SIX LESSONS FOR
MUNICIPAL LAWYERS:
CITY OF
MONTEREY V. DEL MONTE DUNES AT MONTEREY, LTD.
119 S. Ct. 1624 (May 24, 1999)
Presented by:
Timothy
J. Dowling
Chief Counsel
Community Rights Counsel
International Municipal Lawyers
Association
64th Annual Conference
September 26-29, 1999
Toronto, Ontario Canada
Note:
This paper has been divided into sections for web
publication. At the bottom of each page is a link to the
next page.
SUMMARY
This paper first describes the facts,
procedural history, and Supreme Court rulings in City
of Monterey v. Del Monte Dunes at Monterey, Ltd.,
119 S. Ct. 1624 (1999). In a nutshell, the Court held:
(1) given the unique procedural posture and facts of the
case, the trial court properly submitted the takings
claim to a jury; (2) based on the specific facts of the
case, the jury verdict for the landowner did not
improperly infringe upon the city's land use
decision-making authority; and (3) the Ninth Circuit
erred in applying Dolan's "rough
proportionality" test to a municipal permit denial.
The paper then discusses six practical
tips drawn from the case that should prove useful to
municipal attorneys as you litigate takings claims. The
six tips are:
Build an appropriate record for
land-use decisions to avoid takings liability
based on "bad facts." (click here to skip to this
section)
Use Del Monte Dunes to
show that takings claimants should litigate in
state court first. (click here to skip to
this section)
Show that Del Monte Dunes'
jury trial ruling is limited to its unique facts.
(click here to
skip to this section)
Use Del Monte Dunes to
demonstrate that Dolan and Nollan
apply only to dedication requirements. (click here to skip to
this section)
Object to the Agins
means-end theory of takings liability. (click here to skip to this
section)
The "Sleeper": Move to
dismiss federal takings claims filed in
state court. (click here
to skip to this section)
As to Points 4 and 5 in particular, the
paper describes at some length how municipal attorneys
should use Del Monte Dunes to defend against
various theories of takings liability. Community Rights Counsel has
briefed these arguments in various courts and would happy
to discuss them (or other aspects of this paper) with
government counsel.
I designate the final tip as "The
Sleeper" because thus far it has received little
attention among commentators, but it offers significant
potential benefits to municipalities that face takings
claims in state court.
THE CASE
The Facts:
Del Monte Dunes involved a 37-acre parcel of
environmentally sensitive, oceanfront property in
Monterey, California, within an area known as Del Monte
Beach. The sand dunes on the property are among the
largest and best preserved in central California.
In 1981 the previous owner, Ponderosa
Homes, applied for a permit from the City of Monterey to
build a 344-unit residential complex on the property.
After denying several development proposals, in 1984 the
city council approved a plan for 190 units, subje ct to
the requirement that Ponderosa Homes satisfy 15
conditions within 18 months. These conditions included a
requirement that the developer adequately mitigate
environmental harm caused by the development
In late 1984, Del Monte Dunes at
Monterey, Ltd., bought the property for $3.7 million. Del
Monte pursued final approval of the permit application by
seeking to meet the 15 conditions.
In 1986, the city denied the permit for
the 190-unit proposal, listing six reasons for the
denial, including significant harm to the environment.
The city was especially concerned about harm to the
property's native flora, buckwheat, which is the natural
habitat of the Smith's Blue Butterfly, a species listed
as endangered under the federal Endangered Species Act.
Regulatory agencies, environmental experts, and others
advised the city that Del Monte's habitat restoration
plan would not adequately mitigate the environmental
impact of the proposed development.
In 1991, while the litigation was
pending, the State of California purchased the property
for $4.5 million, $800,000 more than Del Monte paid for
the site in 1984. The $4.5 million purchase price was
based on an appraisal that assumed that the highest and
best use of the property is residential development of up
to 150 units.
The Lawsuit:
Del Monte Dunes filed suit in federal district court
under 42 U.S.C. § 1983, alleging that the permit denial
constituted a compensable taking and violated the Equal
Protection and Due Process Clauses of the Fourteenth
Amend ment. The district court dismissed the claims,
ruling that Del Monte should pursue less intensive
development before being allowed to sue the city. In
1990, however, the Ninth Circuit reinstated the claims.
Viewing the evidence in the light most favorable to Del
Monte, the appeals court concluded that further permit
applications would be futile. See Del Monte Dunes at
Monterey, Ltd. v. City of Monterey, 920 F.2d 1496
(9th Cir. 1990). The litigation proceeded to trial.
