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Due Process Issues Arise in New York Condemnation Proceedings

New York Law Journal

March 12, 2012

Under New York’s Eminent Domain Procedure Law (EDPL), acquisition of property through eminent domain is a two-step process. In the first step, the government or other condemnor decides whether to exercise its condemnation power. That decision is reviewable in an original proceeding brought in the Appellate Division of Supreme Court under EDPL §207. The second step is the actual acquisition of property, which occurs in a separate proceeding brought in the New York Supreme Court.

Once the property is acquired, if a property owner asserts that the government has valued the property too low, the owner can assert a claim for additional compensation, in order to achieve so-called “just compensation.” Persons affected by any of these procedures have certain Due Process rights to notice and an opportunity to be heard.

This article explores the application of Due Process principles to the various stages of the condemnation process in New York and the various persons who may be entitled to notice that a property in which they have an interest may be acquired by eminent domain. The article notes where some have asserted that the EDPL may not provide complete Due Process protection, and suggests how condemning agencies can provide more notice than is required by the EDPL in order to avoid being the subject of a claim alleging failure to afford Due Process. It must be acknowledged at the outset that Due Process rights are complex. This article is not intended to exhaust all Due Process issues affecting condemnations in New York.[1]

The Public Hearing

The condemnation process begins with a public hearing to consider whether to exercise the eminent domain power.[2]  Members of the public have the right to attend such hearings and express their views on the proposed use of condemnation in furtherance of the project.[3]  The Due Process issues that arise with respect to such public hearings include (a) the method used to give notice of the hearing, (b) the conduct of the hearing, and (c) notice of the impact of the hearing (i.e., that within 90 days after the close of the hearing record the condemnor may issue its determination and findings to condemn, which will trigger a short 30-day statute of limitations for judicial review).

The EDPL requires publication of notice of the public hearing in newspapers and mailing of notice to each “assessment record billing owner” of affected properties.[4]  Whether Due Process requires more, such as individualized notice of the public hearing to persons other than the owners of properties to be acquired, is not well settled.[5]  Recently, inRichards v. Tompkins County,[6] the Appellate Division, Third Department, considered whether individualized notice of an EDPL public hearing must be sent to persons whose properties may be affected by a condemnation, but whose properties are not intended to be acquired. In that case, the county had mailed notices to 78 property owners. 

After the hearing the county had a change of plans, which changed the persons who might be affected by the project. As a consequence, the county gave additional notices to others who would be affected by the project. The court approved the notice provided by the county, even though not all persons whose property interests might be affected were notified in advance of the hearing. However, it is important to note that the court made explicit mention of the absence of any claim by the petitioners that they were unaware of the public hearing.

Aside from this quite unique case, no case has been found that directly addresses the question of whether Due Process requires individualized notice of the EDPL public hearing to persons who are not owners but who have interests in a property being condemned.[7]  It is arguable that lienholders and others have rights to notice of the hearing because they have property rights that may be affected by government action. On the other hand, no person’s rights will be cut off at a public hearing.

At the hearing, the project is described and comments are received, but no decisions are made. The public record created by the condemnor will provide whatever support it has for its action, and such record is used for judicial review of issues that can be reviewed in a challenge under EDPL §207, such as whether a project lacks a public use, or whether a condemning agency has exceeded its authority or failed to comply with state environmental laws or the procedural mandates of the EDPL.

The standard for determining whether Due Process has been provided when a protected property interest is at stake is not whether actual notice has been received by persons with protected property interests.[8] The correct standard—whether the notice given was reasonably calculated under all of the circumstances to apprise interested parties of the event— is articulated in Mullane v. Central Hanover Bank & Trust Co.[9]  This straightforward test of reasonableness under the circumstances is used to evaluate the adequacy of the method used to give notice instead of the balancing test that might otherwise have been applied under Mathews v. Eldridge.[10]  The practicality of sending individualized notice remains a central issue. It is one thing to mail notice to all with recorded interests in a property (mortgagees, judgment creditors, lienors).[11]  It is quite another thing to be required to mail to others who may have an interest but whose identities are not known and are often unknowable. It is still another thing to have to mail to all in the community who might wish to submit comments at a public hearing, or who own property nearby that might be affected by a project in the area.  

