Daily Development for Monday, August 22, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
CONSTITUTIONAL LAW; TAKINGS; “PUBLIC PURPOSE:” Even under narrow standards of Michigan’s Hathcock decision, City’s taking of private property to construct a road will satisfy the public use requirement when the proposed road will be available for public use even if the road primarily will be used by a private entity contributing money to the project
City of Novi v. Robert Adell Children's Funded Trust (Mich7/20/05)
The issue in dispute was whether the City could acquire property to build a spur road to a public road project when the road’s primary purpose was to provide access to the property of a private owner who contributed money to acquire and construct the spur. The condemnee argued that the City could resolve its traffic problems and provide access to the subject land in other ways that would not involve condemning its property, even though this would be far less convenient to the benefitted owner. It argued that the City was taking the property and building the spur entirely to benefit the owner, and underscored its argument with the fact that the owner was paying the bill.
The court held that, in this case and under the facts presented, the City could take private property to construct a "spur" road, and the requirement of a public use under the Michigan Constitution was met where the road would be available for use by the public -- even though it would be primarily used by a private entity that contributed funds to the project and even though, arguably, the City had not considered all available alternatives.
The court noted that the City initiated the project in response to increasing traffic problems, and it planned to retain control, maintenance, and ownership of all roads, including the spur. While the private entity might be the primary user of the spur road, the public would be free to occupy and use it. The fact the private entity was expected to contribute to funding the road was not dispositive. As to defendants' challenge to plaintiff's determination there was a public necessity, plaintiff was not required to show its plan was the best or only alternative, simply that it was a reasonable one. Neither fraud, error of law, nor abuse of discretion was shown. The proposed condemnation did not violate the Michigan Constitution, and plaintiff's determination defendants' property was necessary to complete the road project did not violate the UCPA.
The decision reversed the holdings of the trial court and appellate court, which had ruled in favor of the private party objecting to the condemnation, and came on the heels of the ruling the Michigan Supremes issued in the recent Hathcock case (The DD for 8/3/04) , which overruled Poletown and established significant limitations on takings for private benefit under the Michigan Constitution, going well beyond the more permissive rulings later propounded by the U.S. Supreme Court in Kelo .
The court acknowledged that under its ruling in Hathcock, the condemnation of private property for private use, even though some "public interest" may be said to be served by such private use, was impermissible. The court also agreed with defendants that the single fact that a project is a road does not per se make it a public road.
But in this case the court found the public agency (the City) would retain ownership and control of the land and that, under Michigan law, "where the public body establishes a road, pays for it out of public funds, and retains control, management, and responsibility for its repair, the Michigan Constitution allows private land to be condemned for the project, no matter what the proportional use of the road will be by the public or by private entities." According to the court, "when the public body that establishes a road retains ownership and control of it, and the public is free to use and occupy it, that proposed use is a public use." Further, according to the court, "the determination of necessity is left not to the courts but to the public agency, which in this case is the City. The only justiciable challenge following the agency's determination is one based on 'fraud, error of law, or abuse of discretion'" (none of which factors, the court ruled, were present in this ca!
The court further found that the proposed route of the public road was not "outside the zone of reasonable alternatives," and therefore the City did not abuse its discretion with respect to the necessity of the taking (noting that "legislative determinations are entitled to a highly deferential standard of judicial review"). The court also rejected the defendant's mootness argument (which was based on the present lack of state funding from the State of Michigan to complete the ring road of which the spur road would be an offshoot).
The concurrence agreed with the majority opinion the proposed road was a public use and private property could be condemned for construction of the road, and with the majority opinion plaintiff did not commit fraud, an error of law, or abuse its discretion in declaring the condemnation of the property was necessary under MCL 213.56. While also agreeing the case was not moot, the justice did not join the majority's "purported review of the basic principles of mootness law...."
Justice Cavanagh, in a vigorous dissent, argued that the matter was moot because funding was not available, that the City had not established the necessity of the taking, and that there had been no effort by the City to examine reasonable alternatives. He further argued that the City had in effect obtained an unpermitted and unwarranted "advisory opinion" that would cause severe negative consequences for the defendant for an indefinite period of time because the road might never be built.
