inversecondemnation.com

CA9: No Taking For Charging School Fees, Because Idaho's "Free Common Schools" Clause Does Not Create Private Property Interest

We don't see any free public education here.

Some old-school property "sticks" analysis from the U.S. Court of Appeals for the Ninth Circuit in Zeven v. Jones, No. 23-35438 (Aug. 23, 2024), worth checking out.

The Idaho Constitution has a "free common schools" clause:

The stability of a republican form of government depending mainly upon the intelligence of the people, it shall be the duty of the legislature of Idaho to establish and maintain a general, uniform and thorough system of public, free common schools.

Idaho Const. art. IX, § 1.

According to some parents, the term "free" means that school districts cannot charge fees for "certain educational and extracurricular opportunities." In one case, the fees ranged from $4 for locker use, to a $32 optional fee to cover the cost of purchased items for a "health occupations" store. In another, the fees ranged from $15 to $300.

According to the plaintiffs, charging these fees violated their due process rights, and were a taking of private property without compensation. The district court granted the schools summary judgment, and the Ninth Circuit affirmed.

The court concluded that the "free common schools" provision in the state constitution does not create any private property rights that are protected by the Takings Clause. To qualify for takings protections, a property right must be (in the court's words) "vested" and a private right, which is determined by a somewhat circular analysis: a right is vested if it cannot be removed or modified without compensation. Slip op. at 22. 

Because that doesn't really help, you might want to pay attention to this passage, where the court relies on certain "core" notions. Dust off those Real Property treastises and your Blackstone:

A claimed property interest can rise to the level of a vested private property right if it concerns “a ‘core’ notion of constitutionally protected property into which state regulation simply may not intrude without prompting Takings Clause scrutiny.” Ward v. Ryan, 623 F.3d 807, 812 (9th Cir. 2010) (quoting Schneider v. Cal. Dep’t of Corr., 151 F.3d 1194, 1200 (9th Cir. 1998)). “Property’s core meaning is determined by reference to traditional background principles of property law.” Id. (internal quotation marks and citation omitted).

Tangible objects such as real and personal property fall within property’s core meaning. The Supreme Court has also extended Takings Clause protection to “the group of rights inhering in the citizen’s relation to the physical thing, [such] as the right to possess, use and dispose of it.”

Slip op. at 23-24.

Public education is not one of those things that fits "within this bundle of property rights." This is public education, and thus, "[t]he very manner in which public education is provided precludes Appellants from having a private interest in it because what constitutes public education (and therefore what constitutes free public education) can be changed by public entities as a matter of Constitutional right in Idaho." Slip op. at 24.

The opinion also contrasted "private property" as used in the Fifth Amendment with plain-old "property" as used in the Due Process Clause. The latter, the court held, protects a broader range of interests, including government-granted entitlements. Slip op. at 21-22.

There's also some "law of the case" discussion by the court, rejecting the plaintiffs' argument that one trial judge is bound by an earlier trial judge's interlocutory rulings. You know the answer to that one (our rule of thumb: until final judgment, everything is interlocutory and subject to change).

Zeyen v. Jones, No. 23-35438 (9th Cir. Aug. 23, 2024)

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)

The Eminent Domain Podcast Is Back!

As we hinted at a couple of weeks ago, we have some good -- nay, great -- news: the Eminent Domain Podcast, retired earlier this year by its originator Clint Schumacher, is back with a new host and a slightly new title: "Come and Take It: The Eminent Domain Podcast."

Bobby Debelak has stepped into the host's chair. As you might be able to tell from the new title, Bobby is also a Texas lawyer.

Here's the first episode, where Client figuratively hands the baton to Bobby. If you haven't already subscribed to the feed, now's the time so you don't miss an episode. Available on all pod feeds, so be sure to get subscribed.

Are you as excited about this as we are?

New Cert Petition: Can An Owner Whose Property Has Been Taken Sue A State Directly Under The Fifth Amendment?

Check this out, a recently-filed cert petition asking whether, in order to sue for compensation for a taking, the government must first affirmatively provide a cause of action (an issue recently left unanswered by the U.S. Supreme Court). That's an issue we've been following closely (our outfit recently filed this cert petition also). 

This one is a takings challenge to California's unclaimed property scheme and the State's immunity, vel non, to being sued for just compensation.

Here are the Questions Presented:

The State of California, pursuant to its unclaimed property laws, regularly seizes possession of owners’ unclaimed personal property, holds it in custody and trust for the owners, uses it for the state’s purposes to pay its obligations, without paying the owners of that unclaimed property any compensation for its use of the owners’ property pursuant to California Code of Civil Procedure §§1540(c) and 1562. That is an unconstitutional taking without just compensation in violation of the Fifth Amendment’s Takings Clause made applicable to the states pursuant to the Fourteenth Amendment.

The issues in this case are:

1: May a property owner whose property is taken and used by the state without compensation, sue the state directly for just compensation under the Fifth Amendment’s Takings Clause where the state has not affirmatively provided the property owner with a cause of action and in fact, has affirmatively precluded any cause of action to recover compensation for its taking and use of the owner’s property?

2: Does Eleventh Amendment sovereign immunity bar a property owner’s self-executing Fifth Amendment right to just compensation for the state’s taking of his/ her property?

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

Petition for a Writ of Certiorari, Cole-Kelly v. California, No. 24-158 (U.S. Aug. 12, 2024)

Lawprof Somin: "Federal Appellate Court Rules in Favor of Takings Lawsuit Against the CDC's Covid-Era Eviction Moratorium"

Be sure to read the entirety of Lawprof Ilya Somin's recent post on Volokh, "Federal Appellate Court Rules in Favor of Takings Lawsuit Against the CDC's Covid-Era Eviction Moratorium."

There, he analyzes the Federal Circuit's recent 2-1 opinion in Darby Dev. Co., Inc. v. United States, No. 22-1929 (Aug. 7, 2024) (we wrote up the case here: "Deepening A Lower Court Split, Fed Cir (2-1) Reinstates CDC Co-19 Eviction Moratorium Temporary Takings Claim").

Professor Somin does a better job that we did offering his thoughts on the "authorized" issue, concluding:

To me, the decisive factor should be that the Takings Clause nowhere says that compensation is only required for legal government actions or for those specifically authorized by statute. Rather, the Clause imposes a general rule that compensation must be paid whenever the government takes private property for "public use." That, of course, can happen even without proper legislative authorization. I can understand if takings liability is nonetheless denied when rogue low-level officials seize property without any plausible justification. But that isn't what happened here.

He also dives into the question of whether leasing property to a tenant is an "invitation" to occupy the property that pretty much wipes out any claim that the government restricting the ability to recover the property upon expiration or breach of the lease is a physical taking:

To put it a different way, any "invitation" expires at the point where the property owner has a legal right to evict the tenant. At that point, there is no voluntary landlord-tenant relationship anymore; and if the government forces the owner to keep on housing the tenant on his land, we have a mandated physical occupation of property, which counts as a per se taking.

Well worth reading. Check it out.

Michigan: "few rights and legal principles have greater legal, historical, and constitutional pedigrees than the protection against uncompensated takings"

Here's the latest in the solved-but-not-quite-solved issue of whether the government can keep the surplus which remains after a tax-foreclosure sale (see Tyler v. Hennepin County), the Michigan Supreme Court's opinion in Schafer v. Kent County, No. 164975 (July 29, 2024), where the court concluded that its earlier decision in Rafaeli v. Oakland County is applicable not merely going forward (prospectively) but applies to those cases which are not final and closed out.

There's a lot there -- especially on the nuances of whether judicial decisions on constitutional rights apply only prospectively, or govern cases instituted in the past -- but we are focused on the opinion's analysis of property rights and takings as matters of history and tradition. We're not going to comment here because this case is one of ours, argued by Christina Martin and Pacific Legal Foundation's Home Equity Theft team. That said, here's the holding:

Respecting traditional standards of procedure and the interest of finality, Rafaeli is the rule of the law in Michigan that governs constitutional takings; it applies to all those who have been denied the surplus proceeds that remain after their property has been seized and sold as a result of tax foreclosure. There is no basis for this Court to decline application of Rafaeli to cases that are not yet final or to timely filed claims premised on events that predated our decision in Rafaeli. Therefore, Rafaeli has full retroactive effect.

Slip op. at 21 (footnote omitted).

Check it out. There's a lot there to digest, especially what we think is the money quote:

As we explained in Rafaeli, the property right to surplus proceeds dates back to the Magna Carta, through the English common-law tradition, through Michigan’s early statehood, and into twentieth century Michigan and American jurisprudence. "[A] property owner’s right to collect the surplus proceeds from the tax-foreclosure sale of his or her property has deep roots in Michigan common law." "Because this common-law property right is constitutionally protected by our state’s Takings Clause," no subsequent amendment of the GPTA can abrogate this basic right. As Rafaeli demonstrated, few rights and legal principles have greater legal, historical, and constitutional pedigrees than the protection against uncompensated takings, which applies fully to the taking of surplus proceeds following a tax-foreclosure sale.

The Supreme Court of the United States recently came to the same conclusion under the United States Constitution in Tyler v Hennepin Co. In that case, the Supreme Court held that the Takings Clause of the United States Constitution prohibited the state of Minnesota from retaining surplus proceeds after a tax foreclosure without providing any opportunity for divested property owners to claim those proceeds. The Tyler Court, like this Court in Rafaeli, cited extensive historical support and thoroughly explained that a property right to surplus proceeds exists and is protected under Takings Clause jurisprudence. As this Court recognized in Rafaeli, this right dates back centuries to the very foundations of the Anglo-American legal tradition.

Slip op. at 22-23 (footnotes omitted).

Schafer v. Kent County, No. 164975 (Mich. July 29, 2024)

A Property Rights Advocate Is An Environmentalist Who Has Been Overregulated: Anti-Takings Advocate Argues For The Right To Exclude

You remember that old adage (or maybe its a cliché?) that "a conservative is a liberal who has been mugged?" Well, here's your environmentalist analog.

In Echeverria v. Town of Tubridge, No. 23-AP-291 (Aug. 2, 2024), the Vermont Supreme Court held that property owners' lawsuit asserting their right to prohibit the town from allowing bicycling on hiking trails on their land, and to prohibit it from allowing members of the public onto the property to maintain the trails, is ripe. The owners asserted that as the owners, they alone have the authority "whether and how to maintain the legal trails that cross their property." Slip op. at 2. Here are the details: the owners assert

sole and exclusive authority to decide whether and how to maintain the legal trails that cross their property. They alleged that the expected entry onto their property by volunteers seeking to exercise the Town's maintenance authority will adversely affect their plan to maintain the trails as natural forest paths and minimize destruction of vegetation on the trails. They further alleged that such entry would constitute a trespass and taking in violation of the Vermont and U.S. Constitutions. They sought a declaration that the selectboard does not have the legal authority to engage in maintenance or repair activities on the legal trails of the town or to delegate such authority to private individuals.

Slip op. at 3.

The trial court dismissed, agreeing with the town that the lawsuit was not ripe. No one had actually been authorized to enter the property to maintain the trails. The owners appealed to the Vermont Supreme Court.

None of this would be particularly remarkable, except that the landowner asserting the government overriding his private property right to exclude is a taking is none other than well-known environmental advocate, takings law blogger, and lawprof John Echeverria. The former Director of the now-defunct Georgetown Environmental Law & Policy Institute (those of you who were around when GELPI was active remember it primarily as the leading anti-takings laboratory, and for its annual conference for strategizing ways of defeating takings claims). An anti-takings guy asserting a taking when it comes to his property rights.

Now don't get us wrong: we wish the good law professor well in this quest. We do love it so. Because it brings us a smile -- and perhaps a small frisson of satisfaction -- to witness this road to Damascus moment, especially on the subject of property rights, takings, and ripeness, a topic the plaintiff has written a lot about:

Oh, in case you are interested, the Vermont Supreme Court reversed, and held that the owners' claims are ripe. The court reached this conclusion by treating this as a pleadings matter and not judicial gatekeeping, an analysis we've been pushing on this side for a long time:

We conclude that plaintiffs have satisfied the actual-case-or-controversy requirement here. Plaintiffs allege that the Town has adopted a new policy for maintenance and repair of legal trails. According to plaintiffs, this is the first time in the Town’s history that it has formally asserted authority to maintain and repair legal trails. The Town also established a process for private individuals to apply for and receive permission to exercise the Town’s authority to maintain and repair legal trails. Two of the Town’s four legal trails are on plaintiffs’ property. In sum, the Town has taken concrete steps manifesting its intent to enter onto plaintiffs’ property for the purpose of improving the trails. Assuming as we must for purposes of a motion to dismiss that these allegations are true, they demonstrate a sufficiently concrete threat of physical invasion and interference with plaintiffs’ asserted right to control who enters or alters their property.

Slip op. at 9. The court rejected the town's argument that someone needs to apply for a permit first before the claim becomes ripe:

This case similarly presents a justiciable claim because the Town has formally asserted that it has authority to enter onto plaintiffs’ land for the purpose of maintaining and repairing the legal trails and has created a procedure for implementing that authority, and plaintiffs assert that the Town has no legal authority to do so. This is a purely legal dispute that is appropriate for a declaratory judgment action, and resolution of this question will settle the dispute between the parties.

...

The Town argues that plaintiffs’ action is premature because no person has yet applied to maintain the trails on plaintiffs’ property. However, plaintiffs alleged in their complaint that the selectboard chair told them the Town planned to “sit on” the procedure until plaintiffs’ litigation was resolved. It is reasonable to infer from this statement that the Town fully intends to implement the new procedure and exercise its asserted right to maintain and repair trails once the litigation concludes. Moreover, the filing or granting of an application to exercise the Town’s asserted authority to maintain trails would not add any new dimension to the purely legal question presented by plaintiffs: whether the Town has that authority in the first place. Thus, the fact that no person has yet attempted to maintain the trails on plaintiffs’ property does not render this issue unripe.

Slip op. at 11-12.

And what about the town's claim that the plaintiffs were merely anticipating future action, and the court should wait (we wonder where the town got that argument from)? Nope:

We are also unpersuaded by the Town’s contention that plaintiffs’ feared injury is subject to "voluntary avoidance." The Town argues that plaintiffs have not alleged that anyone has applied to maintain the trails on their property and even if someone did, the Town would still have to review the application. This does not change the fact that the Town has asserted the right to enter, through its agents, onto plaintiffs’ property for the purpose of maintaining the trails. As discussed above, we can reasonably infer that the Town intends to implement its new procedure once this litigation concludes. There is no indication that the Town’s exercise of its asserted authority is contingent on any other actor or regulatory process. The situation here is therefore distinguishable from the cases cited by the Town, where the facts showed that the plaintiffs could avoid the threatened injury through their own avoidance or that the occurrence of the threatened injury depended on the uncertain actions of a third party.

Slip op. at 12.

Welcome to the fight! (Call us if you need an amicus brief down the road in support of your right to exclude and for compensation for a taking if the town keeps pressing.)

