In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 01-1158

WILLIAM DANIELS AND JUDY DANIELS,

Plaintiffs-Appellees,

v.

THE AREA PLAN COMMISSION OF ALLEN COUNTY,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Northern District of Indiana, Fort Wayne Division.

No. 00 C 157—William C. Lee, Chief Judge.

____________

ARGUED NOVEMBER 1, 2001—DECIDED SEPTEMBER 11, 2002

____________

Before FLAUM, Chief Judge, MANION and KANNE, Circuit

Judges.

MANION, Circuit Judge.

I.

On April 13, 2000, William and Judy Daniels filed a

complaint, under 42 U.S.C. § 1983, in the United States

District Court for the Northern District of Indiana, seeking

a declaratory judgment that the Area Plan Commission of

Allen County violated the Fifth and Fourteenth Amendments to the U.S. Constitution, as well the Indiana Constitu-
2 No. 01-1158

tion, when it vacated a restrictive covenant attached to

their property that was designed to preserve the residential character of the surrounding neighborhood. On crossmotions for summary judgment, the district court concluded that the Plan Commission violated the Daniels’ Fifth

Amendment right by vacating the restrictive covenant

without a public purpose. The court entered a permanent

injunction ordering the Plan Commission to reverse its

removal of the covenant and prohibiting the Plan Commission from further removal of the covenants for any

private purpose. The court also found that Indiana Code

§ 36-7-3-11, under which the Plan Commission had vacated

the covenant, was unconstitutional because it does not

require the Commission to follow the procedures set

forth in the state’s eminent domain statute for determining public use. We affirm in part and reverse in part.

II.

William and Judy Daniels (“the Daniels”) are the current owners and residents of the property located at 1735

Broadmoor Avenue in Fort Wayne, Indiana. The Daniels’

property is in a subdivision commonly known as the Broadmoor Addition (“Broadmoor”). Broadmoor was surveyed

and platted for 80 lots in 1940 and the Daniels own lot 10.

The plat of the Broadmoor Addition has had a restrictive

covenant limiting lots to residential use since the subdivision was platted. Specifically, the plat’s restrictive covenant states: “No building other than a single family dwelling and a private garage shall be built on any one lot.”

The Broadmoor lots numbered three through five (collectively referred to as “Lots”), located in the 8800 block

on the west side of Lima Road, are the subject of the current litigation. Along with lots one and two, these prop-
No. 01-1158 3

1 Broadmoor, with the exception of lot 1, was zoned RS-1/Suburban Residential at the time of the petition. Lot 1, located on

the corner of the plat on Lima Road, was explicitly exempted

from the residential use requirement in the restrictive covenant at the time the subdivision was platted and was instead

zoned C-1/Limited Commercial.

erties form the eastern perimeter of Broadmoor along Lima

Road. Lima Road is a north-south corridor into Fort Wayne,

Indiana, where each day over thirty thousand cars travel.

In October 1999, HNS Enterprises, LLC and LST, LLC

(collectively “HNS”), as the owners of the Lots, submitted

a rezoning petition and application for primary development to the Area Plan Commission of Allen County (“Plan

Commission”). As part of the application, HNS requested

that the Plan Commission vacate their Lots and the associated restrictive covenants from the Broadmoor plat

pursuant to Indiana Code § 36-7-3-11.1

 HNS also petitioned the Commission to rezone the Lots to C-2A/Neighborhood Shopping Center and approve a primary development plan for the Lots consisting of a 12,000 square foot

shopping center which contained five stores within a single story building (the “Broadmoor Shops”). At the time,

each of the Lots contained an uninhabited residence.

On December 9, 1999, the Plan Commission held a public hearing on the petitions and numerous residents of

Broadmoor objected to the granting of any of HNS’ petitions. Also at the hearing, the Daniels’ counsel appeared

and argued that the Plan Commission did not have the

authority to remove the restrictive covenants requiring

that all structures built within Broadmoor be single-family

residential homes. The Daniels’ counsel further argued

that the vacation and rezoning of lots three through five

of Broadmoor would constitute an unconstitutional taking
4 No. 01-1158

of private property for a private use. HNS filed a statement of reasons for the proposed vacation along with its

petition to the Plan Commission. In their statement of

reasons, HNS claimed that the conditions relating to the

Lots had changed so as to defeat the purpose of the plat.

HNS also contended that vacating the covenant would be

in the public interest because without the residential

restriction, HNS could develop the property with commercial uses which would serve as a buffer between Lima

Road and the remaining residences. Finally, HNS claimed

that the covenant vacation would not diminish the value

of the remaining single-family homes in the plat and

could in fact increase their value due to the run-down

nature of the uninhabited houses currently on the Lots.

At a second meeting held on January 20, 2000, the Plan

Commission adopted a “do pass” recommendation approving HNS’ rezoning petition. The Plan Commission also

granted conditional approval to the vacation of the Lots

from the plat of the Broadmoor Addition and for the

primary development plan for the Broadmoor Shops. The

Plan Commission specifically found that it was in the public interest to vacate the Lots and covenants from the

Broadmoor plat because:

it would allow the site to be redeveloped with commercial uses which could be a more appropriate use for the

property and could be a benefit to the immediate

neighborhood. The uninhabited and deteriorating residential structures would be removed from the site.

In addition the Plan Commission found that the value of

the other lots in Broadmoor would not be diminished by

the vacation because:

redevelopment of the site for commercial uses will

require development plan review by the plan commis-
No. 01-1158 5

2 At oral argument, the Plan Commission verified that the Lots

are currently listed for sale with a local Ft. Wayne realtor for

$695,000. See also Daniels v. Area Plan Comm’n of Allen County, 125

F. Supp. 2d 351, 353 (N.D. Ind. 2000).

sion. This review will address land use compatibility

issues resulting from commercial use of the property,

and will preserve property values in the remainder

of the subdivision. The uninhabited and deteriorating

residential structures would be removed from the site.

The Plan Commission also imposed several conditions

designed to limit the impact of the development of the

“Broadmoor Shops” on Broadmoor’s residential character.

The conditions impose frontage, transportation and state

agency approval requirements. The Plan Commission

apparently also added limitations on the future commercial uses of the Lots, although those conditions are not

in the record.

On April 13, 2000, before HNS began to develop the Lots,2

the Daniels filed suit under 42 U.S.C. § 1983 for declaratory

relief and a permanent injunction in the United States

District Court for the Northern District of Indiana. Under

Ind. Code § 36-7-3-11, the Daniels could have challenged

the Plan Commission’s action in state court by filing of a

writ of certiorari to the circuit or superior court of Allen

County. See Ind. Code § 36-7-4-1016 & § 36-7-4-1004. However, the Daniels did not file the petition to state court

and instead proceeded directly to federal court. The

Daniels’ federal complaint alleged that the Plan Commission’s actions violated their constitutional rights by taking

the Daniels’ property for private use in violation of the

Fifth and Fourteenth Amendments of the United States
6 No. 01-1158

Constitution and the Indiana Constitution. The Plan Commission filed a motion to dismiss, arguing that the district court lacked subject matter jurisdiction because the

Daniels failed to exhaust their administrative remedies

and thus their claim was not ripe, or alternatively because

the Daniels failed to allege damages. The district court

denied the Plan Commission’s motion to dismiss, finding that exhaustion of administrative remedies was not

required under Patsy v. Board of Regents of Florida, 457

U.S. 496, 516 (1982). Both parties then filed motions for

summary judgment on the Daniels’ claim that the property was taken for private use. In their motion for summary judgment, the Daniels also claimed that Indiana Code

§ 37-6-3-11 was facially unconstitutional because it permitted takings for private purpose.

The district court granted the Daniels’ summary judgment

motion. Daniels v. Area Plan Comm’n of Allen County, 125

F. Supp. 2d 338 (N.D. Ind. 2000). The court noted that under Indiana common law, “a restrictive covenant in a plat

is a covenant running with the land, and that a state

that takes a restrictive covenant for a private purpose

violates both the Federal and Indiana Constitutions.” Id.

at 348. (citing Pulos v. James, 302 N.E.2d 768, 771 (Ind.

1973)). The court concluded that the Plan Commission

unconstitutionally took the Daniels’ property for private

use by removing the restrictive covenants and authorizing another individual to commercially develop property.

