Amicus Curiae Brief — Shubert Organization, Inc. v. Landmarks Preservation Commission

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No. 91-1382

In The

Supreme Court of the United States

October Term, 1991

¢

THE SHUBERT ORGANIZATION, INC., et al.,

Petitioners,

LANDMARKS PRESERVATION COMMISSION

OF THE CITY OF NEW YORK, et al.,

Respondents.

¢

Petition for Writ of Certiorari to the Supreme Court,

Appellate Division, First Judicial

Department of the State of New York

.

MOTION FOR LEAVE TO FILE BRIEF

AMICUS CURIAE AND BRIEF AMICUS CURIAE

IN SUPPORT OF THE PETITIONERS

¢

RONALD A. ZUMBRUN

Epwarp J. Connor, Jr.

*OrRRIN F. FINCH

*Counsel of Record

Pacific Legal Foundation

2700 Gateway Oaks Drive,

Suite 200

Sacramento, California 95833

Telephone: (916) 641-8888

Attorneys for Amicus Curiae,

Pacific Legal Foundation

COCKLE LAW BRIEF PRINTING CO,, (800) 2256964

OR CALL COLLECT (402) 342-2831

No. 91-1382

¢

In The

Supreme Court of the United States

October Term, 1991

*

THE SHUBERT ORGANIZATION, INC., et al.,

Petitioners,

V.

LANDMARKS PRESERVATION COMMISSION

OF THE CITY OF NEW YORK, et al.,

Respondents.

¢

Petition for Writ of Certiorari to the Supreme Court,

Appellate Division, First Judicial

Department of the State of New York

¢

MOTION FOR LEAVE TO FILE BRIEF

AMICUS CURIAE

¢

Pacific Legal Foundation (PLF) respectfully moves

this Court for leave to file the accompanying amicus

curiae brief in support of the Shubert Organization and

the other petitioners pursuant to Supreme Court Rule

No. 37 urging this Court to grant the petition for cer-

tiorari.

Written consent to the filing of this brief has been

granted by counsel for petitioners and counsel for

li

respondents expressed in writing no objections. Consent

has been withheld by counsel for intervenor-respondent

Save the Theatres, Inc., requiring the filing of this motion.

Copies of these consent letters have been lodged with the

Clerk of the Court.

PLF is a nonprofit, tax-exempt corporation organized

under the laws of the State of California for the purpose

of engaging in the litigation of matters affecting the pub-

lic interest. Policy is set by a Board of Trustees composed

of concerned citizens, the majority of whom are attor-

neys. PLF’s Board evaluates the merits of any contem-

plated legal action and authorizes such legal action only

when the Foundation’s position has broad support within

the general community. PLF’s Board has authorized the

filing of an amicus curiae brief in this matter.

The New York Supreme Court, Appellate Division,

ruled that the Landmark Law of the City of New York

was previously adjudicated as valid by this Court in Penn

Central Transportation Company v. City of New York,

438 U.S. 104 (1978). As a consequence the New York court

held as a matter of law that no taking of private property

without the payment of just compensation resulted from

the landmarking of the theatres on Broadway and the

prohibition of their demolition or alteration. However, by

the direct application of Penn Central in this manner, the

lower court refused to adhere to the admonitions of this

Court in that case regarding the need for an ad hoc judi-

cial evidentiary hearing. PLF believes that this serious

lil

misapplication of Penn Central sets the stage for whole-

sale intrusions on the fundamental right to reasonable

use of private property.