Echeverria v. Town of Tubridge, No. 23-AP-291 (Vt. Aug. 2, 2024)

Register Now: 21st Brigham-Kanner Property Rights Conference, William & Mary Law School, Sep. 12-13, 2024

Come join us in Williamsburg, Virginia at the William and Mary Law School for the 21st edition of the Brigham-Kanner Property Rights Conference. The Conference is unique, because its express purpose is to bring property legal scholars and property law practitioners together to discuss, what else, property and property rights law.

Yes, there's a healthy dose of theory and academics, but also the real-world perspectives of practicing lawyers who bring the cases that put theory into practice. (New to this event and want a preview? Here's our write-up of the 2024 Conference.)

More details here. Register here.

The days prior to the Conference launch on Thursday All that week, we're putting on student-oriented programming.in conjunction with the WM Law Career Services Office. Sessions on "Careers in Dirt Law," "Land Use and Real Estate Law in Practice," and "Comparative Property Rights," for example, presented by experienced practitioners including W&M Law alums who now are lawyers in the field. Thursday is the Wren Building dinner at which lawprof Lee Fennell will join the pantheon of past winners, and will be awarded this year's Brigham-Kanner Property Rights Prize.

Friday brings us to the academic portion, where five panels of national expert legal scholars and practitioners. Here's the agenda:

• Restructuring Property: A Tribute to Lee Fennell
• Background Principles, General Law, & Constitutional Property
• Roundtable: Unfinished Business & Emerging Issues
• Property Rights and The Housing Crisis
• Government Trespass: The Open Fields Doctrine Turns 100

Register now and plan on joining us!

Deepening A Lower Court Split, Fed Cir (2-1) Reinstates CDC Co-19 Eviction Moratorium Temporary Takings Claim

This one is a must-read.

In Darby Dev. Co., Inc. v. United States, No. 22-1929 (Aug. 7, 2024), the U.S. Court of Appeals for the Federal Circuit held that the Court of Federal Claims should not have dismissed Darby's complaint for failure to state a physical invasion takings claim.

The short takeaways:

• Takings claims do not require the government action be legally authorized (here, the courts invalidated the government action, after which the plaintiff sued for a taking), only that the government action was "authorized" and thus can be "chargeable to the government."
• Prohibiting evictions is not merely a regulation of the landlord-tenant relationship. Yee v. City of Escondido is distinguishable, and does not categorically exempt all actions that implicate the landlord-tenant relationship from physical takings challenge.

We think the longer story is worth your time. Here it is.

As you may recall, the Center for Disease Control purported to impose a nationwide moratorium on residential evictions during the Co-19 lockdowns. (Sidebar: we don't know about you, but the lockdowns now seem like eons ago -- some distant fever dream, no?) When the Supreme Court got a hold of a challenge to the CDC's authority to do this, the Court concluded, "[i]t strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts."

Now remember, that was one of the cases challenging the CDC moratorium on non-takings grounds, primarily asserting that the CDC's enabling statute did not give it the authority to impose such a sweeping an action (or if it does, the statute is unconstitutional). The Court invalidated the moratorium. Or, more precisely, concluded the challengers in that case stood a pretty good chance of ultimately prevailing on the merits, since this went to the Court on a preliminary injunction. In any event, that was enough, and the CDC stood down.

But as we also noted, Court's opinion contained some tantalizing takings language that we thought then (and continue to think now) predicted a physical takings claim:

Despite the CDC's determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means. And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership - the right to exclude. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982).

Not surprisingly, some property owners took up the challenge, and several takings claims against the federal government in the Court of Federal Claims followed. Some of the claims were quite ... extraordinary. Others a bit more modest. But here's the general theory most of them employed:

In their operative complaint, they claimed that the Order, by preventing them from evicting non-rent-paying tenants, constituted a physical taking of their rental properties for public use, thus requiring just compensation under the Fifth Amendment’s Takings Clause. See J.A. 37 ¶ 31, 38 ¶¶ 36–37 (describing the Order as having deprived Appellants of their “fundamental right to exclude” and having “effected a government-authorized physical invasion, occupation, or appropriation of [their] private property, for the government itself or for third parties” (cleaned up)).

Slip op. at 6-7 (footnote omitted0.

To our surprise [more like "surprised not surprised"], most of those complaints went nowhere, and floundered on familiar shoals, as in the Darby case:

The government moved under Court of Federal Claims Rule 12(b)(6) to dismiss Appellants’ complaint for failing to state a claim upon which relief could be granted. The government made two primary arguments relevant here. First, it argued that a takings claim cannot be premised on government action that was unauthorized; and, in its view, the Supreme Court in Alabama Association of Realtors essentially confirmed that the Order was unauthorized. Second, it argued that, under Yee v. City of Escondido, 503 U.S. 519 (1992), the Order could not constitute a physical taking because it merely regulated the landlord-tenant relationship.

The Court of Federal Claims granted the government’s motion and dismissed the complaint. Darby Dev. Co. v. United States, 160 Fed. Cl. 45 (2022).

Apparent Authority and "Chargeable to the Government"

The Federal Circuit first considered the government's argument that only authorized actions result in takings liability. It argued that "authorized" means legal, or done with actual legal authority. The court rejected the claim, holding that "authorized" means "chargeable to the government" Slip op. at 10. So an action that is ultimately ultra vires or illegal can result in takings liability. This reminds us of the common law "apparent authority" vibe:

An action will normally be deemed authorized if it was done by government agents “within the general scope of their duties”—i.e., if it was “a natural consequence of congressionally approved measures” or “pursuant to the good faith implementation of a congressional act.” Del-Rio, 146 F.3d at 1362 (cleaned up); see also Ramirez, 724 F.2d at 152 (“[O]n numerous occasions when the government agent was acting within the ordinary scope of responsibilities conferred on him by Congress, and took private property without express statutory authority or prohibition, the Tucker Act remedy was held to lie.”).

Slip op. at 11 & n.7 (citing Restatement (Third) of Agency § 2.02 cmt. c (Am. Law. Inst. 2006) ("In determining when an agent’s act is attributable to a principal, it is not novel to define the agent’s authority based on its reasonable (even if ultimately mistaken) understanding of the authority that the principal gave it.")).

This portion of the opinion wraps up with this summary:

To summarize: even if an action by a government agent is unlawful, it will likely be deemed authorized for takings claim purposes if it was done within the normal scope of the agent’s duties—for example, if it was done “pursuant to the good faith implementation of a congressional act.” Del- Rio, 146 F.3d at 1362 (cleaned up). If instead the action was outside the normal scope of the government agent’s duties— or, despite being within that scope, it contravened an explicit prohibition or other positively expressed congressional intent—it will likely be deemed unauthorized. See id. at 1363; Ramirez, 724 F.2d at 151. The ultimate inquiry is whether the government agent’s action is “chargeable to the government.” Del-Rio, 146 F.3d at 1362.

Slip op. at 16.

The court concluded that "because the CDC issued the Order within the normal scope of its duties, and because it did not contravene any explicit prohibition or positively expressed congressional intent in so doing (far from it, as just discussed), we concluded that the Order was 'authorized' for takings-claim purposes." Slip op. at 20.

Yee Doesn't Go That Far: Cedar Point is More On-Point

Next, the court considered whether Yee v. Escondido -- a case which has caused all sorts of mischief in the takings field -- could be employed to deem the CDC's restriction on a lessor recovering possession of rented property via eviction merely a regulation on the landlord/tenant relationship, and not the government allowing third-party occupation of property.

The court found Cedar Point more on-point: "Cedar Point's reasoning indicates that the complaint stated a physical-takings claim. And, as explained below, we consider Yee distinguishable." Slip op. at 30.

[A]t a fundamental level, we cannot reconcile how forcing property owners to occasionally let union organizers on their property infringes their right to exclude, while forcing them to house non-rent-paying tenants (by removing their ability to evict) would not.

Slip op. at 31.

The court limited Yee ("the laws at issue in Yee expressly permitted eviction for nonpayment of rent"), and noted that "Yee was fundamentally a rent-control case." Id. The court rejected each of the government's Yee-based arguments. 

First, Yee is not a get-out-of-jail-free card, and did not hold that "government actions implicating the landlord-tenant relationship can never be a physical taking." Slip op. at 31-32. Yes, there's a broad power to regulate, but "we see nothing in Yee (or any other binding precedent we are aware of) that immunizes -- as a categorical matter -- government action implicating the landlord-tenant relationship from being treated as a physical taking." Slip op. at 32.

Second, the court rejected the notion that because the owner invited the tenant to occupy the property by entering into a lease, she thereby abandons a right to recover the property upon breach of that lease. "While we agree that this point distinguishes Cedar Point, we are not persuaded that it compels a different result." Slip op. at 33.

If a previous voluntary invitation (by itself) controlled the analysis, that would essentially mean that all government actions implicating the landlord-tenant relationship are immune from being treated as physical takings. (After all, we can safely assume that just about every landlord-tenant relationship stems from a voluntary “invitation” from the landlord to the tenant.) And yet, as noted above, we see no reason why government actions implicating that relationship must be categorically immune from being treated as a physical taking. At bottom, just because tenants (or other occupiers of property) were at one point “invited” does not mean that their continued, government-compelled occupation cannot, under any circumstances, be treated as a physical taking.

Id.

The court summarized by noting that the CDC's restriction "is hardly a run-of-the-mill law implicating the landlord-tenant relationship. Instead, it is a highly-unusual -- and, so far as the parties have shown, unprecedented -- Order that outright prevent evictions for nonpayment of rent." Slip op. at 34.

The Federal Circuit joins the Eighth in limiting the scope of Yee, while other circuits (see also this) -- and some state courts -- continue to to view Yee as allowing nearly any form of regulation as long as the tenancy originally was permissive. 

One judge dissented (Judge Dyk, in case you were wondering). He focused on the "authorized" argument, and would have concluded that the CDC's actions were not within the "normal scope" of the agency's duties, and was "well-outside" what the CDC is charged with doing. In other words, the more the CDC strayed outside the lines, the less its actions could result in a taking.

This, he asserted, would result in a massive expansion of government liability:

It would effectively make even clearly unauthorized agency action authorized for purposes of takings liability unless that action was contrary to a specific prohibition of the authorizing statute or taken in bad faith. That cannot be correct. The majority’s decision would work a sea change in our takings jurisprudence and impose significant takings liability on agencies for unauthorized acts, directly discouraging adoption of legitimate government programs because of the risk of takings liability in addition to injunctive and declaratory relief. Historically, unauthorized programs were enjoined. Now, in addition there is the specter of takings liability.

Dissent at 3.

The length of Judge Dyk's dissent tells us he was trying to set up en banc review, or even a government cert petition.

So stay tuned.

Darby Dev. Co., Inc. v. United States, No. 22-1929 (Fed. Cir. Aug. 7, 2024)

New Cert Petition: After Permit Denial, To Ripen A Takings Claim Do You Have To Keep On Trying?

Check this out, the latest takings cert petition from the Pacific Legal Foundation shop.

Since this is one of ours (our colleague Chris Kieser is in the lead), we're not going into too much detail, but will say that this involves ripeness in a regulatory takings claims, a topic we've been focused on a lot lately.

The question here is once the government says "no" to a development plan, must the owner keep on asking? What's that old adage? If at first you don't succeed, try and try again? We know that in land use, that means as long as the government says it is willing to "clarify" or "change" its decision (something it almost always asserts it is able and willing to do), most courts will very likely never hold it to task. Planning authorities know this, and as a consequence are hardwired to almost never say no, and only "no, but..." or "maybe." Which puts owners in permit purgatory. Or as The Eagles noted, "you can check out any time you like, but you can never leave."

Until the Supreme Court wakes up to this dynamic, nothing is likely to change.

Here's the Question Presented:

Lemon Bay Cove, LLC, sought permission from the United States Army Corps of Engineers to develop coastal property in Charlotte County, Florida. After soliciting public comment concerning the environmental impact of the proposed project, the Corps told Lemon Bay to look for a different parcel to develop. More than three years later, the Corps denied Lemon Bay’s permit application with prejudice. Lemon Bay sued, arguing that the denial of the permit deprived the land of all economically viable use and thus effected a per se taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). The Court of Federal Claims held that Lemon Bay had not shown a denial of all economically viable use because it could have asked the Corps for permission to build a smaller development that might have been approved.

The question presented is whether a regulatory takings claim seeking just compensation under Lucas may be defeated by the mere possibility that a permitting authority might have approved a smaller development proposal.

Lawprof Dennis Crouch has written up the case in more details at the Patently-O blog, in his post "Bleak House Revisited: Lemon Bay Cove and the Regulatory Takings Quagmire." Recommended reading.

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

Petition for Writ of Certiorari, Lemon Bay Cove, LLC v. United States, No. 24-134 (U.S. Aug. 2, 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)

NC App: "Map Act" Takings Are Temporary, Valued Not By Rent But "by taking into account all pertinent factors"

A fairly short one from the North Carolina Court of Appeals, but well worth your time to read.

Mata v. N.C. Dep't of Transportation, No. COA23-1140-1 (July 16, 2024) is the latest in the "Map Act" takings cases that we have long covered. There, N.C. legislature adopted a statute that identified future highway corridors and then "restricted [owners'] fundamental rights to improve, develop, and subdivide their property for an unlimited period of time." Kirby v. N.C. Dep’t of Transp., 239 N.C. App. 345, 769 S.E.2d 218 (2015), aff’d, 368 N.C. 847, 786 S.E.2d 919 (2016). The Map Act also classified these properties as eligible for a 20% to 50% reduction of the appraised value for property tax purposes.

In Kirby, the North Carolina Supreme Court held that the restrictions the Act imposed amounted to a taking. In response, the N.C. legislature rescinded the Map Act.

The Matas own property that was burdened by the Map Act restrictions from the time of the adoption of the Act until it was repealed (August 1996 to July 2016). The question in the case is calculation of the amount of just compensation that NCDOT must provide.

First, the court rejected NCDOT's argument that the taking here was permanent and not temporary. True, Kirby held that the Map Act restricted owners' uses "for an unlimited period of time," but that was before the lege repealed the statute. Slip op. at 9-10. As the court noted:

The Map Act restrictions dates in effect were properly defined from DOT’s recording the highway corridors on 6 August 1996 until the corridors were rescinded as of 11 July 2016. The taking was no longer “indefinite.” The trial court correctly defined and concluded the dates above are the operative dates of Plaintiffs’ alleged temporary taking.

Slip op. at 10.

The court next rejected the trial court's conclusion that rental value was the proper way to determine just compensation for the temporary taking. But wait, you say, isn't rental value the time-tested method of determining just compensation for temporary takings? Yes, for sure.

But here, the court of appeals concluded that in an earlier case, Chappell v. N.C. Dep’t of Transp., 374 N.C. 273, 841 S.E.2d 513 (2020) (which we summed up here), the court held the "before and after" method was the right way. Consequently, the court of appeals held:

The damages are calculated based upon the diminution in value of Plaintiffs’ property during said period. Id. The trial court erred in ordering a calculation based on “rental value,” as the proper measure is any proven diminution in value during the relevant period “taking into account all pertinent factors” to include the reduction in accessed [sic] ad valorem taxes Plaintiffs benefited from during the relevant temporary taking. Id.

