That now-cliched line from Field of Dreams, "if you build it they will come" (actually, it's "he will come," but work with us here) seemed to be the driving force behind the New London Development Corporation's plans for the Fort Trumbull neighborhood when it wanted to condemn the homes of Susette Kelo and her neighbors. If they condemned, Pfizer would come.

They condemned the hell out of it, but it turns out that it wasn't the pharmaceutical giant that came, or even Shoeless Joe and his Black Sox. According to a report in the New London, Connecticut paper The Day, birds -- killdeer, red-winged blackbirds, mourning doves and others -- have come: "Fort Trumbull Neighborhood Is For The Birds."

When Spinoza observed some 350 years ago that "nature abhors a vacuum," the Fort Trumbull peninsula hadn't seen its first fort yet, let alone any hints of the epic property-rights struggle to come as the 21st century dawned.

Now, just two years after the last house was razed by the New London Development Corp. for an as-yet unrealized new development, the former neighborhood is something of a demonstration site for the Dutch philosopher's famous insight. The empty lots once occupied by yards, porches and office buildings are turning into a meadow of wildflowers, milkweed and tall grasses, and the birds are moving in.

As Professor Gideon Kanner commented on this story last week, You Can't Make this Up. See also Eminent Domain is for the Birds, from Reason's blog.

In System Components Corp. v. Florida Dep't of Transportation, No. SC08-1507 (July 9, 2009), the Florida Supreme Court resolved a conflict in the lower Florida courts regarding the application of business damages in a condemnation case under Florida Statutes § 73.071(3)(b). The court held that a business is not required to relocate as the result of a partial taking, but if it chooses to do so, only the actual damages suffered by the business are compensable, and "its business damages must be determined in light of its continued existence at its new location." Slip op. at 3.

The Florida appeals courts were split on the issue. In State Dep't of Transportation v. Tire Centers, LLC, 895 So. 2d 1110 (Fla. 4th DCA 2005), the Fourth District court awarded business damages as if the business had ceased to exist on the date of the taking, reasoning that the business owner had no duty to relocate, but in System Components Corp. v. Dep't of Transportation, 985 So. 2d 687 (Fla. 5th DCA 2008), the Fifth District court of appeals did not agree.

The System Components case involved a partial taking of property for road widening. The property owner operated its business on the site from a 5000 square foot building. The taking cut the building in half, and reduced the parcel from 1.8 acres to .64 acres. The remaining land was unusable due to setback requirements which precluded rebuilding, and of nominal value. Consequently, the property owner moved its business to another site.

The property owner filed a motion in limine to exclude evidence of the fact that it relocated and continued to operate in a new location. Citing Tire Centers, it asserted that "it was entitled to the 'total-take' value of its business as though it had ceased to exist on the date of taking." Slip op. at 7. The owner argued that condemnation actions "are solely concerned with the land taken and the resulting damages to the condemnee," and its mitigation measures did not relieve the condemnor for the wipeout of its business. Id.

The Supreme Court first noted that business damages are a matter of "legislative grace" and are not required by the state or federal constitutions, and the court was thus limited to the language of the statute. Slip op. at 13-15. In section 73.071, the legislature provided for damages in right-of-way partial takings:

(3)  The jury shall determine solely the amount of compensation to be paid, which compensation shall include:

. . .

(b)  Where less than the entire property is sought to be appropriated, any damages to the remainder caused by the taking, including, when the action is by the Department of Transportation, county, municipality, board, district or other public body for the condemnation of a right-of-way, and the effect of the taking of the property involved may damage or destroy an established business of more than 4 years' standing before January 1, 2005, or the effect of the taking of the property involved may damage or destroy an established business of more than 5 years' standing on or after January 1, 2005, owned by the party whose lands are being so taken, located upon adjoining lands owned or held by such party, the probable damages to such business which the denial of the use of the property so taken may reasonably cause; any person claiming the right to recover such special damages shall set forth in his or her written defenses the nature and extent of such damages;

Florida Statutes § 73.071(3)(b) (emphasis added). The court held that to compensate the property owner under this section for goodwill damages when the business chooses to relocate and as a result does not suffer any loss of goodwill would result in a "windfall" --

In this case, the jury awarded System Components business damages for (a) loss of value due to an altered capital structure (i.e., increased debt), (b) moving expenses and rent, (c) costs associated with obtaining a replacement property, (d) costs associated with constructing a replacement facility, and (e) down-time productivity losses, and the trial court subsequently deducted the amount of FDOT‘s good-faith deposit to avoid double recovery. System Components did not lose any goodwill and its witnesses could not identify any specific loss of sales. The company did not cease to exist on the date of taking. Consequently, System Components received the "probable" business damages "reasonably" suffered as a result of the taking.

Slip op. at 25-26.

The court held the statute does not impose a duty to relocate, id. at 31-32, but that if a business owner chooses to do so as the result of a partial right-of-way taking, the statute only requires compensation for those damages actually suffered.

Note: the opinion cited a Florida Bar Journal article we noted back in May 2009, Eminent Domain: Identifying Issues in Damages for the General Practitioner, by Carlos A. Kelly.

We know lawyers are easy targets (we enjoy lawyer jokes as much as the next person, i.e., What's the difference between a good lawyer and a great lawyer? A good lawyer knows the law; a great lawyer knows the judge.). Still, on the day we celebrate independence, we note that author Thomas Jefferson and 23 other of the 56 signers of the Declaration of Independence were lawyers, and that the document was crafted and understood fundamentally as a legal pleading, and is the product of careful legal thinking. So lawyers can't be all that bad, right?

As convincingly argued by historian Peter Charles Hoffer in his book The Law's Conscience: Equitable Constitutionalism in America (1990), the structure and style of the Declaration follows a form familiar to most modern lawyers: a complaint initiating a lawsuit. There's the introduction and "whereas" section (why we're doing this); the bill of particulars (28 specific factual charges against George III); the Prayer for Relief (severing the colonies' political bonds to Great Britain); and finally, the verification (John Hancock and others signing and "mutually pledg[ing] to each other our lives, our fortunes and our sacred honor."). And you thought Rule 11 was a tough standard.

As Professor Hoffer notes, Jefferson was an equity lawyer and the Declaration advances a familiar equitable breach of trust theory, asserting that George III was a trustee for the colonies and therefore owed them fiduciary duties, and that his failure to protect them from the capriciousness of Parliament was a breach of the trust for which equity provided the remedy of independence. However, since equity derived its power from an appeal to the King's fairness, it seemed inconsistent for the colonists to seek relief from the King for a breach of the King's fiduciary duties, so Jefferson and his fellow lawyers crafted the radical legal theory that equitable power derived from the people, and that the Continental Congress, as representatives of the people, could impose the remedy of independence.

Thus, the Declaration is much more than stirring political prose, and may not have been possible without the work and deep thinking by a bunch of lawyers. So while while you're enjoying today's hot dogs, fireworks and sunshine, please thank a lawyer. We can happily return to lawyer jokes tomorrow.

The Hawaii Supreme Court has agreed to hear the appeal regarding whether the State Board of Registration (County of Maui) correctly concluded that a Maui County councilperson who registered to vote as a Lanai resident is actually a resident of Maui. Under Haw. Rev. Stat. § 602-58 (1993), an appeal may be transferred from the ICA to the Supreme Court if the issue is one of "fundamental public importance" or if it is an issue of first impression or a novel legal question.

The Court's order transferring the appeal from the Intermediate Court of Appeals is posted here.  [Disclosure: my Damon Key colleagues and I represent the Lanai voter who successfully challenged the residency of the councilperson.]  On June 10, 2009, we filed this application to transfer the case from the ICA to the Supreme Court, and for expedited consideration pursuant to Haw. Rev. Stat. § 11-52 (1993).

