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New Takings Cert Petition (Ours): Can Govt Thwart Federal Court Regulatory Takings Claims By Seeking Abstention In Favor Of State Courts?

Here's the latest in a case we've been following since before it became one of ours.

In Gearing v. City of Half Moon Bay, No. 21-16688 (Dec. 8, 2022), the Ninth Circuit upheld the district court's dismissal of a regulatory takings case, holding that federal courts should abstain from considering regulatory takings cases in favor of pending state court eminent domain actions, even when the condemnor instituted the state court action after the federal takings lawsuit was filed.

In the time since the Ninth Circuit issued the opinion, our law firm has joined up with our colleague Kristen Renfro who represented the owner in the court of appeals. That's why we won't be commenting further, and instead suggest you read the cert petition we filed today, chiefly authored by Counsel of Record Deborah LaFetra (lately of the Tyler v. Hennepin County takings case). 

Here is the Question Presented:

Thomas and Daniel Gearing are categorically prohibited from building on residentially zoned vacant land that the City of Half Moon Bay prefers as an open space public park. They exercised their choice of forum by filing a lawsuit in federal court under 42 U.S.C. § 1983, alleging a regulatory taking in violation of the Fifth Amendment, and seeking just compensation, costs, and attorneys’ fees. The City responded by filing an eminent domain lawsuit in state court that significantly limits the issues and the Gearings’ remedies. The City then convinced the federal court to abstain from deciding the Gearings’ first-filed federal lawsuit under Railroad Commission of Texas v. Pullman Co., 312 U.S. 496 (1941). As a result of the forthcoming state court decision to which federal courts are bound to give full faith and credit, 28 U.S.C. § 1738, the Gearings will be deprived of full just compensation as well as other recovery authorized by the Civil Rights Act.

The question presented is:

Whether federal courts may deprive takings claimants of their chosen forum by invoking the prudential Pullman abstention doctrine to require them to first litigate their claims in state court.

Stay tuned, as always.

Petition for Writ of Certiorari, Gearing v. City of Half Moon Bay, No. ___ (June 1, 2023)

Tyler Takings Round-Up

Here are what others are saying about Supreme Court's recent ruling in Tyler v. Hennepin County, No. 22-166 (U.S. May 25, 2023), the case in which the Court unanimously held that the county's keeping the excess equity in Ms. Tyler's home over what she owed in property taxes and fees is an uncompensated taking of private property.

• As usual, lawprof Ilya Somin was first out of the gate with "Major Unanimous Supreme Court Victory for Property Rights in Tyler v. Hennepin County" ("While the Supreme Court decision left some notable issues unresolved, it nonetheless sets a significant precedent. Most obviously, the jurisdictions that currently authorize home equity theft—some twelve states and the District of Columbia—will no longer be allowed to do so. In addition, the holding that states cannot just redefine property rights at will has important implications for other property rights issues. It makes it harder for states to avoid takings liability.")
• Amanda Karras has this casenote at the International Municipal Lawyers Association's blog, "Supreme Court Rules Against County in Important Takings Case" ("States and local governments may also look to Nelson as guidance and provide a mechanism for the return of the surplus equity after the sale of the property.  That said, while Nelson remains good law, the question of overruling Nelson was not on the table, and it may be that such a scheme (which would allow a local government to keep surplus equity after the sale of the property if there is a mechanism for the return of the equity to the homeowner) may not be viewed favorably by the current Court and may also conflict with subsequent precedents from the Court.")
• Amy Howe, SCOTUSblog "Justices rule Minnesota county violated takings clause" ("The county pointed to a 1935 state law that strips an owner who falls behind on her property taxes of her interest in the property. Therefore, the county argued, there was no property for the government to take. The court disagreed, stressing that 'property rights cannot be so easily manipulated.' Indeed, Roberts observed, even Minnesota itself 'recognizes that in other contexts a property owner is entitled to the surplus in excess of her debt.' Although the county can sell Tyler’s condo to recover the $15,000 that she owes it, Roberts wrote, it cannot 'use the toehold of the tax debt to confiscate more property than was due.' By keeping the $25,000, Roberts concluded, the county 'effected a ‘classic taking in which the government directly appropriates private property for its own use.''
• Federalist Society webinar with Tony Francois, "Courthouse Steps Decision: Tyler v. Hennepin County, Minnesota" ("Join us as Tony Francois provides a detailed analysis of the decision and discusses the potential implications from this landmark ruling.").

We'll update as merited.

New (Michael Berger) Cert Petition: Knick "Changed the world of takings litigation" And Applies Retroactively - And Statutes Of Limitations Are Affirmative Defenses

Here's a new cert petition, filed this week by Michael Berger that asks whether Knick's no-need-to-exhaust-or-chase-state-compensation rule applies retroactively.

The Second Circuit held that no, the owner's claims were too late, and although Knick overruled the Williamson County rule that kept him from a timely filing in federal court, that's just too bad:

We also agree with the district court that the remaining claims are largely time barred. Demarest filed this lawsuit in June 2021, yet much of the conduct targeted by his complaint dates from long before. Since a § 1983 claim adopts the limitations period for a state personal injury tort-which in Vermont is three years, see Morse v. Univ. of Vt., 973 F.2d 122, 125-27 (2d Cir. 1992)-claims accruing before June 2018, which comprise the majority of Demarest's complaint, would be time barred. Although Demarest argues that his claims accrued only when a recent Supreme Court decision, Knick v. Twp. of Scott, Pennsylvania, 139 S.Ct. 2162 (2019), removed an impediment to his pursuing them, he is incorrect: "[a] decision recognizing a cause of action after the period has run does not retroactively interrupt the running of the limitations period." Fiesel v. Bd. of Educ. of N.Y.C., 675 F.2d 522, 524 (2d Cir. 1982) (internal quotation marks omitted).

Arguing that Knick rewrote the script (and righted the ship that Williamson County had upended), the petition asks the Court to give retroactive effect to its rule.

To us, this makes a lot of sense because Knick wasn't so much a new rule as a return to normalcy. Williamson County was the aberration and the Court veering takings litigation and procedures off-track. Before Williamson County, a property owner could go to federal court with her federal takings claim, and she can now. It seems like this is just what retroactivity was meant for.

The petition also points out that the Second Circuit treated the statute of limitations as some kind of jurisdictional bar, and not a claims processing rule (hang on, that sounds familiar....).

Here are the Questions Presented:

The Court of Appeals refused to give retroactive effect to this Court’s landmark decision in Knick v. Township of Scott, 139 S.Ct. 2162 (2019), which opened the federal courts to constitutional property litigation for the first time in 34 years. Compounding that error, the Court of Appeals refused to grant rehearing to consider the impact of the then pending decision in Wilkins v. United States, 143 S.Ct. 870 (2023), which ended up restricting the impact of statutes of limitation. In combination, the Court of Appeals’ refusal to apply this Court’s current law deprived Petitioner of property without just compensation and due process of law.

The questions presented are:

1. When Knick changed the world of takings litigation by allowing—for the first time since 1985—a property owner with a claim for unconstitutional taking of property to file suit in federal court, must that decision be applied retroactively, with the time to file suit tolled until the date Knick was decided, so as to give its benefit to property owners who had been precluded from suing in federal court before?

2. When Wilkins confirmed in the real property context that statutes of limitation are not jurisdictional but are merely claim processing tools, must lower courts now treat statutes of limitation as affirmative defenses to be proved at trial by the defendant?

Are we going to follow along? You bet we are (and you should also).

Petition for a Writ of Certiorari, Demarest v. Town of Underhill, No. ____ (U.S. May 8, 2023)

Tyler SCOTUS Takings Argument Round-Up

Our Pacific Legal Foundation Property Rights Litigation Tyler team,
and Counsel of Record Christina Martin (second from right)

Here are your links to the buzz about Tyler v. Hennepin County, No. 22-166, our law firm's case which argues that Hennepin County's seizure of Ms. Tyler's condo and then keeping the excess equity over what she owed in property taxes and fees, is an uncompensated taking of private property, and also violates the Excessive Fines Clause.

• Transcript and audio recording of the oral arguments.
• Kelsey Reichmann, Grandma who lost her house to debt finds high court sympathy (Courthouse News Service)
• Lawprof Ilya Somin, Unusual Cross-Ideological Agreement in Tyler v. Hennepin County (Volokh Conspiracy)
• Steve Osunsami, Laura Romero, Dr. Mark Abdelmalek, Doug Vollmayer, Supreme Court takes on what critics call predatory tax foreclosure practice (Good Morning America)
• Amy Howe, Justices appear likely to side with homeowner in foreclosure dispute (SCOTUSblog)
• Mark Sherman, Supreme Court seems to favor woman who got $0 in condo sale (Associated Press)

More on the way. Stay tuned.

More SCOTUS Takings Previews (Argument Tomorrow, 10am ET)

Tomorrow, Wednesday, April 26, 2023, at 10:00 a.m. Eastern Time, the U.S. Supreme Court will be hearing oral arguments in Tyler v. Hennepin County, No. 22-166, our law firm's case which argues that Hennepin County's keeping the excess equity in Ms. Tyler's home over what she owed in property taxes and fees, is an uncompensated taking of private property, and also violates the Excessive Fines Clause.

Listen to the arguments live, here.

We posted some preview links earlier this week here. But wait, there's more!

• Amy Howe, Court to hear dispute over confiscated condo title and sale (SCOTUSblog).
• George Will, The county seized her condo, sold it and kept all the money. Not nice. (Washington Post).
• Anthony Francois, Nancie Marzulla & John Bursch, Courthouse Steps Preview: Tyler v. Hennepin County (Federalist Society) (video)
• Perry Cooper, Seized Home Sold for Profit Set for Supreme Court Consideration (Bloomberg Law)
• Cases & Controversies Podcast, Supreme Court Abortion Dispute, Ethics Sage Intesify (includes PLF attorney David Deerson on Tyler) (Bloomberg Law)

Stay tuned.

CA8: Where A State's Just Comp Remedy Is Inadequate, You Can Sue For Injunctive Relief For A Taking

Check out the U.S. Court of Appeals for the Eighth Circuit's opinion in Pharmaceutical Research and Manufacturers of America v. Williams, No. 21-1731 (Apr. 3, 2023), where the court reinstated a complaint dismissed by the district court for lack of standing.

The Eighth Circuit held that even though the "usual" remedy for a regulatory taking is just compensation, where a state's just compensation remedy would be inadequate, the property owner may seek equitable relief such as a declaratory judgment or an injunction. [Disclosure: our law firm filed an amicus brief in support of the plaintiffs, arguing that equitable is available in takings claims.] 

The complaint challenged Minnesota’s Insulin Affordability Act, which requires insulin manufacturers to provide insulin at no charge to eligible Minnesotans in 90-day increments for up to one year. The manufacturers argued that the Act works a taking, and sought to enjoin its enforcement. Note that the complaint was brought in federal court, against state officials in their official capacities. So the real battle here was over the forum: if compensation is the only available relief, then the Eleventh Amendment means the suit cannot be brought in federal court (at least as the current state of 11th Amendment law stands). But if declaratory or prospective injunctive relief is okay, then the Ex parte Young exception applies and green light to federal court action.

The District of Minnesota held that equitable relief was unavailable, based on its misreading of Knick v. Township of Scott, which suggested that "equitable relief is generally unavailable" for a takings claim "[a]s long as an adequate provision for obtaining just compensation exists." The District Court held that the plaintiffs could have obtained just compensation in an inverse condemnation action in the Minnesota courts (yes, Minnesota uses the mandamus remedy which is not, technically speaking, "inverse condemnation," but close enough - the court held that property owners can get money in Minnesota courts for takings).

The Eighth Circuit, however, recognized the issue was the adequacy of this remedy -- not merely its existence -- because "Knick does not hold that every state’s compensation remedy is adequate in a particular situation; implicit in Knick is the requirement that just compensation must be available to petitioners seeking a remedy." Slip op. at 11. To determine adequacy, the remedy must be "practical and efficient." Slip op. at 12. 

And that's where the district court's analysis fell short. Because the Act requires indefinite periodic donations of private property, the repetitive nature of the taking would require the plaintiffs to keep on suing for just compensation claims, ad infinitum. The Eighth Circuit held that state court compensation would not be an adequate remedy, given the endless and repetitive nature of the taking:

An inverse condemnation action to reimburse a manufacturer for each discrete alleged taking is incapable of compensating the manufacturers for the repetitive, future takings that will occur under the Act’s requirements. By contrast, equitable relief would protect manufacturers from those future harms.

Slip op. 18.

The court also rejected Minnesota's arguments that the Eleventh Amendment barred jurisdiction, and that Ex parte Young does not apply to takings claims because of the state’s "special sovereignty interest" in eminent domain. The court held that where there is no adequate remedy at law, and where a takings claimant seeks a prospective injunction that will not result in payment from the state’s treasury, the Ex parte Young exception applies and the Eleventh Amendment is no bar to a federal court action.

Pharmaceutical Research and Manufacturers of America v. Williams, No. 21-1731 (8th Cir. Apr. 3, 2023)

CA4: Exactions Takings Claim Accrues When Owner Knows Of The Demand, Not When It Paid

As most of you probably already know, there's a demon lurking out there in takings claims. Not of the Levon Helm-narrated The Right Stuff variety, but maybe just as deadly in litigation.

That's right, the too-early-or-too-late thing (or in some cases, the too-early-and-too-late argument). Getting caught between arguments that a takings claim isn't ripe, and arguments that it is too late (statutes of limitation).

The U.S. Court of Appeals for the Fourth Circuit was dealing with the latter (a statute of limitations) in Epcon Homestead, LLC v. Town of Chapel Hill, No. 21-1713 (Mar. 20, 2023), but there are lessons in the case for the other side of the issue, ripeness.

The facts are pretty straightforward. If you are going to build at least five single-family units, the town's zoning ordinance contains a requirement of "inclusionary zoning" (aka affordable housing; aka below-market units. Or if you don't want to build such housing, you can pony up some cash if the town agrees.

The owner of the property wanted to build 63 units so was subject to this requirement. It didn't want to build affordable units, so opted to pay cash (approximately $800k). The town agreed, and conditioned its issuance of a special use permit which would allow the project to proceed on the developer paying this in-lieu fee: no certificates of occupancy would issue until the fee was paid.

Then Epcon bought the property. It built the 63 homes, and sold them. It made the first installment payment for the in-lieu fee, and two years later paid the final payment. Voila, certificates of occupancy. 

Next stop, state court where Epcon asserted the in-lieu fee was illegal under a variety of theories, including a section 1983 claim that the fee was an unconstitutional taking and violated Epcon's due process rights. The town removed the case to federal court and moved to dismiss the federal claims because the lawsuit was filed more than three years after the in-lieu condition was imposed (it had been four years).

As we all know, section 1983 does not have a built-in SOL, so the courts have held that the SOL of the closest state-law analogy applies. In North Carolina, that's three years. The District Court agreed with the town and dismissed. You snoozed, so you lose Epcon.

The Fourth Circuit agreed. We suggest you go read pages 9-11 of the opinion for the reasons why. The bottom line is that "there is no 'distinctive rule' in the Takings Clause context to apply for determining when the limitations period for a § 1983 claim begins to run[,]" and the usual ("standard") rule applies: a 1983 claim is ready when the plaintiffs knows or has reason to know that it is injured. Slip op. at 9. But when did the injury here occur?

Epcon argued it wasn't really injured until it finished paying. Not so, held the Fourth Circuit, it was injured when it learned of the special use permit condition after it purchased the property.

Here, Epcon alleges that it suffered an injury under § 1983 stemming from the application of an unlawful special use permit condition. As the district court concluded, Epcon first had reason to know of this injury no later than 2015, when it began purchasing the land subject to the special use permit. Thus, its claim that the permit condition violated its rights to just compensation and due process accrued at that point and extinguished three years later. By the time Epcon filed suit in October 2019, the sun had set on its federal claims.

Slip op. at 9 (footnote omitted).

The court rejected Epcon's argument that the injury occurred when it was compelled to actually pay the fees, and that happened when it went to the town for the certificates of occupancy. And this isn't a regulatory takings claim, Epson asserted. If it were, the SOL clock might have started earlier. No, this is an unconstitutional conditions claim, and that's different. Slip op. at 10. We didn't lose our property right until we paid, it argued.

We disagree, the court held. "The distinction Epcon attempts to draw between exactions and regulatory takings proves little more than that the government need not physically appropriate property to enact a taking." Slip op. at 10. [Barista's note: "enact" a taking?]

And here's your money quote: "Once the government conditions the grant of a land-use permit on the surrender of a landowner’s right to just compensation, a Takings Clause claim becomes cognizable." Slip op. at 10. In other words, once that happens, the lawsuit window is open and the SOL clock is ticking. In other words, the claim is ripe.

Remember that one the next time the government argues an exaction case isn't ripe because the action being challenged as unconstitutional (the government's demand, and the subsequent owner payment) isn't complete.

Epcon Homestead, LLC v. Town of Chapel Hill, No. 21-1713 (4th Cir. Mar. 20, 2023)

New Cert Petition: Do You Need Statutory Authorization To Sue For A Taking?

Check this out, a recently-filed cert petition in a case we've been following, filed by our friends and colleagues at the Institute for Justice. This one involves an issue we've been on top of also, most recently in these two cases (see here and here).

That is, what does the Supreme Court's description of the Takings Clause as "self-executing" actually mean? Do you need statutory authorization in order to bring a takings or just compensation claim, or can you sue directly under the Constitution?

In Devillier v. Texas, No. 21-40750 (Nov. 12, 2022), the Fifth Circuit's cryptic opinion concluded that "the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right to action for takings against a state[.]" Slip op. at 1-2. Here's the entirety of the decision (minus footnotes):

The State of Texas appeals the district court’s decision that Plaintiffs’ federal Taking Clause claims against the State may proceed in federal court. Because we hold that the Fifth Amendment Takings Clause as applied to the states through the Fourteenth Amendment does not provide a right of action for takings claims against a state, we VACATE the district court’s decision for want of jurisdiction and REMAND with instructions to return this case to the state courts. The Supreme Court of Texas recognizes takings claims under the federal and state constitutions, with differing remedies and constraints turning on the character and nature of the taking; nothing in this description of Texas law is intended to replace its role as the sole determinant of Texas state law. As such, this Court lacks jurisdiction to review these claims.

Here's the Question Presented by the Petition:

In First English Evangelical Lutheran Church v. County of Los Angeles, this Court recognized that the Fifth Amendment’s Takings Clause was “self-executing” and that “[s]tatutory recognition was not necessary” for claims for just compensation because they “are grounded in the Constitution itself[.]” 482 U.S. 304, 315 (1987). Since First English, several state courts of last resort have held that the self-executing nature of the Takings Clause requires them to entertain claims directly under the Clause without the need for statutory authorization. Two federal Circuits, the Fifth and the Ninth, disagree and have held that claims for just compensation are only available if they are legislatively authorized. The question presented is:

May a person whose property is taken without compensation seek redress under the self-executing Takings Clause even if the legislature has not affirmatively provided them with a cause of action?

Follow along on the Court's docket here. We sure will be.

One Guess What The Second Circuit Did With A Takings Challenge To Rent Control

Let's say you know nothing else about an appeal except it is being decided by the U.S. Court of Appeals for the Second Circuit, and the case is a constitutional challenge to rent control. What's your best guess about the outcome (the district court dismissed for failure to state a claim)?

When the Second Circuit issued its summary order in just such a case last week -- a challenge to the "Housing Stability and Tenant Protection Act of 2019" -- we decided to undertake a little unscientific poll to see whether others out in the Twitterverse predicted as we did.

Looks like so. Yes, the sampling size was small, and the respondents were only those who voluntarily offered their thoughts. But 95% accurately predicted that the property owners would lose, as the Second Circuit indeed held in an appellate court's version of "laughing heartily" at an appellant's arguments: an unpublished summary order.

We could spend the rest of this post going through all of the reasons why the Second Circuit didn't find a scintilla of reversal in the property owners' arguments. But the Order is so short, you might as well read it yourself.

Short story: facial claim? Nope, no physical taking because you fool landlords let tenants in your properties. No facial reg take either, because "different landlords have greatly varying expectations." Order at 4. Rather than serve as an apt illustration of why the "expectations" part of the Penn Central test focuses on an irrelevant inquiry, the Second Circuit effectively concludes that reg takings claims can never be raised as facial claims. 

Same outcome for the as-applied claims: no plausible allegation of a physical taking because there's still the possibility of getting tenants out, and owners are not prohibited from exit the rent-controlled market by getting out of the rental market; the law merely "restricts a landlord's ability to profit by converting a rent stabilized unit to a market-rate unit[.]" Order at 6. And, for good measure, these claims are not ripe because the owners didn't plead that they tried to get anyone out. As for the as-applied regulatory takings claim, the claim is not ripe because the complaint does not allege that the owners tried to take advantage of any of the non-futile procedures to obtain a hardship exemption. And even if ripe, the owners lose "on the merits." (Remember this is an appeal from at 12(b)(6) dismissal, so what "the merits" has to do with anything is beyond us.)

