Amicus Curiae Brief — Rossco Holdings Inc. v. California

n a

‘oe —*-

BIBED

(3)

No. 89-1314 ~~ MAR 13 1990

JSSEPr F. SAPIOL,

IN THE CLERK

Supreme Court of the United States

OcToBer TERM, 1989

ROSSCO HOLDINGS INCORPORATED,

a California Corporation,

d.ba. QUAKER CORPORATION,

MICHAEL T. GHOSN,

Petitioners,

vs.

STATE OF CALIFORNIA,

CALIFORNIA COASTAL COMMISSION,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE CALIFORNIA COURT OF APPEAL

SECOND APPELLATE DISTRICT, DIVISION THREE

BRIEF OF GRIFFIN HOMES, INC.

AS AMICUS CURIAE IN

SUPPORT OF PETITIONERS

MICHAEL M. BERGER

Counsel of Record

of FADEM, BERGER & NORTON

A Professional Corporation

12424 Wilshire Boulevard

Post Office Box 250050

Los Angeles, California 90025

(213) 207-2727

Attorneys for Amicus Curiae

Griffin Homes, Inc.

Lawyers Brief Service / Legal Printers / (213) 383-4457 / (714) 720-1510

No. 89-1314

IN THE

Supreme Court of the United States

OcTOBER TERM. 1989

ROSSCO HOLDINGS INCORPORATED,

a California Corporation,

d.b.a. QUAKER CORPORATION,

MICHAEL T. GHOSN,

Petitioners,

vs.

STATE OF CALIFORNIA,

CALIFORNIA COASTAL COMMISSION,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE CALIFORNIA COURT OF APPEAL

SECOND APPELLATE DISTRICT, DIVISION THREE

BRIEF OF GRIFFIN HOMES, INC.

AS AMICUS CURIAE IN

SUPPORT OF PETITIONERS

MICHAEL M. BERGER

Counsel of Record

of FADEM, BERGER & NORTON

A Professional Corporation

12424 Wilshire Boulevard

Post Office Box 250050

Los Angeles, California 90025

(213) 207-2727

Attorneys for Amicus Curiae

Griffin Homes, Inc.

a

a

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES li

INTEREST OF AMICUS CURIAE 2

INTRODUCTION 2

SUMMARY OF THE CASE 6

THE CALIFORNIA COURTS HAVE

THUMBED THEIR NOSES AT THIS

COURT’S DECISIONS 9

THE “WAIVER” ISSUE WAS SQUARELY

BEFORE THIS COURT IN NOLLAN 11

CONCLUSION 12

~

- ii -

TABLE OF AUTHORITIES

Page

Cases

Agins v. City of Tiburon (1979)

24 Cal 3d 266 6

First English Evangelical Lutheran Church

v. County of Los Angeles (1987) 2-4

482 US 304 6, 7, 10-14

Kaiser Aetna v. U.S. (1979)

444 US 164 9

Loretto v. Teleprompter Manhattan

CATV Corp. (1982)

458 US 419 9

Nollan v. California Coastal Commn. (1987) 2-4, 6,7

483 US 825 11,12, 14

Preseault v. I.C.C. (1990)

__US ___, 58 USLW 4193 5, 6, 10, 14

Rossco Holdings Inc. v. State (1989)

212 Cal App 3d 642 4,5, 11

Seawall Associates v. City of New York (1989)

74 NY 2d 92 7,8

U.S. v. Security Indus. Bank (1982)

459 US 70 9

Williamson County Reg. Planning Commn.

v. Hamilton Bank (1985)

473 US 172 12

- ill -

Page

Constitution

United States Constitution

Fifth Amendment 2: 4,3, 13. 4

Publications

R. Babcock & C. Siemon, The Zoning

Game Revisited (1985) 257 3

Comment, He Who Calls the Tune Must Pay

the Piper: Compensation for Regulatory

Takings of Property After First English

Evangelical Lutheran Church v. County

of Los Angeles (1988) 53 Mo L Rev 70 14

No. 89-1314

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1989

ROSSCO HOLDINGS INCORPORATED,

a California Corporation,

d.b.a. QUAKER CORPORATION,

MICHAEL T. GHOSN,

Petitioners,

vs.

STATE OF CALIFORNIA,

CALIFORNIA COASTAL COMMISSION,

Respondents.

