Real Estate & Property Law

Certworthiness Alert: 2-1 CA9 En Banc Denial (And 9 Judge Dissental) - Is A Takings Claim Forever Unripe Because The Owner In The Past Didn't Jump Through All Administrative Hoops?

By Robert Thomas (inversecondemnation.com)

Here's the latest in a case we've been following. In this Order, the Ninth Circuit denied rehearing and rehearing en banc of the 2-1 panel decision in Pakdel v. City & County of San Francisco, No. 17-17504 (9th Cir. Mar. 17, 2020).

Earlier, the panel concluded that a regulatory takings case was not ripe under Williamson County's requirement. Recall that in Knick, the U.S. Supreme Court overruled the first Williamson County ripeness hurdle -- the requirement that a property owner first pursue and be denied just compensation via "state procedures" -- but the Court didn't consider or disturb the "final decision" requirement.

The Pakdels sued San Francisco for a regulatory taking because of the city's requirement that as a condition of converting a tenancy-in-common to a condominium, the owners must first offer any tenant a lifetime lease. The Pakdel's twice requested exemptions from the lifetime lease requirement, but the city denied both requests. That sounds like a "final decision" that qualifies under Williamson County, no? After all, the reviewing court knows exactly what uses the city is allowing or requiring, and that is the whole point of the final decision requirement. 

No, held the panel, it turned out that the Pakdels had "Committed a procedural default during the administrative process" and this meant that not only was their claim not ripe for not obtaining a final decision from the city, their claim could never become ripe because it was too late in the administrative process to "un-default" the default.

If that strikes you as weird, you are not alone. Not only did Judge Bea dissent from the panel decision, nine judges dissented from the denial of the en banc petition. Please read the dissent in whole. It's not that long, and makes a lot of sense to us. The dissenters concluded that this isn't really a final decision requirement, but rather a way of backing into an administrative exhaustion requirement, something the Supreme Court has long rejected in section 1983 cases, and which the Williamson County final decision requirement doesn't really address.

The Court in Williamson County, however, carefully distinguished this finality requirement from an exhaustion requirement, noting that the ?question whether administrative remedies must be exhausted is conceptually distinct . . . from the question whether an administrative action must be final before it is judicially reviewable.? 473 U.S. at 192. The purpose of a finality requirement, the Court explained, is simply to ensure that ?the initial decisionmaker has arrived at a definitive position on the issue that inflicts an actual, concrete injury,? whereas an exhaustion requirement focuses on whether the claimant has complied with ?administrative and judicial procedures? for seeking relief. Id. at 193.

Under the facts of this case, the application of Williamson County?s finality requirement is straightforward. The City has definitively imposed the Lifetime Lease Requirement on Plaintiffs? property, and there is no further avenue open to them under local law to avoid that. Indeed, Plaintiffs twice requested an  exemption from the requirement, and the City rejected both requests. Neither the City nor the panel majority contend that any route of administrative appeal remains available to Plaintiffs. There is therefore no danger that a federal court would have to speculate as to how the City would apply the Lifetime Lease
Requirement here. The City?s decision is final, the Lifetime Lease Requirement applies, and Plaintiffs? suit is ripe.

Dissent at 9.

The dissenters concluded that the owners' failure to fulfill administrative requirements "is an exhaustion requirement pure and simple[.]" Dissent at 10. It's one thing to say they didn't go through the admin process, another to say the city hasn't reached a final decision about what they can do with their property.

Ninth Circuit. 2-1 panel. En masse dissental. Pacific Legal Foundation (the group that brought you Knick) representing the property owners. Think there will be a strong certworthy petition coming?

Order (Denying Petition for Rehearing En Banc), Pakdel v. City & County of San Francisco, No. 17-17504 (9th... \

Full post as published by inversecondemnation on October 14, 2020 (boomark / email).