More On Sonia Sotomayor And Property Rights

by Pejman Yousefzadeh on July 15, 2009

This issue was already covered here at A Chequer-Board of Nights and Days, but it is worth following up with a link to Ilya Somin’s excellent article concerning Judge Sotomayor’s property rights jurisprudence. Somin takes on the case of Didden v. Village of Port Chester, in which Judge Sotomayor’s appellate court panel extended the Supreme Court’s ruling in Kelo v. City of New London to find that government can condemn property merely because the owners of that property refused to pay what amounted to “extortion money” to a private developer with significant political contacts:

In 1999 the village of Port Chester, N.Y., established a “redevelopment area,” giving designated developer Gregg Wasser a virtual blank check to condemn property within the area. When local property owners Bart Didden and Dominick Bologna sought a permit to build a CVS pharmacy in the area, Wasser demanded that they pay him $800,000 or give him a 50 percent partnership interest in the store, threatening to have their land condemned if they said no. They refused, and a day later the village condemned their property.

Didden and Bologna challenged the condemnation on the ground that it was not for a “public use,” as the Constitution’s Fifth Amendment requires. Their argument was simple and compelling: Extortion for the benefit of a private party is not a public use. In a short, cursory opinion, Sotomayor’s panel upheld the condemnation.

Although based partly on Kelo’s very broad definition of “public use,” the Didden ruling extended the term beyond what Justice John Paul Stevens had in Kelo. In particular, Stevens had noted that “the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit,” was not enough to count as a “public use.” As an example of such an unconstitutional pretextual taking, he cited a case with far less egregious facts than Didden – a California federal court ruling invalidating the condemnation and transfer of a 99 Cents Only store to Costco, rationalized on the ground that Costco might produce more tax revenue and economic growth.

Like the Didden property, the 99 Cents Only store was located in a redevelopment area. But, the rationale for the 99 Cents Only store condemnation and transfer was at least plausible, since the Costco store might have generated more economic activity and hence a public benefit. In Didden, by contrast, there was no plausible public benefit. Didden and Bologna’s land would not have been condemned but for their refusal to pay Wasser the money he demanded. If that isn’t a pretextual taking, it is hard to imagine what is.

How is it possible that so much of mainstream commentary overlooks this radical limitation of property rights, endorsed by Judge Sotomayor? And how can we be assured that similar radical limitations of rights don’t await us in other areas of the law, if Judge Sotomayor is confirmed to the Court?

  • mryan621

    Although I find the condemnation of land for private use appaling, there are many mitigating facts in the Didden/Wasser dispute. As a resident of Port Chester and a personal aquaintance of Mr. Didden's, I wish to share some additional facts regarding the sordid history of the Port Chester develpment saga. First, I am not here to defend the actions of the town, nor the developers D & G (read Gregg Wasser), which I find despicable. Port Chester has a long history of corruption in the area of land use and development.
    On the other hand, Bart Didden and his partner owned the parcel of land in question for many years. The original structure which housed a pharmacy and a gun shop burned down and was demolished. It lay as an empty lot, right in the center of downtown, piled with rubble and shot through with weeds for well over a decade. In the late 80's or early 90's, Didden and his partner proposed a five story office building on the lot, but never went ahead to bring the project to fruition. When Wasser came along with a proposal to develop the downtown area, there was a public hearing held. Mr. Didden did not attend.
    Furthermore, another local business owner went around trying to get the other property owners whose properties or businesses might be effected by the project to organize and come up with some compromise concessions etc.. Nearly all of them, including Mr. Didden, showed no interest in getting together to fight or influence the project. That business owner ultimately lost his property, and multi-million dollar businesses located there to condemnation by the town. Amongst all the property owners, there is one who has prevailed in court, but he chose to actively fight his case from day one and was compensated.
    Didden, on the other hand, ignored the town's develpment plans until he learned that his parcel, considered blighted (which, I must admit it was, although I have doubts that should have allowed the town to take it away and hand it over to a private developer), had been turned down by CVS and Wasser had gotten Walgreen's to agree to put a drugstore on that spot. He then entered into a footrace with the developer and claimed to have gotten CVS to agree, at least in principle, to a thirty year lease. Meanwhile, Wasser was moving ahead with his plans. Incidentally, Didden would have received the market value of his parcel, plus or minus 10%. That market value would have been considerably higher if during all the the previous years he had bothered to clear away the rubble and clean up and shown real movement towards developing the property prior to the parcel being labelled as blighted.
    Wasser, seeing that the total value of his project would be diminished without Didden's parcel, and having planned a Walgreen's pharmacy on the site, proposed the $800K or 50% interest options to abandon his claim to the parcel. Extortion? Possibly, but Justice Sotomayor points out that Wasser had legally been granted the right to develop the blighted parcel and therefore the requeat was not illegal, therefore not 'extortion' in a court of law. Furthermore, Didden failed to express his opposition in the proper venues, first the public hearing, then in the local courts. Sotomayor declined to hear the case on those grounds, stating the Court of Appeals was not the proper place to bring the claim. Perhaps Didden might have prevailed had he had better legal representation, but here he was trumped by Wasser; During the years leading up to the case, Wasser and his company, D&G spoke about it to nearly every local real estate attorney. The result was that all the legal experts in the area were prevented from representing Didden in court!! Smarmy on Waser's part, but all's fair in love and war….
    In any event, Didden sat on the land doing nothing for himself, nor the town for well over 15 years. Wasser, on the other hand, astutely perceived that the empty lot was under utilised and included it in his development zone. The statement above that there was no plausible public benefit as in the 99 Cents Store flys in the face of the actual situation on the ground. On the contrary, the land was fallow and Didden showed no prior signs of rehabilitating it.

