How, might you ask, could this happen? The short answer to this question appears to be that the California Supreme Court had set out on some sort of anti-property rights holy war and decided to abolish the doctrine of regulatory takings, in outright defiance of the U.S. Supreme Court’s existing takings law. For unfathomable reasons, the U.S. Supreme Court as then composed lacked either sufficient knowledge of takings law or the intellectual fortitude to deal forthrightly with the then ongoing intellectual rebellion by California and New York courts.14
The 1979 California Supreme Court decision in Agins I followed the reasoning of the New York Court of Appeals (without attribution) and simply defied the U.S. Supreme Court’s contrary holdings, notably those in Pennsylvania Coal Co. v. Mahon15 and Hurley v. Kincaid, by holding that there is no such thing as a regulatory taking requiring payment of just compensation. The landmark Mahon decision held explicitly that when a property regulation goes “too far” it will be judicially recognized as a taking.16 The California Supreme Court disagreed and disregarded that holding, without so much as citing either Mahon or Hurley.
The Mahon opinion did not specify the remedy for takings effected by regulations, as opposed to takings effected by other means. We surmise that Justice Holmes, speaking for the eight-Justice Mahon majority, must have thought that this was obvious (i.e., that compensation for takings was explicitly specified in the Fifth Amendment, and that it was therefore unnecessary to be dealt with in a case that pitted two private parties against one another, with no compensation claim made against the regulating entity that, in any event, was not a party to this litigation).17 And it was that omission that gave rise to the issue of remedies in the 1980s and led to the Agins controversy.18
The California Supreme Court’s Agins I decision also disregarded a century of prior state law holding uniformly that once private property is taken, “public use attaches” and the aggrieved owner’s sole remedy then is to seek just compensation on an inverse condemnation theory.19 Instead, without any mention of its own prior state law of remedies, Agins I abrogated the compensation remedy and held that in cases where regulation went “too far” the aggrieved property owner could only petition the courts for a writ of mandate seeking judicial invalidation of the offending regulation.20 Since the Agins plaintiffs, relying on preexisting law, had filed an inverse condemnation complaint seeking just compensation, the California Supreme Court held that their action was properly dismissed by the trial court since there was no such cause of action under the newly minted California law.
On further appeal, the Agins I holding was affirmed by the U.S. Supreme Court in Agins II but on other grounds; the Court did not reach the issue of remedies.21
The Agins I ruling came as a doctrinal surprise, although the California court hinted at it in HFH, Ltd. v. Superior Court,22 four years earlier. In Agins I or Agins II, the issue of ripeness had never been raised, briefed, litigated, or even mentioned either below, or in oral argument, leaving the substantive issue of proper remedies for uncompensated regulatory takings unresolved.23 On the contrary, in its briefing in the California Supreme Court, Tiburon implored the state supreme court justices to reach the merits of the remedies issue and to eliminate the just compensation remedy, and the court complied. The U.S. Supreme Court — ignoring prior law directly on point24 — held that an action seeking just compensation for a taking of private property was unripe (without mentioning the word “unripe” or even the concept of “ripeness”) until the aggrieved owner applied for, but was denied, a development permit from the regulatory agency.25
The U.S. Supreme Court finally revisited the issue of remedies on the merits seven years later in First English, where it held that the California Supreme Court erred in deciding Agins I because the “just compensation” undisputedly required in cases of physical property takings was also the remedy in regulatory ones. It explicitly disapproved the California Supreme Court’s Agins I holding, with typical understatement: “[T]he California courts have decided the compensation question inconsistently with the requirements of the Fifth Amendment.”26
This article provides a more detailed history of the Agins controversy and deals with other factors that should be of interest to students of eminent domain, but which may not be obvious to the casual reader of the Agins opinions, particularly the U.S. Supreme Court opinion, and of the vast scholarly commentary that they inspired.
Perhaps the most remarkable aspect of this judicial “march up the hill” and its subsequent “march down,” was that the First English case in which the court eventually did reach the merits and overruled Agins I, was no more ripe than Agins. Both cases presented the courts with appeals from judgments of dismissal. in Agins I, California courts sustained a general demurrer to the plaintiffs’ complaint. In First English, they ordered the complaint stricken. In other words, they dismissed both cases on the pleadings, without permitting any evidence.27 In neither case did the property owners apply for a building permit, which Agins II held to be indispensable to consideration of the regulatory taking claim on the merits.
What we got during the seven years of the Court’s evasion of the issue of remedies brought to it was a situation in which one could not tell whether the pertinent law of remedies was “up or down,” even as fortunes in land values and litigation expenses were frittered away while awaiting the Court’s decision on the merits.
The Agins Controversy in Context
It took Bonnie Agins thirty years of litigation and ongoing harassment by the city of Tiburon plus a half-million dollars in municipal fees to build three homes on her five-acre parcel of land ostensibly zoned for as many as five homes.28 That effort also involved an inconclusive trip to the United States Supreme Court, with stops at three levels of state courts along the way. To put it in perspective, we note that thirty years is five times the period of time it took to fight and win World War II.
Welcome to California where, as a wit put it, everything is legal between consenting adults, except developing real estate.29
In 1968 Bonnie Agins and her husband Donald bought a five- acre parcel of land in Tiburon, an upscale community located just north of San Francisco on a ridge overlooking San Francisco Bay. It had views of the San Francisco Bay, the Pacific Ocean, and the Golden Gate Bridge. The Agins parcel was aptly described by the Washington Post as:
The Tiburon ridge stretches out in a long golden curve, rocky and bright with wildflowers. To the east, one can see small sailboats cutting lines through the blue-grey stillness of San Francisco Bay. To the west, lit by the sun when the fog burns away, the Golden Gate Bridge spans the whitewater where the bay meets the Pacific.30
In a word, it was "magnificent."
