Friday, June 24, 2016
I’ve been doing a lot of research lately on how property law and the law governing debt recomposition interact—specifically in the context of the Puerto Rican debt crisis. Two major concepts that keep coming up in my research are the Takings Clause and the Contracts Clause.
Property law professors routinely teach eminent domain and Takings Clause concepts in class. In fact, it’s rare to attend a property law conference these days without at least several panels being devoted to such topics. But, I’ve not spent much time thinking about the Contracts Clause—or how it’s different from/similar to the Takings Clause.
Let me make this a little more concrete [BEWARE: this is going to be long-winded] . . . the Supreme Court recently struck down Puerto Rico’s Recovery Act. For those who haven’t been following this as obsessively as I have, Puerto Rico has been going through a bit of a debt spiral of late (to the tune of about $72 billion). Rather than waiting for Congress to do something about it, back in June 2014 Puerto Rican lawmakers decided to take things into their own hands and passed something called the Public Corporation Debt Enforcement and Recovery Act. The new law essentially created a bankruptcy-like process for the island to restructure its debt (I am summarizing, of course. For a more in-depth discussion, the good folks over at CreditSlips have some great descriptions and analysis).
Naturally, the island’s bondholders didn’t greet this new law with open arms. A group of them quickly filed a lawsuit in late summer 2014 arguing that the Recovery Act was unconstitutional. They raised a number of claims, including that the Act was preempted by the U.S. Bankruptcy Code. Now, despite the way oral arguments seemed to go, on June 13, 2016 SCOTUS struck down the Recovery Act in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust et al., holding that it was preempted by the federal bankruptcy code (specifically, Section 903).
But the part that got me thinking didn’t have anything to do with the Bankruptcy Clause—instead, I got interested in some of the other claims that the bondholders made, but that were not decided by the Court. They asserted in their complaint that “The operation of the Act, as enacted by the Commonwealth and signed into law by the Governor, threatens to improperly impair Plaintiffs' rights . . . in contravention to . . . the Takings Clause, and the Contract Clause.” See Amended Complaint, Franklin California Tax-Free Trust et al., 2014 WL 4954576 (D. Puerto Rico) (Trial Pleading). So, basically, modifying the creditor’s debt would violate the Contracts Clause and the Takings Clause—so Puerto Rico can’t do it – because both constitutional rights apply—or something like that—Right?
THE CONTRACTS CLAUSE
The Contract Clause (Article I, Section 10, Clause 1) states that “[n]o state shall . . . pass any . . . law impairing the obligation of contracts . . . .”
By its very terms, it only applies to the states (i.e., feds, this isn’t a problem for you). The Contracts Clause has a storied history—ebbing and flowing from importance to obscurity. In the early days of the republic (often called the Critical Period, being that time during which the Articles of Confederation were in effect) it was precisely due to a fear of state governments interfering with the rights of creditors that the provision was ultimately included in the federal constitution. As background, after the American Revolution many citizens of the new country found themselves horribly in debt. As a result, various state legislatures began passing laws to ease their pain (which creditors didn’t like very much). Drafters of the constitution found these “invasions into the contracts of private parties” harmful to commerce and the general course of business so they decided to put a limitation in place. See Ogden v. Saunders, 25 U.S. 213, 354 (1827) (for some angry commentary by Chief Justice Marshall). As with so many other provisions in the federal constitution, numerous state constitutions contain parallel contracts clauses as well.
THE TAKINGS CLAUSE
The Takings Clause (in the Fifth Amendment), on the other hand, provides that “private property [shall not] be taken for public use, without just compensation.”
Going back to the early days of the Republic, Thomas Jefferson and his buddies who were opponents of a strong central government advocated for the Bill of Rights (which contained the Fifth Amendment), but they weren’t the first to come up with the idea of protecting private property from the government. The Magna Carta had a similar idea going on, and the concept was already fairly prominent in various state constitutions during the period of the Articles of Confederation.
Initially, the Takings Clause only applied to the federal government (i.e., states, not your problem). Chief Justice Marshall stated in Barron v. Mayor and City Council of Baltimore, 32 U.S. 243 (1833) that “The provision in the fifth amendment to the constitution of the United States, declaring that private property shall not be taken for public use, without just compensation, is intended solely as a limitation on the exercise of power by the government of the United States; and is not applicable to the legislation of the states.”
