A bill seeking to repeal some eminent domain powers is being considered by the Montana Legislature.  The Montana Senate Energy and Telecommunications Committee recently approved Senate Bill 180 which would repeal the explicit grant of authority to a public utility or a developer to exercise the power of eminent domain that comes with a project permit awarded under the Major Facility Siting Act.  Property rights groups and utilities that build power and pipelines were on opposite sides of the debate.  “Nothing in Montana is more vital and more important than private property rights, so that is why I brought Senate Bill 180 and I’m still asking you to pass that,” SB 180’s sponsor Debby Barrett said at the close of the hearing.


The Montana Legislature passed House Bill 198 in 2011 which enabled public utilities and other developers of pipelines and power lines have the authority to use eminent domain if need be.  


SB 180 will be considered soon by the Montana Senate.

The New Jersey Appellate Division recently held “that a condemning authority is not obligated under N.J.S.A. 20:3-6 to negotiate with the assignee of a mortgagee which has obtained a final judgment of foreclosure on the subject property.” In Borough of Merchantville v. Malik & Son, LLC, a lien holder appealed from a trial court’s order permitting the Borough of Merchantville to exercise its power of eminent domain. New Jersey requires a condemning authority to engage in “bona fide pre-litigation negotiations” prior to condemning property. The court found the Borough did not have a duty to engage in bona fide negotiations with the lienholder and satisfied its obligation to engage in such negotiations with only the property owner.

The Borough made a good faith offer to the property owner and, after the property owner rejected the offer, filed a verified complaint and declaration of taking. The lienholder claimed it was "the real party in interest" and the Borough should have negotiated with it regarding the proposed acquisition. The lienholder argued that, “based on the unique circumstances, it essentially stepped into the shoes of the property owner, and the [condemnor] breached its obligation to ‘turn square corners’ by not including it in the negotiations and in failing to make a bona fide offer prior to filing the condemnation action.”

The Appellate Division stated that the trial court “properly rejected this argument based on the language and spirit of the Act, as well as the case law.” The Court noted the distinction between the general definition of "condemnee" in the eminent domain statute, i.e. "the owner of an interest in the private property being condemned for a public purpose under the power of eminent domain[,]" N.J.S.A. 20:3-2(c), and the specific section, N.J.S.A. 20:3-6, mandating that the bona fide pre-litigation negotiations are to be undertaken with the condemnee "who holds title of record to the property." Id. at 70. The Court also stated that it was “satisfied that the rights of all other condemnees with a compensable interest are better protected by allowing them to participate later” when just compensation is determined and allocated.

According to the firm RealtyTrac, national foreclosure filings fell to a six-year low in January. The report states that foreclosures dropped 7 percent in January from December 2012, with foreclosure activity down 28 percent from January 2012. It further found that U.S. bank repossessions dropped 5 percent from the previous month and were down 24 percent from January 2012 to the lowest level since February 2008.

One possible reason for the declines, according to RealtyTrac, was a steep drop in California notices of default issued in January, which fell 62 percent from December and were down 75 percent from January 2012 to the lowest level since October 2005.

Of course, areas of the country are still feeling the effects of the recession. RealtyTrac reported that 1 in 300 Florida housing units had a foreclosure filing in January — more than twice the national average and the highest in the U.S. for the fifth consecutive month. Nevada posted the nation’s second highest foreclosure rate for the fourth consecutive month, with 1 in every 344 housing units filing a foreclosure in January. Other states topping the list for highest foreclosure rates in January include Arizona (1 in 501 housing units filing a foreclosure), Georgia (1 in 513 housing units) Ohio (1 in 612 housing units) and Washington (1 in 674 housing units).

The Appraisal Foundation, a national non-profit organization dedicated to the advancement of professional valuation and protecting the public trust, has released two new pamphlets benefitting consumers and lenders. According to the Foundation, A Guide to Understanding a Residential Appraisal was developed specifically for consumers. This pamphlet is intended to provide consumers an overview of the residential appraisal and how it relates to the home buying process. Appraisers, Appraisals & You: A Lender’s Guide to USPAP was developed for lenders working in the loan underwriting process. This pamphlet is intended to provide insight to lenders in working with appraisers as well as an overview of the entire appraisal process.
Both pamphlets are available from the Foundation by a downloadable PDF on its website www.appraisalfoundation.org

The U.S. Supreme Court recently heard oral argument a property owner’s claim that the denial of a permit to develop his land constituted an unconstitutional taking of his property. The Court seemed skeptical of the claim. As the National Law Journal reported, Justice Antonin Scalia asked the landowner’s counsel, "What has been taken?" This case, Koontz v. St. Johns River Management District, is being closely watched by property rights advocates, environmentalists and government officials. It could have a major impact on the ability of government agencies to attach conditions to land development permits.

