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Opening Brief Filed in Ninth Circuit Maui Vacation Rental Appeal

Today we filed the Opening_Brief (250kb pdf) in Maui Vacation Rental Association, Inc. v. County of Maui, No. 08-15251, the Ninth Circuit appeal from the Hawaii district court's dismissal of MVRA's complaint which sought to declare Maui's shut down of vacation rentals illegal. 

I won't go into details of the case since the brief spells out the facts and arguments, but here are some prior posts on the case, and links to media coverage:

• Los Angeles Times: Maui: Vacation rentals and B&Bs shut down and 50 illegal Maui B&Bs & vacation rentals shut down

• San Francisco Chronicle: Maui County closes unlicensed bed and breakfasts and vacation rentals

• The Maui News: Vacation rental suit dismissed in federal court

• Honolulu Star-Bulletin: Maui B&Bs face 'crisis'

• inversecondemnation.com: Federal Court Dismisses Vacation Rental Due Process Claims -- Details (with links to the District Court's opinion, MVRA's complaint, and the briefs in the district court)

New Article Published: "Because They Can: Judicially Excising the People from the Definition of 'County' in the Hawaii Constitution"

The ABA Section on State & Local Government has published my article "Because They Can: Judicially Excising the People from the Definition of “County” in the Hawaii Constitution" in the State & Local Government Law News (Spring 2008). 

The article is a summary and analysis of County of Kauai ex rel. Nakazawa v. Baptiste, 165 P.3d 916 (Haw. 2007), the 3-2 decision in which the Hawaii Supreme Court creatively overcame justiciability problems to hold that the term "the counties" in the Hawaii Constitution's provisions regarding property taxes means "county councils."  In doing so, the court invalidated a voter-enacted Kauai charter amendment that would have rolled back property taxes to 1998 levels, and set a yearly cap on increases.  The dissenting justices accused the majority of "subverting the judicial process," and would have dismissed the case for lack of standing. 

For those of you who are not section members and don't receive a copy in the mail, the article is reposted here.  More on the case, including the majority and dissenting opinions, a Wall St. Journal story about the decision, and the briefs and oral arguments, is posted here.   

Cert Petition in Ceded Lands Case

In a very short (17 page) petition, the State of Hawaii has asked the U.S. Supreme Court to review a decision by the Hawaii Supreme Court regarding "ceded lands."  The petition argues that by basing its decision in Office of Hawaiian Affairs v. Housing and Community Dev. Corp. of Hawaii, No. 25570 (Jan. 31, 2008) on the "Apology Resolution," the Hawaii Supreme Court "effectively insulated its decision from any political check at the state level," an error only the U.S. Supreme Court can correct.  The cert petition is posted here.

The petition was filed filed by heavy-hitter Seth Waxman, a former U.S. Solicitor General, so despite its brevity, it should be taken seriously.  It asks the Court to review a single question: 

In the Joint Resolution to Acknowledge the 100th Anniversary of the January 17, 1893 Overthrow of the Kingdom of Hawaii, Congress acknowledged and apologized for the United States' role in that overthrow.  The question here is whether this symbolic resolution strips Hawaii of its sovereign authority to sell, exchange, or transfer 1.2 million acres of state land-29 percent of the total land area of the State and almost all the land owned by the State-unless and until it reaches a political settlement with native Hawaiians about the status of that land.

Petition at (i).  The petition notes, but does not focus on, a key point -- the ceded lands are supposed to be held in trust by the State "for the benefit of all citizens of Hawaii."   

First, the practical impact of this decision is enormous: it bars the State from prudently managing, for the benefit of all citizens of Hawaii, more than 1.2 million acres of State-owned land-29 per cent of the total land area of the State and almost all the land owned by the State.

Petition at 11 (emphasis added).  This point has been glossed over in recent decisions on ceded lands, and this petition gives the U.S. Supreme Court an opportunity to correct it. The petition obviously does not suggest that the usual route to SCOTUS review -- the "circuit split" -- is present, since the case presents facts and law that are unique, and have not expressly arisen in another case.  Instead, it argues that the Hawaii Supreme Court grossly misinterpreted federal law and that there is no other remedy available:

Absent review by this Court, this injunction will continue to hold the State hostage to the Hawaii Supreme Court's deeply flawed analysis of federal law.  The error and the injury in this case are unmistakable, and only this Court has the power to correct them. It should exercise that power.

