Supreme Court Ruling Strengthens Just Compensation

The following article originally appeared in the August 1987 issue of Signs of the Times magazine.

The Fifth Amendment guarantees that private property shall not “be taken for public use, without just compensation.” Those words have caused much heated debate and litigation ever since they were written. In a 6-3 decision on June 9, 1987 the Supreme Court defined those words further. The majority opinion, penned by Chief Justice William H. Rehnquist, read “temporary takings which . . . deny a landowner all use of his property, are not different in kind from permanent takings, for which the Constitution clearly requires compensation.” Before this landmark decision, property owners could not sue the government for damages due to a temporary taking even if the taking was later ruled non regulatory. The most they could get was a reversal of the decision.

The case that caused all this controversy, First Evangelical Lutheran Church of Glendale v. County of Los Angeles California, dates back to 1978.

The ruling is being hailed by real-estate developers and other landowners. Gus Bauman, counsel to the National Assn. of Home Builders, said, “It’s very significant. They have established the rule that land-use regulation can be called a taking, requiring just compensation.” But even he is cautious. The court was very clear in emphasizing that its ruling applies only to cases in which all use of land is blocked and not to he quite different questions that would arise in the case of normal building permits, changes in zoning ordinances, variances and the like.” The court has not specified whether regulating use of property short of total deprivation constitutes a taking or how long the regulation must last in order to amount to a taking. Bauman added, “Courts must still determine in each case whether the property interest is so large and whether enough time has gone by to raise the taking issue.”

Therein lies the problem dissenters have with the decision. In a strongly worded minority opinion, Justice John Paul Stevens, who was joined by justices Harry A. Blackmun and Sandra Day O’Connor, said the decision will set off a “litigation explosion. Most of it, I believe, will be counterproductive. The policy implications of today’s decision are obvious and, I fear, far reaching. Cautious local officials and land-use planners may avoid taking any action that might later be challenged and thus give rise to a damage action. Much important regulation will never be enacted, even perhaps in the health and safety area. The loose cannon the court fires today is not only unattached to the Constitution, but it also takes aim at a long line of precedents in the regulatory takings area.”

Land-use planners share these fears. Alan Beals, executive director of the National League of Cities, decried the Court’s verdict: the “chilling prospect of a large retroactive damage claim after costly and drawn-out legal proceedings will surely intimidate local governments.” Lee Ruck, general counsel of the National Assn. of Counties, was also worried. He feared “This will upset the entire balance of land-use control developed over the last 75 years and will expose 39,000 different public agencies to money damage actions.” He was also concerned that communities and environmentalists will lose their voices: “An outcry of community concern is now less likely to sway a member of a board of supervisors or a city-planning committee faced with a high-priced lawyer in a three-piece suit who is threatening money damages.”

Here’s the background. In 1957, the church in question purchased a tract of land on which it operated Lutherglen, a campground, retreat center and recreational area for handicapped children. The land was located in a canyon next to a creek and was a natural drainage channel for a watershed area, the Los Angeles National Forest. In 1977, a forest fire engulfed the hills upstream from Lutherglen’s buildings, and destroyed 3869 acres of the watershed area, which created a serious flood hazard. In 1978, a flood destroyed the camp’s buildings.

After the flood, the County of Los Angeles adopted an interim ordinance, effective immediately for the preservation of public health and safety, which provided that no person shall construct, reconstruct, place or enlarge any building or structure, any portion of which is or will be located within the outer boundary lines of the Inter-Flood Protection area at the canyon where Lutherglen had been located.

Approximately a month after the county’s adoption of the ordinance, the church filed suit in the Superior Court of the State of California, and alleged two claims: 1) That the defendants, the County and the County Flood Control District, were liable under California Government Code, Section 835 (This section establishes conditions under which a public entity may be liable for injury caused by a dangerous condition of its property.) for damages based upon dangerous conditions known and maintained on their upstream properties which contributed to the flooding of Lutherglen, and, as part of this claim, also alleged the interim ordinance denied the church all use of Lutherglen. The church sought damages for such loss of use and 2) The church, in its second claim, sought to recover damages from the Flood District in inverse condemnation and in tort for engaging in cloud seeding during the storm that flooded Lutherglen.

Both a trial court, and on appeal, the California Court of Appeals, dismissed the entire complaint on the basis of Agins v. Tiburon. In this case, the California Supreme Court decided a landowner may not maintain an inverse condemnation suit based upon a regulatory taking. The court judged that maintenance of such a suit would allow a landowner to force the legislature to exercise its power of eminent domain. Because Lutherglen alleged a regulatory taking and only sought damages, the allegation that the ordinance denied all use of Lutherglen was irrelevant in light of Agins. It refused to re-evaluate the Agins case, because the U.S. Supreme Court had not yet ruled “whether a state may constitutionally limit the remedy for a taking to non-monetary relief.” The church took its case to the Supreme Court, which, as explained above, decided monetary compensation could be sought in a temporary taking, if that taking was total. The Court, however, sent the Lutherglen case back to the California courts for a decision on whether or not there had been a total taking in that particular case.

The pressing question was what effect this new decision would have on the sign industry. Both Eric Rubin, counsel to the Outdoor Adv. Assn. of America (OAAA) and Robert Aran, counsel to the California Electric Sign Assn. (CESA), agreed that the ruling would have impact, albeit unknown. Aran commented, “However, I suspect that, where displays are prohibited, a temporary monetary compensation may be awardable. Where displays are made non-conforming, it will be difficult to argue that all use has been even temporarily denied. The effect of amortization as compensation has not been reviewed in this case, but may now in light of that decision be a worthy reviewable project.”


Wade Swormstedt

Wade Swormstedt

Wade is Executive Director of the Foundation for the Advancement of the Sign Industry. Formerly he was Editor and Publisher of Signs of the Times magazine.

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Posted in Amoritzation, Associations, Outdoor Advertising, Sign Codes, Supreme Court.