The Agins intended to build five homes on the five acres (for which the land was zoned at the time of its purchase) in order to sell four of them and live in the fifth. But the City of Tiburon had other ideas. It too appreciated the beauty of the subject property, which was described in the Agins complaint as one of the most valuable parcels of land in California,31 and decided to acquire it for open space. To that end, it retained consultants who studied the area and the city’s financial options and recommended that the Agins parcel be so acquired. Accordingly, the City adopted a condemnation resolution authorizing the taking and filed an action in eminent domain. This is where the fun began.
Under California law and practice, eminent domain cases are usually tried within a year of filing, because thereafter — unless the condemnor deposits the estimated compensation into court for the owner — the date of value shifts from the date of filing to the date of trial.32 In California, that usually means that the land’s value goes up during the delay.33 Also, once filed, eminent domain cases have trial priority.34 But these procedural advantages were for some reason insufficient for Tiburon, which successfully moved for an even more accelerated trial setting. Shortly before the case was to go to trial, however, the city abruptly abandoned the condemnation and dismissed its action without explanation. In spite of our inquiries, we were unable to learn what motivated the city to go through this on-again, off-again performance. We can only speculate that the city’s motives were not wholesome.
Simultaneously, the city amended its ordinance changing the zoning from one house per acre to a complex system whereby allowable density would be anything between the original one house per acre to only one house per the entire five-acre parcel. The determination — which of these densities would be permitted — would be discretionary with the city. In other words, no particular density would be permitted as of right. The would-be builder would have to file an application for a proposed development, and the city would then decide whether or not to permit it.
Given what went on up to that point in the permitting process and the rapidly evolving anti-property-rights regime in California courts, the prospects for approval looked slim, except perhaps for the extreme option of building one house on five acres, which at the time (the 1970s) Agins believed to be economically infeasible. So would proposing several densities seriatim — a prohibitively costly process.35 This sort of thing, not unheard of in zoning law,36 became common. James Longtin, the city attorney of Thousand Oaks, cynically counselled his fellow city attorneys to engage in such “legal preventive maintenance” to frustrate property owners’ plans and their constitutional rights with impunity. And then:
If legal preventive maintenance does not work, and you still receive a claim attacking the land use regulation, or if you try the case and lose, don’t worry about it. All is not lost. One of the extra ‘goodies’ contained in the recent [California] Supreme Court case of Selby v. City of San Buenaventura, 10 Cal.3d 110, appears to allow the City to change the regulation in question, even after trial and judgment, make it more reasonable, more restrictive, or whatever, and everybody starts over again.37
We find it remarkable that, in spite of this undenied factual record, the U.S. Supreme Court’s Agins II opinion blandly characterized the on-again, off-again condemnation of the Agins parcel as “good faith planning.” To begin with, there was no evidence supporting such a conclusion, no judge made any such finding,38 and this course of conduct by the city was anything but in “good faith.” Its on-again, off-again condemnation of the Agins land reeked of bad faith.39 After a total of 100 years of joint eminent domain practice, we have seen all sorts of questionable governmental behavior,40 but this saga does not come close to being an Oscar winner.
This description of the Agins litigation would be incomplete without also informing the reader about what transpired after the U.S. Supreme Court’s decision. These events are probably best summarized by their depiction in the amicus curiae brief filed in 1987 by the Pacific Legal Foundation on behalf of Bonnie Agins in First English,41 as follows:42
The Agins have been trying to get governmental permission to develop their land ever since this court ruled in 1980 that their case was not ripe. Pursuant to this Court’s finding that the Agins could build up to five houses on their property, the Agins went back to the Tiburon City Council and applied for permission to subdivide their parcel into five buildable lots. The city held more than two years of public hearings in order to decide that it would permit only three lots. As conditions of approval the city required dedications of open space, improvement and dedication of a hiking trail, the construction of an off-site road to the property, an environmental impact report, a traffic study, a soils study, and the payment of various in lieu fees, impact fees, inspection fees, and utility connection fees. The Agins estimate that they spent approximately $560,000 just obtaining approval of the three lots. The Agins finished making the improvements required by the city in August 1985. A few weeks later, in October 1985, the city council adopted a city-wide building moratorium temporarily banning construction by the Agins and other Tiburon property owners. The moratorium has been extended by initiative until at least April 1988, with a provision allowing an indefinite extension thereafter. Thus, after expending all these years of time and physically and emotionally draining effort, and paying over one-half million dollars in fees and costs, the Agins now sit unable to use their property and uncertain as to when or if they will be allowed to build their home.
This inspired the following exchange with the Country's lawyer in the First English oral argument:
QUESTION [by Justice O’Connor]: . . .There are horror stories out there of local governments intentionally running these things through the mill indefinitely in a jurisdiction like California, with full recognition that if they lose one they can make a minor modification of the requirement and go again and effectively deprive people forever of any use. Now, what’s an owner to do?
MR. WHITE [Counsel for Los Angeles County]: Well, Justice O’Connor, I don’t know of any horror stories.
QUESTION [by Justice O’Connor]: Well, the Agins come pretty close, don’t they?
