BACKGROUND
The Facts:
The case involves a 37.6-acre parcel of environmentally
sensitive, oceanfront property in Monterey, California at
Del Monte Beach. The sand dunes on the property are among
the largest and best preserved in central California. The
property's native flora includes buckwheat, which is the
natural habitat of the Smith's
Blue Butterfly, a species listed as endangered under
the federal Endangered
Species Act.
In 1981, the previous owner of the
property, Ponderosa Homes, applied to the City of
Monterey for a permit to build a 344-unit residential
complex on the property.
After denying several development
proposals, the City Council approved a site plan for 190
units in 1984, subject to 15 conditions. The conditions
included a requirement that the developer submit an
adequate habitat restoration plan.
In late 1984, Del Monte Dunes at
Monterey, Ltd. bought the property for $3.7 million, with
full knowledge that development of the site was subject
to the 15 conditions. Del Monte pursued final approval of
the permit application by seeking to fulfil the
conditions
In June 1986, the City denied the permit.
The City Council listed six reasons for the denial,
including th e significant harm to the environment
expected from the development and the lack of adequate
access to and from the property. During public hearings
on the permit, regulatory agencies, environmental
experts, city staff, and others advised the City that Del
Monte's proposed habitat restoration plan would not
adequately mitigate the environmental impact of the
development.
In 1991, while the litigation was
on-going, the State of California purchased the property
for $4.5 million, $800,000 more than Del Monte had 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 with
a density up to 150 units
The lawsuit: In late
1986, Del Monte filed suit in federal district court,
alleging that the permit denial constituted a
"taking" of private property under the Fifth
Amendment that entitled Del Monte to just
compensation. Del Monte also claimed that the denial
violated the Equal Protection and Due Process Clauses of
the Fourteenth
Amendment. The parties argued for several years about
whether Del Monte's claim was "ripe" for
adjudication. In 1990, the Ninth Circuit Court
of Appeals allowed Del Monte's suit to proceed.
Viewing the facts in the light most favorable to Del
Monte, the Ninth Circuit ruled that it would have been
"futile" for Del Monte to make further permit
applications.
The litigation proceeded to trial. The
district 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 trial record shows that regulatory
agencies and many others advised the City that Del
Monte's habitat restoration plan would not adequately
mitigate the environmental im pact of the proposed
development. Del Monte presented contrary evidence. The
court found that the evidence before the City was
"in conflict," there were "differences of
opinion" regarding the proposed development's effect
on the environment. It concluded that the City's
resolution of the conflicting evidence was reasonable and
its decision to deny the permit was "for valid
regulatory reasons." The district court also
specifically concluded, based on a full factual record
presented at trial, that the City was "not
attempting to forestall all reasonable development."
Finally, the district court found that city staff and the
city planning commission spent "exhaustive time and
energy" on the proposal and that they engaged in
"a sincere effort" to work with Del Monte on
the proposal.
Notwithstanding these rulings, the court
sent the takings claim to the jury, instructing the jury
to rule for Del Monte 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 awarded Del Monte
$1,450,000, without specifying which theory of takings
liability it has accepted. The Ninth Circuit affirmed.
The City sought review in the U.S.
Supreme Court on three issues: (1) whether the trial
court erred in having a jury decide the takings claim;
(2) whether the trial court erred in allowing the jury to
reweigh the evidence concerning the reasonableness of the
permit denial; and (3) whether the appeals court erred in
ruling that a development permit denial must be
"roughly proportional" to the harm expected
from the proposed development. In March 1998, the Supreme
Court agreed to review the case, and in October 1998 it
heard oral argument.
Back
|
