Recent Developments in Eminent Domain: Public Use

LibraryAt the Cutting Edge: Land Use Law from The Urban Lawyer (ABA) (2014 Ed.)

Mark M. Murakami,* Bethany C. K. Ace,** and Robert H. Thomas***

I. Introduction

IN KELO V.CITY OF NEW LONDON,1 THE UNITED STATES SUPREME COURT held that a municipality's exercise of eminent domain power supported only by claims that doing so would help the local economy was not a per se violation of the Public Use Clause of the Fifth Amendment. The Court's majority—and especially Justice Anthony Kennedy's concurring opinion, which provided the fifth vote to affirm—left open the possibility that some takings would not qualify.2 In the intervening time, however, the Court has not provided any guidance whatsoever about what takings it would consider unconstitutional private-to-private transfers, or when a proffered justification will be considered a pretext to impermissible private benefit. Despite massive uncertainty and conflicting rulings from the lower courts, the Court has yet to take up a case, despite several viable petitions.

In this article, we summarize the past year's decisions, several of which attempt to discern what Kelo means. This article also discusses pipeline takings, the effect on a due process claim of a finding that a taking was pretextual, and other issues related to the power to condemn private property for public use.

II. Guam: Redevelopment Takings

In Government of Guam v. 162.40 Square Meters of Land More or Less, Situated in the Municipality of Agana ("Ilagan"),3 the Supreme Court of Guam upheld a condemnation supported by the Agana Plan ("Plan"), an economic development plan. The taking resulted in the seizure of a portion of a residential lot, which was subsequently conveyed to an adjoining neighbor who just happened to be the mayor of Agana, for use as a driveway to access his parcel that had been landlocked by an earlier condemnation under the Plan.4

The Plan was designed to promote the economic development of Guam, by providing public access to all properties by straightening lot lines and streets following the destruction of the village during World War II.5 To the extent the redrawing of lot lines created fractional lots, the Plan provided that the owners of the largest contiguous lot would have priority in purchasing the fractional lots.6 The condemnation was for this lot only, however, and occurred nearly ten years after the Plan was last actively executed.7 The Ninth Circuit had previously upheld a taking under the Plan as satisfying the public use requirement.8

The trial court invalidated the taking because it was for private ben-efit.9 The Supreme Court of Guam, relying upon Kelo, held that contemporaneous takings under an economic development plan are not necessary to validate a taking for economic development to satisfy the public use requirement.10 The court found the fact that prior cases such as Kelo involved contemporaneous en masse takings was not dispositive.11 The court concluded the Plan had not been "abandoned" at the time of the taking because the government was still addressing the existing fractional lot problem—trying to fix the earlier poor execution of the Plan—nor had the subsequent land trust acts demonstrated any clear legislative intent to supersede or repeal the Plan.12 The Plan imposed no time limit, which the court found to be reasonable because "economic developments are by nature long-term undertakings."13 That the taking occurred long after the last known taking "[did] not mitigate the fact that it achieved the goals of the original Agana Plan."14

This case emphasized that the focus in analyzing condemnations must be the "purpose, and not its mechanics, to determine whether the Public Use Doctrine is met."15 It also emphasizes that courts believe that it is "not our function to substitute our judgment for that of the legislature" on how the public purpose is effectuated,16 and that the government's decision to exercise its eminent domain power is subject to deference unless the use "be palpably without reasonable foundation."17 The court focused on the "ultimate goal" of the Plan,18 which included providing public access to all properties, to "establish order out of chaos"19 and a taking that satisfied the ultimate goal was deemed valid.20 Moreover, "[t]he mere fact that the taking provided an incidental benefit to a private party does not invalidate a taking as long as there is a valid public purpose."21 Further, apparently an economic development plan once approved (here by the Ninth Circuit) never dies and can be used to justify "selective" and "sporadic" condemnations for years to come.22 The court also concluded that those affected by a judgment overturning a condemnation—here, the purchaser of the land from the government—has Article III standing to appeal the decision even if the government does not join in the appeal.23 However, for this case, the United States Supreme Court denied certiorari.24