The Court will be considering two issues:

• Physical presence.  When a voter registers in a district, he attests that the district is the location of his "fixed habitation" and the place he "intends to return." In order to gain a "new residence" in another district, the voter must have both a "physical presence" there and an intent to make the new location his residence. The first question is whether the Board was clearly erroneous when it found that the councilperson registered as a resident of Lahaina, Maui in 2006, and lives and works there, and that he lacks a physical presence on Lanai.

• Standing. Hawaii's Election law, Hawaii Revised Statutes chapter 11 allows "any registered voter" to challenge another’s registration with the County Clerk "for any cause," and "the person ruled against" by the Clerk may appeal to the Board of Registration. The Board ruled only that the councilperson is not a resident of Lanai for registration purposes. The second question is whether in these circumstances, the voter who challenged the councilperson's residency had standing and whether the Board exceeded its jurisdiction in ruling on that issue.

Here are the briefs in the appeal:

• County Clerk's Opening Brief

• Councilperson's Opening Brief

• Lanai voter's Answering Brief

• Clerk's Reply brief

• Councilperson's Reply Brief

In a separate but related case in which we represent a group of Lanai residents and voters, we have filed an appeal with the ICA of the Maui Circuit Court's dismissal of their complaint seeking enforcement of section 3-3 of the Maui Charter. The seats on the Council are apportioned by "residency area" districts, and the Charter requires continuous residency by council members in their respective residency areas, with immediate forfeiture the consequence of ceasing to reside there:

If a council member . . . ceases to be a resident of the council member’s residency area during the council member’s term of office, or if a council member is adjudicated guilty of a felony, the council member shall immediately forfeit office and the seat shall thereupon become vacant.

Maui Charter § 3-3 (2003). The Lanai residents instituted an original jurisdiction complaint in Circuit Court seeking a declaratory judgment that because the councilperson is not a resident, he has forfeited office which is vacant. The Circuit Court ruled the Charter provision means that a council member who ceases to be a resident of his or her residency area or is adjudicated guilty of a felony has a duty to immediately resign, and if he or she fails to do so, may be impeached or recalled, but that declaratory judgment is not available. We've asked the ICA to expedite consideration of the appeal. More details here (motion to expedite).

In What's At Stake in Stop the Beach Renourishment, Lawprof D. Benjamin Barros posts a comprehensive summary of "judicial takings" case accepted for review by the US Supreme Court, Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted. June 15, 2009). Raises several interesting points and worth a read.

Here are items which we've been reviewing today:

• Dwight Merriam's thoughts on SCOTUS nominee, Second Circuit Judge Sonia Sotomayor.

• A report that the "Florida Hometown Democracy" initiative has made the 2010 ballot. According to the report "[i]f the proposal gets 60 percent approval at the polls, Hometown Democracy would require local referendums on changes to city and county comprehensive plans."

• From the Willets Point United blog: "Willets Point United Hires NY State's Top Eminent Domain Attorney." (They've hired our Owners' Counsel of America colleague Michael Rikon.)

• The New York Court of Appeals (that state's highest court) will be hearing arguments in the Atlantic Yards cases. The NY Observer's report here, and the NY Times report here.

• Speaking of takings for sports facilities, Professor Gideon Kanner dishes on using taxpayer money to attract and support stadiums and arenas.

• My Damon Key colleague Mark Murakami links to a Maui News article about a different approach to beach erosion issues.

Last week's cert grant by the Supreme Court in Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted, June 15, 2009) got us to thinking about other petitions in takings and land use cases which we've discussed, so here's an update on the cases denied review:

• Empress Casino Joliet Corp. v. Giannoulias, No. 08-945 (cert. petition filed Jan. 21, 2009) - the Illinois Supreme Court held (896 N.E.2d 277 (Ill. 2008) that a regulation which imposes a 3% "surcharge" on Illinois casinos with gross receipts over $200 million per year, and then gives the money to horse racing tracks is not a taking of property. Several casinos challenged the law asserting, among other arguments, that the redistribution of their money to tracks was a taking.  The Illinois Supreme Court held that the regulation was a tax, and not subject to takings analysis. Cert denied June 8, 2009.

• Fairbanks North Star Borough v. U.S. Army Corps of Engineers, 543 F.3d 586 (9th Cir. 2008)- the Ninth Circuit held that since the Corps' jurisdictional determination is not a final agency action, the property owner cannot immediately challenge it under the Administrative Procedures Act. Cert denied June 22, 2009.

• Joy Builders, Inc. v. Town of Clarkstown, 11 N.Y.3d 863 (2008) - the New York Supreme Court Appellate Division upheld the imposition of a fee in lieu of a dedication of land. Cert denied April 20, 2009.

• Navajo Nation v. United States Forest Service, 535 F.3d 1058 (9th Cir. 2008) - the Ninth Circuit determined it was not a "substantial burden" on the religious exercises of Native American tribes under the Religious Freedom Restoration Act for the Forest Service to allow a ski resort to make artificial snow from recycled sewage water on a mountain considered by the tribes to be sacred. Cert denied June 8, 2009.

• McClung v. City of Sumner, 548 F.3d 1219 (9th Cir. 2008) (cert petition filed Mar. 2, 2009) - the Ninth Circuit held that legislatively imposed exactions should be analyzed under the Penn Central ad hoc standards and not under Nollan/Dolan. Cert denied June 8, 2009.

• AmeriSource Corp. v. United States, No. 08-497 (cert. petition filed Oct. 15, 2008) - the Federal Circuit held that the seizure as evidence was not a taking for public use because the seizure was an exercise of the government's "police power," and not an exercise of eminent domain. Cert denied March 23, 2009.

A very interesting conference call today, focusing on the property-related decisions by SCOTUS nominee Sotomayor and the takings case recently accepted for review by the U.S. Supreme Court. Here are the links to some of the cases and other topics discussed during today's call, and other items of interest which we didn't have time for:

• Judge Sonya Sotomayor's decisions about eminent domain and regulatory takings

• Resource page for the Florida beachfront takings case, Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted, June 15, 2009).

• On Judicial Takings, And The Hawaii Water Rights Backstory In Stop The Beach Renourishment - our summary of Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir. 1985) and Sotomura v. County of Hawaii, 460 F. Supp. 473 (D. Haw. 1978), two cases regarding judicial takings relied upon by the cert petition,

• Scalia and O'Connor's dissent from the denial of cert in Stevens v. City of Cannon Beach, 510 U.S. 1207 (1994) ("As a general matter, the Constitution leaves the law of real property to the States. But just as a State may not deny rights protected under the Federal Constitution through pretextual procedural rulings, see NAACP v. Alabama ex rel. Patterson, 357 U.S. 449, 455-458 (1958), neither may it do so by invoking nonexistent rules of state substantive law. Our opinion in Lucas, for example, would be a nullity if anything that a State court chooses to denominate "background law" -- regardless of whether it is really such -- could eliminate property rights.").

• McQueen v. South Carolina Coastal Comm'n, 530 S.E.2d 628 (S.C. 2000).

• Pruneyard Shopping Center v. Robbins, 447 U.S. 74 (1980) (California Supreme Court's interpretation of California Constitution's free speech clause to require a shopping center to allow handbilling on its property was not a taking).

• Another beachfront case - Severance v. Patterson, No. 07-20409 (5th Cir., Apr. 23, 2009). 

• Case to watch: Casitas Municipal Water District v. United States, 543 F.3d 1276 (Fed. Cir. 2008). More here.