So what might the 95% response indicate? People have very good predictive powers? Our colleagues are as cynical and jaded as we are? Constitutional challenges to rent control are so lacking in merit and plead-worthiness that courts rightly laugh them out of court? The Second Circuit is predictable but in other circuits you might get a more balanced view?

Or maybe -- just maybe -- something else is at play here, and, like a lot of other courts have done before it, the Second Circuit isn't about to upset the apple cart and do anything to undermine what started off, like a lot of these things do, as an "emergency" measure now fossilized into an untouchable entitlement (but an entitlement that is not paid for by the taxpayers, but by private property owners)? In these cases, the lower courts aren't likely to do doodly-squat, and rent control cases will be pushed up to the Supreme Court until that Court does something more than repeatedly decline to review the issue.  

Summary Order, 335-7 LLC v. City of New York, No. 21-823 (2d Cir. Mar. 1, 2023)

New Article: "Toward Principled Background Principles in Takings Law" (Strahilevitz & Hansen)

Check this out, a new article co-authored by a federal judge's law clerk and lawprof Lior Strahilevitz (Chicago). With the title, "Toward Principled Background Principles in Takings Law" are we going to read it? You bet. (Unlike a lot of new scholarship that we post here, we read this one immediately.)

Here's the Abstract:

Blunders made by lawyers, judges, and scholars have caused the Supreme Court’s recent opinion in Cedar Point Nursery v. Hassid to be deeply misunderstood. In Cedar Point, the Court re-wrote takings law by treating temporary and part-time entries onto private property as per se takings. Prior to Cedar Point these sorts of government-authorized physical entries would have been evaluated under a balancing framework that almost invariably enabled the government to prevail. As it happens, there were two well-established rules of black letter law that California’s lawyers and amici mistakenly failed to invoke in defending the Cedar Point union organizer access regulation. First, a physical takings claim accrues when a regulation authorizing third parties to enter private property is promulgated, not when the third party actually enters the land. Second, only the party that owned the land at the time the physical taking cause of action accrued can prevail. Under these doctrines, Cedar Point Nursery’s lawsuit was filed decades too late. By the wrong plaintiff. California’s oversights were probably outcome determinative.

Moving beyond Monday-morning quarterbacking, we argue that the statute of limitations arguments available to governments in future cases help provide the essential limiting principles that went unmentioned in Cedar Point. In the aftermath of Cedar Point prominent scholars denounced the opinion as a vehicle for gutting antidiscrimination law, labor law, environmental law, rent control, and other parts of the regulatory state. Our analysis reveals that these concerns are likely exaggerated because defenders of those long-standing limits on the right to exclude can invoke the statute of limitations arguments that California’s lawyers failed to raise. On the other hand, new restrictions on owners’ rights to exclude are vulnerable to legal challenge. Properly understood, contemporary takings law grandfathers in many longstanding limits on the right to exclude while constraining governments that wish to tackle collective action problems by restricting property rights in new ways. Moreover, statutes of limitations and related doctrines can provide courts with something that has been elusive since the Supreme Court’s 1992 takings decision in Lucas v. South Carolina Coastal Council: a principled and coherent account of what restrictions on owners’ rights are impervious to takings claims because they qualify as background principles of state property law.

Read it at SSRN.

[Before we go on, Disclosure 1: my law firm represented the property owner in Cedar Point Nursery, so yes, I have a dog in the hunt.]

What do you think of the article's premise and conclusion that a regulation alleged to allow a physical invasion must be brought when the regulation is adopted, and not when property is actually invaded?

Government lawyers need not and should not repeat the mistake that California’s lawyers made, a goof that evidently went unnoticed by all three dissenting justices, all thirteen amici, and every scholar who has written about Cedar Point. By correcting Cedar Point’s litigation strategy blunder, governments may avoid having to compensate landlords who want to refuse to rent to members of a protected class, landlords whose ability to evict is constrained by rent control laws, employers who wish to fire workers involved in unionization efforts, and business owners who want to bill governments for the inconvenience of having to endure entry by health and safety inspectors. Most of these claims brought by property owners should fail if defended by competent government counsel who can learn from California’s error.

Id. at 5 (footnote omitted).

In other words, the allegedly unconstitutional act is the enactment of the regulation, and not also the failure to provide compensation when an invitee subsequently exercises the rights granted by the regulation to enter the plaintiff's property against the owner's wishes.

And what of the article's other premise, that regulations allowing physical invasions and occupations of property over time become "background principles of the State's law of property and nuisance" and disappear upon conveyance of the property?

Understandably, many observers were unnerved by Chief Justice Roberts’ decision to brush aside the notion that the California regulation – just seven years younger than the Fair Housing Act – was a background principle of state property law, unnerved many observers. If the 1975 California statute and regulation do not count by 2021 as background principles that inhere in title why shouldn’t the 1968 Fair Housing Act suffer the same fate? The response to Cedar Point from the least alarmed property scholars fell back on the idea that the Court would nonetheless treat the Fair Housing Act as a background principle. But no one has a good theory – other than a realist reading of the justices’ relative hostility to the goals of labor law – for why something magical happened between 1968 and 1975. After Cedar Point it is quite challenging to conclude that there are any principles at all underlying the Supreme Court’s conception of background principles. Our goals in this article include articulating coherent principles that are grounded in existing law and consistent with what the Court decided in Cedar Point.

Id. at 17 (footnotes omitted). 

Some preliminary impressions:

Are all physical invasion challenges facial claims? The article's premise seems to eviscerate the longstanding distinction in constitutional law generally -- and takings law specifically -- between a facial challenge and an as-applied challenge. The window opens on a facial challenge on behalf of everyone when a regulation is adopted, but we thought it was settled that individual property owners had to wait -- upon pain of being tossed out on ripeness grounds --  for the challenged regulation to actually be applied to their facts and circumstances. But the article does not mention the facial vs as-applied distinction.

Standing before incurring a concrete injury? The argument also seems a variation of the Federal Circuit's rationale in Campbell v. United States, 932 F.3d 1331 (Fed. Cir. 2019), where the court held "[i]n the case of a regulatory taking, however, the taking may occur before the effect of the regulatory action is felt and the actual damage to the property interest is entirely determinable." Disclosure 2: we thought the Federal Circuit's reasoning in that case was faulty (that a property owner has an obligation to sue even before she is actually injured seems very strange), and petitioned for certiorari (denied). But it does seem like a weird rule, and very much at odds with injury-in-fact and Article III standing requirements.

Whither Kirby Forest? The rule also seems at odds with Kirby Forest Indus. v. United States, 467 U.S. 1 (1984), where the Court upheld all sorts of government actions that muck around with an owner's property rights prior to an actual judgment and tender of compensation in eminent domain cases. No, the Court concluded, the "taking" takes place in straight takings when there's been an adjudication of compensation and a tender of actual payment. And all those things which happened before that interfere with the owner's use -- like instituting an eminent domain action, filing a lis pendens and clouding title, drying up the market for the property, and similar -- do not interfere sufficiently with property interests because "petitioner was free to make whatever use it pleased of its property." Id. at 15-16. The California provision seems similar: until the union organizers actually entered Cedar Point property under color of the statute, the owner could exclude whom it wanted.

Too early and too late: You just know that if property owners had challenged the California statute as a taking upon enactment, but before anyone had actually attempted to enter under the authority of the statute, that the claim would not have been that they filed too late, but rather too early. Property owners are used to these type of inconsistent arguments and being whipsawed between being accused of filing too early, or too late (or, in many cases, both too early and too late at the same time). We don't think that the line the courts are going to enforce between ripeness and staleness is as clear as the authors make it out to be.

Get ready for more takings claims, federal courts. Unless the article is arguing for abandoning the remaining takings ripeness requirement (something we're down for, but so far the courts are not), we're not sure that a rule that will force prudent property owners to sue upon adoption of new regulations is one that the courts will enthusiastically embrace (even if they should).

Zombie takings, or zombie statutes? The article describes Cedar Point as a "zombie takings claim" (p. 33) because it challenged a statute originally adopted decades ago. It argues that after about 40 years, regulation ossifies into a background principle, immune from challenge. Even though we'd use the "zombie" label to describe the California statute and others like it that are there on the books but are pretty obscure, let's go with the zombie takings label. That brings up an intriguing tradeoff: would we surrender Cedar Point and the ability to challenge 40 year old regulations in return for eliminating the ripeness hurdle and opening up courts to immediate challenges of newly-adopted regulations as we think the piece is advocating for? Hmmmmm... we gotta think about that one.

Cringe. No matter what, we think that calling the Cedar Point outcome the result of "blunders" by lawyers, judges, and scholars (p. 1), the government's strategy a "goof" (p. 5) and "bad lawyering" (p. 48), its lawyers "bone-headed" (id. at 49 & n.314), and accusing government counsel of committing "a colossal strategic blunder" (id. at 2), and saying that the government's lawyers in Cedar Point and Lucas committed "legal malpractice" (id.), is unnecessary and uncharitable in the extreme. We get that the authors don't care for the outcome in Cedar Point and wish their "Monday-morning quarterbacking" strategy (their words not ours, see p.1) would have been raised and tested. But in our view, these type of accusations should not be thrown about lightly, especially by those who didn't enter the amici arena themselves, and by those who don't appear to have been there, done that because their collective time actually practicing law and making strategic litigation decisions in real time in real cases appears to be, let's say, very limited. We hope there can be even vehement disagreement about the issues without slinging accusations of malfeasance, incompetence, and especially malpractice -- claims the practicing bar takes very, very seriously. We respectfully urge the authors and the law journal editors to reconsider these characterizations prior to print publication. 

We're going to meditate on the article and its arguments more. But whatever you may think of the authors' analysis and conclusions, this piece is well worth reading.

Join Us On Wed March 8 at 4:30pm For 2023 Distinguished Gifford Lecture In Real Property - Prof Thomas Mitchell On "Heirs' Property & the Uniform Partition of Heirs' Property Act: Challenges, Solutions, & Historic Reform"

If you are in Honolulu, please join us on Wednesday, March 8, 2023, 4:30-5:30 p.m. at the University of Hawaii Law School for Professor Thomas Mitchell on "Heirs’ Property and the Uniform Partition of Heirs Property Act: Challenges, Solutions, and Historic Reform."

Our U.H. Land Use class is attending to learn more about "heirs' property" (described as "the biggest problem you've never heard of"), and so should you. Yes, Hawaii has adopted the Uniform Partition of Heirs' Property Act and we have followed this issue for some time, but if you didn't know about this, now is your chance to catch up.

Here are the details from the U.H. newsletter:

Carlsmith Ball presents the 2023 Distinguished Gifford Lecturer in Real Property, Thomas W. Mitchell. Mitchell is a professor at Boston College Law School, where he holds the Robert F. Drinan, S.J. Endowed Chair and serves as the Director of the Initiative on Land, Housing & Property Rights. He is a national expert on property issues facing disadvantaged families and communities and has published leading scholarly works addressing these matters.

In 2020, Professor Mitchell was named one of 21 recipients of the MacArthur Fellowship in recognition of the substantial impact his professional work has had in assisting disadvantaged farmers and property owners, people who are disproportionately but not exclusively African American and other people of color. He is the only lawyer in his MacArthur Fellowship class. Please join us for this Distinguished Gifford Lecture; a light reception is to follow from 5:30 - 6:30 p.m.

Come, join us for this compelling session.

Ice Ice Baby: A Report From The 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-4, 2023, Austin

We were eagerly anticipating 40th American Law Institute-CLE Eminent Domain and Land Valuation Litigation Conference. The 2022 Conference in Scottsdale was one of the first meetings where everyone was back in-person (and was a smashing success), but that conference was early in the game so not everyone could or would attend. But in the past year most of us got back to some semblance of "normal," and the turnout promised to be good.

We had record registrations: with over 300 attendees, faculty, and staff signed up, things were shaping up.

Plus, we were headed to Austin, Texas. The last time we held the Conference there in 2016, we loved it so much it has been in-demand for a return visit. And this year is the debut Conference for some new planning co-chairs for both the main tracks as well as the "Condemnation 101" tracks, so the buzz for the 2023 Austin Conference was building.

But then the weather reminded us that Mother Nature is often the boss. 

Very Icy Austin on Wednesday (Conference Eve).

On Tuesday, one day before the Conference was to get underway, the 2023 Central Texas Ice Storm blew in and things were gonna get (as they say) "challenging."

Austin Airport effectively shut down with few flights in or out. Planes and cancellations stacked up nationwide. And even for those nearby, slick icy roads, and seemingly everything was closed, from gas stations to hotels to restaurants. Widespread power outages. 

Were we ready with Plan B if people couldn't get on-site? Read on.

Unless you are already here or are driving,
you ain't getting to Austin via AUS any time soon, pard.

Even flying from sunny California was a problem.

Ticket agent: Austin flight cancelled. How about flying to Houston and then driving?

Me: Sure, that'll work. Just get me to Texas and I'll figure it out from there.

Improvise, adapt, overcome: planes, trains, and automobiles (and car rentals, and long-distance rideshares, and four-layovers-from-Boise flights). Jacksonville to Austin via Chicago and Nashville.

Although those of us who made it to Austin were receiving widespread reports of people delayed and rerouted, we had only a handful who said they would not be pressing forward to get here. 

When this is what greets you when you arrive
at your conference site...uh oh.

And yes, Austin was cold and icy. Most things shuttered and widespread loss of power. But the Conference venue was up and running, and throughout the day on Wednesday, faculty, staff, and attendees were showing up. Trickling in, but showing up or on the way.

When this is what you see at the United Airlines
luggage counter, you ask yourself:
Can I make my presentation in a t-shirt and sweats? (Yes!)

We had confidence, and were prepared
for everyone to get to Austin.

So the aforementioned Plan B went into effect. Agenda items shuffled from tomorrow to today because the speaker is here, now. One speaker in the room, one speaker remote. Our audience is full of experts ... say, Billy can you pinch-hit on this panel? Sure. One speaker remoting in from his (unexpected) hotel room in Phoenix and presenting, before he went to the airport in the afternoon to continue on to Austin.

And so forth. Our long-time ALI-CLE Program Attorney, Amy Weinberg (who was delayed out of Philadelphia) was working furiously behind the scenes doing a lot of juggling, updating, texting and calling, and making alternative arrangements. And the tech team from ALI-CLE was preparing for overload if needed.

Plan A: continue to set the room up, assuming everyone is here or on the
way, and we'll have most or all of our people in the room.

Our Planning Chairs were ready, even if not
all of us were actually there (yet).

Plan B: the ALI-CLE technical crew was prepared to livestream
and record the Conference if the weather made travel
to Austin impossible or infeasible.

The tech command center.

Before we go on, a big thank you to our generous sponsors.
Without your support, this Conference would not be as
good as it is, year after year.

We're underway, with a pretty good crowd.

Thursday morning, 9:00 a.m., and we're looking not too bad. A fair number of folks have pressed forward despite the weather and travel disruptions and are in the room. More report they are not tapping out, and are pressing onwards.

We have more viewers remote than we originally anticipated, but the tech is holding up.

Over the next couple of days, our lawyers, judges, legal scholars, appraisers, law students, right-of-way agents, relocation experts, property owners, and other related professionals made their way to Austin.

The fact that folks who were experiencing some rather dramatic travel difficulties and delays (ask Jack about his late night Uber from Houston airport to Austin, or how our west coasters got re-routed all over creation), didn't quit but were determined to get to Austin told us something about why this Conference has been so successful over the decades.

It's more than great programming from the nation's experts. The Conference is also an essential venue to get acquainted with new colleagues and welcome them to the Dirt Law Bar, reconnect with long-time friends, and have a bit of fun together.

Most of the Conference attendees eventually made it, and very few (reasonably) threw in the towel and turned around for home. This was the 40th edition of the Conference, and we really know why it is one of the most-established and successful conferences in the ALI-CLE stable of programs. This year's experience really drove home why we come, and why our attendees and faculty are so dedicated and committed, despite the sacrifices we make to attend or to present. 

Hybrid: Pacific Legal Foundation's John Groen
remoting in while en-route via Phoenix, and
Baylor lawprof Jessica Asbridge on
"Everything Old is New Again: Why Today’s Practitioners
Need to Understand the Original Meaning of the
Takings and Just Compensation Clauses."


The "Condemnation 101" track was wildly popular
both with new members of the Eminent Domain Bar,
as well as old hands. Standing room only throughout the day.

We also had reports from the field that the remote viewing
was going well. Here's how we looked in the
mountains of North Carolina.

Let's not forget the substance of the Conference.
Lots of practical learning. Here's Hawaii's Mark Murakami
and Virginia's Steve Clarke on "Avoiding the Real Jeopardy:  
Structuring Eminent Domain Settlements."
And no, two-time Jeopardy! champion Steve did not
give answers in the form of a question.

Weather throughout Wednesday and Thursday was icy and nasty,
but towards the end of Thursday seemed to be clearing up.

Consequently, the view from the podium looked better and better
with more showing up and more reporting they were nearly there.

The programming at the Conference is traditionally
a mix of practical subjects and the more theoretical.
Here's one of the highlight latter programs,
Alan Ackerman (Michigan), Matthew Ackerman (also Michigan),
and Steve Davis (Missouri) on "What Does the Supreme Court
Mean When it Says Just Compensation is “Self-Executing?"

There's an ethics program, naturally, for those of us in jurisdictions
with mandatory CLE requirements. But we try and not do "typical"
(i.e., boring) ethics programs. Here's Sarah Kellner (Colorado) and
Shane Rayman (Ontario, CN) on "Ethics: Building Your Practice
by Mentoring the Next Generation of Eminent Domain Professionals."

An example of our practice-oriented programming: Tony DellaPelle
(New Jersey), Bernadette Duran-Brown (California), 
and Andrew Lines (Illinois) on "Preparing Your Expert
Witness to Shine in Virtual Proceedings:
Tools and Tips For Trial Lawyers." 

Andrew actually pretended he was far, far away for his "deposition"
when he was in fact one floor up from the Conference room.
Way to go all-in.

Thanks to our generous sponsors, we were able to avoid Austin's
icy roads and have our Mickelthwait barbecue
brought in for lunch. Was it well-received? See for yourself. Line
was through the lobby and nearly out the front door.

Thank you to Texas Supreme Court Justice Jimmy Blacklock
for speaking on "Developing Property Right Issues in Texas,
Questions and Answers with Justice Jimmy Blacklock"
(interviewed by Justin Hodge (Texas)

It was not an echo-chamber either. Here, in a hotly-debated
session, Jeff Redfern (Virginia), Steve Silva (Nevada), and
Lawprof Emilio Longoria (St Mary's Law, Texas)
debate "When the SWAT Team Comes (No) Knocking:
Police Power Takings."

Jeff, Steve, and Prof Longoria's session got everyone's blood pumping.

It wasn't all serious, and we had a bit of fun.
Like this after-hours live edition of the Eminent Domain & Right of Way
Clubhouse with Beth Smith (Wisconsin), Patrick McAllister (Indiana)
and some dude who was having a post-CLE session beer.

Some of our faculty are more formal and like to speak
standing at the lectern. Here, Pacific Legal Foundation's Jon Houghton
(New Jersey) and Ben Stormes (Montana) on
"Avoiding Pitfalls When Trying a Penn Central Case:
Lessons From the Takings Trenches."

Others are less formal, and speak while sitting
(and wildly gesticulating to make sure you are paying attention).
Kristen Renfro (California), and some guy on
"Your Regulatory Takings Case is in Federal Court – Now What?"

By Friday morning, the Austin weather was looking up. Really up.
And we nearly had everyone in the room.
By hook or by crook, most everyone was there.

By Friday were were pretty much back to normal.
Nearly all faculty and all attendees in the room.
And thus we turned it over to our Saturday morning stalwarts,
starting with Jim Burling, here speaking about "The Many Theories of
Property - Do They Matter in Court?" (and Pufendorf)

No one wanted to miss Michael Berger's "Regulatory Takings Update"
on Saturday morning either.

When you can fill this many seats at a CLE conference on a
Saturday morning after two full days of programming,
you know your speakers are the
right ones (thank you Jim and Michael).

After Jim and Michael did their thing, we held our "National Forum,"
a moderated "open-mic" session where Conference attendees
take to the podium and speak about their case or issue,
or crowdsource a question. Here, Pacific Legal
Foundation's Kady Valois, speaking about
our firm's latest takings cert grant.

We were happy to announce that the 41st ALI-CLE Eminent Domain &
Land Valuation Litigation Conference will be held February 1-3, 2024,
at the JW Marriott in New Orleans.
Save the date!

Ivy Cadle (Georgia - Go Dawgs!) is already planning his trip to
#EminentDomain 2024 in New Orleans.
See you there, Ivy.

With the programming wrapped up, it was time for farewells
and thank yous. Here, four of our law students from William and Mary Law,
who took the time out of their schedules to make their way to
Austin for some real-world learning and networking.
Well done, new colleagues!

Even after the proceedings closed, there was more work to be done.
Here, the ALI-CLE Tech Team breaks it down, after successfully
guiding us through the past four days. They are a large part of the
reason why this Conference works so well (plus, they make the
speakers look really good on camera).

