Archive for July, 2011

Eminent Domain in China — and in the Good Ol’ U.S. of A.

Saturday, July 30th, 2011

The East Asia Forum of July, 29, 2011, contains an interesting article on eminent domain in China, by Chun Peng (Oxford University), entitled Eminent Domain in China: Rule of Law in the Making — click here

This article observes that though a legal system of land expropriation is evolving in China, this emerging system is subject to criticism because of its widespread displacement of populations, and of its consumption of arable land.  Also, “anxiety is rooted in the question of whether the increasing mass protests against compulsory land takings have opened Pandora’s box for the legitimacy and stabiliy of the current regime.”

We find of particular interest the following passage, noting that in Chinese law of eminent domain,

“[T]he ‘public interest’ prerequisite is vaguely defined, the due process of acquisition has not been erected and compensation standards remain unfairly low.”

This is remarkable because, these same factors are also present and provide a valid basis for criticism of American eminent domain law. You doubt it? Then consider this. In America, the “public use” constitutional limitation has become a joke, particularly after the Kelo case. Except under state law of Arizona, Illinois, Michigan, Ohio, Oklahoma and South Carolina, all of which have disapproved of the use of eminent domain for “economic  redevelopmemnt,” the constitutional “public use” limitation has been diluted and in some cases (notably in New York)  de facto read out of the constitution.

Next, due process is not required in takings of property under  American law. Only when the government files a condemnation action, it must provide due process, but it isn’t required to file such an action. Two U.S. Courts of Appeals (the 5th and 9th) have held that the government may simply seize private property and say to the displaced owner “sue me.” The U.S. Supreme Court made it clear in the Dow case that no process and no court order is required before the government may just seize private property. Indeed, Congress may engage in legislative expropriation whereby it passes a bill declaring that as of a specified date, your land now belongs to Uncle Sam. Period. If you then want to get paid, you have to take the initiative, hire a lawyer and an appraiser, file an inverse condemnation action in  the U.S. Court of Federal Claims in Washington, and hope to receive your “just compensation” years later. That is how the California Redwood National Park and the Manassas Battlefield Memorial in Virginia were created.

Ostensibly, the Uniform Relocation Assistance Act forbids this and requires the government to file an eminent domain action when it wants to acquire private property. But the Act is a “paper tiger” because it is not enforceable  by its express terms – property owners have no right to sue to enforce its provisions when they are violated by the government.

And as for compensation. . . For decades, the law journals have been full or articles criticizing the prevailing undercompensation of condemnees whose property is taken by eminent domain. For our most recent effort on that score, see Gideon Kanner, “Fairness and Equity,” or Judicial Bait-and-Switch? It’s Time to Reform the Law of “Just” Compensation, 4 Albany Jour. Gov’t. Law 38 (2011).

In conclusion, we hesitate to say “Welcome to Red China” because here such abuses are still an exception whereas over there they are the rule. But even so, we find a parallelity, however small, between the treatment these two countries mete out to property owners to be disturbing. Whatever else you may want to say, our law that ostensibly provides extensive protection to private property rights, should be sharply different — and much better – than that of the authoritarian regime of Red China.

Mississippi Churning

Saturday, July 30th, 2011

Interesting development concerning eminent domain law comes to us from Mississippi. As was the case in some other states, following the wretched 2005 Kelo case in which the U.S. Supreme Court (by a 5 to 4 decision) permitted the condemnation of private property for “economic development,” a clearly private commercial use, in 2009 the Mississippi legislature enacted a new eminent domain law curbing this practice. But Governor Haley Barbour vetoed that legislation and the Mississippi Senate was unable to override his veto.

Undeterred, the Mississippi Farm Bureau Federation set out to curb abuses of eminent domain by the initiative process. But as soon as the initiative petition qualified for the ballot, one of Barbour’s political allies, who also happens to be Barbour’s appointee to the Mississippi Development Authority, filed suit to enjoin placing the eminent domain initiative on the ballot, on the grounds that under Mississippi law, the state Bill of Rights may not be modified by initiative.

As applied to these facts such an interpretation of the proposed amendment would lead to an absurdity — the people of Mississippi would be precluded from enlarging their constitutional rights by initiative. So far, Judge Winston Kidd of the Mississippi trial court ruled (on July 29, 2011), in favor of permitting the eminent domain initiative to be placed on the ballot. To get the story as reported by the Associated Press, click here

There is an interesting political/ideological wrinkle to this story. Republicans, as they never tire of telling us, are supposed to be favorably inclined toward private property rights and opposed to government encroachment on those rights. It’s the leftist liberals, so goes the theory, who are hostile to private property. But here, Barbour is a Republican. Not only that, but before becoming Governor of Mississippi he was the Republican National Chairman. So we can’t help wondering how he squares his position on Mississippi eminent domain reform with the position of conservative Republicans?

