Category: Uncategorized

Dispatch from La-La land

There is a typical California kerfuffle going on on the California coast near Half Moon Bay (south of San Francisco). A successful tech mogul named Vinod Khosla bought a 90-acre beachfront parcel that the previous owner permitted to be used by the public upon payment of a fee. But upon acquiring the land, Mr. Khosla closed public entry to this beach with expectable consequences. The locals threw a tantrum, demanding that “their” access to Mr. Khosla’s beach be provided.

This being California, the locals demanded that the state acquire the beach and make it public so they can use it. But they ran into several problems. First, no state agency is eager to plunge into this battle, since none has a dog in this fight. The likely candidate for acting as condemnor is the State Lands Commission which lacks the power of eminent domain. So appropriate legislation has been introduced and is pending, But where will the money come from to pay Khosla’s just compensation? Here things take a turn into black comedy. The State thinks of paying $360,000 for 6.4 acres out of Khosla’s 90-acre holding, and it purports to be serious, even though in that part of the state you can’t buy a dog house — literally — for that kind of money, much less a multi-acre beachfront parcel of land. Khosla thinks his parcel is worth $30 million, but the state is allocating $1 million for the acquisition of the 6.4-acre part of it.

In short, this caper has all the makings of another one of those California cases in which a condemnor bites off more than it can chew — like the famous DOT v. So. Cal. Edison case where the state deposited $240,000 for the taking of an Edison transmission corridor only to get hit with a $49.5 million judgment that was summarily upheld by the state Supreme Court.

So let’s stay tuned and see how it all turns out. It should be a good show for eminent domain mavens, and lots of employment for specialized lawyers.

For the latest doings in that controversy, see Angela Hart, California Moving to Seize Public Beach Closed off by Tech Billionaire, Sacramento Bee, June 19, 2017.
http://www.sacbee.com/news/politics-government/capitol-alert/article156697154.html?utm_source=dlvr.it&utm_medium=twitter

What’s Wrong With Regulatory Takings Law? Are Some of these Decisions in Good Faith?

A friend sent us the new opinion of the Florida District Court of Appeal (5th District) in Town of Ponce Inlet v. Pacetta, LLC, Case No. 5D14-4520, filed June 16, 2017. Though probably unintended, this opinion provides an excellent example of what is wrong with regulatory taking law, and reveals that courts can be either incompetent or not acting in good faith when they decide these cases. Here is the opening paragraph of the Pacetta opinion:

“The parties in this case make their third appearance before the court. In this appeal, the town of Ponce Inlet (“Town”) appeals a multi-million-dollar second amended final judgment entered following a jury trial on damages arising from an inverse condemnation claim as well as an earlier order resulting from a bench trial on liability (“liability order”) that found in favor of the Appellees . . .”

So after three trials and opinions by judge and jury, and after three appeals you’d think that courts acting with minimal competence and in good faith would get the issue of liability right Yes? No.

We won’t go through the whole history of this litigation; you should read the opinion if you want to get into the whole megillah. Suffice it say here that this opinion ends with holding against the property owners on their Lucas — complete taking theory — and remands the case to the trial court for yet another trial on liability, and damages (if appropriate). Which seems to us as a deliberate judicial strategy to exhaust the property owner and deplete his resources without ever reaching the elusive “real” merits of the controversy. Legal tradition admonishes lawyers to respect judicial decisions, but this . . .?

A while back your faithful servant wrote an article entitled Hunting the Snark, Not the Quark: Has the U.S. Supreme Court Been Competent in its Effort to Formulate Coherent Regulatory Takings Law? 30 Urban Lawyer307 (Spring 1998). With a title like that you can probably guess that our answer was “No!” But dig it up anyway and read it (or re-read it as the case may be) and see for yourself that our negative assessment of the court’s handiwork in this field rested, and still does, on a sound foundation. It is increasingly apparent that things have gone beyond mere judicial incompetence, and it is increasingly proper to question the judicial good faith in these controversies — if that term may be properly used.

