Monthly Archives: April 2008

The Perils of Pauline – Take Four

It occurs to us that our younger readers may not be familiar with the term “The Perils of Pauline,” so we better explain. It was an old movie serial — a film with a story line stretchnig over multiple episodes. Pauline was the heroine who at the end of eaxh episode always wound up in peril, like being tied to railroad tracks with a train coming. She was always rescued at the last moment — in the next episode, so the movie makers kept the audience in suspense, and you had to go to the movies every week to find out how it all came out.

It has been sort of like that with the New London redevelopment project that gave rise to the wretched Kelo case. When last we blogged on that subject, on December 11, 2007, Corcoran-Jamison,  the redeveloper in charge of the Fort Trumbull project ‘fessed up:  after several years of planning, it had not been able to secure financing for the redevelopment project, and had to ask for an extension of time until the end of May to give it time to go schnorring to the feds, imploring them to cross its palm with silver so it could build some upscale, top-of the-market dwellings to replace the lower middle class neighborhood that the city of New London acquired for it by eminent domain and then destroyed to make room for its fancy planned redevelopment. 

The end of May is not yet upon us, but the New London folks figure that what with the economy going into the toilet and all, it appears unlikely that the funds will become available.  The New London newspaper, The Day, reports in an article by Kevin Dale (Fort Trumbull Housing Plan in Jeopardy) that New London’s redevelopment agency (NLDC) figures that it’s unlikely that Corcoran-Jamison will get its hands on the funds necessary for the project to proceed. So these folks are talking about “creative financing” — a term that usually causes us to grab our wallet whenever we hear it, to make sure it’s still there — whereby Corcoran-Jamison would kick in some $4 million of its own funds on top of the loan, and proceed that way. But the problem is that according to the Day article, even that will leave a $3.5 million gap in financrng, that no one in sight is eager to fund. And so it goes.

What makes this saga of delay and ineptitude particularly galling is that when the Kelo case was in the Supreme Court, New London carried the day by persuading the Justices that it had these wonderful, thoroughly vetted redevelopment plans, prepared by experts, so that the Court could rely on the city’s representations, and approve the taking of the homes of Suzette Kelo and her neighbors for the sake of this wonderful municipal plan. Now it turns out, the “plan” is a triumph of hope over reality, that shows little promise of materializing. The municipal planners behind this plan, who gave such expansive planning assurances to the Supreme Court, can’t even find the financing necessary for their “expertly planned” project.

That leaves one loose thread. Given these facts, aren’t the Supreme Court Justices who inflicted the Kelo atrocity on the country ashamed of themselves?  Aren’t they angry over having been snookered into approving  in this fashioon a supposedly well planned project that — now we learn — can’t even get off the ground for lack of financing? True enough, no one can hold the Justices accountable for the city’s ineptitude, but shuldn’t they at least provide a minimally effective standard of review so chances for things like that happening are minimized?

Many years ago Justice Musmanno of the Pennsylvania Supreme court observed in an eminent domain case in which the right to take was being challenged, that “The genius of our democracy springs from the bedrock foundation on which rests the proposition that office is held by no one whose orders, commands or directives are not subject to review.” Winger v. Aires, 89 A.2d 521, 522 (Pa. 1952).  Those who disregard that civic verity are courting the kind of human tragedy and economic disaster that has been unfolding in New London as the aftermath of the Kelo case — a middle-class community scattered to the four winds, and over $70 million in public funds blown, with nothing to show for it thus far.

Update: The May 1, 2008, editorial entitled No More Second Chances, in The Day, calls upon the City of New London to grant no more extensions to the current redeveloper, to select a new one and restart from scratch if financing is not obtained within the present, already extended, deadline of end of May.

Unequal Justice Under Law

Check out the new law review article, Gideon Kanner, “[Un]equal Justice Under Law”: The Invidiously Disparate Treatment of American Property Owners in Taking Cases, 40 Loyola of L.A. Law Review 1065 (Spring 2007). It discusses various anomalies and inconsistencies in eminent domain and inverse condemnation law, and the raw injustice in the treatment of American property owners whose property is being taken ostensibly for “public use,” but often for private enrichment. For example, did you know that American property owners whose property is taken are not entitled to due process of law? It’s true. See  pp. 1083-1087 of the above article.

The article is based on the author’s lecture at the 2006 annual Brigham-Kanner symposium on property rights at the William & Mary College School of Law in Williamsburg, Virginia.