And it isn’t just a case of abstract ideology. Mississippi is one of the worst actors when it comes to abuse of eminent domain power. It was Mississippi that used that power to forcibly acquire land for Nissan and Toyota car factories in that state. Which also happens to have been a form of economic warfare against the American car industry that was driven into bankruptcy by its Japanese competitors enjoying American government subsidies, like those car factory sites provided on the cheap by Mississippi’s [mis]use of the power of eminent domain for ”economic development.”

So with conservatives like that, who needs radicals?

Stay tuned for the next chapter — the losers in that Mississippi trial court decision (allowing the initiative to proceed), are talking about appealing Judge Kidd’s decision.

Follow up. Predictably, the losers have filed an appeal. Click here.  The Mississippi Supreme Court ordered that briefs be filed by August 12, 2011. Stay tuned.

High Speed Rail – (Cont’d.)

Thursday, July 28th, 2011

An interesting article comes to us from  the San Francisco Chronicle (sfgate.com). It sums up the status of the high speed rail project in California, in light of the fact that both the state and the feds are tapped out and are looking at huge deficits, leaving a rational mind to wonder where this project’s proponents think the billions necessary for its creation will come from. It’s a pretty good, balanced article. Carolyn Lochhead,  California’s Bullet Train Plans’ Moment of Truth, July 24, 2011. If you want to read it in its entirety, click here

Follow up. The Los Angeles Times, Dan Weikel, Bullet Train Forecasts Questioned, July 29, 2011, at p. AA4, (click here)  brings the news that an internal review of the data underlying the California high speed rail plans, performed by the California High Speed Rail Authority, indicates that they are unreliable.  For openers, “forecasts of up to 117 million annual riders by 2030 — which have helped support predictions that the system would generate billions in profits — need to be recalibrated to be more conservative and better reflect important factors that could affect ridership.” * * * “Ridership forecasts are crucial for the project’s 500-mile first phase, which would link Los Angeles and San Francisco.”

So if the LA Times is to be believed, fortunes have already been spent (with more to come) on a rail project as to which no one can reliably say that its benefits will come anywhere near its cost. Those forecasts “form the basis of calculating ticket income, the amount of public funding required, stations needed, as well as the size and number of trains to be purchased.” Other than those few niggling details,  it’s a jim-dandy set of projections.

 

Santa Claus Is Coming to Town!

Thursday, July 28th, 2011

As you may have heard, the latest something-for-nothing municipal shtick in Los Angeles is the proposal to build a new stadium next to the Staples Center in downtown LA. This would involve tearing down (and later enlarging) the convention center, so this is going to take a lot of money, or as Angelenos tend to put it, muy mucho dinero. So how is the city handling that little problem?

Rest easy folks. The Los Angeles Times reports that Councilwoman Jan Perry assures one and all that it’s going to be a freebie. We quote without comment what the L.A. Times tells us: “Councilwoman Jan Perry said the plan would not ‘cost the taxpayers a dime.’ ”

So there.  Now you don’t have to worry about a thing — the free lunch will be served.

For the L.A. Times story, Financial Plan for Downtown Stadium Gets First Public Hearing, July 27, 2011) click here

“[T]he city’s plans do not pass the smell test.”

Wednesday, July 27th, 2011

The preceding post on the wretched Freeport case, reminds us that something should be said about the project that gave rise to this civic calamity. Originally, the owners sued in federal court, evidently in the naive belief that federal courts would uphold the federal Constitution — which they frequently tell us, is their cherished function. Alas, this was eminent domain where the “public use” clause of the Fifth Amendment has been obliterated by the very courts that are sworn to uphold it. And so, the owners lost at the trial court level by summary judgment. But the federal judge in question was evidently an intellectually honest man, so he had something to say about the prevailing situation. You could say that his Lordship held his nose as he ruled for the city. It’s probably best if we simply quote him (W. Seafood v. Freeport, 346 F.Supp. 892, 901 (D.C.S.D.Tex. 2004), citations omitted):

“This case involves a municipality’s efforts to take, through eminent domain, one private party’s property and transfer it to another private party to promote the public interest in a healthy local economy. These circumstances present stark and startling evidence of the potential for governmental interference with individual property rights….4

_____________________________________________________
4 The Court sympathizes with Plaintiff’s bewilderment at its situation. Indeed, its strongest argument may be that the City’s plans do not pass the smell test. But while engaged in constitutional interpretation, the Court must apply the law as the Supreme Court interprets it, regardless of its subjective sympathies.”

