Opinion ID: 2135973
Heading Depth: 1
Heading Rank: 8

Heading: Nature of Property Interest

Text: As the city properly observes, [p]roperty interests are not created by the Constitution, `they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law....' Cleveland Board of Education v. Loudermill, 470 U.S. 532, 538, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985) (quoting Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972)). Indeed, in considering the property rights involved in taking claims, the U.S. Supreme Court has referred to the limits imposed by the controlling state law. Lucas v. South Carolina Coastal Council, ___ U.S. ___, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992). Citing Whitehead Oil I; City of Omaha v. Glissmann, 151 Neb. 895, 39 N.W.2d 828 (1949), appeal dismissed 339 U.S. 960, 70 S.Ct. 1002, 94 L.Ed. 1370 (1950), reh'g denied 340 U.S. 847, 71 S.Ct. 15, 95 L.Ed. 621; and Goodwin v. City of Kansas City, 244 Kan. 28, 766 P.2d 177 (1988), the city argues that Whitehead Oil can have no vested property right which could be taken, for a landowner has no vested right in a particular zoning designation. Therefore, according to the city, a subsequent change in zoning may be applied retroactively so as to deny a land-use permit which would have been granted at the time the permit was originally sought. However, as pointed out in Whitehead Oil II, that argument begs the question of the validity of the subsequent change in zone. Relying on First Lutheran Church v. Los Angeles County, 482 U.S. 304, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987), the city next argues that under the U.S. Constitution, compensation for a temporary taking can only be had when all the economically viable uses have been foreclosed. The First Lutheran Church Court, in holding that a landowner may sue for damages when property is taken by government regulation, even if the taking is only temporary and the regulation later invalidated, wrote: We merely hold that where the government's activities have already worked a taking of all use of property, no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective. ... We limit our holding to the facts presented, and of course do not deal with the quite different questions that would arise in the case of normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like which are not before us. 482 U.S. at 321, 107 S.Ct. at 2389. Similarly, in Lucas v. South Carolina Coastal Council, supra , the Court held that even a facially valid regulation forbidding a harmful use not previously prohibited gives rise to compensation if the regulation denies all economically beneficial use of the land. Such a regulation results in a `total taking,' and the owner is entitled to compensation unless the forbidden use was not a reasonable property right under the laws of the state. ___ U.S. at ___, 112 S.Ct. at 2901. However, undue focus on these cases ignores the line of cases which recognizes relief is possible from regulatory takings which do not deprive the owner of all economic use of the property. This problem was addressed in Lucas, which explained that although the test for a facial challenge to a taking requires a showing of the denial of all economically viable use of the land, when challenging a regulation as applied, which is the situation here, a landowner may be entitled to compensation based upon the factors discussed in Penn Central Transp. Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978), reh'g denied 439 U.S. 883, 99 S.Ct. 226, 58 L.Ed.2d 198. Penn Central Transp. Co. recognized that determining whether a taking has occurred involves essentially ad hoc factual inquiries, but that the Court's decisions have identified several factors which have particular significance. These factors are the economic impact of the regulation on the claimant; particularly, the extent to which the regulation has interfered with distinct investment-backed expectations; and the character of the governmental action. A taking may more readily be found when the interference can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good. The U.S. Supreme Court has long recognized that a land-use regulation or zoning ordinance which is an invalid exercise of police power may result in a taking, although not all economically viable use of the land is denied: Under Euclid [v. Ambler Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) ], a property owner can challenge a zoning restriction if the measure is clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare. Id., at 395 [47 S.Ct. at 121]. If the substantive result of the referendum is arbitrary and capricious, bearing no relation to the police power, then the fact that the voters of Eastlake wish it so would not save the restriction. Eastlake v. Forest City Enterprises, Inc., 426 U.S. 668, 676, 96 S.Ct. 2358, 96 S.Ct. at 2363, 49 L.Ed.2d 132 (1976) (quoting Euclid v. Ambler Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926)). Accord, Nollan v. California Coastal Comm'n, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987); Agins v. Tiburon, 447 U.S. 255, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980); Penn Central Transp. Co. v. New York City, supra . Some decisions have either postulated or inferred that a regulation which goes so far that it has the same effect as a taking by eminent domain as an invalid exercise of the police power is perhaps better phrased or analyzed as a substantive due process claim. Williamson Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985); Eide v. Sarasota County, 908 F.2d 716 (11th Cir.1990), cert. denied 498 U.S. 1120, 111 S.Ct. 1073, 112 L.Ed.2d 1179 (1991); Wheeler v. City of Pleasant Grove, 833 F.2d 267 (11th Cir.1987), reh'g denied 844 F.2d 794 (11th Cir.1988). Whatever uncertainty may have existed has been erased by Nollan v. California Coastal Comm'n, supra , which was decided in 1987. Although the Nollan Court held that the requirement of an easement across beachfront property as a condition to obtaining a development permit represented a permanent physical occupation of a portion of the land requiring compensation, it also wrote that the regulation was not reasonably necessary to substantially advance a legitimate state interest. The Nollan Court announced the following standard: [L]and-use regulation does not effect a taking if it `substantially advance[s] legitimate state interests' and does not `den[y] an owner economically viable use of his land.' 483 U.S. at 834, 107 S.Ct. at 3147. The Nollan Court, it must be noted, formulates a disjunctive test under which a taking results if either element is not met. In addition, the test requires that the regulation substantially advanced the legitimate state interest sought to be achieved, not that the state could rationally have decided that the measure adopted might achieve the state's objective. Our determination in Whitehead Oil II, that in changing the applicable zoning designation the city acted not in furtherance of a legitimate state interest but arbitrarily and capriciously so as to deny Whitehead Oil a use permit, compels our agreement with the district court's ruling that Whitehead Oil's property has been subjected to a taking under the federal Constitution.