The scope of “background principles”
Posted: August 16, 2014 Filed under: Meaning of Property Comments Off on The scope of “background principles”The Second Circuit’s August 1, 2014, decision in 1256 Hertel Ave. Associates, LLC v. Calloway, illustrates a not uncommon problem in takings law – how the straightforward application of the Supreme Court’s established takings rules sometimes leads to, or at least suggests, problematic outcomes, and how creative courts sometimes avoid the problem. Read the rest of this entry »
Lost Tree Revisited
Posted: August 12, 2014 Filed under: Regulatory Takings Comments Off on Lost Tree RevisitedThe “parcel as a whole rule” has long been one of the few ironclad rules one could count on in takings litigation. But in a controversial decision issued on January 1, 2013, in Lost Tree Acres v. United States, the U.S. Court of Appeals for the Federal Circuit adopted a novel approach to the parcel issue that seemed to knock everything into a cocked hat. But it turns out the U.S. Department of Justice believes there is still more to talk about in the Lost Tree case.
The case arose from the U.S. Army Corps of Engineers’ denial of a CWA section 404 permit to fill approximately 5 acres of tidal wetlands and submerged lands on the Atlantic coast of central Florida for residential development. The parcel at issue is a tiny fraction of a larger 1300-acre real estate holding the plaintiff purchased and developed over a period of several decades. Thus, the 5-acre parcel was the last potentially developable portion of an essentially complete, highly successful real estate development. Notwithstanding the fact that a court would normally treat the entire 1300-acre holding as the relevant parcel as a whole, the Federal Circuit ruled that the 5-acre property was the relevant parcel, essentially because plaintiff had “ignored” the possibility of developing this particular parcel for most of the development process and only focused on it when an unexpected opportunity arose to use wetlands mitigation credits in connection with the possible development of this last parcel. The Federal Circuit denied the United States’ interlocutory rehearing petition on the parcel issue. On remand, the claims court, applying the Federal Circuit’s narrow definition of the relevant parcel, found a taking and entered a judgment in favor of plaintiff for $4.2 million (plus interest).
Now, the United State has filed a brief appealing the final judgment. While the parcel ruling represents law of the case for the purpose of review by a panel of the Federal Circuit, the Department of Justice brief “preserves” the government’s “disagreement with the earlier panel ruling,” observing that the “ruling remains subject to further appellate review,” apparently referring to potential en banc review or possibly even review in the U.S. Supreme Court. The brief argues in part:
The panel based its holding on Lost Tree’s subjective treatment
of Plat 57 as a “distinct economic unit[ ],” A24, rather than the objective
factors—e.g., physical contiguity, unity of purchase, and mutual
enhancement of value—that the Supreme Court has considered when
defining the parcel-as-a-whole. The panel opinion allows a developer to
artificially sever the regulated portion of a project from the unregulated
portion merely by developing the unregulated portion first and then
alleging a “temporal severance” between different phases of the project.
A24–25. In effect, the panel’s ruling permitted Lost Tree to “defin[e]
the property interest taken in terms of the very regulation being
challenged,” a “circular” approach that the Supreme Court and other
courts have “consistently rejected.” Tahoe-Sierra, 535 U.S. at 331; see
also, e.g., Zealy v. City of Waukesha, 548 N.W.2d 528, 533 (Wisc. 1996).
The proceedings on remand highlighted the flaws in the panel’s holding.
It is perverse that Lost Tree’s vociferous denial of investment backed
expectations—a factor of “particular significance” to the takings
inquiry, Penn Central, 438 U.S. at 124—was precisely what allowed the
company to circumvent Penn Central and “shoehorn its claim into [the
Lucas] analysis” before the trial court. Concrete Pipe, 508 U.S. at 643;
see, e.g., A782 (plaintiff’s summary judgment reply brief) (“Lost Tree did
not have any economic expectations for Plat 57 until 2001–02, and
therefore before that time Lost Tree could not and did not consider the
value of Plat 57 to be part of a ‘single economic unit’ with other property
in the vicinity.”).
