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Op ed on the Didden case:

University of Chicago Law Professor Richard Epstein and I have coauthored an op ed in the National Law Journal urging the Supreme Court to review the important eminent domain case of Didden v. Village of Port Chester. Here's an excerpt:

The U.S. Supreme Court's 2005 decision in Kelo v. City of New London generated a backlash on both sides of the political spectrum..... Many of the rear-guard defenders of this ill-conceived decision insisted that abusive condemnations are an aberration in an otherwise sound planning process. They, it turns out, were wrong. Didden v. Village of Port Chester, a most unfortunate decision out of the 2d U.S. Circuit Court of Appeals, helps demonstrate the shortcomings of their optimistic view.

In 1999, the village of Port Chester, N.Y., established a "redevelopment area" and gave its designated developer, Gregg Wasser, a virtual blank check to condemn property within it. In 2003, property owners Bart Didden and Dominick Bologna approached Wasser for permission to build a CVS pharmacy on land they own inside the zone. His response: Either pay me $800,000 or give me a 50% partnership interest in the CVS project. Wasser threatened to have the local government condemn the land if his demands weren't met. When the owners refused to oblige, their property was condemned the next day.

Didden and Bologna challenged the condemnation in federal court, on the grounds that it was not for a "public use," as the Fifth Amendment requires. Their view, quite simply, was that out-and-out extortion does not qualify as a public use. Nonetheless, the 2d Circuit . . . upheld this flexing of political muscle. At present, Didden and Bologna are working against the odds to persuade the U.S. Supreme Court to hear the case. If the 2d Circuit's reasoning prevails, private developers everywhere could follow Wasser's example to extort money from property owners in thousands of development zones, which while created for noble purposes, can easily be turned to ugly ones.

I previously blogged about the Didden case here. Along with several other eminent domain experts, Richard Epstein and I coauthored an amicus brief urging the Supreme Court to review Didden. The brief can be accessed here.

CONFLICT OF INTEREST WATCH: As I noted in the initial post, I once briefly worked as a summer law clerk for the Institute for Justice, the public interest law firm representing the property owners in this case.

Unsurprised:
This was so 'freaking' predictable. And, Ford was proud that he appointed Stevens, who wrote the majority opinion upholding Kelo. Perhaps I'll be fortunate, and by the time "Atlas Shrugs" I'll have died of very old age.
1.8.2007 6:21pm
Allan:
Good piece of advocacy. You take only one side and argue the facts as you see them.

Of course, the city and developer have a slightly different perspective. From what I understand, the developer laid out a lot of money for the exclusive right to develop the land. The developer wanted to build a pharmacy near where the Plaintiff in this case wanted to build his. To forgo building its own pharmacy, the developer made an offer to the Plaintiff.

This is more like a zoning issue than anything else. The Plaintiff only wanted to build because the developer had plans for upscaling the neighborhood. That is, he was getting the benefit of the developer's bargain with none of the risk.

So, this may not be as clear cut as you make it.
1.8.2007 6:59pm
Ilya Somin:
Of course, the city and developer have a slightly different perspective. From what I understand, the developer laid out a lot of money for the exclusive right to develop the land. The developer wanted to build a pharmacy near where the Plaintiff in this case wanted to build his. To forgo building its own pharmacy, the developer made an offer to the Plaintiff.

Even if this is true, it changes nothing about the case. It would still be true that the owners' land is being condemned solely to further the interests of the developer. From the standpoint of any public interest, it doesn't matter whether Didden and Bologna own a pharmacy on the property or the developer does. As for the claim that Didden and Bologna only wanted to build their pharmacy in the area because of the developer's other plans, it is far from clear that this is true. But even if it is, it still doesn't justify the condemnation of their land for refusing to pay the developer $800,000. The fact that you may benefit from my use of property located near yours doesn't justify me in having the government condemn your property if you refuse to pay me a large sum of money that I demand.
1.8.2007 8:44pm
Steve:
Every time there's a breakdown in state or local political processes, the federal courts should step in to provide a remedy. I'm glad we've finally come to agreement on this.
1.9.2007 12:01am
Eli Rabett (www):
Seems to me this calls for a political not a judicial answer, same as Kelo.
1.9.2007 12:08am
Tennessean (mail):
I'm probably going to stick my foot in my mouth, since I am not familiar with the facts of the case. But, if "the developer laid out a lot of money for the exclusive right to develop the land," then it is not the case that "[f]rom the standpoint of any public interest, it doesn't matter whether Didden and Bologna own a pharmacy on the property or the developer does."

