California Eminent Domain Report : a blog following condemnation, inverse condemnation, and regulatory takings written by attorneys with Nossaman LLP.

After our webinar on the California Supreme Court's decision in California Redevelopment Assn. v. Matosantos, we've received a number of requests for the materials both by folks who attended and those who missed the event.  We've got you covered:  you can find our Power Point slides here.  But we can do even better:  you can find the entire recording of the webinar here.

Let us know your thoughts.  And, if you have any follow-up questions, feel free to give us a call or shoot us an e-mail. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Yesterday, we reported briefly on the Supreme Court’s decision in California Redevelopment Assn. v. Matosantos.  As many of you undoubtedly know by now, the outcome was the nightmare redevelopment agencies feared most, but that many (including us) had forecast after listening to oral argument last month. 

The Court upheld ABX1 26, allowing the dissolution of California’s redevelopment agencies to proceed, but struck down ABX1 27, the “voluntary” buy back program that would have allowed redevelopment to continue.  In particular:

• The Court had little difficulty upholding ABX1 26, the law eliminating California’s redevelopment agencies. The Court reasoned that because redevelopment agencies were created by the Legislature, the Legislature could also eliminate them:  “A corollary of the legislative power to make new laws is the power to abrogate existing ones. What the Legislature has enacted, it may repeal.” 
• When it came to ABX1 27, the Court felt differently.  All but Chief Justice Cantil-Sakauye concluded that the “voluntary payment” portions of ABX1 27 run afoul of Proposition 22, adopted by voters in November 2010. The Court further concluded that the balance of ABX1 27 was not severable from the improper payment provisions, and the Court struck down ABX1 27 in its entirety. 

Though as a technical matter the CRA obtained a split decision (successfully attacking one of the two laws), the outcome represents a self-described “worst case scenario” that is obviously not what redevelopment proponents had in mind when they filed the lawsuit.  That said, the result is not too surprising to those who followed the oral argument, which focused largely on three issues:

1. The fact that redevelopment agencies were created initially by the Legislature, which would, absent some constitutional prohibition, mean that the Legislature could also abolish them.
2. The fact that the “voluntary” payments under ABX1 27 were not particularly voluntary, since failure to make them meant the redevelopment agency would be eliminated.  And, if not voluntary, the payments seemed to run afoul of Proposition 22.
3. The question of whether the two laws were so intertwined that striking down one (presumably, ABX1 27) would necessitate striking down both. 

Much as it telegraphed during oral argument, the Supreme Court started by concluding that ABX1 26 – the dissolution bill – passed constitutional muster.  Rejecting the argument that Proposition 22 created a constitutional right for redevelopment agencies to exist, the Court found no discussion of redevelopment agencies taking on constitutional stature, and without some explicit mention of such a profound shift in the law, the Court would not imply any such intent.  As the Court summarized, the drafters of legislation do “not, one might say, hide elephants in mouseholes.” 

The Court moved on to ABX1 27, focusing its attention on the “voluntary” payment program.  The Court concluded that ABX1 27 was substantively indistinguishable from earlier efforts by the State to shift property tax increment from redevelopment agencies to the State’s educational revenue augmentation funds (“ERAFs”) – the very circumstance Proposition 22 sought to prevent. 

The Court then put the nail in the ABX1 27 coffin: “A condition that must be satisfied in order for any redevelopment agency to operate is not an option but a requirement.  Such absolute requirements Proposition 22 forbids.” 

Finally, the Court turned to the severability question, needing to decide whether ABX1 26 could stand alone, or whether it must fall given ABX1 27’s fate. The Court responded to claims that a number of legislators had reportedly opined that the Legislature would not have wanted such an outcome by looking at the statute’s specific severability clause stating the opposite, concluding that

whatever individual legislators may have said at one point or another, what the Legislature actually did establishes it would have passed [ABX1 26] irrespective of the passage of [ABX1 27], and that [ABX1 26] is volitionally separable. Consequently, it is severable.

Thus, the Court’s final conclusion: ABX1 26 stands, while ABX1 27 falls. 

What Happens Next: the Mechanics? The Court examined some of the mechanics of ABX1 26’s implementation in light of the partial stay and the passage of time that has rendered some of the law’s time frames impossible. The Court concluded that it had the power to reform the law, and it chose a superficially simple solution: all initial dates in ABX1 26 are shifted four months, representing the time period during which the Supreme Court’s partial stay was in place. 

But there is a twist. For any obligations that span multiple fiscal years, the Court did not reform the deadlines. Instead, only those trigger dates which fall before May 1, 2012, get shifted. This means, for example, that for the distributions required to be made on January 16 and June 1 every year, the January 16, 2012, distribution is now due May 16, 2012, but the June 1, 2012, distribution (and all future distributions) remain due as set forth in ABX1 26. 

