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The debate: Eminent domain violates the Constitution

Taking the mortgage could go against 14th Amendment

September 27, 2013
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The eminent domain dispute is far from over. Actually, it's just getting started. And now, it's beginning to get interesting.

What is clear is that it is highly unlikely the housing and lending industries will give up without a fight, no matter how far Richmond, Calif., takes a proposal to use eminent domain to take over mortgages from pools of investors for the purpose of restructuring the debt for underwater borrowers.

Eminent domain is a very viable legal concept that allows municipalities to take a private property with just compensation for a public usage.

The only lingering question I have after listening to attorneys discuss the issue of eminent domain Friday morning is whether another Constitutional claim (14th Amendment) can be effectively made in federal court to block eminent domain in the mortgage context by essentially making the case that eminent domain violates the Equal Protection Clause of the U.S. Constitution by treating investors tied to these mortgages differently from other investors in the marketplace by intervening in their contractual rights to manage their own interests.

A successful Constitutional challenge that becomes precedent – or sends the threat of eventual precedence – may end up chilling the spread of eminent domain faster. Although it’s clear from listening to a stream of cases discussed by a panel of attorneys this morning that eminent domain cases are plentiful and turn on the individual facts of each case.

Attorneys should pipe in on this issue (use the comment section below) because this is an intriguing concept, albeit, there may be efforts already underway to lean on the Equal Protection strategy when dealing with the eminent domain concept in this context.

In a continuing legal education seminar held in Dallas, Texas, on Friday, a panel of attorneys went through a series of cases involving eminent domain.

What I found most intriguing was a compelling case cited by a panelist in which a woman successfully fought a government’s taking of her property by arguing that under the Equal Protection Clause of the U.S. Constitution the government was treating her differently when compared to other citizens in the area.

While eminent domain is a valid legal concept when the elements of a takings for a public use are met, the woman was able to successfully argue that the actions of the government targeted her property alone with a type of directed agenda that violated her right to equal protection under the law.