Amicus Curiae Brief — Del Oro Hills v. City of Oceanside

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No. 94-2112

In the

Supreme Court of the United States

October Term, 1994

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DEL ORO HILLS,

Petitioners,

Vv.

CITY OF OCEANSIDE,

Respondents.

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4

Petition for a Writ of Certiorari to the

California Court of Appeal

for the Fourth Appellate District

+

BRIEF AMICUS CURIAE OF

PACIFIC LEGAL FOUNDATION IN

SUPPORT OF PETITION FOR CERTIORARI

FILED BY PETITIONER DEL ORO HILLS

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* JAMES S. BURLING

*Counsel of Record

Pacific Legal Foundation

2151 River Plaza Drive, Suite 305

Sacramento, California 95833

Telephone: (916) 641-8888

Attorneys for Amicus Curiae

Pacific Legal Foundation

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

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REASONS FOR GRANTING

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I. THE OPINION OF THE COURT OF

APPEAL CONTRADICTS WELL-ESTABLISHED

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II. CONFUSION PREVAILS AMONG

STATE COURTS AND FEDERAL CIRCUIT

COURTS REGARDING THE CORRECT

APPLICATION OF THE TWO-PRONG AGINS TEST ... 10

A. Some Courts Properly Apply

ae 10

B. Some Courts Confuse Agins and

Embrace a Conjunctive Test ..........eec00. 12

¢. A Few Courts Have Adopted What

Can Best be Described as an

Exclusive Substantive Due

Process/Effective Conjunctive Test ............ 13

D. Application of a Nonexclusive

Substantive Due Process Standard

Allows the Use of Both a Substantive

Due Process and a Takings Analysis ........... 15

ij

Page

E. A "Balancing" Test Applied by

Some Courts Subsumes or Ignores

the Two-Prong Agins Test ........---+e-0e5 17

F. Other Courts Use Second Prong

Takings Analysis Exclusively,

Calling the First Prong Irrelevant ............. 18

CONCLIISIGNM .cccccvwcncveewennvesueecaeeus 20

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TABLE OF AUTHORITIES CITED

Page

CASES

Agins v. City of Tiburon,

ee ne EE oo. aso Woe bw So we 4 alk bw views os passim

Bello v. Walker, 840 F.2d 1124

(3d Cir. 1988), cert. denied,

ee ec ewes eeeeebe 14

Christopher Lake Development Co. v.

St. Louis County, 35 F.3d 1269

CMS eee coe 6 kk cet eee eee ee cee 14

City of Pompano Beach v. Yardarm

Restaurant, Inc., 641 So. 2d 1377

(Fla. Dist. Ct. App. 1994),

cert. denied, _U.S.__,

Pee ee eee 14-15,18

Dolan v. City of Tigard, 512 U.S. __,

Be le EE et cc tt ttween 4,6,8-9,15,17

Eide v. Sarasota County, 908 F.2d 716

(11th Cir. 1990), cert. denied,

se a's as ok os Gs be bow oe eo es 13-15

Esposito v. South Carolina Coastal

Council, 939 F.2d 165 (4th Cir. 1991),

cert. denied, ___ U.S. __,

CE ree ee roa 17

First English Evangelical Lutheran

Church of Glendale v. County of

ee eh ls 2-3,9,19

iv

Page

Gardner v. New Jersey Pinelands Commission,

SD Ae Fe ee OOS 6 ho Oh 6 60k cs ek OS 11

Gerijo, Inc. v. City of Fairfield,

638 N.E.2d 533 (Ohio 1994), cert. denied,

soe ees ere ee 12-13

Halverson v. Skagit County,

Sa Fe Bee ee el Ue 6 6 5 0 ak Rw 15-16

Jackson Court Condominiums, Inc. v.

City of New Orleans,

SPS Fe Per re TE 0 0.6 bn ee he eed 5

Kaiser Aetna v. United States,

Oe RE ee ok a eh 6 Res RR eae 5

Kelly v. Tahoe Regional Planning Agency,

FA 8 og | EP ere e erie ee. or ee 10

Keystone Bituminous Coal Association v.

DeBenedictis, 480 U.S. 470 (19867) . 2... . eT ST... 2,4

Loveladies Harbor v. United States,

oe ae SET rs GO BRA a eo HC Ee ERS we 18

Lucas v. South Carolina Coastal Council,

ee ee a sk kk Se a ee eee 8

Lucas v. South Carolina Coastal

Council, 505 U.S. __,

Se tas ee ee Pe vc es oir tee 2,4,7-8,18-19

Manocherian v. Lenox Hill Hospital,

0p Pee Oe es 2 ee ne hac be te eel en 11-12

EE

Page

McAndrews v. Fleet Bank of Massachusetts,

Weer ee 5 oie yk eos ids osc oka 17-18

McDougal v. County of Imperial,

Pere ee ee ee oo ie ho Sk e S 5,10

Miller v. Columbia River Gorge Commission,

pow Fan Gar Cm, C2, Age. 1998 ee. Sos oo ee ee 10-11

Moore v. City of Costa Mesa,

886 F.2d 260 (1989), cert. denied,

Pe ori ss ons 2S ks cE aL bbe eat 18

Nollan v. California Coastal

Commission, 177 Cal. App. 3d 719 (1986) .............. 7

Nollan v. California Coastal

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

Northern Illinois Home Builders

Association, Inc. v. County of Du Page,

seivitierits vel dts one. SOE OR EOE OTE ore ee ee 5

Penn Central Transportation Co. v.

