Opinion ID: 835006
Heading Depth: 2
Heading Rank: 1

Heading: Did Plaintiff Allege Facts Giving Rise to a Claim for Just Compensation Under the Federal Constitution?

Text: After Nollan and Dolan, the Supreme Court decided a case that clarified the constitutional basis of those decisions Lingle v. Chevron USA Inc., 544 U.S. 528, 548, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). In Lingle, the Supreme Court began by observing that governmental action that falls into one of the following categories constitutes a taking: 1. A physical invasion of property, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982); 2. A regulation that completely deprives a plaintiff of all economically beneficial use of property, Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992); or 3. A regulation that, on balance, imposes economic impacts that constitute a taking under the several factors identified in Penn Central Transp. Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). [15] The Court explained that those categories are intended to describe governmental actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his or her domain. Accordingly, each category describes governmental acts that impose burdens on private property rights. The Court stated: A permanent physical invasion, however minimal the economic cost it entails, eviscerates the owner's right to exclude others from entering and using her propertyperhaps the most fundamental of all property interests. See Dolan [, 512 U.S. at 384, 114 S.Ct. 2309]; Nollan [, 483 U.S. at 831-32, 107 S.Ct. 3141]; Loretto [, 458 U.S. at 433, 102 S.Ct. 3164]; Kaiser Aetna v. United States, 444 U.S. 164, 176, 100 S.Ct. 383, 62 L.Ed.2d 332 (1979).    [T]he complete elimination of a property's value is the determinative factor. See Lucas [, 505 U.S. at 1017, 112 S.Ct. 2886] (positing that `total deprivation of beneficial use is, from the landowner's point of view, the equivalent of a physical appropriation').    [T]he Penn Central inquiry turns in large part, albeit not exclusively, upon the magnitude of a regulation's economic impact and the degree to which it interferes with legitimate property interests. Lingle, 544 U.S. at 539-40, 125 S.Ct. 2074 (paragraph structure added for clarity). In Lingle, the Court then declared that other governmental acts that do not impose similarly severe burdens are not subject to challenge under the Takings Clause, but are, instead, subject to challenge under the Due Process Clause. Thus, the Court explained, a property owner's claim under Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980), that a governmental regulation is invalid because it does not substantially advance legitimate state interests is properly viewed as a claim that due process precludes the regulation entirely, and not as a claim that the takings clause requires payment of just compensation. The Court stated: Instead of addressing a challenged regulation's effect on private property, the `substantially advances' inquiry probes the regulation's underlying validity. But such an inquiry is logically prior to and distinct from the question whether a regulation effects a taking, for the Takings Clause presupposes that the government has acted in pursuit of a valid public purpose. The Clause expressly requires compensation where government takes private property `for public use.' It does not bar government from interfering with property rights, but rather requires compensation in the event of otherwise proper interference amounting to a taking.    Conversely, if a government action is found to be impermissible  for instance because it fails to meet the `public use' requirement or is so arbitrary as to violate due process  that is the end of the inquiry. No amount of compensation can authorize such action. Lingle, 544 U.S. at 543, 125 S.Ct. 2074 (emphases in original; internal citation and quotation marks omitted). Although not necessary to its holding, the Court also addressed how its prior decisions in Nollan and Dolan fit into that paradigm. The claims of the property owners in those cases could have been seen as implicating the Due Process Clause, because they challenged the sufficiency of the nexus between the state interest and the condition imposed and sought judicial invalidation of the condition. However, the claims in those cases also could have been seen as implicating the Takings Clause, because the conditions that the governments imposed required the property owners to dedicate real property for governmental use  the classic taking in which the government directly appropriates private property. The Court chose neither and placed Nollan/Dolan challenges into their own category  a special application of the `doctrine of unconstitutional conditions': Although Nollan and Dolan quoted Agins' language, see Dolan, [512 U.S. at 385, 114 S.Ct. 2309]; Nollan, [483 U.S. at 834, 107 S.Ct. 3141], the rule those decisions established is entirely distinct from the `substantially advances' test we address today. Whereas the `substantially advances' inquiry before us now is unconcerned with the degree or type of burden a regulation places upon property, Nollan and Dolan both involved