Coalition for Property Rights

Key Property Rights Cases

KEY PROPERTY RIGHTS TERMS AND CASES:

Eminent Domain is the constitutional power that Federal, State, and Local Governments use when they wish to FORCE an Unwilling, Private Citizen to Sell Private Property to the Government. Condemnation is the name given to the typical process by which most Takings occur.

The Fifth Amendment of the U.S. Constitution states: “Nor shall Private Property be taken for Public Use, without Just Compensation.”

PUBLIC USE

The Clearest violation of the “Public Use” requirement is a Taking by the Government which serves a Purely Private Interest. For Example: Taking One Private Citizen’s property and giving it to Another Private Citizen, with absolutely NO Expectation that it benefit the public in anyway. However, Kelo v. City of New London was a U.S. Supreme Court that established that the term “Public Use” does NOT prohibit Taking property and Giving it to Private Entities, if there is indeed an assumed “Public Use” associated with the new use of the property.

Case Summary: http://www.oyez.org/cases/2000-2009/2004/2004_04_108

Entire Supreme Court Opinion: http://www.law.cornell.edu/supct/html/04-108.ZS.html

The term “Public Use” is interpreted by courts under what is known as Rational Basis Review. Under this type of review, a Court is extremely reluctant to go against decisions already made by the legislature. As long as the court can find a Legitimate State Purpose for the Taking, and the Property taken is Rationally Related to accomplishing that Purpose, the Court will likely agree with the Government’s decision to take the property. (Note that the court is not bound by those purposes stated by the legislature; the court can provide their own excuses for why the taking serves a legitimate purpose)

A Taking, or a Regulation amounting to a Taking, which Fails the Rational Basis Review will be found Unconstitutional. When found to be Unconstitutional, the Landowner can prevent the Taking altogether. However, if the Taking is found to be Constitutional, the result will be the Forced Sale of the Land, by the Private Property Owner to the Government, for Fair Market Value.

JUST COMPENSATION

Just Compensation means that the Government Must Pay the Fair Market Value of the Property Taken.

Conventional vs. Inverse Condemnation

In a typical or Conventional Condemnation, the government makes clear their intention to Take Private Property Before the actual Taking. The Government will Identify which Property or Properties it wishes to Take, and proceed with the Condemnation Process. This process can either lead to: an Agreement between the Private Property Owner and the Government, in which they settle on a fair price, OR, if there is a Disagreement, the matter may be brought into Court by the Government.

On the other hand, Inverse Condemnation is the name given to those situations where a Property Owner is forced to bring the matter before a court on his own. Inverse Condemnation is often the result of the Government proceeding with their plans WITHOUT consulting the Private Property Owner. These situations tend to arise when the Government (or a third party working under government authority): Physically Invades and/or Occupies Private Property or Enacts a Government Regulation that affects the Value or Use of the Land.

Categorical Takings vs. Non-Categorical Takings

Any action by the Government that causes a Physical Occupation or Invasion of Private Property, or deprives a Private Property Owner of ALL Economically Viable Uses of his Property will likely be a Categorical Taking. Categorical Takings of Private Property by the Government are often so self-evident and easily proven that the Government will have no defense or recourse but to pay the Property Owner (Note that this does NOT mean the Landowner will be able to end the occupation – Unless a Court finds the Occupation serves NO Legitimate State Purpose).

Physical Occupations and Invasions are always Categorical because they are easily proven by the existence of some physical evidence on the private property. Loretto v. Teleprompter Manhattan CATV is an example of an obvious physical occupation. A state law mandated that Loretto allow television cables be placed across her building’s roof. The court found that the law served a legitimate state purpose (providing cable access to the public), but that the physical presence of the cables was indeed a Taking and required Just Compensation.

Case Summary: http://en.wikipedia.org/wiki/Loretto_v._Teleprompter_Manhattan_CATV_Corp.

