What? Another “Motion Picture Museum”?

According to a front-page story in today’s LA Times (Mike Boehm, Movie Museum OKd, Heads to Production, June 25, 2015, at p. A1), Los Angeles is about to build a motion picture museum on Wilshire Boulevard at Fairfax Avenue. Whooppee!

But wait. What happened to the other motion picture museum that was a center of notoriety back in 1963? Nothing happened. It was never built. So what was the fuss all about back then?

It was another instance of crude abuse of the power of eminent domain, that was duly rubber-stamped by our courts. See County of Los Angeles v. Anthony, 224 Cal.App.2d 103 (1963). A group of private show biz types decided to build a motion picture museum on a site outside the Hollywood Bowl, that was occupied by the home of a tough former Marine named Steve Anthony, who challenged the condemnation of his home for what he logically contended was a private, for-profit enterprise, not a public use as required by the Constitution. Poor Steve. He was promptly tossed out of court which reasoned that his argument, even if factually correct, cut no ice because any private benefit of this enterprise was “incidental” to the public benefit of building a museum.

Alas, the museum was never built. It evidently was never properly funded, so the plans for it were the usual BS that so often may or may not bear any relationship to reality when it comes to eminent domain cases. Sort of like the wretched Kelo case in which the Connecticut city of New London sold a load of booster style “planning” that turned out to be unrealistic BS. The Kelo case is at the moment in the news again being as (a) its tenth anniversary is upon us, and (b) George Mason law professor Ilya Somin has just  published a book about that dismal failure (The Grasping Hand, 2015) that consumed over $100 million with nothing — absolutely nothing — to show for it.

If you want some background of the Anthony case, click on http://gideonstrumpet.info/?p=6524 which will tell you the story of how Anthony, convinced that the courts’ ruling was wrong, armed himself with a shotgun and confronted the sheriff’s deputies when they came to take possession of his house and evict him. For that he was convicted and actually served time. You can find this information, compleat with photographs of Anthony’s defense of his home by clicking here http://www.lapl.org/collections-resources/blogs/central-library/here-lies-liberty-steven-anthonys-fight-against-eminent

And so it goes. We wish we could say that the Anthony affair was a rare instance of the government’s poor planning, but it wasn’t. Locally, there was also the nonexistent domestic relations courthouse for which land was taken, but which was never built (Levine v. Jessup), the grandly named Los Angeles Intercontinental Airport — in Palmdale, yes Palmdale) that consumed over $170,000,000 in public funds but eventually had to be shut down because airlines wouldn’t use it in spite of government subsidies, to say nothing of the Pasadena Redevelopment project that defaulted on its bonds, etc., etc. For additional exploration of such fiascos, go to http://gideonstrumpet.info/?p=137 .

We could go on like this (and we have at times) but the bottom line is that whatever happens to the newly proposed LA Motion Picture Museum  at Wilshire and Fairfax, we ought to pause and give a thought to the outrage that was perpetrated on Steve Anthony whose home was taken from him for nothing — last time we looked it was being used for parking at the Hollywood Bowl.

Second Horne Case Decided. California Raisins – 2. Government – 0.

We didn’t have a chance to read the many opinions in this case properly when we began writing this post early in the morning, so unsurprisingly we have more to say about it now. But the bottom line remains (quoting from the court’s syllabus):

ROBERTS, C.J., delivered the opinion of the Court, in which SCALIA, KENNEDY, THOMAS, and ALITO, JJ, joined, and in which GINSBURG, BREYER, and KAGAN, JJ, joined  as to parts I and II. THOMAS, J, filed a concurring opinion. BREYER, J, filed an opinion concurring in part and dissenting in part, in which  GINSBURG and KAGAN, JJ, joined. SOTOMAYOR, J, filed a dissenting opinion.

 

So the basic news is good; the good guys won. Eight out of nine Justices agreed that the owners of the tons of raisins sought to be taken — physically seized – by the feds without compensation was clearly a taking that gave rise at the very least to an issue of compensability, with the majority finding the taking compensable and invalidating the feds’ attempt to seize Hornes’ raisins without compensation. Since the government’s position was unconstitutional, Horne was also relieved of any obligation to pay the government-imposed fine.