Petition at 17.  Download the entire petition here.

Cert Petition in Ninth Circuit Case on Reserved Powers, Contracts Clause in Repeal of Eminent Domain Ordinance (Matsuda)

The City and County of Honolulu has filed a petition for writ of certiorari in Matsuda v. City and County of Honolulu, No. 06-15337 (9th Cir. Jan. 14, 2008), asking the U.S. Supreme Court to review the case.  We don't have a copy of the cert petition yet, but when we do, we'll post it.  The Supreme Court docket report is here (No. 07-1305).

Matsuda involved th repeal of "chapter 38," Honolulu's version of the Hawaii Land Reform Act at issue in Hawaii Housing Auth. v. Midkiff, 467 U.S. 229 (1984).  Chapter 38 allowed for conversion of condominium interests to fee simple, via a condemnation process. 

In Matsuda, apartment owners applied to the city to "convert" (condemn) their apartment leases, and entered into written contracts with the city, in which the apartment owners each agreed to pay the city $1,000, in return for which the city promised that after its acquisition of the lease, it would convey it to the apartment owner.  The owners subsequently received the city's approvals, but final approval by the City Council was withheld because the council was already considering repealing chapter 38, which it did in 2005. 

The ordinance repealing chapter 38 eventually contained a provision allowing any conversion proceeding which has been approved by the City Council to be completed, but because Matsuda's had not received final council approval, the taking was denied.  Matsuda and others filed suit against the city in federal court, alleging that the repeal of chapter 38 was a violation of the U.S. Constitution's Contracts Clause.  The Ninth Circuit held that the district court should have viewed the repeal of Chapter 38 with "heightened scrutiny" because the repeal of Chapter 38 was the city voiding its own contracts.  A complete summary of the Ninth Circuit's opinion is posted here.

Tim Sandefur added his thoughts about Matsuda here, and Professor Gideon Kanner's are posted here.  More to follow when we receive a copy of the cert petition.

Opening Brief in Kona Eminent Domain Appeals: Damages for Failed Condemnations, Abatement, and Pretext

Today, we filed the Opening Brief in County of Hawaii v. Richards, No. 28882, the consolidated appeal from two eminent domain lawsuits filed by the County in 2000 and 2005.  I won't go into detail about the case and will let the brief speak for itself since I am part of the legal team representing the appellant/property owner. 

The issues in the case include:

• application of Haw. Rev. Stat. § 101-27 (1993), the statute that provides that the government must make a property owner whole and pay damages when an attempt to take property by eminent domain is discontinued or dismissed

• whether the government may concurrently prosecute more than one condemnation lawsuit at the same time

• the standards for demonstrating that the government's claim of public use is pretext to hide private benefit

The brief, minus Appendices, is posted here (1.8mb pdf)

A link to the trial court's findings, along with a summary of the case is posted here.

Cases and Links From Today's Seminar

To all those who attended today's seminar, thank you.  Here are the links to the cases I mentioned.  From the morning session on Case Law Update:

• Wilkie - Government Gone Wild! - no comprehensive federal remedy for federal interference with property
• My Advertiser op-ed on Wilkie
• Crown Point - Ninth Circuit abandons Armendariz doctrine
• Cine SK8 - one way to prove a substantive due process case
• Post-Kelo claims of pretext:

• Franco - District of Columbia Court of Appeals - allegations of pretext cannot be summarily dismissed

• Goldstein v. Pataki - Second Circuit - government's claim of public use trump claims of pretext - cert. petition filed March 31, 2008

• Brescia - shoreline setback and equitable estoppel - HAWSCT holds you gotta get your "official assurances" from the right party
• Private agreements and public process - development and settlement agreements not a substitute for zoning process

From the afternoon session on Appealing an Administrative Zoning Decision:

• Hawaii Home Infusion - venue in administrative declaratory actions under § 91-7
• CARD - can a § 91-8 declaratory action substitute for an appeal?
• Colony Surf - nonconforming uses and reliance on administrative procedures
  
• E & J Lounge - what is a "contested case?"  See also Aha Hui Malama v. Kaniakapupu v. Land Use Comm'n (July 24, 2006)
• Rees v. Carlisle - private rights of action
• Silva v. City and County of Honolulu - the basis for rational basis equal protection arguments must be in the record

Questions?  Want a copy of the vested rights/zoning estoppel law review article? Drop me an email.