It concludes: “It was said of the Holy Roman Empire that it was neither holy, nor Roman, nor an empire. In like veim, it can be said of eminent domain law requiring the payment of ‘just compensation’ upon taking of private property for public use, that the use need not be public and the compensation is not just.” pp. 1133-1134.

 Check it out.

Heads, I win — Tails, You Lose. It’s the Law in California

Imagine a situation in which a property owner has decided to improve his vacant land in accordance with its existing zoning. So he gets financing, hires engineers, architects and planners, gets them to do their thing, lines up contractors and is ready to pull his permit when — whammo! — a condemnation action is filed to take his land. What now?

The condemning authority takes the position that there are no improvements on the subject property and it should therefore be valued as vacant land, allowing for its highest and best use as suitable for development. But the owner responds by arguing “Wait a minute! What’s this ‘vacant land’ business? Sure enough,” says he, “my land is unimproved but I have complete plans for its development with no need for any discretionary approvals, and surely that fact increases the market value considerably since buyers in the market will pay extra for land that’s ready for development, and not have to start from scratch with raw land.”

That makes sense to us, and maybe to you, readers, but not to California judges.

California law holds that “[e]vidence as to what the owner intended to do with the land cannot be considered.” People etc. v. LaMacchia, 264 P.2d 15, 24-25 (Cal. 1953)  Thus, owners with realistic, imminent development plans get screwed by receiving “just” compensation that does not take those plans into account in spite of the fact that they add to market value.

But what happens when the shoe is on the other foot? In City of Fremont v. Fisher, 160 Cal.App.4th 666, 687 (Cal.App. 2008) the owner claimed temporary severance damages, but the court denied them, holding that their availability depends on whether the owner had imminent plans to develop his property. In Fisher, he did not, so the court denied temporary severance damages.

So here is California law, folks. Where the owner does have imminent development plans, he may not present them in evidence because they are irrelevant. But if he doesn’t have such plans, they abruptly become relevant, their absence may be considered, and it becomes a basis for denial of temporary severance damages.

Heads, I win — tails, you lose. It’s the law, you know. California law.

It’s Not for Big Business, Folks — It’s for the Likes of Poor Hot Dog Vendors

            When you practice, teach and write about the law of eminent domain for a while, it kinda makes you think.  After 40 years of doing that, we have concluded that there is some sort of evil black magic about this field of law that makes otherwise brilliant and revered people say silly things. You don’t believe us? Try this one. The Republican, a Springfield, Massachusetts newspaper of April 9, 2008, reported a visit to the U.S. Supreme Court by a group of local students, and their chat with Justice Breyer, as follows. We quote in haec verba; 

“Suzanna Strempfer, a senior from East Windsor, Conn., asked Breyer about the recent Kelo vs. City of New London decision, in which the court agreed that the town of New London could lawfully condemn Kelo’s home so that the land could be used by a private developer. Asked if he thought that decision would open the door for abuse by private industry, Breyer said there is always a private aspect to any government taking of property for a public purpose, giving the example of a city building an athletic stadium – obviously a public purpose – that would, as a byproduct produce jobs for private industry, such as hot dog vendors gaining a new venue for selling their products.”

Abuses? You want to see abuses? Take a look at the artcle about Port Chester, New York, by Professor Richard A. Epstein, entitled The Taking of Port Chester, FORBES, March 29, 2008, at p. 40. If the Port Chester caper described by Epstein isn’t exemplary of abuse of the power of eminent domain, what is? Since the Supreme Court refused review in that one, we are left to wonder what it would take for Justice Breyer to understand the concept. 

We’ll bet that mega-developer Bruce Ratner can’t wait to build his $3 billion Atlantic Yards Brooklyn redevelopment project, including a new stadium for his baseball team, so those poor local hot dog vendors can make an extra buck. Increasing hot dog sales in a professional sports stadium is a public use, you know — it says so right here in the Living Constitution. But be careful about selling Hebrew National kosher wieners to baseball fans because the folks who make them (the wieners, not the fans) say that they answer to a Higher Authority — so selling those under the aegis of public use  might give rise to a violation of the Establishment Clause. You never can tell what the Living Constitution may say next.

Trial by Jury: A Bulwark of Our Liberties, or a Loathsome Social Disease?

