The court of appeal held that plaintiffs’ inverse condemnation and damages claims based on dredging in the bay adjacent to their properties was barred under the doctrine of res judicata based on a 1931 judgment conclusively establishing that the property alleged to have been taken or damaged was not owned by plaintiffs. SLPR, LLC v.

The State of Hawaii Land Use Commission’s reversion of 1,060 acres from a conditional urban land use classification to the prior agricultural use classification was not an unconstitutional taking because the landowner could still reap economic benefits from the property, the reclassification did not substantially affect the overall valuation or any potential sales, and the landowner should have anticipated reversion for failure to satisfy certain conditions. Bridge Aina Le’a, LLC v. State of Hawaii Land Use Commission, 950 F.3d 610 (2020).

In 1989, the Commission approved the then-owner’s request to convert 1,060 acres of largely vacant and barren, rocky lava-flow land from an agricultural to an urban use classification to accommodate development of a mixed residential community. Twenty-two years later, following numerous unfulfilled representations by various landowners concerning development of the land, the Commission ordered the land’s reversion. The Commission specifically found that the owners had failed to comply, and were unlikely to comply, with a condition of the changed classification requiring completion of 385 affordable housing units.

Property owner Bridge Aina Le’a, LLC sued the Commission alleging, among other things, that the reversion constituted an unconstitutional taking. The U.S. Court of Appeals for the Ninth Circuit analyzed the claim under the separate Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) and Penn Central Transportation Company v. City of New York, 438 U.S. 104 (1978) takings tests.
Continue Reading Reclassification of Land From Urban to Agricultural Did Not Result in Unconstitutional Regulatory Taking

The Ninth Circuit upheld dismissal of a takings claim as unripe because plaintiffs did not seek a timely exemption from the City’s requirements for conversion of property into condominium ownership. Pakdel v. City and County of San Francisco, No. 17-17504 (9th Cir., March 17, 2020).

The City of San Francisco allows conversion of property owned as a tenancy-in-common to condominium ownership on condition that the owner agree to offer any existing tenants lifetime leases in units within the converted property.  Plaintiffs purchased an interest in a tenancy-in-common property and rented their portion of the property to a tenant. When they later applied to convert their property to condominium ownership, plaintiffs initially agreed to offer their tenant a lifetime lease as a condition of receiving final conversion approval from the City. In November 2016, they signed an agreement with the City committing to offer the lifetime lease and specifically “covenant[ed] and agree[d] that [they] w[ould] not seek a waiver of the provisions of the [applicable ordinance] after that stage of the approval process.” In exchange, plaintiffs sought and received a partial refund of the permit conversion application fee.

Plaintiffs’ final conversion map was approved in December 2016. Six months later, they requested that the City either not require them to execute the lifetime lease or compensate them for the value of the lease interest. When the City refused to do either, plaintiffs sued, contending that the lifetime lease requirement violated the Takings Clause of the Fifth Amendment.
Continue Reading Takings Claim Unripe Where Property Owner Knowingly Failed to Seek Exemption from City Requirements

An inverse condemnation challenge to a permit denial is not ripe until the government makes a final determination regarding the scope of allowable development on a plaintiff’s property, the California Court of Appeal held in York v. City of Los Angeles, 33 Cal. App. 5th 1178 (2019).

The plaintiffs submitted an application to the

The United States Supreme Court overturned a 34-year-old precedent established by Williamson Planning Comm’n v. Hamilton Bank, holding that landowners pursuing takings claims need not seek redress in state courts before pursuing a federal claim.  Knick v. Township of Scott, No. 17–647 (U.S. S.Ct. Jun. 21, 2019).

The Knick decision arose from a

Twenty years was a reasonable period of time for a public agency to accept a right-of-way dedication offer by physically occupying the property. Prout v. Department of Transportation, 31 Cal. App. 5th 200 (2019).

Prout developed a 165-acre residential subdivision that fronted State Highway 12 in Calaveras County. In 1989, Prout submitted to the California Department of Transportation (Caltrans) an application for an encroachment permit to connect his subdivision’s private road to Highway 12. Caltrans approved the encroachment permit conditioned upon Prout dedicating a 20-foot-wide strip of vacant land along Highway 12 (1.31 acres total) as public right-of-way. Final subdivision maps recorded in 1990 labeled the 20-foot strip as “area in the process of being deeded to Caltrans for highway purposes.” However, “the matter simply ‘fell through the cracks,’” and the 20-foot strip was never transferred by deed to Caltrans. In the subsequent years, Prout never was assessed or paid property taxes on the 20-foot strip, and he did not fence the area within his subdivision parcels.

Two decades later, while planning for work to improve Highway 12, Caltrans discovered that the 20-foot strip of land had never been transferred by deed. Caltrans requested that Prout sign a deed to convey the strip of land; Prout refused. Caltrans proceeded with widening Highway 12 to include the 20-foot strip of land, completing the work in 2011.

