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CA4: Exactions Takings Claim Accrues When Owner Knows Of The Demand, Not When It Paid

As most of you probably already know, there's a demon lurking out there in takings claims. Not of the Levon Helm-narrated The Right Stuff variety, but maybe just as deadly in litigation.

That's right, the too-early-or-too-late thing (or in some cases, the too-early-and-too-late argument). Getting caught between arguments that a takings claim isn't ripe, and arguments that it is too late (statutes of limitation).

The U.S. Court of Appeals for the Fourth Circuit was dealing with the latter (a statute of limitations) in Epcon Homestead, LLC v. Town of Chapel Hill, No. 21-1713 (Mar. 20, 2023), but there are lessons in the case for the other side of the issue, ripeness.

The facts are pretty straightforward. If you are going to build at least five single-family units, the town's zoning ordinance contains a requirement of "inclusionary zoning" (aka affordable housing; aka below-market units. Or if you don't want to build such housing, you can pony up some cash if the town agrees.

The owner of the property wanted to build 63 units so was subject to this requirement. It didn't want to build affordable units, so opted to pay cash (approximately $800k). The town agreed, and conditioned its issuance of a special use permit which would allow the project to proceed on the developer paying this in-lieu fee: no certificates of occupancy would issue until the fee was paid.

Then Epcon bought the property. It built the 63 homes, and sold them. It made the first installment payment for the in-lieu fee, and two years later paid the final payment. Voila, certificates of occupancy. 

Next stop, state court where Epcon asserted the in-lieu fee was illegal under a variety of theories, including a section 1983 claim that the fee was an unconstitutional taking and violated Epcon's due process rights. The town removed the case to federal court and moved to dismiss the federal claims because the lawsuit was filed more than three years after the in-lieu condition was imposed (it had been four years).

As we all know, section 1983 does not have a built-in SOL, so the courts have held that the SOL of the closest state-law analogy applies. In North Carolina, that's three years. The District Court agreed with the town and dismissed. You snoozed, so you lose Epcon.

The Fourth Circuit agreed. We suggest you go read pages 9-11 of the opinion for the reasons why. The bottom line is that "there is no 'distinctive rule' in the Takings Clause context to apply for determining when the limitations period for a § 1983 claim begins to run[,]" and the usual ("standard") rule applies: a 1983 claim is ready when the plaintiffs knows or has reason to know that it is injured. Slip op. at 9. But when did the injury here occur?

Epcon argued it wasn't really injured until it finished paying. Not so, held the Fourth Circuit, it was injured when it learned of the special use permit condition after it purchased the property.

Here, Epcon alleges that it suffered an injury under § 1983 stemming from the application of an unlawful special use permit condition. As the district court concluded, Epcon first had reason to know of this injury no later than 2015, when it began purchasing the land subject to the special use permit. Thus, its claim that the permit condition violated its rights to just compensation and due process accrued at that point and extinguished three years later. By the time Epcon filed suit in October 2019, the sun had set on its federal claims.

Slip op. at 9 (footnote omitted).

The court rejected Epcon's argument that the injury occurred when it was compelled to actually pay the fees, and that happened when it went to the town for the certificates of occupancy. And this isn't a regulatory takings claim, Epson asserted. If it were, the SOL clock might have started earlier. No, this is an unconstitutional conditions claim, and that's different. Slip op. at 10. We didn't lose our property right until we paid, it argued.

We disagree, the court held. "The distinction Epcon attempts to draw between exactions and regulatory takings proves little more than that the government need not physically appropriate property to enact a taking." Slip op. at 10. [Barista's note: "enact" a taking?]

And here's your money quote: "Once the government conditions the grant of a land-use permit on the surrender of a landowner’s right to just compensation, a Takings Clause claim becomes cognizable." Slip op. at 10. In other words, once that happens, the lawsuit window is open and the SOL clock is ticking. In other words, the claim is ripe.

Remember that one the next time the government argues an exaction case isn't ripe because the action being challenged as unconstitutional (the government's demand, and the subsequent owner payment) isn't complete.

Epcon Homestead, LLC v. Town of Chapel Hill, No. 21-1713 (4th Cir. Mar. 20, 2023)

New Cert Petition: Do You Need Statutory Authorization To Sue For A Taking?

Check this out, a recently-filed cert petition in a case we've been following, filed by our friends and colleagues at the Institute for Justice. This one involves an issue we've been on top of also, most recently in these two cases (see here and here).

That is, what does the Supreme Court's description of the Takings Clause as "self-executing" actually mean? Do you need statutory authorization in order to bring a takings or just compensation claim, or can you sue directly under the Constitution?

In Devillier v. Texas, No. 21-40750 (Nov. 12, 2022), the Fifth Circuit's cryptic opinion concluded that "the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right to action for takings against a state[.]" Slip op. at 1-2. Here's the entirety of the decision (minus footnotes):

The State of Texas appeals the district court’s decision that Plaintiffs’ federal Taking Clause claims against the State may proceed in federal court. Because we hold that the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right of action for takings claims against a state, we VACATE the district court’s decision for want of jurisdiction and REMAND with instructions to return this case to the state courts. The Supreme Court of Texas recognizes takings claims under the federal and state constitutions, with differing remedies and constraints turning on the character and nature of the taking; nothing in this description of Texas law is intended to replace its role as the sole determinant of Texas state law. As such, this Court lacks jurisdiction to review these claims.

Here's the Question Presented by the Petition:

In First English Evangelical Lutheran Church v. County of Los Angeles, this Court recognized that the Fifth Amendment’s Takings Clause was “self-executing” and that “[s]tatutory recognition was not necessary” for claims for just compensation because they “are grounded in the Constitution itself[.]” 482 U.S. 304, 315 (1987). Since First English, several state courts of last resort have held that the self-executing nature of the Takings Clause requires them to entertain claims directly under the Clause without the need for statutory authorization. Two federal Circuits, the Fifth and the Ninth, disagree and have held that claims for just compensation are only available if they are legislatively authorized. The question presented is:

May a person whose property is taken without compensation seek redress under the self-executing Takings Clause even if the legislature has not affirmatively provided them with a cause of action?

Follow along on the Court's docket here. We sure will be.

Exactions, Takings, And Ripeness...Oh My! When Planning Officials Say "No," That's Enough (Even If They Might Have Said "Yes" Some Other Way)

There's a lot to digest in the 36-page Order of the U.S. District Court for the Southern District of Florida in case that mostly concerns the validity of an exaction a small property owner was required to pony up in order to tear down and replace an old home on its land.

Megladon bought the residentially-zoned property in 2016 to tear down the existing building and build a new one. Simple enough, right? It demolished the old house, and applied to the Village to build a new one. But the Village also needed a road, and began making noise about a "possible road dedication." And sure enough, eventually the Village notified Megladon that "a certificate of occupancy will not be issued until dedication of the right-of-way is complete." Slip op. at 4. There's a dispute over exactly whose law requires such a dedication -- Village or County? -- but that's not terribly important for our purposes. 

Megladon balked, as dedicating a road would require it to reformulate its plans. There's apparently a procedure by which a property owner can request and exemption or waiver, but "Megladon refused because of the 'legal inconsistency of doing so[.]'" Slip op. at 4. Instead, it sued in a Florida state court. The Village then removed the action to federal court. After removal, Megladon amended its complaint to add an unconstitutional conditions claim.

