Federal Court In Removed Eminent Domain Case: Quick-Take/Immediate Possession Is Erie Procedural, So Does Not Apply

by Robert Thomas, Inverse Condemnation, July 22, 2024

Here's an unusual, and kind of interesting one, from a U.S. District Court (Hawaii) in an eminent domain case brought by the County of Maui against the owner of Maui property which is needed for a solid waste disposal site for debris from the recent Maui wildfire.

First unusual point: the owner, a citizen of a state other than Hawaii, removed the case to federal court, asserting diversity jurisdiction. A state eminent domain action in federal court? Don't see that every day, do you? (The County has not challenged federal court jurisdiction.)

Second unusual point: when the County deposited its estimate of just compensation and sought immediate possession under Hawaii's eminent domain procedures (Hawaii does not have a true "quick take" procedure, but merely immediate possession where title does not transfer to the condemnor until final adjudication of compensation and payment of the judgment by the condemnor), the property owner asserted that this was "procedural" law under Erie, where "federal courts sitting in diversity apply state substantive law and federal procedural law." Gasperini v. Ctr. v. Humanities, Inc., 518 U.S. 415 (1996).

In this Order, the Magistrate Judge agreed. The immediate possession procedure is indeed "procedural," and does not determine the outcome. Thus in diversity cases, Erie dictates that the outcome should be the same as if the case were in state court, while the case gets processed via the federal court's procedures.

Here's the immediate possession statute:

§101-29  Possession pending action; alternative procedure. Where the plaintiff is the State or any county, the following alternative procedure may be followed. At any time after the commencement of an action pursuant to this part, the State or any county may file a motion for an order of possession invoking this section and supported by an affidavit alleging, or by oral evidence prima facie showing:

(1)  The right of the State or county to maintain the action;

(2)  The public use for which the real property sought to be condemned is being taken; and

(3)  The sum of money estimated by the State or county to be just compensation or damages for the taking of the real property.

Upon such motion and upon payment of such estimated sum of money to the clerk of the court for the use of the persons entitled thereto, the court shall issue an order ex parte putting the State or county in possession of the real property sought to be condemned and permitting the State or county to do such work thereon as may be required for the purpose for which the taking of the property is sought.  The order placing the State or county in possession shall become effective upon the expiration of ten days after service thereof; provided that for good cause shown within the ten days, the court may vacate or modify the order or postpone the effective date thereof for an additional period of time.  Service of the order shall be made personally on those defendants who are in actual possession, and in other cases may be made by depositing a copy thereof in a United States post office, postage prepaid, registered mail addressed to the defendants at their last known addresses, or to their attorneys of record.

Haw. Rev. Stat. § 101-29.

The court concluded this is a procedural tool, not outcome determinative. First, "[t]he plain language of HRS § 101-29 indicates that it is an 'alternative procedure' that may be followed in eminent domain proceedings." Slip op. at 5. The lege history shows the purpose of the statute was to make eminent domain procedures "uniform." And the Hawaii Supreme Court has referred to the quick-take/possession process "as a 'procedure,' albeit in passing[.]" Slip op. at 6.

Ultimately, the court concluded that an immediate transfer of possession from the owner to the condemnor "is not outcome determinative."

The Court acknowledges that the State or county gains leverage by obtaining immediate possession. Possession during the pending proceeding, however, does not determine the outcome of the litigation. Simply put, applying HRS § 101-29 does not affect the key issues of an eminent domain proceeding: whether the State or county may ultimately take the subject property and the amount owed as just compensation for the taking.

Slip op. at 7.

Here's the heart of the court's reasoning:

In this Court’s view, a substantive rule is one that creates the County’s right to exercise its power of eminent domain. A statute that allows the County to file a motion for immediate possession of the subject property during a pending proceeding, however, is merely a mode of enforcing this right by allowing the County to obtain possession while its eminent domain claim proceeds on the merits. The Court thus finds that HRS § 101-29 is procedural and, therefore, does not apply in this diversity action.

Slip op. at 8.

Bottom line: the court ordered the clerk to return the County's deposit of estimated compensation, and the case to proceed without immediate possession.

So what's your take, is quick-take/possession a mere procedural device that has no effect on the outcome? Eminent domain practitioners know that having the condemnor seize the property now (even under statutes like Hawaii's where the condemnor only obtains possession and not title) can totally alter the dynamic between the owner and the condemnor. And if the owner withdraws the deposit, this alters the owner's substantive rights: doing so is deemed abandonment of all challenge to the taking itself (public use, necessity, or "all defenses" other than the amount of compensation). See Haw. Rev. Stat. § 101-31 ("A payment to any party as aforesaid shall be held to constitute an abandonment by the party of all defenses interposed by the party, excepting the party's claim for greater compensation or damages.").

So in our view, the court's assumption that "[p]ossession during the pending proceeding, however, does not determine the outcome of the litigation" is doing a lot of work. In reality, very few aspects of the way an eminent domain case goes can be said to determine the outcome (the substantive law is mostly skewed against property owners, especially on power-to-take challenges), and the court's failure to recognize that dramatically altering the power relationship between the condemnor and the property owner, and forcing the owner into a withdraw-or-forfeit-substantive-defenses, can have dramatic effects on the ultimate outcome of a case.

More on the story here ("Federal Judge Rules Against Maui County Taking Private Land Soon For Lahaina Fire Debris"), from Honolulu Civil Beat.

Will the County take it further up the food chain? Stay tuned.

PDF: Order Denying Plaintiff County of Maui, Dep't of Envtl Mgmt's Motion for an Order of Immediate Possession,...