Prout filed an inverse condemnation action against Caltrans, alleging that Caltrans owed him just compensation for physically occupying the 20-foot strip of land. Caltrans filed a cross-complaint for breach of contract, promissory estoppel, and specific performance, alleging that Prout had accepted the benefit of the encroachment permit but refused to finalize the dedication and deed of the 20-foot strip. In response, Prout argued that if the dedication of the 20-foot strip was a condition of the encroachment permit (as claimed by Caltrans), it was an illegal exaction.
Continue Reading Public Agency Could Validly Accept Dedication After Twenty Years By Physically Occupying the Property

The Ninth Circuit held that the City of Carson’s mobile home rent control board’s decision not to factor in debt service increases in its adjustment of a rental rate for a mobile home park did not result in a regulatory taking of the mobile home park owner’s property. Colony Cove Props., LLC v. City of Carson, 888 F.3d 445 (9th Cir. 2018)

The plaintiff purchased a $23 million rent-controlled mobile home park in the City of Carson, $18 million of which was financed through a loan.  When the plaintiff acquired the property, the City Rent Review Board’s application review guidelines required the Board to consider certain expenses submitted by property owners against the property’s income to determine what rents would give the owner a fair return on their investment. At the time the plaintiff purchased the property, these expenses included debt service, which are interest payments made on a loan to purchase the rent-controlled property.  Subsequently, the City revised its guidelines for considering rent increases and the City’s new rent control formula no longer factored in debt service expenses.

The plaintiff twice petitioned the city’s Rent Review Board for a several hundred-dollar rent adjustment, per space. Applying the new guidelines, the City only granted a rent increase of $36.74.  The plaintiff sued the City, contending the Board’s decision was an unconstitutional taking. The jury awarded the plaintiff over $3 million in damages and the City appealed the decision.
Continue Reading Ninth Circuit Holds that Rent Control Board’s Denial of a Mobile Home Owner’s Request for Rent Increase Is Not an Unconstitutional Taking 

Under the doctrine of regulatory takings, a regulation of property that goes “too far” in burdening property rights will be recognized as a Fifth Amendment taking. The Supreme Court’s recent decision in Murr v. Wisconsin (U.S. Supreme Court No. 15-214, June 23, 2017), represents an important step in the evolution of regulatory takings jurisprudence. It addresses the issue of how to define the “proper unit of property” in the regulatory takings analysis, a question often termed “the denominator problem.” In Murr, the Court rejected the notion that a legally defined parcel is necessarily the relevant unit of analysis finding that, under certain circumstances, multiple legal parcels may jointly constitute the relevant unit of property. But the Court avoided adopting a bright-line rule to determine the relevant unit of property and instead adopted a complex, multifactor test to address the denominator problem.

Background of this Case

The property at issue in Murr consisted of two adjacent lots, Lot E and Lot F, in Troy, Wisconsin, owned by two brothers and two sisters, the petitioners in the case. Local regulations prevented these lots from being sold or developed unless there was a minimum of one acre of developable land. A lot merger provision also provided that adjacent lots under common ownership could not be sold or developed as separate lots if they did not meet the size requirement.

The two lots were situated along the St. Croix river, with a steep bluff cutting through the lots limiting the lots’ developable area. Though each lot was approximately 1.25 acres in size, the lots’ combined buildable area was only 0.98 acres due to the terrain.

The petitioners’ parents purchased Lot F in 1960 and built a small cabin on it. Lot F was later transferred to the family plumbing company. In 1963, they purchased neighboring Lot E, which they held in their own names. The lots remained under separate ownership until 1995, when they were transferred to the petitioners.

The petitioners became interested in moving the cabin on Lot F to a different portion of the lot and selling Lot E to fund the project. However, based on the lot merger provision, the local zoning board determined that the lots could not be separately sold or developed.

The petitioners filed an action, alleging that these restrictions amounted to a regulatory taking by effectively depriving them of all or practically all use of Lot E.

The Takings Clause

The Takings Clause of the Fifth Amendment provides that property shall not “be taken for public use, without just compensation.” Traditionally, the Takings Clause reached only a direct appropriation or physical occupation of property. The Court’s regulatory takings jurisprudence was initiated by Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922), which declared that “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”

Two subsequent Supreme Court decisions provide guidance on application of this principle. In Lucas v. South Carolina Coastal Council, 505 U. S. 1003 (1992), the Court stated that, with certain qualifications, a regulation which “denies all economically beneficial or productive use of land will require compensation under the Takings Clause.” When a regulation impedes the use of property without depriving the owner of all economically beneficial use, a taking may still be found based on multiple factors described in Penn Central Transportation Co. v. New York City, 438 U. S. 104, 124 (1978), which include (1) the economic impact of the regulation; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.
Continue Reading Supreme Court Announces New Test for Regulatory Takings Claims

In Property Reserve v. Superior Court, S217738 (Cal. Supreme Court, July 21, 2016) the Supreme Court of California held that the precondemnation entry and testing statutes are constitutional when reformed to permit affected property owners the right to have a jury determine damages.

The California Department of Water Resources sought a court order allowing