dedications of property so onerous that, outside the exactions context, they would be deemed per se physical takings. In neither case did the Court question whether the exaction would substantially advance some legitimate state interest. See Dolan, [512 U.S. at 387-88, 114 S.Ct. 2309]; Nollan, [483 U.S. at 841, 107 S.Ct. 3141]. Rather, the issue was whether the exactions substantially advanced the same interests that land-use authorities asserted would allow them to deny the permit altogether. As the Court explained in Dolan, these cases involve a special application of the `doctrine of unconstitutional conditions,' which provides that `the government may not require a person to give up a constitutional right  here the right to receive just compensation when property is taken for a public use  in exchange for a discretionary benefit conferred by the government where the benefit has little or no relationship to the property.' [512 U.S. at 385, 114 S.Ct. 2309]. That is worlds apart from a rule that says a regulation affecting property constitutes a taking on its face solely because it does not substantially advance a legitimate government interest. In short, Nollan and Dolan cannot be characterized as applying the `substantially advances' test we address today, and our decision should not be read to disturb these precedents. Id. at 547-48, 125 S.Ct. 2074 (emphases added; original emphases deleted). Thus, under Lingle, in circumstances in which the government exacts dedications of property so onerous that, outside the exactions context, they would be deemed per se physical takings, the Supreme Court subjects the government's exaction to a Nollan/Dolan analysis. Id. at 547, 125 S.Ct. 2074. Under that analysis, the government is precluded from making the exaction and must pay just compensation for the real property that it acquires unless the exaction is roughly proportional to the effect of the proposed development. The Ninth Circuit's second question requires that we consider the reasoning of the Supreme Court in Nollan, Dolan, and Lingle and decide whether the Nollan/Dolan analysis extends to a requirement that a property owner construct off-site improvements at a cost that is not roughly proportional to the impacts of the owner's development. In Lingle terms, we must decide whether such a requirement is so onerous that, outside the exactions context, [it] would be deemed [a] per se physical taking. Lingle, 544 U.S. at 547, 125 S.Ct. 2074. Plaintiff first posits that the Oregon Court of Appeals already has recognized such a requirement as a Fifth Amendment taking and that this court should not disturb that ruling in answering a certified question. The case that plaintiff deems determinative is Clark v. City of Albany, 137 Or.App. 293, 299, 904 P.2d 185 (1995), rev. den., 322 Or. 644, 912 P.2d 375 (1996). In Clark, the Court of Appeals considered a ruling by LUBA that, as relevant here, applied Dolan's rough proportionality standard to development conditions that required the petitioner to make road improvements on and extending beyond the affected property. The Court of Appeals affirmed the application of that standard, seeing little difference between a requirement that a developer convey title to the part of the property that is to serve a public purpose, and a requirement that the developer himself make improvements on the affected and nearby property and make it available for the same purpose. Id. at 300, 904 P.2d 185. Although we agree with plaintiff's assertion that [c]ertification is not an appropriate vehicle to obtain clarification of existing law or to test the continued viability of long-standing legal precedent against current conditions, see Western Helicopter Services v. Rogerson Aircraft, 311 Or. 361, 374, 811 P.2d 627 (1991), we do not think that those principles describe the posture of this case. Clark was decided in 1995, and, although Nollan and Dolan both had been decided, the Supreme Court had not had occasion to opine on their reach. In 1999, the Supreme Court decided Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 702, 119 S.Ct. 1624, 143 L.Ed.2d 882 (1999), and stated that it had not extended the application of Nollan and Dolan beyond the special context of [such] exactions. As a result of that statement, the Court of Appeals considered its decision in Clark open to question. Dudek v. Umatilla County, 187 Or.App. 504, 516 n. 10, 69 P.3d 751 (2003). Then, in 2005, the Supreme Court decided Lingle and discussed, in the context of its disaggregation of due process and takings challenges, the jurisprudential underpinnings of Nollan and Dolan. We choose not to rest on a Court of Appeals case that predated Lingle. On the merits, plaintiff contends that the city's requirement that it use asphalt, concrete, bedding material, pipe and other personal property to construct public improvements cannot be distinguished from the requirements imposed by the governments and considered by the courts in Nollan and Dolan. Plaintiff argues that any coerced transfer of property, whether real or personal, must meet the Nollan/Dolan standard. The city disagrees and urges that Nollan and Dolan are limited to