Id. at 353. The court further concluded that because Indiana Code § 36-7-3-11 authorized private takings, it was

facially invalid. Id. at 353-54. The court issued a declaratory judgment finding that the Plan Commission had

committed a violation under § 1983 by depriving the

Daniels of their constitutional rights by removing the

restrictive covenants from lots 3-5 of Broadmoor. Id. The

court also entered a declaratory judgment voiding the
No. 01-1158 7

acts of the Plan Commission purporting to vacate the

restrictive covenant on the Lots, and stating that the covenant remains in full force and effect. Id. Finally, the court

issued a permanent injunction ordering the Plan Commission to reverse the HNS petition and prohibiting the

Plan Commission from removing the restrictive covenants

in the plat of Broadmoor for any private purpose. Id. at

357. The Plan Commission appeals.

III.

On appeal the Plan Commission maintains that because

the Daniels’ claims were not ripe for review the district court erred in concluding that it had subject matter

jurisdiction. Additionally, the Plan Commission argues

that even if the Daniels’ claims were ripe, the district court

erred in concluding that its actions constituted a taking

for a private purpose. Finally the Plan Commission contends that the statute is not facially unconstitutional.

A. Subject Matter Jurisdiction

The Plan Commission argues that the district court did

not have subject matter jurisdiction over the Daniels’ claims.

Because the Daniels failed to exhaust their remedies in

state court, the Plan Commission asserts that the Daniels’

claims are not ripe for review. We review de novo a district

court’s decision that it had subject matter jurisdiction.

CCC Inform. Services, Inc. v. Amer. Salvage Pool Assoc., 230

F.3d 342, 345-46 (7th Cir. 2000).

In the recent cases of Forseth County v. Village of Sussex,

199 F.3d 363 (7th Cir. 2001), Covington Court Ltd. v. Village

of Oak Brook, 77 F.3d 177 (7th Cir. 1996), and Gamble v.

Eu Claire County, 5 F.3d 285 (7th Cir. 1993), we have had
8 No. 01-1158

3 In Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725, 733

n. 7, the court noted that ripeness requirements stem from both

Article III as well as “prudential reasons for refusing to exercise

jurisdiction.” (citing Reno v. Catholic Social Services, Inc., 509

U.S. 43, 57, n. 18 (1993)). The Court describes the requirements

imposed specifically on federal Takings Clause claimants as

“prudential”. Id. at 734.

the opportunity to consider the ripeness requirements

imposed on litigants by federal courts seeking to challenge

takings for private purpose.3

 In each case, we held that

the court lacked subject matter jurisdiction because the

claim was not ripe for review due to the failure of the

plaintiffs to seek state remedies. See Forseth, 199 F.3d at 370,

Covington Court, 77 F.3d at 179, Gamble, 5 F.3d at 288.

These cases all hinged on the ripeness hurdles imposed

on Takings Clause litigants by the Supreme Court in

Williamson County Regional Planning Comm’n v. Hamilton

Bank of Johnson City, 473 U.S. 172 (1985). In light of our

past jurisprudence, we begin our analysis with Williamson

County.

In Williamson County, the Supreme Court held that prior

to initiating a civil action for a taking in federal court,

a plaintiff must demonstrate that he has both received a

“final decision regarding the application of the [challenged] regulations to the property at issue” from “the

government entity charged with implementing the regulations,” id. at 186, and has sought “compensation

through the procedures the State has provided for doing

so.” Id. at 194. The Plan Commission argues that because

the Daniels did not seek state remedies for the alleged

taking, their claim is barred under Williamson County.

In this case the Daniels did not seek redress in state

court for either equitable relief or compensation after the
No. 01-1158 9

4 See also Samaad v. City of Dallas, 940 F.2d 925, 937 n. 27 (5th

Cir. 1991) (noting that a district court’s interpretation of Williamson County as imposing an exhaustion requirement in private takings claims was in violation of Patsy) (citing HMK Corp.

v. County of Chesterfield, 616 F. Supp. 667, 670 (E.D. Va. 1985)).

Plan Commission issued its decision on the plat vacation.

They claim that they bypassed state court first because

they were not seeking monetary compensation, which is

the only remedy available through the state’s inverse

condemnation procedure, and second, state court relief

is not mandated in Takings Clause cases where plaintiffs

are only seeking equitable remedies. Instead, the Daniels

proceeded to federal court by filing a claim under 42 U.S.C.

§ 1983. The district court denied the Plan Commission’s

motion to dismiss for lack of subject matter jurisdiction,

relying on Patsy v. Board of Regents of Florida, 457 U.S.

496, 516 (1982). In Patsy, the Supreme Court held that

“exhaustion of state administrative remedies should not

be required as a prerequisite to bringing an action pursuant to § 1983.” Id. See also Wudke v. Davel, 128 F.3d 1057,

1063 (7th Cir. 1997) (“[T]here is no general exhaustion

requirement for § 1983 plaintiffs.”). The district court

reasoned that because the Daniels were litigating a case

filed under § 1983, they were not required to pursue

state administrative remedies under Patsy.

The district court’s conclusions are not without foundation as we have commented in the past on the tension

between Patsy and Williamson County. See Gamble, 5 F.3d

at 288.4

 In general, Patsy does not “require exhaustion

of judicial remedies as a precondition to bringing a federal

civil rights suit.” Id. However, the additional ripeness

requirements of Williamson County create a takings claim

exception to Patsy’s general requirement that exhaustion
10 No. 01-1158

5 In determining whether or not the Daniels claim is ripe for

review under Williamson County it is immaterial whether the

Daniels are classifying their federal claim as a Fifth Amendment

takings claim or a substantive due process claim under the

Fourteenth Amendment. We have chosen to review ripeness

concerns in claims for takings for a private purpose under the

Fifth Amendment’s taking’s analysis even if a litigant has claimed

that his property was taken in violation of his substantive

due process rights. See, e.g., Forseth, 199 F.3d at 369, n. 8; Covington Court, 77 F.3d at 179 (7th Cir. 1996) (holding that Williamson

County ‘s ripeness analysis applies “[r]egardless of the purpose

of the taking”); Coniston Corp. v. Village of Hoffman Estates, 844

F.2d 461, 464-66 (7th Cir. 1988) (“[T]he takings clause may be

broad enough to take care of the problem without the help of

the due process clause.”); see also Gamble, 5 F.3d at 286-87.

6 Other circuits have disagreed with this requirement. In Montgomery v. Carter County, Tennessee, 226 F.3d 758 (6th Cir. 2000),

(continued...)

is not required in § 1983 suits. Id. at 287. Therefore litigants, like the Daniels in this case, who assert a takings

claim under 42 U.S.C. § 1983 may not rely solely on Patsy,

but must meet the Court imposed ripeness requirements

of Williamson County prior to bringing a federal claim.5

Unlike some circuits, this Circuit has consistently maintained a strict requirement that Takings Clause litigants

must first take their claim to state court even when plaintiffs, such as the Daniels, are alleging a taking for private

purpose. See Forseth, 199 F.3d at 370, Covington Court, 77

F.3d at 179, Gamble, 5 F.3d at 288. In Covington Court, we

explicitly stated that even where a state takes property for

“a purely private rather than a public use,” on “takings

and due process claims, [a plaintiff] first must show that

it has availed itself of state court remedies.” See Covington

Court, 77 F.3d at 179-80.6
No. 01-1158 11

6 (...continued)

the Sixth Circuit held that requiring a plaintiff to wait before

suing in federal court, “when her sole claim is that she was

dispossessed of property for a private use, would have only one

apparent purpose—to force the plaintiff to vet her claims in state

proceedings (such as a state court declaratory judgment action

to quiet title, as the county defendants have suggested) before

the claims can be aired in federal court.” Id. at 770. The court

reasoned that forcing the plaintiff to pursue state “remedial”

procedures would be an exhaustion requirement, “a requirement that Williamson County explicitly does not impose.” Id.

(citing Williamson County, 473 U.S. at 193-94 (distinguishing

the obtaining of final administrative action (required) from

the exhaustion of judicial remedies (not required))); also citing

Steffel v. Thompson, 415 U.S. 452, 472-73 (1974) (noting the general rule that exhaustion of state remedies is not a prerequisite

to a § 1983 action). In Montgomery, like the case at hand, there

was no doubt that the plaintiff had received a final administrative action. Id. at 768 (finding a physical invasion had occurred).

