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Third Circuit: Closing A Business To Remove Unexploded Munitions Is Not A Taking

If you haven't figured out by now, we like takings claims. We really do. But here's one where we think the Third Circuit reached the right result when it concluded that there was no compensable taking. National Amusements, Inc. v. Borough of Palmyra, No. 12-1630 (May 9, 2013).

Why? Because when there may be an unexploded artillery shell on the property, and as a result the government seals off the property and temporarily closes the business conducted thereon, we don't think the Takings Clause requires compensation, that's why. The property owner thought otherwise, and in response to the Borough's order to shut down after someone discovered that a flea market site was also former WWII-era muntions magazine and testing area, and that there was still some of that stuff left over, it objected:

The gist of the Complaint is that Palmyra overstated the danger posed by the unexploded munitions as pretext to shut down NAI’s economic activity on property Palmyra had been eyeing for redevelopment. NAI contends that Palmyra’s failure to enact similar restrictions on adjacent property or adopt a less restrictive course of action that could have permitted the continued operation of the Market demonstrated this surreptitious intent.

Slip op. at 4. Yes, the Borough had sold the property to the flea market's predecessor in title. Yes, the Borough apparently was now targeting the area (sorry for the bad pun) for redevelopment. Yes, the Borough didn't shut down neighboring parcels. Yes, the Borough and the property owner entered into a consent order which allowed the market to open at certain times, presumably meaning the danger was not all that great. Yes, a five-month shutdown seems a bit much. And yes, the discovery by the Borough was, shall we say, conveniently timed. But as far as we can tell from the opinion, unexploded artillery shells were not found on other parcels, and the property owner introduced no evidence that the "we discovered unexploded artillery shells on your property" thing was just a pretext designed for leverage in the redevelopment acquisition. Unless there's more to this case than what the opinion reveals, we have to go with it-is-better-to-be-safe-than-sorry when dealing with old artillery rounds and a public venue.

Question: how desperate for a bargain does a shopper have to be to go to a flea market knowing that there are unexploded artillery shells on the premises? Not us, brother.

The takings issue came up in the context of a request for $200,000 in attorneys' fees, which the property owner sought following the entry of the consent order, claiming it was the prevailing party. The Third Circuit affirmed the District Court's denial of the motion for fees, concluding "[i]t is difficult to imagine an act closer to the heartland of a state's traditional police power [to abate nuisances] than abating the danger posed by unexploded artillery shells." Slip op. at 7.

Read the opinion. It's short. It makes sense.

National Amusements, Inc. v. Borough of Palmyra, No. 12-1630 (3d Cir. May 9, 2013)

ABA Spring Conference: Public Use And Regulatory Takings Updates

We just wrapped up the spring meeting of the ABA's Section of State and Local Government Law in Nashville, which included our presentation of two updates, one on the latest in public use in eminent domain, the other on regulatory takings.

Here are the draft papers presented:

• Recent Developments in Eminent Domain: Public Use (coauthored with Mark Murakami and Bethany Ace)

• Recent Developments in Regulatory Takings

For those of you who attended, you already have these articles in your materials.

Materials From Today's Virginia Eminent Domain Conference

For those of you attending the Virginia Eminent Domain Conference, here's the expanded papers on "Tough Takings Questions: Regulatory Takings, Zoning Issues and Judicial Takings" and Public Use issues.

Use the password provided at the conference to open the pdf's. It's the same p/w for both. If you forgot the password, email me.

• Regulatory Takings

• Public Use

For those who did not attend, sorry folks, there are some benefits to coming to a conference! Y'all are going to have to wait for a bit -- after a decent interval to allow the attendees to get their money's worth, we'll remove the password.

For more about the cases and books we discussed yesterday during my presentation on "Virginia's Place in National Eminent Domain Trends, check these out:

• More about Crenshaw v. Slate River Co., 27 Va. 245 (1828).

• Arlington National Cemetery and the Takings Clause.

• Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984) (private takings, Public Use Clause).

• Lingle v. Chevron, U.S.A., Inc., 544 U.S. 528 (2005) (gas station rent control, and the demise of the "substantially advance" test as a takings test).

• Kaiser Aetna v. United States, 444 U.S. 164 (1979) (navigable waters, regulatory takings).

• Livingston v. Virginia Dep’t of Transportation, 726 S.E.2d 264 (Va. 2012) (flooding and taking liability).

• James Ely, The Guardian of Every Other Right: A Constitutional History of Property Rights (1998) (read this book!).

 

Fifth Circuit: City Not Required To Give Notice Prior To Demolishing Building If It Merely Believed There Was An Emergency

A short one from the U.S. Court of Appeals for the Fifth Circuit. In RBII, L.P. v. City of San Antonio, No. 11-50626 (Apr. 23, 2013), the court overturned a jury verdict that the city violated the due process and Fourth Amendment rights of a property owner when the city demolished its building without first providing notice that it was going to do so.

The city believed a structure owned by the plaintiff was dilapidated and a danger, and needed to be demolished immediately. The city undertook environmental review, exhausted its internal procedures for demolition, notified the Historic Preservation office, turned off the utilities, and checked the permit register to see if any repairs were made. It accomplished this all in about two weeks. But it didn't notify the property owner before it took down the structure.

The owner filed suit in state court, and the city removed it to federal court. The owner asserted among other things that the city violated it procedural due process right to a predeprivation notice, and its Fourth Amendment right against unreasonable seizure. After a jury trial, the district court awarded the plaintiff $27,500 in damages.

The Fifth Circuit bacated the verdict and remanded the case. Predeprivation notice is unnecessary where an emergency presents a threat to public safety, and postdeprivation process is sufficient. If the city acted in accordance with its emergency procedures -- which it did here -- its determination that there was an emergency is "entitled to deference." Slip op. at 6. "In such cases, the relevant inquiry is not whether an emergency actually existed, but whether the State acted arbitrarily or otherwise abused its discretion in concluding that there was an emergency requiring summary action." Id. It doesn't matter whether there actually was an emergency. The court held that the district court wrongly instructed the jury that the city was only excused from providing predeprivation notice if there was an immediate danger to the public, not mentioning the part about discretion and compliance with its emergency procedures. Verdict vacated, sent back for a new trial.

The problem also infected the Fourth Amendment verdict, even though the jury instructions there were not in error. The erroneous due process instruction "would have led the jury to believe that such a decision can only be reasonable when there is actually 'an immediate danger to the public.'" Slip op. at 10-11.

RBIII, L.P. v. City of San Antonio, No. 11-50626 (5th Cir. Apr. 23, 2013)

The Ninth Circuit Botches Regulatory Takings Again

When reading the Ninth Circuit's latest foray into the regulatory takings doctrine which holds that a muncipal rent control ordinance did not qualify under Penn Central (MHC Financing Ltd P'ship v. City of San Rafael, No. 07-15983 (Apr. 17, 2013), we were reminded of the opening line in Andy Williams' signature tune "Love Story" --

"Where do I begin ..."

But before we begin, two preliminary thoughts. First, the district court's decision finding that San Rafael's mobile home rent control ordinance worked a taking of the mobilehome park owner's property because it reduced the value by more than 80% was not some one-off aberration by a conservative district judge out on a lark. No, the decision was by the now-retired Vaughn R. Walker, the same judge who invalidated California's Proposition 8 in one of the same-sex marriage cases currently before the Supreme Court. Apparently a proponent of actual judicial review for all constitutional rights, he also found a taking in another case we've covered here, Yamagiwa v. City of Half Moon Bay, No. 05-4149 VRW (Nov. 28, 2007), in which he concluded that the city was liable for $37 million in compensation.

Second, San Rafael is not in some backwater, but is the heart of Marin County, which a source no less than Wikipedia tells us "is well known for its natural beauty, liberal politics, and affluence" (they forgot to mention hot tubs). San Rafael is the place where Frank Lloyd Wright designed the county courthouse, and is up the street from Tiburon and just south of George Lucas' broken dream of expanding his Lucasfilm studio. In other words, you need some serious coin to live in Marin County. Indeed, the property at issue in this case is no "trailer park" but is quite tony and just a stone's throw from Skywalker Ranch.

But the city fathers and mothers apparently thought it important to insure that owners of mobile homes could enjoy the bounty that Marin County has to offer. So they adopted a rent control ordinance in 1989, amended it in 1993, and then in 1999 amended it yet again. We'll leave it to you to read the ordinance in its entirety, but here's the short version. The ordinance initally tied the park owner's ability to increase the ground rent to the CPI, with a sliding scale. The 1993 amendment added vacancy control which gave the mobile home owner the ability to transfer the lower-than-market rent to the purchaser of a mobile home. The 1999 amendment removed the sliding scale, and all pad rent increases are limited to 75% of CPI.

The rent-control-as-a-taking issue has been before the Ninth Circuit before with pretty much the same results, most recently in Guggenheim v. City of Goleta, 638 F.3d 1111 (9th Cir.2010) (en banc), cert. denied, 131 S. Ct. 2455 (2011). [Disclosure: in that case, we filed an amicus brief for the Manufactured Housing Institute, arguing the Ninth Circuit was wrong, and that the Supreme Court should grant cert.]. See also this case and this case for more examples of challenges to mobilehome rent control ordinances. 

In MHC, after a bench trial (two, actually) the district court held the ordinance was a taking under Penn Central, but not a due process violation:

"[p]urchasers of mobilehomes in Contempo Marin after the 1999 Amendments have paid a premium reflecting the present value of expected rent savings due to San Rafael rent regulation. This premium averages $67,000 for the right the enjoy the below market regulated rent." Because the premium is being paid to the Contempo Marin mobilehome owners, “the amendments reduced MHC’s revenue streams from Contempo Marin and the value of its property by $10,609,136." The district court also held that "the whole Ordinance reduced MHC’s net operating income by 75 percent and reduced the value of the park from $120 million to $23 million."

Slip op. at 11-12.

The Ninth Circuit, as we mentioned above, reversed. According to the panel, the central fact that made hash of the plaintiff's Penn Central claim was that when it purchased the park in 1993, the original 1989 ordinance had already been adopted.  Thus, analysis of each of the three Penn Central factors results in no taking:

Economic Impact: The property owner didn't suffer a huge economic impact because the district court should only have measured the diminution in value by comparing present market value with the market value of the property at the time of MHC's acquisition, instead of at the time of the amended ordinance. Apparently, the original ordinance had already depressed the market value of the park, and the district court should have measured the economic impact as "only" $10 million, and not $97 million (the value of the park with no rent control at all). See slip op. at 17-18. However, even if measured against the value of the park unencumbered by any ordinance, an 81% reduction in value would not be sufficient according to the court. Slip op. at 18-19. Read that again, to make sure you got it: a transfer of $97 million is not enough. Wow. Maybe this is just Marin County, and you know, a dollar doesn't go as far here as elsewhere.

Investment-backed Expectations: the Ninth Circuit rejected the district court's conclusion the property owner expected that the rent it charged would be set by the market, not by the city. "[T]hat is, MHC's expectation was that Contempo Marin would be subject to no rent control at all." Slip op. at 19. This was not a reasonable expection to the Ninth Circuit because "MHC had even less reason to expect that the rent control regime would disappear altogether." Id. Renting property is a "regulated field," and those who choose to participate in it "cannot object if the legislative scheme is buttressed by subsequent amendments to achieve the legislative end." Slip op. at 19-20. Relying upon the rationale in Guggenheim, the court held this is the "primary factor," and surmised that the "price they paid for the mobile home park doubtless refected the burden of rent control they would have to suffer." Slip op. at 20.

Character of the Government Action: This was not a physical invasion (allowing mobile home owners to occupy space in the park, or a physical taking of the rent premium), but rather a mere adjustment of the benefits and burdens of economic life. In other words, you knew the regulatory environment was harsh when you decided to buy a mobile home park. Slip op. at 22-23.

Some thoughts:

Presuming Expectations. First, the Ninth Circuit reached its conclusions as a matter of law, not because the district court misunderstood the facts. In other words, when you buy property already subject to a regulation that takes property, you simply cannot form investment-backed expectations that you can operate free of the regulation, even if it may be a taking. This was a case where the district court held two trials before concluding that the ordinance was a taking under an "essentially ad hoc, factual inquiry." But even though appellate courts usually defer to a trial court's factual findings, the Ninth Circuit didn't do so because it was simply legally impossible for those expectations to be formed when a restrictive ordinance predates purchase. But aren't someone's "expectations" and how property is priced questions to be decided by the trier of fact and not by appellate judges who surmise about what the price "doubtless" reflected?  Instead, the court substituted its view that it was "doubtless" that MHC's acquisition price for the park was already discounted to account for the rent control regulation. But was there any testimony on this? Even if there was, would it matter to the Ninth Circuit?

Where's Palazzolo? Second, where's the Ninth Circuit's analysis of Palazzolo v. Rhode Island, 533 U.S. 606, 626 (2001), in which the Supreme Court rejected the proposition that "postenactment purchasers cannot challenge a regulation under the Takings Clause[?]" The Ninth Circuit cited that case only in the section of the opinion dealing with ripeness, not in the Penn Central discussion. Our read of Palazzolo is that a property owner's right to make reasonable use of her land does not evaporate simply because restrictive regulations predate her acquisition. Purchasers of property subject to restrictive regulations maintain all of the rights protected by the Fifth Amendment and may assert a takings claim, and regulations do not become part of a parcel’s "background principles" simply because the property is transferred to a new owner. As the Court put it, the government cannot “put an expiration date on the Takings Clause." Id. at 627. The Ninth Circuit doubled down on its Guggenheim rationale, which ignores the above principle.

The Armstrong rationale. Finally, even if a rent control ordinance does not allow another to physically occupy property (we thought that in Yee v. City of Escondido, 503 U.S. 519 (1992) the Court held that rent control was a physical occupation, but that hey, you threw open your property by offering to rent it, so that's on you), the San Rafael ordinance in particular seems designed to effectively create "affordable" housing in Marin County. If so, then isn't MHC being required to provide this public benefit at its own cost, and therefore doesn't the ordinance run up against the central principle of regulatory takings theory? Shouldn't the cost of providing affordable housing be provided by the public as a whole? 

Will this case result in another cert petition challenging rent control as a taking, asking the Supreme Court for clarification on how to apply the Penn Central factors? As Andy Williams sang, "I have no answers now but this much I can say" it should.  

MHC Financing Ltd. P'ship v. City of San Rafael, No. 07-15982 (9th Cir. Apr. 17, 2013)

Ninth Circuit: No Penn Central Taking In Rent Control Ordinance

This just in: the Ninth Circuit has issued an opinion in MHC Financing Ltd P'ship v. City of San Rafael, No. 07-15983 (Apr. 17, 2013), reversing the District Court's decision that the city's mobilehome rent control ordinance was a taking under Penn Central.

