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What If The Hawaii Governor's Cutting Of The Gordian Land Use/Environmental Knot Actually Works?

The two-plus years under the declared Co-19 emergency surely have given Hawaii's executive-branch officials a clear vision of how much easier they could get their agendas accomplished without all that pesky democracy.

Hawaii's Sweeping Emergency Management Act: Governor is the "Sole Judge"

Hawaii's Emergency Management Act gives state and county executives broad and nearly unreviewable authority to suspend a wide spectrum of the usual laws, regulations, and rules. As we wrote in Hoist The Yellow Flag and Spam® Up: The Separation of Powers Limitation on Hawaii's Emergency Authority, 43 U. Hawaii L. Rev. 71 (2020), Hawaii's Act confers among the nation's most muscular and sweeping powers. For example, the governor is the "sole judge of the existence of the danger, threat, or circumstances giving rise to a declaration of a state of emergency." The Act's one limitation -- the 60-day time limit on how long an emergency may be declared and acted upon without legislative action -- is, in reality, a paper tiger, as the courts have refused to meaningfully enforce it.

Build Baby Build: Governor Green's Emergency Housing Proclamation Sidelines Decades of Land Use and Environmental Regulations and Restrictions

And it appears that executive officials really dig these powers. As you may already know, in July -- just a couple of months after the Co-19 emergency was officially declared pau -- the Governor of Hawaii discovered a new emergency, and issued a Proclamation that the longstanding "shortfall of affordable housing" is an "emergency or disaster" as defined by the Act.

If it is an emergency, it surely has been on a very long fuse, and is primarily a self-inflicted crisis. As is widely reported (see, e.g., Jason Sorens, Zoned Out: How Housing Regulation Drives Young Americans Towards Socialism (Am Inst. for Econ. Rsh. July 24, 2023)), Hawaii is the most highly-restricted and regulated residential land in the nation (see Fig. 3):

We're Number One! We're Number One!

The costs of the current regulatory and environmental system in time, expense, and effort, is cited as a leading contributor to the fact that Hawaii is one of the most expensive housing markets in the country. As the Proclamation notes:

WHEREAS, this [housing] shortfall has never been adequately addressed, contributing to a 1,200% increase in home prices over the last 45 years, which is double the 600% growth in income over the same period[.]

Not at all good.

Pointing to these infamous "regulatory barriers" to building housing (and just about anything else), the Governor deployed his office's broad powers under the Act to suspend a slew of significant land use and environmental regulations, including the State environmental impact statement and reporting requirements, historic preservation restrictions, certain county home rule and zoning laws, civil service laws, collective bargaining with public worker unions, the "open meetings" requirements, the procurement code, the rezoning powers of the State Land Use Commission for certain parcels, school impact fees, and even the Emergency Management Act's own rulemaking requirements. The Proclamation establishes a Privy Council (the "Building Beyond Barriers Working Group" -- how appropriate, given Hawaii's royal history -- or perhaps you prefer "rule-by-junta") that can, according to this report, "block projects deemed to go too far outside the guardrails that would have been in place but for the proclamation." That's comforting. 

Acting under his dictatorial emergency powers (and we are not exaggerating when we say that the powers conferred by Hawaii's Act are truly "dictatorial" as we noted in this law review article), the Governor asserts this will "streamline processes for housing development, while ensuring respect for our iwi kūpuna and environment." To emphasize the so-let-it-be-written-so-let-it-be-done nature of this enterprise, the Proclamation even comes accompanied by its own set of Rules for how it is to be implemented (you know, just like a real law). 

What Others Are Saying

For a nuanced view -- by an analyst with no dog in the Hawaii hunt -- see zoning expert and author M. Nolan Gray, who writes at Bloomberg's City Lab that this "could provide a model for chief executives in housing-strapped states across the country." See M. Nolan Gray, Can Hawaii Solve Its Housing Emergency? (Bloomberg City Lab, July 31, 2023).

Other commentators are less sanguine. Andrew Walden writes that "Housing Emergency Designed to Fail" (Hawaii Free Press, July 31, 2023), arguing that these temporary measures can only work if they are permanent ("Because it is temporary, Green’s Proclamation ensures that too few projects will be approved to actually bring down the cost of housing. ... So when the legislature reconvenes you may be 100% certain that Green’s emergency orders will not be enshrined into law.").

Schadenfreude Alert

Now don't get us wrong: the Governor is absolutely right about Hawaii's oppressive system of regulations and restrictions on building housing that ends up restricting supply, and massively driving up costs. So although we are patently against the routine use of extraordinary emergency powers to accomplish things that should be done through the normal channels of democracy, our long experience playing the land use game in the 808 can't help but turn us into a keen observer of this experiment. We also can't help but being a bit bemused by all of this gnashing of teeth by all involved. As noted above this is a self-inflicted wound and the result of longstanding voting patterns; on a very basic level you get what you vote for, and the voters of Hawaii must either want to restrict the supply of housing to keep things exclusive and preserved, or they are deep-down okay with paying a lot for their homes or living in three-generation households.

And now, instead of doing the right thing and making fundamental needed reform and convincing the voters that now is the time to realize that the system as it stands doesn't work, we get the lazy shortcut. 

Thus, although we are no longer in the day-to-day dirt law and land use game in Hawaii, we're going to be watching this closely.

Fear of Success?

Of course, the usual suspects are already voicing the predictable objections that this will result in cowboy land use (our description, not theirs) and environmental degradation, and are already mentioning possible legal challenges. See, e.g., Stewart Yerton, Can An Emergency Proclamation Solve Hawaii's Housing Crisis? 'That's the Million Dollar Question'' (Civil Beat, July 30, 2023).

Other than the Governor's sweeping repudiation of democratic processes, what is spurring the substantive objections to this? You might think that this is just one more example of NIMBYism and "drawbridge protectionism" (or maybe just a naked "I got mine" and the hell with those who don't -- those vibes play extraordinarily well in the 808, in courts and in the public).

But we sense that a more fundamental fear is driving objections. This may well be the closest we'll ever get to a real-time experiment in whether Hawaii's byzantine land use and environmental regulations -- touted for decades as absolutely necessary to "preserve paradise" -- are worth their massive costs. We've been told that the current system is the only thing standing between us and foul air, water evaporating, beaches disappearing, and historical and cultural resources being despoiled.

What if, when this experiment winds down (whenever that is, since by law an emergency can last a maximum of 60 days, even though this time limit is illusory, because the emergency can be renewed indefinitely), there are 50,000 new residential units built out and the the environmental sky has not fallen? If that's the case, what more empirical evidence does the legislature need that the touted Hawaii system of restrictions, regulations, and the precautionary principle simply are unnecessary?

Or does Hawaii just go back to business as usual? 

The Hole Card

So now we shall see. We predict a lawsuit will soon be filed to challenge this, because Hawaii's courts are the objectors' hole card. Look for a claim under the Hawaii Constitution to lead the charge, because the Hawaii Supreme Court is the final arbiter of the state constitution and a ruling from that court would be armored up against revision by the other branches of government. There's a long judicial history in Hawaii of doing just that.

Hawaii's courts will be the preferred forum: lax standing rules (nearly anyone can be a plaintiff), a Supreme Court that historically has been open to such claims (as a study published in the University of Hawaii Law Review in 2011 reported, environmental plaintiffs enjoy an enviable record of success in the Hawaii Supreme Court, which during the years studied (1993-2010) found in favor of such groups "approximately eighty-two percent of the time, sixty-five percent of which reversed the Intermediate Court of Appeals."), and a judicial ruling that would be immune from the Governor's or the Legislature's tampering. That's the play.

With two of the current bench of five Hawaii Supreme Court Justices in the process of being replaced, does this make the game even more interesting, and the moving pieces more in motion? You bet.

So stay tuned and follow along with us.

That sound you hear right now is the late-night typing of someone drafting up a state-court complaint.

Office of the Governor, State of Hawaii, Proclamation Related to Housing (July 17, 2023)

Ninth Circuit Invalidates Berkeley's Too-Clever-By-Half Ban On New Natural Gas Piping

Proving there's more than one way to protect property rights and, you know, our basic freedom to (1) diversify our energy uses so when the power goes out as it frequently does in California, we don't lose the use of every single appliance and modern convenience, and (2) heat up our dinner the way humans have been doing it for a long time, in California Restaurant Ass'n v. City of Berkeley, No. 21-16276 (Apr. 17, 2023), the U.S. Court of Appeals for the Ninth Circuit invalidated Berkeley, California's too-cute-by-half attempt to ban new gas appliances.

Gas stoves are the latest villain from The Land of No (aka The Golden State), but instead of trying to ban gas stoves directly (after all, a crafty home chef might just go to Emeryville or Albany and obtain one of these kitchen cabinet Death Stars, at least until those cities also get on the Berkeley bandwagon), Berkeley got clever: it adopted an ordinance that banned gas piping in new construction under the Building Code. Buy and install all the gas stoves you like, homebuilder; there'll just be nothing to hook it up to. A gas stove without gas piping is like an assault rifle without bullets.

And after all, what can be more local than a building code? The ordinance also expressly disclaimed that it was prohibiting, you know, gas stoves or anything, or mandating electric. No, it was merely eliminating "obsolete natural gas infrastructure and associated greenhouse gas emissions," which will help save the planet.

The Restaurant Association sued, asserting the ordinance was preempted both by California and federal law -- in the latter case, the Energy Policy and Conservation Act, 42 U.S.C. § 6297(c).

Now we're a takings and property blog, so we are not going to go into the preemption details, which frighten and confuse us. You can read the opinion yourself if you are a preemption nerd. The bottom line, in our reading of the opinion, is that the EPCA prohibits any state or local laws that concern energy efficiency, or use. The court concluded that Berkeley's ordinance involved "energy use." As the opinion notes:

Berkeley’s main contention is that its Ordinance doesn’t regulate “energy use” because it bans natural gas rather than prescribes an affirmative “quantity of energy.” While Berkeley concedes that a prohibition on natural gas infrastructure reduces the energy consumed by natural gas appliances in new buildings to “zero,” it argues that “zero” is not a “quantity” and so the Ordinance is not an “energy use” regulation. But that defies the ordinary meaning of “quantity.”

Slip op. at 13.

There's more, both in the opinions (46 pages to cover the majority and the two separate concurring opinions), and in the media, where it has generated a lot of coverage and analysis, including these:

• Federal court strikes down a California city's natural gas ban (Emma Newburger, CNBC)
• Does the 9th Circuit’s rejection of Berkeley, CA’s municipal gas ban spell doom for Massachusetts’ own gas-banning “Demonstration Program”? (Paula M. Devereaux, Pierce Atwood's Massachusetts Dirt and Development Law blog)

Given the tenor of the times, we seriously doubt that this is the last word on this topic, either in this case or overall. Berkeley ain't a quitter after all, and it sure knows how to double-down on those municipal policies that have resulted in its two main nicknames, "Berzerkely," and "The People's Republic of Berkeley." Maybe calling out the National Guard to take those gas stoves quartered in your homes? (Don't give them ideas!)

Now if only we could reduce the greenhouse gas emissions from politicians, we'd be going a long way to saving the planet. One can dream, can't one?

California Restaurant Ass'n v. City of Berkeley, No. 21-16278 (9th Cir. Apr. 17, 2023)

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

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

Here's the Abstract:

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

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

Read it at SSRN.

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

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

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

Id. at 5 (footnote omitted).

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

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

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

Id. at 17 (footnotes omitted). 

Some preliminary impressions:

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

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

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

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

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

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

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

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

Federal Court: Honolulu's 3-Month Minimum Rental Term Preempted By State Law (And Would Be A Taking Of Vested Rights)

Many Honolulu residents don't like short-term (less than 30 day) rentals. Whether fueled by NIMBY-ism, a genuine belief that tourists should stay out of residents' neighborhoods and be limited to accommodations built for transients, or the belief that long-term rentals to locals somehow promote more affordable housing, the anti-transient renter vibe is most definitely there.

The no-less-than-thirty-days restriction wasn't enough, however, and recently the City and County of Honolulu made it illegal to rent for less than three months (90 days). The ordinance stated the reasons:

Short-term rentals are disruptive to the character and fabric of our residential neighborhoods; they are inconsistent with the land uses that are intended for our residential zoned areas and increase the price of housing for O‘ahu’s resident population by removing housing stock from the for-sale and long-term rental markets. The City Council finds that any economic benefits of opening up our residential areas to The city's ordinance brought a challenge from property owners tourism are far outweighed by the negative impacts to our neighborhoods and local residents. . . .

The purpose of this ordinance is to better protect the City’s residential neighborhoods and housing stock from the negative impacts of short-term rentals by providing a more comprehensive approach to the regulation of transient accommodations within the City.

Hon., Haw., Rev. Ord. 22-7. Violating the ordinance meant massive daily fines ($10k), plus disgorgement of the rent. Thus, not surprisingly the ordinance drew a federal court challenge from property owners who assert a variety of claims:

Plaintiff asserts violations of HRS § 46-4(a) (Count 1), the state law doctrines of vested rights and/or zoning estoppel (Count 2), substantive due process principles under the U.S. and Hawai‘i Constitutions (Counts 3 and 4), the Takings Clauses of the U.S. and Hawai‘i Constitutions (Counts 5 and 6), the Contracts Clause of the U.S. Constitution (Count 7), and the Excessive Fines Clauses of the U.S. and Hawai‘i Constitutions (Count 8 and 9).

The plaintiffs sought a preliminary injunction, and in this Order, the U.S. District Court for the District of Hawaii granted it, enjoining the city from "enforcing or implementing" the ordinance "insofar as it prohibits 30–89-day home rentals, or the advertisement of such rentals" in any zoning district.

The court focused on the state-law zoning enabling act, the statute by which the state delegates limited zoning authority to Hawaii municipalities. The key provision is section § 46-4(a), which limits authority to prohibit "the lawful use of any building or premises for ... any purpose for which the building or premises is used at the time this section or the ordinance takes effect." In other words, a municipal zoning ordinance cannot outlaw existing uses. The ordinance also recognizes an exception, and permits municipalities to eliminate existing uses if they phase out the use over a reasonable amortization period. But this exception only applies in industrial, resort, and apartment zoned areas, not residential zones: "[i]n no event shall such amortization or phasing out of nonconforming uses apply to any existing building or premises used for residential (single-family or duplex) or agricultural uses."

That convinced the district court that Honolulu's ordinance was ultra vires, because "[]t is currently legal to rent O‘ahu homes to tenants for 30–89 day periods in any zoning district." Order at 13. With a "direct conflict" with state law, the city's ordinance is likely void. Like many similar statutes, the Hawaii zoning enabling act does not define "residential" use. So the court looked for the "common meaning" of the term, concluding that it means a use for "ordinary living activities and benefits--e.g., eating, washing, sleeping, storing their belongings and vehicles, and enjoying the surrounding scenery and community." Order at 17.

The court also concluded that "residential" does have a time component, but "the Court has not found any cases, nor have the Defendants cited any, holding that rentals of 30 days or longer were not residential." Id. The court rejected the city's argument that the frequent turnover of a residence is not traditionally associated with family living, and that rentals of less than 90 days are commercial uses, more akin to a resort or a hotel. The court noted that it is more important what is being done with the home rather than how long. People rent property for 30-89 days for all sorts of reasons:

(1) O‘ahu residents who have sold and bought [homes]; (2) off-island families traveling to O‘ahu for medical care; (3) traveling healthcare workers temporarily assigned to O‘ahu; (4) military families in transition; (5) employees performing work on O‘ahu; (6) temporarily displaced families; [and/]or (7) others who prefer to temporarily reside closer to work or schools than the resort districts.

Order at 19. The court noted the city can still regulate the duration of vacation rentals, but it must do it within the constraints of state law. Order at 20 ("The City may, and indeed must, execute its long-range planning goals, while respecting and accommodating prior lawful uses already in place, as HRS § 46-4(a) requires it to do.").

The court additionally concluded the ordinance likely works a taking. It first asked whether the owners have vested rights to rent their property for more than 30 days and less than 90. They do: "[i]n the present case, 30-89-day rentals in non-Resort districts are a vested property right protected by takings principles." Order at 23. Equitable reliance principles, backed by law (the above-noted zoning enabling act), means that there's "nothing 'contingent,' 'uncertain,' 'speculative,' or 'discretionary' in the long-standing use of private property for the rental purposes identified[.]" Id. 

Having established the owners have a private property right, the court also concluded that the city's ordinance would take that right without compensation because it outlaws the use entirely, "without providing any process to compensate or accommodate nonconforming uses." Order at 24. 

We suggest you check out the entire order. Kudos to our former law partner and land use lawyer extraordinaire Greg Kugle for the compelling win.

Order Granting Pltf's Motion for Preliminary Injunction, Hawaii Legal Short-Term Rental Alliance v. City &...

Tuesday Round-Up: Austin Airport Taking Its Own Land?, The Right To Exclude, And More

Here's what we're reading today:

• "ABIA attempts 'unusual' use of eminent domain to force out South Terminal operator" Austin Airport, which already owns the property, is condemning it?
• "Gun Rights, Property Rights, and Takings" from lawprof Ilya Somin
• "Can tenants have it both ways? - Some demand the freedom of renting and the stability of ownership" (via The RealDeal)
• "When Is it a Taking of Private Property to Bar a Property Owner from Excluding Unwanted Visitors?" Thoughts on Cedar Point and PruneYard from lawprof Eugene Volokh
• "The City of Portland Tried to Undo Gentrification. Black Portlanders Are Conflicted About the Results" "'It’s kind of a typical Portland reaction to an injustice,' Millner says. 'It’s a feel-good story that doesn’t move the needle very much.'" (via Willamette Weekly)
• "Grand Ronde moves to intervene in Willamette Falls land condemnation" A tribe seeks to intervene in a condemnation case, asserting cultural and historical interest in the land (WestLinn Tidings)

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

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

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

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

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

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

Flash forward years. Decades, actually:

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

Slip op. at 5.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Slip op. at 38.

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

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

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

Slip op. at 39.

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

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

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

The opinion wrapped with this:

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

Something is very wrong with this picture.

Slip op. at 108.

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

Four decades, and counting....

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

When City Busts A Redevelopment Deal, It Might Face The Wheel (But Not For A Taking)

A developer alleged that the city didn't live up to its contractual obligations.

The city thought it would be a good place for a new headquarters for something called "Perfect Game Incorporated." The usual plans ensued, including agreements between the city, a non-profit redevelopment facilitator, and Preston Hollow, a "finance company that funds economic development projects for municipal governments and development corporations." These agreements dealt with loans by Preston to the city and the facilitator; the loans were used by the facilitator to purchase two parcels in the city for the project, with some of the money remaining in escrow subject to disbursement when certain things happened.

That's when things allegedly went awry. As the Fifth Circuit put it, "trouble ensued." Preston claimed that the facilitator insisted on disbursement, even tough it has not yet complied with the conditions. Preston sent a notice of default, and requested that the escrow company return the funds. Denials by the city and the facilitator, and back-and-forth claims and denials. Next up, federal court 1983 lawsuit. 

For a taking.

The district court dismissed for failure to state a claim. In Preston Hollow Capital, LLC v. Cottonwood Dev. Corp., No. 21-50389 (Jan. 14, 2022), the U.S. Court of Appeals for the Fifth Circuit agreed with the district court and affirmed the dismissal. Even if everything the complaint alleged was true, that does not equal a taking. The city and the facilitator were acting in their "contractual or proprietary capacity," and "[w]e decline this invitation to constitutionalize what amounts to nothing more than a contract dispute." Slip op. at 1.

The court rejected the plaintiff's main argument, that Knick changed the substantive ground rules and rejected the notion that section 1983 does not mean that all state law tort or contract actions are takings. Slip op. at 5. No, the Fifth Circuit concluded, "Knick concerns when a takings claim becomes ripe as a procedural matter -- not what constitutes a 'taking' as a substantive matter." Slip op. at 5.

Preston countered by pointing out that its contractual rights are property, and that such property is protected from uncompensated takings. Here, it argued, the money it disbursed is property (correct there), and that this property was taken when the city and the facilitator kept it. Ah, the Fifth Circuit responded, there's the rub: by what authority did the city get it, and by what authority was it allegedly (wrongfully) keeping it? That's right, the contract. "But Preston Hollow exchanged that 'pre-existing title' for various rights laid out in the Loan Agreement[,] ... so Preston Hollow cannot seriously claim that 'the right at issue is not governed by the terms of the parties' contract.'" Slip op, at 6 (citation omitted).

But we kind of guessed why the takings path was chosen here - no viable claim against the city for breach of contract under state law. Tough cookies, the Fifth Circuit concluded. Sovereign capacity is sovereign capacity, and here, when it allegedly wrongfully broke the deal with Preston, the city was employing the same authority that ever other contractual dealbreaker employs -- its private capacity power, not its governmental power:

But even if it were true that there were no contractual or other claims under state law that Preston Hollow might have pursued against Defendants—an issue on which we of course express no position here—that does not change the fact that a government must be acting in its sovereign capacity to effect a taking.

Slip op. at 6.

Preston Hollow Capital, LLC v. Cottonwood Dev. Corp., No. 21-50389 (5th Cir. Jan. 14, 2022)

New L Rev Article: Knick Won't Mean Much Until Federal Courts Get Over "Strong Distate, If Not Outright Contempt" For Land Use Matters

R.S. Radford's most-recent article, Knick and the Elephant in the Courtroom: Who Cares Least About Property Rights? in the latest issue of the Texas A&M Journal of Property Law, should be next on your to-read list. 

Here's the summary of the article:

Throughout the thirty-four-year history of Williamson County, one fact was taken for granted. Never directly mentioned but always looming in the background of two rounds of oral argument before the Supreme Court in Knick was the premise that relegating takings claims to state court made it less likely that property owners would prevail on those claims than if they could be filed in federal court in the first instance. This Article examines that premise and finds little support for it in the historical record.

Part I of this Article discusses Williamson County and highlights the logical, doctrinal, and procedural confusion associated with the opinion, both in its conception and as the consequences of the ruling were revealed over time. It concludes with a brief review of the Knick decision, which finally laid Williamson County to rest. Part II turns to the “elephant in the courtroom”—the generally unspoken assumption that reopening the federal courthouse doors to takings claims will significantly increase the number of claims that result in awards of compensation. Part II also points out that, both before Williamson County and after, federal courts have expressed a strong distaste, if not outright contempt, for becoming involved in land-use disputes. A review of the pre-Williamson County practice of invoking abstention to clear the federal judiciary’s calendar of takings cases is followed by an examination of the extremely low success rate of takings cases that have managed to avoid both Williamson County and abstention and adjudicated on their merits in federal court. A case study of Guggenheim v. City of Goleta exemplifies the Ninth Circuit’s policy of dismissing takings challenges to regulations that predate a plaintiff’s acquisition of title—in direct contravention of the Supreme Court’s ruling in Palazzolo v. Rhode Island. Finally, the Ninth Circuit’s most recent foray into takings law, Bridge Aina Le’a v. State of Hawaii Land-Use Commission, raises the question of whether the Circuit is flouting the Seventh Amendment’s Re-examination Clause in its eagerness to set aside jury verdicts of takings liability. Part IV concludes this Article by reminding the reader that Knick has essentially returned federal takings jurisprudence to where it stood in 1984—before Williamson County cut off its development by diverting most takings cases to state court. How the federal judiciary responds to the Knick challenge will set the parameters of takings law for the twenty-first century.

7 Tex. A & M L. Rev. at 579-580 (footnotes omitted).

Radford highlights a point that we've made also (thanks for the shout-outs, R.S.) - that until the courts clean up substantive takings doctrine, the availability of a federal forum - while it will help - won't be a true game-changer.

The entire article is worth your time.

R.S. Radford, Knick and the Elephant in the Courtroom: Who Cares Least About Property Rights?, 7 Tex. A & M...

Listen (Or Read) As SCOTUS Hears Arguments In A (Sorta) Eminent Domain Case

What's up with that (sorta) snarky headline, you ask? After all, isn't the PennEast v. New Jersey case, heard yesterday by the Supreme Court, a real honest-to-goodness eminent domain case about a pipeline?

Doesn't the transcript show terms like "in rem," "takings," "eminent" and "eminent domain" were used a whole lot? Aren't a lot of the media reports saying this is a big eminent domain case (see here and here for example)?

But read the transcript or a listen to the recording (stream above or download the mp3 here) and see what you think, eminent domain mavens.