The Sixth Circuit concluded that to the extent that a plaintiff

claims that her property was taken for a private use, the claim is

ripe and the plaintiff may sue immediately without resorting

to state remedies Id. at 771. Both the Fifth and Ninth Circuits

have also followed this line of reasoning. See Samaad v. City

of Dallas, 940 F.2d 925 (5th Cir. 1991) (holding that a privatepurpose takings claim was immediately ripe for judicial determination); Armendariz v. Penman, 75 F.3d 1311, 1320-21 & n. 5 (9th

Cir. 1996) (en banc) (“Because a ‘private taking’ cannot be constitutional even if compensated, a plaintiff alleging such a taking would not need to seek compensation in state proceedings before filing a federal takings claim under the rule of

Williamson County . . . .”). The Sixth Circuit stated that the

approach of the Seventh Circuit articulated in Covington Court

imposed a judicial exhaustion requirement that Williamson

County does not require. Because we find that the Daniels claim

(continued...)
12 No. 01-1158

6 (...continued)

satisfies the futility exception to Williamson County’s ripeness

requirement, see infra § III, B, we need not resolve the tension

between this circuit’s and the Sixth Circuit’s reading of Williamson

County.

Under Williamson County, federal courts are precluded

from adjudicating a claim of a taking for a private purpose

until litigants have met two requirements: “(1) the ‘Final

Decision Requirement’: the plaintiff must demonstrate

that he or she received a ‘final decision’ from the relevant

government entity; and (2) the ‘Exhaustion Requirement’:

the plaintiff must have sought ‘compensation through

the procedures the State has provided for doing so.’ ”

Forseth, 199 F.3d at 372 (citing Williamson County, 473 U.S.

at 186-87, 194; see also Unity Ventures v. County of Lake, 841

F.2d 770, 774-75 (7th Cir. 1988); Hager v. City of West

Peoria, 84 F.3d 865, 869 (7th Cir. 1996)).

1. Final decision requirement.

Under the ripeness analysis of Williamson County, the

plaintiff’s first requirement is to show that he received a

final definitive determination by the agency responsible

for deciding the permitted development on the land. See

MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340,

351, (1987); Williamson County, 473 U.S. 172 at 193-94. Thus,

to determine whether the Plan Commission’s actions constitute a final decision, we turn to Indiana law to analyze whether the plat vacation statute imposed additional

administrative responsibilities on the Daniels. Indiana law

provides that “the approval, disapproval, or imposition

of a condition on the approval of the vacation of all or
No. 01-1158 13

part of a plat is a final decision of the plan commission” and

may be appealed to a court for review. Ind. Code § 36-7-3-

11(h). In this case the Plan Commission approved HNS’

petition for vacation of the Lots and covenants in Broadmoor. Although the Plan Commission conditioned the

final vacation on the approval of the development plan

by various utility providers, both an approval of a plat

vacation and the imposition of a condition on a plat vacation constitutes a final decision. Id. Therefore the Plan

Commission’s plat and covenant vacation of the Lots from

Broadmoor’s plat satisfied Williamson County’s final decision requirement.

2. Exhaustion requirement.

Under the second requirement for ripeness imposed by

Williamson County, the plaintiff must seek compensation

from the state prior to proceeding to federal court. The

Supreme Court has explained that Williamson County’s

exhaustion requirement “stems from the Fifth Amendment’s

proviso that only takings without ‘just compensation’ infringe that Amendment.” Suitum v. Tahoe Regional Planning

Agency, 520 U.S. 725, 734 (1997). The Court reasoned that, “if

a State provides an adequate procedure for seeking just

compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used

the procedure and been denied just compensation.” Id.

(citation and quotation omitted); see also Williamson County,

473 U.S. at 194 n. 13 (“[B]ecause the Fifth Amendment

proscribes takings without just compensation, no constitutional violation occurs until just compensation has been

denied. The nature of the constitutional right therefore

requires that a property owner utilize procedures for obtaining compensation before bringing a § 1983 action.”)

(emphasis in original); Gamble, 5 F.3d at 286 (“[U]ntil he
14 No. 01-1158

7 In 2002, Ind. Code 32-24-1-16 replaced the prior inverse

condemnation statute, Ind. Code 32-11-1-12, which was relied on

by both parties. The new statute is substantively identical to its

predecessor.

exhausts his remedies for obtaining a compensation award

or equivalent relief from the state . . . [a landowner] cannot

know whether he has suffered the only type of harm

for which the just-compensation provision of the Constitution entitles him to a remedy.”) (internal citations omitted). The Plan Commission argues that the Daniels’ claim

is not ripe because they failed to exhaust their available

state law remedies by either seeking statutory certiorari

review of the Plan Commission’s decisions, see Ind. Code

§ 36-7-4-1004, or suing for inverse condemnation. See Ind.

Code § 32-24-1-16.7

Initially we note that the Plan Commission’s claim that

the Daniels should have sought state certiorari review is

clearly not required by Williamson County. The only remedies available to plaintiffs under certiorari review of a

covenant vacation are reversal, affirmation or modification.

See Ind. Code § 36-7-4-1009, 1016. In Williamson County,

the Court specifically contrasted this type of review procedure, and “those for obtaining a declaratory judgment . . .

with procedures that allow a property owner to obtain

compensation for a taking. Exhaustion of review procedures is not required.” Williamson County, 473 U.S. at 194

n. 13 (citing Patsy v. Board of Regents of Florida, 457 U.S.

496 (1982)). The Court concluded that Takings Clause

litigants need only exhaust “procedures for obtaining compensation before bringing a § 1983 action.” Id.

However, the availability and adequacy of an inverse

condemnation claim in state court is a different matter. In

SGB Financial Services, Inc. v. Consolidated City of Indiana-
No. 01-1158 15

8 Cf. Hoehne v. County of San Benito, 870 F.2d 529, 533 (9th Cir.

1989) (takings claim ripe for review because California did not

provide an inverse condemnation remedy at time of the alleged

taking); Corn v. City of Lauderdale Lakes, 816 F.2d 1514, 1517 (11th

Cir. 1987) (takings claim ripe for review because Florida did not

recognize inverse condemnation suits).

polis-Marion County, Indiana, 235 F.3d 1036, 1037-38 (7th

Cir. 2000) this court applied the inverse condemnation

requirements of Williamson County to Takings Clause

litigants in Indiana. In SGB, the plaintiff, SGB, owned 26

buildings in the Timber Ridge Apartment complex in the

City of Indianapolis. The city put SGB’s buildings on its

“acquisition list” of properties. SGB claimed that by listing

their properties, the city had accomplished a taking because no potential purchaser would be willing to pay the

pre-listing value once the properties were designated for

possible condemnation. Id. at 1037. We dismissed SGB’s

claim because the plaintiff failed to take advantage of

Indiana’s inverse condemnation proceedings before filing

the federal suit. Id. (citing Ind. Code § 32-11-1-12). We held

that because the Takings Clause “does not forbid takings

but simply requires ‘just compensation’ for the property,

a state violates the Constitution only by refusing to pay

up.” Id. Accordingly, in SGB we concluded that “[a] final

decision about the disposition of the plaintiff’s property,

coupled with a lack of any financial remedy . . . could satisfy both [prongs of Williamson County].” Id. at 1038.8

Generally an inverse condemnation comes into play when

property not actually taken or condemned is detrimentally

affected by a threatened condemnation or the actual condemnation of an adjoining parcel of land. For example

if condemnation of parcel A limits access to (or even

landlocks) parcel B, the owner of parcel B could have
16 No. 01-1158

9 In this manner the case presented before us is distinguished

from Forseth, Covington Court and Gamble. In all three of those

cases, the plaintiffs had incurred pecuniary damages from an

adverse zoning decision. See Forseth, 199 F.3d at 366; Covington Court, 77 F.3d at 178; Gamble, 5 F.3d at 285. See also Conniston

Corp., 844 F.2d at 466 (stating in a case where the plaintiff alleged a taking for private purpose that the “the rejection of the

plaintiffs’ site plan probably reduced the value of their land.”).

a cause of action for the diminished value of his parcel

that was not actually taken. After utilizing a state remedy,

such as a suit for inverse condemnation, if the owner

does not receive what he believes is just compensation,

he may proceed with a Takings Clause claim in federal

court. But what happens with a condemnation that leaves

no diminished value to the property of an adjacent owner?

That is the question before us.

The Daniels did not file a state inverse condemnation

action prior to filing their § 1983 claim in federal court.

