Private Property Rights and the ‘Takings Clause’

May 19, 2020

- By The MAR Legal Team

Most people have a general understanding that the government cannot take an individual’s property without paying compensation for the taking. But what happens when a taking is not a complete and total taking? What happens when the government only takes 91.5% of the value of the property? Massachusetts and federal courts seemed to be headed in different directions when it comes to private property rights. In Massachusetts, the courts ruled that leaving a property owner with land valued at 8.5% of its previous value does not constitute a taking. Meanwhile, the federal courts flung open the once locked doors of federal court just a bit to private property claims that used to require state court action.

The Takings Clause

The Fifth Amendment to the US Constitution contains what is referred to as the Takings Clause. The Clause provides, “nor shall private property be taken for public use without just compensation.” It further requires the payment of compensation whenever the government acquires private property for a public purpose. Courts at both the state and federal levels have struggled with applying the Takings Clause and inconsistent court holdings have made it difficult for property owners to know when a taking is really a taking.

Article 10 of the Massachusetts Declaration of Rights.

The Massachusetts Case:

In 1975 Janice Smyth’s parents purchased oceanfront property in Falmouth, Massachusetts. They hoped to one day build a retirement home on the lot. Although the lot was considered buildable in 1975, the town of Falmouth passed a “no disturbance zone” zoning bylaw amendment in 2008 that reduced the developable part of the lot to a small 115 square foot section. By this time Janice Smyth had inherited the lot from her parents and applied for the necessary variances to build a home on the lot. The town denied her application, which resulted in the assessed value of her lot dropping from $700,000 to just $60,000—a 91.5 percent drop in value.

Mrs. Smyth took her appeal to the Massachusetts trial court and argued that the 2008 bylaw change and the resulting decrease in the value of her property affected a taking. After trial, a jury found that the bylaw did result in a regulatory taking of Mrs. Smyth’s property, and awarded damages in the amount of $640,000.

The Town of Falmouth appealed the trial court’s decision to the Massachusetts Court of Appeals, which ruled in favor of the town, reversing the trial court’s judgment for Mrs. Smyth. The appellate court found that even though Mrs. Smyth’s lot was no longer buildable, it could still possibly be used for something like a “park or playground” and therefore the property still had value. In this way, the Massachusetts appellate court brought further confusion to the Takings Clause analysis in Massachusetts.

The Federal Case:

It is not very often that private property cases make their way to the US Supreme Court, but in 2019 the Court ruled on a case, Knick v township of Scott, Pennsylvania, that might just provide a glimmer of hope for property owners such as Mrs. Smyth.

The Knick case centers on a 2012 ordinance affecting private properties that contained cemeteries. The ordinance required that all cemeteries within the Township be kept open and accessible to the general public during daylight hours and no owner could unreasonably restrict access to the cemetery. Rose Mary Knick owns property in the Township of Scott and in 2013 a Township officer entered her property and identified certain stones as grave markers. Knick was then cited for violating the ordinance and filed a lawsuit to challenge the ordinance. Knick appealed the district court decision denying her claims to the United States Court of Appeals for the Third Circuit. The Third Circuit held that Knick’s Fifth Amendment claims were not proper because she had not sought and been denied just compensation using state procedures as required by previous Court rulings. The US Supreme Court ultimately found that a government violates the Takings Clause when it takes property without compensation, and specifically, that a property owner may bring a Fifth Amendment claim to federal court at that time, overruling the state litigation requirement previously set forth.

This is important for property owners because prior to Knick, a property owner was barred from the federal court unless he had exhausted all claims at the state level. Many also view the more removed federal court as potentially friendlier to private property rights claims than state courts.

Smyth begins her legal journey in Falmouth in 2016, three years before Knick sprung open the doors of the federal court to private property claims. Had Knick been decided three years earlier, Janice Smyth would have had the option to bring her claim in federal court where she may have encountered a different application of the Takings Clause test. At the close of 2019, The US Supreme Court declined to hear Smyth’s appeal so we will need to wait for another aggrieved property owner to take a claim to federal court to see whether or not federal courts are going to continue in a private property rights friendly direction.