Attorneys for PLF have participated in numerous

land use takings cases before this Court and other courts

as amicus and in representing property owners. PLF par-

ticipated as amicus in Penn Central and PLF attorneys

represented the Nollans in Nollan v. California Coastal

Commission, 483 U.S. 825 (1987).}

Amicus firmly believes that a review of this matter is

necessary in order that the constitutional issues involved

may be properly considered. The decision below conflicts

with the precedents of this Court, including Penn Central,

and other federal authorities holding that even a valid

1 PLF has also participated as amicus in other “takings” cases

before this Court such as in Yee v. City of Escondido,

No. 90-1947 (Apr. 1, 1992); Preseault v. Interstate Commerce

Commission, 494 U.S. 1 (1990); Lucas v. South Carolina Coastal

Council, No. 91-453 (Jan. 1992); Pennell v. City of San Jose,

485 U.S. 1 (1988); First English Evangelical Lutheran Church of

Glendale v. County of Los Angeles, 482 U.S. 304 (1987);

MacDonald, Sommer & Frates v. County of Yolo, 447 U.S. 340

(1986); Williamson County Regional Planning Commission v. Ham-

ilton Bank of Johnson City, 473 U.S. 172 (1985); San Diego Gas &

Electric Company v. City of San Diego, 450 U.S. 621 (1981);

Agins v. City of Tiburon, 447 U.S. 255 (1980); Hodel v. Virginia

Surface Mining and Reclamation Association, 452 U.S. 264 (1981);

Federal Communications Commission v. Florida Power Corporation,

480 U.S. 245 (1987); Keystone Bituminous Coal Association v.

DeBenedictis, 480 U.S. 470 (1987); Hodel v. Irving, 481 U.S. 704

(1987).

iv

regulation that deprives a landowner of economical via-

ble use of property or frustrates reasonable investment-

backed expectations will result in an unconstitutional

taking of private property if just compensation is not

paid. To insure that the overriding purpose of the Takings

Clause is met, i-e., to bar government from forcing

selected property owners alone to bear public burdens

which should be borne by the public as a whole, it

becomes essential for the state courts to afford property

owners, aS a minimum, an ad hoc judicial inquiry regard-

ing the particular circumstances of each case. This

includes analysis of the economic impact of the regula-

tion on the property, the extent of interference with dis-

tinct investment-backed expectations, as well as the

character of the governmental action and any other rele-

vant factors. Penn Central, 438 U.S. at 124.

For the foregoing reasons, Pacific Legal Foundation

requests that the motion to file the annexed brief amicus

curiae be granted.

DATED: April 27, 1992.

Respectfully submitted,

RONALD A. ZUMBRUN

EDWARD J. CONNOR, JR.

*ORRIN F. FINCH

*Counsel of Record

Pacific Legal Foundation

2700 Gateway Oaks Drive,

Suite 200

Sacramento, California 95833

Telephone: (916) 641-8888

By

ORRIN F. FINCH

Attorneys for Amicus Curiae,

Pacific Legal Foundation

vi

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES CITED. . 20 iescscreceeees Vii

BRIEF AMICUS CURIAE IN SUPPORT OF THE

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INTBREol OF AMILUS CURIAR .....5.cs0sssecuss 1

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SUMMARY OF ABGGUMIEINE. 000.2. ccceeckccscanacs 4

REASONS FOR GRANTING CERTIORARI ......... fe)

I. THE FIFTH AMENDMENT BARS GOVERN-

MENT FROM FORCING SOME PEOPLE ALONE

TO BEAR PUBLIC BURDENS WHICH IN FAIR-

NESS SHOULD BE BORNE BY THE PUBLIC... 5

Il. GOVERNMENTAL ACTION RESULTING IN A

REGULATORY RESTRICTION ON THE USE

AND ENJOYMENT OF PRIVATE PROPERTY

REQUIRES A JUDICIAL CASE-BY-CASE FAC-

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Vii

TABLE OF AUTHORITIES CITED

CASES

Agins v. City of Tiburon, 447 U.S. 255 (1980)...

