Eminent Domain Report

We wanted to provide some timely articles for those of you in the eminent domain and valuation arena.

First, Brad Kuhn, the Chair of Nossaman’s Eminent Domain and Valuation Practice Group, was recently featured on the cover of the July/August 2018 issue of Right Of Way magazine—a publication of the International Right of Way Association.  Brad participated in an Industry Roundtable in the issue on leveraging the right of way professional in today’s fast-paced design-build world.  The  Roundtable examined the critical right of way component in infrastructure projects and how ...

One issue that eminent domain attorneys face routinely involves helping businesses obtain the relocation benefits to which they are entitled under the law, while at the same time pursuing a claim for lost business goodwill.  To us, there is a clear difference between the two, as we are indoctrinated early in our careers into understanding that the two types of relief, while seemingly closely related, are instead largely unrelated in the eyes of the law.

But to a typical business owner facing a forced relocation due to a government acquisition, the issues can appear thorny and complex.  ...

I saw a couple of California redevelopment-related stories over the past week that seemed worthy of at least a brief comment.

First, a court decision involving a rather bold argument by a public agency.

The City of Loma Linda, like so many California cities, used to have a redevelopment agency.  That redevelopment agency acquired property and embarked on various efforts to, well, redevelop things.  When Governor Brown eliminated California's redevelopment agencies, many projects were left in mid-stream.

In the case of Loma Linda, the redevelopment agency purchased some ...

Earlier this week, Governor Brown vetoed AB 374, a bill to amend Code of Civil Procedure section 1263.510, the statute governing recovery of loss of business goodwill in an eminent domain case.  But it's not the veto that caught my eye so much as the veto message, which really left me scratching my head until I looked more carefully at what was going on (or at least what appeared to be going on).

Some history:  last year, the Court of Appeal issued the decision in People ex rel. Department of Transportation v. Dry Canyon Enterprises 211 Cal.App.4th 486 (2012).  The case purported to make some ...

OK, I'll admit it.  A year ago I thought this whole condemnation-of-underwater-mortgages thing would die off pretty quickly.  I predicted we'd never see any large-scale condemnation effort.  So far, I've missed badly on the first prediction -- but it remains to be seen whether I'm right on the second one.

To date (unless I've missed something), not a single condemnation action has been filed anywhere in the U.S. to condemn an underwater mortgage.  But the concept certainly has not disappeared quietly into the night.  Instead, some cities continue to pursue the idea.

One in particular ...

As reported earlier today by a number of news outlets (see for example this KCET article by Chris Clarke), the Bureau of Land Management ("BLM") will be issuing a Final Rule to facilitate right-of-way applications for lands with wind and solar energy development potential.  As explained in the press release issued by the BLM, in the past

"lands included in a proposed right-of-way [would] remain open to the location and entry of mining claims while the BLM" considered the application.

However, the Final Rule, which will be published in the Federal Register, permits the BLM to temporarily ...

For those of you who attended the joint meeting today between Chapter 1 of the International Right of Way Association and the Appraisal Institute, we promised to post a cheat sheet that reminds you about the cases associated with our cleverly crafted slides.  (For those of you who did not attend, you missed a great event, and will be punished by likely having no idea what we're talking about below.)

As promised, here is the recap of our case slides, each of which started with:

Where We Learned . . .

1. "That the Court can’t exclude appraisers simply because the judge thinks they are full of crap":  ...

Given how much publicity the proposal to condemn underwater mortgages received when it first appeared last summer, I suppose it's not surprising that San Bernardino's decision last week not to move forward has also garnered a lot of attention.  Still, it's been hard to keep up with the many articles on the subject these past few days.

If you're trying to keep up as well, here are a number of pieces published over the last few days:

• A January 25 article by Erin Coe on Law360 entitled Calif. County's Halted Mortgage Seizure Plan May Deter Others, that focuses on the question of whether San ...

This underwater mortgage / eminent domain issue does not appear to be going away any time soon.  Along with eminent domain attorneys Robert Thomas from Hawaii, Casey Pipes from Alabama, and Tom Olsen from New Jersey, I spoke last Friday at the ABA Annual Meeting in Chicago -- one of the cities apparently considering the plan.  The presentation itself did not focus on the underwater mortgage plan, but many of the questions at the end did.  Indeed, the issue generated more buzz in the room, by far, than any other.

This week, the news is that the Federal Housing Finance Agency ("FHFA") has ...

Over the past few days, I've had several conversations and have received a number of emails concerning the underwater mortgage series I posted recently.

Rick Friess, one of my former colleagues, commented on the series and provided two additional sources of concern.  Because I suspect many people missed his comment, I'm copying it here:

I agree with your analysis, and I see at least two other reasons this plan will not work. First, many, if not most, of the loans are likely refiances, not purchase-money loans, so the lenders will have recourse against the borrower. Thus, if the lender is ...

