Thursday, June 3, 1999
When the United States Supreme Court ruled last week in favor of a would-be land developer, you could almost hear the champagne corks popping across the country. While land developers celebrated the high court order as a victory, environmentalists and city governments lamented a day of doom.
Originally filed in federal District Court in 1984, the Del Monte Dunes case finally came to closure May 24 when the Supreme Court ruled 5-4 to affirm a federal District Court jury decision awarding $1.45 million to Del Monte Dunes at Monterey, Ltd. The now-defunct development company attempted to build condos on the beach between the Del Monte Beach Hotel and the beach community off of Casa Verde Way.
Although some have heralded the decision as another victory in a string of pro-property rights decisions handed down by the Supreme Court in recent years, the Court itself says City of Monterey v. Del Monte Dunes at Monterey, Ltd. does not affect the right of governments to regulate or take private property. According to the Supreme Court''s concurring opinion, the decision was based on a narrow and unique set of circumstances, and it won''t set any great precedent for future land use cases.
"It''s probably not that far-reaching in the sense that there probably isn''t going to be a rush of federal cases filed," says Tony Lombardo, a local land-use attorney who represents a number of land developers.
Del Monte argued in district court that the city of Monterey had temporarily "taken" property without just compensation by denying approval of a development in what Lombardo describes as a "horror story."
Even though the project fit well within the limits of the city''s zoning ordinance, the applicant argued that the project was unreasonably denied approval. The project was turned down five times between 1981 and 1986 by the city Planning Commission, which each time imposed a new set of restrictions on the project. On an appeal, the City Council approved the project, but again rejected the plans in 1986.
The jurors were also apparently swayed by the argument that the city was intentionally holding back approval in order to compel the owner to sell to the state parks department, which did eventually buy the property.
Attorneys for Del Monte Dunes asserted that it was unfairly denied building permits, even after complying with city regulations and the ever-changing demands of city officials. Further, they argued, the city failed to follow its own rules, and the permit denial constituted an unlawful temporary "regulatory taking" because the property owner was not justly compensated.
The plaintiff argued that his rights, as guaranteed by the Fifth Amendment of the U.S. Constitution, which states that private property shall not be taken for public use without just compensation, were violated. The district court jury agreed, as did the 9th Circuit Court of Appeals.
While the award--estimated at $2.7 million with attorney''s fees (about 7 percent of the city''s general fund)--is a financial blow to the city, the good news is that the case in no way challenges a city''s regulatory rights. The Supreme Court continues to recognize a government''s "eminent domain" over private property, meaning their right to take private property for legitimate public use. For example, a state may condemn a house that stands in the way of a proposed highway. That taking of property is only unlawful if the government does not justly compensate the property owner.
As cited by the Court, Del Monte Dunes conceded the city''s regulatory rights: >"This case is not about the right of a city, in this case the city of Monterey, to regulate land. We all accept that in today''s society, cities and counties can tell a land owner what to do to some reasonable extent with their property."
The court''s opinion states: The city and its amici suggest that sustaining the judgment here will undermine the uniformity of the law and eviscerate state and local zoning authority by subjecting all land-use decisions to plenary, and potentially inconsistent, jury review. Our decision raised no such specter. Del Monte Dunes did not bring a broad challenge to the constitutionality of the city''s general land-use ordinances or policies, and our holding does not extend to a challenge of that sort.
...Rather, to the extent Del Monte Dunes'' challenge was premised on the unreasonable government action, the theory argued and tried to the jury was that 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. Del Monte Dune''s argument, in short, was not that the city had followed its zoning ordinances and policies, but rather that it has not done so.
The case is significant in that it allowed a case of "inverse condemnation" to be heard by a jury in federal court. A property owner files an inverse condemnation case when seeking just compensation for property taken for public use.
In essence, per the city''s appeal, the Supreme Court was not charged with ruling on the city''s actions but on whether the District Court erred by allowing the case to be decided by a jury. Generally judges hear cases of law, and juries hear cases of fact.
The city argued that the case challenged the lawfulness of the city''s general plan and zoning ordinance and should therefore be heard by a judge. But the Supreme Court ruled that the case was not about the constitutionality of Monterey''s city code, or a matter of law, it was about the facts surrounding the city of Monterey actions in violating the property owner''s civil rights. That, they concluded, is proper for a jury to decide.
"The city was trying to argue that the [jury decision] really attacked the city''s power to zone," says Lombardo. "The court said, no, it''s just that [the city] didn''t follow what the ordinance said."
Typically juries tend to be more sympathetic to plaintiffs and grant larger awards than judges do. Moreover, judges are bound by law to give government agencies deference, whereas juries are not.
"The importance on a national basis is that the Supreme Court says that this kind of conduct could be heard by a jury, exposing yourself to a much larger financial loss," continues Lombardo. "Just like Rodney King, Monterey Dunes was entitled to have a jury hear how much they should get for the city beating the hell out of them."
But that doesn''t guarantee all inverse condemnation cases filed from now on will be tried by juries.
The court''s opinion states: This Seventh Amendment holding is limited in various respects: It does not address the jury''s role in an ordinary inverse condemnation suit, to attempt a precise demarcation of the respective provinces of judge and jury in determining whether a zoning decision substantially advances legitimate governmental interests that would extend to other contexts.
"It''s a bitter pill to swallow," says Monterey City Attorney Bill Conners. "At the same time, to get a split of the Supreme Court, even if you''re on the losing side, you know that it''s an issue that really needed to be resolved. In this case it''s fair to say the law wasn''t that clear and still isn''t that clear."
And, Conners points out, in California, the Supreme Court''s recent ruling was rendered moot before it was even made. In 1984, when the Del Monte Dunes case was originally filed, the California Supreme Court did not recognize the temporary taking of property as a cause of legal action. Therefore, Del Monte Dunes sought legal relief within the federal court system.
However, in the 1987 U.S. Supreme Court case First Lutheran Church v. Los Angeles County, the high court ruled that temporary taking is a valid cause of action and should be heard in state court. Therefore, cases of inverse condemnation are now heard in state court systems. And, in California, those cases are heard by judges, not juries.
"I wouldn''t hesitate to recommend to the City Council to do exactly what they did before," adds Conners. "Today it would be heard in state court, it would be heard by a judge, and it would be heard locally."