Recent Developments in Eminent Domain

B.  The Chicago Way: City Taking Non-Blighted Property for Economic Development Was Not Pretextual Because . . . Studies

In City of Chicago v. Eychaner,¹⁵ the Illinois Appellate Court upheld the taking of private vacant land near the Chicago Loop so that it could be transferred to the owners of a nearby chocolate factory. The court viewed this “A-to-B” taking as merely a part of an area redevelopment and tax increment finance plan, which would keep the chocolate factory from moving out as the area gentrified.

The opinion contains a long recitation of the reasons for the taking, how the Planned Manufacturing District (PMD) was designed to “protec[t] the 2,800 industrial jobs located in the area, [to] preven[t] residential encroachment on the existing manufacturing facilities, and [to] encourag[e] manufacturers to invest in their facilities,” and how the process ultimately resulted in Eychaner’s land being transferred to Blommer.¹⁶ In addition to the chocolate factory, the PMD area included eight other “industrial firms.” But the opinion (and, apparently, the plan) focused on Blommer’s chocolate factory. Ironically, Blommer did not want to be included in the PMD either, because a property to its south was already scheduled for a “massive residential development,”¹⁷ which meant there would be no buffer between Blommer’s industrial use and these future new residents, who would be sure to find intolerable the smell, noise, and traffic generated by the chocolate factory.

Because it wanted to avoid these future troubles, Blommer suggested that the city exclude it from the PMD or prohibit the residential development. Otherwise, it might have to leave Chicago and convert its property to some other use, or, as suggested by Blommer, maybe they could spread the campus north.¹⁸ Initially, these plans did not include Eychaner’s land, but the very next month the city wrote to Blommer:

[w]e are committed to keeping quality manufacturing firms, such as [Blommer] in the City. To that end, we are very interested in helping you create a larger ‘industrial campus’ as a means to internalize your loading operations, limit traffic impacts on adjacent streets, and provide room to expand.” The commissioner wrote that the Plan Commission would: (i) work on the possibility of closing parts of Hubbard Street and Jefferson Street; (ii) pursue the creation of a tax-increment finance district to finance public infrastructure improvements and “any potential acquisitions,” which now included Eychaner’s land; and (iii) defer approval of residential development south of Blommer’s plant “to explore design, use and density issues.” The PMD, the commissioner noted, would “ensure that properties to the north and east of [Blommer’s] factory are not developed for residential use,” and also made clear that Blommer’s “public support for this action [was] crucial in getting this measure through the legislative process.¹⁹

By the following month the plan was even more concrete, and “Blommer commissioned an architect to draw up a site plan for its expanded campus. That plan included Eychaner’s land” and proposed using the city’s eminent domain power to take it and transfer it to Blommer for one dollar.²⁰

The city complained that “Blommer’s seems to be negotiating as if they have us over [a] barrel,”²¹ but ultimately a few months later, the city adopted the PMD and began the tax increment financing scheme. The city commissioned studies, and produced a sixty-eight page report which concluded that:

tax-increment financing would induce private investment and arrest blighting factors in the area. Because the area had not been subject to growth and reinvestment, the study reasoned that property owners would not invest in their properties without tax-increment financing. The study anticipated benefits, including: (i) stronger economic vitality; (ii) increased construction and long-term employment opportunities; (iii) replacement of inappropriate uses, blight, and vacant properties with viable, high-quality developments; (iv) the elimination of physical impediments, such as roads in poor condition; (v) the construction of public improvements to attract private investment; (vi) job-training services to make the area more attractive to investors and employers; and (vii) opportunities for minority- and women-owned businesses to share in the redevelopment.²²

Eychaner’s land was not blighted, but there was some blight in the area, so Eychaner’s land was soon placed into a “conservation area” because in the future it “may become a blighted area.”²³ A few months later, Blommer submitted a proposal to redevelop the area around the factory, which included Eychaner’s land, for all of the usual reasons that support an economic development taking: creating and retaining jobs, increased tax revenue, and ensuring that the plant stayed in the city. When Eychaner refused to sell to Blommer, down came the city’s eminent domain hammer.

The appellate court distinguished Southwest Illinois Dev. Auth. v. National City Environmental, LLC,²⁴ the case in which the Illinois Supreme Court invalidated a taking for private benefit, concluding that an A-to-B taking with “minimal public benefit” which “principally benefitted” a private party could not withstand public use scrutiny.²⁵ Concluding that the taking of private property for an adjacent racetrack’s parking lot was a “purely private benefit and lacks a showing of a supporting legislative purpose,” the SWIDA court held that the “true beneficiaries of this taking are private businesses and not the public.”²⁶

The Eychaner court held SWIDA was different because of the absence of plans in SWIDA. In SWIDA, the condemnor produced no studies, thus the court was able to see through the pretext to the “sweetheart deal” to understand that the taking was not intended to benefit the public.²⁷ It did not matter whether the public was allowed to access the property under its new ownership because the key issue is the motive of the condemnor.