Slip op. at 10-11.

This strike us as odd. It's one thing to say that as a general proposition compensation for a temporary taking is calculated as the "diminution of value during the relevant period 'taking into account all pertinent factors'[,]" and another entirely to reject the trial court's conclusion that rental value is a way to make the determination apparently because it didn't "show its work" and invoke the magic words. On remand, would it pass muster for the trial court to conclude, "After taking into account all pertinent factors, the court concludes that rental value to be the proper measure of damages in this temporary taking"? We'd think so.

We suspect the court of appeals isn't reading Chappell properly. To us, that case did not hold that "all pertinent factors" are words that must be expressly invoked, but instead concluded that there are multiple ways to value temporary takings, as long as those methods take into account all pertinent factors (as all valuations must do, no?). It hardly seems like error here for the trial court to have reached the conclusion (after, we assume, assessing all pertinent factors that go into an expert's valuation opinion) that indeed, rental value is the most accurate way to ensure the owner has been put in a position he would have been had his property not been taken.

Will there be more? Stay tuned.

Mata v. N.C. Dep't of Transportation, No. COA23-1140-1 (N.C. App. July 16, 2024)

Statute Allowing Public To Access Formerly Private Portions Of Rhode Island Beaches Is A Taking

Check out this decision, entered by a Rhode Island Superior Court (a general jurisdiction trial court) denying the State's motion for summary judgment. The court concluded that a recently-adopted statute shifting the boundary between public and private property on RI's beaches is a taking.

We won't be commenting in too much detail because this is one of ours (PLF colleague Dave Breemer represents the plaintiffs). But here's what you need to know:

• Until recently, RI law used the high water mark (mean high-tide line) as the boundary between the public beach and private property.
• In 2023, the RI Assembly adopted a statute that redefined that boundary, and moved it shorewards to where "the land held in trust by the state for the enjoyment of all of its people ends and private property belonging to littoral owners begins."
• As a consequence, the public may enter and use "where shore exists, on wet and or dry sand or rocky beach, up to ten feet (10') landward of the recognizable high tide line."
• Takings claim under both RI and U.S. Constitutions followed. The State moved to dismiss, and the court converted it to a motion for summary judgment.
• The court first recognized that the public trust doctrine preserves the public's ability to engage in certain activities in state waters and to access the shoreline.
• In 1982, consistent with longstanding U.S. Supreme Court precedent, RI established the mean high tide line as the boundary between private property, and the area in which the public can exercise those rights.
• The court rejected the State's argument that the public trust and custom have rendered public access on this part of a beach a "background principle" that effectively removed the right to exclude stick from littoral owners' bundle.
• Not so, held the court: "The General Assembly, in enacting The Act, appropriated a public right of access onto private property when it designated up to 10' landward of the recognizable high tide line as the access point for the public's rights and privileges." Slip op. at 10-11.
• "Therefore, The Act, in disposing of the MHT line, extended the point of public access over the Plaintiff’s private property. Furthermore, rather than restraining the Plaintiff’s use of their own property, The Act extends permanently a right of access to the public and inhibits Plaintiff’s right to exclude. The extension of the access point clearly results in the taking of 'an interest in property.'" Slip op. at 11.
• "The Act reduced the Plaintiff’s “bundle of rights” inherent in the ownership of property by expanding the preexisting boundary line to ten feet landward of the recognizable high tide line and confiscated the Plaintiff’s property resulting in an unconstitutional taking." Id.

More on the decision here:

• R.I. Superior Court judge sides with property owners in shoreline access law dispute" (Rhode Island Current)
• "RI judge sides with beachfront homeowner in court fight. What does it mean for public beach access?" (The Providence Journal)
• "Initial Court Ruling Tosses Sand on R.I.'s Year-Old Beach Access Law" (ecoRI News)

According to these stories, the State indicates it is going to appeal to the RI Supreme Court, so stay tuned.

Decision, Stilts, LLC v. State of Rhode Island, No. SC-2023-0481 (R.I. Super. July 12, 2024)

New Article - "Sheetz v. County of El Dorado: Legislatures Must Comply with the Takings Clause" (Brian Hodges & Deb La Fetra)

Check this out: our Pacific Legal Foundation colleagues (Brian Hodges and Deborah La Fetra we on our Sheetz SCOTUS team), have posted a new scholarly piece on SSRN, "Sheetz v. County of El Dorado: Legislatures Must Comply with the Takings Clause."

Here's the Abstract:

For more than 30 years, the Supreme Court has recognized that building permit conditions requiring a dedication of property to the public implicate the Fifth Amendment’s Takings Clause and are therefore subject to the unconstitutional conditions doctrine as set out by Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). But for nearly as long as the Nollan/Dolan doctrine has been in place, state and lower federal courts have divided on the foundational question of whether the doctrine applies equally to all branches of government, or if it applies only to administrative exactions imposed by agencies on an ad hoc basis. See, e.g., California Bldg. Indus. Ass’n v. City of San Jose, 136 S. Ct. 928, 929 (2016) (Thomas, J., concurring in denial of certiorari) (acknowledging a decades-long split of authority); Parking Ass'n of Georgia, Inc. v. City of Atlanta, 515 U.S. 1116, 1117-18 (1995) (recognizing that the split of authority raises an important question of constitutional law).

The United States Supreme Court’s unanimous decision in in Sheetz v. County of El Dorado settled this split of authority by ruling that the unconstitutional conditions doctrine applies to all branches of government, including the legislature. 601 U.S. 267, 280 (2024). Although the holding drew support from the full Court, the opinion drew three concurring opinions commenting on additional questions may need to be determined on remand or in future litigation. Id. at 280-84.

This article reviews the state of the law regarding Nollan/Dolan’s special application of the doctrine of unconstitutional conditions both before and after the Sheetz case and discusses the questions posed by the concurring opinions—i.e., whether an impact fee is an exaction subject to Nollan and Dolan and whether class-based exactions should be held subject to the same heightened scrutiny, “essential nexus” and “rough proportionality” tests as all other exactions. The article then discusses the decision’s implications on other emerging takings issues, including whether sovereign immunity can bar property owners’ recovery of just compensation and the cognizability of judicial takings claims.  

Download the article here.

Highly recommended.

New Cert Petition: Does The Obligation To Provide Just Compensation Waive Sovereign Immunity?

Because the latest takings cert petition is one of ours (our colleagues Dave Breemer and Deb La Fetra are counsel for the petitioner), we won't be commenting all that much on it.

Except to say that this is the latest in a series of cases where the obligation to provide just compensation for takings butts up against a state government's claim that it cannot be sued in federal court unless it agrees to be sued. We wrote up the Seventh Circuit's opinion below here ("Coming And Going: Eleventh Amendment Trumps Fifth Amendment - States Must Consent To Be Sued In Federal Court, Even For Just Compensation")

Here are the Questions Presented:

1. Whether a state’s constitutional obligation to pay just compensation when taking property waives its sovereign immunity from a claim seeking damages for an unconstitutional taking?

2. Whether a property owner may sue state officials in their personal capacity under 42 U.S.C. § 1983 for a violation of the Takings Clause, as the First Circuit holds, or whether such a personal capacity suit is barred, as the Seventh and Sixth Circuits hold?

Dust off your Federal Courts hornbooks and follow along here, or check out the Court's docket.

Petition for Writ of Certiorari, Gerlach v. Rokita, No. 24-21 (U.S July 9, 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)

Fla App: Govt Agreed To Be Bound By Restrictive Covenant, But So What!

A short one (per curiam is one two-sentence paragraph), with an interesting concurring opinions from the Florida District Court of Appeals (4th District).

In Vazquez v. City of Hallandale Beach, No. 4D2023-0833 (June 12, 2024), the court held that a restrictive covenant that ran with Vazquez' land (and others in his subdivision, including the city, which had agreed to be bound by the covenant in the settlement of a 1969 lawsuit) is not a compensable real property interest that must be compensated when wiped out by what otherwise would be a regulatory taking.

Vazquez sued the city, asserting that its marina and parking lot violated a buffer zone which had been created by the 1969 settlement. The city was a party to that lawsuit and settlement agreement. The city agreed that yes, the buffer zone indeed had that effect. But we're the government and even though we agreed to be bound by the restrictive covenant in that settlement agreement back in the day, we're not bound by it now. These are contract rights not property rights, and thus unenforceable against the government.

Chief Judge Klingensmith "reluctantly" concurred, noting that the precedents support the court's conclusion when the government has not bound itself via agreement to the covenant. However, he found it important that the city was a party to the settlement and had agreed to be bound:

Phrased differently—in contrast to Bay Harbor and Ryan—the City did not simply acquire land with an existing restrictive covenant attached to the land. Rather, the City created the same restrictive covenant that it now seeks to destroy. Thus, the fact that the City did not own the property in question at the time of the 1969 settlement is irrelevant.

The City also argues that even though it was a party to the 1969 agreement which created the restrictive covenant, and despite the City being involved in a 2012 declaratory judgment action to enforce the restrictive covenant, the City itself was not—nor was it ever—bound by that restrictive covenant. Indeed, the City claims it was free to violate the restrictive covenant at will and has no obligation whatsoever pursuant to Bay Harbor and Ryan to use the power of eminent domain to extinguish the restrictive covenant. In my opinion, this is the very definition of an illusory contract. Despite the City’s assertions that the contract is not illusory, the City has wholly failed to explain under these circumstances why it is not. Pan-Am Tobacco Corp. v. Dep’t of Corr., 471 So. 2d 4, 5 (Fla. 1984) (a contract is illusory if it is not mutually enforceable).

Slip op. at 3 (Klingensmith, C.J., specially concurring).

Judge K didn't like this, but felt "constrained" by the Florida Supreme Court's decisions in the Bay Harbor and Ryan cases that restrictive covenants are categorically contract rights not enforceable against the government, and not property rights. In his view, "both private and public parties should be held to the agreements which they freely enter." Slip op. at 3-4 (Klingensmith, C.J., specially concurring).

One other judge also specially concurred, noting that the 1969 settlement agreement did not contain a clear and express waiver of the city's sovereign immunity.

With two judges offering their input, might this not be the end of this one? Stay tuned.

Vazquez v. City of Hallandale Beach, No. 4D2023-0833 (Fla. Dist. Ct. App. June 12, 2024) (per curiam)

Vermont: Environmental Court Doesn't Have Jurisdiction To Determine Property Rights, But We're Going To Find No Cedar Point Taking Anyway

DJK was adding a bedroom to an existing residence and needed a wastewater permit from Vermont's environmental agency. The agency has a "presumptive isolation zone" around potable water supplies and septic systems in which a property owner is presumed to be barred from doing anything sewage related. In this case, the isolation zone for DJK's property crossed over onto the property of their neighbors, the Crowleys.

The agency granted DJK the permit, which contained a provision that not only no sewage-related construction could take place in the isolation zone, but that "[n]o buildings" could be construction which "might interfere with the operation of a wastewater system or potable water supply[.]" Remember, the isolation zone was located partially on the Crowley property.

The Crowleys were not very appreciative, so appealed (to a Vermont trial court sitting as the Environmental court). They argued that the permit was invalid because it worked a taking of their land, imposed an unconstitutional condition, and they had not received notice and an opportunity to be heard before the permit was issued.

The Environmental court granted the agency summary judgment, concluding the court lacked jurisdiction over what it called the "property-related issues and rights." But the court continued and considered if the permit imposed an uncompensated taking ("The court did consider if 'the Rules, as applied to [neighbors] by way of the Permit, amount[ed] to a taking due to the State’s placement of potential development limitations on their propert[y].'"). We're not all that clear on the distinction being drawn and how a court without jurisdiction can make a ruling on the substance of the claim, but there it is. The court concluded the permit did not impose a physical invasion taking, and the Crowleys got all the process they were due.

In In re DJK, LLC, No. 22-AP-269 (June 14, 2024), the Vermont Supreme Court affirmed. The court rejected the Crowleys' assertion that the case "involves the legality of permit conditions," which would mean that the Environmental court had jurisdiction under the Vermont statute which grants jurisdiction over such claims. Slip op. at 10.

Not so, held the court, "[t]he fact that the Environmental Division [of the trial court] has authority to consider permit appeals does not authorize it to adjudicate private property disputes, such as the existence of easements. The civil division, not the Environmental Division, has jurisdiction over such matters." Slip op. at 11. This is a "private property dispute," slip op. at 12, and thus no jurisdiction. Slip op. at 14 ("Neighbors offer no persuasive authority in support of their assertion that the Environmental Division had jurisdiction to determine if the permit created an easement in their property and we reject their first claim of error.").

Well, okay then. End of this story, no? If the Environmental division doesn't have jurisdiction but the civil division does, the Crowleys can go file their constitutional claims there, right? You might think a "no jurisdiction" conclusion would mean that any rulings by the Environmental division would be ultra vires, yes? Or maybe not:

¶ 35. As referenced above, the Environmental Division did consider if the permit condition effected a taking under the analysis in Cedar Point Nursery, that is, whether the regulation authorized a physical invasion of their property. This was consistent with its authority to consider “property-related issues and rights . . . within the scope of the regulations governing the permit application.”

Slip op. at 14-15.

Wait, what? To get to this conclusion, the Supreme Court had to make a very nuanced distinction: the Environmental court didn't have jurisdiction to consider the constitutionality of the agency's actions, but nonetheless could reach the conclusion that the permit did not impose a physical invasion taking, and this is consistent with its jurisdiction to consider property issues "within the scope of the regulations governing the permit application." See slip op. at 15 ("¶ 37. Neighbors fail to show that the court erred in finding the absence of any physical invasion here.").

There might have been an easement created by the isolation zone (and that is a matter beyond the jurisdiction of the Environmental court), but the court concluded that there hasn't yet been an "actual physical invasion" of the Crowley's property. Slip op. at 16. 

If you can figure this one out in a way that makes sense, please let us know.

In re DJK, LLC, No. 22-AP-269 (Vt. June 14, 2024)

Register Now! ALI-CLE Webinar "Property Rights and Regulatory Takings at the Supreme Court" (With Counsel For Sheetz & Devillier) - July 16, 2024

Mark your calendars and register now for the upcoming American Law Institute-CLE webinar "Property Rights and Regulatory Takings at the Supreme Court." The focus of this program is a summary and analysis (including "what's next?") of the two big property and eminent domain cases decided by the U.S. Supreme Court, Sheetz (exactions), and Devillier (just compensation remedy).

We've brought together counsel for the property owners in the cases, as well as a legal scholar to provide an academic view of the cases and issues.

