Why People Are Leaving Los Angeles

Though it does not receive much coverage in the press, people are leaving LA, while investors, often foreign, are snapping up individual homes at outlandish prices in order to rent them out at fancy new rents, or as a place to park their money safely, as contrasted with their home countries where safety may be debatable.

Apartment buildings are going up in Los Angeles, but rents are high and the pace at which they are going up is not sufficient to take care of the demand. The locals who sell and move out do so because they find the rising cost of housing increasingly financially unmanageable. See Want to Live in Orange County? It’ll Cost You $1,848 a Month for an Apartment – an All-Time Average High, Orange County Register, July 15, 2015. For another recent article dealing with  this problem, see http://www.laweekly.com/news/why-people-really-leave-los-angeles-or-any-other-big-city-5785769

Lowball Watch — Minnesota

The Winona Post of July 13, 2015 (Chris Rogers, Mn/DOT Settles With Winona Leasing) reports that after the Minnesota DOT offered Winona Leasing $600,000 for its land on which a car rental business was conducted, the offer was rejected and eventually, Mn/DOT settled for $900,000. The trial court also awarded the owners $32,000 in attorneys’ fees in spite of the fact that the owner’s contract with his lawyers called for a fee of one-third of the overage, or $100,000.


Guess What? Atticus Finch Turns Out to be no Moral Superhero, But Only a Man of His Times.

As the Romans had it, tempora mutantur et nos mutamur in illis, and here is an illustration of their wisdom: things that are deemed admirable in the 21st century are not the same as they were in the 1950s.

If you do any reading and, particularly, writing on subjects related to lawyers, trials and the morality thereof, to say nothing of race relations in America, it is now de rigeur to offer a head-shaking comment deploring the startling development that the newly discovered Harper Lee novel, Go Set a Watchman, depicts Atticus Finch, the saintly lawyer-protagonist of To Kill a Mockingbird, not as a moral giant but as an ordinary Southern gentleman who was hostile to desegregation even in the wake of Brown v. Board of Education. Finch, played by Gregory Peck in Mockingbird, as you may recall, was the soft-spoken, dignified defense lawyer who wore a vest with his seersucker suit in the stifling summer heat of Alabama, and, braving the hostility of his neighbors, defended a black man who had been falsely charged with the rape of a white woman, an accomplishment that made Finch a durable hero of legal tradition.

But now, in Go Set a Watchman (a sequel to Mockingbird) Finch turns out to be, not the moral giant we were led to believe he was, but only a flawed human being influenced by the ideas and mores of the society in which he lived, who didn’t think that Southern blacks of his day were “ready” for full integration into the American majority white society. So what? Which is not to say that we are about to defend the old Jim Crow South. Hell no! But even so, Finch’s critics miss an important professional point.

We — we lawyers, that is — need to be reminded periodically that we represent a client’s interest in a case, not the client as a person. Thus, counsel who defend murderers do not thereby endorse murder, and it is in the finest legal tradition for a lawyer to defend or otherwise represent people who may be despised by the community in which they live, but who still have legal rights that a principled society must enforce at its peril. That may not be “nice” in some abstract moral sense, and a lawyer always retains the right to decline representation of a client whose activities he or she finds so repugnant as to impair his ability to do a good job. But neither is there anything professionally-ethically wrong with a lawyer’s decision to accept the representation and to represent the bad guys. The vice versa is also true: a lawyer is free to represent the position of a moral client irrespective of a redneck community’s hostile feelings. As our sainted USC law professor Vic Netterville explained to us over 60 years ago, you don’t go to law school to learn how to be a nice guy — or a conformist.

So we wish to make the unremarkable point that there is a huge difference between  lawyers’ subjective, personal beliefs and the values of their clients, however noble or morally repugnant the latter may be.

Anyway, that’s what our betters taught us in law school, and our decades of practice have only reinforced that bit of teaching. As it turns out, Atticus Finch was a flawed human being as are most of us. And don’t forget that he was also a crack shot who could dispatch a mad dog with a single shot from a block away, which, one supposes, made him a Second Amendment aficionado as well as a fan of the 14th Amendment, as well as an effective courtroom lawyer who could ably represent a client who was despised by the community.



Cities vs. Suburbs: Joel Kotkin Tells It Like it Is. Again.

We can’t do better than to quote from Joel Kotkln’s latest:

“Theoretically, the suburbs should be the dominant politically force in America. Some 44 million Americans live in the core cities of America’s 51 major metropolitan areas, while nearly 122 million Americans live in the suburbs. In other words, nearly three-quarters of metropolitan Americans live in suburbs. [ ] Yet it has been decided, mostly by self-described progressives, that suburban living is too unecological, not mention too uncool, and even too white for their future America. Density is their new holy grail, for both the world and the U.S. Across the country efforts are now being mounted—through HUD, the EPA, and scores of local agencies—to impede suburban home-building, or to raise its cost. Notably in coastal California, but other places, too, suburban housing is increasingly relegated to the affluent.” Joel Kotkin, Countering Progressives’ Assault on Suburbia, Real Clear Politics, July 10, 2015.


Kotkin’s conclusion:

“In the coming year, suburbanites should demand more respect from Washington, D.C., from the media, the political class and from the planning community. If people choose to move into the city, or favor density in their community, fine. But the notion that it is the government’s job to require only one form of development contradicts basic democratic principles and, in effect, turns even the most local zoning decision into an exercise in social engineering.”


So in the end, it’s a matter of individual choice which, in a free society, should be determined by people’s decisions where and how they wish to live, not by bureaucrats imposing lifestyles by fiat.

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.


*     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).


*    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.