They claim that while under Williamson County they would

normally be required to seek compensation through the

state court’s inverse condemnation proceedings, under

the facts of this case, such a proceeding would be futile

because there is no monetary loss that begs compensation. Therefore they insist that their federal claim is ripe.9

In Williamson County, the Supreme Court adopted a

limited exception to its exhaustion requirement based on

the futility of seeking state court relief. Specifically, the

Court held that a plaintiff may be excused from the exhaustion requirement if he demonstrates that “the inverse

condemnation procedure is unavailable or inadequate.”

Williamson County, 473 U.S. at 197. If inverse condemnation is inadequate, i.e., where compensation for diminished value is not an issue, resorting to that remedy would
No. 01-1158 17

be futile. Accordingly, we turn to the question of whether,

given the facts of this case, Indiana’s inverse condemnation procedure while “available” is nevertheless inadequate.

In Indiana, an inverse condemnation action is one

“against an entity with the power to condemn (usually a

governmental defendant) to recover the value of property

which has been taken in fact, even though no formal

exercise of the power of eminent domain has been attempted by the taking agency.” City of Gary v. Belovich, 623

N.E.2d 1084, 1095 n. 1 (Ind. Ct. App. 1993). Moreover, under Indiana law, an inverse condemnation action is an

action at law limited to monetary compensation. See Dible

v. City of Lafayette, 713 N.E.2d 269, 274 (Ind. 1999); Indiana

Dept. of Trans. v. Southern Bells, Inc., 723 N.E.2d 432, 434

(Ind. Ct. App. 1999). However, the manner in which

the Plan Commission allegedly took the Daniels’ property leaves them without a definable pecuniary loss. The

Daniels’ property value has not decreased as a result of

the Plan Commission’s action. In fact, prior to granting a

plat vacation petition a plan commission must find, as it

did here, that the surrounding plat will suffer no injury

to the value of their land. Ind. Code § 36-7- 3-11(e). The

Code provides, in pertinent part, as follows:

The plan commission shall approve the petition for

vacation of all or part of a plat only upon a determination that:

. . .

3. the value of that part of the land in the plat not

owned by the petitioner will not be diminished by

vacation.

In this case the Plan Commission found that the value of

the land in the plat would not be diminished because

redevelopment of the site for commercial uses will re-
18 No. 01-1158

10 Whether a taking in violation of the Fifth Amendment exists

under these circumstances is a separate issue and one discussed

infra at III, 2.

11 Cf. Duke Power Co. v. Carolina Environ. Study Group, Inc., 438

U.S. 59, 71 n. 15 (1978) (“[The Declaratory Judgment Act] allows

individuals threatened with a taking to seek a declaration of the

constitutionality of the disputed governmental action before

potentially uncompensable damages are sustained.”); Transohio

Sav. Bank v. Director, Office of Thrift Supervision, 967 F.2d 598, 613

(D.C. Cir. 1992) (“the district court should accept jurisdiction

over takings claims for injunctive relief in the few cases where

a Claims Court remedy is ‘so inadequate that the plaintiff

would not be justly compensated.’ ” (citation omitted)).

quire development plan review by the plan commission.

This review will address land use compatibility issues

resulting from commercial use of the property, and

will preserve property values in the remainder of

the subdivision. The uninhabited and deteriorating residential structures would be removed from the

site.

The Plan Commission does not dispute this admission

on appeal. In fact, the Daniels’ property value may have

even increased, at least according to HNS’ assertion to the

Plan Commission that property values will be enhanced

by the commercial development.10 Both parties effectively

agree that vacating the plat and the covenant did not

diminish the value of the Daniels’ property. Therefore, a

suit for monetary relief under Indiana’s inverse condemnation proceedings would be futile, if not frivolous.

This does not mean that a taking has not occurred, or

that the Daniels are not entitled to relief.11 Indiana courts

have held injunctive relief instead may be necessary to

remedy interference with a landowner’s property rights
No. 01-1158 19

12 Of course, the Daniels had the option of bringing their claim for

equitable or declaratory relief in state court, but they were not

required to do so under Williamson County’s ripeness requirements.

13 The Daniels eventually amended their complaint to include

a facial challenge to the constitutionality of the statute. Litigants

are not required to meet the Williamson County ripeness requirements when solely mounting a pre-enforcement facial

challenge to the constitutionality of a statute under the Fifth

Amendment. Yee v. City of Escondido, 503 U.S. 519, 533 (1992);

Triple G Landfills, Inc. v. Board of Commissioners of Fountain Cty.,

Indiana, 977 F.2d 287 (7th Cir. 1992). In this case the Daniels

did not mount a facial challenge to the statute until after it had

been enforced to their detriment. While we see no reason why

enforcement would change the ripeness requirements of a purely

facial challenge, this finding would not impact the ripeness

of their separate as-applied challenge under Williamson County.

for a private purpose. See Indiana Dept. of Trans. v. Southern

Bells, 723 N.E.2d 432, 434 (Ind. Ct. App. 1999). Cf. Pulos,

302 N.E.2d at 771 (holding that a governmental entity

cannot take private property for a private purpose). But

under Indiana law, purely equitable relief—a reversal of

the rezoning and the eradication of the covenant and

plat—is unavailable under the inverse condemnation

procedure. See Southern Bells, 723 N.E.2d at 434. Accordingly, with no monetary loss and injunctive relief not

an available option under the statute, the inverse condemnation procedure is inadequate to address the Daniels’

injury. Under Williamson County this futility exempts

them from the exhaustion requirement.12 Therefore, the

Daniels have satisfied the Takings Clause ripeness requirements of Williamson County, and the court has subject

matter jurisdiction to hear the merits of the case.13
20 No. 01-1158

14 The Daniels’ theory of the case has consistently been that the

taking in this case resulted in a violation of the Takings Clause

as opposed to a violation of their substantive due process rights.

We have had an opportunity in the past to examine whether

a taking for private purpose claim is more properly analyzed

under the standards of the Fourteenth Amendment Due Process

Clause or the Takings Clause of the Fifth Amendment. See

Forseth, 199 F.3d at 369-70; Covington Court Ltd. v. Village of Oak

Brook, 77 F.3d 177, 179-80 (7th Cir. 1996); Coniston Corp. v. Village

of Hoffman Estates, 844 F.2d 461, 464-66 (7th Cir 1988). We have

also recognized that plaintiffs may maintain a substantive

due process claim to contest land use decisions. See, e.g., Doherty

v. City of Chicago, 75 F.3d 318, 325 (7th Cir. 1996). However, in

our latest discussion of this issue we held that we will analyze

a taking for a private purpose claim under the Takings Clause.

See Forseth, 199 F.3d at 369 n. 8 (stating, “there is authority that

when a taking is made for wholly private use, the takings clause

and not substantive due process provides the analytical frame-

(continued...)

B. Takings for a Public Purpose

Having concluded that the Daniels’ takings claim is ripe,

we now proceed to the merits. We first address whether

the vacation statute was applied unconstitutionally to the

Daniels and then address their facial challenge. Cf. Renne v.

Geary, 501 U.S. 312, 324 (1991) (facial challenge should

generally not be entertained when an “as-applied” challenge

could resolve the case). The Daniels allege that the Plan

Commission violated § 1983 by acting under the color

of state law to take their property in violation of their

constitutional rights. The Daniels argue that the covenant

vacation was a taking for private purpose in violation

of their rights under the Fifth and Fourteenth Amendments to the Constitution and Article 1, §§ 21, 23 of the

Indiana Constitution.14 In this case, the Plan Commission
No. 01-1158 21

14 (...continued)

work.”). See also Armendariz v. Penman, 75 F.3d 1311, 1325-26

(9th Cir. 1996) (holding that if the Takings Clause applies to an

alleged violation, no substantive due process claim applies.

“Substantive due process analysis has no place in contexts

already addressed by explicit textual provisions of constitutional protection, regardless of whether the plaintiff’s potential claims under those amendments have merit.”). Because the

Daniels have chosen to frame their claim as an improper taking

for a private purpose in violation of the Fifth Amendment, we

see no need to readdress the issue in this case.

asserts that it was entitled to summary judgment because

the undisputed facts demonstrate that the restrictive

covenants on the Lots were vacated in the public interest. We review de novo the district court’s decision to grant

summary judgment to the Daniels, construing all facts,

and drawing all reasonable inferences from those facts,

in favor of the Plan Commission, the party against

whom the motion under consideration was made. See

Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir.

