On the Twenty-Fifth Anniversary of Lucas: Making or Breaking the Takings Claim

• Author: Carol Necole Brown & Dwight H. Merriam
• Position: Professor of Law, University of Richmond School of Law/Robinson & Cole LLP, Hartford, Connecticut
• Pages: 1847-1896

BROWN_PP_F (DO NOT DELETE) 7/11/2017 12:40 PM

1847

On the Twenty-Fifth Anniversary of Lucas:

Making or Breaking the Takings Claim

Carol Necole Brown* & Dwight H. Merriam**

ABSTRACT: In Lucas v. South Carolina Coastal Council, the United

States Supreme Court established the premier categorical regulatory takings

standard with certain limited exceptions. The Lucas rule establishes that

private property owners are entitled to compensation for a taking under the

Fifth Amendment Takings Clause when a government regulation “denies all

economically beneficial or productive use of land.” Today, Lucas remains the

controlling law on categorical regulatory takings. But in application, how

much does Lucas still matter?

In reviewing more than 1,700 cases in state and federal courts, we identified

that Lucas claims were successful in just 1.6% of the cases. This does not

mean Lucas is unimportant, however. The small Lucas claim success rate

suggests the importance of being strategic in pleading takings claims. The

problem of defining the denominator in the regulatory takings equation is

essential to understand for litigants pursuing the Lucas categorical

regulatory takings analysis. Based upon our research, we argue that Lucas’s

holding incentivizes the private contractual agreements entered into by

property owners to shrink the takings denominator and tilt the scales slightly

in favor of the plaintiff. The ability of a property owner to reduce the

denominator remains the loadstar for a Lucas case-winning strategy.

This is important for not only theorists but also for practitioners to know as

they litigate and conduct transactions in Lucas’s shadow.

*

Professor of Law, University of R ichmond School of Law. Special th anks to Suzanne B.

Corriell, Associate Director for Reference, R esearch and Instructional Services at the University of

Richmond School of Law and to my research assistants, Jessica Barile and William Stroud. Thanks

to Professor Vada Lindsey and the ent ire Marquette University Law School faculty for allowing me

to workshop this paper and for their invaluable assistance. Thank you also to Professors Daniel R.

Mandelker, Corinna Barrett Lain, and David L. Callies, and to the University of Richmond School

of Law and Dean Wendy Perdue for her support of this project. Thank you to my parents, the late

Allen S. Brown, Jr., and the late Valerie J. Brown, as well as to my husband, Paul Clinton Harris, Sr.,

and my daughters, Reagan Mackenzie Harris and Hannah Madison Harris.

**

Robinson & Cole LLP, Hartford, Connecticut. Mr. Merriam is past president and a

fellow of the American Institute of Certified Planners and is also a member of the American

Coll ege o f Rea l Est ate L awyer s as w ell a s a co unse lor o f real esta te. H e is a co-au thor of The Takings

Issue and co-editor of Rathkopf’s The Law of Zoning and Planning, 4th edition.

1848 IOWA LAW REVIEW [Vol. 102:1847

I. INTRODUCTION ........................................................................... 1848

II. TAKINGS CLAIMS À LA LUCAS ....................................................... 1850

A. LUCAS AND ITS HOLDING ...................................................... 1850

B. THE CATEGORICAL REGULATORY TAKINGS RULE ................... 1851

1. The Nuisance and Background Principles

Defenses ....................................................................... 1852

2. The Denominator Question ....................................... 1853

C. COMPLICATING THE PICTURE: THE DISSENTING AND

SEPARATE OPINIONS .............................................................. 1853

D. AMBIGUITIES ABOUND ........................................................... 1855

1. The Categorical Regulatory Takings Rule ................. 1856

2. The Nuisance Defense ................................................ 1858

3. The Denominator Question and the Parcel as a

Whole ........................................................................... 1859

