Is FEMA Forcing Monroe County to Pay Millions for Regulatory Takings as the Price of Maintaining Flood Insurance in the County?

On Christmas Eve 2011, the Florida Keys Keynoter published an article entitled "County to Sue FEMA Over Habitat Inspections." One wonders how Monroe County even figured out it had a problem --- even though the Florida Key Deer sued the Federal Emergency Management Agency (FEMA) in 1990. 

In that case, the Key Deer, through their human spokesman, sued to prohibit the issuance of federal flood insurance in areas where Key Deer habitat existed. A summary judgment hearing was held, in Key West, on August 25, 1994. I assume the Key West Citizen let the locals know that a bunch of deer were trying to stop development in the Florida Keys. Monroe County, on the other hand, made no effort to intervene in the lawsuit.

Following the hearing, U.S. District Judge Michael Moore entered summary judgment in favor of the Key Deer, and against FEMA, ordering FEMA to "consult with" the USFWS (U.S. Fish & Wildlife Service) within 30 days. The agencies were required to determine whether the implementation of FEMA's National Flood Insurance Program [NFIP] was "likely to jeopardize the continued existence of the endangered Key Deer." See Florida Key Deer, et al. v.Stickney, 864 F. Supp. 1222 (DC SD Fla., 1994).

Several people have asked why Monroe County did not move to intervene in the 1990 Key Deer lawsuit. There is a simple answer for this. After the huge changes in land development regulations that Monroe County went through from February 1982 through September 1986, including more than 100 public hearings (or one every two weeks for four years), Florida Keys landowners were worn out. In addition, all the 1990 Key Deer lawsuit sought to accomplish was to require FEMA to "consult" with USFWS. 

In 1990, USFWS was adamantly opposed to FEMA issuing flood insurance policies in the Florida Keys. As time went on, USFWS began to waiver, and it ultimately decided to "work with" FEMA. One could probably look at Washington, DC, politics between 1990 and 2005, and figure out who was doing what to whom, but that is a story for another day (and another blogger).

Nothing much occurred for the next 15 years, until the Key Deer plaintiffs sought, and Judge Moore granted, a permanent injunction against both FEMA and the USFWS. The injunction was to be lifted after the agencies "have complied with the [court's] order." As part of the order, the federal agencies were to provide the court with a list of all the properties in the Florida Keys that are "suitable habitat for the Listed Species." By 2005, the list had grown to eight species: the Key Largo cotton mouse, Key Deer, Key Largo woodrat, Lower Keys marsh rabbit, Schaus' swallowtail butterfly, silver rice rat, Stock Island tree snail, and Key tree cactus. See Florida Key Deer, et al, v. Brown, et al., 386 F. Supp. 2d 1281 (DC SD Fla. 2005), affirmed, 522 F. 3d 1133 (11th Cir., 2008).

Monroe County finally woke up in 2005 -- not because the County was asleep, but because the County was beginning to understand the concept of "regulatory taking" jurisprudence. It frantically sought to become a defendant in Florida Key Deer v. Brown, supra, but Judge Moore rejected the County's effort -- saying it was too little, too late, and that after waiting 15 years to intervene, the County's options had run out. In an attempt to appear meaningful, Monroe County appeared as an amicus in the 11th Circuit's appeal of Judge Moore's 2005 decision.

The future is not clear as to Monroe County. But what is this hullabaloo all about? First, we note that many parts of the United States were denied federal flood Insurance in 1989. These are coastal areas deemed "too sensitive" for development for a variety of reasons, and are in the Coastal Barrier Resource System (CBRS). No Name Key, just east of Big Pine Key, is such an area. There are several other parts of the Keys that were, or almost were, designated as CBRS zones in 1989.

The federal flood insurance program does not reach the CBRS areas, yet those areas continue to be developed, with or without some form of flood insurance. If people want to own a house on a beach, they are in an income bracket in which they can afford to purchase private flood insurance. What difference does it make whether a Federal flood insurance prohibition or a CBRS prohibition prevents private landowners from obtaining inexpensive flood insurance from the federal government? These landowners are going to build anyway.

Monroe County has had a schizophrenic County Commission since 1990 -- which happens to be when the CBRS and flood insurance fiascos started (and I started practicing law here in 1983). The County's latest threat, as County Attorney Bob Shillinger put it, is:

"We'll file suit and seek an injunction to stop [FEMA's request to Monroe County to determine which parcels are located in endangered species habitat]." Why, I am not sure. The County also puts a price tag on the issue, quoting County Administrator Roman Gastesi, stating:

• "the real exposure comes in possible takings cases in which landowners claim they can't build on their land because the County denied use of the land through the Endangered Species Act. They could then sue the County for the value of their land."

Now, I am the first person who would sue the County under Mr. Gastesi's theory, if it made sense. But, these are federal regulations, and they don't actually deprive landowners of anything other than subsidized federal flood insurance -- which is not within the County's purview. On the other hand, I do not pretend to be a genius, and I would be willing to listen to the County's theories. The invitation is theirs to accept or reject.

On that note, I wish everyone a Happy New Year! (And it lies less than an hour away.)

Do Some of our Elected Judges Lean Toward "Politically Correct" Decisions?

Any trial attorney knows that psychological issues are as important to a trial judge as legal issues are to a jury. Anyone who ever watched a Perry Mason TV episode (sorry if you're too young to get it) understands the role emotions play in a courtroom. Instead of cops and robbers, we often just have robbers who consist of: (a) government bureaucrats who are interested in "taking" private property without paying just compensation, and (b) trial court judges who are more concerned with the financial integrity of the local government than they are for the Constitution of the United States of America.

The 50 states that comprise the United States of America are blessed with some of the most pristine -- and beautiful -- landscapes on earth. For private owners of these landscapes, the words "beautiful" and "pristine" have often become fighting words. Yet in 1789, our founders reached an accommodation, of sorts, on that issue. That deal, ultimately part of our constitution, and included assurances that no private property would be taken by the government without just compensation.

It would not surprise me to learn that, on the first opportunity, some 18th century government bureaucrats sought to seize private property "for a public purpose," without any regard for just compensation. Today, it goes without saying that local governments have fallen behind on revenue projections to the extent that their grande schemes of the previous decade were nothing but pixie dust. Unfortunately, that dust includes fixed labor contracts with government employees' unions, primarily teachers, firefighters, and police, but also school janitors, bus drivers, etc. These forces can re-shape the environment in any town or city in the United States.

One subject, that of elected vs. appointed trial judges, has come up many times over the past 200 years. To whom are elected judges indebted to? The subject has been debated before, as we note below.

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"What method of judicial selection produces the “best” judges? And how do we determine who are the “best” judges? Stephen J. Choi (NYU Law), G. Mitu Gulati (Duke Law), and Eric A. Posner (University of Chicago Law) endeavored to answer these questions in their paper, “Professionals or Politicians: The Uncertain Empirical Case For An Elected Rather Than An Appointed Judiciary.” They took an empirical look at how differently selected judges rate on effort, skill, and independence aspects of judicial performance. As you might discern from the title, which judges perform “best” largely turns on what virtues you are looking for in a judge. (Hat tip to the University of Chicago Law Faculty Blog).

