Florida’s Eminent Domain Shenanigans

It’s a belated round two for Florida’s legislation on eminent domain. In the 1980 case Webb’s Fabulous Pharmacies v. Beckwith, the Supreme Court struck down a Florida statute giving the state ownership over the interest earned on disputed funds—what lawyers call “interpleader” funds—held on deposit in the Florida court registry. The Court held that the statute effected unconstitutional takings under the Fifth and Fourteenth Amendments.

Now there’s a challenge to a similar statute, concerning “quick-take” deposit funds. Florida’s eminent domain law empowers condemning authorities to fast-track their appropriation of a desired property by allowing the authority to simply deposit the constitutionally required just compensation into the court registry and then taking title to the condemned property. The scheme further authorizes the court clerk to invest the deposited funds before a court renders a final valuation judgment. The interest on that investment is split 90/10 between the condemning authority and court clerk, respectively, with none of it going to the (now former) property owner.

Several property owners challenged this mechanism, wanting to recover the interest that accrued on compensatory funds that were indisputably theirs as a matter of state law. Florida’s intermediate appellate courts have evaded the Webb’s precedent and denied these challenges—and the state supreme court has thus far declined to review the rulings. Cato has filed a brief supporting the challengers’ request that the U.S. Supreme Court take the case.

The lower state courts have ruled that quick-take deposits are “public property” until final judgment and thus owners of condemned properties had no interest in the accrued interest, as it were. Yet Webb’s stands for the proposition that funds deposited with a court registry are “private property,” belonging to the ultimate beneficiary of the legal action. In announcing this holding, the Supreme Court applied the “interest follows principal” rule.

Twenty-five years later, eminent-domain condemnees stand in the shoes of the Webb’s plaintiffs and should be entitled to the interest earned on funds that were, after all, deposited in the court registry for their benefit. The Florida judiciary has again unduly deferred to a state legislative schemed that violates the Fifth and Fourteenth Amendments, so the U.S. Supreme Court should again take up this issue.