MR. WHITE: Well, the Agins, I don’t know what happened after the Agins decision was decided [sic]. But this Court held that there was no taking in the Agins case.43
The Court was provided with an example of the sort of “horror story” that Justice O’Connor alluded to when the Del Monte Dunes case appeared twelve years later. There, the would-be builder was forced to go through five permit applications and nineteen plot plans,44 only to be told at the end of six years of what purported to be the permitting process that he would not be permitted to build anything on his 37.6 acre parcel ostensibly because an endangered butterfly that had never been seen on or near the subject property might like it as its habitat should it ever wander onto it.45 At least in Del Monte Dunes, the land owner prevailed, after the city’s counsel was subjected to harsh questioning by court members during oral argument.46
The Del Monte Dunes case is hardly unique. in Healing v. California Coastal Commission,47 the property owner who tried to build a single house for his family was subjected to what the Court of Appeal sharply characterized as a “long-term nightmare,”48 lasting some seventeen years. But that is not even the worst. To the best of our knowledge, the current California champion in such matters is the unfortunate land owner who was subjected to thirty years of administrative proceedings and litigation, only to be told by the California Court of Appeal that his case was not yet ripe.49
Finally, since the court disposed of the Agins controversy on the basis of lack of ripeness, because — so it said — the Agins had not applied for a building permit, it seems appropriate to let the readers in on a court-counsel exchange that took place during the rebuttal phase of the Agins II oral argument:
MR. KANNER: A most remarkable argument. This is a case in which a demurrer was sustained, thereby giving rise to the traditional Anglo-American issue of pure law. Yet virtually all we have been arguing about is facts.
QUESTION [Chief Justice Burger]: Well, that’s perhaps because of the way you undertook to set this litigation in motion, instead of asking for what is provided under the city’s ordinance, an opportunity to get five sites, and passed that opportunity to get five sites, and you passed that opportunity and plunged right into the total litigation.
MR. KANNER: Well, may I respectfully point out and call to the Court’s attention the basic American seminal case, Euclid v. Ambler, 272 U.S. at page 385, [where] that very issue was presented and this court said, “A motion was made in the court below to dismiss the bill on the grounds that because the complainant had made no effort to obtain a building permit or apply to the zoning board of appeals for relief as it might have done under the terms of the ordinance, the court [case] was premature. The motion was properly overruled. The effect of the allegations of the bill is that the ordinance on its own force operates greatly to reduce values of appellees’ land and destroy their marketability for investor or commercial and residential use.... ”50
Nonetheless, this holding of the Euclid case, directly on the point raised by the Chief Justice, went without discussion in the Agins II opinion which, by an ipse dixit statement, held to the contrary.
In sum, it was clear at the time, and it remains clear with the benefit of hindsight, that the court was reluctant to address the issue of remedies51 and that the Agins case was a precursor (or if you prefer, the tip of an iceberg) of what has become the legendary California legal environment in land-use cases, as described in more detail in the next section. One could also speculate (since the Justices’ thought-process is a closely guarded secret) that at the time of the Agins oral argument the court was not prepared to tackle the issue of regulatory takings with the degree of acuity one might have wished for. In any event, the U.S. Supreme Court’s failure to nip the resulting legal anomaly in the bud, so to speak, exacted a heavy price in confusion, delay, and waste of time and resources — all of which had to be rectified years later in the First English and Lingle cases.
The California Supreme Court’s Holy War Against Property Rights
In the late 1970s, the legal climate in California became openly hostile to the constitutional rights of property owners, particularly in the context of regulatory takings. That much is not open to serious dispute, even if the legal basis for it remains unclear.52 The U.S. Supreme Court’s clear holdings notwithstanding, the California Supreme Court insisted on marching to the beat of its own Fifth Amendment drummer. indeed, its holdings were so off-kilter that they had become the subject of a drumbeat of criticism and, at times, derision by commentators on both sides of the issue around the country. They have aptly characterized California’s attitude toward land owners as “more hostile . . . than any other high court in the nation.”53 They concluded that California’s attitude was “extreme,”54 “onerous [and] draconian”55 — in short, “the most restrictive state in the country with respect to land use.”56 Even commentators outspokenly sympathetic to government regulators concede that California’s courts have applied this anti-property owner bias “consistently” and that it “pervades the body of California zoning law generally.”57
The year 1987 was something of a watershed period for the U.S. Supreme Court in takings law. Having ducked four opportunities in preceding years to straighten out the compensation issue, the Court decided to deal with some of the pending issues in regulatory takings. In both First English and Nollan, it plainly intended to set California back on the path trod by the rest of the country. As the Court put it in First English: “[T]he California courts have decided the compensation question inconsistently with the requirements of the Fifth Amendment.”58
Two weeks later, the Court decided Nollan. There, striking down as “extortion”59 a standard California Coastal Commission permit condition (repeatedly applied and judicially approved in California), the Court said: “Our conclusion on this point is consistent with the approach taken by every other court that has considered the question, with the exception of the California state courts.”60 As one commentator noted, First English “brought California, always at the fringe, in line with most other states.”61
One would have thought that this double-barreled message would have been clear and that the California judiciary would have responded by providing the protection demanded by the U.S. Supreme Court and the Constitution — and most other states. But everyone who thought that was disappointed. The California courts continued as though it were “business as usual.” A poll of land-use experts on both sides of the issue taken five years after First English found “California was [still] a near unanimous choice as the state least likely to protect landowner rights. California municipalities . . . are accustomed to meeting little resistance from the state courts.”62 This merely confirmed what others had known already: California had long since become the target of sarcasm in the national land use community. People elsewhere, it was said, “have joked about why a developer would sue a California community when it would cost a lot less and save much time if he simply slit his throat.”63 In a more serious vein, these two knowledgeable commentators64 went on to observe that, “[i]n California, the courts have elevated governmental arrogance to a fine art.”65 And so they had.
The upshot of “elevat[ing] governmental arrogance to a fine art” was that California regulators did as they pleased. After all, with a compliant judiciary that was willing to shield them from accountability to the Constitution, even if it meant defying the U.S. Supreme Court’s pronouncements, they believed that they had little to fear.66 The foreseeable result was more draconian regulation67 that inspired more litigation. A lot of it. Our review of takings cases decided by the U.S. Supreme Court shows that land use cases arising in California account for almost as many of the Supreme Court’s decisions as all other jurisdictions combined.68 Many of the household names in Fifth Amendment takings law arose in California. And this catalogues only those cases in which the Supreme Court asserted plenary review. Only the Court’s file keepers know how many unsuccessful petitions lie buried in the Court’s vaults.
