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Michigan, Over Dissent, Declines To Hear Co-19 Shutdown Takings Case

In this Order, the Michigan Supreme Court declined to consider a case which challenges the Michigan governor's Co-19 shutdown executive orders, which, in the words of the dissenting Justices, reached "nearly every aspect of life in our state."

There have been a lot of cases asserting that Co-19 shutdowns are takings, with most (but not all) of them crashing and burning, including this one. Here, the plaintiffs -- a class of owners whose businesses suffered devastating losses as a result of the shutdown orders -- sought just compensation for the regulatory taking. They alleged both types of takings, categorical and ad hoc (Penn Central). They also asserted claims under the Michigan Constitution (a trend we approve!).

We recommend you take a dive into the Statement of the two Justices who dissented. They would have taken up the case because "the majority leaves unresolved novel and important questions regarding federal and state takings jurisprudence." What are those novel and important questions? Glad you asked:

Can the temporary impairment of business operations be a categorical taking if there are no reasonable alternative uses of the business property during the period in which its intended and normal use is prohibited? And, if not, can the prohibition of the normal business operations nonetheless constitute a taking under the multifactor test established by the United States Supreme Court and employed by our courts? Because neither that Court nor this one has given significant guidance on the actual application of the test, and because this case is an appropriate case in which to provide clarity in this area of the law, I would take the opportunity to do so. Plaintiff, on behalf of a putative class, has raised plausible claims that the government took its property without just compensation, and genuine issues of material fact exist regarding its claims. Further factual development would aid in the proper resolution of these questions that should eventually be answered, such that summary disposition prior to the close of discovery was inappropriate. I would reverse the Court of Appeals and remand to the trial court to allow discovery to continue in this case.

Dissent at 1-2.

The Justices undertake what we view as very valid criticisms of the way the Michigan Court of Appeals analyzed the the claims. On that, some humblebragging (and what else is the internet good for but a good humblebrag?): the Justices apparently appreciated the article we published on "emergency takings," Evaluating Emergency Takings: Flattening the Economic Curve, 29 Wm & Mary Bill of Rights J. 1145 (2021)), which contains our own criticisms of the way that many courts approach these type of claims generally, and specifically how they apply the ad hoc Penn Central test. 

More on the story here:

• Michigan Supreme Court won’t hear appeals on COVID-19-related compensation lawsuits
• Mich. Supreme Court sides with state in COVID-19 shutdown cases
• Mich. Supreme Court Shuts Down COVID Closure Suits

Stay tuned.

Order, The Gym 24/7 Fitness, LLC v. Michigan, No. 164557 (Mich. Aug. 30, 2024)

Relying On Complaint's Allegation That City Issued A Permit As Confirmed By Chief Building Officer Email, Texas App Holds Takings Claim Ripe Even Though City Said Council Must Issue Permits

Check out City of Kemah v. Crow, No. 01-23-00417-CV (July 25, 2024), from the Texas Court of Appeal (First District).

This is yet another takings ripeness case -- here, the so-called "final decision" requirement -- the second recent opinion on this issue from the Texas court. See "Final Decision Takings Ripeness Is Based On All Circumstances, Not Hard-And-Fast Requirements (Read That Again: A Factual Question)" for our write-up of the other case.

In this one, the owner asserted that the city issued her a building permit for her "barndominium" and and two other structures to be used as short-term rentals, but later issued a stop work order. This resulted in a Penn Central taking, she asserted.   

The city sought ripeness dismissal, asserting the owner didn't actually have a permit issued by the city council as its ordinances require. The owner didn't have the actual permit, but her complaint alleged that she did have emails from the City's Planning officer and City Manager saying she had a permit, and her complaint also included allegations that these and other city officials repeatedly confirmed that she had the permit. See pages 2-9 of the slip opinion for the details as recited by the court.

The city argued that emails and other communications with city officials don't count, and only the city council can issue permits. Yes, she applied for a permit, but the city council has never approved one.

The City argued that Crow never obtained a final decision from the City on her permit application. Specifically, it asserted that although Crow claimed to have received an email from Shoaf advising her of the City’s approval of her permit application, she failed to allege facts showing the actual issuance of such a permit or the City’s denial of her application. It further argued that Crow did not allege that she obtained a variance, or that her alleged variance request was denied, and she failed to allege facts showing that re-application for a building permit would be futile. Thus, it argued, Crow failed to present a ripe claim over which the trial court could assert subject matter jurisdiction.

Slip op. at 9-10.

No official final decision from the council = takings claim not ripe.

The court limited itself to the allegations in the complaint: we take those allegations and the attachments to the complaint (including, inter alia, the emails from the planning and city officials saying 'you have a permit') as true, and if proven, this would be enough to show that the city made enough of a final decision to consider the takings claim on the merits, even though the city now claims it didn't make a formal, official permit grant. The city made enough of a final decision to show the case was ripe:

In support of her allegation that the City issued her a building permit, Crow attached copies of the emails and texts above as exhibits to her amended petition. Crow also attached a transcript of the minutes from the February 16, 2022 City Council meeting. At the meeting, Mayor Joiner stated, “[Item] 24. Discussion, consideration, and possible action on a request to lift the stop work order on 1306 Fay Road, Kemah, Texas 77565, Owner Veronica Crow, request for the city to provide a hard copy of the permit for 1306 Fay Road, Kemah, Texas 77565, issued under No. 210603007 . . . .” Also attached to Crow’s amended petition is a December 10, 2021 email from Shoaf to the Mayor and City Council providing an update on 1306 Fay Road. In the email, Shoaf stated, “It has also been brought to the attention of Walter [Gant] and myself that a member of Council has reached out to the permit holder.” (emphasis added)

Crow alleged that she was issued a permit to build on 1306 Fay Road in July 2021, constituting the final determination of her permit application, the City then denied Crow her right to proceed with construction under that permit, and later denied that the permit ever existed. Crow alleged that she sustained the loss of investment-backed expectations as a result of the City’s improper, intentional, and wrongful conduct, which amounts to a taking under the Texas Constitution. Taking her factual allegations as true, as we must, we conclude that Crow’s claim is ripe.

Slip op. at 17-18.

Here's a practical lesson that we take from this case and others: we know that in most jurisdictions, a complaint only need meet the fairly low bar of "notice pleading" tempered (in federal courts) by Twiqbal "plausibility." And that ripeness is generally a defense and not an essential element of a claim. But when pleading regulatory takings, property owners are seemingly held to a higher standard.

That being so, if you have the facts and the documents to anticipatorily plead the case is ripe, you should do what Crow's lawyers did her: plead with specificity like this was a fraud claim, and attach the documents to the complaint. Yes, it might not be required, but there's little harm in it, and doing so might avoid all kinds of mischief wrought by defendants and courts looking to get rid of your claim. 

PS - can we move all of our clients' properties to Texas, please? 

City of Kemah v. Crow, No. 01-23-00417-CV (Tex. App. July 25, 2024)

Final Decision Takings Ripeness Is Based On All Circumstances, Not Hard-And-Fast Requirements (Read That Again: A Factual Question)

We suggest those of you interested in takings ripeness -- here, the so-called "final decision" requirement -- take a quick gander at the Texas Court of Appeals' opinion in City of Buda v. N.M. Edificios, LLC, No. 07-23-00427-CV (July 2, 2024).

We won't go into the details, except to say that a property owner developing its land entered into an agreement with the city, under which the owner would grant a drainage easement to the city to alleviate citywide flooding, while the city was obligated to construct drainage improvements. When the owner submitted a plan, the city instructed it to "provide additional drainage improvements on the property." Slip op. at 2. Not so fast, said the owner: the city, not me, is on the hook for these additional improvements. If you condition approval of my development plans on me providing more drainage stuff, that's a taking (what the court calls "an investment-backed or regulatory taking," which we assume means Texas's versions of Penn Central or Nollan).

The city asserted these claims were not ripe because the owner had not submitted an application, and the city consequently had not denied said application. No application, no decision. "Buda argues that a final decision typically requires both a rejected development plan and the denial of a variance from the controlling regulations." Slip op. at 4. The owner countered by pointing out the fact that at the city's lawyer's "direction," the city stopped the application process.

While it is true that in many cases, an application, denial, and variance are what ripen a claim, That's true, the court concluded, but the application rule is merely the "usual" rule, and not a requirement in every case:

"'[U]sually' does not imply a hard and fast rule but, rather, a determination dependent on relevant circumstances. Indeed, futility may be one of those circumstances, that is, requiring a complaint to engage in futile ventures. Thus, a 'final decision' may take different forms. And, we cannot see why exclusion from the castle should be less definitive because it came from the captain as opposed to the king. It is not farfetched to conclude that directives from the City's legal counsel to those at the gate could be found sufficient to render futile additional attempts by Edificios to gain entry into the realm of the city council. And, to the extent we have an affiant attesting that such directives were made, there exists a question of fact pretermitting our adoption of the City's position on ripeness.

Slip op. at 5-6 (citations omitted).

The court emphasized that these are factual disputes, not legal questions to be resolved at the pleadings/jurisdiction stage: "the issue as presented by Buda sounds more like an attack on the merits of Edificio's cause of action rather than a jurisdictional inquiry. As said previously, consideration of the underlying merits of the claim generally lies outside the scope of review when address pleas to the trial court's jurisdiction." Slip op. at 6-7.

The court concluded: "[s]uch review will happen, if it happens at all, after the trial court has been presented with a fully developed record and comes to a final substantive judgment on the matter." Slip op. at 7.

It's good to see at least one court that "gets it." In many cases where a takings plaintiff's complaint alleges that it received some kind of final decision from the government about development plans -- even where that decision is not via the government's claimed official or usual process for eliciting such decisions -- it should be a factual question, not one for the court's pleading-stage gatekeeping.

If a factual allegation is Twiqbal-plausible that the government has made a decision such that the court on the merits can measure the owner's property losses – a determination that should not be based on any judgment call on the merits of the claim at this stage, but only on whether the facts as alleged are within the realm of possibility, that should be enough to get to the next stage.

It may be, in the court's view, a weak claim. But don’t weak - but plausible - claims have the right to move past pleadings? The purpose of 12(b) screening is to get rid of cases where there’s no actual controversy ((b)(1) jurisdictional ripeness), or those where the alleged facts are fantastic and don’t add up to a claim ((b)(6) (i.e., the complaint pleads only a diminution of value and doesn’t allege anything about character or expectations). It is the function of Rule 56 summary judgment to weed out those claims that are factually weak and should not waste judicial resources with a trial. Not, as many courts conclude, Rule 12 dismissal.

As the Texas court noted, "[s]uch review will happen, if it happens at all, after the trial court has been presented with a fully developed record and comes to a final substantive judgment on the matter."

Study this one.  

City of Buda v. N.M. Edificios, LLC, No. 07-23-00427-CV (Tex. Ct. App. July 2, 2024)

New Jersey: Forcing Hospital To Provide Care At A Loss Isn't A Taking

We were all set to write up a scintillating and detailed analysis of the New Jersey Appellate Division's opinion in Englewood Hospital & Med. Center v. New Jersey, No. A-2767-21 (June 27, 2024), when we thought, ah, why not just ask you to read our New Jersey colleague Joe Grather's scintillating and detailed analysis.

Short story is right there in the title of this post. As Joe puts it:

In short, the hospitals argued that requiring them to provide charity care and Medicaid care at a loss was an unconstitutional taking of private property without just compensation.  The trial court analyzed the claims as an “as-applied” challenge.  Therefore, it dismissed some of the claims because of a failure to exhaust administrative remedies.  The “slightly different reason” was that the Appellate Court found the claims were a facial challenge to the constitutionality of the statute, and therefore it analyzed the takings claims under the familiar rubric of whether there was a “direct government appropriation or physical invasion of private property,” or an “uncompensated regulatory interference with a property owner’s interest in their property.” Slip op. at 14.

No physical taking, no Penn Central taking. We recommend you read his entire post "As We Approach Our Nation's Birthday, a New Jersey Appellate Court Rejects Hospitals' Takings Claims."

Joe ends it this way: "I bet the hospitals are preparing their petition for certification to the New Jersey Supreme Court now.  Happy 4th of July!"

That means to stay tuned for more.

Englewood Hospital & Med. Center v. New Jersey, No. A-2767-21 (N.J. App. Div. June 27, 2024)

New Article: "Original Understanding of 'Background Principles' in Cedar Point Nursery v. Hassid"

Worth reading: a student-authored piece in the latest issue of the Harvard Journal of Law & Public Policy, "Original Understanding of 'Background Principles' in Cedar Point Nursery v. Hassid."

From the Introduction:

But in Cedar Point, when considering a regulation that authorized union organizers to enter certain businesses, the Court held that even a temporary physical occupation was a per se taking requiring compensation.

The Court’s shift to a per se rule is significant because it means a landowner can receive “just compensation” without satisfying Penn Central’s high bar required for regulatory takings. For governments, the Cedar Point holding could pose a heavy financial burden if they must compensate landowners for temporary intrusions authorized under existing regulations. Due to this imposing financial burden, some have suggested that Cedar Point threatens existing civil rights regimes, which at first blush resemble the labor rights regulation at issue in Cedar Point.

But Cedar Point also recognized three exceptions to its per se rule, one of which is particularly expansive: “longstanding background restrictions on property rights.” Writing for the majority, Chief Justice Roberts defined this exception as “background limitations [that] encompass traditional common law privileges to access private property.” The opinion listed several examples, including entering private land for public or private necessity or to enforce criminal law. For governments, these background principles could alleviate otherwise staggering financial liability due to the Cedar Point rule.

...

This Note argues that these principles are part of the original meaning of the Fifth Amendment, and then offers an originalist framework for deriving them. The Framers viewed provisions like the Takings Clause as “declaring” existing law that the American people already recognized as enforceable. When viewing the Takings Clause this way—as declarative of “general law”—it becomes apparent that the methodology of Cedar Point reflects the original understanding of the Fifth Amendment. In addition to confirming Cedar Point’s originalist pedigree, general law also informs the framework for how originalists can divine these background principles.

Check it out.

New Cert Petition: Gov't Asks Whether A Penn Central Taking Is Really A Lucas Taking

Check this out, a local government has filed a cert petition seeking reversal of one of those relatively rare circumstances where the property owner won below on a temporary regulatory takings claim for the County's denial of a development permit.

We won't go into details on this, but urge you to read the petition, especially the Questions Presented:

In First English Evangelical Lutheran Church of Glendale v. Los Angeles County, Cal., the Court held that the Fifth Amendment requires “just compensation” for temporary regulatory takings, i.e., “those regulatory takings which are ultimately invalidated by the courts.” 482 U.S. 304, 310 (1987). The appropriate compensation for a temporary regulatory taking is described as “fair value for the use of the property during this period of time.” Id. at 322. All claims for temporary regulatory takings must be analyzed using the ad-hoc, fact-based analysis set out in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 328 (2002). The takings analysis must “focus on ‘the parcel as a whole,” including a temporal element, in determining the impact of the challenged regulation. Id., 535 U.S. at 331 (quoting Mahon, 438 U.S. at 130-131.

Judgment was entered in this case finding that the denial of a permit for a specific project – a three-story beachfront duplex – during administrative appeal proceedings was a temporary regulatory taking, even though other economically beneficial uses remained available, and there was no evidence of any effect that this denial may have had on the fair market value of the land. Compensation was awarded for the total value of claimed lost profits, plus additional estimated costs, as if the denial of the permit had completely stripped the property of all value during the litigation.

The questions presented are:

1) Does the temporary prohibition of a specific project or use constitute a compensable regulatory taking, regardless of the availability of other economically beneficial uses of the property?

2) Alternatively, whether it is “just” pursuant to the Fifth Amendment to award compensation for a temporary regulatory taking based solely on the lost profits and other costs of the prohibited project or use, without regard for any remaining value.

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

Petition for a Writ of Certiorari, Baldwin Cnty. v. Bordelon, No. 23-1337 (U.S. June 25, 2024)

Unhappy 45th Birthday, Penn Central

If you know, you know.

Sad birthday wishes to our most un-favorite decision ever, Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), which turns 45 today.

