Lowball Watch – New Jersey

Business Week reports that the New Jersey Appellate Division has affirmed the trial court’s judgment in an interesting case. The town of Harvey Cedars decided to restore the beach and in so doing built a 22-foot dune between the sea and the beachfront home of the Karans, concededly worth $1.9 million. It offered them $300 for the diminution in value caused by the loss of view.

After trial the court awarded $375,000. Now, that award has been affirmed on appeal.

For a Business Week story reporting these events, click here.

Lowball Watch – Florida

The News Press reports the results of an eminent domain taking of 3.39 acres out of a 26-acre tract by Lee County (Mark S. Krzos, Estero Land Seizure Will Cost Lee $1.92 Million, Jury Rules, news-press.com, March 26, 2012 – click here) as follows: offer – $883,000; verdict – $1,920,000. Or, according to our calaculator the award was over twice the amount of the offer.

The bone of contention was the county’s position that it should pay only for the taken land, and pay nothing for severance damages which came to $860,000 according to the owner. The jury agreed.

The Second Coming of the South Bronx

Don’t miss the article in today’s New York Times (Joseph Berger, No Longer Burning, the South Bronx Gentrifies, N.Y. Times, March 26, 2012, at p. A20 – click here) informing one and all that, yes indeed, the South Bronx, the venue that served as a backdrop of the movie “Fort Apache – The Bronx” with Paul, Newman (which you should see if you haven’t), is rising above its wasteland image and becoming a haven for newcomers who according to the Times are making up for the 300,000 person exodus of  the 1970s. We have no doubt, at least we hope, that there has been some improvement up there since, short of conducting live-fire urban military warfare, the place couldn’t go down any lower. So bully for those brave pioneering souls who are moving in and gentryfying the place. We wish them well.

However, we have noticed over the years that the Times has a habit of depicting the doings in decrepit urban areas more optimistically than circumstances warrant, particularly in its headlines, and this is no exception. How do we know? Catch this depiction of current reality of living there, coming from a 66-year-old lady who sold her one-bedroom Manhattan digs for $550,000 and replaced them with a two-bedroom place in the Bronx for $200,000, thereby stashing $350,000 tax free:

“If you walk around wearing gold chains and flaunting an iPhone,  four 15-year olds are going to take it from you.”

Welcome to the new, improved Bronx. And here we didn’t realize that owning and using an iPhone constitutes “flaunting” it. Do the folks at Apple know about this?

Afterthought. It occurs to us that younger readers of this blog, and there may be a few, do not fully realize what the South Bronx looked like when it acquired it’s reputation as an urban disaster area. In those days your faithful servant used to go to New York, fly in to JFK and take a taxi into town, which involved traversing the Bronx on the freeway. Wow! It looked like Hamburg in 1944. There were entire blocks of rubble, with facades of ruined builngs standing among it. So do you know what the city did? You may not believe this, but it was reported in the New York Times at the time, and we are sure a Nexis search will bring you that reportage. The city ordered (and spent taxpayers’ money on) a bunch of rectangular pieces of plywood, on which it painted window frames, curtains and flower pots, and had them inserted into the gaping window holes of ruined buildings, so that flatlanders zooming by on the freeway would think those buildings were populated. Yes indeed — it happened.

If you want to see what the South Bronx looked like at its nadir, go to google images and type in South Bronx Photos.

High Speed Rail (Cont’d.)

Herewith the next installment of “The Perils of Pauline,” which was a serial movie early in the 20th century. Its shtick was that at the end of each episode, Pauline, the heroine, was left tied to railroad tracks while a train was rounding the bend and rushing at her, leaving the audience in suspense and eager to return the following week to see how it turned out. So here we go again, with the California high-speed rail farce. And make no mistake, it is beginning to assume farcical proportions.

To sum up for the benefit of newcomers, back in 2008 the ever gullible California voters approved a ballot proposition that would approve and finance a high speed train line operatting between San Diego and San Francisco. There were several conditions in that proposition: those using it would be able to board at one end and go to the other without changing seats, as many as 12 trains an hour would operate each way, and the system would operate without taxpayer subsidies. (Good luck with that one.) And oh yes, the funding approved in that vote woud be $9 billion.