All of such persons have the right to attend an EDPL public hearing and submit their views on a project.[12]  There is no list of such persons and it is not possible to ascertain their identities. Some government condemnors, aware of the uncertainty in the statute, mail to a very broad range of persons, thereby attempting to avoid any question as to the adequacy of notice.[13]

Insofar as the hearing format is concerned, Due Process is given if the test established in Mathews v. Eldridge is met. An EDPL public hearing is a legislative-type hearing, not an evidentiary hearing, so it need not include cross examination of government witnesses.[14]  Although in Brody v. Village of Port Chester the court found that Due Process required mailing of a notice of the Determination and Findings to property owners, it did not require the notice to inform the public of the available procedures for challenge.[15] 

Determination and Findings

After a public hearing, if a condemnor decides to acquire a property, it issues a Determination and Findings. Under the EDPL, a notice of such Determination and Findings must be published and mailed to each assessment record billing owner of each property to be acquired. Although the EDPL does not require that individual notice of the Determination and Findings be issued to mortgagees or others with an interest in the property, the same Due Process arguments discussed above can be applied to the issue of whether notice of a decision to condemn must be sent to such persons. The rights affected by a Determination and Findings are greater than the rights affected by a public hearing. At the public hearing, people have the right to present their views to the condemnor. This is not a constitutionally guaranteed right. The issuance of a Determination and Findings triggers a person’s right to oppose a condemnation in court, in a proceeding under EDPL §207, where all legal arguments will be heard by a judicial tribunal. It is in this forum that an interested person can challenge the public use of the acquisition. Since the Determination and Findings is the direct trigger of the right to challenge public use in court, a constitutionally protected right, receipt of this notice would appear to be of greater concern to an interested party than notice of the public hearing.

The Acquisition Petition

After a Determination and Findings has been adopted, and survived any challenges under EDPL §207, a condemnor will commence a special proceeding in the New York Supreme Court to acquire the property. The EDPL requires that this proceeding be commenced by service of a Petition “upon the owner of the property to be acquired.” The EDPL does not require service on mortgagees, lienors or others with an interest in the property.

Clearly, notice in such a proceeding must not only comply with the EDPL (service on the property owner), but must also be adequate under Due Process principles applicable in an in rem action. Due Process in an in rem action generally requires the same notice to affected persons as would be provided in an in personam action.[16]  Thus, for example, the U.S. Supreme Court has noted that “a mortgagee possesses a substantial property interest that is significantly affected by a tax sale”[17] and mortgagees are entitled to mailed notice prior to a tax sale. This reasoning can be applied to acquisition of property by eminent domain. Note, however, that the two constitutionally protected interests in a condemnation are the requirement that a property be taken for a public use and that just compensation be paid for the property.[18]  Under New York’s multi-step process, neither of these rights is at stake when a property is actually acquired. The issue of public use is judicially reviewed in the prior EDPL §207 proceeding. The only issue reviewable in an acquisition proceeding under EDPL §402 is procedural compliance with the EDPL. This is clear from the language of EDPL §402(B)(5) itself:

[U]pon due proof of service of notice and upon filing of such petition and proof to its satisfaction that the procedural requirements of this law have been met, the court shall direct the immediate filing and entry of the order granting the petition….”

It is also clear from the cases that have interpreted it.[19]  It is in a later stage of a condemnation proceeding that just compensation is secured.