What Happens Next: Implementation? Moving beyond the technical issues, the real question is what happens to redevelopment obligations and assets. This will be the subject of considerable discussion in upcoming weeks, but there are a few, bright-line rules people should know:

1.  For obligations incurred prior to January 1, 2011, the obligations remain valid and binding. 
2. For deals under negotiation when the Supreme Court stay was issued, the redevelopment agencies have no power to consummate the deals. 
3. Remaining redevelopment assets will be sold. 
4. If the agency transferred any assets to its city/county or another public agency after January 1, 2011, the transfer is potentially subject to ABX1 26’s “claw back” provisions. 

What Happens Next: a Legislative Compromise? Finally, entering into the realm of pure speculation, there is already some murmuring about a possible legislative compromise designed to reinstate some form of redevelopment. Whether any such compromise sees the light of day remains to be seen. And even if it does, considerable obstacles may exist. 

In particular, any legislative effort to reinstate some form of redevelopment must overcome the very problem that led to the demise of ABX1 27: how to fund “Redevelopment 2.0” without running afoul of Proposition 22. Moreover, a legislative compromise only works if the Governor approves it, and Governor Brown’s early comments do not suggest he is dissatisfied with the Court’s holding. 

For more information on the opinion and its aftermath, please join us for a webinar, Supreme Court Upholds Elimination of Redevelopment in California - Now What? It will take place on January 4, 2012, at 2:00 p.m. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Today, the California Supreme Court issued its much-anticipated opinion in California Redevelopment Assn. v. Matosantos, the case challenging ABX1 26 and ABX1 27.  In a decision foreshadowed by the tone of last month's oral argument, the Court upheld ABX1 26, but struck down ABX1 27 as a violation of California's Proposition 22:

• "Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution."
• "A different conclusion is required with respect to Assembly Bill 1X 27, the measure conditioning further redevelopment agency operations on additional payments by an agency‘s community sponsors to state funds benefiting schools and special districts. Proposition 22 ... expressly forbids the Legislature from requiring such payments."

This means that the law eliminating California's redevelopment agencies stands, while the law that would have provided a mechanism to reinstate redevelopment agencies upon making certain "voluntary" payments was struck down.  The bottom line:  the decision ends redevelopment in California.

We will have more on the opinion in the very near future.  In addition, we will be hosting a free webinar on Wednesday, January 4, 2012, at 2:00 p.m. to discuss the opinion, its implications, and what happens from here.  We hope you'll join us, you can register here. 

UPDATE, 2:05 p.m.  While we digest the opinion and attempt to write something meaningful about it, Robert Thomas has already managed two substantive blog posts on the case today, including a short summary of the opinion and a good collection of early reports on the decision. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Supreme Court heard oral arguments yesterday in California Redevelopment Assn. v. Matosantos, the action filed by the California Redevelopment Association, League of California Cities and others challenging the constitutionality of ABX1 26 and ABX1 27.  Based upon their questions it appeared that the Justices were satisfied that ABX1 26, the bill abolishing redevelopment agencies, passes constitutional muster.  However, ABX1 27, the bill allowing for their reinstatement by the making of  “voluntary” payments, seemed to be on much shakier grounds.  The question then becomes:  are the two so inexorably intertwined that they must stand or fall together, or is 27 severable from 26?  The future of redevelopment in California may depend on how the Justices answer this question.  

A. What the Legislature Creates, the Legislature Can Abolish

Based on their questions, the Justices seemed convinced that, on a stand alone basis, AB1x 26 would be constitutional.  Redevelopment agencies are, after all, creatures of statute.  The Legislature which created redevelopment agencies has the power to abolish them.

Counsel for the Petitioners conceded this issue, but argued that the vice of 26 is not that it dissolves redevelopment agencies per se, but that it dissolves them and transfers their tax increments to schools and special districts in violation of Proposition 22.  The Legislature cannot use a constitutional means to achieve an unconstitutional end.  Of course, this argument hinges upon the contention that the Legislature enacted 26 in an effort to coerce cites and counties with redevelopment agencies to participate in 27’s “Voluntary Alternative Redevelopment Program,” which Petitioners claim is not at all voluntary.

The real test then becomes whether ABZX1 27 is or is not constitutional and, if it is unconstitutional, is it severable from ABX1 26? 

B. Is the “Voluntary Alternative Redevelopment Program” Truly Voluntary?

The Justices tested the Petitioners’ contention that reestablishment payments made by cities and counties under 27 would inevitably come from local tax revenue, in violation of Proposition 22.  As many of our readers will recall, Proposition 22 amended the California Constitution to prohibit the State from redirecting revenue from locally imposed taxes to pay for the State’s obligations.  Attorneys for Petitioners, Respondents and the Intervener, County of Santa Clara, all seemed to agree that payments under ABX1 27 would most likely come from local tax revenues. 

Counsel for the State argued that this was not prohibited by Proposition 22 because it merely prohibits the Legislature from making a law “requiring” tax increments to be diverted to state obligations.  ABX1 27 was drafted to avoid this prohibition by creating a “Voluntary Alternative Redevelopment Program” in which cities or counties may elect to participate.  Many of the Justices seemed skeptical of this argument.  More than once the term “ransom payment” was used to characterize the payments required by 27.

