The novel, The Hitchhiker’s Guide to the Galaxy, begins with its hero lying in front of a bulldozer trying to prevent his home from being taken and destroyed in eminent domain. Unfortunately, for most people impacted by eminent domain (including our hero), by the time the bulldozers get there, it is too late. If you are a target of eminent domain, be proactive early and often. Many times, property and business owners impacted by eminent domain decide to wait until the government moves them on its own schedule and at its own convenience without regard to their needs or concerns. They lose the opportunity to negotiate for realistic help on a realistic schedule, while the government can still adjust and change its own plans. For example:
- A large manufacturing plant with press brakes and other heavy equipment was targeted by Caltrans for eminent domain, but Caltrans took years to formulate its plans and obtain federal funding, all the time leaving the plant owners in limbo as to whether and when they would be condemned and forced to move. We advised this client to take a more proactive approach, to find a relocation site for themselves without waiting for the government to do it for them, and to try to be the “squeaky wheel” that gets the grease rather than the silent bystander waiting for the bulldozers to arrive. As a result, the client searched proactively for and found a viable relocation site only a block away. We then asked Caltrans on the client’s behalf to provide advance relocation funding and to formally approve the relocation, pointing out that Caltrans might end up spending far more if the client ultimately could not relocate and was put out of business by the taking. Caltrans then claimed that it lacked the authority under federal funding laws to help the relocation. It also claimed that federal regulations barred it from “approving” a relocation when the entire public project still awaited final plans and final approvals. We pointed out that Caltrans was wrong. Federal law not only allowed Caltrans to help; it required Caltrans to help. Two months after our initial request, Caltrans approved the relocation and funded it in seven figures.
- A large, but family owned, rubber parts manufacturer faced loss of the entire business in eminent domain, if it could not relocate. We advised the client to hire a relocation consultant who, for a reasonable fee, prepared a budget estimating the cost of relocation and a schedule showing how long it would take. Both of these are key. Under general eminent domain law, the government typically gives no more than 120 days notice that it will take possession of property taken in eminent domain. For many businesses, that is too little and too late. The business simply cannot be moved in that small a time period. With a budget and a schedule, however, we helped this client make the case for early approval of relocation and relocation funding.
Be proactive. The government moves on “government time.” You have to push the government sometimes to recognize that it is dealing with real people, real businesses and real employees who have real human needs and concerns that should be protected and addressed, even if the bureaucracy has to do a little more work.
Bankruptcy and Eminent Domain
Several federal cases have recognized that the stay automatically imposed when a bankruptcy case is filed may bring state eminent domain proceedings to a halt. While governmental actions to enforce its police or regulatory powers are not halted by the filing of a bankruptcy case, the mere exercise of the power of eminent domain without any public safety or important regulatory issue at stake is subject to the automatic bankruptcy stay. For example, if the government takes property in eminent domain in order to increase its tax base (as in the famous Kelo case decided by the United States Supreme Court), no police or regulatory powers are at stake. If the taking might destroy a business and force it into bankruptcy, the filing of a bankruptcy Chapter 11 petition could stay the eminent domain proceeding pending the outcome of the bankruptcy case. While bankruptcy petitions must never be filed in bad faith or for frivolous purposes, in the appropriate situation a property or business owner forced into bankruptcy by an eminent domain proceeding may seek the protection of the bankruptcy courts and the protection of the automatic stay imposed in bankruptcy proceedings.