In that circumstance, it seems to me, the public has sold the right to control development; if the public loses the ability to sell that right (e.g., by courts undercutting the right after the fact), then the public will not be able to get the same offers for the right that it would otherwise.
1.9.2007 1:11am
Ragerz (mail):
Mr. Somin writes:

"CONFLICT OF INTEREST WATCH: As I noted in the initial post, I once briefly worked as a summer law clerk for the Institute for Justice, the public interest law firm representing the property owners in this case."

Is it really necessary for Somin to say that he has a conflict of interest? I mean, given his clearly strong feelings concerning this issue, it is clear that he is not merely a neutral observer anyway. (And I mean that in a good way! Neutral is not always better.)

Anyway, in my view, it doesn't make sense to list conflicts of interest unless one purports to be neutral. I would want to know about this conflict if Somin were a judge. But since he is instead a passionate advocate, I don't see it as relevant. Am I missing something here??

If I worked for an ideological organization the greatly influenced my views, it might explain why I think the way I do. But do I have a duty to disclose that work if it so happens that the organization in question files ideologically motivated lawsuits, but not otherwise? This doesn't really make sense. Mr. Somin has never claimed to be a neutral observer on the issue of eminent domain.
1.9.2007 2:05am
Public_Defender (mail):
Port Chester, Wasser and their lawyers must not have noticed that Kelo was decided by a reluctant 5-4 majority of a court with a different lineup of justices.

Even though Kelo was a loss for the property rights side (and given precedent, a correctly decided one), it was a shot across the bow of shady development deals.
1.9.2007 4:49am
David M. Nieporent (www):
Every time there's a breakdown in state or local political processes, the federal courts should step in to provide a remedy. I'm glad we've finally come to agreement on this.
Not every time; only when fundamental rights, like property rights or voting rights or free speech rights, are at stake.

Tennessean:
In that circumstance, it seems to me, the public has sold the right to control development; if the public loses the ability to sell that right (e.g., by courts undercutting the right after the fact), then the public will not be able to get the same offers for the right that it would otherwise.
But where on earth did the public get "the right to control development"? Even if we accept, as I don't, that they have the right to control what gets developed, how could they possibly have the right to control who develops it? (i.e., it's one thing to say that this private property owned by Fred should be used for retail rather than residential. It's quite another to say that this private property owned by Fred should be used for Joe's store rather than Fred's store because Joe spent more money bribing local politicians. There may be some sort of perverted argument that the public benefits from having a drugstore there instead of a home. But how does it affect the public whether Joe or Fred owns that drugstore?)
1.9.2007 6:23am
Ilya Somin:
In that circumstance, it seems to me, the public has sold the right to control development; if the public loses the ability to sell that right (e.g., by courts undercutting the right after the fact), then the public will not be able to get the same offers for the right that it would otherwise.

Even under Kelo, the government cannot "sell the right to control the development if that means giving a private party the power to condemn other people's property in a given area for any reason he wants - such as, in this case, refusing to pay him a large sum of money. Any condemnations must be for some sort of "public use" (even if broadly defined). Even under the very expansive definition of public use in Kelo, the concept doesn't include a private developer's desire to extort money from property owners.
1.9.2007 6:41am
John M. Perkins (mail):
Conflict statements are always appreciated. In this case, it added credibility.

Any chance that the extortion and the condemnation could have been separated? IOW, that the condemnation fits under Kelo, but that Wasser can be hit both civilly and criminally?
1.9.2007 10:52am
Kurt Paulsen (mail):
Prof. Somin:

In your National Law Journal piece, you cite Didden as a "particularly egregious example of pretextual condemnation."