Relying on Kelo, the Eychaner court concluded that the city had adequately documented that its motives were pure because it showed that the taking of Eychaner’s land was just part of a plan — a “carefully formulated” economic development plan, not a sweetheart deal. Thus, the court held that the taking “unquestionably serves a public purpose of preventing blight, promoting economic revitalization, and protecting existing industry.”²⁸

The court rejected Eychaner’s pretext arguments after acknowledging that “[r]ecognizing the difference between a valid public use and a sham can be challenging.”²⁹ But the existence of the plans made it much less challenging, indeed a foregone conclusion:

Recognizing the difference between a valid public use and a sham can be challenging. But a telling feature of sound public use in the context of economic redevelopment is the existence of a well-developed, publicly vetted, and thoughtful economic development plan. Such a plan was present in Kelo, 545 U.S. at 483-84, and Gutknecht, 3 Ill. 2d at 542-43, but absent in SWIDA, 199 Ill. 2d at 240 (“SWIDA did not conduct or commission a thorough study of the parking situation at [the racetrack]. Nor did it formulate any economic plan requiring additional parking at the racetrack.”). A taking will likely pass constitutional muster where done in furtherance of a sound economic development plan, rather than the plan retroactively justifying the taking. Cf. Romeo v. Cranston Redevelopment Agency, 254 A.2d 426, 433 (R.I. 1969) (“governing bodies must either plan for the development or redevelopment of urban areas or permit them to become more congested, deteriorated, obsolescent, unhealthy, stagnant, inefficient and costly” (internal quotation marks omitted)).³⁰

This was no “sham to take [Eychaner’s] property.”³¹ The city had an economic revitalization plan, and the taking was but a part of it because it “aligned” with the city’s stated goals to retaining existing industry (Blommer), prevents conflict between residential and industrial use (Blommer), and promotes investment and revitalization (Blommer’s) in a conservation area.³²

Having found the taking constitutional, the court did have problems with the way the trial court handled the just compensation issue, concluding that the “scope of the project” rule should have resulted in the trial court excluding evidence of the PMD zoning. The court held that the “public improvement” (the project) “is Blommer’s expanded industrial campus, the ultimate use of Eychaner’s property.”³³

The record indicates that the creation of the PMD, the River West TIF, and the taking of Eychaner’s land were all a single project. The City began the process of creating the PMD in late 1999 with the goal of protecting industrial users like Blommer. The City’s study regarding the River West TIF indicated that it was a “financial mechanism necessary to implement the goals and objectives of” the PMD. The taking of Eychaner’s land was not only an integral part of creating the PMD, but also served to carry out the goals of PMD and River West TIF. Namely, the preservation of the City’s industry, prevention of conflicts between industrial and residential uses, job creation, and increased tax revenue.³⁴

Ah, the plan again. Note the irony in the city’s argument: the “project” for purposes of the scope of the project rule — supposedly the property owner’s expectations of why its property was taken — was not to give it to its neighbor, but that was exactly the city’s argument supporting its claims of public use. The court rejected as “speculative” the city’s argument that “Eychaner’s land would have been included in the PMD even if it was not taken for Blommer’s expansion.”³⁵

C.  “Eminent Domain Abuse” Turnaround in Idaho: Property Owner Liable for Condemnor’s Attorneys Fees for “Extreme and Unlikely” Appeal and Defenses

You have no doubt heard a lot about “eminent domain abuse” in the past few years, and that is what seemed to fuel the Idaho Supreme Court’s opinion in State of Idaho, Dep’t of Transportation v. Grathol,³⁶ Except here, it was not abuse of the property owner by the condemnor, but rather the other way around: the overall sense of the opinion was that the court was not too pleased with the property owner’s approach. It determined the appeal was “extreme and unlikely” and assessed the property owner the attorneys’ fees and costs the government incurred on appeal. It also concluded that the property owner may have interposed “extreme and unlikely” defenses in the trial court, even though that court had already concluded that the defenses were not unreasonable. The supreme court reversed the trial court’s refusal to assess fees and costs. It also affirmed the valuation for the taken property made by the trial judge over the objections of the property owner.

The Idaho Supreme Court gave short shrift to the property owner’s argument that “an award to a condemnor would unconstitutionally reduce the landowner’s award merely because the landowner puts the government to its proof.”³⁷ Instead, the court treated this eminent domain case as if it were ordinary civil litigation. However, condemnation cases are not your typical plaintiff v. defendant civil litigation, where the plaintiff claims the defendant breached a duty, broke a contract, or committed some wrong. Eminent domain cases should be considered differently because the only reason the defendant is being sued is that she owns property that is purportedly needed for the public’s use. There is no culpability involved.

Those not bothered by the result might say that the rule allowing an owner to be assessed fees and costs adopted by the Idaho court applies only to what the court calls “extreme and unlikely” cases of property owner abuse; that the court adopted standards — and thus safeguards — which would prevent condemnors from leveraging the power to seek fees to put even more pressure on property owners to take whatever is offered and forego theories of valuation that may seem novel or aggressive. But let’s take a look at the factors the court required to be met before a condemnor can be awarded fees and costs:

1. whether the trial court correctly perceived the issue as one of discretion;
2. whether the trial court acted within the boundaries of this discretion and consistent with the legal standards applicable to the specific choices available to it; and
3. whether the trial court reached its decision by an exercise of reason.³⁸

Next, the court must apply the statute, which allows the award of fees and costs to the “prevailing party” in “any civil action,” and determine which party “won.” In a condemnation case, this is not always straightforward. Who “wins” when the government’s duty is to award the full and perfect equivalent of the property taken? This part of the opinion is not easy to follow, but the court summed up the test this way:

First, the condemnor must have met all of Acarrequi factors that applied to the condemnor. Second, the condemnor’s case must have been brought reasonably, not frivolously, and have adequate foundation. Finally, the condemnee must meet the standard in section 12-121. Fees can be awarded under section 12-121 only when the court ‘finds, from the facts presented to it, that the case was brought, pursued or defended frivolously, unreasonably or without foundation.’ I.R.C.P. 54(e)(1). When a district court decides in its discretion that a case meets all three of these elements, the condemnor recovers its attorney fees.³⁹

In Ada Cnty. Highway Dist. v. Acarrequi,⁴⁰ the Idaho Supreme Court held that the standards for fee shifting are not really standards (no “rigid guidelines”), and it is really just up to the trial judge. It is difficult to see how the final factor listed above squares with the trial court’s finding that the property owner’s arguments and conduct were not frivolous. This author’s reading of these factors is that, absent the trial court really going off the rails, there is virtually no chance the appellate court will reverse.

The Idaho Supreme Court held that the trial court did not apply these factors, and therefore sent the case back for a determination of whether the property owner would be held liable for fees and costs. The court, however, assessed the owner fees and costs incurred by the government on appeal, concluding that the property owner’s arguments were “unreasonable,” “false and misleading,” “completely unreasonable and frivolous,” and “only ask the court to re-weigh the evidence.”⁴¹

The opinion does not discuss the lodestar, but since the government was represented by outside private counsel (a 470-lawyer firm), the amounts it seeks will likely be significant. The concurring opinion notes that, “the State claimed it incurred $724,136 in attorney fees, $13,079.06 in costs as a matter of right, and $167,103.59 in discretionary costs, for a total of $906,318.65.”⁴² The concurring justice also noted that “the costs of defending would likely have been substantially less, had the Attorney General’s office been properly funded and not obliged to seek the assistance of outside counsel[.]”⁴³ It seems unfair to hang the fact that the AG’s office is underfunded on the property owner, and if liable for the government’s fees, it should not be on the hook for more than what it would have cost the AG’s office to prosecute the case.

The concurring justice also seemed even more offended by the property owner’s approach than the majority was, writing that it treated “the condemnation proceeding as a ride on the gravy train.”⁴⁴ Justice Jones also castigated the property owner for not taking the settlement that was offered to it by the condemnor because the settlement offer was “reasonable.” It is not clear how the settlement offer was entered into the record.

A final question is whether this rule is going to be sauce for Idaho condemnors as well as Idaho property owners. Will the courts look with a similarly jaded eye when offers of just compensation end up being much lower than the final award?

D.  North Carolina: “Map Act,” Which Land Banks Property for Future Highways, is a Taking

In Kirby v. North Carolina Dep’t of Transportation,⁴⁵ the North Carolina Court of Appeals not only held that the property owners’ claims were ripe, but that the Map Act — which gives the DOT the ability to designate property for future highway use and prevent its development in the meantime — effected a taking. The court reversed the trial court’s dismissal and sent the case back down for a calculation of the compensation owed to each property owner.

The North Carolina legislature adopted a statute that allows the DOT to designate future highway corridors, but does not require it to actually acquire the property.⁴⁶ Once the DOT files a map showing the location of the future highway with a county registrar of deeds, even the owners of the properties designated cannot pull building permits. Although there are means for property owners to seek relief from the development prohibition, that process is a limited one and a property owner must show extreme hardship. The stated purpose of the Act is to keep acquisition costs low.

The court of appeals concluded that the property owners’ claims for inverse condemnation, regulatory takings, and equal protection were ripe because the Act and the filing of the maps were an exercise of the state’s power of eminent domain, and not merely the state “regulating” property under its police power, as the DOT argued. Relying on the rationale of a Florida Supreme Court case, Joint Ventures, Inc. v. Dep’t of Transportation,⁴⁷ the court held that the purpose of the Act was to reduce the cost of acquisition in the event of future condemnation, and was thus an exercise of the eminent domain power. In other words, this was a taking.

Once the DOT files a map with the register of deeds, the Act bars the issuance of building permits, “and are absolute.”⁴⁸ The court rejected the DOT’s argument that this was “merely” a “temporary three-year restriction on new improvements” which eventually will be lifted.⁴⁹ To the contrary, the court concluded that the prohibition on use could last as long as sixty years based on a letter sent from DOT’s CEO.

Therefore, with potentially long-lasting statutory restrictions that constrain Plaintiffs’ ability to freely improve, develop, and dispose of their own property, we must conclude that the Map Act is distinguishable from the cases that established the rule that “the recording of a map showing proposed highways, without any provision for compensation to the landowners until future proceedings of condemnation are taken to obtain the land, does not constitute a taking of the land, or interfere with the owner’s use and enjoyment thereof.”⁵⁰

In other words, the map designations were not merely preliminary planning, as the DOT argued, but clouded the plaintiffs’ ability to use and market their properties.

