The Knick property. Source: Pacific Legal Foundation.

Last week, the U.S. Supreme Court granted a petition for certiorari in the case of Knick v. Township of Scott.  In Knick, the Court is being asked to re-examine its 30-year-old doctrine requiring takings claimants to exhaust state court remedies before filing a claim for just compensation stemming from a regulatory taking in federal court.  The decision to grant the petition indicates that at least four justices agree that it’s time to consider eliminating procedural hurdles created by the Court’s 1985 decision in Williamson County Regional Planning Commission v. Hamilton Bank.

The Fifth Amendment to the U.S. Constitution prohibits the government from taking private property without justly compensating the property owner.  The Takings Clause has been expanded to allow owners to seek compensation in cases where government regulation becomes so onerous that it effectively takes property.

Knick addresses a township law requiring individual property owners to, without compensation, maintain their properties open for public access.  Rose Mary Knick’s 90-acre parcel in western Pennsylvania, which includes her personal residence, was identified by township officials as being the possible site of an ancient burial ground.  Although Knick attempted to convince the township that no documentation proved the existence of such a burial ground, the township passed an ordinance in 2012 allowing general public access to any private cemetery during daylight hours.  Knick attempted to block public access to her property, but was issued a notice of violation by the township’s code enforcement officer.

Knick first sued in the Pennsylvania Court of Common Pleas in 2013, claiming that the township’s ordinance had effectively taken her property.  Because the township had not yet filed any judicial action against Knick, the state court dismissed her claim.  She then filed suit in federal court, again seeking compensation for the alleged taking.  The federal district court dismissed her claims as being unripe, since Knick had not sought compensation through state courts.  The Third Circuit affirmed the district court, similarly finding that Knick’s facial and as-applied claims were unripe.  The Supreme Court granted certiorari last week.

At issue in the case is what is frequently termed the “state litigation rule.”  Understanding the rule requires a look back at Williamson County.  In that case, which involved the denial of a plat application by a county planning commission and subsequent regulatory taking claim, the Supreme Court held that a party bringing a regulatory taking claim must first exhaust all state judicial remedies before bringing such a claim in federal court.  The Supreme Court specifically found in Williamson County that a plaintiff wishing to seek compensation for an alleged regulatory taking must first exhaust all administrative remedies—in Williamson County, the plaintiff should have sought a variance—and must also avail itself of any state procedures for obtaining compensation.  In most cases, that second requirement would have plaintiffs seeking compensation through state courts.

The practical effect of Williamson County has been to require plaintiffs seeking compensation for alleged takings to proceed through lengthy and costly state court litigation, all the way to a point of finality, before even commencing federal litigation to vindicate their Fifth Amendment rights.  In Colorado, for example, a landowner whose land use application was denied and who wanted to bring a subsequent regulatory taking claim would be required to file an action under Colorado Rules of Civil Procedure Rule 106(a)(4), along with a regulatory taking claim.  The claim would need to be litigated through district court and then through the Colorado Court of Appeals.  Only after the Colorado Supreme Court either ruled in favor of the defendant or denied a petition for certiorari—which could be expected to take anywhere from three to five years after the denial, and impose significant cost—could the plaintiff then file a claim in federal district court.

Property rights advocates have long panned the Williamson County decision as imposing a serious and unnecessarily high burden on property owners who wish to seek compensation in the event their property has allegedly been taken as a result of an onerous regulation.  As Knick notes in her petition for certiorari, many problems have been observed with Williamson County.  First, because federal courts are required under the Constitution to afford full faith and credit to state court decisions, most state court takings decisions have been found to be unreviewable by federal courts.  Second, because many parties remove takings claims to federal court, and federal courts subsequently dismiss such claims as unripe, the removal of these claims makes them effectively unreviewable.

The plaintiff in Knick asks the Supreme Court to do one of two things.  It first asks the Court to reverse its Williamson County decision in order to allow takings claimants to bring their claims in federal court.  In the alternative, Knick asks the Court to at least recognize that facial takings claims (i.e. claims that a law effects a taking on its face) be allowed to proceed to federal court without a detour through state court.  Assuming the Supreme Court grants either request, it could be considered a significant win for property rights advocates.

There is no telling what the Court will do with Knick.  Early indications suggest that Justices Thomas and Kennedy are not fond of the state litigation rule, as they joined together in a dissent from a denial of certiorari in an earlier case that attempted to seek the Court’s reversal of Williamson County.  And given the pro-property rights position of Chief Justice Roberts and Justices Alito and Gorsuch, there is a strong initial indication that Williamson County’s days are numbered.  However, the Court has been known to surprise, and much remains to be seen.

As previously reported on this blog a Colorado Court of Appeals decision in 2015 allowed a developer/declarant to retain a right to consent to amendments to a common interest community’s declaration that require arbitration of construction defect claims.

The Colorado Supreme Court has now weighed in on the case involved, which is known as Vallagio at Inverness Residential Condo. Ass’n v. Metro. Homes, Inc., affirming the decision of the Court of Appeals.

Vallagio involved a residential development in which the declaration, created pursuant to the Colorado Common Interest Ownership Act (“CCIOA”) included certain dispute resolution provisions, including an arbitration requirement.  The dispute resolution provisions also stated that those provisions could “not ever be amended without the written consent of the Declarant,” who was the developer of the project. Continue Reading Colorado Condominium Construction Defect Issue: Colorado Supreme Court Affirms the Right of Declarants for Condominium and Other Common Interest Communities to Require Binding Arbitration of Disputes

A survey of the two lots in question. Source: Pacific Legal Foundation.