New York City, 438 U.S. 104 (1978). .............. 17-18

Pennell v. City of San Jose,

PW Ba eee oN ee ok 6 wk cL ee 4

Reahard v. Lee County, 968 F.2d 1131

Oe EE ek ia ads pes Sooo es ee 18-19

San Diego Gas & Electric Co. v. City of

wt Rie, Se a CID kg ii ke ocak. 4

Schultz v. City of Grants Pass,

wee Fim oer Com. ts Ma WORD). oon cc ck ccc cen. 5,11

vi

Page

Seawall Association v. City of New York,

ee Ee Ne Cots es BOUPD 0 oe 6 KcaWiorek wlelvees eee 10-11

Southview Association, Ltd. v. Bongartz,

980 F.2d 84 (2d Cir. 1992), cert. denied,

pol! eee eer 15

United States v. Riverside Bayview

ss Se, OE CE gn a a 0 6 ce oe 05s be ae 4

Whitehead Oil Co. v. City of Lincoln,

- FAS FY 8 | Pere eree Tr ee ee 5,11

Whitney Benefits, Inc. v. United States,

Pe EP fg ee os a rs rrr re 5

Woodbury Place Partners v. City of Woodbury,

492 N.W.2d 258 (Minn. Ct. App. 1993),

cert. denied, _U.S._.,

ee ha Oe ED. a0 3 8S ORAS wi ee 18

Yee v. City of Escondido, 503 U.S. __,

ome 2 eer oe ere 2,4-5

RULES

ancients Cant Hale FU.S.. ek se ho a es be ae 2

CALIFORNIA CONSTITUTION

California State Constitution,

— POPPE Per eer Ee Eee Te Pe ee ee te 6

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Vil

No. 94-2112

In the

Supreme Court of the United States

October Term, 1994

-+—

DEL ORO HILLS,

Petitioners,

v.

CITY OF OCEANSIDE,

Respondents.

~~

Petition for a Writ of Certiorari to the

California Court of Appeal

for the Fourth Appellate District

a

BRIEF AMICUS CURIAE OF

PACIFIC LEGAL FOUNDATION IN

SUPPORT OF PETITION FOR CERTIORARI

FILED BY PETITIONER DEL ORO HILLS

ow

INTEREST OF AMICUS CURIAE

PLF is a nonprofit, tax-exempt corporation organized

under the laws of the State of California for the purpose of

litigating cases affecting the public interest. PLF has over

20,000 contributors and supporters located throughout the

country and maintains its principal office in Sacramento,

California.

2

PLF has participated in numerous cases involving issues

arising under the Takings and Due Process Clauses of the

Fifth and Fourteenth Amendments to the United States

Constitution. Its attorneys were counsel of record in the

landmark United States Supreme Court case Nollan vy.

California Coastal Commission, 483 U.S. 825 (1987), and

PLF participated as amicus curiae in Lucas v. South Carolina

Coastal Council, 505 U.S. __, 120 L. Ed. 2d 798 (1992);

Yee v. City of Escondido, 503 U.S. __, 118 L. Ed. 2d 153

(1992); Keystone Bituminous Coal Association v.

DeBenedictis, 480 U.S. 470 (1987); and First English

Evangelical Lutheran Church of Glendale v. County of

Los Angeles, 482 U.S. 304 (1987). Given its public policy

perspective and experience, Pacific Legal Foundation

believes it can provide additional insight with respect to the

issues before this Court in the present case. Pursuant to

Rule 37.3, written permission from all parties to file this

brief has been lodged with the clerk of the Court.

+

SUMMARY OF ARGUMENT

Who is responsible for the injury suffered by a property

owner as a result of a local growth control initiative that is

subsequently declared to be unlawful. The landowner? Or

should the taxpayers who passed the measure and inflicted

the injury be required to pay? The answer to this question

will follow from this Court’s determination of exactly what

is the proper standard for determining a regulatory taking.

This Court should grant the petition for writ of certiorari

because the decision of the California Court of Appeal

directly threatens a central analytical pillar of takings law.

It has long been settled that a land use regulation effects a

taking in at least two discreet instances: (1) where the

regulation fails to substantially advance legitimate

government interests; or (2) where the regulation denies an

3

owner economically viable use of his land. Agins v. City of

Tiburon, 447 U.S. 255, 260 (1980). Either instance is

sufficient to trigger a taking under the Fifth and Fourteenth

Amendments; these amendments also require governments to

pay just compensation for takings. With respect to a

regulation that is later declared to be unlawful, because such

a regulation fails to substantially advance a legitimate

governmental interest, it may result in a taking and

compensation would be due--at least for the period of time in

which the offending regulation was in effect. See First

English 482 U.S. at 321.