Among the junk mail that keeps arriving in our P O Box we found a flyer advertising an upcoming trial advocacy program that prominently features a bon mot by Thomas Jefferson: 

“I consider trial by Jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.” 

Sure enough, that sentiment is a hallowed principle of American law and the stuff of civics lessons. The Seventh Amendment to the Constitution preserves the right to trial by jury as it existed in Britain in the late 18th century when American colonies gained their independence and the Constitution was adopted. But for all the familiar lofty prose about the virtues of trial by jury, once you find yourself in an eminent domain case, whether direct or inverse, all of a sudden, the idea of entitlement to a trial by jury is viewed by the courts as utterly preposterous. Oh sure, a number of state constitutions do provide for a trial by jury in eminent domain, but those state constitutional provisions were adopted to grant condemnees the right to jury trials that was denied them by judges.

If you examine pertinent decisional law you will quickly discover that state courts disfavor the right to trial by jury in eminent domain and inverse condemnation cases and construe this right narrowly. Notwithstanding its state constitutional origins, courts hold that unlike juries in other cases, eminent domain juries are limited to deciding only questions of value, rather than all issues of fact as in other cases. In eminent domain cases tried in federal courts there is no right to a trial by jury at all — not even on the issue of value. Under Federal Rule of Civil Procedure 71A, federal courts may deny jury trials and submit valuation issues to Commissioners. 

So the question is: how come? How do the federal courts evade the plain language of the Seventh Amendment that preserves the right to a trial by jury, which they observe in all other cases? 

If you seek enlightenment in treatises on eminent domain, all you get is confusion.  The preeminent multi-volume treatise, Nichols on Eminent Domain tells us (Vol. 1A, § 4.105[1]) that the procedure whereby the British government acquired privately owned land for public works, did not use common law juries, so there is nothing to preserve. According to Nichols, only jury-like bodies similar to our commissioners were used in a procedure known as “inquest of office.” The Nichols treatise cites Vol. 2 of Blackstone’s Commentaries at p. 259 in support of its position, but if you look up Blackstone, is says nothing of the sort. The inquest of office procedure had nothing to do with compulsory purchase – it was a medieval procedure used in cases of escheat or forfeiture of feudal estates. Similarly, the writ of ad quod damnum referred to by Nichols had nothing to do with government land acquisition. On the contrary, it was a procedure which facilitated relinquishment of land from public to private use. 

The other leading American eminent domain treatise, Lewis Orgel’s Valuation Under Eminent Domain (Vol.2, at 268-271), disagrees with Nichols. It says that juries were used in British eminent domain (or as the Brits call them, compulsory purchase) cases, and were not abolished until after World War I, when the Acquisition of Land (Assessment of Compensation) Act was enacted in 1919..  

So who is right?  

If you check British law, Orgel gets the nod. The British Court of Appeal case, De Keyser’s Royal Hotel v. The King, (1919) 2 Ch. at 222, inquires into British legal history as far as trial by jury in compulsory purchase cases is concerned, and concludes: 

“The second period [of compulsory purchase litigation] begins in 1708.  It appeared to be fully recognised that the land of a subject could not be taken against his will, except under the provision of an Act of Parliament. Accordingly, in 1708, was passed the first of a series of Acts to enable particular lands to be taken compulsorily. By the statute of 7 Anne c. 26, which recites that it was necessary to enlarge and strengthen the fortifications of Portsmouth, Chatham and Harwich, and to purchase land for the purpose, and that some proprietors desiring to make an unreasonable gain to themselves might insist on extravagant rates, provision is made for the appointment of Commissioners to survey the lands to be purchased, and in default of agreement with the owners, the true value is to be ascertained by a jury.’” (Emphasis added). 

As for inverse condemnation, government takings of privately held land fell under the rubric of trespass since Britain lacks a written Constitution containing a Takings Clause like our Fifth Amendment. Therefore inverse takings were tried to juries, the same as other trespass cases. The problem of sovereign immunity – how did those Brits get to sue the King? – was solved by a procedure known as a Petition of Right whose existence was noted by Chief Justice Marshall in Marbury v. Madison. Using this procedure, the aggrieved subject supplicated His Majesty for relief in the respectful form of a petition, to which the King always replied: “Let right be done,” whereupon the matter was referred to the courts for a decision on the merits, tried to a jury. 

