owner of the partially taken property had his severance damages offset or greatly diminished by the projected benefits, getting paid is like pulling teeth.