Armstrong v. United States, 364 U.S. 40 (1960)

Goldblatt v. Town of Hempstead, 369 U.S. 590

DA co en Gee come

Kaiser Aetna v. United States, 444 U.S. 164

RU ea Oe ee eden ces

Lockary v. Kayfetz, 917 F.2d 1150

UE UE oa oe ceri ices dawwacdav’

McDougal v. County of Imperial, 942 F.2d 668

a i eee

Nollan v. California Coastal Commission,

th e.g Bg Ole ene

Penn Central Transportation Co. v. City of

New York, 438 U.S. 104 (1978)..............

Pennsylvania Coal Company v. Mahon,

cil ii MR ecsc oe, ig | ERE EP eee ee

Pennell v. City of San Jose, 485 U.S. 1 (1988)...

San Diego Gas & Electric Co. v. City of

San Diego, 450 U.S. 621 (1981)..............

Yee v. City of Escondido, No. 90-1947

Se Fy HOWE he ei ok 5 54s onan ye yens ae:

wees 4,9

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beaae 4,9

No. 91-1382

4

In The

Supreme Court of the United States

October Term, 1991

4

THE SHUBERT ORGANIZATION, INC., et al.,

Petitioners,

LANDMARKS PRESERVATION COMMISSION

OF THE CITY OF NEW YORK, et al.,

Respondents.

¢

Petition for Writ of Certiorari to the Supreme Court,

Appellate Division, First Judicial

Department of the State of New York

¢

BRIEF AMICUS CURIAE

IN SUPPORT OF THE PETITIONERS

*

INTEREST OF AMICUS CURIAE

The interest of amicus Pacific Legal Foundation (PLF)

is set forth in the preceding motion for leave to file this

brief.

STATEMENT OF THE CASE

In 1982, the Heien Hayes and Morosco Theatres were

razed to accommodate a city-promoted effort to revitalize

Time Square. This included building a major new hotel at

Broadway and 45th Street (now the Marriott-Marquis

Hotel) which incorporated the construction of new legiti-

mate theatres. The ensuing outpouring of public concern

over the loss of these two theatres led to a complete

reversal in city policy from replacement to preservation

of existing Broadway theatres.

Between October, 1987, and January, 1988, the city’s

Landmarks Preservation Commission (Commission)

issued landmark designations for 28 theatres (some were

landmarked as to interior as well as exterior) of which 22

are owned by the petitioners and are the subject of this

action. In addition, regulations of the New York City

Board of Estimate prohibit the demolition of these the-

atres without a Special Demolition Permit obtainable only

on a showing that the theatre is unsafe for continued use,

or with findings by the City Planning Commission “{t]hat

demolition of the theatre structure will not unduly dimin-

ish the character of the Theatre District as a cultural,

entertainment and theatrical showcase.” Zoning Resolu-

tion 81-742.

Petitioners timely filed for judicial review of the

landmark designations.' The trial court refused to con-

duct an evidentiary hearing regarding the economic

impact of these designations and also dismissed peti-

tioners’ takings damage claims without an evidentiary

hearing. Based on Justice Brennan’s statement in Penn

' The property owner in Penn Central had opposed the land-

mark designation before the Commission, but did not seek

judicial review of the final designation decision. Penn Central

Transportation Company v. City of New York, 438 U.S. 104, 116

(1978).

Central Transportation Company v. City of New York,

438 U.S. 104, to the effect that “a city may, as part of a

comprehensive program to preserve historic landmarks

and historic districts, place restrictions on development

of individual landmarks . . . without effecting a ‘taking,’ ”

id. at 107 (emphasis added), the trial court concluded as a

matter of law that a landmark designation cannot result

in a taking.

On appeal, the Supreme Court, Appellate Division,

similarly concluded that “[s]lince the [United States]

Supreme Court in Penn Central .. . clearly ruled that the

application of the Landmarks Law does not affect a tak-

ing of the property, the constitutional challenge thereby is

resolved.” Shubert Organization, Inc. v. Landmarks Preserva-

tion Commission of the City of New York, 570 N.Y.S.2d 504,

508 (1991).