Discretion Wins Out Over Valor in Half Moon Bay Inverse Condemnation Case

Remember that whopping $36.8 million inverse condemnation judgment against the City of Half Moon Bay, California by the U.S. District Court back in November 2007?  Yamagiwa v. City of Half Moon Bay, No. 05-4149 VRW (Nov. 28, 2007).  The city said at the time it was going to appeal, and it hired some pretty impressive guns to do so.  Now, however, it appears that the city has changed its mind, as reported in the San Francisco Chronicle's story, "Half Moon Bay's plan to avert fiscal ruin."

In a move to save their city government, Half Moon Bay officials tonight approved a settlement agreement with a developer who won a $36.8 million court judgment last fall that threatened to leave the city in financial ruins.

The Half Moon Bay City Council signed off on an $18 million settlement to developer Charles "Chop" Keenan, whose trustee wanted to build an 83-unit subdivision on a 24-acre property that the city had inadvertently turned into protected wetlands.

Under the agreement, which was accepted by the developer, the city could get out of paying a cent if it can successfully get special legislation passed that would allow Keenan to build 129 lots on the property and an adjoining parcel, bypassing wetlands protection laws.

Read the complete report here.  The city probably should have thought about the consequences before it turned the plaintiff's property into undevelopable wetlands, but government regulators often don't seriously consider the possibility of losing.  The law is stacked against property owners, and government has no problem interposing all sorts of procedural hurtles in an effort to expense the property owner down (as one government attorney once confessed, "we'll 'motion' you for a year before we ever reach the merits").  Even if the government eventually loses, any monetary judgment will be paid with O.P.M. (Other People's Money).  In this case, however, the judgment was more than three times the annual municipal budget, an amount so large it could not be ignored by the city fathers and mothers. 

Read the District Court's 167-page Findings of Fact and Conclusions of Law if you want to find out the whole sordid story of what led up to the judgment. 

Cert Petition in Goldstein v. Pataki: How to Plead Kelo Pretext

The homeowners threatened with eminent domain for the Atlantic Yards project in Brooklyn, New York have filed a petition for a writ of certiorari in Goldstein v. Pataki, 516 F.3d 50 (2d Cir. 2008).

The petition points out the schizophrenic nature of Public Use analysis after Kelo: on one hand, the Court's holding that "pretextual" takings are prohibited, and incidental public benefits are not enough, seems to invite inquiry into the motivations of the condemnor and the "actual purpose" of the taking.  On the other, the Court's continuing reliance on the sweeping language of Berman and Midkiff may suggest that any reason that is "conceivable" would insulate a taking from further judicial scrutiny.  The Second Circuit in Goldstein chose the latter path.  As I wrote here:

The crux of the issue in Goldstein was whether factual allegations of pretext could be trumped by the invocation of the Berman-Midkiff-Kelo legal standard of conceivable public use.

In other words, the appellants have effectively conceded what Rosenthal found to have been a complete defense to a public-use challenge: that viewed objectively, the Project bears at least a rational relationship to several well-established categories of public uses, among them the redress of blight, the creation of affordable housing, the creation of a public open space, and various mass-transit improvements.

Slip op. at 13-14.  Here's the Second Circuit's rationale in a nutshell:

We need not go further. As Berman and Rosenthal illustrate, the redevelopment of a blighted area, even standing alone, represents a “classic example of a taking for a public use.”

Slip op. at 15.  In other words, according the court, it doesn't matter one whit whether a taking was accomplished by ignoring or subverting the public process, whether a taking was designed to bestow private benefit on a government insider, or whether a taking was accomplished to punish a landowner for wanting to develop her property.  Under the Goldstein holding, such facts are not relevant unless some conceivable post-hoc linkage between the project and public benefit cannot be be conjured up from the record by government lawyers or a court.  Fat chance of that happening since -- as Justice Scalia once noted -- government agencies generally do not employ "stupid staffs" who cannot paper a record with some possible public benefits that may stem from just about any project or regulation. 

