Jury Trial OK for Takings Case: Supreme Court Upholds Jury's $1.45 Million Award to Builder
WASHINGTON — The U.S. Supreme Court gave property owners the right to jury trials in federal court in regulatory takings cases brought against state or local governments under the federal civil rights law.
The 5-4 ruling handed down in late May upheld a $1.45 million jury award won by a developer against the city of Monterey for blocking a planned oceanfront residential development during the 1980s.
The division in the case was mostly along normal conservative-liberal ideological lines, with conservative justices backing the developer's right to a jury trial while liberal-leaning justices voted against it. However, Justice John Paul Stevens — a former Chicago city attorney and usually a reliable vote for the government in property rights cases — left the liberal bloc to vote in favor of permitting jury trials. Justice Sandra Day O'Connor, who has generally supported broader property rights, voted against it.
Michael Berger, the longtime property rights litigator who represented the developer, predicted the decision would encourage more such suits and discourage local planning agencies from giving "the runaround" to developers and property owners.
"It's going to make people take notice that when they act this way, there is a penalty," the Santa Monica-based lawyer said.
But George Yuhas, the San Francisco lawyer who represented Monterey, called the ruling "a narrow decision" with an uncertain long-term impact.
"It depends on how courts apply the decision," Yuhas said. "I'm cautiously optimistic that courts will give the decision a narrow scope"
The decision for Del Monte Dunes at Monterey, Ltd., reflected the justices' evident disapproval of the city's treatment of two separate developers who unsuccessfully sought permission to build on a 37.6-acre parcel over a five-year period. The city rejected five applications and 19 different site plans for the residentially zoned property along Highway 1 in north Monterey, even though developers continually scaled down the project. The city said it wanted to protect habitat for a rare butterfly. All of the justices joined the first sections of Justice Anthony Kennedy's opinion, which depicted the parcel as a neglected, spoiled site and the developer's plans as sensitive to land use and environmental issues.
But the justices divided on the legal issue of whether the developer was entitled to a trial before a jury rather than a judge in a suit brought under the Reconstruction-era federal civil rights law, 42 U.S.C. section 1983. The law permits money damages and injunctions against state or local governments for actions that interfere with federal constitutional rights.
Traditional civil rights plaintiffs have made frequent use of the statute in recent decades, but only recently have developers and property owners turned to it as a vehicle for taking complaints about unfavorable land use decisions into federal court.
In this case, Del Monte Dunes claimed the city's final rejection in 1986 of its pared-down plans for a 190-unit development on the site violated its property rights under the Fifth and Fourteenth Amendments by denying any "economically viable use" of the land.
After preliminary legal battles, the judge in the case ruled that Del Monte Dunes was entitled to a jury trial on the major parts of its suit. The jury found that the city's actions amounted to a "temporary taking" and a violation of the developer's equal protection rights and voted a $1.45 million-damage award.
The city, supported by an array of local government and planning organizations, urged the high court to bar jury trials in such cases. Berger attracted support from property rights groups, the National Association of Home Builders and the American Farm Bureau Federation in arguing in favor of jury trials.
For the high court, the issue turned on an interpretation of the Seventh Amendment, which provides that the right to jury trial "shall be preserved" as it existed at common law. The amendment, which applies only to federal courts, has spawned an assortment of rulings that turn on efforts to draw analogies between newly created legal remedies and suits recognized in America and England in the 1700s or before.
The court divided three ways on the question. In the main opinion, Kennedy reasoned that the takings claim amounted to "an action at law" — the phrasing from the Seventh Amendment — because it sought "a compensatory remedy" for "a constitutional violation." He went on to carefully distinguish between a takings claim and a normal inverse condemnation suit, which he said would not need to be tried by a jury.
Only three other justices joined that passage of Kennedy's opinion. Justice Antonin Scalia provided the fifth vote for the decision in a separate, broader opinion. Scalia said that any suit brought under section 1983 gave rise to a right to a jury trial and that the distinctions in Kennedy's opinion were "irrelevant." In an odd twist, Kennedy added a sentence to his opinion agreeing with much of Scalia's reasoning.
In the dissenting opinion, Justice David Souter argued that the Seventh Amendment did not apply because there was no analogous legal action at the time the Constitution was written. "The notion of regulatory taking or inverse condemnation was yet to be derived," he wrote.
The justices also divided on the likely impact of the ruling. Kennedy, in a passage that Scalia did join, minimized the potential effects on local land use decisions. He noted that federal courts cannot entertain takings claims "unless or until the complaining landowner has been denied an adequate postdeprivation remedy." Kennedy also emphasized that Del Monte Dunes was complaining only about the city's action in its case and was not broadly challenging the constitutionality of the city's planning and land use policies.
But Souter said Kennedy's qualifications would provide "cold
comfort" to local governments. "The narrowness of the Court's intentions cannot be accepted as an effective limit on the consequences of its reasoning," Souter wrote.
Property rights groups praised the court's decision. James Burling, a lawyer with the Pacific Legal Foundation in Sacramento who filed a friend of the court brief, called the decision "a major victory for landowners, who are now assured of having their grievances against government heard by members of their own community who also may be impacted by regulatory actions."
On the opposite side, John Echeverria, a professor at Georgetown University Law Center in Washington, D.C., who filed a brief on behalf of environmental organizations, said the decision was "a disappointing loss for local government in California and across the country." Having the right to a jury trial, Echeverria said, "gives developers more leverage in negotiating with local government and gives them a valuable tool if they go to litigation."
City of Monterey v. Del Monte Dunes at Monterey, Ltd., No. 97-1235, 99 C.D.O.S. 3846, filed May 24, 1999.
For Monterey: George Yuhas, Orrick, Herrington & Sutcliffe, (415) 773-5492.
For Del Monte Dunes: Michael M. Berger, Berger & Norton, (310) 449-1000.
Kenneth Jost, formerly editor of the Los Angeles Daily Journal, is staff writer for Congressional Quarterly and author of The Supreme Court Yearbook.