To those who joined us - in-person or on-line, thank you. This conference reminded us of why this program is so successful, and why we all return year-after-year.

To those of you who didn't (or couldn't) join us, here's what you missed. You need to remedy that, and come join us next year in New Orleans...

We'll see you in New Orleans for
#EminentDomain2024!
(Want to keep the conversation going in the
interim? Join the ALI-CLE Eminent Domain Conference
page on LinkedIn.)

CA2, Pellucidly:* You Let 'Em In, Property Owners, So New York Can Tell You To Keep 'Em (Part I)

Here's the latest in a case we've been following since its inception.

The U.S. Court of Appeals for the Second Circuit has affirmed the Eastern District of New York's 12(b)(6) dismissal of a complaint alleging that New York (state)'s sweeping amendments to its Rent Stabilization (rent control) statute effected physical and regulatory takings.

First, this can't be a surprise to anyone who has been paying attention to how courts treat rent control. Putting aside for a moment the legal theories and the various challenges, rent control has become so ossified -- such a political third-rail and sacred cow -- that courts are very reluctant to do anything to upset the system, and will approve most any ratcheting-up of the restrictions. Any challenger, whatever the logic of their legal theory, has to recognize that they start off in a very deep hole.

That said, let's take a look at the Second Circuit's opinion because this case is, by all accounts, headed to the Supreme Court (and always has been aimed in that direction).  

Physical Occupation?

The plaintiffs, owners of apartments subject to the amended rent control statute, asserted the law effected facial and as-applied takings. The first claim was for a physical occupation. The statute deprived them of the right to exclude, they argued,  because they have to house tenants at below-market rates. The panel opinion didn't beat around the bush, but got right to the heart of the reasons why it affirmed the dismissal - the owners have no right to exclude, relying on Yee v. City of Escondido because you let the tenants in:

However, where—as here—property owners voluntarily invite third parties to use their properties, regulations of those properties are “readily distinguishable” from those that compel invasions of properties closed to the public. Cedar Point, 141 S. Ct. at 2077. As the Supreme Court made pellucid in Yee v. City of Escondido, when “a landowner decides to rent his land to tenants” the States “have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails.” 503 U.S. 519, 528–29; see also Loretto, 458 U.S. at 440 (“This Court has consistently affirmed that States have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails.”); Home Building & Loan Ass’n v. Blaisdell, 290 U.S. 398 (1934); Edgar A. Levy Leasing Co. v. Siegel, 258 U.S. 242 (1922). The numerous cases that affirm the validity of rent control statutes are the necessary result of this long line of consistent authority. See, e.g., Bowles v. Willingham, 321 U.S. 503 (1944); Block v. Hirsh, 256 U.S. 135 (1921).

Slip op. at 7.

We've never quite wrapped our head around this rationale (assuming that Yee says that pellucidly, which we don't think it does at all). What is the difference between an owner saying "keep out" and barring the door and having the law force the door open, versus the law restraining an owner from saying to someone who is no longer invited to "get out?" Yeah, the owners here voluntarily invited tenants to occupy their properties, but occupancy was subject to whatever terms the owners and the tenants agreed to.

But the court was having none of that. You property owners willingly put your units into the rental market -- oops, sorry, the "regulated housing market," slip op. at 9 -- so this is on you for not simply keeping your gates closed. Shame on owners for offering your properties for rent!

To begin, no plaintiff alleges that the RSL forces them to place their properties into the regulated housing market, and it is well-settled that once an owner “decides to rent his land to tenants, the government . . . may require the landowner to accept tenants he does not like.” Yee, 503 U.S. at 526–28. See also Heart of Atlanta Motel Inc. v. United States, 379 U.S. 241, 259–60 (1964).

Slip op. at 9.

Next, the court concluded that the statute doesn't deprive the owners permanently of the right to exclude, "[b]ecause, as pled, landlords may yet succeed in evicting current tenants, we cannot say that the RSL “compel[s] a landlord over objection to rent his property or to refrain in perpetuity from terminating a tenancy.” Yee, 503 U.S. at 528." Slip op. at 9.

Ripeness (Exhaustion)

Same story with the regulatory takings claim and pleading Penn Central. Before whacking the claim for a failure to plead, however, the court noted the claim was not ripe because the owners have not sought an exemption from the statute's effects under the "hardship" provision. Slip op. at 12. "[T]he as-applied challengers have not sought exemptions. Instead, they speculate that the hardship provisions offer economic relief 'in theory' but practically 'result in few applications . . . being granted.' Speculation of this sort is insufficient under Pakdel." Slip op. at 13.

Yes, such "hardship exemptions" or "variances" are seemingly built into every land regulation scheme out there, and are increasingly becoming the tail that wags the dog: they rarely if ever get granted (and when they do, they are the product of behind-the-scenes decisionmaking that virtually overrule the legislatively-adopted regulation, and operate mostly as a ripeness pressure valve allowing government to avoid having to face the takings music that is the natural consequence of the blanket regulatory ban or restriction).

But who knows, the State just might grant some relief, right Second Circuit?

Penn Central

Back to the Penn Central claim. Slip op. at 13 ("That said, even if the as-applied challengers’ regulatory takings claims were ripe, these claims would nevertheless fail on the merits."). The court seems to analyze the merits of the claims, rather than just stick to whether the Penn Central factors were adequately pleaded. For example, check out this sleight-of-word: "Furthermore, the as-applied challengers have not plausibly alleged that the economic impact factor tilts in their favor." Slip op. at 15.

But isn't all that is required is an allegation that the regulations have had an economic impact on the owners (with it being up to the jury or fact-finder to determine whether this impact, when measured against the other factors, "goes too far" and looks like it is having an effect similar to an eminent domain seizure? Here, the plaintiffs alleged a decrease in value between 20 and 40 percent, and that seems like it should have been enough. But here we have the court determining as a matter of law that this can never be enough, which to us is an usurpation of the right to have a jury make this determination.

Next, the investment-backed expectations factor (which, in itself, invites the kind of bizarre analysis the court engaged in, focusing on whether the property owners here could and should have predicted future restrictions). One answer might be that of course, having their properties in New York, they should have expected to get nailed. And strangely, that is just what the court concluded:

We agree with the district court and hold that any investor could reasonably expect limits on the use of rental properties, such as those as provided by the RSL.

Slip op. at 17. Go ahead, read the rest of pages 17 and 18, where the court bootstraps the very existence of the RSL to conclude that owners should just know that more is coming. You frogs in the slowly boiling water: it's your own damn fault for not getting out of the pot. 

The opinion ends on a low note, the inevitable butchering of Penn Central's character inquiry. The RSL is a valid police power regulation, the court concludes, and therefore the character factor is in the government's favor. That analysis properly belongs in the following section (pages 21-23) where the court concludes that the rent control statute is a valid exercise of police power.

More on the opinion:

• Federal Appeals Court Rejects Rent Control Challenge, Says Government Has Wide Powers To Regulate Land Use (Reason)
• NYC Rent Stabilization Rules Beat Challenges by Landlords (Bloomberg Law)

Stay tuned there will be more.

------------------------------------
*We know the rule in legal writing is never to use "clear" or "clearly," but if you substitute "pellucid," you are just making it worse, not better.

74 Pinehurst LLC v. New York, No. 21-467(L) (2d Cir. Feb 6, 2023)

"Emerging Issues In Property Rights" - Wednesday, February 8, 2023, 3-4pm ET (Free!)

Join our Pacific Legal Foundation colleagues Jon Houghton, Daniel Woislaw, Kady Valois, and Sam Spiegelman (moderating) tomorrow, Wednesday, February 8, 2023, at 3:00 - 4:00 p.m. ET for a free webinar, "Emerging Issues in Property Rights."

Here's the agenda:

Protecting private property rights has been at the heart of PLF’s work since our founding in 1973. Our view, and that of the American Founders, is that property rights are foundational to all other constitutional rights.

Our relentless defense of property rights has secured many precedented victories, including 12 property rights wins at the U.S. Supreme Court—and counting.

Unfortunately, even today, the need for property rights champions remains critical.

Government officials too often relegate property rights to second-class status among Americans’ constitutional rights—cloaking their assaults in erroneous assertions of environmental protection or cleverly constructed land use restrictions.

To learn more about property rights’ legal landscape in 2023, join us for part two of our four-part webinar series, Emerging Issues in Property Rights. Our panel of PLF attorneys will preview the road ahead for property rights and strategies to restore these fundamental rights to their rightful constitutional status.

Join us, and register here (free!).

(Nearly) Last Call: There's Still Time To Join Us For The 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-4, Austin

We really want you there...

One (nearly) last reminder that there's still time to register for your space at the 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, February 1-4, 2023, in Austin. In the past several years, we have sold out due to the conference room capacity and the conference hotel block. But there's still space, although we are nearly full. So register now - don't delay any further! 

Here's the brochure with the complete agenda, schedule, and faculty listing. But to tempt you, here are some of the highlights of the program:

• Everything Old is New Again: Why Today’s Practitioners Need to Understand the Original Meaning of the Takings and Just Compensation Clauses
  
• When the SWAT Team Comes (No) Knocking: Police Power Takings

• Private Utility Takeovers – Lessons From a 67 Day Trial

• "Contraband": How Property Rights Helped Pave the Way for Civil Rights

• Valuation Issues When Billboards and Signs are Condemned

• Setting Client Expectations and Identifying Red Flags

• Preparing Your Expert Witness to Shine in Virtual Proceedings: Tools and Tips for Trial Lawyers

• Developing Property Right Issues in Texas - Questions and Answers from the Bench (with Texas Supreme Court Justice Jimmy Blacklock)

• Eminent Domain and Regulatory Takings Updates: Important Decisions You Need to Know

• Ethics: Building Your Practice by Mentoring the Next Generation of Eminent Domain Lawyers

• the Condemnation 101 program (a one-day course for those new to the practice, or for experienced practitioners wanting a refresher)
• ...and much more!

To register, go here.

Looking forward to seeing everyone in Austin for the 40th edition of the Conference.

Program Brochure, 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Austin, Texas, Feb 1-...

North Dakota: State May Lease Out Property It Doesn't Own As Long As It Calls It "Overinclusive Leasing Activity"

We've had the North Dakota Supreme Court's opinion in Wilkinson v. Bd. of Univ. & School Lands, No. 20220037 (Nov. 10, 2022), in our queue for a while because it isn't exactly the clearest opinion we've come across. It is relatively short, so that's not the issue. But it is cryptic and poorly written, and each time we steeled ourselves to understand and digest it, we got distracted by some bright shiny object and put the opinion aside. But we've always meant to post it, and now that 2022 is winding down, we figured we better get on with it.

So let's see if we get this right (we're still not entirely sure we did, so feel free to comment if your read of the facts and the court's analysis differs from ours). Here goes.

Wilkinson's predecessors-in-title owned land in the Missouri River, and conveyed most of their interests to the federal government to build a dam. But the owners reserved the oil, gas, and mineral rights, and over the years leased those rights to others. Apparently, there was some uncertainty about title and the location of where Wilkinson's rights ended and the State's began, because in 2009, the State Land Board entered into its own oil and gas leases with oil operators for the same properties. The Land Board leases contained disclaimers of any government warranties that the property it was leasing was, you know, property it actually owned.

Wilkinson sued the Land Board to quiet title, and later added constitutional and section 1983 claims, asserting that the Land Board's leases of the mineral rights to oil operators of what was Wilkinson property was a taking. Later, in one of the case's interlocutory trips to the North Dakota Supreme Court, the court confirmed that despite the disputed properties being in the bed of the Missouri River, the plaintiff owns the minerals, and these are not State sovereign lands. 

But after remand and a bench trial, the trial court dismissed Wilkinson's claims, concluding the Land Board was not liable for physical invasion or a Lucas-style total taking, even though the Land Board conceded that after the Supreme Court's decision, the plaintiff owns the disputed minerals and that this property has value. And if there was a taking, it would owe compensation. Slip op. at 8.

That "if" carried a lot of water, because the North Dakota Supreme Court affirmed the dismissal. The court concluded the Land Board had not committed a taking because (and here's where the opinion really spirals into difficulty for us) the "State did not cause a physical taking of the plaintiff's minerals. While the State's leases [with the oil operators] included legal descriptions of property that was ultimately determined to be the plaintiffs' property, the State did not warrant title to the property ... By themselves, the leases neither invaded the property nor legally authorized a physical invasion or occupation of the plaintiffs' property." Slip op. at 12. 

The court rejected the owner's argument that the government is liable for a taking by issuing mineral leases to third parties whether or not the government actually asserts title. Here, the Land Board expressly refused to warrant title to the leased minerals in its leases with the oil operators (here, pay us rent even though we're not really sure we own what we're renting to you). Additionally, the court concluded the owner was not harmed by the Land Board's leasing the minerals to others. After all, the court concludes, the Land Board leases didn't prevent Wilkinson from also leasing the property:

Additionally, the plaintiffs fail to demonstrate the State's leases interfered with any of their property rights. Recall, the plaintiffs entered into leases on their property in 2009. Because the Lippert Well continues to produce, the plaintiffs' leases concerning Section 12 remain active. Unlike in [two distinguishable cases], the State's overinclusive leasing activity of disputed interests did not cause the plaintiffs to lose other leases or interfere with the lessees' operations. Therefore, the intervening events of the State entering into leases with oil operators in 2010 and 2011 did not interfere with the plaintiffs' negotiations concerning bonus payments and royalty rates.

Slip op. at 14-15. "Overinclusive leasing activity" is a pretty slick spin on it, no?

The Land Board didn't acquire possession or otherwise seize Wilkinson's minerals, it simply allowed others to do so to the extent of whatever interest the Land Board might have had in the minerals (which turned out to be nothing, if we're reading this correctly). 

The court distinguished a recent opinion in which it concluded that allowing third-party oil and gas operators to invade an owner's property by fracking constitutes a per se taking. See "Shades Of Mahon From North Dakota: Fracking Statutes 'constitutes a per se taking.'" That case was different:

In [that case], the State, acting in its sovereign capacity, reallocated property rights through legislation, eliminating the core of a longstanding property right in pore space--the right to exclude others. Here, the State acted in its proprietary capacity by issuing leases. The State's leases did not warrant the State's title to the leased property, nor did they diminish the interest of any other property owner. Through the leases, the State acted in its capacity as a landowner to release any claims it may have to the mineral interests. By entering into the lease agreements, the State did not purport to alter the rights or obligations of others who may have claims or interests in the property.

Slip op. at 16.

Despite the Land Board engaging in overinclusive leasing activity (selling something that it didn't own is how we'd phrase it), "[a]t no point in time has the State prevented or hindered the plaintiffs' ability to exercise the primary incident of mineral ownership, issuing oil and gas leases, which they have done throughout the years. The plaintiffs have received bonus payments and, upon resolution of the title dispute, royalties owed to them." Slip op. at 16-17.

The court also rejected the Lucas claim because the "plaintiffs do not assert they received below market rates in leasing the minerals. As noted above, it was not the lease but the underlying title dispute that triggered the suspension and escrowing of royalties. The plaintiffs do not argue that the State is obligated to pay just compensation every time royalties are subject to suspension or escrow under applicable statutes or rules. Accordingly, we conclude the State has not committed a regulatory taking." Slip op. at 18.

What to make of this decision? Maybe the court was motivated by the seeming lack of great harm to Wilkinson, who knows. But if we're reading the facts correctly, the government inviting others to share in what turns out to be private property sure does seem like a taking, even if the government quitclaims any interest and even if the compensation isn't significant. (Ms. Loretto could not be reached for comment.) And maybe the court also believes that the government renting out property it doesn't actually own is something like "normal planning delay" and something that we expect.

What's your read of this one?  

Wilkinson v. Bd. of Univ. & School Lands, No. 20220037 (N.D. Nov. 10, 2022)

CA9: Land Use Is A "Sensitive Area Of Social Policy" So We're Gonna Let A Local Govt Bleed The Property Owner Out

Here's another one from the Ninth Circuit, argued on what one advocate called "land use day at the Ninth Circuit" (except, unlike the other two cases argued that day, the decision in this one gets published). 

In Gearing v. City of Half Moon Bay, No. 21-16688 (Dec. 8, 2022), the panel upheld the dismissal of a takings case, holding that federal courts should abstain from considering regulatory takings cases in favor of pending state court eminent domain actions, even when the condemnor instituted the state court action in response to the federal takings claim (and even though, unlike the other two cases argued that day, the federal takings claim is ripe).

This one started in federal court, where the property owner asserted the city's rejection of its development application worked a taking. In response, the city ran to state court and filed an eminent domain action to take the owner's fee simple interest in the land (we presume that's the property the city is condemning, because the opinion doesn't specify). Next, the city ran back to federal court with its state court complaint in hand and asked the federal court to exercise Pullman abstention to let the state court condemnation action play out first. The district court agreed ... federal case gone (for now).

Rejecting the owner's argument that abstention here was just a backdoor state-procedures exhaustion requirement -- both of which were rejected by the Supreme Court in Knick and Pakdel -- the Ninth Circuit affirmed. The panel first concluded that there's nothing in either of those cases that make federal takings claims immune from Pullman abstention. Those cases involved ripeness and exhaustion, and didn't say anything that prohibit federal courts from ducking federal civil rights issues. See slip op. at 7 ("As an initial matter, neither Knick nor Pakdel explicitly limit abstention in takings litigation. Neither case even addresses abstention."). Abstention is to avoid "friction" between federal and state courts, and to prevent federal courts from unduly interfering with the delicate balance between the states and the federal courts. Id.

Addressing the owner's argument that Pullman abstention results in a de facto return to the state court exhaustion requirement rejected by Knick, the panel concluded that "[t]he state court can adjudicate the eminent domain action without reaching the regulatory taking issue because eminent domain and regulatory takings suits compensate property owners for different injuries." Slip op. at 9.

Eminent domain compensates property owners for the forced sale of their properties to the government; the property is transferred to the government, and the owner is paid the property’s fair market value as of the date the government made a deposit on the property. Cal. Code Civ. Proc. § 1263.310. A regulatory taking action, on the other hand, compensates a property owner for “[t]he economic impact of [a] regulation . . . and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations.” See Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 538–39 (2005) (quoting Penn Central Transp. Co v. New York City, 438 U.S. 104, 124 (1978)); Steven J. Eagle, Regulatory Takings § 8-9(a) (2021) (surveying methods of calculating compensation proportional to harm and level of interference).

Id.

In our view, the actual differences between a regulatory takings/inverse claim and an exercise of eminent domain are not those identified by the court, because it isn't so much about different injuries (eminent domain isn't at all about "injury" at all), but more like different property being taken and valued. Here, the owner's regulatory takings claim asserts that by engaging in some otherwise legitimate function (denial of permission to develop), the government has, from the owner's perspective, effectively condemned the right to use the property (the development rights), or even the fee simple interest if this is framed as a Lucas taking, but has not provided just compensation for the interest(s) taken. On the other hand, the owner's argument in the state court eminent domain case isn't that the government action is unconstitutional because it has not provided compensation, but that it has not paid (or offered) enough compensation for whatever interests it is taking. Those differences have nothing to do with the owner's "injury."

And wait, you say, in the eminent domain action, doesn't the property owner have to raise the issues he's raising in the regulatory takings action as part of his defense or as part of the highest and best use of the property? We'd think yes, that the owner has some sort of argument, or defense, or counterclaim that the eminent domain action isn't fully compensating him for the interests actually taken, and either should (or more likely must) raise these issues in the state court. Or would be taking a pretty big risk by not raising the issue. 

But the Ninth Circuit panel saw no downside, and concluded that the owner could somehow reserve the federal claim, even with an England reservation!

The Gearings could defend the eminent domain action without challenging the constitutionality of the City’s enforcement of LUP Section 9.3.5 or other regulations, and simply recover the fair market value of the property as restricted by those regulations.¹ When the eminent domain action concludes, they could then litigate their regulatory taking claim in federal court and recover damages for the economic impact of the regulation and interference with their investment-backed expectations. See Lingle, 544 U.S. at 538–39. The Gearings have not cited, and we are not aware of, any support for their assertion that the constitutionality of the City’s restrictions on their properties must be adjudicated before compensation can be determined for purposes of eminent domain.

----------------------------------

¹ To the extent the Gearings argue that this would result in issue preclusion that would bar their federal claims, they are incorrect, because issue preclusion only applies to issues that were “actually litigated and decided in the prior proceedings.” Snoqualmie Indian Tribe v. Washington, 8 F.4th 853, 864 (9th Cir. 2021) (emphasis added). As noted, the Gearings would not be required to litigate their takings claim in the eminent domain action. Thus, this case is distinct from San Remo Hotel II, in which the property owners were required to litigate their takings claim in state-court proceedings in order for those claims to ripen for federal review. See 545 U.S. at 347.

Slip op. at 9-10.

Having determined that Pullman abstention was not categorically precluded, the panel found it simple to conclude that the doctrine should be invoked here because land use is a "sensitive area of social policy." But if Pakdel and Knick, stand for anything, they to reflect the Supreme Court’s thorough rejection of the longstanding trope that takings claims challenging land use regulations are “local” matters outside the competency of federal judges, and that federal courts need to give local governments a lot of leeway and right-of-first-action when it comes to restricting property owners' uses.

