Crossing a Property Rights Threshold

Nancie Marzulla*

Bernadine Suitum had to go all the way to the U.S. Supreme Court to win the right to file a lawsuit. Isn't it ironic? The ruling is a bittersweet victory for the widowed Mrs. Suitum, who is now in her 80s. On May 27, 1997, after six years of litigation, the Supreme Court ruled she can finally file suit against the Tahoe Regional Planning Agency (TRPA) for the unconstitutional taking of the property she and her late husband bought in the Nevada town of Incline Village back in 1972.

At the time the Suitums bought the 18,300-square-foot lot in what is now a bustling subdivision, there were no regulatory impediments to building on the land. Mrs. Suitum, however, did not seek to develop her property until 1987. In the intervening 15 years, TRPA designated the land containing her lot as part of a "stream environment zone." When she applied for a building permit to construct a single-family home on her lot, she was told that building a home on her lot no longer was allowed.

The Fifth Amendment to the United States Constitution clearly states that "nor shall private property be taken for public use, without just compensation." The actions of federal, state, and local regulators, however, have made a mockery of this important keystone of our liberties; and, the actions of TRPA in particular in this garden-variety zoning case should serve as a "wake-up" call to those who believe they are immune from ever having their own property rights infringed.

TRPA sought to bypass its constitutional mandate to pay Mrs. Suitum the fair and just compensation she was owed by giving her what is called "transferable development rights" (TDRs). Under TRPA's logic, she could sell the TDRs to a third party for a portion of the market value of her lot, thus fulfilling TRPA's constitutional obligation. The problem here, however, was that Mrs. Suitum did not want to get embroiled in TRPA's complex transfer lottery scheme. She simply wanted TRPA to honor its constitutional duty to pay her the just compensation she deserved.

She was forced to file suit to obtain compensation. TRPA argued that her claim was not "ripe" for judicial review because she had not attempted to market the TDRs. Thus began the "rotten" system of ripening a constitutional claim for just compensation.

The notion of "ripeness" is rooted in part in Article III of the Constitution, which bars federal courts from rendering speculative or advisory opinions. For example, if you went to federal court complaining that your neighbor's tree was going to fall on your house, you would either have to show it would likely fall or wait until it actually fell to bring a lawsuit.

In 1985, the Supreme Court increased the ripeness requirement for constitutional claims for just compensation. As a result of Williamson County Regional Planning Commission vs. Hamilton Bank, property owners -- unlike any other federal court litigants -- must show not only that there is a concrete injury-in-fact, but that the government in question has reached a "final" decision with respect to any use of the property. It was this unusually harsh standard of ripeness that forced Mrs. Suitum to spend six years litigating her case solely on that issue.

In its unanimous decision in Suitum vs. Tahoe Regional Planning Agency, however, the Supreme Court held that even though Mrs. Suitum had not made any attempt to market the TDRs, she had, in fact, obtained a "final decision" consistent with Williamson County.

The central holding of Suitum states that "(t)he demand for finality is satisfied" by merely looking at how the "regulations at issue (apply) to the particular land in question." This a long overdue breath of fresh air in this area of law. The holding will also have a profound impact on local government decision-making which routinely utilizes TDRs as a means of avoiding payment of just compensation.

The Suitum holding also means that no matter what subsequent steps government may take -- or what offers of value the government may attempt to exchange for the taking of your property -- it cannot bar you from at least having your claim heard by a federal court.

Justice Antonin Scalia, in his concurring opinion, takes the analysis to its logical end when he states: "If money that the government-regulator gives to the landowner can be counted on, the question of whether there is a taking (causing the courts to say that the land retains substantial value, and has thus not been taken), rather than on the question of whether the compensation for the taking is adequate, the government can get away with paying much less. That is all that is going on here."

By the same token, Mrs. Suitum is also entitled to full compensation for the taking of her property, not the inadequate grant of the potential to sell some portion of her development rights to a third party. Thanks to the Supreme Court's decision, she and property owners across America are now a step closer.

*Nancie Marzulla is president and chief legal counsel of Defenders of Property Rights. She and Roger Marzulla are the authors of "Property Rights: Understanding Government Takings and Environmental Regulations" published by Government Institutes Press. Copyright@1997. News World Communications, Inc. Reprinted with permission.


2001 The Federalist Society