The Justices probed further as to what sources sponsoring agencies might have to make the ABX1 27 payments that would not otherwise be prohibited.  There seemed to be a consensus that if the payments made under 27 were deemed to be involuntary, they would indeed run afoul of Proposition 22. 

C. The Severability Clause in ABX1 27 

At various points the question was posed:  what happens to 26 if we decide that 27 is unconstitutional?  Counsel for the CRA and League of Cites argued that since 26 was enacted solely to compel cities to make the payments under 27, the two bills are not functionally severable.  He added that to uphold 26 and strike down 27 would be the worst of all possible outcomes for his clients.  Counsel for the State took a more nuanced approach, but ultimately acknowledged that his clients would be satisfied with such a result.  Counsel for the County of Santa Clara hammered hard on the theme that 26 should be allowed to stand while 27 should be struck down.  He argued that for too long redevelopment agencies have siphoned off money desperately needed by counties to meet their financial obligations. 

In the end, it may all come down to Section 5 of Chapter 5 of ABX1 27 which says, in essence, that if any provisions of 27 are held invalid, the provisions of ABX1 26 shall continue in effect.  Counsel for Petitioners argued that this clause is not conclusive.  He asserted that the Court must be able to conclude the Legislature would have passed 26 even if 27 had failed.  The legislative history of these two bills, he argued, shows that it was never the intent of the Legislature that redevelopment be abolished with no means for its reestablishment.  

Did the Legislature utilize a constitutional means in the adoption of ABX1 26 to achieve an unconstitutional end? Is ABX1 27 truly a “voluntary” program so as to not run afoul of Proposition 22?  Can the Court find that 26 and 27 are so joined at the hip as to not be functionally severable, despite the severability clause in 27?  These are the questions that the Justices are now weighing and which will be answered in their decision, which is expected to be handed down before January 15, 2012.

Stay tuned….

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last Friday I spoke at the CLE Eminent Domain Conference in San Francisco.  The topic of my talk was "The Death And Possible Rebirth of Redevelopment in California."  I spoke on the current state of limbo in which redevelopment agencies find themselves as a result of the passage of ABX1 26 and ABX1 27 and the ensuing lawsuit challenging their constitutionality.  While I mentioned that the California Supreme Court would be hearing arguments on November 10th, I neglected to mention how to access the webcast of the proceedings.  For those interested in watching the arguments, direct your browser at 9:00 a.m. on Thursday, November 10, 2011 to the California Channel at www.calchannel.com. 
 
Back in August, the Court agreed to hear the case on an expedited basis, so as to reach a decision before Jan. 15, 2012, when the first payments under AB1x 27 would be due.  The positions staked out by the two sides were neatly summarized in statements given this morning on Sacramento's Capital Public Radio by H.D. Palmer of the Governor's Department of Finance and Chris McKenzie of the League of California Cities.

Palmer: "We believe the law is clear, that these agencies were created by an act of the legislature, and similarly, they can be dissolved by an act of the legislature."

McKenzie: "It's an abuse of their power - you can't violate the constitution and claim, oh, but we really are just using this other power that we have."

We expect to see these conflicting arguments probed and challenged by the Supreme Court Justices on Thursday.  Check back here later in the week for our take on the arguments and how they were received.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

When we think of some of the most well-recognized and controversial decisions from our judicial system, cases like Roe v. Wade (abortion) and Dred Scott v. Sandford (slavery) come to mind.  Within our group of right of way professionals, we obviously think Kelo v. City of New London is a huge deal, as it allows for the use of eminent domain for purely economic purposes.  But does it rank up there with the others?  It does, according to US Supreme Court Justice Scalia.

According to an ABA Journal article, Justice Scalia was recently speaking to a group of students at Chicago-Kent School of Law, and he predicted Kelo will be overturned:  "I do not think that the Kelo opinion is long for this world," Scalia said.  He went on to compare Kelo to the other cases mentioned above, noting it ranks among the top cases in which the court made a "mistake of political judgment."  (Justice Scalia is not alone -- see another recent apology for the decision by Justice Palmer.)

While Justice Scalia notes that the US Supreme Court has made mistakes of law, 

it has made very few mistakes of political judgment, of estimating how far ... it could stretch beyond the text of the Constitution without provoking overwhelming public criticism and resistance.  Dred Scott was one mistake of that sort.  Roe v. Wade was another. ...  And Kelo, I think, was a third.

On a less serious note, you can also read the Chicago-Sun Times article on the subject, where Justice Scalia also answers questions such as whether he prefers deep dish or thin crust pizza.  (He was in Chicago; how do you think he responded?)

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Most of us in the right of way profession are following closely the redevelopment lawsuit pending before the California Supreme Court.  The decision could have widespread implications.  So, to keep you fully informed, here's another quick update.

Yesterday, the California Supreme Court announced it will hear oral argument from 9 a.m. to 10 a.m. on Thursday, November 10, 2011.  For those of you up north who are keen on seeing the event in person, oral argument will be taking place at the Supreme Court Courtroom, Earl Warren Building, Fourth Floor, 350 McAllister Street, San Francisco.  For the rest of us, there will be a live TV broadcast and webcast of the case on California Channel at www.calchannel.com. 

