Property Owners Options Revived. Supreme Court Overrules Its 1985 Decision.
Affected by a local government just compensation action? Your remedies have now changed significantly. The Supreme Court on June 21, 2019 overturned 35 years of precedent. In Knick v. Township of Scott, Pennsylvania the Court held that you can now take your federal takings claims pursuant to 42 U.S.C. § 1983 directly to federal court without exhausting state court remedies.
In the latest of a growing line of 5:4 decisions, Chief Justice Roberts, writing for the majority, overruled the Court’s 1985 decision in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). That decision had effectively stopped anyone from being able to challenge local government just compensation actions in federal court without first going to state court.
The “Preclusion Trap.” The decision removes what the Court referred to as an important “Catch-22” that had prevented property owners from bringing federal takings claims. Of great concern to the Court was its 2005 decision In San Remo Hotel, L. P. v. City and County of San Francisco, 545 U.S. 323 (2005). There, the Court had held that a state court’s resolution of a just compensation claim under state law had preclusive effect in subsequent federal lawsuits. The Court explained that in light of its decisions in Williamson County and San Remo Hotel, a property owner “could not 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. The federal claim dies aborning.”
The June 21, 2019 Knick decision eliminates the “preclusion trap.”
Local regulations are safe. The Court emphasized that its decision focuses solely on monetary compensation, and that the opinion will not open the door for property owners to seek injunctive relief barring the enforcement of local rules causing or authorizing takings. “Governments need not fear that our holding will lead federal courts to invalidate their regulations as unconstitutional. . . . As long as just compensation remedies are available . . . injunctive relief will be foreclosed.”
This post was drafted by John Watson, an attorney in the Denver, CO office of Spencer Fane LLP. For more information, visit spencerfane.com.