The Court made clear that land use and takings claims are civil rights matters and are to be treated like every other civil rights claim. If federal courts can resolve cases about monkey selfies, nude dancing, creating Valentine’s Day artwork out of naked bodies, and whether pet pigeons are diseased (all examples taken from cases in which a federal court resolved the issues) then it doesn't seem like a straightforward land use question is uniquely sensitive or so inherently local as to be beyond the ken of federal judges expressly tasked by Constitution (amend XIV) and statute (section 1983) with dealing with the issue.

More on the decision here ("Does Pullman Abstention Apply to Federal Takings Claims Post-Knick?") and here ("This Week at the Ninth: Abstention and the Golden Globes").

Will there be more on this one? Stay tuned.

Gearing v. City of Half Moon Bay, No. 21-16688 (9th Cir. Dec. 8, 2022)

Montana: Owning The Land Is Enough To Plead A Property Interest: Property Means "Rights Inherent In Ownership," Not Extent Of Govt Discretion

The Supreme Court of Montana's opinion in Tai Tam, LLC v. Missoula County, No. DA21-0660 (Nov. 15, 2022) starts off like a somewhat typical land use dispute turned into a constitutional fight. The property owner sought subdivision approvals for a 28-acre parcel to allow residential development, and the County denied the applications because "the proposal failure to adequately mitigate the loss of agricultural soils." Slip op. at 2.(Oh, and "bird habitat." Slip op. at 3.)

Next, the complaint, alleging some of the usual claims: due process, equal protection, and takings, and a statutory claim under Montana law. The trial court dismissed all claims: the statutory claims for failure to get in before the 30-day limitations period, and the constitutional property claims based on the court's conclusion that the plaintiff lacked a "property" interest.

We'll let you read the part of the opinion in which the court reversed the dismissal of the statutory claim for not filing within 30 days. Short story: the 30-day limitations period doesn't apply to the type of statutory damage claim that the plaintiff brought. See slip op. at 8 ("Ultimately, we find the plain language of [the statute] is not ambiguous and does not contain a 30-day statute of limitations.").

Now on to the good stuff - the property interest. The trial court concluded that the plaintiff did not possess a property interest in a subdivision application. Or maybe more precisely, in subdivision approval. The court also rejected the notion that the plaintiff owned the land, and that was sufficient to plead a property interest.

The Supreme Court had a different view. It started with the notion that on a motion to dismiss, every fact is deemed true and all inferences cut in the plaintiff's favor. Addressing the "threshold" question of whether the plaintiff owns property, the court held that the plaintiff's "ownership of McCauley Meadows [the land] is sufficient to state a protected property interest and bring § 1983 claims against the Board in this case." Slip op. at 13.

Rather than apply this interest to Tai Tam’s § 1983 claims, the District Court took Tai Tam’s concession it did not have a protected property interest in the subdivision application and ended its inquiry there. This was in error, as the District Court was required to address whether Tai Tam’s rights inherent in its ownership of McCauley Meadows were violated by the Board’s actions, and inactions, in this case.

Slip op. at 14.

This is significant because it rejects the usual sleight-of-law way that many courts define the property in these type of challenges. Often, courts will define the property as the thing which the plaintiff claims the government wrongly denied. (Here, that would be a grant of the subdivision.) But if you define the property as the very action being challenged -- then the owner's property is shaped almost exclusively by the extent of the regulator's discretion, and not by the property owner's rights. Where the focus is on the scope of the government's discretion to limit property uses and not on the owner's inherent rights, it shouldn't be too surprising that most of the time the courts conclude "no property."

Not here. 

Having concluded that the complaint adequately pleaded a property interest, the court also held that the due process/1983 claim survived because the complaint alleged the County had not provided adequate notice and an opportunity to be heard by denying subdivision approval due to lack of protection for ecological concerns, despite never having adopted any regulations requiring protection of ecological concerns. Slip op. at 17 ("Specifically, Tai Tam asserts the Board has “implemented policies to protect viewsheds, protect generic ecologic values, and protect adjacent property owners, despite having no such adopted regulations.”). In short, it may violate due process if the government is implementing policies "which are not based on any adopted regulations at all." Id.

And finally, the takings claim. The court concluded that as an "ad hoc" claim, the Penn Central takings claim was adequately pleaded:

Taking the allegations of Tai Tam’s Complaint as true, which we must at this stage in the proceedings, Barthel, ¶ 9, we find Tai Tam has sufficiently pled a takings claim in this case. According to the Complaint, Tai Tam alleges the Board is applying rules and regulations to the development of McCauley Meadows which have not been adopted with proper notice and opportunity to be heard and is unfairly requiring Tai Tam to shoulder the burden of preserving agricultural lands and viewsheds which was not imposed on other landowners. Whether these burdens are so unfair that they require compensation is, again, a question for another day.

Slip op. at 18.

The majority rejected the dissent's view that because the County retained discretion to deny the subdivision (but wait, we thought subdivision approvals were ministerial?), there could never be a takings claim based on a denial of same. The dissent's reasoning is one based on its conclusion that the denial of a discretionary permit "does not sufficiently interfere with reasonable investment-backed expectations or economic value under Penn Central." Slip op. at 18-19. But that, the majority concluded, is a judgment reserved for the trier of fact, not as a matter of law. Penn Central is an ad hoc inquiry. Check out pages 18-20 for more details of the majority's reasoning (it is definitely worth your time to do so).

Tai Tam, LLC v. Missoula County, No. DA 21-0660 (Montana Nov. 15, 2022)

Hawaii 5-80: Land Use Law At The University Of Hawaii

Starting in January, we'll be teaching the venerated, and oh-so-important Land Use course (Law 580) at the University of Hawaii's Law School.

We're at least temporarily stepping into some mighty big slippers (this is Hawaii, so we don't always wear shoes), as this is the course that our mentor Professor David Callies taught for decades. And is there a better venue in which to teach and study land use law and regulation, and its limits? After all, Hawaii may be the most heavily-regulated land on the planet, and is a focal point for every issue you can think of, from zoning to environmental restrictions to takings to public trust to subdivision to admin law to ... well, you get the drift.

We'll cover those topics, as well as the fundamentals. And we have a few surprises up our sleeve - some impressive guest lecturers, explorations of dirt law careers, and maybe a field trip or two. We'll bring you the highlights here, as they happen.

Is there a bit of pressure on us to get it right? You bet. But are we looking forward to it (not just an opportunity to head back to the 808, but because this is a great subject)? You bet.

Ninth Circuit: Property Owners Don't Have A Fundamental Right To Use And Occupy Their Own Property

Here's a short one you might have overlooked because it's an unpublished memorandum opinion.

In Kagan v. City of Los Angeles, No. 21-55233 (Nov. 10, 2022), a Ninth Circuit panel summarily affirmed the dismissal of property owners' challenge to a city ordinance prohibiting eviction of "protected status" tenants from a duplex in order to regain the unit for family use. 

The takings claim was rejected for the now-familiar Yee rationale: there's no physical invasion or a taking of the right to exclude, because the owner wasn't forced to let the tenant on the premises in the first place. In other words, once you let someone in your property, you lose the right to exclude:

Here, as in Yee, the Owners “voluntarily rented their land,” and were not required to submit to physical occupation by another. Id. at 527. Moreover, the RSO allows at-fault evictions, such as evictions for creating a nuisance, breaking the law, or failing to pay rent, L.A. Mun. Code § 151.09(A), and grants landlords the right to end a protected tenancy by removing the entire property from the rental market with one year’s notice, id. § 151.23(B). Accordingly, the Owners’ claim that the City has compelled them to “refrain in perpetuity from terminating” this tenancy is unavailing, Yee, 503 U.S. at 528, and we affirm the dismissal of their takings claim with prejudice.

Slip op. at 3.

The substantive due process claim fared no better. The panel concluded that the owners do not possess a property interest protected from deprivation by the due process clause. Say what? They do own property, just not the property interest in, you know, actually occupying their property:

As appellants cite no authority for their contention that their right “to use and occupy their own property” is a fundamental right, they can only sustain a substantive due process claim if they can allege that the RSO is “arbitrary, irrational, or lacking any reasonable justification in the service of a legitimate government interest.”

Slip op. at 3-4. Rational basis review? You know what that means: you lose.

Finally, you can guess what the panel did with the procedural due process claim: the owners, the panel concluded, were not deprived of an adequate forum because they could have challenged the tenant's "protected status" in an unlawful detainer proceeding.

Kagan v. City of Los Angeles, No. 21-55233 (9th Cir. Nov. 10, 2022) (unpub.)

Here's The Program For The 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-4, 2023, Austin

Here it is, the official agenda and program for the 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, February 2-4, 2023 (with a special event the evening of Wednesday, February 1, 2023 to entice you to arrive early).

Here's the brochure with the complete agenda, schedule, and faculty listing. But to tempt you, here are some of the highlights of the program:

• Everything Old is New Again: Why Today’s Practitioners Need to Understand the Original Meaning of the Takings and Just Compensation Clauses

• Private Utility Takeovers – Lessons From a 67 Day Trial

• Valuation Issues When Billboards and Signs are Condemned

• Setting Client Expectations and Identifying Red Flags

• Developing Property Right Issues in Texas - Questions and Answers from the Bench: A View From the Bench (with Texas Supreme Court Justice Jimmy Blacklock)

• Eminent Domain and Regulatory Takings Updates: Important Decisions You Need to Know

• Ethics: Building Your Practice by Mentoring the Next Generation of Eminent Domain Lawyers

• ...and much more!

To register, go here.

Register now and hold your space. In the past several years, we have sold out due to the conference room capacity, and the conference hotel block. So don't delay. 

Looking forward to seeing everyone in Austin for the 40th edition of the Conference.

Program Brochure, 40th ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Austin, Texas, Feb 1-...

Let's Take A Deeper Look At Takings Ripeness, Ninth Circuit

Well, that was quick. As we noted here, we recently argued a case in the Ninth Circuit (October 20, 2022) about whether a regulatory takings claim is ripe. 

Not long after we posted the argument recording, the Ninth Circuit panel issued a short memorandum opinion rejecting our arguments wholesale (November 1, 2022).

So earlier this week, we asked the entire Ninth Circuit to take a look. Here's our en banc petition.

We'll leave it to you to read it and see why we think this one is ripe.

Appellants' Petition for Rehearing En Banc, Ralston v. San Mateo Cnty., No 21-16489 (9th Cir. Nov. 15, 2022...

More On Federal Court Invalidating Honolulu's 3-Month Minimum Rental Term

Earlier this month, the U.S. District Court invalidated Honolulu's stretching of the minimum term for a residential rental from 30 days to three months, concluding that the ordinance likely violates the state Zoning Enabling Act, and also would be a taking if implemented. The court issued a preliminary injunction.

The lawyers repping the plaintiffs in that case -- our former law partner Greg Kugle -- appeared on Kelii Akina's Hawaii Together (Think Tech) program to talk about it more. Check it out.

CA9 Takings Ripeness Oral Arguments: Must Property Owners Secure Govt's Agreement That Property Is Subject To Challenged Regulations Before A Court Can Review?

October 20, 2022 was what one advocate noted was "land use day at the Ninth Circuit," because three out of the four cases being argued in Courtroom 3 of the San Francisco courthouse were indeed land use -- or perhaps more accurately, regulatory takings -- cases.

Ours was one of those cases, Ralston v. San Mateo County.

Without going into too much detail, this is an appeal from the district court's 12(b)(6) dismissal of our regulatory takings complaint. The crux of the claim is that Ralston's R-1 zoned property is subject to an "overlay" district called the Montecito Riparian Corridor, a highly-restricted zone that allows only 5 environmental uses of land within the zone (none of which are consistent with the R-1 zoning). (Ralston's property is labeled "076-19" on the County's MRC map.)

Absent some kind of special dispensation -- what the County calls an "override" -- the County cannot grant a Coastal Development Permit for a residential use in accordance with the R-1 zoning, because CDPs must be consistent with both the Residential zoning, and the MRC overlay.

Following the County's instructions that "[a]ny intention to proceed with an application for development that would run counter to any of those policies must first be throughly [sic] reviewed by the Community Development Director and County Counsel[,]" Ralston did ask the Planning (Community Development) Director. He received what he thought was a pretty definite response: no development in the MRC, and no override.

But the County argued the Planning Director's response wasn't an official denial, and the district court agreed, holding that the case was not ripe under the "final decision" rule of Williamson County, because the County might have granted a waiver of the MRC restrictions and issued a CDP for a residence, if only Ralston had asked the right way by applying for a CDP and then exhausted the County's review process.

In addition to that issue, the focus of yesterday's oral arguments was also on a slightly different issue: the panel questioned the advocates (esp. me!) about whether, to ripen the claim, the County must also have confirmed that indeed, Ralston's property is subject to the above-mentioned MRC restrictions. The complaint alleged it is (see, e.g., the County's map, above). The location of the MRC is determined by how much of a property is covered by certain vegetation, and indeed, Ralston's property is covered, stem-to-stern with arroyo willow, one of the species listed in the County ordinance.

"It is like a finger, pointing a way to the subject property,
back there by the big dead pine tree..."

We argue that alleging this -- which as a factual allegation must be taken as true at this stage -- is enough to ripen the claim, but the County and the Coastal Commission assert that Ralston must have obtained the County's final confirmation that his property is subject to the MRC regulations, before his lawsuit was ripe. In other words, whether this property is indeed at least 50% covered in arroyo willow is not a fact question (for pleading), but rather a scientific and technical legal question that the County must first be given a chance to exercise its discretion about, via some kind of application and official response from the County.

Stream the arguments above, or download the mp3 (big file!) here. And along with us, keep your fingers crossed for a favorable result from the panel.

Stay tuned.

Shades Of Mahon From North Dakota: Fracking Statute "constitutes a per se taking"

Been meaning to post this one for a while.

The plaintiff in Northwest Landowners Ass'n v. North Dakota, No. 20210148 (Aug. 4, 2022), challenged North Dakota's adoption of a statute about "pore space," which is "a cavity or void, whether natural or artificially created, in a subsurface sedimentary stratum." Whoa.

The problematic part of the statute "allows an oil and gas operator to use subsurface port space and denies the surface owner the right to exclude others or to demand compensation for this subsurface use." Slip op. at 2. The statute also amended the definition of "land" to exclude pore space, and barred tort claims for injection or migration of substances into pore space. Frack!

The Association sued, asserting that the statute effected a facial taking because "it strips landowner of their right to possess and use the pore space within their lands and allows the State of North Dakota to directly redistribute that right to others without the consent of or compensation to the landowners." Slip op. at 3. Everyone filed cross-motions saying they should win as a matter of law. The trial court agreed with the Association, and entered summary judgment in its favor. 

After agreeing that the plaintiff's takings claim was a proper facial claim, the North Dakota Supreme Court (applying the Fifth Amendment and the North Dakota Constitution's "overlapping and broader" property protections) held that under North Dakota law's historical treatment of pore space, concluding that it was a recognized private property interest, and additionally, that owners of that property could sue in tort for trespass "for the use of their surface estate that was not 'reasonably necessary' to develop the mineral estate." Slip op. at 8. 

"Thus," the court concluded, "North Dakota law has long established that surface owners have a property interest in pore space." Slip op. at 9. Did the plaintiff establish its members have a protected property interest? Yes.

Next, was this a taking without just compensation? Applying a physical invasion categorical analysis (Cedar Point Nursery and Loretto), the court held that this qualified as a taking of owner's right to exclude, and that "Senate Bill 2344 constitutes a per se taking." Slip op. at 11. "It allows third-party oil and gas operators to physically invade a landowner's property by injecting substances into the landowner's pore space." Id.

Moreover, by prohibiting the payment of compensation, the statute "removes all rights that make ownership or pore space valuable." Id.

The court rejected the State's argument that because the owner of the mineral rights also owns an implied easement to access property to find and develop those mineral rights, there's no taking because that means mineral owners already have a right to access and use the surface owner's pore space. Slip op. at 12.

Not so fast, held the court: "[e]ven when a severance of minerals has created an implied easement permitting use of the surface estate by the owner of the severed minerals, S.B. 2344 constitutes a taking." Slip op. at 13. Check out ¶ 30 on page 13 for the full analysis of why.

Next, the court rejected the State's assertion that because the statute is a valid exercise of police power, it cannot be a taking. Labeling the argument "misplaced," the court held that the takings clause(s) are inherent limitations on the police power. Thus, answering the police power question does not also resolve the takings question: "[w]hen an action is determined to be within the broad scope of the state's police power, the court must still consider whether just compensation is due for a taking or damaging of property." Slip op. at 14. 

Finally, the court rejected the State's related argument that third-party access to pore space was a "background principle" of North Dakota law under Lucas. Again, no succor from the court. Background principles are for Lucas claims only, and don't apply to the physical invasion/appropriation categorical taking category. 

The court affirmed the taking, and concluded that the unconstitutional provisions could be severed from the balance of the statute.

Northwest Landowners Ass'n v. North Dakota, No. 20210148 (N.D. Aug. 4, 2022)

CA6: Home Equity Is Property Even If State Law Says Otherwise: Govt Can't Foreclose To Satisfy A Tax Debt, Then Keep The Change

We won't be providing our detailed thoughts on last week's U.S. Court of Appeals for the Sixth Circuit's opinion in Hall v. Meisner, No. 21-1700 (Oct. 13, 2022), because we're obviously biased: our law firm colleagues Christina Martin and Kady Valois represent the prevailing property owners, so we naturally agree with the court. Thus, you should really read the opinion in its entirety yourself. But we shall offer some commentary:

• This is another one of those "home equity theft" cases where, after foreclosing property in order to satisfy a tax or other debt, the government doesn't remit the excess equity to the property owner, but keeps it or allows a private third-party to do so.
• This case is a takings challenge to a Michigan county doing just that under the authority of state law. Hall owed a tax debt of $22k, and her home was worth close to $300k. The County foreclosed, then transferred Hall's home to a local municipality which satisfied the tax debt and in turn conveyed the home for $1 to a nonprofit, which then sold it for $308k.
• The District Court dismissed Hall's section 1983 takings claim for failure to state a claim. The court concluded that the County had not obtained the "excess equity" in Hall's home, because it merely foreclosed and then conveyed the home to a separate municipality, which in return conveyed to the County only the amounts of the tax debt. Thus, the County argued, we took nothing.
• The Sixth Circuit reversed. It framed the issue thusly: "The question, then, is whether Michigan likewise disavowed traditional property interests merely by defining them away in its General Property Tax Act." Slip op. at 6.
• The court concluded that the excess equity in one's home is a private property interest because "Anglo-American legal history" has long-recognized such an interest, and English courts of equity and law considered "irrevocable forfeiture of the debtor's entire interest in the land" if mortgaged, to be "an intolerably harsh sanction for the borrower's default." Slip op. at 7.
• American courts were similarly "uniformly hostile to strict foreclosure ... where the land's value exceeded the amount of debt." Slip op. at 9.
• The court held that the Michigan statute which permitted the County to foreclose without returning the excess equity to the homeowner "contravened all these long-settled principles[.]" Slip op. at 12. The statute was an "ipse dixit" that "sidestepp[ed] the Takings Clause by disavowing traditional property interest long recognized under state law." Id.
• The court also rejected the County's argument that the County wasn't the party doing the taking, because it only foreclosed, while it was the municipality to which the property was transferred that kept the change. Slip op. at 13.
• The court similarly rejected the Michigan Attorney General's argument that the state and local governments would suffer "serious fiscal consequences" if the statute were unconstitutional. The court responded much as we might expect, and gave little stock to this chicken little claim (as most courts do).
• "In sum, the Takings Clause “is addressed to every sort of interest the citizen may possess.” U.S. v. General Motors Corp., 323 U.S. 373, 378 (1945). The plaintiffs’ equitable title to their homes was such an interest. On the facts alleged here, the County took the plaintiffs’ property without just compensation, in violation of the Takings Clause." Slip op. at 15.

So there it is. The court looked at whether the interest claimed was a long-standing and traditional property right. It was and is. Thus, although state law may redefine that right, it can only do so if it provides just compensation. If there's a big-picture takeaway from the opinion, to us it is this:

Where we respectfully disagree with the district court, however, is in its assumption that the question whether the County took the plaintiffs’ property is answered solely by reference to Michigan law. True, the federal “Constitution protects rather than creates property interests,” which means that “the existence of a property interest,” for purposes of whether one was taken, “is determined by reference to existing rules or understandings that stem from an independent source such as state law.” Phillips v. Washington Legal Foundation, 524 U.S. 156, 164 (1998) (quotation marks omitted). But the Takings Clause would be a dead letter if a state could simply exclude from its definition of property any interest that the state wished to take. To the contrary, rather, “a State may not sidestep the Takings Clause by disavowing traditional property interests long recognized under state law.” Id. at 167.

Slip op. at 5 (emphasis added).

For more, check out Christina Martin's recent guest spot on the Eminent Domain Podcast, and John Stossel's report, "Stealing Homes."