Although federal judges are appointed with life tenure, most state judges are elected for short terms. Conventional wisdom holds that appointed judges are superior to elected judges because appointed judges are less vulnerable to political pressure. However, there is little empirical evidence for this view. Using a dataset of state high court opinions, we construct objective measures for three aspects of judicial performance: effort, skill and independence. The measures permit a test of the relationship between performance and the four primary methods of state high court judge selection: partisan election, non-partisan election, merit plan, and appointment. The empirical results do not show appointed judges performing at a higher level than their elected counterparts. Appointed judges write higher quality opinions than elected judges do, but elected judges write many more opinions, and the evidence suggests that the large quantity difference makes up for the small quality difference. In addition, elected judges do not appear less independent than appointed judges. The results suggest that elected judges are more focused on providing service to the voters (that is, they behave like politicians), whereas appointed judges are more focused on their long-term legacy as creators of precedent (that is, they behave like professionals).

It is my professional opinion that judges who are appointed on ability, rather than elected in a nonpartison election are the better choice.

The Galleon Bay Case

During the 1960s, Hannelore and Wolfgang Schleu bought undeveloped land on No Name Key, then linked by a wooden bridge to Big Pine Key. In the late '60s and early '70s, the Schleus, and others, platted two canal subdivisions, Bahia Shores in 1969 and Dolphin Harbour in 1970, with 91 lots in total. The Schleus held on to additional vacant land east of the two subdivisions, 14.5 acres of which were transferred to the Galleon Bay Corporation.

In 1986 - at the request of a commercial fisherman who had an option to buy the 14.5 acres, Monroe County rezoned the Galleon Bay land to commercial fishing village, or CFV, a zoning district that allows both residential development and limited commercial fishing uses. When the fisherman could not obtain a dredging permit from the Dolphin Harbour canal to the 2-acre borrow pit on the Galleon Bay parcel, he let the option expire. At that point in time, the Schleu's daughter began a quest to develop the Galleon Bay land.

This is where we came in - in 1988 - to assist Galleon Bay in obtaining a dredging permit so fishermen could have ingress and egress to the ocean. Even though the state agency responsible for issuing the permit agreed to do so, another state agency - the Department of Community Affairs (DCA) - exercised a then-unheard of state authority, under the federal Coastal Zone Management Act, and stated its opposition to the issuance of the dredging permit. What made this particularly galling was the same agency - DCA - had to sign off on the rezoning to commercial fishing village just two years earlier.

After its first fiasco with DCA, Galleon Bay requested a change in zoning to improved subdivision, that Monroe County denied. After all, they had to protect commercial fishing villages even if they had no access to the ocean. Undaunted, in January 1991 Ms. Schleu appeared before the County Commission for a 14-lot plat approval - after giving up 11 of the 25 dwelling units that supposedly came with CFA zoning. The plat was approved, but the DCA stuck its nose into Galleon Bay again. The DCA lodged an appeal of the plat approval with the Florida Land & Water Adjudicatory Commission (FLAWAC), an "agency" comprised of the Governor and Cabinet of Florida.

Still undaunted, Ms. Schleu filed a lawsuit against the Department of Community Affairs, and she filed it in the 16th Judicial Circuit, which consists solely of Monroe County. Circuit Court Judge Richard Fowler strongly suggested the DCA settle with Galleon Bay. And, after numerous conferences and delays, DCA, the County, and Galleon Bay agreed to a reduction in the sizes of the 14 lots, and the Revised Plat of Galleon Bay was approved by the County Commission in April 1994.

From 1991 to 2011, the only development on the Galleon Bay subdivision has been the construction of roads and drainage structures. One lot was exchanged for a loan advanced by a family friend. It is now owned by the government - because she could not build on it.

Galleon Bay went through a (statutory, not common-law) vested rights proceeding in 1998, after which a hearing officer, in October 1998, determined the corporation had invested $578,670 from the date of the first plat approval, January 1991, through April 1998. He recommended the County grant Galleon Bay vested rights to construct 14 homes on the property.

By 1998, the majority of the County Commission were "got-miners" (I've got mine; we don't want any more development). In April 1999, the County Commission rejected both the hearing officer's factual findings - which is a no-no - and his recommended order. In November 2001, Galleon Bay filed a Certiorari complaint against the Monroe County Commission on their vested rights decision. Circuit Judge Richard Payne reversed the County Commission's 1999 decision. See Final Judgment Granting Writ of Certiorari, October 2002. Monroe County appealed to the Third District Court of Appeal, and lost. Monroe County v. Galleon Bay Corporation, 876 So. 2d 569, writ denied, no opinion (Fla. 3rd DCA, 2004).

Meanwhile, in May 2002, Galleon Bay filed a regulatory taking lawsuit against Monroe County. The County third-partied the State of Florida, and Galleon Bay also sued the State after they became a party. Circuit Judge Richard Payne rendered an Amended Order on Liability on January 30, 2006. On April 18, 2006, Monroe County and the State of Florida filed a rather novel, Petition for Writ of Prohibition with the Third District Court of Appeal. The petition is so off-the-wall that I always suggest attorneys read it, if only for laughs. The District Court denied the petition, without oral argument, on June 2, 2006, four days before the jury trial was to begin. State of Florida and Monroe County, 930 So. 2d 627 (Fla. 3d DCA 2006). The jury trial on compensation was had June 6-10, and 12, 2006. The jury returned a verdict of $3,000,000.

Galleon Bay's appraiser valued the subject property at $6,000,000, while the government's appraiser valued it at $250,000. Galleon Bay had forcefully argued before, and during, trial that the government's appraiser should not be allowed to testify, as his appraisals were nonsensical. All the jury did was split the difference. Galleon Bay moved for a new trial, which was granted. Order Granting Motion for New Trial. The County and State appealed the new trial order and lost. Monroe County et al. v. Galleon Bay Corporation, 954 So. 2d 1169, per curiam affirmed, (Fla. 3d DCA 2007).

Circuit Judge Richard Payne retired at the end of 2006, and his successor rolled the clock back to before January 30, 2006, invalidating Judge Payne's January 30, 2006, liability order. In light of the fact that this successor judge also threw out four regulatory taking cases that were in front of him (Collins, Shands, McCole, and Beyer), and he was reversed in Collins, Shands, and Beyer, Galleon Bay filed a motion to disqualify the successor judge, as did Collins, Shands, and Beyer. Galleon Bay's regulatory taking case ended up with Circuit Judge Mark Jones - whose judicial experience is almost exclusively criminal law. Following a four-day bench trial on liability (as Judge Payne's January 30, 2006, liability order had been rescinded), Judge Jones entered an order, on April 27, 2011, dismissing Galleon Bay's regulatory taking case in its entirety. Galleon Bay has appealed that order, and its initial brief is due on January 4, 2012. For those with an interest in these matters, you may wish to read Judge Jones' Final Judgment in Favor of Defendants Denying Claim for Inverse Condemnation.