The Questions Presented by the Goldstein petition:

Is the Court’s statement that the Public Use Clause prohibits the taking of “property under the mere pretext of a public purpose, when [the] actual purpose [is] to bestow a private benefit,” Kelo v. City of New London, 545 U.S. 469, 478 (2005), a rule of general application, or is it limited to takings justified solely on economic development grounds?

Does the substantial deference afforded to legislative public use determinations under Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229 (1984), apply to non-legislative condemnation decisions?

What are the elements of a Public Use Clause claim, and how should such a claim be evaluated on a motion to dismiss, given the tension between Kelo’s
assurance that “purpose” and “pretext” matter and Midkiff’s statement that courts should defer to a legislative taking that appears “rationally related to a conceivable public purpose”?

The petition is posted here.  A press release with background is here.

Kelo has been wielded too broadly.  It did not, as many courts wrongly assume, validate all economic development takings, or takings supported by a blight determination.  The only question presented by that case was whether economic development takings are, in all cases, violative of the Public Use Clause.  In other words, a claim of per se invalidity, i.e., they never are legal.  The Kelo opinion was careful to leave open the possibility that in individual cases, takings supported by claims of blight or economic development would not pass muster because the claims are pretextual or a subterfuge, a position expanded upon by Justice Kennedy in his concurring (and fifth vote) opinion. 

Finally, keep in mind that Goldstein is a pleadings case -- the plaintiffs' complaint was dismissed for failing to state a claim under Rule 12(b)(6) -- where the court held that even if everything the plaintiffs claimed were true, they were not entitled to go forward and muster proof.  That's stretching Kelo too far.

6th Circuit: We Have No Jurisdiction, But We Rule Against The Property Owner Anyway

If you picked up and read a copy of Braun v. Ann Arbor Charter Township, No. 07-1370 (Mar. 13, 2008), an opinion by the US Court of Appeals for the Sixth Circuit, without having read the briefs of the parties and the decision of the court below, you might not see anything terribly unusual. 

The case arose after property owners asked the Township to rezone their parcels from Agricultural to Residential, and the Township refused.  The property owners did not seek a variance because the Township informed them that none was available.  The property owners then dutifully went to state court to seek compensation, arguing that the only economically beneficial use of the property was residential.  The state courts did not reach the constitutional claims, and dismissed the case on procedural grounds because the property owners had not sought a variance.  See Braun v. Ann Arbor Township, 683 N.W.2d 755 (Mich. Ct. App. 2004).  The Township's Zoning Board of Appeals denied the variance because it lacked jurisdiction .

Probably believing it was futile to thrash about in this state court procedural shell game (hadn't the Michigan Court of Appeals just held the ZBA did have jurisdiction?), the property owners filed suit in federal district court, asserting the denial of their zoning change request deprived them of substantive and procedural due process, denied them equal protection, was a regulatory taking and a violation of a federal civil rights statute (42 USC § 1983). 

They fared no better in federal court, however, which dismissed all of their claims on Williamson County ripeness grounds because they had not sought and been denied just compensation by the state courts (more on the Williamson County rule here). 

But wait, you say, the regulatory takings claim was only one of the property owners' claims; what about the due process and equal protection claims -- those are not subject to Williamson County because denial of just compensation is not an element of a due process and equal protection claim.  You'd be right, but apparently the District Court was following the now-discredited and overruled Armendariz doctrine from the Ninth Circuit which treats all property owner claims as takings claims, even when they plainly are not. 

The court of appeals affirmed, holding that the regulatory takings claim was not ripe under the Williamson County rule, and that the due process, equal protection, and 1983 claims were "ancillary" to the takings claim, and thus were also not ripe.  See Braun, slip op. at 3.  The court of appeals held:

Because the plaintiffs did not fulfill their obligation of seeing just compensation in state court, we do not have jurisdiction to reach the merits of their takings claim.

Slip op. at 5 (emphasis added). 