But that all changed with the ratification of the Fourteenth Amendment in 1868. In Chicago Burlington and Quincy R.R. v. City of Chicago, 166 U.S. 226 (1897) the Court stated: “‘Whatever may have been the power of the states on this subject prior to the adoption of the fourteenth amendment to the constitution, it seems clear that, since that amendment went into effect, such limitations and restraints have been placed upon their power in dealing with individual rights that the states cannot now lawfully appropriate private property for the public benefit or to public uses without compensation to the owner.”
To the point about the recomposition of debt, SCOTUS later developed the regulatory takings doctrine in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), which provides that the government need not physically dispossess a person from his property in order for a takings claim to be raised. Rather, the government could restrict or regulate the use of property to such a degree that the state action was tantamount to a physical taking.
THE CLAUSES WORKING TOGETHER (OR NOT)
So now, when a state government takes an action that causes an impairment or modification of a contract, an aggrieved party can asset claims under both the Takings Clause and the Contracts Clause. That got me wondering—are they really, practically different? Do they produce different outcomes? Are those outcomes consistent? Do courts do a good job (or even try) when it comes to differentiating between the two?
I’m still working on the answers to those questions, but what does seem clear to me is that there doesn’t appear to be very clean lines here. The law is a bit…well…cloudy.
Take the Contracts Clause, for instance. Contemporary cases have held that just because a law impairs a contact doesn’t necessarily mean that it’s prohibited. Cases like U.S. Trust v. New Jersey, 431 U.S. 1 (1977) and Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) hold that this clause still has to be squared with “the inherent police power of the State to safeguard the vital interests of its people.” See Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 410 (1983). The Supreme Court noted in U.S. Trust that “an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose.” So the prohibition isn’t all that prohibitive after all.
In the context of the Takings Clause, courts have held that various government actions, despite limiting or restricting the use of property, nevertheless do not raise a takings claim. Regulations related to providing for the general welfare, for instance, are perfectly permissible. The court in Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 105 (1978) stated that where the government “reasonably conclude[s] that ‘the health, safety, morals, or general welfare’ would be promoted by prohibiting particular contemplated uses of land,” there is no requirement to compensate the owner. Joe Singer points out in Justifying Regulatory Takings, 41 Ohio N.U. L. Rev. 601 (2015) that:
Key examples of laws that promote the public welfare are zoning and environmental laws and consumer protection laws such as building codes. The Supreme Court has upheld against takings challenges laws that impose height limits and setback requirements, as well as zoning laws that segregate residential, commercial, farming, institutional, and industrial uses. The Court has upheld public accommodation laws and implicitly approved fair housing and employment discrimination laws. It has allowed minimum wage and maximum hours laws and workplace safety laws to operate without challenge.
Both clauses are, in a sense, concerned with protecting the sanctity of property rights (be they tangible—like land or personalty—or intangible—like those arising from a contract creating debt). One obvious difference is that with the Takings Clause it’s still possible for state governments to “take” property as long as they do so for a public purpose and just compensation is paid. Under the Contracts Clause, however, states are flat out prohibited from impairing a contract right. But, as indicated above, both of these commands can ring a bit hollow. States can pass laws that break contracts when it's “necessary and reasonable” and states can regulate property without causing a taking when its “justified.” And if a state is prohibited from impairing a contract, then can they just turn around and claim they're doing it under the Takings Clause? Can a public purpose be "necessary and reasonable" for Contracts Clause purposes and yet not "justified" for Takings Clause purposes? What about the other way around? Are these standards different or are they the same thing?
So what does all this mean for the distinction between the two? Can they always be raised together in the face of state action? What are the defining features/lines that make them wholly separate concepts—or is it better to think of them as being interlocking (like how Justice Kennedy describes the Equal Protection and Due Process Clauses in Obergefell v. Hodges)? I hope to formulate some answers to these questions (or at least sound a bit more like I know what I’m talking about) in the months ahead. Your thoughts are welcome and appreciated in the comments below.
Tuesday, June 7, 2016
I’ve been thinking a lot lately about the property law aspects of debt (don’t let your head hit the keyboard as you fall into a deep slumber from reading that, now!). Most of my interest in this topic comes from my obsession with the Puerto Rican debt crisis. Unless you’ve shut yourself off from social media (or any media, for that matter) you likely at least know that the island, a U.S. territory serving as home to 3.5 million American citizens, is flat broke. They’ve defaulted on multiple interest payments to their bondholders, tried to enact their own bankruptcy-like law (overview by Stephen Lubben at Senton Hall here)--currently pending a decision from SCOTUS, and right now Congress is trying to pass a super special insolvency procedure to help out the island (for a little Citizens United flavor, take a look at this dark money ad urging the defeat of the bill). I’ll have a post on this topic, and the takings claims posed by the bondholders, next week.