Having concluded that the Act effects a taking, the court remanded the case to the trial court “to consider evidence concerning the extent of the damage suffered by each Plaintiff as a result of the respective takings and concerning the amount of compensation due to each Plaintiff for such takings.”⁵¹

E. Texas: Pipeline Is Not a Common Carrier with Power of Eminent Domain Just Because, Post-Taking, It Might Transport Others’ CO₂

This dispute was previously before the Texas Supreme Court, which held that trial courts must make a factual inquiry into a claim that a pipeline company is a common carrier with the power of eminent domain, and not just accept as conclusive the fact that the company registered as a common carrier.⁵² On remand, the trial court concluded that the pipeline operator was a common carrier because the operator intended, after the pipeline’s construction, to move CO2 belonging to another entity through the pipeline.⁵³ The trial court granted the pipeline company summary judgment on the common carrier issue.

In Texas Rice Land Partners, Ltd. v. Holland,⁵⁴ the court of appeals disagreed and, after applying the test set out in the Supreme Court’s decision, concluded that reasonable minds could differ as to whether the pipeline operator is a “common carrier” as defined in Texas statutes.

Under Texas law, a common carrier is defined as an entity that:

owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide or hydrogen in whatever form to or for the public for hire, but only if such person files with the commission a written acceptance of the provisions of this chapter expressly agreeing that, in consideration of the rights acquired, it becomes a common carrier subject to the duties and obligations conferred or imposed by this chapter.⁵⁵

In order to qualify under the Texas Supreme Court’s fact-based test, the entity must have the intent to be a common carrier at the time of its plans to construct the pipeline. The court of appeals focused on this language from the supreme court’s opinion:

for a person intending to build a [carbon dioxide] pipeline to qualify as a common carrier under Section 111.002(6), a reasonable probability must exist that the pipeline will at some point after construction serve the public by transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier.⁵⁶

It did not matter that after construction, the entity produced evidence that showed the gas of others would be transported:

The record demonstrates that the Green Line was first contemplated in 2008, but Airgas did not approach Denbury Green about transporting carbon dioxide until after the Green Line was completed. Tellingly, when Airgas raised the issue in an email sent after the Texas Supreme Court’s ruling, Airgas stated, ‘Given the recent ruling about your pipeline, I thought it might be advantageous for you to have another company transport some CO2 down this line.’ As the Texas Supreme Court has noted, the professed use must be a public use in truth. [. . .] We cannot say that the Airgas contract, reached after the Green Line’s completion, speaks to Denbury Green’s intent at the time of its plan to construct the Green Line.⁵⁷

This is a logical result because the power of a private entity to take property as a common carrier should be determined by its intent at the time of the taking, not whether after acquisition it can devote the property taken to public use. Because the common carrier issue turned on issues of fact about which reasonable persons could differ such as the entity’s intent, the court concluded that summary judgment was not warranted.

F.  Washington: State Trust Land Can Be Condemned by County Utility

In a case with a somewhat unusual twist, the condemnee objecting to the taking by a public utility district was the state. In Public Utility Dist. No. 1 of Okanogan Cnty. v. State of Washington,⁵⁸ the Washington Supreme Court affirmed the power of a county utility district to take an easement over “school trust lands” for the construction of an high-voltage, high-capacity transmission line and corridor. The land, which was owned by the public and held in trust for schools, was “a portion of the largest publicly owned tract of shrub-steppe habitat in the Methow Valley,” and was being used for cattle grazing.⁵⁹ The grazing leases generated $3,000 per year for the state’s public schools, and it was acknowledged that the land may be subject to easements and condemnation.

The court first concluded that an environmental organization could intervene to address the power of the utility district to take the land. Although not an adjoining landowner (who, under prior decisions, have standing to intervene to challenge the power to take), the interest of the environmental organization was like that of an adjoining landowner, and the state might not adequately protect that interest. The state was there to protect the lands as school lands, while the organization’s interest was in protecting “wildlife sanctuaries and shrub steppe lands.”⁶⁰ Thus, the trial court did not abuse its discretion when it allowed the environmental organization to intervene to challenge the power to take.

On the merits, the court sided with the utility-condemnor, and held that the state land was not immune from being taken. The utility has been delegated the power of eminent domain by statute, so the court viewed this issue as the scope of the delegation to a municipal corporation under the statute, which provides:

A district may take, condemn and purchase, purchase and acquire any public and private property, franchises and property rights, including state, county, and school lands, and property and littoral and water rights, for any of the purposes aforesaid, and for railroads, tunnels, pipe lines, aqueducts, transmission lines, and all other facilities necessary or convenient, . . .⁶¹

The state asserted that its property was exempt as trust land, and that transfer would violate its fiduciary duties. When the state owns land in its “proprietary” capacity, it is enough that the enabling statute confers the power to take this type of land. By contrast, when the state owns land it its “governmental capacity” (in trust), it can only be condemned when the statute authorizes condemnation of the land in that specific capacity. The court agreed with the state that it “indisputably” held the school lands in its trust capacity, meaning the question was “whether [the utility] is expressly authorized to condemn the subject school and turns on whether the term ‘school lands’ provided in RCW 54.16.050 refers to school trust land.”⁶²

Undertaking detailed statutory analysis,⁶³ the court concluded that yes, “school lands” in the statute includes school trust lands. The legislature directed the courts to “liberally” construe the statute and other similar grants of power include the condemnation of trust lands.