Just compensation, the second of the constitutionally guaranteed rights under the Fifth Amendment, is determined after acquisition, and after service of a Notice of Acquisition.[20]  Thus, prior to having to serve a notice of claim, the step necessary to commence the procedure to obtain a trial on valuation, a condemnee will receive a Notice of Acquisition. The Notice of Acquisition must be served on all “condemnees,”[21] not just upon the owner of record, as with the service of the Petition. Under the EDPL, “condemnee” includes the holder of any right, title, interest or lien in the property. It is this notice that directly protects the right of persons to seek just compensation, and it must be served on all persons with any interest in the property. After this notice is served, persons may file a claim for just compensation.

Conclusion

Although certain of the notice requirements of the EDPL have been questioned, dissemination of broader notice than is required can avoid issues concerning satisfaction of Due Process requirements. A central Due Process issue is when individual notice to mortgagees and others with an interest in the property (other than a fee interest) is required. A condemnor who engages in broader dissemination of notice than is required by the EDPL can avoid an inquiry into the compliance of the EDPL with Due Process requirements. Such a Due Process inquiry lasted for seven years in the Minnich/Brody[22] series of decisions, ending in a finding that Due Process rights had been violated, the project had a proper public use (and so satisfied that constitutional mandate), and the property owner was merely entitled to $2.00 in nominal damages.


John R. Casolaro is a partner at Carter Ledyard & Milburn, where he heads the condemnation practice group. Associate Natalie F. Wilmore assisted in the preparation of this article.

 

Reprinted with permission from the March 12, 2012 edition of the New York Law Journal © 2012 ALM media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.

Endnotes

[1] Acquisitions by the State of New York under EDPL §402(A) are excluded from the scope of this article.

[2] EDPL §201. The EDPL permits exemption from the requirement of a hearing where other procedures have been followed that allow for receipt of public or local input, or where the acquisition is de minimis. EDPL §206.

[3] Although the opportunity for oral comments is often limited at these hearings due to the number of people who wish to comment, the right to submit written comments of any length is typically granted. See Aspen Creek Estates, Ltd. v. Town of Brookhaven, 47 A.D.3d 267 (2d Dept. 2007), aff’d, 12 N.Y.3d 735 (2009) (holding that a property owner was given a reasonable opportunity to testify and present evidence at a public hearing even though his speaking time was limited, particularly since he had the opportunity to supplement his presentation with written materials).

[4] “Assessment record billing owner” is a term derived from tax assessment procedures. It is defined in EDPL §103 (B-1) as

the owner, last known owner, or reputed owner, at such person’s tax billing address, of each parcel or portion thereof, of real property which may be acquired by the condemnor for such public project, as shown on the assessment records of the political subdivision in which such parcel or portion thereof is located….

Assessment record billing owner is further defined in the NYCRR §185-1.1(a)(18), using the definition provided in the EDPL and further describing methods by which a person seeking to give notice can confirm the identity of the assessment record billing owner.

[5] Some have asserted that the EDPL is deficient because it does not require more. See, e.g., M. Robert Goldstein, “The EDPL Revisited,” 4 Albany Gov. L. Rev. 302, 306 (2011).

[6] 82 A.D.3d 1323 (3d Dept. 2011).

[7] The Second Circuit explicitly noted that it was not considering the issue in the third of the Brody v. Port Chester trilogy. 434 F.3d 121, 127 n.7 (2d Cir. 2005).

[8] See Dusenbery v. United States, 534 U.S. 161, 170 (2002) (stating that pursuant to Mullane and its progeny, due process does not require actual notice, only an “attempt to provide actual notice”).

[9] 339 U.S. 306 (1950).

[10] 424 U.S. 319 (1976). The Mathews test is a three-part test that determines whether an individual has received Due Process under the Constitution. The test balances

(1) the importance of the interest at stake;

(2) the risk of an erroneous deprivation of the interest because of the procedures used, and the probable value of additional procedural safeguards; and

(3) the government’s interest.