But we are baffled as to how so many smart people could produce so many opinions in answering the simple question whether a government physical seizure of tons of privately grown and privately owned raisins, and its exercise of dominion and control over them, is a “taking” within the meaning of the Fifth Amendment. It is. So say we and now so say eight of their Lordships, except for Justice Sotomayor whose opinion is so far out of it, that it leaves us speechless — at least for the moment — and wondering how a rational human being could utter such stuff. More about that anon.

Suffice it to say that Justice Sotomayor appears to be under the impression that a physical taking under Loretto v. Teleprompter Manhattanrequires that each and every property right be destroyed by governmental action before that action can be said to have effected a per se taking.” But the undisputed facts of Loretto were clear that what was in issue was not the destruction of “each and every” right of the owner, but the attachment of a TV cable box (not much bigger than the proverbial breadbox) to the exterior of an apartment building. That’s a destruction of “each and every property right” in the apartment building?! Huh? Or did she mean “each and every property interest” in the part of the subject property occupied by that box? And if so, wouldn’t that be contrary to the Penn Central case which says that takings jurisprudence does not divide property into segments but rather  deals with the subject property as a whole?

In any event,  we believe that such parsing of her opinion would be a waste of time because, as the Supreme Court took pains to explain in the World War II era General Motors case, a taking is the deprivation of the owner, not the accretion of any property interest to the taker, much less what the taker does with the property after its taking. And as the court emphasized in the 1954 case of Berman v. Parker, what the taker does with the property after the taking, is of no legitimate interest to the [former] property owner if he receives his just compensation. See the case law discussed in Gideon Kanner, We Don’t Have to Follow Any Stinkin’ Planning — Sorry About That, Justice Stevens, 39 Urban Lawyer 529 (2007).

The best part of the majority opinion is the Chief Justice’s sensible conclusion that “This case, in litigation for more than a decade, has gone on long enough.” Amen to that, Your Honor.

Since this case has thus gone on “long enough” the court found no need to remand it for a calculation of values, because the government had found earlier that the taken raisins were worth $483,843.53, so it could not now contradict itself, and there was no point in trying their value now. In any event, doing so would be unnecessary because the relief granted by the Supreme Court to the Hornes was a Supreme Court order relieving them of their obligation to accede to the government’s demand that they surrender those raisins to the feds or pay a $400,000+ fine. Which is the relief they sought in the first place.

Bottom line: the [partial] dissenters simply don’t understand that the right to take and compensation are two separate issues. It is possible that a case presents the court with a taking, but no compensation is payable, as most recently illustrated by the AIG (Starr v. US) case that we wrote about earlier. And if there is no right to take it doesn’t matter what the value of the subject property is because then the owner gets to keep it, and no just compensation is payable.

Afterthought: We don’t have the chutzpa to appropriate it, so we suggest you go to Robert Thomas’ blog www.inversecondemnation.com and take in the video of those California Raisins doing a victory dance.

Correction: The $400,000+ figure used in the text represented the value of the subject raisins, that the feds demanded in lieu of the Hornes’ physical delivery of them to the feds. On top of that, the feds demanded a $200,000 penalty for a total of over $600,000.

Edited 6/22/15 at 12:18 PM

Quotable Quote

We realize that for a guy who announced his intention to hold his commentary on the Horne case until after the opinion comes down (any day now) we have been going on a bit about it, but we just came across a quote that captures that case to perfection and we feel we should share it.

Oscar Wilde said that nature imitates art. One of our undergraduate professors turned us on to that line and suggested that as we go through life, we keep track of such instances, so we did. Here is an example that captures the essence of that line to perfection in the Horne case.

“In such a world [of administrative law], there is no ‘law’ – in the sense of (a) you the citizen being found by (b) a jury of your peers to be in breach of (c) a statute passed by (d) your elected representatives. Instead, unknown, unnamed, unelected, unaccountable bureaucrats determine transgressions, prosecute infractions, and levy fines for  behavioral rules they themselves craft and which, thanks to the ever more tangled spaghetti of  preferences, subsidies, entitlements, and incentives, apply to different citizens unequally. . . . No trial, no jury, just a dogsbody in some office who pronounces that you are guilty of an offense a colleague of his invented.” Mark Steyn, After America, at pp. 83-84 (2011).*

Which captures what happened in the Horne case to perfection. There, the government, purporting to act under a Great Depression era statute (that Justice Kagan characterized from the bench as the most outdated statute), said in effect to Mr. Horne: ”Give us your raisins, tons of ‘em amounting to 40% of your crop, without compensation, so we can use them to manipulate the raisin market by raising prices, and if you won’t, we — not a court — will levy a $400,000+ fine on you, which you won’t be able to contest in court  until after you pay it.”

