Judicial Engagement in Practice: Property Rights

Adam Shelton · September 4, 2020

The Institute for Justice fights every day to ensure that all Americans enjoy the freedoms the Constitution guarantees. As part of this work, the Institute has long advocated for judicial engagement. That is, the idea that judges should analyze and evaluate the facts in every constitutional case that comes before them and not prejudge a case in favor of the government.

But what does that actually mean? What does that look like in the context of actual cases? This is the third in a series that seeks to answer just those questions. The first focused on judicial engagement in economic liberty cases while the second in First Amendment cases. This third post will explore judicial engagement in the context of private property rights.

The right to control one’s property is a foundational right. The exercise of many other rights depends on the extent to which people are at liberty to control their own property. For example, the freedom of religion and speech can be greatly diminished if the government can take the property of non-mainstream religions or those who espouse unpopular viewpoints. The Founders recognized government may need to take private property, yet they also recognize the inherent danger in this power. Thus, when acknowledging this power in the Fifth Amendment, they also limited it.

Kelo and the Aftermath

Under the Fifth Amendment the government can only take property through eminent domain for a “public use.” Alas, the Supreme Court in 2005 reinterpreted the term “public use” to mean “public benefit” in Kelo v. City of New London. In doing so, the Court paved the way for the government to take property and hand it over to private developers with the hope of increased tourism or more tax revenue.

Fortunately, many states have rejected this path. Since the Kelo decision numerous states amended their constitutions or instituted statutory protections that paid greater respect for property rights than IJ’s clients had in Kelo. Most of these were adopted as a direct rejection of the Supreme Court’s 2005 blunder. But the tide towards great protection for property rights began turning even before this decision.

Two years before the Supreme Court’s decision, the Arizona Court of Appeals considered the eminent domain provision of the Arizona Constitution. The Arizona Constitution explicitly prohibits property from being taken for private use. Yet, Arizona responded with similar arguments advanced in Kelo. The state argued that even though IJ client Randy Baileys’ brake shop would be given over to private developers, jobs would be created, property values would go up, and it would just look nicer. The court rightly rejected these arguments. And fortunately, now more states are closer to Arizona on eminent domain than to the Supreme Court.

Due to these post-Kelo developments, municipal governments have seen their eminent domain power curtailed. Yet, this has not stopped many from attempting to transfer property between private entities. The local governments have just become more creative at doing so. Or at least they have attempted to.

This is where judicial engagement comes into play. As the government becomes more creative, it is key that the courts refuse to accept the government’s assertions of pure motives at face value. Courts should analyze the actual facts and evidence to ensure that the government is not using constitutional means to bring about unconstitutional ends. In other words, courts must ensure that governments are not using other powers to bring about results that would be unconstitutional or unlawful uses of the eminent domain power.

Charlestown & Pleasant Ridge

An Institute for Justice lawsuit against the city of Charlestown, Indiana exemplifies this situation. There, Charlestown had been trying to take an entire neighborhood, the Pleasant Ridge neighborhood, and turn over the land to a private developer to build luxury homes.

Under Kelo, the plan to use eminent domain to take the neighborhood and transfer it to a private developer might be constitutional. But the U.S. Constitution is only a floor of protection that states can go above. Indiana did just that in the wake of Kelo. Indiana adopted a new law to limit the circumstances in which the government could use eminent domain. Specifically, the legislature restricted it to situations where a specific property was truly blighted.

The Pleasant Ridge neighborhood of about 350 homes was originally built by the U.S. Army during World War II for the employees of the nearby munitions plant. Understandably, over the decades since that time, some of the homes came to need repairs, some quite a lot of repairs. But under Indiana’s new law just because some homes are blighted doesn’t mean the entire neighborhood can be taken. A city perhaps could take individual properties, but each property must itself be truly blighted. That protects the many homes in great condition from eminent domain.

Yet, this prohibition did not deter Charlestown’s former mayor. Instead the City decided to weaponize local ordinances concerning property maintenance and safety. Before use of the code against the residents of Pleasant Ridge, code enforcement was rare. But that changed once the mayor realized the code could be used as a replacement for eminent domain.

So, in 2016 Charlestown began to use the code as a way to pressure the owners to sell the property to a developer, issuing them against landlords, with plans to later use them against homeowners. The citations for the “violations” were typically $50 per day, per violation. And the violations could be as minor as a torn screen, chipped paint, or long grass. The fines accrued quickly. After just a few days they could be in the thousands of dollars. The many unable to pay the fines were left with two choices: sell their homes to the developer who worked out a deal with Charlestown (and in which case the City agreed to waive the fines) or simply vacate the homes and tear them down.

Eminent Domain Another Way

These two choices were, of course, Hobson’s-like. And this led to some residents partnering with IJ to challenge this scheme in court. A scheme that had no real basis in protection or safety and instead was meant to force people out of their homes. The old mayor even used Facebook to discourage the residents in the neighborhood from spending the money to fix their homes because they were just going to be torn down anyways.

Charlestown quickly lost in state court, where the judge granted the property owners’ motion for a preliminary injunction. The judge ruled that the City obviously was not issuing the citations in order to protect public health and safety, but instead to favor one property owner (the developer) over all the others. He rejected their assertion that because the asserted purpose was legitimate the court could not look any deeper to see whether what was really going on was constitutional.

On the other hand, if a judge were to exercise the extreme form of judicial deference Charlestown argued for, then they might have escaped unharmed. That is, with an extremely deferential judge, the City could have its procedures rubber-stamped and sneak through what amounts to eminent domain.

Far from judicial engagement, this would have constituted judicial abdication. Such a judge would allow a local government to do exactly what the state government had prohibited by enacting eminent domain reform simply through a different law while lying about its intentions.

Judicial engagement is looking at the facts of the situation. It is evaluating and analyzing the evidence. It means not taking the government’s assertion of a seemingly valid purpose as gospel truth. In such a situation, courts should look at the facts and see whether the code is being enforced equally across the town, city, or county as you would expect, or whether it is concentrated against certain property owners, and if so what the actual reason for that is.

Such a situation highlights the dangers of a court refusing to look at and analyze evidence, as well as the danger of extreme deference to the “political branches.” Accepting the government’s assertion that this was all about “safety” at face value would have allowed the city of Charlestown to thwart the restrictions on the use of eminent domain. Judges should ensure that the government does not achieve unconstitutional results by finding and utilizing creative facially constitutional means. Judicial engagement allows the courts to peer under the hood and engage with what really is going on. Thankfully, the judge here did just that. But if the judge decided to exercise the level of extreme deference many other judges do, the result could have been much different for the residents of the Pleasant Ridge neighborhood.

 Adam Shelton is a fellow with IJ’s Center for Judicial Engagement.