Opinion ID: 2330535
Heading Depth: 1
Heading Rank: 4

Heading: Striking Defenses

Text: Courts disfavor motions to strike. E.g., Sweeney v. American Registry of Pathology, 287 F. Supp. 2d 1, 5 (D.D.C. 2003); Nwachukwu v. Karl, 216 F.R.D. 176, 178 (D.D.C. 2003); WRIGHT & MILLER, supra, § 1380, at 394. Such motions are useful and appropriate tools for weighing the legal implications to be drawn from uncontroverted facts. United States v. 416.81 Acres of Land, 514 F.2d at 631 (internal citation omitted). However, a motion to strike a defense as insufficient will be denied if [the defense] fairly presents a question of law or fact which the court ought to hear. Securities & Exchange Commission v. Gulf & Western Industries, Inc., 502 F. Supp. 343, 345 (D.D.C. 1980) (internal quotation marks and citation omitted). [6] In sum, a motion to strike will not be granted if the insufficiency of the defense is not clearly apparent, or if it raises factual issues that should be determined on a hearing on the merits. WRIGHT & MILLER, supra, § 1381, at 427-28 (footnotes omitted). Applying these standards, we reverse the trial court's premature conclusion that Mr. Franco's first defense was completely foreclosed by the recent Supreme Court decision in Kelo v. City of New London, Connecticut, 545 U.S. 469, 125 S.Ct. 2655, 162 L.Ed.2d 439 (2005). We affirm its decision to strike Franco's other defenses. [7]
Mr. Franco's first defense alleged that the legislation authorizing NCRC to take his property violated the Takings Clause of the Constitution because the actual purpose of the condemnation was to confer a private benefit on a private party (the Purchaser/Developer). He claimed that the asserted public purpose for the taking was pretextual. In its decision, the trial court stated: [T]he issue Franco raises, that private property cannot be taken for private use even if there is an overriding public purpose as determined by the legislature, is foreclosed by Kelo, in a situation like this, where the stated reason for the taking is the removal of slum and its replacement by an economically developed area that will provide substantial benefits to the public. As mentioned above, that was the Council's purpose in enacting the authorizing legislation, and it should not be second-guessed here. The trial court did not undertake any factual inquiry to determine that the legislation had an overriding public purpose and will provide substantial benefits to the public. Thus, its discussion suggests that, once the legislature has declared that there is a public purpose for a condemnation, an owner is foreclosed as a matter of law from demonstrating that the stated reason is a pretext. We do not interpret Kelo so broadly. To be sure, the decision in Kelo emphasized that, apart from determining what compensation is just, courts play a limited role in condemnation cases. Without exception, our cases have defined th[e] concept [of public purpose] broadly, reflecting our longstanding policy of deference to legislative judgments in this field. 545 U.S. at 480, 125 S.Ct. 2655. The Court was satisfied that its public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power. Id. at 483, 125 S.Ct. 2655. (Similarly, courts will not second-guess the legislature's considered judgments about the efficacy of its development plan . . . [or its] determinations as to what lands it needs to acquire in order to effectuate the project. Id. at 488-89, 125 S.Ct. 2655.) Some questions have been settled. Promoting economic development is a traditional and long accepted function of government. . . . Clearly, there is no basis for exempting economic development from our traditionally broad understanding of public purpose. Id. at 484-85, 125 S.Ct. 2655. Moreover, it is not a valid objection that private parties will benefit from the taking. Quite simply, the government's pursuit of a public purpose will often benefit individual private parties. Id. at 485, 125 S.Ct. 2655. See also id. at 485 n. 14, 125 S.Ct. 2655 (Any number of cases illustrate that the achievement of a public good often coincides with the immediate benefiting of private parties.); Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 243-44, 104 S.Ct. 2321, 81 L.Ed.2d 186 (1984) (The mere fact that property taken outright by eminent domain is transferred in the first instance to private beneficiaries does not condemn that taking as having only a private purpose.). On the other hand, it has long been accepted that the sovereign may not take the property of A for the sole purpose of transferring it to another private party B, even though A is paid just compensation. Kelo, 545 U.S. at 477, 125 S.Ct. 2655. Thus, the Kelo majority reaffirmed that the City would no doubt be forbidden from taking petitioners' land for the purpose of conferring a private benefit on a particular private party. Id. See Midkiff, 467 U.S. at 245, 104 S.Ct. 2321 (A purely private taking could not withstand the scrutiny of the public use requirement; it would serve no legitimate purpose of government and would thus be void.). Importantly for this case, the Court added: Nor would the City be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit. Kelo, 545 