But back to debt as property . . . The Supreme Court has long held that rights in debt (contract rights) constitute property. See Omnia Commercial Co. v. U.S., 261 U.S. 502 (1923); see also Lynch v. United States, 292 U.S. 571, 579 (1934) (“Valid contracts are property.”). And we freely buy, sell, and trade such rights all the time. Indeed, that’s what the secondary mortgage market and the private label mortgage market are all about! Buying and selling mortgage debt at discounted rates, typically (in the Fannie/Freddie context) to provide more liquidity to the residential housing market and thereby increasing the availability of credit.
But people buy debt for other reasons as well—to make money! There was a great (and, per usual, hilarious) discussion on John Oliver’s HBO show, Last Week Tonight, this past Sunday on the topic of “Debt Buyers.” Here’s the video:
In the show he points out a bunch of things about the debt buying industry—prominently discussing the shady practices of some of the industry’s less than wholesome characters. In fact, he sends a team with a hidden camera to the industry’s trade conference in Las Vegas. One of the panel presenters at the conference notes cavalierly that, despite state law requirements that debt buyers disclose to consumers that their obligation to pay the debt may be extinguished by the statute of limitations: “Who’s going to read and understand the words on this letter? The unsophisticated consumer? . . . I depose these plaintiffs in these lawsuits and they don’t even read the letter.” What a jerk! I bet he wasn’t too happy to see his remarks go viral.
But back to the point . . . the general idea of the show was to basically talk about how bad the debt buying business can be: how bad guys go after poor, unsuspecting consumer debtors and ruin their lives. But it strikes me that the issue of how one gets into debt and the ability of someone other than the original creditor to enforce the credit right are entirely different. Putting aside the former, is there anything wrong with selling debt like we sell tangible personal and real property? From a debtor’s perspective, does it really matter whether the original counterparty to the contract is the party now trying to enforce it? We could assume that there might be something particular about that specific obligee that makes contracting with him, from the obligor's perspective, special. In those cases we have doctrines of assignability. But, in the context of pure debt (the right to collect on an amount owed) in an arms-length transaction, it does not seem much different than a market for anything else.
But are there policy reasons why we should prohibit (or at least discourage) this type of market from becoming more robust (if it isn’t already – spoiler: it is already)? Chain of title problems certainly loom large in these transactions. As the segment above indicates, often all that is exchanged between the debt seller and debt buyer is the purchase price and an Excel spreadsheet with minimal information about the obligations owed. There’s also little due diligence done on the buyer’s end – such as ascertaining whether the debt is even still collectable. Perhaps one could argue that the nature of this particular type of “property” (specifically how it can impact vulnerable consumer debtors when owned by unscrupulous collectors) merits thinking differently about whether the debt buying business is just another property market. Maybe there are just too many bad guys or, if there aren't that many, the damage that the few cause is just too great.
My home state of Louisiana has a really interesting way of dealing with debt sales once litigation on the debt has commenced. We call it the “right of litigious redemption.” It basically works like this: Original Creditor commences a lawsuit against Debtor. As the litigation proceeds, Original Creditor realizes that he cannot (or does not want to) carry the lawsuit through to the end because it is too time consuming or is eating up too many resources (or for whatever reason). Instead, Original Creditor “sells” the lawsuit to Buying Creditor for a discounted purchase price. Now, Buying Creditor is the plaintiff against Debtor in the litigation. Under Louisiana law, Debtor can now pay to Buying Creditor an amount equal to the discounted purchase price he paid Original Creditor, and in doing so completely extinguish the lawsuit! Voila! Just like that. You can see how this is a great deal for Debtor. If the debt he owes to Original Creditor is $20,000, but Buying Creditor only paid Original Creditor $7,000 for it, then Debtor is essentially relieved of paying $13,000 worth of debt! The supposed policy reason for doing this has to do with wanting to discourage a robust market for the buying and selling of lawsuits from developing. To my knowledge, no other state in the U.S. has such a law (please correct me if I’m wrong in the comments below).
So what about property markets in debt? Good? Bad? Or . . . like most things, a little bit of both?
Monday, May 9, 2016
Professors’ Corner's FREE monthly webinar featuring a panel of law professors, addressing topics of interest to practitioners of real estate and trusts/estates.
