News & Events > Blog > Property Owners Win Big Battle in Supreme Court Decision on Regulatory Takings
Property Owners Win Big Battle in Supreme Court Decision on Regulatory Takings
By: JEANETTE SCHUSTER
On June 21, 2019, the U.S. Supreme Court ruled in Knick v. Township of Scott, Pennsylvania, 139 S. Ct. 2162 (2019) (Knick), that private parties seeking to challenge a local government under the “Takings Clause” can now file their lawsuits directly in federal district court. The Takings Clause is contained in the fifth amendment of the U.S. Constitution and states that private property cannot be taken for public use without just compensation by the government. The fourteenth amendment of the U.S. Constitution applies the Takings Clause to the states and local governments.
With the Knick holding, the Supreme Court abandoned its long-standing rule in Williamson Cty. Regional Planning Commission v. Hamilton Bank, 473 U.S. 172 (1985) (Williamson), in which the court held that Takings plaintiffs have to first exhaust their remedies in state court. Under the holding of that case, plaintiffs who alleged unconstitutional takings under the Fifth Amendment by the federal government could bring claims directly in federal court, but plaintiffs who alleged an unconstitutional taking under the Fifth Amendment by a state or local governmenthad to first exhaust their state court remedies before filing in federal court. This disparity in procedure occasionally produced unequal results for plaintiffs because a state court’s resolution of a claim for just compensation under state law generally has preclusive effect in any subsequent federal suit. This meant that Takings plaintiffs found themselves in a Catch-22: they could not go to federal court without going to state court first; but if they went to state court and lost, their claims were barred in federal court.
Under the Knick case, a violation of the Takings Clause now occurs at the moment the property is taken.
Justice Kagan wrote a vigorous dissent in which she argued that a proper reading of the Takings Clause recognizes that the clause has two necessary elements. First, the government must take the property and, second, it must deny the property owner just compensation. The dissent argued that only after being denied compensation by all available state remedies does an unconstitutional taking occur.
It will be interesting to see if a significant number of Takings plaintiffs now avail themselves of this new remedy and choose to bring their cases in federal court. If so, this could cause federal courts to get embroiled in state and local land use issues. Whether or not that is a good thing remains to be seen. But in the meantime, private property owners should be happy to know that a significant regulatory hurdle has been removed for plaintiffs seeking redress from regulatory takings of property or diminishment in property values.