If you are like us, you understand that the case isn't going to tell us a lot about eminent domain generally, or about valuation, or the power to take (except in very limited circumstances). After all, the case asks whether the State of New Jersey - not some mere private landowner - can be haled into a federal court as a defendant in a Natural Gas Act private pipeline taking, and the issue isn't the same as a typical NGA pipeline case in which a private landowner can't assert Eleventh Amendment immunity.

As a consequence, here we witnessed a much different result in the way the lower courts treated the condemnee. Unlike virtually all other NGA cases in which the private pipeline condemnor pulled the usual "quick-take-by-preliminary-injunction" trick to get immediate possession of the property (even though the NGA doesn't delegate the federal government's quick take power), the Third Circuit invalidated the PI.

So we had lowered expectations that yesterday's arguments would tell us anything truly worthwhile about this issue or any other eminent domain-ey things. It didn't, but here's what we thought were the most interesting points:

• There was a lot of mention of how eminent domain is an "in rem" action. See, e.g., Tr. at 5 ("Second, the proceedings here are in rem and can only augment the state treasury. This Court has recognized that in rem proceedings pose a lesser threat to state sovereignty."). An action against the property and not against the owner. That seemed to be an assumption that everyone was operating under. But as Justice Gorsuch noted (and only Justice G) noted the "in rem" shorthand really doesn't help much. Tr. at 83 ("I remember Upper Skagit. I may be the only person who does, but I do having gotten saddled with that one, but it was a delightful assignment. But that -- that has to do with property outside the state. What about inside the state?"). The "Upper Skagit" case he refers to is this one, which we thought reflected the notion that the "in rem" vs. "in personam" distinction is not terribly helpful in eminent domain. But we'll hold off on that one here, because one of PennEast's key arguments is that it wasn't really suing New Jersey qua New Jersey, but rather land that just happens to be owned by New Jersey.
• It was kind schadenfreudey to hear New Jersey complain about how unfair and harsh eminent domain can be. Welcome to the world of typical condemnees, New Jersey!
• The main point of PennEast's argument was that PennEast really isn't a private actor, and it isn't simply exercising a delegated federal power. Instead, it has effectively been "deputized" as a federal agent, and this is really just like the feds are suing New Jersey. If the Court buys that, we think it is all over for New Jersey.
• Finally, this: PennEast emphasized what we've always thought was a point worth repeating: eminent domain is not a typical civil action: "And of all in rem actions, eminent-domain proceedings pose the least concerns. They allege no wrongdoing, they impose no liability, and they cannot be brought without federal authorization. The whole point of the proceeding is to ensure just compensation for a taking."). Tr. at 6. If the Court picks this up, the opinion might be more interesting.

A clear consensus was not obvious among the Justices. To be honest, we're kind of ambivalent about the outcome in this one because the Court didn't even think about the quick-take-by-PI issue that we believe remains a festering problem, and the Court deciding whether a state can be subject to the unfair and unconstitutional regime that private owners have to suffer under leaves us lukewarm (same as it ever was).

Transcript, Penneast Pipeline Co., LLC v. New Jersey, No. 19-1039 (U.S. April 28, 2021)

Holiday Suggestions For The Dirt Lawyer On Your List (2020 Edition)

Charlie Brown got a bag of rocks for Halloween.

But you aren't so cruel, and want to give better gifts this holiday season to the dirt lawyer in your life, no? Here are our 2020 suggestions for stocking stuffers that will make property mavens celebrate the season. 

Start with this one, Professor Bart Wilson's newly-published "The Property Species - Mine, Yours, and Human Mind." As describe in the book blurb: "Arguing that neither the sciences nor the humanities synthesizes a full account of property, the book offers a cross-disciplinary compromise that is sure to be controversial: Property is a universal and uniquely human custom. Integrating cognitive linguistics with philosophy of property and a fresh look at property disputes in the common law, the book makes the case that symbolic-thinking humans locate the meaning of property within a thing."

We are so confident that the book is sure to please any true bundler of sticks that we made it the subject of our Spring 2021 Directed Reading at the William and Mary Law School. Bonus: if you would like to join us for the Directed Reading, because we're on Zoom we're opening it to all. Read the book, and then join our discussion - the list of participants is growing.

* * * *

Next, one that every condemnation lawyer should love: wines from Oregon's Eminent Domaine vintner. 

From their web site: "The name, Eminent Domaine, is a reflection of our experience with the legal term, eminent domain, our dedication to the Oregon wine industry and our love of the wines produced in our region. In 2002 the City of Portland cited eminent domain as reason for claiming an office building we owned downtown. We began negotiations, as we agreed with the intent of the law, which states that the property would be used for the public good in exchange for a price based on fair market value. However, when both qualifiers came into question, a lengthy legal process ensued. Despite having a more favorable outcome from arbitration, the compensation was low and the property was used for undisclosed purposes. Having been brought up on a small farm in Hillsboro Oregon, Jeff Meader always wanted to go back to the land. Already entrenched in Oregon’s wine industry and looking to the future, it was a natural progression to re-invest in a small piece of land in the coveted Ribbon Ridge AVA. In 2009, we set about planting the 7-acre parcel with selected Pinot Noir clones and harvested our first estate fruit in 2011."

Hurry down the chimney, Santa. 

* * * *

Next up, another book. This time a classic: Andrew Alpern & Seymour Durst, "Holdouts! The Buildings That Got In The Way" (1984).

The title pretty much gives it away, but here's the description: "A strip of land 5 inches wide and 78 feet deep owned by a taxi driver whose asking price killed a developer's plans for a huge apartment house. An empty 9- by 20-foot site in the middle of a Wall Street office building created by the site's former use as an outhouse at the end of the eighteenth century. A two-story building surrounded by a tall apartment house on Upper Broadway that owes its continued existence to the timing of Prohibition. These snapshots are of holdouts that got in the way."

For the property lawyer or any lover of New York City history. We were gifted this book recently by a friend and colleague, and we can highly recommend it. Maybe one of these days we'll do a review.

* * * *

More books. A reissue of another classic, Professor Bernard Siegan's "Land Use Without Zoning" (2020 ed.)

What property lawyer or land user wouldn't be happy to find this on her table on a cold December morning? "In his pioneering 1972 study, Land Use Without Zoning, Bernard Siegan first set out what has today emerged as a commonsense perspective: Zoning not only fails to achieve its stated ends of ordering urban growth and separating incompatible uses, it also drives housing costs up and competition down. . . .Siegan demonstrates how land use will naturally regulate itself in a nonzoned environment."

Cheaper than a flight to Houston.

* * * *

Not another book. For a mere twenty-five simoleons (plus shipping, unless your total order exceeds $50), you can give a present that every property lawyer will "get," pick up sticks. (I see what you did there.)

In case you can't quite figure it out: "Relive a childhood favorite with this fresh take on the classic pick-up-sticks game - it makes the perfect accessory for your coffee table." Designed in Sweden. "Includes 41 wood sticks | Wood, paper | Imported."

Comes bundled.

* * * *

A film buff on your list? Already gave 'em The Castle, Little Pink House, and Battle For Brooklyn?

Well fear not, we have "Eminent Domain" (1990)

It does not quite sound like a property-related movie ("The film is based on the true story of a senior member of the Polish Politburo (played by Donald Sutherland) and his wife (played by Anne Archer) who are both abruptly banished from the party. While they struggle to figure out why, having unusual encounters with people they do not know in the process, things start to take a darker turn when the wife is sent to a mental asylum and their 15-year-old daughter is kidnapped.").

But hey, the title wouldn't lie, would it?

Available on VHS here. 

 

* * * *

Finally, a board game, "Eminent Domain." 

Promising title, but frankly, we can't quite tell you what this involves: "Eminent Domain is a civilization-building game in which your civilization's abilities are based on a deck of Role cards. At the beginning of the game each player has the same deck of cards, with just two cards for each Role in it. Every turn you must choose a Role to execute (and like Glory to Rome or Puerto Rico, your opponents will get a chance to follow suit), and in doing so you will add one of those Role cards to your deck. When executing a Role, you can boost its effect by playing cards out of your hand matching the Role you have chosen. For example, the more you Research, the better you get at Researching (because you'll have more Research cards in your deck)."

"Civilization building?" Sounds like this should be called "Redevelopment" instead.

If it were truly "Eminent Domain," one side could make up all the rules ("I win 99% of the time."), and the referee would agree ("Under rational basis review, you win.").

Happy holidays, everyone.

Charlie Brown got a bag of rocks for Halloween.

But you aren't so cruel, and want to give better gifts this holiday season to the dirt lawyer in your life, no? Here are our 2020 suggestions for stocking stuffers that will make property mavens celebrate the season. 

Start with this one, Professor Bart Wilson's newly-published "The Property Species - Mine, Yours, and Human Mind." As describe in the book blurb: "Arguing that neither the sciences nor the humanities synthesizes a full account of property, the book offers a cross-disciplinary compromise that is sure to be controversial: Property is a universal and uniquely human custom. Integrating cognitive linguistics with philosophy of property and a fresh look at property disputes in the common law, the book makes the case that symbolic-thinking humans locate the meaning of property within a thing."

We are so confident that the book is sure to please any true bundler of sticks that we made it the subject of our Spring 2021 Directed Reading at the William and Mary Law School. Bonus: if you would like to join us for the Directed Reading, because we're on Zoom we're opening it to all. Read the book, and then join our discussion - the list of participants is growing.

* * * *

Next, one that every condemnation lawyer should love: wines from Oregon's Eminent Domaine vintner. 

From their web site: "The name, Eminent Domaine, is a reflection of our experience with the legal term, eminent domain, our dedication to the Oregon wine industry and our love of the wines produced in our region. In 2002 the City of Portland cited eminent domain as reason for claiming an office building we owned downtown. We began negotiations, as we agreed with the intent of the law, which states that the property would be used for the public good in exchange for a price based on fair market value. However, when both qualifiers came into question, a lengthy legal process ensued. Despite having a more favorable outcome from arbitration, the compensation was low and the property was used for undisclosed purposes. Having been brought up on a small farm in Hillsboro Oregon, Jeff Meader always wanted to go back to the land. Already entrenched in Oregon’s wine industry and looking to the future, it was a natural progression to re-invest in a small piece of land in the coveted Ribbon Ridge AVA. In 2009, we set about planting the 7-acre parcel with selected Pinot Noir clones and harvested our first estate fruit in 2011."

Hurry down the chimney, Santa. 

* * * *

Next up, another book. This time a classic: Andrew Alpern & Seymour Durst, "Holdouts! The Buildings That Got In The Way" (1984).

The title pretty much gives it away, but here's the description: "A strip of land 5 inches wide and 78 feet deep owned by a taxi driver whose asking price killed a developer's plans for a huge apartment house. An empty 9- by 20-foot site in the middle of a Wall Street office building created by the site's former use as an outhouse at the end of the eighteenth century. A two-story building surrounded by a tall apartment house on Upper Broadway that owes its continued existence to the timing of Prohibition. These snapshots are of holdouts that got in the way."

For the property lawyer or any lover of New York City history. We were gifted this book recently by a friend and colleague, and we can highly recommend it. Maybe one of these days we'll do a review.

* * * *

More books. A reissue of another classic, Professor Bernard Siegan's "Land Use Without Zoning" (2020 ed.)

What property lawyer or land user wouldn't be happy to find this on her table on a cold December morning? "In his pioneering 1972 study, Land Use Without Zoning, Bernard Siegan first set out what has today emerged as a commonsense perspective: Zoning not only fails to achieve its stated ends of ordering urban growth and separating incompatible uses, it also drives housing costs up and competition down. . . .Siegan demonstrates how land use will naturally regulate itself in a nonzoned environment."

Cheaper than a flight to Houston.

* * * *

Not another book. For a mere twenty-five simoleons (plus shipping, unless your total order exceeds $50), you can give a present that every property lawyer will "get," pick up sticks. (I see what you did there.)

In case you can't quite figure it out: "Relive a childhood favorite with this fresh take on the classic pick-up-sticks game - it makes the perfect accessory for your coffee table." Designed in Sweden. "Includes 41 wood sticks | Wood, paper | Imported."

Comes bundled.

* * * *

* * * *

It does not quite sound like a property-related movie ("The film is based on the true story of a senior member of the Polish Politburo (played by Donald Sutherland) and his wife (played by Anne Archer) who are both abruptly banished from the party. While they struggle to figure out why, having unusual encounters with people they do not know in the process, things start to take a darker turn when the wife is sent to a mental asylum and their 15-year-old daughter is kidnapped.").

But hey, the title wouldn't lie, would it?

Available on VHS here. 

 

* * * *

Finally, a board game, "Eminent Domain." 

Promising title, but frankly, we can't quite tell you what this involves: "Eminent Domain is a civilization-building game in which your civilization's abilities are based on a deck of Role cards. At the beginning of the game each player has the same deck of cards, with just two cards for each Role in it. Every turn you must choose a Role to execute (and like Glory to Rome or Puerto Rico, your opponents will get a chance to follow suit), and in doing so you will add one of those Role cards to your deck. When executing a Role, you can boost its effect by playing cards out of your hand matching the Role you have chosen. For example, the more you Research, the better you get at Researching (because you'll have more Research cards in your deck)."

"Civilization building?" Sounds like this should be called "Redevelopment" instead.

If it were truly "Eminent Domain," one side could make up all the rules ("I win 99% of the time."), and the referee would agree ("Under rational basis review, you win.").

Happy holidays, everyone.

 

* * * *

Join Us: Tuesday, Nov. 10, 2020 (3pm ET, 12n PT) For Free (!) Webinar: "Shutdowns, Closures, Moratoria, and Bans"

Join us next Tuesday, November 10, 2020 at 3pm ET (12 noon Pacific) for the free webinar "Shutdowns, Closures, Moratoria, and Bans," produced by Pacific Legal Foundation and Owners' Counsel of America.

Along with my colleagues Leslie Fields (Executive Director, OCA), and Jim Burling (PLF), I'll be talking about the legal foundations for objections, some of the cases that have made their way to decision, and what the future might look like. To register (did I mention it was free?) go here.

Here's the program description:

Governors and state legislatures across the country have implemented an array of policies in an attempt to contain the virus and its socioeconomic impacts. Many of these policies broadened the scope of government power while placing a heavy burden on property owners and businesses already struggling with the pandemic.

Join representatives from Pacific Legal Foundation and Owners’ Counsel of America as they explore COVID-related policies and the legal challenges to them, including:

• The constitutionality of emergency eviction moratoria and lockdown orders restricting property and business owners
• The rights and legal status of property and business owners impacted by emergency orders
• Past, current, and upcoming litigation challenging these orders

We want to hear from you! Come prepared with your questions for our panelists. This is a public event. Please pass along this invitation to any colleagues that may be interested in this program.

As noted, in addition to presentations, we've reserved a lot of time for comments and questions, so bring those with you on Tuesday.

See you then, online!

Utah App: "All bets are off for any actions other than exactness." Close Enough Isn't Good Enough In Condemnation - When The Statute Requires Notice To Property Owners Within 10 Days, It Means 10 Days

When an opinion starts off with "[t]his case offers a feast of legal issues - ranging from procedural to constitutional - but its main course is a cautionary tale to government entities: they must follow the exact statutory requirements for bringing a condemnation action[,]" you just know that you have to read the entire thing.

That's exactly what we recommend with the Utah Court of Appeals' opinion in Salt Lake City Corp. v. Kunz, No. 20190010-CA (Oct. 16, 2020). The court concluded that when a statute requires that a condemnor provide the property owner with at least 10 days written notice and an opportunity to be heard before the condemnor takes a final vote to approve exercising eminent domain, "substantial compliance" isn't sufficient. We make this recommendation that although this sort of statutory requirement is quite common -- as are examples of condemning agencies not strictly adhering to the required procedures -- we find that courts are just as often willing to let it slide, and these requirements are honored more in the breach than in the observance. Thus, we appreciate reading decisions in which courts do what they should and hold the condemnor's feet to the fire the legislature established.

How bad was the city's deviation from the required procedures here? Not that bad, frankly. Instead of conforming to the notice and opportunity requirement, the city did this:

Based on the undisputed facts, the City fully complied with those requirements as to the first meeting by sending notice at least ten business days in advance and allowing Owners to speak at the meeting. However, it only half complied as to the second meeting because it allowed Owners to speak but did not send written notice at least ten business days in advance. And it did not comply with either requirement as to the third meeting because the notice it sent arrived only three business days before the meeting and Owners were not allowed an opportunity to be heard.

Slip op. at 16.

Responding to the owners' objection, the city responded with "ahh, close enough; besides, there's no showing that the owners didn't have actual notice or didn't have an opportunity to be heard." See slip op. at 18. Sorry, held the court, when the statute says a condemnor must do X, it must do X. Strict compliance:

Once the statute is determined to require strict compliance, all bets are off for any actions other than exactness.

Slip op. at 18-19. The whole point of these type of procedural requirements isn't process for the sake of process, but to protect the rights of the property owners:

And the statute in this case does not relate to a mere fax number, recitation of a statute in a disclaimer, or a timeframe like the ones in the cited cases; instead, it goes to the weighty matter of providing procedural fairness and placing a check on a government entity’s immense power to deprive an owner of a substantive private property right. Thus, those cases do not allow a reading of substantial compliance into this statute because the statute’s requirements are mandatory.

Slip op. at 18.

Prejudice to the property owner, vel non, is not even relevant, and the court rejected the city's argument that the owners needed to have shown some prejudice that resulted from the lack of notice and hearing. 

In sum, we view section 78B-6-504(2)(c)’s requirements as strict based on longstanding precedent. Actual notice simply won’t fly. And we conclude that Owners need not show prejudice in this context. Accordingly, we affirm the district court’s interpretation and dismissal under the statute.

Slip op. at 20-21.

One last thing (and this is related to our recent post on litigation fees under the Uniform Relocation Act). The court rejected the owners' claim to attorneys fees under the URA. The court mirrored the rationale of the Ohio Supreme Court, holding that the URA only applies to federal agencies, not Salt Lake City. The court also engaged in a somewhat weird (to us) approach to the URA's language that fees may be awarded if the agency "cannot acquire the real property by condemnation." The court read this language as meaning not that the owner defeats a particular taking, but that a court must conclude the condemnor "cannot" take the property. Slip op. at 23-24. In other words, there has to be some kind of final judgment that the taker can't take at all, not just that its case fails, as here.

We find that rationale to be just ... strange, especially in light of the court's earlier ruling on adhering to the requirements of Utah's procedural statute. Are there any circumstances in which a court will absolutely prohibit a condemnor from ever taking the property? We sure are hard-pressed to imagine any. In short, prosecuting and defending eminent domain actions are always done seriatim, and each case stands or falls on its own. A condemnor may repeatedly try to take property, but if it fails to adhere strictly to the requirements of how to do so, it should be on the hook for "not acquiring" the property. 

But despite this glitch in the court's reasoning, we (naturally) recommend you read the opinion, and incorporate its core holding: close enough is not good enough in eminent domain.

Salt Lake City Corp. v. Kunz, No. 20190010-CA (Utah App. Oct. 16, 2020)

Dissenting Virginia Supreme Court Justices: By Suspending Evictions, Courts May Be Liable For Judicial Takings

Here's the Virginia Supreme Court's order (over vociferous dissents) extending a ban on state courts issuing writs of eviction and processing unlawful detainer (eviction) proceedings:

"Effective August 10,2020, and through September 7,2020, pursuant to Va. Code § 17.1-330, the issuance of writs of eviction pursuant to unlawful detainer actions is suspended and continued. However, this suspension and continuation shall not apply to writs of eviction in unlawful detainer actions that are unrelated to the failure to pay rent."

Order at 2.

Remind us again why there's no such thing as a "judicial taking?"

As if the dissenters are reading our minds, you should jump forward to page 12 of the dissent by Justice Kelsey (joined by Chief Justice Lemons and Justice Chafin), who focus on the takings issues:

Next, prohibiting the issuance of a writ of eviction to a landlord with an unlawful detainer judgment arguably sanctions a continuing trespass on the landlord's property. A landlord who sees it this way should have a chance to address whether the ex parte order constitutes a de facto temporary taking of his properties that is subject to the order and, if so, whether such a taking entitles that landlord to just compensation. That is a serious issue. "If a legislature or a court declares that what was once an established right ofprivate property no longer exists, it has taken that property, no less than if the State had physically appropriated it or destroyed its value by regulation. '[A] State, by ipse dixit, may not transform private property into public property without compensation. '" Stop the Beach Renourishment, Inc. v. Florida Dep't of Env't Prot., 560 U.S. 702, 715 (2010) (plurality opinion) (emphasis in original) (citation omitted).

It is no answer to say the taking is merely temporary. '"[T]emporary' takings which, as here, deny a landowner all use of his property, are not different in kind from permanent takings, for which the Constitution clearly requires compensation." First Eng. Evangelical Lutheran Church of Glendale v. Los Angeles Cnty., 482 U.S. 304, 318 (1987). "Once the government's actions have worked a taking of property, 'no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective." Arkansas Game & Fish Comm 'n v. United States, 568 U.S. 23, 33 (2012) (citation omitted). We stated the point plainly in Anderson v. Chesapeake Ferry Co., which held that "[t]he fact that the taking is temporary does not require just compensation for the taking to be based on new principles. As just compensation for a permanent taking is fair market value, so just compensation for temporary taking can only be a fair rental value." 186 Va. 481,492 (1947). See generally Va. Const. art. I, § 11 ("No private property shall be damaged or taken for public use without just compensation to the owner thereof.").

Dissent at 12-13.

In re: Amendment of Eighth Order Extending Declaration of Judicial Emergency in Response to COVID-19 Emerge...

Is It A Taking When Five-O Bogarts Your (Legal) Weed?

California law has decriminalized weed. Local governments, however, may regulate the use, sale, possession, and other things (like it can regulate other perfectly legal things). You know, police power kind of regulation.

Under that latter authority, the County of Santa Cruz adopted an ordinance that prohibits a medical weed facility from growing more than 99 plants. A dispensary was growing way more than 99 plants: more like 2,200 to be precise. This is Santa Cruz, man. 

Well, the Sheriff's Department didn't quite see it the same way. Under the authority of the ordinance, they seized the weed, and issued a notice of violation of the law. The dispensary sued for a taking (and other causes of action), and among the remedies sought was a return of the plants. The trial court demurred (without leave to amend, for all you California practitioners), on the basis that it isn't a taking for the government to seize illegal property, and is under no obligation to return such property. 

The court of appeal concluded that because weed has been functionally legal under state criminal law since 1996, the plants are not illegal contraband. The court concluded that the county ordinance was not really a classic police power regulation, but was more like zoning (regulating the use of land), and it could not criminalize what state law had not made criminal (even though violation of the county ordinance was a criminal offense).

Thus, the court held, the complaint validly stated a claim for return of the plants. Remember, this was up on a demurrer, which meant that the court of appeal assumed the most critical fact is true: that the plaintiff's weed plants complied with state law. Ultimately that might not be true, but for purposes of the appeal it is deemed true. "If the plaintiff was cultivating marijuana in a manner not allowed by state law, the marijuana would indeed be contraband and not subject to return." Slip op. at 8.

What about the takings claim? On that one, the court employed a different analysis that looked at the county ordinance as a criminal offense, and came to a different conclusion, one we just can't square:

An essential element of the claim is that the property was taken for public use or damaged in connection with a public work of improvement. (Ibid.) Here, the marijuana was seized in connection with enforcing the ordinance prohibiting cultivation, violation of which is a criminal offense. (See Santa Cruz County Code §§ 7.126.070 (A); 19.01.030(A).) But inverse condemnation has never been applied “to require a public entity to compensate a property owner for property damage resulting from the efforts of law enforcement officers to enforce the criminal laws.” (Customer Co. v City of Sacramento, supra, at p. 377–378.) The complaint contains no allegation indicating the marijuana was taken for public use or damaged in connection with a public work of improvement, so it does not state a cause of action for inverse condemnation.

The demurrer was properly sustained as to the causes of action seeking damages (trespass, conversion, and inverse condemnation).

Slip op. at 11.

Sorry, we don't get the distinction. If Five-O can't keep your weed, why isn't it a taking if they do?

The court seems to be applying the old "there's no taking when the government is exercising its police powers" rule, a rule we've criticized as nonsensical. And, even under the court's analysis, isn't a seizure of (allegedly) illegal property "for public use?" What are we missing here?

