Property rights at US high court in 2019

The U.S. Supreme Court reinvigorated property rights in 2019, purporting to "restore takings claims to the full-fledged constitutional status the Framers envision" with its June ruling in Knick v. Township of Scott. But it stepped back from driving the point home by side-stepping two petitions for writ of certiorari in December that presented some of the most contentious and persistent property rights conflicts for review.

The Knick decision promised to revitalize modern takings practice, flinging open federal courthouse doors to property rights claims that had been effectively barred for the past 35 years. The prior state of the law was established by the 1985 Supreme Court decision of Williamson County Regional Planning Commission v. Hamilton Bank, which held that a claimant whose property had been taken by a local government was barred from bringing a federal takings claim in federal court until a state court had first denied the claim for just compensation under state law. Experienced counsel know that this was a disaster for plaintiffs -- causing them to be ping-ponged between state and federal courts for years, most often to see their federal claims ultimately extinguished entirely by the application of various abstention, preclusion, and res judicata doctrines.

The Supreme Court vitiated Williamson County with Knick, stating that the former "rest[ed] on a mistaken view of the Fifth Amendment," one that "conflicts with the rest of [] takings jurisprudence," and "impose[d] an unjustifiable burden on takings plaintiffs."

To the relief of property owners nationwide, the upshot of Knick is that property owners may now file a federal takings claim directly in federal court, bypassing state procedures when the claimant believes it strategically appropriate. Government counsel should take note and expect many more takings claims to be brought in federal courts in the future.

In the course of its ruling, the Knick court sought to keep the takings clause from being relegated "to the status of a poor relation among the provision of the Bill of Rights." Public interest cases and certiorari petitions filed in 2019 helped draw the Supreme Court's attention to two of the most persistent and contentious issues in the field.

In the first, Cherk v. County of Marin, the court was asked to consider when so-called "affordable housing" ordinances run afoul of the unconstitutional conditions doctrine, represented by the Nollan v. California Coastal Commission, Dolan v. City of Tigard, and Koontz v. St. John's Water Management District line of cases. In the second, the court was presented with an opportunity to reconsider Penn Central Transportation Company v. New York City, the prevailing test of government liability for regulatory takings -- generally considered very bad for property owners. The court declined both cases, although each was curiously rescheduled or relisted for conference by the justices three times before denial. One can only surmise the reasons for the extended consideration of the petitions.

Cherk involved Marin County's affordable housing ordinance, similar in many respects to ordinances that have been enacted nationwide in hundreds of jurisdictions and nearly 200 in California alone. Marin's ordinance imposed a substantial "affordable housing" fee (or alternative dedications of various property interests aimed at facilitating the public purpose of affordable housing) as a condition of approving a permit to divide a residential lot into two. The government failed to make any finding that the exactions mitigated any adverse impacts of the proposed development. This type of ordinance runs headlong into the central concern of the unconstitutional conditions doctrine, which the U.S. Supreme Court has described as "the risk that the government may use its substantial power and discretion in land-use permitting to pursue governmental ends that lack and essential nexus and rough proportionality to the effects of the proposed new use of the specific property at issue."

To put it simply: Landowners are over a barrel and vulnerable to governmental demands for money or property when they apply for a permit to use their property. A property owner will often knuckle under, even to an extortionate exaction rather than resist and seek compensation due under the takings clause. The cost of standing firm is often too high. This concern has only become more urgent since the California Supreme Court's 2015 endorsement of such schemes in California Building Industry Association v. San Jose. Alas, Cherk shows that even in the wake of Knick and its soaring rhetoric about property rights, the Court appears not yet ready to hear the issue.

Smyth v. Conservation Conservation Commission of Falmouth raised the severe defects of the Penn Central doctrine -- the Supreme Court's modern regulatory takings test -- to the court's attention. Patricia Smyth owned vacant lot in a mature, built-out residential community in coastal Massachusetts. She was denied a permit to build an ordinary residential home on the lot -- similar in size, kind, and location to her neighbors -- stripping the land of 91.5% of its value. Its only remaining uses were as a potential playground or park, or as a yard for a neighboring property. A trial court jury awarded Ms. Smyth $640,000 for the damage wrought by the state's permit denial.

The Massachusetts appellate court overturned, however, on the grounds that Penn Central's various "factors" lined up for the conclusion that the state agency's actions were not a taking as a matter of law. Penn Central has been flayed for decades as incoherent by scholars on all sides of the property rights debate, described variously as a "barely coherent potpourri of vaguely specified" (Radford, R.S. & Wake, Luke A., "Deciphering and Extrapolating: Searching for Sense in Penn Central," 38 Ecology L.Q. 731, 735 (2011)) factors and "permitting purely subjective results, with the conflicting precedents simply available as makeweights that may fit pre-existing value judgments." Oakes, James L., "Property Rights" in Constitutional Analysis Today, 56 Wash. L. Rev. 583, 613 (1981).

Despite an exceptionally clean vehicle for reconsidering and clarifying the doctrine, the Supreme Court denied the Smyth petition without comment after its several conference relistings and notable commentary by observers in the Supreme Court bar. Regulatory takings will for now remain a conceptual hash.

A fair reading of the Knick decision is that the Supreme Court has reinvigorated respect for property rights among federal courts. It remains for the next term and beyond for that spirit to manifest itself in substantive reform of older precedents that are notoriously hostile to property owners. 

PLF litigated the Knick case and filed the petitions for certiorari in the Cherk, California Building Industry Association and Smyth cases.