August 18, 2020

Question of eminent domain during COVID-19 likely headed to the state supreme court

Joe Gratz


When Gov. Michelle Lujan’s lawyer spoke to the state Supreme Court earlier this month, he made it clear that he expected to be in front of the justices to argue the merits of almost a dozen lawsuits against the state. 

In his opening argument, Matt Garcia, the governor’s legal counsel, reminded justices that he has been in and out of their courtroom numerous times since the COVID-19 pandemic hit New Mexico. 

“The COVID-19 pandemic has given rise to a number of nominal and significant legal issues for this court’s consideration, ranging from everything to elections to prison conditions,” Garcia said. 

On that specific day though, Garcia was arguing the state’s case for issuing fines and misdemeanor charges against businesses that do not comply with the state’s public health order. Just as they had in nearly every case related to COVID-19 before, the justices sided with the governor’s office. 

But several times during the hearing, justices asked Garcia about the idea that the state may owe businesses money for ordering them to shut down. 

Justice Judith Nakamura asked Garcia about a request in his petition that the high court make a ruling on whether or not the state has to pay businesses that were forced to close. 

Garcia said he asked the justices to consider the issue as a way to save time and resources and referenced the ten cases pending in district court, all filed by Albuquerque-based attorney Blair Dunn. 

“Undoubtedly, the court will have to address this issue again, at some point, and so it makes sense now to do it when it’s been presented directly to the court,” Garcia said. 

The justices ultimately decided not to weigh-in on the issue, but there is little doubt that the issue of compensation for closed businesses will eventually end up back at the state Supreme Court. 

The main question justices will likely have to answer is whether businesses that were ordered to close are due compensation from the state for the impact of the closures. 

Garcia argued briefly in court that the difference between a categorical taking and a regulatory taking is key. 

The state’s Public Health Emergency Response Act (PHERA) contains a provision that outlines compensation for businesses that were taken over by the state. 

In the case of the state’s public health order, Garcia said, the directive to close businesses should be considered regulatory. Garcia added that previous case law holds that ordering businesses to close does not constitute a regulatory taking and that the provision in PHERA specifically addresses categorical taking.

But Dunn, who is representing about a dozen business owners in various judicial districts, said he thinks it could be considered both. 

“Our argument is that any of those where it required 100 percent shutdown, was the government taking 100 percent control of the business and is therefore 100 percent of the taking, which goes both to this idea of a regulatory taking versus categorical taking,” Dunn said. 

Former state Senator Dede Feldman helped draft the bill in 2003 that would ultimately become PHERA. She said the impetus for the bill was the anthrax scare that was happening at the time and that she and other lawmakers intended the compensation section of PHERA for hospitals or medical companies.  

“What we talked about were hospitals that were taken over and used for quarantine,” Feldman said. “This was primarily directed to help facilities that the state would actually take over.”

Feldman said even though she and her colleagues had anthrax in mind when passing the bill, she worked with a number of health experts who she said used the 1918 flu pandemic as a reference. 

The wording in question is, “The state shall pay just compensation to the owner of health care supplies, a health facility or any other property that is lawfully taken or appropriated by the secretary of health, the secretary of public safety or the director for temporary or permanent use during a public health emergency.”

Dunn contends the words “any other property” expands the law to all businesses, not just medical facilities. 

But Dunn has already anticipated the state using the argument of ejusdem generis, a latin phrase that means “of the same kind.” In the legal world it essentially means a generic term among a list of specifics should be viewed the same. In terms of PHERA, “any other property” could be read to mean any other property similar to a health facility or health care supply facility. 

“They could try to read into this and say, ‘Well, the statute talks about this type of facility and under ejusdem generis, that clearly only meant similar types of property,” Dunn said. “I imagine that’s going to be a big hiccup and a big problem for us to deal with, but I think they’d be wrong in reading that into that statute.”

But the government taking property, or eminent domain, goes beyond PHERA and is part of the U.S. Constitution as well as the New Mexico Constitution. 

The New Mexico Constitution states, “Private property shall not be taken or damaged for public use without just compensation.”

Dunn said a judge and likely the state Supreme Court will have to decide whether “damage” applies to businesses in an economical way. 

Nora Meyers Sackett, a spokeswoman for the governor’s office pointed to the second part of the compensation section of PHERA which states that all compensation claims have to go through the state Attorney General’s office. 

“So procedurally speaking, at this point in time, it’s fair to say those claims are flawed,” Meyers Sackett said. 

Dunn has at least 10 pending cases in various different judicial districts, all in the early stages of litigation.