Judge: DM&E’s abuse of eminent domain cost landowners dearly

The potential to abuse Wyoming’s eminent domain laws was clearly noted this week in a ruling by U.S. District Judge William Downes.

On Wednesday, Downes issued a ruling blasting the Dakota, Minnesota & Eastern Railroad Corp. — now owned by Canadian Pacific Railway — for “abuse of the condemnation process,” and for having “squandered not only a great deal of the Defendants’ hard-earned money, but also a great deal of this Court’s time.”

“The court is mindful that the amount of costs Defendants seek to recover in this action is only a fraction of the money they actually spent to defend their property rights from what, in the Court’s view, was an abuse of the condemnation process,” Downes wrote. “By their conduct, Plaintiffs have squandered not only a great deal of the Defendants’ hard-earned money, but also a great deal of this Court’s time. The Court makes this comment for the benefit of its judicial colleagues in this and other districts, so that they might look at any similar conduct by this railroad with a jaundiced eye.”

In DM&E v. Joseph and Michele Simmons, Downes’ ruling denied the landowners’ request for a portion of the costs they incurred fighting DM&E’s attempt to condemn their private property for a proposed railway expansion to the Powder River Basin coal mining district. Costs started adding up for landowners in 2007 when the Simmons, and about 18 others in northeast Wyoming, received notice DM&E was seeking condemnation of about 1,200 linear acres.

To the ire of Wyoming lawmakers and landowner advocates alike, DM&E’s condemnation action was filed just days before Wyoming’s modified eminent domain laws went into effect on July 1, 2007. Wyoming’s landowners, businesses and lawmakers had worked for two years to reform those laws, including a change to give landowners fair market value for property condemned.

Defendants in the case argued that DM&E’s condemnation action was speculative (the railroad didn’t have funding to build the $1 billion expansion). Defendants’ attorneys said DM&E was attempting to condemn the property in order to leverage those assets to help fund the rest of the project, and they accused DM&E of filing the condemnation case as a way to punish the landowners for not accepting original offers.

When contacted by WyoFile on Friday, Pacific Canadian Railway had no comment.

The proposed DM&E Powder River Basin expansion had already been in the works for some 15 years without ever attracting the amount of funding needed to move forward. And in 2009, DM&E dropped its condemnation case against the Wyoming landowners.

“Here, there can be no question that Plaintiff’s actions in dismissing their condemnation case was a complete vindication of the position taken by Defendants before this Court,” Downes wrote in his July 20 ruling, noting that DM&E could not provide reasonable assurances the railroad would be built.

Despite being on the winning side of the legal argument, however, there was never a ruling in the condemnation case. Downes said that in condemnation cases the focus is usually limited to fair compensation for a “due taking” of property. Applicable rules and case law, according to Downes’ ruling, do not provide for compensation of the defendants’ legal costs in fighting a condemnation case that is dropped by the plaintiff.

“… Public policy is the prerogative of the legislature and not a federal trial court,” Downes wrote. “Without a basis in existing law for doing so, this Court, regrettably, cannot award Defendants the relief they seek.”

Gillette attorney Tad Daly, who represented several landowners in the case, told WyoFile that under Wyoming’s current set of eminent domain laws his clients may have received some compensation for their costs and attorney’s fees in fighting DM&E. But the company “raced” to file the suit just days before those new laws went into effect in July 2007.

“He (Downes) would have loved to have give them (landowners) money,” Daly said. “Downes said it best; legislatively, we need to give landonwers some type of remedy when eminent domain is abused,”

— Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

Download a PDF of the U.S. District Court’s ruling by clicking here.

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