To find out more details, or to see what else the high Court will be hearing, you can take a look at the court's website.  And, if you can't take the time to tune in, I'm sure we'll be providing our thoughts shortly after the hearing takes place.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I wanted to provide a quick update on what is going on in the lawsuits involving ABX1 26 and ABX1 27.  For those trying to keep score on who stands where, the following is a list of the amicus briefs that have been filed. 

In support of the CRA / League of Cities' position, seeking to overturn the laws:

• Association of California Cities - Orange
• City of Irvine
• Long Beach
• Public Interest Law Western Center
• San Bernardino County
• Southern California Coalition
• Southern California Non Profit Housing
• Riverside County

In support of the State's position, seeking to uphold the laws:

• Affordable Housing Advocates
• California Professional Firefighters
• Center for Constitutional Jurisprudence
• California Teachers Association 
• Los Angeles Unified School District
• MORR - Chris Norby
• Santa Clara Unified School District

Next, we have a new lawsuit entering the fray.   Last week, a group of 10 Southern California cities filed a lawsuit seeking to strike down ABX1 26 and ABX1 27.  This lawsuit, filed in Superior Court, would seem at first glace to be a bit late to the party.  After all, the Supreme Court has already accepted jurisdiction over the original lawsuit, promising a decision by January.

So what is the point of a new filing in Superior Court?  Perhaps there is none.  The State responded almost immediately, filing a notice of related cases and noting for the Court that the case encompasses issues pending before the California Supreme Court and may become moot before any action is taken. 

But there may be a bit more to it.  The new lawsuit indeed raises the very same arguments as those being made in the Supreme Court.  But the new lawsuit also raises some additional grounds for striking down the laws - 14 claims of invalidity in total - including claims that the bills:

1. Did not qualify for passage on a majority-vote basis.
2. Exceeded the scope of the "special session" in which they were passed.
3. Did not meet the requirements necessary to take effect immediately.
4. Endanger existing contracts.  

And one final update.  Yesterday, Governor Brown vetoed SB 450, a bill proposed by Senator Alan Lowenthal of Long Beach that would have made changes in Low and Moderate Income Housing funds managed by redevelopment agencies.  But before anyone thinks Governor Brown may be changing his mind, his veto message for SB 450 makes clear that the veto is tied to the pending Supreme Court case, which makes the bill "a little ahead of its time."

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

As probably everyone following this blog already knows, redevelopment is under attack in California.  While some might assume the attack flows from continued outrage over the Supreme Court's Kelo decision, the reality is actually quite different.  Here in California, the driving force is not moral outrage, but budgetary crisis. 

As I learned earlier this week at the IRWA Chapter 67 lunch meeting, Governor Brown's plan to eliminate redevelopment is not part of some long-planned effort.  According to a presentation by one of my partners, Gale Connor, when now Governor Brown was Mayor Brown of Oakland in recent years, he actually benefited from and backed several redevelopment efforts.  It is only now, when facing nearly impossible budget shortfalls, that Governor Brown has taken this path. 

So where do things stand?

Status of the Lawsuit:  The lawsuit over ABX1 26 and ABX1 27 continues in the Supreme Court.  The respondents (those supporting the laws) filed their brief on September 9; the responsive brief from the California Redevelopment Association is due September 24.  (By the way, I've seen these bills referred in several iterations including "X1 26," 1x 26," "26 1X," and various other combinations.  According to the official bill on the legislature's website, the correct designations are ABX1 26 and ABX1 27.  I'll try to use that designation consistently from now on, but I make no promises.) 

Earlier this week, the Court also denied the CRA's request for clarification/modification of the partial stay entered last month. 

Other Recent Developments:  In an effort to avoid the new legislation and the murkiness of the lawsuit and the Supreme Court's partial stay, a few agencies have adopted a different tactic, seeking a legislative end run around the whole mess.  Whittier reportedly took the first crack at it, seeking a legislative exemption from the new law regarding the sale of the site of the former Fred C. Nelles Youth Correctional Facility.  

While initial press reports suggested this tactic might succeed, it ultimately failed in the legislature.  A September 12 article in the Whittier Daily News, "Defeat of Nelles development bill likely to delay project, Whittier officials say," describes the effort and its ultimate failure in more detail.   If Whittier had managed to garner legislative support, one must wonder whether Governor Brown would have signed the law. 

Other agencies are reportedly trying similar tactics, including an effort by Monrovia related to the Gold Line Extension Project, which is described in a September 7 article in the Altadena Patch, "Gold Line Extension Could be Delayed by Redevelopment Lawsuit." According to an article in today's Arcadia Patch, the Monrovia City Council has hired a lobbying firm to help with those efforts, but the legislative session has now ended, so it seems unlikely anything will happen on this front in the immediate future.