More, after a chance to review the opinion.

MHC Financing Ltd. P'ship v. City of San Rafael, No. 07-15982 (9th Cir. Apr. 17, 2013)

Fla Fed Ct: Exaction Scheme Is "Constitutional Mischief" To Avoid "Nettlesome Payment of 'Just Compensation'"

Here's one to brighten your day, courtesy of the the U.S. District Court for the Middle District of Flordia (that's Tampa, to all you non-Floridians). In Hillcrest Property, LLP v. Pasco County, No. 8:10-cv-819-T-23TBM (Apr. 12, 2013), the court held the county's "Right of Way Preservation Ordinance" that allows it to land bank for a future road corridors by means of an exaction (more details on the ordinance below), is "both coercive and confiscatory in nature and constitutionally offensive in both content and operation." Slip op. at 4.

We've seen this situation before -- the government wants to build roads, but it either doesn't have the money to buy or condemn the necessary property to do so, or it simply figures it can get it another way. The county had such plans, and designated future transportation corridors on its comprehensive plans. In 2005, the county adopted the ordinance which "targets landowners who own property encroached by the corridor and who aspire to build on the property adjoining the corridor." Slip op. at 4. Here's how the court described the ordinance's operation:

 In exchange for a development permit, the Ordinance requires those landowners to agree to dedicate the corridor in fee simple to Pasco County. Under the Ordinance, Pasco County withholds the construction permit until the landowner dedicates the property "by recordation on the face of the plat, deed, grant of easement, or other method acceptable to the County." Code § 319.8(A); Code § 901.2(H). If the property owner declines the dedication, Pasco County declines the construction permit.

Once a landowner dedicates the land to Pasco County, the landowner may apply to Pasco County’s Development Review Committee for permission to use his former land until Pasco County needs to build the road. The Ordinance provides a list of specific and temporary “interim uses,” such as a produce stand or a bridal path for a residential zone or a boat storage yard or a ground to host “festivals, carnivals, community fairs, and the like” for a commercial zone. Code § 319.6(C)(1); Code § 901.2(F)(3). When and if Pasco County needs the land, the former landowner must remove any permitted, temporary use (for example, a lemonade stand, a Tilt-AWhirl, or a putt-putt course).

Slip op. at 4-5. A property owner who believes that the exaction is not "roughly proportional" to the transportation impacts its development may have may seek a waiver, sought via an application requiring myriad studies and experts. ("Roughly proportional? Looks like Justice Scalia was right and a smart staffer has read Dolan). If the Review Committee agrees, she gets 115% of the value of the excess, or other credits. The Review Committee may also waive the waiver requirements via a "variance" if the owner can show the application process would impose a hardship. The court noted the ordinance "is no model of clarity." See slip op. at 9-11 & n.3.

The transportation corridor protrudes into Hillcrest's undeveloped commercially-zoned property. Hillcrest wanted to build a shopping center and it submitted a plan to the Review Committee, which rejected the application because it did not account for the corridor. Hillcrest submitted a second plan which was rejected, and a third plan which was eventually approved. It required Hillcrest dedicate the right of way to the county, although Hillcrest reserved its right to object to the dedication. Hillcrest then filed the federal action seeking to invalidate the ordinance, asserting several claims including federal due process and a takings claim under Florida law. Hillcrest had not applied for a waiver or a variance.

The court first rejected the county's argument that the substantive due process claim was not ripe under Williamson County because Hillcrest had not pursued a waiver or variance. The court noted that Williamson County only applied to takings claims, although due process claims may be subject to a similar requirement depending on the remedy sought. But the exhaustion requirement was not applicable since Hillcrest was only claiming the county acted arbitrarily and capriciously when it used the ordinance as a way to avoid condemnation and compensation, and the remedy it sought was invalidation.

Starting at page 23, the court attempted a "clarifying account of the constitutional first principles," to distinguish due process claims from taking claims. We won't detail it here, but it is well worth a read in its entirety and, we think, for the most part correct. This section of the opinion is something everyone who follows this blog should read:

Instead of finding that the Ordinance deprives a landowner of property without paying just compensation, the magistrate judge finds that the Ordinance leverages the police power to compel a landowner to relinquish rights guaranteed by the Takings Clause – a finding that the Ordinance fails to advance a legitimate governmental purpose. Although not "set[ting] forth the applicable standard," Nollan and Dolan are central to understanding the Ordinance’s perverse scheme and Nollan and Dolan "inform the due process analysis."

Slip op. at 25. In other words, it is a due process violation to use the police power to avoid taking and paying for property. We made this point a few years ago in an amicus brief in Lingle, where we argued it was not a legitimate exercise of government power to try and get property without using eminent domain. As the court noted, "[t]he government's failure to satisfy [the Nollan and Dolan] requirements violates the Takings Clause. If taking an amount of land in excess of the amount that the government has proven necessary to mitigate the development's contribution to the public hardship, the government must proceed as it always has -- through condemnation, in which the government bears the burden of proof and a disinterested fact-finder determines 'just compensation.'" Slip op. at 35.

The court concluded the Right of Way Preservation Ordinance violated the Takings Clause because it shifts the burden to disprove rough proportionality to the property owner and empowers the county to obtain land in excess of what it would otherwise get in the absence of the ordinance:

Instead of proceeding through eminent domain, in which the government proves a public need and a disinterested fact-finder determines "just compensation," the Ordinance requires Pasco County to prove nothing and empowers Pasco County to determine the "just compensation," if any, Pasco County will pay.

Slip op. at 36. This is a due process problem because "by legislative fiat, Pasco County uses a development permit to compel a landowner either to convey valuable land for free or to submit to a regime catigated by Dolan. In other words, Pasco County wields the police power to compel a landowner's abandoning rights guaranteed by the Takings Clause." Id. at 37. The ordinance also offends due process because it was desiged to circumvent the requirements of the takings clause, and was a "misuse of the police power" to avoid exercising the county's eminent domain power. The court wrapped up its takings/due process analysis with this:

In sum, the Ordinance discriminates based on economic aspiration. Against the class of landowners who never attempt to develop, Pasco County will acquire land by eminent domain, beginning when and if Pasco County needs the land. A landowner without need of a permit enjoys the protection of condemnation and receives the "just compensation" guaranteed by the Constitution. A landowner who aspires to develop property and who aspires to a permit for a grocery store, a doctor’s office, an apartment building, or the like faces an immediate confiscation of land. For these landowners, a last but forlorn hope for just compensation is in Pasco County’s prolix, opaque, and overbearing Ordinance. Further, these landowners’ just compensation is an elusive contingency, held for ransom by a committee methodically acquiring property at a steep, aggregate discount. "[M]erely an attempt to circumvent the constitutional and statutory protections afforded private property ownership under the principles of eminent domain," the Ordinance improperly uses the police power and fails to advance a legitimate governmental purpose (taking by eminent domain is a legitimate governmental purpose; extorting landowners is not).

Slip op. at 46 (citation omitted).

Order, Hillcrest Property, LLP v. Pasco County, No 8:10-cv-819-T-23TBM (M.D. Fla. Apr. 12, 2013)

Amicus Brief In Ninth Circuit Homeless Property Case: No One Has Constitutional Right To Leave Unattended Property On The Street

Here's the amici brief of the International Municipal Lawyers Association and the National League of Cities, which urges the U.S. Supreme Court to review the Ninth Circuit's decision in Lavan v. City of Los Angeles, 693 F.3d 1022 (9th Cir. 2012).

In that case, a 2-1 panel held that the city could not presume that property owned by homeless people in the Skid Row area of downtown was abandoned, and enjoined the city from seizing and destroying it when the owner was "momentarily away" from it.

The city filed a cert petition, arguing that the panel decision resulted in an invasion of vermin and other public health hazards in the area. IMLA's brief argues:

The Ninth Circuit’s Opinion distorts that balancing act and jeopardizes local governments’ ability to act for the benefit of all their citizens. Like other citizens, homeless individuals have a right to use and enjoy the public streets, but no one—homeless or not—has a federal constitutional right to leave items unattended on a public street to the detriment of other citizens, including other homeless individuals. As a practical matter, that is what the Ninth Circuit’s Opinion creates: a right to use public streets as long-term storage facilities in contravention of local law.

....

Local governments need to know when their attempts to create safe and healthy communities may subject them to liability.

....

Under the novel injunction and constitutional analysis here, however, this basic yet essential local government function always presents a Fourth Amendment question. That cannot be correct. Because public sidewalks are not constitutionally protected storage bins, and because a local government’s mere movement of unattended items from this public space does not implicate the Fourth Amendment, this Court should grant the City’s Petition and reverse the Ninth Circuit’s decision.

Br. at 2-4. The respondents waived their right to respond, and the case is on the Supreme Court's conference calendar for April 19, 2013.

Brief of Amici Curiae The International Municipal Lawyers Association and the National League of Cities, Ci...

Wednesday Round-Up: Houseboat Redux, Backtracking Post-Kelo, Arkansas Game Remand, Big Gulps

Here's what's on our reading list today:

• Here's the latest chapter in the saga of one Fane Lozman, whose titling at windmills got some Supreme Court love recently when the Court held that his floating home was not a "vessel" under admiralty law, and a Florida city was wrong to seize it. My Damon Key colleague Mark Murakami reports on the 11th Circuit's recent ruling in Lozman's related federalcivil rights case. Houseboat Redux - Eleventh Circuit Reinstates Lawsuit (via Hawaiioceanlaw.com). 

• Arkansas Game & Fish did not overturn the well-settled physical takings test - from PLF's Liberty Blog, Brian Hodges writes about the amici brief that PLF and others filed yesterday in the Federal Circuit.

• Ilya Shapiro at Cato writes about the same issue in U.S. Can't Use Supreme Court's Property Rights Ruling to Rewrite Takings Law (via Cato at Liberty blog). 

• Lawprof Ilya Somin writes that Alabama Undermines its Post-Kelo Eminent Domain Reform Law at Volokh Conspiracy. 

• Let Them Drink Big Sodas from Dean James Huffman (via Defining Ideas - Hoover Institution).

• One more from PLF: Yes, the Due Process Clause covers property owners, by Daniel Himebaugh, pointing out that the "property" being deprived when a local government denies a development permit is not the "new property" right to the permit process, but the "old property" right to use and develop land.

Horne v. USDA Oral Argument Transcipt

Here's the transcript from today's Supreme Court oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012).

Here's a recap of the arguments from Lyle Dennison at SCOTUSblog: "If only it were simple..."

Transcript, Horne v. USDA, No. 12-123 (Mar. 20, 2013)

Reply Brief In California Raisin Takings Case (Argued Today): Don't Confuse Constitutional Rights With Remedies

Here's the Reply Brief in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012), the case asking whether in an enforcement action by the USDA, California raisin farmers can raise the defense that the requirement they turn over to the government a certain percentage of their yearly crop would be a taking.

The brief responds to the USDA's brief, and argues that the issue before the Court is not "jurisdictional," which means it could be raised any time, much like the USDA did here, even after the Ninth Circuit issued its opinion. Rather, this is a choice of remedies ripeness question subject to "forfeiture." Barista's note: we're happy to see what is commonly referred to as "waiver" (a knowing and intentional relinquishment of a known right) properly labeled as "forefeiture" (relinquishment of a right by operation of law), because in civil litigation when you don't raise issues you could have, you lose them even if you don't intend to. The brief argues that every case from Williamson County to Stop the Beach Renourishment has treated "takings clause ripeness as non-jurisdictional." Br. at 5.

The Reply focuses on Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) -- a case sure to get Justice Kennedy's attention because he provided the fifth vote for the property owner, but argued the case was one of Due Process, not Takings -- arguing that a takings claim should be able to be raised as a defense when the regulatory scheme being challenged does not provide for compensation:

But the government nowhere cites any case for the novel proposition that Congress would want to establish such a "one-bite" regime. It makes no sense to have the question of which court should hear a takings claim depend on a factor as difficult to ascertain as whether the Executive Branch would abandon its enforcement of the law in response to a just compensation award. That is no doubt why cases addressing takings claims on the merits have given no weight to the fact that the Executive Branch had the authority to stop the taking. See, e.g., Kaiser Aetna v. United States, 444 U.S. 164, 168-169 (1979) (government initiated enforcement action for public access to property); Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952) (property seizure based on unilateral executive order). In these cases, federal courts simply reached the merits of the takings claim upon concluding that the underlying regime made no provision for just compensation, rather than requiring a party to proceed to the claims court to determine whether compensation was available there.

Br. at 8.

Finally, the reply argues that a defendant in an enforcement action may raise a takings defense because the USDA's argument that the availability of the Tucker Act avoids the constitutional violation "confuses constitutional rights with remedies." Br. at 13.

More, after today's oral arguments.

Reply Brief for Petitioners, Horne v. United States Dep't of Agriculture, No. 12-123 (Mar. 13, 2013)

Horne v. USDA Oral Argument Preview: Is It The Takings Clause, Or Only The Just Compensation Clause?

Koontz Sets The Stage

The apparent sticking point during the January oral arguments in n Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012), came to light via Justice Scalia's questioning of the property owner's counsel about whether anything had been "taken" when a property owner refused to accept a development permit conditioned on him paying for improvements to public land miles away from his property, because doing so would violate the unconstitutional conditions doctrine of Nollan/Dolan. For how could the owner claim that his property was taken when he didn't accept the permit? The issue was succintly stated by Justice Kagan when she asked point-blank, "where is the taking?" (see p. 11 of the Koontz transcript).

We're still waiting for the opinion in that case so don't have the Court's answer just yet, but Part II of the Koontz debate will likely be taking place on Wednesday, March 20, 2013, when the Court is scheduled to hear oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012), the third takings case to be argued this term.

In Horne, the Court is reviewing the Ninth Circuit's opinion which concluded that the court lacked jurisdiction to consider a takings defense raised by raisin farmers who asserted they did not qualify as "raisin handlers" under federal regulations, and could not be required to "reserve" (donate) 47% of their crop to the government because it would be a physical taking. The Ninth Circuit concluded it lacked jurisdiction because the farmers could seek just compensation in a Tucker Act claim in the Court of Federal Claims. "Takings" cases, in the Ninth Circuit's view, are about recovering just compensation and thus must be brought in the CFC if the amount sought is in excess of $10,000.

Some background before we return to that concept.