• Property owners entitled to damages including reasonable attorneys fees and costs for failed condemnation attempt, even if government prevails in intermediate steps. More here.

• Delegation of eminent domain power: redevelopment agency without power to take property until it enters into a development agreement when statute requires as a condition precedent. Eagan Economic Development Authority v. U-Haul Company of Minnesota, No. A08-0767 (Minn. Ct. App., May 19, 2009).

• Delegation of eminent domain power: statutory delegations strictly construed. Spokane Airports v. RMA, Inc., No. 26538-2-III (Wash. Ct. App., Apr. 28, 2009).

• Might Makes Blight In The New York Appellate Division - Develop Don't Destroy Brooklyn v. Urban Dev. Corp., 2009 NY Slip Op 01395 (Feb. 26, 2009).

• Determining Eminent Domain Pretext In Serial Takings - County of Hawaii v. C&J Coupe Family Ltd. P’ship, 198 P.3d 615 (Haw., Dec. 24, 2008) (proposed Findings of Fact and Conclusions of Law on remand).

• Rose Acre Farms, Inc. v. United States, No. 2007-5169 (Fed. Cir., Mar. 12, 2009) - regulation restricting the sale of eggs was not a taking under Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978), because the economic impact of the regulation "was not severe" and the character of the government action "strongly favored" the government.

The U.S. Supreme Court last week agreed to review the Florida Supreme Court's decision in Walton County v. Stop the Beach Renourishment, Inc., 998 So.2d 1102 (Fla. Sep. 29, 2008), which held that a state statute prohibiting "beach renourishment" without a permit did not effect a taking of littoral (beachfront) property, even though it altered the long-standing rights of the owners to accretion on their land and direct access to the ocean. See Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted. June 15, 2009). More background on the case at our resource page.

The Court accepted three questions for review, and the cert petition relied on two rather notorious cases with Hawaii origins to support the conclusion that a decision by a state court which unexpectedly changes established state common law rules of property is a compensable taking. See Pet. at 31-32 (citing Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir. 1985); Sotomura v. County of Hawaii, 460 F. Supp. 473 (D. Haw. 1978)).  The first Question Presented accepted for review is:

The Florida Supreme Court invoked "nonexistent rules of state substantive law" to reverse 100 years of uniform holdings that littoral rights are constitutionally protected. In doing so, did the Florida Court's decision cause a "judicial taking" proscribed by the Fifth and Fourteenth Amendments to the United States Constitution?

In this post, we explore the background to the esoteric issue of "judicial takings" presented by the two Hawaii cases.

Robinson v. Ariyoshi — The Never Ending (Water Rights) Story

The Robinson litigation is one that holds a special place in our hearts, as it is a tale interwoven with the recent history of Hawaii, taking us from the time before jet travel when sugar and pineapple -- not tourism -- were the economic engines driving politics and the economy of the Territory of Hawaii, through the salad days of the openly activist Hawaii Supreme Court under the leadership of Chief Justice William S. Richardson, and finally sputtering out (sort of) after the U.S. Supreme Court's ripeness ruling in Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985).

Here's the short summary, repeated from memory (the litigation, which is still pending, has been going on for 50 years now, so please forgive us if a few of the details are off). The case started out in 1959 in a Kauai county trial court as a dispute between several sugar plantations over which of them possessed the rights to surplus water in a Kauai stream, among other things. Nine years later, the trial court issued a 65-page decision based on long-standing Kingdom, Territory, and State water law, and declared who owned what. So far, it was just another in a long line of water disputes between private parties. The losing parties took the case to the Hawaii Supreme Court (in those days, there was no Intermediate Court of Appeals and all appeals by right went directly to the Supreme Court), where no party, including the State, argued that the controlling water law was anything but as established by long-standing Hawaii cases.

The Hawaii Supreme Court, however, "sua sponte overruled all territorial cases to the contrary and adopted the English common law doctrine of riparian rights." Robinson, 753 F.2d at 1470 (citing McBryde Sugar Co. v. Robinson, 54 Haw. 174, 504 P.2d 1330 (1973)). The court "also held sua sponte that there was no such legal category as 'normal daily surplus water' and declared that the state, as sovereign, owned and had the exclusive right to control the flow," and "that because the flow of the Hanapepe [stream] was the sovereign property of the State of Hawaii, McBryde's claim of a prescriptive right to divert water could not be sustained against the state." Robinson, 753 F.2d at 1470. In other words, in a dispute between "A" and "B" over which of them possessed water rights, the Supreme Court simply said "neither of you do, the State owns it all."

The private parties who thought they had owned something for over a hundred years were understandably a bit miffed that their property had seemingly morphed into public property by the stroke of a Justice's pen, and, to add insult to injury, without even the chance to brief the Supreme Court before it announced the new rule. But after a rehearing on a narrow issue of state law, during which the court rebuffed an attempt by the private parties to raise federal constitutional issues, the Hawaii Supreme Court reaffrimed the McBryde ruling, with two Justices dissenting. See McBryde Sugar Co. v. Robinson, 55 Haw. 260, 517 P.2d 26 (1973) (per curiam). Justice Bernard Levinson switched his vote from the first opinion, concluding that it was a "radical departure" from established law, and was a taking:

Although I voted with the majority of this court in McBryde Sugar Co. v. Robinson, 54 Haw. 174, 504 P.2d 1330 (1973) [hereinafter referred to as McBryde I], I am constrained to recant that position in view of my current understanding of the problems of this case.  In light of the arguments adduced on rehearing, historical evidence discovered upon further research subsequent to the court's previous decision in this case, and a reappraisal of the reasoning supporting that decision, it is my opinion that the court committed error in holding that all surplus water belongs to the State and that private water rights, however acquired, may not be transferred to nonappurtenant land.  Because of the importance of this case to the development of the law on the subject of Hawaii's water resources, I have undertaken to present a detailed analysis explaining why McBryde I is not in keeping with long established and unique principles of Hawaiian water law.  Precisely because McBryde I is such a radical departure from these principles as they have been heretofore understood, moreover, I have concluded that McBryde I effectuates an unconstitutional taking of the appellant's and cross-appellants' property without just compensation and should be reversed on this ground as well.

McBryde, 55 Haw. at 262-63, 517 P.2d at 27 (Levinson, J., dissenting). The U.S. Supreme Court denied certiorari meaning the Hawaii Supreme Court's McBryde decision was final.

But it was not the last word. The sugar companies sued the state (Governor Ariyoshi, actually, since under Ex parte Young, 209 U.S. 123 (1908), a state official can be sued in federal court to enjoin unconstitutional conduct despite the 11th Amendment) in federal district court under the federal civil rights statute, 42 U.S.C. § 1983. The district judge -- the inimitable Martin Pence -- held that the Hawaii Supreme Court's McBryde decision took property without just compensation, and enjoined the state from enforcing the decision. See Robinson v. Ariyoshi, 441 F.Supp. 559 (D.Haw. 1977).

Up to the Ninth Circuit the parties went, which noted the tortured procedural path the case next took, including a detour back to the Hawaii Supreme Court on certified questions when the Ninth Circuit asked the court whether it really meant what it said in McBryde:

The leisurely pace of this litigation has produced three oral arguments in this court, two of which were followed by referral of certified questions to the Supreme Court of Hawaii. See Robinson v. Ariyoshi, 65 Hawaii 641, 658 P.2d 287 (1982) (Robinson II). Following the publication of the state court's answers to the certified questions, the parties briefed the remaining issues that had been narrowed by the earlier proceedings and reargued the case. A number of complex questions remain, but to expedite the matter we will discuss only those essential to a resolution of the main question: Can the state, by a judicial decision which creates a major change in property law, divest property interests?

