Court Opinion

ID: 6970423
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:01:27.706281+00
Date Added: 2024-06-11T09:12:11.399904
License: Public Domain

SPENCER WILLIAMS, District Judge,
concurring.
I concur in the result but wish to set forth my reasoning separately.
I
The Tenant Relocation Assistance Ordinance (“TRAO”) and its enabling legislation, ROW 59.18.440, like thousands of other ordinances and statutes imposing fees and penalties, call for the payment of money, not the dedication of “property” for which just compensation can logically be paid. The lack of a just compensation remedy should activate the jurisprudential alarms and warn us that appellants’ claim falls not within the confines of the Fifth Amendment, which prevents governments from taking property without just compensation, but within the scope of the Fourteenth Amendment, which prevents states from taking property without due process of law.
The just compensation clause of the Fifth Amendment provides that “private property [shall not] be taken for public use, without just compensation.”1 The plain language of this clause guarantees property owners a monetary remedy in the event the government wishes to use their property for some public purpose. With the exception of the public purpose requirement, the clause omits any language relating to a substantive limit on government action. As the Supreme Court has expressly recognized, the takings clause is not designed to “limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.” First English Evangelical Lutheran Church v. Los Angeles County, 482 U.S. 304, 315, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987). This Circuit, too, has recognized that the clause does not prevent a government from appropriating private property. Bay View, Inc. v. AHTNA, Inc., 105 F.3d 1281, 1284 (9th Cir.1997); Macri v. King County, 126 F.3d 1125, 1129 (9th Cir.1997). The clause is only offended when it takes private property for a public purpose without paying just compensation. Bay View, 105 F.3d at 1284-85; Macri v. King County, 126 F.3d at 1129; see also Rose Acre Farms, Inc. v. Madigan, 956 F.2d 670, 673 (7th Cir.1992) (“[T]he takings clause does not forbid takings; it requires compensation for takings.”). Moreover, this Circuit has recognized that, while “a takings violation is not *818complete until the plaintiff has sought compensation through slate remedies and been denied,” that “a substantive due process violation is complete as soon as the government action occurs.”2 Macri, 126 F.3d at 1129. In short, I believe that appellants are attempting to confer on their substantive due process claim a special status by characterizing it as a Fifth Amendment just compensation claim.3
Allow me to explain further. In light of the remedial nature of the just compensation clause, takings principles cannot logically apply to a case where, as here, the property owners challenge a government action not on the grounds that the government has denied them just compensation, but on the grounds that the government has acted ultra vires by enacting legislation that is inherently wrongful and unfair. Appellants do not seek, nor can they seek, just compensation for government interference which, in the words of First English, is “otherwise proper.”4 In fact, appellants’ prayer for relief, which seeks a declaration of invalidity, an injunction, and a refund of monies paid, omits any mention of just compensation. A refund would de facto invalidate the ordinance; it cannot logically equate to “just compensation” for government action which is “otherwise proper” as contemplated by the Fifth Amendment.5
Appellants’ status as owners of real property should not divert our attention from the bedrock fact that the TRAO does not “take” any property. The TRAO does not, as in the classic takings circumstance, involve a government action that results in the occupation or confiscation of private physical property. See, e.g., Pumpelly v. Green Bay and Mississippi Canal Co., 13 Wall. 166, 80 U.S. 166, 20 L.Ed. 557 (1871) (government-authorized dam flooded private property); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982) (New York law forced landlords to permit cable television operators to affix cabling to their apartment buildings); Nollan v. California Coastal Commission, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987) (public commission conditioned building permit on the dedication of a beachfront easement); Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994)(local government conditioned building permit on transfer of interest in owner’s creekside land); Parks v. Watson, 716 F.2d 646 (9th Cir.1983) (city required that property owner dedicate its geothermal wells in exchange for vacation of platted streets). Nor does it impair any intangible interests in property. See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984)(trade secrets); Armstrong v. United States, 364 U.S. 40, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960) (materialman’s