An Irrational Public Purpose Taking is Not a Violation of Due Process

By: Michael Rikon

Sometimes when you read a case you just want to run head first into a brick wall. That’s the feeling we had when we read the Second Circuit’s recent decision in Matter of 49 WB v Village of Haverstraw in an unpublished summary order. The Second Circuit was reviewing de novo the district court’s granting of summary judgment for defendant-appellees (Village of Haverstraw) and denying 49 WB’s cross-motion for partial summary judgment as to liability. 49 WB argued, based on the Appellate Division’s determination regarding the attempted condemnation of Plaintiff’s property (discussed below), that collateral estoppel required the district court to grant summary judgment on the issue of “whether the Village acted irrationally and in violation of Plaintiff”s substantive due process rights.” The Second Circuit, however, found that such behavior did not qualify as “outrageous.” We are grateful to our Hawaiian Owners Counsel Member Robert Thomas for bringing this case to our attention when he discussed the case on his essential blog, inversecondemnation.com.

49 WB, LLC had earlier won an exceptional victory in New York’s Appellate Division in a challenge to the Village of Haverstraw’s attempt to condemn its property. Matter of 49 WB, LLC v Village of Haverstraw, 44 AD3d 226 (2d Dept 2007). 49 WB, LLC was represented by Feerick Lynch MacCartney, PLLC, of South Nyack, New York, a well-known property rights law firm. The victory in stopping the condemnation was exceptional because, quite frankly, it is almost impossible to do so in New York.

In a decision authored by Justice Mark Dillon, the Appellate Division reviewed virtually every decision which determined a challenge to a “Determination and Findings.” This document authorizes a condemnation. In New York a challenge may only be made in the Appellate Division by a petition filed within 30 days pursuant to section 207 of the Eminent Domain Procedure Law.

Review by the Court is extremely limited. Only a “condemnee” as defined by Section 103(c) of the EDPL could file a petition. The EDPL provides that the scope of the review is limited to four issues:

1. Was the proceeding in conformity with Federal and State constitutions;
2. Whether the proposed acquisition is within the condemnor’s statutory jurisdiction or authority
3. Whether the condemnor’s determination and findings were made in accordance with procedures set forth in this article [Article 2] and with Article 8 of the Environmental Conservation Law (SEQRA); and
4. Whether a public use, benefit, or purpose will be served by the proposed acquisition.

Although Section 207(c) of the EDPL only provides four areas of review, it is clear that there are at least two additional grounds for granting a petition to set aside a Determination and Findings—an “excess taking” can be challenged as well as a “pretext taking.”

It is this last ground, “pretextual,” which was the basis for granting the Petition in 49 WB and annulling the “Determination and Findings.” The Appellate Division found that the proposed taking was not based on a public purpose but was a pretext to aid a private party. This finding was made relying on a rational basis analysis to find that the proposed taking for alleged low income housing was groundless. Doesn’t this mean that the government has engaged in a sham?

One note about the Appellate Division’s Decision: It got the legal fees reimbursement wrong. This was corrected by New York’s highest court, the Court of Appeals, in Hargett v. Town of Ticonderoga, 13 NY3d 325 (2009), which held that attorney fees and costs incurred by a condemnee may be sought at the first step of the eminent domain process. Anytime a party is successful or the condemnor abandons the proceeding, legal fees must be reimbursed.

So, the Second Circuit’s finding that 49 WB’s substantive due process rights were not violated because Haverstraw’s actions were not arbitrary and outrageous is, well simply, outrageous. How can the Second Circuit state that Justice Dillon’s review of the condemnation’s “rationality”” was more circumscribed than that of a constitutional inquiry? Isn’t an eminent domain taking constitutionally required to be for a public purpose? Here the property owner sustained substantial damages due to the wrongful acts of Haverstraw. In addition to significant legal fees incurred to fight for its property, the cloud of condemnation hung over the property for years. The property owner was unable to develop the property as planned and according to 49 WB’s counsel was left with a carcass of a building and no tenants or development funds.