Court backs property owners in eminent domain case

JEFFERSON CITY, Mo. -- Five years have passed since a suburban Kansas City shopping center was declared blighted by the city of Gladstone. Although the city has yet to condemn the land, some shops have shut down or moved because of the threat.

On Tuesday, the Missouri Supreme Court granted the shopping center owners the right to sue the city for millions of dollars in lost income, diminished property values and increased costs allegedly caused by the prolonged threat of eminent domain.

Although the unanimous decision directly affects just one city and shopping center, it could have ramifications statewide for property owners facing condemnation threats.

The essence of the ruling is this: Property owners don't have to wait for their land to be condemned to contend a government already has effectively taken it by dragging out the threat of eminent domain.

"This is a major opinion," said attorney Michael Abrams of the Kansas City law firm of Lathrop & Gage, which represented the owners of the Gladstone Plaza Shopping Center.

"What it means is that if property owners are victims of undue delay by a city, or untoward activity by a city, they have a recognized constitutional claim that can be made against the city," Abrams said.

An attorney representing Gladstone had no immediate comment about the Supreme Court ruling.

Clay County Circuit Judge Rex Gabbert had ruled in favor of the city, which argued the property owners failed to make a claim of an unconstitutional taking and could not sue before their property was condemned. The Missouri Court of Appeals, Western District, also had ruled for the city while deciding it was too soon for the property owners to sue.

The Supreme Court decision written by Judge Mary Russell reinstates the lawsuit and sends it back to the circuit court to proceed toward a trial.

Property rights have been a significant political issue across the United States, including in Missouri. In a 2005 Connecticut case, the U.S. Supreme Court upheld the taking of private property through eminent domain for economic redevelopment.

That prompted Missouri Gov. Matt Blunt to appoint a special eminent domain task force and led to a 2006 Missouri law limiting the use of eminent domain and boosting the money property owners can receive when it is used.

Not satisfied, a group has submitted petition signatures for a constitutional amendment that could appear on the November ballot further restricting the use of eminent domain.

Tuesday's Supreme Court ruling sounds like a positive step toward addressing "eminent domain limbo -- (when) you've got eminent domain hanging over your head," said Ron Calzone, chairman of Missouri Citizens for Property Rights, which is sponsoring the ballot initiative.

"There's something that's terribly inequitable about allowing a government entity to effectively tie up your life indefinitely, and you not receive any type of compensation for it," Calzone said.

The Missouri Constitution already states: "That private property shall not be taken or damaged for public use without just compensation."

In May 2003, Gladstone declared the shopping center property blighted. But an agreement with a redeveloper fell through by August 2005. So two months later, the city adopted another ordinance designating the property blighted under the state's tax-increment-financing law that allows the use of eminent domain for economic development.

But Gladstone has never adopted a subsequent ordinance approving a specific redevelopment project, which would trigger a five-year time limit to take the property through eminent domain, the Supreme Court said.

The lawsuit contends that as a result of the delay, numerous retail tenants have not renewed their leases. The suit also contends the city has harassed the shopping center with inspections and code violations and has discouraged prospective tenants from locating there -- allegations denied by the city.

The lawsuit claims the city's actions have diminished the shopping center's value by more than $5 million and resulted in at least $1.5 million in lost rental income and increased operating costs.

The Supreme Court said enough facts are in dispute about whether the city's actions show an "aggravated delay or untoward activity" that the case should proceed.

------

Case is Clay County Realty Co. v. City of Gladstone.

On the Net:

Supreme Court: http://www.courts.mo.gov/page.asp?id=27