Time has not treated the opinion well. Practitioners, judges, and legal scholars across the spectrum have called the three-factor Penn Central test for an ad hoc regulatory taking "demanding," "fuzzy," a four-part test, "neither defensible as a matter of theory nor mandated as a matter of precedent," and "problematic" and "mysterious." Courts mess up the basic meaning of the factors, treat what is supposed to be a fact-centric "ad hoc" test as a legal question decided on the pleadings, and gatekeep most of these cases from juries.

The definitive deconstruction of the case was Professor Gideon Kanner's "Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York," 13 Wm. & Mary Bill Rts. J. 679 (2005). A must-read for anyone who plays in the Penn Central sandbox. 

If you want to be a part of rethinking Penn Central, listen to this episode of Clint Schumacher's Eminent Domain Podcast with our colleague Jon Houghton ("Jon Houghton and His Penn Central Quest"), or early-bird register for the 2025 ALI-CLE Eminent Domain and Land Valuation Litigation Conference in San Diego (Jan. 30-Feb 1, 2025), where we will be putting on a presentation about alternative regulatory takings tests. Penn Central is not written in amber.

But until something better comes along, let's wish Penn Central an Un-Happy Birthday.

Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978)

We Heard You, Justice Thomas: NY Property Owners File New Takings Cert Petition Challenging Rent Control

As we noted here ("SCOTUS Denies Review To Remaining Rent Control Takings Petitions: "Important and pressing question" (Just Not In This Case)"), a small silver lining in the Court declining review was the statement of Justice Thomas accompanying the denial, where he noted the issue is an "important question," and set out a rough roadmap to future challenges.

Here's a cert petition which asserts this is the case to take up the issue. Here's the Question Presented:

New York’s Housing Stability and Tenant Protection Act of 2019 transforms a temporary rent- regulation system into a permanent expropriation of vast swaths of private real estate, without just compensation, in the name of “affordable housing.” Among other things, the Act prohibits owners—even of small and midsized apartment buildings like Petitioners—from reclaiming rental units for their own personal use, and grants tenants a collective veto right over condo/co-op conversions. As Justice Thomas has observed, the constitutionality of regimes like New York’s is “an important and pressing question” that has divided the courts of appeals and should be addressed in “an appropriate future case.” 74 Pinehurst LLC v. New York, 2024 WL 674658, at *1 (U.S. Feb. 20, 2024) (statement respecting denials of certiorari). Although case-specific vehicle concerns may have dissuaded the Court from granting other recent petitions that sought to challenge the constitutionality of rent-control regimes in general, this case is based on a substantially different record, targeting only a specific set of amendments to New York’s regulatory regime, and thus provides an ideal vehicle for this Court’s review.

The questions presented are:

1. Whether New York’s rent-regulation laws, and in particular its new restrictions on owner reclamation and condo/co-op conversions, effect physical takings.

2. Whether this Court should overrule Penn Central or at least clarify the standards for determining when a regulatory taking occurs.

Here's the unpublished Second Circuit decision.

Follow along this case here or on the Court's docket here.

Petition for Writ of Certiorari, G-Max Mgmt, Inc. v. State of New York, No. 23-1148 (U.S. Apr. 18, 2024)

Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It

Guess where we stopped for coffee this morning?
(A reminder: this case has nothing to do
with the convenience store.)

Note: this is the first of two posts on the recent Supreme Court opinions in Sheetz v. County of El Dorado, the case in which the unanimous Court held that exactions imposed by legislation are not exempt from the essential nexus (Nollan) and rough proportionality (Dolan) standards. Here's the second post, which covers the concurring opinions.

[Disclosure: this case is one of ours.]

In this post, we cover the background, and the Court's unanimous opinion.

* * * *

Does the government have the unfettered ability to demand "the goodies" (as one municipality's chief land use planner famously called them in the 1980s), simply because a property owner needs the government's approval to make use if his or her land?

That's the issue the Supreme Court agreed to resolve (or more accurately, clarify) in in Sheetz v. County of El Dorado, No. 22-1074 (Apr. 12, 2024).

Confessing Judgment: Game over man, game over!

After oral arguments a bit over three months ago, the Court's unanimous opinion by Justice Barrett issued last week wasn't too hard to predict. Especially because during the arguments the advocate for the County expressly acknowledged that there was "radical agreement" on the Question Presented in the case:

The question presented is whether a permit exaction is exempt from unconstitutional-conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.

The unanimity of the resulting decision reflects that with the County's acknowledgement on the record, it was all over but the shouting: the Court, as predicted, held that a blanket exaction (in this case a traffic impact fee) isn't exempt from the "essential nexus" and "rough proportionality" standards that have long governed exactions imposed ad hoc. See slip op. at 1 ("The Takings Clause does not distinguish between legislative and administrative permit conditions.").

Which leads to an obvious question: if the County was going to confess judgment by agreeing that legislative exactions are not categorically exempt -- a conclusion it contested in the lower courts -- why did it let the case get to decision stage at the Supreme Court? We're not at all sure. [Disclosure: this case is one of ours.]

Anyway, with that question asked (but not answered), let's see what the entire Court thought about this, and why.

Laying the Foundation: Nollan, Dolan, (and Koontz)

In 1987, the Court held that before the government can force a property owner into the choice between giving up something in return for government land use approvals, there must be an "essential nexus" between the demand and the owner's proposed use of land. Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987). And in 1994, the Court refined the requirement by recognizing the need for a "rough proportionality" between the burdens the owner's proposed use is predicted to put on the public, and the magnitude of the government's demand. Dolan v. City of Tigard, 512 U.S. 374 (1994). In Koontz v. St Johns River Water Management Dist., 570 U.S. 595 (2013), the Court further refined the doctrine by holding that demands for money are subject to the nexus and proportionality requirements as much as demands for land.

The close nexus and rough proportionality requirements were designed to check the government's temptation to use the land use approval process as an opportunity to leverage its power to regulate in furtherance of the public health, safety, welfare, or morals to exact land, money, or other property out of the applicant.

These requirements were motivated primarily by two concerns. First, if the government wants land or other property from an owner, it has the means to do so -- eminent domain, which comes with the requirement to provide the property owner just compensation; it should not use the land use regulatory process to get by regulation for free what it is required to pay for by a compensated taking. Second, there is something unseemly about the government demanding that an owner give up one of her constitutional rights (the right to compensation for a taking of property) as a condition of exercising another constitutional right (the right to make reasonable use of land). The government has no business forcing people into these kind of "money or your rights" choices.

But many lower courts refused to understand how broadly the close nexus and rough proportionality requirements applied, and for the longest time, they were split. Some held that Nollan and Dolan's requirements applied any time the government conditioned land use permits on either a surrender of land or money. Others, like California, held that unless the government was demanding the donation of land, and did so on a case-by-case basis as an exercise of discretion and not as a product of a legislative-imposed ministerial requirement, that nexus and proportionality were not required.

With a longstanding lower court split, the stage was set for Supreme Court review.

California Courts: We Don't Ask Whether The County's $23k Traffic Impact Fee Is Related, or Proportional, to Sheetz's Proposed Home

The facts of the Sheetz case are straightforward. George and Mrs. Sheetz, property owners in unincorporated rural El Dorado County, California, sought a building permit to "build a modest prefabricated house on the parcel, with plans to raise their grandson there" on their residental-zoned land. Slip op. at 3. The County was okay with issuing the permit, but only if Sheetz first paid the County's $23,420 traffic impact fee.

The impact fee was determined by the preset fee schedule in the County's General Plan, and not on a determination that the Sheetz home would increase the County's traffic burdens. California law treats the County's General Plan as legislation. In recent years, the area has seen dramatic growth, with related demands on infrastructure, the County uses the traffic fees to fund improvements to county roads. The rates for the traffic impact fees are fixed, and set by the schedule:

The fee amount is determined by a rate schedule, which takes into account the type of development (commercial, residential, and so on) and its location within the County. The amount is not based on "the cost specifically attributable to the particular project on which the fee is imposed."

Slip op. at 2 (citation omitted).

The General Plan prohibited the County from issuing building permits without collecting the fee, so "Sheetz paid the fee under protest and obtained the permit." Slip op. at 3. He filed suit in state court for a refund, arguing inter alia, that the County's conditioning the issuance of a building permit was an unlawful exaction of money, because the County had not demonstrated either a close nexus between the requested building permit for a "modest prefabricated house" and any additional traffic burdens this use of the property created in the County, or a rough proportionality between the scheduled amount of $23k and those same supposed traffic burdens.

The trial court prohibited Sheetz from asserting the claim. Under California law, the Nollan/Dolan requirements apply only "to permit conditions imposed 'on an individual and discretionary basis[,]'" and do not allow for any kind of judicial inquiry into nexus or proportionality when the condition is imposed on every applicant by broadly-applicable legislation. Slip op. at 3 (citation omitted).

The rule in California (and some other other jurisdictions) is that broadly-applicable rules like this, imposed ministerially on everyone and not individually, are just plain-old land use legislation, to be examined by courts (like zoning regulations) only under the rational basis test. And you know what that means: nearly everything passes muster.

As noted above, other courts went a different way. North Carolina, for example. See slip op. at 4 & n.3, where the opinion lays out a part of the lower court split of authority.

A Regulatory Takings Primer: the Right to Just Compensation and the Police Power "seem more like in-laws than soulmates"

The next portion of the opinion is a worthy read if you want to get an overall flavor of what all nine Justices of the Court think about regulatory takings today. Yes, the theory has been recognized as a federal constitutional doctrine for more than a century, but any insights we get into how the current Justices view the doctrine are going to be helpful. And there are a lot of clues embedded in Justice Barrett's opinion:

• Public Use. The opinion starts off with the idea that "[w]hen the government want to take private property to build roads, courthouses, or other public projects, it must compensate the owner at fair market value." Slip op. at 4. Focus on the examples the opinion lays out. All are "classic" public uses, and the opinion conspicuously avoids citing Kelo, its most recent eminent domain decision, where the project involved taking Kelo's property and turning it over to another private owner. So maybe that omission is a hint that Court would be open to revisiting Kelo's very reviled opinion.
• Takings law spreads the cost. The opinion next lays out the Armstrong rationale: the point of the Takings Clause and the requirement that government "pay for what it takes," is to avoid focusing the cost of public burdens on individual property owners. Id. Good to know that all nine Justices understand the big vibe of both eminent domain and de facto takings.
• De facto takings by over-regulation. Next, the opinion highlights the essential tension behind the regulatory takings doctrine and straight up eminent domain (what the Chief Justice calls an "upfront taking;" see PennEast Pipeline Co. v. New Jersey, 594 U.S. ___ (2021)). The essential question is when does an exercise of regulatory power "go too far" such that it has the same effects on the property owner's rights as an exercise of eminent domain?
• Per se regulatory takings. The Sheetz opinion noted the government's "substantial authority to regulate land use" on one hand, and on the other the various rules the Court has established for when that authority goes too far and triggers the obligation to pay compensation. Slip op. at 4-5. Things like when a regulation physically appropriates property, or "otherwise interfere[s]" with the owner's right to exclude others = easy analysis, compensation always required. 
• Euclid and land-use regulations. But "different rules apply" when government "merely restrict[s] how land is used." Slip op. at 5.
• Substantially advance? You takings mavens can be forgiven for a bit of an inside baseball chuckle for how the opinion lays out those different rules. The Court described the regulatory takings test thusly: "'[T]he Fifth Amendment is violated when land-use regulation does not substantially advance legitimate state interests or denies an owner economically viable use of his land[.]"” Id. (quoting Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1016 (1992)  (internal quotation marks omitted).
• Whoa!  Has Agins been resurrected? (Recall that in Lingle, the unanimous Court rejected Agins's "substantially advance" standard as a regulatory takings test.) No, we doubt that this was intended to bring back Agins. But this also doesn't seem to be merely a (mis)citation to the takings test as set out in Lucas (1994) before the Court clarified it in Lingle (2005).
• Character of the government action. Instead, we're viewing the Court's recitation of the regulatory takings test that "[a] use restriction that is 'reasonably necessary to the effectuation of a substantial government purpose' is not a taking unless it saps too much of the property's value or frustrates the owner's investment-backed expectations[,]" as meaning that Penn Central's "character of the government action" factor requires that regulation be reasonably necessary for the effectuation of a substantial government purpose." That isn't the rational basis test that many courts currently apply when asking about the character of the government action, is it? If so, this is a major clarification that deserves more attention.  
• Double whoa! Justice Barrett also treats Penn Central as a disjunctive test ("or frustrates the owner's investment-backed expectations"). That's a correct view of the Penn Central test we think, but many (many) lower courts have not received the message and treat it as a "one strike and you're out" (conjunctive) rule and not a series of factors to be weighed by a jury -- where a single factor could be dispositive, but also where failing to convince on a single factor is not an automatic loss. See Hodel v. Irving, 481 U.S. 704 (717) (1987) (proof of a single Penn Central factor alone could be sufficient to show a taking; in the case, "the character of the Government regulation ... is extraordinary"). 
• Very cheeky. The money quote in this part of the opinion might just be Justice Barrett's assertion that the relationship between the police power to regulate the use of property, and private property owners' right to just compensation is "more like in-laws than soulmates." Slip op. at 4. Probably not BFFs, but more like frenemies, Your Honor? We recommend lawprof Josh Blackman's take on this turn of the phrase ("Justice Barrett on the Takings Clause and the Police Power").

On To Exactions...Err "Permit Conditions"

The special application of the takings rules to permit conditions is "more complicated."

The opinion starts off with the premise that if the government can deny a building permit for some "'legitimate police-power purpose,' then it can also place conditions on [a grant of] the permit that serve the same ends." Slip op. at 5 (citation omitted).

[Sidebar: no one has adequately explained to us how the County could condition a building permit -- the classic example of a "must issue" ministerial permit -- on anything but the application's failure to comply with the Building Code. An application for a building permit does not involve any exercise of the government's discretion, at least in our experience.]

Here, if Sheetz's home would "substantially increase traffic congestion," then the County could legitimately condition its approval of the building permit on Sheetz's willingness to pony up land or money for road improvements. This, according to the Court is "the hallmark of responsible land-use policy." Id. (citation omitted). When this situation exists, then the government is within its authority if it tells the owner that it must accept the condition or else no government approvals will be forthcoming.

But (and this is a significant "but"), "[t]he bargain takes on a different character when the government withholds or conditions a building permit for reasons unrelated to its [legitimate] land-use interests." Slip op. at 5-6. (Remember, the County's police power interests here are limited in the Court's view to traffic mitigation.) In such a case, the condition isn't being employed to further the health, safety, or welfare of the public (traffic mitigation), but takes on the character of "an out-and-out plan of extortion[,]" an "abuse of the permitting process." Slip op. at 6 (citation omitted). Show us the money!

After reciting the Nollan "essential nexus" and Dolan's "rough proportionality" requirements, the opinion next noted that the "nexus requirement ensures that the government is acting to further its stated purpose, not leveraging its permitting monopoly to exact private property without paying for it." Id. The rough proportionality requirement serves the same function, but from a slightly different angle: "[a] permit condition that requires a landowner to give up more than is necessary to mitigate harms resulting from new development has the same potential for abuse as a condition that is unrelated to that purpose." Id.

Wait, since when can legislation be subject to more exacting judicial review than the oft-applied rational basis test? After all, California law considers the County's General Plan to be legislation, adopted by a legislative body. Why isn't this treated like other legislation? The opinion stated it succinctly:

Nothing in constitutional text, history, or precedent supports exempting legislatures from ordinary takings rules.

Slip op. at 7.

We're going to emphasize the "takings rules" part of that sentence because it highlights what we've always thought was the problem with the analysis applied by those lower courts which focused on the form or source of the condition (legislative/legislature) rather than the effect the condition had. Perhaps applying the tiers-of-scrutiny method is what is called for when the challenge asks whether a regulation arbitrarily and capriciously interferes with a constitutional right. But the entire Court, it seems, views takings as a independent limitation on the power of government, subject to different rules. 

The opinion next laid out seriatim the "text, history, [and] precedent" to support its conclusion that conditions-from-legislation are to be treated on "equal footing" with every other condition, regardless of source.

