Supreme Court Removes Obstacle to Property Owners Bringing Takings Claims in Federal Court

Supreme Court Removes Obstacle to Property Owners Bringing Takings Claims in Federal Court

Client Alerts

Contributors

On June 21, 2019, the U.S. Supreme Court held in Knick v. Township of Scott, Pennsylvania that property owners whose property is taken by local governments may bring claims for just compensation directly in federal court and need not first exhaust procedures for seeking compensation provided for under state law. Overruling its 1985 decision in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, the Court concluded that property owners may bring federal takings claims under 42 U.S.C. § 1983 without first going to state court, as Williamson County had required.

As the Court noted, its decision removes an important “Catch-22” that had hindered property owners in bringing federal takings claims. In San Remo Hotel, L. P. v. City and County of San Francisco, 545 U. S. 323 (2005), the Court had held 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, as the Court explained, between 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 Knick decision gets rid of this “preclusion trap.”

Background

In 2012, Scott Township, Pennsylvania adopted an ordinance requiring that all cemeteries “be kept open and accessible to the general public during daylight hours.” Mary Knick’s 90-acre property includes a section serving as a graveyard for a number of neighborhood families. In 2013, the township notified Knick that she was violating the ordinance. Knick responded by seeking declaratory and injunctive relief in state court on the ground that the ordinance effected a taking of her property. But the state court action did not move forward because the township had not actually taken any enforcement action against Knick.

Knick then filed an action in federal district court under 42 U. S. C. §1983, alleging that the ordinance violated the Fifth Amendment’s Just Compensation Clause. The district court dismissed Knick’s takings claim under Williamson County because she had not pursued an inverse condemnation action in state court. The Third Circuit affirmed.

Decision

Chief Justice Roberts, writing for a five-member majority, reasoned that Williamson County’s “state-litigation requirement” should be rejected because it “relegates the Takings Clause ‘to the status of a poor relation’ among the provisions of the Bill of Rights. Plaintiffs asserting any other constitutional claim are guaranteed a federal forum under §1983, but the state-litigation requirement ‘hand[s] authority over federal takings claims to state courts.’”

The Court explained that “contrary to Williamson County, a property owner has a claim for a violation of the Takings Clause as soon as a government takes his property for public use without paying for it.” Thus, “the availability of any particular compensation remedy, such as an inverse condemnation claim under state law, cannot infringe or restrict the property owner’s federal constitutional claim—just as the existence of a state action for battery does not bar a Fourth Amendment claim of excessive force.” The Court acknowledged that “it is correct that a fully compensated plaintiff has no further claim.” But it explained that “is because the taking has been remedied by compensation, not because there was no taking in the first place.” As the Court colorfully put it: “A later payment of compensation may remedy the constitutional violation that occurred at the time of the taking, but that does not mean the violation never took place. . . . A bank robber might give the loot back, but he still robbed the bank.”

The Court made clear that its holding did not open the way for property owners to seek injunctive relief barring enforcement of regulations causing or authorizing takings, only monetary compensation. “Governments need not fear that our holding will lead federal courts to invalidate their regulations as unconstitutional,” the Court stated. “As long as just compensation remedies are available . . . injunctive relief will be foreclosed,” including against the federal government under the Administrative Procedure Act.

Implications

  1. Property owners affected by local governments’ actions may now take their federal takings claims directly to federal court. That will likely lead to many more just compensation challenges to local government regulations being adjudicated in federal court and it may thereby enable such challenges to be resolved more quickly.(As the dissent, penned by Justice Kagan, points out, it may also lead to more antecedent questions of state property law being resolved by federal courts. To the extent federal courts certify those questions to state courts, the gain in speedy resolution of claims may be lessened.)
  2. State governments cannot be sued for damages under 42 U.S.C. § 1983, so the Knick decision does not directly affect takings claims against States or state agencies. Although the Supreme Court has not addressed the question whether Eleventh Amendment sovereign immunity bars Fifth Amendment takings claims against States (and their agencies and officials) in federal court, the courts of appeals that have considered the issue have uniformly held that it does. See, e.g., Hutto v. South Carolina Ret. Sys., 773 F.3d 536, 540 (4th Cir. 2014); DLX, Inc. v. Kentucky, 381 F.3d 511, 526-528 (6th Cir. 2004)
  3. As the dissent notes, Knick affords the latest example of the current Court overruling one of its own precedents by a 5-4 vote. It thus represents the latest round in an ongoing debate among the Justices about the importance of stare decisis.

Contributors