Robinson, 753 F.2d at 1471. [Barista's note: are you keeping score yet? There's McBryde. McBryde II. McBryde III. Robinson I. Robinson II. Robinson III. Still to come: Robinson IV, V, VI, VII, and VIII, and then back to McBryde IV.]  After addressing jurisdictional issues, res judicata, and the Rooker/Feldman doctrine, the Ninth Circuit addressed the merits:

The state conceded at oral argument that the Fourteenth Amendment would require it to pay just compensation if it attempted to take vested property rights. The substantive question, therefore, is whether the state can declare, by court decision, that the water rights in this case have not vested. The short answer is no.

Robinson, 753 F.2d at 1473.The court determined that the water rights claimed by the private parties were vested rights, and that the state legislature or the state supreme court cannot alter those rights without condemnation and payment of just compensation.

By the time Robinson IV rolled around, the U.S. Supreme Court had issued its ruling in Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) that certain regulatory takings case were not ripe, and it granted cert and summarily vacated the Ninth Circuit's Robinson decision, ordering it to consider the decision again in light of Williamson County's new ripeness rules. See Ariyoshi v. Robinson, 477 U.S. 902 (1986) (Robinson IV). The Ninth Circuit vacated its earlier order (Robinson v. Ariyoshi, 796 F.2d 339 (9th Cir.1986) (Robinson V) and sent the case back to Judge Pence in the District Court.

Not to be deterred, Judge Pence found the case ripe under Williamson County. See Robinson v. Ariyoshi, 676 F.Supp. 1002, 1020-21 (D.Haw. 1987) (Robinson VI). Back up to the Ninth Circuit they went, and in Robinson v. Ariyoshi, 854 F.2d 1189 (9th Cir. 1988) (Robinson VII), the Ninth Circuit ordered further briefing on the issue.  In Robinson v. Ariyoshi, 887 F.2d 215 (9th Cir. 1990) (Robinson VIII), the Ninth Circuit vacated the District Court's decision and sent it back with instructions to dismiss the case because it was not ripe under Williamson County.

A thirty-one year old case was not ripe, you say?  How so?

As noted, we previously certified six questions to the Supreme Court of Hawaii. In response, the Hawaii court stated that the decision in McBryde II did not constitute the final disposition of the case. See Robinson II, 658 P.2d at 295-97. The court explained that the McBryde litigation began and was treated throughout by the trial court as an action to determine the rights of the parties to the waters of the Hanapepe. The trial court had attempted to identify the exact quantity of water to which each party was entitled. On appeal, the Supreme Court of Hawaii affirmed the award of appurtenant rights and reversed the award of prescriptive and surplus rights. No specific instruction was imparted to the trial court, and the Supreme Court did not utilize its power to render a final judgment. Further, no further proceedings are of record in the trial court. The court explained that the partial reversal without instruction merely rendered that portion of the judgment void. Id. at 296-97. Thus the only portion of the judgment which could be considered final after appeal was the partial quantification of the parties' water rights, namely the award of appurtenant rights.

Robinson VIII, 887 F.2d at 218 (footnote omitted). Unbelievably, a third cert petition was not sought, and the litigation (per the Hawaii Supreme Court's edict as noted above) went back to the Kauai trial court where it all began in 1959, where, as far as anyone in these parts is aware, the case remains on the docket. The state certainly has no interest in moving it forward and ripening the case, and the private parties who originated the litigation are long since out of the sugar business. [See one note of correction in the comments.] Kauai is now a place of tax revolts, zoning fights, and quiet beaches, and the sugar industry is but a distant memory.

County of Hawaii v. Sotomura — Shifting The Line in the Sand

If you have managed to come along this far, congratulations -- there's more, but thankfully it's a shorter tale and one which follows the same general plot.

McBryde/Robinson was not a unique case, and the Hawaii Supreme Court regularly accomplished similar changes in established law in other areas. In County of Hawaii v. Sotomura, 55 Haw. 176, 517 P.2d 57 (1973), the court redefined the seaward boundary of a littoral parcel in a condemnation action from the high water mark to the "upper reaches of the wash of the waves," holding that no compensation was owed for the land seaward of the new line because it was owned by the state. The trial court had awarded nominal compensation of one dollar to the property owner for the condemnation of this property, but the Supreme Court declared that was error and took the dollar away. [Disclosure: my late law partner and name partner of our firm, Charlie Key, represented the property owners in the Hawaii Supreme Court.]

The property owners followed the Robinson script and sued in federal district court (for due process violations, not under a takings theory). The court determined "[j]udicial transfers of title to private lands to the State which do not permit the owner an opportunity to be heard or to present evidence is not constitutionally valid. Whenever a party is to be deprived of property, he is entitled to a meaningful hearing before the fact." Sotomura v. County of Hawaii, 460 F. Supp. 473, 478 (D. Haw. 1978). The district court concluded:

This Court fails to find any legal, historical, factual or other precedent or basis for the conclusions of the Hawaii Supreme Court that, following erosion, the monument by which the seaward boundary of seashore land in Hawaii is to be fixed is the upper reaches of the wash of the waves. To the contrary, the evidence introduced in this case firmly establishes that the common law, followed by both legal precedent and historical practice, fixes the high water mark and seaward boundaries with reference to the tides, as opposed to the run or reach of waves on the shore. For example, on the Island of Hawaii, the seaweed line was used to indicate the level of the high tides and high water mark. The decision in Sotomura was contrary to established practice, history and precedent and, apparently, was intended to implement the court's conclusion that public policy favors extension of public use and ownership of the shoreline. A desire to promote public policy, however, does not constitute justification for a state taking private property without compensation.

Id. at 480-81. The state's appeal to the Ninth Circuit was dismissed as untimely.

Just think of the possibilities if the deadline had not been missed -- this case might still be going on today.

It looks like the federal government will likely seek U.S. Supreme Court review of Casitas Municipal Water District v. United States, 543 F.3d 1276 (Fed. Cir. 2008). As noted here, the SG's office has sought and received two extensions of time and the cert petition is now due by July 17, 2009.

In Casitas, the Federal Circuit held that contractual water rights were taken when the federal government required the landowner to construct a fish ladder and divert water in order to protect endangered steelhead trout. The court held that the requirement resulted in a physical diversion of water for public use, and that "Casitas will never, at the end of any period of time, be able to get the water back. The character of the government action was a physical diversion for public use -- the protection of an endangered species." The Federal Circuit's opinion is posted here, and the court's denial of rehearing and rehearing en banc -- which generated concurring and dissenting opinions, see 556 F.3d 1329 (Fed. Cir. 2009) -- is available here.

The briefs in the court of appeals are not available via PACER, unfortunately, but the mp3 of the oral arguments is posted here. More background from the local paper.

Thanks to New Jersey Eminent Domain Law blog for reminding us of this case.

We predicted this was a case to watch, and we will be following any developments.

• Daniel S. Hafetz, Ferreting Out Favoritism: Bringing Pretext Claims After Kelo, 77 Fordham L. Rev. 3095 (2009).

  The plaintiffs in Goldstein based their pretext claims on both Justice John Paul Stevens's brief discussion of pretext in the majority opinion of Kelo and Justice Anthony Kennedy's more lengthy discussion in his concurrence. Acknowledging that "[t]here may be private transfers in which the risk of undetected impermissible favoritism of private parties is so acute that a presumption . . . of invalidity is warranted," Kennedy’s fifth-vote concurrence identified the possibility of "a more stringent standard of review than [rational basis review] for a more narrowly drawn category of takings." Although the Second Circuit rejected the application of this heightened pretext standard in Goldstein, it acknowledged that "Kelo opened up a separate avenue for a takings challenge" where the plaintiff alleges the asserted public purpose is a pretext for bestowing a private benefit.