U.S. at 478, 125 S.Ct. 2655. Finally, the question [of] what is a public use is a judicial one. City of Cincinnati v. Vester, 281 U.S. 439, 446, 50 S.Ct. 360, 74 L.Ed. 950 (1930). See Kelo, 545 U.S. at 480, 125 S.Ct. 2655 (The disposition of this case . . . turns on the question whether the City's development plan serves a `public purpose.'). The Kelo Court did not address the sufficiency of the pleadings filed by the landowners. An extensive record had been developed during a seven-day bench trial, and the Court noted that [t]he trial judge and all the members of the Supreme Court of Connecticut agreed that there was no evidence of an illegitimate purpose in this case. Id. Based on the record presented, the Court concluded that the City's development plan was not adopted `to benefit a particular class of identifiable individuals.' Id. at 478, 125 S.Ct. 2655 (quoting Midkiff, 467 U.S. at 245, 104 S.Ct. 2321). Although the Court determined that the taking at issue in Kelo was not pretextual, it emphasized, as we have noted, that a government would not be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit. Kelo, 545 U.S. at 478, 125 S.Ct. 2655. [8] Thus, Kelo recognized that there may be situations where a court should not take at face value what the legislature has said. The government will rarely acknowledge that it is acting for a forbidden reason, so a property owner must in some circumstances be allowed to allege and to demonstrate that the stated public purpose for the condemnation is pretextual. It may be difficult to make this showing, and the Supreme Court's decision may raise many more questions than it answers, but a pretext defense is not necessarily foreclosed by Kelo.
Because such a defense is sometimes viable, we must evaluate whether Mr. Franco adequately pled a defense of pretext. All facts underlying the defense must be taken to be those set up in the . . . answer. Kelly v. Kosuga, 358 U.S. 516, 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959). In considering a motion to strike defenses, a court draws all reasonable inferences in favor of the party asserting the defenses and resolves all doubts in favor of denying the motion to strike. Nwachukwu, 216 F.R.D. at 178. A motion to strike will be denied if [the defenses] fairly present[] a question of law or fact which the court ought to hear. Securities & Exchange Commission v. Gulf & Western Industries, Inc., 502 F. Supp. at 345. Applying these standards, we hold that Mr. Franco sufficiently pled his pretext defense. His answer alleges that the legislation authorizing NCRC to take his property would authorize the taking of said property for a private use and not for a public use or purpose by, among other things, having as its purpose conferring a private benefit on a particular private party, stating pretextually a public purpose but having as its actual purpose bestowing a private benefit. . . . These allegations may be too conclusory by themselves to survive a motion to strike (a question we do not decide). See Super. Ct. Civ. R. 8(b) (A party shall state in short and plain terms the party's defenses to each claim asserted. . . .); id., R. 8(e)(1) (Each averment of a pleading shall be simple, concise, and direct.). Cf. Twombly, 127 S.Ct. at 1965 (Factual allegations [in a complaint] must be enough to raise a right to relief above the speculative level. . . .). However, Franco made many specific factual allegations to support this claim, albeit presenting them under the subheading First Counterclaim (Taking In Violation of the Takings Clause Public Use Provisions of the Fifth Amendment of the U.S. Constitution). The trial court did not address these facts because it struck Mr. Franco's six counterclaims, holding that Superior Court Civil Rule 71A (e) prohibited it from considering them. See Kansas Pipeline Co. v. A 200 Foot by 250 Foot Piece of Land, Located in Section 6, Southwest Quarter, Township 32 South, Range 10 West, County of Barber, State of Kansas, 210 F. Supp. 2d 1253, 1258 (D. Kan. 2002) (according to Rule 71A (e), counterclaims are not permitted in the answer); 12 CHARLES ALAN WRIGHT, ARTHUR R. MILLER AND RICHARD L. MARCUS, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2D § 3048, at 216 (1997) (same). Mr. Franco does not contest the decision to strike his counterclaims, as such, or the court's refusal to re-designate the counterclaims as additional defenses. See Rule 71A (e) (providing that after the answer has been filed, [n]o other pleading or motion asserting any additional defense or objection shall be allowed). However, he urged the trial court to recognize that the allegations in the counterclaims provide addition[al] detail to the respective defenses in the answer, and we decline to ignore factual detail which elaborates on his defense that the proposed taking would violate the Fifth Amendment. See Super. Ct. Civ. R. 8(c) (When a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the Court on terms, if justice so requires, shall treat the pleading as if there had been a proper designation.); Horsford v. Romeo, 407 F.2d 1302, 1303 (3d Cir. 1969) ([T]he court will treat a defendant's pleading denominated a counterclaim as an answer