Raisin Handlers vs. Raisin Producers

This case involves much more than $10,000. For the 2003 and 2004 crop years, the USDA brought an enforcement action against the Hornes seeking to recover the monetary value of raisins they did not turn over to the government under the "marketing order" program, New Deal-era regulations designed to stabilize the raisin market. The Hornes believed they set up their business so they qualified as raisin "producers" and thus were not required to reserve any portion of their crop.

The USDA disagreed and pursued them for $483,843 for the value of the raisin crop they should have set aside, plus $200,000 in civil penalties. In the enforcement action, the Hornes asserted they were not "handlers" and didn't need to reserve any raisins, but even if they were, to impose the reserve requirement would be a prohibited physical taking of their raisins under Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) and Kaiser Aetna v. United States, 444 U.S. 164 (1979). After a losing appeal through the USDA's administrative process, the Hornes also lost in the District Court which ruled against them on all counts.

Ninth Circuit Round I: It's Their Market, You Just Participate In It

The Ninth Circuit affirmed, holding that the reserve requirement was not a taking because the raisin farmers could have avoided the confiscatory regulations by choosing to not enter the raisin market. The panel acknowledged the Hornes' "logic has some understandable appeal" because raisins are property, and they are being taken, but held there was no taking because "their argument rests on a fundamental misunderstanding of the nature of property rights and instead clings to a phrase divorced from context." The court recognized that a simple physical appropriation of raisins would be a taking. "No one suggests the government could come onto the Hornes' farm uninvited and walk off with forty-seven percent of their crops without offering just compensation, even if the seizure itself were justified."

But the reserve requirement in the USDA marketing orders are not the same thing as a direct seizure according to the court, and the regulations were merely the price that raisin farmers have to pay if they want to participate in the raisin market:

Far from compelling a physical taking of the Hornes' tangible property, the Raisin Marketing Order applies to the Hornes only insofar as they voluntarily choose to send their raisins into the stream of interstate commerce. Simply put, it is a use restriction, not a direct appropriation. The Secretary of Agriculture did not authorize a forced seizure of forty-seven percent of the Hornes' 2002-03 crops and thirty percent of their 2003-04 crops, but rather imposed a condition on the Hornes use of their crops by regulating their sale. As we explained in a similar context over seventy years ago, the Raisin Marketing Order "contains no absolute requirement of the delivery of [reserve-tonnage raisins] to the [RAC]" but rather only "a conditional one." Wallace v. Hudson-Duncan & Co., 98 F.2d 985, 989 (9th Cir. 1938) (rejecting a takings challenge to a reserve requirement under the walnut marketing order).

Relying on the rationale of Yee v. City of Escondido, 503 U.S. 519 (1992), the court viewed the raisin sale business as voluntary. In Yee, the Supreme Court upheld a mobile home rent control ordinance against a physical takings challenge, since the landowners were not required to use their property as a mobile home park, and thus the occupation of the land was not required by the government. Same for the raisin industry; no one is forcing the Hornes to participate: "[t]heir argument is founded on an erroneous belief that they have a property right to 'market their [raisins] free of regulatory controls.'" 

The court distinguished the ability to sell personal property such as raisins, from the right to develop real property (as in Nollan and Dolan, two cases where the government was prohibited from conditioning the right to build on the owner's agreement to surrender the right to compensation). The government's power to regulate commerce "ought to put a property owner on notice 'of the possiblity that new regulation might even render his property economically worthless (at least if the property's only economically productive use is sale or manufacture for sale)'." Thus, personal property is apparently different than real property, and the right to sell personal property is subject to the government's power to regulate the market (even to the point of requiring raisin producers to surrender their right to compensation for reserved raisins).

Ninth Circuit Round II: A New Gloss On The Old Tucker Act Shuffle

The Hornes sought rehearing and in response, the USDA for the first time asserted that the takings defense was not ripe, and the District Court and the Ninth Circuit couldn't even consider the argument. In an amended opinion, the Ninth Circuit agreed, holding that the exclusive forum for considering takings claims -- even those raised defensively -- is a CFC claim for compensation under the Tucker Act. The Ninth Circuit dismissed the Hornes' takings defense for lack of jurisdiction, effectively telling the farmers that they could not object to the imposition of fines, but must pay and then file a claim for just compensation in the CFC to get the money back. Oddly, the Ninth Circuit didn't wipe out the earlier opinion and substitute an order dismissing the case. It left intact the substantive decision over which it had just ruled it had no jursidiction. 

Old takings hands will recognize the Ninth Circuit's ruling as the latest incarnation of the Tucker Act Shuffle, which is like Williamson County ripeness writ small for takings claims against the federal government. Under that theory -- in which district courts only deal with the validity of the regulations and do not consider takings claims, leaving those exclusively to the CFC -- a property owner must either lose in the District Court, or concede the validity of the regulation at issue, and only then be able to pursue the CFC case for compensation. In these situations, the property owner's check to the government paying a fine and the government's just compensation check to the property owner for a taking could literally cross in the mail.

Cert Review

Just a few weeks after the Court granted cert in Koontz, it did the same in Horne, agreeing to consider two Questions Presented: 

1.  Whether a party may raise the Takings Clause as a defense to enjoin a "direct transfer of funds mandated by the Government." Eastern Enterprises v. Apfel, 524 U.S. 498, 521 (1998) (plurality; quotation marks omitted).

2.  Whether the federal courts have jurisdiction over petitioners’ takings claim, where petitioners, as "handlers" of raisins under the Raisin Marketing Order, 7 C.F.R. Part 989, are statutorily required to exhaust all claims and defenses in administrative proceedings with exclusive jurisdiction for review in federal district court.

The petitioners' merits brief argued that ripeness prohibits a plaintiff from bringing a claim only where it seeks "anticipatory relief against government action that has not yet taken place," and "does not apply when a party seeks to interpose a constitutional defense to an enforcement action brought by the government at the time and in the forum of the government’s own choosing."

The USDA's merits brief countered that the Hornes only have standing to assert the takings defense as "producers," but the USDA's order was imposed on them "only as handlers." Moreover, claims under the "Just Compensation Clause" must be brought in the CFC, and cannot be raised in the District Courts, even defensively.

A number of amicus briefs were submitted. The brief filed by Texas supporting the Hornes is here. The brief supporting the Hornes filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. Also supporting the Hornes are the U.S. Chamber of Commerce (here), and five constitutional law scholars (here). The USDA is supported with an amicus brief from the International Municipal Lawyers
Assoociation (here), and by a brief filed by Sun-Maid Raisins (here).

Koontz Continued?

The reason we began this post with a reference to the arguments in Koontz is that we're predicting that the questions that dogged the property owner's counsel in that case will continue to interest the Court here. In Justice Kagan's words, "where is the taking?" In Koontz, the Justices seemed hung up on the semantics of what was alleged to have been taken -- was it the permit, the property owner's right to develop his land, or the cash that was "suggested" he donate to improve the government's land? In Horne, the USDA has taken a similar approach, arguing that the Hornes have not identified what property has been taken -- is it the raisins they were required to turn over, the cash they must pay as a penalty for not doins so, or their right to sell their raisins? Hopefully, counsel for the Hornes will use the oral arguments to clarify that issue, for if the Court can identify "the taking," then the Hornes will have gone a long way to convincing it that they should be able to raise it as a defense.

"Takings" Or "Just Compensation?" -- A Remedies Question

This lead us to what we believe is the issue at the heart of the case: whether the Fifth Amendment contains a "Takings" Clause, or only a "Just Compensation" Clause. The focus of the analysis in regulatory takings law recently, especially after Lingle v. Chevron USA, Inc., 544 U.S. 528 (2005), has been whether a government action is the functional equivalent of an exercise of eminent domain. In many regulatory takings and inverse cases, the usual remedy being sought -- just like in most eminent domain cases -- is the recovery of just compensation. But that's only part of the equation, and there's no reason that after-the-fact compensation is the exclusive remedy under the Fifth Amendment.

The USDA's brief carefully labels it the "Just Compensation Clause" as if that were the only remedy available to a property owner objecting to what it believes is unconstitutional action by the government. But that's never been the case, and property owners have the ablity to challenge an action because it would be a taking if the government were to do it, even if they do not pursue compensation. For example, in Kaiser Aetna, the property owner was not seeking compensation, but only a declaratory judgment that were the Corps of Engineers to impose a navigational servitude on the private marina, it would be a taking. The Court agreed, holding that "if the Government wishes to make what was formerly Kuapa Pond into a public aquatic park after petitioners have proceeded as far as they have here, it may not, without invoking its eminent domain power and paying just compensation, require them to allow free access to the dredged pond." Kaiser Aetna, 444 U.S. at 180. In Loretto, the property owner was not only seeking compensation but an injunction. In Nollan, the property owner sought a writ of mandate ordering the offending condition struck from the permit, and not compensation.  

The USDA’s argument is based on the idea that a court does not have the power to stop the agency action that is claimed to be a taking. In other words, a court cannot tell the USDA that it can’t impose reserve requirement (or the fines) on the Hornes because to do so would be a taking. Instead, the Hornes must either reserve the raisins or pay the fine and then seek "reimbursement" by way of an action in the CFC. This doesn’t make much sense, and it is a duplication of legal process and a waste of time to shuttle back and forth from a District Court to the CFC when the same issues are at stake. Indeed, where fines are at issue, the USDA’s "pay-first-then-sue-for-reimbursement" theory reeks of inefficiency and needless process.

If a majority of the Court is inclined to rule in the Hornes' favor, it can limit its ruling by issuing a narrow opinion that deals only with their ability to defend against the USDA, and offering no opinion on the merits of the takings defense. Doing so should allay the fears expressed by the USDA and its amici that a ruling in favor of the Hornes will open the floodgates to courts invalidating vast segments of the regulatory state under the Takings Clause.

Predictions

We're not going to predict the outcome, at least not yet. But we do offer these prognostications: as in Koontz, Justice Scalia may be the key. If he's convinced that the Hornes can articulate where's the taking, it doesn't seem like a stretch to conclude they can raise that claim defensively. And Scalia has shown an ability to get other Justices to join him in takings cases. Justice Breyer will probably talk about the Penn Central test, as he always seems to, and Justice Kennedy will likely do likewise about Due Process. As for the others, we don't expect them to cross the usual lines in takings cases. And, of course, Justice Thomas won't ask anything (we end on an easy one).

More to follow after the arguments on Wednesday.

New Cert Petition: Ninth Circuit Homeless Property Ruling Created Public Health Hazard

As we noted here, the City of Los Angeles has filed a cert petition asking the Supreme Court to review Lavan v. City of Los Angeles, 693 F.3d 1022 (9th Cir. 2012). In that case, a 2-1 Ninth Circuit panel held that the city could not presume that property owned by homeless people in the Skid Row area was abandoned, and enjoined the city from seizing and destroying it when the owner was "momentarily away" from it. L.A.'s petition details the conditions on the area that purportedly resulted from the Ninth Circuit's injunction, and it sounds pretty bad (see pages 16 through 22).

The petition also argues that, like the vermin that has swept Skid Row, the panel majority's ruling has "swept" around the Ninth Circuit from the Venice area of L.A., to Fresno, and "across the Pacific Ocean to Hawaii." The Hawaii section of the petition points out a federal lawsuit filed in December 2012 alleging that the City and County of Honolulu violated the due process rights of "De-Occupy Honolulu" members (those folks who are still camping on the sidewalk next to Thomas Square across Beretania from the Honolulu Museum of Art).

As noted here, we didn't think that Lavan would have a direct impact on Honolulu's "stored property" ordinance, but maybe we were wrong. We'll see. 

The petition also contains a short section on the panel opinion's conflicts with Supreme Court decisions, and rulings from other circuits.

Here is the Question Presented:

In a divided opinion, the Ninth Circuit held that even in the face of a posted law expressly prohibiting such conduct, personal effects left unattended on the public sidewalk are constitutionally protected. Thus, the majority concluded when city employees dispose of these unattended items during a scheduled cleaning operation, the city commits both an unreasonable seizure in violation of the Fourth Amendment and a deprivation of procedural due process in violation the Fourteenth Amendment. The profound effect of this opinion is that a city can no longer fulfill its obligation to protect the public health. The interest in safe, clean, passable sidewalks has been supplanted. In its place, as the photographs in Appendix E illustrate, are public sidewalks that become home to mounds of tarp-covered tems, often tagged with a sign reading "not abandoned." If a city wants to protect the public’s health by removing this accumulation of stuff piling up on the sidewalk, yet not violate the Constitution, a city must dedicate resources to sort through these items for contamination, fend off lawsuits alleging illegal search, and then bag, tag, and provide the facilities to store the remainder for retrieval by their owner.

Do the protections of the Fourth Amendment and the due process clause of the Fourteenth Amendment extend to these personal effects intentionally left unattended by the owner on the public sidewalk in violation of an express law, such that city workers cannot dispose of these items during routine street cleaning without violating the Constitution?

More to follow when the respondents file their BIO.

Petition for Writ of Certiorari, City of Los Angeles v. Lavan, No. ___ (Feb. 28, 2013)

Complaint for Deprivation of Civil Rights, Damages, Declaratory and Injunctive Relief, De-Occupy Honolulu v. City and County of Honolulu, No. CV-12-00668-JMS-... 

Links And Materials From Today's ABA Takings Teleconference

Here are the links to the materials and briefs from the Supreme Court's three taking cases which we are discussing at today's teleconference sponsored by the ABA's Section on Litigation's Environmental Litigation Commitee and the Condemnation, Zoning, and Land Use Committee. 

Post-telecon note: thanks to everyone for joining us. I will be posting up the briefs in the Big Oak case now pending in the Court of Federal Claims that Rob Meltz mentioned in his "what's next" talk about Arkansas Game. Update: here are the Big Oak briefs.

IMLA Amicus Brief In California Raisin Takings Case: Tucker Act Is Exclusive Method Of Raising Takings Arguments

Here's the amicus brief filed today on behalf of the International Municipal Lawyers Association in Horne v. United States Dep't of Agriculture, No. 12-123 (cert. granted Nov. 20, 2012). The brief argues:

Petitioners have needlessly complicated the vindication of their asserted rights under the Takings Clause of the Fifth Amendment by failing to file a straightforward claim for just compensation in the U.S. Court of Federal Claims. Petitioners have long participated in the raisin industry marketing program which they now believe results in a taking. Thus, they could easily have filed a claim for just compensation in the U.S. Court of Federal Claims based on this asserted taking. Instead, petitioners decided to disregard federal law requiring that they participate in the program and now seek to invoke the Takings Clause to defend against the sanctions imposed as a result of their illegal action.