The faculty:

• Larry Salzman - Vice President for Litigation, Policy & Research, Pacific Legal Foundation
• Robert McNamara - Deputy Litigation Director, Institute for Justice
• Professor Elizabeth Elia - University of New Mexico School of Law

Details:

• Date: July 16, 2024
• Time: 12n - 1pm Eastern Time
• Format: webinar, with audience questions
• CLE credits: ALI-CLE programs are approved for CLE credits in most jurisdictions

Come join us!

More details including registration information here.

New Cert Petition: When Does The Statute Of Limitations Start To Run On A Reg Takings Claim?

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

Check out this cert petition which asks about what actions trigger the statute of limitations on a takings claim. This is an issue that seems to be cropping up more and more these days. For example, see here, here, here, here, and here.

Here are the Questions Presented:

Whether the statute of limitations for a Section 1983 takings claim for the unconstitutional deprivation of private property (specifically real estate) can begin to run before the municipal action that caused the property owner to sacrifice all economically beneficial uses has transpired?

And further, whether the Tenth Circuit Court of Appeals used the proper unit of property to measure if Mr. Bruce was forced to sacrifice all economically beneficial uses of his property?

And finally, whether the 14th Amendment’s due process provisions permit the mayor of a city with a political or policy interest in the demolition of a building to act as the judge who determines whether a city will order the demolition of that building?

Follow along on the Court's docket here.

Petition for Writ of Certiorari, Bruce v. Ogden City Corp., No. 23-1260 (U.S. June 3, 2024)

New Article: "At Will [Employment] as Taking," 133 Yale L.J. 2165 (2024)

Here's the abstract:

Employment at will is legally and politically entrenched. It is the default termination law in forty-nine states and controls the working lives of most U.S. workers, creating a political economy of precarity and exploitation. In light of these challenges, this Essay offers a novel framework for a constitutional challenge to the at-will termination regime under the Fifth Amendment’s Takings Clause.

The argument advanced in this Essay is that at-will rules strip workers’ job security and are, thus, unconstitutional takings of workers’ property. Following the Supreme Court’s lead, numerous courts equate public-sector workers’ job security with property entitlements in their jobs under the Due Process Clause. I offer theories to expand this doctrine from the public sector to the private sector, and from the Due Process Clause to the Takings Clause. As a sword, takings claims can be raised against the prevailing termination regimes in forty-nine states. As a shield, at-will-as-takings claims can protect public-sector workers against increasing precarity in federal, state, and local government work.

This Essay makes two additional contributions. First, it rejects the premise underlying contemporary critiques of the Supreme Court’s takings doctrine that identify employers as the only property owners on the job. Second, it offers a property-friendly progressive constitutional vision that rejects reliance on the administrative state as the only tool for progressive policy advancements.

Read the entire article here.

What do you think?

La Cour suprême du Canada: In Constructive Takings, Compensation Calculated Without Reference To "The Scheme"

Readers know that from time-to-time, we like to cover the going's on in the courts of our neighbors to the north. See here and here, for example. Although property rights are not a constitutional principle in Canada (the people did not include property as a fundamental constitutional right when the Constitution was amended last), there's a lot for U.S. lawyers to learn from the way Canada law treats those from whom the government must expropriate property (either directly, or in what they call "de facto" or constructive takings (i.e., regulatory takings and inverse condemnation). In some ways, their system treats property owners slightly better than our constitutional system.

Well, here's the latest in a case we've been following.

In St. John's (City) v. Lynch, 2024 SCC 17 (May 10, 2024), the Supreme Court held that compensation in a de facto taking is calculated by excluding the effects of the challenged regulation. What they call up there the "Pointe Gourde principle" -- the idea in expropriation valuation that the effects of "the scheme" should not influence the calculation of compensation -- what we call "the scope of the project" rule, or even the "before and after" rule. 

Rather than continue to delve into areas well beyond our expertise and understanding, we're going to refer you to a blog post by our Toronto friend and colleague Shane Rayman and his firm colleagues Conner Harris and Leah Cummings. They filed a friend-of-the-court factum on behalf of the Canadian Home Builders Association. The Court adopted much of their reasoning, by the way.

In "Supreme Court of Canada Clarifies Law of Constructive Takings," they write:

The Court confirmed that the Pointe Gourde principle, also known as “screening out the scheme”, applies to constructive takings in the same way as it does to statutory or de jure expropriations. The Pointe Gourde principle is a common law rule invoked as part of the determination of market value when land is expropriated. The principle seeks to remove extrinsic influences associated with the taking, ignoring both increases and decreases in value caused by the expropriation scheme to avoid placing an economic burden on the expropriated owner or granting to them a windfall gain (para 37). The Court clarified the application of the Pointe Gourde principle and confirmed that land-use regulations undertaken “with a view to the expropriation” must be screened out when determining the market value of expropriated land. This is the case regardless of whether the taking is de jure or constructive.

Check both the opinion and their post out.

Many good lessons await for U.S. property lawyers.

St. John's (City) v. Lynch, 2024 SCC 17 (Supreme Court of Canada, May 10, 2024)

Lawprof Lee Fennell To Be Awarded 2024 Brigham-Kanner Property Rights Prize

Lawprof Lee Anne Fennell, whose work makes frequent appearances here (see here, here, and here for example), has been selected as this year's recipient of William and Mary Law School's Brigham-Kanner Property Rights Prize. See this announcement for details.

“Lee Fennell is one of the most thoughtful and thought-provoking scholars writing about property law in the United States today,” said James Y. Stern, Professor of Law at William & Mary Law School and Director of William & Mary’s Property Rights Project. “Her work examining property’s conceptual and social boundaries has almost literally helped to reshape thinking about property law, and the Brigham-Kanner Prize is a fitting tribute to her many contributions.”

Save the date: the Prize will be awarded as part of the 21st Brigham-Kanner Property Rights Conference, to be held at the law school in Williamsburg, Virginia, September 12-13, 2024. That's a bit earlier in the calendar than usual, so make your plans to join us now.

As we've said before, the B-K Conference is the best one-day property rights conference, which is designed to bring the practicing property bar together with the legal academy to talk about dirt law.

Join us!

Tex App: A Fight Over Who Owns A Historic Letter Isn't A Takings Problem

Check out Texas State Library and Archives Comm'n v. Westmoreland, No. 03-22-00276 (Mar. 22, 2024), where the Texas Court of Appeals (Third District) rejected a claims of a putative owner of a letter that the State of Texas asserting that it owns the letter would be a taking.

Westmoreland possesses a historic letter, and offered it to the Commission for sale. Instead of negotiating, the Commission claimed that the letter is a "state record" that had at some point in the past been purloined from the State. We're not going to buy from you what is already ours!

The Commission sued. Westmoreland brought counterclaims, including, inter alia, for a taking because "the Commission has clouded his ownership of the Letter by filing the present lawsuit[.]" Slip op. at 5. The commission's lawsuit challenges Westmoreland's ownership, and does not raise takings concerns:

[T]he Commission, through its lawsuit, seeks a judicial determination of the ownership of the Letter. If the trial court determines the Letter is a state record that was removed without authorization by law, then the Letter is property of the State and no unlawful taking has occurred because the Commission has not “taken, damaged, or destroyed” Westmoreland’s property, but is rather seeking the return of State property. See Tex. Const. art. I, § 17(a). Alternatively, if the trial court determines the Letter is not a state record, then the Letter is Westmoreland’s property and the Commission has no right to the Letter under the record recovery statute. See Tex. Gov’t Code § 441.192(c). Although Westmoreland asserts “independent” counterclaims, the sole issue and dispute between the parties is ownership of the Letter (determined through the Commission’s right of recovery), and therefore there is no basis for Westmoreland to assert a constitutional takings claim.

Slip op. at 8-9.

Seems very similar to this recent decision by the California Supreme Court holding that a court determining the winner in an easement beef isn't a judicial taking.

Texas State Library and Archives Comm'n v. Westmoreland, No. 03-22-00276-CV (Tex. App. Mar. 22, 2024)

Blinded Me With Science! No Taking For Selective Co-19 Business Shut-Down, But Might Violate North Carolina's Fruits Of Labor Clause

Check out the North Carolina Court of Appeals opinion in North Carolina Bar and Tavern Ass'n v. Cooper, No. COA22-725 (Apr. 16, 2024).

We're not going to go into great detail, mostly because this one tracks the most common judicial approach to takings challenges to business shut-down orders during the Co-19 period. The court concluded that the State's selective shut down of certain bars but not others was neither an "emergency commandeering" under North Carolina's emergency response statute, not a physical, Lucas, or Penn Central taking. Read the opinion for the reasons why.

But there is more than one way to skin that cat. The court held that the trial court should not have rejected the plaintiff's motion for summary judgment on its North Carolina's Fruits of Labor Clause claim.

That provision states:

We hold it to be self-evident that all persons are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, the enjoyment of the fruits of their own labor, and the pursuit of happiness.

N.C. Const. art. I, § 1.

The court held that the State's invocation that its treatment of the plaintiffs was backed by "data and science" was not enough. A government action violates the Fruits of Labor Clause if it bears "no rational, real, or substantial relation to the public health, morals, order, or safety, or the general welfare." Slip op. at 24.

In other words, "if the restrictions are arbitrary and unreasonable." Id. But unlike those situations where a court is reviewing governmental action under the rational basis test where the mere invocation of "science" is usually enough to satisfy the test, under the Fruits of Labor Clause that science has to be kinda good science. See slip op. at 27 ("Although we view the evidence in the light most favorable to Defendant for purposes of summary judgment, we must also review the scientific evidence that was before the trial court, which acts in its capacity as the gatekeeper of expert testimony, to determine whether it is sufficiently reliable.").

Check it out.

North Carolina Bar and Tavern Ass'n v. Cooper, No. COA22-725 (N.C. App. Apr. 16, 2024)

Aloha To Another Semester Of U. Hawaii Land Use

There are some rewards for working late in the 808

Yesterday was the last day of instruction for the Spring 2024 semester at the University of Hawaii Law School. Did these last few months ever go by fast. 

A big thank you to Professor Mark M. Murakami, with whom I guest-lectured at the Old School (both of us earned our JD's at the Law School) over the semester, on such topics as Euclid, vested rights and development agreements, and of course limitations on the police power such as takings.

Although our students have another couple of weeks to finish up with their final papers, we can say with certainty that the future of Hawaii land use law is in good hands. We had some very intriguing and educational discussions over the past few months. 

Law of the Splintered Paddle

      
Old School chalkboards remain in some of the classrooms.
(A plus.)


Speaking of Old School, the original signage from
the Law School's original location is up in the front office.

Flora abounds on the U. Hawaii campus, as you might expect.
Not a bad place to learn the law. Or to teach the law.

We say a fond "aloha" to our new colleagues

New Cert Petition: Tolling Statutes Of Limitations; Are Equitable Remedies Available For Takings?

Here's the latest, a cert petition where the property owners are represented by Michael Berger.  

We're not going to be saying too much here, because a Berger cert petition certainly doesn't need any furter explication by us. And, our firm is going to be filing an amicus brief, urging the Court to take up this case (so this is going to be one of our cases, too).

Here are the Questions Presented:

Petitioners’ predecessors sold an easement to the United States in order to preserve the land’s environmental character and to permit members of the public to use the easement as a trail. The property was unimproved and the grantors expected it to remain that way. When the property owners learned that the government intended to build a paved road instead, they sued. The trial court held that they waited too long and granted summary judgment to the government. That allowed it to construct a raised and paved roadway across the otherwise pristine landscape. The Ninth Circuit affirmed, in an opinion raising these questions:

1. Whether equitable tolling is available for statutes of limitation, highlighting a conflict between Boechler, P.C. v. Commissioner, 142 S. Ct. 1493, 1500 (2022), holding that such relief is “presumptively” available, and the earlier decisions in United States v. Beggerly, 524 U.S. 38, 49 (1998) and Block v. North Dakota, 461 U.S. 273, 287 (1983), holding that the statute of limitations must be “strictly” applied.

2. Whether the only remedy for a regulatory taking is cash payment, a conclusion of the Ninth Circuit that conflicts with recent decisions of this Court, like Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021); Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987); Dolan v. City of Tigard, 512 U.S. 374 (1994); and Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005), holding that takings relief is not limited to compensation but can be declaratory or injunctive, depending on the circumstances.

3. Whether a constitutional right can be eliminated by a statute — in this case, whether the “self-executing” just compensation provision of the Fifth Amendment can be eliminated by a statute purporting to impose an artificial time limit in which to sue to enforce that constitutional guarantee.

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

Petition for a Writ of Certiorari, Sawtooth Mountain Ranch, LLC v. U.S. Forest Svc., No. 22-1103 (U.S. Apr....

"Breaking Down the Supreme Court Ruling on Permit Fees" (Thursday, Apr. 25, 2024, 4pm ET/1pm PT)

Be sure to join our Pacific Legal Foundation colleagues Brian Hodges and Larry Salzman, and Paul Beard (arguing counsel) and Chance Weldon (Texas Public Policy Foundation) tomorrow, Thursday, April 25, 2024, at 4pm ET for a free webinar on Sheetz v. El Dorado County, the Supreme Court's recent decision holding that all permit conditions are subject to the nexus and proportionality tests of Nollan and Dolan.

Here's the description:

Pacific Legal Foundation just won its 18th Supreme Court victory! Join us for a virtual discussion to learn more about the case, Sheetz v. County of El Dorado, and how it helps secure property rights (and lower housing costs) for everyone. 

When George Sheetz wanted to build a modest manufactured home on the property he bought in El Dorado Country, California, the government told him he was going to have to pay a “traffic impact fee” of more than $23,000 in exchange for a building permit. Even worse, the fee would go toward projects that were not tied to the actual impact of George’s home.  

George challenged the fee as an unconstitutional abuse of the permitting process. On April 12, the Supreme Court sided with George in a unanimous decision. At this post-victory discussion, attendees will hear from Paul Beard, the former PLF attorney now at Pierson Ferdinand who argued George’s case before the Court. You’ll also hear from PLF attorney Brian Hodges, who worked on George’s case, and Texas Public Policy Foundation’s Chance Weldon as they break down the Sheetz decision and its significance for property rights and housing costs. 

Register here (free)!

 

Our thoughts on the decision here ("Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It").

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. II: The Concurrences - Does Nollan/Dolan Operate Differently When Exaction Affects A Class?

Note: this is the second of our 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 our first post, which covers the case and the main opinion ("Sheetz pt. I - 'Radical Agreement' At SCOTUS: 'Your Money Or Your Rights' Isn't OK Just Because A Legislature Does It").

[Disclosure: this case is one of ours.]

In this post, we cover the three very short concurring opinions.

* * * *

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 also 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.

Now that the Court has expressed unanimity on the Question Presented in Sheetz (does the government have the unfettered ability to demand "the goodies" simply because a property owner needs the government's approval to make use if his or her land? No.), let's take a look at the three concurring opinions. 

Sotomayor & Jackson: Hands Off Taxes!

Justice Sotomayor joined by Justice Jackson, wrote separately to restate their agreement with the narrow holding (answering the Question Presented and only the Question Presented) that legislatively-imposed exactions are subject to Nollan and Dolan.

But they noted that this case assumed the "predicate" inquiry that "government could not have constitutionally ordered the person asserting the claim to do what it attempted to pressure that person into doing." Concurring op. at 1 (citing Koontz). thus, "[t]he question presented in this case did not include that antecedent question: whether the traffic impact fee would be a compensable taking if imposed outside the permitting context[.]" Concurring op. at 2.

What we think they are getting at is that straight-up government requirements that some, or all, persons pay money for something (also known as taxes or sometimes fees), are not subject to nexus or proportionality (or at least not in the same way as property exactions are). Fees and taxes may be subject to other limitations, but they are not, generally speaking, evaluated as "takings." 

It probably shouldn't be surprising that Justice Sotomayor concurred on this basis, since during oral arguments, she seemed particularly concerned with the line between exactions, fees, and taxes.

Gorsuch: Broadly-applicable exactions are no different than parcel-specific exactions

Justice Gorsuch preemptively addressed a question that was bandied about at oral arguments, but that the entire Court determined was not presented by the case (so the majority opinion avoided doing more than mentioning it):

The Court notes but does not address a separate question: whether the Nollan/Dolan test operates differently when an alleged taking affects a "class of properties" rather than "a particular development."

Concurring op. at 1. He answered his own question: "But how could it?"

He goes on to note that "[n]othing about" the Nollan/Dolan test "depends on whether the government imposes the challenged condition on a large class of properties or a single tract or something in between." Concurring op. at 1-2.

Short story: there's no reason to not apply the Nollan/Dolan tests to "class" exactions.

Kavanaugh, Kagan, & Jackson: class exactions subject to different nexus and proportionality tests

Three Justices expressed a slightly different view, noting that "today's decision does not address or prohibit the common government practice of imposing permit conditions, such as impact fees, on new development through reasonable formulas or scheduled that assess the impact of classes of development rather than the impact of specific parcels of property." Concurring op. at 1. The three wrote to note that these type of exactions may be subject to different standards, and that the Court did not address or decide that issue. Big hint for those of us who are asking "what might be next?"

Tropebusters! 

What to make of Sheetz? It does resolve, fully and finally, the longstanding question of whether legislatively-imposed exactions are just plain old land use regulations subject to only the rational basis test. Answer: no, they aren't. Does Sheetz leave open some follow-on questions? It seems so to some Justices, at least.

We do know that several longstanding tropes of land use law generally -- and exactions  doctrine specifically -- seem to be gone, while a couple of others may have continuing life:

• Land vs. money? Demanding money or demanding land...all the same thing.
• Labels not controlling. Relatedly, labeling a condition as an "exaction" or "in lieu" fee doesn't matter. Or "legislative" vs "administrative." The opinion refers to the County's traffic impact fee as a "permit condition," an "impact fee." What counts is what the condition does, not what someone calls it. 
• Ministerial vs discretionary. This longstanding distinction in land use and administrative law did not seem to carry a lot of analytical weight with the Court. The opinion referred to "permit conditions," here a condition on a presumably ministerial building permit. We always thought that conditions can only be placed on discretionary approvals, not on things like building permits that are "must issue" when the application conforms to the technical requirements of the governing code.
• Judicial Takings. Fans of the doctrine take note: all nine Justices just signed on to the notion that "there is 'no textual justification for saying that the existence or the scope of a State's power to expropriate private property without just compensation varies according to the branch of government effecting the expropriation." Slip op. at 7 (quoting Stop the Beach Renourishment). Yes, the STB plurality opinion just garnered all nine Justices. Justice Scalia lives; how much wood could a woodchuck chuck!

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

Devillier v. Texas (Part II): After Rope-a-Dope By Texas, Unanimous SCOTUS Saves The State Immunity Issue For Later

Note: this is the second of our posts on the U.S. Supreme Court's recent decision in Devillier v. Texas. The first -- which tries to put the weird post-opinion controversy over which party "won" at the Supreme Court into its proper perspective -- is here.

In this post we'll cover the case's facts, the odd procedural path that Texas dragged everyone through (only ultimately abandon a key position once at the Supreme Court), and what the Court actually decided, if anything.

The State Flooding Private Property is a Taking Under Everyone's Constitutions

After the Texas DOT flooded his property as part of a freeway project by creating a dam that caused rainwater to collect on his land, Devillier and other landowners sued the State of Texas for a taking, aka inverse condemnation.

The state flooding someone's property is one of those "classic" cases which are considered takings, triggering the obligation to provide compensation to the owner, even where the government has not formally instituted eminent domain. 

But Texas didn't acknowledge its obligation to provide compensation, so Devillier sued Texas for a de facto taking seeking just compensation under both the U.S. and Texas Constitutions.

Devillier Sued Texas For Federal Compensation in Texas's Own Courts

Devillier sued in a Texas court. Importantly, he did not seek redress for his federal compensation rights under a statute, but asserted his right to just compensation directly under the U.S. Constitution. He did not (because he could not) bring this federal constitutional claim pursuant to the commonly-employed procedural vehicle for raising such claims, a post-Civil War civil rights statute 42 U.S.C. § 1983. There, Congress created a cause of action subjecting "any person" who violates someone's federal rights "under color of state law" to liability for legal and equitable remedies.

We often see section 1983 employed in takings cases seeking Fifth Amendment just compensation, but only when the government alleged to be doing the taking is a local (municipal) government. Why? Because the Supreme Court has held that states themselves and their officials are not "persons" covered by the statute.

So if you want to sue a state for just compensation because it has taken your property, you can't use section 1983, and must look elsewhere for the authority to do so.

Devillier: I Don't Need Texas's Preclearance to Sue Texas for Federal Just Compensation (in a Texas Court)

In most cases, before you can sue the government for money it must consent to be subject to lawsuits. Sovereign immunity, grounded in notions that the Crown can do no wrong, seems like both a very un-American concept, and very anachronistic. But in American law, the doctrine is very robust. One question in takings law has plagued the lower courts: does a property owner need the government to waive sovereign immunity before an owner can sue for compensation for a taking?

Devillier thought he didn't need seek permission from either Congress or Texas to sue for just compensation. Government doesn't have the power to take property without providing compensation, and every right has a remedy doesn't it? Or as it is often phrased, a waiver of sovereign immunity isn't necessary to sue for just compensation.

Why so, if a waiver is needed in nearly every other area of law? Because the text of the Fifth Amendment (which is a limitation on the states via the Fourteenth Amendment) lays out the remedy: "nor shall private property be taken for public use, without just compensation." Thus, the U.S. Constitution itself provides him all the authority a property owner needs to bring a claim for compensation if the government has taken property.

He also asserted that the Supreme Court has long described the Just Compensation Clause as "self-executing," which in his view (and the view of many others, us included) means that the Fifth Amendment of its own force and authority allows owners whose property has been taken to sue for just compensation.

That, Devillier argued, means that if Texas had taken private property for public use but hadn't acknowledged its obligation to provide compensation, he could sue for compensation whether or not Texas had consented. Especially in one of Texas's own courts.

Texas's Two-Step: Removal to Federal Court

Before the state trial court got to that question, however, Texas (somewhat unusually) removed the case to federal court. Recall that in certain cases filed in state courts, the defendant has the final choice of forum (state or federal court). If a case could have been brought in federal court in the first instance -- in other words, there is federal jurisdiction over the claim the plaintiff asserts, but the plaintiff has chosen to bring the claim in state court -- the defendant may "remove" it to federal court. Texas did so, alleging federal question jurisdiction.

Check out the Master Complaint filed in federal court. Scroll down to page 25, and Count 2, paragraph 78, for how Devillier pleaded the federal takings claim:

In addition to, and in the alternative to, their claim under the Texas Constitution, Plaintiffs seek recovery for the State’s permanent and/or temporary taking of their real and personal property without paying just compensation in violation of the Takings Clause of the Fifth Amendment of the U.S. Constitution, a self-executing constitutional provision applicable to the State through the Fourteenth Amendment of the U.S. Constitution.

District Court: Just Compensation Clause is Self-Executing

After it removed the case to federal court, Texas asked to dismiss Devillier's case. Here's how the Magistrate Judge described Texas's request:

In its motion to dismiss, the State argues that Plaintiffs’ federal inverse condemnation claim should be dismissed for a number of independent reasons. First, the State contends that Plaintiffs’ federal takings claim cannot be brought directly under the Fifth Amendment, but rather must be brought under 42 U.S.C. § 1983. According to the State, this dooms Plaintiffs’ federal takings claim because § 1983 claims cannot be brought against a state actor. Second, the State argues that Plaintiffs’ federal claims are barred by the applicable statute of limitations. Third, the State insists that Plaintiffs have failed to properly plead a valid federal inverse condemnation claim.

Pet. App. 12a.

The Magistrate recommended denial of Texas's motion. The U.S. District Court agreed, concluding that the Just Compensation Clause is self-executing and thus Devillier had all the permission he needed.

Fifth Circuit: No Cause of Action, No Jurisdiction

But when Texas appealed to the Fifth Circuit, that court held that the federal courts lacked jurisdiction to hear Devillier's federal claim for compensation because property owners like Devillier who claim to have suffered a taking at the hands of a state government do not have a "right of action for takings claims against a state[.]"

Texas, the court concluded, "recognizes takings claims under the federal and state constitutions, with differing remedies and constraints turning on the character and nature of the taking; nothing in this description of Texas law is intended to replace its role as the sole determinant of Texas state law."

The Fifth Circuit concluded that the case belonged in Texas state courts (where Devillier had originally brought it, remember) and sent the case back to the federal trial court with instructions to bounce it out of federal court, and "return this case to the state courts."

Texas To Supreme Court: Devillier Is Required To Vindicate His Federal Constitutional Rights in a Texas Court Under Texas Law

Devillier asked the U.S. Supreme Court to review this Question Presented:

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

Once at the Supreme Court, Texas continued to argue that you may possess a constitutional right -- and a self-executing remedy -- but that's not enough because you also need a cause of action. What that means is you need to have some ability to bring a lawsuit to enforce your rights and obtain a remedy, and for that you must have some sort of government authorization to use the courts.

But Texas seemed to subtly change its tack. It now claimed to be a champion of property rights! It opened its arguments with this astonishing claim (we say astonishing because it was Texas which had removed Devillier's lawsuit from a Texas court to the federal courts and then sought to dismiss it, a very cynical and wasteful tactic and hardly the kind of thing you'd think a property rights champion would do):

MR. NIELSON: Mr. Chief Justice, and may it please the Court.

The Court will be hard-pressed to find any government more committed to property than Texas. The Texas constitution is more protective than the federal Constitution, and Texas courts under a Texas cause of action adjudicate takings claims under both constitutions.

This appeal thus isn't about substantive rights. All Petitioners had to do was use Texas's cause of action.

Tr. at 38-39 (emphasis added).

Rope-a-Dope

Hold on, "all Petitioners had to do was use Texas's cause of action?" Didn't we just say that Devillier filed his lawsuit in a Texas court? Yes, he brought a Texas claim for compensation under the authority of Texas law. And a federal claim for compensation under the authority of federal law (the U.S. Constitution) in a Texas court. Wasn't that enough?

No. Texas claimed that suing for a federal remedy in a Texas court was only a half-measure. Instead, it asserted that Texas law recognized a property owner's ability to sue Texas for federal compensation, so Devillier needed to make clear in his complaint that he was bringing his federal constitutional claim under the authority of Texas law (and Devillier merely bringing his federal claim in a Texas court was not enough to make that clear). If Devillier had only pleaded clearly that he was asserting his federal claim under state procedure, then Texas would have welcomed his federal claim!

Or so it said. It wasn't at all clear that this had been Texas's position all along, and from our perspective it reeked of a late-breaking strategic concession to keep the court from deciding the Question Presented. After all, if Texas had made the position it took in Supreme Court clear when the case was in the lower courts, then everyone could have avoided the sturm und drang for the past several years, and the parties' and the Court's time would not have been wasted.   

There were some encouraging signs during the arguments that the Court was skeptical. Several of the Justices, for example, taking Texas to task for shifting the lawsuit from one where Texas argued it could be sued (state court), to one where it argued it couldn't (federal court) -- and then arguing that Devillier could have brought his claim in a Texas court. But like all SCOTUS oral arguments, the Devillier arguments concluded without a decision. All we could do was wait.

Did the Court Actually Decide Anything Other Than Which Party Won the Appeal? (Hint: No)

Last week, we were rewarded with a decision that didn't really decide much of anything. Make no mistake: Devillier definitively won the Supreme Court phase of the case. The Court vacated the dismissal of his case, and sent it back down for more, including explicit directions to allow Devillier to include in his complaint the magic words that Texas claimed were missing. But did the Court decide the Question Presented (does an owner who seeks just compensation for a taking need the legislature to recognize a cause of action)?

No, the unanimous Court said it accepted Texas's oral argument concession that Devillier has always possessed a cause of action to sue for federal compensation because Texas recognizes inverse condemnation under state law. As a consequence the Court concluded there was nothing for it to decide.

The opinion acknowledged that it continues to be a good question whether a property owner needs the government's permission in order to sue for just compensation for a taking. But because Texas (finally) admitted that Devillier does have a procedural vehicle by which he may seek to vindicate his right to compensation, that issue is a no-go here:

Texas state law provides a cause of action by which property owners may seek just compensation against the State. As Texas explained at oral argument, its state-law inverse condemnation cause of action provides a vehicle for takings claims based on both the Texas Constitution and the Takings Clause. And although Texas asserted that proceeding under the state-law cause of action would require an amendment to the complaint, it also assured this Court that it would not oppose any attempt by DeVillier and the other petitioners to seek one. This case therefore does not present the circumstance in which a property owner has no cause of action to seek just compensation.

Slip op.at 6-7.

Instead, the Court said that it would wait for a case in which it can be satisfied "of the premise that there is no cause of action." Slip op. at 6. The Court vacated the Fifth Circuit's judgment and remanded the case "for further proceedings consistent with this opinion." Slip op. at 7.

The Supreme Court phase of the case thus ended disappointingly: it's satisfying that Devillier has his win and can continue the fight; but we have no answer from the Supreme Court on the still-open question. What if a state doesn't recognize a state cause of action to raise a federal compensation claim, can a property owner still sue for compensation? 

SCOTUS: "[T]he absence of a case relying on the Takings Clause for a cause of action does not by itself prove there is no cause of action."

There are some hints in the decision (dicta), although it is too soon in our thinking to tell what those hints eventually might mean. There are a lot of questions remaining.

        1.  Future cases?

For example, the Court noted that the question of whether the Constitution itself provides a cause of action for compensation "do[es] not arise when property owners have other ways to seek just compensation." Slip op. at 6. And the "other ways" here is a state law cause of action in state court. Does that mean that if a state recognizes an inverse condemnation cause of action like Texas, then there isn't a claim directly under the Takings Clause for compensation?