Sponsored by the ABA Real Property, Trust and Estate Law Section Legal Education and Uniform Laws Group
Tuesday, May 10, 2016
12:30 p.m. Eastern/11:30 a.m. Central/9:30 a.m. Pacific
A Lawyer’s Guide to the Law of Public Art
Tyler T. Ochoa, Professor of Law, High Tech Law Institute, Santa Clara University School of Law
Anthony L. François, Senior Staff Attorney, Pacific Legal Foundation, Sacramento, CA
Moderator: Christopher K. Odinet, Assistant Professor of Law, Southern University Law Center
The use of art in public spaces has captivated the minds of federal, state, and local policymakers in recent years, with some cities even requiring that private developers include public art in all new projects. Moreover, ownership of public art has drawn the attention of lawyers and advocates, particularly when it comes to competing property and management rights between the public, the artist, landowners, and interested third parties. This program begins with an overview of the intellectual property rights in connection with public art, explaining the differences between the rights in the intangible work and the rights in the physical object itself. The program continues with a case study of the City of Oakland's art requirement for private real estate developers, exploring the property and related legal issues that surround such regimes.
Register for this FREE webinar by clicking here.
Sunday, April 24, 2016
Chris Odinet (Southern) has posted The Unfinished Business of Dodd-Frank: Reforming the Mortgage Contract (SMU Law Review) on SSRN. Here's the abstract:
The standard residential mortgage contract is due for a reappraisal. The goals of Dodd-Frank and the CFPB are geared toward creating better stability in the residential mortgage market, in part, by mandating more robust underwriting. This is achieved chiefly through the ability-to-repay rules and the “qualified mortgage” safe harbor, which call for very conservative underwriting criteria to be applied to new mortgage loans. And lenders are whole-heartedly embracing these criteria in their loan originations — in the fourth quarter of 2015 over 98% of all new residential loans were qualified mortgages, thus resulting in a new wave of credit-worthy homeowners that are less likely than ever before to default. As a result of this and other factors, the standard form residential mortgage contract, with its harsh terms and overreaching provisions, should be reformed. This is necessary not only due to the fact that such terms should no longer be needed since borrowers are better financially positioned than in the past, but also because of a disturbing trend in the past few years where lenders and their third party contractors have abused the powers accorded to them by the mortgage contract — mostly through break-in style foreclosures. This Article argues for a reformation of the Fannie Mae/Freddie Mac standard residential mortgage contract and specifically singles out three common provisions that are ripe for modification or outright removal.
April 24, 2016 in Common Interest Communities, Home and Housing, Law & Economics, Mortgage Crisis, Real Estate Finance, Real Estate Transactions, Recent Cases, Recent Scholarship | Permalink | Comments (0)
Sunday, October 6, 2013
It's that time again, this month's Professors’ Corner Webinar. A FREE monthly webinar which features a panel of law professors, discussing recent cases or issues of interest to real estate or trust and estate practitioners and scholars. Sponsored by the Legal Education and Uniform Laws Group of the ABA Real Property, Trust and Estate Law Section
Wednesday, October 9, 2013
12:30pm Eastern/11:30 am Central
This month's topic: Current Issues in Common Interest Communities
Register at http://ambar.org/professorscorner
Our October program, “Current Issues in Common Interest Communities,” features three outstanding scholars and three timely topics in the field of common interest development.
Paula Franzese is the Peter W. Rodino Professor of Law at Seton Hall University School of Law in Newark, NJ. Prof. Franzese will explore the uneasy intersection of takings law and shorefront redevelopment in the context of the New Jersey Supreme Court’s recent decision in Borough of Harvey Cedars v. Karan. In this case, a New Jersey shorefront town used its takings powers to condemn part of a family's oceanfront property to build an enhanced 22-foot-high dune to protect against the sorts of calamities wrought by Superstorm Sandy. Although the dune provides protection against future storm damage, it partially blocks the home's beach and ocean views. A jury’s award of $375,000 for reduction in view and value was reversed by the New Jersey Supreme Court, which held that the jury must assess not only the diminution in value suffered by the affected property owner but also the benefit conferred. To the extent that oceanfront owners reap the benefits, at taxpayers’ expense, of the dunes’ protection, how should that benefit be quantified appropriately to accommodate the loss of owners’ investment-backed expectations?
Shelby Green is an Associate Professor of Law at Pace Law School in White Plains, NY. Prof. Green will discuss the appropriate role of alternative dispute resolution within a common interest community. Disputes within CICs are inevitable, but their amicable and efficient resolution is not. Prof. Green will discuss two California cases, Chapala Management Corporation v. Stanton, 186 Cal. App. 4th 1532 (2010) and Grossman v. Park Fort Washington Ass’n, 212 Cal. App. 4th 1128 (2012), and how the cases demonstrate that two formal mechanisms—(1) the deferential standard of review (the business judgment rule) over decisions by managing boards and (2) the potential award of attorneys’ fees to the prevailing party—fail in their aim to channel disputes away from courts. Prof. Green will also discuss whether current reform proposals, such as statutory ombudsman programs and ADR requirements as a prerequisite to suit, can readily facilitate the need for more amicable and efficient dispute resolution within CICs.
