The Supreme Court's Property Rights Hat Trick
The Supreme Court's Property Rights Hat Trick
Private property rights are back in fashion in the halls of the Supreme Court. While Takings Clause cases have traditionally been one of the most ideologically divisive issues on the Court for decades, they appear to be striking out in a new direction, with three consecutive unanimous decision in favor of private property rights over state claims of sovereign immunity, or “compelling governmental Interests” in the last year.
Property rights are the bedrock of individual liberty. Where strong property rights don’t exist, neither does freedom.
Following the Court infamous 2005 case, Kelo v. City of New London, one of the most controversial rulings in its history—in which the Court held that economic development was a “public use” under the Fifth Amendment to the U.S. Constitution, many people had largely given up all hope that this is an issue that could ever be reformed by the high court. But the Court’s decisions in last term’s Tyler v. Hennepin County and this term’s Sheetz v. County of El Dorado and Devillier v. Texas auger well for the future of private property rights.
Tyler v. Hennepin County
Last May, the Supreme Court issued a unanimous decision in Tyler v. Hennepin County that addressed the issue of "home equity theft," a legal regime under which local governments can seize the entire value of a property in order to pay off a much smaller delinquent property tax debt. Geraldine Tyler, the plaintiff in the case, is a 94-year-old widow whose home, valued at $96,000, and was seized by Hennepin County after she was unable to pay off $15,000 in property taxes, penalties, interest, and fees. The County only got $40,000 at auction for the home, less than half its actual value. But what’s more the County then kept the entire $40,000 for itself, as Minnesota law allows.
In Tyler, the Supreme Court unanimously ruled that such practices qualify as takings requiring the payment of "just compensation" under the Takings Clause of the Fifth Amendment.
No person shall be deprived of life, liberty or property without due process, nor shall private property be taken for public use without just compensation.
Importantly, it also concluded that state law is not the sole source of the definition of property rights under the Takings Clause, and therefore state governments cannot seize private property without compensation simply by redefining it as the state's property.
While the Supreme Court decision left some notable issues unresolved, it nonetheless sets a significant precedent. Most obviously, the jurisdictions that currently authorize home equity theft—some twelve states and the District of Columbia—will no longer be allowed to do so. In addition, the holding that states cannot just redefine property at will has important implications for other property rights issues. It makes it harder for states to avoid all manner of takings liability.
In the majority opinion, Chief Justice John Roberts would provide one of the most concise descriptions of just how deeply rooted private property rights are in our laws and our history.
The Takings Clause does not itself define property. For that, the Court draws on "existing rules or understandings" about property rights. Phillips v. Washington Legal Foundation established State law is one important source…. But state law cannot be the only source. Otherwise, a State could "sidestep the Takings Clause by disavowing traditional property interests" in assets it wishes to appropriate. ("[T]he Takings Clause would be a dead letter if a state could simply exclude from its definition of property any interest that the state wished to take."). So we also look to "traditional property law principles," plus historical practice and this Court's precedents….[1]
The principle that a government may not take more from a taxpayer than she owes can trace its origins at least as far back as Runnymeade in 1215, where King John recognized in Magna Carta that when his sheriff or bailiff came to collect any debts owed him from a dead man, they could remove property "until the debt which is evident shall be fully paid to us; and the residue shall be left to the executors to fulfil the will of the deceased….." That doctrine became rooted in English law……
This principle made its way across the Atlantic. In collecting taxes, the new Government of the United States could seize and sell only "so much of [a] tract of land . . . as may be necessary to satisfy the taxes due thereon.[2]
Given the high value the Founders placed on property rights, it would be strange—to say the least—if these constitutional rights were left entirely at the mercy of state governments to redefine as they please, because state law protects them and plays a key role in defining their scope.
This was a crucial victory, since applying Minnesota’s arguments about the nature of property rights to other constitutionally protected individual rights would equally justify allowing states to redefine the scope of many other constitutional rights. For example, rights to speech and bodily autonomy could similarly be left to the discretion of the states on the theory that state law historically defined the scope of protection against assault and battery, and the extent to which speech could be restricted by laws against libel, slander, sedition, and blasphemy.
Sheetz v. County of El Dorado
“Your money or your life!” The armed bandit’s classic demand offers no good options—handing over your wallet in this circumstance would never be a voluntary act, and laws treat both the threat and the theft as criminal acts.
But what if the bandit wears an Uncle Sam mask? What if the government itself makes demands beyond its authority? This is the basis of the “unconstitutional conditions” doctrine, which enforces limits on the government’s ability to demand that private property owners hand over land or money.
It is precisely this unconstitutional conditions doctrine upon which this case would turn.
In Sheetz, the main issue would be whether there is a "legislative exception" to takings liability in at least some situations where the Fifth Amendment otherwise requires the government to pay "just compensation."
When George Sheetz, a contractor and consultant in Northern California bought a tract of land to build a small manufactured home for him and his wife to retire in and raise their grandson, the permit fees he was charged were so exorbitant, he made a federal case out of it.
