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After Decades of Abuse – The Challenge to Restore Property Rights in California

By Ronald A. Zumbrun and Timothy V. Kassouni; Published by Sacramento’s Daily Recorder September 10, 2007, Published by the San Francisco Daily Journal as Combating Takings October 10, 2007
Since 1993, California planning department officials have relied on the State’s “Landgate” decision for providing them confidence that they and their employers are immune from claims of abuse. This article describes the history, the relevant law and the legal attack on the Landgate precedent. Michael Shaw, President of Freedom Advocates is a plaintiff in both cases described in that attack.In 1939 Winston Churchill struggled with the task of forecasting the actions of Russia:  “It is a riddle, wrapped in a mystery, inside an enigma.”  The same can be said of the jurisprudential state of the United States Constitution’s takings clause, as set forth in the Fifth Amendment:  “[N]or shall private property be taken for public use without just compensation.”

These simple words have been stretched, contorted and mangled over the years by courts seeking to rationalize an end result favorable to the government, particularly in California.  After all, our state supreme court has remarked, if governments were forced to pay just compensation for taking private property, the result would be a “chilling effect upon the exercise of police regulatory powers,” and a “threat to legislative control.”  (Agins v. City of Tiburon (1979) 24 Cal.3d. 266, 276.)  Threats to individual liberty and the importance of private property to a free society are rarely acknowledged. 

As recently as 1979 the California Supreme Court in Agins v. City of Tiburon rejected the remedy of “compensation” for a taking of property, despite the unambiguous “just compensation” mandate of the Fifth Amendment.  It took an opinion by the United States Supreme Court in 1987 to clarify that the “just compensation” clause of the Fifth Amendment does indeed require the payment of “just compensation.”  (First English Evangelical Lutheran Church of Glendale v. City of Glendale (1987) 482 U.S. 304.)

Consider also the California Coastal Commission’s long-standing policy of requiring a dedication of land in exchange for a building permit.  In 1982, the California Supreme Court had an opportunity to address the suspect constitutionality of this policy.  Unfortunately, the California Supreme Court ducked the issue on ripeness grounds.  The late Justice Stanley Mosk, writing for the court, determined that case-by-case challenges were necessary, and that it was “sheer guesswork to conclude that the [California Coastal] Commission will abuse its authority by imposing impermissible conditions on any permits required.”  (Pacific Legal Foundation v. California Coastal Commission (1982) 33 Cal 3d. 158, 174.)

The United States Supreme Court took the “guesswork” out of the equation five years later in Nollan v. California Coastal Commission (1987) 483 U.S. 825, 837, concluding that the dedication requirement at issue was tantamount to an “out-and-out plan of extortion.”  Earlier, the California Supreme Court had declined to even review the California Court of Appeal opinion, thus tacitly approving its holding in favor of the government.Despite the United States Supreme Court’s direction in Nollan and First English Evangelical Lutheran Church, California courts continue to resort to increasingly convoluted reasoning in an attempt to justify an end-result in favor of the government.  In his dissent to the United States Supreme Court’s denial of the petition for writ of certiorari in Lambert v. City and County of San Francisco (2000) 529 U.S. 1045, a case involving mitigation fees, Justice Scalia, joined by Justices Kennedy and Thomas, expressed dismay that two of the three bases for the Court of Appeal’s decision were “so implausible as to call into question the state court’s willingness to hold state administrators to the Fifth Amendment standards set forth by this tribunal,” and that there was “reason to believe that this may be more than a local and isolated phenomenon.”

Unfortunately, Justice Scalia’s concerns are well-founded.  The California Supreme Court’s opinion in Landgate v. California Coastal Commission (1998) 17 Cal.4th 1006, also authored by the late Justice Stanley Mosk, is yet another example of the tortuous logic courts will employ to obtain a ruling in favor of the government.

In Landgate, the California Coastal Commission had acted unlawfully when denying a permit to build a home because it erroneously contended that an earlier lot split granted by Los Angeles County required its approval.  The California Supreme Court nevertheless reversed a lower court’s award of monetary damages for loss of use in the amount of $155,567.  The California Coastal Commission, noted Justice Mosk, merely made a “mistake” in the pursuit of the legitimate goal of coastal regulation and should not be penalized for it.  Thus, even though the property owner prevailed, he was required to absorb the $155,567 penalty, not the public.  Justice Mosk also noted that the California Coastal Commission’s position “was not so objectively unreasonable as to give rise to the inference that it was adopting that position solely for purposes of delay or some other illegitimate reason.”