  Article available here from the Fordham Law Review. (In the section on Goldstein and Twombly, this inversecondemnation.com post is cited.)

• Daniel B. Kelly, Pretextual Takings: Of Private Developers, Local Governments, and Impermissible Favoritism, 17 Sup. Ct. Econ. Rev. (forthcoming Summer 2009).

  Since Kelo v. City of New London, the preferred litigation strategy for challenging a condemnation that benefits a private party is to allege that the taking is "pretextual." This Article contends that, although pretextual takings are socially undesirable, the current judicial test for identifying such takings is problematic. Yet an alternative, intent-based test might be impracticable, as well as underinclusive: condemnors often have mixed motives, particularly when confronted with a firm’s credible threat to relocate. Instead, the Article develops a framework that emphasizes informational differences between local governments and private developers. When the government lacks information regarding the optimal site for an assembly, the government may need to rely on a private party to identify, as well as develop, a particular site. However, when the government itself possesses information regarding the site, precondemnation private involvement, as well as post-condemnation involvement by a preferred developer, is generally unnecessary. Such involvement increases the likelihood of a pretextual transfer without any corresponding public benefit. The Article concludes that a burden-shifting framework, analogous to Title VII’s test for identifying pretext, can be adopted in the takings context. The new framework is then applied to several situations in which allegations of pretext are likely to arise.

  Available here from SSRN.

• Matthew Cory Williams, Restitution, Eminent Domain, and Economic Development: Moving to a Gains-Based Conception of the Takings Clause, 41 Urban Lawyer 183 (Winter 2009) (25th Smith-Babcock-Williams Student Writing Competition Winner).

Post-Kelo, those recognizing the value of eminent domain to aggregate property for redevelopment have suggested that the real focus should not be on whether economic development is a public purpose, but on the amount of compensation given to the takees. Indeed, assuming takees werec compensated at the takee’s subjective value, the problem of forcing takees to "sell" their property to the government would be a much less divisive issue. However, current measures of "just compensation" are based on the "fair market value" of the property. In response to this "under compensation," several suggestions have been made on how to raise the level of compensation, and some states have enacted measures aimed at increasing compensation levels. Proposed solutions seek to award some of the benefit of the reaggregation and development of the land, called "after value," to the takees. This article examines whether awarding after value to takees complies with the major purposes of the Takings Clause. While it examines a few of the many proposed ways to award takees a portion of this after value, this article focuses more on whether the general idea of after value complies with the philosophies underlying the Takings Clause.

Article available here for ABA members.

Head's up to all members of the ABA's Section of State and Local Government Law's Condemnation Law Committee: you should have received an email about next week's conference call (Thursday, June 25, 2 p.m. EDT) to discuss recent developments and items of interest, including:

• Judge Sonia Sotomayor's opinions in takings-related cases, including Didden v. Village of Port Chester, 173 Fed. Appx. 931 (2nd Cir. 2006) and Brody v. Village of Port Chester, 345 F.3d 103 (2nd Cir. 2003).

• The Supreme Court's granting of certiorari in the Florida beachfront takings case, Walton County v. Stop Beach Renourishment, Inc., 998 So.2d 1102 (Fla. 2008), cert. granted, 2009 WL 688854 (June 15, 2009).

If you are a section member and did not get the notification email with call-in information, send me an email and I will forward it to you.

Adam Liptak reports Issue of Property Rights Is Likely to Arise in Sotomayor’s Confirmation Hearings in the June 14, 2009 edition of the New York Times, comparing SCOTUS nominee Sotomayor's decision in an infamous (at least in eminent domain circles) case with the positions of the two Justices most recently confirmed to the Court, Chief Justice Roberts and Associate Justice Alito on a similar issue.

Supreme Court nominees almost never comment on recent decisions from the court they hope to join. But both Chief Justice John G. Roberts Jr. and Justice Samuel A. Alito Jr. broke with protocol and perhaps prudence at their confirmation hearings when it came to a decision that had been issued just months before, Kelo v. City of New London.

Without quite saying Kelo had been incorrectly decided, both men, at the time federal appeals court judges, spoke at length about their doubts concerning its wisdom and consequences. The decision, a 5-to-4 ruling in 2005, allowed local governments to take private property for business development and provoked outrage across the political spectrum. 

The article details the events which resulted in the Second Circuit's unreported summary decision in Didden v. Village of Port Chester, 173 Fed. Appx. 931 (2d Cir. 2006), noting that the issue will likely be raised in Judge Sotomayor's upcoming confirmation hearings. As explained in the Times piece:

The case arose from a meeting in 2003 between Mr. Didden, who owned property in Port Chester, N.Y., and an executive of a company that had been designated by the village to develop a 27-acre urban renewal area that included part of the property. What happened at that meeting, Mr. Didden said, amounted to extortion.

Mr. Didden had made arrangements to put a CVS drug store on his lot. At the meeting, the executive, Gregg Wasser, demanded $800,000 as the price for permission to proceed with that project, Mr. Didden said in court papers. The alternative, Mr. Wasser said, according to the papers, was to have the village condemn Mr. Didden’s property so that Mr. Wasser's company could put a Walgreen’s in the same place. 

The Second Circuit's unsigned panel order disposed of the case in a mere 1 1/2 pages, agreeing with the district court's dismissal of Didden's challenge for being brought too late, and holding that even if not time-barred, that Kelo "obliges us to conclude that they have articulated no basis upon which relief can be granted." Order at 3.

These type of summary orders by an appellate court are especially frustrating for the parties and their attorneys, because they provide no clue as to the court's rationale, no guidance for future cases, and appear to blow off worthwhile arguments without explanation. The lack of an opinion setting forth the court's rationale also makes it difficult for the losing party to seek further review (the Supreme Court denied cert in this case).

We've summarized Judge Sotomayor's property rights-related decisions in this post, and if she is confirmed, we won't have long to wait to find out her views on regulatory takings since the Court recently accepted review of a case from Florida on takings of beachfront property. That case won't be heard until next term when the new Justice presumably will be on the Court.

The US Court of Appeals has reversed the Court of Federal Claims' dismissal of a takings case, holding the right to develop land is property protected by the Takings Clause. In Schooner Harbor Ventures, Inc. v. United States, No. 2008-5084 (June 16, 2009), the property owner claimed a designation of its property (Site 28) by the U.S. Fish and Wildlife Service as a critical habitat for the Mississippi Sandhill Crane -- which required it to purchase another parcel as a mitigation measure before it could sell Site 28 to the Navy -- was a taking.

The property owner sought just compensation in an inverse condemnation action in the CFC, which entered summary judgment for the government because the owner failed to assert a property right. The CFC characterized the interest claimed as "the right to sell its property to the government, without conditions imposed, in this instance to meet regulatory burdens imposed on the Navy, by obtaining the mitigation parcel." The CFC's decision is available here.

The Federal Circuit reversed, concluding the CFC misconstrued the property owner's claim, which was not a that it was deprived of its ability to sell to the Navy, but that the critical habitat designation affected its right to sell to any other party, the right to develop the land, and its fee simple title.

This alleged regulation of Schooner Harbor’s right to develop Site 28 would have an obvious impact on any subsequent sale, regardless of the purchaser’s identity—a development-restricted parcel commands a lower price. A lower sale price, of course, is not a restriction on the right of alienation, but rather one effect of a regulation on the right to develop. A detailed reading of Schooner Harbor’s position below and on appeal thus reveals that this alleged regulation of the right to develop Site 28 is also asserted as a taking.

Slip op. at 8-9. The court remanded the case to the CFC for a ripeness determination, and (if ripe), an application of the Penn Central factors to determine whether these property interests were taken.