As for the state’s prior public use argument that the land was already being used to graze cattle, the court held that the utility’s proposed use was not incompatible with the state’s use, and therefore the doctrine did not prohibit the taking. The court also rejected the state’s constitutional argument:

PUD’s condemnation of a right of way through school lands is consistent with these constitutional provisions because condemnation of an easement does not involve the sale of land in fee and requires payment of full market value. The plain language of section 2, when contrasted with that of section 1, strongly indicates that the drafters did not intend the sale of lesser land interests (e.g., easements) be subject to the public auction requirements of section 2. Had they so intended, they would have included similar “estate or interest” language in section 2 as appears in section 1. Because PUD is not attempting to condemn a fee interest, we need not consider whether the public auction requirements of section 2 would prohibit condemnation of a fee interest.⁶⁴

Finally, the court rejected the state’s argument that condemnation of school trust lands violated the state’s fiduciary duties as trustee. The fact that condemnation requires the payment of just compensation was not incompatible with the state constitution’s prohibition on disposal of trust land, because that limitation is subject to the proviso that “unless the full market value of the estate or interest disposed of ” is paid to the state.

G.  Minnesota Supreme Court Orders Power Company to Buy the Farm — Literally

When we hear the phrase “buy the farm,” we think of the cliche´ from old war movies, not eminent domain. But in Minnesota, “buy the farm” is taken literally. In Great River Energy v. Swedzinski,⁶⁵ the Minnesota Supreme Court interpreted that state’s “buy the farm” statute, which gives certain landowners the option to require a public utility that is taking an energy corridor easement to buy the entire parcel if certain conditions set out in the statute are met.

To be accurate, the court was not “interpreting” the statute, but reviewing the lower courts’ refusal to graft a reasonableness requirement into the statute as Great River, a utility with the power of eminent domain under the statute, had requested after it condemned a permanent easement and a temporary access easement across Swedzinski’s land, and Swedzinski exercised the option to require Great River to buy the entire farm. Great River argued that even though Swedzinski’s election qualified under the factors laid out in the statute, it should not have been forced to buy more than was reasonable. It asserted that “the land subject to the election was so much larger than the land needed for the easement.”⁶⁶ It argued that in addition to the factors spelled out expressly in the statute (wholly owned undivided fee simple interest, timely notice, the land at issue in the election must be contiguous with the condemned parcel, and commercially viable), there is an implied requirement of reasonableness under the totality of the circumstances. Both the trial court and the court of appeals rejected the argument, as did the supreme court, reasoning that the legislature spelled out certain factors, and those are the only factors.

Although two earlier Minnesota Supreme Court decisions interpreting an earlier iteration of the “buy the farm” statute required that certain conditions be “reasonable,” in Great River the court held that the legislature’s subsequent amendment of the statute had incorporated these cases’ reasonableness requirements, and thus it was not a separate overall requirement under the current version of the statute. The court recognized that it might make sense from a policy standpoint to have an overall requirement of reasonableness, but we all know where policy arguments get you most of the time in Supreme Court arguments: directions to the legislature. It was no different here.⁶⁷

H.  Second Circuit: Amtrak Loses on Claim its Property Immune from NY’s Eminent Domain Power

The State of New York sought to build the Bronx River Greenway, a “[twenty-three] mile-long ribbon of green with a multi-use path that will extend along the full length of the river in Westchester County and the Bronx.” Who could argue with that? Amtrak, that’s who. After failing to acquire six parcels along the river owned by the private corporation formed under the Rail Passenger Service Act of 1970,⁶⁸ the state, in 2008, filed notices of appropriation and maps with the county clerk and title to the land vested in the state. After efforts to resolve their dispute failed, in 2012 Amtrak sued in federal court, arguing that the takings were invalid under the Supremacy Clause because they were expressly or impliedly preempted by federal law.

In National Railroad Passenger Corp. v. McDonald,⁶⁹ the U.S. Court of Appeals for the Second Circuit concluded that Amtrak waited too long to raise its preemption claim. The court applied New York’s six-year statute of limitations, and detailed the series of events that convinced the court that Amtrak knew or should have known about the injury:

We do not pause to determine the precise date on which NYSDOT knew, or had reason to know, because both possible dates are well beyond six years from the date this action was brought. In 2005, when Weld sent the email informing Amtrak that NYSDOT would hold a May 2005 public hearing on the subject of condemning Amtrak’s land, Amtrak arguably had reason to know of the alleged Supremacy Clause violation that is the basis of its present claim. Eminent domain proceedings cloud title, and Amtrak concedes that it suffered not merely potential, but actual in- jury once its property became the subject of EDPL proceedings. At the very latest, Amtrak had notice of this harm in August 2005, when NYSDOT announced its findings.⁷⁰

But if the takings did not take place until 2008, and Amtrak sued in 2012, its claim was seemingly timely. Not so, held the court; the “completion of the takings was merely the final act of the intrusion on Amtrak’s alleged Supremacy Clause rights that accrued in 2005 at the outset of the condemnation proceedings.”⁷¹

It would make no sense to begin the limitations period — or restart it — when title to the real estate actually vests in the state, an act that occurs only after notice to interested parties and the requisite findings have been made. Indeed, Amtrak’s proposed rule would leave the validity of a condemnation of its property in doubt for some six years after title has passed. Common sense, not to mention the record of Amtrak’s failure to take any of the obvious protective measures, directs otherwise.⁷²