Hall v. Meisner, No. 21-1700 (6th Cir. Oct. 13, 2022)

Brigham-Kanner Property Rights Conference 2022 Report: It's Chief Justice Roberts' Property World, We Just Live In It

We spoke on the second panel of the day at the 2022 Brigham-Kanner Property Rights Conference at the William and Mary Law School. The subject of our panel -- which included Professors David Callies, Tim Mulvaney, and Dave Owen -- was "Reshaping the Framework Protecting Property Under the Roberts Court."

Here's a rough transcript of my remarks.

--------------------------------------

President Reveley, Professor Butler, distinguished Brigham-Kanner Prizewinners (present and future), mentors, colleagues, family and friends: thank you for the opportunity to speak today.

The story goes that when asked what it was like to be a part of the "Rat Pack,*" that Dean Martin responded "It's Frank's world, we just live in it."

When I first heard the title of this portion of the program and the discussion of how and if the Roberts Court is reshaping property, my first reaction was a paraphrase of Dean Martin's quip, with a legal twist:

It's the Chief Justice's property world; we just live in it.

Now let me explain. Our session asks if the Roberts Court is reshaping the framework of property protections, and if so how.

I can answer the first part with a definitive yes. The Roberts Court is reshaping the way we look at property, and specifically the term “private property” as employed in the Fifth Amendment.

Summed up, this is property’s “moment” at the Supreme Court.

And to me, there's no question that it is the Chief who is, in Reggie Jackson’s immortal words, “the straw that stirs the drink.”

The “how” takes us to a series of decisions by the Court, most of which have seen the Chief take the lead in producing the opinion. Or at least providing the intellectual steam and the vision of how the Court views this thing called “private property” and its role in the pantheon of civil and human rights. In addition to Cedar Point, how many of the Court's property or property-related opinions has he authored? Knick. Penn East. Horne II. Murr dissent. Winter. This recent per curiam sure reads a lot like he wrote it, too. Those opinions he didn't author he played a big part in: the fifth vote in Koontz; presumably employing his role as Chief to organize unanimous or nearly unanimous decisions in Arkansas Game, Horne I, Brandt, Hawkes, and Sackett; and joining in very pro-property rights pluralities when there wasn't a majority. (Did we miss any?)

So let’s take a look at the vibe of these decisions, starting with the most recent, Cedar Point Nursery v. California. And before we go further, let me proudly disclose my bias, as my own law firm – the same law firm as our Brigham-Kanner honoree, Pacific Legal Foundation – represented the property owner in Cedar Point.

There, the narrowest framing of the issue would ask whether there’s any difference between a temporary and permanent physical invasion. The Court has already told us that a permanent physical occupation is considered a taking, which shifts the burden to the government to either pay up, or back off.

And on that, let another hat tip to my former law partners Diane Hastert and Charlie Bocken who bucked more than a century of seemingly contrary law and started us down this path with 1979’s Kaiser Aetna v United States in a decision authored by then-Associate Justice Rehnquist (who, the following Term, would be the boss of a young Harvard Law grad named John Roberts).

In Kaiser Aetna, the majority concluded that just because a navigable waterway might be subject to federal regulatory authority didn’t mean that along with the regulatory authority came the public. If those regulations invited the public to “come on in, the water’s fine,” that’s such a dramatically different nature than mere regulation, and triggered the obligation to pay compensation. Or, in that case, decide whether the price of regulation was worth the cost. It was not, and the federal government chose to back off instead of pay, leaving the owner to bar the public if it chose.

Kaiser Aetna re-introduced us to the centrality of the “right to exclude” (another hat tip to Prizewinner Tom Merrill) and the notion that permanent invasions triggered the Fifth Amendment calculus. Leaving open the natural question: what if the invasion isn’t “permanent?”

Let’s set that aside for a moment, and get to the issue the Kaiser Aetna Court was able to avoid dealing with: what might be the more difficult question of the source of the right to exclude and other property rights deemed to be within the scope of how private property is defined in the Fifth Amendment (and Kaiser Aetna was a pure Fifth Amendment case, as the federal government was the party pushing the closed gates open).

I say this was an easier question in Kaiser Aetna because there, the Court noted that under Hawaii law – all the way back to the Kingdom days – these type of waterways were not considered “navigable” in the sense we do (even though many of them were, in fact, navigable. Thus, the majority reasoned, if state law recognizes an admittedly unusual right to exclude, who are we as mere federal judges to say otherwise? On that, they were on firm footing, going at least as far back as Justice Holmes in another case out of Hawaii, Damon v. Hawaii, in which he noted in the most Holmesian language that if local law recognizes portions of the ocean as private property, then so does the Fifth Amendment.

So let’s flash forward to Cedar Point which resolved that permanent vs temporary question, holding that permanence is not the sine qua non of takings. But the Court did have to grapple with the issue of where the property interest the owner asserted was taken actually came from. (Or maybe “who” defines property.) We all know that state law is the touchstone of private property and states have a lot of latitude about how to define and redefine it. As the Court noted in Cedar Point, "[a]s a general matter, it is true that the property rights protected by the Takings Clause are creatures of state law."

But, as we all know, a state’s notion of property cannot go below the floor of the Fifth Amendment, and the Court has never countenanced state law defining property in a way that eliminates “fundamental elements” of “central importance to property ownership.” Indeed, the Cedar Point majority rejected California’s argument that state regulations limited the fundamental right to exclude). The Court held that core property right such as the right to exclude are not “empty formalities, subject to modification at the government’s pleasure.”

For that notion, I think there’s no better statement of the issue than Justice Thurgood Marshall in PruneYard Shopping Center v. Robins, where he emphasized that property includes a “normative dimension” insulated by the Fifth Amendment from state tampering. These fundamental rights protect individual autonomy:

I do not understand the Court to suggest that rights of property are to be defined solely by state law, or that there is no federal constitutional barrier to the abrogation of common law rights by Congress or a state government. The constitutional terms “life, liberty, and property” do not derive their meaning solely from the provisions of positive law. They have a normative dimension as well, establishing a sphere of private autonomy which government is bound to respect.

Justice Marshall continued:

Quite serious constitutional questions might be raised if a legislature attempted to abolish certain categories of common-law rights in some general way. Indeed, our cases demonstrate that there are limits on governmental authority to abolish “core” common-law rights, including rights against trespass, at least without a compelling showing of necessity or a provision for a reasonable alternative remedy.

For more, see the Chief’s dissenting opinion in Murr v Wisconsin, where he argued that Justice Kennedy’s multifactor test (surprise!) for defining the denominator property in takings isn’t so much defined by state law as the baseline, but turns on a multiplicity of factors (what one advocate in that case called Penn Central squared).

The Chief argued that the question of property should always start with state law and traditional understandings (this is my property line) but doesn't always end there. And that gets me to my point here: when trying to predict what the Court might do about property and how it might analyze it, the best place to start isn't with "new property," but with old property. So dirt lawyers and scholars, dust off your Lord Coke, your Blackstone, and your Grotius. State law goes only so far, and cannot dominate the conversation and shape an owner's expectations (if expectations are even part of the calculus).

Let me suggest what some of those "normative" dimensions of property might qualify as "core" would look like. What, in addition of the right to exclude, are fundamental to the notion of property?

• The right of reverter. This is where Yee v. Escondido may come into play. If I invite you on my property subject to certain terms (you can only stay for a year or a month, or can only stay if you continue to pay rent), can the government alter that deal?
• The right to timely compensation when your property is taken.
• The right to be indemnified when property is taken. Can "other law" interfere with the natural operation of compensation? Or, what does it mean when the Court says the Just Compensation Clause is "self-executing?"

Before I sign off, let me wrap up by recognizing the people who attend this Conference. The William and Mary law students who take advantage of this great event and spend the day (or more!) with us, seeing how the things they are leaning in class are applied in the world.The alums of our Land Use course, and our Eminent Domain and Property Rights course. It was heartening to see that many lawyers who first attended this Conference as students continue to come as lawyers. And I am thrilled to see several emerging property law scholars in attendance, because among them may be the next generation of B-K Prizewinners.

And finally, to Jim Burling for his hard earned, well-deserved recognition. This Conference is the Cooperstown of Dirt Law, and I'm thrilled to be here sharing in the celebration. And if it isn't out of place, this student (and yes, I continue to consider myself a law student -- a 38L at this point) would like to honor one of his teachers. I do consider Jim Burling to be one of those legal mentors who shaped my own views of property and law.

I anticipate many years of continued studying at your side, Jim. And I might have to modify slightly my opening thoughts; I should say that it isn't the Chief Justice's property world we live in: it's Jim Burling's Property World.

Congratulations, Jim.

------------------------------------------------------------

*We refer to the Rat Pack in its Vegas iteration, not the original RP formed by Humphrey Bogart.

Viewing Social Media Content Censorship Through The Takings Lens

We were all set to write a deep and insightful takings analysis of the U.S. Court of Appeals' recent opinion in Net Choice, LLC v. Paxton, No. 21-51178 (Sep. 16, 2022), a challenge by the major social media platforms to a Texas statute that limits the platforms' ability to censor speech or "de-platform" (kick out) speakers they don't like.

In NetChoice, the Fifth Circuit sustained the statute against a Free Speech challenge. There's been a lot of commentary on the court's reasoning, as well as the conflicting result reached by the Eleventh Circuit in a similar case. See here and here, for example.

But the arguments in both of those cases focused on the First Amendment speech issues. Naturally, we don't limit our view of the issues, and see lurking property rights questions. But in the Fifth Circuit case, the plaintiffs purposely avoided raising takings claims:

This and other frequent invocations of private property rights suggest the Platforms’ real complaint is with the Texas legislature meddling in their right to control their own business. But the Platforms have not brought a regulatory takings claim. Cf. Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). Instead, they’ve asked for the more drastic remedy of invalidation of an economic regulation—a remedy the federal courts have not been in the business of providing since the Lochner era. Given the courts’ deference to state economic regulations for the last eight decades, “it would be freakish to single out” this historically grounded nondiscrimination requirement “for special treatment.” Cf. Gundy v. United States, 139 S. Ct. 2116, 2131 (2019) (Alito, J., concurring).

Slip op. at 63 n.33.

Our old "friend" PruneYard makes appearances in both opinions -- but again, only on the speech issues and not the property rights issue.

What we're getting at is that the property rights lens may be another way of looking at this issue - do these private platforms have property rights, and if so are the state statutes forcing them to open up that property to intruders, thus violating their right to exclude? And as we noted above, we were all set to go down that analytical path when lawprof Ilya Somin beat us to it, with "Why the Florida and Texas Social Media Laws Violate the Takings Clause" at Volokh.

We suggest you read his analysis, but here's a highlight:

The Florida and Texas social media laws are also blatant attacks on the right to exclude. No one doubts that the Twitter site and its various features are Twitter's private property. And the whole point of the Florida and Texas law is force Twitter and other social media firms to grant access to users and content the firms would prefer to exclude, particularly various right-wing users. Just as the plaintiffs in Cedar Point wanted to bar union organizers from their land, so Twitter wishes to bar some content it finds abhorrent (or that might offend or annoy other users).

To be sure, there are obvious differences between virtual property, such as a website, and more conventional physical property, like that involved in the Cedar Point case. But the Taking Clause nonetheless applies to both. If Texas decided to seize the Twitter site, bar current users, and instead fill it with content praising the state government's policies, that would pretty obviously be a taking, much like if California decided to seize the Cedar Point tree nursery's land.  In the same way, requiring Twitter to host unwanted content qualifies as an occupation of its property, no less than requiring a landowner to give access to unwanted entrants. The Supreme Court has previously ruled that intellectual property is protected by the Takings Clause. Websites present similar issues.

Professor Somin also considers PruneYard, concluding that it is "a bad decision and should be overruled." Unlike the shopping center in that case, social media platforms are not generally open to the public (you have to first agree to the terms of service, which includes acknowledgement of the platforms' power to censor your speech, or kick you off based on what you are saying).

This issue is not going away. With different outcomes from the Fifth and Eleventh Circuits on the speech issues, we, like others, suspect this one is going further up the food chain. But what of the property issues? For now, with no case to discuss, it remains a mostly academic issue. Let's see what the future might bring.

NetChoice, LLC v. Paxton, No. 21-51178 (5th Cir. Sep. 16, 2022)

Jon Houghton On Regulatory Takings - Eminent Domain Podcast

Clint Schumacher's Eminent Domain podcast is one of those things that we almost shouldn't post about. After all, every episode is worth your time. But this one is especially good. After all, it features our law firm colleague and friend Jon Houghton, discussing what you all know is one of our fave topics, regulatory takings.

As Clint describes it:

Jon Houghton of Pacific Legal Foundation joins the podcast today to talk about regulatory takings. This is a complex area of the law, but Jon is a true expert and breaks it down into understandable pieces. He discusses how practitioners can assess when a regulation has risen to the level of a taking. He also discusses regulatory taking issues and cases that are current.

So even though we always say "check out the Eminent Domain Podcast," we're saying it again. Check it out.

Still Time To Join Us (In-Person Or Remote) For The 19th Annual Brigham-Kanner Property Rights Conference

One last reminder that there' still time to register for the upcoming Brigham-Kanner Property Rights Conference at the William and Mary Law School in Williamsburg, Virginia, September 29-30, 2022. If you can't make it to the historic campus, there's an option to attend remotely.

In our opinion, the Conference is the best of its kind because it brings together legal scholars and the practicing bar to talk dirt law theory and practice. We also a have a full supplemental program for law students, that covers property law and careers in eminent domain law, a recruiting session, a program on international property rights, and a program on land use law.

Registration for the Conference is ongoing, and you can sign up here.

Here is the full agenda. (We'll be speaking on Panel #2, "Reshaping the Framework Protecting Property Under the Roberts Court.")

Come on, join us!

 

New Symposium: Northwestern L. Rev.'s Property Issue

Be sure to check out Northwestern Law Review's symposium issue on "Reimagining Property Rights in the Era of Inequality." which brought together "scholars of legal history, property, tax, land use, fair housing, environmental law, natural resources and water rights, family law, education, and constitutional law, to highlight new scholarship at the intersection of these fields."

We found the essay by Professor Fennell ("Streamlining Property," and the essay by Timothy Mulvaney ("Compulsory Terms in Property") to be of particular interest. Full list of essays above, or here.

New Must-Read Article: "Cedar Point Nursery and the End of the New Deal Settlement" - Property Rights Are Civil And Human Rights

Here's your must-read for today, a new article from U. Va. lawprof Julia D. Mahoney, "Cedar Point Nursery and the End of the New Deal Settlement."

Disclosure: we show up in footnote * along with others for offering "comments and conversations" about the piece. 

Here's the Abstract:

In Cedar Point Nursery v. Hassid, the United States Supreme Court ruled that a California state regulation granting labor organizations a limited “right to take access” to agricultural employers’ property constitutes a per se physical taking. Cedar Point has sparked intense criticism, with critics arguing that the decision threatens to transform the law of property rights so as to “hobble” government land use regulation and even undermine democracy. This Article explains why the objections of Cedar Point’s detractors are misplaced. Far from disabling government regulation or fomenting stasis by favoring the “already haves,” Cedar Point is best understood as another step in the normalization of property rights. In this, Cedar Point is in accord with other recent Court decisions, including Horne v. Department of Agriculture, and Knick v Township of Scott. These cases illustrate how constitutional recognition of property interests, duly enforced by the judiciary, protect the interests of the working and middle classes. That is no small thing, particularly at a time of well-justified concerns about the outsize influence of elites on the legislative and executive branches of government, with its attendant worries that those who lack power to defend themselves in the political and administrative arenas are vulnerable to “redistribution up.”

It is true that this normalization of property rights amounts to a retreat from the “New Deal Settlement,” under which courts declined to subject legislative and administrative actions affecting property rights to significant oversight. But for anyone who cares about the economically vulnerable, the passing of the New Deal Settlement should be cause for celebration rather than alarm. Eighty years on, it is evident that the costs to many poor communities of judicial abdication in the area of property rights were very high. The careful readjustment now underway does nothing more than recognize property’s status as a civil and human right, one that needs serious constitutional protection if people are to flourish as citizens, family members, and workers.

Check it out. Get the pdf here.

CA3: Claim That Govt Is Keeping Property Seized (But Not Used) As Evidence "checks all the Fifth Amendment boxes."

The facts are pretty straightforward in the U.S. Court of Appeals' opinion in Frein v. Pennsylvania State Police, No. 21-1830 (Aug. 30, 2022):

Eric Matthew Frein is on death row for cold-blooded murder. In 2014, he ambushed two Pennsylvania State Troopers, killing one and injuring the other. For a while, he evaded capture. Police knew he had used a .308-caliber rifle. So they got a warrant to search the home that he shared with his parents and seize that type of rifle and ammunition.

When they executed the warrant, state police did not find a .308-caliber rifle. Instead, they found forty-six guns belonging to the parents: twenty-five rifles, nineteen pistols, and two shotguns. None was a .308. Even so, the officers got a second warrant and seized them all.

Slip op. at 3.

The police eventually got their man, and Frein was tried and convicted. His appeals (including discretionary review) were unsuccessful. And the guns seized from the parents were never used by the government in its prosecution. Indeed, there was not even any allegations that their guns were relevant to their son's crimes.

They gave 'em back, right? No. So the parents asked the Pennsylvania courts to order the police to return the guns, "raising Second Amendment, takings, due-process, excessive-fines, and state-law objections." Slip op. at 3-4. Denied, "[i]n a one-sentence order[.]" Slip op. at 3.

Next stop, federal court and a section 1983 action against the state police, several officers, and other prosecutorial officials:

The parents do not challenge the seizure under the Fourth Amendment. But they say that by keeping the guns after the criminal case ended, the government is violating two other parts of the Constitution: the Fifth Amendment’s Takings Clause and the Second Amendment’s right to “keep … Arms.” Plus, they argue that the state’s procedure for letting them reclaim their property violated procedural due process.

Slip op. at 4. We didn't use the guns as evidence, but we might be keeping them in case Frein seeks habeas relief. And besides, we seized the guns pursuant to a valid search warrant, so what's the problem? The district court agreed and dismissed for failure to state a claim.

The Third Circuit reversed. The parents didn't challenge the initial seizure, but "the state police's continued retention of the guns once the criminal case ended." Slip op. at 5. 

The takings part of the opinion is not all that long. And there's a lot of good stuff there. So rather than summarize it, we're going to reproduce it in full. Or you can just read the opinion:

The Fifth Amendment’s text supports the parents. After all, their guns are “private property.” And they were “taken” by the officials. Plus, the parents have never gotten a dime, let alone “just compensation.” Id.

Finally, the officials pressed the property into “public use.” Id. The parents’ property was seized by public officials (police) to help public prosecutors enforce state law at a public trial. So their claim checks all the Fifth Amendment boxes.

The officials counter that because the parents have tried to get their guns back in state court, they are collaterally estopped from using a takings claim to try again. Not so. The state court’s order would preclude this takings claim only if the state court had decided an “identical” issue. Metro. Edison Co. v. Pa. Pub. Util. Comm’n, 767 F.3d 335, 351 (3d Cir. 2014). But that one-sentence order said nothing about takings or the government’s need to keep the evidence for a possible retrial; it gave no reasoning at all. Nor could claim preclusion have barred this claim, even if the officials had raised it, because Rule 588 motions are the wrong vehicle for seeking just compensation for a taking. Compare Pa. R. Crim. P. 588 (authorizing only “the return of the property”), with Dep’t of Transp. v. A & R Dev. Co., 2020 WL 1130855, at *6 (Pa. Commw. Ct. Mar. 9, 2020) (explaining that Pennsylvania’s “Eminent Domain Code … is the exclusive remedy for a de facto taking”).

Next, the government says Bennis v. Michigan forecloses this claim. Bennis held that the government need not compensate the owner when it has “lawfully acquired” property in reliance on its police powers, rather than “eminent domain.” 516 U.S. 442, 452 (1996). No one doubts that the government seized the guns under its literal police powers. And because it had a valid warrant, it says it lawfully acquired the guns too.
But Bennis applies only when the government gains title to the property. There, formal ownership of the property had been “transferred by virtue of [a forfeiture] proceeding from [the owner] to the State.” Id. Here, by contrast, the government has never “lawfully acquired” title to the guns; they still belong to the parents. See Cedar Point Nursery v. Hassid, 141 S. Ct. 2063, 2071 (2021) (confirming that a taking happens “when[ever] the government physically takes possession of property without acquiring title to it”). Plus, the guns are not forfeitable as contraband, instrumentalities, or proceeds of a crime. They are, at most, potential evidence, and police do not gain title to “mere evidence.” Warden v. Hayden, 387 U.S. 294, 306 n.11 (1967). So Bennis is no obstacle to the parents’ takings claim.

Slip op. at 5-6.

And what about that warrant ... doesn't that immunize the police from liability? No, the court concluded, the warrants "are not blank checks." Slip op. at 7. Check out pages 7 through 10 for the details. 

There's a lot more to the opinion (concluding, for example, that the keeping of the guns violated the parents' right to "keep" arms under the Second Amendment, and a rejection of the procedural due process claim). If that kind of thing is your thing, please do read the balance of the opinion. 