Twenty years is not the end of it all. There will be more to come.

The Galleon Bay TragiComedy

I cannot explain how a trial judge could enter the judgment that 16th Judicial Circuit Judge Mark Jones rendered in Galleon Bay Corporation v. Monroe County, et al., on April 27, 2011. This is the most extraordinary trial court decision I have ever seen --- and I've seen a lot in my 30 years of practicing law ---  but this one takes the cake.

There is no doubt that Judge Jones is a very good trial judge. But his experience has been dominated by hundreds of criminal cases, where the government rarely loses. Before sitting down to write this blog entry, I pulled a Lexis-Nexis listing of every appellate decision in Judge Jones' career -- from June 11, 1997, through April 20, 2011. In 14 years on the bench, Judge Jones' decisions have been appealed 140 times. But for a few exceptions, he has rarely been reversed in his criminal appeals.

Judge Jones' appellate affirmances at the 3rd District Court of Appeal are impressive, but it is unlikely that his criminal successes will carry over into eminent domain law. He has never had to decide such a case, and nobody should be surprised when this Galleon Bay decision is reversed.

Collins Liability Trial Concluded April 14, 2011

The liability trial in Collins, et al. v. Monroe County & State of Florida, was heard over nine days, from April 4-14, 2011, in Key West. When the Collins case returned to the trial court in 2009, it was ultimately assigned to Circuit Judge Tegan Slaton. Judge Slaton knocked out three of the eleven plaintiffs, and those three plaintiffs have filed their Notices of Appeal. In the nine trial days during April 2011, Judge Slaton heard testimony only on the issue of liability. (A compensation trial -- requiring a jury -- follows a finding of liability.)

Judge Slaton acknowledged a complete lack of experience in regulatory taking litigation -- but he is a copious note-taker. He tasked the parties to submit proposed orders after the trial transcript is available, and expressed hope that he would issue an order before August of this year. The transcript has been delivered, and the proposed orders are due on June 6, 2011.

[Edited May 14, 2011.]

April 4-14, 2011: Finally, a Trial in Collins v Monroe County

[Edited May 14, 2011.] On December 31, 2008, the 3rd District Court of Appeal (DCA) reversed Circuit Judge David Audlin's 2007 dismissal of the 11-plaintiff Collins regulatory taking lawsuit. The Florida Supreme Court denied review July 16, 2009. After some judge-shifting, the liability trial was set by Circuit Judge Tegan Slaton, for April 4-14, 2011. Judge Slaton also dismissed three of the 11 plaintiffs before trial. The Collinses and Magrinis had received building permits -- but only after extensive delays. The Schneider heirs, according to Judge Slaton, "waited too long" to bring their taking claims (no statute of limitation argument here, just "you waited too long."). The Schneider heirs' claims are now being litigated by Greg Riordan, who is two generations removed from Mr. Schneider. These dismissals were appealed and are now before the 3rd DCA.

A Little History: On January 3, 1997, the original 11 Collins plaintiffs started down this path when Mr. Tobin and I filed their petitions for Beneficial Use Determinations ("BUDs"). The 1997 BUD process was effective January 4, 1996. It was written by the Florida Department of Community Affairs (DCA) as part of the Florida Keys 1996 Comprehensive Plan. Technically, the language was adopted -- by rule -- by the Governor and Cabinet sitting as the Florida Administration Commission (ADCOM). We would note that the 1996 ADCOM rule was a huge improvement over the unconstitutional BUD process that the County -- and ADCOM -- adopted in 1986. For those who were not involved in the 1982-86 evolution of the first ADCOM Florida Keys Comprehensive Plan, it is worth reviewing the 1986 BUD regulation to understand why landowners did not utilize the 1986 BUD to obtain compensation for the loss of all beneficial use of their land.

The 1986 BUD rule/regulation [this, too, had to be approved by ADCOM] required landowners whose property was unbuildable to: (1) make a "bona-fide attempt" to sell their post-1986 unbuildable property for no more than 40% of its pre-1986 Fair Market Value ("FMV"), and (2) if they found no buyers, these property owners would, at best, be entitled to compensation that would not exceed 40% of the land's pre-1986 FMV. The 1986 BUD rule/regulation was declared unconstitutional by Circuit Judge Richard Payne, in Gonzalez v. Monroe County, a lawsuit we initiated in 1988. Judge Payne's decision was affirmed by the 3rd DCA, with an opinion, in Monroe County v. Gonzalez, 593 So. 2d 1143 (Fla. 3d DCA 1992).

Ultimately, between 2002 and 2004, each of the Collins plaintiffs received a resolution, from the Monroe County Board of County Commissioners, stating that they had been "denied all beneficial use" of their subject properties. In 2004, they sued Monroe County for the just compensation they were entitled to under the United States and Florida Constitutions. On November 6, 2006, then-Chief Circuit Judge Richard Payne denied the County's and State's motions for summary judgment on liability. Unfortunately, Judge Payne was about to retire as of December 31, 2006, and this case was automatically assigned to newly-elected Circuit Judge David Audlin on January 1, 2007.

Judge Audlin turned out to be the governments' greatest ally in 2007. After assuming the Circuit Judge seat left vacant by Chief Circuit Judge Richard Payne, David Audlin swept all regulatory taking cases off his docket within a year! Needless to say, we spent many months on the Audlin appeals. We sucessfully reversed Judge Audlin's dismissals in Collins v. Monroe County and Beyers v. City of Marathon. At the same time, Pacific Legal Foundation ("PLF") successfully reversed Judge Audlin in Shands v. City of Marathon. [We are in the process of taking over PLF's responsibilities in Shands v. City of Marathon, while PLF focuses on appellate practice.]

So far, we have not been successful in reversing Judge Audlin's decision in McCole v. City of Marathon, nor Judge Garcia's decision in Sutton v. Monroe County. We believe these appeals were wrongly decided by the 3rd District Court of Appeal, but there are no longer any Florida courts in which we can continue these battles. There is a possibility, having exhausted State judicial remedies, that the Sutton and McCole cases can now be brought in a United States District Court under the United States Constitution. [At least U.S. trial judges do not have to worry about re-election.]

Happy New Year

Well, it has been almost a year since I updated the Grand Theft: Property Blog. So a brief review of our regulatory takings cases in the Florida Keys appears to be in order.

I should point out that, in 2009, we spent about six months getting our Collins and Galleon Bay regulatory taking cases out of the hands of a pro-government trial judge, David Audlin. Judge Audlin had dismissed four regulatory taking cases in 2007 -- Collins v Monroe County, Shands v City of Marathon, McCole v City of Marathon, and Beyers v City of Marathon -- and Judge Luis Garcia dismissed a fifth case, Sutton v. Monroe County. On December 31, 2008, the Florida 3rd District Court of Appeal reversed Judge Audlin's dismissals of Collins and Shands -- but that still left McCole, Beyer, and Sutton to be decided.