Granny Purps, Inc. v. County of Santa Cruz, No. H045387 (Cal. Ct. App. Aug. 5, 2020)

Michigan: Gov't Keeping The Change From Tax Delinquency Sale Is A Taking

Our Louisiana friends have a great word -- lagniappe -- that we're not sure we understand precisely, but to us has always meant that little something extra. As Mark Twain wrote, "[i]t is the equivalent of the thirteenth roll in a 'baker's dozen.' It is something thrown in, gratis, for good measure." As far as we can tell, however, it's meant to be something you give to others, not a little something extra you keep for yourself.

Maybe that message didn't make its way up to Michigan, because until the Michigan Supreme Court's ruling in Rafaelli, LLC v. Oakland, County, No. 156849 (July 17, 2020), local governments apparently were free to treat themselves to a little something extra when they foreclosed on property for the owner's failure to keep up with their property tax payments. They would sell the property, pay themselves the taxes owed, and then pocket anything left over.

There a lot to digest in the court's opinion (even the syllabus is nearly 5 single-spaced pages), but if you've been following this case, you know that the facts are pretty straightforward. It started after an owner was short on his property tax payment by a whopping $8.41. For whatever reason, he didn't pay up and was hit with additional interest, penalties, and fees for a grand total of $285.81. When he didn't pay that, the County foreclosed, sold the home for $24,500, paid itself the taxes and penalties due, and kept the change. You know, for lagniappe.

The owner sued the County for (among other things) a taking under the Michigan and U.S. Constitutions. Both the trial court and the court of appeals rejected the claim. But the Michigan Supreme Court -- after hearing oral argument back in November (video here) -- unanimously concluded that it was a taking. We suggest you read the entirety of the majority and concurring opinions, all 92 pages, because there's a lot there to soak in. Magna Carta. Blackstone. Justice Cooley (naturally, this is Michigan, after all, so there's lots of Cooley). About the only thing missing from the case is a citation to United States v. Lee, 106 U.S. 196 (1882), another case involving a failure to pay taxes (for what is now Arlington National Cemetery) and whether forfeiture results in a taking. But we won't quibble with that.

The big question in Rafaelli was whether a homeowner possesses any "property" interest in the proceeds of a tax foreclosure sale. The owner may have forfeited its fee simple property interest in the home, but did it also forfeit its equity, or the specific right to return of the surplus after a tax sale? The court held no, "[t]his right continued to exist even after fee simple title to plaintiffs' properties vested with defendants[.]" Slip op. at 49. 

But what about the U.S. Supreme Court's decision in Nelson v. City of New York, 352 U.S. 103 (1956), in which the Court, in an opinion by Chief Justice Warren, held that New York's self-lagniappe from a tax foreclosure sale was not a taking? The Michigan court distinguished that case, concluding that the critical feature of Nelson was New York's statute, which provided a means (albeit a "harsh" one, in the words of Chief Justice Warren's opinion) for the property owner to recover the surplus. The statute both recognized a property interest in the surplus, and set up a way for the owner to get it back. This is like your waitperson asking you after you hand them payment for your meal, "do you need change?" If your meal was $12, and you hand them a $100 bill, dang right you need change! New York asked, but the the owner in Nelson did not avail himself of this process, so the Court concluded the government could keep the surplus without running afoul of the Takings Clause.

Michigan's statute, by contrast, contains no such process. Once sold by the authorities, there's no procedure available for the owner to try and get the surplus back. The County didn't ask "need change?" And Michigan's statute does not expressly recognize the owner's right to the surplus, either.

The court rejected the County's argument that there was no property interest at all here, because the owner had forfeited it. Relying primarily on the U.S. Supreme Court's opinion in Bennis v. Michigan, 516 U.S. 442 (1996), the County argued there's no taking under the Fifth Amendment when an owner is forced to surrender property for "civil asset forfeiture." The court concluded that Michigan's tax process was not civil asset forfeiture, which has a punishment function. The tax process, by contrast, "is to encourage the timely payment of property taxes and to return tax-delinquent properties to their tax-generating status, not necessarily to punish property owners for failure to pay their property taxes." Slip op. at 14 (footnote omitted). And forfeiture does not affect title: 

Forfeiture does not affect title, nor does it give the county treasurer (or the state if the state is the foreclosing governmental unit) any rights, titles, or interests to the forfeited property. Therefore, we reject the premise that plaintiffs “forfeited” all rights, titles, and interests they had in their properties by failing to pay their real-property taxes.

Slip op. at 12-13.

The Michigan court was thus faced with the question of if there's a property interest in the surplus, what's the source of that property interest? For the majority's answer to that, jump to page 26 of the slip opinion. English common law, the court concluded, recognized the owner's right to any surplus after a tax debt sale. Michigan law too (cue, Justice Cooley). The government's tax power only extended to the power to take property to satisfy the debt. The court's ruling is worth quoting at length:

We conclude that our state’s common law recognizes a former property owner’s property right to collect the surplus proceeds that are realized from the tax-foreclosure sale of property. Having originated as far back as the Magna Carta, having ingratiated itself into English common law, and having been recognized both early in our state’s jurisprudence and as late as our decision in Dean in 1976, 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. We also recognize this right to be “vested” such that the right is to remain free from unlawful governmental interference. “To constitute a vested right, the interest must be something more than such a mere expectation as may be based upon an anticipated continuance of the present general laws; it must have become a title, legal or equitable, to the present or future enjoyment of property . . . .” As demonstrated by the discussion earlier, the right to collect these proceeds was beyond a mere expectancy or claim of entitlement. It is as much an interest in property as our kitchen tables; television sets; and, as this Court observed in Seaman, our cattle and farming utensils. Further, the prohibitions against collecting excess taxes, selling more land than needed to collect such taxes, and taking more property than necessary to serve the public all underlie a property owner’s right to collect the surplus proceeds and were well-established legal principles before 1963. Therefore, we hold that the ratifiers would have commonly understood this common-law property right to be protected under Michigan’s Takings Clause at the time of the ratification of the Michigan Constitution in 1963.

Slip op. at 35-36 (footnotes omitted).

It was that last sentence that prompted a lengthy concurring opinion from Justice David Viviano on two main grounds. First, he viewed the property interest more broadly (a right to the equity in the home, not merely the surplus proceeds from the tax sale). Second, he thought the question should have been answered with original public meaning analysis, not whether the founders or ratifiers of the constitution(s) might have believed that this was within the definition of property.

By contrast, the majority here focuses on what res the ratifiers would have believed were encompassed by the term “property.” This treats the ratifiers’ expectations about the application of the constitutional text as binding. Such an approach has been rejected by those who, like myself, consider courts to be bound by the Constitution’s original textual meaning—it is the publicly accessible meaning of the text, rather than its intended or expected applications, that binds the courts.

Concurring op. at 4 (footnotes omitted). But although he disagreed with the analysis, he agreed with the result.

Finally, this: eight bucks seems more like a rounding error than a significant underpayment, but we get that you do owe every cent. And that when you don't pay on time, they can hit you up for the taxes owed, the interest, and penalties. But the lawyers who got this case surely must have quietly rejoiced when the County dug in its heels and teed up for the court the glaring inequities. As lawprof Ilya Somin wrote here ("Michigan Supreme Court Rules Government Can't Seize Entire Value of Home Over Property Tax Delinquency Worth $8.41"), there should not have been a fight over what is truly a "trifle."

The figure in the previous paragraph is not a typo. Oakland County really did seize an entire rental house, sell it, and kept all the money for itself, over a mere $8.41 in unpaid taxes. That's $8.41, not $841 or $8410.

...

People who are not experts in takings law can be forgiven for thinking that all of the above should be obvious. Of course it is unconstitutional for the government to seize the entire value of a $24,000 home to pay off $8.41 in delinquent taxes. Seizing the entire value of an $82,000 house to pay off a $6000 delinquency is only slightly less awful.

Reaching these obvious conclusions shouldn't require a state supreme court decision with almost 100 pages of majority and concurring opinions! Moreover, a reasonable local government should never  have tried to seize a house over a mere $8.41 in the first place—even if its lawyers advised them they might be able to get away with it. It's the kind of case that gives lawyers —and taxes—a bad name.

We suppose the County believed it had to do this -- that it couldn't overlook small matters while also enforcing more significant shortfalls. But whatever the reason, the County picked a fight over a piddly amount, and ended up with nothing (nothing!) even for big matters.

So what's next?

In the short run, there's not much of a need for a valuation trial. This involves money and we know the exact fair market value of the property on the date of the taking (plus the time value of that money for any delay in payment, and maybe attorneys' fees?). 

In the long run, we're guessing there's an amendment to the statute coming, to make it more like New York's in which there's a process in place for the property owner to get the surplus back.

Rafaeli, LLC v. Oakland Cnty., No. 156849 (Mich. July 17, 2020)

Hawaii AG: For The Hearing At Which I Will Argue That Indoor In-Person Gatherings Are Dangerous, Let's Gather Indoors In-Person!

Here's the latest in the remaining federal court challenge to Hawaii Governor David Ige's coronavirus-related series of orders which, among other things, suspended a wide range of statutes, ordered activities deemed “nonessential” to stop or be limited, imposed a two-week self-quarantine on interisland, mainland, and international travelers, effectively shut down one of the main engines of the Hawaii economy—tourism, and compelled most residents to remain at home as much as possible and avoid large indoor gatherings.

The plaintiffs sought a temporary restraining order, and the court scheduled a hearing for Thursday, July 2, 2020. Apparently, the hearing was originally planned to be "virtual," with the lawyers and parties participating by Zoom, while the public could listen in (audio only) via telephone.

But then yesterday, the Hawaii Attorney General asked the court for "an adjustment to the format" of the hearing, to allow the AG to appear in person. The plaintiffs' counsel responded responded that if the court granted the AG's request, that she too would attend in person. Since she is not in Hawaii, this would necessitate a waiver -- from the Governor -- of the usual 14-day inbound quarantine, one of the very restrictions that the plaintiffs are challenging. 

The court agreed to cancel the virtual hearing and consider arguments in-person:

EO: Based on the Attorney General's request to convert the 7/2/20 Zoom hearing to an in-person proceeding for Plaintiffs' Application for Temporary Restraining Order and for Order to Show Cause Why Preliminary Injunction Should Not Issue, and there being no opposition by Plaintiffs, the Court shall conduct an in-person hearing. The parties are notified of the following:

(1) They shall inform the Court, by no later than noon on Monday 6/29/20, of the number of parties and counsel who will attend the hearing, and whether any parties or Mark P. Meuser seek to attend telephonically. Those attending telephonically shall provide the Courtroom Manager with their contact information.

(2) Save for the parties and Mr. Meuser (should they attend telephonically), the hearing will be exclusively in person. That is, it will not be broadcast or accessible to the public by remote means.

(3) Everyone entering the courthouse is subject to the mitigation measures set forth in the June 1, 2020 Temporary General Order Regarding District of Hawaii Response to COVID-19 Emergency, which includes wearing "a face mask covering the nose and mouth while in all public areas of the courthouse." Counsel may bring face shields if they wish, for the purpose of arguments; otherwise they are expected to wear masks during arguments.

(JUDGE JILL A. OTAKE)(otake1) (Entered: 06/26/2020)

So here's the bottom lines:

• The AG, who is arguing in favor of government limits on in-person indoor gatherings, actually asked the court to conduct an in-person indoor gathering. So in a case where the issue is whether public gatherings are a source of disease transmission, the lawyer arguing in favor of the restriction asked the court to shift from a 100% safe means, to a public gathering. Seems that could undercut the argument, no?
• The attorney arguing the 14-day quarantine is unconstitutional actually must obtain a waiver of the allegedly unconstitutional rule in order to appear and argue that the quarantine rule is unconstitutional.
• The public and members of the press, who would have been able to at least listen to the arguments next week by phone and remain sheltered-in-place, will now have to put themselves at (supposed) risk by coming down to the courthouse indoor gathering.
• The arguing advocates either have to mask up while presenting arguments or wear a face shield. Never done that, and we bet it will look and feel odd.

Strange times, indeed.

Should Takings Mavens Follow The Latest Eminent Domain Case At SCOTUS?

Short answer: yes, with a caveat. For why there's an asterisk on this one, take a look at the Supreme Court's electronic docket for PennEast Pipeline Co., LLC v. New Jersey, No. 19-1039 (cert. petition Feb. 20, 2020) (a case we've been following), and tell me whether you think there's anything unusual about the list of parties, amici, and their counsel.

SCOTUS Überlawyers? Check. Big well-funded parties? Check. Heavy-hitter amici? Check.

But the one thing missing, we noticed, was the property owners' bar. No Mike Berger, neither of the Ilyas (Somin or Shapiro), no PLF, no IJ, no Carolyn Elefant, no Chris Johns, no NFIB, none of the other individuals or groups who often weigh in on property questions on either side (and yes, no Owners' Counsel). This might strike you as odd, in a case where the Question Presented is about eminent domain:

Whether the NGA delegates to FERC certificate holders the authority to exercise the federal government’s eminent domain power to condemn land in which a state claims an interest.

The issue is one we've dealt with repeatedly here, the question of the authority of private pipeline companies to preemptively seize property under the Natural Gas Act, even though the NGA does not delegate to these companies the quick take power. A situation that one D.C. Circuit judge noted was "kafkaesque."

We don't get that many opportunities to ask the Court to take a look at eminent domain issues, so why are all the pros sitting on the sidelines on this one?

As we pointed out in this post (about the Third Circuit's opinion), this case involves a special property owner on the target end of eminent domain, the government. In this case, the State of New Jersey. Federal courts (including the Third Circuit) have pretty much blown off any private property owner that has challenged the extra-statutory take-now-decide-whether-to-pay-later scheme.

But now that it is government property -- big deal! You know where this is heading: Eleventh Amendment immunity. You can't sue a state in federal court to take its property, private condemnor, argues New Jersey, you can only sue us in our own courts! (And we know how that one will go, don't we.)

In short, this case is a fight between two condemnors. This is the caveat that we noted at the start of this post. If granted, don't expect big things from the Court, and it will not likely do anything to fix the faux-quick-take regime, other than maybe a passing remark saying "good issue, but not now." Could the Court muddy the waters up even more (like the Third Circuit sorta did in its discussion of orders of condemnation)? Yes, for sure.

So follow along, but don't expect the needle to move much while the "big leaguers" slug it out over which court can determine that private property owners have little procedural or substantive opportunity to object to NGA pipeline takings.

But all snark aside, yes, we shall continue to follow this case. More here ("New Jersey Says High Court Should Reject Pipeline Builder's Case") and here ("NJ tells high court not to bite on 'overstated' impacts in pitch from PennEast").

NC: There Isn't Just One Way To Value An "Indefinite Negative Easement"

Back in December -- only a few months ago, yet it seems like another world away -- we attended oral arguments in Raleigh in a case we've been following for a long time, about North Carolina's "Map Act."

This case is the follow up (after remand) of the N.C. Supreme Court's landmark decision in Kirby v. North Carolina Dep't of Transportation, No 56PA14-2 (June 10, 2016), in which the court held that the "Map Act," a statute by which DOT designated vast swaths of property for future highway acquisition, was a taking because the Act prohibited development and use of designated properties in the interim. The court concluded "[t]hese restraints, coupled with their indefinite nature, constitute a taking of plaintiffs’ elemental property rights by eminent domain." The court remanded the case for a parcel-by-parcel determination of just compensation. Shortly after the decision in Kirby, the North Carolina Legislature repealed the Map Act, turning a permanent taking into a (very) long-term temporary taking. 

On remand, the trial court concluded the Chappell case was a permanent taking, and awarded compensation accordingly. DOT had argued that the Map Act's massive use restrictions had not wiped out all uses of the properties, only some, and therefore this could not be valued as a DOT appealed, and here we are. 

In Chappell v. N.C. Dep't of Transportation, No. 51PA19-1 (May 1, 2020), the N.C. Supreme Court (unanimously) affirmed the just compensation judgement on narrow grounds, as we hoped it would. As we wrote after the arguments:

Second, we're not sure if the record shows that DOT preserved its main argument by an offer of proof of the uses supposedly remaining under the Map Act "negative easement." If not, that seems like one way for the court to rule in favor of the property owners and affirm, without dealing with the temporary vs indefinite nature of the taking. If the owners are satisfied with being compensated for the fee taking in this proceeding and not seeking the rent-plus-interest, who are we to say otherwise, provided the court does not establish a (wrong) rule that these type of cases generally are valued as permanent fee takes. 

The court noted that under a NC statute, partial takings are valued by the "before and after" method. N.C.G.S. § 136-112(1) (2019). In Kirby, the court concluded the Map Act was an "indefinite restraint on fundamental property rights," and limited the owners' rights to "improve, develop, and subdivide their property for an indefinite period of time." Slip op. at 15. 

Thus, the relevant determination when calculating just compensation for a taking that involves less than the entire parcel of property starts with the fair market value of the entire property before the taking and the fair market value of what remains after the taking. This is true whether the taking is an indefinite negative easement, as in the case of Map Act takings, or involves some other taking for public use.

Slip op. at 15-16.

And here's your first takeaway: the statute is about fair market value, but "the statute does not restrict real estate appraisers with regard to the method they use to determine fair market value." Slip op. at 16. You can use any method (comp sales, income cap, and replacement cost), and "[w]hile the comparable sales method is the preferred approach, the next best method is capitalization of income when no comparable sales data is available." Slip op.at 16. And here, DOT was free to do this.

But, the court concluded, it didn't. Instead, DOT's expert "sought to value the rights that remain to the property owner after the taking based on a three-year temporary negative easement[.]" Slip op. at 18. The appraiser testified he chose this method because he didn't have comparable properties. That's not good enough, the court concluded, because "[l]acking any sales of comparable property from which to determine fair market value, there remained two other methods of assessing the fair market value of the property, the cost approach and the income capitalization approach." Slip op. at 19. If you can't value it one way, try another. Do not go off the map, so to speak. 

[T]here was no evidence from a NCDOT appraiser concerning the fair market value of the property after the 1992 and 2006 takings based on a cost approach or income capitalization approach to valuation. Thus, it was not an abuse of discretion for the trial court to exclude testimony that did not relate to one of the three appropriate methods of determining fair market value.

Slip op. at 20. 

And here's your second takeaway: labels don't matter as much as substance. Valuing the taking as a "indefinite negative easement" or a "fee simple" taking" isn't terribly important: "[w]hether one assume the road is built, calls the taking similar to a fee simple taking, or gives the taking some other name, the fact that there was evidence of no market whatsoever for the property, in other words, that no one wanted to buy a house in the Outer Loop corridor once the 1992 map was recorded, was a proper consideration in determining the after-taking fair market value." Slip op. at 20-21.

Here's your third takeaway: even if a jury instruction was erroneous, the DOT didn't show the error was prejudicial. Slip op. at 22-23. The DOT didn't introduce anything at trial to counter the property owners' appraiser and "[t]here was no evidence of an alternative fair market valuation on a cost basis or income capitalization basis that could have informed the jury's verdict." Slip op. at 23.  

So there you have it: an appropriately narrowly tailored decision that upholds the verdict the property owners sought, but did not venture into areas where the court might have screwed up the law for others. As we wrote at the time of argument, a narrow ruling on the evidentiary issue "seems like one way for the court to rule in favor of the property owners and affirm, without dealing with the temporary vs indefinite nature of the taking." Looks like the court wisely did so. 

Chappell v. N.C. Dep't of Transportation, No. 51PA19-1 (N.C. May 1, 2020) 

How Property Law Helped To Save Hawaii's Mother's Day

As we understand it, at some of our leading law schools the basic Property course is no longer a required 1L course. It's an elective. Quelle horreur! 

We think that's a bad idea. Our Property I course (a 4-credit one-semester monster) is where we learned about things like treasure trove (finders, keepers - losers, weepers), fee tail, and the dreaded Rule Against Perpetuities from the venerable Allan F. Smith. It's also where we first learned of vested rights and zoning estoppel. Thank you Professor Smith. What a shame it would have been had we not been required to take that course where we learned so much about the vibe of the law (not just property law). 

Hawaii's vested rights and estoppel rules as developed over the years by the courts are based on constitutional and equitable principles: if someone receives "official assurances" from a government official acting "within the ambit of their authority," and actually relies on those assurances to substantially change position, then that person has a property right that "cannot be taken away," and the government is estopped from backing away from those assurances. More about these concepts in property law here (a U. Hawaii Law Review article we wrote up with Ken Kupchak and Greg Kugle).

What's all that got to do with Mother's Day, you ask? 

Well, it turns out that under the Governor's coronavirus orders, Hawaii's florists are not deemed to be "essential," and were ordered to stop doing business. But as this story ("Ige’s reversal halts delivery of Mother’s Day flowers") details, recently, in anticipation of Mother's Day (May 10, don't forget Mom, wherever you are), florists responded to the Governor's invitation to request an exemption. The Governor even has a special email address at which to send such requests. And responding to those requests, florists received a good response from that same email address: if florists comply with three health-related conditions, they could open and take and fulfill orders for Mother's Day.

All seemed well until two days later, when the Governor publicly announced "my bad." Sorry, the exemption notification was an error (NoKo "this is not a drill" nuke texts, anyone?). The sender didn't have authorization or approval. Sorry, florists.

Problem was, in the two days since the official green light to reopen, many florists took orders, ordered flowers from their suppliers, and generally incurred a whole lot of obligations. After all, Mother's Day is, we understand, the biggest single flower event on the yearly calendar. Florists are hurting badly in the shut down, and maybe they could undig that hole a bit and bring a small ray of sunshine to shut-in Hawaii moms. Now they were even more screwed. 

That's where Property I might've played a small part. In addition to an outpouring of public support in petitions to the Governor (we told you the First Amendment doesn't get tossed aside in emergencies) someone told the Gov about things like "official assurances" by an official "acting within the ambit of their authority," and "substantial reliance" leading to a property right that "cannot be taken away" (without condemnation and compensation), and equitable estoppel and restitution. These principles can be enforced even against the government.

Next thing we know, the Governor is holding a press conference announcing reversing the reversal ("Governor Ige reverses his decision and allows flower shops to make deliveries for Mother's Day"). Mother's Day flowers are back on the calendar! 

So here's your lesson, elite law students who may be thinking of not registering for the basic Property course because you don't see a need to learn things with a lot of confusing Norman Law French terms (and it conflicts on the schedule with "Arguing with Judge Judy: Popular Logic on TV Judge Shows"): resist that temptation. You never know when the things you learn there will help out, even if you never practice property law.  

PS - order Mom some flowers!

Take It Easy: Today Is Hawaii's Secular Good Friday Holiday

Even if the world were open today, the doors to most Hawaii state, county, and city offices would still be locked. Because today is the day that Hawaii celebrates Good Friday.

Yes, Good Friday is an an official state-sanctioned holiday in the 808 area code, so we're reposting our annual recounting of how it came to be that the State commemorates the date of the crucifixion, and how that squares with the Establishment Clause of the First Amendment. 

Turns out that we don't really commemorate today as the crucifixion date, and it is just coincidence that the official State "spring holiday" occurs on the same day. (And this being Hawaii, in the end it's really a public worker's union thing.)

Good Friday is a legal holiday in the State of Hawaii pursuant to Haw. Rev. Stat. § 8-1. [Barista's note: here's a case we argued a couple of years ago in which the difference between a state holiday and a federal holiday made a difference in the way a voter's appeal time was calculated.] The day of the crucifixion was originally made a holiday in 1941 by the Territorial Legislature. The statute was recodified upon statehood in 1959, and the holiday has been confirmed via Haw. Rev. Stat. § 89-1, the law that makes the establishment of public holidays -- among many other things -- a product of what the statute calls "joint decision-making" process between the government and the government employee unions (also known as collective bargaining -- and here it was you thought that elected representatives made laws).