BRIEF OF GRIFFIN HOMES, INC.

AS AMICUS CURIAE IN

SUPPORT OF PETITIONERS

By agreement of counsel for the parties, whose letters

of consent have been filed with this Court’s Clerk,

Griffin Homes, Inc. files this brief as amicus curiae in

support of the Petitioners.

_

ah

INTEREST OF AMICUS CURIAE

Griffin Homes, Inc. is a California corporation en-

gaged in the building of homes.

Griffin is presently in litigation over the con-

Stitutionality of a “growth limitation” ordinance adopted

by the City of Simi Valley, California. (Griffin Homes,

Inc. v. City of Simi Valley, Ventura County case no.

107352) In that litigation, Griffin seeks compensation

for a regulatory taking of its property because the opera-

tion of the City’s ordinance denies Griffin economically

viable use of its property and interferes with its reason-

able, investment backed expectations. The City is seek-

ing to dismiss Griffin’s complaint, in part because of the

holding of the Court of Appeal in the case at bench, i.e.,

because Griffin did not first seek a writ of “admin-

istrative mandamus” to invalidate the actions of the City.

Griffin thus has a vital interest in the outcome of this

litigation as, in a substantial way, its litigational posture

will be directly affected by this case.

INTRODUCTION

The California courts are at it again.

In 1987, this Court sent not one, but two unequivocal

messages to the California judiciary that it was failing to

provide the protection of property owners mandated by

the Fifth Amendment. (First English Evangelical

Lutheran Church v. County of Los Angeles [1987] 482

US 304; Nollan v. California Coastal Commn. [1987]

483 US 825) This Court’s analysis of the lack of

~ e

protection provided property owners by the California

courts! bore out the analysis of text writers and com-

mentators who had long and frequently noted the unfair-

ness of California property law. As Richard Babcock

and Charles Siemon, long-time, national practitioners of

land use law, pungently expressed it:

“What can one say about the Califor-

nia courts other than that one has to be

a madman to challenge a government

reguiation in that bizarre jurisdiction?

* »* *

“California has always been notorious

for being the first jurisdiction to sus-

tain extreme municipal regulations.

Practitioners in other states have

joked about why a developer would

sue a California community when it

would cost a lot less and save much

time if he simply slit his throat.””

Instead of heeding this Court’s doubly reinforced

message in First English and Nollan, the California

| In First English, this Court told California:

“... the California courts have decided the

“compensation question inconsistently with the

requirements of the Fifth Amendment.” (482

US at 311)

In Nollan, this Court told California:

“Our conclusion on this point is consistent

with the approach taken by every other court

that has considered the question, with the

exception of the California state courts.” (483

US at 839)

2 R. Babcock & C. Siemon, The Zoning Game Revisited (1985) 257,

293; emphasis in original.

y=

courts have erected new roadblocks in the path of

property owners seeking the protection this Court in-

tended by those decisions.

The case at bench is a paradigmatic illustration of

California’s thumbing its nose at this Court’s decisions.

Rather than dealing forthrightly with an extortionate

exaction by the same agency rebuked by this Court in

Nollan, and either invalidating the conditions or

compelling compensation for the property taken, the

California Court of Appeal created a new precondition to

a property owner’s ability to seek the aid of the “self-

executing” Just Compensation Clause’ of the Fifth

Amendment: before seeking compensation for a regu-

latory taking, the property owner must file a separate

suit to invalidate the regulation. (Rossco Holdings Inc.

v. State [1989] 212 Cal App 3d 642, 656)

That holding not only flies in the face of both First

English (in which a suit for compensation was filed

immediately after the regulation was adopted, with no

challenge to the regulation’s validity)‘ and Nollan (in

> As this Court put it in First English:

“We have recognized that a landowner is

entitled to bring an action in inverse condem-

nation as a result of the self-executing

character of the constitutional provision with

respect to compensation ..... [T)he Court has

frequently repeated the view that, in the event

of a taking, the compensation remedy is

required by the Constitution.” (482 US at

315, 316; quoting with approval; internal

quotation marks deleted)

* The County moved to dismiss the First English appeal because the

property owner had failed w attack the validity of its regulations on

grounds other than the absence of compensation. This Court denied

the motion. (482 US at 314 n. 8)

+ 2

which the property owner accepted the benefit of the

permit while simultaneously challenging the extortionate

condition in court), but also this Court’s recent decision

in Preseault v. 1.C.C. (1990) __|§ US _ ___, 58 USLW

4193.