So what happened in the end? Was that “public interest” served? Don’t be silly. Like so many other ambitious redevelopment projects, this one did not work out. We are informed that after the U.S. Court of Appeals for the 5th Circuit remanded the matter with instructions for the District Court to abstain (202 Fed.Appx. 670), the trial court abstained (2007 U.S. Dist. Lexis 60189) in order to allow Texas state court to consider new state legislation limiting such takings, that was passed by the Texas legislature in the meantime. The matter then wound up in state court which ruled against the city (Freeport Economic Development v. Western Seafood Co., Brazos County No. 1032664 (2007)).  Eventually, the Texas courts awarded Western Seafood attorneys fees ( Brazos Co. Water Control & Improvement Dist. No. 1 v. Salvaggio, 698 S.W.2d
173  (Tex.App. 1985 ). So after all this sturm und drang, the subject property was not taken.

That leaves the question of what did this outrage cost the taxpayers? We will try to find out.

Another Victory For the First Amendment

Tuesday, July 26th, 2011

After keeping us in suspense for quite a while, the Texas Court of Appeals came through and in an opinion filed July 25, 2011, held in the case of Carla T. Main et al. v. Royall, Tex. Ct.App., 5th Dist., No. 05-09-01503-CV, that the trial court erred when it refused to grant summary judgment in favor of the defendant, Carla Main and her publisher. Main’s book, ”Bulldozed” was about eminent domain, with particular focus on a redevelopment case in Freeport, Texas.  H. Walker Royall, the redeveloper, was the plaintiff in the defamation suit. He complained that the book defamed him. The Texas Court of Appeals disagreed, and ordered the case remanded and dismissed. You can read the opinion here It quotes the assertedly defamatory passages and explains that they are nothing of the sort.

Though the court disposed of the matter on the basis of the law of defamation, rather than the First Amendment, the result is the same. The Main decision is another blow for the integrity of the First Amendment which, if nothing else, protects citizens’ right to speak out critically on the way the government goes about its business, particularly when its conduct is abusive.

Also see our recent post about another First Amendment victory (that one in St. Louis)  where a federal Court of Appeals invalidated a city ordinance used to forbid a citizen to put up a sign protesting abuses of eminent domain. Go to www.gideonstrumpet.info/?p=1514 of July 13, 2011.

Lowball Watch – Tennessee

Saturday, July 23rd, 2011

Nashville Channel 5 reports in a sketchy dispatch that a local jury has awarded Tower Investments, the owner of a property being taken by eminent domain, $30,000,000, on the city’s evidence of $14,800,000.

For the entire news item click here

Follow up. For somewhat fuller coverage of this verdict see Nate Rau, Metro Busts Music City Center Land Budget, The Tennessean, July 23, 2011 – click here . We learn from this story that the condemning agency has been pursuing this project on “a very tight budget,” so it shouldn’t be too surprising that it may have underestimated the cost of this acquisition. It also appears that the agency underestimated its own attorneys fees by $300,000, “so far.”

A Bit of California Eminent Domain History

Friday, July 22nd, 2011

We recommend an article by Larry Stevens, in the July/August 2011 issue of RIGHT OF WAY magazine, entitled What Constitutes a Public Use?, at p. 22. It’s the story of the Homeric battle of May Rindge, owner of the old Rancho Malibu, located at the northern edge of Los Angeles County, and stretching for over 20 miles along the coast, to  defeat a taking by the County of Los Angeles, for what became known as the Pacific Coast Highway .

The problem was that at the time there was nothing there, except the Rindge land, so travelers on the new highway could only drive up and down the coast to the road’s dead end at the Ventura County line. They could not get off that road because all the surrounding land was owned by the Rancho and Mrs. Rindge was not about to allow any trespasser to set foot on her land. She meant it. The right-of-way was fenced off from the Rancho and patrolled by shotgun-wielding riders. The courts held that even though the road’s utility to the public was limted, this was sufficient to satisfy the “public use” constitutional requirement.

Since the new road was public (even though it was a road to nowhere) Mrs. Rindge defended against the taking on the grounds of lack of necessity required by a state statue. But California law at the time made a condemnor’s  determination of necessity conclusive, so she argued that denying her the chance to demonstrate a lack of necessity was a denial of due process. The U.S. Supreme Court disagreed. Rindge Co. v. County of Los Angeles, 262 U.S. 700 (1923).

