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Media Alerts - United States v. 0.073 Acres of Land - Fifth Circuit
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January 29, 2013
  United States v. 0.073 Acres of Land - Fifth Circuit
Headline: Fifth Circuit denies compensation under the Takings Clause for lost assessments on condemned property

Area of Law: Property, eminent domain, constitutional law

Issue Presented: Whether a homeowner association's right to collect assessments on member properties is a compensable property interest for purposes of the Takings Clause of the Fifth Amendment.

Brief Summary: A homeowner association lost the right to collect assessments on several properties when the federal government condemned the properties in connection with a project to restore and improve a levee system. The association claimed that this loss constituted a taking under the Fifth Amendment and that it was owed just compensation. The U.S. Court of Appeals for the Fifth Circuit denied the compensation. The Court held that this intangible property right cannot be compensated because it is not directly connected to the substance of the thing taken. Instead, the association's right was a contractual right that was extinguished when the federal government exercised its eminent domain power.

Significance: This is a question of first impression in the Fifth Circuit.

Extended Summary: Mariner's Cove Townhomes Association, a homeowner association, collected assessments on properties in return for providing residential services. The obligation to pay these assessments was part of a covenant that ran with the land. After the neighborhood suffered substantial damage after Hurricane Katrina, the United States Army Corps of Engineers began to repair and rehabilitate the area. The Corps requested additional land for a pumping station, and fourteen of fifty-eight properties in the Association were condemned. As a result, the Association was deprived of its right to collect assessments on the condemned properties. The Association claimed this diminution in its assessment base constituted a taking for which it should be paid just compensation under the Fifth Amendment.

The Fifth Circuit denied compensation to the Association. First, the Court looked to Louisiana state law to determine that the right to collect assessments is a building restriction; therefore, it may be more generally viewed as a real covenant, which is a property interest. However, the Court held that the Consequential Loss Rule bars compensation. The rule only allows compensation for intangible interests if they are directly connected with the physical substance of the thing taken. In this case, the Court ruled that the Association's right was contractual and not directly connected to the land. When the federal government exercised its eminent domain power, such contractual rights were extinguished. The Court added that if it did not rule this way, the government's eminent domain power would be unjustifiably burdened.

For the full opinion, please see:

Panel: Chief Judge Stewart and Circuit Judges Owen and King

Argument Date: 12/04/2012

Date of Issued Opinion: 1/28/2013

Docket Number: No. 11-31167

Decided: Affirmed

Case Alert Authors: Ward Goolsby and Brandon Hindmarsh

Counsel: Tamara Nichelle Rountree, U.S. Department of Justice, for Plaintiff - Appellee United States. Henry Walsworth Kinney, III, Kinney, Ellinghausen, Richard & Deshazo, for Interested Party - Appellant Mariner's Cove Townhomes Association, Inc.

Author of Opinion: Per Curiam

Case Alert Circuit Supervisor: Aaron-Andrew P. Bruhl

    Posted By: Aaron Bruhl @ 01/29/2013 08:08 PM     5th Circuit  

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