1998); Hall v. Bodine Elec. Co., 276 F.3d 345, 352 (7th

Cir. 2002). Summary judgment is proper when the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that

the moving party is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(c).

The Takings Clause of the Fifth Amendment provides,

“nor shall private property be taken for public use, without just compensation.” This limitation on governmental

power has been imposed on the States through the Fourteenth Amendment, see Phillips, 524 U.S. at 163; Chicago,

Burlington & Quincy R.R. v. Chicago, 166 U.S. 226, 239

(1897). The Constitution only protects, rather than creates,
22 No. 01-1158

15 Indiana courts have also held that a restrictive covenant is

a “species of express contract,” Columbia Club, Inc. v. American

Fletcher Realty Corp., 720 N.E.2d 411, 417 (Ind. Ct. App. 1999),

subject to the Contracts Clause of the Indiana constitution. Clem

v. Cristole, 582 N.E.2d 780, 782 (Ind. 1991). While Indiana has

recognized that a restrictive covenant is both a property right

and a contract right, in the context of takings jurisprudence,

Indiana has indicated that a restrictive covenant may only be

taken for a public purpose. See Pulos, 302 N.E.2d at 772-75; see

also, Dible, 713 N.E.2d at 274. (“Our precedents, and today’s

holding, clearly indicate that where a governmental entity

(continued...)

property interests, therefore the existence of a property

interest is determined by reference to “existing rules or

understandings that stem from an independent source

such as state law . . . .” Board of Regents of State Colleges

v. Roth, 408 U.S. 564, 577 (1972); see also Chapman v. Sheridan

Wyo. Coal Co., 338 U.S. 621, 626-27 (1950) (finding that a

restrictive covenant was a property right similar to an

easement by relying on state common law).

The property interest at issue here is the restrictive

covenant that was included in the plat of Broadmoor

limiting construction in the plats to single-family residences.

By removing the Lots from the Plat and the restrictive

covenants included therein, the Plan Commission has

prevented the enforcement of the residential covenant

against the current or future owners of the Lots. Under

Indiana law it is well established that a restrictive covenant constitutes a constitutionally protected property

interest. Pulos v. James, 302 N.E.2d 768, 771 (Ind. 1973). It

is a covenant that runs with the land and “creates a property right in each grantee and subsequent grantee of a lot

in the plat subject to the restriction.” Id. (citing Wischmeyer v. Finch, 107 N.E.2d 661 (Ind. 1952)).15 The Daniels,
No. 01-1158 23

15 (...continued)

violates restrictive covenants in furtherance of a public use

or purpose, that violation is a taking for which compensation

must be paid.”)

16 See also Cincinnati v. Vester, 281 U.S. 439, 447 (1930); Madisonville

Traction Co. v. St. Bernard Mining Co., 196 U.S. 239, 251-52 (1905);

Fallbrook Irrigation Dist. v. Bradley, 164 U.S. 112, 158 (1896); Calder

v. Bull, 3 U.S. (3 Dall.) 386, 388 (1798) (Chase, J.) (noting

that because “[i]t is against all reason and justice, for a people

to entrust a Legislature with such powers” as the power to

enact “a law that takes property from A and gives it to B,” the

legislature cannot be presumed to have such powers).

as owners of the right to enforce the covenant pursuant

to their ownership of a lot in Broadmoor, may no longer

prevent commercial development in the Lots, which were

in the original plat of Broadmoor. Because they have

been dispossessed of this enforcement ability by the Plan

Commission, they have demonstrated a property right

that has been taken by state action. See Dible, 713 N.E.2d

at 274.

Next, we look to the Daniels’ claim that their property

was taken not for a “public use.” The Supreme Court has

held that implicit in the Fifth Amendment is a requirement that the government not take property for private

purposes: “one person’s property may not be taken for

the benefit of another private person without a justifying

public purpose, even though compensation be paid.”

Thompson v. Consolidated Gas Utils. Corp., 300 U.S. 55, 80

(1937). See also, Hawaii Housing Auth. v. Midkiff, 467 U.S. 229,

245 (1984) (“A purely private taking could not withstand

the scrutiny of the public use requirement; it would serve

no legitimate purpose of government and would thus

be void.”).16
24 No. 01-1158

17 We made a similar observation in 1993 in Gamble v. City of

Eau Claire, noting that we could find “no case in the last half

century where a taking was squarely held to be for a private use.”

See Gamble, 5 F.3d at 287. However, several courts have recently

found unconstitutional takings that were for a private use.

See, e.g., 99 Cents Only Stores v. Lancaster Dev. Agc’y, 2001 WL

811056 (C.D. Cal. 2001) (holding that a plan condemning commercially viable real property in order to transfer it to a potentially more lucrative private entity was a private taking); Southwestern Ill. Dev. Auth. v. National City Environmental, L.L.C.,

768 N.E.2d 1 (Ill. 2002) (holding that a taking of a recycling

facility’s property to convey to a racetrack for the purpose of

expansion of its parking lot was unconstitutional as it would

not achieve a legitimate public use). Cf. Tolksdorf v. Griffith,

626 N.W.2d 163 (Mich. 2001) (holding that the Opening of

Private Roads and Temporary Highways Act was unconstitutional as it authorized the taking of private property for a

predominantly private purpose). See also Pulos v. James, 302 N.E.

2d 768 (Ind. 1973) (holding that a statute authorizing Metropolitan Plan Commission or its committee to vacate covenants or

restrictions applying to subdivided real estate where such

restrictions were contained in recorded plan was invalid as

authorizing taking of property for private purpose); Port Authority of the City of St. Paul v. Grippoli, 202 N.W.2d 371 (Minn. 1972)

(holding that the condemnation of property and subsequent

transfer to a different private interest under a thirty-year lease

(continued...)

Even though the Supreme Court has required the existence of a public use to justify a taking, the burden on

the state is remarkably light. When a state’s exercise of

eminent domain power is “rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause.”

Midkiff, 467 U.S. at 241 (citing Berman v. Parker, 348 U.S.

26 (1954)).17 Due to the “rational relationship” test, the
No. 01-1158 25

17 (...continued)

without change in the character of the property was a taking

for private purpose).

Court has held that “the ‘public use’ requirement is thus

coterminous with the scope of a sovereign’s police powers.”

Id. However, while the scope of judicial scrutiny is narrow, “[t]here is, of course, a role for courts to play in

reviewing a legislature’s judgment of what constitutes a

public use,” id., although this role is very limited when

the legislature has determined what constitutes a public

use. See National Paint & Coatings Ass’n v. City of Chicago,

45 F.3d 1124, 1127 (7th Cir. 1995) (“a legislative decision

‘is not subject to courtroom fact-finding and may be based

on rational speculation unsupported by evidence or empirical data.’ ”) (citing FCC v. Beach Communications, Inc.,

508 U.S. 307 (1993)). Therefore, to the extent that the decisions of the Area Plan Commission fall under specific

Indiana legislative determinations of public use, they

should not be disturbed unless the decision is “palpably

without reasonable foundation.” Midkiff at 241.

In this case, however, the legislature has not made a

specific determination of what constitutes a “public use”

under Ind. Code 37-7-3-11(e) and instead has delegated

that duty to the local Plan Commission. See Ind. Code 37-7-

3-11(e) (“a plan commission shall approve the petition for

vacation of all or part of a plat only upon a determination that . . . it is in the public interest to vacate all or part

of the plat.”). This has not been the situation in prior

case law prescribing deference to state “public use” determinations. For example, in Midkiff, the Court ruled that

the decisions of the Hawaii Housing Authority in determining whether state acquisition of a certain tract of

land effectuated the public purposes of the Land Reform
26 No. 01-1158

Act of 1967, as passed by the Hawaiian Legislature, would

not be disturbed unless shown to be irrational. Midkiff

at 242. Similarly in Berman v. Parker, 348 U.S. 26 (1954), the

Court upheld the taking of private property that the government intended to reconvey to other private persons

because the taking was part of a legislatively enacted

plan to remove blight found by the legislature to be for

public good. And finally, in United States ex rel. TVA v.