III. SUCCESSFUL LUCAS TAKINGS CASES: EMPIRICAL DATA ............... 1862

A. THE NUISANCE ABATEMENT CASES (THE LUCAS

EXCEPTION) .......................................................................... 1863

B. PRIVATE AGREEMENTS AND THE DENOMINATOR ..................... 1866

C. PYRAMIDAL SEGMENTATION AND PUBLIC LAW IMPACT ........... 1875

D. DELAY THEORY ..................................................................... 1884

IV. IMPLICATIONS ............................................................................. 1887

A. JURISPRUDENTIAL IMPLICATIONS............................................ 1887

B. PRACTICAL IMPLICATIONS ..................................................... 1890

V. CONCLUSION .............................................................................. 1892

I. INTRODUCTION

In Lucas v. South Carolina Coastal Council, the Supreme Court established

the premier categorical regulatory takings standard with certain limited

exceptions.1 The Lucas rule establishes that private property owners are

entitled to compensation for a taking under the Fifth Amendment Takings

Clause when a government “regulation denies all economically beneficial or

productive use of land.”2 The Fifth Amendment Takings Clause states that

“private property [shall not] be taken for public use, without just

compensation.”3 In determining whether the regulation at issue meets this

1. See generally Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992).

2. Id. at 1015.

3. U.S. CONST. amend. V.

2017] MAKING OR BREAKING THE TAKINGS CLAIM 1849

standard, courts have traditionally used an “economic value fraction.”4 The

numerator is the diminution in value of the private property attributable to

the impact of the government regulation.5 The denominator is the entirety of

the owner’s rights in the “parcel as a whole.”6 For a Lucas categorical taking,

the denominator must be at least virtually equal to the numerator such that

there is a deprivation of “all economically beneficial or productive use of

land.”7 As a result, property owners seek to characterize their property rights

narrowly for as small a denominator as possible.8 The smaller the

denominator, the more likely it is to be equal to the numerator. On the other

hand, government regulators seek to characterize the property owner’s

property rights broadly for as large a denominator as possible.9 This creates a

denominator that is much larger than the numerator signaling that the land

still has economic benefit to the property owner.

Today, Lucas remains the controlling law on categorical regulatory

takings.10 But in application, how much does Lucas matter? Our review of

more than 1,700 cases in state and federal courts reveals only 27 cases in 25

years in which courts found a categorical taking under Lucas.11 By percentage,

4. Walcek v. United States, 49 Fed. Cl. 248, 261–62 (2001), aff’d, 303 F.3d 1349 (Fed. Cir.

2002).

5. Lost Tree Vill. Corp. v. United States (Lost Tree CFC II), 115 Fed. Cl. 219, 258, 262

(2014), aff’d, 787 F.3d 1111 (Fed. Cir. 2015); see also Lucas, 505 U.S. at 1016 n.7 (“Regrettably,

the rhetorical force of our ‘deprivation of all economical ly feasible use’ rule is greater than its

precision, since the rule does not make clear the ‘property interest’ against which the loss of value

is to be measured.”).

6. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 130–31 (1978); see also Luc as,

505 U.S. at 1016 n.7 (describing “the ‘property interest’ against which the loss of value is to be

measured”). For a discussion on the Penn Central test, see infra Part IV.

7. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992); see also Palazzolo v. Rhode

Island, 533 U.S. 606, 631 (2001) (stating in the context of the Lucas total-takings analysis that

“[a]ssuming a taking is otherwise established, a State may not evade the duty to compensate on

the premise that the landowner is left with a token interest”); Lost Tree Vill. Corp., 787 F.3d at 1113

(finding that a taking resulted from 99.4% diminishment in value in clai mant’s land and

“affirm[ing] that a Lucas taking occurred because the government’s permit denial eliminated all

value stemming from Plat 57’s possible economic uses”).

8. DOUGLAS T. KENDALL ET AL., TAKINGS LITIGATION HANDBOOK: DEFENDING TAKINGS

CHALLENGES TO LAND USE REGULATIONS 170 (2000).

9. See Danaya C. Wright, A New Time for Denominators: Toward a Dynamic Theory of Property in

the Regulatory Takings Relevant Parcel Analysis, 34 ENVTL. L. 175, 188 (2004) (“[W]hen the

numerator is a small toothpick and the denominator is the entire bundle, the likelihood of the

Court requiring compensation is small. Where the numerator is a large portion of the bundle, or

cuts across every stick in the bundle, the likelihood of compensation increases until it become s

mandatory if certain core sticks or the entire bundle is taken.”).

10. Wendie L. Kellington, New Takes on Old Takes: A Takings Law Update, LAND USE L.,

http://landuselaw.wustl.edu/takings_update.htm (last visited Apr. 29, 2017).

11. These 1,700 cases represent all cases availa ble in the two major online databases (Lexis

Advance and WestlawNext) that cited Lucas v. South Carolina Coastal Council, 505 U.S. 1003

(1992), through March 23, 2017. A total of 1,808 cases were drawn from a Lexis Shepard’s report

and 1,713 cases were drawn from a Westlaw Keycite report. Compare Citing References for Lucas v.