• Text. After chiding the framers for the syntax of the Takings Clause ("[t]he Clause ... speaks in the passive voice"), the opinion noted that it "does not single out legislative acts for special treatment. Nor does the Fourteenth Amendment, which incorporates the Takings Clause against the States." Id. On one hand, this seems very noncontroversial. Of course legislation and legislatures are subject to the limitations the Fifth and Fourteenth Amendment place on them. Yet we've had several decades of some lower courts concluding otherwise, mainly because (in our view) they can't get past the form (legislation) to the substance (your money or your rights). 
• History. Legislation was how governments exercised their eminent domain power (today and historically), so "[s]pecial deference for legislative takings would have made little sense historically[.]" Slip op. at 7. This analysis tells us that once regulation is deemed a taking requiring compensation, the entire Court views the regulation as having taken on a different character. Instead of merely regulating property's uses, these regulations require compensation as if the legislature had exercised its eminent domain power, and not its police power.
• Precedent. The opinion noted that "[w]e have applied the per se [physical takings] rule requiring just compensation to both legislation and administrative action." Slip op. at 9. And to regulatory takings. Indeed, in the "big one" (Pennsylvania Coal Co. v. Mahon), the Court held that a Pennsylvania statute went "too far" was was a taking.

The Court also put the Nollan/Dolan test into a larger context, the "unconstitutional conditions" doctrine that covers other areas like free speech, the right to travel freely, and other constitutional rights, noting that in these areas, legislative conditions are regularly challenged. See slip op. at 10.

In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators.The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.

Id.

The majority opinion summed up by noting the "radical agreement" and the County's oral argument acknowledgement that it agreed with Mr. Sheetz (at least on the Question Presented):

The County no longer contends otherwise. In fact, at oral argument, the parties expressed “radical agreement” that conditions on building permits are not exempt from scrutiny under Nollan and Dolan just because a legislature imposed them. Tr. of Oral Arg. 4, 73–74. The County was wise to distance itself from the rule applied by the California Court of Appeal, because, as we have explained, a legislative exception to the ordinary takings rules finds no support in constitutional text, history, or precedent.

Slip op. at 10.

The Court took no position on whether the County's traffic impact fee has an essential nexus to the Sheetz development, or whether $23 grand is roughly proportional to any traffic his proposal might be responsible for. For this and more, the Court remanded the case. Notably, the Court did not decide whether "a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development." Slip op. at 9-10.

In our next post, we'll cover the three concurring opinions, to thoughts about what Sheetz might mean, and what's on the horizon.

Sheetz v. County of El Dorado, No. 22-2074 (U.S. Apr. 12, 2024)

Commit To Submit: Call For Papers "Imagining the Future of Regulatory Takings"

Have thoughts about where regulatory takings are (or should be) headed? Here's your chance to get in on the conversation, and to shape the future of the law.

Our outfit, the Pacific Legal Foundation, in cooperation with the Antonin Scalia Law School's Journal of Law, Economics, and Policy, are calling for papers on "Imagining the Future of Regulatory Takings." There will be an in-person discussion of these papers at the Law School in October 2024.

Here's the full description:

A century ago, Oliver Wendell Holmes, speaking for the Supreme Court, assured us that “[t]he general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” In the ensuing one hundred years, courts have struggled to draw the line defining “too far.” Some still wonder whether such a line should even exist. As Justice Clarence Thomas recently said, “If there is no such thing as a regulatory taking, we should say so. And if there is, we should make clear when one occurs.”

To date, many jurists and scholars have argued that the “too far” line is anything but clear. The regulatory takings doctrine is a hodgepodge of balancing and categorical tests alongside a scattered throng of exceptions, with little guidance on which tests or exceptions apply when, much less how to apply them in a principled and consistent manner. There are the categorical tests of Lucas (“total” takings) and Loretto (“physical” takings) and the amorphous balancing tests like the Penn Central ad hoc regime and the threshold “relevant parcel” test. Then there are vexing and unanswered questions about whether some restrictions on property are simply exempted from a takings analysis: When is a property restriction a “background principle” baked into the meaning of property itself as opposed to a restraint on a recognized property right? When, if ever, does a valid exercise of the police power operate outside of takings constraints? And, to top it all off, we still aren’t settled on how to define “property.” Pacific Legal Foundation seeks papers that offer fresh ideas on how to make “too far” more just, more concrete, and more principled. We welcome proposals that look at this problem from legal, economic, political, historical, and related angles, including empirical and nonempirical approaches.

For accepted works there is a $2500 honorarium and an opportunity to publish your work in the Journal. Certain travel expenses to the Law School also will be covered.

Download the full brochure for all the details, including timeline, and a list of possible topics.

Please consider submitting, and joining us in this fascinating enterprise. Find out more here.

Call for Papers: "Too Far: Imagining the Future of Regulatory Takings"

Pass A Good Time: Our Report From The 41st ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-3, 2024, New Orleans

When it comes to the longstanding ALI-CLE American Law Institute-CLE Eminent Domain and Land Valuation Litigation Conferences, we're always ready to go. You know that. But this year's version -- the 41st -- was buzzing like no other in recent memory.

Maybe it was the New Orleans venue with its atmo, food, and music for our after-class activities, or even the timing (the second-to-last week on the Mardi Gras parade season, and our conference hotel was right on the routes). It might have been the nice weather (oh, it rained buckets one evening, but there wasn't an ice storm like we experienced in Austin in 2023). Or maybe it was the capacity crowd, and new topics and speakers on the agenda. Or maybe it was just the prospect of seeing our friends and colleagues again after a year.

Here's a photo essay of some of the Conference highlights.

And if you missed out, the webcast was recorded and is available for viewing. Or, better yet, hold on your calendar January 30 through February 1, 2025 for the 42d Conference, to be held at the Westin Bayside San Diego.

Excitement this way...

The view from the podium.
Say "hello" to our opening plenary session in wide-angle.

Prepping the space.
The finished stage that Conference attendees
see isn't how the room starts off.
It takes a lot of work by the ALI-CLE staff
to get the place camera-ready.

The live webcasting of the sessions also takes a lot of
set-up and a ton of equipment. This is just some of it. 

Here's more. 

The badges were arranged on the table with care...

...in trust that our faculty and registrants would soon be there.

No conference would be complete without swag.
Here is but a sampling.

As always, a huge thank you to our generous sponsors.
Without your support, this Conference would not be as
good as it is, year after year.


The Conference site was right on the routes of several parades.
It was difficult to keep focusing on severance damages and larger parcel
when the music and excitement was just outside.
But we tried.


The opening plenary session -- on the U.S. Supreme Court's
big takings case -- got us off to a solid start.


Thanks to Christina Martin and Steve Silva for speaking
on Tyler v Hennepin County.

The view from the podium as Amy Boulris speaks about the most
significant eminent domain decisions of 2023.

The speakers are a mix of practicing lawyers, judges, other eminent domain
professionals, and legal academics. Here, two property scholars --
Timothy Harris and Jessica Asbridge --
discuss how state property law and state courts
can drive the constitutional issues.

Kinnon Williams, Esq. and Christina Thoreson, SR-WA, MAI, CRE 
present on "Valuation of Wasting Assets."

Lawprof Emilio Longoria and attorney Tony Francois
on "What Condemnation Lawyers Need to Understand
About the Clean Water Act After Sackett"
(hint: it goes to highest and best use).

Matthew Ackerman, Marianna Baggett, and Kenneth Haywood
on "The Pitfalls of Objectively Measured Just Compensation:
When Market Value Isn't Enough."

It was not all work and no play.
Again, a big thanks to our generous sponsors.

Our speakers take questions, of course.
We solicit them the old-fashioned way (thanks, James Masterman).

William and Mary Law School Professor
Emerita Lynda Butler (and her former student, North Carolina's
Jeremy Hopkins" discuss property rights in an age of coastal retreat.

Luis Gallardo-Rivera, Dana Berliner, and (off-camera)
Sophia Holley on "Proving and Defending Pretext,
Public Use, and Necessity."

James Masterman and Martye Kendrick on "Preparing Your Witness
to Overcome Obstacles to Highest and Best Use."

Jeff McCoy, Robert McNamara, and Kristen Renfro on
"Getting to Federal Court and Staying There:
Navigating Procedural Mazes in Federal Takings Claims."

Sean Metherell and Nathan Farris zero in on
"How to Win a Future Highest and Best Use Claim: Proving Reasonable
Probability of Rezoning and Other Issues."

Michael Berger is Watching You:
SCOTUS Property Rights Maven Michael Berger zooms in with his
annual "Regulatory Takings Update."

We always hold a spot for Jim Burling on Saturday.
Why? Because his tours-de-force always are interesting
and put people in seats, even on a Saturday morning.

More Big Michael.
Here, sharing his memories of Professor Gideon Kanner.

See you in San Diego!
January 30 - February 1, 2025
Westin San Diego Bayside

DC App: $350k Loss In Value Due To Home's Historic Designation Not A Penn Central Taking

The DC Court of Appeals' (note: not the U.S. Court of Appeals for the D.C. Circuit) opinion in Gordon v. District of Columbia, No. 20-CV-0568 (Feb. 15, 2024), presents a good cross-section of property rights issues. Not a good outcome on property rights issues, mind you.

If nothing else, be sure to check out the outrageous facts in the case. They will make your toes curl. 

The Gordon brothers own a home in the District, in the Forest Hills area. They didn't want to be owners of this home, and instead wanted to sell it. Consequently, they took some of the usual steps one takes when one wants to sell a home - they retained a real estate agent, authorized certain entries for looky-looks (but did not ok free access or open house showings), and the like.

This aroused the ire of some of the area's residents, who were "[c]oncerned that the property was being sold as a development opportunity" and did what people like this do: they nominated the home for historic landmark designation.

One of these buttinskys even went so far as to retain her own real estate agent (who is also the president of the Forest Hills Neighborhood Alliance) so she could pose as an interested buyer and obtain access to the inside of the house for an intel-gathering view. Believing that Ms. Buttinsky was a genuine potential buyer, the Gordons allowed unaccompanied access to her and her real estate agent. A second pretextual access also occurred during which an official with the District's Historic Preservation Office, the agency tasked with designating properties as historic landmarks, and several "friends and colleagues" -- accompanied the interloper for what the official termed a "site visit." Slip op. at 3.

Next thing you know, Ms. Buttinsky informed the Gordons' real estate agent that she was preparing an application to designate the property as a historical landmark. Then, "[o]n May 11, 2015, the Forest Hills Neighborhood Alliance submitted a petition, drafted partly by Ms. Berk, nominating the Gordon house to be designated a historic landmark. Around this same time, Ms. Berk was awarded a lifetime achievement award by the [Historic Preservation Review Board]." Slip op. at 6.

After even more questionable shenanigans (read pages 6-8 of the opinion for some astounding details), the Board approved designation of the Gordons' house as a historical landmark. Did the approval have an effect? You bet, an immediate one:

Before the designation, the Gordons had received an offer to purchase their home for $1.55 million dollars, but that offer was withdrawn the day after the Historic Preservation designation. The same buyers later made the Gordons another offer for $1.2 million dollars; they cited the landmark designation as the reason for their reduced offer.

Slip op. at 8.

Lawsuit followed. Claims included takings (natch), due process, and search-and-seizure violations. The trial court dismissed some of the claims for failure to state a claim, and granted the District summary judgment on the remainder of the claims. Next, the Gordons appealed to the DC Court of Appeals.

The Gordons asserted that the historic preservation official's entry into their home violated the Fourth Amendment and was a trespass. The trial court rejected the claim because it was Ms. Buttinsky who let the official on the premises, and the official asserted she believed Ms. Buttinsky had apparent authority to do so. And this wasn't an investigation into a crime. Concluding that there was no violation of "clearly established" law, the trial court dismissed. Qualified immunity strikes again.

The appeals court held that it didn't matter why the official entered the property, only that she did. Next, the court seemed to be heading toward rejecting the District's argument that it couldn't be liable unless the official violated some clearly established prohibition. In other words, some court must have already said that this kind of behavior was illegal. The court noted that no other court had done so in this precise situation, but that "this court spoke to the issue of apparent authority over property with sufficient specificity" in a 2023 case, such that the officials are now on notice that this kind of conduct is illegal. Slip op. at 18.

This principle applies with obvious clarity to the facts presented here and compels the conclusion that the nature of Ms. Warner’s access to the Gordon home was clearly limited to her role as a real estate agent, not a preservationist. It was therefore unreasonable for Ms. Williams to believe that Ms. Warner had the apparent authority to consent to her entry into the Gordon home for an HPO site visit. Ms. Williams was aware that Ms. Warner was “not the listing agent,” but instead a “sympathetic” agent “who want[ed] to save” the Gordon home, and she was aware that Ms. Berk had arranged the tour not because she was considering buying the home, but because she was “strategizing its rescue” and wanted to take photos for the historic nomination application.

Slip op. at 19.

Things seemed to be looking the Gordons' way. But then the court held that this 2023 case was decided after the official had entered the Gordon property, and thus it was not clearly established at the time she did so that it was wrong. Thus, the court concluded, she is entitled to immunity. We'll get you next time!

But what about the District's liability for its employee's illegal entry? Nope there as well. The complaint didn't allege that there was some official District policy to do this and that omission was fatal. The only claim the court allowed to go forward was the common law trespass claim against the official. The court rejected the trial court's conclusion that the official was entitled to qualified immunity, holding instead that QI "does not shield government officials from liability for common law torts, like a claim of trespass." Slip op. at 26.

Now on to the takings claim. As noted above, the complaint alleged that the designation of the Gordon home as a landmark resulted in a loss of the value of the property of $350,000, as evidenced by that lost sale and new lower offer. The trial court dismissed because the complaint did not plead anything about alternative economic uses of the property. (In other words, the complaint didn't allege that every other possible use of the property was not economically beneficial.)

But wait, the owners argued, we're arguing "that the court erred by . . . applying what they construe to be a categorical rule for assessing the occurrence of a total taking, rather than the multi-factor inquiry for partial takings[.]" Slip op. at 33. No deal, held the appeals court. To press a Penn Central claim, you must allege that there are no other alternative uses that are economically beneficial. Slip op. a 34.

Indeed, the court expressly considered both the fact that the Gordons had alleged the historic designation of their home reduced its value by $350,000, and the fact that they still had an offer to purchase the home, albeit at a reduced price—$1.2 million as opposed to $1.5. million. Lastly, we note that the Gordons have failed to explain what factor under the fact-specific Penn Central test the Superior Court should have considered but did not that would have made a difference in the court’s analysis. For all of these reasons, we affirm the court’s determination that the Gordons failed to allege facts sufficient to support a takings claim.

Slip op. at 35.

So there is is. What looks to us like outrageous government conduct mostly gets a pass.

And the Penn Central pleadings trap continues it yeoman's work keeping takings claims from being determined on the merits. 

Gordon v. District of Columbia, No. 20-CV-0568 (D.C. App. Feb. 15, 2024)

Ohio: We Really Meant It When We Remanded For Weighing Of Evidence - Appeals Court Had No Business Dismissing

A quick per curiam from the Ohio Supreme Court.

In State ex rel. AWMS Water Solutions, LLC v. Mertz, No. 2023-0125 (Ohio Jan. 24, 2024), the court issued a gentle (or maybe not-so-gentle) "benchslap" to the court of appeals. Here's the scenario.

First of all, recall that Ohio does not recognize a claim for "inverse condemnation" or "regulatory taking." Instead, if a property owner believes that the government has de facto taken property but has not provided just compensation, the owner seeks a writ of mandamus asking the court to compel the government to institute an eminent domain action (what CJ Roberts calls "an upfront taking").

AWMS thought this was the case and sought a writ to compel Mertz, an official with the state Department of Natural Resources, to take and pay. The court of appeals entered summary judgment for Mertz, but the Ohio Supreme Court held that the case should be tried. "In an earlier appeal, we reversed the court of appeals’ grant of summary judgment in favor of the state and remanded the case to the court of appeals with directions to weigh the parties’ evidence relating to AWMS’s total-takings and partial-takings claims." Slip op. at 1.

On remand, the court of appeals held a nine-day trial. [Sidebar: it is interesting that in Ohio, a three-judge panel of the court of appeals conducts trials.] So far, so good. But at the close of the evidence, "the court of appeals again ruled in favor of the state and denied the writ. This time, the court of appeals held that AWMS did not have a cognizable property interest for purposes of a takings analysis." Id. It denied the writ. Foiled again!