Surprisingly, the Court of Appeal below rejected this

established "either/or" formulation, insisting instead that a

landowner satisfy both elements of the analysis before a

taking may be found. This unprecedented departure from

bedrock takings principles contradicts virtually every major

United States Supreme Court takings decision in the last

15 years, not to mention scores of state and federal court

decisions. Worse, it undermines crucial constitutional

protections that shield property owners from arbitrary and

abusive government regulations.

Despite this Court’s disjunctive interpretation of the two-

pronged Agins test, many lower state and federal courts inter-

pret the Agins test in ways that are varied and unpredictable.

While the disjunctive interpretation predominates, at least

five other implicit and explicit applications of the Agins test

exist. To resolve the lower courts’ confusion in favor of the

disjunctive interpretation of the Agins test, amicus Pacific

Legal Foundation strongly urges this Court to grant the

petition for certiorari.

4

REASONS FOR GRANTING

THE PETITION FOR CERTIORARI

THE OPINION OF THE

COURT OF APPEAL CONTRADICTS WELL-

ESTABLISHED PRINCIPLES OF TAKINGS LAW

In Agins v. City of Tiburon, this Court established the

present framework for evaluating regulatory takings claims:

"The application of a general zoning law to particular

property effects a taking if the ordinance does not substan-

tially advance legitimate state interests [citation], or denies an

owner economically viable use of his land [citation]."

447 U.S. at 260 (emphasis added). Expressly stated in the

disjunctive, the Agins test provides two independent bases on

which a taking may be found: a taking arises whenever the

government violates either prong of the formulation. The

independence of each prong of the two-prong Agins test has

been reiterated by this Court in nearly every major regulatory

takings case in the last 15 years.'

' Dolan v. City of Tigard, 512 U.S. __, 129 L. Ed. 2d 304,

316 (1994); Lucas v. South Carolina Coastal Council, 120 L.

Ed. 2d at 813; Keystone Bituminous Coal Association v.

DeBenedictis, 480 U.S. at 485; Nollan v. California Coastal

Commission, 483 U.S. at 834; United States v. Riverside

Bayview Homes, Inc., 474 U.S. 121, 126 (1985); see also

Yee v. City of Escondido, 118 L. Ed. 2d at 169 (restating and

providing additional citations for petitioners’ first prong

argument); Pennell v. City of San Jose, 485 U.S. 1, 18

(1988) (Scalia, J., concurring in part; dissenting in part)

(restating Agins test and noting the independence of its

prongs); San Diego Gas & Electric Co. v. City of San Diego,

450 U.S. 621, 647 (1981) (Brennan, J., dissenting) (restating

Agins test).

5

For instance, this Court in Yee v. City of Escondido

explicitly stated that a claim that a regulation fails to

substantially advance a legitimate state interest (i.e., a first

prong Agins challenge) “does not depend on the extent to

which [the property owners] are deprived of the economic

use of their particular pieces of property." 118 L. Ed. 2d

at 169 (emphasis added); see also Kaiser Aetna v. United

States, 444 U.S. 164, 174 (1979) (these are “entirely

separate question[s]"). Numerous state decisions and dozens

of federal cases have also recited and relied on the

disjunctive Agins test.”

Regarding state cases, see, e.g., Schultz vy. City of

Grants Pass, 884 P.2d 569, 573 (Or. Ct. App. 1994)

(holding that imposed exaction of land was regulatory taking

because exaction did not relate to impact of plaintiffs’

proposed development); Whitehead Oil Co. v. City of

Lincoln, 515 N.W.2d 401 (Neb. 1994) (holding that arbitrary

and capricious government action did not advance legitimate

state interest and thus was a regulatory taking); Northern

Illinois Home Builders Association, Inc. v. County of Du

Page, 649 N.E.2d 384, 389 (1995) (adopts Agins disjunctive

test in reviewing transportation impact fees).

Regarding federal cases, see, e.g., Whitney Benefits,

Inc. v. United States, 926 F.2d 1169, 1176 (Fed. Cir. 1991)

("a regulation effects a taking if it either (1) ‘does not

substantially advance legitimate state interests,’ or (2) ‘denies

an owner economically viable use of his land’") (emphasis in

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

677 (9th Cir. 1991) (reciting the two-prong Agins test in the

negative voice); Jackson Court Condominiums, Inc. v. City

of New Orleans, 874 F.2d 1070, 1080 (Sth Cir. 1989)

(reciting two-prong Agins test).

6

The two-prong Agins test can also be phrased in a

negative voice with no alteration of its meaning. For

instance, in its most recent affirmation of the Agins test, this

Court in Dolan v. City of Tigard, 129 L. Ed. 2d at 316, |

stated: "A land 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’

[citation to Agins].". (Emphasis added.) See also Nollan v.

