Monday, April 14, 2014

California Property Rights Attorney & Scholar Michael Berger to Receive 11th Annual Brigham-Kanner Property Rights Prize

Michael M. Berger will receive the 2014 Brigham-Kanner Property Rights Prize October 30, 2014.  He is the first practicing attorney to receive the Prize.
Today William & Mary Law School and the William & Mary Property Rights Project announced that accomplished property rights lawyer, scholar, and teacher Michael M. Berger will receive the 2014 Brigham-Kanner Property Rights Prize October 30-31, 2014 at the 11th Annual Brigham-Kanner Property Rights Conference in Williamsburg, Virginia. [Disclosure: Mike Berger is a property rights attorney affiliated with the Owners' Counsel of America as an Honorary Member.]

The Brigham-Kanner Property Rights Conference is sponsored by the William & Mary Property Rights Project which seeks to promote the exchange of ideas between scholars and members of the property rights bar through lectures, this annual conference and the Brigham-Kanner Conference Journal.  The Conference is named in recognition of the lifetime contributions of Toby Prince Brigham, Florida attorney, and Gideon Kanner, appellate attorney and professor of law emeritus at Loyola Law School.

Each year the Property Rights Project presents the Brigham-Kanner Property Rights Prize to an individual whose work affirms that property rights are fundamental to protecting and preserving individual liberty.  Mike Berger is the first practicing lawyer to receive the prize.

Berger is a partner with Manatt, Phelps & Phillips, LLP in Los Angeles and is co-chair of Manatt's Appellate Practice Group. He is not only one of the country’s preeminent appellate lawyers, but also one of the nation’s top condemnation and land use attorneys. Mike has argued before numerous appellate courts, including throughout California, the federal courts of appeal, other state supreme courts and the United States Supreme Court.   He has appeared as counsel of record arguing on behalf of property owners before the U.S. Supreme Court on four occasions in these well-known property rights cases: Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency (2002), City of Monterey v. Del Monte Dunes at Monterey, Ltd. (1999), Preseault v. ICC (1990) and First English Evangelical Lutheran Church v. County of Los Angeles (1987).

In addition to his many scholarly publications on takings and property rights, Mike has authored amicus briefs in some of the landmark property rights cases of our time, including Kelo v. City of New London (2005), Lingle v. Chevron USA, Inc. (2005), San Remo Hotel v. City & County of San Francisco, 545 U.S. 323 (2005), Lucas v. South Carolina Coastal Council (1992) and Nollan v. California Coastal Commission (1987).

The Conference will take place over two days beginning with the award ceremony on Thursday night in the historic Wren Building, the oldest building on the William & Mary campus and oldest college building in the United States.  The Conference continues on Friday at William & Mary Law School with panel discussions focused on property rights, property law and takings law as well as a panel devoted to exploring the impact of the Prize recipient's scholarship.  (You can read coverage of past Brigham-Kanner Conferences on this blog here.)

At this time, a list of panelists and a conference schedule have not yet been posted.  For more details about the conference and how to participate, please contact the William & Mary Property Rights Project at lsdevl@wm.edu or call (757) 221-3796.

Friday, April 11, 2014

Missoula Files Condemnation Suit to Take Privately-held Mountain Water Hoping the Second Time Will be the Charm

Mountain Water's "Water Wagon" pictured at the Big Sky Science Circus.
Picture from Mountain Water's website: www.mtnwater.com.
Last week the City of Missoula, Montana filed suit in District Court seeking "a judicial determination entitling it to acquire by eminent domain Missoula’s privately-owned water supply and distribution system" - Mountain Water Company. The City has sought to purchase the utility from its parent company, the Carlyle Group for some time, however, the City's most recent offer of $50 million and previous offer of $65 million were both rejected.  Unable to coax Carlyle into to becoming a willing seller, Missoula filed a condemnation action to take the utility by eminent domain.

Missoula has ventured down this path once before and came up short.  In 1984, Missoula sought to acquire Mountain Water from its owner via condemnation.  After a 5 year legal battle, the Montana Supreme Court ruled against Missoula opining that the taking was not necessary to the public interest.  
“Since this property is already a public utility, and hence to some degree dedicated already to a public use, it is not more necessary the city take over its operation. The public interest will be best served by the city not being permitted to condemn Mountain Water.”  
City of Missoula v. Mountain Water Co., 88-148 (Mont. 1989).
Montana law requires that public entities show “by a preponderance of the evidence that the public interest requires the taking” in order for the power of eminent domain to be used.  Additionally, the public body must demonstrate that:

• The property's use will be a public use.

• The taking is necessary to the public use.