No, the Fifth Amendment itself may recognize a cause of action, irrespective of state law and section 1983. The opinion recognized that "[t]he absence of a case relying on the Takings Clause for a cause of action does not by itself prove there is no cause of action." Slip op. at 6. It's just that, like here, the issue will never come up in a case where a state recognizes a process under its own law for a property owner to seek federal compensation. That question will only be answerable in a narrow band of cases where a state does not recognize an inverse condemnation cause of action at all, or if it does, limits the remedy to state constitutional law.

Are there states whose law like that? Yes, we can think of a few. (Stay tuned for more on that.)

        2.  Williamson County Revived?

Next, doesn't the Court's rule in Devillier -- that if state law recognizes a cause of action for federal compensation, then a property owner can use the state's procedures to vindicate her rights when a state is the defendant -- revive the "state procedures" requirement from Williamson County?

Sort of looks like the same requirement, but no. Before the Court overruled the state procedures requirement in Knick v. Township of Scott, it required property owners to chase state procedures for compensation before coming to federal court on a takings claim. That rule applied to all takings claims, against both state and municipal defendants. Devillier only applies when a state is the defendant, and says if a state recognizes a way to prosecute a claim for federal compensation, then property owners need to use that process to vindicate their federal rights. That way, the Court can avoid the broader questions these issue present -- such as whether a property owner can sue a State in federal court for compensation -- until the right vehicle is presented.

        3.  So What Does "Self-Executing" Mean? 

The Court didn't really clarify what "self-executing" means. At the very least, it means that property owners must have a cause of action for federal just compensation in some court. If a local or municipal government takes your property, you already have a section 1983 cause of action which can be prosecuted in federal court (federal question jurisdiction) or in state court (concurrent jurisdiction). If a State takes your property and state law, like Texas, recognizes a cause of action that "provides a vehicle for takings claims based on both the [State] Constitution and the Takings Clause[,]" slip op. at 7, then go to state court. But if a State takes property without paying, but does not recognize a federal cause of action to vindicate that right, then the property owner may go to [court to be determined]...

        4.  No More Takings Games?

By declining to consider the Question Presented, and instead holding that Devillier's original claim and his choice of forum are to be respected, the Supreme Court seems to have concluded that the last few years of federal court litigation caused by Texas’s removal and failure to make its position clear were utterly needless, and that Texas should have just let Devillier proceed with his original choice to sue in a Texas court.

The "removal game" (where owners file for compensation in state courts, only to see the government remove the case to federal court and seek dismissal), a tactic the Court has viewed skeptically before, is now quite clearly not at all favored by the Justices. This opinion seems very much like a pushback on the tactics Texas deployed here.

Summing Up

We don’t think that Devillier moved the needle very much at all on the substantive question the Court declined to answer: does the Just Compensation Clause recognize the right of property owners to seek compensation of its own force? That question, and the even larger issue of sovereign immunity, are still very much in play.

As a U.S. Senate report noted once, "'Sovereign immunity or the infallibility of the Crown, so to speak, became embedded in the common law of England and so came into our American law,' but 'this principle is not appropriate where the courts are established … to serve the people.'"

Devillier v. Texas, No. 22-913 (U.S. Apr. 16, 2023)

In Devillier v. Texas, The Winner Takes It All (Part I)

The winner takes it all
The loser's standing small
Beside the victory
That's her destiny

Note: this is the first of a short series of posts on the U.S. Supreme Court's recent decision in Devillier v. Texas.

In Part II, we'll cover the case, the procedural path that Texas dragged everyone through, only to abandon it at the Supreme  Court), and what the Court actually decided, if anything,

Three Common Questions for Lawyers

In the classroom, I often ask students to use their intuition to guess the three most common questions that lawyers almost always get from potential clients. Put yourself in a client's shoes: what would you want to know?

The students mostly get it right. "What's this going to cost?" Check. "How long will this take?" Check. And perhaps most obviously, "What are my chances of winning?"

That last question -- am I going to win? -- is perhaps the most common. And when they ask, I'm thinking that that most clients don't have an overly nuanced approach to what it means to "win" a case: I get what I want; I keep on fighting; I recover just compensation; I get vindication from the justice system; I lose but get my day in court, even.

It doesn't seem all that difficult to figure out what a "win" looks like, does it?

Deviller v. Texas II: the Afterfight

So you might think that after the U.S. Supreme Court issued a unanimous opinion in Devillier v. Texas (that's 9-0 if anyone is counting), a property rights case we've been following, you'd be able to figure out which party "won" in the Court.

Nope. It turns out that like the post-Oscar afterparties, there's a weird post-opinion afterfight going on between Devillier's lawyers and the Texas Attorney General. Before the ink (ok, toner) was seemingly dry on the opinion, a dispute broke out on social media over who "won" the Supreme Court case after the AG issued a press release and tweeted about what he claimed is Texas's big win:

Texas: We're down for the big win!

Devillier: Not so fast, pard. 

So Who "Won?" (Hint: Devillier)

We really don't want to get bogged down in secondary dispute who won a unanimous Supreme Court decision. After all, the more interesting question in many Supreme Court cases is what the decision means to a wider scope of players than just the parties to the case, and not which litigant can legitimately claim to have won a phase of the litigation.

Besides, we don't think it's that hard to figure out who prevailed. Prior to the Supreme Court rendering its decision, Devillier was facing legal oblivion: the Fifth Circuit had dismissed his lawsuit. As in gone. Bye bye. Get outta here. The Supreme Court undid that (vacated the lower court judgment, in technical terms), and sent the case back down the federal court chain for further proceedings. It may even end up eventually back in state court right where Devillier started. In short, Devillier is back from the brink as if the last few years never happened, and gets to continue his legal pursuit of Texas for just compensation. That sure looks like a "win."

And Devillier's lawsuit will continue mostly in the in way he set it up; yes, it is in federal court (at least for the time being), and not a Texas court where Devillier originally brought it, but (a) if it stays in federal court maybe the federal forum will be more favorable so he might be in an even better position than where he started; (b) the case might eventually go back to state court, which is literally Square 1 for this lawsuit; and (c) the Supreme Court ordered the lower federal courts to allow Devillier to amend his complaint to make it clear he is asserting his federal right to just compensation (but, kinda weirdly, pursuant to a Texas cause of action), a procedure Texas belatedly but ultimately conceded in the Supreme Court, something it had not earlier (more on that later). We'd call that a Devillier "win" also. And any time a property owner can convince all nine Supreme Court Justices reject a government's denial of its obligation to provide just compensation when it has taken property, that seems like a good thing.  

Spin City?

If so, then how could Texas with a straight face claim this was a big win?

On one hand, it could be written off as the very cynical product of political spin. Elected AG's are known as "Aspiring Governors" for a reason. On the other, could Texas legitimately claim that it got what it wanted from the Supreme Court, and that's a "win?" For that, you have to start viewing the litigation like a lawyer and not a normal person. Especially as a lawyer for a defendant. In those cases, it often it isn't about the final outcome of the case as much as it is about damage control, minimizing your losses.

Or (as we suspect here) seeing how long you can slow-walk a procedural strategy and hope the other side eventually bleeds out and gives up, broke and exhausted. And if the owner somehow holds on through years of the procedural nonsense you throw at him, you can then offer up a late-breaking concession and ask the reviewing court to avoid the issue. Legal rope-a-dope.

Maybe the Supreme Court being convinced to not decide in this case (but to save it for the future) whether the Fifth Amendment itself allows owners to sue for compensation when a state takes their property, was enough for Texas to claim a "win."

Our bottom line is this: the more important question than which party won the Supreme Court phase of the litigation was did the Court actually decide anything beyond which party won the Supreme Court phase of the litigation? If so, then what? And what does the Devillier case mean for the future, if anything? So let's shuck this "who won" distraction and focus on what is important, if anything, about the Supreme Court's decision.

* * * *

In our next post, we'll cover the case, the weird procedural path that Texas dragged everyone through (only ultimately to say "nevermind" in the Supreme Court), and what the Court actually decided, if anything.

Devillier v. Texas, No. 22-913 (U.S. Apr. 16, 2023)

$48 Million The Hard Zoning Way: Thanks To NIMBYs And NIMTOOs, Las Vegas Must Pony Up A Lucas Takings Judgment

If there's a money quote in yesterday's opinion by the Supreme Court of Nevada which "wholly affirm[ed] a trial court judgment awarding $48 million in just compensation for Las Vegas's regulatory taking in City of Las Vegas v. 180 Land Co., LLC, No. 24-13605 (Apr. 18, 2024), it might just be this sentence:

Although the City rejected 180 Land's development proposals, its representatives had previously recognized the site's ability to be developed residentially.

Slip op. at 8.

That alone should tell you where this one is ultimately headed. But let's break it down and see how this got there.

Residential PUD Zoning

It started off well for the property owner, who owned land it wanted to use as a golf course, part of a (much) larger 2,200 acre ranch. The city preliminarily approved a request to zone the proposed golf course for residential PUD (planned unit development - which should reveal to you land uses when this went down (1980s)). In 1990, the city was satisfied and the golf course area was zoned R-PD7 (Residential Planned Unit Development).

This being Nevada, the zoning approval meant that the golf course was actually built.

General Plan: Open Space

During the construction, the city adopted a new General Plan which designated the parcel as "Parks/Schools/Recreation/Open Space." But despite the change in the GP, the zoning was not altered. Indeed, in 1986, the city confirmed in a letter that the R-PD7 zoning remained for the golf course. And in 2001, the city adopted another ordinance that "formally rezoned it to R-PD7 on the Official Zoning Map Atlas, and repealed any previous conflicting ordinances." Slip op. at 5.

By 2015, however, the golf course was struggling. "[T]he operator of the golf course informed the then-landowners, Fore Stars, Ltd., that it could not longer make a profit operating the golf course and thereafter terminated the lease in 2016." Id.

Residential Zoning, Residential Development

That same year, an outfit known as "180 Land" acquired the assets of Fore Stars, including the golf course area, and later a fellow named Yohan Lowie acquired ownership. It was time to change the use from a golf course to something more in line with the zoning.

180 Land segmented the 9 parcels of the golf course into four development areas. One of these, a 35-acre parcel, became the focus of the dispute. In 2016, 180 Land sought to develop the site, first by seeking to change the GP designation from Open Space to low-density residential, and then by submitting typical development applications such as a Tentative Map, and site review. City staff recommended approval. While these were in-progress, 180 Land also sought approval of a new Master Development Agreement. Staff was on board with that as well.

Successful Opposition to the Residential Project

Then came the opponents, a "homeowner group" which challenged the city's approval of a separate application for another one of the four former golf course parcels. Next up, the discussion of the 35-acre parcel residential development at a City Council public hearing became "contentious," with "strong public opposition to 180 Land's applications." Slip op.at 7.

The walls came tumbling down:

The City ultimately denied the applications despite the City's planning staff having recommended approval. The City's final decision stated that the denials were "due to significant public opposition to the proposed development, concerns over the impact of the proposed development on surrounding residents, and concerns on piecemeal development of the Master Development Plan area rather than a cohesive plan for the entire area." Despite rejecting the 35-acre application, in part because of concerns over "piecemeal development," the City also rejected the comprehensive Master Development application in August 2017, two months after rejecting the 35-acre application. Also in August 2017, the City rejected applications from 180 Land pending since 2016 for three access points to the golf course acreage from neighboring public streets and to install fencing around two water features on the acreage. The City stated it denied the applications because of "the various public hearings and subsequent debates concerning the development on the subject site" and instructed 180 Land to file an application for a "Major Review" under the City's municipal code. 180 Land did not file any Major Review applications. The City also denied 180 Land's application for a technical drainage study, though Las Vegas Municipal Code (LVMC) 19.16.105 requires such a study before residential development is allowed.

Slip op. at 7-8.

City's Representations

But that wasn't the end of the story. "Although the city rejected 180 Land's development proposals, its representatives had previously recognized the site's ability to be developed residentially." Slip op. at 8. Various city employees and officials confirmed that the city had already approved the residential zoning of the property and under Nevada land use law, zoning is king: if the GP is inconsistent with the zoning, the zoning trumps. 

Inverse Condemnation

Next up, an inverse claim in a Nevada state court. The trial court held that the "hard zoning" was indeed R-PD7, meaning that 180 Land had "as a right" a single-family and multiresidential development. Slip op. at 9. You know what that means: the city could either let 'em build, or condemn. It could not use its police power to deny the "as of right" development. The trial court granted 180 Land multiple summary judgments on liability, and considered valuation evidence of just compensation:

[T]he district court ultimately adopted 180 Land's expert's valuation of the land, $34,135,000, noting that the City did not present any contrary valuations or any other rebuttal evidence and did not depose 180 Land's expert. The district court also granted 180 Land's requests for reimbursement of its property taxes, prejudgment interest, and attorney fees. In doing so, the district court rejected 180 Land's request for a 23-percent prejudgment interest rate, calculating its prejudgment interest award using a prime plus 2-percent rate. The final judgment in favor of 180 Land totaled $48,114,039.30.

Slip op. at 9-10. Both sides appealed. The city sought to overturn the takings judgment, while 180 Land challenged the amount of prejudment interest.

Nevada Supreme Court: a Right to Develop

The Supreme Court described the issue as "whether the site's R-PD7 residential zoning or its PR-OS land designation [on the General Plan] governed 180 Land's ability to develop the property and/or conferred certain rights on 180 Land." Slip op. at 10. When the taking issue is framed that way (as a land usey and not a takings issue), then you can kind of see where this one is going. If the zoning defined 180 Land's property rights, game over. Vested, etc. If the city's argument -- that it could deny "any development applications" inconsistent with the GP designation were accepted, then no property and no taking.

In short, the taking issue turned on the question of whether zoning or the General Plan controlled the use of 180 Land's land. You can read pages 11-12 of the opinion for the details, but the short story is that the court concluded that indeed, zoning is law while the GP is "not a legislative mandate from which no leave can be taken." Slip op. at 11.

Plan/Zone Consistency?

What about the rubric in Nevada land use law that zoning must be consistent with a general plan? The court was not convinced because "[t]he problem with applying the consistency requirement in this case is that the substantial evidence demonstrates that the R-PD7 zoning predated the PR-OS land designation." Slip op. at 12. Zoning: 1986. GP: 1992. And the court also noted that the ordinance adopting the PR-OS GP designation expressly noted that the GP designation didn't modify or invalidate the existing zoning.

Murr Denominator Parcel

Having determined that 180 Land had a vested right to develop in accordance with the residential zoning, the court held that the city's denial of its residential development applications was a taking. The court identified the property interest: the 25-acre parcel. It rejected the city's claim that Murr v. Wisconsin required the denominator to be the entire 9-parcel former golf course.

The court applied the multi-factor Murr standard to conclude that no, the property here was only the 35-acre residentially-zoned parcel, not the other of 180 Land's holdings. The court also rejected the city's claim that the case wasn't even ripe because 180 Land submitted "only one development application[.]" Slip op. at 21. To the court, that one denied application was enough, and "any further attempts to apply for development by 180 Land would have been futile[.]" Id.