California Coastal Commission, 483 U.S. at 834 (also stating

the Agins test in the negative voice). Though the emphasis

is somewhat different, the negative voice rendition (no less

than the positive voice rendition) makes it perfectly clear that

for a land use regulation to pass muster under the Takings

Clause, it must substantially advance legitimate state interests

and leave an owner with economically viable use of his prop-

erty. If either one of these conditions is violated, the

government has effected a taking. The taking of property is

constitutional only when accompanied by just compensation.

U.S. Const., Art. V; Cal. Const., Art. I, § 19.

The opinion below contradicts these well-established

principles by denying that either prong of the Agins test is

sufficient to establish a taking: "[W]e cannot accept Del

Oro’s theory that satisfaction of one element of the Agins test

(i.e., that there was an invalid regulation) is enough to

establish a taking as a matter of law." Del Oro Hills,

31 Cal. App. 4th 1060, 1079 (1995). The Court of Appeal

further held:

In Nollan, Lucas, and Dolan, the United States

Supreme Court’s analysis of the taking issue

inextricably interlinked both the regulation’s validity

and ‘the question of whether any economically

beneficial use of the property remained in light of

the regulation. Jn light of later authority, Agins did

not establish an "either/or" type of test.

Id. (emphasis added).

a en en a err nnn rm A

7

This conclusion is patently wrong. And it is flatly

contradicted by the very cases the opinion cites.

Nollan v. California Coastal Commission involved an

attempt by the California Coastal Commission to exact a

public easement from a private property owner as a condition

for a permit to build a house. 483 U.S. at 827-28. This

Court ultimately struck down the exaction under the first

prong of the Agins test, i.e., for failing to substantially

advance legitimate state interests and thus effecting an

unconstitutional taking of property without just compensation.

Id. at 837 and 841-42. This Court never suggested,

however, that the exaction of a simple use easement deprived

the Nollans of economically viable use of their property.

Quite the contrary, by the time this Court heard the case, the

Nollans had already constructed a new house on their

beachfront lot. Jd. at 829-30. More importantly, this Court

expressly rejected the opinion of the California Court of

Appeal that the Nollans’ takings claim was invalid because

they had not been deprived of all reasonable use of their

property. Jd. at 830 and 837; see Nollan v. California

Coastal Commission, 177 Cal. App. 3d 719, 723 (1986).

Therefore, the statement by the court below that the issue of

"economically beneficial use" was somehow "inextricably

interlinked” with the "analysis of the takings issue" in Nollan

is incorrect. Economically beneficial use was never at issue

in Nollan.

Lucas v. South Carolina Coastal Council likewise

contradicts the notion that both prongs of the Agins test must

be satisfied before a taking may be found. Whereas Nollan

was a purely first prong Agins case, Lucas was a purely

second prong Agins case. In Lucas the validity of the

challenged regulation was conceded by the property owner

and assumed by the Court. 120 L. Ed. 2d at 808. There

was never any question that the regulation substantially

advanced legitimate state interests and thus met the standards

of Agins’ first prong. Still, this Court held that, absent some

8

preexisting limitation in the land’s title, the property owner

was due compensation for a taking under Agins’ second

prong solely on account of the economic impact of the

regulation.’ Lucas, 120 L. Ed. 2d at 815-16 and 820. As

it did in Nollan, the Supreme Court in Lucas found a

compensable taking where only one prong of the Agins test

was violated.‘ In doing so it rejected the holding of the

South Carolina Supreme Court that both prongs of Agins

had to be satisfied for a compensable taking--the very

position the court below has taken. See Lucas v. South

Carolina Coastal Council, 304 S.E.2d 895, 901-02 (S.C.

1991) (no taking arises when government advances a

legitimate police power interest even if all economically

viable use is denied), rev’d, 120 L. Ed. 798 (1992).

Finally, the Supreme Court in Dolan v. City of Tigard--

the final case the Court of Appeal cites for the false notion

that economic impact is always intertwined with the takings

inquiry--made it clear that its takings analysis rested solely

> The Supreme Court indicated that no compensation would

be due for denial of all economically viable use if the state

were merely preventing a traditional common law nuisance

or enforcing a preexisting limitation in the property’s title.

Lucas, 120 L. Ed. 2d at 820-21.

* It is also worth noting that in Lucas the Court again stated

the Agins test in the positive voice originally used in Agins:

"(T]he Fifth Amendment is violated when land use regulation

‘does not substantially advance legitimate state interests or

denies an owner economically viable use of his land.’

[Citation to Agins.]" Lucas, 120 L. Ed. 2d at 813 (emphasis

in original). The Court of Appeal’s implication that the

Supreme Court has somehow backed off the “either/or”

standard originally elaborated in Agins, Del Oro Hills,

31 Cal. App. 4th at 1079, has no merit.

9

on the first prong of the Agins test. The Court explicitly

Stated that the economic impact of the challenged regulation

had nothing to do with the Court’s decision to invalidate a

regulation as an unconstitutional taking. 129 L. Ed. 2d

at 316 n.6 ("There can be no argument that the permit

conditions would deprive petitioner of ‘economically

beneficial us[e]’ of her property as she currently operates a

retail store on the lot."). As in Nollan, the challenged

regulation failed to substantially advance a legitimate

government interest as required by the first prong of the

Agins test.