Now, almost two decades later it has become all too clear that the evident judicial rationale in these controversies is frequently not a resolution of legal disputes, but rather the creation of a spider-web-like labirynth in which to trap constitutionally aggrieved, faultless property owners whose “sin” is a desire to use their seemingly constitutionally protected property for socially constructive purposes, like creating badly needed housing. They get taxed on its value for its highest and best use, but as it turns out they can’t use it at all for any economically rational purpose.

And this isn’t just our opinion. Check out the torrent of invective pouring out from the scholarly community, that characterizes judicial performance in this area of law as including characterizations ranging from “worse than chaos” to “deceptive” and “absurd,” uttered by commentators on both sides of the issue. See 36 Urban Lawywr at 702-703.

Legal tradition calls for respecting judicial decisions. But respect has to be earned.

Decline of the Malls – Chickens Coming Home to Roost

A while back we posted an item about cities putting up shopping malls, using public funds (in the form of proceeds of municipal revenue bonds), and we expressed our doubts about the soundness of this practice, being as malls are inherently private commercial enterprises, dressed up as “public use” in order to meet the limitation of the Fifth Amendment to the Constitution. We thought, and still do, that this practice is ridiculous — an anchor department store and its usual gaggle of satellite chain shops is no more of a public use of land than any other privately-owned merchandizing effort.

But the courts have been consistently swallowing such municipal mummery, and rubber-stamping takings private property for such projects as being for “public uses. But in fact, they are — private, not public merchandizing operations misusing the power of government to wrest desired property from its rightful owners for transfer to private developers. But to their credit, not all judges went along with this charade. The highest courts of several states said “No!” California was not among them, but Justice Macklin Fleming, then on the California Court of Appeal delivered a needed lecture about the hazards of such activities in Regus v. City of Baldwin Park, 139 Cal.Rptr. 196, (1977), pointing out the obvious — these were private merchandising operations, not public uses. Quoth Justice Fleming:

“[U]nrestricted use of redevelopment powers fosters speculative competition between municipalities in their attempts to attract private enterprise, speculation which they can finance in part with other people’s money. When the extraordinary powers of legislation designed to combat blight and renew decayed urban areas are used as a fiscal device to promote industrial, commercial, and business development in a project area that is merely underdeveloped rather than blighted, competitive speculation may be turned loose. By misemploying  the extraordinary powers of urban renewal a redevelopment agency captures pending tax revenues which it can then use as a grubstake to subsidize commercial development within the project area in the hope of striking it rich. Such schemes contemplate borrowing money by issuing bonds on the strength of assured future tax revenues, money which is then used to acquire, improve, and resell property within the project area at a loss as an inducement to business enterprises . . . to locate within the project area rather than in neighboring communities. In essence, tax revenues are used as subsidies to attract new business. The immediate gainers are the subsidized businesses. The immediate losers are the taxpayers and government entities outside the project area, who are required to pay the normal running expenses of government operation without the assistance of new tax revenues from the project area.”

”The promoters of such projects promise that in time everyone will benefit, taxpayers, government entities, other property owners, bondholders; all will profit from increased development of property and increased future assessments on the tax rolls, for with the baking of a bigger pie bigger shares will come to all. But the landscape is littered with speculative real estate developments whose profits turned into pie in the sky; particularly where a number of communities have competed with one another to attract the same regional businesses.”

Now, Fleming’s warning has come about. The landscape is now littered with declining and failed malls. Today’s Los Angeles Times, June 4, 2017, at p. B1, carries an article by Steve Lopez, entitled Reimagining the Mall, reporting that while a few malls are still prospering, many others are circling the drain and, faced with growing vacancies, are shutting down. Just as Justice Fleming foresaw, they are falling victim to competition, although the competition is taking the unforeseen form of on-line sales. Who wants to endure the hassle of schlepping to a far-away mall, parking and then, laden with packages like a camel, staggering back to the car for a trip home, when without leaving the comfort of one’s easy chair, one can hit a few computer keys and have one’s purchases delivered to the front door?

So when you get a chance raise a glass and toast the memory of Mack Fleming who saw the future and shared it with us.