It’s quite a story, and we recommend that you read Mr. Stevens’ article for yourself. In the end, after over a decade of contentious litigation, Mrs. Rindge was paid $107,289 on her demand for $9,180,000.

And as for California law of necessity, it only got worse when in People v. Chevalier, 52 Cal.2d  299, 340 P.2d 598 (1959) the California Supreme Court held that necessity for condemnation was not subject to judicial review and was altogether nonjusticiable, even when the resolution of necessity was procured through fraud, bad faith or abuse of discretion. This extremist judicial interpretation of the statute remained in place until 1976 when the California Legislature repealed the Chevalier holding, and instead passed Cal. Code Civil Proc. Sec. 1245.255 (2)(b), providing that the resolution of necessity is not conclusive when its “adoption or contents were influenced or affected by gross abuse of discretion by the [condemnor's] governing body.” Also, the legislature provided that the resolution of necessity does not meet legal requirements when it is procured by bribery of a member of the condemnor’s governing body.  Cal.  Code C ivil Proc. Sec. 1245.270.

Lowball Watch – New York

Thursday, July 21st, 2011

This may well be the all time champion recovery in an eminent domain case. If any of our readers know of bigger awards, please let us know.

The case is Collegiate Church et al. v. Metropolitan Transit Authority, 2011 NY Slip Op 05986, Appellate Division, July 21, 2011.

It’s probably best if we just recite the figures:

As to defendant-owner Collegiate Church: MTA’s evidence – $74,450,000. The trial court award – $106,510,521.

As to defendant-owner Riese: MTA’s original offer – $15,800,000, later increased, first to $24,400,000, and then to $26,000,000. MTA’s evidence at trial – $27,440,000. The trial court award - $35,630,000.

The court also awarded interest at 9% on the difference between the MTA’s deposits into court and the award.

The trial court judgment was affirmed with directions that the trial court conduct a hearing and award attorneys fees. Stay tuned on that one.

The bone of contention that accounts for the large difference between the valuation contentions of the parties had to do with probability of joinder. But MTA had an uphill fight on that issue because the owners were already in the process of effecting the joinder so it must have been hard for MTA to argue that the joinder was not probable.

One interesting touch: one of the parcels had an old church on it, which the owners (The Ministers, Elders, and Deacons of the Reformed Protestant Dutch Church of the City of New York) originally acquired in the year 1720 A.D.

Another interesting touch is the identity and history of the law firm that represented the owners. Goldstein, Rikon & Rikon is without a doubt the best law firm devoted to eminent domain in New York. It was founded in 1923 as Samuel Goldstein & Sons. Its founder, Mr. Samuel Goldstein, lived to a ripe old age and tried his last eminent domain  case at the age of 94. He won.

Ten Times?!

Thursday, July 21st, 2011

The Roanoke Times brings a story from Virginia, about a farmer’s successful lawsuit in inverse condemnation. Laurence Hammack, Wythe County Farmer Wins Case Against VDOT, Roanoke Times, July 21, 2011.  A local judge found that the State’s reconstruction of an Interstate highway bridge over the subject property impaired access to it and increased storm runoff which eroded ditches on the subject land. This, ruled the judge, effected a taking of the farmer’s property, and resulted in monetary liability, although the amount of compensation is yet to be determined by a jury. So far, it’s one of those “dog bites man” stories — unremarkable. But read on.

We also learn from this story is that over the years the farmer has been subjected to ten — count, ‘em, ten — eminent domain takings of land from his farm for an Interstate, a high bridge looming over the farmhouse, as well as elecrical lines and gas pipelines.

In our book, this must be a record that earns the unfortunate farmer the “Lucky Pierre” award. In our 40 years of practicing eminent domain law, we have never seen or heard of anything like this. Two or three condemnations per lifetime has been about it. But ten?

We can only hope that the Virginia DOT folks will have the good sense to settle this case, quicly and generously. If anybody deserves that it’s the farmer, Mr. Ed Jennings.

You can read the whole Roanoke  Times article by clicking here.


The purpose of this blog is to provide a forum for people, whether eminent domain professionals or not, for exchange of ideas and a discussion of eminent domain news and issues. It does not provide legal advice. Questions concerning actual cases should be directed to the readers' own legal, appraisal and real estate advisers.

We reserve the right to delete comments that in our judgment are abusive or otherwise inappropriate, or that digress from the topics that are the subject of this blog.