In Preseault, this Court forcefully concluded that the

proper rule is exactly the opposite of the new California

rule: before seeking to invalidate a regulation on the

ground that it is a taking, the property owner must seek

compensation under the Fifth Amendment. As this

Court concluded, “In sum, petitioners’ failure to make

use of the available [inverse condemnation] remedy

renders their taking challenge to the ICC’s order prema-

ture.” (58 USLW at 4197)

As this Court has decided — as a matter of paramount

federal Constitutional law — that compensation must be

first sought and denied before a property owner may sue

to invalidate governmental action as a regulatory taking

of property, then California is not at liberty to invert that

rule and require the property owner to first seek to in-

validate the regulation.

This is no mere “procedural” difference, as the

California Court of Appeal held at bench. (Rossco, 212

Cal App 3d at 656) It is the very heart of the Fifth

Amendment issue: this Court held that a property owner

cannot challenge the validity of a regulation without first

secking compensation, while the California courts held

that a property owner cannot seek compensation without

first challenging the validity of the regulation. The two

“rules” cannot coexist.

In the last decade, this Court has spent considerable

time and effort in attempting to outline the basic Con-

stitutional rules applicable to dealings between property

owners and property regulators. Many of the cases on

which this Court has toiled have arisen in California.

=

Whether this Court’s considered decision-making is to

bring real world protection depends on how its deci-

sions are applied by lower courts. The “application”

demonstrated in the case at bench is outrageous. It is a

defiance of this Court’s decisions. Lower courts are able

to act this way out of a belief that this Court’s limited

time will preclude review of their actions.

The decision below deserves this Court’s swift

repudiation.

Because the decision below is so plainly in conflict

with this Court’s decisions — particularly First English,

Nollan, and Preseault — this case seems appropriate for

a summary reversal and remand to the California Court

of Appeal with instructions to reconsider its decision in

light of the paramount decisions of this Court.

SUMMARY OF THE CASE

The case at bench is an effort by a property owner

who was victimized by action of the California Coastal

Commission similar to that struck down by this Court in

Nollan as “extortion” (483 US at 837) to obtain compen-

sation for what the same Coastal Commission unlawfully

took from him. Until this Court struck down that condi-

tion in Nollan and held in First English that the

Constitutionally-mandated remedy for an unconstitu-

tional taking was compensation, the property owner in

this case had no inverse condemnation cause of action in

California. (See Agins v. City of Tiburon [1979] 24 Cal

3d 266; overruled by First English.) Thus, when the

action below was filed after those two landmark deci-

sions, it was filed at the earliest meaningful time. Be-

fore those decisions by this Court, no California court

would have entertained the suit.

x P

Fundamentally, what the Coastal Commission has

done in this case is t© prevent development UNLESS the

property owner pays $297,500 to an environmental

group and “dedicates” vast acreage to the public. If

the Commission had simply denied any use to the prop-

erty owner, there is little question but that a taking of the

entire ownership would have occurred. The grant of a

permit accompanied by extortionate conditions precedent

causes the same Constitutional taking.

A similar problem was recently analyzed by New

York’s highest court in Seawall Associates v. City of

New York (1989) 74 NY 2d 92. There, in an attempt to

help with New York City’s homeless problem, the city

passed an ordinance requiring the owners of single-

room-occupancy hotels to fully maintain and rent all

their rooms. Fines would be levied for non-compliance.

Like the conditions at bench, the New York ordinance

attempted to provide an escape valve. For the payment

of money, an owner could escape from the terms of the

ordinance. Relying, among other things, on First

English and Nollan, New York’s highest court struck

down the scheme. Of interest here is its treatment of the

conditions intended to ameliorate the taking:

“If, as we hold, the effect of the

moratorium and anti-warehousing

“measures is unconstitutionally to de-

prive owners of their basic rights to

possess and to make economically

viable use of their properties, merely

allowing them to purchase exemptions

from the law cannot alter this conclu-

’ Eschewing label games, this Court's decision in Nolian makes

clear that the “giving” of this property interest was in no sense a

“voluntary” act of the property owner. (483 US at 834, n. 2)

cS

ifs

sion. In effect, the city, in the buy-out

and replacement exemptions, is saying

no more to the owners than that it will

not do something unconstitutional if

they pay the city not to do it. But if

the initial act amounts to an unlawful

taking, then permitting the owners to

avoid the illegal confiscation by pay-

ing a ‘ransom’ cannot make it lawful.