Finally, one "clean up" bill was passed before the legislative session ended.  SBX1 8 passed in both the Senate and Assembly on September 8, but it has not yet been signed by the Governor.  If signed, it would make several changes to ABX1 26 and ABX1 27.  We'll provide additional details about those changes when and if the Governor signs the bill. 

• Email This
• Print
• Comments (1)
• Trackbacks (1)
• Share Link

We'll have more soon, but I wanted to report quickly that the California Supreme Court announced today that will assert jurisdiction over the CRA's lawsuit involving the constitutionality of AB 26 X1 and AB 27 X1, the bills involving the dismantling of California's redevelopment agencies. 

The Court also announced a partial stay of the legislation while it considers the case.  A news release by the Judicial Council of California describes the scope of the Court's stay as follows:

The court allowed the first statute [the one that eliminates redevelopment agencies] to remain in effect insofar as it precludes existing redevelopment agencies from incurring new indebtedness, transferring assets, acquiring real property, entering into new contracts or modifying existing contracts, entering into new partnerships, adopting or amending redevelopment plans, etc., but it stayed enforcement of both statutes in all other respects.

The Court also indicated that it intends to make a final decision by mid-January 2012. 

We will have a more detailed analysis in the next day or two.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

When dealing with regulatory takings claims, we've covered in the past the maze of procedural landmines that await a property owner.  We've once gone so far as to describe it as resembling "Alice's trip through Wonderland, with the parties falling in and out of state and then federal court (instead of a rabbit hole) based on procedural and substantive rules that often seem as logical as the Mad Hatter's recitals at the Tea Party."  Could one of those major obstacles disappear, allowing land owners a more direct shot at a regulatory takings claim in federal court?  The US Supreme Court could decide this issue if it takes up a new case where the property owners have filed a petition for review.  

While the chances of US Supreme Court review are slim, there's a fascinating new case that has made its way up the judicial ladder that deals specifically with the silly and confusing Williamson County rule that bounces a property owner around our legal system.  Our friend Robert Thomas has a detailed post on his blog, InverseCondemnation.com, that we highly recommend following.  

Generally, the case -- Alto El Dorado Partnership v. County of Santa Fe 634 F.3d 1170 (10th Cir. 2011) -- goes like this:

• The property owner sought to subdivide its property to build residential units.  However, a County ordinance requires subdividing land owners to build "affordable housing" units to be sold to County-approved buyers.  
• The property owner challenged the "affordable housing" obligation in federal court, claiming it amounts to an unconstitutional permit condition in violation of Nollan v. California Coastal Commission 483 U.S. 825 (1987).  
• The court held that under Williamson County, the owner's claim was unripe and had to be litigated in state court, and regardless, the owner could not challenge the affordable housing condition under Nollan because (1) it is a legislative (as opposed to administrative) requirement and (2) it does not take real property, but merely restricts the use of land.

In the property owner's petition for review, the US Supreme Court is being asked to decide whether Williamson County's state-procedures rule should be overturned given that it effectively bars property owners from asserting federal takings claims.  

If the Supreme Court takes up the case, it will be fascinating to follow.  We'll keep you posted.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

We've been following the Ninth Circuit Guggenheim case for more than a year.  That Court's change in its holding between the initial decision by a three-judge panel and the subsequent en banc decision, coupled with the considerable attention the decision received, led many to think the case was ripe for Supreme Court review. 

Today, we learned that the Supreme Court denied the owner's Petition for Writ of Certiorari, meaning the en banc Court's decision will stand.  (As a reminder, that opinion held that the City of Goleta's rent control ordinance did not constitute a taking, despite the fact that the ordinance transferred the vast majority of the mobile home park's value from the park owners to the tenants.)

For those looking for more insights into the Court's reasoning in denying the cert petition, you'll have to try to read the tea leaves of a summary order, "Certiorari Denied," that lists about 200 cases, of which Guggenheim is the 18th.  Most, including Guggenheim, contain no further information.

For those who think this is a shocking result, remember that the sheer number of people seeking Supreme Court review makes the odds of success quite low, even for significant cases.  As I forecast back in February, even if one viewed this case as having a "great" chance at being reviewed, the odds were still likely only around 10%.  In the end, the Guggenheims will have to suffer with the other 200-odd parties whose hopes of a victory in the Supreme Court were dashed in summary fashion. 

In other Supreme Court news, I'm happy to report that today's order also contained information concerning rulings on various attorney disciplinary proceedings, and of the 11 attorneys ordered disbarred from the Supreme Court, I didn't recognize a single name. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

We thought it was over in 2009 when the Ninth Circuit held that the City of Goleta's rent control ordinance constituted a taking.

We thought it was over in late 2010 when an en banc Ninth Circuit panel ruled the other way, holding that the property owner failed to establish the "investment-backed expectations" necessary to establish a takings claim under Penn Central.

Now, we're not sure if it's ever going to be over.  Apparently, Dan Guggenheim has decided to seek review by the U.S. Supreme Court, so there may yet be more drama for the long-playing battle between the Guggenheims and the city over a mobile home rent control ordinance that the parties seem to agree has the effect of transferring the vast majority of the mobile home park's value to the tenants. 

