Monthly Archives: August 2009

Quotable Quote


“When the U.S. Constitution was written, there was broad consensus in America that private property was a fundamental human right and that government existed to protect it, not to manipulate it to serve purposes politicians deemed more important. But today, the nation’s intellectual elite — and particularly judges — have rejected the traditional principles underlying property rights. They see property as simply a privilege the government can alter or rearrange at will. America’s founders believed that a person’s right to own, buy, sell and use property was a timeless moral principle, not a temporary expedient that changes based on who wins elections. Hence the clash between today’s lawmakers — who want maximum power to manipulate property — and permanent constitutional principles designed to protect each individual’s right to pursue happiness.”

Timothy Sandefur, Setting Boundaries for Property Rights, National Law Journal, August 31, 2009.

Half Moon Bay Case Settlement Implemented

  Back in 2007, the U.S. District Court in Northern California filed its decision in Yamagiwa v. City of Half Moon Bay, awarding $36,795,000 to property owners whose land the city flooded and then forbade its development on the grounds that it was now a wetland, don’t you see. No, we are not making this up. You can check it out for yourself at Yamagiwa v. City of Half Moon Bay (N.D.Cal. 2007) 523 F.Supp.2d 1036. For our earlier post discussing this case, see Half Moon Base Case Settles, dated April 3, 2008.

After the expectable handwringing on the part of the city, and its dire predictions of fiscal gloom and doom, the case settled. For a discussion of the case and the settlement see David P. Hamilton, Treading Water, California Lawyer, May 2008, at p. 25. In a nutshell, the city promised to seek legislative aid in the form of relaxation of the statutory scheme under which it purported to be acting, and allow the developer to proceed. Failing that, the city promised to pay $18,000,000 in damages. Predictably, the enviros put up a huge lobbying fight and persuaded the California Legislature to deny the city’s request. 

Now, the settlement has been completed. The city paid the $18,000,000 and got title to the subject property. Also, the owner retained water rights that though unusable by him since he no longer owns the subject property, are marketable and estimated to be worth $3 to $5 million. 

So ends a saga of municipal rapaciousness and unspeakable chutzpa. Why chutzpa? Because when the owners filed their inverse condemnation suit, they did so in state court, as required by the U.S. Supreme Court’s Williamson County case. But the city had the temerity to remove the case to federal court, try it there with all sorts of depositions, and other discovery that consumed years, plus a long trial, at the end of which (evidently surmising that its case was not persuasive) the city announced that the federal court lacked jurisdiction and the case should be remanded to the state court where it would begin all over again. The federal judge was not amused, rejected the city’s suggestion and with saintly restraint refrained from imposing sanctions on the city.

The smiling lawyer for the owners is Edward Burg of Manatt, Phelps & Phillips, in Los Angeles. Full disclosure: your faithful servant is of counsel to that law firm.

Everybody Wants to Go to Heaven, But Nobody Wants to Die

          Yep, it’s those dams again. But this one, folks, is a doozy. You haven’t lived until you read the editorials in today’s New York Times (Salmon Test, Aug. 12, 2009, at p. A20) and the Los Anglest Times (Giving Snake River Salmon a Lift, Aug. 12, 2009,,0,3449261.story ).

          You could say that both these editorials act out the fable of the mice trying to decide how to bell the cat. They both articulate a clear idea of what they think should be done (breach the dams) but neither one has any idea of how to do it without incurring heavy penalties in the form of lost power, increased fossil fuel consumption, increased air pollution, etc. They both agree that Snake River salmon are having problems, and that something should be done about it. But by their lights that “something” would be the breaching of some four dams on the Snake River, that account for 4% or 5% (depending on which paper you read) of the region’s electrical power supplies, to say nothing of losing the ability to transport Idaho’s grain crop to market by barge. 

          Obviously, shutting off that source of hydroelectric power would create all sorts of problems, not the least of which would be  additional fossil fuel consumption, with the attendant carbon dioxide emissions, i.e., consumption of energy that now can be used for other purposes. And let’s not forget air pollution both from the combustion of that extra fossil fuel and from the exhaust of all those trucks that would now have to bring the Idaho grain crop to market, instead of letting it float down the river.

