Monthly Archives: April 2015

The California Dancing Raisins Case — An Exercise in Absurdity Goes to Court

If you are interested in eminent domain, you must have noted the activities of our fellow bloggers concerning the Horne case — the one where the federal government took some 40% of Mr. Horne’s raisin crop (tons of ’em), but refused to pay on the grounds that it was only “regulating” the raisin market by removing some of them from private ownership, reducing supply and thereby keeping  prices up, thereby assuring raisin growers of a proper income. This was one of those Depression-era laws that, as Justice Kagan put it during the first argument, had to be the most outdated statute. What the feds were really trying to say was: We are stealing your raisins, Mr. Horne, but it’s for your own good.

In an outstanding display of chutzpa, the feds took the position that by seizing tons of Mr. Horne’s raisins they were conferring a favor on him because his leftover raisins would bring a higher price in the government-distorted market. How could they tell? Beats us because to the best of our knowledge there has not yet been a valuation trial of either the taken or the leftover raisins. Still, the feds fined Horne over $400,000 when he refused to comply. The case has already been in the Supreme Court once before. SCOTUS reversed the 9th Circuit’s ruling in favor of the government, and held that Horne was within his rights when he sought to raise a taking defense in the US District Court when the government sought to enforce its demand. On remand, undeterred, the 9th Circuit reached the same result again on the second go-round: no taking. The Supreme Court took the case again.

Naturally, this was catnip for the eminent domain bar and pertinent blogging community. It made much of the second oral argument that took place a week ago. One argument-inspiring aspect of this controversy was the government’s contention that this outright theft of Mr. Horne’s raisins was not a taking.

So there was much to say about last week’s oral argument. You can check out the usual suspects, like for example our friend Robert Thomas’ blog on www.inversecondemnation.com . We, however, haven’t had much to say about that because (a) we were out of town, and (b) in our opinion this is the sort of case that should be entertained by a court (much less the Supreme Court) for, oh, about five minutes. The fact that it has taken up such an enormous amount of judicial time and effort, arguing over whether an uncompensated physical seizure of tons of privately owned raisins is a taking, tells us that at least some of the Justices are struggling with result-orientation — they are overwhelmed by the sheer absurdity of the government’s position, but on the other hand are in the throes of result orientation — they want the government to win but can’t think of any way of reaching such a result without making themselves look bad.

With some 40 years of eminent domain experience under our belt, we decline to speculate about the outcome. So we will take it easy until the opinion comes down — probably by the end of June, and see what’s what.

Unfortunately, that opinion will not to say to the government what we believe it should, namely, “You guys have got to be kidding.”

So stay tuned.

Eminent Domain In Fiction.

We have just been advised by a colleague that a new Harlan Coben bestselling book, “The Stranger” offers a plot that involves two eminent domain actions. We haven’t read it yet, but we sure intend to do so at the earliest opportunity. Should be worthwhile. Also, we recently came across an episode of the PBS series “Foyle’s War.” It is a British series about a bright, effective police officer, Detective Superintendent Foyle who is forbidden to enlist in the military in WW II so that he can continue to fight crime on the home front, where his prowess as a cop enables him to do his job well. But as the war ends, Foyle gets tired of moral compromises he is called upon to make in order to accommodate the war effort, so he retires from the police force. At this point, Foyle is assigned to British intelligence where by virtue of the work the spooks are called upon to perform, morality goes out the window, much to his displeasure. “Foyle’s War” has been a great, entertaining program, and we recommend it highly. But this blog is primarily about eminent domain and such, so this post is devoted to our recommendation of one of the last Foyle episodes (when he serves with the British intelligence boffins), that is entitled “Sunflower.” It’s main plot has to do with good guy Americans tracking down a nasty Nazi SS type in order to arrest him for the atrocity of ordering (and participating in) the murder of some two dozen American POWs in the ending days of the war. The British intelligence types know all about his misdeeds but shelter him anyway because he is supplying them with useful information about  intelligence matters. Nasty business that pisses Foyle off but never quite gets him to defy his intelligence betters to act. What does that have to do with eminent domain, you ask? The subplot involves a condemnation action in which a British citizen’s land had been taken “for the duration” of the war, but not returned upon its end. Which pisses off the former owner mightily and causes him to demand persistently that the British government live up to its promise made at the time of the taking. The problem is that the government minister in charge of matters that include such land won’t do his duty and live up to the government’s promise to return it after the war, in spite of the former owner’s increasingly strident demand that he do so. Altogether, a good plot with good actors acting out a good story. Apart from the nasty Nazi who gets his in the end, the bad-guy government minister has to resign in the end when one of his associates fingers him for failing to do his duty — he, on the other hand, wants to keep the land in agricultural use to relieve food shortages in post-war Britain, but doesn’t want to pay for it.