So what happens now?  First, the Guggenheims must actually file their Petition for Writ of Certiorari, asking the Supreme Court to review the case.  Then, the Court decides whether it wants to review the case, and it's a serious uphill battle.  The Court receives thousands of petitions each year and it typically selects only about 100 of them for review.  In other words, based on the math alone, the Guggenheims aren't likely to see the inside of those hallowed halls. 

But some cases are more likely than others to pique the Justices' interest (four must agree that review is warranted), and controversial land use cases that have garnered media and practitioners' interests - and that have generated multiple, conflicting decisions by separate panels of a federal Circuit Court - probably have a greater likelihood of being chosen then most cases. 

Add to this that the decision comes out of the Ninth Circuit - which has a well-documented reputation for receiving far more than its share of decisions selected for review - and the Guggenheims probably have a decent shot (of course, even if these factors make the case five times more likely to be selected than a typical case, that still probably means only about a 10% chance of being reviewed).

And if the Supreme Court grants review?  Obviously each case is reviewed on its own merits, but according to an analysis of ten years' worth of Supreme Court review, the Ninth Circuit was reversed (or had its decision vacated) 80% of the time and affirmed 20% of time.  In other words, the Guggenheims' odds once they get there are a whole lot better than the odds of getting there in the first place.

We'll let you know what happens.

UPDATE:  February 4, 2011, 4:00 p.m.  Since publishing this post earlier today, I've gotten feedback from several sources, some from people involved in the case and some from other interested observers.  The one consistent comment is a belief that the chances of Supreme Court review are quite a bit higher than I forecast above.   While nobody is telling me they thinks it's a slam dunk, there is some optimism that this really does meet a lot of the criteria the Court looks for when selecting cases.  Stay tuned.

• Email This
• Print
• Comments
• Trackbacks (1)
• Share Link

Earlier this year, we reported on the decision in Ridgewater Associates, Inc. v. Dublin San Ramon Services District.  There, the Court of Appeal rejected an inverse condemnation claim by a purchaser of a property that suffered water intrusion damage caused by an adjacent waste water treatment facility. 

The court held that the seller's failure to assign the inverse condemnation claim to the buyer, coupled with the fact that the buyer was "compensated" for any damages through payment of a reduced purchase price, left the buyer with no standing to sue in inverse condemnation. 

The buyer sought review by the California Supreme Court, and while the Court denied the Petition, it did issue an order depublishing the Ridgewater opinion.  Thus, while the buyer is still out of luck, the case no longer has any precedential value, meaning it cannot be cited by parties to any other lawsuit, except in very narrow circumstances.   

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection case received considerable attention both before the Supreme Court agreed to hear it, and following the very colorful oral argument before the Court last December. 

At issue was whether Florida's efforts to restore some of its beaches through depositing 75-feet of sand seaward of the high-tide line rose to the level of a taking due to the restoration work's causing former beach-front owners' property lines to be moved further away from the ocean water.  

What made the case even more interesting was that by the time it got to the US Supreme Court, the issue was framed as whether the Florida Supreme Court's decision in favor of the state constituted a "judicial taking" of property -- a concept first recognized in a 1967 concurring opinion by former Justice Potter Stewart in Hughes v. Washington, in which he explained that “a sudden change in state law, unpredictable in terms of the relevant precedents” could qualify as a taking.  In the nearly half-century since Justice Stewart posited the concept of a "judicial taking," no court has upheld such a claim. 

Today's opinion is almost as complicated as the archaic law of littoral rights, accretion, and avulsion that underlies it, with four different groupings of Justices signing on to various portions of three different opinions. 

Let's start with the simple part:  the Court held unanimously that the Florida Supreme Court's decision did not constitute a taking.  The Court upheld the ruling in favor of the state, meaning those beach-front property owners whose property is now a bit further away from the ocean are out of luck.

From there, things get a bit murky.  Four Justices signed an opinion authored by Justice Scalia, recognizing the validity of judicial takings claims.  Specifically, the Justices concluded that if a court declares that what was once a recognized private property right no longer exists, such a decision qualifies as a taking. 

However, they believed that the Florida Supreme Court made no such announcement; rather, they concluded that the Florida court based its decision on existing legal principles.  (Note that the other Justices did not reject the idea of a judicial takings claim; they concluded that the Court did not need to reach the issue at all.)

Now, before you call this part of the opinion a big "who cares," in this case, four Justices did not constitute a minority of the panel.  In one of the case's odd twists, Justice Stevens recused himself as a result of his personal ownership of some Florida beach property.  Thus, this part of the opinion represents half the Court.  Still, under long-standing Supreme Court precedent, in the case of a 4-4 tie, the lower court's decision is upheld, and the opinion of the equally divided Court does not constitute binding precedent. 

