The DC Court of Appeals' (note: not the U.S. Court of Appeals for the D.C. Circuit) opinion in Gordon v. District of Columbia, No. 20-CV-0568 (Feb. 15, 2024), presents a good cross-section of property rights issues. Not a good outcome on property rights issues, mind you.
If nothing else, be sure to check out the outrageous facts in the case. They will make your toes curl.
The Gordon brothers own a home in the District, in the Forest Hills area. They didn't want to be owners of this home, and instead wanted to sell it. Consequently, they took some of the usual steps one takes when one wants to sell a home - they retained a real estate agent, authorized certain entries for looky-looks (but did not ok free access or open house showings), and the like.
This aroused the ire of some of the area's residents, who were "[c]oncerned that the property was being sold as a development opportunity" and did what people like this do: they nominated the home for historic landmark designation.
One of these buttinskys even went so far as to retain her own real estate agent (who is also the president of the Forest Hills Neighborhood Alliance) so she could pose as an interested buyer and obtain access to the inside of the house for an intel-gathering view. Believing that Ms. Buttinsky was a genuine potential buyer, the Gordons allowed unaccompanied access to her and her real estate agent. A second pretextual access also occurred during which an official with the District's Historic Preservation Office, the agency tasked with designating properties as historic landmarks, and several "friends and colleagues" -- accompanied the interloper for what the official termed a "site visit." Slip op. at 3.
Next thing you know, Ms. Buttinsky informed the Gordons' real estate agent that she was preparing an application to designate the property as a historical landmark. Then, "[o]n May 11, 2015, the Forest Hills Neighborhood Alliance submitted a petition, drafted partly by Ms. Berk, nominating the Gordon house to be designated a historic landmark. Around this same time, Ms. Berk was awarded a lifetime achievement award by the [Historic Preservation Review Board]." Slip op. at 6.
After even more questionable shenanigans (read pages 6-8 of the opinion for some astounding details), the Board approved designation of the Gordons' house as a historical landmark. Did the approval have an effect? You bet, an immediate one:
Before the designation, the Gordons had received an offer to purchase their home for $1.55 million dollars, but that offer was withdrawn the day after the Historic Preservation designation. The same buyers later made the Gordons another offer for $1.2 million dollars; they cited the landmark designation as the reason for their reduced offer.
Slip op. at 8.
Lawsuit followed. Claims included takings (natch), due process, and search-and-seizure violations. The trial court dismissed some of the claims for failure to state a claim, and granted the District summary judgment on the remainder of the claims. Next, the Gordons appealed to the DC Court of Appeals.
The Gordons asserted that the historic preservation official's entry into their home violated the Fourth Amendment and was a trespass. The trial court rejected the claim because it was Ms. Buttinsky who let the official on the premises, and the official asserted she believed Ms. Buttinsky had apparent authority to do so. And this wasn't an investigation into a crime. Concluding that there was no violation of "clearly established" law, the trial court dismissed. Qualified immunity strikes again.
The appeals court held that it didn't matter why the official entered the property, only that she did. Next, the court seemed to be heading toward rejecting the District's argument that it couldn't be liable unless the official violated some clearly established prohibition. In other words, some court must have already said that this kind of behavior was illegal. The court noted that no other court had done so in this precise situation, but that "this court spoke to the issue of apparent authority over property with sufficient specificity" in a 2023 case, such that the officials are now on notice that this kind of conduct is illegal. Slip op. at 18.
This principle applies with obvious clarity to the facts presented here and compels the conclusion that the nature of Ms. Warner’s access to the Gordon home was clearly limited to her role as a real estate agent, not a preservationist. It was therefore unreasonable for Ms. Williams to believe that Ms. Warner had the apparent authority to consent to her entry into the Gordon home for an HPO site visit. Ms. Williams was aware that Ms. Warner was “not the listing agent,” but instead a “sympathetic” agent “who want[ed] to save” the Gordon home, and she was aware that Ms. Berk had arranged the tour not because she was considering buying the home, but because she was “strategizing its rescue” and wanted to take photos for the historic nomination application.
Slip op. at 19.
Things seemed to be looking the Gordons' way. But then the court held that this 2023 case was decided after the official had entered the Gordon property, and thus it was not clearly established at the time she did so that it was wrong. Thus, the court concluded, she is entitled to immunity. We'll get you next time!
But what about the District's liability for its employee's illegal entry? Nope there as well. The complaint didn't allege that there was some official District policy to do this and that omission was fatal. The only claim the court allowed to go forward was the common law trespass claim against the official. The court rejected the trial court's conclusion that the official was entitled to qualified immunity, holding instead that QI "does not shield government officials from liability for common law torts, like a claim of trespass." Slip op. at 26.
Now on to the takings claim. As noted above, the complaint alleged that the designation of the Gordon home as a landmark resulted in a loss of the value of the property of $350,000, as evidenced by that lost sale and new lower offer. The trial court dismissed because the complaint did not plead anything about alternative economic uses of the property. (In other words, the complaint didn't allege that every other possible use of the property was not economically beneficial.)
But wait, the owners argued, we're arguing "that the court erred by . . . applying what they construe to be a categorical rule for assessing the occurrence of a total taking, rather than the multi-factor inquiry for partial takings[.]" Slip op. at 33. No deal, held the appeals court. To press a Penn Central claim, you must allege that there are no other alternative uses that are economically beneficial. Slip op. a 34.
Indeed, the court expressly considered both the fact that the Gordons had alleged the historic designation of their home reduced its value by $350,000, and the fact that they still had an offer to purchase the home, albeit at a reduced price—$1.2 million as opposed to $1.5. million. Lastly, we note that the Gordons have failed to explain what factor under the fact-specific Penn Central test the Superior Court should have considered but did not that would have made a difference in the court’s analysis. For all of these reasons, we affirm the court’s determination that the Gordons failed to allege facts sufficient to support a takings claim.
Slip op. at 35.
So there is is. What looks to us like outrageous government conduct mostly gets a pass.
And the Penn Central pleadings trap continues it yeoman's work keeping takings claims from being determined on the merits.
Gordon v. District of Columbia, No. 20-CV-0568 (D.C. App. Feb. 15, 2024)