The inevitable motion to dismiss under 12(b)(1) and 12(b)(6) followed.

Many pages of the court's order (mostly) denying the motion to dismiss are devoted to whether the plaintiff sued the right defendant. Important to the case and the parties, but not really of interest to us. If you might be, check out pages 9-23. 

Page 24 is where the interesting stuff heats up. The court concluded the claims are ripe over the Village's objection that -- you guessed it -- it has not yet reached a "final decision." Slip op. at 24. The court concluded "[t]his argument strains credulity[,]" because the Planning Director send Megladon an email that indeed "a certificate of occupancy will not be issued until dedication of the right-of-way is complete." To the court, this looked like a final decision:

Especially when we view this communication (from the Village’s Planning Director no less) in the light most favorable to the Plaintiff, we don’t think we’re going out on a limb by saying that it sounds a lot like a final decision. Director Olmsted made clear that the Village would issue the permit provided the Plaintiff acceded to the dedication. See ibid. “Provided” in this context means “with the provision or condition (that); it being provided, stipulated, or arranged (that).” Provided, Oxford English Dictionary Online, https://www.oed.com/view/Entry/153449 (last visited Mar. 1, 2023); accord Provided, Merriam-Webster's (defining “provided” as “on condition that, with the understanding, if only”). And, in case there was any doubt, Olmsted clarified that Megladon would “need” to consent (in writing) to the dedication “prior to” the issuance of any permit, and he was pellucid that the permit “will not be issued until dedication of the right-of-way is complete.” SAC ¶ 64 (emphases added). The word “will”—like the word “shall”—indicates the imposition of a mandatory condition. See Hewitt v. Helms, 459 U.S. 460, 471 (1983) (“[T]he Commonwealth has gone beyond simple procedural guidelines. It has used language of an unmistakably mandatory character, requiring that certain procedures ‘shall,’ ‘will,’ or ‘must’ be employed[.]”); Will, Oxford English Dictionary Online (“An utterance of the auxiliary verb ‘will’; (also) a command, promise, or determination expressed by such an utterance.”); Will, Merriam-Webster's (defining “will” as “used to express a command, exhortation, or injunction”); Scalia & Garner 112 (“Mandatory words impose a duty; permission words grant discretion.”).

And Olmsted’s unequivocal use of the phrase “will need” in relation to the dedication requirement puts to bed the Defendants’ bordering-on-frivolity contention that “the response to [the architect’s] email was not a refusal to continue processing the application absent a showing of dedication.”

Slip op. at 25 (footnote omitted).

This all in the context of an exaction or unconstitutional condition claim, where the bad act (according to the court) isn't that the government actually denied the permit asked for, but only that the government imposed the condition. Slip op. at 26.

The order noted that yes, the property owner could have gone further in the administrative process under the Village's procedures. But that's what we call "exhaustion." Id. ("But the Supreme Court has made clear that the unconstitutional-conditions doctrine isn’t subject to an exhaustion requirement." (citing See Pakdel v. City & Cnty. of San Francisco, 141 S. Ct. 2226, 2231 (2021)). And you don't need to exhaust in order to ripen a federal takings claim.

And here's the kicker: the ripeness requirement isn't some hard-and-fast "one application" rule, but rather "[t]o assert a plausible unconstitutional-conditions claim, therefore, a plaintiff need only allege that there’s 'no question . . . about how the ‘regulations at issue [apply] to the particular land in question.''" Slip op. at 27 (citing Suitum v. Tahoe Reg’l Plan. Agency, 520 U.S. 725, 739 (1997); Williamson Cnty. Reg’l Plan. Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 191 (1985)). And the availability of a variance isn't important, because "[i]n Williamson County, after all, the Court was concerned only with whether the plaintiff could seek a variance from the initial decisionmaker." Slip op. at 28.

Thus, the takings claim was not filed too early.

But, you know that -- as the court noted -- "the Plaintiff isn't out of the woods just yet[,]' because the Village also asserted the claim was filed too late. Slip op. at 31. Yeah, this happens a lot in takings-land, where you can be accused with a straight face of being both too early and too late. Check out pages 32-34 for why (it turns on the construction of the sovereign immunity waiver statute, if you are interested). 

Nothing resolved except the plaintiff is allowed to proceed. But as you all know, in takings law sometimes just surviving to continue the fight is a victory.

Order, Megladon, Inc. v. Village of Pinecrest, No. 1:21-cv-22819-ALTMAN (S.D. Fla. Mar. 2, 2023)

When Statute Says No Eminent Domain For "Pedestrian Way," Does That Include Sidewalks? (Is This A Trick Question?)

A short one today from the Wisconsin Court of Appeals.

In Sojenhomer LLC v. Village of Egg Harbor, No. 2021AP1589 (Mar. 14, 2023), the court held that when a statute prohibits the use of eminent domain to acquire property for a "pedestrian way," the village cannot take for a sidewalk.

Seems pretty obvious, no? Well, it took a 24-page opinion to work through it.

Here's the statute. Sure enough it does say that "[p]roperty may not be acquired by condemnation to establish or extend a recreational trail; a bicycle way, as defined in s. 340.01 (5s); a bicycle lane, as defined in s. 340.01 (5e); or a pedestrian way, as defined in s. 346.02 (8) (a)." And clicking on that last link shows that pedestrian ways are defined as "a walk designated for the use of pedestrian travel."

Sojenhorner naturally thought so, because when the village "sought to condemn Sojenhomer's property to establish a sidewalk," slip op. at 2, it objected.

We're not going to spend a lot of time on the remaining 22 pages of opinion because if you want the statutory-intepretation details you can just go read it. Short story is that the village was expanding the highway, and part of that was a place where pedestrians could walk. On the side. Of the road. You know, a sidewalk.

In the end the court held that sidewalks are pedestrian ways, even if all pedestrian ways might not be sidewalks. (Someone Venn diagram this, please.)

Hey, at least a sidewalk isn't a fish.

Sojenhomer LLC v. Village of Egg Harbor, No. 2021AP1589 (Wis. Ct. App. Mar. 14, 2023)

Mass SJC: Families Have No Common Law Property Right To Have Predecessors' Remains Remain In Cemetery

The Massachusetts Supreme Judicial Court's recent opinion in Church of the Holy Spirit of Wayland v. Heinrich, No. SJC-13326 (Mar. 14, 2023) isn't our usual takings-and-related fare, but it is straight-up Dirt Law and a bit land-usey so we're posting it. Besides, it is just what you need to perk up your ears midweek. 

The church, like a lot of churches, has a place where the dearly departed are interred. But this is not your typical cemetery or graveyard, but a "'Memorial Garden,' also referred to as a 'Churchyard[,]' [where] [p]arishoners could arrange for cremated remains (cremains" to be interred in the Churchyard by purchasing a certificate from the church." Slip op. at 3. Those certificates included a provision that subjected the purchaser to church regulation of the Churchyard "now or hereafter in force." Id.

Over the years, the problems besetting the church were more of the worldly variety: declining membership, financial difficulties. In 2015, it voted to close. The church itself was to be sold, and the offering included the Churchyard. Another church (St. Mark Coptic Orthodox Church of Boston) was thinking of buying, but objected, "largely because the Coptic Church's religious beliefs do not permit cremation." Slip op. at 4.