Still, getting half the voting Justices to endorse the idea of a judicial takings claim is not insignificant, and property-rights advocates are already trumpeting this opinion as a "victory" for property owners.  For example, Timothy Sandefur of the Pacific Legal Foundation writes in a post entitled Judicial takings in Stop The Beach Renourishment:

Today’s decision gives hope to millions of American property owners whose right to their homes, businesses, and other property is often at the mercy of judges who are willing to totally rewrite the law to expand government at their expense.

It remains to be seen whether this decision will open a new floodgate of litigation against judges.  When and if the day finally comes where a court upholds a "judicial takings" claim, one more interesting issue remains:  who pays the judgment?  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I'm a California eminent domain attorney.  I work in Orange County, Los Angeles County, Riverside County, San Bernardino County, etc.  I don't work in Utah.  I'm not even licensed in Utah.  Why, then, would I bother to blog about what is going on with eminent domain in Utah?

Quite frankly, because it amuses me.  The Utah Senate has now approved a law that authorizes the state to condemn property from the federal government.  You may wonder how can a state give itself the power to condemn property from the federal government.  The answer:  it probably can't --and Utah knows it.  

According to a March 10 article by Brock Vergakis in Business Week, "Utah plans to take US land through eminent domain," Utah's lawmakers are using the new law to create a legal battle:

The goal is to spark a U.S. Supreme Court battle that legislators' own attorneys acknowledge has little chance of success.

So why bother?  Probably a couple of reasons.  First, even if unlikely to succeed, the scheme could be incredibly lucrative if it works.  People bet on long shots all the time, and Utah apparently believes that the cost of this long shot is justified by the potential rewards. 

Second, I'm guessing Utah is trying to make a political statement in a very visible way (Supreme Court battles tend to do that).  They do not think the federal government is properly managing federal land, and they want to generate revenue off of land that, at present, does little to benefit the public.  And, this is not a minor issue, as the federal government apparently owns more than 60 percent of the state. 

I think the fight will be a fun one to watch.  Of course, I'm sitting here in California, and I'm not going to foot the legal bill of up to $3 million (that's how much the legislature authorized in spending to defend the new law). 

If the scheme works, I wonder if I could get someone to grant me the power to condemn land from the federal government . . . .

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last week, I reported on Kimco of Evansville, Inc. v. State of Indiana, an access-impairment case pending for consideration by the U.S. Supreme Court.   

In an order earlier today, the Court denied the Petition for Writ of Certiorari.  This is not entirely surprising; in the same order in which the Court denied the Petition in the Kimco case, the Court also denied similar petitions in 175 other cases.  The Supreme Court grants Petitions in less than five percent of the cases presented to it.  

The Court still has pending before it another eminent domain case, Stop the Beach Renourishment v. Florida. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

According to a January 10 post on the Fox Rothschild Eminent Domain & Real Estate Litigation Blog, the U.S. Supreme Court is scheduled to hold a conference this week on whether to grant a Petition for Writ of Certiorari on an access-impairment claim arising from a condemnation case in Indiana, Kimco of Evansville, Inc. v. State of Indiana. 

Post author David Snyder explains that the need for Supreme Court review arises from a "general rule" in most states that damages arising from access impairments are not compensable as long as the owner is left with reasonable access, and the belief among many that this "general rule" is fundamentally unfair.

California eminent domain law is generally more protective of condemnees than the law that exists in "most states."  (A classic example of this is California's Code of Civil Procedure section 1263.510, which makes California one of only a handful of states that provides business owners with a right to compensation for loss of business goodwill.)

However, even if California does not track exactly what "most states" do, California access-impairment law is quite a morass.  The "general rule" here is that an impairment must be "substantial and unreasonable" in order to justify compensation.  However, jurisprudence involving what constitutes "substantial and unreasonable" is murky at best, and reading the case law, it quickly becomes clear that courts are loathe to draw any bright, easily-followed lines in this area. 

Moreover, "substantial and unreasonable" need not always apply.  Turning back to business goodwill, it is not clear that business owners must meet that threshold where access impairments impact business goodwill, as section 1263.510, on its face, contains no "substantial and unreasonable" requirement.  

Confusion also exists in California about whether any difference exists between an access impairment by itself, as compared with an access impairment created in conjunction with a partial taking of property.  Ample case law exists to suggest that courts impose a higher level of scrutiny on access-impairment claims that do not involve any physical taking than they do on impairments associated with a physical taking, even though the impacts to property owners may be indistinguishable. 

In the end, California's eminent domain law could certainly use some clarity in this area, though I'm not sure the Indiana case -- even if the Supreme Court decides to hear it -- will make any real difference here.   That said, a Supreme Court ruling that all access impairments affecting value are compensable as a matter of constitutional right would certainly have repercussions across the country.   

• Email This
• Print
• Comments
• Trackbacks
• Share Link

One of the big eminent domain stories of the last few weeks involved the oral argument at the U.S. Supreme Court in the Florida beach case.  That case involves whether a government program to add sand to parts of the Florida coastline, creating new public beaches in front of private property that had been beach front constitutes a taking.  For more information about that case, see my December 15 article, "Erosion Control, or Coney Island South?" published in the Los Angeles Daily Journal. 

