The Daily Journal - May 7, 2004
State Takings Issue Is Ripe for Taking by Supreme Court
Forum Column
By Michael M. Berger

For years, property owners, particularly in California, have turned to federal rather than state courts for hearings on their regulatory taking claims that local land regulators have confiscated their property without compensation.

Who can blame them? California's state courts have been acknowledged by virtually everyone as the least hospitable in the country toward constitutionally protected property rights.

The classic formulation came from two Midwestern practitioners who generally sided with the regulators. They concluded that people in other parts of the country "have joked about why a developer would sue a California community when it would cost a lot less and save much time if he simply slit his throat." Richard Babcock & Charles Siemon, "The Zoning Game Revisited" 293 (1985).

Contemporary evaluations of the state judicial climate have not altered that conclusion. In a recent text, the authors conclude that "[t]he striking feature of California zoning law is that the courts in that state have historically been far rougher on the property rights of developers than those in any other state." 1 Norman Williams Jr. & John M. Taylor, "American Land Planning Law," Section 7:3, at 222 (Revised edition, 2003).

Nearly two decades ago, the U.S. Supreme Court held that there is an alternative. The high court told property owners that they could air their claims in a federal forum. It would just take time. And "ripening." They needed to be patient. Williamson County Reg. Plan. Commn. v. Hamilton Bank, 473 U.S. 172 (1985).

In Williamson County, the Supreme Court held that a regulatory taking claim was "premature" and "not yet ripe" for federal court litigation until the property owner first seeks compensation through state procedures. The clear implication of Williamson County was that, once ripened by unsuccessfully seeking compensation in the state courts under state constitutional provisions, litigation of the Fifth Amendment question in federal court could proceed.

But a definite split has developed in the federal appellate courts on whether to apply Williamson County as written and allow property owners to try their federal claims in federal court or to apply general concepts of claim and issue preclusion to prevent federal-court access once the state-court "ripening" process has concluded.

The preclusion adherents hew to the strict application of general legal precepts that, once an issue is tried (or could have been tried) in one court, there is no basis for allowing a "second bite of the apple" in another court. And, in ordinary civil litigation, where the plaintiff has chosen the initial venue for suit, nothing is wrong with that.

However, strict application of preclusion fails to account for the fact that property owners who want only to obtain a federal-court trial of their claims are forbidden immediate access to their court of choice and required to repair to a court where they believe the odds are stacked against them. In that circumstance, there ought to be some judicial flexibility.

In a related procedural posture, established law protects litigants' access to federal courts. Under Railroad Commn. v. Pullman Co., 312 U.S. 496 (1941), federal courts abstain from exercising jurisdiction over cases that contain unsettled questions of state law that could alter the analysis of the federal questions. The courts thus order the parties to try the state issues in state court and return to federal court later if necessary.

To ensure the rights of a plaintiff whose federal case has been put on hold under Pullman, the Supreme Court has authorized plaintiffs to notify the state courts to "reserve" the determination of any federal issues for federal court, submitting for decision only the state issues. See England v. Louisiana State Bd. of Medical Examiners, 375 U.S. 411 (1964).

The 2nd, 4th, 5th, and 11th federal circuit courts have attempted to fashion rules to allow property owners who litigate in state courts under the compulsion of Williamson County to have full access to the federal courts when the state process has ended. They have concluded that some process like the England reservation must be made available if Williamson County is to make any sense. See Santini v. Connecticut Hazardous Waste Mgmt. Serv., 342 F.3d 118 (2nd Cir. 2003); Front Royal & Warren County Indus. Park Corp. v. Town of Front Royal, 135 F.3d 275 (4th Cir. 1998); Jennings v. Caddo Parish School Bd., 531 F.2d 1331 (5th Cir. 1976); Fields v. Sarasota Manatee Airport Auth., 953 F.2d 1299 (11th Cir. 1992).

On the other hand, the 3rd, 9th, and 10th Circuits have applied the preclusion rules rigidly to bar property owners from federal court once they have complied with Williamson County's requirement of state-court litigation. See Peduto v. City of North Wildwood, 878 F.2d 725 (3d Cir. 1989); Palomar Mobilehome Park Assn. v. City of San Marcos, 989 F.2d 362 (9th Cir 1993); Dodd v. Hood River County, 136 F.3d 1219 (9th Cir. 1998); The San Remo Hotel v. San Francisco, 2004 DJDAR 4585 (9th Cir. 2004); Wilkinson v. Pitkin County Bd. Of Comm'rs, 142 F.3d 1319 (10th Cir. 1998).

The 9th Circuit has been the most stringent, the most vocal, and the most recent of the group of courts rejecting federal-court access. And the evolution of its law has been strange. Its first contact with the interface between Williamson County and the preclusion rules came in Dodd v. Hood River County, 59 F.3d 852 (9th Cir. 1995). There, after state-court litigation in which the state courts honored a written reservation of federal issues and dealt only with state issues, the federal District Court dismissed on the ground of claim preclusion, and the appellate court reversed.

"Reduc[ing] to its essence" the government's argument, the 9th Circuit concluded that application of claim preclusion "would be to deny a federal forum to every takings claimant," an application of the law that would be both "revolutionary" and "Draconian" and that the court would not countenance.

After Mr. and Mrs. Dodd were remanded to the District Court, that court again dismissed their claim, this time on the ground of issue, rather than claim, preclusion. And this time, the 9th Circuit affirmed. It did so without any recognition that the result was just as "Draconian" as the earlier District Court holding and left the Dodds without a federal forum.

The latest chapter was written a few weeks ago in the San Remo Hotel case. That case began in federal court and was sent to state court on the grounds that one claim required Pullman abstention and another was not ripe under Williamson County. The state Supreme Court eventually held that there was no taking as a matter of law. San Remo Hotel v. San Francisco, 27 Cal.4th 643 (2002). When the plaintiff returned to federal court, its case was dismissed, and dismissal was affirmed.

The 9th Circuit acknowledged that other courts disagreed with its approach, particularly the 2nd Circuit's recent Santini decision. That court concluded that "[i]t would be both ironic and unfair if the very procedure that the Supreme Court required ... - a state-court inverse condemnation action - also precluded ... ever bringing a Fifth Amendment takings claim. We do not believe that the Supreme Court intended [that result]."

The 9th Circuit panel that decided San Remo, however, concluded that it was bound by earlier 9th Circuit precedent and, besides, the state Supreme Court decision was the "equivalent" of a federal decision, anyway. So much for getting a real federal court determination. In light of the logic in the 2nd Circuit's approach, as well as its adherence to the holding of Williamson County that property owners eventually could have their day in federal court, perhaps it is time for an en banc reconsideration of 9th Circuit precedent. Barring that, the conflicts certainly present an appropriate conundrum for the Supreme Court to unravel.

Michael M. Berger is a shareholder of Berger & Norton in Los Angeles.