In Dusenbery v. United States, 534 U.S. at 170, the Court rejected application of the Mathews standard when considering the adequacy of such notices.

[11] In Garden Homes Woodland Co. v. Town of Dover, 95 N.Y.2d 516 (2000), the Court of Appeals held that notice of a public hearing under the Town Law had to be mailed to affected landowners whose names and addresses were known to it.

[12] In East 13th Street Community Ass’n v. New York State Urban Development Corp., 84 N.Y.2d 287, 295 (1994), the Court of Appeals noted that standing to challenge the actions of a condemnor extends beyond condemnees in connection with the hearing and notice obligations imposed under the EDPL.

[13] Providing actual notice to a person deprives that person of standing to challenge the requirements of the EDPL or allege an absence of Due Process. In Minnich v. Gargano, 2001 U.S. Dist. LEXIS 14760, at *11 (S.D.N.Y. 2001), vacated on others grounds, 345 F. 3d 103 (2d Cir. 2003), the district court held that the plaintiff received actual notice of the public hearing, so lacked standing to challenge the notice requirements of the EDPL. The Second Circuit did not question this conclusion.

In ISCA Enterprises v. City of New York, 77 N.Y.2d 688 (1991), the Court of Appeals dismissed a claim of denial of Due Process by a mortgagee in connection with a tax foreclosure because the mortgagee (ISCA Enterprises) had actual notice of the tax foreclosure sale.

[14] Brody v. Village of Port Chester, 434 F.3d 121, 133 (2d Cir. 2005); Aspen Creek Estates, Ltd. v. Town of Brookhaven, 47 A.D.3d 267 (2d Dept. 2007), aff’d, 12 N.Y.3d 735 (2009).

[15] 434 F.3d 121, 133 (2d Cir. 2005).

[16]Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 796 n.3 (1983); Shaffer v. Heitner, 433 U.S. 186, 206 (1977) (“[P]roperty cannot be subjected to a court’s judgment unless reasonable and appropriate efforts have been made to give the property owners actual notice of the action. This conclusion recognizes, contrary to Pennoyer, that an adverse judgment in rem directly affects the property owner by divesting him of his rights in the property before the court.”) (citations omitted).

[17] Mennonite Bd. of Missions, 462 U.S. at 798.

[18] See, e.g., Fifth Ave. Coach Lines Inc. v. City of New York, 11 N.Y.2d 342, 347 (1962) (“[E]minent domain…antedates our State and Federal Constitutions, and…is recognized to have survived the adoption of those Constitutions, subject only to the restrictions that the taking shall be for an authorized public use and that just compensation be paid to the owner”).

[19]Matter of City of Syracuse IDA (Destiny USA), 78 A.D.3d 1523 (4th Dept. 2010) (“The power of the condemnation court to entertain claims raised by the pleadings in a condemnation proceeding is limited to matters of procedural compliance not within the scope of review by the Appellate Division [in an EDPL §207 proceeding]”); UAH-Braendly Hydro Assocs v. RKDK Assocs., 138 A.D.2d 493 (2d Dept. 1988) (holding that only issues of compliance with the procedural requirements of the EDPL can be raised in opposition to a vesting application in the N.Y. Supreme Court under EDPL §402).

[20] EDPL §502.

[21] Service can alternatively be made on counsel, if counsel has appeared in the proceeding.

[22] The decisions in the case began with Minnich v. Gargano, 2001 U.S. Dist. LEXIS (S.D.N.Y. 2001) and ended with a decision in the same case, but then entitled Brody v. Village of Port Chester, 2008 U.S. Dist. LEXIS 61604 (S.D.N.Y. 2008). The name of the case changed after Charles Gargano and the New York State Urban Development Corp. were dismissed as defendants because the Minnich plaintiffs had been given notice of the EDPL hearing and Determination and Findings by the Urban Development Corp., and that fact eliminated the Minnich plaintiffs’ to challenge the notice provisions of the EDPL.



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