Long story short, by the time the preliminary plans were unveiled, the cost went up ten-fold to $98.5 billion, and the rail authority announced that it would start by building a segment of that line, not in the populated areas in need of rapid mass transit, but rather in the Central Valley, between Bakersfield and Fresno (which if you are not a Californian, you should know is the middle of nowhere).

Naturally, politicians all over Californis, particularly in the San Francisco Bay Area decided to get in on the action, and before you knew it, instead of being planned to run on a separate bullet-train track, the envisioned high speed rail  would serve their bailiwicks and run on the same tracks as ordinary passenger and freight trains — no, we are not making this up. That’s what it says right here in black and whie in the Los Angeles Times (Ralph Vartabedian and Dan Weikel, Concessions on Bullet Train May Violate Law, L.A. Times, March 26, 2012, at p. AA1).

Now, it turns out that there are other problems. Big problems. Persnickety readers of the law enacted by the voters in 2008 have noticed that the currently proposed high speed rail layout and manner of operations deviate from the terms of that law.

“Whether a court would actually stop the project because of such alleged violations is not clear, said UC Berkeley assistant law professor Bertrall Ross, an election law expert. The conditions in the law, he added, were not in the ballot summary that voters saw at the polls, and judges often attach more importance to that than the underlying statute. On the other hand, some conditions were in voter pamphlet and a judge could rule against the [current] plan on that basis.”

Ain’t law just swell? Aren’t you glad we live under a rule of law, rather than the say-so of judges who according to Professor Ross, can just approve a project likely to consume $98.5 billion (and counting) rather than the $9 billion solemnly promised to the suckers, er, we mean of course the voters.

You can draw your own conclusions from all this, but it seems to us that if the railroad types pull off that one, California will deserve whatever it gets, including, alas, insolvency.

Should Value Contentions in Taxation Proceedings Be Admissible in Eminent Domain?

Check out the recent decision of the Kansas Supreme Court in Kansas City Mall Associates v. Unified Government of Wyandotte County, No. 102,163, that came down recently. It held that although as a general rule the value of land for ad valorem taxation purposes is inadmissible in eminent domain cases, the owner’s value contentions in tax assessment proceedings are admissible as an admission against interest.   Quoting from the Court’s syllabus:

“Generally, the assessed valuation of property for tax purposes is not admissible as evidence of fair market value of property in an eminent domain action. But statements made by the owner about the
property’s value in an appeal of a tax assessment that are inconsistent with the owner’s position in the eminent domain trial are admissible as admissions against interest.”

So it remains to be seen if the Kansas courts will follow the same rule when the shoe is on the other foot — when it so happens that the taxing authority contends in taxation valuation proceedings that the value of the subject property is higher than what it offers in later condemnation proceedings. Yes, cases like that do come along from time to time.

The problem is that not only are tax assessments notoriously unreliable, but the law that governs them is based on a different policy than the law of eminent domain. In taxation, it allows the owner to minimize taxes and hence it encourages conservative valuation, whereas in eminent domain the owner is entitled to the highest price that the property would fetch in a voluntary sales transaction. Most important, when an error is made in valuation for taxation, it can be fixed by reassesment, whereas in eminent domain once the judgment is final, the value determined by it is not subject to change.

So stay tuned and see what happens in Kansas when the parties’ roles are reversed, and it is an owner who wants the government’s taxation valuation contentions admitted into evidence in an eminent domain action. You think this rule will cut both ways, or will the courts then stick to the general rule of excluding valuation for tax purposes?

 

SCOTUS Decides the Sackett Case: America Values Private Property.

Our thanks to the Volokh Conspiracy for tipping us off that SCOTUS decided Sackett v. E.P.A. earlier today. Unanimously, no less, with two concurring opinions. You can get the message about the nature of the case and the Court’s reaction from this excerpt from Justice Alito’s concurring opinion:

“The reach of the Clean Water Act is notoriously unclear. Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to construct a home on a lot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy. The EPA may issue a compliance order demanding that the owners cease construction, engage in expensive remedial measures, and abandon any use of the property. If the owners do not do the EPA’s bidding, they may be fined up to $75,000 per day ($37,500 for violating the Act and another $37,500 for violating the compliance order). And if the owners want their day in court to show that their lot does not include covered wetlands, well, as a practical matter, that is just too bad. Until the EPA sues them, they are blocked from access to the courts, and the EPA may wait as long as it wants before deciding to sue. By that time, the potential fines may easily have reached the millions. In a nation that values due process, not to mention private property, such treatment is unthinkable.”

