Gideons Trumpet

I was looking into Indiana’s property market the other because I heard that it’s in a good position at the moment. It’s looking strong so if you’re wanting to sell a property quickly for money then I would definitely start looking for companies that buy houses in Indiana soon. However, while I was looking into the market, I can across a very interesting court case based in the state. As you know, I’m fascinated by these types of cases so looked into the details. State of Indiana v. Murphy, No. 45A03-1106-PL-261, March 30, 2012. The basic facts regarding recovery were as follows: valuation by Appraisers (Commissioners) – $23,000. Jury verdict – $332,172.

The bone of contention was the fact that the owner paid only $3900 for the subject property in 2003 at a tax sale, and the state wanted to get that fact into evidence. This was problematic because that sale was remote in time and, being a tax sale, it was probably not a voluntary, open market, arm’s length transaction likely to shed light on fair market value. But it looks like we’ll never know in this case. At the beginning of trial the owner made a successful motion in limine to exclude the state’s evidence of that sale. But the state did not make an offer of proof or object further at trial; it only raised the exclusion as an asserted error when it got to the appellate court. With the aid of an appellate law firm, they were able to shine a light on this error in relation to the sale.

The court held that in order to preserve a record on appeal, an objection or an offer of proof must be made in the course of trial. This the state failed to do, and thereby waived the point. A trial court’s earlier ruling on a motion in limine, before the objectionable evidence is actually sought to be introduced into evidence is not sufficient to make an adequate record on appeal.

So trial counsel beware! At least in Indiana.

Follow up. The original version of the second paragraph of the above post was screwed up by your faithful servant. The corrected version appears there now. Our apologies.

The Florida Court of Appeal has just decided a case dealing primarily with Florida law that governs awards of attorneys’ fees to condemnees. It tells us more about Florida law of attorneys’ fees and the statutory scheme governing them than we ever wanted to know, but we are sure it will be useful to Florida counsel The case is Orlando/Orange Grove County Expressway Authority v. Tuscan Ridge, No. 5D10-3470, March 30, 2012.

Anyway, we glean the following facts from the opinion: Offer – $4,914,221 (“subject to apportionment claims”), later raised to $5,500,000. Verdict – $5,744,830, plus attorney fees of $816,000, $194,000 for “supplemental proceedings,” $277,422 in expert fees, and $19,000 for “reimbursements.”

The $5,500,000 verdict was not contested, but the attorneys’ fees award was vacated, and the matter remanded for recalculation of fees using only the benefit obtained for the owners by the lawyers, and for consideration of the issue of whether the Florida Constitution requires a different, more generous measure of attorneys’ fees.

The basic news is that the U.S. Supreme Court granted certiorari in a case from Arkansas, in which the state is suing the feds for  temporary flooding of state land thereby destroying some forest land and effecting a physical taking. You can get the details and the question presented at www.inversecondemnation.com and we recommend that you do. Click here.  

Since the lower court (the U.S. Court of Appeals for the Federal Circuit which handles all inverse condemnation cases against Uncle Sam) reversed the trial court award of compensation on the grounds that the taking was temporary and as such noncompensable, there is hope for improvement in the law. But living up to our reputation as a curmudgeonly pessimist, we aren’t holding our breath. Every time SCOTUS has messed with a taking case involving water recently (e.g., SWNCC and Rappanos, come to mind) it left the law in shambles. We hope it won’t happen again. Then again, to invoke the line of Brendan Behan, “I cannot conceive of a situation so wretched that the appearance of a policeman couldn’t make worse.” Substitute “water case” for “situation,” and “SCOTUS” for “a policeman,” and you are likely to get it right.

Our own view, for whatever that may be worth, is that the entire temporary-flooding-is-not-a-taking shtick doesn’t make much sense. For if it would be a taking if permanent, it’s also a temporary taking when its duration is less than in perpetuity. After all, the federal government can take property temporarily by eminent domain when it condemns a lease, even a short-term lease. So why wouldn’t a short-term taking sans the required legal niceties of an eminent domain action be any less a taking? Didn’t SCOTUS hold in the Dow case that physical seizure unaccompanied by a court order, and indeed without any judicial proceedings, is a constitutionally acceptable way of the government exercising its power of eminent domain? If anything, an inverse taking should be deemed a taking a fortiori. We see no rational, moral, or doctrinal reason why, when the government obeys the Uniform Relocation Assistance Act and files an eminent domain action to effect a temporary taking, it has to pay just compensation, but when it acts in a scofflaw fashion and just seizes land temporarily (or, as here, floods it temporarily, depriving its rightful owner of its use, damaging the land in the process, and thus effecting a physical taking) it should get a constitutional free pass.