In a 5-4 decision announced today, the U.S. Supreme Court held that Wisconsin could prohibit development of a subdivision lot—while allowing development on an adjacent lot owned by the same family—without paying just compensation.  The Court’s decision is a victory for states and local governments and a loss for property rights advocates. Continue Reading U.S. Supreme Court Finds No Regulatory Taking in Wisconsin Case

A photograph of Lot E, the parcel that is the subject of the Murrs’ dispute. Source:

On Friday, the U.S. Supreme Court set oral argument for March 20, 2017 in the case of Murr v. Wisconsin, in which the Court is being asked to determine what constitutes the “relevant parcel” in determining whether a regulatory taking of private property has occurred.  The Court’s decision in Murr, expected this summer, may significantly affect private parties’ ability to bring takings claims when government actions render portions—as opposed to the entirety—of the parties’ property unusable or undevelopable.

Two parcels of property located along Lake St. Croix in Wisconsin are the subject of Murr.  The two waterfront parcels, each of which are just over an acre in area, were platted in 1959.  The Murr family purchased one of the parcels (Lot F), and subsequently purchased the other parcel (Lot E) in 1963.  The Murrs built a family cabin on Lot F, and Lot E has remained vacant ever since.  The Murrs held title to Lot F in their family business, while they held title to Lot E under their personal names.  In 1994, the family business conveyed Lot F to their six children, and in 1995, Lot E was also conveyed to the children.  Continue Reading U.S. Supreme Court Set to Hear Oral Argument in Takings Case

In a case that has been percolating for over 14 years, the federal Second Circuit Court of Appeals concluded last month that the Village of Garden City, New York engaged in racial discrimination in violation of the federal Fair Housing Act (FHA) as a result of unlawful zoning practices.  The Second Circuit’s decision came in the same week that the Ninth Circuit found that the City of Yuma, Arizona had committed potential violations of the FHA in denying a rezoning for small-lot single-family housing, a case we reported on last week.  Taken together, these two decisions provide important clarification of the U.S. Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. and suggest that local governments should be increasingly cautious about how their zoning decisions pertaining to certain types of housing development affect patterns of racial and ethnic segregation.

MHANY Management v. Village of Garden City has its roots in a 2002 decision by Nassau County, New York to consolidate its operations in Garden City and to sell off a 25-acre parcel for private development.  Garden City is a predominantly white community on Long Island; excluding group quarters residents, the village’s population was just 2.6% non-white in 2000, and the community contained no affordable housing.  At the request of the County, in 2002, Garden City began to consider alternative zoning designations for the property that would allow the development of, among other uses, affordable multi-family residential uses.  In 2003, Garden City and its planning consultants proposed rezoning the property to the village’s R-M multi-family residential district.  Through 2003 and 2004, the village conducted various studies and held hearings regarding the proposed rezoning.  All throughout the process, Garden City residents vehemently opposed the rezoning.

By May 2004, after widespread community outrage regarding the proposed rezoning, the village dropped the proposal to rezone the property for affordable housing and began considering a rezoning to the R-T district, allowing only single-family townhouse units.  The village rushed through the single-family rezoning, and the board of trustees approved that rezoning in June 2004.  The rezoning to allow only townhouses was opposed by fair and affordable housing advocacy organizations, and the eventual plaintiffs—who were interested in purchasing the property for affordable housing construction—could not submit a workable bid on the property following the single-family rezoning decision.

The plaintiff groups filed suit in 2005 in the federal district court for the Eastern District of New York alleging violations of the FHA and 42 U.S.C. §§ 1981 and 1983, claiming that Garden City had intentionally discriminated against the plaintiffs on the basis of race and also alleging that Garden City’s actions created a disparate impact.  Following a bench trial in 2013, the district court found Garden City liable on the claims of both intentional discrimination and disparate impact.  Among other things, the court enjoined Garden City from further discrimination and appointed a third party compliance officer to oversee Garden City’s FHA compliance.

On appeal, the Second Circuit upheld the district court’s findings of discriminatory intent and disparate impact.  With respect to the discriminatory intent claim, the appeals court agreed with the district court’s finding that racially-charged comments made by members of the public and the village board of trustees’ subsequent decision to reject the proposed multi-family rezoning created sufficient evidence of discriminatory intent and that the village’s decision did not have purely non-discriminatory motives.  On the disparate impact claim, despite the fact that Garden City’s decision to shift from multi-family to single-family zoning was a one-time decision, the Second Circuit held that the series of events leading up to the decision constituted a pattern or practice sufficient to produce a disparate impact.  Applying a burden shifting approach adopted by the U.S. Department of Housing and Urban Development and utilized in the Inclusive Communities Project litigation, the appeals court found that the village had rebutted the plaintiff’s prima facie case with a legitimate, bona fide governmental interest, but remanded the case to the district court for further proceedings on the question of whether the government could further its interests in a less discriminatory manner.

Along with the Ninth Circuit’s decision last week in Avenue 6E Investments, LLC v. City of Yuma, the Second Circuit’s decision suggests that fair housing law, particularly relating to disparate impact, is all but settled after Inclusive Communities Project.  In the meantime, local governments will need to be vigilant in their processing of applications for the development of all forms of affordable housing, and will need to carefully consider the potential discriminatory effects of their zoning policies and other actions.