Now, two other water-related takings issues are making news.  The first, as reported December 14 by Fox News in "Not So Private Property?: Clean Water Restoration Act Raises Fears of Land Grab," involves a proposed amendment to the federal Clean Water Act that would, if adopted, remove the word "navigable" from the definition of the water bodies falling within the Act's scope.  What makes the elimination of one word so controversial?

As currently written, the Clean Water Act regulates discharges into certain bodies of water, including any "navigable waters."  (What constitutes "navigable waters" is a whole different can of worms, especially since the Act has been interpreted to encompass not only navigable waters, but also waters with a "significant nexus" to a navigable waterway -- and because the definition of "navigable waters" has been the subject of recent litigation.)  

Some claim that eliminating "navigable" from the Clean Water Act's scope will create major problems:

The Clean Water Restoration Act currently pending in the U.S. Senate could reach to control even a "seasonal puddle" on private property. . . .

This bill is described by opponents as a sweeping overhaul of the Clean Water Act that could threaten both physical land and jobs by wiping out some farmers entirely.

Not surprisingly, the Act's proponents feel differently, claiming the amendment contains sweeping exemptions to ensure that it does not unduly impact existing agricultural uses.  

The second issue comes from a December 15 Fox News story, "Not So Private Property?: Florida Man Takes Eminent Domain Case to High Court."  It involves a case my colleague Brad Kuhn reported on last month in In Determining Just Compensation, Should Zoning Regulations Enacted to Depress a Property's Market Value for Future Acquisition be Ignored?   The question there is whether an effort to down-zone a property, deflating its value in anticipation of a future government acquisition qualifies as compensable.  The case arises from efforts to expand the Florida Everglades National Park and has a factual history dating back to the 1960s. 

One of the homeowners impacted by those efforts has fought his case through the Eleventh Circuit Court of Appeals, which sided with the government and found the down-zoning is not compensable.   However, the owner has petitioned the U.S. Supreme Court to take the case.  As reported by Fox News,

The high court hasn't decided yet whether it will hear the appeal in the potentially landmark property rights case -- 480 Acres of Land and Gilbert Fornatora v. U.S.

So is there a thread that ties together beach protection, navigable waters, and an expanded everglades park?  Maybe this:  if the global warming scientists are correct, the world is facing rising sea levels and changing weather patterns.  If this is the case, the importance of clear jurisprudence concerning the interrelationship among property lines, property rights, and the location of water bodies will similarly rise.  Whether these cases ultimately create that clarity or simply add to the existing confusion remains to be seen.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A year or so ago, I attended a three-day symposium on regulatory takings that was held at Stanford University. At the end of the symposium, the final panel of speakers was asked to predict what the United States Supreme Court might be doing in the area of takings over the next couple of years. The answer of at least one panelist was essentially “nothing.” In his view (at least as I understood it), the Supreme Court had been grappling with various takings issues for years without coming up with particularly workable formulas and was done trying.

Well, based on an article in the Los Angeles Times today by David G. Savage, “Supreme Court to Hear Florida Beach Property Rights Dispute,” it looks like the Supreme Court will weigh in on a takings issue in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection.

The twist that might save the accuracy of the panelist’s prediction is that the case is not a typical regulatory takings case, one where a government regulation, typically a zoning limitation, has gone too far, resulting in a substantial or complete loss in value to the property.

According to the article:

The Florida case began in 2004 when five property owners objected to a state-funded beach restoration project east of Pensacola. More than six miles of white sandy beaches had been eroded by several hurricanes, and the project called for adding up to 75 feet of new sand to the shoreline.

But this public benefit came with a downside for beachfront property owners. The newly built-out beach would be public land.

While many landowners accepted this deal, a few objected and then sued when the project went ahead. They claimed the government had taken their private property, or at least their right to a private beachfront.

"Everyone knows that waterfront property is more valuable than water-view property, and that a private beach is worth a lot more than a public one," said Kent Safriet, a Tallahassee, Fla., lawyer representing the property owners. "This is not a land grab by my clients. It is a land grab by the state to create a public beach."

On its face, a case involving the increase or decrease in the size of a beach would seem to have little relevance to other takings situations. Certainly no agency is likely to build a beach in front of my thoroughly land-locked home. But if the Supreme Court viewed the case so narrowly, it is unlikely that the Court would have agreed to hear it. Presumably, the Justices must instead expect that they can bring some clarity to takings law or can correct something they view as an error in the existing law.

The article mentions an “odd twist” in that the owners’ attorneys are asking the Court to rule that the state’s judges -- rather than a particular agency -- actually did the taking, i.e., it was a "judicial taking." I have to agree that this seems an “odd” holding: Who would actually pay the judgment? The judges themselves? But it is an issue in the case -- for reasons that would likely take several, boring pages to explain; so I won't try here.

Oral arguments in the case are scheduled to be heard by the Court today. It will be fascinating to read what the Court’s final opinion does or doesn’t do to takings law.

• Email This
• Print
• Comments
• Trackbacks
• Share Link