Once his land was ready and all George needed was a county building permit, he was stunned when told he could have his permit, but only if he paid a so-called traffic impact fee of more than $23,000.
The County claimed it was bound by law to charge the fee for roadwork his project might cause, although it provided no evidence tying any future roadwork to any public cost or impact imposed by George’s project.
The government’s fee was nothing more than an exorbitant ransom to pay for permission to build a small, manufactured home. It unfairly imposed costs that had nothing to do with his project.
Supreme Court precedent recognizes that, while local governments can charge fees to mitigate for actual public impacts caused by a private project, demanding property in an amount that goes above and beyond that mitigation standard is a taking. This is true whether imposed by bureaucrats or lawmakers, but until George brought his case, the Supreme Court had yet to say so.
The Supreme Court unanimously ruled in Sheetz’s favor.
“[T]here is no basis for affording property rights less protection in the hands of legislators than administrators”
Justice Amy Coney Barrett wrote in the decision.
Though this outcome had been clear since the Court heard oral arguments in this case, when Justices Neil Gorsuch & Elena Kagan would indicate that that there was “radical agreement” about the lack of a “legislative exception” to the takings clause.
In her majority opinion, Justice Amy Coney Barrett would provide an exceptionally concise and well-crafted description of the Court’s Takings Clause jurisprudence.
The Takings Clause's right to just compensation coexists with the States' police power to engage in land-use planning. (Though at times the two seem more like in-laws than soulmates.) [Emphasis added] While States have substantial authority to regulate land use, see Village of Euclid v. Amber Realty Co., 272 U. S. 365 (1926), the right to compensation is triggered if they "physically appropriat[e]" property or otherwise interfere with the owner's right to exclude others from it, Cedar Point Nursery v. Hassid, 594 U. S. 139, 149–152 (2021).That sort of intrusion on property rights is a per se taking. Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, 426 (1982). Different rules apply to State laws that merely restrict how land is used. A use restriction that is "reasonably necessary to the effectuation of a substantial government purpose" is not a taking unless it saps too much of the property's value or frustrates the owner's investment-backed expectations. Penn Central Transp. Co. v. New York City, 438 U. S. 104, 123, 127 (1978); see also Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1016 (1992) ("[T]he Fifth Amendment is violated when land-use regulation does not substantially advance legitimate state interests or denies an owner economically viable use of his land"
Devillier v. Texas
The dispute here arose after the State of Texas took action to use portions of I–10 as a flood evacuation route, installing a roughly 3 foot-tall barrier along the highway median to act as a dam. When subsequent hurricanes and storms brought heavy rainfall, the median barrier performed as intended. But it also flooded petitioners’ land, causing significant damage to their property. Devillier filed suit in Texas state court. He alleged that by building the median barrier and using his property to store storm water, Texas had effected a taking of his property for which the State must pay just compensation. Texas removed the cases to federal court.
The operative complaint includes inverse-condemnation claims under both the Texas Constitution and the Takings Clause of the Fifth Amendment.
Inverse condemnation is a cause of action against a governmental defendant to recover the value of property which has been taken in fact by the governmental defendant.[3]
In this case, Texas tried to avoid its takings clause liability by employing a rather crafty Catch-22. Devillier initially sought just compensation in a Texas State Court under a state cause of action. Texas preempted their ability to bring this case in a state court, by removing it to federal court.
Texas would then argue that Devillier had no standing to seek just compensation in a federal court because Congress has not provided a federal cause of action. Unbelievably, when this case went before the Supreme Court, Texas’ argument was ‘If their case had any merit they should have brought it in a State Court under a state cause of action.’ Which is precisely what they did.
Had Texas prevailed, it would have made it possible for any state to avoid takings liability by removing a case to federal court then arguing there is no federal cause of action that allows them to seek just compensation.
But perhaps the most notable aspect of Devillier wasn’t the opinion itself, but Justice Thomas’ incredibly clean and concise explanation of how constitutional rights can be litigated in federal court.
Constitutional rights do not typically come with a built-in cause of action to allow for private enforcement in courts. See Egbert v. Boule, 596 U. S. 482, 490–491 (2022). Instead, constitutional rights are generally invoked defensively in cases arising under other sources of law, or asserted offensively pursuant to an independent cause of action designed for that purpose, see, e.g., 42 U. S. C. §1983.
So let’s give three cheers for property rights and for the Supreme Court’s newfound interest in upholding this most crucial of all civil liberties.
Subscribe to the Legale§e Newsletter You will get notifications for all new content, whether it’s articles, podcasts or videos!
Visit the Legale§e Podcast homepage to learn more about the show, get updates, contact me, buy my book, find links to my social media & more!
Follow
Support
BUY MY NEW BOOK
Constitutional Sleight Of Hand: An explicit history of implied powers Now Available on Amazon
[1] Tyler v. Hennepin Cnty., Minn., 143 S. Ct. 1369, 1375 (2023)
[2] Tyler v. Hennepin Cnty., Minn., 143 S. Ct. 1369, 1376 (2023)
[3] Devillier v. Texas, No. 22-913, 5 (U.S. Apr. 16, 2024)