The 3rd District Court of Appeal (3rd DCA) affirmed Judge Garcia's dismissal of the Sutton case on December 23, 2009. We were surprised by the 3rd DCA's decision because it was completely contrary to the Collins and Shands decisions of a year earlier. We filed a Motion for Rehearing in Sutton. That was denied May 25, 2010. We then filed a Petition for Discretionary Review with the Florida Supreme Court. That petition was denied on December 18, 2010 -- less than two weeks ago. There are some other options available to Mrs. Sutton, but I will leave that for another day.

The 3rd DCA's decision in Beyers v. City of Marathon, on June 9, 2010, was consistent with its earlier decisions in Collins and Shands, and the Beyer case was remanded to the trial court. However, the 3rd DCA rejected the McCole v. City of Marathon appeal on April 21, 2010, based upon its logic in the Sutton appeal.

This left us with successful appeals in Collins, Shands, and Beyers, but with completely contradictory decisions in Sutton and McCole. Because of the conflict, we filed petitions for discretionary review, in Sutton and McCole, before the Florida Supreme Court in mid-2010. Two weeks ago, on December 18, 2010, the Florida Supreme Court denied review in Sutton and McCole.

The only fact that distinguishes Sutton and McCole from Collins, Shands, and Beyers, from Sutton and McCole is that Ms. Sutton and the McColes "asked" if they might be able to develop their property many years ago, and were told that it was "unlikely" that they could do so. Neither Ms. Sutton nor the McColes requested a Beneficial Use Determination after being told development was "unlikely." In our opinion, this does not rise to the level of "ripeness" required by the U.S. Supreme Court in Williamson County. For that reason alone, we believe the Sutton and McCole decisions are wrong.

Ms. Sutton's and Ms. McCole's remedies are somewhat limited. Both can file regulatory taking claims in Federal court now that they have "exhausted State judicial remedies." The 3rd DCA, in a footnote, also invited Ms. Sutton to file a new building permit application. This, too, is an option.

It is fair to say that the status of regulatory taking claims in the Florida Keys remains somewhat unclear, even where the landowner has only informally sought a development order or building permit more than four years ago. At least this appears to be true in the minds of the appellate judges in Miami. Perhaps a Federal District Court decision to the contrary will change their minds.

In short, that's what we've been doing this past year. We are also moving forward on the Collins case, which is set for a liability trial in April 2011, and on the Galleon Bay case, another lawsuit that Judge Audlin screwed up during his reign in 2007. But ... more on those cases later this year.

When will the Government Figure it Out?

Three weeks ago, the State of Florida deposited $8.85 million with the Clerk of Court for Monroe County to compensate the landowners in Florida DEP v. West for the condemnation of their North Key Largo properties in April 2004. When this eminent domain action was filed as a slow-take in 1995, the State offered a mere $160,000 for the subject properties. Our response to the slow-take was a regulatory taking counterclaim. That was our way to protect landowners from the State "walking away" from any jury verdict it did not like.

Land values began to rise in 2001 -- although not on these properties. In 2004 the State opted for a "quick-take." At that time, the State's estimated fair market value of the two parcels -- based on the confiscatory regulatory scheme -- was $630,000. But after executing the quick-take, the State could no longer walk away from a jury verdict that exceeded its budget. After all, nobody had been able to build on North Key Largo since February 8, 1982 (except at the Ocean Reef Club and a few existing subdivisions).

After the 2004 quick-takes, we re-cast the regulatory taking counterclaim into a jury instruction on condemnation blight. Even though the Florida Supreme Court has embraced condemnation blight on at least two occasions, the State's in-house attorneys could not grasp the concept. Fortunately we had a trial judge, Luis Garcia, who understands government cannot prohibit a landowner from using his property, and then benefit from its own actions by driving down the property's acquisition cost. (In 2001, Judge Garcia ruled the same way in another case, Shadek v Monroe County, where White & Case attorney Doug Halsey raised the same issues and Monroe County settled by paying $6 million in temporary taking damages.)

So ... the government goes down for the count again! I have remarked, on numerous occasions, that the reason for this waste of money is nothing more than the "tyranny of the majority" in small, attractive, relatively well-to-do communities such as the Florida Keys. Those who already own homes in the Keys will do everything in their power to prevent others from doing so. To that end, the "got-miners" elect like-minded County Commissioners, who respond by prohibiting new development wherever they find it. It's a self-perpetuating, downward spiral, that could well -- unless reversed -- bankrupt every owner of developed property in the Keys.

To got-miners: think about it!

Confiscatory Land Use Regulations are Unconstitutional in Florida: It is Time For the Kill

To the best of our knowledge, no local government in Florida -- other than Monroe County and its municipalities -- has ever been able to maintain confiscatory land development ("zoning") regulations. In 1984, the Florida Supreme Court held, in Dade County v. National Bulk Carriers, 450 So. 2d 213, 216 (Fla. 1984) that "if a zoning ordinance is confiscatory, the relief available is a judicial determination that the ordinance is unenforceable and must be stricken."

Government lawyers are wont to say that National Bulk Carriers was overruled, sub silentio, by the Supreme Court in First English Evangelical Church v. Los Angeles County, 482 U.S. 304 (1987), but that does not seem to be the case. In Joint Ventures v. FDOT, 563 So. 2d 162 (Fla 1990), a post-First English Florida Supreme Court held unconstitutional a statute that allowed the FDOT to "freeze" all development, for up to five years, and for a second five years if it wished, by recording a "reservation map" in the county records.

The 1990 supreme court invalidated Florida's "reservation map" statute, on Due Process grounds, after comparing its effect to the "condemnation blight" case of Bd. of Commissioners v. Tallahassee Bank, 1o8 So. 2d 74, 86 (Fla 1st DCA 1958), writ quashed, 116 So. 2d 762 (Fla 1959), stating "We perceive no valid distinction between "freezing" property in this fashion and deliberately attempting to depress land values in anticipation of eminent domain proceedings. Such action has been consistently prohibited."

In Joint Ventures, the supreme court sealed the fate of the Florida Keys' "Beneficial Use Determination" ("BUD") ordinances, when responding to FDOT's argument that "the property owner can always sue in inverse condemnation," as follows.

DOT contends that Joint Ventures' right to seek compensation through inverse condemnation cures the statute's failure to expressly provide for compensation. We disagree. ... [T]hat remedy is not equivalent to a property owner's remedy under the doctrine of eminent domain. Inverse condemnation affords the affected property owner an after-the-fact remedy, when there has already been a "taking" by regulation, and it is not a substitute for eminent domain protection facilitated by chapters 73 and 74 [Fla. Stat.]

The property owner who must resort to inverse condemnation is not on equal footing with an owner whose land is "taken" through formal condemnation proceedings. The former has the burden of seeking compensation, must initiate the inverse condemnation suit, and must finance the costs of litigation without the procedural protections afforded the condemnee.

In Joint Ventures (1990), as in National Bulk Carriers (1984), the Florida Supreme Court held the "reservation map" statute unconstitutional on Due Process grounds.