In other words, a takings plaintiff cannot wait for the final hammer to fall before formally objecting. This author is not convinced by the court’s analysis here because, before the 2008 notices of appropriation and filing of the maps and vesting of the title in the state, nothing was written in stone, and it appears that there was some chance the state and Amtrak would reach an agreement. Common sense suggests that it would have tainted the negotiations if Amtrak were to have thrown down a lawsuit at that point, and perhaps the reasons it did not file then was not that it was idly sitting on its rights, but rather (1) its property was still its property because the state had not taken the final act to vest title, and (2) it hoped that the ongoing negotiations might be successfully concluded short of a taking. But the Second Circuit thought otherwise, so the prudent course is to file early. Landowners in these situations are put in a tough spot because invariably, if they do file suit as the Second Circuit requires, either for inverse condemnation or to stop a taking, the condemnor will argue that the case is not ripe.

II.  Just Compensation Issues

A.  Condemnor’s Higher Initial Appraisal, Offer, and Deposit Admissible

In Coleman v. Mississippi Transportation Comm’n,⁷³ the Mississippi Supreme Court held that evidence of the condemnor’s initial appraisal, offer, and deposit were admissible when its appraiser presented a lower valuation at trial. The appraiser was also subject to cross-examination about why he lowered his valuation. The court concluded that the property owner was entitled to introduce evidence of the condemnor’s initial offer and deposit of $380,300, and to cross-examine the Commission’s appraiser about why his trial testimony was that the property was worth nearly $100,000 less, $289,400. The trial court prohibited the jury from learning about the deposit and earlier appraisal, concluding it was part of settlement and compromise and thus excludable under Rule 408. The court also prohibited the property owner’s appraiser from testifying that the property was worth $799,000, because he “could not explain his appraisal methods.”⁷⁴ The trial court entered a directed verdict for $289,400.

Relying in part on United States v. 320.0 Acres of Land,⁷⁵ the Mississippi Supreme Court concluded that the condemnor’s initial appraisal — a valuation required by state statute — was relevant and admissible, and was not an offer of settlement to be excluded under Rule 408. First, an appraisal is not an offer of settlement or compromise; it is an appraisal. Second, under Mississippi law, things that happen before a condemnation complaint is filed are not subject to Rule 408 because there is no disputed “claim,” as the rule requires.⁷⁶ Eminent domain is different because the “claim” does not arise until the complaint is filed, unlike other civil actions where the “claim” arises when the duty or contract is breached even if a complaint has not yet been filed. The court also concluded that the Commission’s offer, as well as the deposit, was admissible subject to a ruling on whether the jury would be too prejudiced by this evidence:

We find that MTC’s first appraisal, in addition to cross-examination thereon, should have been available to the jury for consideration of MTC’s prima facie demonstration of value and Coleman’s claim to just compensation. Because the appraisal was erroneously excluded under Rule 408, where that rule did not apply, this exclusion was reversible error. We note that the appraisal, like all proffered evidence, is still subject to the Rule 403 considerations discussed earlier.

Concerning Coleman’s contention that exclusion of the quick-take deposit and the initial offer also constituted error, we find that, having been excluded subject to Rule 408, such exclusion was erroneous, as neither the offer nor the deposit is the type of “offers of compromise” covered by Rule 408. It may be the case on remand, however, that evidence of the deposit or offer is inadmissible under Rule 403.⁷⁷

B.  Florida: Quick Take Deposit Vests Only Owner’s Right to Compensation, Not to Specific Funds

Florida Dep’t of Transportation v. Mallards Cove, LLP,⁷⁸ was a regulatory takings case that followed on the heels of a straight condemnation. The DOT condemned property belonging to Mallards Cove via Florida’s quick take procedure, by which certain agencies may obtain immediate possession and title, provided they deposit a good faith estimate of the land’s value with the clerk of the court. Under Florida law, the property owner’s right to just compensation then vested, and two weeks later, the property owner withdrew the two million dollar deposit. While the funds were on deposit, the clerk invested it, and under a Florida statute, ninety percent of the interest went to the DOT. The eminent domain case wrapped up, with the owner agreeing that the final judgment represented full compensation for the property taken.

But the owner was not finished. It filed a separate lawsuit, alleging the interest the clerk earned on the deposit was its property, and that the DOT and the clerk took that property without just compensation. The trial court agreed on the ground that the deposit vested in the owner, meaning that the interest also became its property. The court of appeals, however, disagreed, holding that while interest is a component of just compensation, the interest in this case was not “property.”

First, the judgment in the eminent domain case was final, and the property owner could not, in effect, seek additional compensation in a second action. Second, the court rejected the owner’s claim that its property interest in the interest was separate from its property interest in the land taken, and that since its interest in the deposit vested immediately, the interest earned on the deposit also belonged to it. The court concluded that condemnees’ rights are indeed vested upon the deposit, but that the right is one to full compensation, not the right to the specific funds on deposit.

Thus, the prior eminent domain judgment meant the case was over. It is a decision somewhat governed by semantics because, if the owner indeed had the right to compensation immediately upon deposit, it should also have the right to the time value of that compensation from that point forward. One wonders whether the outcome might have been different had the owner not stipulated, in the eminent domain case, that it was fully satisfied, but had pursued the claim for interest there.

