It’s not often an interview guest on my show at Noogaradio 1240 AM 92.7 FM files a brief with the host on the topics they will explore. But attorney Adam Sanders, a specialist in eminent domain with law firm Baker Donelson, does just that, talking about a recently signed bill to enhance property rights in Tennessee and the famous Parkway Towers case of 1998. He is a guest on the David Tulis show today. — DJT
By Adam Sanders / Baker Donelson
The recent enactment of SB1184
This is a big win for Tennessee property owners
- The bill removes industrial parks from the exceptions to the otherwise-applicable prohibition of private economic development takings
- But to me, the much more interesting aspect is that it guarantees to condemnees reimbursement of their appraisal costs, regardless of the outcome of the case
- Prior to this, a land owner only got his appraisal fees if the condemnation was abandoned or the court ruled the taking unlawful
- In my experience, the cost of appraisal can be a big obstacle for condemnees. In my experience trying condemnation cases in several states, I haven’t encountered a regime that reimburses for appraisals regardless of outcome
- However, less generously than many states, Tennessee still doesn’t allow a land owner to recoup his attorney’s fees unless the case is abandoned or ruled unlawful. In many states, you get your attorney’s fees if the jury verdict is higher than the condemnor’s initial assessment. Not so in Tennessee.
- One other interesting change is that the standard of value is changed from “fair market value” to just “value.” I’m not sure what to make of that. FMV is the most typical standard of value, and it’s a pretty favorable one for property owners. The change to “value” could signal that other standards of value can be used, though in the real-world I expect most appraisers will still use FMV (other standards of value include investment value, liquidation value, “fair value,” and book value). It will be interesting to see what effects this change has in the future. In the abstract, I’m not sure who it will help more.
Private Economic Development Takings Generally
- I think it would be interesting to talk about the 2005 Kelo case, and the backlash it caused among the states, causing many states to enact more restrictive laws limiting private economic development takings. The facts of that case are interesting too, and fun to discuss
- While discussing Kelo, it will be easy to briefly mention a few other landmark SCOTUS condemnation cases the listener might not know about. For example, the 1950’s case of Berman, which said “public use” includes eliminating blight & slums, and the 1980’s case of Midkiff, which said “public use” includes breaking up an oligopoly where a very few landowners own most of the property in a location, to redistribute that property more widely (in Midkiff, 22 people owned about 75% of the land on Oahu)
The Chattanooga water company case
- The listener may be interested in some of the eminent domain work I focus on. My typical eminent domain practice is pretty niche: representing privately owned utility companies when a municipality tries to condemn the entire company to turn it into a municipal utility. These are rare. The City of Chattanooga attempted to do it to Tennessee-American Water Company in the 1990’s, and that’s how the partner I work with got his start in this line of work. I have been practicing for 5 years (2 years prior clerking for a Federal District Judge), and have worked on eminent domain cases for privately-owned utility companies in Illinois, Indiana, Massachusetts, Montana, and California.
Parkway Towers Case
- This is an interesting case, and obviously a big win for the owner
- What I find interesting about the case is how fact-bound it was, and how an astute condemnor could probably learn to side-step it in the future
- The crux of this case, as I read it, is that by the time the case was heard, the City had already built Finley Stadium, and so obviously didn’t “need” the Tower to do so
- The court noted that usually, all the court will consider is 1) is the taking for a public purpose, and 2) is it just compensation.
- Here, the court found it was a public purpose
- However, the Court said that it was also going to look at whether the taking was “necessary”
- The Court correctly noted that usually “necessity” is conclusively settled by the mere fact of a legislative determination of necessity
- But where, as here, the project had already been completed, the Court felt free to “look behind the veil” and determine if the taking was truly “necessary.”
- A smart condemnor would learn two lessons:
- One, try to resolve the case quickly. If Finley Stadium hadn’t yet been built, it’s likely the Court wouldn’t have looked into “necessity,” but would have accepted the City’s legislative determination that the taking was necessary.
2. Two, articulate the specific need for the property at the outset. At trial and on appeal, the City tried to say the taking of the Tower was necessary to build a parking lot. However, the Court noted that this was an ex post facto justification, because the City didn’t say the Tower was necessary for a parking lot at the outset. If I’m the City’s attorney, I’m telling them going forward that they need to identify the specific use for each parcel they’re condemning at the outset of the case.