In Pennington v. Gwinnett County, the Georgia Court of Appeals has obliquely revisited the endlessly interesting question of whether the government can “take” private contract rights. This case was a laydown for the government, but it still provides a useful opportunity to highlight how difficult it is to prevail against the government in this type of takings case. Read the rest of this entry »
In Murr v. State of Wisconsin, the Wisconsin Court of Appeals has offered an instructive decision on how the parcel-as-a-whole rule applies to two contiguous, legally subdivided lots. Applying the traditional parcel-as-whole-rule in this context, the Wisconsin Court of Appeals affirmed a circuit court decision rejecting the owners’ claim that they suffered a taking as a result of a restriction on their ability to develop the (combined) lots. The decision also represents an interesting application of the Wisconsin Supreme Court’s landmark decision in Just v. Marinette County, 201 N.W.2d 761 (1972). Read the rest of this entry »
The Alaska Supreme Court issued a troubling decision on November 28, 2014, in Brewer v State, reversing a trial court ruling absolving the State of liability under the Alaska Takings Clause for property damage caused by State firefighters in a successful effort to protect the plaintiffs’ properties from being consumed by wildfire. In the summer of 2009, a major fire engulfed hundreds of thousands of acres of forestland south of Fairbanks. In order to protect the plaintiffs’ structures from the approaching fire, firefighters lit a “backfire” on plaintiffs’ land in order to burn away combustible vegetation and deprive the oncoming fire of fuel. The tactic worked, because the fire passed through the plaintiffs’ subdivision without destroying the plaintiffs’ buildings. Read the rest of this entry »
The mischief threatened by the Supreme Court’s strikingly incoherent decision in Koontz v. St John’s Water Management District continues to reverberate in the lower courts. The latest for instance is the October 21, 2014, decision by the federal District Court for the Northern District of California in Levin v. City & County of San Francisco. The Court (Breyer, Charles, J.) ruled that a recently enacted San Francisco ordinance requiring landlords who withdraw from the rent-controlled rental market to make a lump sum payment to displaced tenants constitutes a taking under the Nollan/Dolan/Koontz trifecta. Read the rest of this entry »
On September 30, 2014, the federal District Court for the District of Columbia let the first shoe drop in the controversial takings litigation based on the federal government’s bailout of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). In Perry Capital, LLC v. Lee, the District Court (Judge Royce Lamberth) rejected stockholder claims that the decision by the Federal Housing Finance Agency (“FHFA”) to virtually wipe out the stockholders’ equity in these companies resulted in a compensable taking. An appeal will surely follow.
In 2008, during the so-called Great Recession, after Fannie Mae and Freddie Mac had suffered serious financial losses as a result of widespread mortgage defaults, the FHFA placed the companies into a conservatorship. The terms of the conservatorship evolved over time. In 2012, the companies and the FHFA entered into an agreement that required the companies, in consideration for the infusion of taxpayer dollars, to pay a quarterly dividend to the Treasury Department equal to the entire worth of the companies, minus only a small reserve that shrinks to zero over time. Various shareholders, including some hedge funds that purchased shares in the companies at a deep discount, brought suit seeking just compensation for the taking of their stakes in the companies. (The lawsuit might have proceeded in the District Court, rather than the U.S. Court of Federal Claims, because the plaintiffs framed their case as a class action suit under the Little Tucker Act.)
Judge Lamberth rejected the takings claim on the ground that the plaintiffs lacked a protected property based on their stock in the companies given that the shareholders were at all times exposed to the risk, based on pre-existing federal regulations, that they might lose their investments if and when the companies were placed in a conservatorship. Relying on several Federal Circuit precedents involving similar cases, the District Court ruled that the “shareholders necessarily lack the right to exclude the government from their investment when FHFA places the [companies] under governmental control—e.g., into conservatorship.” In addition, and in the alternative, the Court ruled, emphasizing the plaintiffs’ lack of reasonable investment-backed expectations, that the plaintiffs’ takings claims failed under the Penn Central analysis.
For a withering critique of this litigation – and the similar AIG lawsuit – see Stephen Ratner’s column in the NY Times.