III. District of Columbia: Redevelopment Takings

This year resulted in the latest, and perhaps the last, chapter in the long-standing Skyland Shopping Center saga that has already resulted in several reported decisions.25 In 2007, the D.C. Court of Appeals originally remanded the case, recognizing that property owners may object to a taking on the grounds that the proffered public use is really a pretext hiding private benefit.26 Now, the D.C. Court of Appeals has heard the appeal after remand of the 2007 Franco case, and in Franco II,27 they noted:

We reversed and remanded because the trial judge had not considered appellant's specific factual allegations, which were misleadingly contained in the section entitled "counterclaims." We instructed that the inquiry into whether or not a project was approved for pretextual reasons should focus on whether or not the project was designed to meet the purported public purpose, not on the subjective motivations of the legislature or officials involved in the project. Finally, we emphasized "that further proceedings, including discovery, should honor the 'longstanding policy of deference to legislative judgments' concerning the public purpose of a taking."28

On remand, the trial court struck all of the property owner's defenses, granted the District partial summary judgment, gave the District possession, and ordered the property owner to vacate.

The Court of Appeals first rejected the owner's claim that the D.C. Council exceeded its authority in adopting the Skyland Act, the ordinance that allowed the taking, because the taking was not for a public purpose.29 The claim was couched as one of subject matter jurisdiction, but the court rejected the argument, holding that "[a]ppellants confuse subject-matter jurisdiction with the merits of the action."30 The court held that the Act did not exceed the Council's authority. The court also affirmed the trial court's grant of summary judgment to the District:

First, we note that the District need only show that the D.C. Council approved the Skyland legislation for the purpose of economic development in order to defeat the allegation of pretext. Second, we reiterate the standard of deference to the legislative decision to which we are bound. In Franco I, we left open the possibility of a trial on the issue of pretext, but following the prolonged discovery period, appellants have not shown that there remains a triable case regarding the issue of pretext.31

The court noted the references in the record that the Council "could rationally have approved the legislation on the basis of economic de-velopment."32 "So, in this case, we defer to the D.C. Council's determination, fully supported by the record, that the Skyland Shopping Center was sufficiently distressed to justify a program of economic development."33 Relying upon Kelo, the court rejected the argument that the Council could not have believed that the redevelopment would be successful, because there is no requirement that the expected public benefits would actually come to pass.34 It is enough that the Council believed—or, more accurately, professed to believe—that the plan would work. The court also held that the taking was executed pursuant to a carefully considered development plan, and that some private benefit is not enough to invalidate the taking.35

This opinion elevates form over substance, and essentially makes the first Franco opinion a hollow promise: if a condemnor merely states it is taking property for redevelopment, no amount of private benefit will overcome it. The court also conflated the public use inquiry with the question of pretext, which is predicated on the stated public use or purpose not being the actual reason for the taking.

IV. Texas: No Fraud or Malintent in Taking

In City of Austin v. Whittingthon,36 the Texas Supreme Court sought to "examine and define the scope of judicial review of legislative takings" under the Texas Constitution, holding that "judicial review is proper to challenge a taking on the basis of fraud, bad faith, or arbitrary and capricious determinations by the condemnor."37 Finding no such intent, however, the court reversed a jury verdict and court of appeals decision in favor of the landowner, and remanded.38

At issue was a condemnation of a lot "to build a parking garage for the city s nearby convention center and a facility to chill water used to cool nearby buildings," thereby reducing municipal energy consumption and costs.39 The condemnation occurred in connection with the city s joint venture with a hotel developer to develop a multi-use project comprised of a hotel, residential and retail spaces, and parking for the expanded convention center.40 Under the Texas Constitution, when condemning property a municipality must demonstrate: "(1) it intends to put the property to public use (the public use requirement); and (2) the condemnation is necessary to advance or achieve that public use (the necessity requirement)."41 The court rejected the city's assertion that "fraud, bad faith, and arbitrariness and capriciousness are simply means to proving that the...

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