Eventually, the Church of the Holy Spirit agreed to disinter and relocated the cremains as a condition of the sale to St. Mark Coptic. The sale was completed, and St. Mark resold the property to another Coptic church (which had the same objection to the cremains remaining). 

The Holy Spirit church contacted the families of the 49 individuals whose cremains remained in the Churchyard. How about relocating and reinterring elsewhere at church expense, or we return the cremains to you? Most agreed. But a few did not. When no compromise could be reached, the church amended the Churchyard regulations to provide that if the church closed, the interred cremains could be relocated or returned to the families. The church then sued, seeking a declaratory judgment that the amended regulations allowed it to remove the cremains over any objections. 

The objecting family members counterclaimed. Not only was this a breach of contract, Massachusetts common law limits the power of the church to mess around with interred remains, and the family members "urge us to recognize that certain trust-like property rights are held by all families of those interred, rights that the church may not regulate out of existence by contract." Slip op. at 9.

After all, don't we call what's left of the dearly departed "remains" for a reason?

No, held the Mass SJC. The court surveyed its prior decisions, it held that the rights of the families are circumscribed by contract (the certificates, by which the families agree to be regulated by the church). Slip op. at 12 ("Review of our limited cases addressing burial rights reveals no common-law rights of the kind asserted by the families.") (footnote omitted). The court rejected a rule from Tennessee (Hines v. State, 126 Tenn. 1 (1911)), which recognized a type of trust, concluding the rule is "a poor fit for the case at bar." Slip op. at 13 (footnote omitted).

So there's no common-law right to have these remains remain. But the court was quick to caution that its rule is limited to the facts of this case, and "that in other circumstances a different result might obtain." Slip op. at 15. This is, after all, a "sensitive, difficult" topic, with a large human element.

Church of the Holy Spirit of Wayland v. Heinrich, No. SJC-13326 (Mass. Mar. 14, 2023)

Denying Uses (But Allowing Discretionary Ad Hoc Exceptions) Isn't A Recipe For Rational Land Use

If a zoning statute or ordinance sets out the uses permitted in a zone, and the uses not permitted in the zone, and a property owner wants to make a use not permitted in the zone, all she needs to do is apply for a variance, or a Conditional Use Permit, or a nonconforming use permit, or a Special Use Permit, right? After all, isn't the point of these exceptions to bright-line use prohibitions to build in a large degree of flexibility and afford front-line regulators in the right circumstances the discretion to grant a use the legislature prohibited? One size does not fit all, does it? 

That was the issue that closely divided the Hawaii Supreme Court in Hoomoana Foundation v. Land Use Comm'n, No. SCWC-17-181 (Mar. 10, 2023). In a 3-2 opinion, the court concluded that when a use is expressly barred by a zoning statute (and yes, here it is a zoning statute because Hawaii has state-controlled zoning) you cannot ask for a Special Permit to make that use. The only way you can make a use expressly prohibited by the statute is to change the parcel's zoning.

The Case and the Issue

Here's the story. The Foundation wanted to set up an "overnight campground for homeless and commercial campers" (slip op. at 3) on land it leased, which was zoned by the State as Agriculture (B-rated soil, if you are interested):

16. Under Ho'omoana's proposal, the Project would consist of 2 acres, while the remaining adjacent 5.9 acres would be reserved as an agricultural field to be used by the campground occupants for therapy and work. It is envisioned that the [homeless] campers may work in the agricultural field to supplement their rental fees. Homeless campers are expected to pay $10 a night, while the commercial campers would be charged more. The camping fees are anticipated to underwrite the expenses of the campground. Although some of the campers may wish to participate in farming activities on the Property, there is no guarantee that the agricultural field would result in future agricultural productivity nor is there a current requirement placed upon the campers to engage in agricultural pursuits.

17. The 2-acre area of the Project would have up to 26 pods for tents accommodating up to 80 people. Tents are to be provided by the campers. It is intended that both the homeless campers and the commercial campers would be camping alongside each other. In addition to the pods, showers, toilet facilities, fire pits or camp stove areas, a paved parking area, and a charging station for campers are proposed. Homeless campers would be allowed to stay for two to three months or more as approved by the campground manager. It is unclear how long commercial campers would be allowed to use the grounds, but any stay would need to be approved by the manager.

Slip op. at 4.

Problem is, the Agricultural district doesn't seem to allow for overnight camping. The statute says that recreational uses like day camping is permitted, but expressly excludes "overnight camps" as allowed uses:

Within the agricultural district ... all lands ... shall be restricted to the following permitted uses: ... Public and private open area types of recreational uses, including day camps ... but not including ... overnight camps[.]

Haw. Rev. Stat. § 205-4.5(a)(6).

But an adjacent statute also allows a request for a Special Use Permit, for "unusual and reasonable uses within agricultural and rural districts other than those for which the district is classified." Haw. Rev. Stat. § 205-6. So what's the deal, can a county Planning Commission or the state Land Use Commission consider a special use permit to allow a use expressly prohibited by the zoning statute?

What Happened

The Foundation thought so, and asked the Maui County Planning Commission for a Special Permit to allow the overnight homeless and commercial campground project as a "unusual and reasonable use." The Foundation also had behind it a Hawaii Supreme Court case, Mahaulepu v. Land Use Comm'n, 71 Haw. 332, 790 P.2d 906 (1990), which held that a use not permitted under section 205-4.5(a)(6) might well be authorized via a special use permit.

But neighbors who object to the project asked the State Land Use Commission for a declaratory ruling that the proposed use of Agricultural land requires a zoning change (known in the parlance of Hawaii's statewide zoning scheme as a "boundary amendment"), and cannot be accomplished ad hoc by a discretionary special use permit.

The LUC agreed with the neighbors, concluding that the overnight camping project could not be approved by way of a special use permit, but that there must be a change in the zoning in order to allow it. By expressly prohibiting "overnight camping," the legislature had, in effect, already made the determination that overnight camping was not an unusual and reasonable use. Thus, no special use permit.

The Foundation appealed to a state trial court under the Administrative Procedures Act. It argued that the special use permit statute doesn't expressly preclude asking for an exception for uses prohibited by the zoning, and moreover, that Mahahulepu case held that doing so is just fine. The trial court bought the Foundation's argument and reversed the Land Use Commission.

Next stop, the Hawaii Intermediate Court of Appeals, which seemed to go both ways on the issues:

The ICA concluded it was bound by Mahaʻulepu, making the LUC’s decision contradicting Mahaʻulepu palpably erroneous. However, the ICA observed that the specific exclusion of overnight camps should control over the general availability of special permits in keeping with canons of statutory construction and furthering the statutory scheme.

Slip op. at 11.

Majority: The Statute Bars Overnight Camping, And That's That

Final stop, discretionary review by the Hawaii Supreme Court. There, a three-Justice majority (Nakayama, Wilson, Eddins) overruled the Mahahulepu case, and concluded that no, you cannot ask for a special use permit if the use you are seeking is expressly prohibited in the zoning statute:

HRS §§ 205-4.5(a)(6) and 205-6 are clear: the “public and private open area types of recreational uses” of “dragstrips, airports, drive-in theaters, golf courses, golf driving ranges, country clubs, and overnight camps” are not permitted on class A and B agricultural land, and cannot be permitted by special use permit.