The Establishment Clause, which has been incorporated against the states by the due process clause of the 14th Amendment, prohibits the government from establishing an official religion (the so-called separation church and state), and in 1987, several Hawaii taxpayers challenged the designation of Good Friday as a public holiday because it was plainly -- they claimed -- a religious, not secular observance. The Hawaii federal court held otherwise in Cammack v. Waihee, 673 F. Supp. 1524 (D. Haw. 1987), concluding among other things that the Legislature made Good Friday a holiday to ensure that public workers have more days off, not to make sure they were religious: 

[T]he Good Friday holiday was primarily proposed to increase the frequency of legal holidays. It is also noteworthy to point out, as does the State in this case, that the legislative report seems to acknowledge that Good Friday is not an entirely religious day. The 1939 report characterizes Good Friday as  in theory at least a day of solemn religious observances, apparently reflecting the legislature's sentiment that Good Friday had lost much of its religious nature and had become a holiday similar in nature to Thanksgiving or Christmas which have been secularized to some extent over the centuries. Indeed, this court is also of the opinion that Good Friday has attained a secular character; for the majority of Americans Good Friday has become more an integral part of a traditional three day secular celebration of Spring which begins on Good Friday and continues through Easter Sunday than a solemn observance of Jesus Christ's crucifixion.

This court concludes that the secular purpose behind the establishment of the Good Friday is manifest. The legislature does not offend the First Amendment by enacting a statute intended to ensure that the people of Hawaii have an adequate number of leave days. This court further concludes that any ancillary sectarian purpose which the legislature may have had in establishing Good Friday as a holiday is not fatal to the Hawaii Rev. Stat. § 8-1, since  a clearly secular purpose  for the statute exists and since Good Friday, like Christmas, has become secularized to some extent over the centuries.

An examination of the effects of Hawaii Rev. Stat. § 8-1 leads this court to the conclusion that the legislature's intended purpose in declaring Good Friday to be a legal holiday has been fulfilled. While the plaintiffs argue that the effect of the Good Friday statute is to give Christian sects the imprimatur of State approval, an analysis of the effects of the statute compels this court to find that the secular effects of the statute significantly predominate over the sectarian effects of the statute.

The Ninth Circuit affirmed. See Cammack v. Waihee, 932 F.2d 765 (9th Cir. 1991). The majority of the three-judge panel noted that many people in Hawaii use the Good Friday holiday to go shopping, and held "[i]t is of no constitutional moment that Hawaii selected a day of traditional Christian worship, rather than a neutral date, for its spring holiday once it identified the need." The court concluded that the presence of a plausible secular purpose for enacting the law made the holiday's religious nature effectively irrelevant; to violate the Establishment Clause, the legislature must have intended the Good Friday holiday to only serve a religious purpose: 

We conclude that the Hawaii statute has a legitimate, sincere secular purpose, specifically to provide Hawaiians with another holiday, and thus is not motivated wholly by an impermissible purpose. There is nothing impermissible about considering for holiday status days on which many people choose to be absent from work for religious reasons. That the state legislature was able to accomplish its secular purpose and at the same time accommodate the widespread religious practices of its citizenry is hardly a reason to invalidate the statute.

(citation omitted). One judge dissented, arguing that a day off for Good Friday was not in any sense secular, and was a government endorsement of religion: 

The holly and the ivy, jingling bells, red-nosed reindeer, and frosty snowmen this is not. What this case is about is Hawaii's endorsement, by means of a state holiday, of a day thoroughly infused with religious significance alone. Because I believe that such a state establishment of religion violates both the purpose and effects prongs of Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971). I respectfully dissent.

The dissenting judge argued that the court's duty is to seek out whether the legislature had a primarily religious purpose, rather than whether it had any legitimate secular purpose.

So even though you can't (physically) go shopping, or go to the beach today, folks, take it easy. If you do use that time to go to church -- either in person or virtually -- it is "of no constitutional moment." Because it is plausible, isn't it, that the State had a secular purpose when it officially sanctified "a religious holiday observed primarily by Christians commemorating the crucifixion of Jesus Christ and his death at Calvary?" 

As the Church Lady would say, "how conveeeeenient."

CA4: No, Your Dog Being Killed By Adopted Violent Shelter Dog Isn't A Taking

Suppose you're walking your pooch "Kaiser" in the local dog park. Another owner is walking his dog "Odin" in the same park. Off-leash Odin attacks you and Kaiser, unfortunately killing Kaiser.

Those bastards took Kaiser, my property! A total wipeout Lucas taking (after all, you plainly have been 100% deprived of both the use and value of poor Kaiser, who is no more). 

So you sue. But who do you sue? The owner of the miscreant Odin? Nope, not a state actor, no power of eminent domain. So not liable for a taking. How about Odin himself? After all, courts are entertaining lawsuits by ape plaintiffs, so why not dogs as defendants? Nope, besides the standing problem, like his master, Odin isn't a state actor and does not have the power of eminent domain.

How about the animal shelter, because it is operated by the county? Genius!

Thus, your federal takings complaint alleges the Fairfax County Animal Shelter (from where the owner adopted Odin months earlier) didn't warn him that Odin was a bad dog and had a "violent history." And FCAS is an arm of the government. Creative!

Nope, held the U.S. District Court. And in McCabe v. Fairfax Cty. Animal Shelter, No. 19-1583 (Mar. 31, 2020), in an unpublished per curiam opinion, the U.S. Court of Appeals for the Fourth Circuit affirmed. 

The court agreed with the District Court that although FCAS is a part of a government entity, Virginia law does not render FCAS subject to suit. OK, how about I substitute the County itself, argued the plaintiff. The County can be sued under Virginia law, and it is a "person" under section 1983. 

Not so fast, concluded the Fourth Circuit, even if you get the right defendant, you complaint doesn't allege a valid takings claim:

McCabe’s theory of liability was grounded on his allegation that FCAS failed to disclose Odin’s violent history in order to facilitate his adoption, as part of a broader policy of knowingly adopting out dangerous dogs. However, Odin was neither in FCAS’s possession nor under its control at the time of the attack, which occurred almost six months after Odin’s adoption. Odin’s owner made the decision to have Odin off-leash in a public area. Accepting McCabe’s well-pled allegations as true, there has been no actual government interference with his property. See Sunrise Corp. of Myrtle Beach v. City of Myrtle Beach, 420 F.3d 322, 329-30 (4th Cir. 2005). Therefore, although we grant McCabe’s motion to exceed the length limitation for his informal brief, we affirm the district court’s order.

Slip op. at 4.

Seems like every dog has its day, except poor Kaiser (at least not for a takings claim). 

McCabe v. Fairfax Cty. Animal Shelter, No. 19-1583 (4th Cir. Mar. 31, 2020) (unpub.) 

First Takings Lawsuit Challenging Business Shut-Down Order

Well, here it is. What looks like the first complaint to be filed challenging a state governor's order to shut down businesses to "flatten the curve." 

The complaint seeks class action status, and raises section 1983, due process, and Fifth and Fourteenth Amendment takings claims. It seeks damages, compensation, a declaratory judgment, and, interestingly, an injunction prohibiting enforcement of the shut down order "unless, and until, a mechanism is established to provide (a) just compensation for affected businesses and (b) appellate review of Governor Wolf's classifications determining whether individual businesses are 'life sustaining.'" Complaint at 39.

We've written about this issue recently here:

• Latest Readings: On Emergency Takings, Compensation For Commandeered Property
• The Royal Origins Of "Police Power" Hawaii-Style: The King v. Tong Lee (1880)
• Emergencies, Police Power, Commandeering, And Compensation: Essential Readings
• #CoronavirusLaw: Is There A Difference Between "Commandeering" Property In An Emergency, And "Taking" It?

More, from law.com: "Pa. Gov. Wolf's Order Closing Businesses During COVID-19 Outbreak Violates Takings Clause, Lawsuit Claims."    

Fasten your seatbelts. It's going to be a bumpy night. 

Complaint, Shulmerich Bells, LLC v. Wolf, Civ. No. 20-01637 (E.D. Pa. Mar. 26, 2020) 

"And although they may be poor, not a man shall be a slave" - A Brief Visit To The Birthplace Of A More Perfect Union

As we noted recently, our spring William and Mary Law course is taking a look at the role of property rights in the debates about the ratification of the U.S. Constitution and the political atmosphere from the founding to the Civil War. Being able to studying these subject in Williamsburg is even better, because we're right in the center of where some of the most important historical events occurred.

But wait, you say, the ratification debates took place in Philadelphia, not peninsular Virginia, so what gives? Our view is that the unsettled question of whether the U.S. Constitution is a pro- or anti- slavery document was not resolved in law until the Civil War, and that the factual debate continues to this day. And the critical events that set the ball in motion took place right down the road from the law school.

First, Point Comfort, the location where, in 1619, the first Africans touched ground in the New World. Second, the spot at Fort Monroe where two-plus centuries later (and merely yards away, by happenstance), the long road to freedom for the enslaved arguably kicked into higher gear. Fort Monroe, you see, is built on Point Comfort, and is the first place where, as far as we can tell, the legal theory of enslaved persons as "contraband property" was created or applied in the early days of the Civil War. Students of history will tell you that there are myriad political, social, and legal reasons why those who escaped bondage and made their way to Union lines were not deemed emancipated, but were stuck in a legal limbo of being neither enslaved or fully free. A half-measure, perhaps, but surely a start on the road to the principle that "not a man shall be a slave." 

Was it coincidence that General Butler, commander of Fort Monroe in those critical days and the implementer if not the creator of the contraband theory, was also a lawyer in civilian life? Was it also coincidence that after the war, Congressman Butler was the author of the first version of the Ku Klux Klan Act, the statute we now know as 42 U.S.C. § 1983? (Read his bio and see if you don't agree that this fellow does seem to pop up at some of the most important times and places during those days.)   

For more on the subject try these informative sources:

• The Forgotten: The Contraband of America and the Road to Freedom (National Trust for Historic Preservation)
• Slave, Contraband, Refugee: The Complicated Story of the End of Slavery in the United States (Dig: A History Podcast)
• How Slavery Really Ended in America (New York Times Magazine)

So last week our class took a short "field trip" (remember those from high school?) to Point Comfort and Fort Monroe. What did being on-site add to our studies? Any dirt lawyer will tell you that it is critical to see the actual places involved in your cases, and we think history is no different. There's just something about breathing the air at the very places where these important events occurred. 

We created a short video chronicling our class visit that touches on some of the legal issues. (We had to re-record the audio because the original had too much background wind, so forgive us if we sound a bit muffled.) We also held short "dramatic readings" of the book we're studying, Sean Wilentz's "No Property in Man - Slavery and Antislavery at the Nation's Founding." 

If you are ever driving through Hampton on Interstate 64, stop by for a visit. Well worth it. 

Complaint: Honolulu Sues Gas Companies (For Nuisance) To Recover The Cost Of Sea-Level Rise

Make what you will of this 205-paragraph, 114 page (including 128 footnotes) Complaint, filed yesterday by the Acting Corporation Counsel for the City and County of Honolulu and a battery of outside lawyers against gasoline producers, alleging that they are responsible to pay the costs of sea-level rise and other symptoms of what the complaint calls the "climate crisis."  

It's a challenging read, but the fun part is in the claims for relief (fast forward to page 99), which include (for you property mavens) nuisance, private nuisance, and trespass (by flooding), as well as affirmative and negligent failure to warn of the dangers of fossil fuel products. 

Will this lawsuit go anywhere? Is a big municipal payday in the cards? Will it get to a local jury? Your guess is as good as ours. But we'll be following along, for sure.  

Complaint, City and County of Honolulu v. Sunoco LP, No. 1CCV-20-0000380 (Haw. 1st Cir. Mar. 9, 2020) 

Williamson County, In Pictures

As we briefly noted in this post, before we departed the ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Nashville, we just had to stop by the subdivision that was at issue in the Williamson County litigation. 

Frankly, there's nothing especially special or noteworthy about this place, and only takings nerds will truly appreciate these pics. But given our propensity to make "takings pilgrimages" to the sites of famous property cases (see here (Claude Monet), here (Loretto), here (Chicago, B & Q RR), here (Dolan), here (Seneca Village), here (High Line), here (Hadacheck), and here (Nollan), for example), we just could not resist. 

So dig it, takings mavens. 

There's a golf course, of course. (There's always a golf course.)

"Temple Hills" beats "Glengarry Glen Ross"

A panorama of the main drag

Up the street 

Down the street (as we said, nothing too exciting)

The golf course

No, not Scotland; Williamson County, Tennessee

An intersection

We saw this graffiti (jk, jk)

Saw This Sign In Williamson County, Tennessee

Having just wrapped the 2020 ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Nashville (very successfully, but more on that later), we could not depart the area without paying a visit to the site of the late-and-not-so-great Williamson County case, in a nearby suburb (we'll also have more on that later, once we're back in the office). 

Driving into the infamous -- at least in takings circles -- Temple Hills subdivision, we came across this STOP sign at a key intersection, with some curious graffiti. 

California Coastal Comm'n: We're Suing Evil Rich Guy Who Is Blocking Access To The Forbidden Zone (Even Though Court Just Ruled The Other Way On The Same Issues In A Similar Case)

We gave up long ago expecting rationality and straight-up-the-middle narratives when it comes to cases about beaches and beach access. People get kind of nuts about that for some reason. We get why. Who doesn't love a beach? Even a beach that could serve as the location if Planet of the Apes is re-made again. Don't believe us? See this recent video. Or this story with a picture from the 1980s. 

But we overcame our usual reluctance to dive into these stories for the latest in a case we've been following, as it wound the way from California's trial and appeals courts, to the U.S. Supreme Court on a (denied) judicial takings cert petition, to the California legislature which was threatening to condemn and buy the property, to a recent unreported California appellate decision affirming a finding of no public easement, and now this, a recently-filed complaint against the owner by the State. 

The State of California Lands Commission and the Coastal Commission have sued the Silicon Valley billionaire owner, claiming that the access path over his private property is, in reality, publicly-owned property due to frequent historical use of the trail by the public. Who needs to condemn something "we" already own!

The owner of course contests that, and points to the recent unpublished court of appeal decision that affirmed a finding that the plaintiffs in that suit (Friends of Martin Beach) did not prove that any public access was adverse to the owner. The State has now raised what looks to us like very similar claims, so we shall see if that has any impact on this case.

We shall follow along. Stay tuned.

Complaint for Quiet Title, Declaratory Relief, and Injunctive Relief, California State Lands Comm'n v. Mart... 

Florida Dep't of Ag's Middle Finger To The Courts And Property Owners: We Were Ordered To Pay Full Compensation...But We're Not Going To

All seemed to be going well for the property owners in a Florida takings case. They obtained a satisfactory compensation judgment for the taking of their healthy citrus trees (yes, this is that case). And because Florida's Constitution requires "full" compensation, they were also entitled to attorneys' fees and costs. $13 million in compensation, nearly $1 million in fees. Took a while, but so far, so good.

That's when the Florida Department of Agriculture really dug its heels in. It acknowledged it was obligated to pay compensation, but it simply refused to do so. It didn't make a request to the legislature to appropriate money to satisfy the judgment, and claimed it has no obligation to do so. The legal equivalent of a middle finger at both the courts and Florida citizens:

Here, as discussed previously, the Department takes the position that it will make no payment of the final judgments absent specific legislative appropriation; that it has no obligation to take any action to secure such an appropriation; and that it is up to the legislature to decide whether to make an appropriation.

The Department asserted that two statutes say that the state and its agencies can't be required by a court to pay any judgment, and the "sole remedy of the judgment creditor" if the legislature hasn't appropriated the money to satisfy the judgment "is to petition the Legislature in accordance with its rules to seek an appropriation to pay the judgment."

The Department asserted this requirement applies equally to just compensation for takings judgments. You can order us to pay, court, but you can't make us go ask the lege for the money. The property owners can only go ask the lege themselves.

But wait, aren't the just and full compensation requirements of the U.S. and Florida Constitutions self-executing? Meaning that this section can't be applied to such judgments in a constitutional manner? Yes, held the trial court. 

Well, in Florida Dep't of Agriculture and Consumer Services v. Dolliver, No. 2D18-1393 (Nov. 13, 2019), the Florida District Court of Appeals for the Second District agreed:

The difficulty with these provisions is that despite the constitutional imperative in the Takings Clause, they give the legislature the sole discretion to decide whether and when to make an appropriation. And if an appropriation is made, it is subject to the governor's sole discretion to veto it. By doing so, application of these statutory provisions could subject payment of a takings judgment to the whim of the legislature and governor. And this could result in sections 11.066(3) and (4) effectively abrogating judgment creditors' constitutional rights to full compensation under the Takings Clause.

Slip op. at 4.   

The most interesting part of the slip opinion begins on page 9 (don't get us wrong, the entire thing is worth reviewing).

The court concluded that the statutes are unconstitutional as applied. First because sovereign immunity isn't a question in takings cases. The court also rejected the Department's argument that the "go ask the legislature" statutes are reasonable regulations and restrictions on the right to just and full compensation. Not so, held the court. A regulation that deprives property owners of 100% of their just and full compensation judgments isn't a "reasonable" restriction on the right, but a total abrogation. Finally, the Department argued that separation of powers deprived the courts of power to order the Department or the legislature to do anything. Courts may be able to determine the amount of compensation, but they can't actually force the executive or the legislature to pay up. You work your side of the street judge, and we'll work ours. The court rejected that argument as well, concluding that a writ of mandamus is the appropriate (ha, ha) enforcement mechanism to appropriate money to satisfy a judgment. 

If all of this sounds faintly familiar, it does remind us of a decision from a couple of years ago from the Commonwealth of the Northern Marianas Islands, of all places. There, after an affirmative exercise of eminent domain to take property, the government still hadn't bothered to appropriate the money to pay the judgment. The trial court got fed up and ordered the government's bank accounts to be levied. That sure got their attention. The CNMI Supreme Court mostly agreed, and although it vacated the levy, it did tell the government that it had better pay up, or else. 

So what's the deal Department of Agriculture? Why not ask the lege for the money? To us, this looks like it is simply digging in. Do we think this will be the end of the matter, and now it will pay up? Given its actions thus far, maybe not.

Fla. Dep't of Ag. & Consumer Svcs v. Dolliver, No. 2D18-1393 (Fla. Dist. Ct. App. Nov. 13, 2019) 

Who Is In Charge At The County Of Maui? SCOTUS OA Hinges On Internal Dispute Over Who Can Settle

We've been following the ongoing efforts to settle the Clean Water Act case involving the County of Maui with some amusement. 

Why, you ask? Part of it is that we like municipal law. (Perhaps sad, but true.) But we're amused mostly because the case's current posture illustrates the dual principles of "be careful what you ask for," and the legal corollary of one of Murphy's Rule of Combat ("No plan ever survives first contact"): that you may be able to start a lawsuit on your own terms, but you may not always be able to end it the same way. 

The plan here seemed pretty good. Sue the County for violating the CWA for its injection wells, asserting it should have obtained a CWA permit. Yes, the line between a "point source" and a "nonpoint source" was not settled law, but the case seemed like a very good bet. The plaintiffs would very likely find a receptive audience in both the U.S. District Court for the District of Hawaii and in the U.S. Court of Appeals for the Ninth Circuit. And when the lawsuit was instituted in 2012, the Supreme Court was not overly likely to take up the issue. Thus, the risk of making bad nationwide law (from the plaintiffs' standpoint) was low.  

At first, everything went according to plan. The plaintiffs sued the County of Maui, a Hawaii municipal corporation. The Hawaii federal court granted the plaintiff summary judgment. The Ninth Circuit, as expected, affirmed. But between the judgment in the district court, and the Ninth Circuit's ruling in 2018, the composition of the Supreme Court changed. You know why. Thus, when the County petitioned the Court late last year to hear the case, the Court agreed. Which didn't bode well for the until-now successful plaintiffs. The fortunes of war looked to be changing. 

With the looming prospect of the new Court possibly creating unfavorable nationwide precedent, the plaintiffs began a desperate effort to settle the case. That's when the current troubles arose. The defendant/Petitioner is the County of Maui, a municipal corporation organized under Hawaii law. But who, exactly, gets to decide whether the County of Maui can settle? 

The County Council thought "the County" means the Council, and thus the Council has the authority to settle the case. After a day-long hearing, the council (by a one member margin) approved of settling with the plaintiffs. The settlement was pretty much a roll-over by the County in which the plaintiffs get what they want. Not only that, but the Supreme Court thwarted! Game over, man, game over!.

Not so fast, wrote the Mayor, "the County" includes me, and I have to approve of any settlement; because I think the legal issue needs to be clarified, I won't approve. Game on! 

Meanwhile, back at 1 First Street, N.E., an impressive number of amici weighed in, (including some heavy appellate hitters and the federal government, which was granted face time) and the Supreme Court scheduled oral arguments for November 6, 2019. 

The plaintiffs wrote the Supreme Court, giving the Justices a heads-up that there was a brewing dispute over just who was the Petitioner, and that the case may or may not have been settled. The private counsel for the Petitioner County responded, asserting "I am Counsel of Record for the County of Maui," and "[t]his case has not settled," because "the Mayor must agree to settle the case and withdraw the County's petition. At this time, the Mayor has not agreed to do so."

Not content to sit on the sidelines, the Chair of the Maui County Counsel on her own wrote to the Court, "to confirm that on September 20, 2019, the Maui County Council settled the case by adopting Resolution 19-158 authorizing settlement and the withdrawal of the case from the U.S. Supreme Court." The letter described the dispute within the halls of the County building of whether the Council possesses the authority to settle the case on its own, or whether it needs to run it past the Mayor. The letter asked the Court to either dismiss the petition, "or, at the very least, postpone the hearing until Maui County can resolve our Charter crisis by determination of the Council's authority in court within the State of Hawaii or otherwise."

One more letter followed. The County's outside appellate counsel responded that the Council Chair isn't the lawyer for the County of Maui, "I am Counsel of Record for the County of Maui in this case," and that the County's corporation counsel "has asked me to submit the attached letter in response to [the Chair's] letter[.]" The "attached letter" refers to a letter which the Corporation Counsel sent to the Court the same day of the Council Chair's letter, offering "my sincerest apologies for the [Chair's letter]. The Corporation Counsel asserted she is the chief legal officer for the County, and as the lawyer for the County, she asserts "the County of Maui is not requesting a delay or dismissal in this matter," and that "[a]ny alleged conflict involving the County Charter is a matter than may be addressed independently." (emphasis original).  

So who is right? Who speaks for "the County?" Is it the Council alone which has authority to settle lawsuits for the County, or is the Mayor also a part of the process?  

We have been down this path before under Hawaii's law governing municipal governments. Although that case was in a much different context, it presented the same issue: who speaks for "the County?" County of Kauai ex rel. Nakazawa v. Baptiste, 115 Haw. 15, 165 P.3d 916 (2005), was a case about the definition of "the counties" as used in the Hawaii Constitution's article which delegates the counties the power to levy and collect property taxes. The Hawaii Supreme Court held that the term "the counties" did not include the people of a county exercising their home rule powers to adopt Charter amendments via direct democracy. The long and the short of the case is that 3 of 5 Justices concluded that the term "county" means "county council" (the 2 dissenters objected on procedural grounds, and would have never reached the substantive question). 

Baptiste, however, does not solve the present question of who gets to decide for Maui whether to settle, because Baptiste is about the allocation of power within the counties when it comes to property taxes, and how the term "county" is defined by the state constitution. The present case is more about how the Maui County Charter internally allocates the County's home rule authority to make litigation decisions. But still, Baptiste is at least a touchpoint in analysis under Hawaii municipal law.   

And that takes us to our final document of this post, an opinion letter issued in September by the Corporation Counsel. The memo concludes that it is a mixed question under the Maui Charter, and depending on the circumstances, the council has exclusive authority to settle certain cases, the mayor has exclusive authority to settle others, and both the Mayor and the Council must agree in other cases:

DOES THE COUNCIL HAVE THE AUTHORITY TO SETTLE A LAWSUIT ON BEHALF OF THE COUNTY:

A) YES, when the consideration for settlement involves the commitment of county funds in excess of $7,500, or an exercise of municipal authority exclusively vested in the council by the charter.

B) NO, when the consideration for settlement does not exceed $7,500, or where settlement involves the exercise of municipal authority exclusively vested in the executive branch by charter.

C) NO, when the consideration for settlement requires both an exercise of municipal authority vested exclusively by charter in the council and the executive branch, UNLESS the council and the executive branch concur.

Memo. at 7 (emphases original). The memo relied on a Hawaii Supreme Court case resolving a similar dispute between Honolulu's mayor and the city council, which recognized the principle of separation of powers within Hawaii municipal governments, which mandates that each coordinate branch of county government be limited to its charter-specified power.      