          But, says the Los Angeles Times, some of the salmon are now being trucked in tankers around the dams, and it makes more sense to truck wheat instead. True enough, but we doubt whether the volume of those transported salmon comes close to the mass of the wheat that would now have to be transported by truck. Besides, the L.A. Times also lets it be known that some of the decline in salmon population is attributable to climate change, and we have trouble seeing how trucking vast quantities of wheat by truck will help that.

          The N.Y. Times says that “Ways must be found to replace the power that  the dams generate . . .” but tells us not what those ways might be. So you could say that, though brimming with good intentions, the N.Y. Times finds itself between a rock and the first law of thermodynamics. We could go on like that, but the bottom line of the N.Y. Times editorial is that unless the Secretary of the Interior comes up with a solution, the local federal judge — here it comes, folks — will have to “place the operation of the hydroelectric system under court order and devise a plan of his own.” We can’t wait.

          Federal judges have done such a wonderfuil job running schools and prisons, etc. that it’s time for them to screw up electrical power generation. We mean no disrespect to our black-robed betters, but we are not aware of anything in a typical judge’s background and education that would qualify him to become a superlative systems engineer capable of solving what is at bottom an insoluble problem that no one else knows how to deal with. The problem is insoluble because to achieve the results that the critcs of the status quo want, and to do what must be done to achieve them are utterly incompatible.

         So we offer a hearty “rots of ruck,” to the Honorable James Redden of the U.S. District Court in Oregon, to whom fate has handed that hot potato. We can’t wait to see how he will accomplish what to us appears to be a clear violation of the first law of thermodynamics. In the meantime, we’ll console ourselves by consuming some nice gravlachs while the supply lasts.


Law Review Article for Your Consideration

          When you get a chance check out our latest article dealing with the state of property rights in general, and in the context of eminent domain in particular. Gideon Kanner, Do We Need to Impair or Strengthen Property Rights in Order to “Fulfill Their Unique Role”? A Response to Professor Dyal-Chand, 31 Hawaii L. Rev. 419 (2009).

         If you are interested in learning what really happened in Hawaii Housing Authority v. Midkiff, check out footnotes 30 through 34, and the associated text.

“Cash for Clunkers” a Bad Idea

          There are several reasons why the so-called “cash for clunkers” program is a bad idea. Here is another one. The first data are in and it appears that most of the “clunkers” being traded in for new cars are American-made, whereas most of the new cars bought with the “cash for clunkers” $4500 subsidy are foreign. And so it turns out that the government geniuses who came up with this hare-brained scheme are de facto subsidizing foreign competitors of American car makers with American taxpayers’ money.


UPDATE: It’s official. The New York Times reports that the chief beneficiary of the cash-for-clunkers caper was — surprise, surprise! – Toyota. “Not a single model from G.M. or Chrysler made the top 10 list, . . .”  Bill Vlask, Toyota Tops List of Cash-for-Clunkers Winners, N.Y. Times, August 27, 2009, at p. B1.

Airports! Once More Into the Wild Blue Yonder

          Here is a follow-up to our past blogs about the misadvetures of Los Angeles which in the early 1970s tried to create what it modestly dubbed the Los Angeles “Intercontinental” Airport by  acquiring some 17,500 acres in the high desert near Palmdale, about 60 miles out of town. Over the years some eight airlines tried their luck operating out of that facility, to no avail. None of them made it, and eventually Los Angeles surrendered (or tried to surrender) its FAA airport certification. The cost to the public for that fiasco: $100,000,000 for the land alone — and those were 1970s dollars so you probably have to multiply that amount by three or four to get the cost in today’s dollars. If all this is of interest to you, check out our posts at and

          Now, we have just come across a sad — no, make that pathetic — postscript to this saga of government ineptitude and gross waste of taxpayeres’ money. Today’s Los Angeles Times (Aug. 11, 2009) carries a small advertisement, and we quote: “Los Angeles World Airports is seeking  competitive Proposals for the purpose of providing management services to the former Palmdale Airport. The RFP package is available at ” No comment appears necessary.