The Landgate opinion is troubling from a legal and a practical standpoint.  Six years prior to Landgate, the United States Supreme Court had confirmed “two discrete categories of regulatory action as compensable without case-specific inquiry into the public interest advanced in support of the restraint.”  (Lucas v. South Carolina Coastal Council (1992) 505 U.S. 1003.)  One of these categories is application of a regulation which “denies all economically beneficial or productive use of land.”   In Landgate, the California Coastal Commission had taken the position that revisions to a home design were “irrelevant” and that the “project does not work” without a lot line adjustment, which was eventually (and erroneously) denied.  As a result, the property was precluded from any economically beneficial use until the courts reversed the California Coastal Commission’s denial of the lot line adjustment.

The California Supreme Court nevertheless undertook a case-specific inquiry in Landgate, characterizing the California Coastal Commission’s position as a mere “development condition.”  The California Supreme Court reasoned that the California Coastal Commission’s assertion of jurisdiction, albeit erroneous, was simply a “normal part of the development process” and an “incident of property ownership.”  Justice Mosk concluded that although the property owner was in the “unfortunate position” of suffering from a delay not of its own making, “the same can be said of any governmental mistake . . .  .”   The aftermath of Landgate has been predictable:  governmental entities have become even more emboldened in their use of draconian methods to delay, if not outright ban, commercial and residential development.  Even if these methods are legally unsupportable and rejected in court, the government will contend that it has no monetary liability because it had plausible arguments to the contrary.   

Consider, for example, the plight of Lockaway Storage, a California corporation in the business of constructing and operating self-storage facilities. In 2000, Lockaway Storage purchased a five-acre parcel in Alameda County for the purpose of constructing a storage facility.  The property came with a conditional use permit – the last discretionary permit in the development process.  Several months after the purchase, the voters of Alameda County adopted Measure D, a no-growth initiative which encompassed the five-acre parcel.  However, Measure D had a grandfather clause excluding from its reach projects which had already received all discretionary permits.  Unfazed, in late 2002 the Alameda County Planning Department determined that Measure D applied to the Lockaway Storage project and refused to issue grading and building permits, thus permanently halting construction of the storage facility.  Litigation ensued, and in early 2005 Alameda County Superior Court Judge James A. Richman issued a writ of mandate compelling the County of Alameda to allow construction to proceed.

In the interim, however, Lockaway Storage suffered lost income and increased construction costs reaching seven figures, and is currently seeking to recoup these losses in court.  The County of Alameda’s defense?  Landgate.  The County of Alameda contends that although it was wrong in applying Measure D, it was not “unreasonably” wrong. This scenario is no doubt being repeated throughout the state, placing the burden on property owners to prove that the government is not just wrong, but “unreasonably” wrong, in order to obtain just compensation – a burden not placed on the exercise of any other constitutional right.

 Another Landgate-related case now pending on appeal is Shaw v. County of Santa Cruz wherein it is being argued that Landgate is no longer the law due to the United States Supreme Court’s decision in Lingle v. Chevron (2005) 544 U.S. 528.  There the Court declared “Twenty-five years ago, the Court posited that a regulation of private property ‘effects a taking if [it] does not substantially advance [a] legitimate state interes[t].’  …  Today we correct course.  We hold that the ‘substantially advances’ formula is not a valid takings test, and indeed conclude that it has no proper place in our takings jurisprudence.”   Under Lingle, a takings analysis “focuses directly upon the severity of the burden that government imposes upon private property rights.”  This is to be contrasted with Landgate, wherein the California Supreme Court determined that “[t]he proper inquiry is … whether there is, objectively, sufficient connection between the land use regulation in question and a legitimate governmental purpose so that the latter may be said to substantially advance the former.” 

Landgate and its progeny improperly examine takings claims by focusing upon the validity of the governmental regulation instead of the burden imposed on the private property owner.  Lingle also acknowledges that the takings clause does not prohibit government from taking private property, “but instead places a condition on the exercise of that power.”  This condition is the payment of just compensation. 

California’s decades-long pattern of extreme deference to the government at the expense of private property rights must be reversed.  As aptly noted by Justice Janice Rogers Brown in a scathing dissent in Landgate:  “When the answer to every question about what the public needs or wants or should have is always ‘more,’ the demand for free public goods is infinite.  Against this relentless siphon, the takings clause, and the courts’ ardent defense of it, stands as a last lonely bulwark of property rights.”