Pa. Supreme Court Denies Taking Due to a Lack of a Public Purpose
Written by: Alan Nochumson & Alex Goldberg
In a recent decision, the Pennsylvania Supreme Court in Wolfe v. Reading Blue Mountain, 2024 Pa. LEXIS 1209 (Aug. 20, 2024), affirmed the trial court’s ruling that a condemnation was unlawful because it was intended to benefit a single private business rather than the public as a whole.
In Wolfe, Gary and Mary Wolfe owned a property located in Muhlenberg Township, Pennsylvania, the opinion said.
Reading Blue Mountain and Northern Railroad Co. (RBMN), whose predecessor, the Reading Co., previously owned the property now owned by the Wolfes, as well as additional nearby parcels on Pottsville Pike, the opinion said.
Those additional parcels were also now owned by the Wolfes.
Prior to the Reading Co.’s sale of its properties, it maintained two easements over them that are reflected in a 1982 deed and allowed the Reading Co. to continue to use the existing rail siding located on the property at issue, which connected to the main railroad line which crossed State Route 61, the opinion said.
Importantly, the easements contained a termination provision requiring the Reading Co. or its successors to remove the siding within 90 days upon demand by the grantee or its successors, who in this case, are the Wolfes, the opinion said.
The Reading Co. ceased use of the rail crossing in the late 1980s and the Public Utility Commission suspended the crossing for lack of use in 1998.
Soon thereafter, State Route 61 was repaved, and the connector track was buried in the road, the opinion said.
In 2021, RBMN sought to reestablish the rail crossing and the Public Utility Commission granted its request later that same year.
When the Wolfes became aware of the situation, they requested that the RBMN remove the siding from the property at issue per the easement termination provision, and when RBMN refused to do so, the Wolfes filed a complaint and an emergency motion for preliminary injunction with the Berks County Court of Common Pleas.
The trial court enjoined RBMN from entering the property pending a hearing.
RBMN then filed a declaration of taking, seeking to condemn a small portion of the property at issue, claiming the primary purpose was to “promote the health, safety and general welfare of the commonwealth of Pennsylvania by serving the public need to have goods transported via rail,” and RBMN’s plan was to provide rail services to Russell Standard, an asphalt company located to the immediate south of the property along Route 61.
The Wolfes objected to the filed declaration of taking, stating that RBMN’s purpose was not for the public good, but rather to “confer a private benefit to RBMN’s customer.”
At the hearing before the trial court, the Wolfes stated that Russell Standard has the space to use their own property to put the rail across, and that Russell Standard was already transporting by trucks and private haulers.
A lessee of the Wolfes’ property, a roofing business, also testified that the expansion of the rail line would disrupt its business on a daily basis.
The Wolfes also called a land development expert, who testified that the gates RBMN would need to erect would force the Wolfes’ property to fall out of zoning compliance due to the parking spaces that would be eliminated by said gates.
In response, RBMN called a land development expert to testify, who stated that the rail crossing could not be moved to the Russell Standard property due to utility issues.
The trial court ruled in favor of the Wolfes, finding that RBMN’s “condemnation was effectuated solely to benefit a single private commercial enterprise, Russell Standard, and as such, violated the prohibition on using eminent domain for private purposes.”
Per Reading Area Water Auth. v. The Schuylkill River Greenway Association, 100 A.3d 572 (Pa. 2014). “the power of eminent domain may only be exercised for a public purpose,” its use is limited “to the extend reasonably required by the public purpose for which the power is exercised, or else it will be overturned as excessive.”
RBMN then filed an appeal to the Pennsylvania Commonwealth Court, which reversed the trial court’s ruling in an unpublished opinion.
The Commonwealth Court in Wolfe ultimately determined that “the mere fact that some selfish interest may have inspired the plan for the part in controversy in no sense prevents that section from being classed” for public use.
The Wolfes filed an appeal to the Supreme Court to consider “whether the Commonwealth Court erred by reversing the trial court where it held that the taking at issue was for a public purpose.”
On appeal to the Supreme Court, the Wolfes primary argument was that the Commonwealth Court relied on case law that no longer reflects the current legislature’s desire to limit eminent domain powers and protect against condemnations made for a private purpose.
To illustrate their point, the Wolfe’s relied upon the Property Rights Protection Act (PRPA), 26 Pa. C.S. Section 201 et seq., which prohibits “the exercise by a condemnor of the power of eminent domain to take private property in order to use it for private enterprise.”
The Wolfes continued to argue that the Commonwealth Court failed in its duty by not thoroughly evaluating whether the public was the “primary and paramount beneficiary” of the taking, as required by evidence on record.
Instead, according to the Wolfes, the Commonwealth Court simply determined that the taking for railroad expansion was “de facto for a public purpose.” The Wolfes insisted that, if the Commonwealth Court had properly analyzed the record, it would have found the taking by the RBMN is unconstitutional. In doing so, the Wolfes contended that RBMN’s stated public benefits, such as promoting the welfare of Pennsylvania by transporting goods via rail, are superficial and that the true purpose is to serve a private company, Russell Standard. The Wolfes argued that RBMN failed to provide any evidence at trial to substantiate claims of public benefit, making any purported public advantage speculative and incidental.
In response, RBMN defended its position by citing to legal precedents that allow takings for railroad expansions to connect private entities to railroads, arguing that such actions serve a public purpose by facilitating commerce. RBMN point to the PRPA, which explicitly exempts railroads from restrictions on takings for private use and argued that this legislative history supports their authority to condemn property. RBMN emphasized that without such powers, property owners could hinder important infrastructure projects by demanding unreasonable compensation.
RBMN also maintained that even under the “primary and paramount beneficiary” standard, its taking is constitutionally valid because it primarily benefits the public, despite any incidental benefits to private entities like Russell Standard.
The Supreme Court in Wolfe reviewed recent jurisprudence on eminent domain law which led it to the conclusion that “it is only when the public will be the ‘primary and paramount beneficiary’ of the taking that the usual constitutional protections over private land may be lifted.”
From the Supreme Court’s perspective in Wolfe, the Wolfes presented solid evidence that the only beneficiary of the taking would be a private business, and, in response, RBMN did not introduce any evidence of any specific benefit to the public, instead relying on the inherent benefits created by railroads.
In the end, the Supreme Court found that, while analyzing a purported public benefit of a taking, it must consider the technological, social, and economic landscape, and ultimately, the Wolfes met their burden by demonstrating the public is not the primary and paramount beneficiary of RBMN’s taking.
By doing so, the Supreme Court reversed the Commonwealth Court’s ruling and remanded the case to trial court for order of the trial court that denied the taking.
Alan Nochumson is a shareholder of Nochumson P.C., a legal services firm with a focus on real estate, land use & zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-600-2851 or alan.nochumson@nochumson.com.
Alex Goldberg is an associate attorney at the firm. You can reach him at 215-399-1346 or alex.goldberg@nochumson.com.