Even assuming that the Landmark Law as applied to

these theatres does substantially advance a legitimate

governmental interest (and does not exist solely for the

preservation of the economic interest of the industry or

the city) it does not follow that this is the end of the

required inquiry. Still to be adduced are questions of

whether there has been a violation of the Fifth and Four-

teenth Amendments requiring the payment of just com-

pensation for the use of private property for public

purposes, and whether the burdens of societal obligations .

or benefits have been unfairly placed on a select group of

property owners.

Amicus respectfully submits that the ruling of the

New York court in this matter is not only contrary to the

law of takings jurisprudence that has been developed by

this Court, but it is also irreconcilable with the majority

opinion in Penn Central on which it relies.

+

SUMMARY OF ARGUMENT

This Court has repeatedly stated that regulatory acts

of government violate the Takings Clause of the Fifth

Amendment if the action fails to substantially advance

legitimate governmental interests, denies economic use of

one’s property, or frustrates reasonable investment-

backed expectations. Agins v. City of Tiburon, 447 U.S. 255,

260 (1980); Nollan v. California Coastal Commission, 483 U.S.

825, 834 (1987). The function of these indicia is to reveal

whether a select group of property owners is being

unfairly required to bear societal and general welfare

burdens with little or no private benefit. Yee v. City of

Escondido, No. 90-1947, slip op. at 1 (Apr. 1, 1992); Nollan,

483 U.S. at 825 n.4; Penn Central, 483 U.S. 104 at 147-49

(Rehnquist, J., dissenting).

The ordered preservation of these private structures,

because their continued use as theatres is beneficial to

New York City and society generally, and not to prevent

some noxious use, Clearly results in a taking of private

property. The city has not only acquired a servitude in the

land for public use comparable to the “navigational servi-

tude” in Kaiser Aetna v. United States, 444 U.S. 164 (1979),

but has also placed on the owners an affirmative duty to

maintain the structures in their current condition for the

benefit of the public.

More importantly, the majority opinion in Penn Cen-

tral, relied on by the city, acknowledges that “this Court,

quite simply, has been unable to develop any ‘set for-

mula’ for determining when ‘justice and fairness’ require

that economic injuries caused by public action be com-

pensated by the government, rather than remain dispro-

portionately concentrated on a few persons.” Id. at 124.

As a result it is imperative that the trial court engage in

“these essentially ad hoc, factual inquiries” to ascertain

the economic impact of the regulation on the claimant as

well as the character of the governmental action. /d.

+

REASONS FOR GRANTING CERTIORARI

I

THE FIFTH AMENDMENT BARS GOVERNMENT

FROM FORCING SOME PEOPLE ALONE TO BEAR

PUBLIC BURDENS WHICH IN FAIRNESS SHOULD

BE BORNE BY THE PUBLIC

“The Fifth Amendment’s guarantee that private

property shall not be taken for a public use without just

compensation was designed to bar Government from

forcing some people alone to bear public burdens which,

in all fairness and justice, should be borne by the public

as a whole.” Armstrong v. United States, 364 U.S. 40, 49

(1960). As the now Chief Justice correctly noted in Penn

Central, the New York City Preservation Law places the

entire economic burden on the owner of the designated

property with none of the reciprocal benefits that flow

from zoning restrictions:

Here, however, a multimillion dollar loss

has been imposed on appellants; it is uniquely

felt and is not offset by any benefits flowing

from the preservation of some 400 other “land-

marks” in New York City. Appellees have

imposed a substantial cost on less than one one-

tenth of one percent of the buildings in

New York City for the general benefit of all its

people. It is exactly this imposition of general

costs on a few individuals at which the “taking”

protection is directed. The Fifth Amendment

“prevents the public from loading upon one

individual more than his just share of the

burdens of government, and says that when

he surrenders to the public something more

and different from that which is exacted

from other members of the public a full and

just equivalent shall be returned to him.”