• If already used for a public purpose, the public use proposed is more necessary.

• A written offer for the property was submitted and rejected.

Missoula Mayor John Engen has been quoted as saying that the benefits of the City owning the water system are worth the risk of a long and expensive legal battle with the Carlyle Group, which has vowed to vigorously defend its rights.  However, the question remains - Can Missoula convince the District Court that the public interest will best be served by the City owning and running the utility?  

Michigan eminent domain attorney Alan Ackerman pointed out in his blog here that the allegations in Missoula's Complaint seem to suggest that the basis for acquiring the privately-owned utility is premised more upon the fact that the current owner is a private equity firm rather than the necessity of the taking. Ackerman explained to the Missoula Independent: “I’m not so sure they can justify a real reason other than the fact they want it and the other guy’s got it.” 

Another interesting point Ackerman makes: "If investors and privately-owned public utilities read the Complaint, Montana communities may find themselves with no private investors who will fund infrastructure improvements in the State."  Should investors respond to Missoula's actions as they have to the actions of Richmond, California which seeks to condemn underwater mortgages, Missoula may have a difficult time raising the funds needed to acquire Mountain Water through the issuance of tax-exempt municipal bonds.  

Stay tuned, only time will tell...

Friday, April 4, 2014

OCA Welcomes New Colorado Member, Jack Sperber

Jack Sperber, a partner in the Denver office of Faegre Baker Daniels, joins OCA as the Colorado attorney-member.
We are pleased to announce that Jack Sperber, Esq., a partner in the Denver office of Faegre Baker Daniels, has been selected as the Colorado representative of the Owners’ Counsel of America.  Jack succeeds his former partner, Leslie Fields, Esq., who retired from the practice of law at the end of March. Leslie will continue to be affiliated with OCA as an Emeritus Member.

Jack Sperber focuses his practice on eminent domain and real estate litigation. He has significant experience litigating complex and high-value cases, having secured many multi-million dollar awards and settlements on behalf of his landowner clients.  Throughout his career, he has been involved in virtually every major public project in Colorado, including highways, airports, light rail infrastructure, electric transmission lines, pipelines, and redevelopment projects. He also counsels national corporations on condemnation issues affecting them in Colorado and around the country.

We are thrilled to welcome Jack as the Colorado representative of OCA and look forward to collaborating with him in the future.  To learn more about Mr. Sperber's professional accomplishments, please click here or read our announcement here.

And, we tip our hat to Leslie Fields, an accomplished eminent domain attorney, published author, national speaker, former co-chair of the American Law Institute "Eminent Domain & Land Valuation Litigation" course, and founding member of OCA.

Thursday, March 13, 2014

SCOTUS Brandt Decision Neither Derails Owners' Takings Claims Nor Rails-to-Trails Conversions

On Monday, March 10, the Supreme Court ruled in favor of the landowner in Marvin M. Brandt Revocable Trust v. United States, No.12-1173 (Mar. 10, 2014), a rails-to-trails takings case.  Writing for the majority, Chief Justice Robert's clarified that the government, in this case the U.S. Forest Service, can not redefine commonly understood legal principles relating to real property and simply eliminate the property rights of landowners as a means to achieve its goal of expanding the National Trails System.  Justice Sotomayor wrote the sole dissenting opinion disagreeing with Roberts on the meaning of the Court's 1942 ruling in Great Northern Ry. Co. v. United States, 315 U.S. 262 (1942) and whether general property law principles should apply to railroad right of way disputes.  (See SCOTUSblog for more analysis on the opinion here.)   

Owners' Counsel of America and the National Federation of Independent Business (NFIB) Small Business Legal Center filed an amici brief in favor of the landowners in this case.  The brief argued that the government's position in this case sought redefine the common law meaning of certain property rights and by doing so would eliminate an entire class of takings claims by private landowners.  

At the core of the dispute between the landowner and the government was the meaning of the term railroad "right of way" as used in the 1875 General Railroad Right of Way Act and whether the federal government retained an "implied reversionary interest" in railroad rights of way granted under the Act.  Brandt contended that the land grant his family received in a land swap with the government was subject to a railroad easement which expired when the railroad abandoned use in 1996.  The conveyance of the land was conditioned on the railroad's use of the right of way and made under the terms of the 1875 Act.  The government, on the other hand, argued that it had retained an interest in the land underlying the railroad, therefore, upon abandonment the ownership interest reverted to it rather than the private owner to whom the government had granted ownership of the land surrounding the railroad right of way.  Under the principles of general property law, easements may be extinguished whereas reversionary interests cannot.  The Court clearly answered that this railroad right of way was an easement having no "implied reversionary interest", upon abandonment the easement was extinguished and the Brandt's ownership became unburdened by the easement. 