We wish that we could report that, chastened by the double reversal the U.S. Supreme Court administered in 1987 via First English and Nollan, California returned to the constitutional fold. But it was not to be. Examining California cases after First English shows that the California courts have returned to their old ways and have essentially taken California once again out of the mainstream and into its own realm of constitutional jurisprudence.69 For a time, this led to a bitterly divided four-to-three California Supreme Court that provided little, if any, protection to property owners. The dissenting opinions made no bones about this, repeatedly calling out the majority for ignoring paramount U.S. Supreme Court regulatory taking opinions. The primary spokesperson for the dissenters was Justice Janice Rogers Brown. She put it bluntly, but accurately: “[i]n California, at least for now, Lucas [v. S.C. Coastal Council, 505 U.S. 1003 (1992)] is a dead letter.”70 This was based on the California majority’s “conviction that more than a decade of reinvigorated [United States Supreme Court] takings jurisprudence has changed nothing,”71 a conviction born of the “evident” fact that the California “majority is unwilling to come to terms with the true meaning and operative effect of Lucas and First Lutheran.”72
Justice Marvin Baxter, in a lengthy and scholarly discussion of the U.S. Supreme Court’s takings jurisprudence, demonstrated that the California majority simply refused to follow the Court’s decisions.73 Unmasking the majority’s effort to disguise its handiwork74 as seemingly in compliance with Supreme Court teachings, Justice Baxter concluded simply that “[t]he assumption of the majority that just compensation need not be paid . . . finds no support in the authorities on which they rely.”75 “Two centuries of jurisprudence since Marbury v. Madison . . . have escaped notice.”76
With respect to the seminal decision in First English, which established that the constitutional remedy for a regulatory taking is compensation and held that temporary takings are entitled to the same constitutional protection as permanent takings, Justice Ming Chin demonstrated that the California position not only ignored the federal holding, but actually embraced the dissent in First English.77
It is hard to improve on Justice Brown’s observation that
when [the United States Supreme Court] has made an attempt to resolve definitively a difficult point of constitutional law that is applicable to the very issue before us, we ought either to respect its judgment or provide a reasoned basis for refusing to do so. To do otherwise, in Charles Fried’s words is ‘judicial impudence.’”78
To see California’s open rebellion, one need go no further than to compare the U.S. Supreme Court’s 1987 analysis in First English with the California Supreme Court’s decision a decade later in Landgate. In First English, the Court reviewed — and rejected —California’s rule that the remedy for a regulatory taking was to invalidate the regulation. Rather, the Court held that compensation was constitutionally mandated.79 When it overruled California’s unconstitutional rule, the Court did so precisely because California refused to permit compensation for the period before judicial invalidation when a regulation kept private property from being put to economically productive use. The California rule that the Court consigned to the constitutional scrap heap in 1987 is precisely what the California Supreme Court resuscitated eleven years later in Landgate. The deliberate nature of California’s intellectual insurrection is apparent when one reads First English. The Court could not have been more clear in its opening paragraph, which left no doubt as to the issue before it, the correct rule, and California’s disregard of it:
In this case the California Court of Appeal held that a landowner who claims that his property has been ‘taken’ by a land-use regulation may not recover dam- ages for the time before it is finally determined that the regulation constitutes a ‘taking’ of his property. We disagree, and conclude that in these circumstances the Fifth and Fourteenth Amendments to the United States Constitution would require compensation for that period.80
First English thus holds that, once the regulatory action is administratively final (i.e., before litigation testing its validity), compensation is constitutionally compelled for the period during litigation that determines the invalidity of the regulation when its impact is to prevent all economically productive use of the regulated land. California, however, has simply nullified that teaching. It has defiantly re-established pre-First English law by holding that the aggrieved landowner must first sue to invalidate the regulation, and that such a litigational period is merely part of the “normal delay” in the “planning process” and cannot — regardless of the illegality of the regulation and its effect on the property owner — result in a constitutional taking that requires compensation.81 Once again, California has “truncated the [constitutional] rule”82 by refusing compensation for this period. And now it has done so knowingly, in spite of three dissenters forcefully demonstrating the conflict with First English.
This California attitude has continued into the twenty-first century, although three decades have now passed since First English was presumed to have returned California to the constitutional fold. Recently, the Court of Appeal considered a case in which the trial court had issued an injunction requiring the property owner to open beach access over his property to the general public.83 The court felt that it had to agree that such a de facto infliction of an easement over private property would be a per se taking. The law was too clear to ignore.84 But the court (by ignoring First English) concluded that it could deny protection to the property owner by holding that a mere “temporary” physical invasion is not automatically a taking. Forgotten was the First English conclusion that the Fifth Amendment covers all takings, whether physical or regulatory, permanent or temporary. The injunction on its face did not say that it was temporary, so where did that come from (assuming any validity to the distinction between permanent and temporary occupations, which there is not)? It was only temporary, said the court, because the owner could apply to the California Coastal Commission for permission to close the easement and the possibility that the Commission might grant permission to close the road was sufficient to make the easement temporary and thus beyond the protection of the takings clause. In a word, nonsense. California has returned to the pre-First English days when its courts construed their way around U.S. Supreme Court opinions (not exactly disavowing, but truncating, as the High Court said in First English).
