Today, on behalf of the Manufactured Housing Institute, we filed this amicus brief (also available below) in the U.S. Supreme Court in Guggenheim v. City of Goleta, No. 10-1125 (petition for cert. filed Mar. 11, 2011). In that case, California mobile home park owners are asking the Court to review the decision of a sharply divided en banc Ninth Circuit which held that Goleta’s mobile home rent control ordinance did not work a regulatory taking under Penn Central.
The core of the majority opinion is based on the court’s supposition that the Guggenheims could not have “investment-backed expectations” because the rent control regulations were in place when they purchased their property. See Guggenheim v. City of Goleta, No. 06-56306 (9th Cir., Dec. 22, 2010) (en banc).
Our brief argues that the Ninth Circuit wrongly refused to apply the rule of Palazzolo v. Rhode Island, 533 U.S. 606 (2001), which held that post-enactment purchasers did not lose their Fifth Amendment rights simply by virtue of the fact that they purchased property subject to restrictive regulations. Our brief also details the disarray in the lower courts, many of which have similarly refused to adhere to Palazzolo‘s rule. From the brief’s Summary:
A property owner’s right to make reasonable use of her land does not evaporate simply because restrict regulations predate her acquisition. Purchasers of property subject to restrictive regulations maintain all of the right protected by the Fifth Amendment, and may assert a takings claim.
In Palazzolo, this Court confirmed these principles, and recognized that regulations do not become part of a parcel’s “background principles” simply because the property is transferred to a new owner. Palazzolo v. Rhode Island, 533 U.S. 606 (2001). In that case, the Court rejected the so-called “notice rule,” the assertion that a property owner is “deemed to have notice of an earlier-enacted restriction … and is barred from claiming that it effects a taking.” Id. at 626. Such a rule would allow the state “to put an expiration date on the Takings Clause.” Id. at 627. The Ninth Circuit majority, however, treated that holding as a mere “rhetorical flourish,” concluding that the fact the Guggenheims purchased their property after the county’s rent control regime became effect was “fatal” to their regulatory takings claims. Pet. App. 18a.
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Yet, the Ninth Circuit’s decision — as inexplicable as it is in light of this Court’s rejection of the notice rule in Palazzolo — is not terribly surprising, given the difficulty the lower courts have had in applying Palazzolo‘s clear holding. The Ninth Circuit is not the only court that is unable — or unwilling — to correctly follow Palazzolo. Lacking this Court’s guidance, the default regulatory takings test has become a standardless exercise in judicial intuition, hidden behind a gloss of objectivity and faulty economic assumptions.
The cert petition is available here. We will post other amicus briefs as they become available. Our resource page on the case is here (it includes a summary of the Ninth Circuit’s en banc oral argument).