Andrea Boyack is an Associate Professor of Law at Washburn University School of Law in Topeka, KS. Prof. Boyack will discuss the extent to which the law should enforce transfer restrictions in common interest declarations. The law has traditionally enforced such transfer restrictions despite their impact on alienability, viewing such restrictions as appropriate means to address or control maintenance of property within the community and behavior of the community residents. Prof. Boyack will argue that these concerns are better directly controlled through community use regulations and that courts should invalidate covenant restrictions that unjustifiably constrain the right to transfer, particularly when the community’s legitimate objectives could be accomplished through less intrusive means.
Register for this FREE webinar at http://ambar.org/professorscorner!
Thursday, October 4, 2012
A couple weeks ago, the South Africa Supreme Court issued a landmark ruling in a case involving Mugabe’s controversial land reform program in Zimbabwe. The Court ruled that a white Zimbabwean farmer (Mike Campbell) who has been dispossessed by the government could take possession of government property as compensation. The case and the context of the farmer’s dispossession offer particularly troubling illustrations of how the postcolonial dilemma regarding land reform has unfolded in Zimbabwe.
Zimbabwe and the Dilemma of Postcolonial Land Reform, briefly
While many postcolonial states (for example, South Africa and India) struggled during the early years of their independence with how to enact land reform and simultaneously recognize a right to property (in a context of concentrated elite landholdings), Zimbabwe’s experience with land reform has been particularly inequitable and violent.
Unlike many other postcolonial states, the newly independent government of Zimbabwe had its hands tied when it came to distributing land to the large numbers of landless citizens. As a condition of independence in 1980, Zimbabwean leaders agreed to protect the large arable tracts of land held by
white landowners for ten years under the Lancaster House Agreement with Britain. After the ten-year period, the Zimbabwe government could compulsory acquire this land by providing compensation. (Britain agreed to provide some of the government compensation for both the voluntary sales during the first ten years and the compulsory acquisition afterwards.)
Unfortunately, when land reform was possible in the 1990s, the government took action very slowly, and often acquired land that was not ideal for farming. Then, in the early 2000s, the Mugabe government began to encourage violence and land invasions for personal gain through a change in law that allowed for “fast-track land redistribution”:
“To appease the landless masses and maintain political popularity, Mugabe's government officially encouraged veterans to occupy white-owned farms. In some instances, members of the army helped facilitate land grabs and police were told not to respond to landowners' complaints or to remove squatters. As a result of the land grabs, many white farmers and their black workers were killed or subjected to violent attacks.” (PBS)
“Mugabe. . . present[ed] the policy as a “redistribution” of land to the poor and as a triumph over greedy white imperialists. In reality the policy, spearheaded by a ragbag army of armed thugs — the so-called “war veterans” — was a ruse to cement Mugabe’s hold on power through the distribution of patronage. It thus became a scramble for the plum, mainly (though not exclusively) white-owned, estates among the country’s elite, most of whose members had little interest in farming.” (Telegraph)
Not surprisingly, this “program” did little to alleviate the vast inequity of landholdings throughout the country. In 2002, Human Rights Watch reported that:
“The fast track program has . . . violated rights to equal protection of the law, nondiscrimination, and due process. The violence accompanying land occupations has created fear and insecurity on white-owned commercial farms, in black communal areas, and in “fast track” resettled areas, and threatens to destabilize the entire Zimbabwean countryside.” (Human Rights Watch)
As a result of this violence, Zimbabwe, a once-richly agricultural country, is now dependent on food aid.:
"Farms seized in Zimbabwe often have landed up in the hands of Mugabe's cronies and inner circle and have been left to lie fallow, turning the country that once was the breadbasket of the region into a net food-importer where the poor often go hungry." (Associated Press)
The Case of Mike Campbell’s Farm
In 1974, Mike Campbell, a white South African, moved to then-Rhodesia and purchased the Mount Carmel farm. He expanded on it subsequently, and built it into a profitable enterprise. In his obituary last year, the Telegraph noted that
He “plant[ed] mangoes, citrus trees, maize, tobacco and sunflowers, establish[ed] a herd of Mashona/Sussex cattle and dedicat[ed] a large area to a wildlife reserve, complete with herds of giraffe, impala and other animals. Their Biri River Safari Lodge became a popular tourist destination.
