The New Hampshire Supreme Court, in our view, got it wrong in Ashton v. City of Concord, No. 2015-0400 (Apr. 29, 2016). Really, really wrong.
Indeed, the New Hampshire court seems to have resurrected the California Supreme Court's now-defunct rule from Agins v. City of Tiburon, 598 P.2d 25 (Cal. 1979), which held that there is no compensation remedy when the application of an ordinance denies an owner all beneficial use of property, only declaratory and equitable relief. See id. at 26 ("the need for preserving a degree of freedom in the land-use planning function, and the inhibiting financial force which inheres in the inverse condemnation remedy, persuade us that on balance mandamus or declaratory relief rather than inverse condemnation is the appropriate relief under the circumstances"). The Agins rule was held unconstitutional in First English Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987).
In Ashton, the New Hampshire court held that the city wrongly denied a property owner demolition permits to allow him to remove three utterly worthless derelict mobile homes that had been abandoned by their owners on his land, a mobile home park. This denial, however, couldn't be a taking because the city merely mistakenly interpreted and applied the governing statutes, and the statutes themselves weren't unconstitutional. Wait, what?
If like us, this leaves you are scratching your head, read on.
The city refused to issue the permits because the owners of the mobile homes owed back property taxes, and unless Ashton paid them, no permits would issue. "[T]he homes could just sit there until you pay [the taxes]," Ashton alleged he was told by the city. He sued for an order that he didn't owe the taxes, and for an injunction compelling the city to issue the demolition permits. He also alleged that withholding the demolition permits and thereby forcing him to keep the derelict mobile homes on his land (which prevented him from renting the spaces to someone else) resulted in a taking, and sought compensation. The trial court concluded that the city wrongly withheld the permits, and ordered it to issue them. It also held that Ashton was entitled to just compensation for a taking. The city appealed.
On the first issue, the New Hampshire Supreme Court agreed, and held that the city wrongfully withheld the demolition permits. The statutes are pretty clear: they "unambiguously" forbid a municipality from taxing a mobile home park owner for a mobile home's back taxes. "Here, the City refused to allow Everett Ashton to remove the valueless, abandoned homes until it paid the taxes thereon, despite express statutory provision that park owners are not responsible for such taxes." Slip op. at 5.
So far so good.
The derailment came in court's taking analysis. The court first correctly noted that "[a]rbitrary or unreasonable restrictions which substantially deprive the owner of the economically viable use of his land in order to benefit the public in some way constitutes a taking within the meaning of our New Hampshire Constitution requiring the payment of just compensation.” Slip op. at 7. Again, so far, so good. But there's no taking here, because this was a misapplication of the statute, and Ashton wasn't claiming that the statute itself was unconstitutional:
However, erroneous . . . decisions based on mistaken interpretations of valid regulations differ materially from technically precise applications of invalid ordinances; a mistaken . . . decision does not effect a taking when the erroneous decision resulted from misconstruction of otherwise valid restrictions.
Slip op. at 7 (citation omitted). Because "Ashton does not question the validity of the statutes concerning the taxation and relocation of manufactured homes," he was only challenging the way the city applied that law. Wrong, in the court's view, but not a taking. "The City interpreted one of those statutes, which provides that it may allow a park owner to relocate manufactured homes with outstanding taxes, to mean that it may refuse to allow relocation in the circumstances of this case." Slip op. at 7.
Thus, even though "[w]e conclude that, under the circumstances of this case, the City acted outside the bounds of its discretion under the statute," "because Everett Ashton does not challenge the statute's validity, and the misapplication of a valid statute does not affect a regulatory taking, we hold that no taking occurred, and that Everett Ashton is not entitled to compensation." Id. at 7-8 (citation omitted).
First, the court confuses facial challenges (a claim that a statute itself is unconstitutional in all circumstances) with as-applied challenges (a claim that applying that statute to my circumstances is unconstitutional). And Ashton's claim here is pretty much a run-of-the-mill as-applied challenge: he argued that the city's making him leave those derelict mobile homes on his land -- thereby preventing him from renting out the space -- has worked a taking by turning his private land into public storage. Ashton couched his claims in terms of denial of economically beneficial use, but this seems to us to be a physical occupation taking as well.
Second, the court seemed to imply a good faith exception to takings analysis. Slip op. at 8 ("the City relied on the statute's plain language, legislative history, and our case law; and until now, we have not been called upon to offer guidance on the breadth of the City's discretion under the statute."). The city shouldn't have done what it did, but hey, it was just mistaken. No big deal.
But that's never been the focus of regulatory takings analysis, which generally looks at intentional government action undertaken for a public purpose (there's no question here that both of those were present). The focus of the takings analysis is supposed to be on the impact of the regulations on the property owner's use; when intentional government conduct in effect impresses private property into public service, there's your taking. The opinion seemed to recognize this standard. See slip op. at 7 ("Arbitrary or unreasonable restrictions which substantially deprive the owner of the economically viable use of his land in order to benefit the public in some way constitutes a taking within the meaning of our New Hampshire Constitution requiring the payment of just compensation.").
But in the next sentence, the court carved out the exception to that rule where "erroneous" decisions based on "mistaken interpretations" of otherwise valid regulations are not the same thing, and cannot result in takings.The court acknowledged in the opinion's penultimate paragraph that "in other circumstances, a municipality's application of a statute could result in a taking," slip op. at 8, but declined to elaborate. We're not sure there is any exception, given the blanket rule the court adopted. The only daylight is if a municipality in the future tries to do the same thing that Concord did here, and force a mobile home park owner to pay back property taxes on abandoned units. But if a statute hasn't been ruled upon by the New Hampshire Supreme Court, no takings liability. Every dog gets in New Hampshire gets one free bite
The Fifth Amendment doesn't contain such limitations, and Ashton seems to be a restatement of the rule the U.S. Supreme Court held unconstitutional in First English: under the New Hampshire Constitution, the only remedy available to Ashton was declaratory and injunctive, not just compensation.
If, as Ashton concluded, the law under New Hampshire's takings clause (N.H. Const. pt. I, art. 12) really denies compensation -- regardless of the invasion and the impact on the owner's use of the land -- because an owner isn't challenging the statute and the city isn't ignoring existing case law, there seems to us to be big Fifth Amendment problems with such a rule.