The Reporter for this item was Jack Murray of First American Title Insurance Company, Chicago Office. The Editor has heavily edited both the report and the comment that follows, and is reasonable for any and all obscurity not the direct result of the judicial decisions.
Reporter’s Comment: As a native Detroiter (born in Detroit and raised in Dearborn), but with Ford (not GM!) blue running through my veins (I spent summers during my undergraduate and law school days working in the Ford Rouge Plant and as a tour guide for the Rouge Plant tours), I know the Hathcock and Poletown cases well.
As Jim Candler (of the Detroit law firm Dickinson Wright) discussed in a recent article in the American College of Real Estate Lawyers Newsletter, before the Kelo case reached the U.S. Supreme Court, the Connecticut Supreme Court concluded that all the uses proposed by the development plan did fall within the scope of the declarations of public purpose provided by the statute. It then reviewed extensively its prior decisions and those of the U.S. Supreme Court regarding state and federal constitutional public-use clauses, and concluded that "an economic development plan that the appropriate legislative authority rationally has determined will promote significant municipal economic development, constitutes a valid public use for the exercise of the eminent domain power under both the federal and Connecticut constitutions." Kelo v City of New London, 268 Conn. 1, 40 (2004).
As Jim also notes, the Connecticut Supreme Court majority opinion referred to several sister states that had used the same deferential and purposive approach to arrive at the same conclusion; namely, California, Louisiana, Maryland, Michigan, Minnesota, Missouri, New York and North Dakota; whereas the courts of Arkansas, Florida, Kentucky, Maine, New Hampshire, South Carolina and Washington had ruled that economic development by itself does not constitute a public use for eminent domain purposes. Id. at 47. Ironically, the Michigan decision discussed at length by the Connecticut court, Poletown Neighborhood Council v City of Detroit, 410 Mich. 616 (1981), because "it illustrates amply how the use of eminent domain for a development project that benefits a private entity nevertheless can rise to the level of a constitutionally valid public benefit", was overruled four months later by the Michigan Supreme Court in County of Wayne v. Edward Hathcock, 471 Mich. 455 (2004).
Jim Candler's article notes that Poletown is a landmark case that has been followed in dozens of condemnation cases in Michigan and has paved the way for similar decisions in other states. It was expressly followed by the lower courts in Hathcock, which round that Wayne County did not abuse its discretion in determining that the proposed project in that case served a public purpose. But to the surprise of many, the Michigan Supreme Court in Hathcock not only held that the project failed to pass the test established in Poletown of primarily benefiting the public, it expressly overruled Poletown and did so retroactively so as to be applicable to all pending cases in which a challenge to Poletown had been raised and preserved. The court found that "public use" is a legal term of art that must be interpreted in light of the case law in existence at the time the 1963 Constitution was adopted. Jim Candler notes that the majority opinion's distillation of that case law yielded!
ermination that the transfer of condemned property to private entities is a public use only in three specific contexts:
(1) Where public necessity of the extreme sort requires collective action, e.g., where the very existence of the public benefit to be generated depends upon the use of land that can be assembled only by the coordination central government is capable of achieving, such as in the case of highways, railroads, canals and other instrumentalities of commerce;
(2) Where the property remains subject to public oversight after transfer to a private entity, e.g., a pipeline subject to regulation by the Michigan Public Service Commission; and
(3) Where the property is selected because of facts of independent public significance, rather than the interests of the private entity to which the property is eventually transferred, e.g., condemning property to remove blighted housing and thereby advancing public health and safety, with the subsequent resale of the land being incidental to that goal.
As a result of Hathcock, it appears that (the Kelo case notwithstanding) the assemblage of large sites for economic development projects in Michigan cannot be implemented by condemnation unless it can be demonstrated that the primary purpose of the condemnation is a function of the present status of the property, e.g., slum clearance, and not the public benefit to be derived from subsequent development of the property in private hands.
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