AWMS sought Ohio Supreme Court review, and requested oral argument.

The court said no (to the request for oral argument, that is). We don't need to hear more to conclude that the court of appeals wasn't listening to us when we said to WEIGH THE PARTIES' EVIDENCE. "[T]he court of appeals failed to follow our remand order and violated the law-of-the-case doctrine by sua sponte revisiting the issue whether AWMS possessed a cognizable property interest for Takings Clause purposes." Slip op. at 6.

The Supreme Court didn't seem that happy with the appeals court:

It is axiomatic that an inferior court lacks jurisdiction to depart from a superior court’s mandate. State ex rel. Heck v. Kessler, 72 Ohio St.3d 98, 104, 647 N.E.2d 792 (1995). In AWMS, we reversed the court of appeals’ grant of summary judgment to the state and remanded the case specifically for the purpose of conducting the proper takings analysis. In this regard, we did not leave the court of appeals’ task open-ended. Rather, we specified that the court of appeals “must weigh the parties’ evidence relating to AWMS’s total-takings claim” and “must weigh the parties’ evidence in accordance with this opinion and balance all three Penn Cent.[, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631] factors to determine whether AWMS suffered a partial taking.” (Emphasis added.) AWMS at ¶ 88-89.

{¶ 20} The court of appeals did not follow our instructions. Instead, after a trial and posttrial briefing, the court of appeals sua sponte ordered the parties to file supplemental briefs on the threshold issue of whether AWMS has a cognizable property interest that is compensable under the Takings Clause.

Slip op. at 7.

The court didn't really deal with the court of appeals' legal conclusion (AWMS has no property interest) other than to say "we already decided that." Slip op. at 11 ("it is the law of the case that AWMS possesses a cognizable property interest in the leasehold right").

Although this opinion is really more about law of the case than about takings, there's a good lesson here. The Ohio Supreme Court saw this case as one about facts (as most Penn Central takings claims inherently are). Having so concluded -- and apparently treating this takings claim like any other civil claim, and not one subject to judges imposing their own views of the law -- the court rebuked the court of appeals for not understanding that these are factbound claims, not generally resolved by law.

"Ad hoc factual inquiry" rules the day!

State ex rel. AWMS Water Solutions, LLC v. Mertz, No. 2023-0125 (Ohio Jan. 24, 2024)

New Article: Missed Opportunities in State Takings Challenges to Pandemic-Era Restrictions (Brennan Center's State Court Report)

Thank you to the Brennan Center for Justice at NYU Law School's State Court Report (#statecourtreport) for publishing our piece "Missed Opportunities in State Takings Challenges to Pandemic-Era Restrictions." The title gives a hint about what this is about: how state and local government's reaction to Co-19 spurred challenges not only under the U.S. Constitution, but under state constitutions. We give examples of -- and comment on -- missed opportunities and out-and-out errors in several approaches.

Here are the opening paragraphs:

Responding to the Covid-19 pandemic, the federal government and many state and local governments imposed a variety of restrictions on individuals and businesses. The Centers for Disease Control and Prevention, for example, purported to suspend the ability of property owners to evict nonpaying tenants — a move the U.S. Supreme Court rejected as beyond the agency’s power. State and local governments adopted similar eviction moratoria, and many directed businesses to close or curtail operations. Litigation followed.

Much of that litigation focused on the federal Fifth Amendment’s requirement that the government provide just compensation when it takes private property for public use. Property and business owners have generally been unsuccessful in pressing federal takings claims for Covid-19 restrictions. But it is established that the rights acknowledged by the U.S. Constitution are merely a floor, not a ceiling. This notion recognizes that states may freely offer a higher level of protection of rights under their own laws or more severely restrict the state’s powers (or both). And many state constitutions go further, guaranteeing compensation when property is damaged. 

We also take a quick look at a still-pending case in Michigan, with the hope that the Michigan Supreme Court does not fall into these same traps.

We'd appreciate it if you were to read the entire piece -- it's short, we promise!

Dig Property Rights? Join Our Firm As A Courtroom Property Rights Lawyer

If you dream such dreams as this photo, read on.

My law firm, Pacific Legal Foundation, is on the hunt for lawyer to join our Property Rights group (yours truly is the Director of Property Rights Litigation, so you will be working with me and the other takings and con law mavens in our practice). Here's the full description of the spot:

You: An entrepreneurial freedom fighter with a passion for property rights litigation. You work with more senior-level attorneys to find and win cutting-edge property rights cases in trial and appellate across the country. You work as a part of a collaborative team, but are also self-motivated and able to work independently with minimal supervision. You are eager to learn, relentless, and a focused lawyer.

Them: Bureaucrats, city councils, mayors, governors, and federal agencies stripping Americans of their rights every day. There’s a lot of government overreach out there, and it’s backed by seemingly endless resources. But fortunately, like all lumbering giants, abusive government is most vulnerable when countered by individuals who act strategically and nimbly, take calculated risks, have each other’s backs, and are confident in, and passionate for, the cause—the very sort of property rights swashbucklers we employ in spades here at PLF.

Us: We fight back. Pacific Legal Foundation is the nation’s first and most successful public interest law firm dedicated to vindicating individual liberty and protecting the fundamental right to property as the “guardian of every other right.” PLF has an unmatched record in the United States Supreme Court, with 17 victories in the Court. We also are actively litigating more than a hundred cases in trial and appellate courtrooms across the nation.

We are a next-generation public interest law firm. What does “next-generation” mean for a legal nonprofit? It means we aren’t interested in doing the same thing as everyone else. We aspire to be the best player in a constantly changing game.

Here’s what you get to do in this role:

You will be a courtroom lawyer in PLF’s Property Rights Practice Group. From Nollan to Koontz to Knick to Cedar Point Nursery to Tyler, PLF’s property rights litigation is unparalleled. You will help find and win the next important Supreme Court property rights case, becoming recognized as a nationwide leader on property rights litigation. Occasionally, You will have opportunities to speak at conferences or with the media about your cases or important property rights issues.

You will be a key contributor to PLF’s property rights practice group. You will work in teams with junior and senior attorneys, growing in your expertise and knowledge and elevating the team’s efforts to defend property rights. You will have the latitude to think big and the resources to execute. At PLF, you will be at the forefront of shaping property rights for all Americans.

In a nutshell, we’re seeking someone passionate about liberty and property rights, someone who is magnanimous, and someone who is a bold and relentless freedom fighter.

Getting down to brass tacks, your specific job duties likely will include:

• Winning property rights cases! Finding, developing, and litigating important property rights cases.
• Working with other attorneys to develop and litigate PLF’s property rights cases to protect the constitutional rights of Americans.

Qualifications

• 1-3 years of litigation or judicial clerkship experience
• Passion to litigate property rights cases
• A deep understanding of the moral and constitutional basis for property rights is a huge plus
• A track record of successful legal work
• Outstanding interpersonal communication skills
• A knowledge of, and passion for, the ideas of freedom and individual liberty
• The ability and willingness to travel approximately 10% to 15%

General Information

Pacific Legal Foundation identifies and litigates important legal issues to set landmark precedents that benefit Americans nationwide. Using strategic and principled litigation, communications, and research, we battle for freedom in the nation’s courts and the court of public opinion.

As a national nonprofit organization, PLF has brick-and-mortar offices in Sacramento, California; Arlington, Virginia; and Palm Beach Gardens, Florida, although approximately half of the staff work from home offices across the country. You can work physically in any of our offices or request to work virtually. This position is particularly suited for a lawyer who would like to be in one of our offices, or who is a focused and relentless self-starter eager to take advantage of our cross-country virtual office environment by proactively collaborating and communicating with colleagues, clients, and other professionals.

This is a full-time, permanent position. PLF is committed to recruiting and retaining the highest-quality talent available nationwide, and we offer a total compensation package that includes a competitive salary, medical and dental insurance, and employer-paid retirement savings. We take work-life balance seriously through our generous paid leave and flextime policies. We have a flexible, collaborative, positive, and collegial work environment. We take pride in investing in your future and encourage internal advancement. PLF is the place for someone principled, tenacious, and determined to succeed in positively shaping the future of our country and restoring real limits on government power. Join us.

To Apply

Qualified candidates should submit the following application material:

• Your resume or C.V., including your experience in the liberty movement and relevant professional experience.
• A cover letter explaining why PLF is the place for you, why you want to fight for liberty, and what distinguishes you from typical applicants; your letter should detail your courtroom experience, including any experience in trial preparation and civil discovery.
• A recent writing sample, no longer than 10 pages, that demonstrates your analytical and advocacy skills.

More here, including a link to submit your application packet.

If you fit the bill, here's your chance to join us.

No FOMO: There's Still Room For You To Join Us In New Orleans Feb 1-3, 2024 For The 41st ALI-CLE Eminent Domain & Land Valuation Litigation Conference

Don't miss out!

We promise: this is the last time we're going to try to entice you to the upcoming ALI-CLE Eminent Domain & Land Valuation Litigation Conference in New Orleans. We are getting close to capacity, but there is still room. In recent years, we have standing room only in the Conference halls, and have sold out the hotel block. After all, this is a pretty niche area of law. So what gives?

When we were in Austin last year, we thought it might be nice to try and answer that question. We asked Conference participants why they come, year-after-year (and in Austin, despite massive travel disruptions). Yes, it is the various venues (Nashville, Austin, Scottsdale, Palm Springs, to name a few recent locations), and yes, it is the excellent and useful programming.

But as we suspected it is more than that. As the above video notes, the consistent response from our participants about why the attend is the participants. The faculty and other attendees, the vendors. The collegiality, the chance to renew long-standing friendships, and especially the chance to make new friends and colleagues who share our passion for this area of law. The welcoming environment, and our desire to have lawyers and other professionals new to this area of law or new to the Bar feel at home and welcomed.

We have also made a big effort in the last few years to include a range of professionals from various perspectives, including lawyers, legal academics, jurists, appraisers and MAIs, planners, right of way and relocation experts, and jury and trial consultants. Family members also welcome (there are a lot of "adjacent" social and networking events, and families are welcome as long as they don't mind a lot of "shop talk"). Our program is a mix of practical and substantive sessions.

We also have a special track on the first day of the Conference designed as a crash course in Eminent Domain law ("Condemnation 101"), which is a good place for an overview and introduction to the practice, or as a refresher course for those with more time under your belt.

In short, we try and make the Conference not just a place to learn the latest in eminent domain and related topics, but somewhere you can return to each year, and feel welcome.

So if you have not attended before, give us a try! We'd love to see you in New Orleans in just a few months. Registration is still open. Sign up now, and don't miss out.

2023 Year-End Clean Up

As 2023 comes to a close, here are a few of the decisions that we wanted to blog about, but didn't have the time.

• Bruce v. Ogden City Corp., No. 22-4114 (10th Cir. Dec. 1, 2023): city demolishing a building that was damaged by fire was not a Lucas taking because the owner still has use of the land (even though the building is gone). And no Penn Central taking because... Penn Central.
  
• Moriarity v. Indiana, No. 22A-PL-2899 (Ind. Ct. App. Nov. 15, 2023): State ordering removal of illegal dam was not a taking under U.S. or Indiana Constitution. The owners don't have a property right to build an illegal dam. Thus, the "background principles" exception to Lucas rules the day. And no Penn Central taking because the owners never had any investment-backed expectations they could build this dam.
• Lafayette Bollinger Dev., LLC v. Town of Moraga, No. A163636 (Cal. Ct. App. July 19, 2023): No Penn Central taking because city might have allowed a smaller project.
  
• Estancias de Cerro Mar, Inc. v. Puerto Rico Aqueduct and Sewer Auth., No. 20-1644 (D.P.R. Nov. 17, 2023): the complaint plausibly alleged a categorical regulatory taking, and did not need to be pleaded under Penn Central. The complaint alleged that the plaintiff possessed a private property interest, and that the Authority's actions took that interest.
• Moskovic v. City of New Buffalo, No. 23-1165 (6th Cir. Dec. 14, 2023): city's moratorium on short-term vacation rental permits, and eventual permanent ban was not a taking or a deprivation of substantive due process because property owners have no protected interest under Michigan law in renting their properties. 
• First Floor Living LLC v. City of Cleveland, No. 22-3216 (6th Cir. Sep. 28, 2023): even though the plaintiff purchased the property to rehabilitate and redevelop it, the city declared them public nuisances and ordered their destruction. The district court correctly entered summary judgment in the city's favor on the plaintiff's due process claim because the owner received sufficient notice.
• 835 Hinesburg Road, LLC v. City of South Burlington, No. 23-218 (2d Cir. Nov. 8, 2023): takings claim not ripe when city applied restrictions that it intended to adopt and denied owner's preliminary development application [disclosure: this case is one of ours].
• In re City of New York (Coney Island Plan - Stage I), No. 517650/2016 (Kings County, N.Y. Nov. 1, 2023): compensation for city's taking of mostly-vacant land to be measured by the "three unities" test. The zoning in place at the time of the taking was part of "the project," so the pre project zoning is used to measure the value of the taking.

On to 2024!

Cases And Links From Today's ABA State & Local Govt Law Land Use Presentation

Here are the cases that Michael Berger and I discussed in today's presentation to the ABA State and Local Government Law Section's Land Use group. It was good seeing everyone, even virtually:

• Sheetz v. County of El Dorado - are legislatively-imposed exactions subject to the nexus and proportionality requirements of Nollan/Dolan? (SCOTUS)
• Devillier v. Texas - must the government consent to be sued for just compensation? (SCOTUS)
• Watson Memorial Spiritual Temple of Christ v. Korban - the payment of a final just compensation judgment is ministerial, and may be compelled by a writ of mandamus (Louisiana Court of Appeal)
• The New York Rent Control cases - two still pending (SCOTUS)
• Gearing v. City of Half Moon Bay - abstaining from adjudicating a regulatory takings case under Pullman abstention (Ninth Circuit; cert. denied)
• Ateres Bais Yaakov Academy of Rockland v. Town of Clarkstown - RLUIPA claim is ripe; court rejected the "land use is local" trope (2d Cir.)
• Catholic Healthcare Int'l, Inc. v. Genoa Township - RLUIPA claim ripe because Township had taken a "definitive position" on what uses were allowed and not allowed on plaintiff's property, even though there remained a possibility that the Township might allow the use (6th Cir.)
• Yes in My Backyard v. City of Los Angeles - the general plan is law, and controls over zoning (Cal. Super. Ct.)
• Idaho Power Co. v. Bean - some precondemnation entries are takings (Or. Cir. Ct.)
• Town of Apex v. Rubin - after a taking is invalidated for lack of public use, what if the condemning agency just takes it anyway? (N.C. S. Ct. review granted)

Check em out.

And if you are not a member of the ABA State and Local Government Law Section, you should be. Come, join us!

Hawaii Five-80: More Land Use (Law 580) At The University Of Hawaii

Starting in January, we'll be helping our friend and former law partner Mark M. Murakami with the venerated and oh-so-important Land Use course (Law 580) at the University of Hawaii's Law School.

We're 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 sleeves -- 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.

"Groping in a Fog" - Bound by Oath Podcast, S3 E2: Regulatory Takings - Penn Coal And Penn Central ... Unplugged!

We've been eagerly waiting for the new season of the Institute for Justice's podcast series, "Bound by Oath" to drop. Not only because it's a great series - produced by John Ross, it is more like an audio documentary than a typical podcast - but also because John was kind enough to ask us to participate again (our last appearance was in Season 1, where we guested on the episode about the origins of the "incorporation" doctrine).

This season is all about property rights, and episode 2 is all about regulatory takings. Pennsylvania Coal Co. v. Mahon, and Penn Central Transp. Co. v. New York City, to be exact.

So just over a year ago, John and I headed up to anthracite coal country in Pennsylvania. We wanted to be on site on the exact 100th anniversary of the Supreme Court issuing the Mahon decision. Why? It just seemed appropriate. And as true takings nerds, we couldn't resist the chance to be in the room where it happened. Kind of a "John and Robert's Excellent (Takings) Adventure."

And as you dirt lawyers know, nothing substitutes for a site visit. 