If a regulation effects a taking under Agins because it

fails to substantially advance a legitimate governmental

interest, then the responsible governmental agency may

rescind the offending regulation, or it may decide to simply

condemn property adversely affected. First English

Evangelical Lutheran Church of Glendale v. County of Los

Angeles, 482 U.S. at 321. In either event, compensation is

due at least for the period of time in which the regulation

was in effect. Id.

In sum, the Court of Appeal’s holding that both prongs

of the Agins test must be satisfied before a taking may be

found directly conflicts with one of the most deeply rooted

doctrines in takings law. No precedent exists to support this

conclusion and the Court of Appeal lacks authority to

contradict the United States Supreme Court on the

interpretation of federally guaranteed constitutional rights.

10

i

CONFUSION PREVAILS AMONG

STATE COURTS AND FEDERAL CIRCUIT

COURTS REGARDING THE CORRECT

APPLICATION OF THE TWO-PRONG AGINS TEST

Although this Court’s precedent supports the disjunctive

interpretation of the Agins test, lower state and federal courts

lack uniformity in their application of Agins to regulatory

takings. The following analysis demonstrates that among

state and federal courts, at least six different applications of

the Agins test exist. It is not that all these formulations are

wrong; some are quite cogent and practical; others consid-

erably. less so. The problem is that in trying to determine

whether a regulation constitutes a taking, property owners

and government regulators are buried in a morass of contra-

dictory doctrinal confusion. Thus, further guidance from this

Court regarding the proper application of the Agins test

would facilitate much needed consistency and predictability

in regulatory takings doctrine.

A. Some Courts Properly Apply the Disjunctive Test

The disjunctive application recognizes both prongs of the

Agins test. Furthermore, it presumes that satisfaction of

either prong suffices to constitute a regulatory taking.

Seawall Association v. City of New York, 542 N.E.2d 1059

(N.Y. 1989), exemplifies the line of cases supporting the

disjunctive application of the Agins test.°

> See also McDougal v. County of Imperial, 942 F.2d at 677

(reciting disjunctive Agins test in negative voice); Kelly v.

Tahoe Regional Planning Agency, 855 P.2d 1027, 1033

(Nev. 1993) (reciting disjunctive Agins test); Miller v.

Columbia River Gorge Commission, 848 P.2d 629, 630 and

630 n.1 (Or. Ct. App. 1993) (acknowledging that taking

(continued...)

11

In Seawall, real estate developers challenged a local law

that prohibited conversion or demolition of single-room

occupancy properties. Jd. at 1060. The law also required

owners to restore such properties and indefinitely lease them

at controlled rents. Jd. at 1061. The developers claimed that

the local law was invalid and violated the Federal and State

Constitutions as a regulatory taking. Jd. The New York

Court of Appeals reasoned that the challenged law did not

substantially advance legitimate state interests because the

defendants did not show the required nexus between the law

and its purpose--the reduction of homelessness. Jd. at 1069.

Moreover, the Court of Appeals determined that the local

law’s requirement that owners indefinitely lease their

properties at controlled rents denied property owners

economically viable use of their property. Jd. at 1068.

Reversing the decision of the New York Supreme Court, id.

at 1062, the Court of Appeals held that under either prong of

the Agins test, the regulation was invalid and constituted a

regulatory taking. /d. at 1068-69.

Other cases have found a regulatory taking under the

first prong of the Agins test without proceeding to analyze the

second prong.° Manocherian vy. Lenox Hill Hospital,

> (...continued)

occurs if either prong of Agins test is satisfied); Gardner v.

New Jersey Pinelands Commission, 593 A.2d 251, 257 (N.J.

1991) (reciting disjunctive Agins test in negative voice).

® See, e.g., Schultz v. City of Grants Pass, 884 P.2d at 573

(holding that imposed exaction of land was regulatory taking

because exaction did not relate to impact of plaintiffs’

proposed development); Whitehead Oil Co. v. City of

Lincoln, 515 N.W. 2d 401 (holding that arbitrary and

Capricious government action did not advance legitimate state

interest and thus was regulatory taking).

12

643 N.E.2d 479 (N.Y. 1994), represents this line of

disjunctive application cases. In Manocherian, apartment

owners challenged a city ordinance requiring them to offer

renewal leases on apartments to a nonprofit hospital. Id.

at 480. The New York Court of Appeals opined that the

challenged ordinance did not substantially advance the

ordinance’s stated purpose to lessen the emergency housing

shortage. Id. at 485. Rather, it subsidized the hospital. Jd.

at 484. Accordingly, the Court of Appeals reversed the

decision of the New York Supreme Court and held that the

challenged ordinance constituted a regulatory taking. Id.

at 486. The Court of Appeals concluded that in light of the

ordinance’s failure to pass the first prong of the Agins test,

analysis of the second prong was unnecessary. Id. at 486-87.

