City of Monterey v. Del Monte Dunes at Monterey: Drawing the Battle Lines Clearly

• Author: Mark Mahaffey

I Introduction

Recently, there has been a nationwide increase in concern over urbanization and its negative effects. As a result, legislators and politicians have increasingly regulated land use to address issues such as urban sprawl and conservation.¹ The resulting governmental measures frequently conflict with landowners' freedom to use their property as they wish. Consequently, the competing interests of the government and landowners will be presented in the courtroom. As this legal issue presents itself with more frequency, the law of regulatory takings will become an increasingly critical area of the law. The law in this area should be as clear as possible so that governments can draft sound legislation to protect against the negative effects of irresponsible land use. At the same time, regulatory takings law should be unambiguous so that the rights of landowners are protected and development decisions can be planned with certainty.

The basis of regulatory takings law is contained in the Fifth Amendment of the United States Constitution, which states that private property shall not "be taken for public use, without just compensation."² The Supreme Court recognized early that the Constitution would not support a law that purported to take land from one person and give it to another.³ It is clear that "unambiguous governmental seizure of private property for public use-a sufficiently clear laying-on of official hands followed by a transfer of possession and title to the general public-is unconstitutional unless followed by payment to the former owner of the fair market value of what was taken."⁴ This quote illustrates the common conception of what constitutes a taking-a physical invasion of property that alters the owner's relationship to the thing, preventing him or her from using it.⁵ In contrast, a regulatory taking occurs when the government, through regulation, exercises too much control over a person's property.⁶

The Supreme Court's seminal decision involving regulatory takings is Pennsylvania Coal Co. v. Mahon.⁷ In Pennsylvania Coal, Justice Holmes stated that "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."⁸ These words placed before the Court an issue that has "plagued [it] for over six decades"-how far is too far?⁹

Recently, the Supreme Court dealt with the issue of regulatory takings in City of Monterey v. Del Monte Dunes at Monterey,¹⁰ but failed to clarify its prior takings jurisprudence. This note discusses the Supreme Court's opinion in Del Monte Dunes, focusing on the standard used by the Court in its regulatory takings jurisprudence.

II Facts of Del Monte Dunes

Del Monte Dunes involved a 37.6-acre tract of oceanfront property owned by respondent, Del Monte Dunes, and zoned for multifamily residential use under the city's general zoning ordinance.¹¹ In 1981, Del Monte Dunes submitted an application to the Monterey planning commission in order to develop the land in conformance with the city's zoning and general plan requirements.¹² The plan submitted by the landowners proposed development of 344 residential units.¹³ The planning commission denied Del Monte Dunes' proposal, indicating that a plan to develop 264 rather than 344 units would be acceptable.¹⁴ Responding to this recommendation, Del Monte Dunes submitted a proposal to develop 264 residential units.¹⁵ Again, the planning commission denied the proposal, stating that an application to build 224 units would be approved.¹⁶ Del Monte Dunes followed the instructions of the planning commission and submitted a 224 unit development plan.¹⁷ Once more, the commission refused to approve the proposal for development.¹⁸

After the denial of its third proposal to develop the land, Del Monte Dunes appealed to the city council, which overruled the denial of the planning commission and gave the project back to the commission with instructions to consider a plan for 190 units.¹⁹ Subsequently, Del Monte Dunes submitted to the planning commission detailed site plans for 190 units.²⁰ The planning commission rejected these plans.²¹ Del Monte Dunes once again appealed to the city council, which again overruled the planning commission's decision, conditionally approved Del Monte Dunes' plans, and granted an eighteen-month use permit for the proposed development.²²

Almost a year later, Del Monte Dunes submitted its final plan.²³ The city's architectural review committee approved the plan, as did the planning commission's professional staff.²⁴ However, in January 1986, the planning commission again rejected the proposed development plan.²⁵ Del Monte Dunes appealed to the city council and requested an extension of their use permit in order to allow them time to satisfy any additional requirements that the council might impose.²⁶ The council granted a temporary extension of the use permit in anticipation of a hearing on the matter.²⁷ Nevertheless, after the hearing, the city council rejected the final plan without specifying possible remedial measures and denied a further extension of Del Monte Dunes' use permit.²⁸ After five years, five formal decisions, and nineteen different site plans, Del Monte Dunes filed suit in the United States District Court for the Northern District of California under 42 U.S.C. 1983 alleging that the city's denial of the final development proposal was, among other things, an uncompensated, and therefore, unconstitutional regulatory taking.²⁹

The district court dismissed the claims as unripe.³⁰ However, the court of appeals reversed and remanded.³¹ On remand, Del Monte Dunes argued that, although the city had the power to regulate the property, the city's actions effectively denied them any opportunity to develop the parcel.³² Del Monte Dunes buttressed its argument with a detailed history of its attempts to develop the property. It emphasized the fact that the city had continually changed its requirements for development.³³

The district court submitted the parties' claims to a jury. The court instructed the jury to find for Del Monte Dunes if it found either that Del Monte Dunes had been denied all economically viable use of the property, or that the city's denial of the landowners' final proposal "did not substantially advance a legitimate public purpose."³⁴ The jury returned a general verdict for Del Monte Dunes on its takings claim.³⁵

The city appealed the decision, claiming: (1) the issue should not have been submitted to a jury and (2) the jury instructions were improper. The appellate court affirmed.³⁶ It held that allowing the jury to decide Del Monte Dunes' regulatory takings claim was proper because the plaintiff had a right to a jury trial under 1983.³⁷ Further, whether the landowners had been denied all economically viable use of the property and whether the city's denial of the final proposal advanced legitimate public interests were suitable jury questions.³⁸ The court reasoned that these inquiries fell within a category of essentially factual questions and thus could be submitted to the jury.³⁹ The court also based its approval of the district court's jury instructions partly on Dolan v. City of Tigard.⁴⁰ The court of appeals used the "rough proportionality" test articulated in Dolan to decide whether a taking had occurred.⁴¹

The court of appeals found that the jury instruction mirrored the "rough proportionality" test,⁴² reasoning that the jurors were left with a reasonableness test that had been described in Dolan as "essentially factual."⁴³ Although it may have been a mixed question of fact and law, the issue of whether the government's actions were "reasonable" was the type that could be put to the jury.⁴⁴ The court of appeals then concluded that sufficient evidence had been presented to the jury to support a finding for Del Monte Dunes.⁴⁵

In its petition for certiorari, the city limited its questions to three: (1) whether the court of appeals erred in applying the "rough proportionality" test from Dolan to the case, (2) whether the court of appeals incorrectly based its decision on a standard that allowed the jury to re-weigh the reasonableness of the city's land-use decision, and (3) whether issues of liability were properly submitted to the jury.⁴⁶

III Holding In Del Monte Dunes⁴⁷

A Discussion of the Regulatory Takings Standard From Dolan

The Court first held that the Ninth Circuit's use of the "rough proportionality" standard from Dolan was misplaced and did not apply to the Del Monte Dunes case.^{48 49} It refused to extend the "rough proportionality" test beyond the context of exactions, the type of taking that had occurred in Dolan. The Court defined exactions as land-use decisions where approval of development depended upon the landowner dedicating a part of his property to public use.⁵⁰ However, the jury instructions relied upon by the lower courts were found to be sound because at no point did they mention proportionality or require that the jury find for Del Monte Dunes because the city's actions were "roughly proportional" to its asserted. interests.⁵¹ The Court concluded that the appellate court's discussion of rough proportionality was unnecessary to its decision and therefore, irrelevant to the disposition of the case.⁵²

B Examination of Public Land-Use Policy

The Court then...