Of additional note is the court's admonition to the CFC about the so-called "notice defense," where the government (even after the argument was expressly rejected by the U.S. Supreme Court) continues to assert it can escape takings liability for a regulatory scheme that affects property values simply because the regulation was in place at the time the plaintiff purchased the property:

An additional consideration may arise on remand. The trial court indicated that because the critical habitat designation occurred in 1977, subjecting the property to certain regulatory restrictions, and Schooner Harbor did not purchase the land until 2000, it "stretches the credulity of the court that plaintiff, as a real estate developer, did not do due diligence and was not aware of the protected status of the land at issue." Schooner Harbor, 81 Fed. Cl. at 414. Schooner Harbor’s knowledge of the regulation is not per se dispositive, although it is a factor that may be considered, depending on the circumstances. "A blanket rule that purchasers with notice have no compensation right when a claim becomes ripe is too blunt an instrument to accord with the duty to compensate for what is taken." Palazzolo v. Rhode Island, 533 U.S. 606, 628 (2001) (rejecting the argument that one who acquires title after the relevant regulation was enacted could never bring a takings claim). Consequently, the trial court must consider if and when any claim ripened as well as all of the factors relevant to Schooner Harbor’s investment-backed expectations.

Slip op. at 12. The oral argument recording is available here (37mb mp3).

The Eminent Domain Law Blog, published by our colleagues at Owners' Counsel of America, has summarized Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11, the takings and due process case which the U.S. Supreme Court agreed yesterday to review. 

Beachfront property owners along Florida's Gulfcoast, have been trying to stop an effort by local and state officials to restore the beach through renourishment, a process by which sand is dredged from the ocean floor, transported through pipes and distributed along eroded beach areas, in essence adding sand to widen the beach. This proposed beach renourishment project would cover nearly seven miles of shoreline and widen the beach by approximately 210 feet in Destin, FL.

A key issue in the litigation thus far, which has moved from Circuit Court to the First District Court of Appeal to the Florida Supreme Court, is that by adding sand to the waterfront and restoring the beach, the State of Florida will assume ownership of some of the beach. The property owners have argued that their littoral rights would be limited, amounting to a regulatory taking, without just compensation.

Check it out here. (I am the Hawaii member of Owners' Counsel.)

The Questions Presented are posted here, and links to other reports are here.

Here are links and other items of interest about Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted. June 15, 2009):

• Cert petition, BIO's and amicus briefs (via SCOTUSblog)

• ABA Journal: Surprise: Supreme Court Grants Cert in Beachfront Takings Case

• The decision below: Walton County v. Stop the Beach Renourishment, Inc., 998 So.2d 1102 (Fla. Sep. 29, 2008)

• ABA Journal: Up Against the Seawall

• Florida Land Use Law blog's take on the Florida Supreme Court decision

• PropertyProf Blog's brief reaction to the cert grant

• Volokh Conspiracy: Supreme Court Takes Regulatory Takings Case

• Dwight Merriam's thoughts at IMLA's Local Government blog.

• Pacific Legal Foundation's (the only organization to file an amicus at the cert stage) summary of the issues.

• Law of the Land blog's summary.

In Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted. June 15, 2009), the US Supreme Court agreed to review a case that raises several important takings issues, including the issue of whether a court decision can take property. The ABA Journal's July 2006 report "Up Against the Seawall" tells the backstory on the case and highlights other beach issues.

In Walton County v. Stop the Beach Renourishment, Inc., 998 So.2d 1102 (Fla. Sep. 29, 2008), the Florida Supreme Court held that a state statute which prohibits "beach renourishment" without a permit did not effect a taking of littoral (beachfront) property, even though it altered the long-standing rights of the owners to accretion on their land and direct access to the ocean. The cert petition presents these questions:

The Florida Supreme Court invoked "nonexistent rules of state substantive law" to reverse 100 years of uniform holdings that littoral rights are constitutionally protected. In doing so, did the Florida Court's decision cause a "judicial taking" proscribed by the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that eliminates constitutional littoral rights and replaces them with statutory rights a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that allows an executive agency to unilaterally modify a private landowner's property boundary without a judicial hearing or the payment of just compensation a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

On the first question, while the Court has implicitly recognized that a taking can occur if a court decision departs from long-standing principles it has yet to directly address the question. The cert petition raised a split in lower court authority by pointing out that in Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir. 1985), the Ninth Circuit held the Hawaii Supreme Court's radical restructuring of Hawaii riparian water rights in the McBryde case was a judicial taking (the U.S. Supreme Court reversed Robinson on the basis it was not yet ripe for review under Williamson County).

The Hawaii appellate courts are presently reviewing a similar case. In Maunalua Bay Beach Ohana 28 v. State of Hawaii, an appeal now pending in the Intermediate Court of Appeals, the issue is whether the state or littoral landowners are entitled to ownership of accreted land. In "Act 73," the Hawaii Legislature declared that shoreline land naturally accreted belongs to the State of Hawaii and is public property. The act overturned the age-old rule of shoreline accretion and erosion, which held that beachfront owners lose ownership of land when it erodes, but gain it when it accretes.  Instead of these balanced rules, Act 73 made the erosion/accretion equation one-sided: the State wins every time. We filed an amicus brief in the appeal, a copy of which is available here.

More to come.

I've received a few interesting comments and e-mails on an earlier post ("Why Hawaii Can't Vote On Property Taxes") about the Ohana Kauai property tax charter amendment and how it was declared unconstitutional by a 3-2 Hawaii Supreme Court.

Here's one that I thought was worth moving from the below-the-fold comment section:

I know you're addressing strict legal interpretations here at inversecondemnation.com, but I feel compelled to mention that giving the direct power to tax to the electorate does not necessarily mean that it will be exercised fairly and wisely. To deprive the electorate of ability to directly set tax policy through charter amendments does not deprive them of the ample power they have to effect tax policy through their choice of elected representatives and their ability to remove unresponsive representatives. It also permits elected representatives to make wise and balanced decisions fair to all taxpayers many of which have no right to vote. These decisions may then also be enacted with an eye to economic consequences which are often overlooked by the electorate. My primary concern over the Ohana Kauai charter amendment was that it would tend to shift the property tax burden to non-owner occupants such as owners of rental units who in turn must pass this along in rent increases to their non-home owning, less affluent tenants. 

I recall talking to a less than affluent renter I know who voted for the amendment because he wanted to prevent tutus from being forced to sell their homes due to rising property taxes. This was one of the several heart-wrenching and effective pleas that were voiced during the public debate regardless of their factual validity. He had no clue that by voting for the amendment, he might just as likely be voting to indirectly increase his own rent. As we all know, government is reluctant to reduce spending in the face of lower revenues when it can increase them simply by raising taxes, especially when the heavier financial burden is shifted to non-voters, the uninformed and minority classes of taxpayers.

It's true that the voters are not presently without remedies, and that reasonable people can differ regarding whether establishing or amending property tax policy by direct democracy is a good idea from a philosophical or political standpoint. At issue in the Baptiste case, however, was not whether a property tax cap or whether allowing voting on taxes was a good idea or not, but but whether judges are the ultimate arbiters of that question. In the end, the 3-2 majority of the Hawaii Supreme Court held they are.

In High court ruling on residency requested, the Maui News reports on Dupree v. Hiraga, No. 29464, the appeal of the decision by the State Board of Registration (County of Maui) which concluded that a Maui County councilperson who registered as a Lanai resident is actually a resident of Maui.

Attorneys for a Lanai man challenging County Council Member Sol Kaho'ohalahala's claim of Lanai residency are applying for the case to be transferred directly to the Hawaii Supreme Court.