Welch, 327 U.S. 546, 552 (1946), the Court stated that “it is

the function of Congress to decide what type of taking is

for a public use and that the agency authorized to do the

taking may do so to the full extent of its statutory authority.” Midkiff, Berman and Welch differ from our situation

in that the condemning state agencies were not free to

create a public purpose out of whole cloth but instead

were limited to findings of public purpose established

by the legislature. See Midkiff, 467 U.S. at 233-34; Berman,

348 U.S. at 28-30; Welch, 327 U.S. at 552.

Instead we are faced with a situation where a local plan

commission is making legislatively unrestrained decisions

as to what constitutes a public use. The Ninth Circuit

has warned that takings made by local agencies without

legislative authority serve to undermine the public use

requirement. See Armendariz v. Penman, 75 F.3d 1311, 1321

(9th Cir. 1996). The court noted that “[if] officials could

take private property, even with adequate compensation,

simply by deciding behind closed doors that some other

use of the property would be a ‘public use,’ and if those

officials could later justify their decisions in court merely

by positing ‘a conceivable public purpose’ to which the

taking is rationally related, the ‘public use’ provision of

the Takings Clause would lose all power to restrain government takings.” Id. Therefore, to the extent that the Area

Plan Commission’s determination of a use that is in the

public interest falls outside Indiana’s legislative defini-
No. 01-1158 27

tions of “public use” in other areas of state law, they will

not be given the almost complete deference that the

Court has afforded legislative determinations. Cf. Cinncinnati v. Vester, 281 U.S. 439, 448 (1930) (holding that condemnation proceedings by a municipality exercised outside

the grant of authority conferred by the legislature were

void).

In this case, pursuant to Indiana Code § 36-7-3-11(e) the

Plan Commission determined that the vacation was in

the public interest because “it would allow the site to be

redeveloped with commercial uses which could be a more

appropriate use for the property and could be a benefit

to the immediate neighborhood. The uninhabited and

deteriorating residential structures would be removed from

the site.” In approving the rezoning and primary development plan, the Plan Commission also made several findings of fact:

(1) Nearby commercial development and increased

traffic along Lima Road have made this property

less desirable for residential use.

(2) Redevelopment of the site for commercial uses will

require development plan review by the plan

commission. This review will address land use

compatibility issues resulting from commercial use

of the property, and will preserve property values

in the remainder of the subdivision.

(3) The proposed redevelopment of the site would

create a commercial development which could be

an asset to the surrounding neighborhood. Site

development plan review will mitigate any negative impacts on the adjacent residential properties.

(4) The proposed rezoning will establish a desirable

precedent in the area because: it will continue the
28 No. 01-1158

established precedent for commercial development

or redevelopment of properties fronting on Lima

Road in this area.

At the same time that the Plan Commission approved

the covenant vacation, it also rezoned the area for commercial uses and conditionally approved HNS’s development plan for the Lots that provided for a development

of a 12,000 sq. ft. commercial space. Based on a plain

reading of the Plan Commission’s findings it is apparent that the public benefit of the vacation and zoning action will not materialize absent any promised commercial

development of the Lots by HNS or a subsequent owner.

HNS is thus the primary beneficiary of the vacation of the

restrictive covenant, and not Allen County. The direct

benefit to HNS is emphasized further by the fact that rather than build the proposed shopping center, the property

is currently up for sale as commercial property for $695,000.

The residents of Allen County will see none of the possible improvement in their health, safety and welfare

until HNS either sells the property to a potential developer or commercially develops the property itself. This private benefit does not necessarily doom the covenant vacation under current takings jurisprudence, as even takings

that transfer property from one private person to another

have been deemed valid as long as there is a public purpose underlying the transfer. Hawaii Housing Auth. v.

Midkiff, 467 U.S. 229, 245 (1984). However in this case there

is no rationally related public purpose as defined by either the Indiana legislature or the Plan Commission to

support the private taking.

1. Legislatively Determined Public Purposes

The Plan Commission’s stated purpose for the covenant

vacation is the development of commercial property and
No. 01-1158 29

the removal of empty homes. The Indiana legislature

has addressed, in other enactments, the public purpose

requirement of eminent domain procedures in areas of

commercial development and vacated homes in blighted

areas. The Plan Commission’s statement of public use

fails under either scenario.

First, under Indiana law, the Plan Commission may not

condemn property if “commercial development” is the

sole public purpose. In Indiana, local governments may

designate areas “economic development areas” and establish redevelopment commissions based on findings

that increased development in the region will promote

employment, attract a new business enterprise, increase

the property tax base, improve diversity of the economic

base and create other similar benefits. Ind. Code 36-7-14-41

(b)(4). Redevelopment commissions have several powers

in economic development zones including purchasing, selling and leasing property, maintaining structures, providing financial assistance to local entities, and contracting

to construct necessary structures. Ind. Code 36-7-14-12.2.

However, Ind. Code 36-7-14-43(a)(7) specifically prohibits

a commission from exercising the right of eminent domain in an economic development area. See also, Evansville

v. Reising, 547 N.E.2d 1106, 1110 (Ind. Ct. App. 1989).

Similarly, local commissions may not use eminent domain for industrial development but instead may only

“acquire by purchase, gift, or devise, and own, improve,

maintain, sell, lease, convey, contract for, or otherwise

deal in, real property for the development of industrial

parks or industrial sites.” Ind. Code § 36-7-13-3. Therefore,

the Indiana legislature has determined that economic

development on its own does not constitute a public

purpose sufficient to satisfy the public use requirement

inherent in the exercise of eminent domain under Indiana

law.
30 No. 01-1158

Instead, redevelopment commissions must treat an area

as “blighted” in order to use eminent domain to achieve

the purpose of commercial development. Id. at 1111-12.

Under Indiana law the clearance of blighted areas constitutes a public purpose sufficient to enable the exercise

of eminent domain. Ind. Code § 36-7-14-2(a) (“The clearance, replanning, and redevelopment of blighted areas

under this chapter are public uses and purposes for which

public money may be spent and private property may be

acquired.”). However, the determination of blight is a

significant step that requires more than just a finding of a

couple of vacant houses. See Ind. Code § 36-7-9-4.5. For

vacant structures the Indiana legislature has authorized

local governmental bodies to enact regulatory standards

for repair and maintenance, and order repair or at most

removal of the structure itself, providing certain procedural requirements are met. Id.; see also Ind. Code § 36-7-9-5.

Even if there were an argument that these structures

constitute a blight, Indiana has established specific and

detailed processes through which a local commission

must go in order to make that determination. Ind. Code

§ 36-7-14-15. The code provides in part:

Whenever the redevelopment commission finds that

an area in the territory under their jurisdiction has

become blighted to an extent that cannot be corrected

by regulatory processes or the ordinary operations

of private enterprise without resort to this chapter,

and that the public health and welfare will be benefitted by the acquisition and redevelopment of the area

under this chapter, the commission shall cause to be

prepared:

(1) maps and plats showing:

[the affected areas and designated public uses of

those areas]
No. 01-1158 31

18 While there are other legislatively defined public purposes

in the Indiana Code, we are not aware of any which could justify

a taking by the Plan Commission in this case. See, e.g., Ind. Code

36-7-18-2 (“[t]he clearance, replanning, and reconstruction of

(continued...)

(2) lists of the owners of the various parcels of

property proposed to be acquired; and

(3) an estimate of the cost of acquisition and redevelopment.

Ind. Code § 36-7-14-15.

Once these findings are made “the redevelopment commission shall adopt a resolution declaring that the blighted

area is a menace to the social and economic interest of

the unit and its inhabitants.” Id. The resolution must then

be submitted to the plan commission which determines whether the resolution and the redevelopment plan

conform to the plan of development for the unit and

approve or disapprove the resolution and plan proposed.

Ind. Code 36-7-14-16.

Obviously, the Plan Commission did not pursue this

statutory option. Instead, it simply justified the vacation

based on conclusory and largely unsupported statements

as to the state of the homes on HNS properties. Because

the Plan Commission has neglected to follow the statutory requirements for determining blight, they cannot

now rely on that legislatively determined public use in

order to justify their taking. To hold otherwise would

obviate the procedural requirements of Indiana’s blight

code. Because the Plan Commission has not relied on a

legislative determination of public use, the traditional

deference given to those determinations is not appropriate in this case.18
32 No. 01-1158

18 (...continued)

the areas in which unsanitary or unsafe housing conditions

exist and the providing of safe and sanitary dwelling accommodations for persons of low income are public uses and

purposes for which public money may be spent and private

property may be acquired.”); Ind. Code 36-9-11-5 (municipal

parking facilities are public use); Ind. Code 36-9-2-17 (the

improvement of drains in order to increase the public health is

a public use).

