Here’s the latest on the judicial takings/rent control case which we’ve been following.
This is the case where New York property owners assert that the N.Y. Court of Appeals’ decision which concluded that the luxury apartments (which were never formerly subject to rent control) are now governed by the Rent Stabilization Law. This, the petition argues, allows tenants (who hardly need the protections of rent control) to renew less-than-market rent in perpetuity.
Some heavy hitters have weighed in on the side of the Petitioner, including takings maven Richard Epstein, who filed this amicus brief:
But another way of thinking about this case is to focus less on Petitioner’s property right in the physical building and more on its interest in the public benefits conferred under the RPTL and RSL—namely, Section 421-g benefits and luxury decontrol. New York law recognizes a “vested” property right in a public benefit (typically a building permit or a nonconforming use) whenever the government has promised that benefit and the property owner has incurred substantial detriment in reliance on that promise. Even where these conditions are not satisfied, a property right in a government benefit may still arise under New York law here a party has a “legitimate claim of entitlement” to that benefit.
The facts of this case clearly establish that Petitioner acquired a property interest in the luxury decontrol benefit available under the RSL.
Br. at 4-5.
If that quoted language sounds familiar, it is. That’s from the “new property” due process case, Board of Regents v. Roth, 408 U.S. 564 (1972), which held that for purposes of procedural due process, affirmative government acts can create a property right that a person cannot be deprived of without notice and a hearing. In other words, if the government engenders reliance, that’s property. Here, the owners argue that for decades before the Court of Appeals’ ruling, “It was settled as a matter of New York law and practice … that Section 421-g property was eligible for luxury decontrol[.]” Pet. at 35.
The Supreme Court has said the same thing about reliance and property in the takings context in Kaiser Aetna v. United States, 444 U.S. 164 (1979):
While the consent of individual officials representing the United States cannot “estop” the United States, see Montana v. Kennedy, 366 U.S. 308, 314-315 (1961); INS v. Hibi, 414 U.S. 5 (1973), it can lead to the fruition of a number of expectancies embodied in the concept of “property” — expectancies that, if sufficiently important, the Government must condemn and pay for before it takes over the management of the landowner’s property. In this case, we hold that the “right to exclude,” so universally held to be a fundamental element of the property right, falls within this category of interests that the Government cannot take without compensation.
444 U.S. at 177-80.
Here are the other briefs (the BIO, another amicus, and the petitioner’s Reply):
- Brief in Opposition**
- Amicus Brief in Support of Petitioner (Real Estate Board of New York)
- Petitioner’s Reply to Brief in Opposition
- (Here’s the cert petition, also.)
**We have one comment on the BIO. It’s main argument is that the case isn’t a good one for the Supreme Court because — get this — the property owner didn’t raise the judicial takings claim below. While we’re usually down with arguments about preserving arguments on appeal, how exactly does one “preserve” a judicial takings claim? Short answer: you don’t need to, because you are claiming the appellate decision below is the taking. For an example of how this works in this context, see PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980), a case we focused on in this article.
Now that the briefing is done, we’re looking forward to the result of the Court’s conference. Stay tuned, or follow along on the Court’s e-docket.