Eminent Domain Blog

Fox Partner Rothstein Appointed To Montco Board Of View

David Snyder — Wed, 16 May 2012 16:23:42 -0500

Our partner Wendy Rothstein was recently appointed by the Montgomery County Court of Common Pleas Board of Judges to a 3 year term to serve on one of the County Board of View Panels. Wendy was one of three attorneys under consideration and she received overwhelming support from the Judges who voted to appoint her. She will be the first woman attorney to serve on a Montgomery County Board of View.

PA Court Confirms County Must Pay Compensation of Board of View

David Snyder — Fri, 11 May 2012 12:31:38 -0500

The Commonwealth Court of PA recently ruled that the County and not the parties must pay the compensation of a Board of View in an eminent domain case. In Spigelmyer v. PennDOT, the trial court directed the parties to each pay ½ of the Board of View’s compensation. The Board of View is appointed by the judges of the county in which the eminent domain case is pending and hold a hearing after which they determine the amount of just compensation owed to the condemnee(s). Parties may appeal from that finding to PA’s trial court – the Court of Common Pleas.

The Commonwealth Court ruled that the PA Judicial Code requires the County to pay the Board’s compensation. It found that members of the Board fall within the definition of “appointive judicial officers” under Section 3544 of the Judicial Code and, therefore, their fees are the responsibility of the County.

US Supreme Court To Decide Eminent Domain Case

David Snyder — Sun, 29 Apr 2012 11:10:02 -0500

The US Supreme Court has agreed to hear an appeal of a Federal Circuit’s decision in an eminent domain case. The case relates to an eminent domain doctrine known as a "de facto" or "inverse" condemnation which occurs when an act of a governmental entity is, in essence, a taking even if that entity has not formally initiated a condemnation action. The official question presented in that case is: "Whether government actions that impose recurring flood invasions must continue permanently to take property within the meaning of the Takings Clause."

In Arkansas Game & Fish Commission v. United States, the Arkansas Game & Fish Commission, sought just compensation from the United States for physically taking its bottomland hardwood timber through six consecutive years of protested flooding. The Court of Federal Claims awarded $5.7 million, finding that the Army Corps of Engineers' actions foreseeably destroyed and degraded more than 18 million board feet of timber, left habitat unable to regenerate, and preempted the Commission’s use and enjoyment. The Federal Circuit reversed that ruling and found that that the United States did not inflict a taking because its actions were not permanent and the flooding eventually stopped.

This will be a very interesting case to follow. Any time the Court decides an eminent domain case, it has the opportunity to opine regarding issues not necessarily presented by the specific case. I will continue to provide updates as the case progresses.

Philadelphia Decides Not To Change Foreclosure Program

David Snyder — Mon, 23 Apr 2012 09:14:17 -0500

Philadelphia Trial Court Judges Herron and Tereshko announced in a notice to the bar that they were not going to change a popular residential foreclosure diversion program. There was a proposal to end conciliation for foreclosures after a maximum of four conferences held within 150 days after foreclosure complaints were filed. The Judges stated that the reasons for maintaining the program as it has been conducted include the fact that the number of foreclourses is forecasted to increase and that capping the number of conciliation conferences would harm the program. Judge Herron also said that mortgage lenders, servicers and creditors are not always able to assemble the requisite documents in the time frame. Mayor Nutter also supported the continuation of the program.

US House Passes Eminent Domain Limitations Bill

David Snyder — Sun, 22 Apr 2012 19:26:42 -0500

The US House of Representatives recently passed the "Private Property Rights Protection Act of 2012." The Act prohibits the federal government and states and municipalities from exercising its power of eminent domain over property to be used for economic development if the state or municipality receives federal economic development funds during any fiscal year in which the property is so used or intended to be used. "Economic development" is defined as the taking of private property, without the consent of the owner, and conveying or leasing that property from one private person or entity to another for commercial enterprise. Any state or municipality violating this Act would render it ineligible for any federal economic development funds for two years.

The bill is now pending in the Senate. Many states, including Pennsylvania, passed similar statues in the wake of the US Supreme Court Kelo case.

Court Rules That Sellers And Brokers May Need To Disclose Prior Condemnation To Buyers

David Snyder — Fri, 20 Apr 2012 09:03:58 -0500

In Shelp v. City of Scranton, a Pennsylvania trial court ruled that, in some cases, property sellers and brokers may be required to disclose the fact that a property was previously condemned to potential buyers. In that case, the defendant sold property to the plaintiff that had been previously condemned. The defendant had acquired the property from the City of Scranton after it was condemned by the City. The defendant did not disclose the prior condemnation to the plaintiff. The City later evicted the plaintiff at which point the plaintiff was informed that the property was condemned.