As stated in the Roberts opinion:
This dispute turns on the nature of the interest the United States conveyed to the LHP&P in 1908 pursuant to the 1875 Act. Brandt contends that the right of way granted under the 1875 Act was an easement, so that when the railroad abandoned it, the underlying land (Brandt’s Fox Park parcel) simply became unburdened of the easement. The Government does not dispute that easements normally work this way, but maintains that the 1875 Act granted the railroads something more than an easement, reserving an implied reversionary interest in that something more to the United States.  Slip op. at 8. 
A number of commentaries have pointed out that the government's assertions in this case were contrary to the government's assertions some 70 years prior in Great Northern, and in fact, the Court concluded the same.  We would be remiss if we did not include the Court's remarks in that regard:
More than 70 years ago, the Government argued before this Court that a right of way granted under the 1875 Act was a simple easement. The Court was persuaded, and so ruled. Now the Government argues that such a right of way is tantamount to a limited fee with an implied reversionary interest. We decline to endorse such a stark change in position, especially given "the special need for certainty and predictability where land titles are concerned." Leo Sheep Co., supra, at 687.  Slip op. 17.
Read more about the government's "about face" on OCA HI Member Robert Thomas's blog: SCOTUS Benchslap: Railroad Right Of Way Is An Easement, Just Like We Said A Long Time Ago; and NFIB's blog: How the West Was Won: What Does the Brandt Decision Mean for Property Rights?  

While this decision is without a doubt a win for the Brandt family, for private property rights and possibly for landowners around the country whose property ownership interests were taken for rails-to-trails use, this ruling does not mean that the sky will fall and rail-trails will cease to exist.  Rather, the Rails-to-Trails Conservancy has commented that Brandt's reach is much narrower than has been reported.   If fact, RTC states on its website:
The ruling does not affect trails that have been “railbanked” (the federal process of preserving former railway corridors for potential future railway service by converting them to multi-use trails in the interim). Potentially affected corridors are predominantly west of the Mississippi and were originally acquired by railroads after 1875 through federal land to aid in westward expansion. 
Existing rail-trails or trail projects ARE NOT affected by this decision if ANY of the following conditions are met:    

  • The rail corridor is “railbanked.”
  • The rail corridor was originally acquired by the railroad by a federally granted right-of-way (FGROW) through federal lands before 1875. 
  • The railroad originally acquired the corridor from a private land owner. 
  • The trail manager owns the land adjacent to the rail corridor.
  • The trail manager owns full title (fee simple) to the corridor.
  • The railroad corridor falls within the original 13 colonies. 
However, it is possible that the many private property owners currently litigating takings claims against the U.S. regarding rails-to-trails conversions may secure just compensation under the Fifth Amendment. Further, if the government does not own the land underlying an abandoned railway, it will have to negotiate with owners to purchase the rights to that land or follow the proper procedures under eminent domain and pay just compensation to acquire title.

Friday, February 28, 2014

Guest Post: TransCanada XL Route Through Nebraska is Ruled Unconstitional

Today we bring you a guest post authored by OCA Nebraska member-attorney, William Blake, a partner in the Lincoln office of Nebraska law firm Baylor Evnen.  Bill discusses the recent Nebraska District Court ruling which struck down a state law that allowed the Governor to approve a route for the TransCanada Keystone XL pipeline to cross the state.

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Condemnation lawyers who represent property owners tend to appreciate events that shed light on this dark corner of the law, especially those events that help to shape public opinion in favor of property rights.  The recent Keystone XL decision by Lancaster County District Judge Stephanie Stacy (a former partner of this author), is being cast in that mold, but in the process, the litigation is somewhat misunderstood.  The ruling is 50 pages long with almost 250 footnotes, and is written in the style of a law review article.  The misunderstanding is probably excusable, but it is not an eminent domain case.  Eminent domain is only a side effect, and really not much of a side effect.  The driving issue has always been the environment, whether the pipeline is going to be dependably safe enough to let it go through the fragile Nebraska Sandhills and over the Ogallala Aquifer?  See Thompson v. Heineman, Lancaster County Nebraska District Court, Case No. 12-2060 (2012).  

The underlying question is how the Nebraska Legislature (the Unicameral) can delegate the authority to regulate the siting of a major pipeline.  When the first Keystone pipeline was constructed through Nebraska in 2008, the State had a statute that simply empowered pipeline companies to build pipelines through the State and to use eminent domain to do so.  There was no oversight.