If you are interested in this topic you will find it discussed by Prof. Keith Davies (Britain’s foremost treatise author) in his paper, The Jury in Eminent Domain, ALI-ABA Program on Eminent Domain, Jan. 4-6, 2001, Coral Gables, Florida, ALI-ABA publication SF54. Also see Eric Grant, A Revolutionary View of the Seventh Amendment and the Just Compensation Clause, 91 Northwestern L. Rev. 144 (1996) 

So the bottom line of it all would appear to be that the prevailing American rule whereby condemnees are not deemed entitled to trial by jury as a matter of constitutional law, in spite of the provisions of the Seventh Amendment, is ahistorical and stands on feet of clay. As Lewis Orgel put it over a half century ago, eminent domain is the dark corner of the law. And so it is. So what else is new?

Doing Good With Other People’s Money

Here’s a cute story from New Jersey. The New York Times (Kareem Fahim, A Small Site in the War Between Space and Development, N.Y. Times, Apr. 8, 2008, at p. C14) reports that in Mine Hill a farmer wants to preserve his 77-acre farm. It’s described by the Times as “more rust than rustic,” but it’s a farm just the same, even if it is surrounded by developed land and is zoned for office and industrial use. So you’d think that local land-use regulators – the folks who are always lecturing us about the virtues of open land preservation and the horrors of diminishing agricultural lands – would applaud this civic-minded gesture. The 72-year old farmer, John Paschal, wants to enter the state farm preservation program whereby the State of New Jersey would pay him 70% of the land’s market value in exchange for his promise that it would remain a farm forever.  

But guess what? This time it’s the town officials who are objecting – those worthies do not want Paschal to preserve his farm, no sir. They want it developed, perhaps into a parking lot. Why would those public servants (a genre that is ever ready to go to the barricades for the sake of environmental preservation) take a position like that? Money, that’s why. 

It seems that public finances in the Garden State aren’t what they used to be, and Mine Hill is losing $193,000 in state aid this year – a not insignificant amount for a community of 3700 people. So the City Mothers have been born again and want to get their hands on the increased tax revenues that would flow from conversion of Paschal’s farm into a productive money-making operation, and never mind growing patooties and all that other good green stuff.

 As usual, there is a moral to this story. Usually, those who are hectoring us to do right for the environment by preserving farms and leaving land undeveloped, expect that the cost of preservation will fall on the preserved land’s owners, and never mind their protestations that this drastically reduces their land values, and in some cases may be so severe as to amount to a de facto taking of their property – i.e., leaving them with no productive use, with only naked legal title and the dubious honor of having to pay taxes and bear other burdens and liabilities of property ownership.  But now it turns out in this case that the cost of preservation is about to fall on the community that gets to enjoy the benefit of open space. Now that it has to pay for the benefit itself rather than consume the proverbial “free lunch” at the property owner’s expense, it would just as soon skip the environmental benefit of open space preservation and take the money instead.

It’s an old, old verity that there ain’t no such thing as a free lunch. Someone always has to pay the price of sought-after benefits. And sometimes – miracle of miracles – justice is done and that price has to be paid by the folks who get the benefit. Is that bad? Not by our lights. We hew to the old maxim of jurisprudence that he who gets the benefit should bear the burden. It’s the law, you know – it says so right in California Civil Code § 3521.

Half Moon Bay Case Settles

The case of Yamagiwa v. Half Moon Bay has settled, with the City Council voting 4 to 1 in favor of settlement. Under the terms of the settlement, the city won’t have to pay the $36.8 million inverse condemnation judgment entered against it by the U.S. District Court, but in return it will have to permit the land owner to build 129 single-family homes on the 24-acre subject property and an adjacent parcel on which the owner holds an option. The city has promised to obtain passage of state legislation that will exempt the subject property from the regulations the city has relied on to frustrate its development.

All entitlements must be in place by June 30, 2009, and if that deadline is extended, no later than December 31, 2011. Each party is to bear its own attorneys’ fees. 

If the deadline is not met, the city will pay the owner $18,000,000 with interest at 6%. City officials estimate that the bonded indebtedness that the city would have to incur to pay the latter amount would come to $1.25 million per year for 40 years. 

For full local press coverage of this settlement see 

It now remains to be seen whether this case will have a chastising effect on California’s eager-beaver land-use regulators who by and large believe that they are the law, and that land owners have no rights. Stay tuned.

For our earlier coverage of this controversy, see our posts of November 30, 2007 and of December 7, 2007.