Of course, the United States’ brief also cites several other asserted errors by the trial court, which might, depending on their resolution, obviate the need to reconsider the parcel issue.
This should be interesting to watch.
Is Government Failure to Act a Taking?
Posted: August 11, 2014 Filed under: Physical Takings Comments Off on Is Government Failure to Act a Taking?Can government inaction – as opposed to affirmative government action – give rise to takings liability? A recent decision by the Wisconsin Court of Appeals, in Fromm v. Village of Lake Denton, is the latest decision to embrace the general understanding that a government failure to act cannot support a viable claim under the Takings Clause. Read the rest of this entry »
Jury in Harvey Cedars Case Awards $300 [Corrected]
Posted: July 28, 2014 Filed under: Eminent Domain Comments Off on Jury in Harvey Cedars Case Awards $300 [Corrected]With a thank you to an observant follower of takings litigation blog, here is corrected version of a blog posted on a July 26 about the Harvey Cedars case. The initial post mistakenly confused the plaintiffs who recently received an award of $300 in one case, the Grossiers, with another set of plaintiffs, the Karans, who also sued the Borough Of Harvey Cedars on the same theory and whose original takings award was vacated by the New Jersey Supreme Court in the case of Borough of Harvey Cedars v. Karan. According to press reports, the Karans settled their lawsuit with the Borough for $1.00.
The corrected post reads as follows:
As takings mavens will recall, on May 13, 2013, the New Jersey Supreme Court issued its decision in Borough of Harvey Cedars v. Karan, reversing a $375,000 jury verdict for shorefront property owners on Long Beach Island who complained that a new artificial dune created as part of a government-financed storm-protection project obstructed their view of the ocean. The project involved the taking of a piece of plaintiffs’ lot (and land belonging to many other owners up and down the coast), and there was no dispute they were entitled to compensation for the taking of their property. The issue in the case was whether the just compensation award should be reduced to reflect the increase in value of the remainder of the property, including their house, due to the economically-valuable storm protection provided by the project. The lower courts had ruled that the storm protection was a “general benefit,” rather than a “special benefit,” and therefore could not be used to offset the compensation due for the taking. The Supreme Court reversed, casting aside the antiquated distinction special and general benefits, and adopting a new standard: “when a public project requires the partial taking of property, ‘just compensation’ to the owner must be based on a consideration of all relevant, reasonably calculable, and non-conjectural factors that either decrease or increase the value of the remaining property.” The Court remanded the case so that the trial court could hold a new trial using the correct standard.
According to local press reports from New Jersey, the other shoe has now dropped. In September 2013, according to one press report, the Karans settled their takings claim for $1.00. Now, according to another press report in late June, 2014, a jury awarded other property owners in a similar Harvey Cedars case the paltry sum of $300, implicitly concluding that the economic benefit conferred on the owners by the project was essentially equal to the economic loss they suffered as a result of the taking for the new artificial dune blocking their view. For the property owners’ sake, one has to hope that they had a contingent-fee arrangement for this long, disappointing trip through the judicial system. The jury’s award vindicates Governor Chris Christie, who famously railed against landowners seeking windfall takings awards based on post-Sandy beach protection/restoration projects. And now, whatever their other faults, beach protection and restoration projects can at least proceed without burdening taxpayers with the duty to pay unjust takings awards.
