Oct 12, 2023 | Eminent Domain, Land Use, The Practical Real Estate Lawyer


UNESCO designation enough to support taking

2023 National Eminent Domain Update - by Amy Brigham Boulris and Robert H. Thomas - presented by ALI CLE

In State ex rel. Ohio History Connection v. Moundbuilders Country Club Co., the Ohio Supreme Court held that the taking of the Country Club’s lease for the property served a public use.1 The Ohio History Connection, a state agency, sought to extinguish the Moundbuilders Country Club’s lease on the Octagon Earthworks land using the power of eminent domain. The agency wanted to convert the earthworks into a public park and nominate the structures to the World Heritage list as part of the interconnected Hopewell Ceremonial Earthworks. The Country Club objected, arguing that the taking was not in the best interest of the public as a whole.

The Ohio Supreme Court disagreed, holding that establishing the earthworks as a public park will “help preserve and ensure perpetual public access to one of the most significant landmarks in the state of Ohio.”2 In a dissenting opinion, Justice Sharon L. Kennedy argued that Norwood v. Horney,3 (a case most readers will be familiar with) required that the Country Club’s allegations be resolved by the trial court, not disposed of by law-and-motion. The dissent argued that the “contingent and prospective” nature of World Heritage designation did not justify the exercise of eminent domain.4

“Take now, decide later” isn’t a public use

HBC Victor LLC v. Town of Victor is a classically short opinion from the New York Supreme Court. It’s so short that we were tempted to simply post the opinion and let you read it, because it will probably take you just as long to read our summary, but we’re up to the challenge of making our summary even shorter than the opinion, so here goes.5

The town wanted to take property “connected to an enclosed regional shopping center known as Eastview Mall[.]”6 Until Covid-19, the property was occupied by a retail department store, but the store closed permanently in February 2021. The owner tried to get a new tenant but, unsurprisingly, came up short.

Perhaps sensing an opportunity, the Town sought to condemn for redevelopment, but its resolution of taking did not specify why it wanted the property:

The proposed Acquisition is required for and is in connection with a certain project … consisting of facilitating the productive reuse and redevelopment of the vacant and underutilized Proposed Site through municipal and/or economic development projects … by attracting and accommodating new tenant(s) and/or end user(s).7

Even in condemnor-friendly New York, this one should raise a red flag. “In its determinations and findings, the Town stated that ‘no specific future uses or actions have been formulated and/or specifically identified.’”8

When you draft your findings like that, condemning agency, shame on you. (Kudos, however, for your honesty.)

Pointing to a recent similar case by the Second Department, the Appellate Division concluded that “[b]ecause the Town has not indicated what it intends to do with the property, we are unable to determine whether ‘the acquisition will serve a public use.’”9 The court rejected the Town’s argument that the government can take property for redevelopment without a particularized plan. The public use for the taking is determined at the time of the taking, and simply speculating that the taking will produce future public benefits isn’t enough: “In simple terms, the government cannot take your land and then decide later what to do with it without running afoul of the Takings Clause.”

Further, there was no indication or claim that the property here was blighted, even under New York’s notoriously low standards for blight:

To the contrary, the evidence at the public hearing established that petitioner has cleaned and maintained the premises since the Lord & Taylor vacancy and continues to pay property taxes at the assessed value of more than $4,000,000. We do not equate mere vacancy with blight, especially when the vacancy occurs unexpectedly in the midst of a global pandemic.10

Taking invalidated; attorneys’ fees to the owner. Think the Town will have another go at it? If so, think it’ll draft the resolution the same way (or will it heed Justice Scalia’s Lucas11 dictum)?

Waiver of future claims includes reclaim statute

Colton v. Town of Dubois is a good reminder that when you settle a case, you settle the case.

Wyoming is one of those jurisdictions that has “I want it back” provisions, where if property is not actually used for a specified number of X years after it is acquired by the government, the owner may ask for it to be returned. In Wyoming, the term is 10 years:

If a public entity acquires property in fee simple title under this chapter but fails to make substantial use of the property for a period of ten (10) years, there is a presumption that the property is no longer needed for a public purpose and the previous owner or his successor may apply to the court to request that the property be returned to the previous owner or his successor upon repayment of the amount originally received for the property in the condemnation action. A public entity may rebut the presumption created under this subsection by showing good cause for the delay in using the property.12

Back in the day, Craig Colton and the Town of Dubois got into a fight over land apparently needed (or wanted) for the municipal airport. Colton sued for inverse condemnation, and “and sought to prevent the Town from condemning any portion of the property.” 13 After a bench trial, the court rejected Colton’s arguments and concluded that the Town could take 30 acres of property after a determination of compensation.

But peace prevailed before the compensation hearing took place and the parties settled. The Town would pay an agreed-upon amount and would acquire the 30 acres from Colton. Critically, the settlement agreement “contained several terms releasing the Town from all past, present, and future claims related to the disputed 30.17 acres.”14

Ten years passed. Apparently, the Town didn’t make use of the property and Colton wanted it back. He sued, seeking to reclaim it. The trial court granted the Town summary judgment and the Wyoming Supreme Court agreed. The court concluded Colton waived his statutory rights by executing the settlement agreement, even though, yes, the Town acknowledged it had not used the property for the airport. (This is a true waiver situation—not the more usual forfeiture by inaction—since Colton knowingly gave up his right to reclaim.)

The court first accepted that the Town acquired Colton’s property in a way that triggered the statute because it was acquired under the threat of condemnation. Next, the court concluded the statute was in force at the time of the settlement, and therefore Colton is assumed to have known about it. The court also concluded that Colton intended to relinquish his statutory rights because the agreement unambiguously says so in the “Statement of Purpose” and “Release” provisions. There, the agreement notes the agreement is to resolve all claims, including future claims:

The stated purpose of the settlement agreement is to resolve any claims the parties “may have in the future arising out of or in any way related to the above taking[.]” This purpose is further reflected in the terms of the settlement agreement … The release provisions are broad but nonetheless unequivocal in expressing Mr. Colton’s intent to waive “any and all” future claims, “related in any way” to the condemnation action, which would include any claims he had pursuant to Wyo. Stat. Ann. § 1-26-801(d).15

Finally, the court noted that the waiver is in accordance with public policy (an element of waiver under Wyoming law). We like the freedom to contract, and we like settlements, the court concluded.

So, what lessons can we take from this? When you settle, you settle. Done. Finis. Unless you want to hold on to some rights (in which case you don’t agree to language that waives your rights so broadly). But don’t be surprised if the other side really insists on that language. And that points to another option: if you want to retain your rights, don’t settle. The waiver of future rights is just one of those things that parties have to assess the risk of when they are deciding on fight or flight.

CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Real Estate Lawyer.

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