Entire Supreme Court Opinion: http://www.law.cornell.edu/supct/html/historics/USSC_CR_0458_0419_ZS.html

Lucas v. South Carolina Coastal Council is an example of a government regulation that resulted in a Taking because the regulation deprived the property of ALL Economically Viable Use of his property. A law passed to prevent beach erosion also prevented Mr. Lucas from building houses on the two lots he had recently purchased for $1 million. Because it was unlikely Lucas would ever recover his investment by selling to another owner (no one would buy now that the new law prevented ALL housing construction) the court ruled that Lucas’s property had been deprived of ALL Economically Viable Uses. This Regulation resulted in a Categorical Taking because the Regulation had Deprived the Land of ALL Value.

Case Summary: http://www.oyez.org/cases/1990-1999/1991/1991_91_453

Entire Supreme Court Opinion: http://www.law.cornell.edu/supct/html/historics/USSC_CR_0505_1003_ZS.html

Non-Categorical Takings are NOT as clear-cut as Categorical Takings and can be subject to a substantially greater weighing of issues and facts before an actual Taking is proven. In Penn Central v. New York the U.S. Supreme Court noted that prior case history does NOT provide any specific formula for dealing with Regulatory Takings and that each case will vary depending on the facts of that specific case. Non-Categorical Takings are the result of Regulations that do Not Deprive an Owner of ALL Economically Viable Uses but still create complicated land-use issues and restrictions. However, the U.S. Supreme court noted that when a “Regulation goes too far it will be recognized as a Taking.” Pennsylvania Coal v. Mahon. Deciding when a “Regulation has gone too far” is the key issue, and makes each Non-Categorical Takings case separate and distinct from every other Takings case.

The Key Factors in those cases that lack Total Deprivation of ALL Economically Viable Uses are: “The Character of the [Government’s] Action and the Nature and Extent of the Interference with Rights in the Parcel as a WHOLE.” Essentially, these Key Factors result in a Balancing Test; the Court weighs the Regulation’s Purpose (and whether the Purpose is legitimate and the Regulation rationally related to that Purpose) Against the Burden placed on the Property Owner. It is NOT Enough for the Landowner to show that his Property has lost SOME Value – though it is a factor. In some cases the Loss of Value has approached 90% and yet NO Taking was Found! “Anything Less than a ‘Complete Elimination of Value’ or a ‘Total Loss’” requires this type of balancing test – sometimes known as a Penn Central Analysis.

The Penn Central case involved a dispute between the city of New York and the Penn Central Railroad. The Railroad Co. wanted to utilize their existing structure (Grand Central Station) to add a 55-story office building atop the station. However, the City of New York had already declared Grand Central Station a historic landmark, and thus would not allow Penn Central RR to go ahead with the modifications to THEIR building. The Railroad argued that the Restriction on their ability to make the modifications was a Taking.

However, the Supreme Court found that the Regulations restricting Penn Central did NOT create a Taking. The Supreme Court held that the Regulations did NOT interfere with the current use of Grand Central Station – the station could continue with its traditional purpose. Essentially this meant that Penn Central was NOT Deprived of ALL Economically Viable Uses. The Supreme Court also found that the Restrictions had NOT ruled out ALL Potential Modifications, but rather only the specific modifications Penn Central had already chosen. Thus, Penn Central Railroad could Neither recover Just Compensation Nor move ahead with their plans.

Case Summary: http://www.oyez.org/cases/1970-1979/1977/1977_77_444

Entire Supreme Court Opinion: http://www.law.cornell.edu/supct/html/historics/USSC_CR_0438_0104_ZS.html

Also covered in Penn Central are the concepts of: Reasonable or Distinct Investment Backed Expectations, and Viewing the Impact on the Property as a Whole

Reasonable or Distinct Investment-Backed Expectations are best illustrated by comparing an undeveloped property with one that has had significant new construction. Say a Private Property Owner has owned an empty lot next to a national wildlife preserve for the last forty years – which he only uses for bird-watching – and a subsequent Regulation is enacted which prohibits ANY construction within 1 mile of the wildlife preserve. If the Private Property Owner claims a Regulatory Taking has occurred on his empty lot, the Court might not find that the Property Owner has suffered a Taking. After all, the property is still capable of serving the same purpose it has served for the Property Owner for the last forty years. And there is no reason to believe the Property Owner cannot sell the Property to Another Purchaser to use in the same manner.