In addition to John, me, and two Pittston lawyers who now own and used to own the former Mahon property, also weighing in is Professor William Fischel, who shares the insights about the Mahon case he learned while researching his book "Regulatory Takings" (1995)

And not content to cover the case that is seen as the first modern regulatory takings decision (the case is often wrongly assumed to be where the regulatory takings doctrine got its start), this episode also gives an in-depth treatment to the other well-known takings case with "Penn" in its name: Penn Central.

For that one, John goes to the source, Professor Gideon Kanner in what might be his final interview. Professor Kanner, of course, authored the seminal law journal article about the case, so he was a natural for this part of the episode. See Kanner, Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York, 13 Wm. & Mary Bill of Rts. J. 679 (2005). Don't miss out on this part of the episode, or you will miss some of the classic "Kannerisms" the good Professor issues.

Professor Kanner is also responsible for the episode's title, from his reaction to the three factors the Court seemingly created from whole cloth in Penn Central:

John: The Court said, there would be quote “no settled formula” for determining when a taking requiring just compensation had occurred. But there are three factors to consider. It didn’t say how much weight courts are supposed to give each factor or what evidence litigants could use to satisfy them.

Gideon Kanner: So it was another one of these impossible-to-meet criteria. There were three factors. There's no rule, but three factors, such as the impact on the owner, the nature of the government activity. So we all looked at each other: What the hell does that mean? All it did was confuse the law. The Court was groping in a fog.

This is a not-to-be-missed episode.

Here's the description from IJ:

In 1922, Scranton, Pennsylvania was said to be on the verge of collapsing into the vast coal mines beneath the city; residents, buildings, and streets alike were being swallowed up by “suddenly yawning chasms.” State legislators responded by unanimously passing a law meant to save the region, where about a million people lived, from total desolation. But when the law reached the Supreme Court, the justices struck it down, ruling that it would be an unconstitutional “regulatory taking” to force coal companies to leave their coal in the ground. On this episode, we go to nearby Pittston, Pennsylvania to find out what happened to the house at the center of the case. Did it—or Scranton—fall into the pits? After that, we trace the major developments in regulatory takings doctrine, which protect against regulations that go “too far.” But we wind up in a bit of a fog. Plus! This episode will have an unsolved murder—and some Supreme Court trivia: did you know a future Supreme Court justice argued the case on behalf of Scranton (at least in state court)?

Click here for transcript.

In case you are aching for some visuals to go with your listening, here you go.

The (former) Mahon home on a snowy Pittston day.
No signs of subsidence at all.

 

The view from lawyer Mahon's office.

We paid our respects to Mr. and Mrs. Mahon.
The episode also has a murder mystery,
something you don't see everyday in takings cases.

Grand Central Terminal,
preserved in aspic (for free).


That airspace.

Check the episode out here, and be sure to subscribe so you don't miss future eps.

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (Dec. 11, 1922)

New Podcast: The Cedar Point Takings Case (From The Guy Who Argued Cedar Point)

Check this out, our law firm colleague Joshua Thompson talks about regulatory takings, and his big Supreme Court victory in Cedar Point Nursery.

If you are reading this blog, you already know what that means. Regulatory takings. Bundle of sticks. Penn Central (bleh), and right to exclude. Here's the description of the program:

In this thought-provoking episode, Bob Stetson and Joshua Thompson, Director of Equality and Opportunity Litigation at the Pacific Legal Foundation, discuss the landmark case of Cedar Point Nursery vs. Hassid and explore the intricate balance between private property rights and public interests. What constitutes a 'taking' and how far government regulations can go in the name of the public good?

Stream it above, or listen on Spotify here.

(Our own thoughts on the Cedar Point case here.)

Here's The Program For The 41st ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Feb 1-3, 2024, New Orleans

Here's the brochure and the full agenda and registration information for the upcoming ALI-CLE Eminent Domain and Land Valuation Litigation Conference at the JW Marriott in New Orleans, February 1-3, 2024.

This is the long-running nationally-focused conference on all things eminent domain, takings, valuation, and related. We have three tracks, from which you can choose a la carte - Practice, Substantive, and Condemnation 101:

For over 40 years, we’ve been bringing eminent domain practitioners together to examine the latest issues, engage in healthy debate, and get the information they need to stay current in their practice. This year – our 41st – is THE perfect time to reunite with your eminent domain colleagues. There will be plentiful opportunities to meet and mingle with the faculty and other registrants – throughout the conference and at evening social events. Attendees come back year after year to make new friendships and renew longstanding ones – in a welcoming environment and amongst others who share the same passion for this area of the law.

Please check it out. Over the next couple of weeks we shall bring you details of the various programs.

If you have joined us in the past, you know what a worthwhile conference this is. If this will be your first time, welcome; we hope that you will become a long-term colleague.

Register now, and reserve your spot. In the past few years, we've sold out the hotel block and the Conference seats. So don't miss out!

2024 ALI-CLE Eminent Domain and Land Valuation Litigation Conference Brochure, Feb. 1-3, 2024, New Orleans,...

ALI-CLE's Eminent Domain & Land Valuation Litigation Conference (Feb 1-3, 2024, New Orleans): Why Attend? Here's Why.

Why is it, you ask, that the ALI-CLE Eminent Domain & Land Valuation Litigation Conference (scheduled next February 1-3, 2024, in New Orleans) is an event that seems to be growing in popularity and attendance. In recent years, we have standing room only in the Conference halls, and have sold out the hotel block. After all, this is a pretty niche area of law. So what gives?

When we were in Austin earlier this year, we thought it might be nice to try and answer that question. We asked Conference participants why they come, year-after-year (and in Austin, despite massive travel disruptions). Yes, it is the various venues (Nashville, Austin, Scottsdale, Palm Springs, to name a few recent locations), and yes, it is the excellent and useful programming.

But as we suspected it is more than that. As the above video notes, the consistent response from our participants about why the attend is the participants. The faculty and other attendees, the vendors. The collegiality, the chance to renew long-standing friendships, and especially the chance to make new friends and colleagues who share our passion for this area of law. The welcoming environment, and our desire to have lawyers and other professionals new to this area of law or new to the Bar feel at home and welcomed.

I can personally attest to that one, having been welcomed to a Conference long ago by Toby Brigham, who although he was one of the Chairs of the event, made it a point to notice that I was a new attendee, and to introduce me around to the "old hands."

We have also made a big effort in the last few years to include a range of professionals from various perspectives, including lawyers, legal academics, jurists, appraisers and MAIs, planners, right of way and relocation experts, and jury and trial consultants. Family members also welcome (there are a lot of "adjacent" social and networking events, and families are welcome as long as they don't mind a lot of "shop talk"). Our program is a mix of practical and substantive sessions.

We also have a special track on the first day of the Conference designed as a crash course in Eminent Domain law ("Condemnation 101"), which is a good place for an overview and introduction to the practice, or as a refresher course for those with more time under your belt.

In short, we try and make the Conference not just a place to learn the latest in eminent domain and related topics, but somewhere you can return to each year, and feel welcome.

So if you have not attended before, give us a try! We'd love to see you in New Orleans in just a few months. Registration and hotel reservation now open. Sign up now, and don't miss out.

Register Now For The 20th Brigham-Kanner Property Rights Conference, Oct. 26-27, 2023

Heads-up: the registration page for the 20th Brigham-Kanner Property Rights Conference, October 26-27, 2023, at the William and Mary Law School in Williamsburg, Virginia, is now up.

Early registration is a good thing because space is limited, especially at the Wren Building banquet on the 26th, at which the 2023 B-K Property Rights Prize will be presented to Prof. Gregory Alexander.

So please don't miss out.

The Property Rights Hall of Fame (second plaque)

If you are not already familiar with the Conference, it is (in our opinion) the best one-day event on property and property rights theory and practice. Expressly designed to bring together the legal academy and the practicing dirt law bar, the conference is where we discuss the burning property and property rights issues of the day. Here's the 2023 Program:

• Property and Propriety (or a Well-Ordered Society): A Tribute to Gregory S. Alexander
• Equity’s Role in Defining Property Rights
• Roundtable: Emerging Issues
• The Restatement’s Impact on Property Rights
• The Scalability of Property Rights (or the extent to which interests in property are or should be constitutionally protected)

Details here.

For more on the Conference, see our report from the 2022 Conference (more here as well).

Come, join us!

New Cert Petition: Overrule Penn Central!

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

In this cert petition, the property owner is asking the U.S. Supreme Court to review an unpublished decision of the Ninth Circuit which rejected both Lucas and Penn Central takings claims.

Here are the Questions Presented:

1. Should this Court overrule in its entirety, or reconsider parts of, Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978)?

2. Does the “economic impact” of a regulation on the subject property have to approach total loss of use and value to weigh in favor of a taking under Penn Central, as the District Court and Ninth Circuit held below?

3. Can a property owner ever have “distinct investment-backed expectations” for the beneficial use of property, for purposes of alleging a Penn Central taking, if restrictive downzoning is adopted before development of the property is undertaken?

4. Should the “character of the government action” prong of Penn Central be expunged from takings analysis as conflicting with Loretto v. Teleprompter Manhattan CATV Corp., 458 US 419 (1982) and Lingle v. Chevron USA Inc., 544 US 528 (2005)?

5. Does a zoning regulation that places property in a zone for which no beneficial uses are authorized violate the categorical taking rule of Lucas v. South Carolina?

Follow along here as we'll be watching the case as it progresses, or on the Court's e-docket.

Petition for a Writ of Certiorari, Craneveyor Corp. v. City of Rancho Cucamonga, No. 23-169 (U.S. Aug. 18,...

New Article: Application of the Penn Central Test

Here's a recently-published article (ALI-CLE's The Practical Real Estate Lawyer) on a subject that we know you will want to read about: Jon Houghton, Hertha Lund, and Ben Stormes, Application of the Penn Central Test, 7 Prac. Real Estate Lawyer 7 (May 2023).

Check it out. It's short, practical (naturally), and worth your time.

Jon Houghton, Hertha Lund, and Ben Stormes, Application of the Penn Central Test, Prac. Real Estate Lawyer...

Don't Release The Hounds! No Taking When Florida Voters Outlawed Dog Race Gambling

 A short one from the Florida District Court of Appeals (First District).

In D'Arcy v. Florida Gaming Control Comm'n, No. 1D21-3606 (May 24, 2023), the court held that the voters of Florida adopted Amendment 13 to the Florida Constitution that outlawed betting on greyhound racing (indeed betting all dog racing), it did not effect a Penn Central taking of the property of the owner of a greyhound racing business.

The trial court granted the state summary judgment, and the appeal court affirmed. The court also pointed out that the Amendment didn't ban dog racing outright, merely betting on dog racing. Slip op. at 3. The court focused on a single Penn Central factor, the "expectations" question and held that "given then heavily regulated field of gambling, D'Arcy did not have a reasonable expectation that the investment in dog racing could not be severely impacted by regulation." Id.

It is not surprising that reasonable investment-backed expectations “are greatly reduced in a highly regulated field.” Branch v. U.S., 69 F.3d 1571, 1581 (Fed. Cir. 1995). Given the extensive history of state regulation of gambling, it is not reasonable that D’Arcy had no expectation of future governmental interference with their property investments, as they as claimed. Because one of the factors of Penn Central may be dispositive of a takings claim as a whole, we affirm the grant of summary judgment on this ground. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984) (indicating that a single Penn Central factor may be dispositive of a takings case).

The court also held that the Amendment was a valid exercise of the police power, thus no taking:

The operation of Amendment 13 does not deprive racing dog owners of their property; it merely regulates its use. Thus, we also affirm summary judgment on the alternative ground that Amendment 13 was a valid exercise of police power, not eminent domain. Regulation of gambling does not constitute a taking as it is a well-established, valid exercise of police power.

Slip op. at 4.  

You already know what we think of that argument.

D'Arcy v. Florida Gaming Control Comm'n, No. 1D21-3606 (Fla. Dist. Ct. App. May 24, 2023) (per curiam)

SC: No Penn Central Taking For City Ordinance Merging Contiguous-But-Separate Parcels

As you can tell from the date of the opinion, we've been meaning to post the South Carolina Supreme Court's ruling in Braden's Folly, LLC v. City of Folly Beach, No. 2022-000020 (Apr. 5, 2023) for a while. Something else always intervened, but it remains a decision worth reviewing.

The city adopted an ordinance that erased lot lines for certain contiguous properties under common ownership, merging two distinct parcels into one and prohibiting their separate sale. The ordinance recognized nonconforming uses. Braden's properties are covered by the ordinance.

When Braden's Folly acquired the Lots in 1999, there was a small house on Lot A, and Lot B was undeveloped because it was either underwater or part of the active beach. Following a beach renourishment in 2005, Lot B became developable because it had been transformed into mostly sandy beach. Therefore, between 2006 and 2007, Braden's Folly received building permits from Folly Beach and constructed two single-family residences—a larger, more modern one on Lot A and a smaller one on Lot B—for a total cost of $1.1 million.

According to Braden's Folly, it had always intended to keep one of the Lots and sell the other—whichever of Lot A or B received the highest offer—in order to pay for the construction costs of the two houses. However, construction on the Lots finished in 2007 during the housing market collapse and Great Recession, which made selling either of the Lots financially unfeasible at that time. Nonetheless, even after the housing market recovered, Braden's Folly did not place the Lots on the market, continuing to use them for family vacations and as rental properties that grossed an average of $117,000 per year combined. It was not until February 2018 that Braden's Folly finally put the houses on the market, listing Lot A for $1.3 million and Lot B for $1.2 million.

One year later, upon the amendment of Folly Beach's merger ordinance in April 2019, Lots A and B were legally combined or "merged" into a single lot.

Slip op. at 9-10 (footnote omitted).

Braden alleged the merger was a taking of its property rights. The trial court agreed, holding the ordinance effected an as-applied Penn Central taking. Slip op. at 12 ("The circuit court held a property owner's reasonable investment-backed expectations are defined at the time the investment is made, and Braden's Folly intended to sell one of the Lots when it constructed the houses in 2006 and 2007.").

The S.C. Supreme Court held no Penn Central taking. The court's application of the three factors begins on page 16, with what we'll call the "Murr" question: what is the property alleged to be taken? Is it the unsaleable parcel, or the post-ordinance two-combined parcels? Applying the Penn-Central-within-Murr factors, The court held it is the latter. Slip op. at 19 ("we hold the appropriate denominator in the takings fraction, and the appropriate parcel to compare any economic impact resulting from the merger ordinance, is the entirety of Lots A and B combined").

• Economic impact: Assuming the owner's calculations are true, the before-and-after delta caused by the regulations represents a 23% loss of economic value. Slip op. at 22 ("While not insignificant, a 23% reduction in value is far less than other reductions in value found constitutional by the Supreme Court."). Remember, the court already determined that the "property" is both parcels, so you kind of knew where this was going, didn't you? As we wrote here, the big battle in these cases isn't so much whether there's been a taking, but what kind of taking it is (Lucas v. Penn Central), and once that battle has been fought and lost, the handwriting is nearly always on the wall.
• Investment-backed expectations: Because the merger ordinance didn't exist at the time of Braden's purchase, "[o]bjectively, it would have been reasonable for Braden's Folly to have expected to be able to" develop and sell its separate lot. Slip op. at 28. But (and there's always a "but"), Braden has been able to use the property for a number of decades, and it "made little to no effort to actually sell either property." Slip op. at 28, 29 ("Third, even assuming Braden's Folly's investment-backed expectation remained the same, the government cannot be held hostage by a property owner's expectations indefinitely when an owner refuses to implement those expectations. Rather, at some point, the government must have a right to regulate local properties in a measured fashion without running afoul of the takings doctrine, even if its regulation runs contrary to an owner's unspoken and unimplemented investment-backed expectations.").
• Character of the government action: "Folly Beach's merger ordinance does not unfairly single out Braden's Folly's Lots. Rather, as discussed by the Murr Court, merger ordinances have long been employed as a tool to regulate lot sizes." Slip op. at 34. The merger ordinance is designed to help save the beach, and this benefits beachfront owners like Braden. Id. ("Rather, in light of the potential public costs of continuing unchecked super-beachfront development, we reject the argument that Folly Beach's merger ordinance constitutes anything but responsible land use policy— one that is generally applicable and widely accepted nationwide.").