In the first go-’round, the unanimous Supreme Court didn’t like that last part, and now (in the second go-’round) is poised to tell us if that is a taking. But what’s to ponder? Isn’t this kleptocracy? A quintessential, uncompensated, physical taking of private property forbidden by the Fifth Amendment as a per se taking? Still, we just have to sit and wait for years on end until the last moment of the court’s current term to get the answer to that oh-so-difficult question.

And when that answer finally comes down, who knows what “justification” for this meshuggas the left wing of the court will come up with?

So stay tuned.

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*     If you are not acquainted with the writings of Mark Steyn, you should be. He is a conservative writer whose books and columns are  perceptive and witty, and whether you agree with him or not, are well worth reading, if only for his acerbic style.

 

Lowball Watch — North Carolina

The Triangle Business Journal reports that in a taking case in Raleigh, the State DOT offered the owner $263,007, but eventually a jury awarded $1.2 million. The issue that divided the parties was access in the after condition. The taking partially eliminated the subject property’s driveway and eliminated 50 of 99 parking spaces for five years during the construction. See Jeff Jeffrey, Jury Awards N.C. Property Ownr $1.3M Verdicts Against NCDOT, Triangle Business Journal, June 17, 2015.

Click on http://www.bizjournals.com/triangle/news/2015/06/17/jury-awards-wilmington-property-owner-1-2m-verdict.html

 

When Is Forcing a Landowner/Developer to Provide Below Market Housing As a Condition of Permit Issuance Not an Exaction

Today, on June 15, 2015, the California Supreme Court — the court that never met a harsh land-use regulation it didn’t like — issued its opinion in California Building Industry Association v. San Jose, Docket No. S212072, which upheld a city regulation requiring developers of 20-plus unit apartment projects in San Jose to set aside 15% of the units built by them as “low cost” housing for impecunious folk who can’t afford the rents and prices in general housing, which — practically speaking means just about everybody, given the fact that housing in the San Francisco Bay area has gone through the roof.

Legally speaking, the court held that a regulation so requiring does not give rise to an exaction (because that might be a constitutional no-no under the US Supreme Court’s decisions in the Nollan and Dolan cases) but is rather a vanilla-flavored land-use regulation reviewable as any other land-use regulation; i.e., under the deferential due process standard of review, under which anything goes. To get the long, 60-plus page opinion, compleat with two concurrences (by Werdegar and Chin, J.J.) click on http://www.courts.ca.gov/opinions/documents/S212072.PDF

But if you are a maven of such stuff, you ask: what about the 2013 Koonts v. St. Johns River Water Mgmnt. Dist, case in which the US Supreme Court broadened the applicability of the unconstitutional conditions doctrine and held it improper for government to grant permits on condition that the owners pay money or do things that are unrelated to the negative impact of the private project? You can read the California court’s evasion of that holding for yourself at pp. 27 et seq. of this opinion; it’s a masterpiece of parsimonious reading of the import of Koonts.

Anyway, when it comes to inverse condemnation, nothing has changed “up there” at the state supreme court level. No property owner has ever won a case there on a regulatory taking claim, and given the court’s composition none is likely to do so.

We assume that the owners will petition the US Supreme Court for certiorari, and we hope they prevail.

One last thing. Back in 1980 (that’s over 30 years ago) California Supreme Court Justice William P. Clark, Jr., dissented in the Agins case, pointing out that the court’s extreme deference to local land-use regulations would inevitably lead to a cleavage between the wealthy housing haves and their counterpart housing have-nots. Which is exactly what happened. Particularly so in the San Francisco Bay area where San Jose is located. So the bottom line here in California is that the Legislature passes statutes ostensibly requiring that affordable housing be provided, while local government entities that issue the actual building permits, do what they can to limit availability of reasonably-priced housing and increase its cost. They don’t come anywhere near to meeting the statutory goals, as the court conceded in this case. So the predictable result is a housing shortage (at least in areas where people want to live) and a consequent upsurge in housing prices and rents.

