Inverse condemnation
Encyclopedia
Inverse condemnation is a term used in the law
to describe a situation in which the government takes private property but fails to pay the compensation required by the 5th Amendment of Constitution. In some states the term also includes damaging of property as well as taking it. In order to be compensated, the owner must then sue the government. In such cases the owner is the plaintiff and that is why the action is called inverse the order of parties is reversed, as compared to the usual procedure in direct condemnation where the government is the plaintiff who sues a defendant-owner to take his or her property.
The taking can be physical (e.g., land seizure, flooding, retention of possession after a lease
to the government expires, deprivation of access, removal of ground support
) or it can be a regulatory taking
(when regulations are so onerous that they make the regulated property unusable by its owner for any reasonable or economically viable purpose). The latter is the most controversial form of inverse condemnation. It is considered to occur when the regulation of the property's use is so severe that it goes "too far," as Justice Holmes put it in Pennsylvania Coal Co. v. Mahon
, 260 U.S. 393 (1922), and deprives the owner of the property's value, utility or marketability, denying him or her the benefits of property ownership thus accomplishing a constitutionally forbidden de facto taking without compensation.
Unfortunately, the U.S. Supreme Court has not elaborated on what "too far" is, and the doctrinal basis for its jurisprudence has been widely criticized. But it has articulated three situations in which inverse condemnation occurs. These are (a) physical seizure or occupation, (b) the reduction of the regulated property's utility or value to such an extent that it is no longer capable of economically viable use, and (c) where as a precondition to the issuance of a permit, the government demands that the regulated owner convey property to the government even though there is no rational nexus between the owner's activity's impact on public resources, and the owner's proposed regulated use, or where the extent of the exaction is not proportional to the effect of the owner's activities (Nollan v. California Coastal Commission
and Dolan v. City of Tigard
).
Apart from these three situations known as per se regulatory takings, the decision whether or not a taking has occurred is made by judicial consideration of three factors: (a) the nature of the government regulation, (b) the economic impact of the regulation on the subject property, and (c) the extent to which the regulation interferes with the owner's reasonable, investment-backed expectations. This is known as the three-factor Penn Central test (after Penn Central Transportation Co. v. City of New York). The Penn Central decision has been severely criticized by commentators on both sides of the "taking issue" controversy, because its "three-factor" approach is so vague as to make it virtually impossible for lawyers to tell in advance of filing a lawsuit what facts will be deemed decisive by the court, and how to apply the three factors which are (a) the character of the government action, (b) the economic impact on the owner, and (c) the extent of the regulatory interference with the owners reasonable investment-backed expectations. The problem is that the U.S. Supreme court has failed to articulate the elements of a cause of action in regulatory taking cases, and has offered only those "factors," without indicating hoe to determine whether they have been established.
Railroads and other public utilities which are granted the power of condemnation (or eminent domain) by state statute, can be liable for taking or where appropriate, damaging of private property when they act in the performance of their regulated activities.
An inverse taking need not be a taking of land or rights in land (such as easement
s). It can be a taking of personal property
(e.g. supplies for the army in wartime), intellectual property
(such as patent
s and copyright
s), as well as contract
s.
A typical inverse condemnation action is bifurcated. First, there is a trial to determine liability, and if the court determines that a taking has occurred, there is a second (typically jury) trial to determine compensation. Some states (i.e., New York, Connecticut and Rhode Island) do not provide jury trials in such cases. The measure of compensation is the same as in direct condemnation actions in which the government concedes that a taking has occurred, and the sole issue is the amount of compensation.
By statute, many states also provide for recovery of attorneys' and appraisers' fees in successful inverse condemnation actions.
Gideon Kanner, Hunting the Snark, Not the Quark: Has the U.S. Supreme Court Been Competent in Its effort to Formulate Coherent Regulatory Takings Law? 30 Urban Lawyer 307 (Spring 1998).
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
to describe a situation in which the government takes private property but fails to pay the compensation required by the 5th Amendment of Constitution. In some states the term also includes damaging of property as well as taking it. In order to be compensated, the owner must then sue the government. In such cases the owner is the plaintiff and that is why the action is called inverse the order of parties is reversed, as compared to the usual procedure in direct condemnation where the government is the plaintiff who sues a defendant-owner to take his or her property.
The taking can be physical (e.g., land seizure, flooding, retention of possession after a lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
to the government expires, deprivation of access, removal of ground support
Lateral and subjacent support
Lateral and subjacent support, in the law of property, describes the right a landowner has to have that land physically supported in its natural state by both adjoining land and underground structures. If a neighbor's excavation or excessive extraction of underground liquid deposits causes...
