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Amdt5.5.10 Enforcing the Right to Just Compensation

Fifth Amendment:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Ordinarily, the government takes property under a condemnation suit upon paying a money award, and no interest accrues.1 If, however, the government takes property before making payment, just compensation includes an increment which, to avoid use of the term “interest,” the Court has called “an amount sufficient to produce the full equivalent of that value paid contemporaneously with the taking.” 2 If the owner and the government enter into a contract which stipulates the purchase price for lands to be taken, with no provision for interest, the Fifth Amendment is inapplicable and the landowner cannot recover interest even though payment of the purchase price is delayed.3 Where property of a citizen has been mistakenly seized by the government and converted into money which is invested, the property owner is entitled to recover compensation that incorporates increases to the property value during the period of seizure.4

The legislature has discretion over the nature and character of the tribunal to determine compensation and may select a regular court, a special legislative court, a commission, or an administrative body.5 The Government brings proceedings to condemn land for the benefit of the United States in the federal district court for the district in which the land is located.6 The Fifth Amendment does not establish a right to a jury to estimate just compensation; a judge, commission, or other body may make such determinations.7 Federal courts may appoint a commission in condemnation actions to resolve the compensation issue.8 If a body other than a court is designated to determine just compensation, its decision must be subject to judicial review,9 although the legislature may limit the scope of review.10 When a state court’s judgment to the amount of compensation is questioned, the Court’s review is restricted. The Court has stated: “All that is essential is that in some appropriate way, before some properly constituted tribunal, inquiry shall be made as to the amount of compensation, and when this has been provided there is that due process of law which is required by the Federal Constitution.” 11 The Court has also recognized that “[T]here must be something more than an ordinary honest mistake of law in the proceedings for compensation before a party can make out that the State has deprived him of his property unconstitutionally.” 12 Unless, by its rulings of law, the state court prevented a complainant from obtaining substantially any compensation, the Court will not overturn the state court findings as to the amount of damages on appeal, even though, as a consequence of error therein, the property owner received less than he was entitled to.13

Following Penn Central, the Court grappled with the appropriate remedy for property owners impacted by land use regulations.14 Regulations that go “too far” in reducing the value of property or which do not substantially advance a legitimate governmental interest present constitutional issues. Courts may invalidate such regulations as denying due process, or they may require compensation, at least for the period in which the regulation was in effect. In First English Evangelical Lutheran Church v. County of Los Angeles, the Court held that when land use regulation constitutes a taking, compensation is due for the period of implementation prior to the holding.15 The Court recognized that, even though government may elect in such circumstances to discontinue regulation and thereby avoid compensation for a permanent property deprivation, “no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective.” 16 Outside the land-use context, however, the Court has recognized a limited number of situations where invalidation, rather than compensation, remains the appropriate takings remedy.17

The applicability of the ripeness doctrine to takings claims is an area the Court has developed extensively since Penn Central. In Williamson County Regional Planning Commission v. Hamilton Bank,18 the Court announced a two-part ripeness test for takings actions brought in federal court, although the Court subsequently overturned the second part of this test in Knick v. Township of Scott.19 The Williamson County two-part ripeness test provided, first, for an as-applied challenge, the property owner must obtain from the regulating agency a “final, definitive position” regarding how it will apply its regulation to the owner’s land20 and, second, when suing a state or municipality, the owner must exhaust any possibilities for obtaining compensation from the state or its courts before coming to federal court.21 Thus, in Williamson County, the Court found the claim unripe because the plaintiff had failed to seek a variance (first prong of the Williamson County test), and had not sought compensation from the state courts in question even though they recognized inverse condemnation claims (second prong of the Williamson County test).22 Similarly, in MacDonald, Sommer & Frates v. County of Yolo,23 the Court found a final decision lacking where the landowner was denied approval for one subdivision plan calling for intense development, but the possibility of approval for a scaled-down (though still economic) version remained. In a somewhat different context, the Court considered a taking challenge to a municipal rent control ordinance “premature” in the absence of evidence that a tenant hardship provision had been applied to reduce what would otherwise be considered a reasonable rent increase.24

Beginning with Lucas in 1992, however, the Court’s ripeness determinations have displayed an impatience with formalistic reliance on the Williamson County “final decision” rule, while nonetheless explicitly reaffirming it. In Palazzolo v. Rhode Island,25 for example, the Court did not require the landowner to apply for approval of a scaled-down development of his wetland, since the regulations at issue permitted no development of the wetland. The Court stated: “[O]nce it becomes clear that the agency lacks the discretion to permit any development, or the permissible uses of the property are known to a reasonable degree of certainty, a takings claim is likely to have ripened.” 26 Facial challenges dispense with the Williamson County “final decision” prerequisite, although unless claimants have pursued administrative remedies, they often lacks evidence that a statute has the requisite economic impact on his or her property.27

As noted above, the Supreme Court eliminated the second prong of the Williamson County test, which required litigants to exhaust state remedies before bringing a federal takings claim,28 because the “exhaustion requirement” had significant consequences for plaintiffs.29 In San Remo Hotel, L.P. v. City & County of San Francisco, the plaintiffs lost an inverse condemnation claim in state court after a federal court dismissed their earlier attempt to file in federal court, citing Williamson County's exhaustion requirement.30 When the litigants attempted to return to federal court, the court dismissed their claim, holding that the legal doctrine of issue preclusion prevented the court from relitigating the claim.31 Under common-law preclusion doctrines, which are “implemented by” the federal full faith and credit statute,32 federal courts are, in some circumstances, required to abide by state court decisions that have already resolved the issues presently before the federal court.33 In San Remo, the Supreme Court held that these preclusion doctrines barred the plaintiffs’ takings claim, declining to create any special exceptions in the context of the Takings Clause.34 Thus, as the Court later described this outcome, “[t]he adverse state court decision that . . . gave rise to a ripe federal takings claim simultaneously barred that claim.” 35

