SIX LESSONS FOR MUNICIPAL LAWYERS:
CITY OF MONTEREY V. DEL MONTE DUNES AT MONTEREY, LTD.
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Takings cases often are driven by the facts. Del Monte Dunes proves the admonition that bad facts make bad law. The opinion describes the permit application process in a way that evokes considerable sympathy for the landowner, and the ruling constitutes the first time the Supreme Court has upheld an actual award of just compensation under the Takings Clause.

The Court recited considerable evidence that undercut the reasons cited by the city to justify the permit denial. But in addition to the conflicting evidence, the Court seemed disturbed by three aspects of the city's dealings with the landowner. First, the Court emphasized that the city repeatedly rejected the landowner's various development plans, "each time imposing more rigorous demands on the developers" (119 S. Ct. at 1631), only to reject each subsequent plan despite municipal assertions that the scaled-down version "would receive favorable consideration." Id. at 1632. The Court characterized these repeated exchanges between the city and the owner as a "tortuous and protracted history of attempts to develop the property." Id. at 1637. At oral argument, Justice Scalia described the landowner as having been "jerked around" and as having good reason to "smell a rat." Other Justices also questioned the city's good faith (notwithstanding their awareness of the due process ruling to the contrary).

Second, the Court expressed concern that the permit denial was inconsistent with the recommendation of the city's professional staff and the council's previous decisions. Id. at 1637. According to the Court, the development proposal was "conceptually satisfactory and in conformance with the city's previous decisions regarding, inter alia, density, number of units, location on the property, and access." Id. at 1632. The Court seemed troubled by the city's apparent failure to reconcile its permit denial with these earlier determinations.

Third, the Court was disturbed by evidence that "the city had considered buying, or inducing the State to buy, the property for public use as early as 1979," which Del Monte used to argue that the permit denial was simply a ruse to acquire the property at a reduced price. Id. at 1633-34. According to the Court, the State's purchase of the property while the suit was pending "may have bolstered the credibility of Del Monte Dunes' position." Id. at 1634.

Relying on these aberrational facts, the Court had little difficulty rejecting the city's argument that the lower courts did not give the city appropriate deference in reviewing the jury's determination that the permit denial constituted a taking. The Court emphasized that the instructions prevented the jury from questioning the legitimacy of the city's stated interests in protecting the environment, preserving open space, and preserving the quality of the community. Id. at 1636. Nor did the instructions "allow the jury to consider the reasonableness, per se, of the customized, ad hoc conditions imposed on the property's development * * *." Id. Nor was the jury "given free rein to second-guess the city's land-use policies." Id. at 1637. To be sure, the jury was asked to consider evidence that undermined the city's proffered justifications for the permit denial, but only in light of the inconsistency of the denial with the recommendation of the professional staff and the council's previous decisions, as well as the evidence of the city's longstanding interest in acquiring the property for public use. Id. at 1637. Thus, the Supreme Court concluded that the lower courts did not adopt a rule of takings law that allowed "wholesale interference by judge or jury with municipal land-use policies, laws, or routine land-use decisions." Id.

In fairness to the City of Monterey, it should be noted that the Court's recitation of the facts is demonstrably one-sided. For example, the Court nowhere mentions that in rejecting Del Monte's substantive due process claim, the trial court found that the city's permit denial was "for valid regulatory reasons and not attempting to forestall all reasonable development," a finding in tension with the Court's factual recitation and ultimate disposition. It is now largely academic, however, whether the Court's articulation of the facts comports with reality. The salient p oint is that the Court's factual description provides the context for, and thus limits, the rulings that follow. They also contain lessons for municipal attorneys who seek to reduce the risk of takings liability.

To avoid similar situations in the future , municipalities should do three things. First, they should ensure that permit applicants fully appreciate the various approvals needed to secure a permit, and they should build a record that shows this recognition. This could be accomplished by furnishing the applicant with a description of the process that explains who has (and who doesn't have) final decision-making authority, and clarifying that no one else has authority to make commitments regarding future approvals.

Second, where a final land-use decision conflicts with the recommendations of staff or with previous municipal determinations, explain on the record why those earlier views no longer obtain. Cite to changed circumstances, new information, or other factors to show that the final positi on is reasonable notwithstanding contrary staff recommendations or earlier positions by the municipality.

Third, local officials should recognize that they increase litigation risk where their conduct suggests that land use controls are simply a ruse to acquire property at a reduced price. Courts might well view with suspicion severe land-use restrictions imposed after a municipality has expressed interest in acquiring property but fails to do so for financial reasons (as appears to have been the case in Del Monte Dunes.

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