Justice for Landowners

Score one for private property owners! In City of Monterrey v. Del Monte Dunes (Case No. 97-1235, opinion issued May 24, 1999) the United States Supreme Court mandated that a property owner is entitled to a jury trial in a case seeking damages pursuant to 42 U.S.C. 1983 resulting from a regulatory taking without compensation. The decision affirmed a jury verdict awarding the land owner $1.45 million because of the city’s zoning denial of the owner’s request to develop private property.

The jury verdict had been affirmed by the 9th Circuit Court of Appeals. But, in an earlier decision, the 11th Circuit held that there was no right to jury trial on a takings claim brought under Section 1983. The Supreme Court decision put the issue to rest.

The importance of the decision must not be understated. The jury was allowed to determine both the liability of the city, ( i.e., whether there was a regulatory taking of the property and whether the regulation bore a reasonable relationship to the public interest which the city said it was pursuing) and the resulting damages. It is a generally held belief that a property owner will fare better before a jury on the issue of liability than he will before a judge sitting without a jury. Critical observers of the judiciary believe that many judges have become fixtures of the "system" with at least an unexpressed commitment to preserve and protect administrative decisions made within the "system". Most often, a jury is not as concerned about the "system" working as it is about fairness to individuals in their relationship with government.

So, within those who continue to fight to protect property rights and liberty, there has been widespread praise for the Supreme Court’s decision. Some have even proclaimed that the right of jury trial has been extended to condemnation actions. Not so. The decision is a landmark for property owners, but the Court takes pain to point out that it does not affect condemnation or even inverse condemnation cases. It appears quite clear that the decision applies only to 1983 damage actions where the property owner charges a regulatory taking and the government denies liability, no just compensation has been paid, and there is no forum for determining post-deprivation remedy.

To fully understand the impact of the decision, one must recognize the nature of Section 1983 actions, and the egregious nature of the underlying facts which led to the decision. Section 1983 is a federal statute which allows a party to seek damages when he has been deprived of a federal right. The "federal right" relevant to the Monterrey Dunes landowner was the fifth amendment provision that takings of land must be accompanied by just compensation.

The facts described by the Court show a pointed and obvious attempt by the city government to prevent development of the landowner’s property which consisted of a 37.6 acre ocean-front parcel in the city of Monterrey. The property was zoned for multifamily residential use, which would have allowed up to 1,000 residential units on the parcel. In 1981 the landowner proposed to develop 344 units. In 1982 the city planning commission denied the request but stated that a proposal for 264 units would be favorably viewed. The landowner modified its proposal in accordance with the city’s view, but in 1983 the planning commission again denied the request, stating that a proposal for 224 units would be favorably considered. The landowner again modified its proposal to 224 units only to have the request again denied. This time the landowner appealed to the city council which overruled the planning commission and remanded the case with instructions to proceed with a proposal for 190 units. The landowner again reduced the proposed units as instructed, but again the proposal was denied in 1984. The landowner again appealed to the city council which overruled the commission, approved the site plans with special conditions and issued an 18 month conditional use permit for the development.

Most of the following year the landowner spent in revising the proposal and taking the steps outlined in the special conditions imposed by the city. The final plan called for construction of residential units on only 5.1 of the 37.6 acres. 17.9 acres were to be devoted to public open space, 7.9 acres to open, landscaped areas, and 6.7 acres to public and private streets. The city’s architectural review committee and planning staff recommended approval, but the planning commission rejected this advice and again denied approval. On appeal, the city council also denied the request but declined to specify measures which the landowner could take to gain approval and refused to extend the time given on the conditional use permit. The denial was not based upon any failure of the landowner to comply with the city’s conditions -- all conditions had been met.

As the Court stated: "After five years, five formal decisions, and 19 different site plans...respondent Del Monte Dunes decided the city would not permit development of the property under any circumstances." So, the landowner filed suit in the U.S. District Court under 42 U.S.C. 1983, charging that "denial of the final development proposal was a violation of the Due Process and Equal Protection provisions of the Fourteenth Amendment and an uncompensated, and so unconstitutional, regulatory taking."

Initially, the District Court dismissed the claims, partially on the grounds that the landowner had not sought just compensation in a state court. The 9th Circuit reversed, pointing out that the state of California had not provided "a compensatory remedy for temporary regulatory takings" at the time the final denial was issued. So, the landowner was allowed to proceed in Federal District Court.

Then, over the city’s objection, the District Court submitted the landowners claim to a jury (minus the due process claim which the court itself decided in the city’s favor). The jury found for the landowner on its regulatory takings claim, and found damages in the amount of $1.45 million. The 9th Circuit affirmed, and the city secured review by writ of certiorari to the Supreme Court.

Eighteen years after the landowner first attempted to develop its property, in a manner consistent with the city’s zoning ordinance, the Supreme Court issued its decision affirming the favorable lower court decisions.

The Court ruled that Section 1983 itself does not afford the right to a jury trial. But, the 7th Amendment provides that "in Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." The Court pointed out that this protection extends not only to causes of action which were recognized at common law but to statutory causes of action which are based on legal concepts which at common law were decided by courts of law rather than of equity or admiralty. A cause of action "sounding in tort" involves such concept, because tort causes were determined by common law courts of law. (A "tort" is a non-contractual wrong committed against a person or his property for which a remedy in the form of an action for monetary damages is provided.) The Court further ruled that the 7th Amendment guarantee of a jury trial applies to a statutory cause of action under Section 1983 which is based upon a "tort" concept.

The Court pointed out that the landowner was "denied not only its property but also just compensation or even an adequate forum for seeking it." Thus, the claim filed under Section 1983 was based upon a concept of tortious, or wrongful, conduct on the part of the city, and was the type of action at law to which the 7th Amendment is applicable.

The city contended that no jury submission was required because there is no right to jury trial in condemnation cases. But, the Court distinguished the case from the condemnation concept, pointing out that in a condemnation proceeding the government announces its taking of the property, and then allows the landowner a forum for determining just compensation. The Court pointed out that in the instant case the government did not acknowledge the taking and did not provide a forum for fixing "just compensation," thus the landowner was forced to bring his own action to seek redress. The Court stated that the landowner "sought not just compensation per se but rather damages for unconstitutional denial of such compensation," and pointed out that lawsuits seeking monetary relief are appropriate for jury determination.

It is important for the landowner to note several limitations specifically related to application of this decision: (1) the decision is not applicable to condemnation cases, (2) the decision is not applicable to "an ordinary inverse condemnation suit," and (3) a federal court cannot entertain a takings claim under Section 1983 unless the landowner has been denied a post deprivation remedy (such as by the absence of a procedure wherein a state court can grant relief for regulatory takings).

The overriding importance of the decision, however, is that the Court specifically distinguished the Section 1983 action from "an ordinary inverse condemnation suit" and a condemnation action, stating that the 1983 action presents a scenario in which "the jury’s role in vindicating constitutional rights has long been recognized by the federal courts."