One more takings piece of interest, right there at the tail end of the opinion. The court concluded that the Eleventh Amendment bars a damages remedy against the state police, and that includes a claim for just compensation. Slip op. at 18 ("That is because the Takings Clause, as incorporated against the states, did not alter the states’ traditional immunity from federal suits, at least if state courts remain open to hear these claims."). And here, Pennsylvania's courts are open to consider compensation claims. Thus, the parents' takings claims can only result in an injunction. Id. ("Unless Pennsylvania decides that it prefers to pay damages to compensate owners for takings, federal plaintiffs like the parents may get only a declaration and injunction requiring the state to return their property.").

Frein v. Pennsylvania State Police, No. 21-1830 (3d Cir. Aug. 30, 2022)

District Court Declines To Back Off Its "SWAT Takings" Verdict

You remember that case we posted recently, from the U.S. District Court for the Eastern District of Texas in which the court granted summary judgment to a property owner after the city police damaged her home in the course of the police's apprehension of a suspect. The court rejected the Tenth Circuit's rationale in a similar case (which concluded that these are "police power" actions, and thus never a taking).

After that ruling, the remaining issues (was the city liable under section 1983, and if so what is the just compensation owed) were tried by a jury.

On June 20, 2022, this case went to trial. Two days later, the jury returned its verdict (Dkt. #74). The jury found the City was liable under § 1983 because it acted under color of state law when it violated Baker’s constitutional rights under the Fifth Amendment of the United States Constitution by depriving her of her property without providing just compensation, and that this violation proximately caused Baker’s damages. The jury awarded Baker $44,555.76 in just compensation for the cost of repairs to her real property, and $15,100.83 in just compensation for the loss in market value to her personal property. Baker elected to recover damages pursuant to § 1983.

Order at 2.

The city wasn't going down without throwing up every obstacle, and its strategy included a motion for judgment as a matter of law (JMOL, or as us old-timers call them, "directed verdicts" or JNOV), and a motion for a new trial. The motion for new trial simply argued that the jury got it wrong, while the JMOL argued that the property owner didn't adequately plead and pursue a section 1983 claim. The district court denied both motions. See Order (denying new trial), and Order (denying JMOL). 

We suggest you read them. Here's a couple of highlights:

First, the City takes issue with the Court’s reliance on Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021) (Dkt. #85 at p. 4). The City correctly points out that Cedar Point did not involve physical damage from law enforcement action. The Court was well aware of this point at the time it rendered its opinion. That said, the Court merely drew general principles from the Supreme Court’s opinion to guide in the Court’s own analysis. Moreover, the City emphasizes the Supreme Court “confirmed that the common law authorizes law enforcement to enter private property to avert public or private harm, arrest a suspect, or enforce criminal law without compensation to the property owner” (Dkt. #85 at p. 3 (citing Cedar Point, 141 S. Ct. at 2079)). Cherry-picking this one quote from Cedar Point, the City makes the leap that “the Fifth Amendment does not apply to property damage caused by law enforcement when reasonably performing law enforcement tasks” (Dkt. #85 at p. 4). However, the Supreme Court in Cedar Creek confirmed law enforcement could lawfully enter property pursuant to the public interest—not destroy it, as law enforcement did to Baker’s property. For these reasons, the Court is not persuaded to re-evaluate its prior reading of Cedar Point or change its holding that the Fifth Amendment applies here.

Order (denying new trial). at 4.

Rejecting the city's argument that while the owner might have adequately pleaded a 1983, she did not pursue it, the court held:

Based on these statements made by counsel at the pretrial conference, it cannot be argued that Baker no longer intended to pursue her claim under § 1983 at trial, or that the City lacked awareness that this claim would be adjudicated at trial. Thus, when the Pretrial Order is read in conjunction with the representations of the parties at the pretrial conference, it is evident that Baker did not waive her claim under § 1983 and that the City was on notice of it. See, e.g., Excel Modular Scaffold & Leasing Co. v. O.S.H.A., 943 F.3d 748, 755 (5th Cir. 2019) (holding defendant waived affirmative defense where defendant omitted defense from the pretrial order and repeatedly failed to mention its desire to pursue the defense at the pretrial conference despite being afforded multiple opportunities); SRSB-IV, Ltd. v. Cont’l Savs. Ass’n, 33 F.3d 1379, 1994 WL 487239, at *3 (5th Cir. 1994) (unpub.) (holding that party waived issues of liability and damages where party did not include the issues in the pretrial order and subsequently failed to raise the issues at the pretrial conference).

Order (denying JMOL) at 10.

A hearty well done to our colleagues at the Institute for Justice for this case.

Memorandum Opinion and Order (JMOL), Baker v. City of McKinney, No. 4:21-CV-00176 (E.D. Tex. Aug 26, 2022)

Memorandum Opinion and Order (New Trial), Baker v. City of McKinney, No. 4:21-CV-00176 (E.D. Tex. Aug 26, 2...

CA1: Rooker-Feldman Defeats Federal Court Takings Claim By "State Court Losers"

If you understand the headline of this post, congratulations: you are officially so deep in the weeds that you deserve both a Federal Courts and a Takings merit badge. 

For those of you not in so deep, here's the short story behind the U.S. Court of Appeals for the First Circuit's short opinion in Efreom v. McKee, No. 21-1382 (Aug. 18, 2022).

This is one of those pension cases, where the state (here, Rhode Island) shored up its tottering pension system with a new statute that "altered in various ways the retirement benefits to which public employees were entitled, including by reducing the amount and availability of cost-of-living adjustment ("COLA") payments to retirees." Slip op. at 4.

As the court noted, "[l]itigation promptly ensured in state court." Slip op. at 5. Takings claims were included in the lineup. All of the cases were consolidated for trial. Most of the plaintiffs settled. Part of the deal was that the legislature would adopt a new statute that modified some of the cutbacks the challenged statute had put into place.

The court formed a class action to effectuate the settlement, and the plaintiffs in the subsequent federal case were all members of one of the subclasses in that action. They may have had objections to the settlement, but under the local R.I. rules of civil procedure they could not opt out of the class.

After the legislature adopted the statutory modifications, the court approved the settlement over "vigorous" objections, and entered judgment in the class action lawsuit. Appeals to the Rhode Island Supreme Court followed, challenging the procedural aspects (the class action), and the substance of the settlement. The Supreme Court affirmed the judgment on both counts. 

Next up, a federal 1983 lawsuit, alleging that the newly-adopted statute (the one adopted in accordance with the settlement agreement) was a taking, and violated the due process and Contracts clauses of the U.S. Constitution. The district court dismissed for failure to state a claim because of res judicata, a lack of standing, and ... Rooker-Feldman.

You remember the Rooker-Feldman doctrine (which we've dealt with here mostly in the context of judicial takings). Named after the two U.S. Supreme Court decisions which defined its contours, the R-F doctrine says is that U.S. District Courts do not have appellate jurisdiction to review final judgments of state supreme courts.

The First Circuit affirmed that the federal lawsuit was subject to R-F, because the "substance" of the plaintiff's complaint was a challenge to the R.I Supreme Court ruling:

It is just this type of impermissible appellate review that appellants seek in federal court. Dissatisfied with the outcome of the state-court litigation, appellants ask us to set aside the Rhode Island state courts' approval of the RIPERC class-action settlement, in an action commenced over two years after the Rhode Island Supreme Court rendered its final decision on the matter. It is undisputed that appellants (and defendants) were all parties to the original Clifford action, the RIPERC class, and the final appeal to the Rhode Island Supreme Court in Clifford v. Raimondo. As such, appellants are "state-court losers" seeking, in effect, to review and reverse "state-court judgments rendered before the district court proceedings commenced."

Slip op. at 14-15 (footnote and citation omitted).

Hold on, the plaintiffs argued, we're not challenging the Rhode Island decision and asking the federal courts to overturn it, but only the effects of that ruling. See slip op.at 15 ("Appellants nonetheless attempt to escape the vise of Rooker-Feldman by disputing, essentially, that their alleged injuries were actually 'caused by' the state-court judgments."). We're challenging the statute adopted in accordance with the settlement judgment, not the judgment itself, the plaintiffs asserted. This law, they argued, caused a new injury separate from the injuries caused by the state court judgments.

The Fifth Circuit didn't buy it. The statute, after all, was a direct by-product of the judgment, and "[p]assage of the 2015 Amendments was a condition precedent for the settlement agreement that resolved the state-court litigation." Slip op. at 16. The statute's text was "contained verbatim in the settlement agreement," and the plaintiff's "attempt to undo the state-court rulings approving the settlement is precisely the sort of 'end-run around a final state-court judgment' that the Rooker-Feldman doctrine proscribes." Id. (footnote omitted).

The court concluded that the plaintiffs are "state-court losers" who sought federal review, albeit indirectly, of the state court's judgment (even though that judgment was the result of a settlement).

We're not quite sure what to make of this one. On one hand, the courts have reminded us that the Rooker-Feldman doctrine isn't a broad rule. It isn't a general rule against judicial takings claims as the Sixth Circuit concluded. It might cover interlocutory rulings as the same Sixth Circuit concluded (whether it covers settlements is an issue the First Circuit assumed but didn't really decide here). And it isn't some catch-all get-out-of-takings-free card, as the Eighth Circuit noted. Yet on the other hand R-F still lives, even if a limited doctrine, as the U.S. Supreme Court reminded in Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005), and maybe this is one of those cases where indeed, the "losers" in state court were merely asking a federal court to overturn the state court loss.

This one seems like a close call, and not one where it is obvious that the case doesn't belong in federal court. After all, why is this case different than, say, any case that challenging the 2015 statute? Does it matter that the plaintiffs here were involuntary members of the class action the state courts authorized in order to settle the case? (The First Circuit concluded no, it doesn't matter, but we have to say that our jury is still out on that one.)

Efreom v. McKee, No. 21-1382 (1st Cir. Aug. 18, 2022)

CA5: "But there’s a big difference between saying that something is property for purposes of procedural due process and saying that it is property for purposes of the Takings Clause"

In Hignell-Stark v. City of New Orleans, No. 21-30643 (Aug. 22, 2022), the U.S. Court of Appeals for the Fifth Circuit, like a lot of other courts, reached an unsurprising conclusion: New Orleans' restrictions on short-term rental of residential properties isn't a taking. But there are parts of the opinion that are definitely worth your time to check out. Read on.

The city had gone back-and-forth on whether renting for less than thirty days was a good thing. Originally barring STRs, then in 2016 offering city licenses, and then when the inevitable flood of STRs resulted, retrenching and substantially revising the licensing program:

One year into the initial regime, the City commissioned a study from its Planning Commission to reevaluate the STR policies. The study found that the rapid proliferation of STRs had brought nuisances to the City. Specifically, it discovered that STRs in residential neighborhoods had lowered residents’ quality of life. Many visitors to the City who stayed in STRs were loud and did not clean up after themselves. The study also determined that the expansion of STRs into residential neighborhoods had led to a “loss of neighborhood character.” And it collected “anecdotal evidence” that the booming STR market had made housing less affordable for residents.

Because of the study and other efforts to examine the STR market, the City substantially revised its STR licensing regime in 2019.

Slip op. at 2-3.

Bottom line: some owners who had obtained licenses were not allowed to renew, while others were denied new licenses because they did not live in the dwellings they were renting out. 

Takings claims (and other claims) followed. See slip op. at 4 ("First, they said the City’s failure to renew their STR licenses violated the Takings Clause because they had a property interest in the renewal of their licenses."). The District Court granted the city summary judgment.

The Fifth Circuit affirmed. The owners do not have a property right in renewal of their licenses. Relying on a case in which the Fifth Circuit held that a business license is property for purposes of procedural due process, the owners asserted that this means they possess a private property interest in getting or renewing a STR license. See slip op. at 5 (citing Bowlby v. City of Aberdeen, 681 F.3d 215 (5th Cir. 2012)). The Fifth Circuit was having none of it:

But there’s a big difference between saying that something is property for purposes of procedural due process and saying that it is property for purposes of the Takings Clause. The former merely obligates a governmental entity to provide the “owner” with procedural protections—and only when a cost-benefit analysis shows that those procedures are worth the cost. See generally Mathews v. Eldridge, 424 U.S. 319 (1976). But the latter means that the government must pay damages. And the test for a property interest protected by procedural due process is quite broad: “A person’s interest in a benefit is a ʻproperty’ interest for due process purposes if there are such rules or mutually explicit understandings that support his claim of entitlement to the benefit . . . .” Perry v. Sindermann, 408 U.S. 593, 601 (1972); accord Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577–78 (1972).

Slip op. at 6.

This is ground that has been covered by other courts (see "CA6: There's A Difference Between Due Process 'Property' And Takings Clause 'Property'"), and by us (see "The New New Property - Public Resources and Private Rights"). 

But the above doesn't really address the question: if Due Process "property" isn't the same as Takings "private property," then what's the difference? The Fifth Circuit concluded that "[s]one 'mutually explicit understandings' can create property interests protected by the Takings Clause." Slip op. at 6. Well okay, but that's pretty cryptic no? The next paragraph of the opinion gets a bit more specific. "[S]ome rights recognized by custom alone could qualify as property for purposes of the Takings Clause." Id. That includes "unwritten common law" and "policies and practices."

And here's the court's actual definition:

We thus concluded [in Dennis Melancon, Inc. v. City of New Orleans, 703 F.3d 262 (5th Cir. 2012)] that “the Fifth Amendment protects expectations arising not just from legislation or judicial precedent, but also those springing from custom and practice.”

Slip op. at 6-7. Ah, so it's expectations that qualify as Takings Clause "private property?" Well, sort of. The expectation has to be "so deeply rooted in custom" that compensation is owed for appropriating it (as opposed to some interest that entitles you to notice and an opportunity to be heard before we appropriate it). Slip op. at 7.

But wait you say, isn't that circular definition? Private property for purposes of the Takings Clause includes those interests and expectations that custom tells us we get compensated for if they are taken. How does that definition advance the ball here? Well, it really doesn't, but let's see how the Fifth Circuit applied that test.

The court first concluded that the STR licenses are privileges, not rights. After all, granting these things are totally discretionary. Slip op. at 8 ("Even an applicant who met the statutory requirements for a license was not entitled to one.") (footnote omitted). Thus, no one could expect to be compensated if a STR license wasn't renewed (except the plaintiffs, that is).

Next, the court considered the length of time that STR licenses have been around. "STR licenses did not exist until 2017, when the City adopted its original licensing regime." Slip op. at 8-9. Then a year later, the city changed the policy. This "short lifespan ... shows that the plaintiffs' licenses were not so rooted in custom and practice that they amounted to property." Slip op. at 9. Apparently, the longer a privilege hangs around unmolested, the more it resembles a right. Got it.

"Together," the court concluded, "those two factors yield one conclusion: The plaintiffs didn't have property interests in the renewal of their licenses." Id.

So there you are - the two questions we need to ask to figure out whether the plaintiff owns Takings Clause private property are (1) does the government call this thing a privilege and have discretion to not recognize the owner's use (that's pretty Hobbesian in our view), and (2) how long has this been going on? It may not be the most satisfying test, but it is indeed a test.

We say "unsatisfying" because we think that when a court defines the scope of the private property interest involved narrowly -- as the Fifth Circuit did here -- that will inevitably lead to a "no property" ruling nearly every time. After all, if the court defines the property interest as the right to have the city issue a STR license, then you never really get past that. The King gives so the King can take away.

But isn't the property right at stake here broader than that? In our view, the property interest at stake here the right to use and to rent your property for less than thirty days, with the real question that should be addressed being whether the government has the authority to interfere with or restrict that right. We acknowledge that this approach may get us to the same place in the end (yes, government can regulate an owner's ability to use property in certain ways if doing so is part of the background principles of property law and nuisance). But even if it does get to the same result, to us, this approach is more realistic and puts the burden on the party restricting property rights (the government), and not the other way around. For an example of how some other courts go this way, see "Tex App: "Property" Includes Right To Rent It Out - City's Short-Term Ban May Be A Taking").

Even though the property owners lost their takings claims here due to a lack of a private property interest, they still had something to celebrate: the Fifth Circuit reversed the district court's rejection of their claim that the residency requirement violated the Commerce Clause:

The district court held that the residency requirement discriminated against interstate commerce. That was the right call. But the court then applied the Pike test to uphold the law. That was a mistake; it should have asked whether the City had reasonable nondiscriminatory alternatives to achieve its policy goals. Because there are many such alternatives, the residency requirement is unconstitutional under the dormant Commerce Clause.

Slip op. at 10. If that kind of stuff floats your boat, read the balance of the Fifth Circuit's opinion.

Hignell-Stark v. City of New Orleans, No. 21-30643 (5th Cir. Aug. 22, 2022)

Ye Olde Law 608: Eminent Domain & Property Rights, S5E1 @ William & Mary Law

Is there a more appropriate place at which to study property rights and dirt law than William and Mary Law School? After all, it is a stone's throw from Jamestown, the place where there's a good argument the concept of property law and property rights first took hold in the New World. As noted by author David Price in "Love and Hate in Jamestown - John Smith, Pocahontas, and the Start of a New Nation" -

The introduction of private property for the common citizen had a salubrious effect on the owners' sense of initiative, as John Rolfe would observe. By the end of 1619, he reported, the "ancient" (or longtime) colonists had chosen their allotments, "which giveth all great content, for now knowing their owne lande, they strive and are prepared to build houses and to cleare their grounds ready to plant, which giveth ... greate incouragement, and the greatest hope to make the colony florrish that ever yet happened to them."

Was it a coincidence that at the same time as property rights took hold, that the seeds of representative and republican government were also planted? As Price writes:

The other major liberalization of 1619 sprang from the company's desire for "a forme of government there as may bee to the greatest benifitt and comfort of the people, and wherby all injustice grevance and oppression may be prevented." That form of government would be English America's first representative legislature. Sir Thomas Dale's authoritarian "Lawes Divine, Morall and Martiall" would be superseded by enactments of a locally elected body, to be known as the General Assembly.

And also just down the road from the Law School, coincidentally, is where the "new birth of freedom" took hold, again by way of a property-centric argument. So yes, William and Mary Law is a very appropriate venue for the study of property rights and property law.  

With that background in mind, in just over three weeks, we're about to get underway with the fall semester at the Law School, where we're again teaching two upper-division courses: Eminent Domain and Property Rights (Law 608), and Land Use Controls (Law 425). For a sampling of what we cover, check out some of the final papers our students produced last year - pretty compelling stuff.

The enrollment in the courses has really grown over the five years we've done them, which might be a reflection that the word is getting out. in the Eminent Domain and Property Rights class we cover not only eminent domain and just compensation, but takings, civil forfeiture, property theory, the cultural view of what it means to "own" something, and international approaches to property law and property rights. And, importantly, how to lawyer up these cases (this is a professional school after all). Of course, we take advantage of the opportunity to have some of the nation's best property law scholars "guest lecture" during the Brigham-Kanner Property Rights Conference. Here's the official description of the course:

Property rights and the sovereign's power of eminent domain have been essential components of Anglo-American law for centuries, and the protection of the right of private property ownership is one of the foundations on which the U.S. Constitution, the Bill of Rights, and the post-Civil War Amendments are built. This course will introduce students to the practical lawyering and analysis necessary for eminent domain practice, including the nuts and bolts of takings practice as well as the study of recent (and ongoing) U.S. Supreme Court cases. In addition, this course will focus on the history, policy, and, to some extent, the politics of property rights, eminent domain law, and related legal topics. We will examine how the right of private property was developed in common and constitutional law, the relationship of property rights to other civil rights and the sovereign's power to take land, the role of federal and state courts in protection of property rights, how private property squares with environmental law, and the proper 'place' of property rights in the modern administrative state. Course materials will be cases and selected portions of books and journal articles, and other materials which will be made available. Grading will be based on a take home paper and class participation.

The Land Use Controls class is your class land use regulation class that focuses on things like zoning and planning, the administrative process, vested rights, nonconforming uses, due process, Euclid, private land use controls, nuisance, and other dirt law topics.   

Students: it's not too late to join (add/drop will commence soon after the first day of classes). We can't promise that you will gain instant knowledge of the subjects, but can guarantee a rewarding semester taking a deeper dive, coming out of it in December with a greater appreciation of these areas of law, and a working understanding of what it takes to actually practice. Come, join us!

New Cert Petition (Ours): Can Condemnor Delay Actually Paying Compensation Indefinitely?

Last week, along with my colleagues Deborah La Fetra and Kady Valois, we filed this cert petition in a case we've been following (even before we joined as counsel).

The petition seeks review of the Fifth Circuit's opinion holding that there's nothing a federal court can do if a local government does not pay a state-court just compensation judgment for an unreasonably long time. Because we are counsel in the case we won't go into further detail, but will leave it to you.

Here's the Question Presented:

A fundamental element of just compensation is "certain payment of the compensation without unreasonable delay.” Bragg v. Weaver, 251 U.S. 57, 62 (1919). In 2013, the Sewerage & Water Board of New Orleans inversely condemned the properties of 70 home and business owners for a flood control project. The property owners obtained state court judgments starting in 2018. Louisiana law prohibits enforcement of judgments against state and local governments—even just compensation judgments—which go unpaid unless government voluntarily appropriates the funds. The Sewerage Board has refused to do so, in some cases for years. The question presented is:

May the government, consistent with the Fifth and Fourteenth Amendments’ self-executing command of Just Compensation for takings of private property, indefinitely delay paying just compensation?

