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Beware of government’s unchecked power to condemn your home: The case of Kelo v. City of New London revisited

In recent times no United States Supreme Court decision has been more widely denouncedamong scholars, jurists, politicians, and the public- than the Courts’ decision in Kelo v. New London. This widely hated decision, involving the “Taking Clause” of the Fifth Amendment of the Constitution, arose from actions by the City of New London, Connecticut, in condemning privately owned property for transfer to another private party in order to further “economic development.” According to Kelo any condemnation which could result in an economic benefit to the community is a permissible “public use” under the Fifth Amendment, which states: “private property [shall not] be taken for public use, without just compensation.”

Once a prosperous port city and whaling center, by the 1990s New London had devolved into generational poverty, crime, and economic depression. In response, municipal government officials established the New London Development Corporation (NLDC), a private non-profit corporation charged with revitalizing the depressed (yet historic) Fort Trumbull neighborhood.

As the NLDC began work on its development plan, a little mom and pop by the name of Pfizer, Inc., entered the fray by agreeing to build a $350 million dollar facility in Fort Trumbull. The development plan produced by the NLDC consisted of housing, office space, a conference center, a five-star hotel, and other facilities designed to support a new Pfizer headquarters. While Pfizer would not own the land, it was the elephant behind the project who NLDC leaders (some of whom were directly tied to Pfizer) were eager to please. The question then became what should be done about the 90 privately owned homes — and the families that lived in them for generations — located on the development site. The answer was clear: they needed to go. After all, as Elya Somin quotes NLDC members in The Grasping Hand: Kelo v. City of New London and the limits of Eminent Damon, “Pfizer didn’t want to be surrounded by tenements, which would look ugly and dumb [and repel] young urban professionals.”

These were hard-working homeowners with deep roots in the community who, understandably, did not take kindly to City agents showing up at the family homestead and ordering them into the street. The Dery family, for example, had lived in Fort Trumbull since 1895; Matt Dery and his family lived next door to his parents, and his mother was born in her house in 1918. No one had lived anywhere else, and no one wanted to.

At the center of the struggle was Suzzette Kelo, the owner of a restored, historic waterfront home, later known as the “Little Pink House,” which became the title of a book about this case by the journalist Jeffrey Benedict. Built in 1890 by a well-known local carpenter, the “Little Pink House” was carefully restored by an area preservationist, and later occupied with great pride by Suzzette Kelo in 1997. The Fort Trumbull landowners joined together to bring suit against the City of New London with Suzzette Kelo as lead Plaintiff. They argued The Law Office of Spinella & Associates is located at historic One Lewis Street, on Bushnell Park in downtown Hartford. What’s Inside: Beware of Government’s Unchecked Power To Condemn Your Home: The Case of Kelo V. City of New London Revisited The Inmates of Connecticut’s Garner Correctional Facility are Being Poisoned by Radon Gas Advocating for the Rights of Citizens One Lewis Street Hartford, CT 06103-3402 P 860-728-4900 F 860-728-4909 attorneys@spinella-law.com Beware of government’s unchecked power to condemn your home: The case of Kelo v. City of New London revisited In recent times no United States Supreme Court decision has been more widely denouncedamong scholars, jurists, politicians, and the public- than the Courts’ decision in Kelo v. New London. This widely hated decision, involving the “Taking Clause” of the Fifth Amendment of the Constitution, arose from actions by the City of New London, Connecticut, in condemning privately owned property for transfer to another private party in order to further “economic development.” According to Kelo any condemnation which could result in an economic benefit to the community is a permissible “public use” under the Fifth Amendment, which states: “private property [shall not] be taken for public use, without just compensation.” Winter 2020 www.spinella-law.com Civil and Criminal Trial Lawyers Practicing in all State and Federal Courts that the NLDC project did not qualify as a “public use” under the Fifth Amendment of the United States Constitution, or the Connecticut State Constitution with the same language.

Judge Thomas J. Corrandino heard the case in 2002. Corradino, a brilliant trial judge, was raised in New Haven by Italian immigrants, and educated at Yale and Harvard Law School. Before becoming a judge, he spent his entire career representing poor citizens as an attorney with the New Haven Legal Assistance Corporation. I won my first seven figure jury verdict in Corradino’s courtroom. I can attest first hand that his reputation as a dedicated, incorruptible trial judge is well deserved. Corradino ruled that nearly all of the properties were wrongfully condemned because the development plans for those properties were “vague, shifting and noncommittal,” with no clear plan to use the property for any public purpose as required by the Fifth Amendment “Takings Clause.”

An appeal followed to the Connecticut Supreme Court where, in a 4-3 decision, the Court upheld all the takings, concluding that “economic development” by private parties is a permissible public use under a standard of review that was highly deferential to any decision by a local government.

Writing for the dissent, Justice Peter Zarella was not buying the majority’s pablum. In his view the vague concept of economic development was hopelessly ambiguous, thereby creating a significant risk of abuse by private developers. “[T] the constitutionality of condemnations undertaken for the purpose of private economic development depends not only on the professed goals of the development plan, but also on their prospect of achievement.” In Justice Zarella’s opinion the majority had created a “Field of Dreams” test: “The test is premised on the concept that if you build it they will come, and fails to protect adequately the rights of private property owners.”