You don’t believe us? In recent years there have been two or three Presidential Commissions studying the problem, and they concluded that the high cost of housing is brought about by the effect of government regulations, and the fact that local land regulatory entities tend to pander to the NIMBY crowd.

For today’s front page story about this case, that praises the San Jose case, see Maura Dolan, Affordable Housing Gets Court Boost, LA Times, June 16, 2015, at p. A1 (above the fold).

In the meantime, another housing bubble is being pumped up in California, and it’s only a question of time when it will pop.

The AIG Decision Is Here: Just What We Predicted, A Taking of Worthless Assets, Does Not Entitle their Owner to Compensation

We haven’t yet read the Court of Federal Claims decision in its entirety, but word reaches us that the court ruled pretty much as we predicted. It held that AIG was badly treated by the feds when they seized its stock, but it also ruled that inasmuch as AIG was then on the verge of bankruptcy, its stock was then worthless. So Uncle Sam took nothing of value and the plaintiffs are not entitled to compensation. It thus boils down to a court conclusion of no harm – no foul. Just as we predicted; see http://gideonstrumpet.info/?p=7164

The essence of the court’s ruling is captured by the following two passages:

“In the end, the Achilles’ heel of Starr’s case is that, if not for the Government’s intervention, AIG would have filed for bankruptcy. In a bankruptcy proceeding, AIG’s

shareholders would most likely have lost 100 percent of their stock value.” Slip Opinion, p. 9

*    *    *

“Particularly in the case of a corporate conglomerate largely composed of insurance subsidiaries, the assets of such subsidiaries would have been seized by state or

national governmental authorities to preserve value for insurance policyholders.” Id., p. 10

 

The Conclusion to the court’s opinion

“Based upon the foregoing, the Court concludes that the Credit Agreement Shareholder Class shall prevail on liability due to the Government’s illegal exaction, but

shall recover zero damages, and that the Reverse Stock Split Shareholder Class shall not prevail on liability or damages. The Clerk is directed to issue final judgment consistent with this opinion.”

You can get the opinion by clicking on https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2011cv0779-443-0

In other words, whatever Uncle Sam took was worthless in terms of its fair market value at the time of the taking, and therefore nothing is what the plaintiffs got.

More to come after we get a chance to read the entire opinion.

A random thought: if you want to see how the other half really litigates, go to the very end of the opinion and check out the interminable list of interested parties. Wow!

Follow-up: If you want to see how the Establishment sees this litigation, see Andrew Ross Sorkin, Surprise Ruling[*] Finds Bailout Shorted A.I.G., N.Y. Times, June 16, 2015, at p. A1. Also see Aaron M. Kessler, A.I.G. Boss Wins Suit But Loses the War, N.Y. Times,  June 16, 2015, at p. B1 (Business Section).

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*    This ruling may have been a “surprise” to the self-proclaimed mavens at the NY Times, but it was no surprise to us, as you can see from our earlier posts on this subject.

Those California Raisins Again, But It’s Still Not Quite the End

We recently made a record of our conviction that the government position in the Horne case is absurd, and that using any reasonable mode of legal analysis it ought to get tossed out of court (http://gideonstrumpet.info/?p=7401) because what is before the court is a case of physical seizure of private property (tons of raisins which the government claims a right to seize without compensation) and as such a categorical compensable taking. The owners who are defendants in a suit brought by the government, defend on the grounds that the law in question should be declared illegal as a violation of the Fifth Amendment.

We said we would await the event, i.e., the Supreme Court’s decision and see what’s what instead of speculating by reading tea leaves in the wake of the oral argument. We are sticking to our decision. But others see it differently and think a bit of speculation is warranted given the unusual history of this case (which is now before the Supreme Court for the second time). Our friend and fellow blogger Robert Thomas at www.inversecondemnation.com has just posted a very good, lengthy analysis of what things look like to him on this eve of the opinion’s release.* A good job that, and we recommend it highly.

So while we stick to our guns and choose to continue waiting as time creeps by and the end of the court’s 2014 term is nigh, we have developed some concerns. The cases that are held by the court until the very end of the term are usually that most difficult ones, on which a court consensus is difficult to obtain. But how can that be the case in the Horne case, a categorical, classic physical taking case?