B. Some Courts Confuse Agins and

Embrace a Conjunctive Test

Despite seemingly clear contrary authority, a minority of

lower courts maintain that the Agins test is conjunctive.

Similar to the disjunctive application, the conjunctive

application recognizes both prongs of the Agins test. It does

not, however, acknowledge a regulatory taking unless the

plaintiff has satisfied both prongs. Thus, under the con-

junctive application, one who alleges a regulatory taking

must prove both that the regulation fails to substantially

advance a legitimate state interest and that the regulation

denies the owner economically viable use of her property.

Other than the California Court of Appeal’s decision in

Del Oro Hills v. City of Oceanside, 31 Cal. App. 4th

at 1060, only one other lower court decision supports the

conjunctive application of the Agins test. See Gerijo, Inc. v.

City of Fairfield, 638 N.E.2d 533 (Ohio 1994), cert. denied,

__ U.S. _, 130 L. Ed. 2d 1068 (1995) (applying conjunc-

tive Agins test). In Gerijo, the Ohio Supreme Court reversed

the appellate court’s finding that a zoning ordinance which

fails to substantially advance a legitimate state interest is

ee a

13

invalid as a regulatory taking. Relying on lower state court

decisions, the Ohio Supreme Court held that to prove a

regulatory taking, the plaintiff must prove both that the

regulation fails to substantially advance a legitimate state

interest and that it denies the owner economically viable use

of her property. Jd. at 230-31. The court in Gerijo did not

acknowledge this Court’s decision in Agins. Id. at 231

(Pfeifer, J., dissenting).

C. A Few Courts Have Adopted What Can Best

be Described as an Exclusive Substantive

Due Process/Effective Conjunctive Test

The exclusive substantive due process application either

explicitly or implicitly analyzes the first prong of the Agins

test as a substantive due process claim. As with the

conjunctive application, however, it consistently requires

satisfaction of the second prong in order to find a regulatory

taking that merits just compensation. For this reason it shall

be referred to as the effective conjunctive application.

The Eleventh Circuit Court of Appeals employed the

effective conjunctive application in Eide v. Sarasota County,

908 F.2d 716 (11th Cir. 1990), cert. denied, 498 U.S. 1120

(1991). There, the plaintiff advanced a substantive due

process claim on the basis that a county zoning ordinance

was unconstitutional as applied to his property. /d. at 718.

Plaintiff sought both declaratory relief and compensatory

damages. Jd. The Court of Appeals in Eide analyzed both

prongs of the Agins test as separate claims. /d. at 721.

Neither mentioning nor analyzing this Court’s decision in

Agins, the Court of Appeals stated in dicta that “arbitrary

and capricious due process" is the theory under which to

challenge a regulation that is arbitrary and capricious, not

takings doctrine. Jd. at 722. Thus, the Court of Appeals

effectively determined that a claim brought under the first

prong of Agins, the legitimate state interest requirement, is

a due process claim, not a takings claim. While the court

14

averred that damages might be available, where this

formulation leaves the heightened scrutiny takings standard

of Nollan is in doubt. See Nollan, 483 U.S. at 834 n.3.

In contrast, to bring a “due process takings claim” the

Court of Appeals stated that the plaintiff must establish that

the challenged regulation destroyed the value of her property,

effectively taking the property by eminent domain. Id.

at 722. The “due process takings claim" resembles the

second prong of the Agins test which requires that the

challenged regulation deny the owner economically viable use

of her property.

Hence, under Eide, merely satisfying the first prong of

the Agins test apparently never amounts to a regulatory

taking. Accordingly, to establish a regulatory taking the

effective conjunctive application always requires plaintiffs to

satisfy the second prong of the Agins test.’

7 See also Christopher Lake Development Co. v. St. Louis

County, 35 F.3d 1269, 1274-75 (8th Cir. 1994) (stating that

arbitrary and capricious government action constitutes

“arbitrary and capricious due process" claim and that "due

process takings claim" requires showing that regulation

destroys owner’s property value); Bello v. Walker, 840 F.2d

1124, 1128-31 (3d Cir. 1988), cert. denied, 488 U.S. 868

(1988) (analyzing arbitrary and capricious government action

as substantive due process claim, holding that takings claim

requires showing that owners have lost all use of property);

City of Pompano Beach v. Yardarm Restaurant, Inc. , 641 So.

2d 1377, 1384 (Fla. Dist. Ct. App. 1994), cert. denied,

_ U.S. _, 63 U.S.L.W. 3890 (1995) (rejecting plaintiff's

inverse condemnation claim on ground that satisfaction of

first prong of Agins was insufficient, stating that "[the lower

court’s decision in plaintiff's favor] was an understandable

(continued...)

