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Supreme Court Takes Back Takings: Knick v. Township of Scott

The Supreme Court recently issued its long-awaited ruling in Knick v. Township of Scott, concluding that a plaintiff alleging that local governments have violated the Takings Clause under the Fifth Amendment may seek relief directly in federal court, as a constitutional violation occurs at the time of the taking without payment, even if just compensation is subsequently paid.[1] In the 5-4 majority opinion, the Court overruled, in part, Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), a 34-year old precedent that established a federal claim was not ripe until a state takings plaintiff exhausted its remedies under state law. The decision, among other things, eliminates the “Catch 22” dilemma created by Williamson in which a state judgment denying the takings claim precluded the federal claim from ever becoming ripe because of the preclusive effect of the state judgment under the federal full faith and credit statute (28 U.S.C. §1738). The ramifications of the decision remain to be seen, but property owners will certainly welcome the readier access to the federal courts for takings claims.

In Knick, the Township of Scott, Pennsylvania passed an ordinance requiring that “[a]ll cemeteries … be kept open and accessible to the general public during daylight hours”. The ordinance further defined a “cemetery” as “[a] place or area of ground, whether contained on private or public property, which has been set apart for or otherwise utilized as a burial place for deceased human beings.” Petitioner Knick owned rural property that included a small, private family graveyard. In 2013, the Township notified Knick that she was violating the ordinance. In response, Knick filed suit in state court seeking declaratory and injunctive relief, arguing that the ordinance effected a taking of her property. Knick did not, however, file an inverse condemnation suit under state law to seek compensation for such taking.

The Township withdrew its violation notice and agreed to stay enforcement of the ordinance. Subsequently, the trial court declined to rule on Knick’s declaratory and injunctive relief action, reasoning that without an ongoing enforcement action, Knick could not demonstrate the irreparable harm element necessary for equitable relief. Knick then sought relief in Federal District Court under 42 U.S.C. §1983, alleging that the ordinance violated the Takings Clause of the Fifth Amendment.[2] Citing Williamson County, the District Court dismissed Knick’s claim because she failed to pursue an inverse condemnation action in state court. The Third Circuit Court of Appeals affirmed this ruling, and the Supreme Court granted certiorari to reconsider the holding of Williamson County.[3]

In Williamson County, a property developer filed a claim in federal district court under Section 1983, asserting that the local zoning authority’s rejection of its proposal for a new subdivision after application of various zoning laws and regulations effected a taking of such property. The Supreme Court granted certiorari to address whether the Fifth Amendment entitles a property owner to just compensation when a regulation temporarily deprives him of the use of his property.[4] The Williamson County Court concluded, in relevant part, that state takings plaintiffs were required to exhaust the compensation remedies provided by a state government before the issue was “ripe” for review in federal court.[5]

The Supreme Court advanced several arguments to bolster its conclusion in Knick that the Williamson County state-litigation requirement imposed an unjustifiable burden and conflicted with the Court’s takings jurisprudence. First, the majority stated that the Williamson County holding was not consistent with precedent or workable for litigants, as illuminated by San Remo Hotel, L.P. v. City and County of San Francisco, 545 U.S. 323 (2005). In San Remo Hotel, the plaintiffs complied with the requirements of Williamson County, bringing suit in state court under the Takings Clause of the state constitution and reserving their rights to file a Fifth Amendment claim in federal court if the state suit proved unsuccessful. After losing in state court, the plaintiffs filed suit in federal court, only to discover that their federal claims were barred by the full faith and credit statute, 28 U.S.C. §1738, which required the federal court to give preclusive effect to the state court’s decision. The adverse state court action that gave rise to a ripe federal takings claim under Williamson Countysimultaneously barred the federal claim.[6] As the Knick Court observed, the “state-litigation requirement relegates the Takings Clause ‘to the status of a poor relation’ among the provisions of the Bill of Rights. Plaintiffs asserting 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.’”[7]

The Knick Court further posited that the text of the Takings Clause supported the conclusion that a constitutional violation arises as soon as the government takes private property for public use without paying for it. As the majority pointed out: “The [Takings] 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.’”[8] In short, because of the “self-executing character” of the Takings Clause with respect to compensation, a property owner has a Fifth Amendment claim for just compensation at the time of the taking without payment.[9] In other words, the landowner suffers a constitutional violation at the time of the taking without payment, regardless of the availability of a state law remedy to correct the violation.[10] The dissent arrived at the opposite conclusion in reviewing the “spare” text of the Takings Clause, remarking that the Takings Clause does not state, “Nor shall private property be taken for public use, without advance or contemporaneous payment of just compensation, notwithstanding ordinary procedures”; and therefore, interpreting the Takings Clause does not lend itself more persuasively to either Williamson County or the Knick majority.[11]Similarly, the dissent objected to the Court’s contrary position regarding when a Fifth Amendment violation arises, upholding Williamson County’s tenet that “payment need not be paid in advance of or concurrently with a taking as long as ‘reasonable, certain and adequate provision for obtaining compensation’ exist at the time of the taking.”[12]