raising affirmative defenses, regardless of its title, if the allegations of the pleading so require.). [9] Therefore, we consider facts alleged in his counterclaims which support Mr. Franco's defense of pretext (although we do not repeat all of those allegations in this opinion). In accordance with the standards discussed above, we assume these facts (as distinguished from his legal conclusions) are true and give Mr. Franco the benefit of reasonable inferences drawn from them. He alleges that NCRC entered into the JDA with a private developer in September 2002, two years before the first bill concerning the Skyland Site was introduced to the Council. The JDA provided that NCRC would share in the profits of the redevelopment. Mr. Franco alleged that NCRC then set about to obtain the funds and legal authority to acquire the Skyland Site. NCRC's sole objective in this intended acquisition [was] to perform its undertakings under the JDA and then sell the property to the developer, who would design and build a new shopping center on the site for his own account. He asserted that NCRC had refused to discuss redevelopment of the site with any of the present owners, despite said owners' repeated requests. He also alleged that NCRC planned to sell the site to the private developer for $25 million less than its value. Mr. Franco asserted that the stores in the Skyland Shopping Center had been fully leased for at least the last five years, he named several of the tenants, and he denied that the center was either blighted or located in a blighted area. He also detailed the actions of the Council in proposing and voting on the four Skyland bills. Mr. Franco alleged that none of the bills specified any use for the properties or stated why the Council considered the properties necessary and desirable for the public use. Finally, he alleged that the legislative findings inserted at the last minute were and remain pretextual, wrong, inaccurate, baseless and substantially irrelevant. For example, the permanent legislation recites that NCRC had advised the Council that the Skyland Shopping Center is blighted, but, according to Mr. Franco, NCRC admitted that it had made no such finding. He claimed that the Council revised the final Skyland bill to include this finding and fifteen others without giving public notice, conducting a public hearing, or giving owners, tenants, or interested members of the public an opportunity to contest the truth of these revisions. Recognizing the limited role of the courts in eminent domain jurisprudence, we are especially careful not to indulge baseless, conclusory allegations that the legislature acted improperly. Compare United States v. 416.81 Acres, 514 F.2d at 631-32 (appellant's assertion that the purported public use was a pretense or a sham did not state a valid defense to the proposed taking; even accepting as true the factual underpinnings of his objections, the taking still would qualify as a public use) to United States v. 58.16 Acres of Land, More or Less, in Clinton County, State of Illinois, 478 F.2d 1055, 1057, 1059 (7th Cir. 1973) (court could not summarily deny without a hearing a property owner's detailed objections; questions of bad faith, arbitrariness, and capriciousness, all bearing upon the determination of public use, having been raised . . ., the district court was required to resolve those questions). Furthermore, courts accord deference to a legislature's judgment that a taking will serve a public purpose. E.g., Kelo, 545 U.S. at 480, 125 S.Ct. 2655 (Without exception, our cases . . . reflect[] our longstanding policy of deference to legislative judgments as to what is a public purpose); Berman v. Parker, 348 U.S. 26, 32, 75 S.Ct. 98, 99 L.Ed. 27 (1954) (when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive.); cf. Robert Siegel, Inc. v. District of Columbia, 892 A.2d 387, 395 (D.C. 2006) (declining to second-guess Council's legislative judgment that estimate of costs to acquire land and build infrastructure for major league baseball stadium was satisfactory). Nevertheless, Kelo makes clear that there is room for a landowner to claim that the legislature's declaration of a public purpose is a pretext designed to mask a taking for private purposes, and we hold that Mr. Franco adequately pled such a defense. With the detailed allegations included in his counterclaims, the defense fairly present[ed] a question of law or fact which the [trial] court ought to hear. Securities & Exchange Commission v. Gulf & Western Industries, Inc., 502 F. Supp. at 345. Cf. Twombly, 127 S. Ct. at 1965 ([A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and that a recovery is very remote and unlikely. (internal quotation marks and citation omitted)). Therefore, we remand so that Mr. Franco's pretext defense can be evaluated on its merits. [10]
Unfortunately, the Kelo majority did not define the term `mere pretext'. . . . Goldstein v. Pataki, 488 F. Supp. 2d 254, 287 (E.D.N.Y. 2007). See Kelo, 545 U.S. at 478, 125 S.Ct. 2655. However, as discussed above, see p. 168, we do know that promoting economic development is a valid public purpose and that it is not enough for the protesting landowner to demonstrate that private parties will benefit from the project. Furthermore, the government may rely on a private entity to implement its public purpose. See id. at 486, 125 S.Ct. 2655 (`The public end may be as well or better served through an agency of private enterprise than through a department of government. . . . (quoting Berman, 348 U.S. at 33-34, 75 S.Ct. 98)). On the other hand, the majority opinion in Kelo did suggest (without deciding) that a transfer of property from one private party to another, executed outside the confines of an integrated development plan, . . . would certainly raise a suspicion that a private purpose was afoot. . . . 545 U.S. at 487, 125 S.Ct. 2655. And it certainly would be relevant if the government proposes a transfer to a private party, but the projected economic benefits of the project [are] de minimus.  545 U.S. at 493, 125 S.Ct. 2655 (Kennedy, J., concurring). Some guidance may be provided by the Court's citation to 99 Cents Only Stores v. Lancaster Redevelopment Agency, 237 F. Supp. 2d 1123 (C.D. Cal. 2001), see 545 U.S. at 487 n. 17, 125 S.Ct. 2655, where the plaintiff alleged that the city of Lancaster was planning to condemn its property in order to give additional space to Costco, an anchor tenant in a regional shopping center. The district court considered whether Lancaster has presented a valid or [a] pretextual public use for its plan to condemn 99 Cents' leasehold interest. 99 Cents Only Stores, 237 F. Supp. 2d at 1129. Observing that [n]o judicial deference [to the legislature] is required . . . where the ostensible public use is demonstrably pretextual, id., the court granted summary judgment in favor of the holder of the lease, concluding that Lancaster's condemnation efforts violate the Public Use Clause of the Fifth Amendment. Id. at 1131. [T]he evidence [was] clear beyond dispute that Lancaster's condemnation efforts rest on nothing more than the desire to achieve the naked transfer of property from one private party to another. Id. at 1129. The district court rejected the city's argument that retaining Costco as a tenant was a public use because it would help prevent the reestablishment of blight. Id. The court noted, among other things, that there is simply no evidence in the record to suggest that so-called `future blight' was the actual reason underlying Lancaster's condemnation efforts at the time they were initiated. Id. at 1130. The idea of future blight simply embodies Lancaster's current litigation position; it is not supported by any evidence in the record. Id. Although the Supreme Court has not clarified the meaning of pretext, Justice Kennedy focused hypothetically on the insubstantial quality of touted public benefits, stating that transfers intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause. 545 U.S. at 490, 125 S.Ct. 2655. In this formulation the word pretextual is used to characterize the public benefits that will flow from the taking, not the thought processes of legislators or other government officials. Nevertheless, the same sentence refers to intent (transfers intended to confer benefits), presumably the intent of the legislators. The terms purpose, motive, and intent sometimes are used (imprecisely) as if they were interchangeable. In the present context, it is important to remember that public purpose is the modern mode of expressing the constitutional requirement of a public use. See Kelo, 545 U.S. at 480, 125 S.Ct. 2655 (the Supreme Court has embraced the broader and more natural interpretation of public use as `public purpose'). Moreover, there are formidable barriers to discovering the motives [11] and intentions of individual legislators. [12] We conclude that a reviewing court must focus primarily on benefits the public hopes to realize from the proposed taking. [13] If the property is being transferred to another private party, and the benefits to the public are only incidental or pretextual, a pretext defense may well succeed. On the other hand, if the record discloses (in the words of the trial court) that the taking will serve an overriding public purpose and that the proposed development will provide substantial benefits to the public, the courts must defer to the judgment of the legislature. Harder cases will lie between these extremes. Other courts applying Kelo have inquired whether the record demonstrates a public purpose for the taking. See Mayor and City Council of Baltimore City v. Valsamaki, 397 Md. 222, 916 A.2d 324, 351-52 & n. 26 (2007) (invalidating quick-take condemnation designed to assist business expansion in the area because the city had presented sparse evidence of public use and had  no plan for the development of the Property; court suggests that in a regular condemnation proceeding city would have presented more evidence to satisfy its minimal burden of presenting a prima facie case as to public use/purpose.); Rhode Island Economic Development Corporation v. The Parking Company, L.P., 892 A.2d 87, 104 (R.I. 2006) (court concluded, based on the record developed before us, [that] the principal purpose for the taking in this case was not a valid public use). In the latter case, the Rhode Island Supreme Court noted that the taking could not possibly have served the purpose of increased parking asserted during litigation because no additional parking spaces were created. 892 A.2d at 105. Furthermore, the taking would enable the Rhode Island Airport Corporation to avoid the terms of its pre-existing contract with the property owner and would result in a multi-million dollar windfall to the Corporation. Id. at 104-06. In a subsequent order the Supreme Court of Rhode Island characterized its opinion as conclud[ing] that condemnation was a ruse by which Rhode Island Airport Corporation (RIAC) could avoid the contract between the parties. . . . Rhode Island Economic Development Corp. v. The Parking Company, L.P., 909 A.2d 943 (R.I. 2006). See also MHC Financing Ltd. P'ship v. City of San Rafael, 2006 WL 3507937, at  (N.D. Cal. Dec. 5, 2006) (denying city's motion for summary judgment; inquiry into claim of pretext was necessary). Cf. Goldstein v. Pataki, 488 F. Supp. 2d 254, 288-91 (E.D.N.Y. 2007) (conclusory allegations were not sufficient to state a pretext claim; plaintiffs concede[d] that the Project will create large quantities of housing and office space, as well as a sports arena, in an area that is mostly blighted; they did not allege any facts suggesting that any Defendant had any reason to bestow a benefit on any private party). Explaining why it was satisfied that there was no illegitimate purpose in Kelo, the Supreme Court emphasized several factors revealed by the record in that case. Although the affected area of New London, Connecticut, was not blighted, the government's determination that the area was sufficiently distressed to justify a program of economic rejuvenation [was] entitled to . . . deference. 545 U.S. at 483, 125 S.Ct. 2655. It was reassuring that the identities of the private parties who would benefit were not known when the plan was adopted. 545 U.S. at 478 n. 6, 125 S.Ct. 2655. Moreover, the takings were to be executed pursuant to a comprehensive development plan, and thorough deliberation [had] preceded its adoption, so it was appropriate to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. 545 U.S. at 484, 125 S.Ct. 2655. Because that plan unquestionably serve[d] a public purpose, the takings challenged [in Kelo ] satisf[ied] the public use requirement of the Fifth Amendment. Id. Mr. Franco argues that the taking at issue here fails the public use requirement because some of the factors mentioned in Kelo are not present. (He argues especially that the identities of the benefiting private parties were known before the taking was authorized by the legislature and that there is no comprehensive plan for redeveloping the area.) However, nothing in Kelo suggests that the items of evidence mentioned there set constitutional standards. Indeed, there are suggestions that the most important, perhaps determinative, consideration was that the plan unquestionably serve[d] a public purpose. 545 U.S. at 484, 125 S.Ct. 2655. We are, of course, aware of the related decision in Franco v. District of Columbia, 456 F. Supp. 2d 35 (D.D.C. 2006), which at first glance may appear to be inconsistent with our ruling. The United States District Court addressed many of the same allegations we consider here, and it held that the defendants have sufficiently shown that the Skyland Legislation serves a `conceivable public purpose.' Id. at 40 (quoting Midkiff, 467 U.S. at 241, 104 S.Ct. 2321). It is important to consider the procedural posture of that case, however. The court had previously dismissed the suit, concluding that the plaintiffs' claims were not ripe, see 422 F.Supp. 2d 216, 225 (D.D.C. 2006), and was addressing a motion to alter or amend the judgment. Moreover, it considered its role to be limited  to determine whether the taking was facially unconstitutional. 456 F. Supp. 2d at 39. In this context the court ruled that, [b]ecause the taking was for a public use, and was not facially unconstitutional, the plaintiffs must first pursue state remedies for uncompensated takings before seeking relief in federal court. Id. at 40. Ruling on a facial challenge, the court had not held any evidentiary hearings, and it did not rule on the claim of pretext. Here, by contrast, we have held that Mr. Franco has sufficiently pleaded a defense of pretext. That defense must now be resolved on its merits. We emphasize that further proceedings, including discovery, should honor the longstanding policy of deference to legislative judgments concerning the public purpose of a taking. Kelo, 545 U.S. at 480, 125 S.Ct. 2655. The Supreme Court has explained, and reiterated, that [t]he role of the judiciary in determining whether th[e] power [of eminent domain] is being exercised for a public purpose is an extremely narrow one, Berman, 348 U.S. at 32, 75 S.Ct. 98; accord, Midkiff, 467 U.S. at 240, 104 S.Ct. 2321, and Kelo did not repudiate those statements. Moreover, `[o]nce the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch.' Kelo, 545 U.S. at 489, 125 S.Ct. 2655 (quoting Berman, 348 U.S. at 35-36, 75 S.Ct. 98). And resolving the pretext defense does not necessarily require a trial. We simply hold that in this case the defense may not be rejected as a matter of pleading.