Slip op. at 19-20 (footnote omitted).

Relying on statutory text, legislative history, and the canon of statutory construction that the specific controls over the general, the majority concluded that the point of chapter 205 is the protection and preservation of agricultural lands, and allowing a use to be made of agricultural land that is expressly prohibited by the zoning statute would not "promote the effectiveness and objectives of this chapter" as the special use permit statute requires. Slip op. at 18.

Having concluded that a special use permit isn't the way one might ask to establish an overnight campground on agricultural land, the majority held that the only way for the Foundation to get its overnight camping project approved would be to seek a "boundary amendment" (aka zoning change) to change the zoning from Agricultural "to one where recreational overnight camps are permitted." Slip op. at 21.

As for Mahahulepu? Overruled. That decision was the product of "flawed" reasoning (that case held that golf courses, another use expressly prohibited by the statute on Agricultural land, could be approved by way of a special use permit), and "failed to engage with the plain language of [the statute] prohibiting certain uses[.]" Slip op. at 22.

Dissent: The Statute Prohibits "Recreational" Uses, Which This Isn't

Two Justices (Chief Justice Recktenwald and Justice McKenna) saw it differently. Stare decisis cautions against lightly overruling cases that are only 30 years old, "[w]hether or not we agree with its reasoning[.]" Dissent at 2. After all, the legislature has had ample time to supersede Mahahulepu, but it hasn't done so.

More interestingly, the dissenters did not view the proposal for an overnight homeless campground as a "recreational use" included in the statute's express prohibition. Dissent at 9-10 ("An overnight campground for unsheltered persons is not a 'recreational' use."). Thus, at least that part of the project might be subject to approval on Agricultural land, because the statute only bars "recreational uses" (and then lists out examples, including overnight camping. The dissenters also were troubled by the Land Use Commission barring the Foundation from intervening in the declaratory ruling process initiated by the neighbors, "some of whom asserted 'not in my backyard' concerns. Dissent at 14-15 (footnote omitted).

Some Thoughts On Bright Lines and Ad Hoccery

Overall, this one isn't terribly surprising, given the Hawaii Supreme Court's wanting to keep a tight rein on land use issues, and its record of reading exceptions to the court's view of the meaning of statutes and ordinances very narrowly. The court, for example, falls squarely in the "narrow" approach to variances.

And we have to agree more with the majority on this one, but for slightly different reasons. We don't really focus on the statutory interpretation as the majority reasoned (after all, it seems you might read the statute both as the majority and as the dissenters did). Instead, we see this one as a push in the correct direction on a larger-scope issue. That being what we see as a trend in land use regulation to paint with a very broad brush in a statute or ordinance, and then rely on administrative or agency officials to exercise discretion to craft ad hoc exceptions. 

To us, this is a bad trend. The problem with "ban use X by law, but allow a discretionary process that might allow use X" is that it shifts the locus of land use regulation from elected officials and legislative judgments to discretionary administrative determinations made by unelected officials (aka bureaucrats). It also seems to favor old-hand insiders who know how to play the system, legally or otherwise. It might not matter whether you can read the law, but it does matter who you know at the Planning Commission or the Land Use Commission.

Bear with us while we play this out. Let's say the legislature has decided to prohibit certain uses in a certain zone and writes the statute or the ordinance that way. Landowners may not like the restrictions because, well, they are restrictions on their use of their land, but at least having a clear line about what is allowed and what isn't fixes a position to which property owners can react and plan. But let's also say that the legislature also includes in the law that in specific cases, an administrative official has the discretion to effectively overrule the legislature's judgment and permit a use that is expressly prohibited. This leaves what should be legislative judgments up to the discretion of nonlegislative officials. 

What's wrong with that, you ask? After all, as noted at the start of this post, one size does not fit all and shouldn't the law itself account for situations in the grey areas that cannot be accounted for when a legislature regulates property? Don't we want to provide landowners with the chance of making a certain use of their property even though a zoning ordinance or statute prohibits it? Flexibility!

It's All Discretionary, Son

In our view, the "everything is discretionary" approach is a recipe for administrative gamesmanship, and runs counter to the idea that to be a valid exercise of police powers, land use regulation should be comprehensive and part of a bigger plan. Maybe more importantly, this type of scheme not only makes arbitrary decisions more likely, it allows government to create "permit purgatories" where property owners are sent to wither on the vine, especially where the legislatively-adopted regulation bars all uses.

In those cases, instead of having to face the takings music for a regulation that prohibits all economic uses, the government gets off the hook if it can point a court to the mere possibility that it might waive, overlook, or vary the restriction. And once a court hears from the government that there is some theoretical possibility that the use prohibited by the statute or ordinance might be allowed if only the property owner asked the right person in the right way (and that person makes a response that can be deemed "final") the judge's interest switch turns to "off" and the court can confidently kick the case for being unripe. We are referring of course to the "final decision" requirement of Williamson County. Because when there is any discretion in the process, courts are loathe to evaluate takings claims on the merits, on the theory that the government might -- just might! -- exercise its discretion and allow what its own statutes or ordinances plainly and expressly prohibit.

Discretion is Often Designed for Permit Purgatory And Takings Avoidance

Perhaps the most glaring example of how this dynamic enables administrative and judicial gamesmanship is California Public Resources Code § 30010, which has been interpreted as providing both the California Coastal Commission and local governments the complete and total discretion to overrule or ignore any restrictive regulation in the coastal zone, if the CCC or a local government can be convinced by the property owner that to apply the statute or ordinance as written would result in a taking. And believe us, the California Coastal Act and local coastal ordinances are full of restrictions that prohibit any and all economically-beneficial uses. But because section 30010 seems to leave open the possibility that these restrictions may be waived ad hoc (if only the property owner asked the right person the right way), courts never get to the merits. "Just ask for an exemption," they counsel landowners, ignoring protestations that these discretionary approvals are more imaginary than a real possibility, and that assembling a request to exercise discretion can be eye-wateringly expensive.

You don't have to be in the land use game all that long to see the evil genius in this, at least the way the courts read this statute: not only does this put the owner into permit purgatory where government is incentivized to avoid taking a concrete position about what its restrictions allow and what they prohibit, this procedure forces a property owner to present her constitutional takings claims to the very government that she claims is violating her rights, upon pain of a 12(b)(1) or 12(b)(6) dismissal if she files a takings lawsuit before the government responds. Yet the Supreme Court says it does not require exhaustion of administrative remedies in takings cases.

What About Euclid?

But these discretionary purgatories take the foundation of the constitutionality of zoning as expressed in Euclid -- the assumption that land use regulations are constitutional because they are the product of big picture thinking and a comprehensive plan -- and inverts it so that every decision is discretionary and case-by-case. The reality is that these "exceptions" are granted rarely, and the process isn't so much designed to get to a "yes" or "no" on what uses might be allowed on a particular parcel, but are often there more as a "takings avoidance" tool like section 30010, where property owners are forced into an open-ended maze and the government does everything it can to strenuously avoid making any decision. That way, the owner remains stuck in the discretionary maze, never to receive an answer, until the owner throws in the towel, after bleeding out financially or spiritually.

This is rational land use planning?