Lucas Wipeout

On the merits, we urge you to read pages 24-26 of the opinion, where the court analyzes the case to conclude that this worked a "per se regulatory taking." In short, a Lucas economic wipeout. This passage is worth quoting at length:

The City's denials of 180 Land's applications and the discussion of those applications at various city council meetings show no meaningful indication that the City would allow any development on the 35 acres. As noted above, the City's denials stated it was rejecting the applications based on strong public opposition and that 180 Land had not provided a cohesive plan for the entire golf course acreage. But the City provided no regulatory basis for the denials13 that would allow 180 Land to seek a variance or submit an amended application that would resolve any such issues. The City similarly rejected 180 Land's Master Plan application that provided a cohesive plan for the golf course acreage. That these denials occurred despite the City's planning office working with 180 Land on at least one of the proposals and repeatedly recommending that the City approve the applications underscores an unwillingness to allow any development. And the City did not provide 180 Land with any viable alternatives for it to reap economic benefit from the 35 acres when denying its applications. In short, the City's actions demonstrate that it would not approve any development on the 35 acres. Further, we discern no error in the district court adopting 180 Land's expert's opinion that, without the ability to develop the 35 acres, it had no economic value

Slip op. at 25-26.

Just Compensation

The court next considered the city's argument that the trial court got the just compensation wrong. No abuse of discretion, so judgment affirmed. The most interesting part of this part of the opinion in our opinion is on pages 28-29, where the court noted that the landowner met its burden of introducing relevant valuation evidence (an expert who opined on the land's value in its highest and best use). And, stunningly, that the city
"presented no contrary evidence[,]" and didn't even depose 180 Land's expert. Indeed, it made no effort to rebut the expert report.  Slip op. at 29. Whoa.

And what of the landowner's appeal on the amount of prejudment interest? No go because the rate it sought would not merely make up for the delay in payment, but would "reimburse it for the purported profit it lose had it been able to develop the land." Slip op. at 32.

The opinion ended by summing up:

When a governmental agency acts in a manner that removes all the economic value from privately owned land, just compensation must be paid. Here, the City's actions demonstrated a refusal to allow any development on the 35-acre parcel owned by 180 Land such that the parcel no longer had any economic value. The district court therefore did not err in finding that a taking occurred. Nor did the district court err in its just compensation award, as it based that decision on uncontroverted evidence from a duly admitted expert witness.

Slip op. at 32.

There it is.

Congratulations are in order for our Nevada colleague Kermitt Waters and his firm.

City of Las Vegas v. 180 Land Co., LLC, No. 24-13605 (Nev. 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)

Sheetz Round-Up

Here's what folks are saying about yesterday's unanimous U.S. Supreme Court decision in Sheetz v. County of El Dorado, where the Court held that impact fees and exactions imposed by legislative action are not categorically immune from the close nexus and rough proportionality requirements already applicable to ad hoc/administratively-imposed exactions under Nollan, Dolan, and Koontz.

• Ilya Somin, "Supreme Court Rules There Is No 'Legislative Exception' to the Takings Clause" (Volokh) ("At oral argument, it seemed like the justices might be interested in going beyond the legislative exception issue, possibly addressing the underlying question of whether the fee imposed in this case was a taking or not. However, the Court chose not to deal with that question, which will now be remanded back to the California state courts for their consideration.")
• Editorial Board, "A Bad Day for Greedy Politicians at the Supreme Court" (Wall St. Journal) ("But Justice Neil Gorsuch wrote in a concurrence that the Court’s Nollan and Dolan tests should apply similarly when “an alleged taking affects a ‘class of properties’” as with a particular development. We tend to agree, and the question may return to the Court. The good news for now is that elected officials can’t extort property developers with impunity")
• Amy Howe, "Court rules for property owner in building fee dispute" (SCOTUSblog) ("In her 11-page opinion for a unanimous court, Barrett explained that nothing in the text of the Constitution indicates that the takings clause does not apply to fees imposed by legislatures. The same is true, she continued, for the history of the takings clause. 'In fact,' she wrote, 'special deference for legislative takings would have made little sense historically, because legislation was the conventional way that governments exercised their eminent domain power.' Nor, she added, do the Supreme Court’s cases interpreting the takings clause distinguish in any way 'between legislation and other official acts.'")
• Charles Gardner and Emily Hamilton, "Opinion: This Supreme Court case from California could ease housing shortages everywhere" (Los Angeles Times) ("When 'impact fees' are unmoored from the increased costs a city or county will incur because of a new house or development, the fees can do more than present someone with an unfair bill — they can also reduce housing construction. In a country where a shortage of homes has led to sky-high prices, this matters more than you might think.")
• Amanda Karras, "Supreme Court Decides Impact Fee Case" (IMLA blog) ("The Court’s narrow ruling was not entirely surprising after oral argument as it noted that the parties agreed on this bottom line holding as the County conceded at oral argument that 'building permits are not exempt from scrutiny under Nollan and Dolan just because a legislature imposed them.' The silver lining was that in reaching this narrow holding, the Court declined to address any other arguments 'including 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.' In other words, the Court did not rule on Mr. Sheetz's arguments that Nollan and Dolan require local governments to make individualized determinations regarding the impact fees.")

We'll have more, including our own thoughts soon.

Unanimous SCOTUS Delivers A YIMBY Blow: "The Takings Clause does not distinguish between legislative and administrative permit conditions."

This just in: the U.S. Supreme Court has issued a unanimous opinion in Sheetz v. County of El Dorado, a case we've been following (not only because it is one of ours).

The Court, as predicted, held that an exaction (in this case a traffic impact fee) isn't immune from the Nollan/Dolan nexus and rough proportionality requirements merely because the exaction is imposed by legislation.

At heart, this is a very pro-YIMBY decision because it gives property owners and housing builders a path to object to barriers to creating housing and the government's use of the land use approval process as a way of exacting "goodies" that increase housing costs.

While we digest the opinion and the multiple concurring opinions -- we shall post more once we do so -- you can either read the opinions themselves, or see what we thought after the oral arguments. Or both.

Stay tuned.

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

Pay To Play? Cal SCT Asked If Challenger Must First Pay A Fee To Object To Zero Water Allocation As A Taking

This one takes a bit of sifting through, but if you do so, you will eventually savor the arguments. Try and follow this thread.

In 2014, pistachio growers with what seemed to be established rights to pump groundwater for irrigation of their trees and who never had to pay fees or were subject to other governmental regulation, were subject to the newly-adopted Sustainable Groundwater Management Act. This statute, designed to manage groundwater, empowers local groundwater agencies to create management plans and the typical things that such regulatory agencies do.

In the course of determining the "sustainable yield" of the groundwater basin that supplies the pistachio growers' water, the local agency purported to determine the rights of various users relative to each other. The agency concluded that "public pumpers" have entitlement to 100% of the native groundwater, the pistachio growers' preexisting water rights notwithstanding. If the pistachio farmers wanted to pump any groundwater, they'd have to pay a "replenishment fee" to be used to purchase nonnative water to import to the area. The fee? $8.5 million. The pistachio growers didn't pay that fee nor had they paid it since 2021, meaning that the cumulative fee is in the neighborhood of $25 million.

The agency acknowledged that turning off the native groundwater taps and making replacement water very expensive would likely result in the demise of large-scale agriculture in the area (including the pistachio farms). So perhaps not surprisingly, the next step was a lawsuit by the pistachio growers challenging the zero allocation of native groundwater as a taking, inter alia. Of special note, the pistachio growers did not challenge the replenishment fee itself (mark that one down for later use -- that fact becomes important).

The trial court dismissed the claim, and in this opinion the Court of Appeal affirmed.

The court held that in order to pursue these challenges, the pistachio growers must first pay the replenishment fee. The court relied on California's "pay first, litigate later" rule -- which requires that in order to challenge a tax or a fee, a plaintiff must first pay the challenged tax or fee.

But wait, you say, you said that the pistachio growers didn't challenge the replenishment fee, right? Yes, we did. But the court held that because the allegedly illegal allocation was made under the authority of the same ordinance that imposed the replenishment fee and that the allocation would indirectly impact the fee charged, the pistachio growers must pay the fee before they could challenge their zero allocation:

As for the physical takings claim (the eleventh cause of action), the [trial] court reasoned that Mojave had not alleged it was in fact physically prevented from extracting water, and thus had not stated a claim.

We agree with respondent court’s analysis. If Mojave had paid the Replenishment Fee in compliance with the “pay first” rule, it could perhaps state a takings cause of action on the theory that the Replenishment Fee makes Mojave’s agricultural operations economically unviable because the fees for extracting groundwater are so high. Perhaps because Mojave has not paid the fee, however, it omitted any reference to the Replenishment Fee from the TAC’s takings claims, instead relying on the other Implementing Actions.

As respondent court correctly concluded, this attempt to escape the previous demurrer ruling fails because the only Implementing Action with an economic effect on Mojave is the Replenishment Fee. Since none of the other Implementing Actions physically prevent Mojave from extracting groundwater or interfere economically with Mojave’s ability to extract groundwater, Mojave’s TAC fails to state a cause of action for a taking.

Slip op. at 35-36.

In other words, the pistachio growers have not suffered an injury unless they pay first. They can still pump groundwater, right?

The growers have now asked the California Supreme Court to take up the case. In their petition, they argue "[t]his Court's guidance is necessary to ensure that overlying water rights holders, otherwise entitled to recognition, priority and protection under the holding of this Court in City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1233, 1253 (“Barstow”), may challenge an administrative action that (1) allocates them zero groundwater; (2) establishes an extortionate fee designed to bar challenge; and (3) bankrupts their businesses as a condition of litigating their claims." Pet. at 8.

Here are the Issues Presented:

1. Under the 2014 Sustainable Groundwater Management Act (“SGMA”), may a groundwater sustainability agency (“GSA”) determine law and facts to conclude that an overlying landowners’ correlative water rights are “inferior” to others and allocate them no (zero) groundwater?

2. Does the “pay first, litigate later” rule, California Constitution, article XIII, section 32 (“Pay First Rule”) apply to SGMA fees (or extend to non-fee provisions separately included in the local agency fee ordinance)?

3. If so, does the Pay First Rule immunize local agencies from constitutional takings claims where an agency establishes a usurious fee designed to bar challenge?

Pet. at 7.

Now we wait to see if the court agrees to review the case.

Petition for Review, Mojave Pistachios, LLC v. Superior Court, No. S284252 (Cal. Mar. 19, 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"

CA9: "Traditional common law rule" That Utilities Bear The Cost Of Relocating From Public Right-of-Way Isn't A Taking

Here's one about Lucas "background principles" of property law, or maybe the Supreme Court's current focus on "history and tradition" when it comes to defining private property for purposes of the Takings Clause. 

In So. Cal. Edison Co. v. Orange County Transp. Auth., No. 22-55498 (Mar. 13, 2024), the U.S. Court of Appeals for the Ninth Circuit affirmed a grant of summary judgment denying a takings claim by a public utility which sought compensation after the County ordered it to move its equipment off of a public right-of-way for a streetcar line at its own expense.

The utility raised a physical takings claim, but the court didn't get to that issue, instead focusing on whether it owned property. The court noted that state law "generally" defines property but, citing Tyler, held that there are certain "traditional property law principles" and "historical practices" about property that no state may alter without compensation.

With that understanding in mind, we consider whether the Utilities have a property interest in maintaining their facilities at their specific locations in the face of OCTA’s efforts to construct a streetcar line. We first examine that question under California property law and then consider traditional property-law principles, historical practice, and precedent.

Slip op. at 9.

The court concluded that the utility never owned the "stick" of compensation for relocation. The court held that "California law does not give the Utilities the property interest that they assert." Id. The court noted a 1958 California Supreme Court decision which held that when a utility "accepts franchise right in public streets," it is subject to an implied obligation to relocate at its own expense when the government wants to use the right of way.

Skip to page 14 of the slip opinion for what we think is the more interesting part: does the California rule that the property rights of utilities in public-rights-of-way do not include recovering relocation costs if the government requires them to move consistent with historical and traditional property rights? The Ninth Circuit relied primarily on a U.S. Supreme Court opinion, Norfolk Redev. & Hous. Auth. v. Chesapeake & Potomac Tel. Co., 464 U.S. 30 (1983), for the notion that "utilities have been required to bear the entire cost of relocating from a public right-of-way whenever requested to do so by state or local authorities."

The Ninth Circuit also noted that this was not a new rule but goes as far back as 1905, and that "for more than a hundred years, utilities have been required to relocate to make way for a government that seeks to vindicate its right to use the streets and enact 'proper regulations in the interest of the public health, morals, and safety.'" Slip op. at 15.

The court also rejected the utility's reliance on City of Los Angeles v. Los Angeles Gas & Electric Corp., 251 U.S. 32 (1919), which held that it was a taking for the city to remove or relocate telephone poles "when necessary." That argument crashed on the shoals of the rational basis test:

we do not read Los Angeles Gas & Electric to invite us to make our own assessment of whether a streetcar line is or is not necessary for Orange County—the California Legislature, after all, believes that the project serves valuable public purposes, and the Utilities offer no reason for us to second-guess that judgment.

Slip op. at 17. In the LA Gas case, the project "apparently lacked any public-facing rationale, and it therefore lost its status of 'governmental.'" Id. The streetcar project here suffered from no such omission as the County had said aloud the magic words that its project was for a public purpose. Thus, "[i]t is a governmental project that fits comfortably within a long tradition of relocations for which franchisees must foot the bill." Id.

Finally, the Ninth Circuit rejected the utility's argument that a California statute assigns the costs for these type of relocations on the government. Check out pages 18-21 for the reasons why.

So. Cal. Edison Co. v. Orange County Transp. Auth., No. 22-55498 (9th Cir. Mar. 13, 2024)

CA1: No Taking When State Banned Possession Of Big Scary Gun Magazines

There's a lot going on in the U.S. Court of Appeals for the First Circuit's opinion in Ocean State Tactical, LLC v. Rhode Island, No. 23-1072 (Mar. 7, 2024), involving a challenge to a Rhode Island statute outlawing possession of certain large capacity gun magazines.

But unsurprisingly, we're going to be most interested in how the court disposed of the takings challenge.

In 2022 Rhode Island added detachable "large capacity magazines" (those capable of holding more than 10 rounds of ammunition) to its existing list of can't-own-or-possess items. If you already owned or possessed one of these things, the law gave you four options: (1) modify the mag so it will hold 10 or less rounds; (2) sell the items to a federally-licensed firearms dealer or someone out of state; (3) give 'em to an out-of-stater (Connecticut gun aficionados, you are in luck!); (4) give 'em to Five-O. There's no payment or compensation, in case you were wondering.

That precipitated a legal challenge which included claims under (predictably) the Second Amendment, the Takings Clause, and the Due Process Clause. The district court denied the plaintiffs a preliminary injunction, and that's how the case ended up before the First Circuit.

