Opinion ID: 1412422
Heading Depth: 2
Heading Rank: 2

Heading: Takings/Due Process Claims

Text: Appellant argues the circuit court erred in finding Act 189 did not amount to a taking of property without just compensation or deprive Appellant of due process of law because: (1) Appellant's vested tax exemption benefit arises under a contract, and, like thirty-year, tax-exempt bonds, the State could not change the tax status in violation of the contract; (2) there was evidence that Appellant had expectations that he would receive the tax exemption; and (3) retirement benefits, including the tax exemption, are property rights. Because both a Takings Clause cause of action and substantive due process cause of action focus on a party's ability to protect their property from capricious state action, parties claiming both of these violations must first show that they had a legitimate property interest. The Takings Clause of the Fifth Amendment provides that private property shall not be taken for public use without just compensation. Rick's Amusement, Inc. v. State, 351 S.C. 352, 357, 570 S.E.2d 155, 157 (2001). In determining whether a governmental action violates the Takings Clause, the courts consider: (1) the economic impact of the state action; (2) its interference with distinct investment-backed expectations; and (3) the character of the state action. Id. Substantive due process provides that one may not be deprived of property for arbitrary reasons. Worsley Co. v. Town of Mount Pleasant, 339 S.C. 51, 56, 528 S.E.2d 657, 660 (2000) (Substantive due process protects a person from being deprived of life, liberty or property for arbitrary reasons.). To support a substantive due process violation, a party must show he was arbitrarily and capriciously deprived of a cognizable property interest rooted in state law. Id. Having found that section 9-1-1680 did not create a contract entitling Appellant to tax exemptions, we conclude that there are no property rights infringed upon by Act 189. Even though taxes amount to taking money from taxpayers or business, those kinds of assessments are not treated as per se takings under the Fifth Amendment. Rivers, 327 S.C. at 275, 490 S.E.2d at 263. Moreover, in order for Act 189 to have effected a taking in the present case, Appellant would have to have had a vested right to the tax exemption. Appellant has failed to show he had any reasonable investment-backed expectations in the tax exemption, and there is no contracted obligation. Because there is not a vested interest in tax laws remaining unchanged, Appellant failed to prove a Takings Claim. There is no cognizable property interest that requires due process. Appellant relies on Rivers in support of his due process claim. His reliance is misplaced. Rivers involved a due process claim as a result of excessive retroactive application of tax legislation. In the instant case, there is no retroactive application of tax legislation.