Here's what bothers us about this case:

After applying the Penn Central test, we find two factors weigh strongly in favor of Folly Beach: the economic impact and the character of the government action. As to the third factor, we find there is competing evidence regarding whether the merger ordinance interfered with Braden's Folly's reasonable, investment-backed expectation. We therefore conclude the third factor is a neutral factor that does not weigh in favor of either party. As a result, we hold the Penn Central balancing test overall weighs in favor of Folly Beach, and the merger ordinance did not effect an unconstitutional taking of Braden's Folly's Lots.

Slip op. at 35.

If there is "competing evidence" about Braden's investment-backed expectations, what is a court doing entering summary judgment on the Penn Central case by balancing and weighing the factors (even if the other two factors are property resolved as a matter of law - which they should not be)? The Penn Central test is ad hoc, with no one factor dispositive. As the Supreme Court has noted, one factor alone can serve to support a Penn Central verdict in favor of a property owner. For more see here and here.

Braden's Folly, LLC v. City of Folly Beach, No. 2022-000020 (S.C. Apr. 5, 2023)

Indiana SCT: We're Not Going To Decide Whether Indiana's Takings Tests Should Be The Same As Federal Tests (But We'd Like To In A Future Case)

In this Order the Indiana Supreme Court declines to take up the question of when property is taken by regulation. We post it here to note the statement of Justice Slaughter, who agreed that this case isn't the right vehicle to examine whether Indiana law should adopt a takings test different than the federal test but that he "remains open" to considering it in the right case.

So, Indiana friends, heads-up. Be sure in your next regulatory takings matter, you plead and argue both federal and Indiana takings.

Order at 2.

Order, Duke Energy Indiana,...

Sad Birthday Wishes To Penn Central - Some Things Don't Get Better With Age

Thanks to lawprof Josh Blackman for the reminder that our un-favorite case, Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978), turned 44 today.

If you know, you know.

Time has not treated the opinion well. Practitioners, judges, and legal scholars across the spectrum have called the three-factor Penn Central test for an ad hoc regulatory taking "demanding," "fuzzy," a four-part test, "neither defensible as a matter of theory nor mandated as a matter of precedent," and "problematic" and "mysterious." Courts mess up the basic meaning of the factors, treat what is supposed to be a fact-centric "ad hoc" test as a legal question decided on the pleadings, and gatekeep most of these cases from juries.

The definitive deconstruction of the case was Gideon Kanner's "Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York," 13 Wm. & Mary Bill Rts. J. 679 (2005). A must-read for anyone who plays in the Penn Central sandbox. 

If you want to be a part of rethinking Penn Central, listen to this episode of Clint Schumacher's Eminent Domain Podcast with our colleague Jon Houghton ("Jon Houghton and His Penn Central Quest"), or submit a proposal for our "Rethinking Penn Central" symposium.

But until something better comes along, let's wish Penn Central an Un-Happy Birthday.

Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978)

CAFED: Temporary But Recurring Flooding Is A Categorical Taking, Not Penn-Central-Plus

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

In Ideker Farms, Inc. v. United States, No. 21-1949 (June 16, 2023), the U.S. Court of Appeals for the Federal Circuit held that temporary, but recurring government-caused flooding was correctly treated by the Court of Federal Claims as a categorical per se taking, and not under Arkansas Game & Fish's Penn-Central-plus multifactor test. The court also held that the property owners are entitled to just compensation for their lost crops.

The opinion is pretty dense (39 single-spaced pages) so we're not going to provide a blow-by-blow account of the arguments and the court's reasoning. But we will hit some of the highlights:

• The Missouri River floods annually. In the 1990s, the Corps of Engineer and Fish and Wildlife Service "began discussions concerning proposed changes to the River designed to mitigate the environmental impact" of the federal flood control measures built and installed long ago. Eventually (you know where this is going, don't you?), the federal agencies decided to "restor[e] the Missouri River to a more natural state," and abandoned its former policy of prioritizing flood control (2004 Changes).
• Well guess what? "While the period from 2000-2006 was largely a drought, periodic flooding returned in 2007, 2008, 2010, 2011, 2013, and 2014." Slip op. at 7. Property owners on the short end "alleged the 2004 Change caused frequent and severe flooding on Plaintiffs' farms between 2007 and 2014 that amounted to permanent, physical takings under the Fifth Amendment." Id. 
• Eventually, the CFC concluded the government caused the flooding and after a trial held the government liable for taking a permanent flowage easement. Just compensation awarded to the three representative plaintiffs: $7 million. That compensation did not include anything for the loss of the crops destroyed; the CFC held that loss was a consequential damage and not recoverable. Slip op. at 8. Both sides appealed: the government from the liability judgment, the owners from the denial of crop compensation.
• The Federal Circuit first rejected the government's statute of limitations argument (there always seems to be one of those, doesn't there?). The "stabilization" doctrine, which instructs courts to look when the impact of the government's acts or omissions stabilized when the impacts are spread out over time, applies here. See slip op. at 15 ("When a reasonable plaintiff knew or should have known that his claim stabilized does not need to correspond identically with the physical event giving rise to liability."). Thus, a takings claim need not invariably be triggered by the physical event giving rise to liability occurs. When the harm stabilizes is a fact question, and the CFC was not clearly erroneous when it concluded the damage settled in 2014, not earlier. Slip op. at 16.
• On to the merits of the takings claim. The court rejected the government's argument that the flooding must be analyzed under the Penn-Central-plus factors for temporary flooding outlined by the Supreme Court in Arkansas Game & Fish. True, the flooding here did not cover the plaintiffs' properties permanently with water. "The [CFC] accepted based on the parties' stipulation that the flooding in this case is permanent, not temporary, in nature. In short, the Government has not ceased and does not plan to cease flooding Plaintiffs' lands." Slip op. at 19. If it wasn't clear enough from Arkansas Game & Fish that permanent-yet-intermittent flooding is treated as a categorical taking, then the Supreme Court's more-recent Cedar Point opinion makes that "abundantly clear."

Where the government takes a permanent right of access, akin to an easement in gross, even if used only intermittently, it is unquestionably an appropriation of the owner’s right to exclude. It is undisputed that the Corps has permanently burdened Plaintiffs’ land with a right to access their land with flood waters.

Slip op. at 20.

• Here's the holding: "Accordingly, Arkansas Game & Fish II’s multi-factor test does not apply to permanently recurring flooding. Instead, such flooding that foreseeably or intentionally results from government action is a categorical physical taking." Slip op. at 21-22.
• Some clarification: "To be clear, we do not alter or amend our trespass-versus-takings jurisprudence or question the applicability of Arkansas Game & Fish II to temporary floodings. Cedar Point, 141 S. Ct. at 2078 (“[O]ur holding does nothing to efface the distinction between trespass and takings. Isolated physical invasions, not undertaken pursuant to a granted right of access, are properly assessed as individual torts rather than appropriations of a property right.”). Nor do we establish a hardline rule for establishing what is a permanent or recurring flooding. We simply reinforce the principle that the permanent appropriation of a flowage easement is 'clear enough' to be on the side of a per se taking and not a trespass." Slip op. at 22 (some citations omitted).
• The Federal Circuit also upheld the CFC's causation analysis. Check out pages 22-29. We think the critical part of this analysis is the court's rejection of the government's assertion that this case is like the MR-GO case in which the Federal Circuit held that Katrina-related flooding is a tort not a taking. 
• The crop-damage analysis begins at page 31. The court agreed with the property owners that their crops are "property" for which they are entitled to receive just compensation and the loss of the crops aren't (uncompensated) consequential damages. Those damages are damages that flow from the taking and are collateral. After all, the flooding wiped out the crops, and it wasn't just some side effect. Slip op. at 33.
• "Plaintiffs do not claim compensation consequential to the taking of an easement—rather, they seek compensation for the government’s appropriation
  of two distinct property interests." Slip op. at 34.  

Will the federal government try and take this one further up the chain? We'll see.

Ideker Farms, Inc. v. United States, No. 21-1849 (Fed. Cir. June 16, 2023)

Clint Schumacher's Eminent Domain Podcast: "Jon Houghton and his Penn Central Quest"

Here's a don't miss episode of friend and colleague Clint Schumacher's Eminent Domain Podcast, featuring our Pacific Legal Foundation colleague Jon Houghton. With a title like "Jon Houghton and his Penn Central Quest," how can we resist listening?

In this episode, Jon Houghton with Pacific Legal Foundation joins to discuss the Penn Central test, why he wants to change it, and what he is doing about it. We also discuss NY Jets football and the big Aaron Rodgers trade.

Listen in!

Rethinking Penn Central: A Call For Symposium Papers

If you know, you know.

Pacific Legal Foundation (that's us) has put out a call for papers about "Rethinking Penn Central." Here's the details (pdf).

Here's some of the suggested topics:

• Can Penn Central be salvaged or does it need to be fully replaced?
• If it is to be replaced, what should the new test be?
• Alternatively, what improvements can be made to Penn Central that would address problems raised by critics without uprooting the test entirely?
• Is economic loss primarily relevant to compensation owed rather than the threshold question of whether a taking has occurred?
• Can a more categorical approach, like those taken in cases including Cedar Point Nursery v. Hassid, Hodel v. Irving, or Lucas v. South Carolina Coastal Council, adequately address regulatory takings?
• What insights does the original meaning of the Takings Clause offer regarding how to fix or replace Penn Central?
• Do colonial or English practices or precedents offer insights into a better approach to regulatory takings?
• How did courts during the ratification and reconstruction periods address regulatory takings prior to Oliver Wendell Holmes’s infamous "too far" statement, and what lessons do those precedents hold for how to fix or replace Penn Central?
• What are the pitfalls that a new test must be careful to avoid?

More details here.

July 1, 2023 deadline to submit proposals. Accepted papers even get a $2,500 honorarium, and travel to the October research roundtable.

Check it out, and submit!

Rethinking Penn Central Symposium Call for Papers

Iowa Trial Court: Pipeline Precondemnation Entry Statute Is Facially Unconstitutional

When a court's opinion (even a trial court's opinion) starts out with the epigram, "'Freedom and property rights are inseparable, you cannot have one without the other.'- George Washington," you know you are in for a ride.

So begins the opinion of the Clay County, Iowa District Court in Navigator Heartland, LLC v. Koenig, No. EQCV034863 (May 3, 2023). The issue was the validity under the Iowa Constitution of Iowa's precondemnation entry statute, which allows pipeline condemnors to enter property for land surveys:

After the informational meeting or after the filing of a petition if no informational meeting is required, a pipeline company may enter upon private land for the purpose of surveying and examining the land to determine direction or depth of pipelines by giving ten days’ written notice by restricted certified mail to the landowner as defined in section 479B.4 and to any person residing on or in possession of the land. The entry for land surveys shall not be deemed a trespass and may be aided by injunction. The pipeline company shall pay the actual damages caused by the entry, survey, and examination.

Navigator wanted to enter Koenig's land to conduct surveys in anticipation of condemnation. Koenig objected, and the court held a trial at which it heard testimony about the scope of the proposed entries. One witness:

identified the four types of surveys typically performed on each affected property; these include a civil survey, a biological/environmental survey, a cultural survey, and a geotechnical survey. Each of the four surveys are completed at separate times, thus at a minimum, surveyors would expect to enter onto the private land on at least four separate occasions. She additionally testified that Navigator typically hires third parties to perform each of the surveys. She conceded that her lay understanding of the Iowa Code §479B.15 does not limit the duration or number of times surveys may occur so long as they are confined to surveying purpose for the proposed pipeline path.

Opn. at 3.

The property owner argued that the statute effects a facial taking by requiring owners to open their properties to third parties without compensation: "Koenig asserts that Iowa Code §479B.15 strips landowners of their right to exclude by statutorily allowing pipeline companies to come onto private land to perform certain surveying operations, which amounts to a per se taking. Additionally, Koenig argues that the statute does not provide for just compensation in accordance with Article I section 18 of the Iowa Constitution." Opn. at 6-7.

The court noted that until recently, Penn Central "had been the leading approach to determine whether a regulatory use restriction amounts to a taking." Opn. at 8. But Cedar Point changed that, according to the court: if there's a physical invasion, that's a taking, after which the question becomes whether the government has provided compensation. 

But, the court also noted, "Cedar Point did not open the door for all government-authorized physical invasions to amount to takings[,]" if those invasions are "consistent with longstanding background restrictions on property rights." Opn. at 9.

Thus, the critical question is: are these private pipeline precondemnation invasions consistent with those background principles? The court held no, they are not. "The Court observes important similarities between the facts of this case and Cedar Point."

Like the private labor organizations in Cedar Point, Navigator presently seeks to repeatedly enter onto privately owned land despite a lack of consent from the landowner. While true the California statute in Cedar Point allowed labor organizations to enter on the property for up to 120 days per year three hours per day whereas Navigator is seeking to enter for no more than four days (ranging from thirty minutes to eight hours at a time); the Court is leery to enter into too much detailed comparison of the intrusive nature of the invasion because, as Cedar Point makes clear, the frequency and duration of the invasion is no longer relevant. Id. at 2074 (“the fact that a right to take access is exercised only from time to time does not make it any less a physical taking” and “the duration of an appropriation—just like the size of an appropriation—bears only on the amount of compensation.”)

Opn. at 10.

The court concluded that although survey access may be a "traditional privilege," the Supreme Court's lack of reference to such access or utility easements "leads to a conclusion." Opn. at 11. And that conclusion? Survey access is more like the union easement in Cedar Point than the background access exceptions also noted in the opinion.

In looking to the language in Iowa Code §479B.15, the Court concludes that the standards established in Cedar Point are applicable. The statute is not a use restriction which can be analyzed under the Penn Central “Takings Test”. Rather, because the statute grants pipeline companies right to physically enter and occupy privately owned land, the statute appropriates a right to invade the landowner’s property. When such appropriation occurs, the Court follows the traditional rule “Because the government appropriated a right to invade, compensation is due.” Cedar Point, 141 S. Ct. at 2076.

The Court finds that Iowa Code section 479B.15 appropriates Koenig’s right to exclude others from his privately owned land. Without Iowa Code §479B.15, Koenig would have had the right under Iowa law to exclude the pipeline company and any third-party surveyors from hi property. Because the statute amounts to a government authorized physical invasion, and additionally appropriates Koenig’s right to exclude, the Court is convinced Iowa Code §479B.15 effects a per se taking for which just compensation is required. 

Opn. at 12.

The court also concluded that the statute does not provide just compensation. Yes, the statute requires the pipeline company entering private property to pay "actual damages" caused by the invasion or occupation, but does not, on its face, require just compensation for the invasion if there's no physical damage resulting:

However, if no physical damage is done to the private property, does Iowa Code §479B.15 still require compensation to the landowner for the government-authorized taking? §479B.15 says no and any other interpretation of such is unreasonable. At the end of trial Navigator argued that the distinction between “actual damages” and per se damage is a distinction without a difference. Navigator’s counsel argued that Koenig’s “actual damage” is any damage that he may claim. The Court does not find such interpretation to be reasonable because the damage has to be “actual” and cannot be subjective. It has to be reasonably ascertainable. The statute requires such.

Opn. at 16 (footnote omitted).

A property owner may not be able to easily ascertain the extent of the economic damages caused by a precondemnation survey entry. The damages caused may be pretty subjective, and similar to pain and suffering in tort law. "Therefore, a clear and common sense reading of Iowa Code §479B.15 is that, if by going onto private property to survey, a pipeline company causes actual damage to the property, compensation is required to cover the damages. However, because non actual damages resulting from the government authorized taking are subjective and not readily ascertainable, the Court cannot interpret the meaning of 'actual damages' within the statute to cover a per se taking in and of itself. To find otherwise would deprive 'actual damages' of all its ordinary meaning." Opn. at 17.

Finally, the court concluded that the usual presumption of constitutionality does not save the statute, because there's no reasonable alternative construction the court might give it.

All we can say is wow.

Trial Ruling on Defendant's Counterclaim re: Constitutionality of Iowa Code § 479B.15, Navigator Heartland...