The Court overruled Williamson County's exhaustion requirement in Knick v. Township of Scott,36 holding that property owners have a “ Fifth Amendment right to full compensation” and a concomitant right to bring a federal suit at the time the government takes their property, “regardless of post-taking remedies that may be available to the property owner.” 37 The Court said its cases had long established that a right to compensation “arises at the time of the taking,” and that Williamson County's conclusion otherwise had rested on a misunderstanding of precedent.38 The Supreme Court concluded that Williamson County was wrongly decided and that stare decisis considerations did not preclude it from overruling the exhaustion aspects of that decision.39 In its 2021 decision, Pakdel v. City & County of San Francisco, the Court confirmed that property compensation need not exhaust avenues for compensation in state court prior to bringing a claim in federal court.40

Footnotes
1
Danforth v. United States, 308 U.S. 271, 284 (1939); Kirby Forest Industries v. United States, 467 U.S. 1 (1984) (no interest due in straight condemnation action for period between filing of notice of lis pendens and date of taking). back
2
United States v. Klamath Indians, 304 U.S. 119, 123 (1938); Jacobs v. United States, 290 U.S. 13, 17 (1933); Kirby Forest Industries, 467 U.S. 1 (substantial delay between valuation and payment necessitates procedure for modifying award to reflect value at time of payment). back
3
Albrecht v. United States, 329 U.S. 599 (1947). back
4
Henkels v. Sutherland, 271 U.S. 298 (1926); see also Phelps v. United States, 274 U.S. 341 (1927). back
5
United States v. Jones, 109 U.S. 513 (1883); Bragg v. Weaver, 251 U.S. 57 (1919). back
6
28 U.S.C. § 1403. Inverse condemnation actions (claims that the United States has taken property without compensation) are governed by the Tucker Act, 28 U.S.C. § 1491 (a)(1), which vests the Court of Federal Claims (formerly the Claims Court) with jurisdiction over claims against the United States “founded . . . upon the Constitution.” See E. Enters. v. Apfel, 524 U.S. 498, 520 (1998). Federal district courts may also hear inverse condemnation claims against the United States not in excess of $10,000 under the “Little Tucker Act.” 28 U.S.C. § 1346(a)(2). back
7
Bauman v. Ross, 167 U.S. 548 (1897). Even when a jury determines the amount of compensation, it is the rule, at least in federal court, that the trial judge instructs the jury on the criteria, which includes determining “all issues” other than the compensation amount, so that the judge decides those matters underlying the jury’s calculation. United States v. Reynolds, 397 U.S. 14 (1970). back
8
Fed. R. Civ. P. 71.1(h). These commissions have the same powers as a court-appointed master. back
9
Monongahela Navigation Co. v. United States, 148 U.S. 312, 327 (1893). back
10
Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685 (1897). back
11
Backus v. Fort St. Union Depot Co., 169 U.S. 557, 569 (1898). back
12
McGovern v. City of N.Y., 229 U.S. 363, 370–71 (1913). back
13
Id. at 371. See also Provo Bench Canal Co. v. Tanner, 239 U.S. 323 (1915); Appleby v. City of Buffalo, 221 U.S. 524 (1911). back
14
See, e.g., Agins v. City of Tiburon, 447 U.S. 255 (1980) (issue not reached because property owners challenging development density restrictions had not submitted a development plan); Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264, 293–97 (1981), and Hodel v. Indiana, 452 U.S. 314, 333–36 (1981) (rejecting facial taking challenges to federal strip mining law). back
15
482 U.S. 304 (1987). back
16
Id. at 321. back
17
E. Enters. v. Apfel, 524 U.S. 498 (1998) (statute imposing generalized monetary liability); Babbitt v. Youpee, 519 U.S. 234 (1997) (amended statutory requirement that small fractional interests in allotted Indian lands escheat to tribe, rather than pass on to heirs); Hodel v. Irving, 481 U.S. 704 (1987) (pre-amendment version of escheat statute). back
18
473 U.S. 172 (1985). back
19
139 S. Ct. 2162, 2179 (2019). back
20
Williamson Cty., 473 U.S. at 191. back
21
Id. at 195. back
22
Id. at 194, 196–97. back
23
477 U.S. 340 (1986). back
24
Pennell v. City of San Jose, 485 U.S. 1 (1988). back
25
533 U.S. 606 (2001). back
26
Id. at 620. See also Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725 (1997) (taking claim ripe despite plaintiff’s not having applied for sale of her transferrable development rights, because no discretion remains to agency and value of such rights is a simple issue of fact). back
27
See, e.g., Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264, 295–97 (1981) (facial challenge to surface mining law rejected); United States v. Riverside Bayview Homes, 474 U.S. 121, 127 (1985) (mere permit requirement does not itself take property); Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 493–502 (1987) (facial challenge to anti-subsidence mining law rejected). back
28
Williamson Cty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 195 (1985). back
29
Knick v. Twp. of Scott, 139 S. Ct. 2162, 2169 (2019). back
30
545 U.S. 323, 331–32 (2005). back
31
Id. at 334–35. back
32
28 U.S.C. § 1738 ( “[J]udicial proceedings . . . shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.” ). back
33
San Remo, 545 U.S. at 336. back
34
Id. at 338. back
35
Knick v. Twp. of Scott, 139 S. Ct. 2162, 2169 (2019). back
36
Id. at 2179. back
37
Id. at 2170, 2173. back
38
Id. at 2170, 2173–75. back
39
Id. at 2177. back
40
Pakdel v. City & Cnty. of S.F., No. 20-1212 (U.S. June 28, 2021). back