Campbell was described as a model employer, and by the end of the 1990s Mount Carmel farm was the largest mango producer in Zimbabwe, helping to generate much-needed export earnings. The farm sustained the livelihoods of more than 500 people...”
During the violence that ensued throughout the 2000s, Campbell’s farm was repeatedly invaded and significantly damaged. Attempts to gain relief in Zimbabwean courts did not yield results. In 2007, he brought his case to the inter-governmental Southern African Development Community (SADC) Tribunal, the highest court in the region. Before that court issued its judgment (in favor of Campbell and other dispossessed white farmers), Campbell and his family were kidnapped and tortured. (He passed away last year as a result of deteriorated health caused by the torture and did not live to see the recent judgment from South Africa.)
The ruling from the South African Supreme Court attempts to enforce the SADC Tribunal’s order.
The Recent Ruling from the South African Supreme Court
On September 20, South Africa's Supreme Court ruled that:
“[A] white Zimbabwean farmer can take possession of a Zimbabwe government property to compensate for the seizure of his farm.
. . .
A tribunal of the Southern African Development Community in 2008 ruled that the takeovers of white-owned farmland in Zimbabwe were illegal and racist. President Robert Mugabe's government argued it was part of a land reform process to redress colonial wrongs. Hundreds of farmers were forced off their property in often violent government-sponsored seizures.
Zimbabwe refused to act on the tribunal's order to restore the farms to their owners, and the Southern African community dissolved the tribunal earlier this year.
In 2010, a South African High Court attached a Zimbabwe government property in Cape Town to satisfy the tribunal's order for punitive costs to pay for farmer Mike Campbell's legal expenses.
[The recent] dismissal upholds that ruling.” (Associated Press)
Enforcing this ruling will be a challenge in Zimbabwe – the Zimbabwean government has already “dismissed” it. Even if it is enforced, it sidesteps the issues of the thousands of landless black Zimbabweans and farm workers for whom a path to property, much less protection of that
property, has never been available.
Priya S. Gupta
For more on Mike Cambpell’s story (including the lawsuit), readers are encouraged to watch the 2010 film, Mugabe and the White African. The film, which is not without fault, especially with regards to its race, gender, and historical framing, does provides some visual context to the legal case and what has been at stake.
Wednesday, June 6, 2012
As I mentioned last month, the Real Property Trust and Estate Law Section of the ABA will host monthly "Professor's Corner" Conference Calls featuring three property professors who will discuss recent cases. You do not need to be a member of the section or the ABA to participate in the call, but we certainly hope that you will consider joining.
The June call will be held on June 13th at 12:30 eastern/11:30 central and so on. The call-in information is:
Dial in number: 866/646-6488
Participant Pass code: 9479109954
I will moderate the June call, which will feature:
Ray Brescia, Visiting Clinical Associate Professor of Law at Yale, currently on leave from Albany Law, will discuss recent developments in "Reverse Redlining" litigation in the wake of the financial crisis. He will focus on recent settlements of actions against Wells Fargo and Countrywide Financial, and provide a brief overview of other ongoing litigation.
Shelby Green, Associate Professor at Pace Law School will discuss Italian Cowboy Partners, Ltd. v. The Prudential Ins., Co. Of Am., 341 S.W.3d 323 (Tex. 2011). In this case, the court considered whether disclaimer-of-representations language in a lease contract precludes a fraud in the inducement claim.
John V. Orth, William Rand Kenan Jr. Professor of Law at University of North Carolina School of Law will discuss RBS Citizens, N.A. v. Ouhrabka, 30 A.3d 1266 (Vt. 2011) in which the court considered a creditor’s challenge to the doctrine of tenancy by the entireties.
If you are interested in participating in future calls, please let me know!
Wednesday, November 9, 2011
Harrison v. Mayor and Board of Alderman of City of Batesville (Supreme Court of Mississippi)
Facts: A gravel company applied for a zoning variance to expand its mining operation to property adjacent to its current operation. Neighboring property owners opposed the action. The mayor and city board of aldermen approved variance, with certain restrictions. Property owners appealed.
Holding: The company failed to manufacture evidence of unnecessary hardship required for zoning variance, and the board of aldermen failed provide specific findings of fact and conclusions of law to support their decision.
