On Friday, the U.S. Supreme Court issued its opinion in Knick v. Township of Scott, in which the Court ruled that a plaintiff in a takings claim need not first exhaust state-court remedies before bringing the claim before a federal court. The decision, addressing a largely procedural matter, is expected to lead to an increase in federal court litigation involving takings issues, and likely increases the chances that local governments may be required to compensate landowners where regulation devalues private property.
The Takings Clause of the Fifth Amendment to the U.S. Constitution provides that “private property [shall not] be taken for public use, without just compensation.” Uncompensated takings may occur where the government physically occupies land or regulates in a manner such that the land may not be put to an economically productive use. Uncompensated takings may also occur where the government requires the dedication of property or payment of money in connection with a land use approval, where the dedication or payment is not rationally related to the impact of the project.
Typically, when the government violates a federal constitutional provision, jurisdictional rules provide that the plaintiff can bring its claim in federal, as opposed to state, court. Nonetheless, under the 1985 Supreme Court case of Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, that was not the case with respect to takings claims. That case held that a landowner who sought compensation for a taking was required first to exhaust all administrative remedies at the local government level (such as seeking a variance or a rezoning to avoid the taking) and second, to seek compensation through state courts before bringing any claim for the taking in federal court. In short, the rationale underpinning that decision is that, because state law defines the parameters of private property, a state court should determine whether property has been taken and the state should be given the opportunity to provide compensation for the taking.
Additionally, federal courts are generally prohibited from upsetting prior rulings of state courts. The practical result of Williamson County was to make it such that a plaintiff might unsuccessfully proceed through state court proceedings—often taking years—and then, when the takings claim went to federal court, have his or her claim thrown out because of the preclusive effect of the state courts’ decisions.
In Knick, a Pennsylvania township required private landowners to provide public access to cemeteries located on private land. A woman who owned property that had such a cemetery challenged the law. She filed suit in federal district court, but the case was dismissed under the auspices of Williamson County. The federal Third Circuit Court of Appeals affirmed, and the Supreme Court granted certiorari.
Writing for a five-justice majority, Chief Justice Roberts concluded that Williamson County’s second requirement—that a takings plaintiff must avail itself of state procedures to obtain compensation—was “exceptionally ill-founded.” The Court concluded that property owners should have the right to a remedy as soon as the uncompensated taking occurs—not after one or more state courts deny the remedy. Moreover, the Court observed, the uncompensated nature of the taking is unlawful, even if the government later pays the owner. Justice Thomas concurred, adding that landowners should be entitled to avail themselves of other remedies, such as trespass or tort claims, in the event of a taking, in addition to the taking claim itself.
Writing in dissent on behalf of the four liberal justices, Justice Kagan disagreed with the Court’s rationale. Because takings are constitutional so long as they are compensated, she argued that, so long as the state provides an avenue for a landowner to be compensated, it is fulfilling its constitutional duty. She further urged that the implication of the Court’s opinion was that a government would be required to pay advance compensation to avoid violating the constitution.
The Court’s ruling will make it more procedurally expedient for takings claimants to obtain relief. As compared with federal courts, it is widely believed that state courts are more sympathetic to government defendants. Plaintiffs’ access to federal courts will ensure that they will obtain compensation earlier than under the Williamson County approach. The decision is likely to increase local governments’ risk exposure in takings cases. From a legal perspective, it was widely believed in pro-property rights circles that Williamson County made little sense, and this decision streamlines what was a roundabout process for obtaining just compensation.
Otten Johnson’s land use and litigation lawyers would be happy to discuss the Knick ruling’s impact on private property rights and regulation with any party whose interests may be impacted by the decision.