When plans for a second pipeline (the XL) were announced, Nebraskans started saying there should be some oversight, some regulation and say in the routing process.  Denying the right to condemn was briefly discussed but  failed to gain any serious traction with our lawmakers.  The issue before the  Unicameral with was how to deal with the routing of pipelines through our state, not whether a pipeline company or a foreign corporation should have the right to condemn. 

The issue in the litigation is whether TransCanada will build the XL pipeline as a ‘common carrier’.  The law dealt with by Judge Stacy gave the primary regulatory power for siting major pipelines to the Governor.  The Nebraska Constitution requires that common carriers be regulated by an elected Public Service Commission, as determined by the legislature.  It is not clear whether a pipeline that just goes through Nebraska and does not pick up or deliver any product in Nebraska is a common carrier.  Judge Stacy ruled that such pipeline is a common carrier.

The appeal has already been filed, and there is another set of statutes that may allow the matter to go to the Public Service Commission.  The offending statutes do not give TransCanada the power to condemn, and the alternative regulatory scheme does not give that power.  It has been there all along, and even if all of the regulatory schemes offend the Constitution, that statutory power will remain.  This author has handled the negotiations with TransCanada on behalf of over fifty property owners for the two Keystone projects, and the concerns have always been primarily routing, safety, permanent property damage, temporary inconvenience and money, usually in that order.  At this writing a great majority of the easements for the route through Nebraska have been obtained, and TransCanada continues to negotiate with willing property owners for the remainder of the proposed route.

The recent litigation might have some small effect on public awareness and opinion regarding the questions of who should have the power of eminent domain, and when the entity is a profit centered corporation, should ‘just compensation’ be measured by something other than fair market value.

Bill Blake
Baylor Evnen Law Firm
Lincoln, Nebraska

Bill Blake practices in the areas of eminent domain/condemnation, real estate and commercial litigation.  He is the editor of the ABA's 50 state compendium "The Law of Eminent Domain," First Chair Press (2012) and the author of "Just Condemnation in Nebraska: a Manual for Owners."


Friday, February 21, 2014

A Virginia Jury Sides with Property Owners in Eminent Domain Trial, yet VDOT Wins?

Last week a Virginia jury awarded property owners $234,000 for property taken by Virginia Dept. of Transportation (VDOT) for a highway improvement project in Virginia Beach.  While it appeared as a victory, unfortunately, it was not.  While the jury came in with an amount of just compensation approximately $142,000 above the value VDOT presented at trial, it was $14,000 less than VDOT's original offer and initial deposit in the case.  As such, nearly 5 years after their property was acquired via a “quick-take” procedure, the homeowners owe VDOT, purchaser of their property, nearly $14,000 back.  This situation has been likened to purchasing a new car at sticker price, then returning to the dealer years later and demanding some of your money back because the car just really was not worth what you paid for it.  In the real world that would simply not occur (or, at least not fly with the dealer, if you tried it).  However, in the"alternate universe" of Virginia, and perhaps other states around the country, this is the reality.

Here’s a little history of the Ramsey case.  In 2009, VDOT acquired .4 acre of private property from Virginia Beach property owners James and Janet Ramsey The property had been owned by Janet Ramsey's family for nearly a century and she and her husband have resided in a home built on it for 40 years.

At the time VDOT sought to acquire the property, it commissioned an appraisal to determine the fair market value which concluded the property to be acquired plus damages to the remaining property totaled approximately $248,000.  Because the property was needed for the public purpose of constructing a new on/off ramp for I-264 and because the two sides could not agree through negotiations on the amount of just compensation to be paid, VDOT initiated “quick-take” proceedings to obtain title.

Under the law, “quick-take” proceedings allow the condemnor to acquire the needed property in order to move forward with the project provided that the condemnor deposit with the court the amount of compensation at which it estimates the property is valued.  Under this type of proceeding, the landowner is permitted to withdraw the deposit without giving up his or her right to a jury trial to determine the amount of just compensation.  In essence, quick-take procedures allow the government to purchase the property with an amount it feels is fair at the time while allowing the owner to an opportunity to contest that amount and seek a different, higher value.  Remember friends, eminent domain is not a “friendly seller, friendly buyer” arms-length sale.  It is a forced transaction permitted by law in which the seller generally does not wish to be involved.  So, although there is a formal period of negotiations, and often continual negotiations throughout condemnation litigation, the property owner/seller is never really an interested and motivated seller and the taking authority is never really a friendly buyer.