required dedications of real property and do not extend to the imposition of an obligation to construct off-site improvements. Such an obligation, the city contends, is, functionally, a monetary obligation that the city has authority to impose to offset the impacts of plaintiff's development. Plaintiff responds that, even if that condition appropriately is characterized as a monetary exaction, the Nollan/Dolan analysis applies when government uses its regulatory power in an adjudicative proceeding to coerce such payment. The Ninth Circuit considered a similar question in McClung v. City of Sumner, 548 F.3d 1219 (9th Cir.2008), cert. den., ___ U.S. ___, 129 S.Ct. 2765, 174 L.Ed.2d 270 (2009). The issue in that case was whether a city ordinance that required property owners, as a condition of development, to install storm pipes effected a taking. The Ninth Circuit viewed the ordinance as imposing a monetary obligation and decided that the validity of the condition that it imposed should be subjected to a Penn Central, and not a Nollan/Dolan, analysis. The Ninth Circuit based its decision on the fact that the condition was legislatively imposed and applied to all development; it was not, as were the conditions in Nollan and Dolan, a condition imposed in an adjudicatory proceeding on the plaintiff alone. The Ninth Circuit also stated, as an alternative basis for its ruling, that the property owners had not been required to relinquish an interest in real property: [T]he City already had an easement for the storm pipe such that the McClungs gave up no rights to their real property. To extend the Nollan/Dolan analysis here would subject any regulation governing development to higher scrutiny and raise the concern of judicial interference with the exercise of local government police powers. As noted by San Remo Hotel [ L.P. v. City And County of San Francisco, 27 Cal.4th 643, 117 Cal.Rptr.2d 269, 291, 41 P.3d 87, 105 (2002)], any concerns of improper legislative development fees are better kept in check by `ordinary restraints of the democratic political process.' McClung, 548 F.3d at 1227-28 (emphasis in original). The Ninth Circuit rejected the plaintiffs' argument that the city had effected a per se taking of its money and the plaintiff's citation to Brown v. Legal Foundation of Washington, 538 U.S. 216, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003). In Brown, the Supreme Court held that interest that accrued on lawyers' trust accounts (IOLTA accounts) was private property that the state could not acquire without payment of just compensation, but that the plaintiff in that case had suffered no loss for which compensation was due. In McClung, the Ninth Circuit distinguished the imposition of a new monetary obligation from the acquisition of accrued interest on an existing account and noted that Brown did not treat the acquisition of accrued interest as an exaction or apply the Nollan/Dolan analysis to the facts presented. [16] McClung, 548 F.3d at 1228. In reaching its conclusion in McClung, the Ninth Circuit observed, however, that [o]ther courts addressing this general issue have come to different conclusions. [17] Plaintiff asks that we adopt the reasoning of one of those courts  that of the Texas Supreme Court in Town of Flower Mound v. Stafford Estates, 135 S.W.3d 620 (Tex.2004). In that case, the town had conditioned its approval of the plaintiff's development on its rebuilding of an abutting road. The Texas court saw no important distinction between a dedication of property to the public and a requirement that property already owned by the public be improved and held that the Dolan standard should apply to both. Id. at 640. The court dismissed the town's contention that the doctrine of unconstitutional takings was not applicable when the thing given up in exchange for a discretionary benefit is simply money, for which the owner has no constitutional right of recompense. The court stated: Assuming that the doctrine of unconstitutional conditions is limited as the Town argues, a position on which we express no opinion, the Town's argument does not limit the application of Dolan because the doctrine was not the only foundation on which it rested and was not even mentioned in Nollan. Nollan was grounded entirely in the Supreme Court's takings jurisprudence. Id. at 636. Of course, as we now know from the Supreme Court's opinion in Lingle, the Court's decision in Nollan was, indeed, premised on the doctrine of unconstitutional conditions. Understanding that premise, we see a clear distinction between a requirement that a property owner dedicate property to the public and a requirement that a property owner spend money to mitigate the effects of development. In the former circumstance, the government seeks to acquire a landowner's existing real property. To do so, it is required to proceed by the exercise of its power of eminent domain and to pay just compensation. In the latter circumstance, the government does not seek to acquire a landowner's existing real property. It seeks to compel the landowner to pay money to mitigate the effects of development and cannot proceed to do so by instituting eminent domain