Class Action Countermeasures : Class Action Lawyers & Attorneys : McGuireWoods Law Firm : Complex Litigation, Mass Torts

Property-rights class actions are difficult to bring, because property tends to be unique, and class actions do not work well with unique claims. But that doesn't stop plaintiffs from trying to certify classes asserting property based claims.

This week's case--Onyx Props. LLC v. Bd. Cty. Comm'ners of Elbert Cty., 2013 U.S. Dist. LEXIS 7151 (D. Colo. Jan. 17, 2013).--arises out of one such effort. The specific details are convoluted, but basically amount to the following: two developments in Elbert County, Colorado were, for various reasons, rezoned from an "A-Agriculture" designation to an "A-1" designation. This was apparently important to at least one set of property owners who ran a composting business--acceptable under one designation but not the other. When Elbert County told them to cease composting, they challenged its ruling in state court, and won; the court found that the rezoning was fatally flawed because it was based on the wrong map.

Not content with their victory in state court, the plaintiffs filed a §1983 class action, alleging that the defendant had violated their constitutional rights (and other property owners') by enacting and then enforcing invalid zoning regulations against them.  

The trial court in the District of Colorado denied their request for class certification on a number of grounds, but the most significant was that 

the property rights at issue differ appreciably between the proposed class members and, as such, the analysis as to whether the alleged illegal activities of the [Elbert County] BOCC violated the property owners' substantive due process rights requires individualized inquiry.

As a result, the plaintiffs could not establish commonality.  But the court went further, pointing out that the unique nature of the plaintiffs' property rights also precluded certification of either a damages class under Rule 23(b)(3) or an injunctive-relief class under 23(b)(2).  

Among other problems, any damages class would have trouble showing superiority, since in a property-based case

each class member has an interest in controlling his or her claim given the individualized nature of that claim.

Similarly, the plaintiffs' request for injunctive relief was not appropriate for class treatment because 

the BOCC's reliance on the regulations/map at issue to consider past determinations would require an individualized assessment of the applicability and the appropriate relief, as opposed to future injunctive relief to Elbert County citizens and members of the public

In short, the more the plaintiffs relied on their due process rights to their real property, the harder it was to fit their lawsuit into any classwide relief.  

For defense lawyers, the takeaway here is simple: the unique nature of property rights means that property-based class actions are almost always a bad idea.  The key is showing the court the specific ways in which real property differs in a given area.

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There's an intuition among defense lawyers that property-based cases are difficult to certify; not impossible, but certainly difficult. This week's case, Burdette v. Vigindustries, Inc., 2012 U.S. Dist. LEXIS 15412 (D. Kan. Feb. 8, 2012), offers several reasons why that is the case.

Burdette is a case about sinkholes. It involves a neighborhood in Hutchinson, Kansas that had been located next to a series of salt solution mines. After a sinkhole developed in the Careyville neighborhood in 2005, the defendant, which owned the nearby salt mine property, created a buffer zone between the neighborhood and its own property. (This appears to have been pretty expensive, involving buying 37 nearby properties at a premium in order to create the zone.)

The plaintiffs--all residents of the Careyville neighborhood who had not been relocated--sued, alleging causes of action for nuisance and negligence under Kansas law. The trial court declined to certify the class. The reasons it gave involve issues that occur frequently in real property-based cases.

Each parcel of property was unique. The first reason the court cited was that individualized issues predominated over common ones. (The defendant, interestingly, apparently argued the Dukes commonality standard, but conceded that there was at least one common issue.) While the plaintiff argued that the court could just focus on the defendant's conduct, the court held that, to prove nuisance, each class member would have to prove the result of the defendant's conduct on their property; more specifically, under Kansas law they would have to show that the defendant had interfered with the owner's use and enjoyment of their property. As the court pointed out:

Determining what constitutes a nuisance is a case-specific inquiry and depends on factors such as: the type of neighborhood, the nature of the thing or wrong complained of, its proximity to those alleging injury or damage, its frequency or continuity, and the nature and extent of the injury, damage or annoyance resulting. Of these factors, only the type of neighborhood would lend itself to common evidence among these class members.

(Internal quotation omitted.) The plaintiffs didn't help their case by arguing for "stigma damages" (diminution in value that results from the perception that the properties were affected by sinkholes), an argument that created even more factual variations for the court to consider.

Based on all of these individualized issues, most of which were tied to the fact that each property in the area was unique, with unique owners, the court also declined to certify plaintiffs' negligence claims. (And, based on these same variations, it found that the plaintiffs were neither typical nor adequate representatives of the proposed class.)

Property-based class actions often lack geographic diversity. The court also found that the plaintiffs had not demonstrated numerosity for one of the subclasses, even though it had 57 members. Why? Because, since they were all geographically close, joinder was eminently practicable in this case.

[S]ubclass A is not necessarily so large as to make joinder impracticable, as it contains just 54 property owners within a confined area, making it easy to locate any remaining individuals for joinder if they wish to sue. Similar to Trevizo, where the Tenth Circuit affirmed a district court finding that 84 members was not sufficiently numerous, this case involves an amount of putative class members that is not "overwhelmingly large" so as to be prohibitive of joinder. There would be no problem identifying the remaining individuals in this subclass for joinder because they all own property in a defined area.

(Internal footnote omitted.)

Cases involving damages to real property often founder on these kinds of issues. Because each parcel is unique, there are often individualized issues involving use, enjoyment, and valuation. And, because many properties involved in "mass" incidents are close to each other, they're also amenable to joinder instead of class proceedings. Burdette provides a concrete reminder of just how these issues will play out in court.

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