The decision in Lucas has fared no better at the hands of the California court. Lucas held that denial of all economically beneficial or productive use of property, whether permanent or temporary, is a “categorical” or per se taking that requires compensation.85 Under California’s resurrected pre-1987 rule, however, even such a drastic impact cannot be deemed a taking if the “development restrictions imposed on the subject property substantially advanced some legitimate state purposes86 so as to justify the denial of the development permit.”87
But the U.S. Supreme Court has consistently held that takings are measured by the impact of the regulators’ acts on the property owner, not their intentions or the professed nobility of their goals. The government can no more confiscate private property for good reasons than for bad ones. The presence of legitimate reasons does not vitiate the Just Compensation Clause — on the contrary, it triggers its applicability. Justice Stewart put it simply: “[T]he Constitution measures a taking of property not by what a State says, or by what it intends, but by what it does.”88
The Court of Appeals for the Federal Circuit expanded on that thought:
The purpose and function of the [Fifth] Amendment being to secure citizens against governmental expropriation, and to guarantee just compensation for the property taken, what counts is not what government said it was doing, or what it later says its intent was.... What counts is what the government did.89
The Supreme Court has applied that bedrock constitutional philosophy repeatedly. For example, in Loretto v. Teleprompter Manhattan CATV Corp.,90 the New York Court of Appeals upheld a statute as a valid exercise of the police power. But the U.S. Supreme Court reversed that state court judgment and pointed out that commendable goals, like good intentions, are no substitute for adherence to the Just Compensation Clause:
The Court of Appeals determined that §828 serves [a] legitimate public purpose ... and thus is within the State’s police power. We have no reason to question that determination. It is a separate question, however, whether an otherwise valid regulation so frustrates property rights that compensation must be paid.91
Similarly, in Kaiser Aetna v. United States,92 the Corps of Engineers had decreed that a private marina be opened to public use. The Court disagreed and, in the process, explained the relationship between justifiable regulatory actions and the takings clause of the Fifth Amendment:
In light of its expansive authority under the Commerce Clause, there is no question but that Congress could assure the public a free right of access to the Hawaii Kai Marina if it so chose. Whether a statute or regulation that went so far amounted to a taking, however, is an entirely separate question.93
In fact, in every eminent domain case, the taking is justified by being for public use (or public benefit) and serving public necessity. But that does not excuse the taker from its obligation to pay just compensation.
That concept is the underpinning for the categorical rule that, if regulation denies all economically beneficial or productive use of private land, it is a per se taking.94 That is why, under Lucas, a taking always occurs when economically productive use is prevented, “without case-specific inquiry into the public interest advanced in support of such a restraint.”95 In other words, for a taking to occur, it matters not whether the regulators acted in good or bad faith. What matters is the impact of their acts, not their motives.96 Indeed, it has long been settled that courts will not inquire into the motivation of political decisions to take private property, thus making their bona fides judicially off limits.97 California’s focus on the regulators’ objective good faith is thus wholly contrary to the U.S. Supreme Court’s consistent teachings. And yet, the war goes on.
This discussion could continue, but we believe the point has been made. Insofar as “the taking issue” is concerned, California’s judiciary was in open intellectual rebellion before 1987, and it remains so to this day. it is in the nature of holy wars that they do not easily dissipate. When California began this trek, it was at least candid in Agins I that the primary concern was fiscal; a straightforward application of the plain language of the Fifth Amendment’s guarantee against uncompensated takings would simply cost too much for government to bear.98 That has never been an accepted rationale in other fields, and it is owed no deference here either.99
Finally, it bears noting, if only in passing, that the California Supreme Court’s ruling in Agins I also disregarded state law of pleading. Modern California pleading law does not require a pleader to plead legal theories.100 A cause of action must be stated by pleading ultimate facts — not evidentiary facts nor legal conclusions. All that is required is that the pleaders state concisely the ultimate facts giving rise to their cause of action, and if any cause of action arises from the well-pleaded facts, the court will grant an appropriate remedy, irrespective of what relief the pleaders ask for.101 Thus, the prayer for relief is not deemed a part of the complaint and, if the well-pleaded facts indicate that a remedy is available on any theory, the court will grant it.102
But in Agins I the California Supreme Court held that instead of granting the plaintiffs leave to amend their complaint even once, it would dismiss the action — a procedural step right out of common law pleading that California discarded in the nineteenth century when it adopted the Field Code,103 to say nothing of strictly followed California judicial policy liberally granting leave to amend defective pleading. Where the pleaders asked for the wrong remedy (i.e., for just compensation instead of non-monetary relief), their action should not have been dismissed. Rather, they should have been allowed leave to amend to adapt to the new law being laid down by the Supreme Court.
Remedies for Uncompensated Takings
It is remarkable that the issue of what is the proper remedy for uncompensated takings should arise in California, much less by a purely conclusionary statement of the California Supreme Court. Before Agins I, California courts uniformly held that the remedy for uncompensated takings was the just compensation specified in the Constitution.104 The first impression California case was San Diego Land & Town Co. v. Neale,105 in which the California Supreme Court reversed a lower court order purporting to restore the uncompensated land owner to possession of his taken land, holding that the sole remedy was an award of damages. A series of similar holdings followed.106
The same was true of the federal law. As noted supra, under federal law, the proper remedy for uncompensated takings has historically been the constitutionally mandated just compensation for what was taken.107 Justice Louis Brandeis’s unanimous 1932 opinion in Hurley v. Kincaid was consistently followed by the U.S. Supreme Court, with cases holding that just compensation was the aggrieved property owner’s sole remedy.108 That rule was unequivocally reiterated in Ruckelshaus. Although analyzed in the context of intellectual property, the Court made clear that it was invoking the rules developed in the real property takings context because they were the same. Property is property. Consistency, although something to be devoutly desired in the law, seems to have eluded the U.S. Supreme Court in this field. This line of cases was based on the long-settled principle that equitable (non-monetary) remedies are available only when the (monetary) remedy at law is inadequate.
In support of its pre-Agins I holdings on remedies, the U.S. Supreme Court also relied on a separation-of-powers rationale, explaining that courts have historically declined to superimpose corrective authority upon considered government decisions of the other branches of government to proceed in a way chosen by them, albeit in disregard of affected land owners’ rights. In those days, the California Supreme Court held likewise and also based its holdings on the idea that where uncompensated owners have already suffered substantial impairment of their property rights, an injunction would not afford adequate relief. It would rather, to borrow the words of the late editor of the CEB Condemnation book, M. Reed Hunter, be a “tardy closure of the barn door” after the horse had already departed.