  • mryan621

    Although I find the condemnation of land for private use appaling, there are many mitigating facts in the Didden/Wasser dispute. As a resident of Port Chester and a personal aquaintance of Mr. Didden's, I wish to share some additional facts regarding the sordid history of the Port Chester develpment saga. First, I am not here to defend the actions of the town, nor the developers D & G (read Gregg Wasser), which I find despicable. Port Chester has a long history of corruption in the area of land use and development.
    On the other hand, Bart Didden and his partner owned the parcel of land in question for many years. The original structure which housed a pharmacy and a gun shop burned down and was demolished. It lay as an empty lot, right in the center of downtown, piled with rubble and shot through with weeds for well over a decade. In the late 80's or early 90's, Didden and his partner proposed a five story office building on the lot, but never went ahead to bring the project to fruition. When Wasser came along with a proposal to develop the downtown area, there was a public hearing held. Mr. Didden did not attend.
    Furthermore, another local business owner went around trying to get the other property owners whose properties or businesses might be effected by the project to organize and come up with some compromise concessions etc.. Nearly all of them, including Mr. Didden, showed no interest in getting together to fight or influence the project. That business owner ultimately lost his property, and multi-million dollar businesses located there to condemnation by the town. Amongst all the property owners, there is one who has prevailed in court, but he chose to actively fight his case from day one and was compensated.
    Didden, on the other hand, ignored the town's develpment plans until he learned that his parcel, considered blighted (which, I must admit it was, although I have doubts that should have allowed the town to take it away and hand it over to a private developer), had been turned down by CVS and Wasser had gotten Walgreen's to agree to put a drugstore on that spot. He then entered into a footrace with the developer and claimed to have gotten CVS to agree, at least in principle, to a thirty year lease. Meanwhile, Wasser was moving ahead with his plans. Incidentally, Didden would have received the market value of his parcel, plus or minus 10%. That market value would have been considerably higher if during all the the previous years he had bothered to clear away the rubble and clean up and shown real movement towards developing the property prior to the parcel being labelled as blighted.
    Wasser, seeing that the total value of his project would be diminished without Didden's parcel, and having planned a Walgreen's pharmacy on the site, proposed the $800K or 50% interest options to abandon his claim to the parcel. Extortion? Possibly, but Justice Sotomayor points out that Wasser had legally been granted the right to develop the blighted parcel and therefore the requeat was not illegal, therefore not 'extortion' in a court of law. Furthermore, Didden failed to express his opposition in the proper venues, first the public hearing, then in the local courts. Sotomayor declined to hear the case on those grounds, stating the Court of Appeals was not the proper place to bring the claim. Perhaps Didden might have prevailed had he had better legal representation, but here he was trumped by Wasser; During the years leading up to the case, Wasser and his company, D&G spoke about it to nearly every local real estate attorney. The result was that all the legal experts in the area were prevented from representing Didden in court!! Smarmy on Waser's part, but all's fair in love and war….
    In any event, Didden sat on the land doing nothing for himself, nor the town for well over 15 years. Wasser, on the other hand, astutely perceived that the empty lot was under utilised and included it in his development zone. The statement above that there was no plausible public benefit as in the 99 Cents Store flys in the face of the actual situation on the ground. On the contrary, the land was fallow and Didden showed no prior signs of rehabilitating it.

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