C.  Texas: Trial Court Cannot Determine Power to Take Until after Commissioners Determine Value

Texas has a bifurcated eminent domain process. After a petition in condemnation is filed in court, in the administrative phase, the court appoints commissioners whose job it is to hold a hearing and render an opinion on value. If any party does not like commissioners’ decision, the judicial phase commences and the more familiar process begins.

In In re Tarrant Regional Water District,⁷⁹ the question was whether the court, in the administrative phase, has the obligation to appoint commissioners even where the court might agree with the property owner’s contention that its property was immune from condemnation. The trial court refused to appoint commissioners, holding it would only do so after a hearing on whether the condemnor could legally take the property.

The court of appeals granted the condemnor’s petition for a writ of mandamus, and held that, during the administrative phase of an eminent domain case, the trial court has no power to not appoint commissioners. The court of appeals concluded that during the administrative phase, the only duty or power of the trial court is to appoint commissioners. It cannot make any determination about the power to take. The court of appeals shrugged off the argument that the condemnor lacked authority to take, and held that it is not a judicial problem, at least not yet. Only after the determination of value by commissioners does the trial court have jurisdiction to determine whether the condemnor can take the property.

That does not seem very efficient, nor does it square with this author’s understanding that courts are not just potted plants when it comes to cases that are on their docket, and always have some kind of power to control them.

D.  Nebraska: Condemnor Did Not Make Jurisdictional Good Faith Effort to Negotiate

Under Nebraska eminent domain law, the condemnor is required to make a “good faith” effort to negotiate with the property owner before it files an eminent domain action.⁸⁰ In Camden v. Papio-Missouri River Natural Resources District,⁸¹ the court concluded that the condemnor had not made these efforts. Here is what occurred:

• The Natural Resources District (NRD) contacted the property owners, and made an offer of $67,000 for the desired easements.
• The owner said, “from now on, talk to my lawyer.”
• The NRD did so, and sent the owners’ lawyer a revised proposed purchase agreement.
• The owners, through their lawyer, rejected the offer, valuing their loss at $750,000.
• The owners also proposed an alternative to only monetary compensation.
• The NRD responded that the counteroffer was unreasonable, and thus staff would not recommend the NRD board accept it, but suggested the owners appear at the next board meeting and make a presentation.
• The owners lawyer did appear, and “was allowed to briefly speak in front of the Board before being told to sit down.”
• “One of the Board members testified that the [owners’] proposal document was not physically presented at the subsequent closed session of the meeting. Nor, he testified, was the [owners’] counteroffer completely explained to the Board; instead, NRD management only informed the Board that the [owners] ‘gave a frivolous offer.’ ”⁸²
• At the conclusion of the meeting, the Board adopted the condemnation resolution.⁸³
• “No actual response to the [owners’] counteroffer was given by the NRD, and no further effort was made to negotiate an agreement with the [owners] prior to commencement of the condemnation proceedings”⁸⁴
• The NRD instituted eminent domain proceedings.

The trial court dismissed the action, concluding that the owners’ counteroffer was not frivolous:

The district court found that the NRD was under pressure to complete the project as quickly as possible to avoid losing federal stimulus funds. It found that because of this pressure, the NRD made a number of errors during the process, including having to initiate three separate condemnation proceedings in order to address legal description discrepancies. The court also concluded that the NRD did not negotiate in good faith, because it did not make a reasonable attempt to induce the [owners] to accept the offer.⁸⁵

The court of appeals affirmed finding that the NRD had not made a good faith effort to negotiate, and that the owners’ counteroffer was not frivolous.

We also reject the NRD’s claim that affording the [owners] an opportunity to present at the August 2009 meeting of the Board was a reasonable attempt to induce acceptance of the offer. The record shows that [owners’ lawyer] had a brief opportunity to address the Board before and after the Board went into a closed executive session. There is no evidence in the record that the Board gave a formal response to the [owners’] counteroffer, presented another offer in response to the [owners’] counteroffer, or even retendered its original offer during that meeting. In fact, the only evidence in the record regarding this meeting demonstrates that the Board was simply informed during its executive session that the [owners’] counteroffer was frivolous.

Finally, having independently analyzed the [owners’] counteroffer, we cannot say the district court erred when it found the counteroffer was not unreasonable to the degree that would have excused the NRD from further negotiations. When the [owners] made their counteroffer, it was in response to the NRD’s revised offer which incorporated a design change in the spillway. The NRD never informed the [owners] that additional changes to the project could not be accommodated. Thus, the [owners’] proposals for design changes were not unreasonable.⁸⁶

The condemnor had not made a good faith offer and undertaken reasonable efforts to induce the owners to accept it. You do not have to undertake “extensive negotiations,” but you have to make an effort. The court also reaffirmed that, while “extensive negotiations” are not required, the efforts are “mandatory and jurisdictional,” meaning that in the absence of a showing of good faith effort, the condemnor lacks the authority to take the property.⁸⁷

III.  Conclusion

More and more courts appear to be delving deeper into a condemning agency’s power to take, and looking at the issues with a more stringent eye. The issues left open by the Supreme Court in Kelo, however, remain, and eventually the Court will be presented with a case that allows it to resolve them. In the interim, the lower courts — particularly state supreme courts interpreting takings provisions in their respective constitutions — are where the interesting action is taking place.