Takings and Mineral Interests
Posted: July 28, 2014 Filed under: Categorical Takings, Regulatory Takings Comments Off on Takings and Mineral InterestsRegulatory restrictions on the development of mineral resources produce some of the most interesting takings issues. For instance:
On July 1, 2014, in Schmude Oil, Inc. v. Department of Environmental Quality, the Michigan Court of Appeals affirmed rejection of a takings claim filed by an oil company based on regulatory restrictions on shale oil drilling. The claim arose from a decision by the Michigan Department of Environmental Quality to deny applications to drill several wells on a private inholding within the protected Pigeon River Country State Forest. Based largely on the fact that the company could still proceed with development of the resources using horizontal drilling (albeit at greater cost), the Court rejected both a Lucas per se takings claim and a Penn Central takings claim. While the Court’s analysis is quite conventional and unsurprising, the case is worth noting because it implicitly repudiates a controversial Court of Appeals decision of 20 years ago in Miller Bros. v. Department of Natural Resources, 513 N.W.2d 217 (Mi. Ct. App.), review denied, 447 Mich. 1038 (1994). In that case, involving essentially identical facts, the Court of Appeals upheld a finding of a taking, rejecting the government’s argument that the oil company’s ability to conduct horizontal drilling should have defeated the takings claim. The Miller Bros. court reasoned, “If allowed, directional drilling could not be used to extract all the oil and gas there may be under the protected area. Consequently, the [permit denial] completely deprived plaintiffs of all use of at least some portion of their property holdings in the protected area.” The new decision in Schmude Oil plainly rejects this logic. What a difference 20 years makes.
Earlier in the spring, on April 29, 2014, in Vane Minerals v. United States, the U.S. Court of Federal Claims rejected a takings claim arising from restrictions on uranium development on federal public lands in the West. The plaintiff claimed a property right in a uranium deposit based on the 1872 Mining Act. However, the Forest Service and BLM, acting pursuant to the Federal Land Policy & Management Act, “withdrew” the lands (in the vicinity of the Grand Canyon) from mineral entry – subject to “valid existing rights.” Thus, the issue was whether the plaintiff had established a valid existing right, and hence a compensable property interest, by the time the agencies withdrew the lands from mineral entry, The court ruled that the plaintiff lacked a valid existing right because it had failed to go through the necessary agency procedures to obtain a determination that it possessed a valid exiting right. Absent such a determination, the court ruled, the takings claim failed for lack of a predicate property interest as well as on ripeness grounds.
Jury in Harvey Cedars Case Awards $300 (!)
Posted: July 26, 2014 Filed under: Eminent Domain Comments Off on Jury in Harvey Cedars Case Awards $300 (!)As takings mavens will recall, on May 13, 2013, the New Jersey Supreme Court issued its decision in Borough of Harvey Cedars v. Karan, reversing a $375,000 jury verdict for shorefront property owners on Long Beach Island who complained that a new artificial dune created as part of a government-financed storm-protection project obstructed their view of the ocean. The project involved the taking of a piece of plaintiffs’ lot (and land belonging to many other owners up and down the coast), and there was no dispute they were entitled to compensation for the taking of their property. The issue in the case was whether the just compensation award should be reduced to reflect the increase in value of the remainder of the property, including their house, due to the economically-valuable storm protection provided by the project. The lower courts had ruled that the storm protection was a “general benefit,” rather than a “special benefit,” and therefore could not be used to offset the compensation due for the taking. The Supreme Court reversed, casting aside the antiquated distinction special and general benefits, and adopting a new standard: “when a public project requires the partial taking of property, ‘just compensation’ to the owner must be based on a consideration of all relevant, reasonably calculable, and non-conjectural factors that either decrease or increase the value of the remaining property.” The Court remanded the case so that the trial court could hold a new trial using the correct standard,
According to local press reports, the other shoe has now dropped, and a new jury has awarded the property owners in the Harvey Cedars case the paltry sum of $300, implicitly concluding that the economic benefit conferred on the property owners by the project was essentially equal to the economic loss they suffered as a result of the taking for the new artificial dune blocking their view. For the property owners’ sake, one has to hope that they had a contingent-fee arrangement for this long, disappointing trip through the judicial system. The jury’s award vindicates Governor Chris Christie, who famously railed against landowners seeking windfall takings awards based on post-Sandy beach protection/restoration projects. And now, whatever their other faults, beach protection and restoration projects can at least proceed without burdening taxpayers with the duty to pay unjust takings awards.