The duration of the taking should go to the quantum of compensation, not to liability. But, of course, SCOTUS has ruled both ways on the issue of liability in temporary taking cases — see Tahoe Sierra Preservation Council and compare the First English Evangelical Lutheran Church case. So maybe SCOTUS took this case to straighten things out. Can that be? Let’s hope so.

Horrifying afterthought. The First English case was decided in 1987. That’s 25 years ago — a quarter of a century. Which means that your typical U.S. Supreme Court clerk has no independent memory of it.

Follow up. An eagle-eyed reader points out that we may be barking up the wrong tree. The claim in this case is inter alia that the flooding caused the destruction of timber owned by the State of Arkansas. That, it would seem, has nothing to do with whether the taking of the subject land was temporary or permanent, since either way, government destruction of timber is in itself a taking. See Cooper v. United States, 827 F.2d 762 (Fed.Cir. 1987). So we better keep watching this one.

Don’t miss the article in today’s New York Times (Joseph Berger, No Longer Burning, the South Bronx Gentrifies, N.Y. Times, March 26, 2012, at p. A20 – click here) informing one and all that, yes indeed, the South Bronx, the venue that served as a backdrop of the movie “Fort Apache – The Bronx” with Paul, Newman (which you should see if you haven’t), is rising above its wasteland image and becoming a haven for newcomers who according to the Times are making up for the 300,000 person exodus of  the 1970s. We have no doubt, at least we hope, that there has been some improvement up there since, short of conducting live-fire urban military warfare, the place couldn’t go down any lower. So bully for those brave pioneering souls who are moving in and gentryfying the place. We wish them well.

However, we have noticed over the years that the Times has a habit of depicting the doings in decrepit urban areas more optimistically than circumstances warrant, particularly in its headlines, and this is no exception. How do we know? Catch this depiction of current reality of living there, coming from a 66-year-old lady who sold her one-bedroom Manhattan digs for $550,000 and replaced them with a two-bedroom place in the Bronx for $200,000, thereby stashing $350,000 tax free:

“If you walk around wearing gold chains and flaunting an iPhone,  four 15-year olds are going to take it from you.”

Welcome to the new, improved Bronx. And here we didn’t realize that owning and using an iPhone constitutes “flaunting” it. Do the folks at Apple know about this?

Afterthought. It occurs to us that younger readers of this blog, and there may be a few, do not fully realize what the South Bronx looked like when it acquired it’s reputation as an urban disaster area. In those days your faithful servant used to go to New York, fly in to JFK and take a taxi into town, which involved traversing the Bronx on the freeway. Wow! It looked like Hamburg in 1944. There were entire blocks of rubble, with facades of ruined builngs standing among it. So do you know what the city did? You may not believe this, but it was reported in the New York Times at the time, and we are sure a Nexis search will bring you that reportage. The city ordered (and spent taxpayers’ money on) a bunch of rectangular pieces of plywood, on which it painted window frames, curtains and flower pots, and had them inserted into the gaping window holes of ruined buildings, so that flatlanders zooming by on the freeway would think those buildings were populated. Yes indeed — it happened.

If you want to see what the South Bronx looked like at its nadir, go to google images and type in South Bronx Photos.

Check out the recent decision of the Kansas Supreme Court in Kansas City Mall Associates v. Unified Government of Wyandotte County, No. 102,163, that came down recently. It held that although as a general rule the value of land for ad valorem taxation purposes is inadmissible in eminent domain cases, the owner’s value contentions in tax assessment proceedings are admissible as an admission against interest. Quoting from the Court’s syllabus:

“Generally, assessed property valuations for tax purposes is not admissible as evidence of fair market value of property in an eminent domain action. But statements made by the owner about the property’s value in an appeal of a tax assessment that are inconsistent with the owner’s position in the eminent domain trial are admissible as admissions against interest.”