;

i i]

15

Because Eide discussed these issues primarily in dicta,

and did not apply each formulation to the allegations in the

case, it is difficult to be certain exactly how inconsistent the

formulations are with the precedent of this Court regarding

standards of review and burdens of proof as outlined in

Nollan and Dolan. In any event, the rather ambiguous

tautology of the Eleventh Circuit points out the doctrinal

conflict inherent in cases like Del Oro Hills.

D. Application of a Nonexclusive Substantive

Due Process Standard Allows the Use of Both

a Substantive Due Process and a Takings Analysis

The nonexclusive substantive due process application

permits first prong Agins claims under either the "arbitrary

and capricious due process" theory or the Fifth Amendment

takings theory. This application highlights the difference in

Standards of review between a due process claim and a

takings claim. Furthermore, it demonstrates how applying an

exclusive due process theory to a takings claim permits lower

courts to elude Nollan’s heightened standard of review for

takings claims. Avoidance of the "essential nexus" test set

out in Nollan, 483 U.S. at 837, places the burden of proof

for takings claims on property owners. According to this

Court’s decision in Dolan v. City of Tigard, 129 L. Ed. 2d

304, however, the burden of proof for such claims properly

lies with the government. Id. at 323.

Chief Judge Oakes applied the nonexclusive substantive

due process analysis in his opinion for the Second Circuit

Court of Appeals in Southview Association, Ltd. v. Bongartz,

980 F.2d 84 (2d Cir. 1992), cert. denied, ___ U.S. __,

7 (...continued)

error given that ‘takings’ law is one of the most confused

areas in American jurisprudence").

16

123 L. Ed. 2d 153 (1993). See also Halverson v. Skagit

County, 42 F.3d 1257, 1261 (9th Cir. 1995) (stating that

facts which form basis of “arbitrary and capricious due

process" claim may also form basis of takings claim). In

Southview, a developer advanced substantive due process and

takings claims against members of the Vermont Environ-

mental Board. Jd. at 101 and 107. The complaint alleged

that the Vermont Environmental Board’s denial of a permit

was arbitrary and capricious and failed to substantially

advance a legitimate state interest. Jd.

The Second Circuit affirmed the lower court’s dismissal

on ripeness grounds. /d. at 100. However, Judge Oakes

proceeded to analyze the merits of the case.* Jd. at 101-09.

Judge Oakes first analyzed plaintiff's substantive due process

claim. Rejecting the validity of this claim, Judge Oakes

reasoned that government regulation of a landowner’s

property violates the landowner’s right to substantive due

process “only when government acts with ‘no legitimate

reason for its decision.’" Jd. at 102. Thus, to avoid liability

for a substantive due process violation, government need

only advance a legitimate reason for its decision. Under a

substantive due process theory, plaintiff carries the greater

burden of proving that the government’s decision was

completely irrational. Jd. at 104.

Next, Judge Oakes analyzed plaintiff's takings claim.

Also rejecting the validity of the takings claim, Judge Oakes

determined that government regulation effects a taking of

property without just compensation when a regulation fails to

"substantially advance” a legitimate state interest. Id. at 107.

Accordingly, to avoid liability for a taking, the government

must establish that a nexus exists between the challenged

* Judge Oakes’s analysis of the merits did not necessarily

represent the official view of the Second Circuit panel.

Southview, 980 F.2d at 100.

17

regulation and the state’s interest. Jd. at 108. Under a

takings theory, the government carries the greater burden of

proving that its decision substantially advanced a legitimate

State interest. This result is, of course, contrary to the

formulation in Del Oro Hills.

Under a nonexclusive due process theory, substantive

due process merely supplements takings as a theory of

recovery. Under an exclusive due process theory, however,

substantive due process is the only means by which plaintiff

can recover under the "legitimate state interest" prong of

Agins. Because substantive due process theory places the

burden on the plaintiff to prove that the challenged

government regulation lacks any rational basis, the exclusive

due process application eludes the "essential nexus"

requirements of both Nollan and Dolan.

E. A "Balancing" Test Applied by Some Courts

Subsumes or Ignores the Two-Prong Agins Test

The balancing application effectively analyzes the second

prong of the Agins test under the three-part balancing test set

out in Penn Central Transportation Co. v. New York City,

438 U.S. 104, 124 (1978). Courts applying the balancing

test either ignore the first prong of Agins, or they conclude

that plaintiff has failed to satisfy the first prong. To

determine whether a regulation has denied the owner

economically viable use of her property, courts employing

the balancing application analyze: (1) the economic impact

of the regulation on the plaintiff; (2) the extent to which the

regulation interferes with the plaintiff’s investment-backed

expectations; and (3) the character of the government action.