Since the issue has been one of federal constitutional law, we are unable to improve on the clear and concise way in which the Supreme Court put it in Ruckelshaus, the most closely contemporaneous case on point which, as it happens dealt with a regulatory taking: “Equitable relief is not available to enjoin an alleged taking of private property for a public use, duly authorized by law, when a suit for compensation can be brought against the sovereign subsequent to the taking. The Fifth Amendment does not require that compensation precede the taking.”109 How much clearer could the Court have been? When Justice Sandra Day O’Connor told government counsel in First English that the Court had heard “horror stories” about the impact of government regulations on property owners,110 she was summarizing the collective impact of the numerous amici curiae briefs filed on the owner’s side in that case. Those briefs showed the following sorts of “horrors stories.”
- Item: the California Building industry Association (CBIA) noted half a dozen reported cases in which heavy regulation resulted in property owners losing their property through foreclosure.111 Beyond that, the Court itself was aware of its own recent case of Williamson County Regional Planning Commission v. Hamilton Bank,112 in which the property owner appearing before the Court was the bank that had taken over the subject property after foreclosing because the county’s actions precluded completion of the development by the original property owner.
- Item: CBIA reported on various other doomed development projects, some proposed by experienced developers, others by ordinary people. Kinzli v. City of Santa Cruz, for example, involved a septuagenarian farmer’s widow and her children, who lacked the skills to deal with the municipal regulatory gauntlet that she faced.113 Unable to develop the land herself, she was also unable to sell it to a developer because developers had no interest in facing hostile municipal regulations.
- Item: CBIA also told the Court of recent experience under a San Francisco development ordinance where permits were denied for such vague reasons as the design was not “architecturally superior” or that the city has “more than adequate space at this time.” That same brief reported on a Utah developer who had thirteen different development proposals rejected, after which he lost the property through foreclosure.114
- Item: The National Association of Home Builders (NAHB) showed the Court how municipalities in various parts of the country engaged in foot-dragging and game-playing in the evident hope of outlasting property owners whose developments were unwanted.115 NAHB added to the list of property owners who were eventually foreclosed because of the time delays involved.116
- Item: Donald and Bonnie Agins filed an amicus curiae brief in First English to update the Court on how they had been treated since the Court decided their case in 1980. In a nutshell, the Agins spent more than a half million dollars in municipal fees over a five-year period to obtain permission to build three homes on their five-acre lot that was zoned to permit five homes. And then the city enacted a moratorium prohibiting any construction.117
- Item: The American College of Real Estate Lawyers demonstrated how extreme forms of land use regulation end up “subsidizing certain favored citizens at the expense of others who are either excluded by the lack of housing within their means, or who pay ‘premium’ prices for the restricted housing supply which results from such regulation.”118 Unrestricted government regulation drives up housing cost, and the absence of a compensatory remedy aids and abets such regulation.
- Item: Even the Solicitor General, appearing amicus curiae in support of the County, had to concede that “[i]t is clear that restrictive land-use regulations can result in an uncompensated taking of property that is prohibited under the Takings Clause of the Fifth Amendment.”119 That brief asserted there was no need for a constitutional remedy for regulatory takings because Congress had enacted a civil rights remedy under 42 U.S.C. § 1983 that provided a damages remedy for actions of local government entities. Numerous citations to cases in which damages were awarded under that statute were discussed in the brief.120
Strangely enough, during the period between Agins II and First English, the California Supreme Court essentially absented itself from the field, deciding no regulatory taking cases at all. Its absence, while California’s lower courts remained quite active in evaluating regulatory takings (while constrained by Agins I), was so striking that one of us wrote a short article about the Supreme Court’s “curious absence.”121 The other member of this writing duo expressed concern about poking a wild animal that is not bothering you,122 but the article was published anyway. To the chagrin of property owners and their counsel, the California Supreme Court came back to life.123
It is customary for law journal authors to conclude their articles with suggestions on how legal doctrine should be made to conform to their preferred policies. Here, we have resisted the temptation to do that since we believe that awarding just compensation to owners of taken property is a remedy explicitly included in our constitutional law, so that reforms and correction in the law should focus on pruning and simplifying what “law” there is, to eliminate the at times nightmarish complexities of what now passes for controlling law. At this time, the maddening procedural mess that aggrieved property owners have to go through in an effort to achieve “ripeness” mocks them instead of providing them with relief.