This effort should fail for three independent reasons. First, because the purpose of the Takings Clause is to provide compensation for takings, rather to stop takings from occurring, it would contradict the purpose and function of the Takings Clause to allow a party who has defied federal law and thereby blocked implementation of a federal program to defend his or her action by invoking the Takings Clause. Second, government seizures of private property for law enforcement purposes, such as forfeitures, are outside the scope of the Takings Clause. Third, government-imposed mandates to pay money in general, including but not limited to the kinds of monetary sanctions at issue in this case, are outside the scope of the Takings Clause.

Br. at 1-2.

The petitioners' brief is here. The amicus brief filed by Texas is here. The brief filed by the Cato Institute, the NFIB, the Center for Constitutional Jurisprudence, and the Reason Foundation is here. The brief by the U.S. Chamber of Commerce is here. The amici brief by five constitutional law scholars is here. The USDA's merits brief is here.

The case is scheduled for argument on March 20, 2013.

Brief of Amicus Curiae International Municipal Lawyers Association in Support of Respondent, Horne v. Unite...

2d Cir: Irrational Taking Is Not Irrational Or Outrageous Government Action

You may remember the opinion of the New York Appellate Division in 49 Wb, LLC v. Village of Haverstraw, 839 N.Y.S.2d 127 (N.Y. App. Div. 2007), in which the court held that a taking of private property for affordable housing was an improper use of eminent domain because "the Village invoked its power of condemnation for the sole purpose of benefitting private, and not public, interests," and the "Village's sole purpose [was] assisting private entities by means of condemnation." In other words, the taking was irrational. The court concluded "[t]he Village's justification for the condemnation, that it serves a public use, benefit, or purpose, is merely pretextual, and hence, improper."

Based in part on that finding, the property owner went to federal court on a substantive due process claim (the government treated me irrationally). The District Court denied the owner's motion for summary judgment and granted the Village's cross motion. Case dismissed.

The Second Circuit, in this unpublished order, affirmed. The court rejected the property owner's claim that the state court's finding of "irrationality" collaterally estopped (that's "issue preclusion" to you young 'uns) the issue of "irrationality" in substantive due process. The issues, the court held, are not identical:

Plaintiff asserts that the Appellate Division’s finding of an "irrational" public purpose in its annulment of Defendants’ condemnation attempt is the same finding required for Plaintiff to prove its substantive due process rights were violated. This is simply incorrect. To show that Defendants’ condemnation of the property at issue rises to the level of a substantive due process violation, Plaintiff must show that (1) it had "a valid property interest" (which is not challenged here), and that (2) the "defendants infringed on the property right in an arbitrary or irrational manner." Cine SK8, Inc. v. Town of Henrietta, 507 F.3d 778, 784 (2d Cir. 2007). "For state action to be taken in violation of the requirements of substantive due process, the denial must have occurred under circumstances warranting the labels 'arbitrary and outrageous.'" Natale v. Town of Ridgefield, 170 F.3d 258, 262 (2d Cir. 1999). These labels are associated with "racial animus" or "fundamental procedural irregularity," for example. Id. (internal quotation marks omitted) Our de novo review of the record demonstrates no genuine issue of fact as to whether the Defendants' actions, viewed as a whole, were arbitrary or irrational. Indeed, notwithstanding its finding that the Village’s public purpose for the condemnation was irrational, the Appellate Division concluded that there was no evidence of bad faith, noting that "mere allegations of bad faith and suspicious timing, such as those alleged by 49 WB here, do not suffice." Indeed, the Appellate Division also found that Village’s procedures "honored the parties’ rights to notice and due process, were within the Village’s eminent domain jurisdiction, and followed the statutory procedures of EDPL article 2."

Order at 3-4 (citation omitted). The court held that the Appellate Division did not conclude that the taking was in bad faith, only that it lacked "a rational factual basis."

Thus, contrary to Plaintiff’s argument, a mere determination that there is no rational relationship between the condemnation and a valid public purpose is simply not the equivalent of a showing that the condemnation is arbitrary, capricious, or in bad faith such that it rises to a substantive due process violation under the U.S. Constitution.

Order at 4.

So there you have it: a municipality's attempt to condemn property for private benefit, while cloaking the private benefit under a veil of public use in violation of New York's eminent domain law (that's how we read "pretext") is not outrageous. We guess it should be expected that a condemnor would try to sneak one by.

Given the track record of the Second Circuit, maybe the fact that the court's conscience wasn't shocked should not be shocking.

49 WB, LLC v Village of Haverstraw, No. 12-787-cv (2d Cir. 2013) 

ABA Takings Roundtable - The U.S. Supreme Court Property Rights Cases - Feb. 26, 2013

If you are a member of the ABA, mark your calendars for Tuesday, February 26, 2013, noon to 1:00 p.m. Eastern Time, for a free teleconference jointly sponsored by the ABA's Section on Litigation's Environmental Litigation Commitee and the Condemnation, Zoning, and Land Use Committee to discuss the latest and greatest in takings law, specifically the three cases the U.S. Supreme Court is ruling on this Term.

Here's the description:

For the first time since 2005, the U.S. Supreme Court has three property rights cases on its docket. One of them, Arkansas Game & Fish, regarding compensation for flooding, was decided in December.  Another, Koontz, concerning the applicability of the Nollan and Dolan nexus tests, has been argued. The final case, Horne, a most unusual case about what might be described as raisin sequestration, is still on the sidelines.

An expert panel -- two practitioners, a federal researcher, and a law professor, all extraordinarily conversant in the three cases -- will discuss what the claims are all about, the outcome of the case already decided and the probable outcomes in the two remaining cases, and what all lawyers who deal with any matters that may affect property rights need to know about them.

This will be a not-to-miss, lively discussion that will not only get you up to speed, but put you out ahead of others when it comes to this especially important term.

More information, including on-line registration, here. The panel will be moderated by Dwight Merriam (Robinson & Cole, Hartford), and includes:

Amy Bourlris (Gunster, Yoakley & Stewart, Miami)

Professor Steven Eagle (George Mason School of Law, Arlington)

Robert Meltz (Attorney-Adviser, American Law Division, Congressional Research Service, Adjunct Professor of Law, Georgetown Law, Washington)

I'm the fourth speaker, and hope you can join us.

Some Days You Get The Bull, Some Days The Bull Gets You

Did you know that as a Hawaii landowner you own all unmarked or unbranded cattle, horses, mules, donkeys, sheep, goats, and swine, over twelve months of age, which may be running wild on your land? Yeah, we knew that.

We also knew that you are going to love any opinion that starts out with "[t]he dispute between the parties arises from [the Department of Hawaiian Home Lands]'s roundup and sale of roughly 115 head of Nobriga's cattle." Our mind immediately hears the twang of Frankie Laine's rendition of the Rawhide theme as we dive into the case. So you've really got to check out the opinion of the Hawaii Intermediate Court of Appeals in Freddy Nobriga Ent. Inc. v. State of Hawaii Dep't of Hawaiian Home Lands, No. 28805 (Jan. 30, 2013), a fact pattern straight out of the Old West (and your Property 101 casebook).

Nobriga grazed his herd on land leased from DHHL on the Big Island of Hawaii. The agency eventually terminated the leases, and Nobriga apparently removed some -- but not all -- of his cattle from DHHL's land ("several head," the opinion reports, "escaped" -- we're envisioning a cow on a motorcycle like Steve McQueen making a break for Switzerland, or some such). DHHL hired another paniolo to remove all cattle from the parcels. He eventually removed and sold 181 head, of which 115 were Nobriga's.

Thankfully, instead of having a quick-draw showdown at high noon in dusty streets of Waimea town, Nobriga only challenged the action in court. He filed a lawsuit raising claims for takings clause and due process violations, trespass to chattel (cattle!), conversion, intentional infliction of emotional distress (on him, not the cows, although they surely were distressed as well), breach of contract, and conspiracy, among others. DHHL counterclaimed for trespass, conversion, and breach of contract. In 2007, the trial court granted DHHL summary judgment, and Nobriga appealed (yes, this appeal really has been pending for nearly 5 1/2 years).

The ICA first reversed the grant of summary judgment on the conversion claim. The trial court concluded that DHHL had introduced evidence that it owned the cattle, an asssertion, if undisputed, would defeat Nobriga's conversion claim. The ICA rejected that conclusion because Nobriga had not forfeited ownership of the cattle under the terms of the lease (as he had with other leases). The court also rejected DHHL's ownership claim under the statute noted in the first paragraph of this post (Haw. Rev. Stat § 142-44), because DHHL had not shown that the cattle were unmarked or unbranded, and the circumstances showed that it was likely the cattle were identifiable as Nobriga's because of markings or brands. 

And who said we don't have Judges of the Plains any more?

The ICA next upheld dismissal of the tort claims against DHHL on the grounds of qualified immunity. We know that this subject is just scintillating, but we're not going to go into the court's analysis, and instead leave it to you. See pages 10-12 of the slip opinion. Regarding the claim for immunity from Nobriga's constitutional claims, the ICA held that Nobriga established a claim that DHHL violated his procedural due process rights by failing to provide him notice and an opportunity to be heard prior to seizing his herd.

Needed to be heard before taking his herd. Nice.

The court also concluded that the right was "clearly established" since Nobriga's situation was very similar to that in a case in which the Hawaii Supreme Court's held that a mooring permit held by the owner of a derelict boat was "property," and that the owner was entitled to procedural due process before the State revoked it. See Brown v. Thompson, 979 P.2d 586 (Haw. 1999).

Finally, the ICA agreed with the dismissal of Nobriga's takings claims. Here, the opinion gets somewhat perplexing, so we quote it at length:

Had Defendants complied with the statutory provisions for impounding cattle, their "taking" would have been a "lawful exercise of police power" unencumbered by the just compensation requirement. Brown, 91 Hawai'i at 12, 979 P.2d at 598. Instead, Defendants acted pursuant to a mistaken belief that they had legal authority to impound the cattle. Despite this mistake, we must examine the purpose of the taking, "not its mechanics." Kelo v. City of New London, Conn., 545 U.S. 469, 482 (2005) (quoting Hawaii Housing Auth. v. Midkiff, 468 U.S. 229, 244 (1984)).

The uncontested facts support the conclusion that Defendants' purpose in clearing out the cattle was to advance DHHL's goals in proceeding with its planting project and ultimately converting the land to homestead use. This was certainly a public purpose sufficient to justify a taking. See Midkiff, 467 U.S. at 245 (law condemning real property and transferring it to tenants satisfied public purpose requirement).

After the cattle had been sold, Defendants offered to compensate Nobriga. Although Nobriga disputed the value of the compensation, Defendants outlined a procedure for substantiating his claim. Nobriga failed to take advantage of that procedure. In opposing summary judgment, Nobriga did not produce any evidence that the proffered compensation or the procedure for verifying the value of the cattle were inadequate. There was not genuine issue of material fact on this issue. Nobriga failed to establish that the Defendants' actions violated his constitutional rights under the takings clause in either the Hawai'i Constitution or the United States Constitution.

Slip op. at 18-19.

First, as a takings claim (or, perhaps more accurately, an inverse condemnation claim since it appears that Nobriga was only seeking compensation for the seized and sold cattle and was not trying to halt the DHHL's actions), the public use/public purpose supporting the taking should either be assumed, or is not relevant to the inquiry. While prior to Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005), a property owner could legitimately challenge the purpose of a taking under the Agins "substantially advance" test, the Supreme Court in Lingle clarified that challenges to the reason for the taking are Due Process questions, not takings issues. While we generally agree with the ICA's analysis (we filed an amicus brief in Lingle arguing that the "substantially advance" test was a takings test of regulatory action under the Public Use Clause), the Supreme Court didn't buy it. Thus, the first two paragraphs of the above quote really don't get us anywere.

Second, We're not quite sure what to make of the court's conclusion that because compensation was available or offered to Nobriga, he has no takings claim, because this sure does seem like Nobriga at least stated a claim for a taking: the DHHL seized and sold his property, and did not provide compensation.

This passage leaves us with more questions than answers. Via what process could he obtain compensation (the opinion only states that DHHL "acknowledged [its] mistake and offered Plaintiff compensation for the sale of its trespassing cattle")?  What is "outling a procedure for substantiating" a claim? Did the ICA fashion some form of Williamson County ripeness requirement because until DHHL denied compensation, there was not an unconstitutional "taking without just compensation?" Or did the ICA create a requirement that an inverse condemnation plaintiff exhaust administrative remedies? What is the effect of the DHHL apparently offering compensation, but Nobriga considering it inadequate? Shouldn't he have a claim for inverse condemnation for the difference, since both Takings Clauses require "just" compensation contemporaneous with the taking, and not merely some compensation? 

We don't think the mere offer to provide some after-the-fact compensation insulates DHHL from a takings claim in state court, although if the procedures to obtain compensation were not ad hoc and simply made up as a mea culpa by DHHL, Nobriga may have had an obligation to pursue those processes first before coming to court. But we don't really know, because we don't know what those procedures may have been.

Like we said, more questions than answers.

Perhaps the court's takings analysis should be viewed only as a product of the allocation of the summary judgment burden, and not a ruling on the unanswered substantive questions. Since DHHL apparently met its burden to produce evidence that it provided or offered compensation (or that it was otherwise available), the burden on summary judgment shifted to Nobriga to call into controversy the issue of whether the compensation process was available, or to support with some evidence his allegation that the compensation was not adequate. That should be a fairly minimal burden, but having failed to do so, Nobriga loses. If that's the case, all the other stuff in the opinion is dicta, and our questions can be written off as unnecessary.

Will Nobriga seek cert to clarify these questions? Stay tuned.

Freddy Nobriga Ent., Inc. v. State of Hawaii, Dep't of Hawaiian Home Lands, No. 28805 (Haw. App. Jan. 30, 2...

S. Carolina: "Substantially Advance" Means "Not Arbitrary And Capricious"

The speed of the internet: we were all set to summarize our thoughts on the South Carolina Supreme Court's opinion in Dunes West Golf Club, LLC v. Town of Mount Pleasant, No. 2011-194211 (Jan. 9, 2013), a case involving equal protection, substantive due process, and takings claims, when Dean Patty Salkin at the Law of the Land blog beat us to it. See "SC Supreme Court Finds No Takings After Council Denies Rezoning for Golf Club Property" for the details.

This one thing caught our eye in the opinion. The court held that the "substantially advance a legitimate state interest" test, which the U.S. Supreme Court in Lingle v. Chevron USA Inc., 544 U.S. 528 (2005) held was a test of substantive due process and not one of takings law, was the same thing as the "rational/conceivable basis" test. In other words, the term "substantially advance" is mere hortatory fluff, and really means only "not arbitrary and capricious." To us, those words sound different, but what do we know.