Follow along here, or on the Court's docket.

Petition for Writ of Certiorari, Ariyan, Inc. v. Sewerage & Water Board of New Orleans, No. 22-52 (July 20,...

John Quincy Adams Loses A Takings Case

No, not that JQA. (Sorry for the clickbaitey headline.) But who could resist the Fifth Circuit's per curiam opinion in John Quincy Adams v. Pearl River Valley Water Supply District, No. 21-60749 (July 20, 2022) which held that Mr. Adams, who owned property near a reservoir, could not sue state officials in federal court for injunctive relief for due process violations and takings.

Adams alleged that Mississippi water district officials were violating a state statute by not allowing him to exercise the option to re-acquire property that the water district had condemned decades earlier. His federal court complaint avoided directly asking for money damages because those claims would mean the state officials would have Eleventh Amendment immunity. Instead, "[t]he Adamses requested a declaratory judgment that the District’s sales and leases of property without notice were ongoing constitutional violations and asked the court to fashion whatever injunctive relief it deemed necessary to correct the violations going forward, including ancillary monetary relief." Slip op. at 4.

Motion to dismiss for lack of jurisdiction granted, and the Fifth Circuit affirmed.

But doesn't the Ex parte Young exception to the usual rule that you can't sue state officials in their official capacities in federal court apply? After all, Adams sought to enjoin what he claimed were ongoing violations, which counts as prospective injunctive relief, right? Not here, the Fifth Circuit concluded, because although Adams alleged that the officials had violated his rights in the past, he had not alleged enough to show that they would do so again:

Once any claims for monetary relief were properly dismissed because of sovereign immunity, all that remains was in essence a demand for the court to order the District to comply with state law in the future as to any of the family’s former land. Even if the Adamses’ rights were violated in the past, the Adamses have at best offered “[a]llegations of possible future injury” that they have not claimed is imminent, or “certainly impending,” or anything other than speculative. See Clapper, 568 U.S. at 409 (quotation marks and citation omitted).

Slip op. at 7.

One correction to the district court's dismissal: the Fifth Circuit noted the dismissal should have been made without prejudice.

John Quincy Adams v. Pearl River Valley Water Supply Dist., No. 21-60749 (5th Cir. July 20, 2022) (per curi...

CA6: State Officials Enjoy 11th Amendment Immunity From Just Compensation Claims In Federal Court

In Skatemore, Inc. v. Whitmer, No. 21-2985 (July 19, 2022), the U.S. Court of Appeals for the Sixth Circuit held that neither the Just Compensation Clause, nor the Fourteenth Amendment abrogated the states' immunity from being sued in federal court for compensation for takings.

This is another one of those cases where -- due to Co-19 -- businesses forced to close or limit operations by the state (here, Michigan) brought regulatory takings claims in federal court. The claims included takings, and the relief sought was just compensation (no prospective injunction or declaratory judgment). The complaint named state officials (in their official capacities) and state agencies as the defendants. The district court dismissed for lack of jurisdiction and for failure to state a claim. 

The Sixth Circuit affirmed. The court rejected the argument that a state's Eleventh Amendment immunity from being haled into a federal court without consent does not apply in takings claims seeking just compensation. It concluded that the Supreme Court in Knick didn't recognize such an exception, distinguishing that case's holding that a property owner has a claim for compensation that may be vindicated in federal court when her property has been taken, because in Knick the defendant was a local government and not the state. Local governments are not covered by the Eleventh Amendment. See slip op. at 8-9.

Next, the court made short work of the argument that the adoption of the Fourteenth Amendment altered the immunity states enjoy from being sued in federal courts. Slip op. at 9. "This argument is meritless." Id. The Fourteenth Amendment only empowers Congress to enforce its provisions with legislation, and "[r]emedies against states under the 14th Amendment are created by legislation, not by other constitutional amendments." Id. [So something like section 1983?] The court also rejected the argument that states consented to federal court jurisdiction by ratifying the Fourteenth Amendment. Slip op. at 10. 

Skatemore, Inc. v. Whitmer, No. 21-2985 (6th Cir. July 19, 2022)

Here's The Full Speaker And Topic List For The Brigham-Kanner Property Rights Conference (Sep 29-30, 2022)

By now, you know that the 19th Brigham-Kanner Property Rights Conference is set for September 29-30, 2022, at the William and Mary Law School in Williamsburg, Virginia (register here - space is limited - fee ranges from free to $195 - a bargain!). And you know that our colleague Jim Burling is this year's B-K Prize winner.

But now you know who is speaking at the Conference, and the topics: here's the full agenda. The list of speakers is too long to list here but check out these topics:

• Panel 1: The Importance of Property Rights: A Tribute to James S. Burling
• Panel 2: Reshaping the Framework Protecting Property Under the Roberts Court (that's the panel we're speaking on)
  
• Roundtable: Emerging Issues in Takings and Property Rights Litigation
• Panel 3: Choosing A Property Regime
• Panel 4: Property Rights in Times of Scarcity and Crisis

Who can resist these subjects? Plan on joining join us in September.

2022 Brigham-Kanner Property Rights Conference Speaker Panels

You Can Sue Utah For Compensation In State Court, So No Injunction In Federal Court

No smoking in Hatu

A short one from the U.S. District Court in Utah, but worth reading because it highlights one of those unresolved issues: the remedy for a "takings" claim.

Now, you've heard the Supreme Court describe just compensation as the "default" remedy for regulatory takings and inverse claims. But it isn't the only remedy, is it? 

Well, in this Order, the U.S. District Court for the District of Utah seems to think so. At least it is in federal court.

Utah adopted a statute that prohibits tobacco businesses from operating within 1000 feet of a school. Smoke shops sued in federal court for a taking under section 1983 and other things (due process, First Amendment, &c.). The defendant was not the State of Utah because, you know, you can't sue a state for money in federal court unless it consents. So as in other cases, the smoke shops sued state officials (in their official capacity), and limited the relief sought to a prospective injunction, including a TRO.

To get a temporary injunction, the standards are pretty much the same as a permanent injunction, and "[i]t is well settled that interim equitable relief is only available when a plaintiff can obtain at least some final equitable relief." Slip op. at 2. And that was the problem here: according to the court, you can't enjoin a taking "as long as an adequate provisions for obtaining just compensation exists." Id. And "because the federal and nearly all state governments provide just compensation remedies to property owners who have suffered a taking, equitable relief is generally unavailable." Id. (quoting Knick v. Twp. of Scott, 139 S. Ct. 2162, 2176 (2019). 

Utah is one of those states that "provide just compensation remedies." In state courts, only of course. Because the state itself and its officials (in their official capacities) are not "persons" under section 1983. But property owners can sue the state and its officials for compensation for a taking under the Utah Constitution.

Ah, the district court concluded, that means the property owners cannot get the injunctive relief they are asking for in federal court, because they can go to state court and get compensation. Slip op. at 3 ("But Plaintiffs may bring an inverse condemnation action against Utah in state court under Article I, section 22 of the Utah Constitution to recover just compensation for a regulatory taking.").

Whoa, you say that sounds a lot like the now-defunct "state procedures" ripeness requirement from (overruled) Williamson County? Courts elsewhere seem to think that equitable relief against a state is available (see here also) if you can't get compensation in federal court. (Yes, we get that in those cases, the allegation is that the government is wrongfully keeping money belonging to the plaintiffs, but that seems like a thin reed).

Check out this post for more on our thoughts about whether a federal court may grant equitable relief against state officials for takings claims.

Memorandum Decision and Order, Exotic Smoke & Vape v. Cox, No. 2:22-cv-408 (D. Utah June 28, 2020)

Alabama: Government Can't Keep The Change After A Tax Sale

A long-ish opinion from the Alabama Supreme Court in Douglas v. Roper, No. 1200503 (June 24, 2022). But a short post because the good stuff is relatively brief.

Bottom line: property owners have a vested interest in excess money generated from a tax sale of their property, and the Alabama legislature cannot prohibit the owners from claiming that excess equity.

Quick background: the legislature enacted a statute that required property owners who had their properties sold to satisfy tax debts first have redeemed the property before they could claim the excess funds, if any, from the sale. This had the effect of permitting the government in many cases to keep that excess (i.e., the property's equity), as a little something extra -- what our New Orleans friends might call lagniappe. Property owners objected, arguing that retroactively applying the statute would be a taking.

There's a lot to like in the opinion, but here's a few choice items:

• "Alabama also places a strong emphasis on an individual's fundamental right to property." Slip op. at 31.
• "Alabama's strong commitment to an individual's right to property is confirmed by this state's constitution, which states that 'the sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty, and property.'" Slip op. at 32.
• "This state has long recognized a property owner's right to the excess funds generated from a tax sale of his or her property." Id.
• "This Court has also recognized that the excess funds that result from a tax sale are representative of the property itself." Slip op. at 33.
• "Based on the foregoing, we conclude that the right of a property owner to recover excess funds that are generated from a tax sale is a vested right that existed at common law. Property rights are vested rights. The excess funds stand in the place of the property and are representative of the owner's vested ownership interest in the property." Slip op. at 35 (citations omitted).
• "Accordingly, an owner has a vested interest in the excess funds that result from a tax sale. Because an owner has a vested interest in the excess funds resulting from a tax sale, the amendments to § 40-10-28 -- which burden the owner's vested right to the excess funds by imposing upon the owner the often expensive and uncertain requirement of redeeming the property before claiming the excess funds -- cannot be applied retroactively to prevent an owner from claiming the excess funds." Slip op. at 36.

For more on this issue, check out our law firm colleague's recent appearance on Clint Schumacher's Eminent Domain Podcast, "Christina Martin on Home Equity Theft." Christina argued and won the first big case on this issue, Rafaeli, LLC v. Oakland County (from the Michigan Supreme Court, and cited by the Alabama Supreme Court), and is responsible from bringing this issue to light. 

Douglas v. Roper, No 1200503 (Ala. June 24, 2022)

CA6: Dammed If You Do - Takings Claim Is Ripe When Govt Decides To Physically Invade And You Don't Need To Wait 'Til It Actually Invades

We've been meaning to post the U.S. Court of Appeals for the Sixth Circuit's opinion in Barber v. Charter Twp of Springfield, No. 20-2298 (Apr. 11, 2022) for a while because it emphasizes an important point about "final decision" ripeness, and the sometimes ridiculous arguments made to support an argument that a takings claim isn't ripe.

In many situations a takings claim is backwards looking, and seeks compensation or some other remedy for something the government has already done. You flooded my property, or your project encroached on my land, or you designated my property for future acquisition and prevented me from using it in the interim are good examples. But not always. Sometimes takings claims are forward looking. Your regulations require me to allow a cable TV company to install a box on my building's roof, or you are threatening to open my private marina to public navigation. Do you have to wait for the bad thing to happen in order to get a court to review your takings claim?

Back to our case. Barber owns land next to Mill Pond Dam, built in 1836 (wow). Apparently, the old dam was not going to hold up forever. After looking at a number of options, the Township and the County decided that removing the dam was the best option. Or at least that's what it looked like they decided. The Township hired engineers and included the removal project in its budget. Its web site noted that "the project has moved to the next phase which included preliminary engineering and conceptual park design." And the local newspaper reported that "Mill Pond Dam to be Removed Next Year."

Barber asserted that removal of the dam would have all sorts of bad impacts on her adjacent land, including flooding of her house. State court inverse and takings claim (§ 1983) followed. "She sought to enjoin the Dam-removal project, alleging that it would constitute a taking under the federal and Michigan constitutions and a trespass under Michigan law." Slip op. at 3.

The Township and the County removed the case to federal court, and followed with a motion to dismiss on the usual grounds - takings case filed too early (ripeness) and lack of standing. The district court agreed, and dismissed the complaint. 

The Sixth Circuit rejected the Township's argument that it had not made the final decision to remove the dam. "Ordinarily" a claim that the government is physically invading property is ripe when the government invades. But that rule only applies when the remedy sought is backwards-looking (compensation), not when the owner seeks injunctive relief. An "impending physical taking could warrant injunctive relief." Slip op. at 7.

In Cedar Point Nursery, the plaintiffs sought to enjoin a local regulation that allowed union representatives to enter private property and speak to agricultural workers. Id. at 2070. The Court, treating the claim as a per se physical taking, allowed the plaintiffs to proceed with their motion for a preliminary injunction even though union representatives had never set foot on one plaintiff’s property. See id. Thus, the plaintiffs could bring suit even without experiencing a physical intrusion because the regulation allowed future physical intrusions. See id. at 2070, 2072–73. Accordingly, a claim for injunctive relief is ripe if the government has reached a final decision that will enable a future physical taking.

Id. The decision to remove the dam gave rise to two takings claim: a regulatory taking (the decision to remove), and the "inevitable demolition" that will amount to a physical taking. So if the Township reached a final decision to remove, both claims are ripe. 

The court concluded that the Township did so. That newspaper article noted the removal project is "scheduled to begin in 2022." At oral arguments, the Township's lawyer acknowledged that "the choice has been made" to remove the dam. But that doesn't mean the taking is ripe, the Township responded, adjudication must wait until the dam is actually removed. The court rejected the idea that a property owner has to wait for the Sword of Damocles to fall before trying to, you know, prevent it:

Having conceded this point, Defendants are left with one argument; until the Dam is actually removed, there is no way to know whether Barber has a viable takings claim. But this cannot be the case in the wake of Cedar Point Nursery. As the Supreme Court made clear, plaintiffs may sue for injunctive relief even before a physical taking has happened. Cedar Point Nursery, 141 S. Ct. at 2070, 2072–73.4 Barber’s claims are therefore ripe.

Slip op. at 8.

Next, the court concluded that Barber had standing because the Township's actions threatened her with injury. If the Township had not made the decision to remove yet, the injury might be too speculative. The court looked at the same facts as its ripeness analysis focusing on the Township's admission that it "planned to remove the Dam in the near future." Slip op. at 11.

One judge dissented, concluding that yes, the Township was thinking of removing the dam, but had really not actually decided to do so because "they had yet to draft - much less approve - blueprints for the project." Dissent at 14. Nor had the Township had not rounded up the money to do so. This was a municipal "hope" to remove, not an actual decision to do so:

Applying an ounce of “experience and common sense” reveals that Barber had little idea how the project, should it come to fruition, would affect her property. Iqbal, 556 U.S. at 679. Instead, her fears rested on “mere speculation and assumptions,” a far cry from the “certainly impending” injury necessary to establish standing where harm has yet to occur. Kanuszewski v. Mich. Dep’t of Health & Hum. Servs., 927 F.3d 396, 410 (6th Cir. 2019) (cleaned up) (quoting Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409, 411 (2013)).

Dissent at 15. This was nothing "more than an abstract policy disagreement about the dam’s future." Dissent at 17.

Barber v. Charter Twp of Springfield, No. 20-2298 (6th Cir. Apr. 11, 2022)

The Keepings Clause: CA5 (Again) Throws Up Its Hands When Local Gov Refuses To Pay Back Money It Owes

Its deja vu all over again: like it did just a short while back, in Lafave v. City of New Orleans, No. 21-30358 (June 1, 2022), the U.S. Court of Appeals for the Fifth Circuit once again has rejected a takings claims "based on the city’s failure to honor a judgment of the Louisiana state courts." Slip op. at 1.

Unlike the previous case, here the judgment being dishonored was not for just compensation, but a state court order that "call[ed] for the return of personal property acquired by the government unlawfully." Id.

Here's the story. New Orleans likes traffic cameras, and "used mail to collect fines for traffic violations captured by street cameras." A class action lawsuit challenged the scheme, and eventually a Louisiana court determined the city lacked the authority to designate the Department of Public Works (and not the police department) as the enforcement authority. New Orleans responded by shifting enforcement to the police department.

End of case, right? Not quite. The DPW had by then collected about $25 million in traffic fines, and the court ordered the city to give the money back: issue an "'immediate refund' of the relevant fines and fees, which included an additional $10 million in interest. Slip op. at 2. The appeals courts of Louisiana affirmed.

Did the city comply? Did it return the wrongfully-acquired and wrongfully-retained money? Nope. As in the prior case, the city did nothing. Oh, it issued a public statement promising to pay. But it didn't do anything else. Slip op. at 2 ("New Orleans still has not reimbursed the fines.").

The Fifth Circuit acknowledged that the amount to be reimbursed ($35 million) is "substantial," and "New Orleans tends to be less than prompt in the payment of judgments." Id. Boy howdy! "At oral argument, counsel for the city stated that the city's unpaid judgment stretch back 'over a decade.'" Slip op. at 2-3.

Not thrilled at the prospect of joining an ever-growing queue of judgment creditors, a class of people to whom those illegally-collected fines should have been returned sued in federal court under § 1983 for a taking. Slip op. at 3 ("The plaintiffs alleged that the city had violated the Fifth and Fourteenth Amendments by confiscating their property and keeping it without just compensation."). They alleged the taking arose when the city refused to return their money immediately, a theory the Ninth Circuit approved a few years ago.

The district court denied the city's motion to dismiss, after which the city sought interlocutory appellate review of a single certified question: "whether the failure to comply with a state court judgment may be construed as a taking.' Slip op. at 3. As our headline infers, having phrased the question presented that way, it wasn't going to be too hard to predict that the Fifth Circuit would again hold no.

First, the court held that the "illegal nature" of the traffic cam fine collection presented "a ... serious problem" because if the money was collected illegally, there's no takings claim: "an exaction of money that is completely unlawful, whether compensated or not, is not a taking." Slip op. at 4. But wait a sec, if the government simply grabs someone's property without any legal authority to do so, it isn't a taking if it keeps it ... so this is like civil forfeiture? Slip op. at 5. Here, isn't the complained-of action not so much that the government wrongly collected the fines (that much was settled in the Louisiana courts), but that it is keeping it?

The next part of the Fifth Circuit opinion - complaining that the "plaintiffs' theory suffers from a logical contradiction" -- reminds us of the struggles courts often go through to conclude that some action that sure looks like a taking, isn't a taking:

They advance two propositions: The taking did not arise until the moment the McMahon judgment became final, and it arose only because the money was initially taken with no claim of right. Both contentions are necessary—to relitigate the initial extraction of fines under ATES would raise serious res judicata concerns, while fixating on the city’s failure to return the money would turn all money judgments against governments into takings. But in their attempt to avoid those pitfalls, the plaintiffs find themselves trying to have their cake and eat it too. They conceive of the city as “taking” their money in 2019, even when that money had been in the city’s possession since 2010 at the latest. And they insist that the city’s conduct from 2008 to 2010 was necessary to effect a taking that did not actually arise until 2019. Such a theory sits uneasily with a linear conception of time and is not rooted in the text of the Fifth Amendment.

Slip op. at 5.

But taking my money and keeping it sure looks to our untrained eyes as a taking. And we thought the Supreme Court told us in cases like Cedar Point that it is taking an "intuitive" approach to this thing called "property." This isn't exactly new, right? See, e.g., United States v Dickinson, 331 US 745, 748 (1946) ("The Fifth Amendment expresses a principle of fairness, and not a technical rule of procedure enshrining old or new niceties regarding 'causes of action' -- when they are born, whether they proliferate, and when they die.").

The Fifth Circuit asserted that its theory is intuitive, see slip op. at 7 ('[t]hat conclusion makes intuitive sense..."), because "it is odd to conceive of a government as instantly 'taking' property ... that has been in its actual possession for years." Id. The panel rejected the plaintiffs' reliance on Vogt v. Bd. of Comm'rs, 294 F.3d 684 (5th Cir. 2002), which held in favor of the plaintiffs, although not because the Board's failure to satisfy a state court judgment was a taking. Slip op. at 5-6. The problem according to the Fifth Circuit, was that if it affirmed the existence of a takings claim here

it would allow plaintiffs in a case like this to bring a federal takings claim the day after receiving a favorable judgment, even if the defendant were acting quickly and diligently to return the plaintiffs' property.

Slip op. at 708.

And to us, that's the real crux of the case and the issue the court should have responded to: has the delay here been reasonable, and has the government complied without undue delay? See Joslin Mfg. Co. v. City of Providence, 262 U.S. 668, 688 (1923) (the Fifth Amendment is satisfied when "the public faith and credit are pledged to a reasonably prompt ascertainment and payment"); Bragg v. Weaver, 251 U.S. 57, 62 (1919) (compensation must be provided "without unreasonable delay").

So instead of a blanket rule that failure to satisfy a state court order can never give rise to a federal court takings claim, these standards ('reasonably prompt," and "unreasonable delay") point to a case-by-case determination, with this question presented to the factfinder: has the government unreasonably delayed? Is it taking too long? Thus, where a defendant "were acting quickly and diligently to return the plaintiffs' property" the factfinder should find for the defendant. And on the other hand, aren't there some some circumstances in which the delay might not be acceptable and becomes the "unreasonable delay" the Supreme Court focuses on? That, it seems to us, is the real question that should be addressed in these cases.

