—“A Case of Condemn First, Decide What to Do with the Property Later”
By David S.White, Esq., of Fainsbert Mase & Snyder, LLP
A recent case graphically illustrates that, if a City wants to take your real property by use of its Eminent Domain power, the City had better be honest about what public purpose makes taking away your private property so necessary and what the City actually plans to do with your property: City of Stockton v. Marina Towers, LLC, et al., an opinion of the California Appellate Court for the Third District (San Joaquin), filed Feb. 13, 2009. For our purposes, Eminent Domain and Condemnation are one and the same thing – the power of a city (or other governmental entity) to take private property for public use upon payment of just compensation to the private land owner, sometimes also called a “Taking,” for reasons we will explain.
You may think Eminent Domain is a creation of our modern world, but its roots go back to 1066 A.D., when William the Conqueror led the successful conquest of Merry Old England, something you may recall from school, if you didn’t sleep through your history lectures. William and his men seized all land in England and, thereafter, granted fiefs to various landowners who had provided valuable services, including military. From the 11th to the 14th Centuries, the very useful concept of Purveyance developed, which is the right of the English Crown to requisition goods and services for royal use – of course, this soon led to all kinds of abuse and corruption. After the early 1500’s, the English Parliament had developed the power of Condemnation to take land for roads, bridges, and other improvements for public use, and the law required compensation; often, 10 per cent more than assessed value. Early settlers of the American colonies brought the practice of Condemnation, and in early years, because there was so much land that could be replaced very cheaply, unimproved land could be taken without any compensation. As new land became more crowded, pressures caused re-thinking. By the late 18th Century, when our Founding Fathers (and a few Mothers too) were busy drafting our Federal Constitution, views on the Eminent Domain power varied. Jefferson advocated the radical view that land could not be taken by any operation of law for any reason whatsoever; Madison, on the other hand, was the author of the Fifth Amendment to the U.S. Constitution , including these immortal words: “…nor shall private property be taken for public use, without just compensation.”
Madison’s more moderate view, offered a compromise which became integral to the American system of real property law, protecting private property rights by requiring both compensation to the private land owner and a “public use” to justify a government entity’s “taking” of private property. California developed detailed procedures for Eminent Domain – key is that the governmental body is required to first adopt a Resolution of Necessity to give notice to the affected landowner of the “public use” proposed for his or her property, in place of private ownership. The California statute examined in the Marina Towers case, is California Government Code section 1240.030, subdivision (a), which “prevents the taking of property by eminent domain unless the public interest and necessity require the project.” As we shall see, the City of Stockton’s failure to identify sufficiently exactly the proposed project and its “public use” in the Resolution of Necessity it adopted to take Marina Towers’ property, had fatal consequences to this Taking and saved Marina Towers’ property, at least for the time being.
Jumping ahead to modern times, in 2000, Marina Towers LLC (“Marina”) bought two parcels of real property on the North Shore of the Stockton Deep Water Channel, which you pass right by when you drive near Stockton on one of several freeways. The East Parcel was unimproved and the West Parcel contained a vacant office building. A year after the purchase, Marina applied to the Stockton Planning Commission to renovate the existing office building, and was in negotiations with San Joaquin County to lease the office building. Under the 1989 Central Stockton Revitalization Plan, described by the Court as a “visionary planning document for future development of the city center,” and the 1991 addition of Marina’s property to the scope of the Plan, in 2003 the City’s Channel Action District Team (“CDAT”) further planned for the redevelopment of the North Shore area and “described [Marina Towers’] property as a ‘catalyst site’ for the City’s revitalization efforts.” Plans of the CDAT for Marina’s property included a “Stockton Event Center, a multi-use complex that would include an arena, hotel, baseball stadium and residential apartments.” When all was said and done, however, the City rushed through a very quick Eminent Domain proceeding, enacted the Resolution of Necessity, but did not sufficiently identify its true purpose for the proposed Taking, took Marina’s land anyway, and, instead of building the touted ‘catalyst site,’ ended up building a baseball field on one parcel and a parking lot on the other parcel, adding insult to injury by paying Marina a significantly low price for the property. Interestingly, the Resolutions of Necessity for the “Taking” by Eminent Domain never actually described what the “public use” project would be; undaunted; the Trial Court sided with the City.
Marina appealed, arguing, that the proposed project was not a “public use,” offering documentary evidence of the City’s negotiations with private developers leading Marina to suspect that the City’s true purpose for the “Taking” was to transfer Marina’s property to a another private developer favored by the City, and that City’s adoption of its Resolution of Necessity taking Marina’s property through use of its Eminent Domain power was a gross abuse of discretion because City had “no project defined [that] necessitates the taking of [Marina’s] property.” The Appellate Court agreed with Marina. It held that the “project description in the resolutions of necessity was so vague, uncertain and sweeping in scope that it failed to specify the ‘public use’ for which City sought acquisition of the property.” The Court said that this “crucial defect precluded an intelligent inquiry into whether City had a legal right to condemn the property and fatally flawed the condemnation process.” The Appellate Court ordered the City to pay Marina’s attorneys’ fees and costs, but gave the City “another opportunity to get it right.”
This is a most unusual Court decision, because Courts often give broad deference to governmental entities in situations like these. Why not here? The City’s Resolution of Necessity which the Court characterized as “nondescript, amorphous resolutions” which really never got around to reciting any “public purpose” or “public use” for the property, totally lacked substance and was just ‘too cute’ in masking the City’s real motives as revealed by documentary evidence of the City’s plans and negotiations with another favored private developer, all under cover of a Resolution which never actually described what the project would be! The moral of our story: even cities must follow the law and cannot simply Condemn First and Decide What to Do with the Property Later.
David S. White is Senior Litigation partner of Fainsbert Mase & Snyder, LLP. Mr. White has litigated all aspects of California real estate law for 32 years and has frequently lectured on litigation and real estate topics for real estate industry trade associations and for attorneys through the California Continuing Education of the Bar program. Mr. White has held a California Real Estate Broker’s license for 22 years, is a Realtor®, often tries real estate law cases in court and teaches continuing education courses for real estate licensees, also occasionally acts as an expert witness, and may be contacted at (310) 473-6400, by fax at (310) 473-8702 or by E-Mail at firstname.lastname@example.org.
Please note, statements and opinions expressed in this article are solely those of their respective author, may not represent the views of this publication and are not legal advice – if you want and need legal advice, kindly get it from a lawyer who you retain for that purpose.