Pa. Supreme Court Denies Taking Due to a Lack of a Public Purpose

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.

Background: Property History and Easements

In Wolfe, Gary and Mary Wolfe owned a property located in Muhlenberg Township, Pennsylvania. 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.

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.

Termination Clause and Disuse

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 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.

Legal Dispute Begins

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.

Declaration of Taking and Trial Court Ruling

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.”

Evidence Presented at Trial

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.

Superior Court and Commonwealth Court Opinions

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 extent 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.

Supreme Court’s Final Decision

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 Wolfes 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 Court Weighs the Evidence

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.

Final Outcome and Implications

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.