Monongahela Navigation Co. v. United States,

148 U.S. 312, 325 (1893).

Penn Central, 438 U.S. at 147-48 (Rehnquist, J. dissenting).

The theatre owners are penalized, not for any “noxious”

use of their property, but precisely because they did “too

good a job” in designing, building, and maintaining these

structures and must now preserve and maintain them

unchanged for the benefit of sightseers and tourists. Id.

at 146 (emphasis in original; Rehnquist, J., dissenting).

“As Justice Brennan observed in his dissent in

San Diego Gas & Electric Co. v. City of San Diego, 450 U.S.

621 (1981):2

2 While Justice Brennan’s opinion was a dissent, the now Chief

Justice made it clear in his concurring opinion that except for

(Continued on following page)

Police power regulations such as zoning

ordinances and other land-use restrictions can

destroy the use and enjoyment of property in

order to promote the public good just as effec-

tively as formal condemnation or physical inva-

sion of property .. . . From the government's

point of view, the benefits flowing to the public

from preservation of open space through regula-

tion may be equally great as from creating a

wildlife refuge through formal condemnation or

increasing electricity production through a dam

project that floods private property.

Id. at 652 (footnote omitted).

Clearly, the imposition of landmark designations

coupled with the inability to modify the structures or

otherwise convert the properties to other legitimate uses

that are enjoyed by adjoining properties results in a Fifth

Amendment taking without payment of just compensa-

tion. The fact that these theatre owners have no plans to

demolish or convert to other uses has no bearing either

upon ripeness nor the fact that a servitude has been

placed on their properties that reduces their fair market

value.

the “final judgment” issue he “would have little difficulty in

agreeing with much of what is said in the dissenting opinion,”

which would have otherwise placed this as the majority opin-

ion. Id. at 633.

II

GOVERNMENTAL ACTION RESULTING IN

A REGULATORY RESTRICTION ON THE USE AND

ENJOYMENT OF PRIVATE PROPERTY REQUIRES

A JUDICIAL CASE-BY-CASE FACTUAL ANALYSIS

The Appellate Division below relies on the fact that

the theatre owners can still receive the economic benefit

of continued use of the buildings as theatres and make

use of transferable development rights (TDRs). This same

issue was raised in Penn Central as to whether TDRs

constituted just compensation, but was not addressed. In

that case, however, the owners were invited to submit

additional evidence on the issue and “[a]ppellants chose

not to avail themselves of this opportunity.” Penn Central,

438 U.S. at 122. In contrast, the theatre owners here were

denied all opportunity to present factual evidence at a

judicial hearing.

The fact that owners may have some residual usage

or “can still walk on, or ride a bike on, or look at their

land does not, at this preliminary stage of the case, reas-

sure us [that a taking has not occurred].” Lockary v.

Kayfetz, 917 F.2d 1150 (9th Cir. 1990). As further stated by

the court in Lockary:

However, the determination of what consti-

tutes an economically viable use of land requires

a case-by-case factual analysis of the particular

circumstances presented. See, e.g., Ruckelshaus v.

Monsanto Co., 467 U.S. 986, 1005 (1984). Resolu-

tion by plenary hearing rather than by summary

judgment is particularly important for claims of

regulatory taking. Naegele Outdoor Advertising,

Inc. v. City of Durham, 844 F.2d 172, 177 (4th Cir.

1988).

Lockary, 917 F.2d at 1155.

Even assuming that the application of the Preserva-

tion Law to the theatres in question substantially

advances a legitimate governmental interest, that does

not end the inquiry as the New York courts below erro-

neously concluded. As stated recently by the Ninth Cir-

cuit in another recent case, McDougal v. County of Imperial,

942 F.2d 668 (9th Cir. 1991):

The legitimacy of the public interest

involved, how nuuch it is furthered by the regu-

latory actions at issue, the extent of the public

benefit obtained or expected, and the degree

that the [owners’] property rights and reason-

able investment-backed expectations have been

impaired are all factors which lie at the heart of

the takings inquiry. These things typically can-

not be assessed properly without a factual

record.

