June 25, 2019

U.S. Supreme Court Opens Federal Courts to Federal Takings Claims

Property Owners Now Allowed to Bring Takings Claims in Federal Court Without First Pursuing State-Court Remedies
Holland & Knight Alert
Daniel R. Golub | Jennifer L. Hernandez

Highlights

  • Overruling a decades-old precedent, the U.S. Supreme Court has held that property owners no longer need to exhaust state-court procedures before bringing federal takings claims in federal court.
  • For California property owners and developers, federal courts could become a viable venue to bring takings claims against local governments that have not survived in California state courts.

The Takings Clause of the U.S. Constitution prohibits governments from taking private property or imposing certain types of restrictive land use regulations unless the government provides "just compensation" to the property's owner. However, since the Williamson County decision in 1985, the U.S. Supreme Court has prohibited property owners from bringing as-applied takings claims in federal court until the owners first exhausted all efforts to achieve compensation through state-level inverse condemnation procedures and litigation.1 Two decades after Williamson County, the Supreme Court held that even when litigants spend years "ripening" their federal claim by pursuing state-court procedures, litigants still cannot get their day in federal court, because federal courts are required to give preclusive effect to state-court decisions rejecting the property owner's claim.2 These precedents have been heavily criticized for effectively making state courts the conclusive arbiters of a federal constitutional guarantee.

On June 21, 2019, in Knick v. Township of Scott, Pennsylvania, a 5-4 opinion written by Chief Justice John Roberts and joined only by the Court's Republican-appointed justices, the Supreme Court overruled Williamson County's requirement that a property owner exhaust state-court remedies before bringing a taking claim in federal court. Now, "[a] property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it," and may bring an action in federal court at that time.3

Knick will be much discussed for what it says about the Roberts Court's willingness to overrule previously decided Supreme Court precedents. But for California property owners, development applicants and public officials, the most significant repercussion of Knick is that there is now, for the first time in decades, a potential forum for bringing as-applied takings claims against state and local governments that have long been inviable in California courts.

California courts are required to apply the California Supreme Court's precedents, which endorse a narrow reading of the federal Takings Clause. For example, under the Takings Clause, a government must establish that any "exaction" it imposes on a development applicant has a "nexus" and "proportionality" to the development's impact.4 The California Supreme Court, however, has held that the "exactions doctrine" applies only to exactions that are imposed on an ad hoc basis on a specific property, and that the Takings Clause imposes no limit on broadly applicable, legislatively imposed exactions.5 In addition, although the U.S. Supreme Court has held that the "exactions doctrine" applies when the government demands that developers pay money as a condition of development, the California Supreme Court has held that such monetary demands are exempt from "exactions" scrutiny unless the payments are "a substitute for the property owner's dedication of property to the public."6 In contrast, federal courts in the Ninth Circuit do not uniformly apply either of these limitations on the scope of the Takings Clause.7

Conclusion and Considerations

With as-applied federal takings claims effectively being decided by California courts, takings claimants had no viable means to advance arguments rejected by the California Supreme Court. But after Knick, litigants may be able to litigate these and other takings arguments in federal court, where the California Supreme Court's view of the federal Takings Clause is entitled to consideration but is not given controlling weight.

It remains to be seen whether the federal courts of the Ninth Circuit will provide, in the long run, significantly greater protections to takings claimants than the California Supreme Court has. And as Justice Elena Kagan emphasized in her dissent in Knick, there are longstanding doctrines of federal abstention that some federal courts may use to decline to adjudicate takings claims that are bound up in complicated questions of state or local law.8 At the very least, however, Knick is likely to open up a new and interesting front in the ongoing battle over the scope of the federal Takings Clause.  


Notes

1 Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 194 (1985).

2 San Remo Hotel, L.P. v. City and County of San Francisco, 545 U.S. 323, 338 (2005).

3 Knick, __ U.S. __, No. 17-647, 2019 WL 2552486, at *3 (U.S. June 21, 2019).

4 Nollan v. California Coastal Commission, 483 U.S. 825, 839 (1987); Dolan v. City of Tigard 512 U.S. 374, 391 (1994).

5 San Remo Hotel L.P. v. City and County of San Francisco, 27 Cal. 4th 643, 671 (2002).

6 California Building Industry Association v. City of San Jose, 61 Cal. 4th 435, 459 (2015) (distinguishing Koontz v. St. Johns River Water Management District, 570 U.S. 595, 612 (2013)).

7 See, e.g., Levin v. City and County of San Francisco, 71 F. Supp. 3d 1072, 1083-84 (N.D. Cal. 2014) (Judge Charles Breyer of the Northern District of California, striking down legislatively imposed ordinance requiring property owners wishing to withdraw their rent-controlled property from the rental market to pay sum to displaced tenants).

8 Knick, 2019 WL 2552486, at *20.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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