Property Owners Affected by Local Government Takings Can Sue in Federal Court

After the Supreme Court's decision in Knick, federal courts will play a more central role in resolving disputes over property takings by state and local governments

** LEGAL UPDATE **

In Knick v. Township of Scott, Pennsylvania (2019), the U.S. Supreme Court changed an important doctrine within American property law, addressing a violation of the Constitution's Takings Clause.

Under the Takings Clause, a government entity must pay individuals "just compensation" for taking their property. In a reversal of prior precedent, the Supreme Court held that individuals can challenge Takings Clause violations directly in federal court.

Who Is Knick, Anyway?

Rose Mary Knick, who brought this lawsuit, owned a graveyard on her 90-acre rural property.

Then the Township of Scott, Pennsylvania, passed a local ordinance mandating that all cemeteries "be kept open and accessible to the general public during daylight hours."

Upon being notified that she was violating the ordinance by keeping the graveyard private, Knick sued in state court. She asked for what's called declaratory relief, or for the judge to state that the government's action constituted a "taking" under the U.S. Constitution.

The Takings Clause is found within the various rights enumerated in the Fifth Amendment to the Constitution. It states, in relevant part, that no "private property [shall] be taken for public use, without just compensation."

In other words, if a local, state or federal government wants to take a person's property for "public use"—such as a building a roadway through someone's backyard—it may do so, but only if the government pays "just compensation" for that taking. "Just compensation" essentially means the fair market value of whatever is taken.

Knick tried to have the state courts in Pennsylvania declare the Township's actions to be a taking. In response, the Township decided to withdraw its violation notice, no longer enforcing it against her. Because the Township was no longer actively enforcing the ordinance against her, she could not establish a taking before the state court.

That left Knick uncertain of whether her rights were permanently protected. So she filed a separate action in federal court, asserting the same Takings Clause violation.

However, the federal trial court—and later the U.S. Court of Appeals for the Third Circuit—dismissed her lawsuit, noting that they were bound by the Supreme Court's precedent in Williamson County Regional Planning Commission v. Hamilton Bank (1985). There, the Court held that a property owner who argues that the government has "taken" his property within the meaning of the Fifth Amendment could only file a claim in federal court after he has first obtained a "final decision" from the relevant state regulatory agency and "exhausted" all possible remedies in state court. In other words, federal courts could not get involved in policing state or local governmental takings until the state courts had the opportunity to fully address the issue.

The U.S. Supreme Court agreed to review the decision from the Third Circuit on Knick's request.

What Supreme Court Said in Knick Case

In a close 5-4 decision authored by Chief Justice John Roberts, the Supreme Court held that a property owner can sue directly in federal court under 42 U.S.C. 1983 whenever a state or local government violates the Takings Clause.

In so holding, the Court explicitly overturned the requirement from Williamson County that property owners must first sue in state court before beginning federal litigation.

Justice Roberts reasoned that the requirement of exhausting remedies in state court can lead to tremendous burden on plaintiffs, and can also lead to situations where obtaining a "final decision" from the state courts is impossible, as was the case with Knick and her graveyard ordinance.

"We now conclude that the state-litigation requirement imposes an unjustifiable burden on takings plaintiffs...," he wrote. "A property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it...."

Justice Elena Kagan penned a scathing dissent, which argued that the Court's majority had drastically deviated from "an understanding of the Fifth Amendment’s Takings Clause stretching back to the late 1800s.” By overturning Williamson County, the majority "smashes a hundred-plus years of legal rulings to smithereens.” Justice Kagan's dissent was joined by Justices Ginsburg, Breyer, and Sotomayor, indicating that the decision fell along traditional ideological lines.

How Knick Case Impacts Property Owners Going Forward

The Court's decision in Knick is likely to have dramatic impacts on property law. Federal courts will now play a more central role in resolving disputes over property takings by state and local governments in the first instance—a role that was formerly played by state courts.

The decision also shows the willingness of the Court's majority to overturn longstanding precedent.