Any guess which circumstance is presented by the council-only-approved settlement here? Apparently, the Mayor and Corporation Counsel believe that it is the last one, "C" (where both branches are required), because the settlement would allocate way more than $7,500 in County money (so the council has a role in getting the money), and the executive branch of the County government -- the Mayor -- also must execute other parts of the settlement by directing County employees to accomplish certain actions. If that is indeed what the final terms of the settlement requires, and how the Maui Charter divides up the County's power, then the Mayor and Corporation Counsel may have a good point. 

But for Supreme Court watchers and environmental law mavens, the real question posed by all of this wrangling is whether the scheduled oral arguments on November 6 will go on, or be postponed while the County sorts out who can do what, and who represents it under Hawaii law (we're guessing there's at least one lawyer in Hawaii who is working this weekend on a state-court declaratory judgment complaint). On that, we defer to the uberlawyers who regularly practice in the Supreme Court, and their guesses about what the Justices might do. 

We'll be following closely. We had planned on taking a field trip to the Court in November with our class, just like we did for the Knick arguments. But until the Court gives us an indication whether the OA is a go or no-go, like you, we remain in limbo. 

Memorandum, Council's Authority to Settle a County Lawsuit (Sep. 16, 2019) 

Hic Sunt Dracones - New Cert Petition Argues Penn Central Results In "Inconsistent," "Unprincipled," "Amorphous," "Illegitimate" Decisions

You know where this is. 

Here's the cert petition filed recently in a case we've been tracking. (See also this guest post by economist Bill Wade about that case.)

As the above photo tells you, this one is going into what may the last truly unexplored frontier of regulatory takings law, the details of the ad hoc Penn Central test, the "default" test in most situations where the regulation does not wipe out all economically beneficial use (Lucas), doesn't physically invade the property (Loretto, Kaiser Aetna), or doesn't render useless a fundamental attribute of property (Webb's Fabulous Pharmacies). 

In all but those situations, the Court has told us to apply the multifactor three-part (or as Professor Steve Eagle argues, the four-part) test from Penn Central. But only in a few cases have property owners successfully navigated that minefield to prove a taking (and defend it on appeal). This petition asks the Court directly to revisit that decision and provide a test that is more understandable, and more workable.  

In this case, the plaintiff owned a vacant lot in a residential subdivision, and from 1975 to 2005, she and her predecessor owners (she inherited it from her parents) did not take steps to develop it. But then she did, undertaking several of the things you usually do in order to get a property ready to develop: she hired land planning consultants, architects, and planners to craft plans and applications. She also informed the town conservation commission that she intended to build a home on the property, because "[a]s submitted, the plaintiff's plans required several variances from the wetlands protection bylaw, as they did not comply with its requirements covering coastal banks, salt marshes, or land subject to coastal storm flowage." Slip op. at 4.

When the commission denied the variance, she sued in a Massachusetts court for a regulatory taking, seeking compensation. She asked that a jury determine both liability and damages. The jury concluded that the application of the wetlands law was a taking, and awarded her $640,000. But the court of appeals reversed the judgment and ordered the commission be declared the winner.

The court not only held that there's no right to a jury for an inverse condemnation claim (a ruling on which the owner has not sought U.S. Supreme Court review), but that the Penn Central test mandates that the property owner lose.

1.   Economic impact. There was not a significant-enough diminution of value ($700k to $60k) because the purchase price was lower ($49k). [Barista's note: huh?]. Plus, even with the restrictive regulations applied, the owner could still make use of the property as a park or playground, or it could be sold to neighbors "for privacy or for expansion of their respective properties." [Barista's note: again, the "investment use."]. And sorry, this is economic illiteracy.

2.     Investment-backed expectations. The owner inherited the property. That alone "does not by itself defeat a claim," slip op. at 15, but here, the owner didn't invest much in the property except pay property taxes, and spend a few hundred on some soil testing.  Any compensation "would constitute a windfall." Palazzolo, anyone?

3.   Character of the government action. No physical invasion. Generally-applicable environmental regulations that are sourced in harm mitigation. And you know what that means: property owner loses. 

Here are the Questions Presented by the petition:

In Penn Central Transp. Co. v. N. Y., 438 U.S. 104 (1978), this Court held that Fifth Amendment “regulatory takings” claims are governed by three factors: the “economic impact” of the challenged regulatory action, the extent of interference with a property owner’s “distinct investment-backed expectations” and the “character of the governmental action.” Id.

The Massachusetts Appeals Court applied the Penn Central factors to hold that Respondent Town of Falmouth (Town) did not unconstitutionally take Petitioner Janice Smyth’s (Mrs. Smyth) property by denying a permit to build a home. Mrs. Smyth’s parents purchased the lot in 1975 for $49,000 ($216,000 in today’s dollars), but did not develop it. In the meantime, the entire subdivision was developed. When Mrs. Smyth inherited the lot and sought to build, the Town refused to grant a permit based on regulation post-dating her interest. The denial left Mrs. Smyth’s lot without any possible use except as a “playground” or “park,” and stripped it of 91.5% of its value. Yet, the court below held that none of the Penn Central factors weighed in favor of a taking under these circumstances.

The questions presented are:

1. Whether the loss of all developmental use of property and a 91.5% decline in its value is a sufficient “economic impact” to support a regulatory takings claim under Penn Central.
2. Whether a person who acquires land in a developed area, prior to regulation, has a legitimate “expectation” of building and, if so, whether that interest can be defeated by a lack of investment in construction?
3. Whether the Court should excise the “character” factor from Penn Central regulatory taking analysis.

Follow the case on the Court's e-docket here. 

Petition for Writ of Certiorari, Smythe v. Conservation Comm'n of Falmouth, No. 19-223 (Aug. 20, 2019)

Upcoming Webinar - Knick Picking Regulatory Takings: Did the Court Right a Wrong, or Wrong a Right? (free for State and Local Govt Law Land Use Committee members)

The Land Use Committee of the ABA's Section of State and Local Government Law is sponsoring a free (for Section members) informal webinar about the latest in takings law:

Knick Picking Regulatory Takings: Did the Court Right a Wrong, or Wrong a Right?

Friday, July 26 | 2 – 2:30pm ET

Here's hoping you can join us for a half hour on the 5-4 SCOTUS decision in Knick v. Township of Scott (June 21, 2019). Knick overruled the 34-year-old precedent in Williamson County requiring that federal takings claimants seek compensation in state court before being allowed to proceed in federal court.

Presenters Dwight Merriam and Robert Thomas will discuss reaction to the decision — which has been as divided as the Court. Was this the conservative justices having their way? Is it a right versus left issue? Did that baby, stare decisis, get thrown out with the old ripeness bathwater? Will the federal courts become a forum resembling a small town zoning board of appeals, buried in trivial cases to the detriment of more important issues on the docket?

In this fast-paced half-hour, we'll ripen the ripeness problem for you, poke about the entrails of the decision to conjure up its true meaning, offer up a doyens' debate on other pundits' prognostications, and preview the in-depth program which will be held at the upcoming ABA Annual Meeting in San Francisco (Thursday, August 8, 2019).

Moderator

• Professor Sarah Adams-Schoen, University of Oregon School of Law

Presenters

• Dwight H. Merriam, Land Use Attorney; Fellow & Past President, American Institute of Certified Planners
• Robert H. Thomas, Director, Damon Key Leong Kupchak Hastert; Joseph T. Waldo Visiting Chair in Property Rights Law, William & Mary Law School

More details, including dial-in and log on information here.

Knick, Entirely In Memes

We've resisted for as long as we can.

Here's our take at telling the Williamson County and Knick story, 100% in memes.

Why, you may rightly ask? 

Well, it started with our Knick amicus brief, which included a meme that we thought captured well the injustice of property owners being prohibited by Williamson County from raising their federal constitutional claims in federal court (or anywhere, for that matter).

And then, as these things often do these days, the tail started wagging the dog. Readers didn't want our cogent and deep analysis, they wanted more Knick memes. And rather than post those willy-nilly, we decided to do 'em all in a single post, and be done with it. 

So here you go. For those of you who dig this stuff, read on. If you think we missed any, or would like to send your own to fill out the story, please do so. For any reader tired of memes, we're sorry. Really sorry. 

Knick Analysis, Part I: After More Than 30 Years, Supreme Court Reopens The Federal Courthouse Door To Property Owners

Yes, this is detail from the Supreme Court's front door.

This is the first in what will be a short series of five posts with thoughts on the landmark decision in Knick. In this installment, a crash course in the extensive doctrinal background necessary to understand why the Knick Court did what it did. Here are the related posts:

• Part II: The Court Finds A Vehicle In A Zombie-Zoning Case
• Part III: What It Means To "Take" Property Without Compensation
• Part IV: Why Not Let Sleeping Dogs Lie? The Dissent and Stare Decisis
• Part V: What's Next?  

* * * *

The opinions in last week's ruling by a sharply-divided Supreme Court, Knick v. Township of Scott, No. 17-647 (June 21, 2019) employed a lot of very evocative language: "aborning," "Catch-22," "loot," "shaky," "sue me," "overthrows," "smashes," "smithereens" "first crack," "points for creativity." But ultimately, the most important word from the case was "overruled."

Takings

A federal regulatory takings claim, as you recall, is the idea which was first articulated in the modern era in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), that if a regulation goes "too far" in restricting the owner's use, it will be recognized as a taking which the Fifth and Fourteenth amendments mandate the payment of compensation. In other words, if a local government's regulation restricted a owner's use severely it was, from the owner's viewpoint, tantamount to an exercise of eminent domain. For more than 60 years, there wasn't a serious question that these claims could be asserted by property owners against local governments in federal court.

Two Ripeness Prerequisites: Finality and Exhaustion

But in 1985, in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), mostly out of nowhere the Court created two procedural prerequisites which owners had to show before their federal takings claims were considered ripe for federal court.

First, the regulating agency had to have made the final decision on what uses are allowed under the regulation. If the agency's process isn't complete, there's no way for a reviewing court to tell what uses of the property remain. This is known as the "final decision" requirement.

Second, the owner must not only have been denied compensation by the local government, she must also sue the local government in state court for inverse condemnation, to try and force it to pay compensation for the regulatory taking. In what become known as the "state-litigation" requirement, the Williamson County Court reasoned that the Fifth Amendment does not make a taking of property unconstitutional, only a taking without just compensation. Because the local government had not denied compensation until it lost the owner's state court lawsuit to recover compensation, the constitutional wrong does not occur until the state's supreme court rules for the government, making the taking "without just compensation." Only then was the case ripe for federal review. 

If that sounds to you like convoluted logic and a stretch of constitutional text, you are not alone. Almost immediately after the Court issued the Williamson County opinion, commentators began to take apart the case's rationale. See, e.g., Michael M. Berger, Anarchy Reigns Supreme, 29 Wash. U. J. Urb. & Contemp. L. 39, 40 (1985) ("Williamson County] takes its place in the pantheon of indecision ... as demonstrating that those learned in the ways of the law can always find a way to duck an issue. With all due respect, the ... decision is both bad law and bad government.").

For the next three decades, the deconstruction by the bar and the legal academy continued unabated. Government lawyers had a very potent tool in their quiver, and legal scholars who supported the Williamson County state-procedures rule (or, more accurately, the limitations it placed on property owners' rights) searched for rationales to justify it (federalism, comity, and even textualism, for example). 

Sua sponte

Much of the reason why the Court's analysis was so fallacious and subject to easy attack was that none of the parties in Williamson County had raised or briefed ripeness, and the Court had done it on its own. (Why we wrote above that the Court created the test "mostly out of nowhere.") The issue the parties were arguing about was whether a restriction on the use of property that is eventually lifted could be a temporary taking requiring compensation (an argument later resolved by the Court positively in First English).

The U.S. Solicitor General, however, as amicus curiae argued that federal courts could not even hear a federal claim for compensation (permanent, temporary, or otherwise) until the owner lost a state law inverse claim in her state's highest court or could show that the remedy was not available under state law. The Court latched on to that argument and adopted it as a wall around the federal court.  

San Remo Catch-22

In theory, a property owner who had the dual luxuries of time and a thick wallet could do what the Court contemplated: after the local government's position was fixed (final decision), the owner could ask the government for compensation, be denied, and then sue the government in state court to force the government to pay compensation. When, presumably years later when the owner lost that claim, its federal claim ripened (the local government had finally taken the property "without just compensation," and the owner could then bring a complaint in federal court. But as a practical and procedural matter, owners never got anywhere and Williamson County amounted to a requirement for a plaintiff to exhaust state remedies, a requirement that no other federal civil rights plaintiff had to adhere to.

In San Remo Hotel v. City and County of San Francisco, 545 U.S. 323 (2005), the Court took Williamson County's flawed logic to its inevitable end. It endorsed a "you're either too early, or you're too late" theory that goes like this: the very process by which an owner ripened a federal takings claim (chasing and eventually losing an inverse condemnation lawsuit in state court), also meant that when the owner later asserted an appropriately ripened federal takings claim in federal court, that claim would be deemed precluded by res judicata. Because resolving your state inverse claim as Williamson County required meant that you had also thereby litigated your future unripe federal takings claim (even where you expressly tried not to -- no England reservations allowed!). And because a state court would consider a subsequent federal takings claim precluded by res judicata, so must the federal court as a matter of full faith and credit. 

Confusing enough? The details were not that interesting except to federal courts nerds and takings junkies, but the short story was that if you tried to file a federal takings claim in federal court without losing first in state court you were too early under Williamson County. And if you followed Williamson County's rule and went through state process, you would be barred by res judicata when you finally were allowed in federal court. Joseph Heller could not have written it better.

The Catch-22 nature of this prompted four Justices to note in San Remo that the Williamson County experiment was due for another look. Chief Justice Rehnquist wrote:

Finally, Williamson County's state-litigation rule has created some real anomalies, justifying our revisiting the issue... I joined the opinion of the Court in Williamson County. But further reflection and experience lead me to think that the justifications for its state-litigation requirement are suspect, while its impact on takings plaintiffs is dramatic... In an appropriate case, I believe the Court should reconsider whether plaintiffs asserting a Fifth Amendment takings claim based on the final decision of a state or local government entity must first seek compensation in state courts.

The four concurring Justices, however, were not interested in San Remo of overruling Williamson County, simply because the property owners hadn't asked them to (that didn't stop them in Williamson County from adopting a rule sue sponte, so we're not sure what spurred the hesitation here).  

Unequal removal

In 1997, the Supreme Court completed the ripeness hat trick. In City of Chicago v. International College of Surgeons, 522 U.S. 156 (1997), the Court allowed a governmental defendant to remove to federal court under federal question "arising under" jurisdiction a takings case brought in state court by the property owner (as Williamson County required it to do). How could it remove a case where the federal issue wasn't ripe? Who knows, the Court provided no answer. 

This resulted in the asymmetry where a regulatory takings plaintiff could not bring the case in federal court, but the local government or state defendant could remove the state court case to federal court. And then, in some of the more extreme examples, some courts didn't blink when the defendant, which had removed the case to federal court sought dismissal of the takings claim because -- get this -- the case wasn't ripe because the state courts had not yet rejected the owner's claim for compensation. Several courts rejected this sleight-of-hand. Even sanctioning the government for playing that game. But many didn't. 

Reverse percolation

As a result, for thirty-plus years, property owners, their lawyers, legal scholars, and the courts struggled. We educated state court judges on federal takings law, but the only hope of having a federal court actually consider a federal takings claim was the thin reed of SCOTUS certiorari review of a state court judgment. And that's a very thin reed. 

Oh, there were some nibbling around the edges. Sensing the injustice of singling-out federal property claims for exclusion from federal courts, for example, some lower courts treated Williamson County's state-procedures ripeness rule as not jurisdictional, but merely a "prudential" requirement; a rule a federal court could overlook if it wanted to hear the case. Case-by-case federal jurisdiction isn't exactly the best circumstance to promote certainty, regularity, and predictability, though.  

But a huge percentage of property owners who were not willing to pay their lawyers to contribute materials for Federal Courts treatises or otherwise endure years of pointless procedural wrangling declined to pursue their rights, or ended up throwing in the towel midstream. 

One additional dynamic contributed to the chaos. As we noted above, Williamson County adopted the state-litigation rule without benefit of party briefing or argument, and without a developed body of scholarly work as foundation. In doing so, it reversed the usual process of getting an issue up to the Supremes. As we understand it, issues contentious enough to merits high court review are most often allowed (even required) to percolate for years in the lower courts and law journals, before the Court is ready to take them up. In Supreme Court litigation, it is often better to be a later case to present an issue, not the first. That way, the Court can consider the question presented after appropriate study by bench, academy, and bar.  

The Court in Williamson County, however, switched the usual script: it adopted the state-litigation requirement on its own, and only then did we start to debate the rule's validity. And we spent the next 30-plus years doing so. 

Only in Knick did the Court finally get full briefing of the issue.

Continued in Part II. 

Knick Analysis, Part II: The Court Finds A Vehicle In A Zombie-Zoning Case

This is the second in a series of five posts taking a look at last week's landmark ruling by a sharply-divided Supreme Court, Knick v. Township of Scott, No. 17-647 (June 21, 2019). Here are the related posts:

• Part I: After More Than 30 Years, Supreme Court Reopens The Federal Courthouse Door To Property Owners
• Part III: What It Means To "Take" Property Without Just Compensation 
• Part IV: Why Not Let Sleeping Dogs Lie? The Dissent and Stare Decisis  
• Part V: What's Next?  

In this post, we'll take a look at the case which finally convinced the Supreme Court that it was time to revisit the Williamson County state-litigation ripeness rule, Knick v. Township of Scott, 862 F.3d 310 (3d Cir. 2017). What we call the Case of the Zombie Zoning Inspectors. 

* * * *

The Township of Scott, Pennsylvania, apparently has a problem of unregulated cemeteries. Who knew?

So it did what local government do when they think they have a problem, it passed a law. That law, Ordinance 12-12-20-001, required owners of all cemeteries, public or private, to maintain them. The ordinance also contained two troublesome provisions. First, it requires the owners of the cemeteries to keep them open to the public during the day. Second, it allows the Township's code inspectors to enter "any property" to inspect and see if it is in compliance with the ordinance.  

Under the authority of the ordinance, a code inspector came on Rose Mary Knick's property without a warrant, and told her "guess what, these stones are actually grave markers, and you better clean up this cemetery." Knick's response was "what cemetery? My land doesn't have a cemetery on it." Not buying it, the inspector wrote her up for violating the ordinance.  

Knick sued in state court, seeking to enjoin the enforcement action. The Township withdrew the notice of violation and the parties agreed to stay enforcement actions. But Knick didn't file an inverse condemnation action, or include a claim for compensation in her state court challenge.

After the Township issued a second notice of violation of the ordinance, and the state court denied Knick's request for a contempt order, she sued in federal court, asserting a violation of her Fourth Amendment rights against warrantless searches, and her Fifth and Fourteenth Amendment rights to due process and just compensation. After some back-and-forth on the contents of the pleadings, the District Court dismissed the action because Knick had not exhausted her state law remedies.

In Knick v. Township of Scott, No. 16-3587 (July 6, 2017), the U.S. Court of Appeals for the Third Circuit affirmed.

The court concluded that Knick lacked Article III standing to assert a facial Fourth Amendment search-and-seizure claim because she did not appeal the District Court's ruling that the ordinance, as applied to her, was lawful because the search was of an open field, and thus not protected. She thus "accepted the District Court's conclusion that her Fourth Amendment rights were not violated." Slip op. at 11. Thus, even if she was injured by the inspector's actions, her rights were not violated, because even if a court were to enjoin the Township from enforcing the ordinance in an unconstitutional manner, it could still search an open field. In short, the Township could search an open field even without the ordinance. 

Although the opinion "recognize[d] that the Ordinance's inspection provision 'is constitutionally suspect and we encourage the [Township] to abandon it (or, at least, to modify it substantially)," the court held that it needed a plaintiff with standing in order to consider the argument. 

Knick fared no better with her claim for just compensation, because -- you guessed right -- Williamson County. As noted earlier, she had not sought compensation via available Pennsylvania law avenues. The court rejected each of her three arguments that she didn't need to pursue just comp in Pennsylvania courts.

First, it concluded that a facial takings claim isn't exempt from the available state-procedures prong of Williamson County. The Third Circuit has already held otherwise, in County Concrete Corp. v. Town of Roxbury, 442 F.3d 159 (3d Cir. 2006), and "[w]e cannot overrule our own precedent." Slip op. at 23. If you want to try and understand the difference between a "facial" challenge, an "as-applied" challenge, and a "facial taking," at least in the Third Circuit's view, take a read of pages 24-27. We don't think the court's reasoning is entirely convincing.

Second, the court rejected Knick's argument that her earlier state court lawsuit was enough. This case, however, wasn't a claim for just compensation, only for injunctive relief, so she has not been denied compensation by the state, yet.  

Finally, the court declined to exercise its prudential discretion and not apply Williamson County. Yes, it is an optional doctrine the court recognized, but the facts here do not suggest that it would be unfair to require her to go back to state court and try and get compensated. The court distinguished decisions from other circuits which declined to apply Williamson County, concluding that "there is 'value in forcing a second trip' to state court here." Slip op. at 35. 

After the Third Circuit's opinion, Ms. Knick vowed to take the case further up the food chain, and Pacific Legal Foundation joined the case as her counsel. PLF and other property lawyers had asked the Court repeatedly in the past to revisit Williamson County, but cert had always been denied.

Until Knick, when the Court agreed to consider whether to expressly overrule the state-litigation requirement.

Next up, Part III: the Knick majority and dissenting opinions.

Knick v. Township of Scott, No. 16-3587 (3d Cir. July 6, 2017) 

Knick Analysis, Part III: What It Means To "Take" Property Without Just Compensation - "A bank robber might give the loot back, but he still robbed the bank."

This is the third in a series of five posts taking a look at last week's landmark ruling by a sharply-divided Supreme Court, Knick v. Township of Scott, No. 17-647 (June 21, 2019). Here are the related posts:

• Part I: After More Than 30 Years, Supreme Court Reopens The Federal Courthouse Door To Property Owners
• Part II: The Court Finds A Vehicle In A Zombie-Zoning Case
• Part IV: Why Not Let Sleeping Dogs Lie? The Dissent and Stare Decisis
• Part V: What's Next?  

In this post, we'll take a deeper dive into the three opinions: Chief Justice Roberts for the five-Justice majority (Roberts, Thomas, Alito, Gorsuch, Kavanagh), Justice Thomas' short stand-alone concurring opinion, and Justice Kagan's dissent (joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan).  

* * * *

BLUFs

Here are the bottom lines up front, the lenses though which we think you should read each of the opinions (and yes, the opinions are a must read, several times over).

First, the BLUF on the big question. Williamson County's state-litigation ripeness requirement overruled. Not cut back, not worked around, not questioned. Overruled. It is enough that the regulation take property, and the government hasn't already paid me. I have no obligation to "ripen" my federal claim by chasing down the local government for compensation in state court. (Barista's note: we were (happily) wrong when we thought that CJ Roberts might go wobbly and look for a federalism way out.) 

Second, the analytical BLUF. At long last, it seems that a majority of the Justices understand what we in the property bar have been saying for decades: the essence of a federal "takings" claim against a local or municipal government is that a regulation deprives an owner of "productive use" of property and the government has not provided compensation (past tense). So nearly 100 years after Justice Holmes famously opined for the Court in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), that if a regulation goes "too far" it will be recognized as a taking, we have the Court finally expressing clearly what that cause of action looks like; Knick is the first time as far as we can tell that the modern Court has plainly stated the precise nature of the constitutional violation.

The third BLUF (the vibe): the unstated, but fundamental, world view difference between the Knick majority and the dissenters is that the dissenters view state courts as part-and-parcel of local government's compensation mechanism, while the majority assumes (rightly) that state courts are a separate branch of state governments. 

The final BLUF, our Knick elevator speech. Our colleague Dwight Merriam asked us to comment for his Knick piece on law.com ("More than a 'Knick' - SCOTUS Overrules 'Williamson County' in Stunning Victory for Property Owners"), and we said this: 

“The federal judiciary’s unnecessary thirty-year abandonment of property and takings cases is at long last over. The Court today rightly relegated to history’s dustbin a judicially-created doctrine that deprived property owners of a federal court forum to resolve federal constitutional claims. The decades of damage that Williamson’s County’s ripeness doctrine wrought on property owners cannot be retroactively undone of course, but by putting property rights on equal footing with other constitutional rights, today’s ruling is a step in the right direction. The Court rectified a mistake it never should have made, and rightly restored property owners’ rights to the ‘full-fledged constitutional status’ they should enjoy.”

