Supreme Court Balks on Major Property Rights Cases

Date: October 31, 2017

With Justice Gorsuch now on the Supreme Court bench, we were rather optimistic that the Court might pick-up where it left-off at the end of the 2016-17 term by agreeing to hear arguments in another major property rights case this year. But disappointingly, the Supreme Court denied certiorari in three important cases this week.

Compensation for Business Losses?

We argued in Jarreau v. South Lafourche Levee District that the Court should clarify whether businesses are entitled just compensation for demonstrable business losses during eminent domain proceeding. We argued that courts violate the Just Compensation Clause in withholding compensation for concrete businesses losses. In denying certiorari the Supreme Court leaves the question open for another day; however, in the case at hand the small business landowner was severely undercompensated. Far from receiving the full and perfect equivalent of what was taken in eminent domain, Mr. Jarreau was left with only a fragment of the value of his property.

Extortionate Permit Conditions?

In 616 Croft Ave., LLC v. City of West Hollywood, we argued that the Supreme Court should grant certiorari to make clear that the government is prohibited from imposing extortionate conditions requiring dedication of private property as a requirement for obtaining a building permit. While the Court has repeatedly held that these sorts of conditions must be reviewed under a heightened form of scrutiny, many courts hold that there is an exception for conditions imposed by legislative proscription. In these jurisdictions extortionate conditions will be struck-down only if imposed on an ad hoc basis (i.e., at the discretion of zoning officials), but will invariably be upheld if the government maintains that it is required by statute or ordinance to impose the same extortionate conditions. Meanwhile, other courts apply the same rigorous standard of review in striking down extortionate conditions—whether imposed by at the discretion of zoning officials or not. And the rift will continue unless and until the Supreme Court intervenes.

Locked Out of Federal Court?

A third vexing problem for small business landowners is that they are almost invariably relegated to state courts when invoking their Fifth Amendment property rights. Controversially, in 1986, the Supreme Court held property owners may not seek just compensation for the taking of their property in federal court until they have first sought compensation in state court. But the great irony is that one is necessarily barred from re-litigating the issue in federal court—which means that takings claimants are effectively locked out of federal court. And as we argued in our friend of the court brief in Wayside Church v. Van Buren County, that result is highly inappropriate because there should be a federal forum to vindicate all federally guaranteed rights. Of course, we will continue pressing the Supreme Court to revisit the issue and to open the federal court house doors for private property owners because access to federal courts is important to ensure consistency and basic fairness in takings cases.

We can only speculate as to why the Court was uninterested in hearing arguments in these cases. One potential explanation may be that the Court is somewhat squeamish about tackling another difficult property rights question in the immediate wake of Murr v. Wisconsin. But, this only underscores the fact that we have our work cut-out for us. In any event, this promises to be a blockbuster Supreme Court term—with or without a major property rights case in the mix. As outlined previously, NFIB Small Business Legal Center has weighed-in on a handful of vital cases this term.

Related Content: Legal - Blog | Legal | Property Rights

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