The plaintiff alleged that seller and real estate broker should have disclosed the prior condemnation. The facts are somewhat unclear, but it appears that the plaintiff was evicted by the City due to the unsafe condition of the property. The seller and the real estate broker filed a motion – known as preliminary objections – alleging that, as a matter of law, there was no duty to disclose the prior condemnation.

The Court denied the motion as to the seller and broker and ruled that the case could proceed. It found, for example, that the plaintiff relied upon the seller and broker’s representation that the property was fit for residential habitation and ultimately it was not fit. The defendants will now have the opportunity, as the case proceeds, to contest the factual arguments so this case is far from over.

US Airways and Philadelphia Say They Are Working Through Disagreement Regarding Airport Expansion

David Snyder — Thu, 29 Mar 2012 12:10:26 -0500

US Airways and the City of Philadelphia issued a joint statement in which they state they are working out their differences regarding the Philadelphia Airport expansion project. US Airways has objected to the costs it would bear for the expansion. The City has threatened to impose new airport-use rates if US Airways did not agree to a new 15-year airport lease by July. The joint statement said recent talks between the two sides had been "very productive" and that "our paramount objective [is] to conclude an agreement on a long-term airport lease …."

The city estimates the airport expansion project would cost $6.4 billion over 13 years. US Airways and other airlines at the airport estimate the cost at about $10.5 billion. The proposed expansion would, among other things, add a fifth runway to the airport, shift the UPS airfreight operations hub to the western side of the airport, lengthen two existing runways and build a new commuter terminal.

Lehigh County Extends Informal Reassessment Appeals Deadline

David Snyder — Sun, 18 Mar 2012 10:43:41 -0500

Lehigh County has extended the deadline for filing informal reassessment challenges. The revised deadline is Thursday, March 22. Informal reviews give property owners the chance to sit down with an assessor and dispute the record. They can be requested online, in person, over the phone or by mail. More than 10,000 challenges were filed as of Wednesday evening. The appointments will be scheduled from late March through mid-June.

Appraisal Institute Advises US Sentencing Commission to Require Appraisals

David Snyder — Wed, 14 Mar 2012 17:19:59 -0500

The Appraisal Institute urged the U.S. Sentencing Commission to require the use of real estate appraisals when calculating loss in mortgage fraud cases. Section 1079A of the Dodd-Frank Act requires the U.S. Sentencing Commission to review and, if appropriate, to amend the federal sentencing guidelines applicable to mortgage fraud and financial institution fraud offenses and to consider whether the guidelines appropriately account for the potential and actual harm to the public and the financial markets from those offenses.

Appraisal Institute President Sara W. Stephens, MAI, testified at a recent hearing, “We believe the Commission should adopt a special rule for determining the fair market value of real property if the mortgaged property has not been disposed of by the time of the sentencing. However, this rule should require use of real estate appraisals prepared by qualified appraisers in accordance with the Uniform Standards of Professional Appraisal Practice, as opposed to tax assessments, to ensure fairness and consistency.”

The Appraisal Institute, the American Society of Farm Managers and Rural Appraisers oppose proposed amendments to the federal Mortgage Fraud Sentencing Guidelines which propose using tax assessments, and not real estate appraisals, to determine fair market value. Stephens said that assessed value may not conform to market value. She also advocated that the Commission establish a special rule relating to the qualifications of real estate appraisers.

Adverse Possession Bill Introduced in PA

David Snyder — Tue, 06 Mar 2012 17:51:06 -0500

A bill was recently introduced in the PA Senate seeking to eliminate the doctrine of adverse possession in PA. Pennsylvania common law provides that adverse possession of a property arises by actual, continuous, exclusive, open, notorious, distinct, and hostile possession of property for a period of 21 years. The bill’s author, State Sen. Richard Kasunic, pointed to cases where community interests and economic development opportunities are hampered by squatters making last minute claims to property they never lawfully owned in the first place.

The bill would be an extraordinary change in real estate law and, therefore, seems unlikely to pass. However, it is definitely something that should be monitored.

We Win De Facto Taking Case

David Snyder — Sun, 19 Feb 2012 09:19:00 -0500

I am often asked whether governmental actions can cause a taking even if the government does not formally initiate an eminent domain case. These cases are known as “de facto” or inverse condemnations and are difficult to prove. However, establishing a de facto taking can have substantial benefits. We recently were successful in establishing a de facto taking in Philadelphia.

Our client was in the process of developing a property for residential condominiums. It took substantial steps including obtaining architectural and engineering designs and lining up financing. PennDOT, however, targeted the property for a road project and announced in August, 2006 that it was going to condemn the property. PennDOT did not initiate a condemnation action until May, 2009. However, we alleged that PennDOT’s action destroyed any opportunity to develop the property for its “highest and best use” – condominiums – and caused a de facto taking.