What takings law needs is not more rules — it has too many as it is124 — but rather the elimination of prevailing anomalies, contradictions, and just plain bad law with which this field is replete.125 We are content for now to describe what, with all due respect, have been acts of municipal and judicial misgovernance as the Agins case wended its way through the court system to its ignominious overruling in the First English and Lingle cases, producing the ongoing intellectual, economic, and moral train wreck that has been takings law in general and its impact on California housing in particular.126
The breathtaking extremism of the now prevailing California rules makes clear that “the system” has gone too far by singling out American property owners as some sort of pariahs who are banned from the federal courts altogether and who are routinely denied relief in California courts. California is the largest, most populous, and most highly regulated state, so one would expect to see its share of successful regulatory takings cases. If nothing else, the law of averages would lead one to anticipate that the numbers would eventually even out. But, in fact, property owners have never won such a case in the California Supreme Court, which, as noted earlier, has gone out of its way to rule against them.127 The Agins litigation went through four court levels, but — with one exception128 — every one of the twenty judges who contributed to it proved to be wrong, and the Agins case had to be overruled, not once, but twice. After nearly a decade of foot-dragging, the U.S. Supreme Court finally so concluded.129
The doctrinal, economic, and ethical mess left behind by the United States Supreme Court’s fits and starts engendered by Agins and its progeny is rooted in a basic idea that ideologues whom Professor Daniel Mandelker aptly called “police power hawks” tried to impose on American property law.130 They meant to import into the United States the ideas underlying British post-World War II legislation131 whereby the right to develop land would cease to be private and become public.132 An effort to transplant it to the United States by judicial fiat also failed but only after destabilizing and confusing the pertinent law to an almost indescribable extent. At this point, litigating to demonstrate a regulatory taking is an activity de facto available only to people with fortunes in litigation budgets and a decade or so in which to pursue a convoluted procedural path said to lead to judicial relief, but in reality producing neither justice nor good law on which citizens can rely.133 What we got instead is a regime of protracted litigation that as often as not fails to provide relief to the constitutionally aggrieved property owners, and confuses the law some more. Rather than good or at least reliable law, it has given us multi-factor “tests” that instead of providing predictability, permit judges to reach whatever results they want — typically favoring the government — since no one has bothered to explain the weight of each such “factor” in reaching a decision whether a taking has occurred or how many of them are essential to a finding that a taking has occurred.134
What we thus have to deal with is a judicially created body of law that even years ago, before it reached its present nadir, was colorfully described as a “Serbonian bog.”135 Today’s state of the pertinent law has gone even this colorful epithet one better. In 2004, we sat down and collected all the terms of invective that have been heaped on this field of law by commentators on both sides of the issue — and a few frustrated judges, to boot. We quickly found forty-one epithets directed at the judicial handiwork, ranging from “deceptive” to “inherently nonsensical.”136
In short, ideas have consequences, and bad ideas have bad consequences. We stated at the beginning of this article that we refrain here from proffering doctrinal solutions to this mess because, among other things, the record of the past thirty-eight years demonstrates that all too often such attempts fall on deaf ears or make things worse by confusing the law some more.
The doctrinal problem is that some of the debate is not being conducted in good faith. Too many government-minded actors in this never-ending drama have made it clear that what they have in mind is not improvement in the law of takings, but rather the elimination of inverse condemnation as a remedy that the Fifth Amendment to the Constitution extends to aggrieved property owners — at least in regulatory taking cases. Such a development was unsuccessfully proposed by the influential tract, The Taking Issue, which openly called for the elimination of this remedy.137 So far, the U.S. Supreme Court has denied them their fondest wish of overruling Pennsylvania Coal Co. v. Mahon.138 Such a development would have eliminated an important central pillar supporting America’s property rights that, in turn, are indispensable to a free society.139 It has not extended meaningful, reliably accessible legal protection to owners of property rights.140 So as one of us put it in an earlier article discussing the impact of Williamson County, anarchy reigns supreme141 and, at this rate, bids fair to continue doing so.142
After this article was largely completed, the Supreme Court granted certiorari in Knick v. Township of Scott,143 which presents the question:
Whether the Court should reconsider the portion of Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 194–96 (1985) requiring property owners to exhaust state court remedies to ripen federal takings claims as suggested by Justices of this Court?144
This development provides the Court with an opportunity to at least begin cleaning up the intellectual and moral mess produced by the past thirty-eight years of judicial ad hoc decision making in the takings field of law. Having done our share of marching up and down this hill, we think it is time to begin the task of rectification. As of now, this field of law has inspired a stream of invective directed at the Court’s handiwork by informed commentators on both sides of the issue — and some frustrated judges, as well. The stakes are simply too big, and the consequences of the present unsettled state of the law are too socially and economically destructive to permit as important145 a constitutional provision as discernible and reliable legal protection of private property to drift in an ad hoc manner, encouraging a regime of regulatory extremism and thus contributing to a growing housing crisis.
On the one hand, we conclude by hoping for the best, or at least for a significant improvement in the state of pertinent law. On the other hand, this may be no more than yet another chapter in the saga of Charlie Brown of “Peanuts” cartoon fame, being assured by Lucy that this time, this time for sure, she will hold the football for him as he tries to kick it.
In litigating this difficult issue before a court that demands of counsel that they conform to exquisitely difficult and ever-changing standards of pleading and proof, even as it candidly confesses its own inability to articulate a coherent statement of an inverse condemnation cause of action, anything is possible.
Epilogue, Part Deux
When we said “anything is possible,” we were not thinking about oral argument. After all, the Court had granted certiorari on an extremely limited question, i.e. whether Williamson County should be “reconsidered.” Crazy optimists that we are, we assumed that the Court understood what it was reconsidering and what the effect of such a reconsideration might be.
The facts in Knick are straightforward. By regulation, the township took an easement — i.e., an interest in land — across the Knick property to provide public access to an ancient graveyard. The substantive question is whether that was a taking of Ms. Knick’s property that required compensation.146 The only issue was where Ms. Knick had to file her case, in state or federal court. We wish we could report that the Justices’ questions and comments at the Knick oral argument demonstrated a clear understanding of the preposterous procedural mess that Williamson County has made of the last three or four decades of regulatory takings litigation.147 Instead, we need to begin this discussion by noting that at least some members of the Court appear to have little or no understanding of the difference between direct and inverse condemnation.
Let’s start with the Chief Justice. That seems fair for two reasons. First, when he was a lawyer, he actually argued a regulatory taking case in the Supreme Court. On behalf of the government. And he won. Against us. That was the Tahoe-Sierra case, one of the last cases he handled as a lawyer before taking the bench. So you’d think that he had some understanding of its core concepts. Second, he was the first Justice to ask a question. Here is what he opened with:
“Well, I thought that was the whole point of an inverse condemnation. [Pay attention here.] They recognize that they owe her money, and the whole point of the process, which can be fairly elaborate, is that they’re just trying to figure out how much. If it’s not enough, then she can bring a claim.”148
No. No. No. How often must we explain this to judges? “They” (that is, government officials) recognize no such thing. On the contrary, they are defendants in an inverse condemnation case precisely because they deny that they have taken anything or that they owe any compensation. If they “recognized” a debt, there could be no litigation whether a taking has occurred. Or how about “they’re just trying to figure out how much.” But that is the question in a direct eminent domain where the taking is conceded. And the upshot? “If it’s not enough, then she can bring a claim.” Really? “A claim?” Where? For What? Isn’t such a “claim” the very thing she just litigated, only to be shortchanged?