proceedings. When the landowner makes payment, it does not relinquish existing property; it fulfills a newly imposed monetary obligation. See Daniel L. Siegel, Exactions after Lingle: How Basing Nollan and Dolan on the Unconstitutional Conditions Doctrine Limits Their Scope, 28 Stan. Envtl. L.J. 577, 592-601 (2009) (discussing reasons that subjecting permits conditioned on payment of fees to Nollan/Dolan analysis cannot be justified doctrinally after Lingle ). That does not mean, of course, that monetary obligations could not, at least theoretically, be so onerous that, outside the exactions context, they would be deemed per se physical takings. Lingle, 544 U.S. at 547, 125 S.Ct. 2074. In Lingle, the Court recognized two circumstances in which governmental regulations that impose economic burdens are considered equivalent to physical takings: (1) where the regulation deprives the owner of all viable economic use of the property; and (2) where the regulation is so burdensome that the Penn Central standard is met. Id. at 539-40, 125 S.Ct. 2074. It is conceivable that a local government could require, as a condition of development, monetary obligations so burdensome as to deprive the property owner of all economically viable use of the property, or to meet the Penn Central standard, as the Ninth Circuit recognized in McClung. If a local government did so, such conditions perhaps could be considered sufficiently onerous to be tantamount to physical takings. But in that circumstance, there would be no need for a Nollan/Dolan analysis. Conditions imposing burdens of that significance would require payment of just compensation without further inquiry, in contrast to conditions that impose exactions subject to the Nollan/Dolan analysis. Under Nollan/Dolan, just compensation is required only when the conditions imposed are not roughly proportional to the impacts of development. See Charles T. Switzer, Escaping the Takings Maze: Impact Fees and the Limits of the Takings Clause, 62 Vand. L.Rev. 1315, 1343-44 (2009) (asserting that only conceivable way for impact fee to amount to per se physical taking is if the fee imposed is so high that it deprives owner of all economically beneficial use of real property). In Lingle, the Court did not express an intent to treat regulations that impose economic burdens that do not deprive a property owner of all economically viable use of property or meet the Penn Central standard as takings under the Fifth Amendment. The Court emphasized, as it had in Monterey v. Del Monte Dunes at Monterey, 526 U.S. 687, 702, 119 S.Ct. 1624, 143 L.Ed.2d 882 (1999), the special context in which Nollan and Dolan arose and pointedly did not categorize the exactions at issue in Nollan and Dolan as takings, instead analyzing them under the doctrine of unconstitutional conditions. In the absence of a Supreme Court ruling to the contrary, we conclude that a government's requirement that a property owner undertake a monetary obligation that is not roughly proportional to the impacts of its development does not constitute an unconstitutional condition under Nollan/Dolan or a taking under the Fifth Amendment, nor does it require payment of just compensation. We also conclude that a requirement that a property owner construct off-site improvements is the functional equivalent of the imposition of a monetary obligation. When a governmental entity requires a property owner to construct improvements, it simply requires the property owner to put money to a particular use. The government could accomplish the same result by requiring the property owner to pay a specified sum, which the government could then use to construct the improvements. The government, through its exercise of the power of eminent domain, can compel neither off-site construction nor the expenditure of money. That conclusion does not mean, of course, that a property owner required to construct off-site improvements at a cost not roughly proportional to the impacts of its development may not have some other legally sound basis for a claim against the government. The Takings Clause may not be the only constraint on such governmental action. For instance, prior to Nollan and Dolan, state courts had invalidated governmental conditions that were not reasonably related to the impacts of development without relying on the Takings Clause as the basis of their decisions. See Dolan, 512 U.S. at 390-91, 114 S.Ct. 2309 (noting that a majority of states have adopted common-law rule that there must be some reasonable relationship or nexus between required dedication and impact of proposed development). [18] See also Switzer, 62 Vand. L.Rev. at 1332-36 (explaining common-law dual rational nexus test used by various courts). Further, as the Court in Lingle acknowledged, the Due Process Clause may serve as a check on arbitrary land use regulation. 544 U.S. at 540, 125 S.Ct. 2074; see also Miller Bros. Co. v. Maryland, 347 U.S. 340, 342, 74 S.Ct. 535, 98 L.Ed. 744 (1954) (It is a venerable if trite observation that seizure of property by the State under pretext of taxation when there is no jurisdiction or power to tax is simple confiscation and a denial of due process of law.).