Wednesday, October 19, 2011
Westpac Aspen Investments, LLC v. Residences at Little Nell Development, LLC (Colorado Ct. of Appeals)
Issue: Does the merger of title doctrine extinguish a prescriptive easement when the sole owner of the servient estate holds title to the dominant estate in joint tenancy with his spouse?
Holding: No. The common ownership necessary to trigger the merger doctrine “must be absolute, not defeasible or determinable, and coextensive, rather than owned in different fractions.” A joint tenant, however, lacks absolute dominion over the jointly held property. “Upon the death of one of the co-tenants in joint tenancy, the entire undivided interest of the deceased passes, by operation of law, to the surviving co-tenant.” Moreover, the joint tenant may not alienate, encumber, or transfer the interest of the other joint tenant.
Wednesday, October 5, 2011
Shashoua v. Zien (Massachusetts Land Court)
Background: Parties are next door neighboors and were "best of friends." Shashoua, however, brings suit claiming adverse possession over a slice of Zien's backyard. The case does a very nice job laying out the requirements for adverse possession and demonstrates how a trial judge teases out whether one party's use of property is "adverse" or "continuous."
Holding: The Judge found that Shashoua's use (cutting grass, planting flowers, children playing, walking dogs, setting up a tent for a bar mitzvah party) failed to meet the continuos and adverse prongs of the test for adverse possession. The judge also ordered Shashoua to remove improvements she had installed that encroached on Zien's land.
Wednesday, September 28, 2011
Harrington v. Metropolis Property Management Group, Inc. (Supreme Court of New Hampshire)
Background: Harrington signed a lease commencing on July 1, 2007, and ending “60 days after written notice has been given.” In August of 2009, Harrington, angry about the barking of a neighbor's dog, gave 30 days notice and vacated the premise. The property management company claimed Harrington violated the terms of the lease and retained his security deposit. Harrington sued to recover the deposit, citing a series of New Hampshire laws indicating that: “30 days' notice shall be sufficient in all cases.”
Holding: "The use of the term “sufficient” in the statute connotes that the legislature intended that thirty days be the minimum period of time necessary for such notice." Nothing in the state's law "prevents parties to a lease from agreeing to a longer notice period than that provided by the statute to secure greater protection for themselves."
Wednesday, September 14, 2011
Background: This case is a real life, modern example of a landlocked piece of property and an owner seeking an easement by necessity. Lewis owned a landlocked parcel and brought a private condemnation proceeding against Glenelk to obtain an easement over Glenelk's land.
Holding: The party seeking the private condemnation must state the purpose of the condemnation in a way that enables the trial court to examine the scope and necessity of the proposed easement.
Thursday, June 23, 2011
Over at Land Use Prof, Tim Mulvaney has a nice write-up on PPL Montana v. State of Montana, a recent property/enviro case that the Supreme Court has decided to grant cert on. The central issue in the case is who owns the beds and banks of three Montana rivers that play a significant role in state's economy. Whether the rivers are privately owned or belong to the state under the public trust doctrine depends on whether the rivers were “navigable” when Montana was admitted to the Union in 1889.
As Tim points out, there may also be a looming judicial takings issue. Tim writes: "In its petition for certiorari, PPL Montana cited to Stop the Beach in asserting that, '[b]ecause [the Montana Supreme Court was] the operative force behind this land transfer [from private ownership to state ownership], it remains to be seen whether property owners in general have a Takings Claim or due process objection to [such a] land grab.'" Moreover, the Cato Institute is arguing that the "Montana Supreme Court adopted a retroactive rule that destroyed title already accrued in violation of the Takings Clause," and calls the Court’s ruling a “thinly-disguised judicial taking.”
Wednesday, May 4, 2011
For all those following the happenings in Severance v. Patterson (important case on the Texas Open Beaches Act), our friends at Land Use Prof have a few updates:
