On July 23, 2018, the U.S. House of Representatives unanimously passed the Private Property Rights Protection Act of 2017 (H.R. 1689). Sponsored by Wisconsin Congressman F. James Sensenbrenner, Jr. and California Congresswoman Maxine Waters, the Act intends to address Kelo v. City of New London, the controversial 2005 U.S. Supreme Court decision that affirmed the right of a city to use the power of eminent domain to take and transfer property from one private party to another for the “public purpose” of economic development.
On March 5, 2018, the U.S. Supreme Court granted certiorari in Knick v. Township of Scott (Case No. 17-647) to address the requirement, established in Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 194-96 (1985), that landowners must first unsuccessfully seek compensation in state court before bringing a Fifth Amendment takings claim in federal court. No other category of plaintiffs desiring to vindicate their constitutional rights under 42 U.S.C. § 1983 is subject to this onerous requirement.
Early last summer the U.S. Supreme Court released its long-awaited, and deeply flawed decision in Murr v. Wisconsin, __ U.S. __ (2017). We wrote about this unfortunate new takings case here and in “Missed Opportunity In Takings Decision,” Daily Journal (July 13, 2017).
The short story is that the Murr family bought two adjacent parcels at separate times in the early 1960s near the St. Croix River in Wisconsin, a designated wild and scenic river. They built a small, 950-square foot cabin on one of the parcels and kept the other parcel vacant as an investment. The Murr children later acquired both parcels and sought to sell the vacant parcel in the 1990s to finance improvements to the rustic, 57-year old, cabin. But a Wisconsin statute and county zoning ordinance, enacted in the 1970s, prevented the Murrs from selling or developing the vacant parcel because it was smaller than the minimum size deemed suitable for development even though it has a half acre of developable land, meets all environmental regulations and setbacks, and is surrounded by development on similarly sized parcels. Because the parcel was still undeveloped, now held in common ownership, and deemed substandard, it was treated as “merged” with the developed parcel.
The United States Supreme Court has had numerous opportunities in recent years to address an important and unsettled issue under the Takings Clause: whether heightened scrutiny under Nollan, Dolan, and Koontz applies in cases where an alleged taking arises from a legislatively imposed condition rather than an administrative one. The Court’s most recent denial of certiorari in such a case occurred on October 30, 2017, in 616 Croft Ave., LLC v. City of West Hollywood (Case No. 16-1137).
616 Croft Ave. concerned the City of West Hollywood’s imposition of a $540,000 “in-lieu” affordable housing fee, under the City’s inclusionary housing ordinance, in connection with the development of an 11-unit condominium project. The case addressed the California Supreme Court’s denial of a petition to review a Second District Court of Appeal decision that upheld the legality of the fee pursuant to the state Supreme Court’s decision in California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015).
In Dryden Oaks, LLC v. San Diego County Regional Airport Authority, __ Cal.App.5th __ (October 19, 2017), the Fourth District Court of Appeal published a previously unpublished opinion addressing both regulatory takings and pre-condemnation damages claims. The case arose out of a complicated set of facts involving two properties near McClellan Palomar Airport in Carlsbad.
In short, in 2002 the City approved permits for both lots despite the San Diego County Regional Airport Authority’s determination the projects were incompatible with the airport. The developer completed construction of a commercial building on one of the lots in 2005, but the second permit expired in 2012 without commencement of any construction. The developer filed an application to restart the process for the second lot, but by that time the Authority had adopted an Airport Land Use Compatibility Plan that designated the property within a higher risk safety zone. Thus, despite its earlier decision to override the Authority’s objections under the predecessor plan to the ALUCP, the City now refused to do so.
In 2011, Pasadena was hit by a powerful storm carrying hurricane force winds that injured more than 5,000 City-owned trees, 2,000 of which were uprooted. During the course of the storm, an approximately 110 foot tall Canary Island pine tree located on City property fell on a private residence, causing severe property damage.
The homeowners’ insurer paid more than $700,000 in insurance benefits. As subrogee under the homeowners’ insurance policy, the insurer sued the City for inverse condemnation, under the California Constitution, on the theory that the City owned the tree and maintained and cared for it as part of the City’s tree protection regulations. The trial court agreed and found the City liable in inverse condemnation on the grounds that the tree that fell was a public improvement maintained for a public purpose, the damage to the residence was proximately caused by the improvements, and the City is strictly liable for the property damage. The court awarded the insurer approximately $800,000 in damages and $330,000 in costs.
