The (In)signifcance Of Del Monte Dunes

Environmental Law & Property Rights Practice Group Newsletter - Volume 3, Issue 2, Summer 1999

October 1, 1999

Eric Grant

The only takings case of the Supreme Court's 1998 Term, City of Monterey v. Del Monte Dunes at Monterey, Ltd.2 was highly anticipated on both sides of the property-rights fault line. When it was argued back in October of last year, the case seemed to portend a major reappraisal of the so-called "first prong" of the regulatory takings standard set forth in Agins v. City of Tiburon, namely, that a land use regulation effects a compensable taking if it "does not substantially advance legitimate state interests."3 The Court had granted certiorari to consider, among other things, whether "liability for a regulatory taking can be based upon a standard that allows a jury or court to reweigh evidence concerning the reasonableness of [a] public agency's land use decision."4 The City of Monterey and its amici curiae had argued strenuously in the negative, propounding a vision of regulatory takings law in which "courts employ deferential standards of review and require only that there be some basis to support the local government's [land use] decision."5 Indeed, at oral argument, the representative of the Solicitor General had gone so far as to urge the Court explicitly to discard the first prong of Agins altogether, in favor of a much more relaxed standard derived from due process jurisprudence.6

In this light, the actual decision in Del Monte Dunes was anti-climactic. In the litigation that occurred before the Supreme Court accepted the case for review, the Ninth Circuit had affirmed a jury verdict awarding $1.45 million to the property owner for having suffered a regulatory taking when the City repeatedly -- and, so the jury found, unreasonably -- rejected the owner's applications to develop beachfront property.7 The bulk of the Supreme Court's three opinions was devoted to the question of whether the district court had properly submitted the City's liability to the jury, as opposed to determining that liability for itself purely as a matter of law. On this question, the Court split along somewhat non-intuitive lines, with a bare majority answering the question in the affirmative. Justice Kennedy -- writing for himself, the Chief Justice, and Justices Stevens, Scalia, and Thomas -- concluded that a jury trial was proper because the owner's regulatory takings claim "sound[ed] basically in tort" and sought "legal relief" (that is, money damages), making the claim an "action at [common] law" within the purview of the Seventh Amendment.8

Losing Justice Scalia at this point, Justice Kennedy's opinion proceeded to distinguish precedent that had held "there is no constitutional right to a jury in eminent domain [i.e., condemnation] proceedings."9 Although this precedent might profitably have been discarded on the basis that it is "not just wrong, but manifestly wrong,"10 the plurality chose to rest on hypertechnical (and, to my mind, unconvincing) distinctions between a condemnation proceeding on the one hand and "a § 1983 action to redress an uncompensated taking" on the other.11 Justice Scalia, by contrast, took a more categorical approach: "all § 1983 actions must be treated alike insofar as the Seventh Amendment right to jury trial is concerned, [and] that right exists when monetary damages are sought."12 Justice Souter, on behalf of himself and Justices O'Connor, Ginsburg, and Breyer, dissented on the jury trial question. His opinion concluded that "the analogy between direct and inverse condemnation is apparent," and "[t]he strength of the analogy is fatal to [the property owner's] claim to a jury trial as a matter of right."13

If this debate strikes you as somewhat arcane, not to mention far afield from the substance of takings law, then you are not alone. But at least the Court clarified an important procedural point, didn't it? We can say with certainty that a property owner who asserts a takings claim through the vehicle of § 1983 in federal court is entitled to a jury trial on the question of . . . . Well, the devil is in the ellipses. The Court self-consciously did "not attempt a precise demarcation of the respective provinces of judge and jury in determining whether a zoning decision substantially advances legitimate governmental interests."14 Thus, the Court emphasized that its holding did not necessarily extend to a claim that presents "a broad challenge to the constitutionality of [a] city's general land-use ordinances or policies."15 The Court also took pains to say that its holding did not address the allocation of decisionmaking power between judge and jury in the context of a claim that "[a] city's general regulations were unreasonable as applied to [particular] property."16 So a property owner's right to jury trial does not necessarily extend to "broad" (facial?) constitutional challenges to land use regulations or to "as applied" challenges either.

Well, at least in the somewhat narrow context of a claim like Del Monte's -- "the city's denial of the final development permit was inconsistent not only with the city's general ordinances and policies but even with the shifting ad hoc restrictions previously imposed by the city"17 -- a property owner is entitled to a jury trial in federal court. In principle, this rule is praiseworthy, since takings law practitioners generally agree that juries are more sympathetic to property owners than judges. In practice, however, the rule is virtually meaningless. As the Court itself pointed out, current doctrine provides that a federal court "cannot entertain a takings claim under § 1983 unless or until the complaining landowner has been denied an adequate postdeprivation remedy."18 This means, in practical terms, that so long as a state "provides a facially adequate procedure for obtaining just compensation for [regulatory] takings" -- and the Court apparently believes that "[e]ven the State of California" now provides such a procedure -- then a property owner must "pursue relief in state court as a precondition to federal relief."19 Moreover, by virtue of collateral estoppel, this supposed precondition to federal relief has become a substitute for federal relief, driving virtually all federal takings claims out of federal court for all time.20