2. Matt Festa gives his two cents and a posts video of a panel discussion on the case.
Monday, April 4, 2011
Scott Kieff (George Washington) has posted Removing Property from Intellectual Property and (Intended?) Pernicious Impacts on Innovation and Competition SSRN. Here's the abstract:
Commentators have poured forth a loud and sustained outcry over the past few years that sees property rule treatment of intellectual property (IP) as a cause of excessive transaction costs, thickets, anticommons, hold-ups, hold-outs, and trolls, which unduly tax and retard innovation, competition, and economic growth. The popular response has been to seek a legislative shift towards some limited use of weaker, liability rule treatment, usually portrayed as “just enough” to facilitate transactions in those special cases where the bargaining problems are at their worst and where escape hatches are most needed. This essay is designed to make two contributions. First, it shows how a set of changes in case law over just the past few years have hugely re-shaped the patent system from having several major, and helpful, liability-rule-pressure-release-valves, into a system that is fast becoming almost devoid of significant property rule characteristics, at least for those small entities that would most need property rule protection. The essay then explores some harmful effects of this shift, focusing on the ways liability rule treatment can seriously impede the beneficial deal-making mechanisms that facilitate innovation and competition. The basic intuition behind this bad effect of liability rules is that they seriously frustrate the ability for a market-challenging patentee to attract and hold the constructive attention of a potential contracting party (especially one that is a larger more established party) while preserving the option to terminate the negotiations in favor of striking a deal with a different party. At the same time, liability rules can have an additional bad effect of helping existing competitors to coordinate with each other over ways to keep out new entrants. The essay is designed to contribute to the literature on IP in particular, as well as the broader literatures on property and coordination, by first showing how a seemingly disconnected set of changes to the legal rules impacting a particular legal regime like the patent system can have unintended and sweeping harmful consequences, and then by exploring why within the more middle range of the spectrum between the two poles of property rules and liability rules, a general shift towards the property side may be preferred by those seeking an increase in access and competition.
Friday, March 18, 2011
Thursday, March 17, 2011
Troy Rule (Missouri) has posted Airspace in a Green Economy on SSRN. Here's the abstract:
The recent surge of interest in renewable energy and sustainable land use has made the airspace above land more valuable than ever before. However, a growing number of policies aimed at promoting sustainability disregard landowners' airspace rights in ways that can cause airspace to be underutilized. This article analyzes several land use conflicts emerging in the context of renewable energy development by framing them as disputes over airspace. The article suggests that incorporating options or liability rules into laws regulating airspace is a useful way to promote wind and solar energy while still respecting landowners' existing airspace rights. If properly tailored, such policies can facilitate renewable energy development without compromising landowners’ incentives and capacity to make optimal use of the space above their land. The article also introduces a new abstract model to argue that policymakers should weigh the likely impacts on both rival and non-rival airspace uses when deciding whether to modify airspace restrictions to encourage sustainability.
Monday, November 8, 2010
Over at the Land Use Prof blog, Matt Festa has a great post on Severance v. Patterson, an important Texas Open Beaches Act case recently decided by the Florida Supreme Court.
[Comments are held for approval, so there will be some delay in posting]
Wednesday, September 1, 2010
Distinguishing Between Private-Public and Private-Private Transfers in Judicial and Regulatory Takings
I've been working on a fairly lengthy post-Stop the Beach article on judicial takings. I will probably post the article on SSRN in a week or so. In the meantime, I wanted to blog about a distinction that is at the core of my arguments in the article. As I explain further below the fold, government actions that mandate the transfer of property interests from private property owners to the public ("private-public transfers") should be distinguished from government actions that mandate the transfer of property interests between private persons ("private-private transfers"). I argue that judicial takings, and regulatory takings more broadly, should apply only to private-public transfers, but not to private-private transfers.
I touched on this distinction way back in my first post on the grant of cert in Stop the Beach (see point 5). Immediately after Stop the Beach was decided, Jerry Anderson asked the following question:
I am curious about Justice Scalia's position that courts may not eliminate "established private property rights." What do such rights consist of? For example, assume that a state court decides to move from a "good faith" approach to adverse possession to an "objective" standard, which will allow some possessors to prevail, even though they knew the land they were occupying was not theirs. This is a standard "evolution" of common law, yet it does, under Justice Scalia's rigid formulation, result in a party losing property that it would not have lost under the old common law test. Is that a "taking"? Can the court NOT change such a common law test without having to compensate property owners?
To me, such a change in adverse possession law involves a private-private transfer, and should not fall within the judicial takings analysis. In excellent posts taking up Jerry's question, Lior Strahilevitz and Eduardo Penalver both discussed the private-private nature of the change in adverse possession law.
What follows below the fold is a very lengthy treatment of this issue. The rest of the post is taken from a few sections of my draft article, with the footnotes removed. I'd very much welcome any comments on the argument. In particular, I'd be interested in references to similar arguments, if any, that have been made in the existing regulatory takings literature.
Friday, June 25, 2010
The New York Court of Appeals today upheld the use of eminent domain for an expansion of Columbia University. Ilya Somin comments at the VC; Matt Festa comments at the Land Use Prof Blog; Tim Sandefur comments at the PLF's blog; and Robert Thomas comments at the Inverse Condemnation Blog.
[Comments are held for approval, so there will be some delay in posting]