New Cert Petition: Forcing Owners To Rent To Tenants Indefinitely Is A Categorical Taking

Here's the latest in a case we've been following since its inception, this cert petition seeking Supreme Court review of the U.S. Court of Appeals for the Second Circuit's affirming the district court's dismissal of a complaint alleging that New York (state)'s sweeping amendments to its Rent Stabilization (rent control) statute effected categorical and Penn Central takings:

Petitioners’ physical-takings claims would have been allowed to proceed if they were brought in the Eighth Circuit. That is because the Eighth Circuit has correctly held that property owners plead a physical taking under Cedar Point where a law prohibits them from terminating a tenancy at the end of a lease term. See Heights Apartments, LLC v. Walz, 30 F.4th 720, 733 (8th Cir. 2022), reh’g en banc denied, 30 F.4th 720. But the Second Circuit held here—as has the Ninth Circuit—that the physical-takings principles articulated in Cedar Point are not implicated when an owner voluntarily offered housing for rent in the first instance. These courts instead read Yee v. City of Escondido, 503 U.S. 519 (1992), as precluding physical-takings claims so long as the property owner may evict tenants in the event they breach the lease or engage in other forms of malfeasance—thus carving out a special and particularly deferential landlord-tenant exception to the general principles articulated in Cedar Point. Those courts misread Yee, which reserved the question whether a taking would occur if a law forced “a landowner over objection to rent his property or to refrain in perpetuity from terminating a tenancy.” Id. at 528.

In affirming the dismissal of Petitioners’ regulatory-takings claims, the Second Circuit also split from other circuits on every Penn Central factor. The court deemed irrelevant the impact that the law would have on Petitioners’ property rights, explaining that it was “of no moment” that they are forced to bear burdens that others are not. App. 16a. The court also viewed the character of the governmental action—which forces Petitioners to house tenants against their will—as counting against Petitioners’ claims because the law serves important public purposes and “courts are not in the business of second-guessing legislative determinations such as this one.” Id. The Second Circuit’s ruling confirms that this Court’s “current regulatory takings jurisprudence leaves much to be desired.” Bridge Aina Le’a, LLC v. Haw. Land Use Comm’n, 141 S. Ct. 731, 731 (2021) (Thomas, J., dissenting from denial of certiorari).

Pet. at 2-3.

Here are the Questions Presented:

Petitioners own small apartment buildings in New York City that are subject to New York’s Rent Stabilization Law (“RSL”). Once an owner leases a unit for a fixed term, the RSL grants the tenant and the ten-ant’s successors a perpetual right to renew the lease, regardless of whether the owner consents. That renewal right strips owners of their right to exclude others from their property and prevents them from living in their own apartments. The Second Circuit held that these facts failed to state a physical-takings claim because Petitioners voluntarily entered the rental market in the first instance and could, in some circumstances, evict tenants who breach their leases. Petitioners’ regulatory-takings claims likewise failed because, among other reasons, the RSL serves an important purpose and does not deprive petitioners’ property of all value. In so holding, the Second Circuit deepened or created circuit splits at each step of its analysis. The questions presented are:

1. Whether a law that prohibits owners from terminating a tenancy at the end of a fixed lease term, except on grounds outside the owner’s control, constitutes a physical taking.

2. Whether allegations that such a law conscripts private property for use as public housing stock, and thereby substantially reduces its value, state a regulatory takings claim.

Stay tuned.

Petition for a Writ of Ceritorari, 74 Pinehurst LLC v. New York, No. ____ (U.S. May 17, 2023)

CA6: Legislative Conditions Are Subject To Nexus-And-Proportionality Requirements

A good opinion from the U.S. Court of Appeals for the Sixth Circuit in Knight v. Metro. Gov't of Nashville, No. 21-6179 (May 10, 2023), holding that conditions imposed on every development -- and not just ad hoc administratively-imposed conditions -- must conform to the Nollan-Dolan-Koontz close nexus and rough proportionality standards.

You takings and land use mavens can stop right there, because you know what this means: the Sixth Circuit has added to the growing split in the lower courts about whether legislatively-imposed conditions on development which cover everyone are, as some courts characterize them, mere land use regulations subject only to Euclid's rational basis review, or are constrained by N-D-K 's requirements (see here, and here for examples). The Supreme Court has been presented with the lower court disagreement, but so far has not stepped in and resolved the issue.

The Sixth Circuit experienced no such qualms when considering a Nashville ordinance that conditions the grant of building permits on the owners agreeing to either grant an easement across their land and build a sidewalk on that easement, or give the city cash instead:

In particular, the parties here disagree over the “test” that we should use to judge whether the sidewalk ordinance commits a taking. The landowner plaintiffs ask us to apply the “unconstitutional-conditions” test that the Supreme Court adopted to assess conditions on building permits in Nollan v. California Coastal Commission, 483 U.S. 825 (1987). Nashville responds that the Court has applied Nollan’s test only to ad hoc administrative conditions that zoning officials impose on specific permit applicants—not generally applicable legislative conditions that city councils impose on all permit applicants. For legislative conditions, Nashville says, we should turn to the deferential “balancing” test that the Court adopted to assess zoning restrictions in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).

We side with the landowner plaintiffs. Nothing in the relevant constitutional text, history, or precedent supports Nashville’s distinction between administrative and legislative conditions. Nollan’s test thus should apply to both types, including those imposed by the sidewalk ordinance. Because the district court reached a contrary conclusion, we reverse its grant of summary judgment to Nashville and remand for proceedings consistent with this opinion.

Slip op. at 2.

We suggest you read the entire opinion -- it isn't long (29 pages) and it has pictures! -- because it really sets out the arguments, and there's even some takings history for you history buffs. The court concluded that the Takings Clause is a limit on legislative authority, not just executive power. See slip op. at 20.

And there's a whole lot of takings and property rights goodness in the opinion, including these:

• "The government does not always directly interfere with constitutional rights. It sometimes indirectly interferes with them by offering a benefit that it has no duty to provide on the condition that a party waive a right." Slip op. at 10.
• "But what rules divide constitutional from unconstitutional conditions on these otherwise discretionary benefits? One generic rule is clear: If the Constitution allows the government to directly compel a private party to undertake conduct on threat of criminal punishment, the government may indirectly compel that conduct as a condition on a benefit." Id.
• "Courts instead must look to a specific constitutional right to identify the specific rules. Id. at 913. This fact brings Nollan to the fore. It created a 'special unconstitutional-conditions framework for an “exaction” in the takings context. Slip op. at 10-11.
• "At first blush, Nashville’s enforcement of its sidewalk ordinance looks like a clear case for Nollan’s unconstitutional-conditions test." Slip op. at 14.
• "Does it matter that the sidewalk ordinance allowed Knight and Mayes to pay fees rather than build sidewalks? No again. Because these “commonplace” in-lieu fees resemble “other types of land use exactions,” Koontz held that they trigger Nollan’s test all the same." Slip op. at 16.
• See page 17 for the opinion's run-down of the different ways different courts go on this issue.
• "This case requires us to answer that question. We now hold that Nollan’s unconstitutional-conditions test applies just as much to legislatively compelled permit conditions as it does to administratively imposed ones. Nothing in the text or original understanding of the Takings Clause justifies Nashville’s requested distinction. Its requested distinction also conflicts both with the Supreme Court’s unconstitutional-conditions precedent and with its takings precedent." Slip op. at 18.

The court held that the "text and history" of the takings clause compelled the outcome, slip op. at 18- 22, as does "Supreme Court precedent." Slip op. at 22-72.

Having determined that Nashville's ordinance is subject to the nexus and proportionality requirements, the court concluded that the city waived the argument that the ordinance met the test: "Nashville has waived any argument that it can satisfy this unconstitutional-conditions test. Knight and Mayes spent pages of their brief arguing that the city could not meet Nollan’s and Dolan’s elements. ... But Nashville did not even try to respond, opting to rely exclusively on its claim that Penn Central’s test applied." Slip op. at 28.

Finally, the court thought about the remedy, and whether it is just compensation (here's your in-lieu fee back, property owner), or equitable relief in the form of a declaratory judgment or an injunction? See slip op. at 28. But the court didn't resolve that question and left it for the district court on remand.

Here are the briefs, including the amicus brief our own firm filed:

• Property Owners' Opening Brief
• Nashville's Answering Brief
• Owners' Reply Brief
• Pacific Legal Foundation's amicus brief in support of property owners

Is this decision the last word on the issue? Most certainly not, and this question won't be definitively resolved until the Supreme Court decides to decide. But in the interim, this one is good in the Sixth Circuit. 

Knight v. Metro. Gov't of Nashville, No. 21-6179 (6th Cir. May 10, 2023)

This Just In - Florida Appeals Court: TDRs, Beekeeping, And Camping Are Not Economically-Beneficial Uses, So Downzoning Is A Lucas Taking

Shands Key, with the City of Marathon in the background

This just in: in Shands v. City of Marathon, No. 3D21-1987 (May 3, 2023), Florida's Third District Court of Appeals held that the city's downzoning the property (Shands Key, shown above in an exhibit from the Key West trial we participated in in June 2021) from General Use (density: one home per acre) to Conservation Offshore Island (one home per 10 acres; Shands Key is just under 8 acres) effected a Lucas taking.

We're not going to go into too much detail, because this case is one of ours. Our Pacific Legal Foundation colleague Jeremy Talcott was the lead trial and appellate counsel, backed by Kady Valois.

Trial (and appeal) team after closing arguments in Key West:
Valois, inversecondemnation.com, Talcott

But we're not going to let you go without noting a few highlights from the Court of Appeal opinion:

• "This inverse condemnation appeal presents a novel issue regarding the role that transferred development rights (“TDRs”) occupy in adjudicating a per se as-applied regulatory taking claim advanced under the landmark case of Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)." Slip op. at 1.
• "Finding that an award of TDRs and Building Permit Allocation System (“BPAS”) points, considered in tandem with the residual land value derived from personal recreation and beekeeping, precluded a per se as-applied claim, the trial court denied the motion. The primary issue on appeal is the propriety of that ruling." Slip op. at 1-2.
• "In the aftermath of Penn Central, Lucas, and their progeny, TDRs have emerged as a popular and effective tool for local governments to promote conservation efforts and urban growth management. Such rights typically benefit the landowner by allowing for expanded “development beyond the restricted level on [another] piece of land.” Ralph A. DeMeo, Transfer Development Rights, in II Florida Environmental and Land Use Law ch. 23 (1996)." Slip op. at 10.
• "The significance of TDRs in the regulatory takings matrix has been sharply debated. Some legal experts have opined that TDRs are irrelevant to the takings side of the equation because they do nothing to impact the nature and extent of the property interest taken by the government. Others have espoused the belief that TDRs necessarily mitigate the economic impact of regulation by infusing the property with value; therefore, they should be considered before determining whether the government has effectuated a taking." Slip op. at 10-11 (footnotes omitted).
• "Appellants established that regulation deprived them of any use of the property, other than for beekeeping or personal camping. These do not constitute economically beneficial uses, as 'a State may not evade the duty to compensate on the premise that the landowner is left with a token interest.' Palazzolo v. Rhode Island, 533 U.S. 606, 631 (2001). As Justice Scalia observed in his Suitum concurrence, any income associated with TDRs does not flow from the cultivation or development of the property in the traditional framework of ownership. Instead, the potential revenue is generated from the non-use of the property." Slip op. at 13-14.
• "Consistent with this logic, while “[p]utting TDRs on the taking rather than the just compensation side of the equation . . . is a clever, albeit transparent, device that seeks to take advantage of a peculiarity of our Takings Clause jurisprudence,” doing so allows the government to provide some compensation without the constitutional stricture of just compensation. Suitum, 520 U.S. at 748–49 (Scalia, J., concurring in part and concurring in judgment)." Slip op. at 14.
• "To reason otherwise would render Lucas nugatory." Id.
• "In accord with the foregoing analysis, we conclude that appellants established overly burdensome government regulation deprived them of “all economically beneficial uses” of their property. Lucas, 505 U.S. at 1019. Consequently, they were entitled to an award of partial summary judgment on their per se as-applied Lucas claim. We therefore reverse and remand for the trial court to vacate the final judgment, enter partial summary judgment in favor of appellants, and conduct further proceedings consistent with this opinion." Slip op. at 17.

Here are the briefs of the parties, so you can see the arguments:

• Initial Brief On Merits (property owners)
• Appellee's Answer Brief (City)
• Appellant's Reply Brief (property owners)

Watch the court of appeal oral arguments (YouTube) here.

A hearty well done to our PLF team for this big win.

Shands v. City of Marathon, No. 3D21-1987 (Fla. Dist. Ct. App. May 3, 2023)

CA9 (unpub.): You Can Never Adequately Plead A Facial Penn Central Taking For City Zoning Restrictions

If everything the Ninth Circuit says in its unpublished memorandum opinion in Craneveyor Corp. v. City of Rancho Cucamonga, No. 22-55435 (Apr. 20, 2023) is accurate, there's no way to ever draft a complaint alleging a facial Penn Central regulatory taking that will survive a 12(b)(6) motion to dismiss for failure to state a claim.

From what we can gather (this is an unpublished memorandum opinion, after all), the property owner asserted a facial takings challenge to some sort of zoning regulations that restrict its use of two parcels it owns. We're not sure what restrictions. See slip op. at 2 ("The complaint asserts a facial takings challenge under 42 U.S.C. § 1983 to a city zoning plan that allegedly restricts development on two parcels of land owned by CraneVeyor.").

Two theories: Lucas and Penn Central.

The court made short work on the facial Lucas claim, concluding that because the owner "acknowledges that the [zoning], on its face, does not prohibit all development in fault zones[, that] ... CraneVeyor has not stated a claim for a facial Lucas taking." Slip op. at 3.

The facial Penn Central claim fared no better. The court assumed without deciding that a property owner may assert a facial Penn Central claim, and proceeded to analyze the three Penn Central factors:

• Economic impact. "[I]nsufficient." Slip op. at 3. Why? Because "[v]aluable uses remain on CraneVeyor's land. According to the city, CraneVeyor could build up to two residential units on its first parcel. And the [zoning] ppermits livestock and poultry keeping on the second parcel." First, what does the (alleged) existence of "valuable uses" vel non remaining on the property have to do with whether the complaint is properly pleaded? This isn't a Lucas theory, which requires some kind of near-wipeout of economically beneficial uses; this this is Penn Central where there's no minimum threshold of economic loss, and even having a lot of "valuable uses" remaining in the after condition might be overcome by significant proof of the other two factors. Second, this was an appeal from a 12(b)(6) dismissal, yet (a) the court takes the city's word that there are other valuable uses remaining, and (b) the court apparently makes some kind of conclusion that the complaint didn't adequately allege the remaining uses are insufficient. So, Ninth Circuit, what percentage is sufficient that we have to plead? Your guess is as good as ours.
• Distinct investment-backed expectations. Nope. No landowner can reasonably expect to be free of zoning. And the owner didn't chase vesting, so there's that.
• Character. This is a regulatory taking, not a physical invasion. And zoning laws ain't facially takings.

Can all this be explained by the fact that the court was dealing with a facial Penn Central claim? Your guess is as good as ours. But if that's the case, wouldn't it just be easier to simply say there's no way to plead a facial claim for an "ad hoc" test, rather than potentially screw up the doctrine when down the road, someone inevitably tries to apply the court's analysis to a complaint asserting an as-applied Penn Central claim?

Craneveyor Corp. v. City of Rancho Cucamonga, No. 22-55435 (9th Cir. Apr. 20, 2023) (mem.)

Links And Materials From The 22d Annual Texas Eminent Domain Conference

Good crowd.

Here are the cases and other materials we spoke about on Friday at the 22d Annual Texas Eminent Domain Conference, in Austin. A big thank you to the Planning Chairs and to our friends at CLE International for the speaking invite.

• Sackett v. EPA (SCOTUS and WOTUS)
• Wilkins v. United States (Federal Quiet Title statute of limitations)
• Tyler v. Hennepin County (Takings, Excessive Fines - Home Equity Theft)
• Eychaner - the near-miss on revisiting Kelo
• Louisiana's successful (!) necessity challenge
• Self-executing Just Compensation: First Circuit (it is self-executing) vs Ninth Circuit (it isn't); see also Devillier v. Texas (pending)
• Property in the non-takings context: K-9 putting his paws on car is a "search" because...trespass to chattels

The other cases discussed are in your materials!

The nearby Caldwell County Courthouse. A classic.

Why did no one tell me that Jabba's Palace is in Austin?