Indeed, the stark alternatives offered

by Local Law No. 9 — either submit

to an uncompensated and, therefore,

unconstitutional appropriation of your

properties or pay the price (in cash or

in replacement units) — amount to

just the sort of exaction which could

be classified, not as ‘a valid regulation

of land use but, “an out-and-out plan

of extortion.” j(Citation.]’ ([Cita-

tions.]” (Seawall, slip op, pp 23-24)

The same is true here. What the Coastal Commission

is attempting to cover up by its conditions prerequisite to

development approval is a use prohibition which would

violate the Constitution. Permitting the property owner

to — in the words of the New York Court of Appeals —

“ransom” his way out of that unconstitutional situation

cannot be countenanced.

The direct conflict between the approaches of the

California and New York courts on the question of “ran-

som” merits this Court’s intervention.

@.

THE CALIFORNIA COURTS

HAVE THUMBED THEIR NOSES

AT THIS COURT’S DECISIONS

The Court of Appeal’s decision is based on the funda-

mental misconception that a challenge to the validity of a

governmental action through administrative mandamus

is the same as an inverse condemnation action which

accepts the operation of that governmental action and

challenges its Constitutionality because it takes property

without compensation.

The two are not the same, as this Court has often held.

See, e.g., Loretto v. Teleprompter Manhattan CATV

Corp. (1982) 458 US 419, 425, in which this Court

aluated a statute designed to facilitate cable television

mmunication:

“The Court of Appeals determined

that $828 serves the legitimate public

purpose of ‘rapid development of and

maximum penetration by a means of

communication which has important

educational and community aspects,’

and thus is within the State’s police

power. We have no reason to ques-

tion that determination. /f is a sepa-

‘rate question, however, whether an

otherwise valid regulation so frus-

trates property rights that compensa-

tion must be paid.” (Emphasis

added.)

(See also Kaiser Aetna v. U.S. [1979] 444 US 164,

174; U.S. v. Security Indus. Bank [1982] 459 US 70.)

-10-

As this Court put it in First English:

“(The Fifth Amendment] is de-

signed not to limit the governmental

interference with property rights per

se, but rather to secure compensation

in the event of otherwise proper inter-

ference amounting to a taking.” (482

US at 315; emphasis added.)

In this Court’s recent Preseault decision, that passage

from First English was the basis for both the majority

and concurring opinions.

Equally important, the Court of Appeal has

misunderstood First English as requiring (or permitting

a State to require) a property owner to first establish the

invalidity of a government regulation through the man-

damus process before seeking compensation for the

taking wrought by the regulation.

That is not what happened in First English. There, no

action was pursued to determine the police power valid-

ity of the County’s action. Nonetheless, this Court held

that the property owner was entitled to a determination

of whether the regulation took its property.

That conclusion was compelled by this Court’s Con-

Stitutional analysis. Please recall that First English

concluded:

“

... government action that works

a taking of property rights necessarily

implicates the ‘constitutional obliga-

tion to pay just compensation.’

[Citation.]

“We have recognized that a land-

owner is entitled to bring an action in

inverse condemnation as a result of

‘“the self-executing character of the

=) ee

constitutional provision with respect

to compensation ...”’ ([Citations.]”

(482 US at 315; emphasis added.)