One more loose end: will the courts now come to their senses and join the supreme courts of Michigan and Illinois, and say “No!” to further abuses of the power of eminent domain, and sensibly note that the conjectured “public benefits” of building private malls with public funds, to generate private profits, are no more a “public benefit” — and certainly no “public use” — than other ways of transferring public funds into the pockets of well connected types. And who is now going to pay off the outstanding bonds issued in the past by cities to finance all those belly-up malls?

Entertaining New Article

If you are into inverse condemnation in general and inverse condemnation as applied to airport operators in particular, we recommend a new article by Michael Berger who is the foremost inverse condemnation litigator, and who was heard from in every modern airport case heard by the California Supreme Court in recent decades, and in a half-dozen or so non-airport inverse taking cases considered on the merits by the US Supreme Court.

The article is semi-autobiographical, which gives Berger’s writing a nice personal touch — none of the usual opaque professorial babblings in this one. It’s both informative and entertaining. Go to http://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1969&context=law_journal_law_policy

If you are still using paper, it’s Michael M. Berger, The Joy of Takings, 53 Wash. U. Jour. of Law & Policy 89 (2017)

 

Lebensraum for Muslim Refugees in Germany

A dispatch from Germany has reached us, indicating that the city of Hamburg is expropriating apartments, taking them from their German owners to provide housing for Middle Eastern Muslim refugees who have been pouring into Germany at the rate of hundreds per day, with the blessings of the German government. The apartments will be renovated upon taking, but — get this — the cost of renovation will be charged to current apartment owners. This dispatch is silent on whether anyone — notably the refugees — will be paying any rent to the condemnee-owners. See Soeren Kern, Germany Confiscationg Houses to Use for Migrants, Gatestone Institute, May 15, 2017. See https://mail.google.com/mail/u/0/#inbox/15c071f6459bb092

This bit of Enteignung is complicated by the fact that the apartments in question have been sitting vacant, with no indication as to why their owners were not using or renting them. Also, the German constitution provides for the exercise of eminent domain for public benefit and upon payment of just compensation. So chances are we will hear about this bit of German kleptocracy.

We’re Back!

As you can see, after a couple of weeks of cyber-misadventures, that inexplicably substituted some other completely unrelated blog for Gideonstrumpet.info, we are back on line.

All appears to be well now. Stand by.

 

Lowball Watch — Louisiana

An acquaintance sent us a copy of a judgment which discloses that on a condemnor’s deposit of $335,287, a Louisiana trial court awarded $1,397,500, plus interest on the $1,o62,213 difference. The County of Concordia, or the parish as they call it over there, vows to appeal.

Biglane v. Board of Commissioners, Docket No. 44712-B, judgment filed on April 25, 2017.

. . . But a Cigar Is a Smoke

 

In the words of the late Jimmy Durante, “Everybody wants to get into the act!”

 

Espinosa Cigars Eminent Domain

The cigar company says that “Eminent Domain” is being released in a single 6 x 50 toro vitola, priced at $9.50 per cigar and packed in 10 count boxes. The company is not disclosing the blend of the cigar, other than to say that the wrapper is a “rustic habano” and that it is a medium bodied cigar.

 

 

 

And the Winner Is . . .

We are pleased to note that the winner of the 2017 Brigham-Kanner property rights prize awarded annually by the William & Mary law school in Williamsburg, Virginia, is Professor David Callies of the University of Hawaii law school.

The Brigham-Kanner prize is awarded to individuals with an outstanding record of achievement in the field of property rights.

Murr Oral Argument: A Parade of Judicial Confusion

When I argued the regulatory taking case of Agins v. City of Tiburon, back in 1980, it was the considered opinion of knowledgeable observers that the members of the court (with the possible exception of Justice Potter Stewart) simply didn’t understand  what the case was all about. Though they ultimately ducked the tendered issue of remedies on ripeness grounds, they evidently thought that the controversy before them had to do with deprivations of property without due process of law — not regulatory takings. And adding insult to injury, their eventual ripeness decision contradicted a earlier holding in Euclid v. Ambler without mentioning it, even though it was explicitly brought to their attention. In short, it was a mess which the court eventually had to overrule (in Lingle v. Chevron where they also explained how they were confused by arguments of the US Solicitor General).