         And speaking of wasting money on airports, catch this item from Alaska. Generous Uncle Sam has popped for $14 million to replace an airport in Aklachak, Alaska, a metropolis of 659 residents. Not to be outdone, Ouzinkie, Alaska, population 167, got nearly $15 million to replace its gravel runway. Way to go Alaska!

See National Briefing, Airport Grants Are Criticized, Los Angeles Times, Aug. 11, 2009, at p. A10.

The Curse of the Courtesy Sandwich Shop

          According to a recent New York Times editorial (Ground Zero Stalls Again, Aug. 10, 2009, at p. A14) the State of New York has had it up to here with the long-delayed reconstruction of the World Trade Center site. It’s all well and good for the state to help out Larry Silverstein, the lessee-developer of that site, with some public money, but after all, says the Times, WTC is a commercial venture and the New York & New Jersey Port Authority (the owner of the WTC site) “should not go deeper into the real estate business.” “Real estate business?” Oh, dear. And here we thought that WTC was not a private but a public building. Why would we entertain such a silly thought? Because that’s what our betters on the New York Court of Appeals told us way back in 1963. And therein lies a tale.

           Back in the early 1960s, the WTC site (some 13 blocks in downtown Manhattan, give or take) was one of those specialized New York commercial neighborhoods, devoted to stores selling electronics and what in those days was known as hi-fi equipment. All these merchants and their employees worked there happily, taking a break every now and grabbing a bite at the Courtesy Sandwich Shop – one of those uniquely New York luncheonettes. But the Port Authority of New York & New Jersey had other things in mind. The Authority chose that particular spot to build TWC – two humongous office towers, the ones that met their demise on 9/11. That meant that all those business blocks would be taken by eminent domain to be razed and consolidated into the WTC building site. All those folks who owned land or leased space and ran businesses there, were now in the way, and would be displaced. Bummer.  

          To add insult to injury – or perhaps more accurately, injury to injury – New York law provided (and as far as we know still does) that when real property housing a business is taken by eminent domain, and the business is irrevocably destroyed in the process, the business owners get no compensation for it. They are paid “fair market value” (which the U.S. Supreme Court conceded does not reflect true value arrived at in voluntary market transactions) but only for the dirt, bricks and mortar that comprise the real estate being taken. They get nothing, nada, zip, bobkes for the business, its goodwill and its stock in trade that is damaged or destroyed in the course of the taking. If you are into that stuff, there are several law review articles dealing with this injustice that – as every legal commentator who has written on the subject notes – is devoid of any defensible doctrinal basis or moral underpinnings, even though judges apply it in the name of “just compensation.” We recommend that you read D. Michael Risinger, Direct Damages: The Lost Key to Constitutional Just Compensation When Business Premises Are Condemned, 15 Seton Hall L. Rev. 483 (1985), and your faithful servant’s views voiced in Gideon Kanner, When Is “Property” Not “Property Itself”: A Critical Examination of the Bases of Denial of Compensation For Loss of Goodwill In Eminent Domain, 6 Cal. Western L. Rev. 57 (1969), which made their way into CCP § 1263.510. 

         As one legal commentator put it at the time, had these New York property owners been hit by a hurricane or some other natural disaster, politicians would have been falling over themselves in an effort to provide government aid. Ah, but this disaster was government-made, so instead of helping, the politicos piled on, singing the praises of the to-be-built Port Authority skyscrapers, and ignoring the plight of the condemnees.

          So the poor owners of the Courtesy Sandwich Shop went to court. Surely, they thought, those wonderful, fair-minded judges, ever ready to do justice, would see through the Port Athority’s charade of calling this huge commercial enterprise a “public” use, wouldn’t they? Actually, no, they wouldn’t and they didn’t.  Though the condemnees secured relief in the New York Appellate Division which couldn’t see how this commercial mega-venture constituted “public use,” the New York Court of Appeals reversed, Judge Van Voorhis dissenting. Courtesy Sandwich Shop v. Port of New York & New Jersey Authority, 190 N.E.2d 402 (N.Y. 1963).