Now, on to the details.

"That's some catch, that Catch-22"

The majority opinion began by laying out the one-two punch of Williamson County and San Remo: "The takings plaintiff thus finds himself in a Catch-22: he cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court. The federal claim dies aborning." Slip op. at 1-2. [Note: even if the plaintiff wins in state court, he has no federal claim because by awarding compensation, the state court has in effect mooted the without just compensation problem.] "The San Remo preclusion trap should tip us off that the state-litigation requirement rests on a mistaken view of the Fifth Amendment." Slip op. at 2.

In defining a takings cause of action, timing is everything 

Note that the majority doesn't say a problem with jurisdiction, or a problem with § 1983. This is a constitutional concern, not a matter of subject matter jurisdiction or statute. But the Court also noted that when there's a constitutional claim, § 1983 provides a federal cause of action in federal court, without the need to exhaust state remedies:

We now conclude that the state-litigation requirement imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of our takings jurisprudence, and must be overruled.

Slip op. at 2.  

For sure, the Court overruling the state-litigation ripeness requirement is big. But to us, the more important part of that sentence is "conflict with the rest of our takings jurisprudence," because it signals that Knick tells us more about substantive takings doctrine than it does about the intricacies of federal procedure. The Court continued:

A property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it. 

Slip op. at 2. There it is. If you were to stop reading there - the middle of the second page of the slip opinion - you'd be fine. The rest of the opinion is important, of course, but the Chief cuts to the chase right away. 

And while we're talking about defining what a violation of the Takings Clause looks like, skip forward a bit to page 14 of the slip opinion, where the majority correctly notes that to state a claim for a taking, the owner alleges either (1) a physical invasion, or (2) destruction of use, not loss of value:

That is quite different from the taking of property by the government through physical invasion or a regulation that destroys a property's productive use. 

Slip op. at 14 (emphasis original).  

The majority also summarized the biggest analytical hurdle, Williamson County's rationale which was supposedly based on the text of the Fifth Amendment ("nor shall private property be taken for public use without just compensation"), and acknowledges that the Fifth Amendment does not require payment contemporaneous with the taking as long as there are procedures in place for the owner "to obtain compensation after the fact." Slip op. at 2. The majority highlighted a distinction that it would delve into deeper later in the opinion -- the difference between equitable remedies for takings and compensation -- and concluded that a federal court § 1983 claim is ripe and may be filed upon the constitutional violation: "when the government takes his property without just compensation[.]" Id.

Two themes: equal treatment, constitutional text

The majority opinion stuck to two main themes.

First, property rights should be treated the same as other Bill of Rights rights. See, e.g., slip op. at 6 ("Plaintiffs assertion any other constitutional claim are guaranteed a federal forum under § 1983, but the state-litigation requirement 'hand[s] authority over federal takings claims to state courts.'") (quoting San Remo, 545 U.S. at 350 (Rehnquist, C.J., concurring)); slip op. at 6 ("The state-litigation requirement relegates the Takings Clause 'to the status of poor relation' among the provisions of the Bill of Rights.") (quoting Dolan v. City of Tigard, 512 U.S. 374, 392 (1994)).   

The second theme which the majority employed was the text of the Fifth Amendment:

The Clause provides: "[N]or shall private property be taken for public use, without just compensation." It does not say: "Nor shall private property be taken for public use, without an available procedure that will result in compensation." If a local government takes private property without paying for it, the government has violated the Fifth Amendment -- just as the Takings Clause says -- without regard to subsequent state court proceedings.

Slip op. at 6.

Section 1983 recognizes a cause of action for a "deprivation" of a right "secured by the Constitution," and thus a "property owner may sue the government at that time in federal court[.]" Slip op. at 6-7. The federal claim for compensation "arises at the time of the taking, regardless of post-taking remedies that may be available to the property owner." Slip op. at 7. The Court relied on the 1933 case which requires that interest owed on a compensation award runs from the time of the taking, and includes both takings situations: affirmative exercises of the condemnation power, and inverse condemnations. Jacobs v. United States, 290 U.S. 13 (1933). 

Interestingly, the majority noted that it doesn't matter for purposes of defining the constitutional violation whether it is eminent domain or some other governmental power being exercised, and "[t]he form of the remedy d[oes] not qualify the right." Slip op. at 7. See also slip op. at 8 ("Jacobs made clear that, no matter what sort of procedures the government puts in place to remedy a taking, a property owner has the Fifth Amendment entitlement to compensation as soon as the government takes his property without paying for it."). 

Having recognized that the constitution itself mandates this result, the majority used this line of thought to directly attack Williamson County's rationale. See slip op. at 8-9. The obligation to pay compensation when property is taken is "self-executing," and "automatically arises at the time the government takes property without paying for it." Id. at 9. 

Post-violation compensation is a remedy, not an element of a claim ("A bank robber might give the loot back, but he still robbed the bank.")

Critically, the Court also recognized the distinction between "without just compensation" being an element of a takings claim (Williamson County's rationale), and just compensation being a remedy for a regulatory taking:

A later payment of compensation may remedy the constitutional violation that occurred at the time of the taking, but that does not mean the violation never took place. The violation is the only reason compensation was owed in the first place. 

Slip op. at 11. 

In what is, in our view, the most evocative language in the majority, Chief Justice Roberts sums up that thought: "A bank robber might give the loot back, but he still robbed the bank." Id. 

Equitable remedies or compensation?

The majority distinguished Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), where the Court held that a property owner must seek compensation via Tucker Act in the Court of Federal Claims, and until she does so, the owner "has no claim against the Government for a taking." Id. at 194-95. The majority concluded that you have to read that case carefully, because the remedy which the plaintiff sought was to enjoin the allegedly offending regulation. Applying the old maxim that law comes before equity, the Court noted that Ruckelshaus only should be read to preclude equitable relief (inunction) when there's a legal remedy (compensation), not that an owner has no takings claim until after a Tucker Act claim is rejected. Slip op. at 13 ("Equitable relief was not available because monetary relief under the Tucker Act.").

Starting on page 16, the majority tackled what we thought was the biggest conceptual hurdle that Ms. Knick had to overcome: the idea that the Takings Clause "does not require that compensation be actually paid in advance of the occupancy of the land to be taken," in Cherokee Nation v. Southern Kansas R. Co., 135 U.S. 641 (1890). Like its treatment of Ruckelshaus, the majority distinguished Cherokee Nation by focusing on the remedy sought in that case: an injunction to stop the taking (not compensation):

Simply because the property owner was not entitled to injunctive relief at the time of the taking does not mean there was no violation of the Takings Clause at that time.  

Slip op at 16. There's a huge difference in the majority's mind between trying to stop an exercise of the eminent domain power or a regulation because compensation hasn't first been paid, and trying to recover compensation once the property has been taken, either affirmatively or by regulation.

Why not let sleeping dogs lie?

Recall that at the first round of oral argument, Justice Breyer asked whether, even if Williamson County was a bad rule, shouldn't the Court "let sleeping dogs lie?"   

JUSTICE BREYER: You don't have to -- the problem -- the problem -- I mean, you could say what Justice Gorsuch said, couldn't you? The state says: No, we're not going to pay you. Ha, because there's no compensation -there's no taking. Ha.

And we could say that's a final decision not to take it. We could. I mean, I don't see any logic. But Williamson didn't. So I thought: Well, why let the sleeping dog -- let it lie?

Tr. at 44-45. 

Sitting there in the Court that day, we have to admit we were a bit taken aback by the thought, and found it hard to fathom that "yeah we were wrong, but so what" would be a reason to double down on Williamson County. Is repose more important than getting it right?

The majority responded to this thought and the dissent's outrage that by overruling Williamson County, the majority was creating a stare decisis crisis (say that three times). Noting the avalanche of criticisms from all sides of the spectrum, the majority noted the doctrine's "shaky foundations" and slow erosion from a seemingly mandatory jurisdictional rule to an optional prudential one. Slip op. at 21-22. 

What, me worry?

Finally, the Court noted the practicalities: the Williamson County/San Remo combination was "unworkable in practice," slip op. at 22, and the sky won't fall because of the new Knick rule: 

Our holding that uncompensated takings violate the Fifth Amendment will not expose governments to new liability; it will simply allow into federal court takings claims that otherwise would have been brought as inverse condemnation suits in state court.

Governments need not fear that our holding will lead federal courts to invalidate their regulations as unconstitutional. As long as just compensation remedies are available -- as they have been for nearly 150 years -- injunctive relief will be foreclosed. For the same reason, the Federal Government need not worry that courts will set aside agency actions as unconstitutional under the Administrative Procedures Act. Federal courts will not invalidate an otherwise lawful uncompensated taking when the property owner can receive complete relief through a Fifth Amendment claim brought under the Tucker Act. 

Slip op. at 23 (citation omitted).

Separation of powers?

As we noted at the start of this post (and as we predicted a couple of weeks ago), one of the threads which we think illustrated the analytical split on the Court was whether state courts are part-and-parcel of a municipal government's compensation mechanism. The dissenters pretty plainly thought that state courts were an arm of local government, while the majority considered state courts to be separate. We don't have the time on this post to delve into municipal separation of powers and compare state judiciaries to the Court of Federal Claims, but we might do so down the road. 

Benchslap

For an interesting sidebar before we leave the majority opinion and delve into the concurrence and dissent, check out footnote 5 on page 14 of the slip opinion, in which the majority chides the Solicitor General's argument that this is a § 1983 issue, not one with strictly constitutional dimensions. Recalling that it was the SG who raised ripeness in Williamson County (see the section "Sua Sponte" in our background post), the majority noted "[t]he Solicitor General continues that tradition here." Slip op. at 14 n.5. Ouch. The Court declined to consider the SG's difficult-to-follow argument that a state law takings claim "arises under" for purposes of jurisdiction and § 1983, and as a result, it remains unsettled whether a state law inverse condemnation claim "arises under" can be an independent basis for a federal court ticket. In our view, it doesn't matter, given the majority's holding that a federal takings claim is ripe for federal court. 

We thought there was a chance that the majority would latch onto the SG's rationale (which upon multiple readings isn't as far out as it is at first blush). But no, the Court was pleasantly much more definitive.  

Thomas, J., concurring: the "sue me" approach doesn't cut it

Justice Thomas issued a short two-page concurring opinion, noting also that he "join[ed] in full" the CJ Roberts' majority:

This "sue me" approach to the Takings Clause is untenable. The Fifth Amendment does not merely provide a damages remedy to a property owner wiling to "shoulder the burden of securing compensation" after the government takes property without paying for it. Our holding that uncompensated takings violate the Fifth Amendment. Instead, it makes just compensation a "prerequisite" to the government's authority to "tak[e] property for public use." 

Thomas, J., concurring at 2. So why did he write separately?

For several of reasons, we think.

First, Justice Thomas emphasized that the Constitution's requirements are the requirements, and that we've always done it this way, and this might cost too much arguments aren't going to fly with him: "if this requirement makes some regulatory programs 'unworkable in practice,' then so be it -- our role is to enforce the Takings Clause as written." Id. (citation omitted). Strong stuff.

Second, Justice Thomas apparently does not care for nationwide injunctions, and Knick's focus on the compensation remedy over injunctive relief gave him a chance to ring that bell.

Finally, Justice Thomas notes that the Court's recognition of a federal takings claim that may be raised in federal court does not preclude other similar claims from being pursued, including "common-law tort claims, such as trespass." Make of that what you will. 

Conclusions

We finally have -- nearly a century after Mahon -- a working cause of action for a federal regulatory taking: the government has regulated property by either forcing an owner to surrender even a small part of her right to exclude, or by depriving the owner of "productive use." If so, the government's obligation to provide compensation is "self-executing" and arises now, and does not need to wait. The owner may pursue a compensation remedy now, either in state or federal court. Pursuing and losing a state law inverse condemnation claim is not an element of a federal takings claim. 

Next up: why not "let sleeping dogs lie," as Justice Kagan's strong dissent argues?    

Knick v. Township of Scott, No. 17-647 (U.S. June 21, 2019)

Knick Analysis, Part IV: Why Not Let Sleeping Dogs Lie? The Dissent And Stare Decisis

This is the fourth in our series of five posts with thoughts on the landmark decision in Knick. In this installment, the dissent. Related posts:

• Part I: After More Than 30 Years, Supreme Court Reopens The Federal Courthouse Door To Property Owners
• Part II: The Court Finds A Vehicle In A Zombie-Zoning Case
• Part III: What It Means To "Take" Property Without Compensation
• Part V: What's Next?  

* * * *

We cannot mask our disappointment with the dissenting opinion. We usually appreciate Justice Kagan's opinions and measured approach, even while dissenting. And after the first oral arguments in October, we thought there was a chance, albeit slim, that she might see things Ms. Knick's way.

But even though we were pretty sure she would rule for the government, we didn't anticipate as vehement a defense of Williamson County's "no violation until you sue the government for compensation and lose" rationale as the dissent made, along with a rejection of any change in the thirty-year status quo, with no recognition of the path of destruction that case wrought upon property owners and their rights. 

We viewed the dissent as revealing several fundamental disconnects with the majority about takings law.  

Who is "the government?" 

As we noted in our earlier summary of the majority opinion, the first fundamental disconnect between the two camps is that the dissenters view the state judiciary as part and parcel of a municipal government's compensation mechanism, while the majority considers state courts as a separate branch, changed with resolving disputes, not being part of the compensation process.

Here's what we think reveals the Achilles' heel of the dissent's rationale:

The majority today holds, in conflict with precedent after precedent, that a government violates the Constitution whenever it takes property without advance compensation--no matter how good its commitment to pay.

Dissent at 1 (emphasis added).

So we have to ask: what "commitment to pay" has a local government made, if all it says to property owners who say that their property has been taken by regulation is "sue me?" (hat tip Justice Thomas). None in our view. The availability of a state court action for inverse condemnation under state law isn't any kind of recognition by the local government that it may be liable for a taking, is it?

Compare state judiciaries (separate co-equal branches of state government) with the Court of Federal Claims, an Article I legislative forum which has been tasked by the federal legislature (Congress) with considering federal inverse condemnation and takings claims in lieu of the former "private bill" method of obtaining compensation. To us they are not the same, even though they may kind of look the same. Pursuing a claim for compensation from the feds in the CFC is, to us, somewhat similar to obtaining a final decision (the first Williamson County ripeness prong, not challenged in Knick): merely the legislature's delegation to a hearing officer to determine whether the legislature should pay up. 

Thus, when the dissent writes that "[t]he Takings Clause is different because it does not prohibit takings; to the contrary, it permits them provided the government gives just compensation. So when the government 'takes and pays,' it is not violating the Constitution at all," you can see how the dissenters are mashing together both the municipal government defendant and the state judiciary into "the government." Dissent at 2. But "the government" hasn't "taken and paid." Instead, the local government has taken, and the state judiciary may order it to pay. Indeed, "the government" has refused to pay. You see the dissent's conflation of municipal governments with state courts throughout the opinion:

Put another way, a Takings Clause violation has two necessary elements. First, the government must take the property. Second, it must deny the property owner compensation.

Dissent at 2-3 (emphasis added).

In our view, the more sensible understanding is that once "the [municipal] government" (allegedly) takes property, all the owner need do to ripen a claim is ask "the government" (the same government) to pay up, and it doesn't need to ask a separate branch of the state to force the municipality to do so. Isn't the separate roles which state courts have the vibe which resulted in the fractured opinions in the "judicial takings" case, Stop the Beach Renourishment? 

Take first, pay later

The second fundamental disconnect was that the dissenters see a state court lawsuit as the functional equivalent of a local government's promise to pay. The dissenters saw this as nothing more that what follows ("as night the day") from long-standing rules which do not require payment of compensation before or at the time of an affimirmative taking by eminent domain. Slip op. at 3-4.

Cherokee Nation, for example, rejected the notion that advance payment is required by the Fifth Amendment, as long as "reasonable, certain, and adequate" post-taking compensation is available. To the dissenters, a state law inverse condemnation action in state court qualifies. Williamson County merely reflected how the Takings Clause works in regulatory takings cases: the same way it works in eminent domain (according to the dissent). Thus, the logic goes, a state court inverse claim to recover compensation for the legal taking is a prerequisite to a ripe federal cause of action. This, they asserted, is based on "a hundred years" worth of "precedent after precedent," "stretching back to the late 1800s." See Dissent at 6-11.

But isn't there a big difference between an eminent domain quick take where the government occupies now, with the corresponding recognition of the absolute obligation to pay whatever the court later determines is just compensation, and a regulatory taking where the government is exercising some other power, and absolutely denies that it needs to pay anything? 

Takings Clause: "unique"

The third fundamental disconnect was that the dissenters rejected the majority's view that property rights should be treated the same as other rights recognized by the Bill of Rights. Instead, they consider the Takings Clause as "unique among the Bill of Rights' guarantees." Dissent at 2. To the dissenters, this is a textual argument (harking back to Williamson County) because in their view, there is no constitutional issue unless and until "the government" denies compensation. 

By contrast, the majority see property rights not as a "poor relation" to other fundamental rights, and conclude that the text of the Fifth Amendment does not compel any different result. 

Let sleeping dogs lie? 

In the last section of the dissent, Kagan vigorously defended "letting sleeping dogs lie" (in Justice Breyer's oral argument words), and argued the Court should not overturn Williamson County for all the reasons that the Supreme Court does not lightly overturn precedent.

We get that the stare decisis debate is part of a much larger context, mostly framed by other cases. Whether it is prudent to go back and revisit existing case decisions and rules of law generally is a question we shall leave to the commentators and legal scholars. But we will say this whatever counsels against overturning recent decisions, Williamson County was a uniquely bad choice for a stare decisis hill to die on. 

Williamson County should be afforded little deference simply because its been around for a while, for two main reasons.

First, as we wrote in our earlier post, the state-litigation rule which Williamson County adopted sua sponte was the usual percolation process in reverse. The SG had raised the issue (not the parties), and the Court just adopted it without the benefit of party briefing, or prior deep consideration by the legal academy. Consequently, the rationale which the Court adopted in Williamson County was too clever by half, and in our view a self-inflicted wound, and an "unforced error."

Nor was the validity and application of the doctrine was never tested or argued directly in the Court in the intervening decades, with a small exception of 2005's San Remo. But even there, the arguments were more focused on preclusion and full faith and credit and why Williamson County didn't control, not why it was fundamentally wrong:

Justice O'Connor: And you haven't asked us to revisit that Williamson County case, have you?

Mr. Utrecht: We have not asked that this Court reconsider the decision in Williamson County.

Justice O'Connor: Maybe you should have.

That lesson was not repeated, and by the time Ms. Knick filed her petition, several property owners had already asked the Court directly to overturn Williamson County. Fool me once, shame on you; fool me twice...we won't get fooled again! The Court had to have know that, like The Terminator, "we'd be back." 

That leads to our second reason. The last thirty-plus years of experience has starkly revealed how the theory works in practice: it doesn't. What value is there in retaining a procedure that has led to such overwhelming problems? Even the rule's supporters, as the majority pointed out, do not strenuously defend it for the reasons it was adopted. And even in Knick, the Township didn't really defend it on those grounds. Instead, it couched its arguments in terms of federal jurisdiction and § 1983. Not exactly a resounding endorsement of Williamson County's rationale.

Thus, to us, the dissent's objections on stare decisis (pages 16-19) are really more of a howl of protest about the doctrine in other cases, not this one, which didn't really deserve deference simply by the passage of time.  

Chicken Little or Chicken Nothing?

We end this post on this, the dissent's complaint that Knick has upset the apple cart. Will lead to cats and dogs living together ... mass hysteria as the Ghostbusters put it: 

The majority's overruling of Williamson County will have two damaging consequences. It will inevitably turn even well-meaning government officials into lawbreakers. And it will subvert important principles in judicial federalism.

To begin with, today's decision means that government regulators will often have no way to avoid violating the Constitution. 

Dissent at 12.

As Justice Gorsuch recently wrote in another case, "Really?" We don't understand this thought, and it looks to us like the dissent is severely overstating it. Government regulators are in no worse off position today on the merits of takings questions than they were last Thursday. They are no more "lawbreakers" after Knick than before. The only major difference is that they now have to answer to a federal judge and not a state judge, and can't use Williamson County's state-procedures requirement to whipsaw property owners through years of pointless processes. The bar that property owners must cross in order to prove that a regulation actually takes property and requires compensation remains high. All you need to do to confirm that is do a Westlaw or Lexis search for cases in which the property owner wins. 

Next up (our last post): What's Next? 

Knick Analysis, Part V: What's Next?

This is the fifth and last in our series of posts with thoughts on the landmark decision in Knick. In this post, we'll be puling out our crystal balls, and doing a bit of forecasting. Here are the related posts:

• Part I: After More Than 30 Years, Supreme Court Reopens The Federal Courthouse Door To Property Owners
• Part II: The Court Finds A Vehicle In A Zombie-Zoning Case
• Part III: What It Means To "Take" Property Without Compensation - "A bank robber might give the loot back, but he still robbed the bank"
• Part IV: Let Sleeping Dogs Lie? The Dissent and Stare Decisis

 * * * *

The execrable state-litigation ripeness requirement is overruled. Ding-dong, the wicked witch is dead. No longer will our only federal review of a federal constitutional issue be limited to petitions for cert at SCOTUS. We can "simply" go to federal court. 

So now what?

We have a few thoughts, both about what Knick means for procedure, as well as what it might portend for property rights in general. 

Continuing Legal Education

Time to start brushing up on the Federal Rules of Civil Procedure, everyone. Dust off that book that has been sitting on your shelf since 1985. There's been a few changes since then. Some federal courts (Hawaii's for example) have quick dockets and cases move along. Which means these cases may get resolved more quickly. That's a good thing. People often think that we as lawyers like 'working the file' to increase our hours. Not true. It isn't fun to draft up fee invoices with entries like "research Rooker/Feldman doctrine," and "prepare England reservation."  Streamlined litigation makes the process less painful all around.

And it isn't just the lawyers who need a refresher course. We will offer free CLE to any federal judge who wants to catch up on the last 30+ years of substantive takings law that you've missed out on, courtesy of Williamson County. We've spent the last three decades educating our state judiciaries, and now its time to do the same with the Article III lords.

Final decision - still needed

Williamson County's "finality" ripeness requirement was not challenged by Ms. Knick, and that part of the decision remains good law.

In most cases, property owners still need to obtain a final decision from the local government or agency about what uses, if any, may be made of their property under the allegedly restrictive regulation. You still need to know the remaining uses under the allegedly offending regulation before you can determine whether the economic impact on the owner of the regulation is so great that it goes "too far" and amounts to a taking. 

Preclusion trap - also dead

The overruling of the state-litigation requirement also implicitly overruled the "preclusion trap" Catch-22 from San Remo, An owner may choose to litigate her state law takings or inverse claims in state court, and she does so, she will likely be barred from later raising a federal takings claim, but she is no longer are going to be forced to go to state court in the first instance and raise a state law inverse condemnation claim, only to be later told she thereby litigated the federal takings claim by implication.

Property owners: your choice of a state or federal forum. Property owners go ahead and file directly in federal court. But you can still bring a § 1983 claim in state court if you want.

Those claims are still subject to removal to federal court by municipal or state defendants. 

Removal

What of the College of Surgeons' removal imbalance? Until Knick, a property owner could not raise a federal takings claim in federal court, but a municipal or state defendant could remove a state court takings action to federal court. Under Knick, a claim seeking compensation is a federal claim, purely and simply. The shenanigans which surrounded the remove-and-dismiss game, as well as the doctrinal imbalance of letting defendants to choose a federal forum while denying plaintiffs that same choice, are over.

Defendants: you have the same ability to remove state court claims to federal court like any other case.

Remedy: Show me the money

If you file a federal takings claim in federal court, the cause of action is § 1983, and the remedy sought should be limited to just compensation. A property owner is not going to get a federal court to enjoin a regulatory taking, or declare a statute or regulation unconstitutional. Unless for some reason no compensation is available. For example, what if the defendant is a state, and recovering compensation is barred in federal court by the Eleventh Amendment? If you are prohibited from your legal remedy of compensation, may you ask for an injunction under Ex parte Young?