Now, over 30 years later, after checking out the intellectual disaster that unfolded before the Supreme Court this week in the form of the oral argument in Murr v. Wisconsin (the latest regulatory taking case to come before the court on the merits), one is left to wonder if things have improved in terms of the Justices’ understanding of this field of law.

The issue in Murr  v. Wisconsin seemed simple, but you must not underestimate their Lordships’ capacity for confusing things in takings cases. The question this week was: where the Murr family owned two adjacent, separately taxed lots, bought at different times; one built out with their family home, and the other one vacant, was it permissible for the local land-use regulators to treat both lots as one, and then take the position that therefore being forbidden to build anything on the vacant lot was not its regulatory taking. The lower court used the absurd Penn Central assertion that “takings jurisprudence” does not divide a parcel into segments,* so a regulatory taking of some of it is no taking, and carried it to a reductio ad absurdum conclusion that even if the taken part is a legal, separately taxed lot complying with local zoning, and it is deprived of all utility by local regulations — which would be a total taking under the Lucas case if that lot were standing alone — is no taking at all. In other words, the Wisconsin courts thought that when the taken ground is adjacent to the owners’ other land, what would otherwise be a taking, isn’t. Got it? If you don’t, please don’t feel bad about it, for as Justice Stevens put it: “even the wisest of lawyers would have to acknowledge  great uncertainty about the scope of this Court’s takings jurisprudence.”

So in Murr, the Justices got all tangled up in an issue of direct, not inverse, condemnation law, having to do with what constitutes a “larger parcel” in a partial direct taking of a part of the condemnees’ property, where liability for a taking is conceded and the only question is whether severance damages are payable — whether the two parcels in question are so intertwined by use and title, that the taking of one damages the other, requiring payment of severance damages. For an example of that sort of case see City of San Diego v. Neumann, 6 Cal.4th 1 (1993). What that could possibly have to do with the question of whether a high degree of regulatory interference with the use of a vacant parcel amounts to its taking — is an entirely different subject.

If you want an explanatory insight into the intellectual chaos the oral argument in this case represented, please go to www.inversecondemnation.com , the premier blog on takings law, run by our colleague Robert H. Thomas who is an experienced appellate lawyer in this field, and is both knowledgeable about the law and candid in assessing judicial handiwork. Check out his blog post of 3/21/2017 entitled Affirmed By an Equally Confused Court? Some Thoughts on the Oral Argument in the “Larger Parcel Case.” http://www.inversecondemnation.com/inversecondemnation/2017/03/affirmed-by-an-equally-confused-court-some-thoughts-on-the-oral-arguments-in-the-larger-parcel-case.html

We refrain from duplicating his effort here because we doubt that we could improve on his work in this case, meticulously dissecting the absurdities uttered by the Justices — you just have to read ’em for yourself. By the way, Justice Thomas, as is his wont, prudently kept quiet so we cannot say what was on his mind.

Bottom line: While takings law has improved a bit in the past decade (albeit in easy cases where the taking was obvious), the Murr disaster suggests that we a are not yet out of the judicially-created intellectual woods. As the late, great Arvo Van Alstyne, California’s leading expert on government liability put it way back in 1970:

“Judicial efforts to chart a usable test for determining when police power measures impose constitutionally compensable losses, have on the whole, been notably unsuccessful.  With some exceptions, the decisional law is  largely characterized by  confusing and incompatible results, often explained in conclusionary terminology, circular reasoning , and empty rhetoric.”**

Looks like things haven’t changed all that much.

______________

*Penn Central made that statement by naked assertion out of the blue, without citation of any supporting legal doctrine, authority or explanation. Actually, most federal takings have been of easements which are quitessentially partial takings, qualitatively and quantitatively. If you want to explore Penn Central’s many absurdities, we immodestly recommend our article, Gideon Kanner, Making Laws and Sausages: A Quarter-Century Retrospective on Penn Central Transportation Co. v. City of New York, 13 Wm. & Mary Bill of Rights Jour. 679 (2005).

For the real state of the law on this point see United States v. Grizzard 219 U.S. 180 (1911).

** Arvo Van Alstyne, Taking or Damaging by Police Power, 44 So. Cal. L. Rev. 1, 2 (1970).