Oh well, it doesn't really matter since the court held first that the the plaintiff did not have a property interest in the zoning remaining the same, and thus did not establish the predicate to a due process claim of having property that was alleged to have been deprived without due process.

Dunes West Golf Club, LLC v. Town of Mount Pleasant, No. 2011-194211 (S.C. Jan. 9, 2013) 

More On Koontz Oral Arguments: Is Nollan A Theory Dependent Upon Accepting An Unconsitutional Condition, Then Challenging It As A Taking?

We're tied up all day in the 10th Hawaii Land Use Law Conference, but two other bloggers have stepped up to fill the gap, offering cogent analysis and some contrarian thoughts about the recent oral arguments in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012).

Most of the existing commentary, ours included, thought that the decision may turn on whether Justice Scalia, the author of Nollan, thought it fatal to a takings theory that the property owner declined to accept the permit. However, Florida land use lawyer Jacob Cremer has a slightly different view, and does not share the pessimism. He attended the oral arguments and provides an eyewitness account and his analysis here. His conclusion? Don't be so quick to write off the case just yet. Same for "Koontz oral argument: Should Nollan and Dolan apply only to 'stupid districts'?" from Christina Martin, a legal fellow at PLF (who represented the property owner).

The Good, The Bad, And The Scalia: Koontz Oral Argument Round-Up

In addition to our summary of and reaction to yesterday's oral arguments in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012), here is the leading commentary from other sources:

• Lyle Denniston at SCOTUSblog: "The very idea that an unconstitutional “taking” had occurred to an owner of a small plot of ground in Florida seemed near to vanishing, propelled toward oblivion by a spreading fear on the bench that maybe the entire regulatory apparatus of government might be at risk. Credit lawyers for a state agency and the federal government for deepening this anxiety."

• Greenwire's Lawrence Hurley: Supreme court: Justices weigh Fla. property rights dispute: "Rather than focus on the two Supreme Court precedents on permitting conditions, some justices seemed to agree with the Obama administration that, if Koontz did have a claim, it would be in the form of a 'regulatory takings' argument that concerns regulations that are so burdensome they can constitute a taking."

• Jonathan Adler at Volokh: scroll down to a comment by "JHW27," who writes: "If Scalia maintains his lonely and bizarre position, the most likely outcome seems to me to be a 5-4 ruling in favor of the government, with an opinion by the four liberals arguing that there is no taking because the regulatory requirement merely required the expenditure of money, a concurring opinion by Scalia arguing that there is no taking because the permit was denied, and a dissenting opinion from the other four conservatives arguing that the distinctions drawn by the five justices in the majority are arbitrary and untenable. But even that would probably not end in a long-term loss for property owners in similar circumstances to Koontz here; the argument would have to be reformulated to win back Scalia, but that would then give them five votes, and it's not clear there would be much shift in substance necessary to accomplish that."

• Gideon Kanner: What Was the Koontz Oral Argument All About? - "Our overall view of this event suggests to us that the Justices are again out of it — e.g. Justice Scalia thought that in Nollan a permit was issued before Nollan sued (it wasn’t — Pat Nollan took his chances and built without city approval and won). Justice Kennedy was still beating his drum in favor of substantive due process with no clue as to whether he also means to relax the forbidding difficulties in winning a regulatory due process case."

• Damon Root at Reason: Scalia Gives the Government a Suprise Boost in Property Rights Case - "But the most surprising resistance came from conservative Justice Antonin Scalia, who questioned whether Koontz had suffered any injury at all under the Takings Clause. 'What has been taken?' Scalia asked Beard. 'The permit’s been denied. I can’t see where there’s a taking here. Nothing’s been taken.' Those words may spell doom for Koontz’s challenge. Scalia is the author of a key 1987 decision by the Supreme Court striking down a California regulatory agency’s imposition of a similarly problematic condition on a building permit. Until his comments in the courtroom on Tuesday morning, Scalia was seen as a solid vote in Koontz’s favor. Now he appears to be the single biggest threat. Without Scalia, Koontz is unlikely to reach the five-justice threshold needed to win."

We'll add others if they are worth reading.

SCOTUS Arguments In Monetary Exactions Case: (Sliced) Bread And Circuses

When you are a property owner making a takings argument and Justice Scalia gives you a hard time at oral argument, you would be safe in thinking that you've got an uphill battle.

That was the situation today during the oral argument (transcript here) in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012), the case in which the Court is considering whether the "essential nexus" and "rough proportionality" standards of Nollan and Dolan are applicable only to exactions for land, or whether they are generally-applicable tests for all exactions.

Justice Scalia, author of the Nollan opinion, did not seem all that concerned with the second Question Presented (whether only exactions of real property are subject to Nollan/Dolan), but more on whether a takings claim can be based on an excessive exaction attached to a permit when the property owner declined to accept the permit with the exaction:

JUSTICE SCALIA: Yes, that's fine. That -- that would enable you to challenge the denial of the permit, saying it's based upon an unconstitutional condition. But how does it -- how does it enable you to say there's been a taking? What has been taken?

MR. BEARD: What has been -- what has been taken in effect is his funds that have to be put now to a public use, the enhancement of 50 acres of public wetlands. And there is nothing in the takings clause, nothing --

JUSTICE SCALIA: It hasn't -- it hasn't been taken. I mean, he turned it down.

MR. BEARD: Nothing was taken in Nollan and Dolan, either. What was proposed there, though, was a threat of a taking.

JUSTICE SCALIA: The -- the -- the permit was granted in Nollan and Dolan. And -- and the condition attached to the permit, therefore, took effect; namely, that you had to dedicate this easement over your -- over your beach whereas -- as my colleague pointed out, anybody could walk back and forth barefooted.

(Laughter.)

MR. BEARD: Justice Scalia, in Nollan and Dolan, there was approval -- approval with conditions. There were no permits issued, and that's -- that is an important distinction to make that most agencies, including this one, you approve a permit with a -- with conditions, which means, We will give you your permits as soon as you comply; which is substantively the same as saying, We won't give you your permits until you say yes to our conditions.

Tr. at 16-18.

The other Justices echoed Justice Scalia's concerns. Their questions focused on the timing: whether it is critical to the takings question that the permit-with-conditions was turned down by the property owner, and not accepted and then challenged. That seems to be the bigger hurdle for the petitioner because it doesn't appear that the Justices are all that concerned with whether a cash exaction would fall within the Nollan/Dolan requirements were this case in the same posture as Nollan and Dolan, cases in which the Justices seem to think that the property owners were granted a permit with the condition, and then challenged the condition as a taking (an assumption the petitioner's counsel pointed out is not correct).

We're not offering a prediction on the outcome, not only because we filed an amicus brief in support of the property owner/petitioner so have a stake in the the case, but because the Justices seemed to press all three arguing counsel, and it is therefore hard to read the tea leaves with any certainty (with the exception of Justice Sotomayor, who we can safely count in the "no taking" camp, with Justice Breyer likely joining). At some points in the argument it seemed a free-for-all, with questions and comments being fired at arguing counsel without much let up.

Here's our take on what each Justice said; the highlights (or lowlights, depending on your perspective):

Justice Scalia: Turning down an extortionate demand isn't a "taking" (p. 18), but under the District's theory, a demand for cash is "magic" (p. 33).

Justice Breyer: Sliced bread: not good (p. 19). He raised this in the context of a question to petitioner's counsel about whether this is a taking, and if so, if Penn Central doesn't supply the analytical framework, because the excessive demand "goes too far," as Justice Holmes said in that case.

Justice Ginsburg: Here, the District didn't say "take it or leave it" (about the condition) (p. 7).

Justice Sotomayor: Stopping landowners from developing their property is interfering with "lost profits." (p. 17).

Justice Kennedy: Due Process, man, Due Process! (p. 26).

Chief Justice Roberts: Is there no constitutional limit on what an agency can demand, as long as it does so prior to issuing a permit? (pp. 30-31).

Justice Alito: Owners' Counsel of America, I read your brief! (He asks the hypothetical we pose at page 12 of our brief) (p.33).

Justice Kagan: I might have a problem here if District is shifting burden to the property owner to propose mitigation measures, and not inform the owner what the District wants (p. 11).

Justice Thomas: This would be a taking, but only if the planner has a Yale J.D. (we're kidding, he didn't say this - or anything else).

In a clever sleight-of-word, the District's counsel hit upon the government's core theory: that the Fifth Amendment doesn't really have a "Takings" Clause, but only a "Just Compensation" Clause:

And in Lingle, this Court reiterated that the Takings Clause is not a substantive limitation on the government's power to regulate.

The Takings Clause -- or as I should call it, the Just Compensation Clause -- is a requirement that if -- that the government will pay you just compensation for any property or property interest it has seized from you. It does not -- it does not itelf impose a -- a requirement that the government substantively justify its regulation.

Tr. at 42. This issue will likely be more squarely addressed in the remaining takings case the Court is considering this term, Horne v. United States Dep't of Agriculture, No. No. 12-122 (cert. granted. Nov. 20, 2012). In that case, the Court is considering whether a property owner can assert a takings defense to the imposition of a fine levied for violating a federal regulation, or whether the owner must pay the fine and then bring a takings case for just compensation in the Court of Federal Claims. That case is in the briefing stage, and is scheduled to be argued on March 20, 2013.

So for now, we'll have to be content with the transcript in Koontz.

7th Cir: If At First You Don't Succeed...

When we first read the Seventh Circuit's opinion in Muscarello v. Winnebago County Bd., No. 11-2332 (7th Cir. Dec. 7, 2012), a case involving takings, due process, and other* challenges to a county zoning ordinance making it easier to build a wind farm, our first thought was "that case sounds familiar."

It was. In this case, the same court ruled pretty much the same way, in a case about wind farms, against what appears to be the same plaintiff.

The recent opinion was covered in detail in Dean Patty Salkin's Law of the Land blog here, so we won't repeat it.

------------------------

*the opinion referred to the suit as "a blunderbuss of federal and state claims" 

Muscarello v. Winnebago County Bd., No. 11-2332 (7th Cir. Dec. 7, 2012) 

U.H. Lawprof: HAWSCT's 1993-2010 Record On Private Property Rights "Appalling"

You know how we're always saying that certain parties have an enviable record of success in the Hawaii Supreme Court? Well, now the statistics are official.

The latest edition of the University of Hawaii Law Review published an article by lawprof David Callies summarzing the decisions of the court during the tenure of now-retired Chief Justice Ronald Moon. The article sets forth the stark numbers (83% win rate, 65% reversal of the intermediate appellate court), and contains a sharp comment about the often-lengthy nature of the court's opinions:

Second, the Moon Court decided some of the state’s most important property and related environmental and Native Hawaiian rights cases in favor of the various non-governmental organizations bringing them (Sierra Club, Earthjustice, Hawaii’s Thousand Friends, and the Native Hawaiian Legal Corporation) approximately eighty-two percent of the time, sixty-five percent of which reversed the Intermediate Court of Appeals (ICA). Third, the court increasingly rendered lengthy opinions, many triple the length of those from the Lum Court and often describing the context in which the case arose procedurally even when the process was not an issue. That said, the court certainly set a high bar for thoroughness and explanatory analysis. For example, its decision in Save Sunset Beach Coalition v. City & County of Honolulu is a model of clarity and organization reminiscent of the style of opinions written by retired ICA Judge Walter Heen and retired ICA Chief Judge James Burns.

David L. Callies, Emily Klatt, and Andrew Nelson, The Moon Court, Land Use, and Property: A Survey of Hawai‘i Case Law 1993-2010, 33 U. Haw. L. Rev. 635, 636-37 (2011).

While we recommend you read the entire article, if you don't have time, here's the Conclusion, which shows these statistics have real-world consequences:

In sum, the Moon Court has made many useful contributions to the law of property in Hawai‘i. It has taken care to preserve the rights of landowners to freely use property in the face of private restrictive covenants limiting that use if such covenants are the least bit vague or poorly defined. It has amplified and extended basic principles in the areas of coastal zone management,  condominium, easement, and leasehold law. Its record on preserving private property rights guaranteed by the U.S. Constitution’s Fifth and Fourteenth Amendments in the face of regulatory challenges is, on the other hand, appalling, particularly given the increasing emphasis on preserving such rights in our nation’s highest court. In case after case, the Moon Court has strained to apply general and often vague goals pursued by select interest groups and factions regardless of statutory law to the contrary. The result, coupled with Hawai‘i’s increasingly well-known penchant for lengthy, often decade-long land use permitting processes, is a climate that increasingly discourages both local and foreign investment in land development, because it is widely perceived as too risky for the private sector to undertake. In particular, the effect on the availability of housing that is affordable at any but the most astronomical levels has been great. In short, the Moon Court has made a considerable negative impression on the land development aspect of property law, virtually converting the use of land into a privilege rather than a constitutional right subject only to regulation for the health, safety and welfare of all. Whether that impression becomes indelible is a matter that the Recktenwald Court should address at the earliest opportunity.

Id. at 667-68. Is this part of the reason why Hawaii is the most expensive housing market in the nation?

Reply Brief In Koontz: Money Is Property

Here's petitioner's reply brief in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012), which responds to the Water Management District's merits brief.

In that case, the U.S. Supreme Court will address whether the "essential nexus" and "rough proportionality" standards of Nollan and Dolan are applicable only to exactions for land, or whether they are generally-applicable tests for all exactions.

Among other things, the reply addresses the argument made by the District and its amici that Nollan and Dolan aren't really "takings" cases, but involve due process or equal protection:

Due process and equal protection claims are also inapt. A due process claim questions whether the exaction serves some legitimate purpose, and an equal protection claim asks whether the exaction is applied equally to similarly situated individuals. But neither claim addresses whether a particular individual has been targeted to bear a public burden that should be borne by the general public, or whether he should be required to give up a constitutional right in exchange for the ability to use his land. Again, only Nollan and Dolan can answer these constitutional concerns.

Br. at 23.

This is the final brief in the case. Oral arguments are scheduled for next week, January 15, 2013. We'll bring you more as the date approaches.

We filed an amicus brief in the case in support of the property owner/petitioner. The property owner's brief on the merits is available here. The other amicus briefs supporting the property owner are available here, here, and here. The Water Management District's merits brief is posted here. The amicus briefs suporting the Water District are posted here.

Petitioner's Reply Brief, Koontz v. St. John's River Water Management Dist., No. 11-1447 (Dec. 8, 2013)

Brief For The Respondent In Koontz: "Mere Obligation To Spend Money Is Not A Taking"

Here's the respondent's brief in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447 (cert. granted Oct. 5, 2012). That's the case in which the Supreme Court is considering whether the "essential nexus" and "rough proportionality" standards of Nollan and Dolan are applicable only to exactions for land, or whether they are generally-applicable tests for all exactions.

