Supreme Court Unlocks Door to Federal Courts for Landowners

 Tom Larson  |    October 14, 2019
Supreme Court

On June 21, 2019, the United States Supreme Court, in Knick v. Township of Scott, 139 S. Ct. 2162 (2019), overturned a 1985 Supreme Court case that effectively prohibited property owners from filing a claim in federal courts to protect their private property rights. The case could be one of the most important property rights cases in over a decade as it will likely cause local governments to reconsider their onerous land-use regulations or face the possibility of a federal lawsuit and be required to pay property owners’ attorney fees if they lose.

Facts of the Knick case

In 2013, the Township of Scott, Pennsylvania enacted an ordinance that required ‚Äúall cemeteries ‚Ķ to be kept open and accessible to the general public during daylight hours.‚ÄĚ The ordinance included private burial grounds. ¬†

Rose Mary Knick owned a 90-acre farm, which included a small, private family graveyard, in the Township of Scott. Shortly after the enactment of the ordinance, township officials told Ms. Knick that she had to allow the public to access the graveyard during daylight hours.

Ms. Knick filed a lawsuit in federal court challenging the ordinance, arguing that by requiring her property to be open to the public, the ordinance violated the Fifth Amendment’s takings clause, which prohibits that “private property be taken for public use, without just compensation.

The federal district court dismissed her case ‚ÄĒ not because her takings argument was incorrect, but because she was not allowed to file a takings claim in federal court without first exhausting all of her remedies at the state level, which is a long and expensive process that is not required of any other constitutional claim.¬†¬†

Ms. Knick appealed to the U.S. Supreme Court.

Background on takings claims

Under the Fifth Amendment, a taking can occur in one of two ways: directly or through regulations. First, a ‚Äúdirect taking‚ÄĚ results when the government acquires private land for a public use and pays the property owner just compensation. Property owners often disagree with the amount offered for the property, and there is a legal process in place whereby the property owner can appeal to a neutral third party to arrive at a fair price.

The other type of taking is a ‚Äúregulatory taking,‚ÄĚ which occurs when government enacts regulations that restrict the use of the property to such a degree that the property owner no longer has a beneficial economic use of the property. For example, if a property owner owned a parcel that was zoned for 20 units, and the government changed the zoning to allow only four units on the property, the property owner may have a valid ‚Äúregulatory takings‚ÄĚ claim because the beneficial economic use of the property has been severely diminished.

Since 1985, landowners were effectively prohibited from filing a regulatory takings claim in federal court due to the U.S. Supreme Court‚Äôs decision in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473. U.S. 172 (1985). Under the court‚Äôs decision in the Williamson County case, property owners wishing to make a regulatory takings claim were first required to exhaust all state remedies before filing a claim in federal court. The problem with this requirement, as the Supreme Court explained, was that it created a no-win situation for the property owners. If the property owner filed a claim in state court, exhausted all state remedies and received an unfavorable outcome, the federal court was often powerless to overturn the state court‚Äôs decision under the constitutional doctrine of ‚Äúres judicata,‚ÄĚ which prohibits a re-litigation of a claim once it has been decided by the state courts.¬†¬†

Supreme Court ruling

In Knick, the U.S. Supreme Court overturned the Williamson County case and held that property owners have a right to take takings claims directly to federal court. Specifically, the court stated that when the government takes private property for public use without paying for it, a taking automatically occurs. In other words, landowners suffer a violation of their constitutional rights at the time of a taking without payment, without regard to whether a state law process is available to remedy the violation.

As the court stated, the requirement to first exhaust state remedies for takings claims ‚Äúrelegates the Takings Clause ‚Äėto the status of a poor relation‚Äô among the provisions of the Bill of Rights‚ÄĚ and the new ruling ‚Äúrestores takings claims to the full-fledged constitutional status the framers envisioned ‚Ķ‚Ä̬†

Why this case is important to property owners

The case is significant because property owners who file takings claims in federal court are allowed to receive attorney fees and court costs if they prevail, under 42 USC section 1983 of the federal statutes. Takings claims filed in state court are generally not eligible for attorney fees or court costs. This means that property owners who are subject to unreasonable or excessive land-use regulations should seriously consider filing in federal court. The following are examples of the types of land-use regulations that could be subject to a federal takings claim:

Downzoning land that significantly reduces the allowable density. 

Changing the allowable use under the zoning ordinance.

Revoking a building permit.

Property owners who experience these and other unreasonable land-use regulations may be eligible for attorney fees and court costs if they prevail in federal court. While the Supreme Court ruling will make it more attractive to file takings claims in federal court, property owners always should be encouraged to consult with an attorney to determine the best litigation strategy.  

Tom Larson is Senior Vice President of Legal and Public Affairs for the WRA. 

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