Most federal takings claims against state and local government do not get heard in federal court (except to dismiss them on res judicata grounds), under the one-two punch of Williamson County and San Remo Hotel.
Williamson County forces property owners into state court because a claim under the Fifth Amendment is not ripe until the state has denied compensation, which includes pursuit of a state law takings claim in state court, while San Remo Hotel penalizes a property owner for pursuing a state law claim in state court by concluding that she will unwillingly litigate her federal takings claim in the course of litigating her state law takings claim, thus, when her federal claim has been ripened by the visit to state court, the preclusion doctrines kick in to prevent her from raising it in federal court.
All of this presumes that the state law of whatever jurisdiction we're talking about actually recognizes a cause of action for compensation for a regulatory taking. Federal courts have bent over backwards to tell property owners that they need to go to state court, even when the state remedy is not exactly clear (see here, here, and here for recent examples). Some state courts, however, have limited the remedy for a regulatory taking in certain circumstances (see Ohio and Pennsylvania, for example), and still others have never expressly recognized a state law claim for a regulatory taking, even though after First English it's hard to see how they could. Hawaii, for example, has recognized the claim in dicta, but has never formally backed off a ruling in an earlier case that the only remedy for a regulatory taking is invalidation of the offending regulation. In those jurisdictions, property owners have a colorable claim that Williamson County/Hotel San Remo do not apply, and that they can bring their federal takings claims in federal court.
With that background in mind, the Alabama Supreme Court's recent opinion in Town of Gurley v. M & N Materials, Inc., No. 1110439 (Dec. 21, 2012), piques our interest because it expressly held that Alabama does not recognize a cause of action for a regulatory taking, and that under the Alabama Constitution, the only time a property owner may assert a takings claim is when her property is physically taken:
Within the plain meaning of its text, § 235 does not make compensable regulatory "takings" by an entity or person vested with the privilege of taking property for public use. As set forth in our long-standing precedent, the taking, injury, or destruction of property must be through a physical invasion or disturbance of the property, specifically "by the construction or enlargement of [a municipal or other corporations'] works, highways, or improvements," not merely through administrative or regulatory acts.
Slip op. at 23-24.
The background: M & N owned a rock quarry in a previously unincorporated part of the county. A group of Town residents didn't appreciate the quarry and formed a group to oppose it, with one member of the group eventually getting himself elected mayor of the Town. The Town had a problem, however. It apparently couldn't regulate the quarry's operations because the quarry was beyond Town limits. So the Town annexed the property in order "to give [it] control over use of the property," and when the quarry applied for a business license, the application was predictably denied. Two weeks later, the Town imposed an immediate moratorium prohibiting it from accepting any applications for any type of permit related to the property for 90 days while it "studied" what to do with the land. This moratorium was extended for an additional 90 days. After al lthe studying, the Town eventually zoned the property "agricultural," which -- surprise, surprise -- prohibited quarrying. The state court lawsuit followed.
As quoted above, the Alabama Supreme Court eventually rejected the property owner's claim that section 235 of the Alabama Constitution allowed for the recovery of compensation for a regulatory taking, and limited the claim to only physical takes. The court also rejected the property owner's call to interpret this provision in line with federal law because the Fifth Amendment is worded differently. The court noted that the property owner could have brought its federal regulatory takings claims in state court, but it didn't:
We also note that M & N could have asserted its inverse-condemnation claim, which is based upon the administrative and regulatory actions of the Town, pursuant to the Just Compensation Clause. M & N initially asserted its claim as a federal constitutional claim, but it later voluntarily dismissed that claim in order to keep this case in the state trial court. M & N, as master of its complaint, chose to forgo, for strategical purposes, any relief it may have been entitled to under the federal Constitution.
Slip op. at 24-25 (citations omitted).
One Justice dissented, reasoning that Alabama should "apply some form" of federal precedents to the interpretation of section 235, and that under the Penn Central test as transported to state law, a jury could have concluded that the Town took the quarry's property. Slip op. at 45 (Murdock, J., dissenting).
Now comes the fun part. Because the Alabama Supreme Court has made it very clear that there is no such animal as a "regulatory taking" under Alabama law, Alabama property owners may now bring their federal regulatory takings claims directly in federal court without worrying about the Williamson County/Hotel San Remo trap.
This could get interesting.