Id. Most prominent among cases applying the Penn Central

analysis is the First Circuit’s decision in McAndrews v. Fleet

Bank of Massachusetts, 989 F.2d 13 (1st Cir. 1993). See

also Esposito v. South Carolina Coastal Council, 939 F.2d

165, 170-71 (4th Cir. 1991), cert. denied, ____ U.S. __,

120 L. Ed. 2d 898 (1992) (applying Penn Central balancing

18

test to analyze second prong of Agins test after determining

that plaintiff has failed to satisfy first prong); Woodbury

Place Partners v. City of Woodbury, 492 N.W.2d 258, 262

(Minn. Ct. App. 1993), cert. denied, ___ U.S. __, 124 L.

Ed. 2d 679 (1993) (remanding to District Court to determine

existence of regulatory taking under “economically viable

use” analysis in light of Penn Central balancing test). But

see Loveladies Harbor v. United States, 28 F.3d 1171, 1179

(Fed. Cir. 1994) (supplementing and partially rejecting

Penn Central balancing test in favor of Lucas v. South

Carolina Coastal Commission analysis).

In McAndrews, a property owner challenged federal

legislation which prohibited him from canceling a lease upon

the lessee bank’s insolvency. McAndrews, 989 F.2d at 14.

In determining whether the property owner had suffered a

regulatory taking under the second prong of Agins, the First

Circuit separately analyzed each factor of the Penn Central

balancing test. Jd. at 18-20. The First Circuit ignored the

first prong of the Agins test. The court’s avoidance of

consideration of the first prong of Agins arguably led to a

result less favorable to the property owner than justified.

F. Other Courts Use Second Prong Takings Analysis

Exclusively, Calling the First Prong Irrelevant

Finally, the second prong application limits analysis to

the second prong of the Agins test, while it consistently

ignores analysis of the first prong. Among cases subscribing

to the second prong application, Reahard v. Lee County,

968 F.2d 1131 (11th Cir. 1992), provides a unique analysis.

See also Moore v. City of Costa Mesa, 886 F.2d 260, 263

(1989), cert. denied, 496 U.S. 906 (1990) (restricting takings

analysis to second prong of Agins test despite lower court’s

finding that challenged regulation was invalid but not

unconstitutional); City of Pompano Beach v. Yardarm

Restaurant, 641 So. 2d at 1384. The Eleventh Circuit stated

in Reahard that just compensation claims always rely on a

ms

19

second prong Agins analysis, and that Agins’ first prong is

irrelevant to such claims. Reahard, 968 F.2d at 1136.

In Reahard, landowners challenged a county land use

plan which limited development on their land. Jd. at 1133.

The landowners conceded that the plan was a valid exercise

of police power. Jd. at 1135. However, they claimed that

the county owed them just compensation because it had

interfered with the landowners’ reasonable investment-backed

expectations. Jd. The Court of Appeals reasoned in dicta

that just compensation claims assume that the challenged

regulation substantially advances a legitimate state interest.

Id. at 1136. Thus, the only relevant inquiry is the extent to

which the regulation deprived plaintiffs of economically

viable use of their property. Jd. The Court of Appeals

accordingly vacated the judgment of the District Court and

remanded the case for further analysis consistent with its

opinion. /d. at 1136.

The Court of Appeals’ dicta regarding just compensation

claims conflicts with this Court’s decision in First English

Evangelical Lutheran Church v. Los Angeles County,

482 U.S. 304 (1987). In First English, this Court held that

invalidation of a regulation is constitutionally insufficient

without monetary payment to compensate for loss of the

property’s use during the time in which the regulation was in

effect. Jd. at 321. Contrary to the reasoning of the Eleventh

Circuit in Reahard, under First English a just compensation

claim is available when a regulation takes property because

it fails to substantially advance a legitimate governmental

interest. Thus while a takings case may assume the validity

of the challenged regulation as in Lucas, that should not be

a necessary predicate.

20

CONCLUSION

Despite having suffered substantial damages as a result

of an unlawful ordinance, Del Oro Hills was denied the right

to establish a claim for an inverse condemnation taking.

Del Oro Hills should be given an opportunity to prove there

was a taking because the offending regulation failed to

substantially advance a legitimate governmental interest. In

proving a taking, of course, Del Oro Hills may rely on the

heightened level of judicial scrutiny of regulations not other-

wise available in mere due process claims. Additionally, Del

Oro Hills should have right to recover whatever takings

damages it can prove it suffered during the period of time in

which the offending regulation was in place.

The two-prong Agins test is a central pillar of takings

jurisprudence. Topple it, and much of the edifice of takings

law comes tumbling down; and with such a collapse the

fundamental individual right to own and reasonably use

property free from arbitrary and inequitable regulations will

be severely abridged. If such a dramatic reduction in the

constitutional protections for property rights is to occur, it

will have to come from the United States Supreme Court and

not the California Court of Appeal.

For the foregoing reasons amicus Pacific Legal

Foundation respectfully urges this Court to grant certiorari.

DATED: July, 1995.

Respectfully submitted,

* JAMES S. BURLING

*Counsel of Record

Pacific Legal Foundation

2151 River Plaza Drive, Suite 305

Sacramento, California 95833

Telephone: (916) 641-8888

Attorney for Amicus Curiae

Pacific Legal Foundation