So we write to call your attention to Foyle’s War “Sunflower” segment. It’s available on Netflix. Get it, along with the rest of the “Foyle’s War” series for some good entertainment.
Oh, and what about that nasty Nazi sheltered by the Brits? He gets his in the form of being nabbed by intrepid Americans who mean to get even for his murder of all those American POWs.  A good plot (and subplot) and a good surprise ending. Justice triumphs in spite of British spooks and bureaucrats working to defeat it. Foyle may not come off as a self-sacrificing hero defying his betters (that role goes to another British intelligence operative), but he also manages to keep his skirts clean when the chips come down and people need to be counted as good guys or bad guys.
We like “Foyle’s War,” the whole series,  so we recommend  “Sunflower” in particular on general principles, and for its eminent domain related plot. Enjoy!
Follow-up.  We finally read that Coben book, “The Stranger” and it turns out that we were misinformed. While, true enough, the main character is an eminent domain lawyer, the plot has nothing to do with that subject.

AIG Taking Lawsuit Entering Final Stage

Last September we began coverage of a lawsuit by some AIG shareholders, alleging that Uncle Sam’s treatment of their company was so harsh that it constituted a taking of their property. You can check it out at http://gideonstrumpet.info/?p=6997 and several follow up posts.

AIG is a giant insurance company that faced insolvency during the 2008 crash, but was rescued by Uncle Sam.

The AIG shareholders’ litigation in the US Court of Federal Claims was a whopper of a lawsuit that took some six months to try, arguing that Uncle Sam’s treatment of AIG was harsh, unfair and discriminatory as compared to the treatment of other entities that were bailed out during that crash. Still, during that time, argue the plaintiffs-shareholders,  Uncle Sam seized controlling stock of AIG which amounted to an uncompensated taking of AIG’s property.

The case went to trial before a Court of Federal Claims judge last fall. Yesterday’s New York Times reported that final arguments by counsel were scheduled to begin yesterday, April 20th, 2015. See A.I.G. Suit Nears End, N.Y. Times, at p.B2. So the end of this saga is in sight.

Defendant, Uncle Sam, argues that its ministrations saved AIG from bankruptcy, so its suit is an example of rank ingratitude. The plaintiffs respond by pointing out that the rescue doe not provide the government with justification of harsh, discriminatory treatment that, among other things, involved a temporary seizure of AIG’s stock, thus constituting a taking of property.

Stay tuned.

Follow-up. Don’t miss one of those analysis/opinion pieces in today’s NY Times, Aaron M. Kessler, April 22, 2015, at p. B4, entitled With Top Lawyer on Offensive, Legal Odds in A.I.G. Bailout Case Are Shifting. http://www.nytimes.com/2015/04/22/business/dealbook/the-legal-odds-are-shifting-in-the-aig-case.html?src=me&_r=0 It’s mostly a paean of praise for the plaintiffs’ lead trial lawyer, David Boies, and his “small army of associates accompany[ing] him to Washington.” They “accompanied him to Washington when the action began in October, taking over an entire floor of the downtown Willard Hotel. The team also set up a ‘war room’ at nearby Skadden Arps, where each day and late into the night dozens of young lawyers crowded around a large table, churning away on computers and picking through boxes of documents on coming witnesses.”

So that’s how the other half litigates. Which is not to detract from Mr. Boies’ litigational prowess. We suppose that with the might of the United States’ unlimited resources aligned against you, you can use all the help you can get. Still, we wonder on what basis the plaintiffs think they’ll carry the day insofar as an award of compensation is concerned. As we noted in our earlier posts, their problem is not so much establishing liability — after all Uncle Sam did take their stock, if only temporarily — but rather establishing damages. After all, when the temporary taking period was over, AIG was not only rescued from bankruptcy by Uncle Sam’s rescue, but also got its stock back, and made a hefty profit in the end when the market value of the seized (and returned) stock soared. So where is the damage to AIG? Would this be a case of injuria absque damno?