The respondent's brief argues that the Water District did not demand an exaction, but merely "suggested a range of ways [the] applicant may [have] become eligible for a development permit." Br. at 40. The brief argues that because the District could have denied the permit outright, it was fine for it to "suggest" ways that the property owner could convince it to issue the permit, without needing to show that there was some relationship between the suggested mitigation measures and the justification supporting the denial. Thus this was not merely the Department being helpful, but was a "suggestion" that had the law behind it.

The District also argues that even if it was an exaction, it was "a mere obligation to spend money" on off-site mitigation, and under Eastern Enterprises v. Apfel, 534 U.S. 398 I1998), that is not a takings issue because requiring a property owner to spend money does not take any "property" --

Expanding the application of Nollan and Dolan to reach conditions on the issuance of permits that merely require the expenditure of fungible money would expose a broad range of monetary obligations—application fees, usage fees, and so forth—to heightened scrutiny under Nollan and Dolan. Petitioner suggests no limiting principle that would prevent many other fees, assessments, and taxes imposed on a daily basis, for everything from obtaining a driver’s license to traveling on a toll road or parking at a metered space, from being subjected to takings litigation. But that cannot be the law.

Br. at 48-49.

We filed an amicus brief in the case that made two points. First, that money is "property," and there's no reason why the Nollan and Dolan tests should protect property owners only when land is demanded. Second, that requiring the authorities to articulate the nexus and rough proportionality of the exaction will likely improve planning practices.  

Brief for Respondent, Koontz v. St. Johns River Water Management District, No. 11-1447 (Dec. 21, 2012)

9th Cir: No Facial Penn Central Taking In Ordinance Creating Mobile Home Zoning

The three-part Penn Central test for an ad hoc regulatory taking tasks courts with evaluation of the economic impact of the regulation on the property's use, the property owner's distinct investment-backed expectations, and the character of the government action. Throw all of these "factors" into a pot, stir, and voila, the answer of whether the regulation goes "too far" is supposed to emerge. But try as they might, many courts don't really have a good idea of how to apply this test, even though in Lingle, the Supreme Court affirmed that it remains the "default" analysis to evaluate most takings claims.

The latest regulatory takings opinion from the Ninth Circuit, Laurel Park Community, LLC v. City of Tumwater, No. 11-35466 (Oct. 29, 2012) is another example of a court applying the test, in this case to evaluate property owners' claims that the enactment of a new zoning ordinance was a facial taking. Whether it does so correctly, or whether it adds to the growing list of courts that simply don't know what to do with Penn Central, we leave to you.

Tumwater, Washington has more than a few mobile home parks, and some of those had plans to close. The residents of the parks, and the park owners had different responses to these plans:

Mobile home owners tended to seek protection from park closures, while park owners tended to emphasize respect for private property and the legal limits on property restrictions.

The residents succeed in getting the city council to adopt two new ordinances, creating a new zoning category, "Manufactured Home Park." Six of Tumwater's ten mobile home parks were subject to this new zoning. Previously, the parks were subject to a variety of zoning restrictions, allowing "a wide range of uses ... including multi-family residences and other dense types of developments." The new MHP zoning severely restricted those uses:

First, the ordinances specify certain “permitted uses,” which are allowed as of right: manufactured home parks, one single-family dwelling per lot, parks, trails, open spaces, other recreational uses, family child care homes, and child mini-day care centers. Second, the ordinances specify 11 “conditional uses,” which are allowed via a discretionary conditional use permit: churches, wireless communication facilities, cemeteries, child day care centers, schools, neighborhood community centers, neighborhood-oriented commercial centers, emergency communications towers, group foster homes, agriculture, and bed and breakfast establishments. Third, the ordinances permit still other uses if specified criteria are met:

“The City Council may approve the property owner’s request for a use exception if the property owner demonstrates a. they do not have reasonable use of their property under the MHP zoning; or b. the uses authorized by the MHP zoning are not economically viable at the property’s location.”

Several of the owners of the parks subject to the new ordinances asserted they effectively prohibited them from closing and using their properties for other uses, and therefore effected a Fifth Amendment taking and violated the state constitution. They sued in federal court. (How, we ask, given Williamson County? But the court doesn't tell us.)

The District Court granted summary judgment to the city, and applying the Penn Central three-part test, the Ninth Circuit affirmed.

The court held that the plaintiffs really didn't offer much evidence of the economic impact of the ordinances on their properties, noting that diminution in value as a result of the application of a zoning ordinance alone does not mean there's been a taking, and "[a]t best, Plaintiffs have presented information that reflects and economic loss of less than 15% with respect to one of the three Plaintiff properties and no effect on the other two Plaintiff properties or the properties of the remaining affected MHP parks." Slip op. at 12970 (emphasis original). 

The court next held that the property owners' expectations that they could make more intensive use of their properties under the old zoning regime were speculative ("that at some indefinite time in the future they could convert their properties to some other specific uses"), and that the new ordinances did not interfere with their "primary expectation concerning the use of the parcel" (a mobile home park). Slip op. at 12971.

Finally, the court evaluated the character of the government action. "As a practical matter, Plaintiffs must continue to use their properties as manufactured home parks. Indeed, that was the intended effect of the ordinances." Slip op. at 12973. The court concluded that this factor "slightly favors [the property owners'] taking claims." Id. at 12972. The benefit the ordinance confers on the residents (continued ability to be housed in a mobile home park) could be distributed more widely, but "[t]hat analysis goes only so far." The ordinances do not require that the property owners to keep using their properties as mobile home parks, but allows them, with restrictions, to convert to some other use.

The court also affirmed dismissal of the takings and substantive due process claims under the state constitution.

Laurel Park Community, LLC v. City of Tumwater, No. 11-35466 (9th Cir. Oct. 29, 2012)

Allegations Of Zoning Enforcement Outrages On Kauai (Part II) - A Rice Cooker Is A Kitchen?

Check out this complaint, filed last week in federal court in Honolulu by a Kauai councilmember against the County of Kauai, a Planning Department Official, and the Kauai prosecutor. The councilmember claims the defendants maliciously prosecuted him for a zoning violation.

And just what was the alleged zoning violation?

While the Planning official was conducting a warrantless search of the councilmember's home supposedly to respond to a complaint about an alleged zoning violation, she "allegedly observed a rice cooker and a refrigerator in the addition/family room in the family home." Complaint para 44. 

The addition/family room was a permitted structure in which no kitchen was allowed. The Planning official apparently concluded that the presence of the rice cooker and the fridge turned this room into a kitchen, and the councilmember received a Zoning Notice Violation.

The complaint goes on to explain how the case was dismissed by a State Deputy Attorney General who was assigned to prosecute the case after the Kauai Prosecutor was removed by the circuit court, and alleges that the councilmember was targeted by the defendants as political retaliation rather than a genuine belief that the presence of a rice cooker constituted a kitchen.

If all of this sounds familiar, it harkens back to a case we've covered here, one phase of which is currently sitting in the Hawaii Intermediate Court of Appeals awaiting a decision by the court. Hence the "Part II" in the title of this post, since the latest complaint seems like more of the same old stuff from Kauai.

In the Part I case, a Kauai family-owned small business was subject to similar actions by the Planning Department, including threatening visits from officials, months of Planning Commission hearings at which Jim Satterfield and his family were subject to abuse, and finally, the wrongful denial of three simple zoning permits by the Commission. Disclosure: we represent Kauai Springs and the Satterfield family that owns it, the victims of the Kauai Planning Department in that case.

The Commission denied the permits not because Kauai Springs had violated the Zoning Code, but rather because the Commision believed that "there may be outstanding regulatory processes ... that the Applicant must satisfy." The Commission itself could not identify what "outstanding regulatory processes" that it claimed Kauai Springs neeed to have satisfied, but nonetheless denied the permits, essentially putting the burden on Kauai Springs to guess.

When Kauai Springs appealed to the circuit court in 2007, the court concluded the Commission's denial was arbitrary and capricious, and ordered the permits issued. Even after the order, however, the County delayed, dug in its heels, and only issued the permits after attempting to add a multitude of "conditions" designed to circumvent the court order.

The County appealed to the ICA. It knows that the Satterfields are holding on by an economic thread, and it apparently adopted a strategy designed to "bleed out" Kauai Springs by delay. The County understands that Kauai Springs is not flush with money and that the cloud of the appeal has impacted its ability to service its existing customers (including, ironically, many County offices and departments), and to deliver water to new customers.

The appeals process took several years just to get past the briefing stage. Here is Kauai Springs' merits brief (June 2010), along with responses to the two amicus briefs filed in the case (here and here (December 2010)). The court heard oral arguments 15 months later in March 2012, 4 1/2 years after the trial court's judgment in favor of Kauai Springs.

The appeals court has yet to issue a decision. Meanwhile, however, Kauai Springs and the Satterfields are holding on, if barely, fearing that the affirmation of the judgment by the court of appeals may come too late to be of any practical good because the County's bleed out strategy, which seems aimed at transforming any eventual win by Kauai Springs into a Pyrrhic victory, and is becoming more of a reality every day.

But like we said earlier, this certainly seems like more of the "same old same old" from Kauai.

Complaint, Bynum v. County of Kauai, No. CV12-00523 RLP (filed Sep. 19, 2012)

More On The Ninth Circuit's Ruling That Homeless Have Property Rights, Too

Here's a follow up to our earlier brief post about the opinion in Lavan v. City of Los Angeles, No.11-56253 (Sep. 5, 2012), in which a 2-1 Ninth Circuit panel held that the Fourth and Fourteenth Amendments protect the homeless against the City of L.A.'s seizure and destruction of their "momentarily unattended" property. The city undertook these efforts to clean up the "skid row" section of downtown.

Honolulu has an ordinance that has a similar purpose and design (to prevent the homeless from clogging up the parks and sidewalks with their "stuff"), but it is constructed quite differently. Instead of prohibiting property from being left unattended, it prohibits the "storage" of property in public spaces, with "storage" being defined as being left somewhere for more than 24 hours. Leave it unattended for more than that time, the city will scoop it up and store it at the owner's expense. One doubts that any of this stuff is ever retrieved.

Honolulu Civil Beat reported on the Ninth Circuit opinion, and asked whether it would impact Honolulu's ordinance:

But it’s unlikely that the decision will have a direct bearing on Honolulu’s "stored property" ordinance, according to local land use and property rights lawyer Robert Thomas.

Thomas cited "carefully crafted" nuances in the Honolulu law that effectively distinguish its policies from those deemed unconstitutional in the 9th Circuit case.

"It’s not directly applicable, it doesn’t make our ordinance illegal," he said in reference to the ruling. The ordinance "certainly seems to be shielded up a bit better. It gives the city more ability to address the problem."

One distinction is that the Honolulu ordinance requires the city to store the property upon seizing it. In Los Angeles, city officials would immediately destroy the belongings, said Thomas.

,,,

Still, Thomas — who supports the 9th Circuit decision — said the ruling could have a meaningful effect on how Honolulu officials choose to apply the ordinance.

"It does have a warning sign: You can’t treat people differently because they’re homeless," Thomas said. "The decision really does emphasize that we should think of property rights as civil rights."

Read the entire story here.

That last bit is the important lesson to be learned from Lavan. When a panel of Ninth Circuit judges rule in favor of property rights, with two classic "liberal" judges comprising the majority, you know you are onto something. We can only hope these judges would maintain the same respect for property rights in other cases.

Gideon Kanner adds his thoughts about the case here.

From Cato Institute's Constitution Day: Property Rights And The Supreme Court (Video)

We sure wish we could have attended the Cato Institute's recent Constitution Day program in Washington, D.C., but here's the next best thing, a video of the presentations on Property Rights, with a review of the recent Sackett and PPL Montana decisions by the Supreme Court, and an update about the state of property rights.

Speakers include our PLF colleague Damien Schiff, lawprof Jonathan Adler, and lawprof Ilya Somin.

We can't embed the video, but you can watch it here on CSPAN's site.

Ohio: No Such Thing As Extraterritorial Inverse Condemnation

In Moore v. City of Middletown, No 2012-1363 (Aug. 30, 2012), the Ohio Supreme Court held that a property owner did not have standing to bring a regulatory takings claim when a "foreign municipality" (the neighboring city) rezoned an adjacent parcel, because the municipality did not have jurisdiction to exercise eminent domain over his property. However, the court held the property owner could seek a declaratory judgment "to challenge the constitutionality of the ordinances."

Under Ohio law, a "regulatory takings" action gives the plaintiff a right to bring a mandamus action to compel a municipality to institute condemnation proceedings, and the court held that since Middletown could not have exercised eminent domain authority outside of its jurisdiction, it could not be compelled to do so by the property owner. Our Ohio colleague Matt Fellerhoff discussed this aspect of Ohio law in his analysis of Clifton v. Blanchester, 964 N.E.2d 414 (2012), the case on which the Moore court based its ruling (see Matt's analysis here and here).

The Moore court, however, took the next step. If the property owner does not have a takings challenge for compensation, might it have other claims? The court worked from the premise that "[t]he rights to acquire, use, enjoy, and dispose of property are among the most revered in our nation's laws and traditions and are integral to our theory of democracy and notions of liberty," and that "[z]oning ordinances directly affect, and often limit, property owners' rights." Slip op. at 14. The impact of zoning decisions are not limited to the owner whose property is zoned, but to other owners whose rights may be impacted. Consequently, adjacent property owners have a due process right to challenge zoning ordinances that are "arbitrary and capricious" - 

We hold that property owners whose property is adjacent to property rezoned by aforeign municipality may use a declaratory-judgment action to challenge theconstitutionality of the zoning action.

Slip op. at 17. (Remember, Ohio is the land of Euclid.)

The net result is that a property owner in this situation cannot bring a regulatory takings action in  Ohio courts for compensation under Ohio law, but only has a cause of action to invalidate the ordiance. This holding further highlights Matt's conclusion that with no recourse for compensation under Ohio law, the property owner may go immediately to federal court, and that Williamson County does not bar raising a federal takings claim in federal court.

Moore v. City of Middletown, No. 2012-1363 (Ohio Aug. 30, 2012)

Thursday's Worth Reading List

Here's a few reports worth reading:

• Sixth Circuit Reverses Verdict for Property Owner Against City of Frankenmuth - from Dalton - Tomich's blog, about the recent decision in Loesel v. City of Frankenmuth, No. 10-2354 (6th Cir. Aug. 20, 2012). Anti-big box zoning.

