In what the court termed a "matter of first impression," slip op. at 5, the U.S. Court of Appeals for the Sixth Circuit held in Beaver Street Investments, LLC v. Summit County, No. 22-3600 (Apr. 21, 2023), that the statute of limitations in a § 1983 takings claim for a local government's alleged home equity theft (for more on that issue, see here) began to run when the period when a homeowner can redeem a foreclosure ended, and not when (as the government argued) the government made the decision to acquire the home (the final adjudication of foreclosure).
As the majority noted:
The dispositive issue in this appeal is what constituted the “act of taking.” See id. In other words, the Court must determine when, as a matter of law, the County took BSI’s property without paying for it. See id. The County argues that the taking occurred when it made a final decision regarding BSI’s property, which it asserts was the final adjudication of foreclosure. BSI argues, by contrast, that the County took its property on the date the County transferred the property to the land bank. This appears to be a matter of first impression.
Slip op. at 5.
We suggest you read the opinion because (1) it isn't that long (11 pages, including the dissenting opinion), and (2) as all takings statute of limitations opinions do, it also backhandedly deals with the flip-side issue of when a takings case is ripe. As the majority noted, the SOL only begins once a case is ripe, and both dates are based on when the taking occurs. The court rejected the government's argument than an earlier decision controlled. The majority concluded that the case involved ripeness, but "is still relevant, however, because it provides the general principle that for a taking to occur, 'there must be a 'final decision' to take the property, ... meaning that it is 'known to a reasonable degree of certainty' what will happen to the property ...." Slip op. at 6.
The end of the redemption period -- the window in which the property owner could effectively pull out of the dive and get the property back -- was the first point in time where the taking could have occurred. If the owner paid up, "the County would have been prohibited from taking the property." Slip op. at 7. This was also the first time that it became clear that the County would seize it. Yes, it decided to take the property earlier when it entered a final decision of foreclosure, but no actual acquisition was possible until the owner let the redemption period lapse. See id. ("until that time, whether the County would transfer title was unclear").
One judge dissented, and would have agreed with the County that deciding to take the property by foreclosing was the operative event. The complaint was complaining about the transfer, not the lapse of the redemption period, the dissent argued. See Dissent at 10. That's when the property owner knew it was injured:
Here, the injury forming the basis of BSI’s action was the County’s decision to direct the transfer of BSI’s property to the County’s land bank. Thus, the key event alerting BSI to protect its rights was the BOR’s final adjudication of foreclosure on June 3, 2019, which ordered that direct transfer. At that time, BSI knew or had reason to know that the County would transfer its property in lieu of sale.
Id.
To the dissent, that decision was also the "final decision" for ripeness purposes. Which is the same date the statute of limitations clock began ticking. When the taking took place is a separate inquiry (at least according to the dissenting judge).
What do you think about this one? What accounts for the different world views of the majority and dissent? Is the majority viewing this as more akin to a physical taking, where compensation is owed when the property is transferred from the owner to the County? And is the dissent seeing this as a regulatory taking where it is the "final decision" to take without compensation that renders the claim for compensation ripe?
We know which way we see it - what about you?
Beaver Street Investments, LLC v. Summit County, No. 22-3600 (6th Cir. Apr. 21, 2023)
