U.S. Supreme Court Rules Private Property Owners Can Proceed Directly To Federal Court To Allege A State or Local Government Has Taken Their Property In Violation Of The Fifth Amendment’s Takings Clause

By Michael W. Ryan on June 25, 2019

On June 21, 2019, the United States Supreme Court ruled in Knick v. Township of Scott that a private property owner whose property is taken by a state or local government may file a lawsuit asserting a Fifth Amendment takings claim under 42 U.S.C. §1983 in federal court without having to first exhaust an inverse condemnation remedy in state court. Chief Justice Roberts wrote the majority opinion of the Court. Justices Thomas, Gorsuch, Alito, and Kavanaugh joined the opinion. Justice Thomas wrote a short concurring opinion and Justice Kagan wrote a dissenting opinion joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor.

The Takings Clause of the Fifth Amendment states that “private property [shall not] be taken for public use, without just compensation.” The Court found that a state or local government violates the Takings Clause the moment the government takes property without payment of just compensation, and a property owner may bring its Fifth Amendment claim under §1983 at that time. This decision overruled a 34-year old precedent found in Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). The relevant holding in Williamson County required private property owners to first seek just compensation under state “inverse condemnation” law in state court and lose before bringing a federal takings claim under §1983. The Court in Knick referred to this rule as the Williamson County “state-litigation requirement.”

As distinguished from eminent domain proceedings, an inverse condemnation describes the manner in which a private property owner recovers compensation for a taking of its property when formal condemnation proceedings to acquire the property and determine just compensation have not been instituted by the government. In an inverse condemnation, the government takes property without paying just compensation, and the owner is forced to file a lawsuit to obtain the required just compensation. An inverse condemnation claim can include a regulatory taking claim, which involves a claim that a government regulation so severely limits the economic use of the private property that the government must pay just compensation.

The Knick case arose from a dispute between Rose Mary Knick and the Township of Scott, Pennsylvania. The Township of Scott passed an ordinance that required all cemeteries be kept open and accessible to the public during daylight hours. Rose Mary Knick owned a 90-acre rural property that contained a small family graveyard. Knick filed a lawsuit in Federal District Court under 42 U.S.C. §1983 alleging that the ordinance violated the Takings Clause of the Fifth Amendment. Prior to bringing the federal suit, Knick had not sought just compensation through Pennsylvania’s state court. The District Court dismissed the suit relying on Williamson County, and the U.S. Court of Appeals for the Third Circuit court affirmed.

Prior to Knick, private property owners faced a “Catch-22” in cases alleging a taking of private property by a state or local government without payment of just compensation. If a property owner followed Williamson County in an attempt to ripen its federal takings claim under §1983, and first exhausted its state law remedy and lost, the private property owner was nevertheless barred from making its takings claim in federal court based upon another decision of the U.S. Supreme Court in San Remo Hotel, L.P. v. County of San Francisco, 545 U.S. 323 (2005). The Court in San Remo Hotel ruled that property owners who lose their takings claims in state court are not entitled to retry their taking claims in federal court, even if forced involuntarily into the state court in the first place. The Court in San Remo Hotel decided the case based on the full faith and credit statute, 28 U.S.C. §1738, which requires courts in different jurisdictions to respect the decisions of other courts. Therefore, under San Remo Hotel, if the property owner lost its takings claim in state court, it was precluded from subsequently raising its takings claim in federal court. The U.S. Supreme Court in Knick referred to this rule as the San Remo Hotel “preclusion trap.”

In Knick, the U.S. Supreme Court recognized the Catch-22 for private property owners. The Knick opinion states that 42 U.S.C. §1983 guarantees “a federal forum for claims of unconstitutional treatment at the hands of state officials,” and “the guarantee of a federal forum rings hollow for takings plaintiffs, who are forced to litigate their claims in state court.” The Knick decision concludes that the state-litigation requirement “imposes an unjustifiable burden on takings plaintiffs, conflicts with the rest of our takings jurisprudence, and must be overruled” and “[f]idelity to the Takings Clause and our cases construing it requires overruling Williamson County and restoring takings claims to the full-fledged constitutional status the Framers envisioned when they included the Clause among the other protections in the Bill of Rights.”

The full text of the Knick opinion can be viewed here.

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