lien); Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 55 S.Ct. 854, 79 L.Ed. 1593 (1935) (real estate lien). Finally, the *819TRAO is not a general regulation restricting the use or development of real property. See, e.g., Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922)(state law prohibited mining of certain pillars of coal in order to prevent surface subsidence); Penn Central Transportation Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)(historical preservation ordinance prevented development of an office tower atop Grand Central Station); Keystone Bituminous Coal Ass’n. v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987)(state antisubsidence law prevented owners of coal deposits from removing pillars of coal in certain locations); Agins v. City of Tiburon, 447 U.S. 255, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980) (zoning ordinance prevented landowners from developing more than five dwelling units on their land); Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) (regulation prohibited construction on owner’s beachfront parcel).
Appellants have not put forward any argument that the TRAO dispossesses them of any property, whether tangible or intangible, or that it impairs the development potential or value of their properties. They simply argue that the TRAO unfairly singles them out to shoulder a fiscal burden that should instead be borne by the general public as a whole. Even if appellants had asserted that the relocation assistance provisions led to the devaluation of their apartment buildings, it is well settled that mere diminution in value, standing alone, does not establish an unconstitutional taking without just compensation. See Penn Central, 438 U.S. at 131, 98 S.Ct. 2646.
The dissent argues that the property being taken is the landowners’ right to exclude, not money. Although I find the argument very intriguing, I cannot agree. If the City of Seattle “takes” the “right to exclude” by imposing a fee, then cities around the country “take” the “right to use” whenever they routinely charge developers any number of general development fees.
Nevertheless, I agree with the dissent to the extent that in certain cases drawing distinctions between exactions of money and exactions of land may “elevate form over substance.” If, for instance, an exaction of money deprived an owner of exercising rights of ownership, that may amount to an uncompensated taking of property. In the present case, however, appellants have made no showing that the TRAO either forces them to retain tenants against their wishes or disables them from using their land.
I also believe the dissent is mistaken in concluding that the Supreme Court’s decision to grant certiorari and summarily vacate a takings decision of the California Court of Appeal, remanding for consideration in light of Dolan, Ehrlich v. City of Culver City, 512 U.S. 1231, 114 S.Ct. 2731, 129 L.Ed.2d 854 (1994), instructs us that Dolan should apply to the monetary exactions at issue here. Do-lan and Nollan established that a local government may constitutionally condition the right to build on an exaction of physical property without the payment of compensation only if the exaction relates to and is “roughly proportional” to the harm imposed by the proposed development itself. Nollan, 483 U.S. at 837, 107 S.Ct. 3141; Dolan, 512 U.S. at 391, 114 S.Ct. 2309. To satisfy the requirement of rough proportionality, the government must “make some'sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.” Dolan, 512 U.S. at 391, 114 S.Ct. 2309.
In the absence of a reasoned opinion of the Court, I would hesitate to conclude that Do-lan should govern the present case, especially in view of the long history of judicial deference to legislation requiring payment of fees. See, e.g., Houck v. Little River Drainage Dist., 239 U.S. 254, 36 S.Ct. 58, 60 L.Ed. 266 (1915) (a fee is not unlawful under the takings clause “unless the exaction is a flagrant abuse, and by reason of its arbitrary character is mere confiscation of particular property”); United States v. Sperry Corp., 493 U.S. 52, 110 S.Ct. 387, 107 L.Ed.2d 290 (1989) (sustaining a user fee aimed at supporting government services created for the assessed party’s benefit); cf. Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980) *820(striking down a Florida law authorizing a county to retain the interest accruing on a private interpleader fund, where the Court could discern no justification for the deduction of the interest other than the bare transfer of private property to the county).6
Even the California Supreme Court, which subsequent to the remand in Ehrlich concluded that only “individual and discretionary” monetary exactions are subject to the heightened scrutiny of Nollan and Dolan, recognized that courts have traditionally been deferential to generally applicable development fees or assessments resulting from legislative and political processes aimed at adjusting the benefits and burdens of economic life to promote the common' good. Ehrlich v. City of Culver City, 12 Cal.4th 854, 876, 881, 50 Cal.Rptr.2d 242, 911 P.2d 429 (1996). In the present case, appellants attack only a generally applicable assessment resulting from a legislative process.