So did the court grant property owners meaningful relief from this outrageous legal scheme? Don’t be hasty. Quoth Justice Alito:

“[T]he combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA’s tune.” Emphasis added.

We would have thought that the treatment meted out by the EPA to affected property owners was clearly unconstitutional on more than one ground (like due process and excessive fines, for instance), but the decision is based, not on the Constitution, but rather on the Court’s interpretation of the availability and timing of judicial review under the  Clean Water Act, and Justice Alito’s opinion instead of calling for meaningful, effective relief, sends Sackett off on another costly and time-consuming round of litigation, and passes the buck to  Congress to rectify the Act’s injustice. Some remedy.

We sympathize with property owners thrust into such a nightmarish scenario because back in 1980 we were involved in such a crazy case, in which our client started plowing bone-dry land for a new citrus grove, when he got served by the Feds with a cease and desist order demanding that he “cease dredging and filling in waters of the United States,” and beyond that, that he ”halt any further work in waters of the United States” (emphasis added). We sued in federal court, the Feds made a motion to dismiss, but the trial court sat on it for so long that everybody decided life wasn’t long enough for this controversy to be judicially resolved, and so the case settled.

And why is the Clean Water Act “notoriously unclear’? Could its lack of clarity have something to do with the courts’ grudging interpretation of property owners’ right under it?

For the Washington Post’s take on this case, click here.

Bottom line: the Sackett decision is better than the alternative might have been, because from the outset, the environmetalits’ objrtive has been to destroy private property rights in America (except their own). You don’t believe us? Then check out  Gladwin Hill, Authority to Develop Land Is Termed a Public Right, N.Y. Times, May 20, 1973 (“A federal task force in land use said today that henceforth ‘development rights’ on private property must be regarded as resting with the community rather than with property owners.”) Clear enough for you?

And so, we are glad to hear that Justice Alito thinks that our nation values property rights. Based on the Court’s most recent handiwork, you coulda fooled us on that one. But hey man, what do we know? Maybe Justice Alito will do some missionary work and persuade some his colleagues to value them as well.

Follow-up. And speaking of the court’s grudging interpretation of the Act, we offer for your consideration the following observation of Richard Frank, former California Deputy Attorney General, with whom we rarely agree, along with a photo of this asserted “wetland” from his blog:

The Sackett parcel in Priest Lake, Idaho “Considering Scalia’s well-known propensity for lengthy opinions and rhetorical flourishes–especially when it comes to property rights claims and environmental regulation – the decision in Sackett is remarkably terse and narrowly crafted.” Indeed.

The Bloom Is Off Law Schools

The New York Times reports that this year’s LSAT takers were down to 129,925, down from 155,050 last year, and 171,514 the year before. David Segal, For 2nd Year, A Sharp Drop In Law School Tests, N.Y. Times, March 20, 2012, at p. B1. Which may not be a bad thing. Why? Because over the years the earnings and image of the legal profession underwent a metamorphosis, attracting hordes of young people to law school. Alas, many of these young people, though bright enough, lack the tolerance for drudgery that the practice of law requires, and the temperament to be lawyers, and one byproduct of this phenomenon has been a profession full of people who don’t like what they do for a living, and who, in disregard of the best legal tradition,  misbehave in and out of court. So if fewer of those don’t go to law school . . . Maybe that will be a benefit in the long run.

As for your faithful servant, he went to law school in antedeluvian days and never had to take the LSAT. Didn’t hurt our career and our accomplishments one bit. There may be a lesson in that.

Anyway, if fewer bright young people become  lawyers and more become engineers, the country may be better off.

