Legal Alerts Jun 25, 2019

Inverse Condemnation Cases May be Filed in Federal Court

Impact on Public Agencies from SCOTUS Knick v. Township of Scott, Pennsylvania Decision

Inverse Condemnation Cases May be Filed in Federal Court

Disgruntled landowners seeking to challenge state and local land use controls under the U.S. Constitution’s Takings Clause were given more options by the U.S. Supreme Court. This ruling, handed down Friday, provides individuals and business entities seeking compensation for alleged takings property with a choice. They no longer have to sue in state court first. Instead they may now sue in federal court. As was noted in the dissent, public agencies should expect this decision “to channel a mass of quintessentially local cases involving complex state-law issues into federal courts.”
The Takings Clause prevents government entities from taking a private landowner’s property unless it is for a public purpose and with just compensation. The Clause may be invoked not only when a government exercises eminent domain power, as in condemning land for a highway, but sometimes also in extreme cases of government regulation of the use of private property, known as “inverse condemnation.” For decades, landowners seeking money damages for inverse condemnation were required to first avail themselves of just compensation remedies provided by state law and sue in state court. The new ruling from the nation’s high court in Knick v. Township of Scott, Pennsylvania says that landowners are no longer required to go to state court first.
In Knick, the Township of Scott adopted an ordinance requiring all cemeteries be kept open to the public during daylight hours. Plaintiff Rose Mary Knick’s 90-acre rural property has a small graveyard where Knick’s neighbors’ ancestors are allegedly buried. After challenging the ordinance for violating the Takings Clause in state court — but seeking only declaratory and injunctive relief, and not monetary compensation — Knick filed suit in federal court, seeking damages under section 1983 of the Civil Rights Act, which allows people to sue the government for civil rights violations. The federal trial court dismissed Knick’s taking claim under a 30-year old U.S. Supreme Court decision, Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City.
Williamson County held that a landowner’s Fifth Amendment taking claim against a local zoning board was not ripe for two reasons: 1.) the developer still had an opportunity to seek a variance from the zoning appeals board, so that any taking “was not yet final” and 2.) the developer had not yet sought compensation through the procedures “the State had provided for doing so.”  The first requirement — exhaustion of administrative remedies — was not an issue in Knick. The Court made that clear, saying “Knick does not question the validity of this finality requirement, which is not at issue here.” What was before the Court in Knick was Williamson County’s second holding — exhaustion of state court remedies. After the federal court of appeal affirmed dismissal of Knick’s complaint, Knick sought review in the U.S. Supreme Court, challenging the requirement that an inverse condemnation plaintiff litigate in state court first before seeking compensation in federal court. 
The U.S. Supreme Court reversed the lower court. The Court overruled the Williamson County’s state court litigation requirement. The Court observed that requiring landowners seeking recovery under the Takings Clause to proceed in state court first had an unanticipated consequence: a landowner who lost in state court, then sought recovery in federal court, would be barred because the federal court would be required to follow that state court decision. Because nearly all states, including California, provide just compensation remedies to property owners who have suffered a taking, the upshot was that landowners claiming to have suffered takings at the hands of state and local regulators have been prevented from ever bringing their claims in federal court, according to the court. The Court reasoned that Williamson County’s rationale for the state litigation requirement was poor and was in conflict with much of the Court’s takings jurisprudence. 
If you have any questions about this decision or how it may impact your agency, please contact the author of this Legal Alert listed to the right in the firm’s Municipal Law practice group, or your BB&K attorney.
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Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

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