But for the time being, what can you do if a local government should pay up or return your property but doesn't ... and then a state court orders it to pay up or return your property, but it doesn't? Nothing (at least in the Fifth Circuit). Like the poor "others" forced to wait in Casablanca, all you can do is wait ... and wait ... and wait ... and wait.

Lafaye v. City of New Orleans, No. 21-30358 (5th Cir. June 1, 2022)

CA7: Like Other Circuits, We're Going To Dodge The Judicial Takings Question

Here's one we've been following since its inception, even before we joined the law firm that represents the property owner. (And because our Pacific Legal Foundation colleagues are repping the plaintiffs in this one, we won't be commenting in-depth.)

You may remember that in Gunderson v. Indiana, 90 N.E.3d 171 (Ind. 2018), the Indiana Supreme Court concluded that the public owns the land up to the ordinary high water mark on Lake Michigan, and had done so all the way back to statehood in 1816. Problem is, according to some lakefront property owners, "undisputed local, state, and federal acknowledgement over the years" was otherwise - the law said that lakefront land was was private, not public, down to the ordinary low water mark. Thus, the plaintiffs alleged, "the Gunderson judgment changed the law of the State of Indiana, as recognized by prior Indiana court precedent as well as federal, state, and local authorities."

The owners sued in federal court, seeking a declaratory judgment that the Indiana court's changing the public-private boundary from the low to the high water mark resulted in an uncompensated judicial taking. The complaint sought an injunction prohibiting state officials from enforcing the Gunderson ruling and the follow-on confirmation statute. The plaintiffs did not ask the federal court for compensation. 

In Pavlock v. Holcomb, No. 21-1599 (May 25, 2022), the U.S. Court of Appeals for the Seventh Circuit affirmed the district court's dismissal. The district court dismissed on the pleadings because "the Owners’ claims are functionally equivalent to a quiet-title action, and so are barred by sovereign immunity[.]" Slip op. at 7 (citing Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261 (1997)). 

The Seventh Circuit didn't quite take the same approach (even though it reached the same outcome). It first noted that after the Supreme Court's decision in Stop the Beach Renourishment, the lower courts have repeatedly dodged the judicial takings question (or what Justice Scalia labeled the "how much wood would a woodchuck chuck" issue):

no federal court of appeals has recognized this judicial-takings theory. What has occurred instead is avoidance: every circuit to consider the issue has expressly declined to decide whether judicial takings are cognizable. Instead, each court has assumed without deciding that if such a cause of action were to exist, the relevant test would be the one Justice Scalia suggested in his Stop the Beach plurality opinion: did some arm of the state declare that "what was once an established right of private property no longer exists"? 560 U.S. at 715. In each of the cases that have reached our sister circuits, the courts have held that the challenged state-court decision had not erased an established property right. Thus, even if there were a theoretical claim for a "judicial" taking, the plaintiffs failed.

Slip op. at 10-11.

And so it was to be here. The Seventh Circuit avoided even the theoretical issue by concluding that the plaintiffs didn't allege enough to show Article III standing because the complaint seeks, essentially, to be awarded title to the property the Indiana Supreme Court took away, but the defendants (Indiana officials tasked with enforcing the public-private boundary) do not "have the power to grant title to the Owners in the face of the Indiana Supreme Court's Gunderson decision[.]" Slip op. at 12. Thus, "[e]ven if we were to agree with the Owners, therefore, a judgment in their favor would be toothless."

There are a number of problems with this approach, not least of which is that we lack authority to overrule a state supreme court. But the straightforward point is that none of the state defendants the Owners have named—not the Governor, not the Attorney General, not the Indiana Department of Natural Resources, and not the State Land Office—has the power to confer title on the Owners to land that Indiana’s highest court says belong to the state. No injunction we enter can fix that problem.

Slip op. at 12-13. The owners could have sued for compensation, but they couldn't have sued the State of Indiana for compensation in federal court under the Eleventh Amendment.. Slip op. at 13 ("Recognizing these hurdles, the Owners seek only equitable and declaratory relief.").

The court viewed the issue as one of title (who owns the lakefront land between the low and high water marks?), and thus distinguished the case from Cedar Point Nursery, where the issue was not title, but whether the state's regulations deprived the owner of their rights related to "property that they indisputably owned." Slip op. at 15. [Barista's comment: true, but wasn't the issue in Cedar Point Nursery whether the right to exclude was part of the owners' title?]

Same lack-of-standing result regarding causation. If anyone injured the plaintiffs according to the Seventh Circuit, it was the the Indiana Supreme Court ("an independent actor") which did so when it changed the law, and the named defendants have not done anything to cause further injury. Slip op. at 16 ("The Owners' injury is therefore traceable not to the state defendants, but to the independent actions of the Indiana Supreme Court."). [Barista's note: is the Seventh Circuit is suggesting that the Indiana Supreme Court or its members are the only proper parties in a judicial takings case?]

The Seventh Circuit also adopted a form of Rooker-Feldman lite. It concluded that "federalism and comity concerns" mean that federal courts should "proceed cautiously" when a plaintiff claims a judicial taking by a state supreme court, even though it is clear that Rooker-Feldman does not apply. See slip op. at 17 ("We recognized, in this connection, that the Rooker-Feldman doctrine does not apply here, because the Owners were not parties to the Gunderson litigation.").

Nonetheless, that doctrine’s animating federalism values counsel us to proceed cautiously when a novel legal theory raises the specter of a lower federal court reviewing the merits of a state supreme court’s decision.

Id.  That "[n]onetheless" is carrying a lot of water here, because "proceeding cautiously" results in dismissing the case, the very same result as a Rooker-Feldman analysis.

Alternatively, the Seventh Circuit determined that ownership of the lakefront land between the high and low water marks was not "established" under Indiana property law, and thus even under the Scalia Stop the Beach plurality opinion, there's no judicial taking. The Seventh Circuit rejected the argument that prior to Gunderson that Indiana law clearly affirmed the lakefront owners' titles to the low water mark. Instead, the court concluded that Indiana law "had been ambiguous at best[,]" and that Gunderson settled the issue as one of first impression. Slip op. at 19. If Indiana law was not established prior to Gunderson, then the Indiana Supreme Court didn't change the law:

The Owners have not and could not show that the Indiana Supreme Court’s decision was a sharp or unexpected departure from a clearly established property right. Rather, the state court in Gunderson settled an unclear and disputed issue of first impression. The district court therefore noted that, even if it had jurisdiction over the case, it would have dismissed the Owners’ action for failure to state a claim under Rule 12(b)(6).

Because the Owners lack standing to sue the state defend-ants, we need not reach either the Coeur d’Alene issue or the alternative ruling under Rule 12(b)(6) today. We merely note that the Owners could not prevail without also overcoming these additional hurdles.

Id.

We set out our thoughts on the judicial takings question in this 2010 article - a bit older now, but, we think, still relevant. 

Pavlock v. Holcomb, No. 21-1599 (7th Cir. May 25, 2022)

District Court: City Liable For Physical Taking For Destroying Home While Apprehending A Criminal

Here's a pretty rare one: a trial court entering summary judgment on liability in favor of the property owner in a takings case. Yes, you read that right.

And to top it off, this ruling comes in a case in which the taking alleged was a police invasion and destruction of a home for the valid public purpose of apprehending a holed-up criminal, a brand of claim that has not met with a whole lot of success. See, for example, this case from the Tenth Circuit, and this case from the Supreme Court of South Carolina.

In this order, the U.S. District Court for the Eastern District of Texas held the City of McKinney liable for a physical taking. The entire order is worth reading, but here are some of the highlights.

• The court rejected the Tenth Circuit's rationale, which concluded that these are "police power" actions, and thus never a taking.
• Lech relied on cases like Mugler (the one where the Supreme Court held that Kansas' banning manufacture and sale of liquor was a valid exercise of its police power).
• But there's a difference between physical takings (the case here) and regulatory takings (not this).
• Check out the law review article the district court cited, Emilio Longoria, Lech's Mess with the Tenth Circuit: Why Governmental Entites Are Not Exempt from Paying Just Compensation When They Destroy Property Pursuant to Their Police Powers, 11 Wake Forest J. L & Pol'y 297 (2021).
• The district court's opinion also picked up on a familiar vibe: a valid police power action doesn't mean it isn't a taking, merely that the government action likely qualifies as a public use. Slip op. at 19 (citing Zachary Hunter, You Break It, You Buy It—Unless You Have a Badge? An Argument Against a Categorical Police Powers Exception to Just Compensation, 82 Ohio St. L.J. 695, 703 (2021).

Definitely check it out.

Memorandum Opinion and Order, Baker v. City of McKinney, No. 4:21-cv-00176-ALM (E.D. Tex. Apr. 29, 2022)

"Something is very wrong with this picture." Cal Ct App Calls Out CEQA ("fearsome weapon"), Tiburon's "official hostility," And "combined animus of two levels of local government"

Anyone who reads this blog regularly knows Tiburon, California, even if you've never stepped foot there. Yes, that Tiburon. Well, the beat goes on: the Agins litigation wasn't the only time that the town and its residents combined forces to try and draw up the drawbridge and prevent the building of more homes in this very exclusive and chichi Marin County waterfront and hilltop community with commanding multi-million dollar views of San Francisco and the Bay. 

For the latest example, read the California Court of Appeal's opinion in Tiburon Open Space Committee v. County of Marin, No. A159860 (May 12, 2022). It's 110 pages, but don't let that discourage you (it's not necessary to dig into the details, unless you are a true California Environmental Quality Act nerd). The facts alone are hair-raising. But on the other hand, the story may be an old story to you experienced land use hands, who know that your result horizon in the development game can be a long one (buy us a beer at the next ALI-CLE Conference, and I'll regale you with the story of our own land use/takings fight that needed over two decades to resolve).

In this case, the "old story" is a really old story (for our story begins in 1974). You don't remember 1974? Watergate was in full swing, ABBA wins Eurovision, we were freaking out about the price of gas because it was 53¢ a gallon!, the war in Vietnam was winding down but still ongoing, the Cleveland Indians had Ten Cent Beer Night (with predictable results), and Muhammad Ali and George Forman were duking it out in Zaire.

Well that's when the owner of vacant land on the edge of the Town of Tiburon in unincorporated Marin County thought about building some homes. The parcel is 110 acres, and even under the then-zoning's density requirements, that meant 300 residences could be built. But the County rezoned the land to limit the homes to at most 34, and barred development of portions of the property entirely (the "Ridge" and "Upland Greenbelt" areas). Federal regulatory takings lawsuit followed. 

In '76, the landowner and the County settled the federal lawsuit by way of a stipulated judgment. The court ordered that the owner could develop 43 single-family residences on 1/2-acre lots, and that some development could take place in the Ridge and Upland Greenbelt areas. The owner dedicated half of the land to the County as open space and for trail use, and the County determined that 43 homes were consistent with the general plan. Because the owner had not yet produced specific plans or undertaken environmental review, the judgment still required the owner to submit these items for County consideration.

Flash forward years. Decades, actually:

After years of planning, [the owner] submitted its application for a development plan to the County, and the County in turn directed [the owner] to file its application with the Town for approval. After the Town conducted years of study without rendering a decision, [the owner] withdrew its application from the Town and on April 19, 2005, reapplied to the County.

Slip op. at 5.

Did the County comply with the 1976 federal judgment? No. Instead, it returned to federal court, suing the owner and other owners (who had said they would sue the County if it complied with the Judgment), asking that it "be relieved from operation of the Judgment." The main claim was that the Judgment was void because it contracted away the County's police and statutory powers. The federal court dismissed the complaint.

Which resulted in another stipulated judgment in 2007. Which mostly restated the requirements in the '76 Judgment, but also included requirements for processing a subdivision map, and other details to hold the County's feet to the fire. See slip op. at 7-9. 

The next year, 2008, the owner filed an application for development with the County. Three years later, the County prepared and circulated a draft EIR. That started the ball rolling on the CEQA show, with public hearings, comments, objections, responses, and the like. See slip op. at 10-11. As you land users know, CEQA review is ostensibly designed to provide decision-makers with information about a proposed use's impacts, vel non, on the environment, so they can, you know, make an informed decision. CEQA isn't designed to block development by itself, just to allow consideration of environmental concerns. But the reality is much different, and the statute is regularly employed to block or delay development. Justices of the California Supreme Court have said so (even as the court as a whole does nothing about it).

Death by a thousand days can be a potent tool for those committed to opposing development. "Significant environmental concerns" certainly sounds a lot better than "I've got mine." Consequently, the County Board of Supervisors refused to certify the EIR, because of "too many unknowns." Give us more information, property owner! "More than three years passed before [the owner] returned with the 'more specific proposal' demanded by the Supervisors." Slip op. at 12.

By now, we're in 2017, and the County couldn't slow-walk this any longer, and after its lawyer reminded the Supervisors about the two federal court judgments, it reluctantly (3-2) certified the EIR. See slip op. at 14-20.

Next stop, a California trial court. Other Tiburon property owners sued the County and the owner, claiming the EIR approval did not comply with CEQA's requirements, and that the federal court judgments were illegal because they contracted away the County's police and CEQA powers, and were therefore void. Slip op. at 23. The Town of Tiburon intervened to take the side of the plaintiffs. The court rejected the arguments, concluding that the County correctly certified the EIR.

That takes us to page 23 of the Court of Appeal's opinion. The next few pages are devoted to an overview of CEQA, and its ostensible purpose (information), and the limitations of EIRs. See slip op. at 26 ("Too much should not be expected of an EIR. It is not to have the exhaustive scope of a scientific textbook.").

Then the court went through what we consider the really good stuff: are the two federal court judgments void because they "contracted away" the County's police powers and statutory powers under CEQA? Did the judgments deprive County of the discretion to act in the public interest (presumably by denying the development, or by saying yet again that the proposal was incomplete)?

The court first dismissed as "hyperbole," insinuations that the County didn't actually exercise its discretion. Slip op. at 31. The court concluded that the outcome of the CEQA process was not "pre-ordained," and rejected the argument that the County only certified the EIR because it was legally compelled to do so by the judgments. "[P]ointless kabuki," as the court put it. See slip op. at 31 (the court rejected the argument as "without merit").

The court agreed that government generally cannot contract away its police powers, but concluded that here, the County's didn't do so because it in fact did exercise its discretion. The judgments required the preparation of an EIR, which was not a "pro forma exercise." Slip op. at 34. The County could not "blow off" (court's words, not ours) CEQA, nor did it. Id. The "lengthy administrative process attending the EIR" confirmed that the County's consideration was not pretextual. The court rejected the plaintiffs' and the Town's implicit assumption that once environmental issues are present, CEQA requires that environmental concerns override everything else:

Petitioners' novel framework, under which longstanding legal obligations would become unenforceable when subject to environmental review, would turn California law on its head.

Slip op. at 35. No, the court concluded, the County was acting as CEQA envisions, because -- guess what -- even if there are impacts on the environment, the reviewing agency can override when it "deems a project sufficiently important or desirable for reasons that override the normal obligation to mitigate significant environmental effects." Slip op. at 37.

The court held that the County did not agree in the judgments "to exempt a class of applicants or ... quit the particular regulatory field." Nor has it "conditioned its exercise of authority upon the agreement of other governmental entities, thus giving those entities actual control or veto power," or agreed "to refrain from legislating in the future," or "approve a project it knew was incompatible with its general plan," or agreed "to give a developer an exemption from zoning laws." Nor was this a "situation where an otherwise valid agreement has been rendered invalid by subsequently enacted regulation." Slip op. at 37-38. 

What we have here is simply a single project with a particular set of attending circumstances, one of which is concluded litigation. There is nothing intrinsically suspect about a governmental entity settling a lawsuit brought by a property developer. Quite the contrary, the law favors and encourages the settlement of legal disputes. Indeed, the practice as applied to property development disputes is common and has been approved by our Supreme Court. Moreover, although it may look a bit like putting the cart before the horse, a lead agency can commit to a project before completing a thorough environmental review.

Slip op. at 38.

And don't forget that the underlying judgments were not just plain old civil judgments, but federal court judgments resolving a federal civil rights case, all of which the County signed on to. As the court put it, "[t]he 1976 Judgment was not an abandoned derelict that suddenly loomed out of the fog." Slip op. at 39. The Town and the plaintiffs "knew it was a dagger pointed at the heart of their campaign to defeat entirely any development of the site, or failing that, to minimize the extent of any development." Id.

And shouldn't a citizen be able to rely on the government's word (especially when that word is given in open court? 

Twice, the County pledged its name and good faith in accepting that [the owner] would be allowed to build at least 43 units on lots of at least one-half acre. To judge from the County Counsel’s remarks to the Board, it may safely be assumed that the County acceded to the 1976 Judgment in recognition that its 1974 re-zoning attempt exposed it to significant monetary liability. Certainly, no one would question [the owner]’s natural inclination to take the judgment at face value, believing the County’s word was good.

Slip op. at 39.

Having resolved that issue in favor of the County and the property owner, the opinion turned to the specifics of the plaintiffs' CEQA objections, including things like project description, analysis of alternatives, mitigation of impacts (for things like traffic safety (really), traffic density (really), pedestrian safety (sounds like an environmental impact, doesn't it?), impacts on the California Red-Legged Frog, groundwater supply, something called "fire flow," the impacts of the temporary construction road). The court also rejected the kitchen sink (we kid, we kid). See slip op. 44-104. We'll leave those to you to digest, you CEQA mavens.

The opinion ended with four pages that really are worth your time. Therein, the court made some choice comments:

• The extreme amount of time the case has taken thus far ("This dispute is almost as old as CEQA itself.")
• The sheer size of the reporting ("When finally certified in 2017, the EIR has been more than 20 years in the making, ballooning to almost three times the recommended maximum size of 300 pages. And now it is 2022, five more years later.").
• CEQA "can be manipulated to be a "formidable tool of obstruction, particularly against proposed projects that will increase housing density."
• Agreeing with the observation that "[n]ew housing projects were the most frequent target of CEQA lawsuits,” and “the percentage of CEQA lawsuits against new housing units" has even been increasing in recent years." We're not dealing with NIMBYs, More like BANANAs.
• That the record here, despite it sheer size and the length of time it took to develop it, is "woeful."

The opinion wrapped with this:

It must be tough enough when the opposition is purely private.  However, when private opposition is joined with official hostility, CEQA becomes an even more fearsome weapon. When the project proponent faces sustained private opposition, plus the combined animus of two levels of local government, the temptation to throw in the towel must be overwhelming.

Something is very wrong with this picture.

Slip op. at 108.

And even though a court has now, finally, set the record straight, this ain't over. Gas may now be nearly $7 a gallon, and the Cleveland baseball club is the "Guardians" (but ABBA is still here). Are there other ways that the Town and opponents can deny, delay, and obstruct? We're not saying no.

Four decades, and counting....

Tiburon Open Space Committee v. County of Marin, No. A159860 (Cal. Ct. App. May 12, 2022)

Hawaii Land Use Law Conference, May 25-26, 2022, Honolulu - Join Us!

It's back! After a hiatus on the in-person program, the bi-annual Hawaii Land Use Conference is back in-person (see here for a sample of one of our prior presentations at this conference).

May 25 and 26, 2022, downtown Honolulu.

The full agenda and speaker list has not yet been published, but here's a summary of the program:

Sponsored by the Hawaii State Bar Association and the Real Property and Financial Services Section. Coordinated by David Callies and Benjamin Kudo, his 2-day conference is a must attend for any attorney or professional whose practice involves land use and development. Distinguished land-use practitioners, scholars, planners, and regulators from Hawaii and the Mainland will discuss timely and relevant issues, including:

• Takings 

• Transit Oriented Development (TOD) 

• Seawalls and Shoreline Access 

• Climate Change 

• Affordable/Workforce Housing 

• Ethical Considerations for Real Property Practitioners and Other Professionals

We'll be speaking during the session on Takings, along with our colleagues Greg Kugle, Brad Saito, and Ellen Ashford.

Register here (limited to 70 registrants, no walk-ins, so be sure to get your spot now). Travel to and from Hawaii is back open and no more Co-19 hassles at the airport, so take advantage of the opportunity for a little R&R and CLE. 

As Jack Lord would say, "be there, aloha!"

New Article (Bethany Berger): "Property and the Right to Enter"

A new article by lawprof Bethany Berger, "Property and the Right to Enter," criticizing the Supreme Court's ruling in Cedar Point Nursery. The article builds on the amicus brief in the case, also authored by Prof Berger.

Here's the Abstract:

On June 23, 2021, the Supreme Court decided Cedar Point Nursery v. Hassid, holding that laws that authorize entry to land are takings without regard to duration, impact, or the public interest. The decision runs roughshod over precedent, but it does something more. It undermines the important place of rights to enter in preserving the virtues of property itself. This Article examines rights to enter as a matter of theory, history, and constitutional law, arguing that the law has always recognized their essential role. Throughout history, moreover, expansions of legal exclusion have often reflected unjust domination antithetical to property norms. The legal advocacy that led to Cedar Point continues this trend, both undermining protections for vulnerable immigrant workers in this case, and succeeding in a decades long effort to use exclusion as a constitutional shield against regulation.

Definitely worth reading.