Remember that now-iconic scene in The Fugitive, where Harrison Ford's character has turned the tables on Tommy Lee Jones, and while holding Jones at gunpoint proclaims, "I didn't kill my wife!"
Jones' response -- "I don't care!" -- could just as easily apply to regulatory takings law, especially where a property owner alleges a regulatory action results in a per se taking (either a Lucas interference with all economically beneficial use, or a deprivation of a fundamental aspect of property such as the right to exclude).
In those cases, it generally does not matter what justifications the government may have for the regulation -- the only thing relevant is the impact of the regulation on the property. In other words, even a regulatory action that might be a very good idea (from the government's perspective) results in liability for compensation if it results in a taking of property.
Thus, a court's proper response to the government's assertion in a takings case seeking compensation that a regulation is "in the public interest" would be a Tommy Lee Jones-esque "I don't care!" The only way the government can avoid liability is to show that the regulation is a "background principle of nuisance and property law" to which the property was always subject.
Earlier this week, the Washington Court of Appeals applied this analysis in Dunlap v. City of Nooksack, No. 63747-9-9 (Oct. 25, 2010). Generally speaking, we don't cover unpublished decisions, but we're going to make an exception because this is an interesting case.
Mr. and Mrs. Dunlap own two parcels in northern Washington state in the city of Nooksack, which appears to us to be just a short American Goldfinch flight from the Canadian-American border (the Goldfinch is the official State Bird of Washington...work with us here). The first is a 29 acre parcel zoned for agricultural and residential uses, bordering West Third Street and several other roads.
The other parcel is a 1/4 acre, zoned for residential use; a slough runs through the middle of this parcel, rendering the middle of the parcel unuseable. See inset photo. The slough is a wetland and shoreline under Washington law.When they purchased the property, there was a 100-foot "no build" buffer from the slough, and when they later sought permission to build a home, the buffer was 50 feet.
The city vacated West Third, meaning it eliminated the public interest in the road, and the Dunlaps asserted that this cut off their access to the 29 acre parcel and was a taking. The trial and appeals courts disagreed, noting, "[t]he trial court concluded that the Dunlaps failed to establish that access to the 29.5-acre parcel was substantially impaired because, even after vacation of West Third Street, the Dunlaps had access to the parcel." Slip op. at 4. Since their parcel was not landlocked, there was no taking. Easy case.
The 1/4 acre parcel was another matter, however. The Dunlaps had applied to the city for a permit to build a house on this parcel, and sought a shoreline variance to retain an already constructed fence. When permission to build the house was denied, the Dunlaps also sought a shoreline variance. Denied also. The Dunlaps exhausted administrative appeals, which were also denied, then headed off to court. You broke it you bought it, said the Dunlaps, and in a regulatory taking claim, they asked for just compensation.
The trial court agreed, holding that the only economically beneficial use of the property was to build a residence, but because of the buffers, the house was limited to 480 square feet. Building a tiny house not much bigger than a walk-in closet, the court found, was not economically viable. Forcing the owners to build a 480 square foot home "is a total and devastating economic impact to the quarter acre parcel." See Findings of Fact at 7. The trial court's written findings are here.
The court of appeals affirmed. First, the court disposed of the city's claim that it was not liable because it was merely enforcing state law. The property owners should have sued the state, not the city, the city asserted. The court concluded that "there is no evidence that the State, through the [state] Department, directed or controlled the City in its decision on the Dunlaps’ application for a variance. In fact, the Department actually recommended approval of the Dunlaps’ application with changes as proposed by the Department." Slip op. at 8. Since the city was not acting as the state's agent, the city was liable.
The court of appeals also rejected the city's claim that a 480 square foot house was an economically viable use of the parcel. The court concluded the trial court was well within its discretion because the testimony supported its findings: building a home without infringing on the slough buffer would be very expensive, the home would have no fence, yard, or patio area, and the no-build buffer would be "right outside the house." Slip op. at 12.
Finally -- and here's the Tommy Lee Jones part -- the court rejected the city's argument that it could not be liable for a taking because the slough buffer was a really good idea. The city asserted that the trial court should have applied the Penn Central three-factor ad hoc regulatory takings test, and not the per se Lucas test. Penn Central allows inquiry into the "character of the government action" (whatever that means), and some have argued this permits the government to argue that there is no taking because the regulations serve some public good.
No dice, held the court of appeals, in Lucas, "the United States Supreme Court held that in a takings case, where the property owner challenges a regulation as denying all economically beneficial or productive use of land, the regulatory action is 'compensable without a case-specific inquiry into the public interest advanced in support of the restraint.'" Slip op. at 9 (quoting Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992)):
Under the Lucas/Guimont analysis, if the City’s regulation of the Dunlaps' property results in a total taking, the Dunlaps are entitled to just compensation regardless of the public interest advanced in support of the restraint, unless the City can meet a rebuttal test. Under the rebuttal test, if the Dunlaps establish that the regulation of their quarter-acre tract has denied all economically viable use of the property, the City can avoid paying compensation only by identifying "'background principles of nuisance and property law that prohibit the uses [the owner] now intends in the circumstances in which the property is presently found.'" "In other words, the [City] must show the proscribed use interests were not part of the owner’s title to begin with." If the Dunlaps prove a total taking and the City fails to rebut that claim, then the Dunlaps are entitled to compensation without any case-specific inquiry into the legitimacy of the public interest supporting the regulation.
Slip op. at 9-10 (emphasis added) (footnotes and citations omitted).