If the Sixth Circuit's opinion stopped there, it would be "nothing to see here, folks, just move along" time -- yet another case to add to the growing list of certworthy decisions highlighting the weird regulatory takings ripeness rules property owners find themselves up against when they have the audacity to believe they can assert federal constitutional claims in federal court.  However, having just held it did "not have jurisdiction" to reach the merits of the property owners' claims, the Sixth Circuit spent the next four pages doing just that, on issues not analyzed by the District Court's opinion (the District Court dismissed the case without prejudice), and not raised, briefed, or argued by either party to the appeal.  The Sixth Circuit apparently believed it possesses the power to raise and decide these issues on its own initiative, without the benefit of input by the parties.  See slip op. at 6-9. 

But the Federal courts are limited by Article III of the Constitution to hear only "cases" and "controversies," meaning that they have no power to decide cases over which they lack jurisdiction, especially when a court expressly acknowledges it does "not have jurisdiction" over a case, as the Sixth Circuit did here.      

9th Cir: Senior Citizens Are Not Automatically Considered "Disabled"

With a name like Carefree, Arizona, who wouldn't want to spend the golden years there?  That appears to have been what was on the mind of one F.G. Budnick, a developer, when he decided he wanted to build the "Residences at Carefree," which he described as a "luxurious, age restricted, senior retirement residential community," in the small town north of Phoenix. 

But alas, it was not to be: the Town of Carefree didn't want him, or at least didn't want his proposed development, so the Planning and Zoning Commission denied the application for a Special Use Permit, which would have allowed the Residences to operate in a residential zone.

Budnick, however, would not be denied.  The future senior residents of the Residences would be "healthy, active, independent seniors who will be impossible to tell apart from" other Carefree residents, he asserted, and an appeal was lodged with the Town Council.  But like the Planning Commission, the Council denied the SUP.

Budnick then changed course: the Residence would serve disabled people, and the Town of Carefree was violating federal law by discriminating against the disabled if it denied his permit.  The parties met, but could not find a middle ground.

Budnick filed suit in federal court, alleging the denial of the SUP was a violation of the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3604, the Americans With Disabilities Act, due process and equal protection, and our old friend 42 U.S.C. § 1983 (violation of federal rights under color of state law).  The district court granted Carefree summary judgments on all of Budnick's claims.

In Budnick v. Town of Carefree, No. 06-15841 (Mar. 11, 2008), the Ninth Circuit affirmed.  The court held that Budnick could not establish a prima facie case of discrimination against the disabled for two reasons.

First, the court held that he did not raise triable issues of fact whether the Residence would house "disabled" people.  As the court put it, "Budnick suggests that the [Residence] would naturally house disabled individuals because the senior citizen residents of the [Residence] would have entered into life care contracts and would inevitably experience disabilities as they age."  Slip op. at 2314.  The court rejected the argument, holding:

We hold that potential [Residence] residents do not presently qualify as disabled under the FHAA simply because some of them will become disabled as they age.  To hold that they can currently be considered disabled under the FHAA would mean, in effect, that every senior citizen (indeed, every person) desiring to rent or buy housing could assert a present claim of discrimination based on inevitable disability due solely to the passage of time.  Such a holding would also disregard the reality that even if many individuals become disabled as they age, many do not, and that being old is not, per se, equivalent to being disabled.

Slip op. at 2314 (emphasis original).  In other words, the FHAA does not cover people who may become disabled, but only those who presently are.

Second, the court held that Carefree had valid, nondiscriminatory reasons for denying the SUP, and that a few statements by witnesses at the public hearings that the Residence would turn Carefree into a place where "people came to die," could not be attributed to the Town, and there was no evidence to show that the SUP was denied due to such beliefs.  Slip op. at 2319.

Download the opinion here.

Appellate practice notes:  The panel was comprised of Circuit Judges William C. Canby (born 1931), David R. Thompson (born 1930), and Milan D. Smith (born 1942).  It was an interesting oral argument, trying to convince three Ninth Circuit judges, all of whom presumably would be eligible to reside in the Residence at Carefree were it ever to open, that being elderly makes you "disabled."  The first question asked at orals:

Before we get to that, there's an underlying issue here that's really quite interesting to me.  It seems to me you are saying that -- at least the literature that was given to the city -- says these are going to be able-bodied people, at least 95 percent.  But we're making the claim for disability, and the reason people are disabled is that because they're human beings, and when you get old, you get disabled.  Is that the argument?

Judge Smith, the youngest member of the panel, authored the opinion.  The oral argument recording is posted here (6mb wav).