April 27, 2023, 5-7pm, Honolulu: Join Us To Celebrate The Work And Career Of Professor David Callies

Come join us on Thursday, April 27, 2023, from 5-7pm, downtown Honolulu, to celebrate the retirement of Professor David L. Callies from the University of Hawaii Law School.

Join U.H. Law School Dean Camille Nelson, Professor Callies' colleagues, his students (present and former), the Hawaii legal community, and family and friends as we honor 43 years of scholarship, teaching, service, and practice.

Professor Callies is a prolific scholar and author, and has mentored generations of lawyers. Known especially for his work in property, land use, takings, administrative law, and state and local government law, he has also been presented with numerous awards including William and Mary's Brigham-Kanner Property Rights Prize, and the Owner's Counsel of America's Crystal Eagle. 

Invitation and how to RSVP (or click below). Space is limited, so please let us know you are attending as soon as you can.

Details:

Thursday, April 27, 2023
5:00-7:00 p.m.

Second Floor Gallery
Pauahi Tower
1003 Bishop Street
Honolulu, Hawaii 96813

Validated parking: Bishop Square garage (entrance on Alakea Street)

RSVP: [email protected]

See you there!

Professor David Callies - Retirement Celebration Invitation Apr. 27, 2023

Instead Of Being The First Case To Take Advantage Of Knick, This One Was The Last Victim Of Williamson County

There's a lot going on in the U.S. Court of Appeals for the Fifth Circuit's opinion in Tejas Motel, L.L.C. v. City of Mesquite, No. 22-10321 (Mar. 22, 2023), but that's mostly because it's a procedural decision resolving a question of whether a Texas court's federal takings judgment was res judicata, and therefore prohibited a federal takings complaint filed later in federal court .

As you might surmise from the above summary, the Fifth Circuit indeed concluded that the second (federal) takings lawsuit was precluded by the judgment in the first (Texas), because the Texas court issued a final judgment on the merits of Tejas Motel's federal takings claim.

Short story: the city doesn't really care for operations like the Tejas Motel. Back in 1997, the city amended its zoning code to effectively outlaw these types of motels, rendering Tejas a nonconforming use. Later, after "local residents allegedly complained about the poor conditions and criminal activity" at such places, the city cracked down ever harder, and told Tejas to shape up or ship out: the motel could either fix the problems that were affecting its neighbors, or it would be shut down, nonconforming use or not. Slip op. at 3.

"Facing pressure from the City and the Board, Tejas agreed to cease operations or bring the motel into conformity with the zoning ordinance by May 1, 2019." Id. But "[t]hree months later," Tejas claimed it executed the agreement under duress and sued the city in state court. By our calculations, the state court lawsuit -- which made claims under both Texas and federal law (including takings) -- was filed in either August or September 2019.

The Fifth Circuit noted that Tejas Motel "was forced into state court by Williamson County," and that case's now-overruled-by-Knick state litigation ripeness requirement. Slip op. at 18. But wait, you note. Wasn't Knick v. Township of Scott decided on June 21, 2019, one to two months before Tejas filed in state court in August or September 2019? How was it "forced" to bring its federal takings claims in state court?

We're not sure at all. Maybe we're not understanding the timeline properly. Or maybe one of the dates on which we're relying is a typo. But in our view, this doesn't quite line up as Tejas being required by Williamson County to file its federal takings claim in state court, when, by our read, when it filed its state court federal takings claim the Supreme Court had already decided Knick.

Yes, it was a freshly-minted decision, but these days word travels fast (those of you of a certain vintage will remember back in the day when it took one week or more for those of us outside of the Beltway to get our hands on the actual text of Supreme Court opinions, when our copy of U.S. Law Week would arrive in the mail). So we can't quite figure out why, if the Fifth Circuit's opinion's timeline is accurate, that the court notes the property owners were forced to file in state court.

Well, in any event that's what Tejas did. Maybe it was a strategic choice to file in state court, and not, as the Fifth Circuit noted, a matter of being forced to do so by Williamson County. And filing in state court had consequences, as the Fifth Circuit noted. As we wrote at the top of this post, the opinion is somewhat challenging to follow, because you've got to keep track of the two parallel actions, and the status of each in its respective court.

In the end, the Fifth Circuit held that Tejas Motel had asserted federal takings claims in state court, that the state court had determined the merits of that claim even though the state court dismissed the complaint for lack of a "constitutionally protected interest in continuing to use the property in violation of the City's zoning ordinances when it acquired the property knowing it was in violation of those ordinances," slip op. at 6, and had entered a judgment that is now final:

One can sympathize with Tejas’s procedural plight. It was forced into state court by Williamson County, and now cannot avoid the consequences of the adverse judgment it received. But nothing in Knick nullifies long-settled principles of res judicata. State courts are competent to adjudicate federal claims, and their judgments are entitled to full faith and credit in federal court. See 28 U.S.C. § 1738. Because the Texas Court of Appeals issued a final judgment on the merits of Tejas’s constitutional claim, the motel does not get a second bite at the apple.

The judgment of dismissal is AFFIRMED.

Slip op. at 18. 

Tejas Motel, L.L.C. v. City of Mesquite, No. 22-10321 (5th Cir. Mar. 22, 2023)

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.

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.)

"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!).

CA4: Being Blocked From Accessing Your Beach House For 45 Days Isn't A Physical Taking (Or Any Kind Of Taking)

You remember, don't you? In the early days of the Co-19 epidemic, government and public health authorities were scrambling to do something ... sometimes anything! ... to respond.

Dare County, North Carolina might have been one of those local governments that went maybe just a bit too far in the precaution vs effectiveness departments: it banned nonresident property owners from entering the county (and apparently didn't ban anyone else from coming and going, only outsiders).

Dare County announced the restrictions on March 16 and implemented them over three phases. Phase one, which took effect immediately, declared a state of emergency and prohibited mass gatherings. Phase two, which took effect one day later, prohibited non-resident visitors from entering the county. Phase three, which took effect four days after the restrictions were announced, prohibited non-resident property owners from entering the county. In effect, Dare County told non-resident property owners: “If you want to quarantine at your beach house, get there by March 20.” This gave non-resident property owners four days to travel to the county.

Seems a bit over-the-top and not really a measure that had much effect, especially in retrospect. 

But no matter, we know that courts are generally very hesitant to seriously entertain challenges to these type of police power actions as arbitrary or capricious, and won't do much if anything to say "hang on, this doesn't seem like an approach that's really going to work, or even do much."

But there are other ways to challenge these, such as state law, Contracts Clause, Equal Protection, or maybe takings, right? As we explained in an article on emergency takings last year, ("Evaluating Emergency Takings: Flattening the Economic Curve," 29 Wm & Mary Bill of Rights J. 1145 (2021)), takings claims are not a sure-fire winner (even where the cost-spreading rationale of takings is accounted for). 

The U.S. Court of Appeals' recent opinion in Blackburn v. Dare County, No. 20-2056 (Jan. 25, 2023), confirms. There, the court held that Dare County's extreme reaction to Co-19, which prohibited the plaintiffs from "reach[ing] their beach house for forty-five days[,]" was not any kind of taking. Slip op. at 3.

The court first rejected the physical takings claim. The stay-out order "did not physically appropriate anything from them." Slip op. at 7. The County didn't authorize government agents or third parties to come onto the plaintiffs' property. The court rejected the argument that the County keeping an owner from accessing his or her own property is a physical appropriation. "This, they say, makes the order a physical appropriation, because the Supreme Court has repeatedly held that an appropriation occurs when the government eliminates a property owner’s right to exclude. But temporarily excluding an owner from their own property differs from eliminating the owner’s right to exclude." Id.

Next, the court made short work of the Lucas wipeout claim:

But Lucas’s per se rule does not apply here. Accepting the allegations in the complaint as true, Dare County’s order did not deprive the Blackburns’ property of all economic value. The restriction was enacted under the County’s State of Emergency declaration and so would only be operative while that state of emergency persisted. And it lasted only forty-five days. This “temporary prohibition” could not have rendered the Blackburns’ property valueless. See Tahoe-Sierra, 535 U.S. at 332. Moreover, the Blackburns could have lived in their house so long as they arrived before the ban took effect. And even during the forty-five days that the ban lasted, they were still able to rent their property to someone within the County or certain adjoining counties. So the order was not a per se taking under the Lucas framework.

Slip op. at 8.

Finally, the court did not address the merits of the Penn Central claim, but affirmed the dismissal of that theory for failure to plead it correctly. The complaint did not allege facts which show a "substantial" diminution of value caused by the restriction. See slip op. at 9. All the complaint alleged was that the plaintiffs "suffered damage" and lost the "fair market rental value and value of use of said property by governmental regulations for 45 days." Id. The court held this is a legal conclusion. We're not sure what the court suggests the plaintiffs could have alleged to make it more clear. The before-and-after? A specific amount of rent allegedly lost? Use the magic word "substantial?" To us, this seems like a too-technical and crabbed reading of the pleading requirements.

On the "expectations" Penn Central factor, the court seemed to be evaluating it on the merits when it concluded that "the non-resident property order did not deny the Blackburns the use of their vacation home. It simply requied them to be at their home by March 20, 2020, if they wanted to use it personally. And the Blackburns remained free to rent the house to those within the county, or to sell it." Slip op. at 10-11.

And finally, "[t]he third Penn Central factor favors Dare County." Slip op. at 11. The court's analysis starts off with this intriguing note: "This factor requires courts to examine 'the character' of the use restriction. Penn Cent., 438 U.S. at 124. Exactly what this factor refers to is, admittedly, a little fuzzy." Id. The court settled on this requiring an inquiry into whether the regulation results in the "functional equivalent" of a classic taking. Slip op. at 12.

Applying this principle suggests that the order is not a taking. Based on the allegations in the Blackburns’ complaint, the order is not “functionally equivalent” to a government appropriation of private property. See Clayland Farms, 987 F.3d at 355. The Blackburns controlled their home during the entire time the order was in effect, and could have personally used it had they arrived in Dare County by March 20, 2020. Cf. Horne, 576 U.S. at 361–62 (holding that a physical appropriation occurred when a regulation physically transferred raisins from farmers to the government).

Nor is the order “functionally equivalent” to an ouster. See Clayland Farms, 978 F.3d at 355. The Blackburns were not dispossessed of their vacation home. And they were never forced to leave Dare County. In fact, just the opposite. Despite promulgating the order on March 16 and implementing the non-resident visitor ban a day later, Dare County delayed implementing this order until March 20 to give homeowners like the Blackburns a chance to travel to the County. This is a far cry from an ouster. See Ouster, Black’s Law Dictionary (11th ed. 2019) (“The wrongful dispossession or exclusion of someone (esp. a cotenant) from property.”).

Slip op. at 12-13.

Dismissal affirmed.

Blackburn v. Dare County, No. 20-2056 (4th Cir. Jan. 25, 2023)

(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-...

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)

New Cert Petition: There Must Be A Real Emergency Before Commandeerings Are Exempt From Compensation

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

In this cert petition, business owners on the losing end of a Co-19 shutdown order assert that the Sixth Circuit got it wrong when it concluded that the "overriding public purpose" of the shutdown orders should be given what amounts to dispositive weight under the "character of the government action" Penn Central factor.

The Sixth Circuit correctly (in our view) rejected the district court's rationale that the takings claim could be rejected simply because "the state acts pursuant to its police powers to protect public health." Slip op. at 15. But the Sixth Circuit didn't stop there, and affirmed the dismissal because the "character" of responding to the Co-19 emergency was so overwhelming that it outweighed the other two factors (which the court had already concluded "weigh in favor of the Plaintiffs").

As we explained in an article on emergency takings last year, ("Evaluating Emergency Takings: Flattening the Economic Curve," 29 Wm & Mary Bill of Rights J. 1145 (2021)), the Penn Central "character" inquiry does not ask about the government's reasons or motive. That is a due process inquiry. No, the character of the government action inquiry asks about the nature of the intrusion on the owner's property rights. [Hat tip to the cert petition, which refers to our article several times.]

Here's the Question Presented:

Is the government required to prove with evidence that its action taken during an emergency which intrudes on private property rights was a necessity in order to be relieved of its duty of compensation for a taking under the Fifth Amendment?

Follow along on the Court's docket here.

Petition for a Writ of Certiorari, Bojicic v. DeWine, No. 22-493 (U.S. Nov. 23, 2022) by RHT on Scribd

Shame On You: Govt Exerting "Irresistible Pressure" On (But Not Forcing) You To Buy Worthless Bonds Isn't A Taking

One from the U.S. Court of Appeals for the First Circuit.

In In re Financial Oversight & Management Board for Puerto Rico, No. 22-1048 (Nov. 22, 2022), the court affirmed the district court's 12(b)(6) dismissal of a takings claim because the government didn't actually force the plaintiff credit unions into buying what the complaint alleges are "worthless government-issued securities," even where "the defendants knew - but did not disclose - that these would be losing investments given the precarious state and dire financial situation in which Puerto Rico found itself at the time." Slip op. at 1.

Conned into purchasing junk bonds? That's on you.

This is another Takings Clause claim arising out of the Puerto Rico governmental bankruptcy. [Disclosure: we represent some of the property owners/Respondents in that other matter, now at the cert stage in SCOTUS.] The complaint alleged that in a series of meetings over the course of four years, Puerto Rico officials misled the credit unions into investing in securities that turned out to be worthless because the Commonwealth's finances, contrary to the picture portrayed, was in shambles. This case is an adversary proceeding in the subsequent bankruptcy case.

To understand the court's handling of the takings claim, you might want to read -- or at least skim -- the first part of the opinion in which the court affirms dismissal of the credit unions' fraud claim because (you guessed it) the claim was not pleaded with the right about of specificity. See slip op.at 24 ("specificity is the name of the game when alleging fraud, and the Credit Unions have not filled the bill here"). 

Slide down to page 29 of the slip opinion, where the takings analysis starts. Here's how the court describes the allegations in the complaint:

In the SAC, the Credit Unions allege that the defendants used "regulatory powers" to take "material portions of Plaintiffs' cash and liquid assets," resulting in "illegally appropriat[ing] the moneys of the Cooperatives to finance the government operation" by providing "materially diminished and value impaired government papers that did not constitute just compensation." According to the plaintiffs, the defendants used the circular letters to compel the Credit Unions "to purchase knowingly materially diminished and value impaired government bonds," "depriv[ing] the Cooperatives' property of any significant economic value." The Credit Unions allege the defendants' actions resulted in both a per se physical taking and a categorical regulatory taking.

Slip op. 29-30 (footnote omitted).

The court summed up the takings claim in a footnote:

As best we can tell, based on closely examining the SAC, the Credit Unions' takings claim theory seems to be that they were compelled to spend more on the bonds than the bonds were worth on the date of purchase. Problem is, merely alleging in the SAC an after-purchase decline in the value of the bonds in support of this theory does not, in and of itself, mean the bonds were not worth what the Credit Unions paid at the time of purchase. And relatedly, the allegations in the SAC about what the government and its instrumentalities knew at the time the Credit Unions purchased the bonds are all no-meat-on-the-bones conclusory in nature, e.g., the "instruments lacked true value," and the defendants pushed the bonds "with full knowledge of the government's lack of financial capacity to pay."

Slip op. at 33 n.20.

The credit unions alleged the government put them under "irresistible pressure" to buy the securities, but the court concluded this wasn't enough because they were not "require[d] to purchase." Slip op. at 34. The government "did not instruct the Credit Unions to purchase the bonds." Id. Yeah, the government "authorized and enticed the Credit Unions to purchase the bonds," but the purchase wasn't at the point of a gun, and the credit unions "voluntarily participate[d]" in the deal. Id. ("[W]here a property owner voluntarily participates in a regulated program, there can be no unconstitutional taking.") (quoting Franklin Mem'l Hosp. v. Harvey, 575 F.3d 121, 129 (1st Cir. 2009)).

Apparently, the plaintiffs did not allege a due process claim.

And we close by noting two items: (1) the opinion uses Courier New (very Old School, First Circuit), and (2) the opinion has a somewhat "hip" feel to it - casual, conversational; and instead of "Conclusion," it ends with the "Wrap Up." Solid.

In re Financial Oversight & Management Board for Puerto Rico, No. 22-1048 (1st Cir. Nov. 23, 2022)