On August 24, 2017, in Mercury Casualty Company v. City of Pasadena, __ Cal.App.5th __ (Case No. B266959 & B268452), the Court of Appeal for the Second Appellate District reversed the trial court judgment and cost order.
Martins Beach, near Half Moon Bay in the County of San Mateo, is the subject of protracted litigation on various fronts stemming from tech billionaire Vinod Khosla’s 2009, decision to change the public’s access to and use of Martins Beach by permanently closing and locking a gate to the public across Martins Beach Road, adding signs to the gate, changing the messages on a billboard on nearby Highway 1, and hiring security guards to deter the public from crossing or using the property to access the beach. From the 1930s or earlier, Khosla’s predecessor encouraged the public to use the road to access Martin’s Beach. They also erected the billboard, which invited the public to use the beach, and provided a general store, public toilets, and a parking area. For some of that time they charged a $.25 entry fee.
We wrote about one strand of the litigation last year—Friends of Martin’s Beach v. Martin’s Beach 1 LLC, 246 Cal.App.4th 1312 (2016)—in which the California Court of Appeal for the First Appellate District addressed an unincorporated association’s lawsuit seeking access to the coast at Martins Beach based on claimed rights of access under various theories. In Friends of Martins Beach, the Court of Appeal held that a plaintiff group had alleged facts sufficient to state a common law dedication claim and thus remanded that claim to the trial court. Because the Friends of Martin’s Beach case is still pending there, the existence of public access rights to Martins Beach is presently undetermined.
On June 23, 2017, the Supreme Court of the United States finally decided Murr v. Wisconsin, __ U.S. __ (2017) (Case No. 15-214), a case that addressed land use regulations that “merged” adjacent parcels (the first of which was developed with a cabin, and the second of which was undeveloped) into one, for environmental reasons, despite the fact they were separately acquired, owned, taxed. The regulations ultimately prevented the development or sale of the second, undeveloped parcel.
The case sought an answer to the fundamental question, in a regulatory taking case, whether the “parcel as a whole” concept described in Penn Central Transportation Company v. City of New York establishes a rule that two legally distinct, but commonly owned contiguous parcels, must be combined for takings analysis purposes? The State of Wisconsin argued for a rule that would tie the definition of the parcel to state law, considering the two parcels in this case merged under the challenged regulations. The landowners argued for a rule that the lot lines define the relevant parcel.
Last September we wrote about 616 Croft Ave., LLC v. City of West Hollywood, an opinion from the Court of Appeal for the Second Appellate District upholding a nearly $555,000 in-lieu fee on an 11-unit residential infill project because the fee was “related to the cost of constructing affordable housing units within the City.” Among other things, we noted that the case “underscores the ongoing need for the United States Supreme Court to finally address whether the heightened scrutiny of the Nollan, Dolan, and Koontz Fifth Amendment takings cases applies to legislatively imposed permit conditions.”
On December 21, 2016, the California Supreme Court denied a petition to review 616 Croft Ave., LLC. A petition for writ of certiorari was filed on March 15, 2017 (Case No. 16-1137), giving SCOTUS its opportunity to consider the case.
As we have previously reported, the California Supreme Court in Property Reserve, Inc. v. Superior Court (2016) 1 Cal.5th 151, ruled that the California statutes allowing precondemnation entry by the government to test and inspect property (Code Civ. Proc., §§1245.010 et seq.) are constitutionally valid, subject to reformation to permit a landowner to obtain a jury determination of damage caused by the entry. Having dealt with the issue of constitutionality of the precondemnation entry statutes, the Supreme Court remanded the matter to the Court of Appeal to resolve several remaining procedural issues.
The Court of Appeal’s opinion on remand, filed December 16, 2016, addresses those procedural issues and provides guidance as to how the Supreme Court’s holding will work in practice. The opinion on remand clarifies (i) that a landowner may seek discovery in connection with a petition for precondemnation entry, and the concurring opinion by Justice Blease (who dissented from the original Court of Appeal opinion) clarifies (ii) that in the event the government proceeds with acquisition of the property, the claim for precondemnation damage may be asserted by means of a cross-complaint in the main condemnation action.