When I was in law school almost sixty years ago, one of my law professors was Rollin M. Perkins, who taught the course in criminal law. He was well-regarded nationally, and his textbook, “Perkins on Criminal Law,” was widely used in leading law schools throughout the country. The students at my law school gave him a license plate that read “Suppose,” the word with which he began each class. His teaching method was to present a hypothetical situation to the class, beginning, of course, with the word, “Suppose.” He would then randomly call on and mercilessly grill his students about the legal principles presented in the hypothetical.
Now, pretend we are in a modern-day law school lecture hall. I’m the professor and you are my students. You can relax, because I’m not as brutal as Professor Perkins was. Here’s your hypothetical for today’s lesson:
“Suppose twenty years ago John Q. Ordinary Citizen finally retired from his job in the Bay Area, and with his retirement savings purchased a beautiful lake-front property in Siskiyou County, fulfilling a life-long dream. Mr. Citizen bought the property unimproved, and built a lovely home with a view of the lake and his own boat dock.
“And suppose Mr. Citizen is now eighty-five years old and has learned that the dam which created his beautiful lake will soon be torn down and there will no longer be a lake. To make matters worse, he has been told that there will be a quarter of a mile between his home and the river that will continue to exist when the lake is gone, and that the property between his home and the river will be owned by someone else, who will do with it who-knows-what.
“And suppose that the state government is actually a partner in the dam demolition project and will be contributing hundreds of millions of dollars toward the project.
“And suppose that the demolition project is already underway and work is being done.
“And suppose Mr. Citizen has a good friend in the real estate business who told him that his property, which cost him $450,000 to buy and develop twenty years ago, will now have little value.
“Okay, class, are there any legal remedies that Mr. Citizen can pursue? And, if so, what are they?”
Charlie Thompson, sitting in the front row of the class, confidently raised his hand and said, “Professor Kaster, he can file a claim with KMF.”
“And what,” asked Professor Kaster, “is KMF?”
Henry Monroe, sitting next to Charlie, became so excited he could hardly stand it. He enthusiastically raised his hand and said, “Why Professor Kaster, don’t you know about KMF? It’s the Klamath Mitigation Fund. It’s a program designed to compensate people for potential impacts from the removal of the four dams in the Lower Klamath Project. The fund utilizes public dollars, including resources from California’s 2014 Proposition 1 bond issue and funding via the Public Utilities Commission.”
“Aha, very good, Mr. Thompson,” said Professor Kaster. “Now class, let’s analyze the remedy Mr. Thompson and Mr. Monroe are so enthusiastic about. Does anyone have more information to add?”
Daisy Franklin, a normally quiet young student in the back of the lecture hall, meekly raised her hand, and said, “With all due respect, Professor, sir, I don’t think the Klamath Mitigation Fund can compensate Mr. Citizen for his loss.”
“Ah, Ms. Franklin,” said Professor Kaster, “And what are your reasons for that?”
“Well, sir,” she said, “The fund is limited to be used only for specified purposes, for physical impacts only. It’s not to be used for economic impacts, such as reduced property values due to the loss of the reservoirs. The fund will only compensate people whose property might be subject to slumping or other instability during the reservoir draw-down, certain people whose downstream property is at risk of flooding, and people who have wells within 1,000 feet of the reservoir that might experience reduced production. KMF’s website says the fund is specifically limited to compensation for those physical impacts, and does not cover claims like diminution in property value, loss of view, or loss of reservoir access.”
You could hear a collective gasp from the students in the room when she said that.
“Very good, Ms. Franklin,” said the professor. “Based on those criteria, it would not appear that Mr. Citizen would be eligible for compensation from the Klamath Mitigation Fund. Does everyone agree that that is the case?”
Everyone in the lecture hall, including Charlie Thompson and Henry Malone silently nodded their heads up and down.
“So …,” said the professor. “Does that mean that Mr. Citizen will simply lose his investment, not to mention his ability to enjoy the benefits of his lake front property during his retirement years? You are all here in law school to learn to help people with their legal problems. What would you advise Mr. Citizen to do?”
Sam Jenkins, a student seated in the center of the room, raised his hand and asked, “What about eminent domain? When the government starts a project that takes land from private owners, like building a freeway for example, doesn’t the government have to go through a process, including a public hearing, to see that the private owners receive ‘just compensation’ for the loss of their property? Isn’t that in both the state and federal constitutions? Surely that’s been done in your hypothetical, hasn’t it? It should have been part of the planning process when they decided to take out the dams, right?”
Daisy Franklin, in the back of the room, again spoke in her quiet voice, “I haven’t read anything about that in any of the information published by the Klamath Mitigation Fund or the Klamath River Renewal Corporation, the company in charge of taking out the dams, or from the state government either, for that matter. But I don’t think eminent domain applies here, anyway. Doesn’t eminent domain only apply when the government actually takes someone’s property? In your hypothetical, Professor, sir, the government isn’t taking Mr. Citizen’s property at all. So does eminent domain even apply?”
“Ah, very good, Ms. Franklin, you are on the right track. And there is certainly nothing in the hypothetical to suggest that the Klamath River Renewal Corporation, the state, or anyone else involved in the dam-removal process has conducted an eminent domain hearing, or for that matter any other proceeding to determine fair and just compensation for people whose property values have been impacted, or how they should be paid.”
That comment from the professor received another collective gasp from the students in the lecture hall.
“Getting back to our hypothetical,” continued the professor, “Does that mean that Mr. Citizen will not receive any just compensation for the loss of value of his property?”
After a profound silence, Daisy Franklin again raised her hand and, in a tremulous voice, asked, “Can he hire a lawyer and file an action in inverse condemnation?”
“Again, very good, Ms. Franklin,” said the professor. Can anyone tell me what Mr. Citizen would have to prove in his action for inverse condemnation?”
There was another period of dead silence in the lecture hall, until Daisy Franklin again tentatively raised her hand and said in her soft voice, “I think the constitutional basis for an eminent domain action also provides that a property owner can bring an inverse condemnation claim against a public entity for taking or damaging private property. The difference is that, in an inverse condemnation action the property owner is the plaintiff and the public entity is the defendant. Also, an inverse condemnation action can be used to claim damages for other governmental actions that do not necessarily involve the government actually taking physical possession and control of the property.”
In the front row, Henry Monroe, who had considered himself to be somewhat of an expert on the Klamath Mitigation Fund, stunned by the way the class discussion had been going, piped up and said, “The KMF website expressly states that public funds ‘may not be used to compensate property owners for a real or perceived loss in property values that does not involve physical damage.’ Why does it say that?”
The instant that Henry finished asking his last question, the bell rang, indicating that the class was over. The professor looked at his watch and said, “Very good question Mr. Monroe. It looks like our class time is up for today. It also looks like Mr. John Q. Ordinary Citizen’s plight in our hypothetical may be rather bleak. Your job as future lawyers will be to try to help Mr. Citizen if you can. Put on your thinking caps and we will consider this some more next time our class resumes.”
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