That court affirmed the district court's conclusion that the plaintiffs were unlikely to succeed on their takings claim. The claim was framed as a physical taking. The court rejected the argument that Horne and Loretto compelled the conclusion that the statute worked a taking, "no matter the justification for the law." Slip op. at 30. But those cases did not control because the magazine owners "have the option to sell, transfer, or modify their magazines." Slip op. at 31. And "Rhode Island offered to assist ... owners with the safe disposal of their soon-to-be-proscribed weapons." Id.

Nor was there a Lucas taking either:

The only thing they may not do is continue to possess them without modification in the state of Rhode Island. We find this regulation to be the very type of use restriction that property owners must "necessarily expect[] ... from time to time" as states legitimately exercise their police powers.

Id. (citation omitted).

The remainder of the opinion is devoted to whether the plaintiffs were likely to prevail on their Second Amendment and Due Process claims (they fared no better on those claims than on their takings claim).

Ocean State Tactical, LLC v. Rhode Island, No. 23-1072 (1st Cir. Mar. 7, 2024)

Lawprof Ilya Somin: "Squatters' Rights Laws Violate the Takings Clause"

Check this out: lawprof Ilya Somin has posted "Squatters' Rights Laws Violate the Takings Clause" at Volokh.

His thesis is just as the title suggests, arguing that state statutes that treat trespassers as tenants are government-authorized physical occupations, and thus are takings:

Ideally, state and local governments should make it easy for property owners to swiftly remove squatters, and should subject the trespassers to civil and criminal sanctions. But where they instead facilitate this violation of property rights, the laws that do so violate the Takings Clause of the Fifth Amendment, which requires payment of "just compensation" whenever the government takes "private property."

Professor Somin relies on Cedar Point, and addresses the narrow exception to the general rule from that case that all physical invasions and occupations are takings without regard to the diminution in use or value or the owner's expectations, where the government had enabled the same access as does the "traditional common law."

The common law knows about adverse possession, he writes, where a trespasser may gain a property right, but only after meeting fairly rigorous legal tests, where the owner has actual notice of the possession and its adversity to her property rights. These squatter statutes go much further, because they force property owners unwillingly to become lessors.

In other cases where the courts have upheld regulations and restrictions on an owner's right to recover possession from an actual tenant -- you know, someone with whom the owner actually and expressly agreed, and then transferred the right to exclude to the tenant -- the courts frequently note that "no one is forcing you to become a landlord."

Well here, the owner is being forced to become a landlord.

Professor Somin wraps by noting, "I hope property owners and public interest law firms give serious consideration to bringing takings challenges against these laws. They are not a panacea for the problem. But they could help."

Since we are part of a non-profit, pro bono, public interest law firm as the good professor describes, we shall note here that the welcome mat is out, and if the above-situation is your situation, let us know.

New Cert Petition: Denial Of Development Under Existing Law Enough To Ripen A Takings Claim

Here's our latest, this cert petition, another one asking whether a property owner's regulatory takings claim is ripe for judicial review.

This is one of ours, so we won't be commenting in depth other than to say that it doesn't seem like you should have to seek permission under Futurelaw in order to ripen a claim.

The Question Presented (and the petition itself) set out the issues, and our take on them:

The City of South Burlington, Vermont, established “Habitat Blocks” where all development is banned to preserve open space. It enacted an “interim” land use ordinance that restricted development between 2018 and 2022 while it contemplated the location of its Habitat Blocks. During that period 835 Hinesburg Road, LLC, submitted a development proposal for the construction of commercial and light industrial buildings on its 113.8-acre parcel of undeveloped land, which complied with all elements of the interim ordinance. The City formally rejected the plan as intruding partially into potential future Habitat Blocks. 835 Hinesburg filed a federal lawsuit claiming the City’s rejection effected an unconstitutional taking without compensation. The district court dismissed the takings claim as unripe because 835 Hinesburg did not submit a second development proposal under subsequently adopted regulations that included the Habitat Blocks. The Second Circuit affirmed.

The question presented is:

Whether a takings claim is ripe when a city makes a final decision under existing ordinances denying a land use permit, or whether a property owner is required to submit subsequent development proposals for consideration under future or later-adopted regulations to ripen the claim?

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

Petition for a Writ of Certiorari, 835 Hinesburg Road, LLC v. City of South Burlington, No. 23-2045 (U.S. M...

Hawaii Beachfront Land Is Worth Nothing: The State May Have Taken Accreted Land, But Just Compensation Is Zero

Zip. Zilch. Zero. Nil. Nada. Squat. Bupkis.

Here's the latest in a case we've been following for a long, long time (see here and here, for example).

In Maunalua Bay Beach Ohana 28 v. State of Hawaii, No. CAAP-19-0000776 (Mar. 18, 2024), the Hawaii Intermediate Court of Appeals confirmed that a state statute declaring certain accreted littoral land to be public property was a temporary regulatory taking of littoral owners' rights (the common law says that accreted littoral lands belong to the private owner), but that the just compensation the State owes to these owners is a big fat zero.

This case goes back to a statute the Hawaii Legislature adopted in 2003, which made certain land accreted on littoral private property public land. As the court put it, "[i]t effectively made land accreted to the Beach Lots after May 20, 2003, public land not owned by [the adjacent littoral owners]." Slip op. at 3.

Sounds like a taking, and sure enough a lawsuit followed, claiming that the ipse dixiting of accreted land was a taking because it represented a change in the common law under which the adjacent owners would own the accreted land. Nine years later, the legislature "changed the law by terminating the taking effectuated by [the statute]." Slip op. at 9.

The trial court dismissed the takings claim, but the Court of Appeals held that the statute worked an uncompensated taking of the land accreted before the effective date of the statute. (The court rejected a claim that the statute also confiscated future accreted land, but that is another story.) The appeals court sent the case back for a a ruling on whether these plaintiffs own land that qualified, and if so, the valuation of the accreted land.

After a bench trial, the trial court concluded that there was a temporary (nine year) taking, not a permanent one. The parties stipulated that just compensation was to be measured by the "fair rental value of the accreted land" as of the effective date of the statute, subject to the governmental and private restrictions that burdened the land. Slip op. at 5. The trial court concluded that just compensation is $0. 

The court of appeals affirmed, and made short work of the owners' argument. It based its conclusion entirely on the appellate standard of review:

Beach Lot Owners' evidence of fair rental value was based on the testimony of Stephany Sofos. The circuit court "did not find Ms. Sofos to be a credible witness" and gave "no weight to her testimony." "It is well-settled that an appellate court will not pass upon issues dependent upon the credibility of witnesses and the weight of evidence; this is the province of the trier of fact." Fisher v. Fisher, 111 Hawaii 41, 46, 137 P.3d 355, 360 (2006) (citation omitted).

The circuit court instead credited the testimony of Craig Leong, a licensed real estate appraiser who holds the MAI designation.

Slip op. at 11-12 (footnote omitted).

The State's appraiser concluded there was no rental value because the size of the accretions were "irregular" and of "narrow widths," and subject to regulations and restrictions. Slip op. at 12.

The owners couldn't believe that beachfront property in one of the most desirable residential areas in Honolulu is utterly worthless: "Beach Lot Owners argued that 'depriving [them] of oceanfront property in Maunalua Bay for 9 years cannot possibly be valued at $0.'" Slip op. at 10. Indeed isn't it intuitive that ownership of even a small and irregularly-shaped portion of beach -- even for a temporary period, and even if open to public access as the plaintiffs stipulated -- could be worth something? Especially, as the plaintiffs claimed, as a buffer to the homes built on the adjacent residential lots (what the opinion calls the "Home Lots").¹

Problem is, the plaintiffs making those claims "do not own any Home Lots." Slip op. at 11. Ouch.

Having noted that the trial court made a determination that the plaintiffs' appraiser offered incredible testimony (what that testimony was, and what value the appraiser assigned to the accreted lands we don't know because the opinion does not tell us), and that the government's appraiser was credible, the court of appeals held the factual conclusion of zero just compensation was not clearly erroneous because there was some evidence in the record to support it. Game, set match.

Also: no nominal damages because the plaintiffs, having scored no just compensation, "did not sustain a 'technical injury due to a violation of some legal right[.]'" Slip op. at 13. In the court's view, they were not injured at all.

Finally, the court rejected the argument that the plaintiffs should have been at least awarded attorneys' fees under the private attorney general doctrine. Read pages 14-20 if you care why (we don't, sorry).

--------------------------------------------
1. This intuition comes from the "Inversecondemnation on Valuation" treatise by the way. You won't find a copy of this august work in your law library, sadly. In the end, the trial court found the in-court testimony of expert valuation witnesses a lot more persuasive than your author's intuition, which, standing alone, is worth doodly-squat in a court of law (as we know). 

Maunalua Bay Beach Ohana 28 v. State of Hawaii, No. CAAP-19-0000776 (Haw. App. Mar. 18, 2024)

New Article: "Fines, Forfeitures, and Federalism" (Jessica Asbridge)

When it comes to property rights, we're most often focused on takings, compensation, and due process. But as you all know, the concept of property rights encompasses a whole lot more.

Our colleague, lawprof Jessica Asbridge, has posted on SSRN an article that is forthcoming in the Virginia Law Review, "Fines, Forfeitures, and Federalism," in which she delves into the question of how the Excessive Fines Clause applies to state and local forfeitures and fines. To resolve the federalism concerns she identifies, the article argues that courts "should look to the exactions doctrine under the Takings Clause."

Count us as intrigued.

Here's the Abstract:

Fines are ubiquitous in modern society, and they are imposed for both serious crimes and minor civil wrongs. The U.S. Supreme Court recently recognized that the Constitution’s Excessive Fines Clause applies to the states, but that decision raises previously unexplored questions as to how to enforce the Clause’s protections in the states. A key question is what role, if any, federalism should play in crafting doctrinal rules that apply the Clause’s protections to state and local fines and related property forfeitures. This Article is the first to accord in-depth treatment to that important question.

The extent to which federalism principles should apply does not have an immediate and obvious answer. On the one hand, federalism plays a significant role in the Court’s jurisprudence on the Cruel and Unusual Punishment Clause. The Court therefore generally takes a highly deferential approach in reviewing sentences of imprisonment. Lower courts have applied that same deferential review in the context of the Excessive Fines Clause. On the other hand, fines and forfeitures are unlike other forms of punishment—such as prison—because they are often used as a revenue source for state and local governments, creating a conflict of interest for state and local decision-making bodies.

To address this conundrum, this Article makes the novel argument that the Court should look to the exactions doctrine under the Takings Clause, which often implicates similar concerns of government self-interest and overreaching. Exactions and excessive fines are conceptually similar, but scholars thus far have overlooked the close relationship between them. The exactions doctrine gives minimal weight to federalism concerns, and it applies a heightened-scrutiny standard that is well suited to the excessive fines context. Indeed, differences between federal practice and state and local practices as to fines suggest that discretionary state and local fines should be subject to closer constitutional scrutiny than federal fines. As a recent example illustrates, such heightened scrutiny would ensure that the Excessive Fines Clause is not merely a parchment barrier, while still accounting for variations between states and localities in terms of their communities’ values and needs.

Check it out. Download your copy on SSRN here.

Call For Academic Papers: "Too Far: 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.

Proposals are due by April 15, 2024, and 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.

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

Too Soon For CA5 To Figure Out Whether City Demolishing Property For Code Violations Is A Taking

In Rhone v. City of Texas City, No. 22-40551 (Feb. 14, 2024), the U.S. Court of Appeals for the Fifth Circuit held that a municipality's conclusion that Rhone's apartment building had not been properly maintained, and a subsequent municipal court demolition order, might be a taking ... or it might not be.

We won't get too far into the facts, except to say that Rhone argued that the city had it out for him, and that the municipal court judge who issued the demolition order was in a contractual relationship with the city by which the judge had to submit for approval all of the court's decisions to the city attorney (the very party pressing the nuisance claims against Rhone). Weird, but apparently a product of Texas law. Short story, according tot the court: "[a]ll of this, facially at least, is a declaration of a lack of independence of judge and city." Slip op. at 12. Yowza!

The district court deemed any pecuniary interest the judge may have had as "de minimis," but the Fifth Circuit noted that "[t]here is evidence that the City Attorney has final authority on what the order on his own petition for abatement would say." Slip op. at 13. Thus, the court ordered a "limited remand" to the district court for a determination of whether the municipal court's demolition order was or was not the product of independent decision-making. If it was, Rhone's constitutional claims would not survive. But "[i]f that premise changes, this opinion will as well." Slip op. at 13. In other words, if the judge's decisions were too tightly controlled by the city -- one of the parties to the very litigation the judge was deciding -- then there might be something there.

The court also rejected the city's argument that the demolition of the building rendered the takings claim moot. "Importantly, demolition of the apartment buildings does not eliminate a takings claims; indeed, it may create one. See Knick v. Twp. of Scott, Pa., 139 S. Ct. 2162, 2167 (2019). This right allows for the property owner to have “some way to obtain compensation after” the government’s unconstitutional actions. Id. at 2168." Slip op. at 7.

So what did the court say about Rhone's takings claim? Jump forward to page 13 for this:

Our limited remand will keep open the issue of whether the Municipal Court’s determination that the property was a nuisance and allowed demolition was not the result of sufficiently independent decision-making. The remainder of the opinion is premised on the Municipal Court’s decision’s being a valid one. If that premise changes, this opinion will as well.

Rhone challenges the district court’s dismissal of his Fifth Amendment takings claim, saying there are fact issues requiring a trial. A property owner may bring a Fifth Amendment takings claim under Section 1983 as soon as the government takes his property without just compensation. Knick, 139 S. Ct. at 2170. Rhone maintains he was subjected to a taking without compensation by the City’s imposing of unnecessary and expensive repair obligations before Rhone would be allowed to use his property; by requiring he keep the property vacant; and by interfering with his efforts to repair, sell, or otherwise address the identified deficiencies in the property. This claim relies on the City’s actions prior to the Municipal Court’s order of abatement that allowed the property’s demolition. Rhone’s legal argument includes that these compliance costs were invalid under the doctrine of unconstitutional conditions. See Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013).

Slip op. at 13-14.

The court concluded that what Rhone was pressing was not really an unconstitutional conditions takings claim (because, after all, the city wasn't really forcing him to choose between two rights, but was merely telling him to stop using his property as a nuisance). But the court noted, that "[t]o be fair, Rhone is not disputing that." In short, the essence of his claim is that the city's safety officials who concluded his property was a nuisance should not have been given unreviewable authority to make that determination. See slip op. at 15.

In the end, this doesn't really look all that much like a takings claim after all does it? On that, the opinion sort of wanders away into other civil rights territory, without a clear statement of what happens to the takings claim after remand. Check out pages 15 and 16 if you doubt us. We think the takings claim survives, based on the court's earlier statement that "[i]f that premise [the judge/city relationship] changes, this opinion will as well." Slip op. at 13. But maybe not.

The common law litigation process was all about narrowing, winnowing, and processing claims by forcing them into predefined forms with their own remedies. Did that occur here? Hard to say. 

Rhone v. City of Texas City, No. 22-40551 (5th Cir. Feb. 14, 2024)