Kaho'ohalahala's appeal of a ruling that he is actually a resident of Lahaina - not Lanai, from which he holds the residency seat on the council - is pending before the Intermediate Court of Appeals. But attorneys for his challenger, Michael "Phoenix" Dupree, said the importance of the case justifies a move to the Supreme Court, and asked for the case to be expedited.

"Whether an individual who is registered as a resident of one district may register in another district and vote in an election merely by declaring that he has an intent to make the new district his residence is an issue of fundamental importance," Dupree's attorneys wrote in court documents.

As noted in the story, we recently applied to the Hawaii Supreme Court for a transfer of the case from the Intermediate Court of Appeals to the Supreme Court, and for expedited consideration pursuant to Haw. Rev. Stat. § 11-52 (1993). Transfer of an appeal from the ICA to the Supreme Court is mandatory if the appeal involves "a question of imperative or fundamental public importance." Transfer is discretionary if it involves "a question of first impression or a novel legal question." Haw. Rev. Stat. § 602-58 (1993). Appeals of residency issues are of great public importance and are subject to speedy resolution under section 11-52, which provides "[w]hen the appeal is perfected, the court shall hear the appeal as soon thereafter as may be reasonable."

More on the appeal here, including the briefs of the parties.

Earlier this week, the Supreme Court declined review of the Ninth Circuit's decision in McClung v. City of Sumner, 548 F.3d 1219 (9th Cir. 2008). In that case, the Ninth Circuit held:

This case presents an issue of first impression in this Circuit — whether a legislative, generally applicable development condition that does not require the owner to relinquish rights in the real property, as opposed to an adjudicative land-use exaction, should be reviewed pursuant to the ad hoc standards of Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), or the nexus and proportionality standards of Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). We affirm, holding that the Penn Central analysis applies to the 12-inch pipe requirement. 

The Ninth Circuit's opinion is available here. The Cato Institute which along with others filed an amicus brief urging the Court to review the case, summarized the case:

When Daniel and Andrea McClung applied for a permit to build a small business on their property, the City of Sumner, Washington, charged them nearly $50,000 to pay for improvements to the City's entire storm drainage system. The McClungs sued the City under the Fifth Amendment to the Constitution, whose Takings Clause prohibits the government from "taking" private property for public use without just compensation. They argue that the City cannot force them to pay fees for off-site pipes absent proof that their development would have a specific detrimental effect on the existing drainage system—and without any evidence that the impact was worth $50,000. The Ninth Circuit ruled in favor of the City, reasoning that money is not property (so there could be no unconstitutional taking) and that because the fees were imposed by ordinance (so the City's determination that the pipes needed upgrading was justification enough for the fees). The McClungs have now asked the Supreme Court to review their case. Cato, joined by the Pacific Legal Foundation and the Building Industry Association of Washington, argues that this case is a perfect vehicle for the Court to revisit the scope of Fifth Amendment protections. Our brief highlights the deep divisions among state and federal courts over several important issues, such as whether the Takings Clause applies to legislative (as opposed to bureaucratic) exactions and whether it applies to monetary exactions (not just burdens on land use). The Court should take this case to ensure that the standard for reviewing development conditions is uniform across the country and make clear that property right protections do not depend on ill-defined distinctions such as the form of property demanded by the government or the manner in which a condition is imposed.

The Supreme Court's denial of review does not establish any precedent, and McClung remains good law in the Ninth Circuit.

Faced with a budget shortfalls and declining revenue projections (and what level of government these days isn't?), the Honolulu City Council voted today to raise property taxes and eliminate a property tax credit that would have softened the raise for some homeowners. See the reports here and here. It also voted to raise the bus fare from $2 to $2.50 for a single fare (with corresponding increases in monthly pass fares), up the vehicle weight tax 25% this year and an additional 25% next year (Hawaii taxes automobiles by weight, not by age as California does), and quadruple parking rates at the Honolulu Zoo.

There's been a lot of rumbling lately from Hawaii taxpayers about decreasing government expenditures and controlling property tax rates, but a few years ago, after years of pleading with their elected representatives for relief, Kauai voters actually did something about it. They voted to amend the Kauai Charter themselves to establish a baseline property tax rate and cap yearly increases. That charter amendment -- known on Kauai as the "Ohana Kauai" amendment after the grassroots citizens' group that drafted the proposal and gathered enough signatures to put it on the ballot -- passed by an overwhelming margin.

[Before we go further, a disclosure: I was the pro bono appellate lawyer for the four members of Ohana Kauai who defended the charter amendment in court.]

Under the Ohana Kauai charter amendment, property taxes for owner-occupied homes were capped at 1998-1999 amounts for taxpayers who purchased their homes in 1998 or earlier, and capped at the amount paid in the year of purchase for homes purchased after 1998. The measure also limited tax increases to 2% per year. It was designed to bring a measure of certainty and predictability to residential real property taxes, as homeowners would know from year-to-year their maximum tax liability, and county officials would know how much tax revenue to expect from resident homeowners.

To a Californian, voting on property taxes probably does not seem like that big of a deal. More than 30 years ago, the people passed Proposition 13, a statewide initiative that capped taxes and limited increases to 2% annually. After it was challenged on equal protection grounds, the U.S. Supreme Court upheld its constitutionality in Nordlinger v. Hahn, 505 U.S. 1 (1992), noting it was rational for the voters to have believed that Proposition 13 would give new homeowners full information about future tax liability at the time of purchase, whereas an existing homeowner was captive to the whims of the tax man, and didn't have that same choice:

[A]lready saddled with his purchase, [the existing homeowner] does not have the option of deciding not to buy his home if taxes become prohibitively high. To meet his tax obligations, he might be forced to sell his home or to divert his income away from the purchase of food, clothing, and other necessities. In short, the State may decide that it is worse to have owned and lost, than never to have owned at all.

Kauai's similar experiment in citizen-initiated property tax revolts would have a different outcome. After the Ohana Kauai amendment was placed on the November 2004 ballot, in the run-up to the vote, virtually every Kauai elected official attacked the measure, with the Mayor and the members of the County Council leading the charge. They advanced the predictable claims: rolling back property taxes and capping increases would hamstring their ability to deliver vital government services such as police and fire (they took the usual approach of threatening police and fire services first and not last) and, most importantly, claimed the amendment would limit the County’s expenditures on the public worker’s union. However, since 1998, the Kauai budget had risen 50%, and the 2005 budget had increased 25% over the previous year’s alone. With Kauai government spending at a record $123 million, the officials’ cries apparently rang hollow with voters: in spite of the organized and well-financed opposition, in November 2004 the voters of Kauai approved the measure by a nearly two-to-one margin.

The County officials did not accept the political defeat lightly, and instituted what can only be described as a "friendly" lawsuit. The Kauai County Attorney sued the Mayor (her boss), the County Council (who finance her office), and the Finance Director, claiming the Hawaii Constitution -- which provides that "counties" may establish property tax law -- grants county councils a monopoly on that issue. In other words, the people of Kauai were without the legal authority to amend their county charter on the subject of property taxes -- only the County Council could set and change property taxes. The County vs. County lawsuit asserted the voter-enacted measure was void because the term "counties" in article VIII, section 3 of the Hawaii Constitution really means "county councils." The lawsuit was, to say the least, a novel procedure: the County Attorney represented both the plaintiff and the defendants, and the litigation was funded by a $250,000 war chest of taxpayer money, budgeted by the defendant County Council to hire Hawaii’s largest private law firm to represent the plaintiff to attack the charter amendment.