As Mr. Roberts points out in his analysis, the government is not even defending the lower court’s absurd ruling (that personal property is not protected by the Takings Clause), and has suggested instead that there is no taking because the Hornes are not required to be in the raisin business, and can do something else. If this sounds idiotic to you — though some courts have actually said it — it is indeed absurd on its face. Can you imagine someone arguing in an analogous case that, say, a newspaper is not entitled to First Amendment protection because nobody forces it to be in the newspaper business so maybe it should make wheelbarrows instead.

Anyway, we resist the temptation to get into the “merits” of the government’s idiotic arguments, and will stick it out to the end when the Horne opinion comes down. Still, the fact that it’s taking their Lordships all that time, and they are taking it down to the wire, does not bode well. So we’ll just have to stick it out because, for the record, we are a member of the pessimist tribe who believe that blessed are the pessimists for they shall not be disappointed.

So stand by. It won’t be long now.

 

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*     If you are not a Supreme Court junkie, be advised that opinions in cases argued during the court’s term (October through June) are filed by the end of June when the court takes its summer recess. So being as today is June 13th, the end is near and all opinions in argued cases (which include Horne) are about to be sprung on us any day.

Lowball Watch — Georgia

We are informed that the Georgia City of Sandy Spring has settled a condemnation action it brought, for twice the original offer. The case is City of Sandy Springs v. 2.97 Acres, Superior Court, Case No. 2015CV255755, Fulton County.

The city first offered $3.5 million, but eventually settled for $7 million.

California Choo-Choo (Cont’d.)

This one, you’ll have to read to believe, folks. And to get an idea of what the current route controversy in the San Fernando Valley is about, do read Ralph Vartabedian, Backlash Over Bullet Train Route, Los Angeles Times, June 9, 2015, at p. B1. It will tell you in some detail who the contending parties are and what their fight is about. Suffice it to say here that, as is the usual case, the proposed route of the planned “Bullet train” would go through the downscale Valley communities, like San Fernando, Sylmar and Pacoima, whose inhabitants are taking a dim view of being put in the path of the new high-speed rail line with its 200 mph trains. Even after you read what follows here, there will be more to come within a week or so when the railroad planners address the route planned to cut across the Valley on its way to Burbank.

It seems that the California “Bullet Train” honchos decided to hold an initial public hearing on the route segment running through the North San Fernando Valley, a suburban Los Angeles bedroom area. Of course, as is usually the case, the proposed route(s) would run through the more downscale Valley communities, notably the city of San Fernando which is up in arms over the prospect. But in a noteworthy instance of the “rabbits shooting at the hunters,” as a French politician once put it, San Fernando isn’t about to be rolled over without a fight.

To the surprise of the would-be railroad builders, the San Fernando types showed up at the hearing represented by its Mayor and other officials, compleat with its own public address system and if we read this stuff correctly, with its own police force. Hoo boy!

Long story short, these folks gave the railroad types an earful, along the line of not wanting to tolerate the new railroad line bisecting their community by sound walls built along the railroad right-of-way, and the consequent loss of some $1.3 million to the community. “[Y]ou are not really welcome,” said the San Fernando Mayor pro tem.

At this point, three alternate routes are being considered, some of which would require tunneling 20 miles under the San Gabriel Mountains, at a depth of  60 feet under the 5 Freeway, and — are you ready? — would cross the San Andreas fault below ground, and near Palmdale  above ground.

And so it goes. We can’t wait to see how it all turns out, and we await with anticipation the next “hearing” scheduled for June  9th, where — so it has been announced — those who wish to address the railroad folks will be given the generous amount of time of 90 seconds. Each.

Read all about it, in Ralph Vartabedian, Feeling Railroaded: San Fernando Leaders Say Planned Route Would Destroy Community, L.A. Times, May 30, 2015, at p. B1, and stand by for the next public meeting. It should be quite a show.

Treat Property Owners Ethically? What’ll They Think of Next?

We were amazed to learn from the Pacific Legal Foundation Liberty Blog that there is an organization out there named — are you ready? — People for the Ethical Treatment of Property Owners.

Being a Californian and thus an inhabitant of a place where property ownership, notably in the form of undeveloped land, is disfavored even if not yet a crime, we sure recognize the need for such an outfit and  think that its emergence as a litigant is a good thing. But the fact that there is a need for such an outfit — and there sure is — is depressing.