Most of the time these days, we're rooting for cert granted. That comes, naturally, from our work pushing cases and issues up to the Supreme Court, looking to correct lower court errors and in the process make some good law. And that usually entails being on the "petitioner" side of things. Cases like Sackett, Wilkins, and Tyler, for example.
But not always. In Financial Oversight & Management Board for Puerto Rico v. Cooperative de Ahorro y Credito Abraham Rosa, No. 22-367, we were on the "respondent" side of things, advocating for a "cert denied" because there, the First Circuit had reached what we think was the right result for the right reasons. As we noted in this post, the First Circuit correctly held that the "Fifth Amendment precludes the impairment or discharge of prepetition claims for just compensation in Title III bankruptcy."
In short, just compensation judgments are not typical civil judgments which can be treated as unsecured debt (aka blown off) when the government subsequently goes bankrupt. You take, you pay just compensation and not pennies-on-the-dollar. The First Circuit held that the self-executing nature of just compensation for takings means that it cannot be discharged or diminished in insolvency proceedings. Our law firm signed up to represent the property owners to defend what we saw as a correct result and the right analysis.
The cert petition here was not at all insubstantial: the FOMB is repped by high-class lawyers and it appeared the First Circuit expressly disagreed with the Ninth, setting up what looked at first blush like a circuit split. Our BIO, however, noted that the apparent split was not a split at all (just some inconsistent dicta), and emphasized the correctness of the First Circuit opinion. The SG filed a BIO, as did the San Juan lawyer who won the case in the First Circuit.
Today, in this order, the Court denied review.
We understand that this is not a definitive statement from the Court that the First Circuit got it right. Indeed, in another recent case involving a similar issue (what is the obligation of government to actually provide just compensation within a reasonable time after it takes property?), the Court denied our cert petition. So the issue of what happens after a taking and an adjudication of the amount of compensation owed remains open. True, in the First Circuit, the government cannot slough off its Fifth Amendment obligation by seeking bankruptcy protection, but maybe in can in the Ninth and other circuits. And at least in the Fifth Circuit, a local government cannot be compelled by a federal court to, you know, actually pay compensation after it takes property. So the issue remains for SCOTUS resolution.
So cert denied does not resolve the issue. But to us, a win is a win, especially for our clients (even a cert denial).