• Lt Gov. Gavin Newsom alleges 'threats' against mortgage plan - the LA Times reports on California's Lieutenant Governor (who just happens to have "some ties to Mortgage Resolution Partners" -- the private investment group that promulgated the idea of using eminent domain to seize underwater mortgages), who is calling for an investigation of whether those objecting to the plan are "threatening" local governments. "Newsom's complaint comes after several groups, including the influential Securities Industry and Financial Markets Assn., objected to the eminent domain plan and warned that mortgages could become more expensive for future homeowners living in regions that adopt the plan. The Federal Housing Finance Agency, the independent government regulator that oversees mortgage titans Fannie Mae and Freddie Mac, also expressed worry about the plan. The agency last month said it has 'significant concerns about the use of eminent domain to revise existing financial contracts' and that it 'has determined that action may be necessary.'"

• Can The Neighbors Sue the Family Farm Across the Street? From Appellate Strategist, a preview of an upcoming "right to farm" case in Illinois.

9th Circuit Recognizes Property Rights

It's the right of homeless folks in L.A.'s "Skid Row" area to not have their personal belongings seized if they leave them unattended for a while, but we will take what we can get.

In Lavan v. City of Los Angeles, No.11-56253 (Sep. 5, 2012), the Ninth Circuit held:

We conclude that the Fourth and Fourteenth Amendments protect homeless persons from government seizure and summary destruction of their unabandoned, but momentarily unattended, personal property.

Read more below. More on the takings angle to the case from the Volokh Conspiracy.

Lavan v. City of Los Angeles, No. 11-56253 (9th Cir. Sep. 5, 2012)

New Complaint Challenging Kauai's Limit On Visitor Units

An interesting new complaint filed in U.S. District Court in Hawaii, asserting claims for substantive due process, violation of the zoning enabling act, and the Kauai County Charter.

A owner of property that has been designated for resort development for 35 years is asserting that the adoption by the County's voters of a charter amendment severely limiting the number of visitor accommodation units (no more than one new unit, and other restrictions), was an attempt to restrict the number of visitors and part-time residents. The complaint asserts that the County has no legitimate interest in restricting tourists or part time residents, and that the charter amendment is a zoning regulation that cannot be adopted by the voters (recall that in Hawaii, zoning ordinances may not be adopted by initiative - thanks to a case we argued many years ago - see here and here).

We'll keep track of this one as it progresses.

Complaint, Kauai Beach Villas - Phase II v. County of Kauai, CV 12-00483-LEK (filed Aug. 27, 2012)

ABA Journal On "Crime After Crime" Film

The ABA Journal reports on yesterday's screening of Crime After Crime: Tears Flow at Screening of Film on Pro Bono Fight to Free Woman Convicted of Her Abuser’s Murder.

ABA Annual Meeting, Chicago: Free Screening Of "Crime After Crime"

On Thursday, August 2, 2012, at 3:30 p.m., as part of the ABA Annual Meeting, the ABA and the State & Local Government Law Section is sponsoring a free screening of " Crime After Crime," the award-winning documentary from director Yoav Potash chronicling two San Francisco Bay Area land use lawyers who volunteer to provide their services to try and help free a woman who has been imprisoned for 20 years. We saw the film last year, and loved it. It was one of the best we have seen in a while:

"Crime" and "land use lawyers" are phrases not usually heard together; in most cases, the worlds of criminal law and land use never intersect, and lawyers for developers and property owners don't have much occasion to visit the "Attorney's Room" at the state pen. But in the documentary film Crime After Crime, two land use lawyers including our State and Local Government Law Section colleague Nadia Costa (Vice-Chair of the Section's Land Use Committee), plunge into that unfamiliar milieu.

In 1983, Deborah Peagler, a woman brutally abused by her boyfriend, was sentenced to 25 years-to-life for her connection to his murder. Twenty years later, as she languished in prison, a California law allowing incarcerated domestic-violence survivors to reopen their cases was passed. Enter a pair of rookie land-use attorneys convinced that with the incontrovertible evidence that existed, they could free Deborah in a matter of months.

More details on the case here. Read my complete review here. Here are the details of the screening:

Location: DePaul University College of Law, 25 E. Jackson Blvd, Chicago, Room 241.

Cost: Free.

CLE Credits: Following the screening, we will be presenting a CLE on "The Cost of Wrongful Convictions" featuring Director Potash, Nadia Costa (one of the lawyers featured in "Crime After Crime"), Craig Watkins (District Attorney, Dallas), and Emily Miller (Better Government Association, Chicago). The panel will be moderated by our SLG Section colleague Donna Frazier.

Hope you can join us if you are attending the Annual Meeting, or are just in Chicago.

9th Circuit Weeps For Property Owners Subject To "Long Odyssey," But Still Rules Against Them

Recently, in Intellectual Laziness on the Supreme Court, a short essay about the Supreme Court's recent Equal Protection decision about unequal property assessments, Professor Richard Epstein wrote, "[i]t’s time to scrap the irrational 'rational basis test.'" Decisions like the Ninth Circuit's recent opinion in Samson v. City of Bainbridge Island, No. 10-35352 (9th Cir. June 15, 2012) make you think he's onto something.

We were about to do a detailed post about the case, when our partner Mark Murakami beat us to it, so we won't repeat the facts or the panel's analysis (more accurately, lack of analysis, given the application of the "rational basis" test) here. Instead, we offer these thoughts:

• A property owner can win in state court, and obtain a ruling that a temporary building moratorium is unconstitutional, but a permanent prohibition is not? That's because the ruling was one of Washington state constitutional law. Wait, I thought the courts are supposed to treat state and federal constitutional claims as if they were the same?

• If an opinion by a left-leaning judge starts off with language that sounds too good to be true to a property owner ("'Full indeed is earth of woes and full the sea,' remarked Hesiod, and reviewing the long odyssey of Kelly and Sally Samson, we are inclined to agree."), don't get your hopes up -- it is too good to be true, and by the end of the opinion, the court will have ruled against the property owner ("It is surely vexing to the Samsons that they and their co-plaintiffs successfully challenged the moratorium in state court, but received no damages for their efforts..But the federal courts do not exist to to satisfy litigants who are unahppy with what they recieved in state court. Nor do they exist to second-guess the manner in which city officials promote the public welfare."). 

• The bootstrap rationale -- recently affirmed by the Supreme Court in Armour -- under which a regulation passes the rational basis test if there could be any conceivable basis to support, seems to have reached its nadir in this case. In Armour, the city asserted it did not have to return an unequal sewage assessment to the property owners who paid it because it would be too much hassle to do so. Here, the city asserted that it was rational to pass the construction moratorium ordinance without the usual process because it was an "emergency." And what was the "emergency?" -- if they didn't adopt a moratorium to prevent property owners from vesting their property rights, their property rights might vest before the city had time to adopt a permanent prohibition.  

Samson v. City of Bainbridge Island, No.10-35352 (9th Cir. June 15, 2012)

Fifth Circuit: Williamson County Ripeness Does Not Bar Due Process Claim In Federal Court

Update: the latest in the latest Williamson County-related cert petition here.

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If you tried to explain the practical results of Williamson County's ripeness requirements to someone not familiar in the last 30 years of regulatory takings jurisprudence, they would probably think you were joking.

As we've explained many times, under Williamson County, a property owner alleging a violation of her express federal constitutional right prohibiting takings without just compensation cannot bring that federal constitutional claim in a federal court. Instead, she is first required to present her state claim for compensation to a state court before she can even think of a federal action. And if she loses in state court, she will be deemed to have also litigated the federal claim, even if she expressly did not. Williamson County's rationale was that there is no violation of the Fifth Amendment by a state or local government unless and until the property owner could both show that there was a taking, and that the state had denied compensation.  So, you see, you have to lose your state takings claim to ripen your federal takings claim.

Williamson County gets particularly bizarre when courts extend it beyond the takings clause, since what thin justification exists for the rule is grounded in the language of the Fifth Amendment. Yet, the lower federal courts regularly apply it to Equal Protection and Due Process Claims, somehow transforming Williamson County from a limited takings requirement to a full-blown bar to the federal courthouse door for any plaintiff alleging a property-related claim. See River Park, Inc. v. Country Club Estates, Ltd., 23 F.3d 164, 167 (7th Cir. 1994) (substantive due process subject to Williamson County's state litigation requirement); Covington Court Ltd. v. Village of Oak Brook, 77 F.3d 177, 179 (7th Cir. 1996) (due process); Bateman v. City of West Bountiful, 89 F.3d 704, 709 (10th Cir. 1996) (due process and equal protection claims subject to Williamson County). For a particularly weird angle, see Braun v. Ann Arbor Township, 519 F.3d 564 (6th Cir. 2008), which concluded that all of the property owner's federal claims were "takings" claims (even though they sought different relief), and whacked the plaintiff's equal protection and due process claims along with its takings claim.

Well, in Bowlby v. City of Aberdeen, No. 11-60279 (May 14, 2012), the U.S. Court of Appeals for the Fifth Circuit provided a different view, and injected a modicum of reality into the strange world of  Williamson County. We won't go too far into the case's details, except to say that the plaintiff had a business permit, which the City summarily revoked. She sued in federal court for a taking and for procedural due process and equal protection violations, and the court promptly dismissed her complaint under Williamson County. She did not pursue an appeal of the takings dismissal, but asserted that Williamson County's state litigation requirement of that case did not require dismissal of the due process or equal protection claim. See this post by Pacific Legal Foundation for more background.

The Fifth Circuit reversed, concluding that Williamson County is applicable only to takings claims, and not due process or equal protection claims:

In Bowlby’s case, however, her business permits were definitively taken away. While it is possible that, had she appealed to the mayor or Board of Alderman, she may have regained her permits, the actual taking is "irreversible," unlike the application of a regulation. ... More importantly, under this Court’s precedents, a procedural due process claim that is brought concurrently with a takings claim, such as Bowlby’s, should be analyzed not under the principles of Williamson County, but according to "general ripeness principles."

Slip op. at 10-11. Read the entire opinion. You will appreciate it.

Cert Denied In NY Rent Control Challenge

It's always a safe bet to predict that the Supreme Court will decline to review a case. Statistics, after all, are on the side of "cert denied" regardless of the substantive merits of a case.

But there are some cases, like Harmon v. Kimmel, No. 11-496 (cert. petition filed Oct. 17, 2011), the case challenging New York City's residential rent control law as a taking (briefs here), that give you pause because they take a slightly different track: the respondents waived their right to respond, the Court invited them to file a BIO; the case was on calendar for consideration on April 13, 2012, anf the conference gets moved to April 20. Things like this make you go "hmmmmm."

Well, the drama was for naught. Today, the Court issued the order denying cert. On one hand, it's not surprising since the weight of statistics is never favorable, and from a practical standpoint, the Court might be reluctant to wade into an issue that would certainly draw fire, however it ruled. On the other, the whole rent control issue is ripe for challenge and the Court will have to face it, eventually. Just not today.

Here's the Court's docket report.

11th Cir: Property Owners Should Use Self-Help To Evict Private Beach Trespassers (Because Florida Self-Help Laws Always Work Out So Well)

In a per curiam unpublished decision, the U.S. Court of Appeals for the 11th Circuit affirmed the district court's dismissal in Crystal Dunes Owners Ass'n v. City of Destin, No. 2011-14595 (Apr. 17, 2012) (per curiam opinion here, or below).

The plaintiffs own a strip of private beach in Destin, Florida. If the name of that locale sounds familiar, it's because its the site of the Supreme Court's recent decision in Stop the Beach Renourishment v. Florida Dep't of Environmental Protection, in which the Court declined to confirm the existence of a "judicial takings" theory of recovery where the plaintiffs claimed the Florida Supreme Court changed the rules midstream and took their property as a consequence.

The latest case does not involve a claim of judicial takings, but has its genesis in the property owners' beef with other branches of government, the city and the sheriff's department. They claim that neither lifts a finger to protect them from trespassers who come onto their private beach, and won't leave. The sheriff has a policy of not enforcing state trespass laws within twenty feet of the wet sand beach's edge. The owners filed a lawsuit in federal court alleging due process, equal protection, and civil rights claims.

The district court dismissed for failure to state a claim: government won't help you evict interlopers and enforce your right to exclude? Tough beans. You don't have a property interest in getting government assistance. Read the district court's order here.

The 11th Circuit affirmed. By failing to help with trespassers, the government has not interfered with or abrogated the owners' right to exclude because "[o]wners have not alleged that the City has in any way barred their access to private remedies, such as filing a civil suit against trespassers, or establishing private security measures." Slip op. at 4-5 (footnote omitted). The constitution, according to the court, recognizes no violation of your rights if the state refuses to pitch in. So do it yourself.

It seems to us that there might be a difference between passive non-enforcement of the law, and an open invitation by the sheriff's department to "come on in, the water's fine" at the private beach, and that this situation is more like the latter than the former. But what do we know.

So go "stand your ground" on your beach and tell those trespassers to beat it, Destin property owners. Recent events in Florida have shown us how well self-help can turn out for everyone. If things go bad, the cops might really have to respond.

More here, from the Destin Log.

Our thanks to colleague Dwight Merriam for the heads up.

Crystal Dunes Owners Ass'n v. City of Destin, No. 2011-14595 (Apr. 17, 2012) (unpublished)

Court: State Land Use Commission Exceeded Its Authority, Violated Developers' Due Process And Equal Protection Rights

We've been meaning to post the latest developments in a case we've been following, two lawsuits that originated in state court in the Third Circuit (Big Island), one an original jurisdiction civil rights lawsuit, the other an administrative appeal (that's a writ of administrative mandate for you Californians) against the State of Hawaii Land Use Commission.

Our colleague Paul Schwind provided a comprehensive guest post on the civil rights case, and summarized the facts that led to both lawsuits here. In short, the Land Use Commission reclassified (rezoned) property as a sanction after it asserted the developers failed to comply with certain conditions, chief among them to provide a certain number of "affordable housing" units by a certain date.

The State removed the civil rights lawsuit to U.S. District Court in Honolulu and promptly moved to dismiss, and this portion of the case nearly caused us to flash back to our Federal Courts class in law school, since it raised a host of procedural questions such as the effect of removal, whether certain defendants are "persons" under 42 U.S.C. § 1983, whether the federal court must abstain from addressing the federal takings claim, whether there is a state damage remedy for deprivation of constitutional rights, and zoning estoppel under Hawaii law, among others.

In early March, in the administrative appeal in state court, the court issued Findings of Fact and Conclusions of Law, and Order Reversing and Vacating the State of Hawaii Land Use Commission's Final Order, DW Aina Lea Dev. LLC v. State of Hawaii Land Use Comm'n, No. 11--1-0112K (Haw. Third Cir. Mar. 6, 2012). It's a long ruling, and we won't go into great detail here. Suffice it to say that the court concluded that the LUC exceeded its statutory authority, and violated the developers' due process and equal protection rights. The entire order is worth a read if you follow similar issues.