In this case, the state designated all but a small portion of the property as protected wetlands and uplands. Koontz needed to obtain permits to develop his land. His requests were rejected and the government made numerous suggestion of ways to mitigate the loss of wetlands. Koontz rejected the suggestions and declined to negotiate further. His permit applications were formally denied.

Justices Stephen Breyer, Sonia Sotomayor and Ruth Bader Ginsburg also were skeptical of the property owner’s claim. Breyer said the analysis should be whether this was a form of regulatory taking that would fall under the court’s 1978 takings precedent, Penn Central Transportation Co. v. New York City. "So we simply look to see if [the regulation] went too far. The lower courts could do that."

According to the National Law Journal, Deputy Solicitor General Edwin Kneedler told the Justices that extending the law to permit denials would be a "radical change." He explained, "It is standard procedure when someone applies for a permit from the government, it is the permit applicant’s burden to establish that he complies with the regulatory program. [Prior cases] shift that burden to the government. That has never been the case under regulation, including land use regulation."

Eminent domain experts will be anxious to see the Court’s ruling and opinion. The opinion is an opportunity for the Court to also delve into tangential issues not necessarily fully at issue in the case.

Sandy has created a number of difficult legal problems. One issue relates to the rights and obligations of landlords and tenants when leased premises suffer casualty damage. The obligations of a landlord as an owner of a commercial property to repair and restore casualty damage are generally found in two documents – (i) a mortgage and security agreement and (ii) the lease. My partners have put together a good summary of the relevant considerations which can be found at  www.foxrothschild.com/newspubs/newspubsArticle.aspx

On Tuesday, the Supreme Court released its unanimous opinion in Arkansas Game and Fish Commission v. United States. In that case, the property owner alleged that a taking occurred when government actions caused flooding on its property. The opinion states, “We rule today, simply and only, that government induced flooding temporary in duration gains no automatic exemption from Takings Clause inspection.” However, the Court restated its prior holdings in this area which provides more broad guidance. It explained:

When regulation or temporary physical invasion by government interferes with private property, our decisions recognize, time is indeed a factor in determining the existence vel non of a compensable taking. Also relevant to the takings inquiry is the degree to which the invasion is intended or is the foreseeable result of authorized government action. So, too, are the character of the land at issue and the owner’s “reasonable investment-backed expectations” regarding the land’s use. . . .

Perhaps the most interesting aspect of this case is that the Court decided to hear the appeal. It is true that the Court reversed a clearly erroneous lower court ruling. However, a “wrong” decision does not typically cause the Court to hear a case. Rather, the Court is more interested in the broader issues presented by a case. The fact that there was a rare unanimous opinion – with no concurring opinions – demonstrates that the decision was not hard or controversial. However, for practitioners, it is always welcome to have a restatement of any eminent domain law.

The opinion can be found at www.supremecourt.gov/opinions/12pdf/11-597_i426.pdf

Fox Rothschild has filed a class action on behalf of the owners of approximately 1,240 properties located in Philadelphia challenging recent legislation which “adopts” an artificially high Established Predetermined Ratio (EPR) for the 2013 tax year. Significantly, while the legislation expressly recognizes that real estate tax assessment in the City has become “increasingly at variance with principles of uniformity and sound assessment,” 53 Pa.C.S.A. § 8565(a)(1), it arbitrarily incorporates knowingly inaccurate 2011 property values and 2009 sales data as the foundation for the new EPR. In so doing, we allege that the legislation undermines the integrity of the assessment process by eviscerating Taxpayers’ fundamental rights to uniformity in taxation. More information about this case can be found at ww.foxrothschild.com/newspubs/newspubsArticle.aspx

The US Supreme Court recently heard oral argument regarding a condemnation case which could have significant impacts. In Arkansas Fish & Game Commission v. United States, the Court is considering whether a temporary “physical invasion” of property which causes permanent harm constitutes a taking warranting the payment of just compensation. Specifically, the Court is will decide whether the temporary, but reoccurring downstream flooding events caused from dam releases by the Army Corps of Engineers, constituted a “taking” of property. A description of the oral argument can be found at www.scotusblog.com/

One important issue for litigation experts to always consider is whether their draft reports can be obtained by another party via discovery. The rules vary by jurisdiction. Recently, the US Tax Court amended Rule 70 of its Rules of Practice & Procedure to exclude drafts of expert reports from discovery. This protection applies regardless of the form in which the draft is recorded.  This is similar to the Federal Rules of Civil Procedure. The new Tax Court regulation also protects the reports and opinions of any consulting (non-testifying) expert.