California Eminent Domain Report

Last fall, we reported on the Ninth Circuit's decision in Guggenheim v. City of Goleta, a regulatory takings case that generated considerable interest.  The Ninth Circuit Court of Appeals held that the City of Goleta's rent control ordinance constituted a taking and ordered the City to pay just compensation to the owner of a mobile home park. 

The Court concluded that the ordinance crossed the line because it had the effect of transferring as much as 90 percent of the property's value from the owner to the mobile home park's tenants.  The holding was significant not only because the Court found that the ordinance qualified as a compensable taking, but also because the Court actually reached the merits of the issue.  Many (perhaps most) regulatory takings cases fail for procedural reasons, with the Court never even reaching the merits. 

For example, courts often hold that regulatory takings cases are not "ripe"; in other words, the owner has not demonstrated that all reasonable avenues for generating an economically viable use of the property have been exhausted before filing the lawsuit.  In other cases, courts find the regulatory takings claim to be "stale"; in other words, the owner did not file the lawsuit within the applicable statute of limitations. 

And, finally, in an ironic twist, some factual scenarios apparently warrant the conclusion that the case is both "not ripe" and "stale"; in other words, the owner has not yet exhausted all options, despite the fact that the conduct that might give rise to a claim happened years earlier, creating a statute of limitations problem -- meaning there never was a viable time to file the lawsuit.

Thus, when the Ninth Circuit Court of Appeals navigated its way through all of the procedural obstacles, reached the merits, and found that a taking had occurred, the Guggenheim opinion understandably generated some buzz. 

On March 12, the case took a new turn.  The Ninth Circuit issued an order granting an en banc hearing of the Guggenheim case.  This means that a large portion of the Ninth Circuit panel (11 judges) will hear the case.  Whether the larger panel will reach a different conclusion than the three judges who initially heard the case remains to be seen. 

In the meantime, the September 2009 Guggenheim opinion is no longer citable as legal precedent.  This could have a significant impact on currently pending regulatory takings cases.   And, depending on whether the Court orders additional briefing and a new oral argument, the new opinion may not be issued for a year or more.  We'll let you know what happens.