The LUC intends to appeal the court's decision to the Hawaii Intermediate Court of Appeals, and as a consequence, in this order (Mar. 30, 2012) the federal court stayed further action in the federal case.

There will be more. Stay tuned.

Findings of Fact and Conclusions of Law, DW Aina Lea Development LLC v. State of Hawaii Land Use Comm'n, No...

Conference Day For New York Rent Control Challenge

Most likely, by the time you read this, the Supreme Court will have decided whether to grant cert in Harmon v. Kimmel, No. 11-496 (cert. petition filed Oct. 17, 2011), the case challenging New York City's residential rent control law as a taking, among other things. Today, you see, is the day the Court is scheduled to hold its conference to decide whether to do so.

We mere mortals won't know what the result of the conference is until next week, of course, but we thought we'd get you ready. Use the time to review the key briefs:

• The cert petition

• Brief amici curiae of Rent Stabilization Association of New York, Inc.

• Brief Amicus Curiae of Atlantic Legal Foundation and Center for Constitutional Jurisprudence in Support of Petitioners

• Brief Amicus Curiae of Pacific Legal Foundation, Cato Institute, and Small Property Owners of San Francisco Institute in Support of Petitioners James D. Harmon, Jr., and Jeanne Harmon

• Brief amicus curiae of Community Housing Improvement Program, Inc.

• The State's BIO

• The City's BIO

• Petitioner's Reply

The Federalist Society posted a podcast about the case with Professor Richard Epstein, available here. Damon Root at Reason.com updated the story yesterday here.

Here's the Court's docket page for the case. Stay tuned. We will be.

Petitioner's Reply Brief In New York Rent Control Case: "Permanent dispossession is nine-tenths of this law"

Here is the Reply Brief in Harmon v. Kimmel, No. 11-496 (filed Mar. 20, 2012), the case in which a Manhattan property owner is challenging New York's rent control law as unconstitutional:

Respondents confuse the issues with their scattershot assertions that rent stabilization concerns merely "landlord tenant relations," "economic regulation," "price controls" and "economic liberties," and is just a matter of political and legislative policy. They disregard controlling precedent of this Court and seemingly concede that the Court of Appeals was mistaken. They also each acknowledge the existence of the "different case" standard set forth in Yee v. City of Escondido, 503 U.S. 519, 528 (1992). However, despite having argued otherwise to this Court and to the Court of Appeals in prior litigation, the State now argues that rent stabilization does not present the elements of the "different case" standard. The conflcts with decisions of this Court and the circuit split, and the reserved issue in Yee remain crystal clear notwithstanding the smoke of respondents’ arguments.

The fundamental question presented is whether New York’s possessory rent regulation scheme as applied to the Harmons is unconstitutional. A law that enables uninvited tenants and their successors to occupy the Harmons’ home over their objection, for as long as they please, could never pass constitutional muster. Permanent dispossession is nine-tenths of this law. For the Harmons, there is no way out; not for their own family use, not by demolition, not by withdrawal from the market and not by any other use.

Justice Alito asked recently in another case, "...if you related the facts of this case as they come to us to an ordinary homeowner, don’t you think most ordinary homeowners would say this kind of thing can’t happen in the United States?”[*] The Harmons respectfully request this Court to grant their petition to say that it cannot.

Br. at 1-2 (footnotes omitted).

* Justice Alito asked this question at oral argument in Sackett v. EPA, No. 10-1062.

We posted the cert petition and three amicus briefs in support here and here, the State's BIO, and the City's BIO. The Federalist Society posted a podcast about the case with Professor Richard Epstein, available here.

Here's the Court's docket page for the case.

Reply Brief, Harmon v. Kimmel, 11-496 (filed Mar. 20, 2012)

Unanimous SCOTUS: Property Owners Entitled To Judicial Review Of EPA "Compliance Order"

Update 2: more commentary here.

Update 1: Two quotes worth noting:

"Scalia joked in summarizing the decision from the bench that the Sacketts were surprised by the EPA decision that their land contained navigable waters of the United States 'having never seen a ship or other vessel cross their yard."” Oh Justice Scalia: you complete me. (via the WaPo)

Justice Alito (mirroring his oral argument question): "The position taken in this case by the Federal Government—a position that the Court now squarely rejects—would have put the property rights of ordinary Americans entirely at the mercy of Environmental Protection Agency (EPA) employees. The reach of the Clean Water Act is notoriously unclear. Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to construct a home on alot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy." (Alito, J., concurring)

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This just in: in a 9-0 decision authored by Justice Scalia, the U.S. Supreme Court has upheld the right of Idaho property owners to seek judicial review of a "wetlands" determination by the EPA via a "compliance order." Justices Ginsburg and Alito filed concurring opinions. The Court's syllabus of Sackett v. EPA:

The Clean Water Act prohibits “the discharge of any pollutant by any person,” 33 U. S. C. §1311, without a permit, into “navigable waters,” §1344. Upon determining that a violation has occurred, the Environmental Protection Agency (EPA) may either issue a compliance order or initiate a civil enforcement action. §1319(a)(3). The resulting civil penalty may not “exceed [$37,500] per day for each violation.” §1319(d). The Government contends that the amount doubles to $75,000 when the EPA prevails against a person who has been issued a compliance order but has failed to comply.

The Sacketts, petitioners here, received a compliance order from the EPA, which stated that their residential lot contained navigable waters and that their construction project violated the Act. The Sacketts sought declarative and injunctive relief in the Federal District Court, contending that the compliance order was “arbitrary [and] capricious” under the Administrative Procedure Act (APA), 5 U. S. C. §706(2)(A), and that it deprived them of due process in violation of the Fifth Amendment. The District Court dismissed the claims for want of subject-matter jurisdiction. The Ninth Circuit affirmed, concluding that the Clean Water Act precluded pre-enforcement judicial review of compliance orders and that such preclusion did not violate due process.

Held: The Sacketts may bring a civil action under the APA to challenge the issuance of the EPA’s order. Pp. 4–10.

Read the decision here, or below. Get ready for a virtual waterfall of opinions making small of this opinion (this is a pyrrhic victory - the Sacketts will ultimately lose the wetlands issue, etc.). But make no mistake: this is a huge win for property owners, and reminds agencies that they are subject to the rule of law. More to follow.

Sackett v. EPA, No. 10-1062 (Mar. 21, 2012)

What We Say To Courts

What owners of rent-controlled mobile home parks say to courts: "Unfair! Due Process! Rate-of-Return! Takings! Equal Protection!"

What courts hear: "blah blah DENIED blah blah blah DISMISSED blah blah blah AFFIRMED blah blah blah blah..."

Latest example: Besaro Mobile Home Park, LLC v. City of Fremont, No. A130753 (Mar. 1, 2012).

State's BIO In New York Rent Control Case

Here's the state's BIO in Harmon v. Kimmel, No. 11-496 (cert. filed Oct. 17, 2011), the case challenging New York City's rent control ordinance as a due process violation and as a taking. We posted the cert petition and the three amicus briefs in support here.

Both respondents waived their rights to file a BIO, but in December, the Court requested responses. Last week, we posted the City of New York's BIO here.

Here's the Court's docket page for the case.

BIO In New York Rent Control Case: Market Rents Are "Unjust, Unreasonable, And Oppressive"

Here's the BIO in Harmon v. Kimmel, No. 11-496 (cert. filed Oct. 17, 2011), the case challenging New York City's rent control ordinance as a due process violation and as a taking. Although the respondents waived their right to respond, the Court requested they file an opposition.

We posted the cert petition and the three amicus briefs in support here.

The BIO argues that Yee v. City of Escondido, 503 U.S. 519 (1992) forecloses the takings claim (it "removes any basis for petitioners' argument that the [Rent Stablization Law] effects a physical taking of their property"). It also argues that the RSL is "rational," and does not violate due process:

The RSL addresses a pressing local problem. "In contrast to the rest of the country, most New Yorkers do not own the homes in which they live." New York City Rent Guidelines Board, 2011 Housing Supply Report 3 (June 2, 2011) ("Supply Report"), www.housingnyc.com/downloads/research/pdf_reports/11HSR.pdf. Moreover, "New York City’s Housing Market remains tight," with a low vacancy rate, id. at 3, and substantial overcrowding in rental housing. Id. at 4.

Petitioners acknowledge that the RSL’s rent controls effectively push rents below market rates (Petition 7–8), thus achieving one of its key objectives. See N.Y.C. Admin. Code § 26-501(f) (finding a need for legislation "to prevent exactions of unjust, unreasonable and oppressive rents").

BIO at 12-13. 

The Federalist Society posted a podcast about the case with Professor Richard Epstein, available here. Here's the Court's docket page for the case.

Amicus Brief In Willets Point Case: Condemnation For Redevelopment Needs A Plan

After the New York Court of Appeals' decisions in the Goldstein (Atlantic Yards) and Kaur (Columbia) cases, we opined that there were not many limits remaining on the government's exercise of eminent domain in that state.

But even after those cases, there's got to be some limits, no?

Our Owners' Counsel of America colleague Michael Rikon is currently testing that hypothesis in a case arising from Willets Point, a Queens neighborhood adjacent to Citi Field (new home of the Mets). Mike represents property owners (mostly small businesses) in the case, their public use challenge to the City of New York's attempt to take their Willets Point properties for "redevelopment." For more, see Willets Point United, and this video.

The problem is, the city doesn't have a redevelopment plan, or any plan regarding what it intends to do with the land beyond making it a "lively, mixed-use, sustainable community and regional destination." Talk about rainbows and unicorns. Seriously, that description sounds like a computer-generated list of trendy planning buzzwords, and the property owners have rightly asked how can a taking of property be "for public use" if the city itself can't say what "use" it plans to make of the property?

The case is now in the Appellate Division (remember, this is New York, where eminent domain challenges are instituted in the appeals court), and the Property Rights Foundation of America filed this amicus brief in support of the Willets Point owners. Read it for a quick summary of the case and the issues:

In particular, this Court can and should hold that the government may not take property for the asserted public purpose of urban redevelopment, where there is no specific development plan identified at the time of the taking; where the government's conceded failure to provide infrastructure and ordinary municipal services is a principal contributing factor to the alleged "blight'; and where financial, environmental, legal, and practical obstacles make it highly and unreasonably speculative that the purported public purpose will ever be achieved. PRFA's principal contention in this amicus brief is that notwithstanding past decisions by both federal and New York courts by which this Court is constrained, there remains an important role for courts to play in articulating and policing boundaries on the use of eminent domain.

Br. at 4.

Brief of Amicus Curiae The Property Rights Foundation of America, Inc. In re Serrone (Willets Point), No. 2...

Where The Sidewalk Ends: The Takings Power Is Different Than The Police Power

Here's one court that gets its doctrine right. Bonito Partners, LLC v. City of Flagstaff, No. 1 CA-CV 10-0819 (Feb. 21, 2012).

A property owner challenged a city ordinance that requires a landowner repair adjacent public sidewalks, else the city will do it and send the owner the bill, and if the landowner doesn't  pay, the city will put a lien on the property.

The city told the owner to fix the broken and dangerous sidewalk next to its property. It didn't ("Please proceed with the repairs. Do not wait for Bonito Partners, LLC to do the work."). The city fixed it, charged the owner, and eventually put a lien on the property. The owner sued for both a taking and for due process.

The trial court granted the city summary judgment. In addressing the takings argument, the court of appeals first noted that takings and due process are doctrinally distinct:

In its minute entry ruling dismissing the complaint, the trial court agreed with the City’s argument that the ordinance was a valid exercise of that power and therefore was not an unconstitutional taking. As we discuss below, the parties’ arguments, and the court’s ruling, conflate the analytically separate—albeit interrelated—issues regarding whether the ordinance is valid under the Due Process Clause of the Fourteenth Amendment and, if so, whether it nonetheless violates the Takings Clause.

Slip op. at 5-6. The court correctly concluded that under Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005), you don't get to takings issues unless you first determine the challenged law is a valid exercise of the police power under the due process clause. The court concluded that broken sidewalks are nuisances, and that under the "rational basis" test, it is a valid exercise of the city's police power to abate nuisances.

But wait a minute, the owner argued, we didn't cause the nuisance and it's not on our property -- it's a public sidewalk, not ours. The court rejected this argument, holding that there is "ample authority" that it is not an unreasonable and arbitrary exercise of municipal power to require a private landowner to maintain and repair public sidewalks on adjacent land. Slip op. at 9-10. We won't go into that, even though we're not all that convinced that due process should have no problem with the concept that even if you didn't break it, you still may have bought it. If property owners can be made to fix adjacent public sidewalks, why not the public adjacent roads?

But that's not the end of the analysis, the court held, because if this valid regulation went "too far" in forcing the property owner to privately bear the cost the entire public should bear, it might be a taking. Not a per se taking (physical invasion or Lucas wipeout), but a taking analyzed under the three-factor Penn Central test, something that "[n]either party has yet addressed." Slip op. at 13. The court vacated the summary judgment on the takings claim, and remanded the case to the trial court for application of the Penn Central test.

Finally, the court of appeals rejected the property owner's arguments that the ordinance is an unconstitutional tax under state law, that it is an illegal "special law," and that it was beyond the power of the city to adopt. 

Check this opinion out if you need a reminder that good ideas are not necessarily insulated from takings claims. This post may also help.

Bonito Partners, LLC v. City of Flagstaff, No. 1 CA-CV 10-0819 (Ariz Ct App Feb 21, 2012)

Federalist Society Podcast On New York Rent Control Takings Challenge With Professor Richard Epstein

Professor Richard Epstein, in his own inimitable and unequivocal style, opines on rent control and the Harmon cert petition in a Federalist Society podcast. A must-listen. Here's the description:

In March 2011, the Second Circuit Court of Appeals issued summary judgment in Harmon v. Markus, a challenge to New York's rent stabilization law by Mr. John Harmon, whose townhouse has been occupied for years by tenants paying rent equal to about 60% of market value. The Second Circuit ruled that "government regulation of the rental relationship does not constitute a physical taking" in light of the Supreme Court precedent, and that Mr. Harmon was therefore not entitled to just compensation. The Supreme Court has asked New York City and the tenants to file a response to the certiorari petition filed by Mr. Harmon. On this previously recorded conference call, Prof. Richard Epstein provides analysis of the case and rent control statutes as they relate to the Takings Clause and answers questions from the callers. 

Stream the podcast here:

(43 minutes) - or download it here.

We posted the cert petition and the amicus briefs in support in the Harmon case here.