Fast forward to today. If it were not for the Keys' governments' "beneficial use" ordinances, many of these local land use regulations would have been declared unconstitutional 23 years ago. But let's take a look at those ordinances in the context of National Bulk Carriers and Joint Ventures -- the law in Florida.

• Not one of the Keys' BUD ordinances provides for the acquisition of a landowner's property by the exercise of eminent domain, if the property has been rendered unbuildable by the local government's zoning regulations. A first-year law student could see this is a Due Process violation that renders the underlying confiscatory regulations unconstitutional.
• Monroe County recently raised the "application fee" for a Beneficial Use Determination to almost $5,000. This is reminiscent of the $2 "poll tax" cases of the '60's. Is it remotely possible that a local government can assess the owners of land within its boundaries a "poll tax" of $5,000? If the government cannot assess a $2 fee for the right to vote, it cannot assess a $5,000 fee for the right to Just Compensation. Or any fee, for that matter.

There is a solution to this madness, and we are about to undertake it. We will soon file an action in the United States District Court for the Southern District of Florida, on behalf of several non-resident owners of Florida Keys property -- under the Federal court's "diversity jurisdiction" -- against the local governments and certain Florida state officials, to invalidate major portions of the Florida Keys' local government comprehensive plans and land development regulations, on Due Process grounds and Florida law.

Postscript: This situation reminds me of Pogo, who would say "we have met the enemy, and it is us." The reason the Florida Keys is up to its neck in "just compensation" liabilities is the classic tyranny of the majority problem. The people who own developed property in the Keys, and vote there, simply do not want anyone else to build anything within their driving radius. These cluckheads, who elect like-minded cluckheads to the County Commission and municipal Councils, have not yet figured out that they will be paying the bills for this fiasco for decades to come.

It Could Be a Busy 4th Quarter

After three weeks away from the pressure of brief-writing -- not to mention the stress of moving our pending regulatory taking and due process lawsuits -- it is a bit easier to cope. I did spend some of that downtime (at least an hour) thinking about what can be done to bring the Keys' land use regulations in line with those of a civilized society. Like the South of France. Not likely, that.

That raises a question: what civilized society would we like to emulate? California? There's a basket case, where affordable housing exactions are killing potential housing projects, and the state budget is a joke. How about Miami, Naples, or Fort Lauderdale? They have too much of everything, and the high vacancy rates to go with it.

Has anyone else noticed that Florida local governments (including the Keys) spent taxpayers' money like drunken sailors in the 2001-06 run-up? And now they're stuck with overpaid administrators and pension obligations that they will never be able to meet. OK, there's a goal.

First, fire half the County staff, starting with those who draw the largest paychecks. I challenge anyone to explain why we need a County Administrator when we have a County Commission that consists of five geniuses, all of whom are former (or future, because they are so smart) Nobel Prize winners. We could also do away with the County Attorney position, as all five Commissioners are more versed in the law than any attorney could possibly be. And the entire planning department could be let go, as there is nothing left to plan.

In the Keys, the City of Marathon cannot give away its building permits. The "village" of Islamorada was (correctly, I might add) deemed "charm-less" by United States District Judge James Lawrence King, and it is being sued by its former mayor, and a bunch of other people, over its sewer impact fees. Key West is, well, Key West. Monroe County may well be the only county in Florida where the population decreased over the 2000-2010 decade. Trust me, we will not get a merit badge for that statistic.

So ... are things good in the Keys? No. We have had several years of over-building, in large part because the State and County superseded the market, so every person who could, built a house. We now have a queue as long as my arm, of people who definitely do NOT want to build here. (The reason people wanted to build here was that "it was difficult.") We have had an artificial market here for 17 years, and it finally folded. Do we have a problem? Yes.

Do we need to change the regulatory climate in the Keys? Yes.

Nollan-Dolan Exactions May See More Play

Since 1976, the State of Florida and the Monroe County (Florida Keys) Commission have imposed ever-increasing restrictions on the use of Florida Keys property -- using regulatory authority to confiscate private property without paying Just Compensation -- on the fuzzy theory that this will somehow better the universe (at no cost to the State and County taxpayers). The major shift took place on September 15, 1986, when the State "approved" a confiscatory comprehensive plan (that was written by the State) that prohibited the development of thousands of legally-platted lots within the Florida Keys, and downzoned thousands more.

In 1987 and 1994, the Supreme Court issued two regulatory taking opinions that did little more than muddy the waters. The 1987 decision, Nollan v. California Coastal Commission, 483 US 825, stemmed from a request for a building permit to rebuild the Nollans' oceanfront property with a larger residence. The California Coastal Commission acquiesced on the condition that the Nollans dedicate a portion of their property as a "viewing easement," that would allow passers-by to see the ocean from the street in front of the Nollans' home. Though many landowners had caved in to the Coastal Commission's demands, the Nollans sued, claiming the easement was an unconstitutional exaction. The Supreme Court agreed, explaining that a permit "condition" must be related to the "impact" of the development approved by said permit. In Nollan, the Supreme Court could not see a connection between the enlargement of the Nollan's home, and the need for passers-by to see the ocean.

In their 1994 decision. Dolan v City of Tigard, 512 U.S. 374, the Supreme Court supplemented the Nollan "connection," with a Dolan "proportionality" requirement for exactions imposed on private property owners. The Dolan decision has always been difficult to articulate. However, the 2006-2008 Utah Supreme Court has done a nice job explaining Dolan.

In B.A.M. Development v. Salt Lake County (I), 128 P. 3d 1161 (Utah 2006), and B.A.M. Development v. Salt Lake County (II), 196 P. 3d 601 (Utah 2008), the Utah Supreme Court reduced the Dolan "proportionality" requirement to dollars. In short, if the cost to the taxpayer exceeds the costs of its improvements (to the public), the taxpayer has been impermissibly overcharged. The difference is a Fifth Amendment taking.

Reverse Endangered Species Act Claim

In a comedic regulatory taking "defense," government counsel opposing our client's regulatory taking claim in Galleon Bay Corp. v. Monroe County & the State of Florida, are attempting to pin the tail on the federal government donkey, arguing "the US Fish & Wildlife Service made us do it."

Most land use attorneys know the USF&WS abhors "regulatory taking" issues because it doesn't have the money to buy "regulatory condemned" property and, if it were to do so, the F&WS would pay for the property out of the agency's regular budget. That means salaries and overhead suffer if a taking claim occurred. So ... what is going on here?

Apparently, the Monroe County Attorney, Suzanne Hutton, and Florida's Attorney General (and gubernatorial candidate), Bill McCollum, never got it. We have been served with a motion to dismiss, based on those politicians' nonsensical theory that the USF&WS "took" the subject property (on No Name Key) by "requiring" the County and State to apply for an Incidental Take Permit ("ITP") for the widening and fencing of US-1 on Big Pine Key, in Monroe County, Florida (the Florida Keys).

Just to bring everyone up to speed, the Endangered Species Act (ESA, adopted in Richard Nixon's administration) places burdens on government, not private sector, activities that affect listed species. Private development activities are not subject to the ESA, but landowners can apply for an ITP if they are concerned about the survival of an endangered species after their project has been completed.