So it remains to be seen if the Kansas courts will follow the same rule when the shoe is on the other foot — when it so happens that the taxing authority contends in taxation valuation proceedings that the value of the subject property is higher than what it offers in later condemnation proceedings. Yes, cases like that do come along from time to time.

The problem is that not only are tax assessments notoriously unreliable, but the law that governs them is based on a different policy than the law of eminent domain. In taxation, it allows the owner to minimize taxes and hence it encourages conservative valuation, whereas in eminent domain the owner is entitled to the highest price that the property would fetch in a voluntary sales transaction. Most important, when an error is made in valuation for taxation, it can be fixed by reassesment, whereas in eminent domain once the judgment is final, the value determined by it is not subject to change.

So stay tuned and see what happens in Kansas when the parties’ roles are reversed, and it is an owner who wants the government’s taxation valuation contentions admitted into evidence in an eminent domain action. You think this rule will cut both ways, or will the courts then stick to the general rule of excluding valuation for tax purposes?

Our thanks to the Volokh Conspiracy for tipping us off that SCOTUS decided Sackett v. E.P.A. earlier today. Unanimously, no less, with two concurring opinions. You can get the message about the nature of the case and the Court’s reaction from this excerpt from Justice Alito’s concurring opinion:

“The reach of the Clean Water Act is notoriously unclear. Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to construct a home on a lot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy. The EPA may issue a compliance order demanding that the owners cease construction, engage in expensive remedial measures, and abandon any use of the property. If the owners do not do the EPA’s bidding, they may be fined up to $75,000 per day ($37,500 for violating the Act and another $37,500 for violating the compliance order). And if the owners want their day in court to show that their lot does not include covered wetlands, well, as a practical matter, that is just too bad. Until the EPA sues them, they are blocked from access to the courts, and the EPA may wait as long as it wants before deciding to sue. By that time, the potential fines may easily have reached the millions. In a nation that values due process, not to mention private property, such treatment is unthinkable.”

So did the court grant property owners meaningful relief from this outrageous legal scheme? Don’t be hasty. Quoth Justice Alito:

“[T]he combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA’s tune.” Emphasis added.

We would have thought that the treatment meted out by the EPA to affected property owners was clearly unconstitutional on more than one ground (like due process and excessive fines, for instance), but the decision is based, not on the Constitution, but rather on the Court’s interpretation of the availability and timing of judicial review under the  Clean Water Act, and Justice Alito’s opinion instead of calling for meaningful, effective relief, sends Sackett off on another costly and time-consuming round of litigation, and passes the buck to  Congress to rectify the Act’s injustice. Some remedy.

We sympathize with property owners thrust into such a nightmarish scenario because back in 1980 we were involved in such a crazy case, in which our client started plowing bone-dry land for a new citrus grove, when he got served by the Feds with a cease and desist order demanding that he “cease dredging and filling in waters of the United States,” and beyond that, that he “halt any further work in waters of the United States” (emphasis added). We sued in federal court, the Feds made a motion to dismiss, but the trial court sat on it for so long that everybody decided life wasn’t long enough for this controversy to be judicially resolved, and so the case settled.

And why is the Clean Water Act “notoriously unclear’? Could its lack of clarity have something to do with the courts’ grudging interpretation of property owners’ right under it?

For the Washington Post’s take on this case, click here.

Bottom line: the Sackett decision is better than the alternative might have been, because from the outset, the environmetalits’ objrtive has been to destroy private property rights in America (except their own). You don’t believe us? Then check out  Gladwin Hill, Authority to Develop Land Is Termed a Public Right, N.Y. Times, May 20, 1973 (“A federal task force in land use said today that henceforth ‘development rights’ on private property must be regarded as resting with the community rather than with property owners.”) Clear enough for you?

And so, we are glad to hear that Justice Alito thinks that our nation values property rights. Based on the Court’s most recent handiwork, you coulda fooled us on that one. But hey man, what do we know? Maybe Justice Alito will do some missionary work and persuade some his colleagues to value them as well.

Follow-up. And speaking of the court’s grudging interpretation of the Act, we offer for your consideration the following observation of Richard Frank, former California Deputy Attorney General, with whom we rarely agree, along with a photo of this asserted “wetland” from his blog:

“Considering Scalia’s well-known propensity for lengthy opinions and rhetorical flourishes–especially when it comes to property rights claims and environmental regulation – the decision in Sackett is remarkably terse and narrowly crafted.” Indeed.