I. Property 1 A. Definition 1

I. Four ways to resolve nuisance claims -- CB 985

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I. Four ways to resolve nuisance claims -- CB 985

1. abate the activity in question by granting π an injunction

a. Morgan

b. Estancias

2. let the activity continue if the defendant pays damages

a. Boomer

3. let the activity continue by denying all relief -- no injunciton and no damages

4. abate the activity if the π pays damages

a. Spur -- developed out of the logic of necessity

b. created by an Arizona court and two scholars -- Calabresi and Melamed

J. Terminology of Calabresi and Malamed?

1. Property rule

a. when an entitlement is protected from being taken away without one's consent --- but all transfers are voluntary -- ie: injunctions are always for sale

2. Liability rule

a. can lose property if one pays you damages for it

b. court can force losses of property / entitlement provided there is payment of damages

3. Who gets protected?

a. Under a property rule: if plaintiff is protected then there is an injunction issued (Estancias/Morgan); if the defendant is protected then no nuisance is found

b. Under a liability rule: if the plaintiff is protected then the defendant must pay plaintiff to continue the activity (Boomer); if the defendant is protected, the defendant may continue the activity so long as the plaintiff does not pay him but once there is payment the activity must stop (Spur)

K. Nuisance law and the environmental movement

1. See CB 986-989

XIII. Eminent Domain and The Takings Clause

A. Taking clause

1. Fifth amendment of the constitution

a. only deals with federal government

b. applied to states through the 14th amendment

2. Incredibly ambiguous

3. Text

a. nor shall private property...

i. what does private mean?
a) owned by individuals?
b) what about state and local land?
ii. what does property mean? What is property?

b. ...be taken...

i. what does it mean to be taken?
a) does federal government have to come in and occupy the land?

c. ...for public use...

i. does this mean that the entire public must be able to use it?
ii. or must it just benefit the public?

d. ...without just compensation...

i. compensation is hard enough and then you add just to it
ii. fair market value?
iii. able to purchase an equivalent commodity in the market?
iv. what is the measure of just compensation

B. Power of eminent domain

1. Defined

a. power of government to take the property with just compensation

2. How is property protected with respect to the govt?

a. protected under a liability rule -- can force the person to part with his property upon the payment of just compensation

3. Inherent power of the govt

a. nowhere in the takings clause does it empower the government to take property -- it presumes the power / right of the government and then limits it

4. Function of eminent domain?

a. Without it, a person could hold out and drive the price of the land up so the govt cannot build the road without paying him as much money as possible

i. either the road would not be built or it will be built at an incredible cost

b. What are its shortcomings? where does the justification fall a little short?

5. Purpose of just compensation clause?

a. Fairness to the property owner?

i. unfair distribution of burdens
a) without compensation, the owner of the property is bearing the cost almost entirely whereas the entire society is getting the benefit of government action -- speading the cost of govt action more widely

b. Efficiency concerns?

i. risk spreading? / insurance?
a) but also have the problem of moral hazard
ii. govt should internalize costs
a) fiscal illusion cost?

c. Liberty?

i. protecting people from excessive govt intrusion

d. Protection against redistribution of wealth?

i. remember who the framers were

6. Why not just cover this through insurance?

a. see Schill's article in the supplement

b. Problems?

i. problem of adverse selection
a) likely that people have a fairly good idea of whether the govt is going to want their property -- only the high risk people will get insurance -- this could destroy the insurance companies
ii. problem of moral hazard
a) person is not likely to lobby the govt to stop the taking -- could also lobby to get the govt to take the property to get out of a bad investment

C. The Public Use Requirement?

1. Public Use or Purpose?

a. Broad view:

i. the term means advantage or benefit to the public

b. Narrow view:

i. that the term means actual use or right to use of the condemned prperty by the public

2. Hawaii Housing Authority v. Midkiff

a. Issue

i. does the public use clause of the 14th amendment prohibit the state from taking, with just compensation. title in real prperty from lessors and transferring it to lessees in order to reduce the concentration of ownership of fees simple in the state?
ii. property taken from one private person and given to another private person? How is this public?

b. Test adopted by the court?

i. where the exercise of eminent domain is rationally related to a conceivable public purpose, the court will allow the exercise of eminent domain
ii. Great deference is paid to the legislature
iii. under this test, it will be extremely rare that a govt taking will not be for the public use

c. Reasoning of the court

i. public use requirement is coterminous with the scope of a sovereign's police power
ii. role of the court is an extremely narrow one in reviewing action of the legislature when the police power is invoked
iii. the means of executing the project are for congress and congress alone to determine, once the public use has been established -- judicial deferrence to the legislature
iv. the court long ago rejected any literal requirement that condemned property be put into use for the general public

d. Is it bothersome that the S.Ct has adopted such a wide interpretation of public use? Have the protections afforded to property been windled away?

i. there are still procedual due process concerns
ii. and more importantly there is still requirement of just compensation -- see below

3. Poletown v. City of Detroit

a. Facts

i. Detroit planned to condemn a residential neighborhood, clear the land, and convey it to General Motors for a new assembly plant

b. Outcome

i. court finds that the public use requirement has been met because of what benefits (jobs / $$) will acrue from the opening of the plant
ii. But limits the test almost imediately
a) this does not mean that every condemnation proposed by an economic development corporation will meet with similar acceptance simply b/c it may provide jobs or add to the industrial or commercial base --- If the public benefit was not so clear and significant... --- such public benefit cannot be speculative or marginal

4. Oakland Raiders Case

a. under the test outlined in Midkiff, the court would probably allow a taking for public use --- entertainment

b. but alas, the court did not have to do this b/c it failed on the commerce clause anyway

5. What about the state standards for public use?

a. Hawaii v. Midkiff is only the federal standard -- it may be easier to challenge the taking in state court b/c federal law only provides the floor and states are free to raise this as they wish

i. this is why the raiders case was brought in state court instead of federal court?

6. Public use --- means or ends? -- CB 1153

a. What are the ends of an act of condemnation?

i. this is what was done in Midkiff

b. What about means? Prof. Merrill CB 1155

i. public use could be applied in such a way as to endorse condemnation through the power of eminent domain only when transaction costs are sufficiently high to frustrate voluntary transactions in the market b/c sellers have the power to hold out for prices they would not be able to obtain under competitive conditions
ii. self-regulating quality -- govt will have an incentive to avoid eminent domain whenever possible -- will have to take into acct the costs of eminent domain (leg authority, judicial proceedings, professional appraisals)
iii. is this all that Merrill is arguing?

7. Public use test is a variant of the rational basis test used in NASH -- but it is a different test and in fact it is an easier standard to meet

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