) or it can be a regulatory taking
Regulatory taking
Regulatory taking refers to a situation in which a government regulates a property to such a degree that the regulation effectively amounts to an exercise of the government's eminent domain power without actually divesting the property's owner of title to the property.-United States law:In common...
(when regulations are so onerous that they make the regulated property unusable by its owner for any reasonable or economically viable purpose). The latter is the most controversial form of inverse condemnation. It is considered to occur when the regulation of the property's use is so severe that it goes "too far," as Justice Holmes put it in Pennsylvania Coal Co. v. Mahon
Pennsylvania Coal Co. v. Mahon
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 , was a case in which the Supreme Court of the United States held that whether a regulatory act constitutes a taking requiring compensation depends on the extent of diminution in the value of the property....
, 260 U.S. 393 (1922), and deprives the owner of the property's value, utility or marketability, denying him or her the benefits of property ownership thus accomplishing a constitutionally forbidden de facto taking without compensation.
Unfortunately, the U.S. Supreme Court has not elaborated on what "too far" is, and the doctrinal basis for its jurisprudence has been widely criticized. But it has articulated three situations in which inverse condemnation occurs. These are (a) physical seizure or occupation, (b) the reduction of the regulated property's utility or value to such an extent that it is no longer capable of economically viable use, and (c) where as a precondition to the issuance of a permit, the government demands that the regulated owner convey property to the government even though there is no rational nexus between the owner's activity's impact on public resources, and the owner's proposed regulated use, or where the extent of the exaction is not proportional to the effect of the owner's activities (Nollan v. California Coastal Commission
Nollan v. California Coastal Commission
In Nollan v. California Coastal Commission, 483 U.S. 825 , the United States Supreme Court reviewed a regulation under which the California Coastal Commission required that an offer to dedicate a lateral public easement along the Nollans' beachfront lot be recorded on the chain of title to the...
and Dolan v. City of Tigard
Dolan v. City of Tigard
Dolan v. City of Tigard, , more commonly Dolan v. Tigard, was a United States Supreme Court case argued before the Court in 1994. It was a landmark case regarding the practice of zoning and property rights, and served to establish limits on the ability of cities and other government agencies, to...
).
Apart from these three situations known as per se regulatory takings, the decision whether or not a taking has occurred is made by judicial consideration of three factors: (a) the nature of the government regulation, (b) the economic impact of the regulation on the subject property, and (c) the extent to which the regulation interferes with the owner's reasonable, investment-backed expectations. This is known as the three-factor Penn Central test (after Penn Central Transportation Co. v. City of New York). The Penn Central decision has been severely criticized by commentators on both sides of the "taking issue" controversy, because its "three-factor" approach is so vague as to make it virtually impossible for lawyers to tell in advance of filing a lawsuit what facts will be deemed decisive by the court, and how to apply the three factors which are (a) the character of the government action, (b) the economic impact on the owner, and (c) the extent of the regulatory interference with the owners reasonable investment-backed expectations. The problem is that the U.S. Supreme court has failed to articulate the elements of a cause of action in regulatory taking cases, and has offered only those "factors," without indicating hoe to determine whether they have been established.
Railroads and other public utilities which are granted the power of condemnation (or eminent domain) by state statute, can be liable for taking or where appropriate, damaging of private property when they act in the performance of their regulated activities.
An inverse taking need not be a taking of land or rights in land (such as easement
Easement
An easement is a certain right to use the real property of another without possessing it.Easements are helpful for providing pathways across two or more pieces of property or allowing an individual to fish in a privately owned pond...
s). It can be a taking of personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...
(e.g. supplies for the army in wartime), intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
(such as patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s and copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
s), as well as contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s.
A typical inverse condemnation action is bifurcated. First, there is a trial to determine liability, and if the court determines that a taking has occurred, there is a second (typically jury) trial to determine compensation. Some states (i.e., New York, Connecticut and Rhode Island) do not provide jury trials in such cases. The measure of compensation is the same as in direct condemnation actions in which the government concedes that a taking has occurred, and the sole issue is the amount of compensation.
By statute, many states also provide for recovery of attorneys' and appraisers' fees in successful inverse condemnation actions.
See also
- Williamson County Regional Planning Commission v. Hamilton Bank of Johnson CityWilliamson County Regional Planning Commission v. Hamilton Bank of Johnson CityWilliamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 , was a case in which the Supreme Court of the United States limited access to federal court for plaintiffs alleging uncompensated takings of private property under the Fifth Amendment.- Facts of the case...
Gideon Kanner, Hunting the Snark, Not the Quark: Has the U.S. Supreme Court Been Competent in Its effort to Formulate Coherent Regulatory Takings Law? 30 Urban Lawyer 307 (Spring 1998).