It isn't, but most federal courts have accepted it as the way the land regulation game is played. So kudos Hawaii Supreme Court, for holding the legislature to what it said in the statute, and not allowing unelected members of a county planning commission or the state Land Use Commission decide that in this case, the statute is meaningless.

Hoomoana Foundation v. Land Use Comm'n, No. SCWC-17-0000181 (Haw. Mar. 10, 2023)

When It Rains, It Floods: Intermittent Flooding, Inevitably Recurring, Is Treated As A Permanent Invasion

A quick one from the Indiana Supreme Court (thanks to our Pacific Legal Foundation colleague Sam Spiegelman for the heads-up on this one).

In Town of Linden v. Birge, No. 22S-PL-352 (Mar. 7, 2023), the court held that intermittent government-induced flooding of property is treated as a permanent invasion and a per se taking if the flooding is inevitably recurring.

A Town owned and maintained drain fell into disrepair, "resulting in frequent flooding of the Town" so replacement and upgrade was in order. The Town did so and formed an improvement district to fund it. The Birge property was assessed $7k, and after some back-and-forth about the location and placement of a manhole cover on the Birge property, the upgrade project went forward. But "[a]fter completion of the project in late 2012, low-lying portions of the Birges’ Property flooded after any heavy rainfall, encumbering the Birges’ farming enterprise. So, rather than pay the $7,679 assessment, the Birges sued the Town, County, and others (collectively, the Defendants) for inverse condemnation." Case dismissed for governmental immunity, but the court of appeal reversed.

Now dealing with the merits, the trial court concluded this was a taking. The Town solved its own flooding problem by, in essence, shifting the flood waters from its own property to the Birge property. Their property floods during every heavy rainfall. While merely recurring because the floodwaters eventually recede, the trial court treated this as a permanent physical invasion.

The court of appeals, however, had a different view. True, under Arkansas Game and Fish, flooding need not be permanent to be deemed a taking. But when flooding isn't permanent, the court applies that long list of factors that Arkansas Game set forth.

The Indiana Supreme Court agreed to hear the case and disagreed with the court of appeals:

Based on this precedent, we analyze a flooding-related takings claim as follows: (1) if the flooding is continuous or “intermittent but inevitably recurring,” and the invasion is “substantial,” then it results in a per se taking; (2) if, on the other hand, the flooding is temporary or of “finite duration,” then the Arkansas Game factors apply.

Slip op. at 8.

The court relied on United States v. Cress, 243 U.S. 316 (1917), where the Supreme Court held that although the flooding itself was temporary and the waters eventually receded, the government's building of a lock and dam that resulted in frequent flooding was a "permanent condition" resulting from the dam being built. "The 'character of the invasion' determines whether a taking occurred, the Court emphasized, “not the amount of damage resulting from it, so long as the damage is substantial." Slip op. at 7 (quoting Cress, 243 U.S. at 329).

In contrast to Arkansas Game where the flooding was temporary and finite (by the time the Court heard the case, the feds had stopped flooding Arkansas' property), here, the flooding is recurrent and indefinite. It rains, it floods:

Unlike in Arkansas Game, where the “recurrent floodings” were of “finite duration” (lasting from 1993 to 2000), 568 U.S. at 27 (emphasis added), the floodings here are repetitive and of indefinite duration—i.e., they amount to a “permanent condition,” see Cress, 243 U.S. at 327. As the trial court expressly found, and as the record evidence supports, the drain reconstruction project has resulted in “repeated flooding events” on the Birges’ Property due to increased pressurization at the Transfer Point during “every heavy rainfall.” App. Vol. 5, p. 59; see Tr. Vol. 2, p. 56 (expert testifying to the same effect). In other words, the flooding here amounts to a permanent physical invasion by way of “intermittent but inevitably recurring overflows.” See Cress, 243 U.S. at 328 (emphasis added). Indeed, so long as the Property sustains “heavy rainfall” (or unless and until the County takes the necessary corrective measures), the flooding will persist indefinitely. This type of physical appropriation reflects the “clearest sort of taking,” which we assess by “using a simple, per se rule: The government must pay for what it takes.” See Cedar Point Nursery v. Hassid, 141 S.Ct. 2063, 2071 (2021) (internal quotation marks and citations omitted).

Slip op. at 9.

But the Birges are not out of the woods just yet. The trial court concluded the flooding made it "more difficult" for the Birges to farm the land. The standard, the Indiana Supreme Court concluded, is a bit higher. The owner must show that the flooding resulted in "substantial" damage. Back down it goes to determine if the Birges meet this standard.

Town of Linden v. Birge, No. 22S-PL-352 (Ind. Mar. 7, 2023)

One Guess What The Second Circuit Did With A Takings Challenge To Rent Control

Let's say you know nothing else about an appeal except it is being decided by the U.S. Court of Appeals for the Second Circuit, and the case is a constitutional challenge to rent control. What's your best guess about the outcome (the district court dismissed for failure to state a claim)?

When the Second Circuit issued its summary order in just such a case last week -- a challenge to the "Housing Stability and Tenant Protection Act of 2019" -- we decided to undertake a little unscientific poll to see whether others out in the Twitterverse predicted as we did.

Looks like so. Yes, the sampling size was small, and the respondents were only those who voluntarily offered their thoughts. But 95% accurately predicted that the property owners would lose, as the Second Circuit indeed held in an appellate court's version of "laughing heartily" at an appellant's arguments: an unpublished summary order.

We could spend the rest of this post going through all of the reasons why the Second Circuit didn't find a scintilla of reversal in the property owners' arguments. But the Order is so short, you might as well read it yourself.

Short story: facial claim? Nope, no physical taking because you fool landlords let tenants in your properties. No facial reg take either, because "different landlords have greatly varying expectations." Order at 4. Rather than serve as an apt illustration of why the "expectations" part of the Penn Central test focuses on an irrelevant inquiry, the Second Circuit effectively concludes that reg takings claims can never be raised as facial claims. 

Same outcome for the as-applied claims: no plausible allegation of a physical taking because there's still the possibility of getting tenants out, and owners are not prohibited from exit the rent-controlled market by getting out of the rental market; the law merely "restricts a landlord's ability to profit by converting a rent stabilized unit to a market-rate unit[.]" Order at 6. And, for good measure, these claims are not ripe because the owners didn't plead that they tried to get anyone out. As for the as-applied regulatory takings claim, the claim is not ripe because the complaint does not allege that the owners tried to take advantage of any of the non-futile procedures to obtain a hardship exemption. And even if ripe, the owners lose "on the merits." (Remember this is an appeal from at 12(b)(6) dismissal, so what "the merits" has to do with anything is beyond us.)

So what might the 95% response indicate? People have very good predictive powers? Our colleagues are as cynical and jaded as we are? Constitutional challenges to rent control are so lacking in merit and plead-worthiness that courts rightly laugh them out of court? The Second Circuit is predictable but in other circuits you might get a more balanced view?

Or maybe -- just maybe -- something else is at play here, and, like a lot of other courts have done before it, the Second Circuit isn't about to upset the apple cart and do anything to undermine what started off, like a lot of these things do, as an "emergency" measure now fossilized into an untouchable entitlement (but an entitlement that is not paid for by the taxpayers, but by private property owners)? In these cases, the lower courts aren't likely to do doodly-squat, and rent control cases will be pushed up to the Supreme Court until that Court does something more than repeatedly decline to review the issue.  