A remedy which is “self-executing” because violation

of the Just Compensation Clause “necessarily” invokes it

cannot be frustrated by any state procedure which re-

quires a mandamus action to invalidate the regulation as

a precondition to invocation of the “self-executing”

remedy. By definition, a “self-executing” Constitutional

remedy cannot be precluded by legislative action or

inaction. (First English, 482 US at 316)

California’s evisceration of the just compensation

remedy which this Court has plainly and repeatedly held

to be the primary and fundamental remedy for a

regulatory taking of property is so at odds with this

Court’s paramount decisions interpreting the Fifth

Amendment that immediate reversal and remand for

reconsideration in light of this Court’s decisions is

appropriate. 3

THE “WAIVER” ISSUE WAS

SQUARELY BEFORE THIS COURT

IN NOLLAN

The-trial court in this case concluded that Nollan

abrogated the rule that a permit applicant cannot accept

the permit and simultaneously sue to invalidate some of

its conditions. In reversing, the Court of Appeal said

that “... waiver was neither discussed nor in issue in

Nollan ...” (Rossco, 212 Cal App 3d at 656) The Court

of Appeal is wrong in so saying. The issue was ex-

pressly raised and briefed in this Court in Nollan:

@ In its motion to dismiss the appeal, the

Coastal Commission entitled one of

—_—

-12-

its two substantive arguments:

“APPELLANTS HAVE WAIVED

THE RIGHT TO CHALLENGE THE

ACCESS CONDITION UNDER

STATE LAW BY CONSTRUCTING

THE DEVELOPMENT PRIOR TO

FINAL ADJUDICATION OF THIS

MATTER.”

@ In its brief on the merits, the Coastal

Commission used the same caption for

a subheading of its argument that

“THIS COURT LACKS JURISDIC-

TION TO HEAR THIS CASE.”

Thus, the Court of Appeal erred in its understanding

of the procedural posture of Nollan. That error led to the

erroneous attempt to distinguish Nollan aptly described

in the Petition at bench. This Court was well aware of

the “waiver” argument and concluded that it posed no

bar to relief.

CONCLUSION

It seems evident that California’s appellate courts do

not like this Court’s 1987 decisions in Firs: English and

Nollan. As the opinion in this case indicates, they are

bending their considerable intellect to defeat property

owners who seek the protection of this Court’s

decisions.

In light of Williamson County Reg. Planning Commn.

v. Hamilton Bank (1985) 473 US 172, requiring

regulatory taking cases to be brought in state (rather than

federal) courts, this Court’s supervision of how the state

courts apply the federal constitutional law of takings is

indispensable for all participants in land use planning

a:

and regulation. Without clear guidance from this Court,

confusion, unfairness, and anarchy will reign. That

harms all and benefits none. California’s intransigence

breeds unpredictable litigational results, undermining

confidence in the judicial system. This Court’s deci-

sions deserve respect, not what is demonstrated by the

decision below. In the guise of applying this Court’s

decisions, the California Court of Appeal has eviscerated

them.

An astute commentator had the following to say about

the legacy which this Court created in First English:

“What the decision did accomplish

may be best described as a leveling of

the playing field on which regulators

and landowners contend. While com-

pensation was unavailable when regu-

lations took away the use of property,

landowners were at a fundamental

disadvantage in attempting to protect

their constitutionally guaranteed prop-

erty rights. Regulators faced no real

penalty for trampling on those rights,

and behaved accordingly...

“The First English ruling has also

. insured an ultimate protection for

individual property rights against

violation by the government through

regulations. That revitalization of

constitutional guarantees is the most

fundamental meaning of the case.

First English stands as a reminder that

even ends which benefit society do

not justify means forbidden by the

Constitution as unfair to individuals.

Its reaffirmation of the mutually

a

-14-

dependent relationship between lib-

erty and property which lies at the

heart of the fifth amendment may in

the end prove to be its most signif'-

cant message.” (Comment, He Who

Calls the Tune Must Pay the Piper:

Compensation for Regulatory Takings

of Property After First English Evan-

gelical Lutheran Church v. County of

Los Angeles [1988] 53 Mo L Rev 70,

120; emphasis added.)

In contrast to that commentator, the California Court

of Appeal has-contorted the “fundamental meaning” of

this Court’s 1987 decisions. Without this Court’s action,

Californians will be without the benefits of the Just

Compensation Clause.

Because the decision below is so in conflict with this

Court’s recent decisions (particularly First English,

Nollan, and Preseault) the appropriate result would seem

to be an immediate, summary reversal with intructions

that the California Court of Appeal reconsider its

decision in light of this Court’s controlling interpreta-

tions of the Fifth Amendment.

Respectfully submitted,

MICHAEL M. BERGER

of FADEM, BERGER & NORTON

Attorneys for Amicus Curiae

Griffin Homes, Inc.