Archive for November, 2007

$36,795,000 Verdict in a Case of Aggravated Municipal Chutzpa

Friday, November 30th, 2007

You mustn’t miss the 167-page opinion of the U.S. District Court for the Northern District of California, awarding $36.795 million against the City of Half Moon Bay for its taking of the plaintiffs’ land. Yamagiwa v. City of Half Moon Bay, 2007 WL 4276385 (N.D. Cal.), Nov. 28, 2007. The city first flooded the subject 24.7-acre parcel, and then pointed to its “wetland” condition as the basis for denying permission to develop it.

The court was not amused by the city’s conduct in court either. The owners originally filed their case in state court as required by the Williamson County case, but the city removed it to federal court which, it said, had jurisdiction. Then, after two years of litigation that included 47 depositions and about a two-week trial, and cost millions to prosecute, the city submitted a post-trial brief saying “never mind” and asking the court to remand the case back to the state court, on the grounds that the federal court, according to the city’s born-again vision, lacked jurisdiction. Nothing doing, said the court, quoting from another opinion: “We decline to let [defendant] take its chips off the table because it didn’t like the dealer’s hand.” We highly recommend that in spite of its length you read this opinion in its entirety, particularly the part that starts at p. 155 and deals with the Williamson County ripeness problem — a first rate job of judicial analysis.

This caper is reminiscent of the incredible behavior of the City of Monterey in the Del Monte Dunes case, where after the city requested five successive development proposals that involved 19 plot plans,  it refused to allow any development on Del Monte’s land supposedly because it was suitable as a habitat of the Blue Butterfly. Of course, no such butterflies were sighted on the subject property, but hey man, the city thought that if a Blue Butterfly were to wander onto that land, it might like it there. This one is worse because of the city’s evident attempt to misuse the federal court as an instrument of oppression of the plaintiff-owners.

 We will keep an eye on this one, if nothing else because the City of Half Moon Bay has an annual budget of only $10 million, so the verdict comes to $5000 per city inhabitant. Still, it’s a case of poetic justice, if ever there was one.

In the interest of full disclosure we note that the plaintiffs were represented by Ed Burg of Manatt, Phelps & Phillips, a law firm to which your editor is of counsel.

New London Redevelopment Project? What Project?

Tuesday, November 27th, 2007

As we had occasion to observe in the past, the vaunted Fort Trumbull redevelopment project that New London, Connecticut, sold to the Supreme Court in Kelo v. New London, has been something less than a rousing success. See Gideon Kanner, The Public Use Clause: Constitutional Mandate or “Hortatory Fluff,” 33 Pepperdine Law Review 335, 384 (2006), noting that in spite of the $70 million spent on New London’s Fort Trumbull redevelopment project by the city and the State of Connecticut, nothing was happening on the ground. See William Yardley, After Eminent Domain Victory, Disputed Project Goes Nowhere, N.Y. Times, Nov. 21, 2005, at p. A1. Another couple of years have gone by since that news story was published but the Fort Trumbull redevelopment project is still going nowhere.

The November 27, 2007, issue of The Day, the local New London newspaper reports that not only nothing has happened on the ground but also that Corcoran Jamison (CJ), the redeveloper selected by New London to rebuild the Fort Trumbull area where Suzette Kelo’s home once stood, has just missed another deadline, and technically could be declared in default on its contract with New London. Among other things, CJ was supposed to obtain financing for the project no later than Monday, November 26, 2007, but it hasn’t. Instead, it has requested a four to six month extension of time to do so. Elaine Stoll, Fort Trumbull Developer Asks for More Time, Misses Deadline, The Day, Nov. 27, 2007.

And these are the people whose planning, according to the Supreme Court, is well-nigh conclusive and as such a sufficient basis for giving the constitutional term “public use,” a loosey-goosey judicial construction. Thus far, it would appear that judging from the events on the ground, these worthies couldn’t find their own posterior with both hands in broad daylight, much less make “well-nigh conclusive” development plans. Remember that they have been planning this project since 1998 and took these properties in November 2000. So much for those awesome municipal decision-making powers that are beyond the courts’ ability to review.  We note in passing that it took about half that  time to fight and win World War II.

And what about Pfizer, the pharmaceutical giant that built a $300 million research facility next to Fort Trumbull and supported the city’s redevelopment effort with money and projections of its future demand for a fancy hotel and other facilities serving its upscale, well-paid worforce? It turns out that Pfizer is having problems of its own. The planned fancy five-star hotel plan had been scrubbed even before the Kelo case reached the Supreme Court. Later, Pfizer suffered market reverses when one of its promising new drugs was disapproved by the FDA, and last time we looked, it was in the process of laying off some 10,000 employees — a process that did not augur well for New London. So much for best laid plans of mice and men and redevelopment agencies, and so much for boosting employment in New London. Remember that New London’s pitch to the Supreme Court had it that the redevelopment project would create 1000 jobs.

We wish we could say that this fiasco is one of those “good enough for government work” efforts. But it doesn’t even rise to that sorry level of accomplishment. We can only hope that Justices of the Supreme Court read the newspapers and that after taking in these reports they are at least ashamed of themselves. Do you suppose? Nah, being a Supreme Court Justice means never having to say you’re sorry.

