The Georgia Supreme Court’s analysis in Diversified Holdings, LLP v. City of Suwanee, No. S17A1140 (Nov. 2, 2017) reminded us of that old trope from logic, “no true Scotsman.” 

According to a completely reliable source (Wikipedia):

No true Scotsman is a kind of informal fallacy in which one attempts to protect a universal generalization from counterexamples by changing the definition in an ad hoc fashion to exclude the counterexample. Rather than denying the counterexample or rejecting the original claim, this fallacy modifies the subject of the assertion to exclude the specific case or others like it by rhetoric, without reference to any specific objective rule (“no true Scotsman would do such a thing”; i.e., those who perform that action are not part of our group and thus criticism of that action is not criticism of the group).

(And, in case you were wondering, “For the practice of wearing a kilt without undergarments, see True Scotsman.”)

Back to our case. In Diversified Holdings, the court considered two aspects of a property owner’s challenge to the city’s refusal to rezone vacant land from commercial zoning to allow for multifamily use, one procedural, one substantive. The owner challenged the refusal, calling it an “inverse condemnation” claim, arguing it was “unlawful, irrational, a manifest abuse of discretion, a taking of property, unconstitutional, null, and void.” Slip op. at 3.

The trial court determined that keeping the property zoned commercial resulted in a substantial decrease in value: as commercial it was worth between $600,000 and $1.5 million; as multifamily, the fair market value was nearly $6 million. But the court also concluded that the refusal to rezone was a valid exercise of the city’s police power, and was not unreasonable. The owner filed both a direct appeal, and employing a belt-and-suspenders approach, also filed a discretionary appeal (which is required under Georgia law for “zoning cases”). 

The first issue the supreme court considered was procedural: was this a “zoning action” which should be challenged via a discretionary appeal? The court concluded that yes, it is. The council made an administrative decision regarding specific property, and was “adjudicatory in nature.” Thus, the court concluded, this was a matter that gets reviewed by discretionary appeal:

Accordingly, and without addressing whether an appeal from a true inverse condemnation proceeding would require a discretionary application, we conclude that the present appeal, which is from a superior court order affirming a local zoning board’s decision that the zoning regulations applied to a particular piece of property are not unlawful, is the type of individualized determination that remains subject to the application procedure set out in OCGA § 5-6-35 (a) (1).

Slip op. at 17. Georgia land use practitioners, take note. 

Note that the court didn’t conclude this challenge was a “true” inverse condemnation claim, and indeed, the next pages of the opinion (starting at page 18 of the slip opinion) is what takings mavens really want to read. There, the court walked through the theory of inverse condemnation and the regulatory takings doctrine, and how those claims mesh (or don’t) with government’s eminent domain and police powers. 

The court finally gets around on page 25 to Lingle, and that case’s holding that challenges to the validity of the government’s action are not really “takings” cases, but sound in due process:

As the Lingle Court explained, “the ‘substantially advances’ inquiry reveals nothing about the magnitude or character of the burden a particular regulation imposes on private property rights. Nor does it provide any information about how any regulatory burden is distributed among property owners.” Id. at 542 (emphasis in original). In other words, rather than advancing an understanding of whether the effect of a regulation is “functionally comparable to a government appropriation or invasion of private property,” this test evaluates a regulatory policy to determine whether its ends are sufficient to justify the means. Id. And that type of substantive inquiry “is tethered neither to the text of the Takings Clause nor to the basic justification for allowing regulatory actions to be challenged under the Clause.” Id.

Slip op. at 26-27. See this article we wrote a while ago for more on that topic. 

The court concluded, “[u]nder a true takings challenge, we recognized, “the focus of the takings analysis is on whether the government takes property, not on whether the government has a good or bad reason for its action.” Slip op. at 27. In other words, “substantially advances” is a due process test under Georgia law as well as the Fifth Amendment. Besides, “zoning is unlikely to be a fertile grounds for inverse condemnation claims,” slip op. at 28, because [z]oning, in short, does not ordinarily present the kind of affirmative public use at the expense of the property owner that effects a taking, and we have previously recognized as much.” Id. at 29. The court concluded that because the relief Diversified requested was a rezoning to multifamily (and not damages), its claim was really a due process claim despite its inverse condemnation label. 

At that point in the opinion, it was all over but the shouting. The trial court, as we noted above, had concluded that the city’s refusal to rezone was a reasonable exercise of its police power. And the supreme court agreed that the refusal did not violate the low “arbitrary and capricious” standard, and thus affirmed.

Well worth a read, if only to understand how lower courts view and are applying Lingle and the U.S. Supreme Court’s takings cases. 

Diversified Holdings, LLP v. City of Suwanee, No. S17A1140 ( Ga. Nov. 2, 2017)