Summary Order, 335-7 LLC v. City of New York, No. 21-823 (2d Cir. Mar. 1, 2023)

Guest Post - Kady Valois, "How The West Was Won: Easements!"

Today's post is by our Pacific Legal Foundation colleague Kady Valois, writing about a recent Federal Circuit Rails-to-Trails takings case, Behrens v. United States, No. 22-1277 (Feb. 13, 2023).

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How The West Was Won: Easements!

by Kady Valois

There’s a saying that the west was won by pioneers, settlers, and adventurers.

And while that may be somewhat accurate, what’s clearer still is that the west -- at least the west we know today -- was built and developed because of railroads. We owe a lot to railroads because this nation was built by the coal engines that carried steel, food, and people to areas never previously explored by Americans. Many of these railroads were built on easements or rights-of-way on private property, subject to the fee owner's reversionary interest: should the easement ever not be used for railway purposes, the property is supposed to revert to the landowner. 

And as with most things, technology advances and what once was cutting-edge or even common becomes outdated. So it seems with railroads. While they still serve a function, rail transportation is not as widespread as in decades or centuries past. But as rail lines are abandoned, in their stead has grown a movement to transform these former railway easements into public recreational trails. Congress even got behind the rails-to-trails movement, and adopted a statute that interferes with the state-law reversionary process.

Typically, when a railroad wishes to relinquish control over a railroad corridor, it must seek permission from the federal Surface Transportation Board to abandon the corridor. Interested parties may intervene and propose to "railbank" the corridor, that is, preserve it for future use. An intervenor must be willing "to assume full responsibility for [m]anaging the right-of-way; [a]ny legal liability arising out of the transfer of use of the right-of-way . . .; and [t]he payment of any and all taxes . . . [on] the right-of-way." See 49 C.F.R. § 1152.29(a).

So let's say the STB agrees, and instead of reverting to the property owner, the easement is designated for use as a recreational trail. The courts have long concluded that the issuance by the STB of a Notice of Interim Trail Use results in a taking for which the United States is liable (after all, absent the federal Rails-to-Trails Act, the easement would have reverted to the owner, and for that, the owner is owed just compensation).

Much of the rails-to-trails litigation in the Court of Federal Claims and the Federal Circuit involve questions about the scope of the grant of these easements. After all, if the federal government can show that recreational trail use is not inconsistent with the terms of the original grant of easement, then voila! ... no reversion, no taking.

That was the dispute in Behrens. The Federal Circuit examined the abandonment of a 144.3-mile corridor previously used by the St. Louis, Kansas City, and Chicago Railroad Company in the 1900s. Here, unlike the usual situation, most of the deeds conveying the easements more than a century ago "did not state a limitation of the grant to use for railroad purposes." Slip op. at 5. The successor-in-interest to the railroad sought the STB's approval to discontinue service and consummate abandonment of the easement. NITU followed, as did an agreement for the Missouri Department of Natural Resources to operate and maintain a recreational path on the easement. CFC takings claim followed.

Plaintiffs moved for summary judgment on liability, asserting that the railroad originally acquired mere easements, pursuant to Missouri law; that the railroad’s easements were limited to railroad purposes; and that the conversion of the easements for a public recreational trail was beyond the scope of easements, and thus constituted a taking. The government then cross-moved for summary judgment on the ground that the deeds granted an easement broad enough to allow for interim trail use and railbanking.

Slip op. at 6-7.

The CFC held that under a Missouri easement statute, the easements contemplated interim trail uses and thus, no taking.

The Federal Circuit disagreed. The court started with the Missouri easement statute, which gives railroads power:

[t]o take and hold such voluntary grants of real estate and other property as shall be made to it to aid in the construction, maintenance and accommodation of its railroads; but the real estate received by voluntary grant shall be held and used for the purpose of such grant only....

Slip op. at 9.

The government pointed to the statute and argued that it does not define the scope of the granted easements, and the court needed to look for the intent of the grantor as evidenced by the language of the grant. Here, the government argued (as noted above), "the deeds themselves contain no language stating a limitation of the grant to a specified purpose." Slip op. at 10.

The Federal Circuit rejected that conclusion because the Missouri Constitution states that properties taken by a railroad by eminent domain are presumed taken "for railroad purposes." See slip op. at 11 (citing Mo. Const. art. I, § 26). The Court acknowledged that state limitation by finding that the property’s acquisition for anything other than railroad use would fall outside the scope of the recorded easement. Thus, the government’s attempt to use the now defunct railroad for an interim trail or rail bank was unconstitutional – which is this author’s opinion was the right conclusion.

The only question left was whether under Missouri property law, use as a recreational trail -- for such things as walking, hiking, cycling, picnicking, frisbee playing -- are railroad purposes. (What do they think this is, New York or something?) Short answer, no. Nor is railbanking:

Under Missouri law, establishing a nature trail for the purpose of keeping the corridor intact for future rail service is not considered a railroad purpose if there is no evidence that such future use is realistic. In Boyles, the court rejected the argument that “because one of the purposes of the trail is to keep the existing corridor intact for transportation needs that may occur in the future, such as reactivated rail service, [the easement’s] proposed use [as a trail] is for railroad purposes.” Boyles, 981 S.W.2d at 649. The Boyles court found that this argument “ha[d] no merit” because “[t]he undisputed evidence, including the removal of the bridges, ties, and rail by [the railroad company], showed that no such [future railroad] use is realistic.” Id. at 649–50. The court also noted that “[t]he proposed development of a hiking, biking, cross-country skiing, and nature trail is completely unrelated to the operation of a railway and consistent only with an intent to wholly and permanently cease railway operations.” Id. at 650 (citation omitted). Thus, in Missouri, trail use with the purported but speculative purpose of preserving the right-of-way for purported but speculative purpose of preserving the right-of-way for future railroad use does not fall within the scope of an easement ranted for railroad purposes. Here, there is no evidence that future rail use is realistic.

Slip op. at 12-13.

The court concluded by holding that "the easements granted to the railroad were not broad enough to encompass interim trail use or railbanking[.]" Slip op. at 16.

Reversed and remanded.

Behrens v. United States, No. 22-1277 (Fed. Cir. Feb. 13, 2023)

Catholic U Law School Student Scholar: "Eychaner v. City of Chicago: Repercussions after The Supreme Court refuses to take up a Takings Clause Reconsideration"

Remember that case from a couple of years back, where the Supreme Court, by a tantalizingly close vote, declined to grant a cert petition seeking review of an Illinois decision that preventing future blight was a sufficiently public use to support a redevelopment taking? 

A law student at Catholic U. law school recently made a presentation on the case and the issues as part of the Student Scholars Series, and the law school has kindly made the video available. More here.

We think it is fantastic both that law students are examining these issues, and that the law school encourages and promotes their work. It gives us comfort for the future of the profession, and the Dirt Law Bar.

Well done, Mr. Tocchio!

Property Owner's SCOTUS Merits Brief: "Under no circumstances can government have an unbounded ability to confiscate entire properties of any size for even the most minimal tax debts."