The Knick Court also found support for its holding in the body of takings jurisprudence, including Jacobs v. United States, 290 U.S. 13 (1933) (allowing a property owner to directly bring a Fifth Amendment claim for compensation upon the taking of the property, without pursuing, for example, the state-litigation requirement as contemplated in Williamson County)[13]; First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U. S. 304 (1987) (holding that a property owner acquires an irrevocable right to just compensation immediately upon a taking)[14], and a narrower reading of Cherokee Nation v. Southern Kansas R. Co., 135 U. S. 641 (1890). While both the majority and dissent agreed with the holding in Cherokee Nation that a property owner “is entitled to reasonable, certain and adequate provision for obtaining compensation after a taking,” the majority noted the Cherokee Nation line of cases mostly involved claims for injunctive relief because there was no adequate remedy for damages, and against this backdrop interpreted its holding to mean that even though there may be a violation of the Takings Clause (if such compensation was not available at the time of the taking), a property owner is not therefore entitled to injunctive relief when such a reasonable, certain and adequate provision exists.[15] The dissent dismissed the majority’s “creativity”, and outlined its interpretation of these cases to simply demonstrate that the Takings Clause does not demand advance payment, without regard to what kind of relief is requested (injunctive or otherwise).[16]

With respect to whether overruling Williamson County would trample on the doctrine of stare decisis, the majority asserted that (i) the Williamson County reasoning was “exceptionally ill founded” and conflicted with much of the Court’s takings jurisprudence (e.g., Jacobs and First English)[17]; (ii) the state-litigation requirement was originally an element of a takings claim, which became relegated to a “‘prudential’ ripeness rule, and which evolved into other novel theories, thus “undermining the force of stare decisis”[18]; (iii) the state-litigation requirement was unworkable in practice, as showcased by the San Remo preclusion trap; and (iv) there are no reliance interests on the state-litigation requirement, effectively “reducing” the force of stare decisis.[19] The dissent cautioned against the majority’s easy dismissal of Williamson County, reminding the Court that purging of precedent demands “a special justification – over and above the belief that the precedent was wrongly decided.”[20] Instead, the dissent asserted Congress can and should resolve the San Remo preclusion trap as evidence that the majority failed to meet this threshold. [21] The dissent further warned that with the Knick ruling, the very routine governmental function of land-use regulation may have the unintended consequence of making government employees carrying out their assigned duties “constitutional malefactors” if such regulations do not provide compensatory remedies upon the taking.”[22] In dismissing this assertion, that majority reasoned that “[its] holding . . . will simply allow into federal court takings claims that otherwise would have been brought as inverse condemnation suits in state court,”[23] and as long as governments provide just compensation remedies “as they have been for nearly 150 years”, federal courts will neither render government regulations invalid as constitutional, nor resort to injunctive relief.[24]

Finally, the dissent admonished that the majority’s holding upsets the balance of judicial federalism by opening the floodgates for all local, state and federal takings plaintiffs to directly bring their claims to federal court, which are not the best suited to handle such claims as the first instance of review.[25] The majority noted, however, that “since the Civil Rights Act of 1871, part of judicial federalism has been the availability of a federal cause of action when a local government violates the Constitution;” this avenue is now provided under Knick. [26]

In sum: with the overturning of the Williamson County state-litigation requirement, if a taking occurs without just compensation, any takings plaintiff (federal state or local) may bring a Fifth Amendment claim in federal court without first exhausting available state and local remedies; a result many property owners nationwide will welcome.


[1] All citations in this post to Rose Mary Knick v. Township of Scott, 588 U.S. ___ (2019) refer to the slip opinion.

[2] Section 1983 provides in relevant part: “Every person who, under color of any statute, ordinance, regulation, custom or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be to the party injured in an action at law[.]”

[3] Knick at 4.

[4] Williamson County at 184.

[5] Id., at 194 (citing Regional Rail Reorganization Act Cases, 419 U.S. 102, 124-125 (1974) and Cherokee Nation v. Southern Kansas R. Co., 135 U.S. 641, 659 (1890)). The Williamson CountyCourt also held that although a regulatory taking was subject to just compensation, such payment need not be paid in advance of or concurrently with a taking as long as ‘reasonable, certain and adequate provision for obtaining compensation’ exist at the time of the taking. Id.

[6] Knick at 6.

[7] Knick at 6.

[8] Knick at 6-7 (analogizing a Fifth Amendment claim against the state under 42 U.S.C. §1983 to a Fifth Amendment claim against the federal government under the Tucker Act, 28 U.S.C. §1491).

[9] Id. at 9.

[10] Id. at 10.

[11] Knick (Kagan, J., dissenting) at 7-8.

[12] Williamson County at 194; see Knick (Kagan, J., dissenting) at 3.

[13] Knick at 8-9.

[14] Knick at 9-10.

[15] Knick at 16.

[16] Knick (Kagan, J., dissenting) at 8-9.

[17] Knick at 20-21.

[18] Id. at 21-22.

[19] Knick at 23.

[20] Knick (Kagan, J., dissenting) at 16.

[21] Knick (Kagan, J., dissenting) at 16.

[22] Id. at 12-13.

[23] Knick at 23.

[24] Id.

[25] Knick (Kagan, J., dissenting) at 15.

[26] Knick at Page 19 n. 8.

 

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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Yvette J. Mabbun Sheppard Mullin Partner Dallas Real Estate and Land Use Commercial Leasing Real Estate Acquisitions and Dispositions
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Yvette J. Mabbun is a partner in the Real Estate, Land Use and Environmental Practice Group in the firm's Dallas office.

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Kelly M. Vazhappilly is an associate in the Real Estate, Land Use and Environmental Practice Group in the firm’s Dallas office.

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Kelly has extensive experience in commercial real estate transactions on a national and local basis, including negotiating purchase and sale, management, leasing, and related agreements in the operation and disposition of a wide variety of asset classes. Her experiences include:

  • Representing Commercial Mortgage-Backed Securities Trusts, Special Servicers, SBA Lenders/Servicers, and financial institutions in receivership and REO transactions.

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