Would it be your argument that there exists a class of economic-development takings which are not pretextual? If I take you to say that (and I would hold that), that would make a clear distinction between you and the IJ folks. It is my understanding that IJ believes that all economic-development takings are pretextual.
1.9.2007 1:47pm
Allan:
Mr. Somin,

This is a tough issue. Had the city not declared the area blighted and had the developer not agreed to manage the area, your client's land would be worth less. In other words, simply by virtue of the city's actions, your client has benefited.

If your client owned a parcel of property zoned for development of 15 homes per acre and the city rezoned it for 1 home per acre, you would argue that the city should pay your client for the loss of value of his land.

On the other hand, if your client owns property zoned for 1 house per acre and the city rezoned it for development of 15 homes per acre, you would certainly not argue that your client should have to pay the city for the rezoning.

Should landowners adjacent to a soon to be constructed publicly funded highway have to pay the government because the highway will increase the value of their land? What right do they have to the windfall?

Why, in the one case would your argument be different than in the other? Certainly, you are not attacking the constitutionality of zoning laws or the right of the government to enforce those laws.

This is simply an extension of the zoning laws. The developer in this case has the legal right to use eminent domain to take over your client's property (I assume that right is legitimate). The developer is simply offering to give up that right for a fee.

This is no more extortion than a copyright holder asking for money to issue a license, a property owner demanding a fee for an easement, or a hardware store in Denver offering to sell you a shovel. If it is not worth the price, your client should just reject the deal. Clearly, your client is better off due to the city's actions (the appraised value of the land must have gone up).
1.9.2007 3:43pm
Mike G in Corvallis (mail):
In that circumstance, it seems to me, the public has sold the right to control development; if the public loses the ability to sell that right (e.g., by courts undercutting the right after the fact), then the public will not be able to get the same offers for the right that it would otherwise.

This opens up entire new realms of possibilities! What other rights can "the public" (i.e., local government) sell? Can local government sell law enforcement and judicial rights to companies or individuals, so they can set up private speed traps? (Not absurd or hypothetical; I'm thinking of the precedent of red-light cameras here.) How about (as a previous poster mentioned) the zoning laws -- can a city sell its zoning board to a private company? How about its rights to conduct elections -- can a private party take over the establishment and monitoring of polling places? Heck, why not just sell a four-year term of city government to the highest bidder? (Assuming, of course, that this last is not ruled out by the state constitution.)

If the Village of Port Chester's action is legal, then what are the limits?
1.9.2007 6:05pm
Allan:
More to the point.

Can a city tell a property that it will build a highway exchange near its property only if the property owner will pay the city money? Can a city tell a developer that it will rezone a property only if the developer will pay the city money?

And, if the property owner benefits, but another does not, can the city force the beneficiary to pay the other?
1.9.2007 6:28pm
Corruption Information:
Not every time; only when fundamental rights, like property rights or......

Okay, I think we've now come to the flaw in your reasoning. Faulty assumptions
1.10.2007 10:22am
A law unto himself:
Property rights aren't fundamental rights?

Apparently CI is not a reader of the founder's writings.
1.10.2007 5:23pm
baby lawyer (mail):
The developer's extortion subjects him to civil and criminal liability. But that doesn't make the use of the condemned land any less public. Even if you disagree with Kelo's public use = public benefit, a pharmacy is, quite literally, used by the public. Courts held that markets are a public use at least 150 years before Kelo. And whether a condemnation for a pharmacy is public use does not depend on who owns the pharmacy or whether the owner used extortion to acquire the land to build it.

But extortion is still extortion, and Kelo certainly does not make extortion legal. The victim here probably has a case against the developer (as does the local prosecutor, perhaps), but not against the city under the public use clause. Maybe this is what Justice Kennedy had in mind when he thought public use claims would still be cognizable under the Due Process clause? If anything, this case seems more like a lack of due process than a lack of public use.
1.11.2007 6:35pm