Let us return now to the issues that suggested Del Monte Dunes might result in a significant ruling on the law of takings. (With respect to the following issues, bear in mind that the Court's opinion was unanimous, joined by everyone from Justice Scalia on the one end of the property rights spectrum to Justice Stevens on the other.) Recall that briefing and oral argument had given credence to the speculation that Del Monte Dunes would produce a comprehensive, if not definitive, explication of the "substantially advance" prong of the Agins standard. That speculation was wrong. Having observed that the Court has not provided "a thorough explanation of the nature or applicability of the requirement that a regulation substantially advance legitimate public interests outside the context of required dedications or exactions,"21 Del Monte Dunes again ducked the opportunity to provide that thorough explanation. Instead, as set forth below, the Court gave us four "negatives."

First, whatever the law is, it has not been changed by this case. As noted above, the Solicitor General had asked the Court to discard the "substantially advance" prong of the Agins test in favor of a less-exacting due process-type standard. The Court, however, explicitly declined to "revisit" Agins and the many other decisions that have reiterated the Agins standard: "the applicability or continued viability of the general test for regulatory takings liability recited by these authorities" was simply not up for reconsideration.22

Second, the law applicable in the aforementioned "context of required dedications or exactions" -- where the Court has indeed explicated the meaning of the substantially advance standard -- is not applicable outside that context. As laid down and applied in Dolan v. City of Tigard,23 the specific rule governing "land-use decisions conditioning approval of development on the dedication of property to public use" is that "dedications demanded as conditions of development [must be] proportional to the development's anticipated impacts."24 In Del Monte Dunes, the Court held that such rule "was not designed to address, and is not readily applicable to, the much different questions arising where, as here, the landowner's challenge is based not on excessive exactions but on denial of development."25 Accordingly, the Court held that "the rough-proportionality test of Dolan is inapposite to a case such as this one."26

Third, the Court emphasized that whatever the significance of the Ninth Circuit's decision upholding the jury verdict, that decision "did not adopt a rule of takings law allowing wholesale interference by judge or jury with municipal land-use policies, laws, or routine regulatory decisions."27 So, despite the presence of the word "reasonable" in the instructions to the jury with respect to whether the city's actions substantially advanced a legitimate public purpose, the verdict was not based on "a jury determination of the reasonableness of [the city's] general zoning laws or land-use policies."28 Moreover, the jury instructions "did not allow the jury to consider the reasonableness, per se, of the customized, ad hoc conditions imposed on the property's development," and "the jury was not given free rein to second-guess the city's land-use policies."29 We do not know from Del Monte Dunes if any of these things are definitely proscribed -- though terms like "wholesale interference" and "second-guess" surely put them in a negative light -- but we do know that by affirming the judgment below, the Supreme Court definitely did not endorse them.

Finally, perhaps to provide the balance necessary to maintain unanimity, the Court also emphasized that is not the law that municipal "land-use decisions are immune from judicial scrutiny under all circumstances."30 Such a notion "is contrary to settled regulatory takings principles."31

What, then, is the significance of Del Monte Dunes? Although the Court left unanswered most of the important questions regarding the "substantially advance" standard, I suspect that the four negatives described above will provide substantial new ammunition for both advocates and detractors of property rights. Let me briefly make the obvious case on behalf of the latter, followed by the rebuttal case on behalf of the former.

If I were a lawyer for a public agency that regulates land use, I would argue that Del Monte Dunes rejected "heightened scrutiny" -- shorthand for any scrutiny greater than required by the rational basis test -- of any land-use decisions outside the narrow context of exactions and dedications. In restricting Dolan's rough-proportionality test to that context, the Court necessarily rejected the notion that heightened scrutiny is generally applicable to regulatory actions challenged as takings. This conclusion is confirmed by the Court's rejection of "reasonableness" as a generally applicable standard in takings law and by the Court's emphasis on the notion that the decisions of land-use regulators are protected from "wholesale interference" by judges and juries, and thus that those decisions may not be "second-guessed" in court.

In response to these arguments, I would lay great weight on the fact that Del Monte Dunes explicitly rejected the Solicitor General's call to discard the "substantially advance" prong of Agins and replace it with the non-heightened scrutiny of the rational basis test. I would point out that the Court cited -- with apparent endorsement -- footnote 3 of Nollan v. California Coastal Commission, in which Justice Scalia had unmistakably distinguished the "substantially advance" standard from the more deferential "rationally could have decided" standard, dismissing the notion that "the standards for takings challenges, due process challenges, and equal protection challenges are identical."32 I would argue that the rejection of Dolan's rough-proportionality test outside the context of exactions and dedications is precisely that -- a rejection of a context-specific rough-proportionality test, not a rejection of heightened scrutiny, the test of which is but a single application. Finally, I would take solace in the Court's clear rejection of any notion that municipal land-use decisions are "immune from judicial scrutiny," a condition that would effectively obtain if the rational basis test were to govern regulatory takings law.