Illustrating the principle that voluntariness is a defense to a takings claim, the U.S. Court of Appeals for the Eleventh Circuit recently ruled that a Florida hospital could not challenge a cap on reimbursements for providing medical treatment to federal detainees because the hospital voluntarily subjected itself to the requirement to provide medical care according to these terms. The decision in Baker County Medical Services, Inc. v. U.S. Attorney General was issued on August 14, 2014. Read the rest of this entry »
The California Court of Appeals has issued an interesting decision rejecting a takings claim based on restrictions imposed by the California Coastal Commission on landowners’ alleged “right to defend” their properties from coastal erosion. Following a serious storm that destroyed erosion control structures protecting two neighboring properties on the coastal bluff in Encinitas, California, the Commission granted the owners permission to construct new coastal erosion structures. However, the Commission took the (relatively new and unusual) step of limiting the permits for the new structures to twenty years, giving rise to the takings issue in the case. Read the rest of this entry »
Last week, in Dimare Fresh, Inc. v. United States, the U.S. Court of Federal Claims affirmed that, after all, there really are some categorical limits to takings liability. The case arose from a public advisory issued by the Food and Drug Administration identifying certain types of tomatoes as the apparent source of a salmonella outbreak – a link that was ultimately demonstrated not to exist. Tomato producers sued under the Takings Clause seeking just compensation for the economic losses they suffered following collapse of the market for tomatoes as a result of the FDA’s public warning. The claims court, citing a persuasive pile of precedent, dismissed the claim, relying on the following principle: “A regulatory takings claim is not plausible and cannot proceed when the government action at issue has no legal effect on the plaintiff’s property interest. Advisory pronouncements, even those with significant financial impact on the marketplace, are not enough to effect a taking of property under the Fifth Amendment.” Plaintiff’s counsel has vowed an appeal.
On Friday, September 19, 2014, the 17th Annual Conference on Litigating Takings Challenges to Land Use and Environmental Regulations will be held at UC Davis School of Law in Davis, California. The event is sponsored by Vermont Law School, UC Davis School of Law, Georgetown University Law Center and many others. The speakers include numerous experts from academia as well attorneys from the U.S. Department of Justice, the U.S. Army Corps of Engineers, the Congressional Research Service, the California Attorney General’s Office, the New York State Governor’s Office of Storm Recovery, the California Coastal Commission, the American Securitization Forum, as well as private and public interest practice.
The conference will feature a keynote “Appreciation of Joe Sax,” presented by Holly Doremus, who has the honor of sitting in Joe’s former seat, the James H. House and Hiram H. Hurd Professor of Environmental Regulation at UC Berkeley. Conference panels will address the long-term doctrinal and practical implications of Koontz, the latest permutations on the parcel as a whole issue, the controversial idea of “taking” underwater mortgages, Brandt and the rails to trails program, takings and water management, and the takings implications of adapting to sea level rise caused by climate change. Details are available here
Space is still available at the conference (go here to register). In addition, copies of the conference papers and audio recordings will be available after the conference. Articles based on conference papers will be published in an upcoming edition of the Vermont Law Review
The recent decision by the federal District Court for the Eastern District of North Carolina in the case of Town of Nags Head v. Toloczko, provides some insight into the potential obstacles presented by the Takings Clause to the use of nuisance-abatement ordinances to effect orderly retreat from eroding shores in the era of climate change.
In November 2009, a powerful storm hit Nags Head, North Carolina, including the Toloczkos’ beachfront cottage. The storm caused considerable damage to the property, including leaving the septic system exposed. In addition, while erosion had been a chronic problem for the Toloczkos, the 2009 storm substantially eroded the remaining beach in front of their property, leaving the cottage on the dry sand portion of the beach.
The Town declared the cottage a “nuisance” under a local ordinance which defined a storm- or erosion-damaged coastal structure a “public nuisance” when (1) the structure is “in danger of collapsing,” (2) the damaged structure or debris creates a “likelihood of personal or property damage,” or (3) the structure or debris “is located in whole or in part in a public trust area or public land.” In response to the Town’s request, the Toloczkos declined to remove the damaged cottage. Citing the second and third provisions of the ordinance, the Town filed suit seeking to abate the nuisance and penalties for failure to comply with the removal order. (Subsequently, following completion of a beach renourishment project, the Town concluded that the cottage could safely remain in place but continued to pursue recovery of civil penalties.) The Toloczkos filed counterclaims alleging, among other things, a taking of their property. Read the rest of this entry »