Here's the merits brief, filed yesterday in the above-depicted Court by our law firm colleagues, headed by Counsel of Record Christina Martin in Tyler v. Hennepin County, No. 22-166, a case and an issue we've been following closely. This is the one, where, as recounted in the petition:

Hennepin County confiscated 93-year-old Geraldine Tyler’s former home as payment for approximately $15,000 in property taxes, penalties, interest, and costs. The County sold the home for $40,000, and, consistent with a Minnesota forfeiture statute, kept all proceeds, including the $25,000 that exceeded Tyler’s debt as a windfall for the public. In all states, municipalities may take real property and sell it to collect payment for property tax debts. Most states allow the government to keep only as much as it is owed; any surplus proceeds after collecting the debt belong to the former owner. But in Minnesota and a dozen other states, local governments take absolute title, extinguishing the owner’s equity in exchange only for cancelling a smaller tax debt, code enforcement fine, or debt to government agencies.

Because this is one of ours, we won't go into it in detail, and leave it to you to read and review. The Questions Presented:

1. Whether taking and selling a home to satisfy a debt to the government, and keeping the surplus value as a windfall, violates the Takings Clause?

2. Whether the forfeiture of property worth far more than needed to satisfy a debt plus, interest, penalties, and costs, is a fine within the meaning of the Eighth Amendment?

We shall continue to follow along with the case and the to-be-filed amicus and merits briefs (or you may follow the Court's docket here). 

This case is the third of our firm's which the Court has granted on property issues this Term (Sackett and Wilkins being the other two).

Brief for Petitioner, Tyler v. Hennepin County, No. 22-166 (U.S. Feb. 27, 2023)

Happy (?) 200th Anniversary, M'Intosh

The Chief Justice Wants YOU to attend this webinar.

We try to remember anniversaries and birthdays. Some welcome, like the recent 100th of Pennsylvania Coal v. Mahon. Some maybe not so welcome, like this, the 200th anniversary of Johnson and Graham's Lessee v. M'Intosh, 21 U.S. (7 Wheat.) 543 (Feb. 28, 1823).

That's the decision in which the Supreme Court, in an opinion authored by Chief Justice John Marshall (noted above, giving us the finger), held:

Upon this principle the North American Indians could have acquired no proprietary interest in the vast tracts of territory which they wandered over; and their right to the lands on which they hunted, could not be considered as superior to that which is acquired to the sea by fishing in it. The use in the one case, as well as the other, is not exclusive. According to every theory of property, the Indians had not individual rights to land; nor had they any collectively, or in their national capacity; for the lands occupied by each tribe were not used by them in such a manner as to prevent their being appropriated by a people of cultivators. All the proprietary rights of civilized nations on this continent are founded on this principle. The right derived from discovery and conquest, can rest on no other basis; and all existing titles depend on the fundamental title of the crown by discovery.

Id. at 569-570 (footnote omitted).

Now, we're not experts in this topic. But we know some who are. And tomorrow at 12 noon ET, they are putting on a webinar: "Johnson v. M'Intosh: Reflections on the 200th Anniversary of a Foundational Case on Property Law and Indigenous Rights in the United States."

Here's the description:

Johnson v. M'Intosh, decided in 1823, dealt with so-called acquisition by discovery and conquest and the need to choose between competing claims to property ownership from divergent chains of title, consequently affecting the rights of indigenous peoples and the rules governing transfer of property in the early days of the United States. It remains a controversial and influential decision, shaping the legal framework around indigenous land rights to this day. Join the Tribal Law & Economics Program and its panel of experts for a discussion of the case.

Thank you to the speakers (lawprofs Bethany Berger, Eric Claeys, Adam Crepelle, and Robert Miller), and to George Mason's Law & Economics Center for putting this on.

We've already registered, and suggest you do as well.

Johnson and Graham's Lessee v. M'Intosh, 21 U.S. (7 Wheat.) 543 (1823)

The Fenwicks, "America's only Afro-Centric Yiddish Ska Band," With The Property Rights Anthem, "Preeminent Domain"

Would not have guessed that The Fenwicks, described as "America's only Afro-Celtic Yiddish Ska band," and compared to "Oingo Boingo on steroids" would have a song about eminent domain & property rights, "Preeminent Domain."

But there it is. Check it out.

New Article: "Toward Principled Background Principles in Takings Law" (Strahilevitz & Hansen)

Check this out, a new article co-authored by a federal judge's law clerk and lawprof Lior Strahilevitz (Chicago). With the title, "Toward Principled Background Principles in Takings Law" are we going to read it? You bet. (Unlike a lot of new scholarship that we post here, we read this one immediately.)

Here's the Abstract:

Blunders made by lawyers, judges, and scholars have caused the Supreme Court’s recent opinion in Cedar Point Nursery v. Hassid to be deeply misunderstood. In Cedar Point, the Court re-wrote takings law by treating temporary and part-time entries onto private property as per se takings. Prior to Cedar Point these sorts of government-authorized physical entries would have been evaluated under a balancing framework that almost invariably enabled the government to prevail. As it happens, there were two well-established rules of black letter law that California’s lawyers and amici mistakenly failed to invoke in defending the Cedar Point union organizer access regulation. First, a physical takings claim accrues when a regulation authorizing third parties to enter private property is promulgated, not when the third party actually enters the land. Second, only the party that owned the land at the time the physical taking cause of action accrued can prevail. Under these doctrines, Cedar Point Nursery’s lawsuit was filed decades too late. By the wrong plaintiff. California’s oversights were probably outcome determinative.

Moving beyond Monday-morning quarterbacking, we argue that the statute of limitations arguments available to governments in future cases help provide the essential limiting principles that went unmentioned in Cedar Point. In the aftermath of Cedar Point prominent scholars denounced the opinion as a vehicle for gutting antidiscrimination law, labor law, environmental law, rent control, and other parts of the regulatory state. Our analysis reveals that these concerns are likely exaggerated because defenders of those long-standing limits on the right to exclude can invoke the statute of limitations arguments that California’s lawyers failed to raise. On the other hand, new restrictions on owners’ rights to exclude are vulnerable to legal challenge. Properly understood, contemporary takings law grandfathers in many longstanding limits on the right to exclude while constraining governments that wish to tackle collective action problems by restricting property rights in new ways. Moreover, statutes of limitations and related doctrines can provide courts with something that has been elusive since the Supreme Court’s 1992 takings decision in Lucas v. South Carolina Coastal Council: a principled and coherent account of what restrictions on owners’ rights are impervious to takings claims because they qualify as background principles of state property law.

Read it at SSRN.

[Before we go on, Disclosure 1: my law firm represented the property owner in Cedar Point Nursery, so yes, I have a dog in the hunt.]

What do you think of the article's premise and conclusion that a regulation alleged to allow a physical invasion must be brought when the regulation is adopted, and not when property is actually invaded?

Government lawyers need not and should not repeat the mistake that California’s lawyers made, a goof that evidently went unnoticed by all three dissenting justices, all thirteen amici, and every scholar who has written about Cedar Point. By correcting Cedar Point’s litigation strategy blunder, governments may avoid having to compensate landlords who want to refuse to rent to members of a protected class, landlords whose ability to evict is constrained by rent control laws, employers who wish to fire workers involved in unionization efforts, and business owners who want to bill governments for the inconvenience of having to endure entry by health and safety inspectors. Most of these claims brought by property owners should fail if defended by competent government counsel who can learn from California’s error.

Id. at 5 (footnote omitted).