All Animals Are Equal, Except that Some Are Less Equal than Others

Saturday, November 24th, 2007

It is familiar decisional law that property owners seeking just compensation in inverse condemnation cases arising from physical taking or damaging of their land are told that they are entitled to no more than the measure of damages awarded to plaintiffs in private tort cases. Of course, that isn’t entirely true — at its best it applies only to the strictly compensatory element of economic damages, and does not include other damages awarded in tort cases. But is this rule really true even as to the strictly compensatory elements of compensation?

Consider the recent decision of the New Mexico Court of Appeals Primetime Hospitality, Inc. v. City of Albuquerque, 168 P.3d 1087 (N.M.App. 2007)) that raises that question, and after much circumlocution answers “no.” The owner of the subject property discovered that the city had laid some water lines under his property without his permission. But the city then said “oops” and removed the lines, giving rise to a temporarty taking. On those facts, what is the measure of damages?  The owner contended that his measure should be the same as that provided in private tort cases involving trespass by encroachment. The court went through an extensive analysis of possible measures of compensation for partial physical takings. Its opinion comprehensively reviews decisional law in other states, and should be read in its entirety by counsel and appraisers with an interest in this subject. It also collects numerous law review articles dealing with the subject of damages for temporary takings (see 168 P.3d at 1094).

But what about that busines of using the same measure of damages in inverse physical takings as in private encroachment tort cases? Nothing doing, said the court, adding in a bit of judicial doubletalk: “We are aware that the notion of full indemnification in the context of condemnation proceedings is generally recognized to encompass a more limited range of remedies than, for example, negligence tort law.” In other words, “full indemnification” isn’t full and it isn’t indemnification; it’s less than in cases of private encroachment. Concluded the court: “. . . New Mexico has not adopted a tort measure of damages in condemnation. . .” * * * “We decline to do so.” * * *  ”We detect no general movement in our condemnation case law toward a broader measure of damages.” * * * “The default measure of damages for [the owner's] loss is . . . an  eminent domain measure. Whatever that measure ultimately may be, we do not agree that we must import tort concepts wholesale to provide constitutionally adequate just compensation.”

So there you have it folks. The tort measure of damages is just dandy when it is used by the courts as a ceiling, to limit compensation in inverse condemnation cases, but its use is a no-no when it comes to using it as a compensatory floor. Now, all that’s left to explain is the why of it. Why do the courts go on about making the condemnees whole, about putting them in the same position pecuniarily that they would have occupied had there been no taking, but then — in a classic bait-and-switch exercise — the courts have it that compensation which fails to meet these criteria is nonetheless the constitutionally required  ”just” compensation?

Even Sex Offenders Have Property Rights

Saturday, November 24th, 2007

A fascinating case was decided by the Georgia Supreme Court on November 21st. The court held in Mann v. Georgia Department of Corrections, S07A1043, that the first part of a law (a) forbidding convicted sex offenders to live within 1000 feet of any child care facility and (b) to work at a place of business similarly located, was an uncompensated taking of the sex offender’s property.

Anthony Mann, a registered sex offender bought a house for himself and his wife, located more than 1000 feet away from such child  facilities. He also became a part owner of a restaurant similarly located. But when new child facilities were established within 1000 feet of his home and his business, has was ordered to move. He filed a lawsuit challenging the constitutionality of the law as a taking of his property without just compensation. The Georgia Supreme Court agreed. Even accepting the strong government interest advanced by the law in question, and the substantiality of the public purpose advanced by the regulation, “we cannot overlook the significant, adverse economic impact of [the statute] on the [registered sex offender], the physical ouster that it effects or its elimination of any investment-backed expectations in [his] residence.” Though all society benefits from the legislation, only the registered sex offender alone bears the burden of this particular protection of minors provided by the statutory residence restriction.

But it was another story when it came to Mann’s half-interest in his restaurant business. Here, said the court, his physical presence on site was not indispensable. Considering his testimony as to what he did at the restaurant, he could retain his half-interest in it without violating the statute, and he could perform his managerial and accounting tasks from his home via computer. There was no showing that maintaining his ownership interest in the business required his physical presence on the premises.  “Thus, although [the statute] OCGA Sec. 42-1-15 (b) (1) has the functional effect of ousting [him] from his business, appellant has not shown that the regulation has unduly burdened him financially or adversely affected his reasonable investment-backed expactations in his business.”

Chief Justice Sears concurred specially, arguing that the majority’s ruling  as to the business, while correct, was overbroad. The holding that the statute bars any business ownership that requires the registered sex offender’s physical presence on the business premises, no matter how infrequent or short is too broad. Properly interpreted, the statute only bars business owners from being employed at a location within the prohibited zone.

More on Precondemnation Planning

Sunday, November 11th, 2007

Don’t miss the article by Prof. Lynda J. Oswald, entitled Can a Condemnee Regain Its Property If the Condemnor Abandons the Public Use? 39 Urban Lawyer 671 (2007). It ties in nicely with the article cited in the immediately preceding post. Whereas that one deals with the common law that governs condemnors’ failure to proceed with the public projects that were presented to the courts as the planned “public use,” Prof. Oswald goes beyond that and discusses legislative efforts to provide relief to property owners whose land is taken for “public uses” that do not materialize.

Prof. Oswald ends on an optimistic note and counsels the readers of her article to “keep a close eye on statutory and constitutional developments within their state.” That’s good advice, even if at this time that approach holds out only a limited promise of success.


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