In two previous posts, I've discussed the proposed plan to condemn underwater mortgages and have analyzed the plan's legality.

Today, I want to talk briefly about whether the plan makes sense -- and whether it would work.  To assist those who don't want to spend much more time on this issue, I'll start with the bottom line:  I think this is a bad idea and that it will not accomplish its intended goal.  I also think the plan carries some potentially harmful baggage.

So why do I think the plan will fail?  Pretty simple, really.  The entire premise behind the plan is to acquire loans at less than their ...

Today I want to focus on whether the plan to seize underwater mortgages through eminent domain is legal. Getting into this topic, in my view the debate should not focus on whether this plan passes constitutional muster at the federal level.  I've seen much written on this subject, but I really think this is a red herring, and that the answer is pretty easy.   While others disagree, I believe the plan passes constitutional muster at the federal level.

The U.S. Supreme Court has issued a long line of cases that all make pretty clear that the government could constitutionally condemn ...

Anyone who follows eminent domain issues no doubt by now has heard about the plan of some government agencies to condemn underwater mortgages -- essentially as a mechanism to refinance those loans to give borrowers loans that better reflect the current fair market value of their homes.

There has been much debate on the issue, and it has included a whole lot of rhetoric that has started to look a bit like an election campaign. I've heard extreme arguments both in favor and against the plan.

My intention here is not to advocate for or against the plan. Rather, I hope to help better -- and more ...

As an eminent domain attorney, a litigated outcome nearly always comes with the satisfaction (or devastation) of realizing that you have won or lost.  Sure, sometimes the jury splits (in fact, that probably happens most of the time), but the result can be placed in the context of the settlement negotiations that took place leading to the trial.

A verdict much better than the settlement possibility feels like a "win" and a verdict much worse than an offered settlement understandably feels like a "loss."  It's really pretty simple.

But I have not had enough decisions to have empirical ...

We're looking back on 2011's wild ride and looking forward to the twists and turns still in front of us in 2012.  We've summarized all of this into the 2011 version of our annual Eminent Domain Year in Review piece.

For those who don't want to take the time to read the actual article, here are a few of the highlights:

• In January, Governor Brown proposed eliminating redevelopment agencies.  In June, he finally got legislation to accomplish that goal.  In August, the Supreme Court agreed to hear a legal challenge to the new law.  And on December 29, the Supreme Court upheld the law dissolving ...

It's Christmas Eve Eve here in Southern California.  Our chances for a white Christmas seem small; as I look out my window, I see bright sunshine and know the temperature is in the 70s.  Still, it's easy to see that the holiday season is in full swing.

If you are in need of some last minute shopping ideas and don't know what to get the eminent domain practitioner on your gift list, there are some great choices to be found.

Perhaps the most all-inclusive option comes to us through the Institute for Justice.  Its "Rally in a Box" comes complete with stickers, posters, signs, and six ...

When eminent domain attorneys think of just compensation in the context of an eminent domain case, we're typically thinking about the value of what we can see:  the dirt itself; and anything built on that dirt.  But every so often, a property's real value lies not in what is on the surface, but what sits below the surface.

A recent post by the Biersdorf law firm, Mineral Rights in Eminent Domain Cases, reminds us about this often overlooked issue.  The post contains a nice summary of when and how these issues can arise, and I won't repeat all of what they have to say.  The bottom line is that when a ...

I received an interesting email last week about possible claims against a neighboring property owner who was taking steps in an apparent effort to lower the amount of compensation the agency would have to pay for the property.   I didn't get much in the way of details, but it did get me thinking about how (and why) this might occur, and what someone could do about it.

The first thought that occurred to me is why would a neighboring property owner want to cause the value of property to be lower?  It seems that in most circumstances, the last thing one owner would want is for a low value to be established ...

On those cold winter nights as the holidays approach, who doesn't pause for a moment to consider the long history between Christmas and eminent domain?  For those who don't spend their time in front of the fire sipping egg nog and contemplating condemnation, I offer these tidbits:

• In August 2010, the Nevada Irrigation District voted to condemn part of a farm owned by Robert Hane.  How does this involve Christmas, you say?  Mr. Hane's farm produces - you guessed it - Christmas Trees.  For more on the story, read the Fair market value? Water district invokes eminent domain, from the Auburn ...

I wanted to provide a quick update on some things about which we've reported over the past few months:

1.  Los Angeles Unified School District v. Casasola (2010) 187 Cal.App.4th 189

In Court Blurs Line Between Goodwill and Relocation Benefits, we reported on the Casasola decision, which expanded upon the earlier decision in Redevelopment Agency of the City of Emeryville v. Arvery Corporation (1992) 3 Cal.App.4th 1357 to hold that business owners cannot recover as lost business goodwill anything that falls within the scope of the Relocation Act, whether or not the losses are actually ...