The court ruled for the city on the due
process claim, concluding that the permit denial was
"not arbitrary and irrational, but was for valid
purposes." The court found that the evidence before
the city regarding the potential for environmental harm
was in conflict, and it concluded that the city's
resolution of the conflicting evidence was reasonable.
The court specifically found that the city was "not
attempting to forestall all reasonable development."
It also found that city staff and the planning commission
spent "exhaustive time and energy" on the
proposal and that they engaged in "a sincere
effort" to work with Del Monte Dunes.
The court sent the takings and equal
protection claims to the jury, instructing the jurors to
rule for Del Monte on the takings claim if the permit
denial either (1) deprived Del Monte of all economically
viable use of the property, or (2) did not substantially
advance a legitimate public purpose. The jury ruled for
Del Monte on both the takings and equal protection claims
and awarded $1,450,000. On the takings claim, the jury
did not specify which theory of liability it accepted
(denial of viable use or failure to advance a legitimate
purpose).
The Ninth Circuit affirmed. See Del
Monte Dunes at Monterey, Ltd. v. City of Monterey,
95 F.2d 1422 (9th Cir. 1996). The appeals court ruled
that the trial court properly submitted the takings claim
to the jury, and that a reasonable jury could have found
for Del Monte on both theories of takings liability.
Relying on Dolan v. City of Tigard, 512 U.S. 374
(1994), the Ninth Circuit ruled that even if the city had
a legitimate interest in denying the permit, the denial
"must be 'roughly proportional' to furthering that
interest." 95 F.2d at 1429-30. Noting that Del Monte
had presented evidence questioni ng each of the reasons
specified by the city for denying the permit, the appeals
court ruled that "[t]he jury was entitled to credit
Del Monte's experts and discredit the city's
testimony." Id. at 1431. Finally, the
appeals court ruled that a reasonable juror could have
found that the permit denial deprived Del Monte of
economically viable use of the property, rejecting the
city's argument that the sale of the property to the
State for $4.5 million established viable use. Because
the appeals court affirmed the jury award on the takings
claim, it did not consider the equal protection claim.
The Three Questions
Presented and the Supreme Court's Rulings
The three issues presented by the city's
petition for certiorari and the Court's disposition are
as follows:
1. Whether issues of liability
were properly submitted to the jury on the regulatory
takings claim?
Held: YES (5-4). -- The Court first held
that there is no statutory right to a jury trial under §
1983. However, "a §1983 suit seeking legal relief
is an action at law within the meaning of the Seventh
Amendment," and thus the claimant has a
constitutional right to a jury trial. Id. at
1638. The question of whether a landowner has been
deprived of all economically viable use of the land is
"a predominantly factual question" proper for
jury consideration. Id. at 1644. Whether a jury
should decide if a land-use decision substantially
advances a legitimate interest presents "a more
difficult question." Id. On the specific
facts of this case, a jury could resolve this issue
because it was a "narrow, factbound" inquiry
tied to "the context and protracted history of the
development application process." Id.
2. Whether the Court of Appeals
impermissibly based its decision on a standard that
allowed the jury to reweigh the reasonableness of the
city's land-use decision?
Held: NO. The jury instruction did not
allow the jury to second-guess the reasonableness of the
city's land-use policies, the permit conditions, or the
interests asserted in defense of the permit denial. While
the jury did consider evidence that undermined the
factual predicate of the permit denial, it also
considered the "shifting nature of the city's
demands," the inconsistency of the denial with the
recommendation of the professiona l staff and the city
council's earlier decisions, and evidence of the city's
longstanding interest in acquiring the property. Id.
at 1636-37. Thus, the jury was not allowed simply to
reweigh the evidence considered by the city, but instead
was asked to evaluate the reasonableness of the permit
denial in light of the entire application process.
3. Whether the Ninth Circuit
erred in assuming that Dolan's
"rough proportionality" standard applies to
this case?
Held: YES (unanimously). "The rule
applied in Dolan considers whether dedications
demanded as conditions of development are proportional to
the development's anticipated impacts. It was not
designed to address, and is not readily applicable to,
the much different questions arising where, as here, the
landowner's challenge is based not on excessive exactions
but on denial of development." Id. at 1635,
1650.
[click
here for the Court's opinion and major documents in the
case]
Next Page:
SIX
LESSONS FOR MUNICIPAL LAWYERS
FROM
DEL MONTE DUNES
|