Also, under our reading of Horne, an owner may raise a takings defense to imposition of a regulation or statute, i.e., you can't prosecute me because to do so would result in a taking. 

Jury trial 

You get a jury trial on your § 1983 claim. Del Monte Dunes. 

State law inverse condemnation claims

It remains unsettled whether a state law inverse condemnation claim "arises under" federal law and can be brought in federal court. The majority declined to consider the SG's difficult-to-follow argument on that issue (Knick, p. 14 n.5). 

Maybe the answer is that a federal court may consider pendent state law inverse condemnation claims as an adjunct of its jurisdiction to hear the federal takings claim.

Federal takings

The majority took great care to preserve the existing system of regulatory or inverse claims against the federal government, where you chase compensation for relatively small takings in district courts, for takings in excess of $10k in the Court of Federal Claims, and all appeals from both courts to the Federal Circuit. Federal takings mavens, keep doing what you are doing. 

The issue of whether the Fifth Amendment requires a jury trial and an Article III forum in these cases is still up for grabs, we think (Brott).

Takings jurisprudence

The last -- and perhaps the hardest -- tea leaf to read is what, if anything, does the Knick opinion mean for success on the takings merits?

Does it signal a shift in how the Court is looking at property rights cases? After all, strictly speaking Knick is a procedural ruling, and the Court didn't rule for Ms. Knick on on the merits. There may be a compensable taking. Or there may not be. We don't know yet.

More than a few of the Court's past property rights cases are are like this: not definitive wins, but rather clarifying of the doctrine and sending the cases back down for more. Where, quite often, the owner eventually lost (here, however, the Third Circuit did note that "the Ordinance's inspection provision 'is constitutionally suspect and we encourage the [Township] to abandon it (or, at least, to modify it substantially)'"). We'll see. 

The majority did clarify that loss of "productive use" and not loss of "value" is the hallmark of a regulatory taking, an issue the Court declined to review recently in Leone. But beyond that, Knick does not on its face result in a sea change (even though it might portend one).

And the beat goes on: just today, the Court denied review of Love Terminal Partners, a petition filed by SCOTUS uberlawyers, with a host of high profile amici, and a slick PR campaign. The notoriously vague and difficult-to-win Penn Central is still the "default" takings test in all but a narrow band of cases. The legislative vs adjudicative distinction for unconstitutional conditions remain unresolved (even though a new petition has been filed on that topic recently). 

In that vein, is Kelo the next property rights precedent ripe for revisiting, as the Wall Street Journal's editorial suggested? We can't say even though we think its a good candidate. And what of just compensation law, a subject the Court hasn't visited since 1985? Lots of issues there. Undivided fee rule. Business losses. And yeah, Penn Central (legal scholars, time to make tenure by writing the definitive article proposing a better ad hoc takings test). 

We'll finish up this post and our Knick series with this: we do get a sense that the property rights vibe is changing. Slowly, and not necessarily inexorably. But it is changing. There might not be a "golden age" on the horizon, but the outlook is certainly different -- better -- for property rights today after Knick, than it was, say, on Monday, November 7, 2016, when all forecasters were predicting a leftward turn at the Court for the conceivable future. 

We will leave you with this, a message for you who are with us down in the trenches: while we like when the Supreme Court hands down decisions like Knick and sets the tone, it is maybe more important how lower courts and local regulators react to it. Will they read the handwriting on the wall, or dig their heels in?

That, colleagues, is entirely up to you.   

Knick Round-Up

A lot is being written about Friday's Supreme Court opinions in Knick v. Township of Scott, No. 17-647 (U.S. June 21, 2019) (including us). Here's a sampling. 

• In Private Cemetery Case, Supreme Court at Last Buries Rule Denying Property Owners Their Day in Federal Court (Ilya Shapiro, Cato). 
• In Property Rights Case, Justices Sharply Debate Power of Precedent (Adam Liptak, New York Times)
• Supreme Court bolsters rights for developers and property owners in California and elsewhere (David Savage, Los Angeles Times)
• A “view” from the courtroom: “We break no new legal ground” (Mark Walsh, SCOTUSblog)
• Opinion analysis: Court overrules takings precedent, allowing more suits in federal court (Miriam Seifter, SCOTUSblog)
• Supreme Court Overturns Precedent In Property Rights Case. A Sign Of Things To Come? (Nina Totenberg, NPR)
• Supreme Court Paves Route to Sue Over Cemetery Law (Jack Rodgers, Courthouse News Service)
• US Supreme Court allows property owners to file takings claims directly in federal court (Carrie Thompson, Jurist) 
• U.S. Supreme Court Reverses Itself – Property Owners Can Have their Day in Federal Court (Ben Rubin, California Eminent Domain Report)
• Clarence Thomas Benchslaps the Federal Government in a Property Rights Case (Damon Root, Reason)
• Rose Knick on her Supreme Court win: “Doing the Constitution the way it’s supposed to be” (Kathy Hoekstra, Pacific Legal Foundation)
• The Supreme Court Rights a Property-Rights Wrong (Timothy Sandefur, Goldwater Institute)
• Kagan Sounds New Alarm as Supreme Court Scraps Another Precedent (Tony Mauro, National Law Journal)
• Supreme Court Overrules Precedent that Created "Catch-22" for Property Owners Attempting to Bring Takings Cases in Federal Court (Ilya Somin, Volokh Conspiracy)
• High Court Finds Landowner Has A Path To Federal Court (Andrew McIntyre, Law360)

Check them out. 

Williamson County Overruled: After Nearly A Century, Supreme Court Finally Has Figured Out What A Regulatory Takings Claim Looks Like

We'll be doing a longer post with our thoughts on the U.S. Supreme Court's landmark ruling in Knick v. Township of Scott, No. 17-647 (June 21, 2019). But here's the big picture.

It appears that at least five Justices finally seem to understand what we in the property bar have been saying for decades - that the essence of a federal "takings" claim against a local or municipal government is that "by regulation, you have deprived my property of 'productive use' [as Chief Justice Roberts noted on page 14 of the slip opinion], and you have not compensated me." So it is enough that the government hasn't paid me, and I have no obligation to "ripen" my federal claim by chasing down the local government for compensation in state court.

So nearly 100 years after Justice Holmes famously opined for the Court in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), that if a regulation goes "too far" it will be recognized as a taking, we may have the Court finally expressing clearly what that cause of action looks like. Knick is the first time as far as we can tell that the modern Court has plainly stated the precise nature of the constitutional violation.  

There's a lot to process in the majority (Roberts), concurring (Thomas), and dissenting (Kagan) opinions but for now, the bottom lines as we see them:

• Williamson County: the "state-litigation" ripeness requirement (which required an owner to not only be denied compensation by a local government, but to then sue the local government in state court, and lose) is overruled into the dustbin of history (Knick, p. 2). Time to start brushing up on the Federal Rules of Civil Procedure, everyone.
• Williamson County's "finality" ripeness requirement was not challenged by Ms. Knick, and remains good law. Property owners still need to obtain a final decision from the local government or agency about what uses, if any, may be made of their property under the allegedly restrictive regulation.
• Also implicitly overruled: the "preclusion trap" from San Remo, You can choose to litigate your state law takings or inverse claims in state court and if you do you will likely be barred from later raising a federal takings claim, but you no longer are going to be forced to go to state court in the first instance and raise a state law inverse condemnation claim, only to be later told you thereby litigated your federal claim by implication (Knick, p. 5-6). 
• Also wiped out: Chicago College of Surgeons' removal imbalance. Until Knick, a property owner could not raise a federal takings claim in federal court, but a municipal or state defendant could remove a state court takings action to federal court. Under Knick, a claim seeking compensation is a federal claim, purely and simply.  (Knick, p. 11). 
• Property owners go ahead and file directly in federal court. But you can still bring a § 1983 claim in state court if you want. Those claims are still subject to removal to federal court by municipal or state defendants. Defendants: you have the same ability to remove state court claims to federal court like any other case.
• If you file a federal takings claim in federal court, the cause of action is § 1983, and the remedy sought should be limited to just compensation (Knick).
• You get a jury trial on your § 1983 claim (Del Monte Dunes). 
• A property owner is not going to get a federal court to enjoin a regulatory taking, or declare a statute or regulation unconstitutional (Knick, p. 12-13), unless the owner is raising a takings defense to imposition of a regulation or statute (Horne). Injunctive relief is equitable, and is generally not available unless there's no remedy at law (which there is most of the time). 
• You still cannot raise a federal compensation claim against a state government (qua government) in federal court (11th Amendment).  
• It remains unsettled whether a state law inverse condemnation claim "arises under" federal law and can be brought in federal court. The majority declined to consider the SG's difficult-to-follow argument on that issue (Knick, p. 14 n.6).
• Takings claims against the federal government: nothing has changed for now. Takings claims in excess of $10k still go to the Court of Federal Claims. The issue of whether you should get a jury trial and an Article III forum is still up for grabs, we think (Brott).

We'll have more after a further chance to digest the opinions. 

Knick v. Township of Scott, No. 17-647 (U.S. June 21, 2019)

"The state-litigation requirement of Williamson County is overruled."

Property lawyers, dust off your Federal Rules of Civil Procedure, and federal judges your long vacay from dealing with regulatory takings and inverse condemnation cases is over, because this just in: by a 5-4 margin (Chief Justice Roberts authored the majority opinion, with Justice Kagan writing the dissent), the U.S. Supreme Court today finally (finally!) overruled the state-litigation prong of the Williamson County ripeness doctrine. Knick v. Township of Scott, No. 17-647 (June 21, 2019).

Yes, overruled. Not trimmed around the edges. Overruled. 

Here's what our quick skim turns up as a critical passage:

The Court in Williamson County relied on statements in our prior opinions that the Clause “does not provide or require that compensation shall be actually paid in advance of the occupancy of the land to be taken. But the owner is entitled to reasonable, certain and adequate provision for obtaining compensation” after a taking. Cherokee Nation v. Southern Kansas R. Co., 135 U. S. 641, 659 (1890). Respondents rely on the same cases in contending that uncompensated takings for which compensation is subsequently available do not violate the Fifth Amendment at the time of the taking. But respondents read those statements too broadly. They concerned requests for injunctive relief, and the availability of subsequent compensation meant that such an equitable remedy was not available. See Regional Rail Reorganization Act Cases, 419 U. S. 102, 107, 149 (1974) (reversing a decision “enjoin[ing]” the enforcement of a federal statute because “the availability of the Tucker Act guarantees an adequate remedy at law for any taking which might occur”); Hurley v. Kincaid, 285 U. S. 95, 99, 105 (1932) (rejecting a request to “enjoin the carrying out of any work” on a flood control project because the Tucker Act provided the plaintiff with “a plain, adequate, and complete remedy at law”). Simply because the property owner was not entitled to injunctive relief at the time of the taking does not mean there was no violation of the Takings Clause at that time.

Slip op. at 16. 

More to come after we've had a chance for a deeper dive on the opinions, but here's one more critical passage: 

We conclude that a government violates the Takings Clause when it takes property without compensation, and claim under §1983 at that time. That does not as a practical matter mean that government action or regulation may not proceed in the absence of contemporaneous compensation. Given the availability of post-taking compensation, barring the government from acting will ordinarily not be appropriate. But because the violation is complete at the time of the taking, pursuit of a remedy in federal court need not await any subsequent state action. Takings claims against local governments should be handled the same as other claims under the Bill of Rights. Williamson County erred in holding otherwise.

Slip op. at 19-20.

Knick v. Township of Scott, No. 17-647 (U.S. June 21, 2019)

Thursday Round Up: Hawaii Water Law, "New" Property, The Edge Denied!

Here's what we're reading today:

• New Ruling In Maui Water Case Still Doesn’t Resolve Old Dispute (Honolulu Civil Beat) - about the Hawaii Intermediate Court of Appeals' recent unpublished memorandum opinion in a long-ongoing water law fight on Maui. The long and the short of it is the court held that whether a short-term license from the State to use water (month-to-month, max one-year as the statute requires) is "temporary" or not (these licenses have been renewed for 18 years to allow the administrative process to be completed) is a factual question that can be resolved by summary judgment. Court held no. In our view, these things operate much like preliminary injunctions, which although they are temporary in nature, can stretch out for quite a long time while the wheels of justice grind. Cert application to the Hawaii SCT coming, for sure. Any guesses on which way this will come out: Native Hawaiian plaintiffs, water law, 18 years is "temporary?" 
• Looking Back: Charles Reich and His Era (Walter Olson at Cato) - noting the death of Professor Charles Reich, author of the influential Yale Law Review article on "new property." A topic we've hit up from time to time. 
• 'He's finished!' U2 guitarist The Edge's dreams of building $100million family compound on an untouched Malibu mountainside are shattered after he loses a 14-YEAR legal battle (Daily Mail) - In what may be the last chapter of a case we've been following (see California Coastal Development in a Nutshell: Hire Jesus - Moses, Actually - To Sell Your Luxe Home Plans, and Become One With the Mountain), the California Supreme Court denied review of the case, meaning that even a woke rock star can't develop in California.

Shaka, When The Walls Fell: Yes, Knick Will Be About Takings, But It Will Be More About Federalism

With the opinion in the Knick v. Township of Scott case to drop as soon as Tuesday (we're guessing the opinion will be by Chief Justice Roberts, by the way), hold on: we're about to get super nerdy here. Impossibly nerdy. Yes, we're revisiting the Star Trek analogies. We've been down this road before, even going so far as to have a colleague (who is perhaps even further down the rabbit hole than we are) present a takings CLE in his Starfleet uniform. 

The bottom line is this (and if you are not into Trek, you can stop right here): to us the key question which the Court is grappling with is whether a state's judiciary is part of the state's compensation system. If the majority of the justices conclude that it is, then don't expect an out-and-out overruling of Williamson County, only a modest trim around the edges, with some of the more obvious inequities (the Chicago Surgeons removal imbalance, and maybe the San Remo trap) eliminated. 

Yeah, but what about Star Trek?

This time, we're not talking Klingon foreheads and makeup budgets in the 1960's TV show. Instead, we're jumping forward one series to one of The Next Generation's seminal episodes, "Darmok," which Wikipedia describes as dramatizing "an incident in which the crew of the Enterprise is unable to establish meaningful communication with the crew of an alien vessel, which is resolved by the struggle of the ships' captains to defend each other from a vicious beast." Because no matter which way that Knick turns out, we're betting that the competing opinions will highlight the divide among the justices about what it means to take property, and what, if anything, courts should do about it. 

The key conceit of the Darmok episode is that our heroes cannot initially communicate with the aliens (and thus cannot comprehend their intentions) because although the aliens use English words, they speak only in allegory, using shared history and myths to give the allegories meaning. They keep repeating "Shaka, when the walls fell," for example. But without an understanding of what events these words reference, the good guys hear this as jibberish, and cannot decipher the meaning. As a result, both sides end up doing what a lot of us do when faced with a language we don't understand: we repeat ourselves, only slower, thinking that will cure the problem.

It doesn't, but in the end, all is resolved when the metaphorical light bulb goes off in Captain Picard's head, and he learns to talk the talk. He starts to understand his counterpart's stories and background, and with that comes an understanding of what he's trying to communicate. "Shaka, when the walls fell" means "failure." (If you are interested in more, one of the better explanations about how this episode was a good example "of the limits of human communication" was this article in The Atlantic.) 

If you are not a Trek fan, sorry for the extensive backstory, but we do have a point to all of this. Here's what you need to know: after we attended the oral (re)arguments a while back in Knick (see our after-action report here), we read the transcript and listened to the OA recording to get a better sense of what we missed in person. And we let things settle into our consciousness, meditating on what might come out of this case, both good and bad.

And the thing that jumped out at us was the above-referenced Trek episode, with each party talking past the other. There was some of that in the first argument (see our post "Oranges And Tangerines - The Difference Between Eminent Domain And Inverse Condemnation: Deconstructing The Knick Oral Arguments"), but the second time around, it seemed on a slightly different -- and even more pronounced -- wavelength. So we predict a huge conceptual gap between the majority and the dissent(s). Oh, they will agree with what is a "taking," but they won't agree when a taking becomes actionable: at the time of the taking? Or later, when compensation is fully denied?  

The key point that we think they will all agree on no matter their position on the ultimate question (the "hill to die on" in the current parlance) is the notion that it is just fine with the Constitution to not pay compensation contemporaneous with the taking. After all, the federal government takes property all the time and doesn't actually pay for it until later, and that's perfectly fine to the Court as long as there are "reasonable, certain, and adequate" means for obtaining post-taking compensation, a process that (to us) every justice wants to protect no matter what (actions under the Declaration of Taking Act is one example). 

Thus, the big gap that will likely divide the opinions is how to protect that concept while also getting to a sensible and equitable result. The SG offered a way out, the argument that the takings clause isn't violated by the local government merely denying compensation, but that the owner may still come to federal court to "vindicate" her right to compensation. Nuanced, but we get it. (That's where we predict CJ Roberts will come down, by the way, even if it's not the way we'd go about analyzing it.) 

So we're guessing the opinions won't turn on when the Takings Clause is violated, but rather will be more about how much federalism the Court is willing to tolerate when it comes to "vindicating" a federal constitutional right. Are state courts as good at resolving state takings claims as federal courts are at dealing with federal takings claims? Which is why at the beginning of this post, we pointed to the case's lynchpin: are state courts merely part of the state's compensation mechanism, or do they have an independent role as courts to resolve whether compensation is owed?

We think the latter, which is why a majority of the Court seemed to accept this idea in the Stop the Beach case. Which is also why, with the Chief Justice likely writing the opinion, we feel pretty good.

But if you hear us muttering "Shaka, when the walls fell" when the opinion drops, you will know why.

All Your Race Are Belong To Us: Baltimore Is Condemning The Preakness Stakes (We're Serious)

Pop quiz: Quick! Name the races in the Triple Crown of horse racing... There's the Kentucky Derby (check) ... the Belmont Stakes (check) ... and ... oh yeah, the Preakness Stakes. We always almost forget that last one. 

But the City of Baltimore sure hasn't. Because the home city of Pimlico racetrack and the aforementioned Preakness Stakes has sued the owner of the race and track in eminent domain, to take the race so it doesn't leave town like the Colts did when they bolted for Indianapolis literally in the middle of the night. Fool me twice, says Baltimore ... shame on me!

Read that again. Baltimore is trying to condemn a horse race. A freaking horse race. (Before we posted this, we checked our calendar to make sure it wasn't April 1. Suspected we were getting pranked. Nope. Then we checked with news sources. Found a bunch. Like this, and this, and this, and this, and this. Guess it's legit.)

And here it is in all its glory: the Complaint. We urge you to read it. It's short, and to the point. You may even get a laugh or two.

Seems like the Preakness is thinking of moving to greener pastures (still in Maryland, just slightly south of its current location, but outside of Baltimore). And the first four causes of action allege that it would violate Maryland law for the race owners to do that. 

The final two claims are what you might call Plan B; in the event those first four claims don't work, the city is taking both the race track, and the race itself. Here's the property descriptions: "5201 Park Heights Avenue, in Baltimore City, State of Maryland," and "the Preakness Stakes trophy that is known as the Woodlawn Vase, including any and all property or property rights associated with it, whether tangible, intangible, real, personal, or mixed, and any business entity that owns it."

In relation to that last bit, Baltimore is also taking "the name, common law and statutory copyrights, service marks, trademarks, trade names, contracts, horse racing events, and other intangible intellectual property that are associated with the Preakness stakes and the Woodlawn Vase," as well as the Maryland Jockey Club's stuff. 

In case you were wondering what public use or purpose that Baltimore intends to put the condemned property to: "These properties will be used to continue their historic role in the cultural traditions of Baltimore City, to foster employment and economic development in Baltimore, and in particular in the Park Heights Urban Renewal jurisdiction, as well as to protect the health and safety of the people attending the Preakness and other Pimlico events, as well as the employees and horses working there." Can't forget to protect those working horses.

So is this a public use under Maryland eminent domain law? Does Maryland law allow the taking of intellectual property as well as real and personal property? Is taking a business and operating it yourself count? We're not sure. But this does seem to stretch the rational basis test to its outer limits. 

And no matter what the courts of Maryland eventually say about this, to us this is about as stupid a use of the power of eminent domain as we can possibly imagine. Stick to condemning for highways, redevelopment, and to keep TV shows in town, guys.  

And in case you think we're not being legal enough in this post, here's the case we think is going to be pretty darn relevant to how the Preakness taking is treated. 

Complaint for Declaratory, and Injunctive Relief, Petition for Condemnation, Mayor and City Council of Balt...

NJ Appellate Division On Land Banking: "Take Now, Decide Later What To Do With It" Isn't Good Enough

Here's the decision in a case we've been following from afar in which our colleagues Anthony Della Pelle and Robert McNamara are on the side of property owners, Borough of Glassboro v. Grossman, No. A-4556-17T2 (Jan. 7, 2019). 

This is redevelopment, New Jersey style. We ask that you read the opinion (it isn't terribly long, and it is worthy of your perusal in its entirety), but here's the bottom line:

[W]e hold that if a landowner within the redevelopment area contests the necessity of a condemnation pursuant to N.J.S.A. 40A:12A-8(c), the statute logically requires the condemning authority to articulate a definitive need to acquire the parcel for an identified redevelopment project. That articulated need must be more specific than the mere "stockpiling" of real estate that might, hypothetically, be useful for a redevelopment project in the future. In addition, the condemning authority in such a contested case must present to the court at least some evidence – consisting of facts, expert opinion, or both – that provides reasonable substantiation of the need. To hold otherwise and allow the condemning authority merely to proclaim a need, without having any obligation to substantiate its existence, would improperly read the term "necessary" out of the Legislature's enactment.

Slip op. at 2-3.

If you think that sounds kind of familiar, you'd be right. The opinion cites one of our favorite cases, City of Stockton v. Marina Towers, 88 Cal. Rptr. 3d 909 (Ct. App. 2009), in which the court held that a "take first, decide later" what to do with the condemned land was not a valid public purpose supporting a taking. 

Here, the Appellate Division rejected the Borough's argument "that it can satisfy the necessity requirement of [the statute] by simply declaring that it wishes to stockpile a parcel for some possible future need in the redevelopment area." The court concluded that "[t]hat sort of inchoate or speculative justification -- aptly described by defendants as 'land banking' or 'land assemblage' -- does not suffice to establish necessity under the statute." Slip op. at 19-20. 

To do that, the condemnor "must do more than recite that a parcel it seeks to condemn has some unexplained necessity to the overall redevelopment area or the redevelopment plan. Instead, there must be particular redevelopment project identified and tied to the proposed acquisition...Our point is that there must be an explained linkage between the property to be acquired and the identified project." Slip. op. at 22. 

We understand that condemnors are kind of used to getting their way, even -- or especially -- in court. But come on, the standards for public use and public purpose (and "necessity") are not really high, are they?

Is it that difficult to have an actual use in mind for land that is being taken at the time the land is being taken? 

Linkage!  

Borough of Glassboro v. Grossman, No. A-4556-17T2 (N.J. Super. App. Div. Jan. 7, 2019)

Knick And Klingon Foreheads: Retconning Williamson County

Retroactive continuity -- or "retconning" -- is, according to that authoritative source Wikipedia, a "literary device in which established facts in a fictional work are adjusted, ignored, or contradicted by a subsequently published work which breaks continuity."

For example, compare the real-world explanation for why the 1960's Star Trek show's Klingons didn't have butt heads, but the later-produced shows and movies did. The real-world reason was that the TV show had a bare-bones budget, so couldn't afford the required intricate make-up. The later-produced stuff, having larger budgets, could. But to those concerned with an in-universe explanation that had to line up with the production realities, it turned out to be a big source of contention. Fandom as well as the later shows' writers struggled to come up with a narrative that accounted for both Klingons with butt heads, and those without. 

Sorry for the impossibly nerdy detour, but that's what the Solicitor General's argument in Knick v. Township of Scott reminded us of.

The SG's brief and argument has emerged as things to pay even more attention to than usual, because the Court's order resetting the case for argument -- and requesting additional briefing -- focused in large part on the federal government's position:

The parties and the Solicitor General are directed to file letter briefs, not to exceed 10 pages, addressing petitioner's alternative argument for vacatur, discussed at pages 12-15 and 40-42 of the transcript of oral argument and in footnote 14 of petitioner's brief on the merits.