This never would have happened five years ago.  A small game company is advertising its latest offering, Eminent Domain, a card game based on the colonization of various planets.

It's hard to imagine a game called "Eminent Domain" before the 2005 Kelo decision made the phrase ubiquitous in American conversation.  Heck, I'm an eminent domain attorney and I'm not convinced I had a clear understanding of what eminent domain was when I graduated from law school.

More interestingly, the title has generated a somewhat heated debate among gamers as to whether the game's true purpose is ...

Yesterday, we celebrated the one-year anniversary of our blog's launch.  We were planning to get a cake, but remembering back to what my one-year-old looked like after we put a cake in front of him on his first birthday, we decided to commemorate the occasion by preparing a "top 10" list from our blog's first year.

Admittedly, selecting 10 items was not a scientific process, and "top 10" really became "10 posts I can describe in a single short sentence," but in any event, here it is, the Top 10 Things You've Learned if You've Been Following Our Eminent Domain Blog (by the way, I find it ...

Five years ago today, the Supreme Court announced its decision in Kelo v. City of New London, triggering perhaps the most broad sweeping eminent domain reform effort in U.S. history, along with tremendous critical commentary -- including, as just one example, an August 2005 piece on Forbes.com titled Eminent Disaster.

Quite frankly, I'm a bit bored by the decision after five years (I can't begin to count the number of times I've explained the decision and what it means to clients, at seminars and conferences, and on this blog).  However, others are marking the occasion with ...

A recent post on the Biersdorf & Associates Eminent Domain Blog discussed criteria for hiring an eminent domain attorney.  While reading the post, I found myself agreeing with much of what they have to say, and since finding a qualified eminent domain attorney can be a tricky process, I thought I would pass it along.  That said, I disagree with some of what they say, so I also wanted to offer my own viewpoint.

Biersdorf breaks the inquiry down into three steps ...

In its April 2010 volume, the Yale Law Journal published a Note by Zachary Hudson titled Eminent Domain Due Process.  My first reaction was a bit odd.  Having spent many years as a practicing eminent domain lawyer, I rarely get the opportunity to spend time with pure, academic writing.  Just reading the Note instantly took me back many years to long hours spent in a small dark room at Boalt Hall (before all the improvements), trying to make sure all the hyper-technical "Blue Book" rules were being followed as I slaved away as Associate Editor of the California Law Review.  (It still ...

A fundamental premise underlying eminent domain laws is that the owner is treated fairly under principles of just compensation.  This means that the owner receives fair market value for the property being condemned.  And, where there is an active, relevant real estate market with ample comparable sales data, this premise can be upheld through traditional appraisal methodologies.

Unfortunately, not all markets include legitimate, open market transactions from which to gather comparable sales data.  This is especially true where market conditions have deteriorated; in other ...

After a flurry of post-Kelo activity, cries for eminent domain reform seem to have quieted in California in the past couple of years.  Now, public utility companies are seeking to step into the calm in an effort to roll back some of the reforms that did occur.

One of the recent changes to California eminent domain law involves the procedures for obtaining prejudgment possession.  Before Kelo, agencies could almost guarantee possession quickly.  In fact, they could obtain orders for possession ex parte, meaning they didn't even have to provide owners with notice that they were seeking ...

Over the weekend, someone posted a comment on an earlier piece involving the City of Vista's Efforts to Assemble an Auto Mall.  The comment referred to potential tax advantages to owners facing condemnation, and was probably more timely than the person commenting realized.  Here is the main point of the comment:

I have read that Owners forced to sell property though eminent domain have tax advantages on any gain as opposed to if they sell voluntarily.

The comment refers to Internal Revenue Code Section 1033, which provides tax deferral for "involuntary conversions" of ...

2009 has come and gone.  With it, we moved one more year past 2005's Kelo decision -- and a lot closer to what those of us who have worked in eminent domain for many years consider "normal."  Massive eminent domain reform efforts seem -- for now -- to be a thing of the past.

The California Legislature passed no substantive changes to California's eminent domain law, and the closest we came to a marquee eminent domain case last year was probably the Marina Towers decision, which was much discussed, but does not represent any sweeping changes to California law.

Still, there were a few notable ...

Eminent domain lawyers who practice in Los Angeles County Superior Court are all familiar with LA County's detailed local rules on eminent domain -- "Chapter 16."   Chapter 16 is the chapter in the Los Angeles County local rules that deals specifically with eminent domain, and it contains meticulous procedural rules for the conduct of condemnation cases in Los Angeles.

Key provisions involve an elaborate "First Pretrial Conference" requiring a substantial, joint written submission to Department 59 (the LA County eminent domain department), along ...