But if the Same Owner had decided that he was going to build his retirement house on the property, and had started the construction BEFORE the Regulation was enacted, the Court would likely allow the Owner to recoup the loss of any funds invested in the actual construction of the house. The portion of the house that has been completed before the Regulation is enacted represents the Owner’s Distinct Investment-Backed Expectations. It is VERY Important to note that a Property Owner CANNOT Recover simply because of his intentions or plans to build on the land or make improvements. There MUST BE ACTUAL PHYSICAL ALTERATIONS TO THE PROPERTY.

Another concept covered in Penn Central and related to the balancing test is the impact on the property as a WHOLE. In Penn Central it was noted that the Railroad was not deprived of their ability to continue to operate their station. The Regulation refused Penn Central the right to ADD-ON to the Station. Furthermore, the Regulation arguably did Not Refuse ALL Additions, only those proposed thus far, because they were not in keeping with the ideals of historic preservation. A further Example of how a Court views the Impact on the Property as a WHOLE comes from Palazzolo v. Rhode Island. In Palazzolo the Supreme Court noted that although a Portion of the Property was affected by a Regulation prohibiting the filling of marshland, there were still Economically Viable Uses because eighteen acres of the property were untouched by the Regulation.

However, Palazzolo is best known for the Supreme Court finding that a Purchaser of Land is NOT Prohibited from Challenging Regulations which were in place BEFORE he Bought the Property. An Unjust Taking Remains Unjust, despite the Passage of Title in the Property.

Temporary Takings

In some instances a Regulation may cause a Temporary Halt of ALL Economically Viable Uses of Property for a Limited Period of Time. Compensation for Temporary Takings is dependent on whether the Halt is viewed as a Typical Delay or Interruption (such as “delays in obtaining building permits, changes in zoning ordinances, variances, and the like”), or whether the Delay is Undue or Unnecessary. In Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency a moratorium on nearly ALL Development was placed on land around Lake Tahoe. The moratorium lasted nearly three years and was enacted for the purpose of developing a comprehensive land-use plan which sought to maintain the “uniquely beautiful” area.

It was argued that this was a Taking requiring Just Compensation, but the Supreme Court noted that the land regains its Economic Viability after the Moratorium is over and any challenge will have to meet the Penn Central Analysis. The Court pointed out that Property is Measured by its physical boundaries and the Term of Years for the Owner’s Interest. Property is NOT Divisible by periods of time less than the Owner’s interest, so there can be NO Argument that Every Delay is Always a Taking. In other words, even though the Land was completely restricted for nearly three years, such a restriction is not sufficient by itself to require compensation. The Tahoe-Sierra case was sent back to a lower court for a Penn Central Analysis

Ripeness

Ripeness is the requirement that, before a Private Property Owner can bring an Inverse Condemnation claim before a court, he must have exhausted all available channels for a remedy provided by the administrative body which is responsible for the Regulatory Taking.

KEY FEDERAL CASES:

Kelo v. City of New London

Case Summary: http://www.oyez.org/cases/2000-2009/2004/2004_04_108

Entire Supreme Court Opinion: http://www.law.cornell.edu/supct/html/04-108.ZS.html

Loretto v. Teleprompter Manhattan CATV

Case Summary: http://en.wikipedia.org/wiki/Loretto_v._Teleprompter_Manhattan_CATV_Corp.

Entire Supreme Court Opinion: http://www.law.cornell.edu/supct/html/historics/USSC_CR_0458_0419_ZS.html

Hadacheck v. Sebastian

Case Summary: http://en.wikipedia.org/wiki/Hadacheck_v._Sebastian

Pennsylvania Coal v. Mahon

Case Summary: http://www.oyez.org/cases/1901-1939/1922/1922_549

Entire Supreme Court Opinion: