Supreme Court Upholds Expanded Concept of Eminent Domain

The Supreme Court on Thursday upheld the right of the City of New London, Connecticut to seize property in its Fort Trumbull section for private development.

The 5-4 decision in Kelo et. al. v City of New London, Connecticut is expected to have far reaching implications for property owners and for cities and towns throughout the country

As we explained in February, nine property owners in the coastal city had refused to sell their homes to make way for a massive project surrounding a new $300 million research/ manufacturing facility being built by Pfizer Pharmaceuticals. The development is to include a hotel and conference center, shopping and restaurants, 80 private residences, a river walk and marina, offices and research facilities. The plan also includes a state park which already exists and a Coast Guard museum.

The petitioning property owners had contested the right of the City of New London to condemn and take their homes and turn them over to a private developer on the basis that the Right of Eminent Domain upon which the proceedings were based could be used only to serve a clear public purpose such as building a school or a highway. In their particular case, the plaintiffs argued, the public would only benefit if the private business venture succeeded and generated the jobs and economic impact promised by the City and the developers.

Eminent domain procedures are permitted by the Fifth Amendment to the Constitution which reads in part "nor shall any person....be deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without just compensation. Originally the procedure was used only to secure property for clearly public purposes such creating parks or building bridges. Over the years, however, the definition eroded to include such public purposes as land for privately owned railroads which would serve as "common carriers." In 1954, however, the Supreme Court in Berman v. Parker ruled that cities can apply eminent domain to raze crime-ridden or decrepit areas for private purposes. This case became the foundation for urban renewal.

What makes the New London case different is that the area in question is neither blighted nor crime-ridden. Fort Trumbull is an older area and, in spite of its riverfront location, not a highly desirable residential area, but homes were (most have already been razed) well cared for and occupied by long time homeowners. Nine of these homeowners refused to sell to the City and, aided by the Institute of Justice, a property rights foundation, took their cause to the Supreme Court. Just compensation was not at issue in the case as property owners were unwilling to sell at any price.

Justice John Paul Stevens, writing for the majority which included Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen G. Breyer, based the decision largely on whether the "City's development plan serves a 'public purpose'." He stated that "the City (of New London) has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including -but by no means limited to-new jobs and increased tax revenue." "Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment."

The majority made it clear it had no intention of second-guessing either the City's judgment of the efficacy of its development plans or its determinations of the appropriate land parcels needed to carry out the project. In fact, deference to the wisdom of local authorities was a continuing theme throughout Justice Steven's opinion.

Justice Stevens argued against the Petitioners' contention that using eminent domain for economic development blurs the boundary between public and private takings but that the government's pursuit of a public purpose will often benefit individual private parties. "The public end may be as well or better served through an agency of private enterprise than through a department of government." "We cannot say that public ownership is the sole method of promoting the public purposes of community development projects."

He also spoke to the Petitioners argument that takings should require a "reasonable certainty" that expected public benefits will happen. "A constitutional rule that required postponement of the judicial approval of every condemnation until the likelihood of success of the plan had been assured would unquestionably impose a significant impediment to the successful consummation of many such plans."

Justice Kennedy in concurring stated that a court, confronted with an accusation of favoritism to private parties, should review the record to see if a taking is truly intended to serve a public purpose or instead, the private party. In this case, however, the Justice said, the identity of most of the private beneficiaries was unknown at the time the city formulated its plans. In other words, the developer had not been picked, and the tenants of the office buildings or residents of the homes are still unknown.

Justice Sandra Day O'Connor, who dissented along with Justice Clarence Thomas, Justice Anthony Scalia, and Chief Justice William Rehnquist wrote that "under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded - i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public-in the process." "Thus, if predicated (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words "for public use" do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power."

Justice O'Connor also lamented that the fallout from the Court's decision would not be random. "The beneficiaries are likely to be those citizens with disproportionate influence and power" "As for the victims, the government now has license to transfer property from those with fewer resources to those with more."

While the Court's decision certainly broadens local government's powers under the Fifth Amendment, it does not lead to the "News at 11" tease we heard last night: "A new law will make it possible for the government to take your home." The Court left room for citizens to fight eminent domain proceedings against their properties in such as in cases where the taking is clearly meant to benefit private entities rather than the public. A number of readers have written about eminent domain proceedings they are familiar with, which, if their facts are correct, would appear to flunk the criteria laid out in this ruling.

The big stumbling blocks in challenging an eminent domain proceeding are not changed, for better or worse, by this ruling. An owner must be properly compensated but while he is free to negotiate, usually cannot contest the price in court until after condemnation has actually occurred. Such court challenges are often well beyond the financial constraints of the property owners, especially since it is usually poorer areas that make economic sense for such takings. Eminent domain proceedings, even those that run smoothly, can take years, effectively holding owners hostage, unable to sell privately or refinance; unwilling to remodel or even maintain their homes and subject to considerable emotional distress.

Anyone wishing to read the entire Kelo v. New London opinion can find it at www.findlaw.com/casecode/ click Supreme Court, click Recent Decisions.