The property owners immediately filed an appeal to the United States Supreme Court; that Court’s decision to hear the case drew national attention. Nearly forty amicus curiae (“friend of the court”) briefs were filed on behalf of a broad spectrum of interested parties. The widespread concern of governmental abuse of eminent domain brought together organizations as philosophically divergent as the NAACP and the Claremont Institute Center for Constitutional Jurisprudence.

On June 23, 2005, the Supreme Court ruled in favor of the City of New London in a 5-4 decision. Writing for the majority, Justice John Paul Stevens held that the condemnation by the City of New London qualified as a “public use” because that term, as contained in the Fifth Amendment, was not to be taken literally. Instead, the Court adopted what it considered the “broader and more natural interpretation of public use as public purpose.” In a sweeping bow to municipal discretion, it was sufficient that the City had “formatted an economic development plan that it believed will provide appreciable benefits to the community,” such as new jobs and increased tax revenue. Justices Sandra Day O’Connor and Justice Clarence Thomas, on behalf of the conservative wing of the Court, wrote powerful dissenting opinions, finding eminent domain takings for the purpose of “economic development” to be dangerously unconstitutional. Justice O’Connor’s dissent came directly to the point: “Today the Court abandons this long-held, basic limitation on government power… Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded.” She made it emphatically clear that the majority’s opinion was a stunning expansion of the power of eminent domain: “The specter of condemnation hangs over all property ... Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall or any farm with a factory.”

Justice Thomas joined O’Connor’s attack on the majority in a separate and equally powerful opinion. Thomas emphasized how the decision made poor property owners extra vulnerable to rich corporations and politically powerful interest groups. In Thomas’ words: “Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. These communities are… also the least politically powerful.”

Thomas also pointed to the express language of the Fifth Amendment, which allows condemnation only for “public use.” It was wrong to instead allow condemnation for virtually any “public purpose” proposed by a state or local government. In Thomas’ words: “This deferential shift in phrasing enables the Court to hold, against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation, is for a public use.”

Indeed, to apply the taking clause in such a deferential way is to afford property rights far less protection than that provided by other constitutional rights. From Thomas: “Something has gone seriously awry with this Court’s interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not.”

The public reaction to the Kelo decision was widespread outrage. In the Grasping Hand, Ilya Somin lists numerous opinion polls revealing universal public disapproval of Kelo, cutting across all categories of gender, race, education, class, and political allegiance.

Newspapers everywhere criticized the decision, such as the New York Times with a front-page headline: “Justices Uphold Taking Property for Development.” When the New London City Council convened its first public meeting after the Supreme Court decision, hundreds of eminent-domain opponents descended on City Hall from across the country resulting in the erection of police barricades to keep the crowd from blocking street traffic. National figures from Ralph Nader to Rush Limbaugh lined up to criticize the decision, calling it the worst opinion of the century.

Promises, Promises. The Consequences of Kelo

It is not hard to understand why the Kelo decision is among the most despised United States Supreme Court decision in modern times.

The obvious problem with using “economic development” as a basis for condemnation is that it can be used to rationalize nearly any taking that benefits a private enterprise on the grounds that it will bolster the economy. In previous decisions, such as the 1954 case of Berman v. Parkers, the Supreme Court limited condemnations to the elimination of slums and blight. The “economic development” rationale, however, is nearly limitless— it exists without any restrictive check, which is an integral component of all constitutional rights.

At the Kelo oral arguments, Attorney Wesley Horton, arguing for the City, decided that he would simply answer yes to the inevitable question of whether economic development condemnations could justify transfers simply because the City would be paid more taxes. So when Justice Scalia, another dissenter, asked: “You can take from A to give to B if B pays significantly more taxes?... You accept that as a proposition?” Horton responded: “I do, your Honor.”

In other words, any condemnation that benefits a large business at the expense of a smaller business or a residential property owner can be rationalized on the basis of a “significant” increase in tax revenue. An illustrative example of this, of course, is the City of New London’s efforts to accommodate Pfizer Corporation at the expense of the Fort Trumbull property owners.

Another glaring hole in the Kelo decision is its failure to insist that new owners of condemned property guarantee the economic benefits that justified the taking to begin with. This creates a danger of enormous abuse by allowing public officials to rely on unsubstantiated claims of economic benefit that the new owners have no obligation to live up to.

In Kelo none of Justice Zarella’s “Field of Dreams” concerns were addressed. The NLDC had not signed a development agreement with anyone. Similarly, the much-vaunted development plan imposed no restrictions on the new private owners of the condemned property. Also, as Justice Zarella noted, the entire development plan failed to undertake any economic benefit analysis or take into account the poor market conditions making any economic benefit unlikely. Equally concerning was the City’s failure to consider “the loss in revenue that could result from the relocation of former residents and taxpayers out of the area” or to take into account the public money that had been invested in the project.