So once again, stay tuned. Presumably, all will be explained in the decision of the Court of Federal claims, whose decision is expected  some time this summer.

Virginia Supreme Court Puts an End to Condemnors’ “Sandbagging.”

For many years, condemnors have been using a nasty gimmick as a weapon against condemnees. It goes like this: First, the condemnor deposits its version of just compensation (and usually takes possession of the subject property, even though the valuation phase of the case is yet to be tried and real just comensation is yet to be determined). Then, when the case goes to a valuation trial, the condemnor shows up with a new appraiser and a new appraisal report, that expresses an opinion of value that is much lower than the deposit which by now the owner has withdrawn in order to replace the subject property. The condemnor then takes the position at trial that the “just compensation” payable to the owner is whatever the second appraiser says. If the condemnor is successful, in so persuading the jury, the owner has to pay back that portion of the deposit that exceeds the verdict. But if you have been paying attention, you probably noted that he had to spend that money for replacement property, and no longer has it. But if the owner seeks to demonstrate the insincerity of the second appraisal and put condemnor’s pretrial offer (and deposit) into evidence to rebut  condemnor’s trial evidence, condemnors take the position that the amount of the deposit was “merely” a settlement offer and as such is inadmissible.

For many years owners have been complaining that this sort of thing is unfair. Condemnor presents the first (higher) offer to a judge to get the court tom act by issuing an order of possession of the subject property before trial, but then argues that the amount of this “offer” which it solemnly presented to the court to get it to act in a manner adverse to the condemnee, is not admissible when the condemnee wants it admitted. Believe it or not, many courts have been going along with such underhanded jiggery-pokery. In California — where else? — there have even been cases where the condemnor used the same appraiser to come up with these two inconsistent opinions of value.

But the Virginia Supreme Court put an end to it in Ramsey v. Commissioner of Transportation, Record No. 140989, April 16, 2015. It held that the condemnor’s first (higher) opinion of value was not a mere “offer of settlement” but rather an appraisal of just compensation required by statute, and as such could be placed into evidence by the condemnee.

Here, the condemnor’s deposit was $248,707 for the part taken, based on its appraiser’s opinion of $500,000 for the total value of the larger parcel. At trial, however, condemnor came up with a new appraiser and a new appraisal. He opined to a value of $92,127 for the part taken and $250,000 for the entire larger parcel. The jury, having been prevented from hearing the first condemnor’s appraiser’s higher figures by the trial court, and unaware of condemnor’s higher appraisal, came in with a verdict of $234,032, leaving the owner in a hole of $14,675 which he was ordered to repay with 3% interest.

When the owner appealed, the Virginia Supreme Court reversed, holding that condemnor’s first appraisal was no mere offer but a statement of valuation required by law.

The case was remanded for retrial.

 

 

 

Kelo — Once More

The Day, the New London, Connecticut, newspaper reports that the mayor has proposed that the site of Susette Kelo’s house that was taken by eminent domain be made into a little park to commemorate the taking that was probably the most unpopular US Supreme Court case in modern history. Colin A. Young, Mayor: Former Kelop Property Should Be Preserved as a Public Park, The Day, March 31, 2015. http://www.theday.com/article/20150331/NWS01/150339850/1047

Kelo’s house and land, and the homes of her neighbors, were taken, razed, and . . . Actually, it was all for nothing. No redevelopment took place and all that land (91 waterfront acres) is still sitting empty, 15 years after the taking and 10 years after the US Supreme Court approved it by a 5 to 4 vote. And let us not forget the $100 million in public funds that were wasted in the process.

Your tax money at work.

Follow-up.  The Day of April 6, 2015, reports that the above development plan isn’t going ahead either. The title says it all: Plan for Kelo Property Park Tabled in New London. And that’s how it goes. It would appear that, to invoke an old Western saying, some things are just plain snakebit and this is one of them..