Takings Clause Plaintiff is in a Catch-22 Under Knick Finding

SAN FRANCISCO—Earlier this summer, the Supreme Court of the United States decided Knick v. Township of Scott, PA, 588 US (case number 17-647), a closely watched property rights case that was argued first in October of 2018 and again in January of 2019. Knick addressed the requirement, established in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 US 172 (1985), that property owners must seek just compensation under state law in state court before bringing a federal takings claim under 42 USC section 1983.

In a 5-4 opinion by chief justice John Roberts, the Knick court held that a government violates the takings clause the moment it takes private property without compensation, and the owner may assert a Fifth Amendment claim under section 1983 at that time, without first pursuing a state-law remedy. Moreover, the court overruled the state-litigation requirement established in Williamson County 34 years ago, describing that case as based on “poor reasoning” and a “(break) with the court’s longstanding position that a property owner has a constitutional claim to compensation at the time the government deprives him of his property” because “the court was simply confused” about how the takings clause works.

The case was filed by Rose Mary Knick, who owns 90 acres of land in rural Pennsylvania. Knick’s property includes a small graveyard where her ancestors are allegedly buried. Such family cemeteries are fairly common in Pennsylvania, where backyard burials have long been allowed. Scott Township passed an ordinance that required all cemeteries to be open and accessible to the public during daylight hours and authorized code enforcement officers to enter upon any property to determine the existence and location of any cemetery.

Knick filed a section 1983 action in federal court, alleging that the ordinance violated the takings clause of the Fifth Amendment. The District Court for the Middle District of Pennsylvania dismissed Knick’s claim under Williamson County because she had not first pursued an inverse-condemnation action in state court. The Third Circuit affirmed, despite noting that the ordinance was “extraordinary and constitutionally suspect.”

According to the Knick majority, in effectively establishing an exhaustion requirement for section 1983 takings claims when it held that a property owner must pursue state procedures for obtaining compensation before bringing a federal suit, the court in Williamson County “was not just wrong. Its reasoning was exceptionally ill founded.”

The takings clause provides: “Nor shall private property be taken for public use, without just compensation.” It does not say “nor shall private property be taken for public use, without an available procedure that will result in compensation.”

The Knick majority thus reasoned that a takings plaintiff “finds himself in a Catch-22” and noted that “the guarantee of a federal forum rings hollow for takings plaintiffs who are forced by Williamson County to litigate their claims in state court.” The catch, under San Remo Hotel LP v. City and County of San Francisco, 545 US 323 (2005), is that a state court’s resolution of a claim for just compensation under state law generally has preclusive effect in any subsequent federal suit. Thus, under that “preclusion trap,” a takings plaintiff cannot go to federal court without going to state court first. But if he or she goes to state court and loses, his or her claim will be barred in federal court.

According to the majority, Williamson County’s “state-litigation requirement relegates the takings clause “to the status of a poor relation among the provisions of the Bill of Rights.” And in a brief, if not effective, attempt to draw on principles of “originalism,” the majority explained that the framers of the Constitution meant to prohibit the federal government from taking property without paying for it.  “Allowing the government to keep the property pending subsequent compensation to the owner, in proceedings that hardly existed in 1787, was not what they envisioned.”

The majority also explained that the state-litigation requirement is based on “shaky foundations,” has been “a rule in search of a justification for over 30 years,” is “unworkable in practice” and “imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of the court’s takings jurisprudence and must be overruled.”  And in overruling that part of Williamson County, the Knick Court held that a property owner has a Fifth Amendment takings claim “as soon as a government takes his property for public use without paying for it.” The Knick majority thus “overthrows the court’s long-settled view of the takings clause…against a mountain of precedent.”

Overruling the state-litigation requirement of Williamson County will have two “damaging consequences,” according to the dissent. First, government regulators will often have no way to avoid violating the Constitution because there are a “nearly infinite variety of ways” for regulations to “affect property interests” and a government actor usually cannot know in advance whether implementing a regulatory program will effect a taking, much less of whose property.

Second, Knick will send to federal court cases that are better suited for state court because a claim that a land use regulation or decision violates the takings clause usually turns on state law issues. The decision will send “a flood of complex state-law issues to federal courts,” make federal courts a “principal player” in local and state land use disputes and “betrays judicial federalism”.

Finally, the dissent expressed deep concern with the majority’s decision to depart from precedent, because adhering to precedent, under the doctrine of stare decisis, is “a foundation stone of the rule of law.” It is not enough that five justices believe a precedent wrong. Reversing course demands a “special justification” beyond the belief that the precedent was “wrongly decided”.

Knick is a monumental new decision in the canons of takings law. In the words of Chief Justice Roberts, the court’s new ruling immediately “restores takings claims to the full-fledged constitutional status the framers envisioned when they included the clause among the other protections in the Bill of Rights.”  And Knick makes clear that government employees engaged in the practice of regulating private property do so in a larger constitutional system that is concerned with fairness to property owners. If this is unfair to land use regulators and makes some regulatory programs unworkable in practice, “so be it.”

Moreover, as Justice William Brennan memorably asked in San Diego Gas & Electric Co. v. City of San Diego (1981), “After all, if a policeman must know the Constitution, then why not a planner?”

Bryan Wenter, a land use shareholder at real estate law firm Miller Starr Regalia in Walnut Creek, recently weighed in on the Knick v. Township of Scott SCOTUS opinion.

“This case is likely to have substantial impacts for local governments and for developers, who may be far more likely to challenge onerous or overreaching regulations now that they may proceed directly to federal court,” Wenter tells GlobeSt.com. “The case is likely a harbinger of future cases addressing important and unsettled issues, including the applicability of the court’s nexus and rough proportionality requirements, under Nollan and Dolan, to administratively imposed conditions on land use.”

Wenter says the Williamson County Court anticipated that if the property owner failed to secure just compensation under state law in state court, he would be able to bring a “ripe” federal takings claim in federal court.

“But as the Court later held in San Remo Hotel LP v. City and County of San Francisco, a state court’s resolution of a claim for just compensation under state law generally has preclusive effect in any subsequent federal suit,” Wenter says. “The takings plaintiff thus finds himself in a Catch-22: He cannot go to federal court without going to state court first. But if he goes to state court and loses, his claim will be barred in federal court.”

He says properly recognizing the unfairness of that preclusion trap, the Knick court determined that the state-litigation requirement imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of the court’s takings jurisprudence and must be overruled.

“A property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it,” he points out. “Originally argued in October of 2018, the case was re-argued in January of 2019 after Justice Kavanaugh joined the bench, perhaps to break a 4-4 tie.”