Four Ohana Kauai homeowners intervened in the collusive lawsuit -- somebody had the defend the charter after all. They asserted the plaintiff lacked standing and the complaint sought an advisory opinion, and that government officials should not be able to manufacture a lawsuit in which they were both the plaintiff and the defendants, fund the case with public money, and represent both sides in litigation. The Kauai county trial court disagreed, held the case was justiciable, and voided the charter amendment, ruling that only county councils may set property tax policy, and the people have no right to vote to amend the county charter regarding property taxes.

Up to the Hawaii Supreme Court the homeowners went, arguing first that the officials-versus-themselves lawsuit sought a nonjusticiable advisory opinion, and the case should have been dismissed before the court reached the merits. The second issue raised was whether the Hawaii Constitution delegated the property tax power to county councils when it said it delegated the property tax power to the "counties."

In the end, a sharply divided Hawaii Supreme Court ruled 3-2 that the case was justiciable and government officials have standing to manufacture a lawsuit, the county attorney may represent both the plaintiff and the defendant, and the county council could take a quarter million dollars of taxpayer money and spend it on private lawyers to assist in the anti-citizen lawsuit. On the merits, the majority struck down the Ohana Kauai charter amendment as unconstitutional, holding only county councils have the property taxation power. See County of Kauai ex rel. Nakazawa v. Baptiste, 165 P.3d 916 (Haw. 2007).

As the lawyer who ended up with the short stick, I naturally preferred the opinion of the two dissenting justices who excoriated the opinion in unusually strong terms (check it out here), accusing the majority of factual manipulations and procedural sleight-of-hand, suggesting the majority’s decision to define "county" as "county council" and preclude popular voting on property taxes was more driven by politics and the majority’s notions of good policy than by a principled analysis of the law.

But a dissenting opinion is by defintion a minority report and not the law, so even though we fought the good fight and (I continue to believe) had the better arguments, those arguments did not carry the day. The Hawaii Constitution, according to the three-justice majority of the Hawaii Supreme Court, gives county councils a property tax monopoly.

And that, dear reader, is why Hawaii voters do not have a direct say in property taxes.

----------------------------------------------------
For more about this case, visit our summary page, which includes links to a Wall Street Journal report on the decision, an article with a legal focus I wrote for the ABA State and Local Government Law News, an op-ed I wrote for the Honolulu Advertiser, all the briefs of the parties and amici, oral argument transcripts, and on and on.

As reported here, the American Civil Liberties Union of Florida has joined forces with the American Center for Law and Justice to help protect a property owner. It's good to see that these two organizations -- usually on opposite sides in the courtroom -- have put aside their differences and agree that property rights are fundamental and an integral part of the Bill of Rights. Is this a sign of the end times?

In Stone v. Holmes County, No. 09-27ICA (May 21, 2009), the property owner alleges the County widened an easement across his property in retaliation for the owner complaining to the County about his neighbor's use of an easement across his property. The complaint alleges the widening of the easement was done as a favor to the neighbor. The complaint for inverse condemnation is available here.

Joining forces isn't unprecedented: the ACLU Fund of Michigan and the Pacific Legal Foundation jointly filed an amicus brief supporting property owners in County of Wayne v. Hathcock, 684 N.W.2d 765 (Mich. 2004), the case in which the Michigan Supreme Court overruled the infamous Poletown case and held that economic development was not a public use under the Michigan Constitution's takings clause. That brief is posted here, courtesy of one of its authors, PLF attorney Tim Sandefur. These two examples highlight what is often forgotten: the right to make reasonable use of property is a fundamental right. See Lynch v. Household Finance Corp., 405 U.S. 538, 552 (1972) ("[T]he dichotomy between personal lberties and property rights is a false one.").

And for those of us who can't get enough of saccharine videos documenting interspecies affection, here's one more:

I just finished reading a recently-published law review article by Missouri Court of Appeals Judge Harold L. Lowenstein, Redevelopment Condemnations: A Blight or a Blessing upon the Land?, 74 Mo. L. Rev. 30 (2009) (available here).

Despite the efforts of legislatures to reform eminent domain, the exercise of eminent domain for private redevelopment still confers a concentrated benefit on a few while imposing the costs of such redevelopment on a discrete set of property owners. To remedy this imbalance, and to prevent developers and development agencies from abusing this power, this article proposes that property owners be accorded remedies at the beginning as well as at the end of the eminent domain process.

The article recommends redefining blight in "concrete and measurable terms," and allowing courts to undertake "meaningful judicial review" of blight determinations. The article also suggests that precondemnation blight cover damage to property for the "pall cast" by the establishment of a redevelopment district.

Worth a read.

Yesterday, my Damon Key colleagues and I filed this brief on behalf of a Lanai voter, asking the Hawaii Intermediate Court of Appeals to affirm a decision by the State Board of Registration (County of Maui) which concluded that a Maui County councilperson who registered as a Lanai resident is actually a resident of Maui.

State law establishes the tests for determining residency for registration and other purposes, and includes "habitation," "permanent dwelling place," "physical presence," and a "present intention to establish the person's permanent dwelling place" in the district. See Haw. Rev. Stat. § 11-13 (1993). The councilperson registered as a resident of Lahaina, Maui, in 2006, but in 2008, the County Clerk determined the councilperson validly registered in the Lanai district. The Clerk determined only a registrant's stated intent is relevant. 

The Board overruled the Clerk, holding that both physical presence and intent are necessary under the statute, and the weight of the evidence showed no presence on Lanai. The Board issued these Findings of Fact, Conclusions of Law and Decision, and the Clerk and the councilperson appealed to the ICA. 

Here are the briefs filed so far:

• County Clerk's Opening Brief

• Councilperson's Opening Brief

• Lanai voter's Answering Brief

More to follow once briefing is complete.

Update: On June 10, 2009, we filed this application to transfer the case from the ICA to the Supreme Court, and for expedited consideration pursuant to Haw. Rev. Stat. § 11-52 (1993).

Remember that song Undecided, recorded by the Ames Brothers (and countless others)?

First you say you do, and then you don't (no you don't)
And then you say you will, and then you won't (no you won't)
You're undecided now
So what are you gonna do?

Now you wanna play, and then it's no (then it's no)
And when you say you'll stay, that's when you go (when you go)
You're undecided now
So what are you gonna do?

That looks to be the situation shaping up in the federal government's attempt to acquire land near Somerset, Pennsylvania for the United 93 memorial (for background see this post).

Initially, the land was to be taken by eminent domain after negotiations broke down, prompting two panel members to resign. Then, the headline "Gov't reverses course on Flight 93 memorial land" (June 5, 2009) which reported "The federal government has backtracked and decided not to take the western Pennsylvania property needed to build a Flight 93 memorial. Interior Secretary Ken Salazar and Sen. Arlen Specter met Friday in Somerset with landowners. They say the government will try to negotiate instead of using eminent domain to take the land." 

The next day, however, the AP reported "Deadline set for Flight 93 memorial land talks" (June 6, 2009), which included this news: "The federal government says it will negotiate with landowners for one week in an attempt to get property needed to build a Flight 93 memorial without using eminent domain."

Summary of negotiations: "Let's talk without the threat of us using eminent domain. You have a week to sell." 

For two examples of how the feds often "negotiate" with landowners, see here (the Bureau of Land Management: "the federal government does not negotiate") and here (where the Border Patrol asserted that its casual contacts with the landowner and conversations with her qualified as bona fide "negotiations").

Now don't get us wrong: we're not saying that exercising eminent domain to take land for a national memorial to honor the UA 93 passengers who fought back wouldn't be a public use -- it sure looks like a taking that would be upheld, if challenged.

But it's one thing to be legal and another to be wise (as the New London Development Corporation found out).