As no landowner is required to apply for an Incidental Take Permit (ITP), no ITP is required for a private developer to build homes on No Name Key -- which already has nearly 60 homes -- or anywhere else, for that matter. Thus, there is no federal law or regulation that requires owners of Galleon Bay lots to obtain an ITP. Monroe County and the State took it upon themselves to obtain an ITP for the hundreds of vacant lot owners on Big Pine and No Name Keys, for the sole purpose of acquiring those parcels at fire-sale prices.

Government Denied Review by Florida Supreme Court in Collins v Monroe County

Yesterday, the Florida Supreme Court denied the governments' petition for discretionary review in Collins, et al v. Monroe County & the State of Florida, 999 So. 2d 709 (2008), rev. denied (Fla. 7/16/2009). The governments' argument -- that Monroe County's Beneficial Use Determination administrative procedure did not trump prior Florida ripeness decisions of the 1st and 4th DCAs -- was without merit. The supreme court saw no conflict between the 3rd DCA's decision in Collins (BUD ripens) and the ripeness decisions in jurisdictions with no BUD (or similar) administrative process.

As Florida's "discretionary review" process is not an "appeal," the 90-day clock for appealing to the United States Supreme Court ran out on May 20, 2009.

The denial of review was rendered only 66 days after the last brief was filed -- which is 26 days quicker that the 92-day average for all review denials in the past 12 months. The result was hardly in doubt. Only 11% of 9,874 petitions for discretionary review were granted by the Florida Supreme Court in the 10 year period 1990-99, and there is no reason to believe anything has changed since the 1990's. If a horse in the Kentucky Derby had an 89% probability of success, a lot of people would bet on it. (Or maybe not, because the payout would be so low.)

As an aside, we note that the supreme court also awarded attorneys' fees to the plaintiffs (landowners).

Ms. Ahearn's $25 Million Eminent Domain Verdict

Gideon Kanner posted this four days ago, about a 101-year old landowner who may have gotten even with the local government. Then the Eminent Domain Law Blog picked it up last Friday, and it's just too good to pass up.

The landowner, 101-year old Ms. Ahearn, had been offered $25 million for her golf course property some 10 years ago, and the local government (Evergreen Park, Illinois) killed the deal by refusing to rezone the property. Then, as luck would have it, the town decided to acquire the property by eminent domain ... offering $5 million. The jury, however, after 30 minutes of deliberation, came back with $25 million -- the amount Ms. Ahearn would have received 10 years ago.

Now comes the difficult part. As in Florida, Illinois apparently allows the condemning authority to "walk away" if it doesn't like the jury verdict. It pays costs and attorneys' fees, but that doesn't do much for the landowner.

We have an analogy to Ms. Ahearn's case here in the Florida Keys -- Florida DEP v West, et al. The West case is pending in the Florida Third District Court of Appeals, after a jury came in at $5.06 million in an eminent domain proceeding where the State put up only $550,000. We represent the landowners in West, and are defending the appeal. But we have a leg up on Ms. Ahearn -- as the State "blinked" and filed a "quick-take" almost at the height of the real estate bubble in 2004. The State of Florida cannot "walk away" on this one.

The State of Florida filed the West condemnation proceeding in 1995, as a slow-take (like Ms. Ahearn's in Illinois). We responded with a regulatory taking counterclaim, figuring the State would run like a scared rabbit if a jury came in at 10 times what the State was offering back then. At the least, the taking counterclaim could be pursued if the State decided to bail out of its slow-take. Fortunately, the State blinked in 2004, and we converted the counterclaim into a motion in-limine on condemnation blight.

Federal Circuit Finds Fifth Amendment Taking by Endangered Species Act

In Casitas Mun. Water Dist. v. United States, 543 F.3d 1276 (2008), rehearing denied, 556 F.3d 1329 (Fed. Cir. 2009), the US Court of Appeals for the Federal Circuit reversed the Court of Federal Claims -- opinion at 76 Fed. Cl. 100 (2007) -- holding that an uncompensated taking under the Fifth Amendment has occurred.

... there is no doubt that the preservation of the habitat of an endangered species is for government and third party use -- the public -- which serves a public purpose. .... when the government forces Casitas to divert water away from the Robles-Casitas Canal to the fish ladder for the public purpose of protecting the West Coast Steelhead Trout, this is a governmental use of the water.

Every environmental NGO in the country filed amicus briefs in Casitas. Though I haven't read them all, it's just the same old song -- "endangered species are entitled to more Constitutional protection than are citizens of the United States." That just ain't so, and the Federal Circuit has so held.

This brings me to Monroe County's latest fiasco on Big Pine Key and No-Name Key. The County and the State of Florida teamed up to develop a BPK-NNK Habitat Conservation Plan to "protect" the endangered key deer and the Playboy marsh rabbits, that prohibits essentially all use of approximately 1,000 acres of undeveloped, privately-owned land. This confiscatory County/State HCP was submitted to the US Fish & Wildlife Service as part of an application for an Incidental Take Permit. Always happy to accept land donations, the USF&WS issued the ITP -- that recites verbatim the conditions in the County/State HCP.

The problem with this scenario is that the County and the State did not have any ownership interest in the land they donated to the F&WS to "save" the key deer and Playboy bunnies. Ooops? You bet! The only difference between the BPK-NNK HCP and Casitas Mun. Water District v. United States is that Casitas is a physical taking (because the water is physically taken from Casitas and given to the fish) and BPK-NNK is a regulatory taking.

Meanwhile, we have a class action lawsuit pending in state court (Lightner, et al. v. Monroe County and the State of Florida), alleging a regulatory taking of those 1,000 acres on BPK-NNK, that should benefit substantially from this excellent decision by the US Court of Appeals for the Federal Circuit.

As we see it, the County and State can rescind their confiscatory regulations and pay temporary taking damages to those who have sought development approvals since the regulations went into effect. Or they can pay out more than $200 million in compensation for a permanent taking of 1,000 acres on Big Pine Key and No-Name Key.

PS. The US Court of Federal Claims (CFC) has exclusive jurisdiction over all inverse condemnation claims -- in excess of $10,000 -- brought against the United States. The Federal Circuit Court of Appeals hears all appeals from the CFC. Yours truly has been admitted to practice before the CFC since 1985, and the Federal Circuit since 1990.

NOTE ADDED August 10, 2009. The U.S. Solicitor General (Elena Kagan) requested two extensions of time to file a petition for certiorari in Casitas Municipal Water District. The second extension ended July 17, 2009 -- 24 days ago -- and no petition has been docketed by the Supreme Court. Looks like the Casitas battle goes to the property owners.

$4,500 Poll Tax Approved by Moron County Commissioners

One wonders what goes through the feeble minds of elected officials, not to mention their sycophantic in-house counsel. Two weeks ago, I noted that the Florida Keys' elected County Commissioners were entertaining their planners' proposed fee of $4,500 for a "Beneficial Use Determination," a/k/a "BUD." Well, they weren't embarrassed in the least. They adopted said $4,500 "poll tax" on April 15, 2009.