It is in a DIRECT (not inverse) condemnation case that “they” recognize that since they have taken the owner’s property, they owe her the “just compensation” mandated by the Fifth Amendment; there they only want the court to tell them “how much.” In other words, the whole idea of a direct condemnation is that the government concedes liability, and the case is solely about how much is owed. An inverse condemnation plaintiff bears the significant added burden of proving to the court that a taking has occurred.149 Only after that is the property owner allowed to claim compensation.150
Justice Kagan continued in this vein about the use and purpose of inverse condemnation [notice that she starts the same way the Chief did]:
“But I thought that the question here arose from the fact that the state has not said yet that it’s not compensating, that, instead, it uses the inverse condemnation proceeding to make that determination. Is that wrong? ... In other words, the state had not denied liability, nor had the state conceded liability. So this isn’t a – a question where the state has said: Look, we deny any liability. It’s – it’s – the state hasn’t said one way or the other.”151
On the contrary. The governmental posture in defending ANY inverse case — whether regulatory or otherwise — is to claim that the government has done NOTHING compensable and owes the property owner nothing. That is what inverse condemnation is all about. That the underlying posture of Knick fit this mold was made clear during Justice Alito’s questioning of the township’s counsel.
“JUSTICE ALITO: Does the township owe Ms. Knick any money, any compensation?
“MS SACHS: That has yet to be determined, Your Honor.
“JUSTICE ALITO: “You don’t know whether you owe her any money? . . . Are you going to go back to your office and – and think about that, and then send her a letter saying whether you owe her any money? You can’t tell me whether you owe her any money?
“MS SACHS: The state has to tell her whether we owe her any money, Your Honor.”152
“JUSTICE ALITO: You are the state. You represent the township. The township is part of the state. So what is before us here is the Commonwealth of Pennsylvania. Does the township owe her any money? Yes or no? I don’t see how you cannot have an answer to that question.”
Of course, counsel said that she could not make such a call at this time because “that’s why” we have an inverse condemnation proceeding. But refusing to be ignored, Justice Alito continued:
“If she files an inverse condemnation proceeding, are you going to – are you going to confess that you owe her money, at the outset?”
After some babbling, counsel came to the point: “I think the township would say there has been no taking.”
Justice Breyer provided an interesting new translation for a Latin phrase with which we are all familiar, stare decisis. As he put it: “But Williamson was decided 32 years ago. This is a very complicated area of law. Why not let sleeping dogs lie? it’s called stare decisis.” In fact, he was so taken with his witticism that he repeated it later in the proceedings. But the court is in the business of cleaning out “sleeping dogs.” In the very field that we are currently examining, the Court re-examined Agins v. Tiburon and eliminated it as a precedent that had been repeatedly cited for a quarter-century.153
Justice Breyer had another interesting — if less humorous — jurisprudential thought: “there’s no reason in history that federal courts have to be open to every federal claim. I mean, sometimes they are. Sometimes they’re not.” We don’t intend to belabor the point.154 We will note only two things. First, in the classic 1946 case of Bell v. Hood155 (and its progeny), the Court held directly that “the party who brings a suit is master to decide what law he will rely upon.” So if the plaintiffs rely on federal law, they are entitled to a federal forum for trial if that is what they also choose. Second, as the Court emphasized in Mitchum v. Foster,156 among many others, the point of 42 USC § 1983 was to “interpose the federal courts between the States and the people, as guardians of the people’s federal rights.” You can’t do that if you compel suits to be brought or tried in state courts. That would nullify § 1983.
But wait; there’s more. As if there were not enough to chew on, we ought to note that Knick was argued before Justice Kavanaugh was sworn in, so that there were only eight Justices considering the case. One month after the Knick argument, the Court issued a Delphic order, which reads in its entirety:
“This case is restored to the calendar for reargument. The parties and the Solicitor General are directed to file letter briefs, not to exceed 10 pages, addressing petitioner’s alternative argument for vacatur, discussed at pages 12 - 15 and 40 - 42 of the transcript of oral argument and in footnote 14 of petitioner’s brief on the merits. The briefs are to be filed simultaneously with the Clerk and served upon opposing counsel on or before 2 p.m., Friday, November 30, 2018. Reply briefs, not to exceed 4 pages, are to be filed simultaneously with the Clerk and served upon opposing counsel on or before 2 p.m., Friday, December 21, 2018.”
Time and space limit our ability to even attempt to analyze the meaning of this order. Perhaps it will become apparent when the opinion is finally written.
We leave any of you with academic connections with this thought from Justice Breyer, following up on whether to let sleeping dogs lie or to overturn thirty-plus year old precedents: “Maybe it will be a boon to law schools that have courses to catch property lawyers up on what’s going on.”
The Final Word
Stop the presses! As we were literally about to mail this issue of The Urban Lawyer to you, the Supreme Court decided the Knick case. More will be written about that decision, but we cannot conclude this article without noting that the Court agreed with us completely about Williamson County and overruled its state court litigation requirement. With simple elegance, the Court concluded that it had been “simply confused” when it decided Williamson, and that its requirement of state court litigation as providing the key to federal courthouse access “was not just wrong. Its reasoning was exceptionally ill founded” and it was “unworkable in practice.”
It was thirty-four years in coming, but the aspect of Williamson County that had given bench, bar, and property owners fits is finally “overruled” and gone. RIP.