In the Ramsey case, VDOT deposited $248,707 with the court representing its estimate of compensation based upon the initial appraisal it commissioned in 2009.  Then, it acquired title to the .4 acre and began construction.  The Ramseys no longer owned that portion of the property and, legally under quick-take procedures, withdrew the deposit.  Then they continued, with the help of their attorneys at Waldo & Lyle in Norfolk, Virginia, to seek just compensation.  [Disclosure: Joseph T. Waldo of Waldo & Lyle is the Virginia attorney-member of Owners' Counsel of America.]

Fast forward a few years, as both sides prepared their case for trial, VDOT commissioned a second appraiser to value the land. This second appraisal estimated value at $92,127 with no damages to the remaining property.  In fact, VDOT argued that the proximity of the property to the highway, improved with additional lanes, added value to the property (hence no damages).  Five lanes of freeway run approximately 30 yards from the Ramsey's bedroom window and despite the proximity, the Ramsey's property does not have direct access to the on/off ramps of I-264.  As the Ramsey’s attorney explains in this interview,no experienced real estate agent would agree with VDOT’s argument that the proximity of the freeway increased the value of the property.  Rather, as common sense would suggest, the remaining property has a lower value to a future buyer as who in their right mind would want to sleep 30 yards from a freeway every night yet not be able to directly access it every morning to make their work commute?

When VDOT offered this second appraisal it also asked the Ramsey's to repay the difference between VDOT's initial deposit of $248,707 and the updated report of value of $92,127 - a difference of nearly $158,000. 

As this opinion piece points out, Virginia law did not allow the Ramseys’ attorneys to introduce at trial the initial deposit as evidence of VDOT’s earlier opinion of value.  All that the jury heard was the $92,000 appraisal from VDOT and the owners' opinion of value.  On the other hand, Virginia law requires that the owner provide all estimates of value it has obtained for the property.  This seems to be a double standard in favor of the government or other agency with the “awesome power” of eminent domain.  It provides VDOT and other taking authorities with an opportunity to commission additional appraisals if, perhaps, the first was more than they wanted to pay.  Or, as the Ramsey’s attorney and other Virginia lawyers have suggested, a bullying tactic to punish landowners for fighting for just compensation and a way to strong-arm owners into accepting the initial offer.

Now that the jury has reached a verdict in this case, the Ramsey’s are on the hook to repay $14,000 to the buyer of their property who after purchasing it and using it felt it was worth less than it originally offered.  However, the case will not end here.  The Ramseys’ and their attorneys plan to appeal and hope to achieve a ruling that will not only benefit the Ramseys but also all Virginia property owners.

This is certainly on our radar, so stay tuned...

Tuesday, January 14, 2014

Supreme Court Hears Oral Argument in Rails-to-Trails Property Rights Case Today

Today, the U.S. Supreme Court hears argument in Marvin M. Brandt Revocable Trust v. United States, No. No. 12-1173, a Rails-to-Trails takings case.  At the core of the dispute between the landowner and U.S. Forest Service is the meaning of the term railroad "right of way" as used in the 1875 General Railroad Right of Way Act and whether the federal government retained an "implied reversionary interest" in railroad rights of way granted under the Act.  Brandt contends that the land grants were subject to a railroad easement which expired when the railroad abandoned use.

In this case, the railway abandoned use of the easement.  Then the federal government instituted a quiet title action in federal court claiming it owned the land beneath the right of way rather than the property owner who holds title to the larger parcel surrounding the former railroad easement.   The Tenth Circuit, contrary to every other court that has considered this issue, held that that the United States, rather than the private landowner, acquired ownership of the land by "implied reversionary interest" when the railroad was abandoned.

Owners' Counsel of America and the National Federation of Independent Business (NFIB) filed an amici brief in support of the Petitioner/Landowner, which argues that if the Court accepts the theory advanced by the government, an entire class of rails-to-trails takings cases would be eliminated.   The brief, authored by OCA Hawaii member, Robert Thomas, makes two distinct points. First, if the Tenth Circuit’s decision is accepted and applied nationwide as the Government has urged in its brief in this case, an entire class of takings claims will be eliminated. Second, the Supreme Court’s decision in Great Northern Ry. Co. v. United States, 315 U.S. 262 (1942) is supported by the common law definition of right of way prevailing at the time of the 1875 Act.  In Great Northern, the Court held that railroad rights of way granted by Congress under the 1875 Act are easements for the limited purpose of railroad use.  In the absence of an express indication by Congress of contrary intent, statutory terms used by Congress should be interpreted as having the meaning commonly assigned to them at the time.  

More commentary on the case is available on Robert's blog here and here as well as our previous posts here and here.  Check out SCOTUSblog for a preview of the issues and argument here