But in our read, the petitioner (Ms. Knick) doesn't really argue for vacatur, and none of the three cites the order refers to are about vacatur. The SG's brief is the one that made the big vacatur push. It's even in the title ("Brief for the United States as Amicus Curiae in Support of Vacatur and Remand"). 

And now having gone back and reviewed the SG's difficult-to-comprehend argument, we are reminded of retconning. Because it seems to reach back and question the "continuity" of what were, we thought, "established facts." 

Recall that in Williamson County, it was the SG's amicus brief that raised the whole ripeness argument. Neither party did. Read the Brief Amicus Curiae of Western Manufactured Housing Communities Association in Knick for the details on how the argument was first raised in Williamson County by the SG's brief, as a substantive requirement under the Fifth Amendment. There's been no constitutional wrong, the brief argued, until the state or local government has denied compensation. We disagree with the rationale, but we get the logic. 

Flash forward three decades, and you have the SG now coming in on the side of the property owner to argue that federal court is an option in Fifth Amendment takings cases. Other than saying "whoops, we were wrong," how was the SG going to frame the government's argument? Retconning, that's how. 

First, we think the goal of the SG's brief was to both come in on the side of property owners, while at the same time preserving the rule that compensation need not be provided contemporaneous with a taking, provided there are reasonable, certain, and adequate means to secure compensation after the taking. That rule, after all, allows quick takings and statutory takings, and forces property owners alleging an inverse condemnation or regulatory taking against the federal government to pursue compensation in the Court of Federal Claims in most instances. Above all else, the SG wants to preserve that line of decisions. 

Second, the only way to do that was in a way that didn't undermine the Williamson County rationale first advanced by the SG's amicus was to retcon a new theory. And while it took no less that four reads of the SG's brief, here's our best summary of that retroactive continuity theory:

• Williamson County was only a ruling that under 42 U.S.C. §1983 a "takings" claim isn't ready for federal court and there's no federal constitutional violation until the state has both taken property, and refused to pay compensation. 
• Consequently, a takings claim does not trigger a § 1983 claim until the state has denied compensation, because any constitutional violation isn't complete until the state has denied compensation. Thus, the Court need not overrule Williamson County. You still must pursue compensation in state court via a state law inverse condemnation claim and lose it, before you can even state a ripe claim under §1983.
   
• But (and there's always a "but," isn't there?) an inverse condemnation claim in state court to get compensation under state law is not a § 1983 claim, but independently implicates a substantial federal question. (That's how the municipal defendant removed Chicago Surgeons to federal court, for example.) And thus, federal jurisdiction may be invoked independently of whether there's been a federal constitutional violation, or a ripe cause of action under § 1983. (Knick's Reply Brief (page 4, n.5) rightly refers to this as a "puzzling" argument.)
  
  
• The embedded takings question is a “federal interest in a state claim" (our characterization, not the SG's) and that is enough to trigger federal question jurisdiction under 28 U.S.C. § 1331 (arising under jurisdiction).

So the bottom line of the SG's brief is this: Knick's situation presents no federal claim sufficient to trigger federal jurisdiction under the Fifth Amendment or § 1983, but there’s enough of a federal issue lurking about in a state inverse condemnation claim to trigger federal jurisdiction. Klingon foreheads, man. 

Will the Supreme Court take up the thread as a way out of the self-created Williamson County mess? It looks like it really wants to. 

Is the SG's argument too clever by half? A nice try? 

Wrap your head around the argument's logic, then let us know what you think.

Litigation As A Substitute For Legislation? Coverage Of Our ABA Section's Federalism CLE

One of our last acts as Chair of the ABA's Section of State and Local Government Law was to green light a CLE program at the recent Chicago annual meeting entitled "State Attorneys General and Federalism in the Obama and Trump Eras."

The title kind of gives it away, but the main topic was the implications of the multitudinous lawsuits brought by states and their attorneys general against actions by the president's administration, first grabbing headlines during President Obama's tenure, and now during President Trump's. And then switching playbooks after the election, it seems.  

One of the good things about the CLE programming we do in our Section is that we try and get speakers from all sides of the ideological spectrum. We think we did a pretty good job here, with (left-to-right -- geographically above, not ideologically) Wisconsin Solicitor General Misha Tseytlin (Madison, WI), William Hurd (past SG of Virginia, and currently with Troutman Sanders, Richmond, VA), Oregon Attorney General Ellen Rosenblum (Salem, OR), and Northwestern U. Law School Dean Dan Rodriguez on our panel.

It was a rapid-fire 1.5 hours. For a sense of what we discussed, see "Increased Role for State AGs as Congress Shirks Duty" by Kimberly Robinson (Bloomberg's Supreme Court reporter, who joined us in the room). Also, after the session our presenters sat for a short podcast about the issues. Worth a listen.  

For our contribution, try this quote from the Bloomberg story:

Now Democrats have taken a page from Republicans and filed their own suits against the Trump administration, Oregon Attorney General Ellen F. Rosenblum said.

Democratic concern for federalism in the face of executive overreach is welcome, Tseytlin said.

But such suits could degrade the public confidence in a neutral judiciary, Robert H. Thomas, the head of the ABA Section of State and Local Government Law, said.

Actions against the Obama administration were largely led by Republican AGs, Rodriguez said. Current litigation against the Trump administration is largely led by Democrats.

But there are a lot of bi-partisan efforts by state AGs, too, Rosenbaum said. She pointed to investigations over opioid use and data privacy.

As we noted at the session, the Democrat AG's newfound concern for so-called "states' rights" reminds us of the final scene in Casablanca, where Victor tells Rick "welcome back to the fight." Like James Bond, we never left. Do we like it when broad edicts are not being handed down from the 202 area code? Of course, that should be the default, not just when you are out of power.

And call us old school, but it seems there are enough petards being thrown about to eventually hoist everyone eventually, especially after the next election or the one after that (ad infinitum). 

This Is How You Do It: Colorado App Looks Behind The Curtain, Invalidates Spite Taking For Improper Motive

Here's a very important decision eminent domain decision we've been waiting to drop.

As the caption might indicate, the Colorado Court of Appeals' opinion in City of Lafayette v. Town of Erie, No. 17CA0595 (June 14, 2018), isn't your usual "condemnor vs private property owner" case. The question was whether one municipality -- a home rule city -- could take land from a neighboring statutory city. Framed that way, the issue seemed like one more to warm the cockles of municipal law junkies than takings mavens.

But no, this one should be read by every condemnation lawyer. Because it details a subject we've been thinking about a lot lately: how to ferret out an improper motive in a taking in which the condemnor's stated purpose appears to be public. Read on. 

As noted above, this dispute was between two Colorado municipalities. Essentially a border dispute where the towns were merging together in the exurbs along the corridor of Highway 287. The Lafayette side of the corridor had plenty of development: a big Walmart, fast food restaurants, an auto repair shop, and a King Soopers supermarket, along with a residential development. 

Erie wanted to get in on the development of the Highway 287 corridor. It formed an urban renewal authority, and purchased two vacant parcels (together, now called Nine Mile Corner). A few years later, Erie annexed Nine Mile from the renewal agency. 

Turns out (surprise, surprise, surprise!) that the Nine Mile parcel was blighted. Time for urban renewal and development! And just who might the new tenant of the saved-from-blight property be? King Soopers, the same supermarket with an outlet just down Highway 287 in Lafayette. King Soopers wanted to ... sooper size ... as it was, in the court's words, developing "a larger store prototype." Erie's Nine Mile property looked mighty good. 

Lafayette, it seems, wanted to keep its King Soopers ("and its corresponding tax revenue," as the court put it). If you want the parcel next to the Walmart, let us know, KS. Apparently, no deal. 

Things moved fast. Just a couple of months after Lafayette found out about King Soopers maybe moving next door to the Nine Mile parcel in Erie, the Lafayette city council approved the taking of the land:

for the public purpose of open space and benefits associated with open space, as well as preservation of Lafayette's local and unique character, and buffering of Lafayette from development activities in neighboring communities.

Now hold on, Erie said, Nine Mile is in our town, not Lafayette's, and it can't grab land we own (that's our AO).

When Lafayette's offer to buy the land was refused, it filed an eminent domain lawsuit. Erie objected, arguing the condemnation lacked a public purpose. After a two day hearing, the trial court agreed, this purpose of this taking was to stop Erie from developing the parcel:

The articulated need of acquiring open space for the purpose of creating a community buffer between Lafayette and Erie is inconsistent with Lafayette’s actions in development the Hwy. 287 corridor. Instead, Lafayette’s actions are more closely aligned with a previously articulated goal to ensure that Erie does engage in commercial development on Nine Mile Corner.

The court of appeals affirmed. The court sideskipped the muni law issue of whether property owned by a statutory city can be taken by a home rule city. Apparently both cities assumed Lafayette could reach outside its borders and take, as long as it had the right reasons. The court noted that a Colorado home rule municipality can, generally speaking, take land outside of its borders, even property already devoted to public use, as long as the the taking is for a public purpose. 

But the court focused on Lafayette's actual motive for the taking, concluding that the taking was motivated by Lafayette's desire to keep King Sooper from opening a larger store prototype just over the border in Erie. And interestingly, the court also found that Lafayette's stated necessity was pretextual. (Yes, necessity.)

The court concluded Lafayette had an improper motive "to interfere with Erie's proposed commercial development." Slip op. at 15. No deal, even where the advanced public purpose (buffer zone) is, on its face, a public use:

The stated public purpose of an open space buffer is valid, but blocking Erie’s planned development— planning that predated Lafayette’s condemnation petition — is not lawful.

Slip op. at 15 (citing R.I. Econ. Dev. Corp. v. Parking Co., L.P., 892 A.2d 87 (R.I. 2006)).

Interestingly, the court looked at the factual record (not just the stated reasons for the taking), and tested whether Lafayette's claim that it needed a buffer zone would not be satisfied by means other than taking Nine Mile Corner. For example, "Lafayette presented no evidence showing why the setback incorporated in Erie's development plans would be insufficient to serve as a community buffer."). Slip op. at 17-18. 

The taking was pretextual. The court concluded:

Because Erie, as the property owner, met its burden of showing bad faith, see Goltra, 66 P.3d at 174, the district court properly examined Lafayette’s finding of necessity to determine, with record support, that the taking to establish an open space community buffer was pretextual and was not a lawful public purpose. See Glenelk Ass’n, 260 P.3d at 1120. The court also indicated that Lafayette’s public officials were highly motivated to keep King Soopers — and the corresponding tax revenue — within Lafayette. Accordingly, the record amply supports the district court’s findings.

Slip op. at 18.  

Here are your takeaway points:

• Courts don't have to just accept whatever the condemnor says its reasons are for the taking. Slip op. at 13-14 ("Lafayette's argument hinges on its belief that because the Lafayette city council determine this condemnation was necessary, the district court cannot look behind that determination to see if it was motivated by bad faith. This is incorrect."). 
• If there's an allegation of bad faith (improper motive), the court gets to take a hard look. Slip op. at 12 ("Without judicial review of condemnation actions, there would be no end to one entity subverting another entity's condemnation action by initiating one of its own.").
• Some public benefit resulting from the taking won't necessarily save it. Slip op. at 12. Motive, not the percent of public benefit, is what counts here. 
• The way to see whether the stated public purpose is indeed public, the court looks to the record. Slip op. at 14 (citing City & Cty. of Denver v. Block 173 Assocs., 814 P.2d 824, 828-29 (Colo. 1991)).   
• Similarly, a condemnor's statement of the necessity of the taking is subject to review for bad faith/improper motive. Slip op. at 13. But only bad faith. Without an allegation of improper motive, a court cannot reweigh the need for the taking. Id. ("Thus, if bad faith is at issue, courts may look behind an entity's stated condemnation purpose and finding of necessity."). 
• The trial court did the right thing to test Erie's claim on bad faith by conducting a hearing to consider the evidence. Slip op. at 14.
• When the condemnation isn't sui generis, but there's a factual record of stuff that happened before the condemnor decided to take, the reviewing court should dive into that record. Drafting a neutral resolution of taking isn't going to insulate the condemnor from this sort of review. Slip op. at 15-16. 
• When the trial court makes these type of factual findings about the condemnor's motive, the appellate court will defer. Slip op. at 15. 

To us, the Colorado Court of Appeals got it right. Motive, not stated reason, is what matters. The fact that a taking motivated by stinky reasons might also have some public benefit, or that there were good motives mixed in with the bad, isn't enough. It doesn't matter, for example, that a taking may be for a public road, if the taking was motivated by other, nonpublic reasons. 

One final note: you often hear about what we call "spite takings." So-and-so is a bad guy, so let's take his property. These have always stuck us as silly proposals, subject to invalidation for the reasons the Colorado court articulated. 

Sidebar: the opinion includes the color map and the property image, above. We wish more courts did this.

City of Lafayette v. Town of Erie, No. 17 CA0595 (Colo. App. June 14, 2018) 

Video: Ninth Circuit Penn Central Oral Arguments

Here is the video of last Friday's oral arguments in a case we've been following, in which the owners of a mobile home park successfully challenged a California municipality's rent control ordinance as a taking.

In Colony Cover Properties v. City of Carson, a U.S. District Court for the Central District of California jury awarded the park owner just compensation, concluding that under Penn Central, the rent control ordinance was a compensable taking. The total award to the park owner, including damages for lost rental income, attorneys' fees, and interest, was over $9 million. As far as we can tell, this is the first case in which a mobile home park owner has succeeded in obtaining compensation for a taking for rent control.

Predictably, the city went ballistic, and its brief in the Ninth Circuit argues the City is the aggrieved party:

In April 2006, Plaintiff Colony Cove Properties, LLC made a highly leveraged purchase of a rent-controlled, senior-citizen mobilehome park, Colony Cove Mobile Estates, with $5 million down and $18 million in financing. Plaintiff wagered that it could obtain a rent increase to force the residents of the park to bear the cost of 3Plaintiff’s enormous debt service—some $1.2 million per year. When Defendant City of Carson refused to allow that, Plaintiff turned to the Fifth Amendment’s Takings Clause to conscript the City’s taxpayers as insurers of Plaintiff’s investment.

Opening Br. at 1. The City also argues that the jury verdict threatens the very existence of rent control.

Read the remainder of the city's Preliminary Statement and see if the rent control board's process doesn't make it seem like the city -- and not the owner -- is the entity actually calling the shots on how the park is financed and operated, and how much if "enough" for the owner to make off of his investment. In short, it really looks like the City owns and operates the park like a public housing project, doesn't it?

Last Friday, the court convened in Pasadena for oral argument. Check out the video above and see whether you can predict the outcome.

Here are the merits and amicus briefs in the case:

• Opening Brief (City)
• Answering brief (property owner)
• Reply brief (City)
• Download Amicus (California Rural Legal Assistance, et al.)
• Download Amicus (League of California Cities, et al.)

When can we expect a decision? Your guess is as good as ours. Stay tuned, as always.

NC App: State Does Not Have Sovereign Immunity From Takings: "sovereign immunity must be juxtaposed with the contrary sovereignty of the individual, whose natural rights preceded government and were enumerated in the federal Bill of Rights"

The latest in the "Map Act" inverse cases out of North Carolina. This is a longer post, but you really will want to read the summary, or just pick up the opinion and read it.

These are the cases in which the N.C. Department of Transportation, under the power of the state's Map Act, for decades has designated private property for future acquisition for highway corridors, which prevented present use and development, but hasn't bothered to actually take the properties.

Hundreds of property owners sued in inverse condemnation (the North Carolina Supreme Court denied class action status). More on the issue and the N.C. Supreme Court's landmark opinion in Kirby v. N.C. DOT, which concluded the properties' designation was a taking, here. The cases were remanded for trials for what should have been compensation and damages calculations, but the DOT instead sought to reboot the cases, and argued on remand that there hadn't been a taking (even though the Supreme Court in Kirby pretty plainly held there had been).

The latest is the North Carolina Court of Appeals' opinion in Beroth Oil Co. v. North Carolina Dep't of Transportation, No. COA-17-74 (Nov. 21, 2017). There, the trial court granted the owners judgment on several key issues:

That order granted Plaintiffs’ motion for partial judgment on the pleadings pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure, finding a taking of Plaintiffs’ fundamental property rights had occurred by inverse condemnation; granted Plaintiffs’ partial summary judgment finding a taking; and established the rules and procedures by which NCDOT would file plats, appraise Plaintiffs’ properties, deposit just compensation, as well as any hearing or trial schedules and procedures as may be required moving forward.

Slip op. at 12.

The DOT sought an immediate interlocutory appeal, and the issue before the court was whether it should undertake appellate review even though the trial court had not yet resolved all of the issues in the case. Things like compensation and damages. The DOT raised two reasons why the court should review it now, each based on North Carolina's "substantial right" test: (1) when title is taken, North Carolina's appellate courts grant immediate review; (2) this case involves the State's sovereign immunity, and because the DOT can't be sued, the court should hear the appeal now. 

The Court of Appeals disagreed with both contentions.

First, it held that the "taken title" rule only allows property owners to seek immediate appellate review, not the condemnor.  Slip op. at 15-16 ("However, this substantial right accrues only to one who holds an interest in the subject property of the eminent domain proceeding, if title to the interest is contested, or to a party who contends that the area taken is different from that identified by the condemnor on the map or plat of the land taken filed by the condemnor pursuant to Article 9 of Chapter 136."). The taker doesn't have any substantial rights at stake:

The government authority effectuating the taking has no substantial right justifying interlocutory review of an order concerning title or area taken unless and until that condemnor has filed a map or plat pursuant to Article 9 identifying the property subject to eminent domain proceedings and condemnation.

Slip op. at 16. 

The most interesting part of the opinion is the court's rejection of the DOT's second argument on sovereign immunity starting on page 18 of the slip opinion. There, the court concluded that the state's sovereign immunity "must be juxtaposed with the contrary sovereignty of the individual, whose natural rights preceded government and were enumerated in the federal Bill of Rights and our own State Constitution’s Declaration of Rights." Slip op. at 19. Rather than us cutting-and-pasting the good stuff in the passages which follow, go read the opinion from page 19-21. 

Applying these principles, the court held that property owners have a statutory and constitutional right to just compensation if their property has been taken, and thus the State has "implicitly waived sovereign immunity." Slip op. at 21. But, the DOT argued, these property owners don't have a right to compensation because we haven't taken their property because we haven't formally condemned their land by filing a declaration of taking. The court rejected that circular and syllogistic argument, concluding that it was enough that the DOT had filed corridor maps under the Map Act, which placed development and use restrictions on the plaintiffs. Besides, the Supreme Court already said there was a taking: 

In its pleadings filed prior to July 15, 2015, NCDOT consistently admitted that it had filed transportation corridor maps for the Northern Beltway, that the filing of the maps placed restrictions upon the properties located within the corridor’s borders, and that the property of the particular plaintiff to whose complaint NCDOT was responding was within the corridor’s borders. As our Supreme Court held, “[t]hese restraints, coupled with their indefinite nature, constitute a taking of plaintiffs’ elemental property rights by eminent domain.” Kirby II, 368 N.C. at 848, 786 S.E.2d at 921.

Slip op. at 23.

Not willing to take this lying down on remand even after what looked like pretty clear direction from the Supreme Court, the DOT kept arguing no taking. The trial court rejected this approach, concluding that the DOT was judicially estopped from, as the court called it "blow[ing] hot and cold in the same breath." Slip op. at 24. [Sidebar: its bad enough when private litigants bounce all over the place, but it's truly embarrassing when condemnors (who have a duty to seek justice and pay full compensation) do this kind of stuff.]

The court of appeals was having none of it:

Before July 15, 2015, NCDOT admitted in its pleadings Plaintiffs’ allegations that it had recorded the highway corridor map and that this recordation placed restrictions on Plaintiffs’ fundamental property rights for an unlimited period of time. It was this set of facts that established for our Supreme Court that a taking had occurred. See Kirby II, 368 N.C. 847, 786 S.E.2d 919. Pleadings filed after July 15, 2015 denied the allegations of these facts, which makes NCDOT’s subsequent position ‘clearly inconsistent’ with its former position. Additionally, NCDOT’s prior position was accepted by the courts to such an extent that, when this litigation was previously before our Supreme Court, that Court used these facts as the structure under which it found a taking had occurred. Judicial acceptance of NCDOT’s latter inconsistent position does pose a threat to judicial integrity in that it could lead to inconsistent court determinations or the perception that either the first or the second court was misled.

Slip op. at 25-26. Bottom line: the DOT's admission that it recorded the maps, coupled with the Supreme Court's ruling, means that the DOT has admitted it has taken the plaintiffs property. Thus, no sovereign immunity. Thus, no immediate appellate review.

The court also rejected the DOT's argument that separation of powers prohibits a court from ordering the executive branch to make deposits of estimated compensation. No deal held the court: you have taken property, and you have a duty to pay for it. The court concluded by musing that if the DOT was concerned with all this and didn't want to be told by the courts that it has to pay, then it should have thought about it more deeply before it started recording against the properties and limiting their use and development. The DOT can choose which properties to designate and when to do it without any interference from the judiciary, but once it does so, it must live with the consequences imposed by the courts when the executive itself won't do its duty:

The State’s judiciary provides the avenue by which the amount of compensation here will be fixed. While there will be a high monetary price, and conceivably a political price as well, once NCDOT pays just compensation for exercising its eminent domain power, perhaps this will force NCDOT to respect the rights of our individual citizens and not restrict their rights without the ability or willingness to pay.

Slip op. at  29.

Will the DOT get the message and stop digging its heels in, or will it try to take it further up the chain to the N.C. Supreme Court?

Given the DOT's approach thus far, we're betting on the latter. Too bad. In our view, these property owners have suffered long enough. 

Beroth Oil Co. v. North Carolina Dep't of Transportation, No. COA17-74 (Nov. 21, 2017) 

6th Circuit: City's "War Of Attrition" Meant Regulatory Takings Claim Ripe For Federal Review

The Sixth Circuit's opinion in Lilly Investments v. City of Rochester, No. 15-2289 (Jan. 5, 2017) is not slated for publication, but its worth a read anyhow because it involves Williamson County ripeness, and the "final decision" rule. Here's how the court summarized the case:

This case concerns Louis Leonor’s efforts to open a dental clinic in Rochester, Michigan. The clinic stands nearly complete, but in May 2013 Rochester issued a stop-work order preventing Leonor from finishing and operating the clinic, prompted by an expert’s finding that the clinic does not comply with the conditions of a city permit. That same expert found compliance a few months later after Leonor made corrective changes. Nonetheless, Rochester refused to lift the stop-work order or take an up-down vote on the project unless Leonor waived any legal claims and paid a $40,000 fee. Unwilling to comply with those conditions, Leonor filed a complaint asserting a regulatory taking, which the district court dismissed on ripeness grounds, citing the lack of a “final decision.”

Slip op. at 1. 

The property owner brought suit in state court, after which the city removed the case to federal court and moved to dismiss. The district court concluded the city had not reached a final decision because the property owner "ha[d] not been met by the consistent and persistent pattern of resistance," and thus pursuing more state process wasn't futile.

The Sixth Circuit panel disagreed, holding that "It is true, as the district court recognized, that many cases excusing compliance with the finality requirement involve prolonged delays calculated to defeat the landowner in a 'war of attrition.'" Slip op. at 8. But although the city was willing to consider another site plan, it's review was conditioned on the property owner surrendering its ability to bring claims against the city. The panel agreed that "[t]he Commission’s demands presented Leonor with a Morton’s Fork: the choice between “voluntarily” waiving potential claims and forgoing a necessary ingredient to ripen those claims—a 'final decision.' Leonor maintains that the parties are therefore at an 'impasse,' and that their core dispute—whether the stop-work order amounts to a regulatory taking—is
sufficiently defined to permit judicial review." Slip op. at 8.

The court also shot down the city's argument -- cue Leo Rosten again here -- that the property owner had not exhausted available state compensation remedies. Recall that the owner filed its takings claims in state court, as Williamson County requires, and that it was the city which removed the case to federal court. The Sixth Circuit was having none of that nonsense, and agreed with the Second and Fourth Circuits, which have held that when a defendant removes a state takings claim to federal court, it waives any Williamson County argument that the plaintiff has not exhausted state compensation remedies. Slip op. at 13. 

All in all a well-thought out opinion, and its only shortfall is that we wish it were published. 

Lilly Investments v. City of Rochester, No. 15-2289 (6th Cir. Jan. 5, 2017 ) (unpub.) 

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