After a two day hearing involving testimony of four experts and numerous fact witnesses, the Judge ruled that PennDOT’s actions constituted a de facto taking by December 2006. This has a significant impact on the case. For example, the property will now be valued as of December 2006 and not May 2009. PennDOT will also be required to pay professional fees (attorneys, experts, etc.) for the entire case.

PA Commonwealth Court Affirms Strict Necessity Requirement for Private Roads

Wendy Rothstein — Fri, 10 Feb 2012 09:21:52 -0500

PA Commonwealth Court recently found that a property owner was not entitled to a private road across a neighboring property since it appeared that the property owner was entitled to an easement by necessity across another property.

In In Re: Laying Out and Opening of: Private Road in Hazle Township, owners of a landlocked property petitioned the Court pursuant to the Private Road Act for a road across a neighbor’s property to connect to PA Route 309. The Board of View determined that the property owners were not entitled to a private road because they could assert an easement by necessity over another property. The Commonwealth Court held that it was proper for the Board of View to consider whether the property owners could assert an easement by necessity across another property other than the property which was the subject of the Petition to Permit a Private Road.

The Pennsylvania Commonwealth Court found “When reviewing a request to open a private road under the Act, we are cognizant that the Act is in the nature of eminent domain and, therefore, must be strictly construed.” The Court further found that while the Board of View cannot “quiet title and make a determination binding on the affected landowners as to whether an easement by necessity exists, it is not error for a Board of Viewers to consider whether it appears that an easement by necessity exists. The potential existence of such an easement is relevant to the question of whether a private road is strictly necessary.”

Philadelphia Taxpayers Intervene to Defend 18.1 Percent CLR

David Snyder — Sun, 05 Feb 2012 10:25:02 -0500

The Philadelphia’s Board of Revision of Taxes (BRT) recently decided to apply the County of Philadelphia Common Level Ratio (CLR)–which had been reduced by Pennsylvania’s State Tax Equalization Board (STEB) from 32 percent to 18.1 percent–to property values as certified by the City of Philadelphia’s Office of Property Assessment (OPA). Our firm filed a Petition to Intervene before the STEB in the appeal of the City of Philadelphia (the City) on behalf of approximately 173 Philadelphia taxpayer clients (taxpayers) who own property in Philadelphia and filed tax appeals. The taxpayers seek to intervene to ensure that the certified 18.1 percent CLR will be vigorously defended.
The suit alleges that if the CLR is altered by the STEB, the taxpayers will suffer a significant, adverse impact. If the petition is granted, the taxpayers intend to actively participate in this proceeding. We await the STEB’s ruling and will continue to monitor this important issue.

PA Agency Objects To Eminent Domain For Pipeline Project

David Snyder — Sun, 29 Jan 2012 11:59:37 -0500

The Pennsylvania Game Commission filed a protest with the Federal Energy Regulatory Commission objecting to Central New York Oil and Gas Co. LLC’s attempt take over land the commission manages. PGC stated, "If FERC allows [Central New York Oil and Gas Co.] to file eminent domain proceedings against the Commonwealth of Pennsylvania, it will bring into contention the implicit federal preemption of state's regulatory authority. The inequitable burden placed on Pennsylvania's wildlife resources is in stark contrast to a project that neither increases the capacity of the downstream gas delivery system, nor increases the supply of gas feeding into the gas supply system, but at best only allocates the direction gas will flow for the private pecuniary benefit of some at the expense of efficiency and economy for all."

The PGC said its interests in maintaining control over state game lands in Bradford County, Pa., outweigh the interests of CNYOG in forcing an eminent domain action. This issue will undoubtedly continue be hotly contested.

US Airways opposes Philadelphia International Airport Expansion Plan

David Snyder — Sun, 15 Jan 2012 15:32:08 -0500

One of the largest and most controversial projects being discussed in Southeastern Pennsylvania is the expansion of the Philadelphia International Airport. US Airways Group Inc. is now increasing its efforts to oppose the project. As the Philadelphia Inquirer reported, “the move by US Airways, backed by other airlines, throws the massive airport project into turmoil after a decade of reviews. Philadelphia officials say they will push ahead with or without airline support - even though airlines will pay much of the bill and could cut service here.”

This project has been the subject of attacks from a variety of sources including property owners in the footprint of the proposed expansion. Now, Philadelphia's biggest airline is publicly stating that another runway would not noticeably reduce delays for passengers because congestion is caused largely by traffic in the skies. However, the city is not changing its commitment to the project. Rina Cutler, Philadelphia’s Deputy Mayor for transportation said, “We are going to move forward. We are going to do the runway."

This fight will likely continue and become even more intense.