In other jurisdictions, similar statutes and ordinances are called "taking avoidance" procedures. Many communities are justifiably concerned that their land development regulations "go too far," placing the local taxpayers in a position where they will have to pony up millions of dollars when regulations go "too far." The more enlightened communities utilize their taking avoidance ordinances to back off on overly confiscatory regulations, and save the taxpayers a ton of money. The Florida Keys $4,500 fee will just cause more litigation. It is now being used to pay planners' salaries, instead of what it was originally intended to do -- save money.

On December 1, 2007, I reported on a good example of municipal incompetence on the part of the City of Half Moon Bay, California, when it got slammed with a $36.8 million inverse condemnation judgment as "payback" for its years of staunch opposition to a residential subdivision within the city limits. Nearly a year later, I reported, also on this blog, that Half Moon Bay and the landowner had reached a settlement. The City would allow the development of the property or, if the California Coastal Commission prevented same, it would pay the landowner $18,000,000.

Monroe County is headed for serious financial trouble, whether the County Commissioners know it or not, and this latest dumb move just digs the hole deeper. Property tax rates in this community are the lowest in the State of Florida, but that will not last long with these clowns in office.

If a $2 Poll Tax is Unconstitutional, Can a $4,500 Ripeness Fee be Constitutional?

I understand charging a fee for reviewing building plans -- or to process a Conditional Use or Special Exception -- but charging a $4,500 fee to request Just Compensation? The Monroe County Commission may think this is a terrific idea. Why, just think, a $4,500 "ripeness fee" might just keep a lot of those damn, rabble-rousing landowners from asking for "money" for their regulatory taken property.

On December 31, 2008, Florida's Third District Court of Appeal, once again, explained how the Florida Keys' unusual Beneficial Use Determination (BUD) process works. See Collins, et al. v. Monroe County, et al., 999 So. 2d 709 (Fla. 3rd DCA 2008) and Shands v. City of Marathon, 999 So. 2d 718 (Fla. 3rd DCA 2008). It is also worth noting that the New Jersey Supreme Court just upheld an almost identical BUD in OFP, LLC v. State of New Jersey, 930 A.2d 442 (NJ App 2007), affirmed, 963 A.2d 810 (NJ 2008). (So we are not alone anymore.)

In 1986, the State imposed a confiscatory zoning map on the Florida Keys. It downzoned at least 5,000 platted lots, making them unbuildable. Until First English in 1987, Florida's position was that confiscatory zoning ordinances were unconstitutional on Due Process grounds. See Dade County v National Bulk Carriers, 450 So.2d 213 (Fla. 1984) (Florida did not recognize a right to monetary compensation for regulatory takings by zoning ordinances.) In 1986, the State planning agency was staring at a major Due Process lawsuit that would have taken down its ComPlan in a heartbeat.

In 1985, along came Charles Siemon. He came up with the State's first (and only) "ripening" ordinance. The 1986 BUD gave the County Commission authority to waive any land use regulation that "took" property. The 1986 language was painfully unconstitutional, as it required the landowner to first "attempt" to sell the property for 40% of its pre-regulation Fair Market Value (FMV). If that failed, and the County declined to waive its regulation(s), the County would pay the landowner 40% of the pre-regulation FMV. Judge Richard Payne struck down both provisions in a regulatory taking lawsuit we filed in 1988. The 3rd DCA affirmed. See Monroe County v. Gonzalez, 593 So.2d 1143 (Fla. 3rd DCA 1992).

In 1990, we filed another regulatory taking lawsuit, this time against the City of Key West. See Key West v Berg, 655 So. 2d 196 (Fla. 3rd DCA), rev. denied, 663 So. 2d 629 (Fla. 1995). In 1994, a new Key West ComPlan included a reference to a not-yet-adopted BUD process. Judge Richard Payne agreed Berg did not have to exhaust a not-yet-written regulation, but the 3rd DCA reversed, asking, at oral argument, "why can't you just write the City a letter?" On remand, the City settled with Mr. Berg for $3.5 million.

In 1993, the State of Florida inserted the 1994 Key West BUD language -- which the State also wrote -- into Monroe County's new ComPlan (effective 1977). The County adopted implementing regulations in 1998, and the 1998 BUD ordinance remained in effect until 2008. A new -- but much less constitutional -- BUD ordinance went into effect last year.

The law is clear that a Florida Keys landowner -- who believes their land has been subjected to a regulatory taking -- must petition for a Beneficial Use Determination before his or her taking claim is "ripe." It is equally clear that the Statute of Limitation does not begin to run on a Florida Keys regulatory taking claim until the BUD determination has been rendered. This protects the landowner who is unaware of their claim, and prevents the local government from receiving windfalls when landowners fail to exercise their right to sue for a regulatory taking. It does not protect the government from claims the BUD process has become "futile" on a case-by-case basis.

Last I looked, the right to Just Compensation for a "taking" of property is enshrined in both the U.S. and Florida Constitutions -- just as is the Right to Vote. We don't allow governments to charge a fee for exercising the right to vote -- not a dollar, nor a penny -- even though it costs the government a boatload of money to buy the voting machines, print the ballots, and staff the polling places.

In 1997, Monroe County began charging a $500 fee for processing a BUD petition. Apparently nobody complained, so the fee began to creep up, first to $750, then to $1,300. We filed about 25 petitions the day before the increase to $1,300 went into effect in 2005. Now -- as you can see from the agenda item I posted on Google Docs -- the leeches in the planning department want to increase the fee to $4,490.

For at least the past two years, we have been considering filing a lawsuit to declare the BUD unconstitutional, on several grounds, and to declare the Florida Keys' confiscatory land use regulations unconstitutional on Due Process grounds. What the State and County planners keep forgetting is the holding in Joint Ventures v. Florida DOT, 563 So. 2d 622 (Fla. 1990). In Joint Ventures, the supreme court held a legislative act that precludes all development on a parcel of land, is unconstitutional on Due Process grounds, unless the landowner has a direct avenue to condemnation proceedings. The supreme court specifically stated that the right to bring an inverse condemnation proceeding, as FDOT argued, does not suffice. In the end, the FDOT land-freezing statute was declared unconstitutional on Due Process grounds. (Note the similarity to National Bulk Carriers, above.)

None of the 5 or 6 Florida Keys' BUD ordinances provide affected landowners with a right to a condemnation proceeding. All you get is a letter in the mail that includes an offer to buy the property at a price that is about 15% of what one would receive, on average, in a condemnation proceeding. And -- if you turn down or ignore the offer, the government is content to let you rot in Hell forever. That is not Just Compensation, and it violates Due Process big time.

As they say in the advertising business, watch this space.

3rd District Court of Appeal Denied Motions to Remand Beyer, McCole, and Sutton

Despite the fact that the City of Marathon agreed to the remand of Beyer v City of Marathon & the State of Florida, and the County's response to our remand motion in Sutton v. Monroe County was essentially "please make them write a Brief," the Florida 3rd District Court of Appeal denied our motions to remand Beyer, McCole v. City of Marathon, and Sutton in light of the Court's New Year's Eve decisions in Collins v. Monroe County and the State of Florida and Shands v. City of Marathon.