The Feds Take It on the Chin Again on Rails-to-Trails Litigation

You may recall our recent post on the mysterious behavior of the Feds who, having lost a bunch of inverse condemnation cases regarding rails-to-trails legislation, keep on trying and losing. Click here. In a nutshell, a lot of railroad rights of way are easements, so that when the railroads stop operating, the land underlying the easement area reverts to the owner of the underlying fee title free and clear of the easement that has thus been abandoned, and therefore the owner of that land (formerly the owner of the servient estate while the railroad was operating) becomes the fee simple absolute owner of the strip of land in question. So far, so good — that much is first-year law school Property I stuff.
But congress passed a law giving the feds the right to convert these abandoned railroad rights-of-way to hiking and biking trails, which amounts to a taking of the servient owners’ land for which compensation is payable. The U.S. Supreme Court made that much clear when in Preseault v. I.C.C. it held that the aggrieved owner’s remedy for such a taking is a suit in inverse condemnation in the U.S. Court of Federal Claims. And so, the [servient] opwners of those abandoned railroad railroad rights of way have been filing these suits and consistently winning, as against the feds’ obdurate resistance.
More recently, the feds tried a new tack. They asked the Indiana courts to rule as a matter of Indiana state law that when a railroad abandons operations, its former right of way nonetheless does not revert to the servient owner, because the feds say that what they mean to accomplish is to establish “rail banking” which is to say that perhaps some day in the future somebody may want to use those abandoned railroad rights of way again for railroad use, so in a manner of speaking the current railroad operations abandonment is not a real abandonment of their easement.
They just got their answer from the Indiana Supreme Court in Howard v. United States, Case No. 94S00-1106-CQ-333, opinion filed March 20, 2012. The answer is “No.” Concluded the court:
“We hold that, under Indiana law, railbanking and interim trail use pursuant to the federal Trails Act are not within the scope of railroad easements and that railbanking and interim trail use do not constitute a permissible shiftung public use.”
So will the feds now stop beating this dead horse? We shall see.

Lowball Watch – New York

Remember the Didden case? As in Didden v. Village of Port Chester, 173 Fed. Appx. 931 (2d Cir. 2006)? Sure you do. That was the notorious case that figured in the appointment of Judge Sotomayor to the U.S. Supreme Court, that was disposed of in an unsigned opinion by a U.S. Court of Appeals panel on which she served. In a nutshell, in the court’s words

“According to Appellants, at a November 2003 negotiation session with  Defendants-Appellees G&S and Wasser, Wasser demanded $ 800,000 from them in order to avert a condemnation proceeding of their property within the redevelopment district, and offered to allow them to proceed if Defendants-Appellees were given a partnership interest in the project. Appellants refused both demands and, two days later, they received a petition seeking to condemn their property. On appeal, Appellants advance constitutional claims based on the Fifthand Fourteenth Amendments asserting, inter alia, that they have a right “not to have their property taken by the State through the power of eminent domain for a
private use, regardless of whether just compensation is given.”

The court ignored the extortionate nature of these events and ruled against Didden on limitations grounds, holding that he should have sued earlier. The court did not explain how Didden was supposed to know about the extortionate offer before it was made. The court also upheld the taking on the authority of Kelo. So much for history.

We now learn that the case eventually went to a valuation trial with the following results. Condemnor’s offer –  $975,000; condemnor’s appraisal – $1,045,000; court award – $3,062,000. That comes to over three times the offer.

A Lesson in Governmentspeak

You may recall that a few days ago, on March 11, 2012, to be exact, we had a post on misconduct of government counsel, that had been inspired by the ongoing controversy over some federal prosecutors who failed to make a required disclosure of exculpatoty evidence to the late Senator Ted Stevens of Alaska, during his prosecution – click here.

By way of follow-up, we learn from today’s Los Angeles Times (Richard A. Serrano and Kim Murphy, Lawyers Faulted in Trial of Ted Stevens, L.A. Times, March 16, at p. AA1, quoting the special prosecutor handling this affair) that the misconduct was unintentional, but that the prosecutors in question purposefully violated criminal contempt statutes. We have problems understanding this evident doubletalk because our Webster’s New World Thesaurus, indicates that “purposeful” and “intentional” are synonymous. You can take it from there.