In other words, the allegedly unconstitutional act is the enactment of the regulation, and not also the failure to provide compensation when an invitee subsequently exercises the rights granted by the regulation to enter the plaintiff's property against the owner's wishes.

And what of the article's other premise, that regulations allowing physical invasions and occupations of property over time become "background principles of the State's law of property and nuisance" and disappear upon conveyance of the property?

Understandably, many observers were unnerved by Chief Justice Roberts’ decision to brush aside the notion that the California regulation – just seven years younger than the Fair Housing Act – was a background principle of state property law, unnerved many observers. If the 1975 California statute and regulation do not count by 2021 as background principles that inhere in title why shouldn’t the 1968 Fair Housing Act suffer the same fate? The response to Cedar Point from the least alarmed property scholars fell back on the idea that the Court would nonetheless treat the Fair Housing Act as a background principle. But no one has a good theory – other than a realist reading of the justices’ relative hostility to the goals of labor law – for why something magical happened between 1968 and 1975. After Cedar Point it is quite challenging to conclude that there are any principles at all underlying the Supreme Court’s conception of background principles. Our goals in this article include articulating coherent principles that are grounded in existing law and consistent with what the Court decided in Cedar Point.

Id. at 17 (footnotes omitted). 

Some preliminary impressions:

Are all physical invasion challenges facial claims? The article's premise seems to eviscerate the longstanding distinction in constitutional law generally -- and takings law specifically -- between a facial challenge and an as-applied challenge. The window opens on a facial challenge on behalf of everyone when a regulation is adopted, but we thought it was settled that individual property owners had to wait -- upon pain of being tossed out on ripeness grounds --  for the challenged regulation to actually be applied to their facts and circumstances. But the article does not mention the facial vs as-applied distinction.

Standing before incurring a concrete injury? The argument also seems a variation of the Federal Circuit's rationale in Campbell v. United States, 932 F.3d 1331 (Fed. Cir. 2019), where the court held "[i]n the case of a regulatory taking, however, the taking may occur before the effect of the regulatory action is felt and the actual damage to the property interest is entirely determinable." Disclosure 2: we thought the Federal Circuit's reasoning in that case was faulty (that a property owner has an obligation to sue even before she is actually injured seems very strange), and petitioned for certiorari (denied). But it does seem like a weird rule, and very much at odds with injury-in-fact and Article III standing requirements.

Whither Kirby Forest? The rule also seems at odds with Kirby Forest Indus. v. United States, 467 U.S. 1 (1984), where the Court upheld all sorts of government actions that muck around with an owner's property rights prior to an actual judgment and tender of compensation in eminent domain cases. No, the Court concluded, the "taking" takes place in straight takings when there's been an adjudication of compensation and a tender of actual payment. And all those things which happened before that interfere with the owner's use -- like instituting an eminent domain action, filing a lis pendens and clouding title, drying up the market for the property, and similar -- do not interfere sufficiently with property interests because "petitioner was free to make whatever use it pleased of its property." Id. at 15-16. The California provision seems similar: until the union organizers actually entered Cedar Point property under color of the statute, the owner could exclude whom it wanted.

Too early and too late: You just know that if property owners had challenged the California statute as a taking upon enactment, but before anyone had actually attempted to enter under the authority of the statute, that the claim would not have been that they filed too late, but rather too early. Property owners are used to these type of inconsistent arguments and being whipsawed between being accused of filing too early, or too late (or, in many cases, both too early and too late at the same time). We don't think that the line the courts are going to enforce between ripeness and staleness is as clear as the authors make it out to be.

Get ready for more takings claims, federal courts. Unless the article is arguing for abandoning the remaining takings ripeness requirement (something we're down for, but so far the courts are not), we're not sure that a rule that will force prudent property owners to sue upon adoption of new regulations is one that the courts will enthusiastically embrace (even if they should).

Zombie takings, or zombie statutes? The article describes Cedar Point as a "zombie takings claim" (p. 33) because it challenged a statute originally adopted decades ago. It argues that after about 40 years, regulation ossifies into a background principle, immune from challenge. Even though we'd use the "zombie" label to describe the California statute and others like it that are there on the books but are pretty obscure, let's go with the zombie takings label. That brings up an intriguing tradeoff: would we surrender Cedar Point and the ability to challenge 40 year old regulations in return for eliminating the ripeness hurdle and opening up courts to immediate challenges of newly-adopted regulations as we think the piece is advocating for? Hmmmmm... we gotta think about that one.

Cringe. No matter what, we think that calling the Cedar Point outcome the result of "blunders" by lawyers, judges, and scholars (p. 1), the government's strategy a "goof" (p. 5) and "bad lawyering" (p. 48), its lawyers "bone-headed" (id. at 49 & n.314), and accusing government counsel of committing "a colossal strategic blunder" (id. at 2), and saying that the government's lawyers in Cedar Point and Lucas committed "legal malpractice" (id.), is unnecessary and uncharitable in the extreme. We get that the authors don't care for the outcome in Cedar Point and wish their "Monday-morning quarterbacking" strategy (their words not ours, see p.1) would have been raised and tested. But in our view, these type of accusations should not be thrown about lightly, especially by those who didn't enter the amici arena themselves, and by those who don't appear to have been there, done that because their collective time actually practicing law and making strategic litigation decisions in real time in real cases appears to be, let's say, very limited. We hope there can be even vehement disagreement about the issues without slinging accusations of malfeasance, incompetence, and especially malpractice -- claims the practicing bar takes very, very seriously. We respectfully urge the authors and the law journal editors to reconsider these characterizations prior to print publication. 

We're going to meditate on the article and its arguments more. But whatever you may think of the authors' analysis and conclusions, this piece is well worth reading.

Join Us On Wed March 8 at 4:30pm For 2023 Distinguished Gifford Lecture In Real Property - Prof Thomas Mitchell On "Heirs' Property & the Uniform Partition of Heirs' Property Act: Challenges, Solutions, & Historic Reform"

If you are in Honolulu, please join us on Wednesday, March 8, 2023, 4:30-5:30 p.m. at the University of Hawaii Law School for Professor Thomas Mitchell on "Heirs’ Property and the Uniform Partition of Heirs Property Act: Challenges, Solutions, and Historic Reform."

Our U.H. Land Use class is attending to learn more about "heirs' property" (described as "the biggest problem you've never heard of"), and so should you. Yes, Hawaii has adopted the Uniform Partition of Heirs' Property Act and we have followed this issue for some time, but if you didn't know about this, now is your chance to catch up.

Here are the details from the U.H. newsletter:

Carlsmith Ball presents the 2023 Distinguished Gifford Lecturer in Real Property, Thomas W. Mitchell. Mitchell is a professor at Boston College Law School, where he holds the Robert F. Drinan, S.J. Endowed Chair and serves as the Director of the Initiative on Land, Housing & Property Rights. He is a national expert on property issues facing disadvantaged families and communities and has published leading scholarly works addressing these matters.

In 2020, Professor Mitchell was named one of 21 recipients of the MacArthur Fellowship in recognition of the substantial impact his professional work has had in assisting disadvantaged farmers and property owners, people who are disproportionately but not exclusively African American and other people of color. He is the only lawyer in his MacArthur Fellowship class. Please join us for this Distinguished Gifford Lecture; a light reception is to follow from 5:30 - 6:30 p.m.

Come, join us for this compelling session.