California Eminent Domain Report

In the last month, the U.S. Supreme Court has declined to hear appeals on two eminent domain-related cases.  The first case, California Building Industry Association v. City of San Jose, is one we discussed last year.  If you recall,  the California Supreme Court held that San Jose's inclusionary housing ordinance that required all new residential development projects of 20 or more units to sell at least 15 percent of the for-sale units at a price that is affordable to low or moderate income households did not impose an exaction on developers that constituted a taking.

The U.S. Supreme Court's February 29 declination to hear BIA's appeal means that developers in San Jose must either include affordable housing in their projects, pay an in-lieu fee to the City or build affordable units offsite.  A sigh of relief can be heard around the state as other municipalities with similar ordinances on the books can proceed with their plans to increase affordable housing for their lower-income residents.  (You can read more about reactions to the decision here.)

And yesterday, the U.S. Supreme Court declined to hear an appeal on an eminent domain case from West Virginia.  In the case, Beacon Resources Inc. v. W. Virginia DOT, Beacon was leasing 187 acres and was extracting coal from it.  The West Virginia Department of Transportation filed a condemnation action seeking to acquire 30 of the 187 acres for a highway project.  While the DOT and property owner agreed to the surface value of the land, Beacon and the DOT disagreed on the value of the underlying coal.

At trial, the DOT requested a jury instruction that compensation could not include any lost profits to Beacon and the court refused to give that instruction.  The jury awarded Beacon $24 million for the coal and the DOT appealed after its motion for a new trial was denied.  On appeal, the West Virginia Supreme Court vacated the award and remanded the case for a new trial stating the lower court erred in not giving the requested jury instruction.  Beacon appealed the state supreme court's ruling and as reported by Law360, the U.S. Supreme Court declined to hear the appeal.