Three years after Mendocino Railway attempted to use eminent domain to acquire private property in Willits, the court decided in favor of the property owner. The trial wrapped up at the end of August last year, but Mendocino County Superior Court Judge Jeanine Nadel just issued her decision on Wednesday.
John Meyer will not be forced to sell his twenty-acre parcel to the railroad, which sued him for the right to purchase and use it for a transloading station and other infrastructure. In a Gofundme launched late last year, Meyer wrote the lawsuit cost him hundreds of thousands of dollars. Back in June of 2020, Robert Pinoli, president of Mendocino Railway, known locally as the Skunk Train, and Mike Hart, CEO of parent company Sierra Railroad, offered to buy Meyer’s property for an amount he wasn’t willing to accept. In an interview yesterday, Meyer spoke about how the years-long proceeding has affected his life and his plans.
First, he said he’d like to “thank the community, my family and friends who have supported me during this, and helped me hold in here. Also, my lawyer Steve Johnson, whose diligent effort has helped me retain my property for the time being.” He said during the last three years, “It’s been terrible. I couldn’t do anything with my property. It’s been under something called an action,” which still hasn’t been lifted. That means if Meyer improved the property and lost the suit, the Skunk would have still been able to purchase it at the original proposed price. So his own project has been on hold for three years. He was planning to build four houses on the property, one for his family and the others to rent out. Before spending so much money on the lawsuit to keep the property, he says he had enough capital to fund the construction himself. Now he’ll have to find investors if he wants to bring the project to fruition. Also, he noted, “The price of everything has basically doubled. So it’s going to cost a lot more to do what I wanted to do.”
In her decision this week, Nadel wrote, “The central issue in this case is whether MR (Mendocino Railway) can be deemed a public utility for purposes of this eminent domain proceeding.” A railroad corporation that is a public utility does have the right to claim private property for public benefit, if it can fairly compensate the property owner.
Nadel mentioned several times that 90% of Mendocino Railway’s revenue comes from its tourism offerings. She wrote, “The court can easily find that MR’s primary objective is to obtain the property to serve the excursion service. No explanation was offered to distinguish the private operations from the “proposed” freight and passenger enhancements,” which could have qualified the railway as a public utility.
But the Skunk Train doesn’t offer transportation, according to the legal definition of the term. Nadel noted that previous court decisions have defined transportation, “in the public utility context,” as taking people from one place to another. The Skunk Train is only able to take passengers on round trips, due to a tunnel collapse on the line between Willits and Fort Bragg. And it’s not able to connect to any line outside of Mendocino County. Last year, the Surface Transportation Board authorized the Great Redwood Trail Agency to turn the line between Willits and Eureka into a trail. The last time any freight car left the county by train was the day before Thanksgiving, 1998.
In a 2016 YouTube interview with Rich Foreman of the Sacramento Startup Grind, Mike Hart gave the distinct impression that he regards railroads as an excellent route to success in private enterprise. “I started buying railroads in the 1990’s,” he recalled. Wearing a red polo shirt with a logo reading, “Ski Dubai United Arab Emirates,” Hart played to a laughing crowd.
“I like them because they’re a good way of acquiring real estate,” he explained. “Once you have a railroad, you have the right of eminent domain…They’re not subject to a lot of laws that other companies are. You’re exempt from the Subdivision Map Act. There’s a lot of cool things that railroads have going for them. So I bought my first one. Once I figured out how it works, it’s a monopoly. You buy four railroads, you can double the rent. I bought my fourth railroad and told everybody I was going to double their rates. They thought I was kidding.”
That’s as long as the railroad qualifies as a public utility. But Nadel admitted into evidence a letter the California Public Utilities Commission sent to Mike Hart last year. That letter says the railroad is regulated by the Commission for safety purposes, but is not a public utility. Mendocino Railway disputed the Commission’s findings in a 21-page letter with attachments. In a statement at the time, Pinoli wrote that, “While the letter is the opinion of a staff attorney, I don’t view this as the opinion of the Commission.”
Nadel wrote that Mendocino Railway provided no evidence to support claims that it or its affiliates provided transportation, passenger service, or freight service during an environmental restoration project near the line. She dismissed letters from prospective customers of a planned freight service as “no more than letters of a possible interest in services should they become available…the intention to provide services in the future is not sufficient to establish the railway as a public utility.”
And in 2006, the Railroad Retirement Board granted a request by Mendocino Railway and its affiliate, Sierra Entertainment, to exempt them from paying into the unemployment and retirement funds for railroad employees. The Board granted the request on the grounds that the companies are not employers under the Railroad Retirement Act, because they are not able to engage in interstate commerce.
The City of Fort Bragg is suing the Skunk, arguing that “Mendocino Railway is no longer entitled to status as a public utility, is in fact an excursion only railroad, and therefore is subject to the jurisdiction of the City of Bragg.” The Railway has asked that case to be moved to a federal court, but in the meantime, it’s scheduled to come before a local judge in June. The entire tranche of documents relating to the Skunk Train can be viewed for free at savenoyoheadlands.org.
Because of the litigation underway, Fort Bragg Mayor Bernie Norvell limited his remarks to saying that he was happy for John Meyer and his family, and, “I think the judge got it right.”
Pinoli reached the opposite conclusion, saying, “We respectfully disagree with the court’s decision, believing it to be both legally and factually in error. We are in the process of determining our next steps.”
As for Meyer, some uncertainty remains. “I feel good that we won the case, but I really don’t feel like I won anything, because I should have been able to move on. And at this point, I can’t still. I’m not positive how to take it, exactly.”