Utah seized a failing bank without notice to the bank, and appointed the FDIC receiver. The bank owners sued for a bunch of things, including a taking under the state constitution. The trial court dismissed for failure to state a claim because the complaint did not contain sufficient factual allegations to support a takings claim.
In America West Bank Members LC v. State of Utah, No. 2012456 (Oct. 24, 2014), the Utah Supreme Court affirmed. Although the court confirmed that under the Utah Constitution, a taking occurs "when there is any substantial interference with private property which destroys or materially lessens its value, or by which the owner‘s rights to its use and enjoyment is in any substantial degree abridged or destroyed," slip op. at 18, it concluded that the bank's complaint did not clarify whether it was alleging a regulatory or a physical taking:
According to AWBM‘s complaint,"it appears that the Plaintiff and its Members have lost all of the ownership, goodwill, equity, capital, and investments that they made in the Bank." This is the extent of AWBM‘s allegations contained in its complaint, and neither we nor the district court can discern whether this alleged taking constituted a physical or regulatory taking. This distinction has a marked impact on UDFI's response and defense, the district court's analysis, and the outcome. Without more, we cannot agree that AWBM has sufficiently pleaded a taking, and we thus affirm the district court‘s dismissal of the claim, but do so without prejudice.
Slip op. at 20. We're not sure why the above allegation, although somewhat general, isn't enough. It claims that the plaintiff "lost all" of its enumerated property, and that seems, at least to us, to ring the Lucas "all economically beneficial use" wipeout bell. But apparently not to the Utah Supreme Court (remember, the plaintiff only alleged a taking under the Utah Constitution).
There remains a glimmer of hope for the bank, however, since the court affirmed the dismissal of the complaint without prejudice. Which means that the bank might be able to clean up its complaint and file again.
America West Bank Members, LC v. State of Utah, No. 20120456 (Utah Oct. 24, 2014)