As an objective observer, however, I would have to say that lower courts should simply ignore Del Monte Dunes as they try to flesh out the "nature or applicability" of the substantially advance standard. In that regard, the most salient point about the decision is that the law has not changed. Whatever footnote 3 of Nollan means and whatever the appropriate level of deference owed by federal courts to land-use regulators, the resolutions of these issues are the same after Del Monte Dunes as they were before. This conclusion makes perfect sense in light of the unanimity of the Court with respect to the substantive issues. Any proposition to which all nine Justices agree is quite likely to be a truism, understood and (usually) accepted by all lower courts.33

If Del Monte Dunes has any significance at all, then, I would say it lies not in what the Court said but what it did. For the very first time, the Supreme Court of the United States affirmed a money judgment in favor of a property owner on a regulatory takings claim. If nothing else, that fact may "keep hope alive" for property rights advocates, particularly those in California, who have had little success in the lower courts in recent years.

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   1. * Mr. Grant practices property rights law at the Pacific Legal Foundation, a nationwide public-interest law firm based in Sacramento, California.
   2. 119 S. Ct. 1624 (1999).
   3. 447 U.S. 255, 260 (1980).
   4. Petition for Certiorari at i.
   5. Brief for Petitioner at 39 (emphasis added).
   6. See Transcript of Oral Argument at 22-29.
   7. See 119 S. Ct. at 1634.
   8. Id. at 1638.
   9. Id. at 1639 (plurality opinion) (quoting United States v. Reynolds, 397 U.S. 14, 18 (1970)).
  10. So I argued at length in A Revolutionary View of the Seventh Amendment and the Just Compensation Clause, 91 Nw. U. L. Rev. 144, 146 (1996).
  11. 119 S. Ct. at 1639 (plurality opinion).
  12. Id. at 1645 (Scalia, J., concurring in the judgment).
  13. Id. at 1651 (Souter, J., dissenting). In the course of contending that the anti-jury precedent mentioned in the text is "on solid footing," id. at 1653, Justice Souter's opinion repeats a number of historical assertions about the role of the jury in 1791-era eminent domain proceedings. In my judgment, those assertions -- exemplified by the statement that "condemnation proceedings carried `no uniform and established right to a common law jury trial in England or the colonies [sic] at the time the Seventh Amendment was adopted,'" id. at 1652 (quoting Moore's Federal Practice) -- are exposed as frauds by an actual examination of the governing statutes of that era. See Grant, supra note 9, at 177-91.
  14. 119 S. Ct. at 1644.
  15. Id.
  16. Id. at 1645.
  17. Id.
  18. Id. at 1644. This doctrine derives principally from Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 194-97 (1985).
  19. Id. at 1633, 1644. The Court's casual acceptance of the "adequacy" of California takings law can only rest on ignorance or an overly ironic use of the word "facially." Anyone who is familiar with this body of law knows that it is adequate for one thing only -- rejecting takings claims no matter what. See, e.g., Santa Monica Beach, Ltd. v. Superior Ct., 968 P.2d 993 (Cal.), cert. denied, 119 S. Ct. 1804 (1999); Landgate, Inc. v. California Coastal Comm'n, 953 P.2d 1188 (Cal.), cert. denied, 119 S. Ct. 179 (1998); Kavanau v. Santa Monica Rent Control Bd., 941 P.2d 851 (Cal. 1997), cert. denied, 118 S. Ct. 856 (1998).
  20. For example, in Dodd v. Hood River County, 136 F.3d 1219 (9th Cir.), cert. denied, 119 S. Ct. 278 (1998), property owners who suffered a regulatory taking unsuccessfully sought just compensation in state court under state law before pursing their federal takings claim. Accordingly, the Ninth Circuit ruled that the owners were not barred from federal court by Williamson County. The owners were barred from federal court by collateral estoppel, however: because the test for a regulatory taking under the Oregon Constitution is substantially similar to the test under the federal Just Compensation Clause, and because the owners had unsuccessfully litigated the takings issue in state court, the owners were precluded from relitigating the issue in federal court. Of course, that "issue" was the essentially the whole case, with the result that the property owners were never able to litigate their federal takings claims in federal court -- even though they had followed all the rules, including having properly "reserved" their federal claims in the state court litigation.
  21. 119 S. Ct. at 1636.
  22. Id.
  23. 512 U.S. 374 (1994).
  24. Del Monte Dunes, 119 S. Ct. at 1635.
  25. Id. (emphasis added).
  26. Id.
  27. Id. at 1637 (emphasis added).
  28. Id. at 1636.
  29. Id. at 1637 (emphasis added).
  30. Id.
  31. Id.
  32. 483 U.S. 825, 835-36 n.3 (1987).
  33. Ironically, it was the one court that seemingly has the greatest trouble applying legal truisms, namely, the Ninth Circuit, that was affirmed in Del Monte Dunes.