In sum, I would hold that the facts of the case at bar are not amenable to an analysis under the just compensation clause, much less the “individualized determination” required by Dolan.7 The Constitution protects persons who own property-as well as those persons who do not own property-against a government’s arbitrary or irrational imposition of fees. However, I believe this general protection is rooted in the substantive due process clause or perhaps the equal protection clause,8 not the just compensation clause.
II
Although my brothers appear to disagree, I believe we should next address appellants’ claim that the two enactments have deprived them of the substantive due process protections of the Fourteenth Amendment (“nor shall any State deprive any person of life, liberty, or property, without due process of law”) Judge Brunetti, citing to Macri v. King County, 126 F.3d 1125 (9th Cir.1997), assumes that the just compensation clause provides the more relevant constitutional limitation and has summarily dispensed with any discussion of the substantive due process issue. As I explain above, I believe that the substantive due process clause provides the more relevant constitutional limitation in the present case, and that therefore the issue does merit our attention.
Appellants simply argue that this court should apply the test of Guimont v. Clarke, 121 Wash.2d 586, 854 P.2d 1 (1993), to determine the constitutionality of the enactments under both the Washington Constitution and the U.S. Constitution. In Guimont, the Washington Supreme Court found that a statute requiring mobile home park owners to make payments to displaced tenants violated the Fourteenth Amendment because it placed an oppressive burden upon the owners. In so finding, the court applied the three-prong test of Presbytery of Seattle v. King County, 114 Wash.2d, 320, 330, 787 *821P.2d 907 (1990) (en banc): “(1) whether the regulation is aimed at achieving a legitimate public purpose; (2) whether it uses means that are reasonably necessary to achieve that purpose; and (3) whether it is unduly oppressive on the landowner.” Guimont, 121 Wash.2d at 609, 854 P.2d 1.
While appellants have stipulated that the enactments serve a legitimate public purpose (that of protecting and assisting low-income tenants displaced by private development), they contend that the enactments do not utilize a means reasonably necessary to achieve that purpose and are unduly oppressive.
Because it burdens no fundamental rights, the TRAO is “a classic example of an economic regulation” and is subject only to the minimum scrutiny rational basis test. Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 83, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978). Substantive due process requires only that economic legislation be “supported by a legitimate legislative purpose furthered by a rational means.” Pension Benefit Guarantee Corp. v. R.A. Gray & Co., 467 U.S. 717, 729, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984). “It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way.” Concrete Pipe & Products of California, Inc. v. Construction Laborers Pension Trust, 508 U.S. 602, 637, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993) (quoting Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976)). Appellants thus bear the heavy burden of establishing that the City, in enacting the TRAO, has acted in an arbitrary and irrational way. Appellants, who argue only that the City could easily have afforded to pay the relocation assistance out of its general budget, have not sustained that burden. No doubt, the City could have provided the assistance out of general funds, just as the City could likely afford to fund many services currently charged to private parties. However, this argument falls far short of establishing that the legislature had acted in an arbitrary and irrational way.
With regard to the third Guimont prong, because I concur with Judge Brunetti that the district court acted within its discretion in imposing the discovery sanction for appellants’ failure to produce evidence relating to the economic impact of the TRAO, appellants, by their own choice, lack any evidence establishing undue oppression.9
Ill
Because the just compensation clause contemplates the payment of money as a remedy, the clause should not generally operate as a limit on a governmental body’s power to legislatively impose fees on property developers or any other persqns. The Fourteenth Amendment, however, requires governments to act rationally when imposing such fees. Like Judge Brunetti, I do not find the TRAO “a wise solution to a difficult problem,” but because I do not find appellants’ arguments weighty enough to justify a finding of a Fourteenth Amendment violation, I must concur in Judge Brunetti’s finding of no constitutional violation.

. I think the moniker "takings clause” has given rise to much confusion. As I explain, neither the spirit nor the letter of the clause prohibits a taking of property; it simply requires governments to pay property owners just compensation in certain circumstances. Identifying the clause as the “just compensation clause” may serve to remind us of the clause's primary purpose.

. See John D. Echeverría and Sharon Dennis, The Takings Issue and the Due Process Clause: A Way Out of a Doctrinal Confusion, 17 Vt. L.Rev. 695, 709-10 (1993), where the authors emphasize that "[t]he differences in language between the Due Process and Takings Clauses strongly suggest that each clause has a different scope and meaning."

. Appellants' due process claim is also on appeal. See part II, infra.

. The dissent argues that the ordinance at issue is in fact "otherwise proper,” but that the City neglected to properly compensate appellants for the deprivation of their right to exclude with cash, tax breaks, or other monetary equivalents. I think this analytical approach is unworkable. How could a government define the value of the "right to exclude" without reference to the dollar amount of the mandated fee? Furthermore, compensating the "taking” of monetary payments with cash or tax breaks appears to me to be a de-facto invalidation of the ordinance.

.Other courts have expressed discomfort in applying takings principles to actions challenging the constitutionality of government-mandated monetary payments. In Branch v. U.S., 69 F.3d 1571 (Fed.Cir.1995), for example, a plaintiff bank attacked the application of monetary assessment provisions of the Financial Institutions Reform, Recovery and Enforcement Act as a taking of private property without just compensation. The Federal Circuit noted that "because the property allegedly taken in this case was money, that leads to the curious conclusion that the government may take the bank's money as long as it pays the money back.” Branch, 69 F.3d at 1575-76. "[T]he takings claim raised in this case amounts to a contention that the Constitution forbids the government from enforcing the [assessment] provision against the [bank] at all.” Id. at 1576.

.I would submit that, although fashioned as a just compensation case, Webb's, which concerned the facial validity of a statute, and not whether compensation was owing, was at heart premised on the reasonableness requirement of the substantive due process clause.
Furthermore, I should note that the Fifth Amendment case currently before the Supreme Court, Washington Legal Foundation v. Texas Equal Access to Justice Foundation, 873 F.Supp. 1 (W.D.Tex.1995), aff'd in part, rev'd in part, 94 F.3d 996 (5th Cir.1996), reh’g denied by, 106 F.3d 640 (5th Cir.1997), is distinguishable. The amended order granting the petition for writ of certiorari limited the inquiry in that case to whether "interest earned on client trust funds held by lawyers in IOLTA accounts [is] a property interest of the client or lawyer, cognizable under the Fifth Amendment of the United States Constitution, despite the fundamental precept of IOLTA that such funds, absent the IOLTA program, could earn interest for the client of lawyer?” Phillips v. Washington Legal Foundation, — U.S. -, 117 S.Ct. 2535, 138 L.Ed.2d 1011. In other words, the case concerns whether interest earned on a client’s fund should be designated the property of the client. The present case does not concern the legal designation of any particular identifiable fund.

. Under the pre-Dolan law of this circuit, appellants’ just compensation claim would fail. In Commercial Builders of Northern California v. Sacramento, we stated that "[a] purely financial exaction ... will not constitute a taking if it is made for the purpose of paying a social cost that is reasonably related to the activity against which the fee is assessed.” 941 F.2d 872 at 876 (9th Cir.1991). In my judgment, the TRAO passes this loose "reasonable relationship” test.

. Appellants have not appealed their equal protection claim.

. The City argues that this circuit rejected the "unduly oppressive” prong of the Guimont due process test in Kawaoka v. City of Arroyo Grande, 17 F.3d 1227 (9th Cir.1994). Because I believe the due process challenge fails on other grounds, I need not address the City’s argument here.