19 The Court has not defined, nor attempted to define when this

test is met and has stated that “[a]n attempt to define its reach

or trace [the police power’s] outer limits is fruitless, for each

case must turn on its own facts.” Berman, 348 U.S. at 32. This

standard, “substantially related to the advancement of the public health, safety, morals, or general welfare,” of course is similar, if not functionally equivalent, to the first half of the test that

the Court has used to determine when a regulation effects a

taking. See Agins v. City of Tiburon, 447 U.S. 255, 260 (1980)

(holding that a land use regulation does not effect a taking if

it “substantially advance[s] legitimate state interests” and does

(continued...)

2. Plan Commission’s Stated Public Purpose

Next we will examine whether the Plan Commission’s

stated public purpose satisfies the Fifth Amendment’s

public use requirement. As we have stated, the Court

has held that the public use requirement is coterminous with the scope of a sovereign’s police powers. See

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1014 (1984) (citing Midkiff, 467 U.S. at 240 (1984)). See generally R. Epstein,

Takings 108-112 (1985). Regulations enacted pursuant to

the police power must be substantially related to the advancement of the public health, safety, morals, or general welfare. See Village of Euclid v. Ambler Realty Co.,

272 U.S. 365, 395 (1926).19 The Plan Commission argues
No. 01-1158 33

19 (...continued)

not “den[y] an owner economically viable use of his land.”).

Because of the vague nature of the test, the Court has struggled

in regulatory takings scenarios with defining whether a public

interest is legitimate, and whether a regulation is “substantially

related” to that interest. See Nollan v. California Coastal Comm’n,

483 U.S. 825, 834-35 (1987). But it has noted that a “broad range

of governmental purposes and regulations satisfies these requirements.” Id. We need not test the limits of “substantially

related” here, however, due to the completely private and

prospective nature of the stated public interest served by the

covenant vacation. Because the removal of the covenant only

benefits the public if HNS benefits first, and even then if the

commercial development is completed and successful, there

is barely a rational relationship much less a substantial relation

of the covenant vacation to the health, safety, and welfare of the

local community.

that if the covenant is vacated, then HNS may develop the

property in the future, thereby removing vacant houses

and creating a commercial zone that may be an asset to

the community. However this possible future public benefit, even combined with the possibility that HNS may decide to remove the vacant homes, is not substantially related to the advancement of the public health, safety or

welfare.

First, this case contrasts sharply even with those cases

where courts have pushed the limits of the Public Use

Clause and have held that a state transfer of property to

a private entity served a public interest. For example in

Poletown Neigh. Council v. City of Detroit, 304 N.W.2d 455,

458 (Mich. 1981), the Michigan Supreme Court authorized

a municipality to take private property for the development of a General Motors plant. In that case, the city of

Poletown condemned a site approved by General Motors
34 No. 01-1158

under the authority of the Economic Development Corporations Act. Id. at 457. The court upheld the stated

public purpose of a new General Motors plant, stating

that “the city presented substantial evidence of the severe economic conditions facing the residents of the city

and state, the need for new industrial development to

revitalize local industries, the economic boost the proposed project would provide, and the lack of other adequate available sites to implement the project.” Id. at 459.

Poletown differs from the case at hand. There, the city

made specific findings pursuant to a legislatively determined public use (under the Economic Development

Corporations Act) as to the exact needs of the local community and the property was condemned for a specific

type of economic development that met those needs and

statutory requirements.

Similarly, in Midkiff v. Hawaii Hous. Auth., the Supreme

Court validated takings of private property for transfer

to individuals under the Hawaii Land Reform Act. Midkiff,

467 U.S. at 233-34 (citing Haw. Rev. Stat. § 516 (1976)).

The land reform statute allowed a local commission to target certain properties and permit the holders of long-term

leases on those properties to purchase the leased property from the owners. Id. The Hawaiian legislature determined that ownership of land in Hawaii was so highly

concentrated as to constitute a “land oligopoly”and thus

allowed those transfers to occur without the landlords’

consent. Id. These transfers were determined by the Court

to be in the public interest because they would effect a

decrease in land prices and an increase in land transfers.

Id. at 240-241. In Midkiff, the actual act of the transfer,

regardless of the proposed use of the property, was found

to serve a public purpose.

Here there is no determination that commercial development in and of itself would serve some overriding pub-
No. 01-1158 35

20 For example, if HNS chose not to commercially develop the

property but instead sold the Lots for residential uses, then the

Plan Commission plat vacation would have no effect on the

plat or local community. If there is no effect on a local community then there can be no public purpose.

lic purpose. In fact there is no limit as to the actual commercial or residential purposes that HNS may use the

property. Under § 3-6-13-2 of the Allen County Zoning

Ordinance land zoned C-2A may be used to provide “goods

and services that meet day-to-day needs.” However,

owners of areas that are zoned C-2A may also use the

property for most C-1A and C-1 uses such as “a service

station, a tire store, a car wash, a laundromat, a tavern, a

package liquor store, a massage salon, a bowling alley, a

pool hall, billboards, and manufactured or mobile homes.”

See Daniels, 125 F. Supp. 2d at 351. As the Daniels point

out, the impact on the community depends on the use to

which the property is put, and without knowing the use,

the Plan Commission could not reasonably find that the

vacation of the covenant could benefit the community.20

The only common feature to all of the potential future

commercial uses of the Lots would be to confer a private

benefit on HNS either through their own development of

the Lots or the sale of the property to a developer. The

underlying purpose of a government taking that transfers

a property interest to a private entity must be for a public benefit, and in this case any speculative public benefit

would be incidental at best.

Secondly, the Plan Commission did not find that any

eventual commercial development would be an asset to

the community, merely that it could be an asset to the

community. This type of possible public use does not satisfy the Fifth Amendment requirements. The Supreme
36 No. 01-1158

21 But see Rindge Co. v. Los Angeles, 262 U.S. 700, 707 (1923) (“In

determining whether the taking of property is necessary for

public use not only the present demands of the public, but

those which may be fairly anticipated in the future, may be

considered.” (citing Central Pacific Railway v. Feldman, 152 Cal.

303, 309 (Cal. 1909)). In Rindge the Court was considering an

eminent domain procedure to expand the highway system

in Los Angeles to alleviate traffic concerns. Id. at 308-09. In

this case, the Plan Commission has not pointed to future needs

of the community, especially on the scale of the future traffic

problems of Los Angeles, but instead stated that commercial

development “could be a more appropriate use for the property and could be a benefit to the immediate neighborhood.”

Court has held that when there is a delegation of power

to a local government to determine a public use, “it is

not enough that property may be devoted hereafter to a public use for which there may be an appropriate condemnation.” Vester, 281 U.S. at 448 (holding that a public use

declaration that an excess condemnation was in “furtherance of the public use” was not suitably defined enough

to justify the taking under a state law requiring that condemnations be supported by a public use) (emphasis

added).21 The Plan Commission argues in response that we

should not just consider the actual purposes that were

considered, but also any “conceivable public purpose.” See

Gamble, 5 F.3d at 287 (emphasis in original). However, that

standard, as enunciated in Midkiff, has traditionally applied to state legislatively or congressionally designated

public purposes employed to justify the use of eminent

domain and so does not apply to independent findings by

the Plan Commission that are unsupported by state code.

See Midkiff, 467 U.S. at 244 (“Thus, if a legislature, state or

federal, determines there are substantial reasons for an

exercise of the taking power, courts must defer to its de-
No. 01-1158 37

termination that the taking will serve a public use.” (emphasis added)). See also Armendariz, 75 F.3d at 1321. Even so,

while in this case there may be some conceivable public benefit of some possible future use of the property,

that benefit will always be subservient to the future private uses of the Lots, and therefore private benefits, by

HNS. Much like the value of the property taken, “public

use” is to be determined at the time of the taking, and at

the time of the taking of the restrictive covenant, the

possible future commercial development could not be

rationally described as for a public purpose. Cf. Coniston

Corp., 844 F.3d at 463 (“The taking is complete when it

occurs . . . .”) (citing First Evangelical Lutheran Church

v. County of Los Angeles, 482 U.S. 304, 320 (1987)). The

public use requirement would be rendered meaningless

if it encompassed speculative future public benefits that

could accrue only if a landowner chooses to use his property in a beneficial, but not mandated, manner.

