Saturday, October 29, 2005

$7.7 million to San Diego Business Owner in Eminent Domain Case

Jury gives man forced from store $7.7 million The San Diego Union-Tribune

The link above is to a disturbing story about how the City of San Diego abused the eminent domain process to take a man's business for the "public purpose" of allowing a private developer to build a hotel. Ahmed Mesdaq bought a downtown warehouse and spend $2.5 million to open his Gran Havana Cigar and Coffee Lounge. The City of San Diego decided that this property was "blighted" and used its power of eminent domain to take the property, which will be used to build a Marriott Renaissance Hotel.

"Eminent domain" - also called "condemnation" - is the power of local, state or federal government agencies to take private property for "public use" so long as the government pays "just compensation." The government can exercise its power of eminent domain even if the owner does not wish to sell his or her property. Traditional examples of "public uses" for which the government might exercise its power of eminent domain include such things as schools, roads, libraries, police stations, fire stations and similar public uses.

In recent years, however, courts have allowed a much broader definition of the term "public use" to include nearly any type of public benefit such as "economic development" for projects that might generate tax revenue for local governments. In some cases, the developer of a proposed project will refuse to pay the seller's price and the local government entity that supports the project will step in and try to impose a lower sale price on the owner through the eminent domain process.

Mr. Mesdaq fought for two years to keep his business, but the struggle proved too much. In the end, Mr. Mesdaq hired San Diego attorney Vincent J. Bartolotta, Jr. to take the matter to trial to decide how much compensation should be awarded for the value of the business and the building. The jury awarded Mr. Mesdaq $7.7 million, which was 256% higher than the $3 million offered by the City of San Diego.

In 2006, California voters may get the opportunity to correct these abuses by local government. Sen. Tom McClintock is proposing a ballot measure to add a constitutional amendment that would protect Californians from seizure of private property through eminent domain. The amendment would require that the government either continue owning the property it seizes or guarantee the public the legal right to use the property. The amendment also would require any property seized to be restored to the original owner or rightful successor if the government ceases to use it for the purpose of the eminent domain action. Voters are strongly encouraged to contact their legislators to encourage them to support reform legislation to prevent any further abuse of the eminent domain process by local governments.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.


BFuniv said...

I have a simple alternative.

Require government to pay two times the fair market appraisal for any property.

Simple, direct, effective.

Carl Starrett said...

Property owners would still need to go to court prove the fair market value of the property. It would still boil down to who could afford the better expert on evaluating the property.