March 23, 2007

Can Courts Compel Government to Abuse Eminent Domain?

By Can Courts Compel Government to Abuse Eminent Domain?

by Timothy Sandefur

Some years ago, the town of Wheat Ridge, Colorado—a suburb of Denver—decided to engage in some redevelopment. So it made a contract with the (unfortunately named) Cornerstone Group, whereby it agreed to condemn several properties and turn them over to Cornerstone, which would redevelop them. Later on, the city changed its mind—not an uncommon occurrence when contracting with the government. But when the developer, predictably, sued the city, it didn't just ask for monetary damages—it asked the court to issue "specific performance." That means, it asked the court to order the government to go through with the contract and condemn the property and transfer it to the developer. The Court of Appeals agreed, and now the case is before the Colorado Supreme Court. Here's the brief that the Pacific Legal Foundation filed in the case.

It's one of the oldest rules in American law that government's power of eminent domain—a sovereign prerogative—cannot be given away or sold. The government is incapable of making a binding promise to refrain from using eminent domain. And that means that it cannot make a binding promise to use eminent domain, either. In two recent cases from Hawai'i, the federal district court explained that

[t]he sovereign right of eminent domain necessarily consists of the discretion to exercise that power in the manner the sovereign deems to be in the public's best interest. A contract requiring the sovereign to exercise the power is just as limiting as a contract prohibiting it from doing so. Although factually distinguishable, the Supreme Court's recent decision in Kelo may be construed as support for the proposition that a legislature's power of eminent domain necessarily encompasses the ability to exercise both the right and to limit the right.

Hsiung v. City and County of Honolulu, 378 F.Supp.2d 1258, 1266 (D. Haw. 2005); Accord, Matsuda v. City and County of Honolulu, 378 F.Supp.2d 1249, 1257 (D. Haw. 2005).

This is the first time I know of that a developer has been given the authority to force the government to go through with a Kelo-style redevelopment condemnation. We'll certainly be keeping an eye on this astonishing case as it goes forward.

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