In sum, because the Plan Commission has not followed

legislative determinations of what constitutes a valid public use, nor provided any facts that demonstrate that the

covenant vacation is substantially related to a public

interest, we conclude that the Plan Commission has violated the public use requirement of the Takings Clause by

vacating the restrictive covenant for a private purpose.

C. Facial Challenge

In addition to holding that the Plan Commission violated

the Daniels’ Fifth Amendment rights by vacating the

restrictive covenant, the district court also held that Indiana Code § 36-7-3-11 was facially invalid under the Takings Clause. Subsection (e) of Indiana Code § 36-7-3-11

provides, in pertinent part:
38 No. 01-1158

22 This current version of § 36-7-3-11 incorporates amendments

to the statue made in 1981 and 1986 after the Indiana Supreme

Court found that it unconstitutionally permitted takings without

a public purpose. Pulos v. James, 302 N.E.2d 768, 770-71 (1973).

The Plan Commission shall approve the petition for

vacation of all or part of a plat only upon determination

that:

1. Conditions in the platted area have changed so

as to defeat the original purpose of the plat;

2. It is in the public interest to vacate all or part of

the plat; and

3. The value of that part of land in the plat not

owned by the petitioner will not be diminished by

vacation.

Ind. Code § 36-7-3-11(e).22

A zoning regulation may be challenged on the basis

that the “mere enactment” of the regulation is unconstitutional and constitutes a taking of property. Agins v. City of

Tiburon, 447 U.S. 255, 260 (1980). However, when making

such a challenge, plaintiffs face an “uphill battle.” Keystone

Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 495

(1987). To successfully claim that a zoning restriction is

unconstitutional on its face, plaintiffs must show either

that it does not substantially advance legitimate state

interests or that it denies them economically viable use

of their land. Agins, 447 U.S. at 260; Lake Nacimiento Ranch

v. County of San Luis Obispo, 841 F.2d 872, 877 (9th Cir.

1987). Moreover, to mount a successful facial challenge

the plaintiff “must establish that no set of circumstances

exists under which the Act would be valid.” United States

v. Salerno, 481 U.S. 739, 745 (1987).
No. 01-1158 39

The Daniels argue that Indiana Code § 36-7-3-11 is facially

invalid because it does not define what constitutes a

public purpose. However, neither the Supreme Court

nor this court has ever required a specific legislative statement as to the limits of a public purpose to avoid a

Fifth Amendment facial challenge. It is true that in determining if the state action satisfies the Fifth Amendment’s Public Use Clause the Supreme Court has relied

primarily, if not exclusively, upon legislative determinations of public purposes within the taking statute. See,

e.g., Hawaii Housing, Auth. v. Midkiff, 467 U.S. 229, 239-42

(1984). However the Court has never held that the sole

source of a definable public use is the specific takingsenabling statute. Indeed because the power of eminent

domain is coterminous with the police power, as long as

a taking is substantially related to the advancement of

the health, safety and welfare of the public it is constitutionally sound under the Public Use Clause. Id.

Also, the United States Constitution does not prescribe

any particular allocation or separation of powers among

the states. See Markham v. Clark, 978 F.2d 993, 995 (7th Cir.

1992). Thus, at least for Fifth Amendment purposes, the

Indiana legislature was free to delegate the authority to

determine public purpose to another branch or unit of

the government. See, e.g., Wisconsin Central Ltd. v. Public

Service Comm’n of Wisconsin, 95 F.3d 1359, 1368-69 (7th Cir.

1996) (no constitutional violation where agency-written

rules delegated to utilities the authority to determine

whether a particular taking had a public purpose; takings

claimants had right to judicial review); United Beverage

Co. of South Bend, Inc. v. Indiana Alcoholic Beverage Comm’n,

760 F.2d 155, 157-58 (7th Cir. 1985) (no general federal constitutional doctrine limiting a state legislature’s delegation of legislative authority to an administrative agency).

Cf. Rindge Co. v. Los Angeles Co., 262 U.S. 700, 709 (1923)
40 No. 01-1158

(“The necessity for appropriating private property for

public use is not a judicial question. This power resides

in the Legislature, and may either be exercised by the

Legislature or delegated by it to public officers.”). The

legislature did in fact delegate this authority when it

authorized the Plan Commission to determine whether

to vacate plats for a public purpose.

Even assuming, arguendo, that the Daniels could show

that the covenant vacation statute was an impermissible

delegation of legislative authority under Indiana law, see,

e.g., Telecommunications Ass’n of Indiana, Inc. v. Indiana

Bell Tel. Co., 580 N.E.2d 713, 716 (Ind. Ct. App. 1991) (recognizing that under Indiana law, some delegations of legislative authority are impermissible), their claim does

not implicate federal law but instead should have been

brought in the Indiana courts. A “failure to implement

state law violates that state law, not the Constitution; the

remedy lies in state court.” River Park v. City of Highland

Park, 23 F.3d 164, 166-67 (7th Cir. 1994). In any event,

while § 36-7-3-11 does not specifically define a public use,

it clearly requires that a public use exist so as to justify a

plan commission’s action.

The Daniels further challenge the procedures authorized

by Indiana Code § 36-7-3-11 because those procedures

demonstrate that the statute authorizes takings for private purpose. Under the procedures mandated by the

statute, the Daniels claim that plat vacations only occur

when a private individual requests that a plan commission alter plats (to the possible detriment of other private

individuals) solely for the petitioner’s benefit. As a result,

even though a typical petitioner could not have any motive for making a request other than for his sole benefit, the

Plan Commission need only make conclusory, written

findings that the vacation of the covenants is “in the public interest.”
No. 01-1158 41

The statute, however, is not that porous. As stated

above, the Public Use Clause is only violated if a person’s

property is “taken for the benefit of another private person without a justifying public purpose, even though

compensation be paid.” Thompson, 300 U.S. at 80. Therefore,

even if a petitioner applies for a plat vacation for a private benefit, if there is a justifying public purpose then

the Fifth Amendment is not violated. Additionally, a local plan commission is not completely without guidance

under 36-7-3-11(e). Specifically all or part of a plat may only

be vacated if “conditions in the platted area have changed

so as to defeat the original purpose of the plat,” Ind. Code

36-7-3-11(e), and “it is in the public interest to vacate all

or part of the plat.” These limits sufficiently direct a plan

commission to act only in concert with the Fifth Amendment. Of course, as demonstrated in this case, a commission may fail to follow those directions. While the Daniels

have been subject to an unconstitutional application of

the statute because the taking of their property was not

in the public interest, this does not render the statute

unconstitutional in every aspect. Under the Salerno standard we can envision several scenarios where a plan

commission could comply with their statutory mandate

and allow a proposed covenant vacation that is in

the public interest. For example, the plan commission

could vacate a covenant if it was rationally related to a

public interest already authorized by legislative enactment. Also, the plan commission could find that the vacation would substantially advance the health, safety and

welfare of the community. For example if the commission found that an area was under-served by doctors’ or

dentists’ offices, or day care facilities, and the vacation would substantially serve to fill that need, then the

vacation could be found to be in the public interest. Therefore, since the covenant vacation statute has potential

constitutional applications, this facial attack fails. See
42 No. 01-1158

Salerno, 481 U.S. at 745. In conclusion, the Daniels have

not shown that Indiana Code 36-7-3-11 is unconstitutional because the statute expressly requires that vacations

be in the public interest, and does not delegate public

use determinations in violation of the Federal Constitution.

IV.

In conclusion, the district court properly asserted subject matter jurisdiction over the Daniels’ claim, although

not under Patsy, but because they were exempted from

Williamson County’s ripeness requirements due to futility.

The district court also properly concluded that Indiana

Code 36-7-3-11 was unconstitutionally applied against

the Daniels by effectuating a public taking for a private

purpose. However the district court improperly found that

Indiana Code 36-7-3-11 was unconstitutional on its face.

The statute could be constitutionally applied and the

Constitution does not prohibit specific delegations of state

legislative power. For these and the foregoing reasons we

AFFIRM the injunction against the Plan Commission from

vacating the restrictive covenant of the Broadmoor Addition for a private purpose, but REVERSE the district court

decision finding Ind. Code § 36-7-3-11 facially unconstitutional.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-97-C-006—9-11-02