California Landmark Cases on Unconstitutional Taking of Private Property

To determine whether an unconstitutional taking has occurred, California courts are guided by decisions of the United States Supreme Court. (See, e.g., Del Oro Hills v. City of Oceanside (1995) 31 Cal.App.4th 1060, 1073-1075; Guinnane v. City and County of San Francisco (1987) 197 Cal.App.3d 862, 867-870.) "A claim that application of governmental regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue." (Williamson County Reg'l Planning Comm'n v. Hamilton Bank (1985) 473 U.S. 172, 186.) This is because until there has been a "final, definitive position" as to how the regulations will be applied to the land, a court cannot determine the extent of the economic impact, a factor that bears on the question whether a compensable taking has occurred. (Id. at p. 191.) The exhaustion requirement also affords the governmental entity the opportunity to rescind or modify the ordinance or regulation or to exempt the property from the allegedly invalid restriction once it has been judicially determined the proposed application of the regulation will constitute a compensable taking. (Hensler v. City of Glendale (1994) 8 Cal.4th 1, 13.) This requirement is jurisdictional and not a matter of judicial discretion. (Tahoe Vista Concerned Citizens v. County of Placer (2000) 81 Cal.App.4th 577, 589.) "While a landowner must give a land-use authority an opportunity to exercise its discretion, once 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." (Palazzolo v. Rhode Island (2001) 533 U.S. 606, 620.) The state and federal Constitutions guarantee real property owners "just compensation" when their land is taken for a public use. (Cal. Const., art. I, 19, subd. (a); U.S. Const., 5th Amend.; Lingle v. Chevron U.S.A. Inc. (2005) 544 U.S. 528, 537 161 L.Ed.2d 876, 125 S.Ct. 2074 (Lingle); Kavanau v. Santa Monica Rent Control Bd. (1997) 16 Cal.4th 761, 773 66 Cal. Rptr. 2d 672, 941 P.2d 851; Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 259 88 Cal. Rptr. 3d 186 (Shaw).) This constitutional guarantee is "'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,' ." (Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104, 123 57 L. Ed. 2d 631, 98 S. Ct. 2646 (Penn Central).) "An 'inverse condemnation' action may be pursued when the state or other public entity improperly has taken private property for public use without following the requisite condemnation procedures or takes other action that effectively circumvents the constitutional requirement that just compensation be paid before private property is taken for public use." (Customer Co. v. City of Sacramento (1995) 10 Cal.4th 368, 377 41 Cal. Rptr. 2d 658, 895 P.2d 900, fn. omitted.) "'The paradigmatic taking requiring just compensation is a direct government appropriation or physical invasion of private property'--a categorical taking." (Shaw, supra, 170 Cal.App.4th at p. 260.) "When property is damaged, or a physical invasion has taken place, an inverse condemnation action may be brought immediately because an irrevocable taking has already occurred." (Hensler, supra, 8 Cal.4th at p. 13; see Hurwitz v. City of Orange (2004) 122 Cal.App.4th 835, 847-848 19 Cal. Rptr. 3d 213.) Additionally, "'government regulation of private property may, in some instances, be so onerous that its effect is tantamount to a direct appropriation or ouster--and ... such "regulatory takings" may be compensable under the Fifth Amendment.' The United States Supreme Court has recognized 'that a regulation of property that "goes too far" may effect a taking of that property, though its title remains in private hands. In such a case, the property owner may bring an inverse condemnation action, and if it prevails, the regulatory agency must either withdraw the regulation or pay just compensation. Even if the agency withdraws the regulation, the property owner may have a right to just compensation for the temporary taking while the regulation was in effect. '" (Shaw, supra, 170 Cal.App.4th at p. 260.) "Two categories of regulatory action will generally be deemed per se compensable takings. First, where government requires an owner to suffer a 'permanent physical invasion' of his property for such things as cable lines, it must provide just compensation. Second, where the government action does not result in any physical invasion of the property, the action will still be considered a taking if the regulation deprives the owner of 'all economically beneficial or productive use of the land.' 'The government must pay just compensation for such "total regulatory takings," except to the extent that "background principles of nuisance and property law" independently restrict the owner's intended use of the property.' " (Shaw, supra, 170 Cal.App.4th at pp. 260-261.) Takings challenges outside the above per se compensable categories (those that do not involve a physical invasion or that leave the property owner with some economically beneficial use of the property), may nonetheless go "too far" and be compensable when the regulation substantially interferes with the ability of a property owner to make economically viable use of, derive income from, or satisfy reasonable, investment-backed profit expectations with respect to the property. (Lingle, supra, 544 U.S. at pp. 538-539, citing Penn Central, supra, 438 U.S. at p. 124.) And a condition imposed on a property owner for land use approval will go "'too far'" when there is no "essential nexus" between the permit condition and a legitimate state interest (Nollan v. California Coastal Comm'n (1987) 483 U.S. 825, 853, 837 97 L. Ed. 2d 677, 107 S. Ct. 3141 (Nollan)), or the condition is not "roughly proportional" to the impact it seeks to address (see Dolan v. City of Tigard (1994) 512 U.S. 374, 385 129 L. Ed. 2d 304, 114 S. Ct. 2309 (Dolan)). Under the Nollan/Dolan test, a public entity may require an uncompensated exaction, such as an easement, as a condition of a development permit only where there is "'rough proportionality'" between the condition and the burden the development places on a public interest. (Dolan, supra, 512 U.S. at p. 391.) "A 'temporary' taking of real property by the government is compensable on the same constitutional basis as a permanent taking. For purposes of the just compensation provisions of the Fifth Amendment, there is no difference between a temporary taking that denies a landowner all use of his property, and a permanent taking. Temporary physical invasions should be assessed according to a case specific factual inquiry. Similarly, whether a temporary regulation constitutes a taking involves an ad hoc consideration of relevant circumstances. The duration or delay resulting from governmental regulations is one of the factors a court must consider in determining the severity of burden of a regulation. Also relevant is the degree to which the invasion is intended or a foreseeable result of authorized governmental action. So too are the character of the property at issue and the owner's reasonable investment-backed expectations. The severity of the interference is also considered." (11 Miller & Starr, Cal. Real Estate (3d ed. 2014) 30:30, pp. 30-146 to 30-147, fns. omitted (rel. 11/2014).) A landowner claiming that application of government regulations effects a taking of a property interest cannot sue directly on an inverse condemnation cause of action unless administrative and judicial remedies have been exhausted. (Hensler, supra, 8 Cal.4th at pp. 13-14.) This requirement is jurisdictional and not a matter of judicial discretion. (Tahoe Vista Concerned Citizens v. County of Placer (2000) 81 Cal.App.4th 577, 589 96 Cal. Rptr. 2d 880.) "A claim that the application of government regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue." (Williamson Planning Comm'n v. Hamilton Bank (1985) 473 U.S. 172, 186 87 L. Ed. 2d 126, 105 S. Ct. 3108.) This is because until there has been a "final, definitive position" as to how the regulations will be applied to the land, a court cannot determine the extent of the economic impact, a factor that bears on the question whether a compensable taking has occurred. (Id. at p. 191.) Even if the administrative decision is final, the exhaustion requirement also affords the governmental entity the opportunity to rescind or modify the ordinance or regulation or to exempt the property from the allegedly invalid restriction once it has been judicially determined the proposed application of the regulation will constitute a compensable taking. (Hensler, supra, 8 Cal.4th at p. 13.) As Hensler explains: "If the alleged taking is a 'regulatory taking,' i.e., one that results from the application of zoning laws or regulations which limit development of real property, ... the owner must afford the state the opportunity to rescind the ordinance or regulation or to exempt the property from the allegedly invalid development restriction once it has been judicially determined that the proposed application of the ordinance to the property will constitute a compensable taking. The owner may do so, where appropriate, by a facial challenge to the ordinance, but in most cases must seek a variance if that relief is available and then exhaust other administrative and judicial remedies. The facial challenge may be through an action for declaratory relief . The latter, an 'as applied' challenge to the development restrictions imposed by the administrative agency, may be properly made in a petition for writ of 'administrative' mandamus to review the final administrative decision ( Code Civ. Proc., 1094.5) and that action may be joined with one for inverse condemnation. A declaratory relief action also may be joined with an action in inverse condemnation. Damages for the 'taking' may be sought in an administrative mandamus action (Code Civ. Proc., 1095), or, if the plaintiff seeks a jury trial, in the joined inverse condemnation action. The owner 'may not, however, elect to sue in inverse condemnation and thereby transmute an excessive use of the police power into a lawful taking for which compensation in eminent domain must be paid.' Compensation must be paid for a permanent taking only if there has been a final judicial determination that application of the ordinance or regulation to the property is statutorily permissible and constitutes a compensable taking. Even then the state or local entity has the option of rescinding its action in order to avoid paying compensation for a permanent taking." (Hensler, supra, 8 Cal.4th at pp. 13-14.) As the Court of Appeal explained in Patrick Media Group, Inc. v. California Coastal Com. (1992) 9 Cal.App.4th 592, 608 11 Cal. Rptr. 2d 824 (Patrick Media), "the essential underpinning of the challenge is the invalidity of the administrative action. The gravamen of a challenge based upon inverse condemnation is that the administrative action was invalid insofar as it did not provide for payment of compensation. " (See Mola Development Corp. v. City of Seal Beach (1997) 57 Cal.App.4th 405, 414 67 Cal. Rptr. 2d 103 (Mola) "Hensler made this point clear. The court required a 'prepayment judicial determination' that a regulation is excessive and constitutes a taking in order to give a city the opportunity to change its mind before being compelled to pay damages.".)