McDougal, 942 F.2d at 680. See also Kaiser Aetna v. United

States, 444 U.S. at 174-75; and Goldblatt v. Town of Hemp-

stead, 369 U.S. 590 (1962). “There is no set formula to

determine where regulation ends and taking begins.” Id.

at 594.

More recently Justice O’Connor writing for the

majority of this Court in Yee v. City of Escondido and

relying on Penn Central stated that a regulatory takings

case “necessarily entails complex factual assessments of

the purposes and economic effects of government

actions.” Slip op. at 1. It is difficult to envision how

complex factual issues can be disposed of as a matter of

law or by summary judgment as has occurred in this case.

For the proper resolution of this matter, concepts of

due process require that a judicial trial be conducted

10

examining the economic impact of the landmarking of the

sites, the nature of the governmental action, and a deter-

mination as to whether TDR rights and other benefits, if

any, constitute just compensation.

+

CONCLUSION

The Takings Clause of the Fifth Amendment as incor-

porated into the Fourteenth exists to shield the owners of

private property against government regulation that

“goes too far.” As observed by Justice Holmes in Pennsyl-

vania Coal Company v. Mahon, 260 U.S. 393 (1922): “When

this seemingly absolute protection [of the Takings Clause]

is found to be qualified by the police power, the natural

tendency of human nature is to extend the qualification

more and more until at last private property disappears.”

Id. at 415.

Today, the temptations of government for “off bud-

get” financing of social demands and concerns have

made Justice Holmes’ observation even more critical.

Now government seeks to provide societal solutions

through the regulatory process by placing the costs on

select owners of property, and thereby avoid the politi-

cally sensitive issues of funding, taxation, budgeting, and

prioritizing expenditures for new social programs. In

Pennell v. City of San Jose, 485 U.S. 1 (1988), the city

proposed to require landlords to bear the costs of subsi-

dizing increased rents of hardship tenants, which is nor-

mally a function of government. Justice Scalia

appropriately observed:

11

The politically attractive feature of regula-

tion is not that it permits wealth transfers to be

achieved that could not be achieved otherwise;

but rather that it permits them to be achieved

“off budget,” with relative invisibility and thus

relative immunity from normal democratic pro-

cesses.

Id. at 22 (Scalia, J., concurring in part and dissenting in

part).

Without the intervention of this Court, it is inevitable

that government will, with increasing frequency, continue

to misuse its regulatory authority to shift the political

demands of social, economic, and cultural improvements

onto the backs of selected property owners who are in no

way responsible for the social condition to be remedied.

To the contrary, the good design, construction, mainte-

nance, and continued use of these theatres by their

owners has led to the landmark designation and the

consequential loss of economic viable use and substantial

interference with reasonable investment-backed expecta-

tions.

Here the city ostensibly wants to preserve the histori-

cal and cultural heritage of the old Broadway theatres in

New York. The purpose may be legitimate, but that does

not conclude the takings analysis that these owners are

entitled to under Penn Central and the many other cases

examined by this Court. The owners are to be afforded a

judicial evidentiary hearing as to the economic impact of

the landmark designations on each of the properties, the

nature of the governmental action, and whether TDR

rights and any other benefits constitute just compensa-

tion.

For the reasons stated above and in the petition for

certiorari amicus, Pacific Legal Foundation, urges this

Court to issue a writ of certiorari to review the judgment

and opinion of the New York Supreme Court, Appellate

Division.

DATED: April, 1992.

Respectively submitted,

RonNaALD A. ZUMBRUN

EDWARD J. CONNOR, JR

*ORRIN F. FINCH

*Counsel of Record

Pacific Legal Foundation

2700 Gateway Oaks Drive,

Suite 200

Sacramento, California 95833

Telephone: (916) 641-8888

Attorneys for Amicus Curiae,

Pacific Legal Foundation