The Eleventh Circuit on Due Process Claims
Posted: July 21, 2014 Filed under: Due Process Comments Off on The Eleventh Circuit on Due Process ClaimsSubstantive due process challenges to local land use regulations have at least three notable features: (1) they can routinely be filed in federal court (rather than state court) in the first instance (unlike most regulatory taking claims); (2) they involve allegations that government acted in an arbitrary and unreasonable fashion (rather than allegations that government acted in a legitimate but economically burdensome fashion, as in a regulatory takings case), and (3) they almost always fail (given the high hurdle the Supreme Court has erected for invalidation of economic regulation under the Due Process Clause). Two recent decisions from the U.S. Court of Appeals for the Eleventh Circuit provide some additional, useful guidance on litigating due process challenges to local land use regulations. Read On …
Scott River Public Trust Ruling
Posted: July 18, 2014 Filed under: Water Comments Off on Scott River Public Trust RulingOn July 15, 2014, Judge Allen Sumner of the California Superior Court issued an important ruling in the case of Environmental Law Foundation v. State Water Resources Control Board, concluding that the California public trust doctrine constrains landowners’ rights to pump groundwater in a way that harms public trust uses of navigable waterways. The case arose from a longstanding dispute over the management of the Scott River in Siskiyou County in northern California. According to plaintiffs’ allegations, extensive pumping of hydrologically connected groundwater has depleted flows in the river, harming fisheries and adversely affecting recreational uses of the river. The Environmental Law Foundation and others filed suit seeking a declaratory judgment and an injunction requiring the County to consider the impact of groundwater pumping on public trust uses of the Scott River before issuing any new well permits.
Judge Sumner handed the plaintiffs a big win. He ruled that the public trust doctrine applies to the extraction of groundwater that causes harm to navigable waters harming the public’s right to use those navigable waters for trust purposes. He also ruled that the County has a duty, as a subdivision of the State, to consider how pumping hydrologically connected groundwater will affect public trust uses before issuing well permits. Importantly, in accord with the established understanding of the California public trust doctrine, the ruling does not necessarily bar the County, after taking the public trust into account, from issuing permits that may not promote, and indeed “may unavoidably harm,” public trust uses. But at the least, the County will have a duty, in accord with the National Audubon precedent, “to protect public trust uses whenever feasible.”
An appeal appears likely. Stay tuned.
Bailout Takings Cases
Posted: July 3, 2014 Filed under: Uncategorized | Tags: Contractual Rights, Federal Circuit Comments Off on Bailout Takings CasesOne might assume that “takings” would be a remote issue when it comes to the federal bailout of the automobile and financial services industries during the economic crisis of a few years ago. After all, if the government spent billions of taxpayer dollars to protect particular companies, and the economy as a whole, from going over a cliff, how could the government be accused of taking anything? But if one made this assumption, one would turn out to be wrong. Two ongoing cases illustrate the point. Read on …
Property Reserve case — Precondemnation Activities
Posted: June 27, 2014 Filed under: Eminent Domain | Tags: California, Loretto, Precondemnation Comments Off on Property Reserve case — Precondemnation ActivitiesOn Wednesday the California Supreme Court agreed to hear an interesting case addressing the types of surveys and investigations of private property the government can undertake without triggering takings liability before deciding whether the property is suitable for a planned public infrastructure project and should be taken by eminent domain for that purpose.
The case arises from California’s proposal to construct a tunnel or canal to divert fresh water from northern California around the Sacramento–San Joaquin River Delta to central and southern California. The project has enormous significance for meeting the water supply needs of many millions of Californians, and also raises a host of environmental concerns. The tunnel or canal would cross tens of thousands of acres of land held by several hundred different owners. To determine whether the project can be built as planned, the State proposes to do a series of geological explorations and environmental surveys of the proposed right on way. The question is whether these precondemnation activities themselves amount to takings. Read on …
Takings Litigation 