1. Kelo v. City of New London, 545 U.S. 469 (2005).
2. Reading Area Water Auth. v. Schuylkill River Greenway Ass’n, 100 A.3d 572 (Pa. 2014).
3. Id. at 573.
4. Id. at 576.
5. Id.
6. Id.
7. Id. (“Under the guise of expanding their customer base and providing water to the public, [the Authority] is attempting to achieve its true goal and take land from one private owner and give it to another.”).
8. Id.
9. Id.
10. Id. at 581.
11. Id. at 582.
12. Id.
13. Id. at 583.
14. See County of Hawaii v. C&J Coupe Family Ltd. Partnership, 198 P.3d 615 (Haw. 2008) (Kelo allows inquiry into actual reasons for taking).
15. City of Chicago v. Eychaner, 26 N.E.3d 501 (Ill. App. 1st Dist. 2015).
16. Id. at 506.
17. Id. at 508.
18. Id. at 504.
19. Id. at 511.
20. Id. at 514.
21. Id. at 511.
22. Id. at 513.
23. Id. at 514.
24. Southwest Illinois Dev. Auth. v. National City Environmental, LLC, 768 N.E.2d 1 (Ill. 2002).
25. See id. at 10 (citing Limits Industrial R.R. Co. v. American Spiral Pipe Works, 151 N.E. 567, 571 (Ill. 1926)).
26. Southwest Illinois Dev. Auth., 768 N.E.2d at 10–11.
27. Eychaner, 26 N.E.3d at 518.
28. Id. at 509.
29. Id. at 511.
30. Id. at 522.
31. Id.
32. Id. at 523.
33. Id. at 525.
34. Id.
35. Id.
36. State, Dep’t of Transportation v. Grathol, 343 P.3d 480 (Idaho 2015).
37. Id. at 492.
38. Id.
39. Id. at 494.
40. Ada Cnty. Highway Dist. v. Acarrequi, 673 P.2d 1067, 1071 (Idaho 1983).
41. Grathol, 343 P.3d at 496.
42. Id. at 497.
43. Id.
44. Id.
45. Kirby v. North Carolina Dep’t of Transportation, 769 S.E.2d 218, 235 (N.C. App. 2015).
46. N.C. GEN. STAT. §136-44.50 (2015).
47. Joint Ventures, Inc. v. N. C. Dep’t of Transp., 563 So.2d 622 (Fla. 1990).
48. N.C. Dept. Transp., 563 So.2d at 234.
49. Id.
50. Id. at 235 (quoting Browning v. N. C. State Highway Comm’n, 139 S.E.2d 227, 230–31 (N.C. 1964)).
51. Id. at 236.
52. Texas Rice Land Partners, Ltd. v. Holland, 363 S.W.3d 192, 204 (Tex. 2012).
53. Texas Rice Land Partners, Ltd. v. Holland, 457 S.W.3d 115, 117 (Tex. Ct. App. 2015).
54. Id. at 121.
55. TEX. NAT. RES. CODE ANN. § 111.002(6) (2013).
56. 457 S.W.3d at 120 (quoting 363 S.W.3d at 202).
57. 457 S.W.3d at 120 (quoting in part 363 S.W.3d at 202).
58. Pub. Utility Dist. No. 1 of Okanogan Cnty. v. State of Washington, 342 P.3d 308 (Wash. 2015).
59. Id. at 311.
60. Id. at 315.
61. WASH REV. CODE ANN § 54.16.050 (2014).
62. Public Utility District No. 1 of Okanogan Cnty, 341 P.3d at 317.
63. See id. at 312–23.
64. Id. at 321.
65. Great River Energy v. Swedzinski, 860 N.W.2d 362 (Minn. 2015).
66. Id. at 364.
67. See id. at 367 (“The policy arguments that Great River advances in support of its theory that the statute should contain additional requirements are properly directed to the Legislature.”).
68. 49 U.S.C. § 24101 (2014).
69. Nat’l R.R. Passenger Corp. v. McDonald, 779 F. 3d 97 (2d Cir. 2015).
70. Id. at 101.
71. Id. at 102.
72. Id. (footnote omitted).
73. Coleman v. Miss. Transportation Comm’n, 159 So.3d 546 (Miss. 2015).
74. Id. at 550.
75. United States v. 320.0 Acres of Land, 605 F.2d 762 (5th Cir. 1979).
76. See Coleman, 159 So.3d at 552 (“[T]his Court’s position on the admission of this specific type of offer is clear: offers of compromise, in condemnation proceeds, cannot occur prior to filing of a complaint.”) (footnote omitted).
77. Id. at 553–54.
78. Fla. Dep’t of Transp. v. Mallards Cove, LLP, 159 So.3d 927 (Fla. Dist. Ct. App. 2015).
79. In re Tarrant Reg’l Water District, No. 12-14-00329, 2015 WL 852349 (Tex. Ct. App. Feb. 27, 2015).
80. See NEB. REV. STAT. § 76-704.01(6) (2014).
81. Camden v. Papio-Missouri River Natural. Res. Dist., No. 854 N.W.2d 334 (Neb. Ct. App. 2014).
82. Id. at 312.
83. Id. at 338.
84. Id.
85. Id.
86. Id. at 341–42.
87. Id. at 340.