All of the problems anticipated by Justice Zarella and Justices O’Connor and Thomas came true. In 2008 the great recession descended on New London, in the midst of which Pfizer announced plans to close its facility leading to the loss of over 1,000 jobs. This coincided with the expiration of tax breaks provided by the City in one of its many efforts to accommodate Pfizer; with Pfizer gone, fellow real estate investors also fled.

Further fanning the flames of public discontent, the City took steps not only to evict the seven hold-out property owners, but to collect back taxes, occupancy fees, and outstanding water and sewer bills that had accumulated during the long legal battle. The City’s intransigence created a large public backlash, including formation of various groups such as One New London to protest the takings. Former Governor Jodi Rell ultimately stepped in, bringing about a settlement with the payment of 4.1 million dollars to the original hold-out property owners, nearly all of whom had left New London, including Suzzette Kelo. Her house was moved to downtown New London where it was dedicated with a plaque commemorating the property owners in the condemnation battle

Following the settlement, the City apologized to Suzzette Kelo and her neighbors. Ultimately the City and the State paid nearly 80 million dollars in their condemnation effort.

Fifteen years after the Supreme Court upheld the Kelo condemnations, the properties at the center of this enormous legal battle are empty and undeveloped. Ultimately, the only beneficiaries of this process are a colony of feral cats who have taken up residence on the property.

In the end, Kelo stands for the proposition that any rich corporation can get its way without commitment to the community it has invaded. New London – a small city of approximately 25,000 people – stood no chance when the international, multi-billiondollar Pfizer corporation came to town, sprinkling promises of jobs and financial bounty to an impoverished city down on its luck. Pfizer was able to get whatever it wanted, including an 80% reduction in its taxes, for no real investment of its own.

After the City of New London tore to the ground a deep-rooted working-class community of property owners, Pfizer simply walked away when their tax exemption ran out.

What happened to the homeowners in Kelo is not uncommon. A typical post- Kelo example is that of the Taiwanese manufacturer Foxconn. In 2017, they agreed to build a flat screen TV and LCD panel manufacturing plant in Mount Pleasant, Wisconsin, announcing they would employ 13,000 people. In return the State of Wisconsin waived significant air and water environmental protections, granted special legal privileges within the state judicial system, and approved nearly 5 billion dollars in state subsidies. To seal the deal, they put together approximately four square miles needed for the Foxconn campus by forcing homeowners to sell their land at a set price or lose their property by eminent domain. Beginning in 2019 Foxconn began walking back all of their commitments, such as their promise to build LCD screens (labor costs were allegedly too high in the United States), and to hire a manufacturing work force. Despite their revised promise to became operational by April 2020, as of the date of this newsletter, any buildings still owned by Foxconn in Wisconsin are completely empty.

After Kelo was decided, about 45 states enacted new eminent domain laws. But many of these laws failed to impose meaningful limitations on seizures of property for the benefit of private economic interests. This included Connecticut, which passed a law prohibiting seizure “for the primary purpose of increasing local tax revenue…” Even the goal of increasing tax revenue, however, can be pursued as long as it is part of a “more general plan.” Needless to say, it does nothing to prevent “economic development” condemnations. More recently there has been an effort to ban use of eminent domain “for any purpose that produces income from such real property for a private entity.” Such a law would provide the start of real eminent domain reform.

After Kelo, one essential question remains: where can a hardworking homeowner with limited resources and community roots go when public officials decide to exercise their condemnation power in order to accommodate some powerful economic interest? The answer is that the courthouse door is now essentially closed because Kelo found this problem poses little or no constitutional injury. I know this firsthand from my practice representing landowners in constructive condemnation claims, including hundreds of homeowners locked out of their houses during the “off-season” winter months in various Connecticut “summer” communities. Although I have been successful in these particular cases, success was hard-won in the post- Kelo legal environment which forced us to look to creative remedies available in statutory or common law, and not grounded in constitutional protections.

There remains, of course, the possibility that the United States Supreme will revisit this issue or the Connecticut Supreme court will make use of our own State Constitution to protect homeowners; as suggested by attorney Wesley Horton (the attorney for the city of New London in Kelo) in his book on the history of the Connecticut Supreme Court. This possibility seems remote, however, since the Connecticut Supreme Court declined this opportunity when it decided its portion of the Kelo case.

All citizens should, however, acknowledge Suzzette Kelo’s determination and courage; in her words: “In the end it was seven of us who fought like wild animals to save what we had; I think that although we ultimately did not win for ourselves it has brought attention to what they did to us, and if it can make it better for other people so they do not lose their homes to a Dunkin Donuts or a Walmart I think we did some good.”

Perhaps the best final words came from New London’s mayor in a 2010 statement given to the New York Times. According to the Mayor, Kelo was not a total disaster: “Basically, our economy lost 1,000 jobs but we still have a building, although I don’t know who will be looking for a building like that in this economy.”

Yes, Mr. Mayor, there is no one looking for that building. Sadly, the former Fort Trumbull homeowners are still looking for their homes.

A. Paul Spinella is a Hartford based trial lawyer.