Ludwigs Corner Horse Show Condemnation Rescinded

David Snyder — Fri, 13 Jan 2012 15:29:18 -0500

We were recently involved in a very controversial condemnation matter. We were retained by the Ludwig’s Corner Horse Show Association to challenge a condemnation filed by West Vincent Township. The Township passed a resolution and filed a declaration of taking to condemn 33 acres owned by the Association. The Association is a true treasure in the horse community as well as the community in general. A firestorm erupted and the Township agreed to rescind the condemnation.

I have seen governmental entities far too often become entrenched in their actions and irrationally refuse to reconsider their decisions. Fortunately, the Township was an exception.

Philadelphia City Council Adopts New Zoning Code

David Snyder — Mon, 26 Dec 2011 16:53:42 -0500

Philadelphia City Council voted to adopt a new zoning code Dec. 15, 2011. Mayor Nutter will sign the zoning code bill on Dec. 22, 2011. The new code will become effective in August 2012.

Philadelphia’s current zoning code was adopted in 1962 and has been amended several times. It has become complex and cumbersome. The new zoning code is simplified and organized in a way that will make it easier for individuals to develop in the City. For example, rather than 55 zoning classifications and dozens of overlay districts, the new zoning code identifies only 35 zoning classifications and 12 overlay districts. All of the existing zoning districts will be converted to a new corresponding district. There have not been any substantive changes to the zoning designations. Three new zoning districts were created that do not have existing corresponding districts: CMX-2.5 (Commercial Mixed Use 2.5), IRMX (Industrial Residential Mixed Use) and SP-AIR (Airport Special Purpose District).

Federal Court Permits "Just Compensation" Claim For Condemnation Challenge Period

David Snyder — Sun, 25 Dec 2011 15:03:42 -0500

A federal appeals court recently held that a condemnee who successfully challenges a taking may be entitled to “just compensation” during the period between the filing of the declaration of taking and the revesting of title. In R&J Holding Company v. Montgomery County RDA, the property owner successfully challenged the taking of its property. The property owner was awarded its attorneys’ fees and expenses as mandated by Pennsylvania law in cases where there are successful condemnation challenges. That challenge took approximately five years including a review by Pennsylvania’s appellate courts.

The condemning authority, the Montgomery Count RDA, held title to the property throughout the state court action. The property owner filed an action in state court alleging it was deprived of certain fundamental property rights, including the right to improve the property and the right to sell the property during the pendency of the condemnation challenge. The Pennsylvania Commonwealth Court reversed rejected the claim holding that the Pennsylvania Eminent Domain limits a prevailing condemnee's recovery to professional fees and expenses. The Commonwealth Court's opinion never explicitly addressed whether denying just compensation violated the state or federal constitutions.

The property owner then filed suit in federal court seeking the “just compensation” promised by the Fifth Amendment. The RDA argued that there was no taking and that without an accompanying attempt to take physical possession of the property, transfer of title to the government does not constitute a taking. The Third Circuit rejected the argument finding that it was “a per se” taking because title to the land actually passed upon the filing of the Declaration of Taking.
The Third Circuit did not elaborate as to the nature of the “just compensation,” however. It will be interesting to monitor this case as it proceeds.

Mississippi Passes Eminent Domain Initiative

David Snyder — Wed, 30 Nov 2011 06:29:58 -0500

73% of Mississippians voted in favor of an eminent domain initiative earlier this month. Initiative #31 amends the Mississippi Constitution to prohibit state and local government from taking private property by eminent domain and then conveying it to other persons or private businesses for a period of 10 years after acquisition. Exceptions from the prohibition include drainage and levee facilities, roads, bridges, ports, airports, common carriers, and utilities. The prohibition would not apply in certain situations, including public nuisance, structures unfit for human habitation, or abandoned property. Mississippi is the 44th state to restrict the use of eminent domain for private development.

Court Rules NY Can Pursue Suit Alleging Inflated Appraisals

David Snyder — Sun, 27 Nov 2011 10:19:54 -0500

New York's top court on Tuesday ruled that the state attorney general may pursue allegations that First American Corp. and its former subsidiary eAppraiseIT inflated property appraisals under pressure from client Washington Mutual. However, the court ruled only on the issue of jurisdiction and not the merits of the attorney general's claims. Then-Attorney General Andrew Cuomo brought the 2007 civil suit alleging the practice contributed to the national subprime mortgage crisis. The Court of Appeals concluded federal law and regulations do not pre-empt the state claims alleging fraud and violations of real estate appraisal rules. The 1989 Financial Institutions Reform, Recovery and Enforcement Act, which followed the federal savings and loan crisis, “sanctions the establishment and use of state agencies dedicated to certifying and licensing appraisers and delineates requirements for using these appraisers in federally related transactions,” Judge Carmen Beauchamp Ciparick wrote.