          The way the Port Authority argued and the way the court’s majority saw it, the occupants of WTC would be either government entities, or folks engaged in import-export commerce, and consolidating them in one location would be a “public use.” Judge Van Voorhis didn’t see it that way, and didn’t see how taking a bunch of indisputably private businesses and putting them together in one building, would make it “public.” For another thing, there weren’t that many such enterprises, and it was plain that the Port Authority would have to rent space to the general business public to come close to filling those millions of square feet of commercial office space. As recently noted by a federal court litigating the post-9/11 donnybrook over who owes what to whom, WTC “struggled to fill its space,” relying first on government tenants, but when that didn’t do the trick, “replacing government tenants in the 1980s with a variety of higher paying commercial tenants, among them premier law, accounting and finance services firms.” In re September 11th Litigation, 590 F.Supp.2d 535, 537-538 (S.D.N.Y. 2008).

          If you want to know more about that fight you’ll have to read the opinions – plural – because, dear readers, we aren’t going there; neither you nor we are young enough to take the time to unravel that aspect of this legal saga in our lifetimes – except that we simply have to note in passing that Larry Silverstein – remember him? — became the all-time winner of the “Lucky Pierre” award, when he leased WTC from the Port Authority just two weeks before 9/11. Need we say more? 

          So where were we? Oh, yes, the Courtesy Sandwich Shop, wasn’t it? The New York Court of Appeals noted the no-compensation-for-business-losses rule, but held that pursuing its constitutional vitality was premature in that case, because this litigation dealt only with the character, public or private, of the proposed project, and compensation would be dealt with in the condemnation case that would follow. So these poor folks waited and then claimed their business losses in the condemnation action, only to be told that this issue had already been decided in the first litigation. Slick, eh? 

          So what happened then? WTC rose on the economic bones, so to speak, of the Courtesy Sandwich Shop, and when it was finished, New York’s spiffiest restaurant, Windows on the World, was built on top of it. We ate there once or twice, and have to concede that the view was unbelievable (the food was good too), but we never could understand why the plain-folks Courtesy Sandwich Shop had to be destroyed without compensation, while Windows on the World got to be the ipsy-pipsiest eatery in New York with government aid.

          So is there a moral to this saga? Not really, unless you are into divine retribution as a legal theory, in which case you may consider joining the nuts who contend that we deserved 9/11, or at least wonder if the curse of the Courtesy Sandwich Shop was a factor in the 9/11 disaster.

Dams – Another Constituency Heard From

          When we blogged about dam removal in the recent past (see ), we had no idea how big a whale we had stuck our little harpoon into. The New York Times reports that in past ten years some 430 dams have been removed, and the process is going on. See Matthew Preusch, Dams Go Down, Uncorking Rivers For Kayakers, N.Y. Times, Aug. 9, 2009, at p. 3 (Travel Section).

         In the past, dams were built “to generate electricity, provide irrigation water and protect against floods.” Now many of those dams are sought to be removed, leaving one to wonder: what about all that electricity and the other benefits? Won’t all that clean power have to be replaced with electricity produced by fossil-burning generating plants? And won’t that add to carbon dioxide emissions that according to prevailing conventional wisdom are a big-time environmental no-no? Go figure.

         While up until now the justification for dam removal has been the wellbeing of fish, notably salmon, it appears that a new one has emerged. That Times article, starting with its headline, makes clear that the pleasure of canoeists and kayakers figures prominently in the decisions to tear down those dams. We don’t begrudge those folks their pleasures, but we can’t help wondering how many of them are ardent environmetalists who are out there inveighing against carbon dioxide emissions. Do you suppose?

Lowball Watch – Connecticut

       In an article entitled DOT Mishandled Brookfield Quarry Acquisition, ( of August 4, 2009, reports that a Connecticut trial judge not only awarded the property owners $22.9 million on the State DOT’s valuation of $4.1 million, but also chewed out the state for its conduct which she characterized as “unprofessional, lacking in dilligence and less than scrupulous.” She found the state’s appraisers lacking in “preparation, experience or professional credentials to render a fair valuation.” She noted that their appraisal reports were used “solely to minimize the quarry’s value.” 

Afterthought. Given the judge’s severe criticism of the State’s appraisal performance, this may have been a proper case for the use of the term “Floccinaucinihilipilificators” — for the definition, see Mayor & City Council of Baltimore v. Kelso Corp., 416 A.2d 1339, 1340 (Md.App. 1980).