All three of these regulatory taking cases were dismissed on the same statute of limitation ground that was rejected by the same Court in Collins and Shands. The only opposition to our remand motions came in McCole, where the City raised an additional argument below and apparently thinks that argument might be enough to win. So, now we need to write three more Briefs, and have three more oral arguments. And the governments' private-sector lawyers will bill the taxpayers for more attorneys' fees.

Gov't Appeals Collins Decision to Florida Supreme Court

For those who are following the New Year's Eve regulatory taking decisions in Collins, et al. v Monroe County, et al., and Shands v. City of Marathon, let it be known that no stone will remain unturned. Friday, the gov't served notice that it was petitioning the Florida supreme court to review the Third DCA's Collins decision under its discretionary jurisdiction to hear whatever it takes an an interest in. These are uphill battles, but the gov't's notice suggests it has located an inconsistency between the Collins decision, and a decision of another District Court of Appeal.

The Monroe County Attorney's office requested permission, in January 2009, to file this petition for discretionary review. But I could not fathom, from its request to the County Commission, what it was relying on for its argument that the Collins decision "conflicts with the decisions of other Florida District Courts of Appeal." Perhaps the field of regulatory taking law is so far from what these gov't lawyers do on a day-to-day basis, they just don't understand the law.

Anyway, the discretionary review process is constrained by time and space limits. The gov't now has 10 days to serve its 10-page "jurisdictional brief." Then, we get 20 days (plus 5 days for mailing) to serve our response. There is no reply brief, and the gov't petitioners are limited to the words in the District Court of Appeal's opinion (no references to the record before the trial court are allowed). This is a tough one for the government.

Meanwhile, there is no automatic stay at this point. If the gov't wants the proceedings below to be stayed, it must get the District Court of Appeal to enter a stay order. Stay tuned. This is far from over.

California Decision Finding Lucas "Categorical Taking" in 30-Year Moratorium. Sounds Familiar.

I downloaded the 49-page slip opinion in Monks v. City of Rancho Palos Verdes ("Monks II") after seeing it mentioned in the October 1, 2008, inversecondemnation.com blog of Hawaii land use attorney Robert H. Thomas. It came back to me this week, when it was highlighted on the front page of the December 2008 issue of Gideon Kanner's newsletter, Just Compensation, with the exclamation:

"Will miracles never cease? The California Court of Appeal held that a city's moratorium forbidding all construction, and extending over a period of some 30 years, was a taking of property."

For those of us who consider California state and federal courts' interpretations of the U.S. Constitution something to be avoided, the tide seems to be changing out there. In December 2007, in Yamagiwa v. City of Half Moon Bay, a U.S. District Judge held that the city, in imposing a series of land development regulations, and excavating nearby areas for stormwater drainage -- that converted the property into undevelopable wetlands -- had "taken" the property and was liable for $37 million in Just Compensation.

Now, in Monks v. City of Rancho Palos Verdes, 167 Cal. App. 4th 263, rev. denied, 2008 Cal. LEXIS 14670 (Cal. Dec. 17, 2008), on its second trip to the Court, an intermediate California Court of Appeal held (and the California Supreme Court declined to review) that a building moratorium that started in 1978 was a permanent, categorical taking (as in Lucas v South Carolina Coastal Council, 505 U.S. 1003 (1992)).

This is a well-analyzed opinion that uses Lucas reasoning to conclude that the City's 1978 ordinance imposing a moratorium on the construction of single-family homes in the "vicinity" where landslides had recently occurred. In the earlier trip to the appellate court, that court rejected the City's one-two defense of "it ain't ripe, and besides, the statute of limitations has run." Monks v. City of Rancho Palos Verdes (Feb. 23, 2005, nonpublished opinion B172698.) ("Monks I," quoted liberally in Monks II.)

The Monks II opinion focused on the following aspects of the Supreme Court's opinion in Lucas. The California court's synopsis can be boiled down as follows.

1. The Lucas court rejected the contention that Lucas's property retained some economically beneficial use just because he could go there to picnic, swim, camp in a tent, or live in a movable trailer. See 505 US at 1044 (Blackmun's dissent).

2. The Lucas court concluded that the findings of the state legislature were of "no import in deciding the taking issue." The Lucas court held "Any limitation so severe [as to deprive land of all economically beneficial use] cannot be mewly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the State's law of property and nuisance already place upon land ownership."

3. "The fact that a particular use has been long engaged in by similarly situated owners ordinarily imports a lack of any common-law prohibition.... So also does the fact that other landowners, similarly situated, are permitted to continue the use denied by the claimant. ... It seems unlikely that common-law principles would have prevented the erection of any habitable or productive improvements on [Lucas's] land; they rarely support prohibition of the 'essential use' of land...." Lucas, 505 US at 1030-31 (majority opinion of Scalia, J.); 505 US at 1052, fn 15 , and 1052-55 (Blackmun's dissent).

4. The government bears the burden of proving that the property owner's intended use is not allowed under state law. "...to win its case South Carolina must do more than proffer the legislature's declaration that the uses Lucas desires are inconsistent with the public interest, or the conclusory assertion that they violate a common-law maxim that ... 'one must so use his rights as not to infringe on the rights of others.' ... Instead, as it would be required to do if it sought to restrain Lucas in a common-law action for public nuisance, South Carolina must identify background principles of nuisance and property law that prohibit the uses he now intends in the circumstances in which the property is presently found. Only on this showing can the State fairly claim that, in proscribing all such beneficial uses, the Beachfront Management Act is taking nothing." Lucas, 505 US at 1031-32.

Just to bring this home, the State of Florida or the local government would have to show that it could have enjoined the building of single-family homes -- on lots zoned for single-family homes -- in the Florida Keys, under the common law in existence before Florida became a state. No statutes or ordinances enacted after that date would be relevant. If it cannot do that, the prohibition on construction of single-family homes in the Florida Keys -- even if it is only a "moratorium" -- is a Lucas categorical taking.

We would like to also mention that the recent Florida 5th DCA decision in St Johns River Water Management District v Koontz, Case No 5D06-1116 (January 9, 2009),brought to mind the fact that, under the US Supreme Court's Nollan/Dolan decisions, forcing landowners to dedicate land to the government as part of the price of obtaining a building permit, is an unconstitutional exaction and a Fifth Amendment taking.

Wouldn't it be interesting if a group of property owners filed a class action against the County and the State, demanding that all of the ROGO lots "donated" to obtain building permits be deemed "unconstitutional exactions," and requiring the County to commence eminent domain proceedings against every one of those parcels, and to pay the "donor" the Fair Market Value of the "donated" lots. After adjusting for Condemnation Blight, of course, which would kick the Fair Market Value up to 125% of the assessed valuation of nearby, developed, residential lots.

Anyway, those are my thoughts for February 2009. Check back here or on mattsonlaw.com to see how these ideas get transformed into action.