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Real Estate Law FLASHPOINTS November 2019

November 15, 2019Print This Post Print This Post

Mike Rooney, Illinois Institute for Continuing Legal Education, Springfield
312-401-3454 | E-mail Mike Rooney

Condemnation: Traverse and Damages; Sanctions

As part of the Recent Case Law Update during the IICLE® Residential Real Estate: Once Bitten, Twice Shy: Don’t Get Bitten by the Gotcha Bug! program in April of this year, we covered the case Enbridge Energy (Illinois), L.L.C. v. Kuerth, 2018 IL App (4th) 150519-B, 99 N.E.3d 210, 410 Ill.Dec. 210. The case involved an oil pipeline project known as the Southern Access Extension (SAX) project. Landowners argued that the condemnation should be denied because the pipeline project was not for the benefit of the public, but rather served a private benefit. One particular company had contracted to use the majority of the proposed pipeline’s capacity.

The case (actually, multiple cases) had a circuitous procedural history, and that is not unusual for large, complicated projects, as this one was. Of course, in order to be granted the right to condemn private land for a public use, there must be a public benefit and the people taking the private land must pay just compensation. As is often the case when utilities seek to take private property, there is a great deal of emotion and antagonism involved.

In Kuerth, the appellate court permitted the taking of the land, finding that a public benefit existed despite the disproportionate use of the pipeline by one particular company. The pipeline company had sought sanctions against the losing property owners and their attorneys. However, the Fourth District Appellate Court refused to impose those sanctions, finding that the issues raised had not been resolved previously, and so the court would not rule that the lawyers and the parties ought to be subject to sanctions. However, the court was very explicit in pointing out that since it had decided the issues in the case in the written opinion, later owners and attorneys who made the same arguments would be subject to sanctions.

If you’ve read this far, you know what happened next: another set of landowners with different counsel came to the same conclusion as the earlier parties and, yes, raised the same arguments on appeal in the same Fourth District Appellate Court involving the same pipeline project, just regarding different parcels of real estate. The follow-on case is Enbridge Pipeline (Illinois), LLC v. Temple, 2019 IL App (4th) 150346. The plaintiff was the successor to the plaintiff in Kuerth and was now known by yet another, different name! The case, to quote Cousin Eddie, “Is the gift that keeps on giving, Clark,” for we also covered the second case in the #CRETrends2019: What’s New in Illinois Commercial Real Estate? course in September.

The court reviewed the opinion in Kuerth and found that the lawyer in the current appeal was arguing matters decided in the earlier case. In fact, he was arguing issues that the earlier opinion had warned should not be argued later, at the risk of sanctions being imposed. The court imposed sanctions under Supreme Court Rule 137 for pleadings (1) not well grounded in fact, (2) not supported by existing law, or (3) lacking a good-faith basis for modification, reversal, or extension of the law. Sanctions were also imposed under Supreme Court Rule 375(b) for an appeal that is frivolous or not taken in good faith.

For those whose practice includes large condemnation projects, the cases are of interest due to the nature of the issues. But all lawyers can take some important lessons from these cases. First, the entire field of eminent domain, like nearly every field of legal concentration, has its own peculiarities, and it is not advisable to “dabble” in the practice. In order to handle eminent domain cases, on either side, lawyers need to educate themselves first. This is no time for on-the-job training.

Second, be sure to distinguish between the private use of a pipeline (or high-voltage line) and the public benefit that accrues to the public from the project. The Interstate Commerce Commission and the courts can find a public benefit even when an individual company seems to be allowed to make a disproportionate use of the capacity of the project.

Third, my friends who are litigators and heard about the sanctions asked immediately how the lawyer is supposed to make a record for appeal if the lawyer cannot raise or argue points of law already decided. The answer is very, very carefully. Truth be told, though, when one reads Temple carefully, one is left with the definite feeling that the lawyer involved was not merely trying to preserve his record and that his arguments were seen by the court as having gone well beyond what the court considered reasonable under the circumstances. I recommend both opinions to you for a complete reading.

Finally, with the many wind farm, pipeline, and high-voltage line projects now underway and yet to come, these issues will have continuing relevance for lawyers with clients that own real property in the paths of these projects. And, more and more, those property owners will be clients of urban and suburban lawyers who need to become familiar with these issues.

For more information about real estate, see TITLE INSURANCE: LAW & PRACTICE — 2019 EDITION. Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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