Top Ten Real Property Cases of 2021

• Publication year: 2022
• Author: Star Lightner

Top Ten Real Property Cases of 2021

Star Lightner

Star Lightner is senior counsel with Miller Starr Regalia. She is senior editor of Miller & Starr, California Real Estate 4th, and a contributing author of Chapter 11, Holding Title, Chapter 19, Landowners' Liability, Chapter 31, Construction Law and Contracting, Chapter 32, Mechanics Liens, Chapter 33, Defective Construction, and Chapter 38, Discrimination. She also is the senior editor and principal author of the bi-monthly Miller & Starr Real Estate Newsalert, published by Thomson-West.

Each year, it is a real challenge to select the top ten real estate cases for our annual overview. Although the impact of COVID-19 on courts resulted in fewer real estate cases overall than in past years, narrowing the list down to 10 cases was still difficult. Thus, as is our tradition, several "related cases" as well as "honorable mentions" are included here.

The cases this year continued to represent a broad offering of real estate issues, as opposed to highlighting a concentration in any given area. As a result, the topics covered in this article include such diverse areas as inverse condemnation, land use, California Environmental Quality Act (CEQA), holding title, and adjoining landowners. There were no California Supreme Court cases, and only one United States Supreme Court case made it onto the list this year. It was a critical one though, representing a potential sea change in takings law in terms of what constitutes a "per se" taking by the government.

The state court of appeal still provided many important decisions though, including:

1. A challenge to a city's design review process as violating the Housing Accountability Act's mandate that local agencies approve projects if consistent with specific and objective general plan and zoning criteria.
2. Two cases testing the power of the California Coastal Commission in light of recent amendments to the Coastal Act giving the Commission new discretion to impose administrative fees.
3. An eminent domain case addressing the question of what constitutes having "moved" to be eligible for compensation.
4. Two quiet title cases dealing first, with evidentiary hearings in the context of a default judgment, and second, with what constitutes "knowledge" of defects or irregularities in a quiet title judgment.

Also included is an "honorable mention" case from the Ninth Circuit addressing an eviction moratorium instituted by the City of Los Angeles.

While selecting cases for inclusion is inevitably subjective, the cases addressed below, including the "related cases" and "honorable mention," met our standard for inclusion: widespread significance for the practice of real property law in California. Accordingly, we offer the following as the most significant real estate cases of 2021.¹

1. Cedar Point Nursery v. Hassid²

In perhaps the most significant takings case since Lingle,³ the United States Supreme Court held that a regulation allowing labor organizers limited access to private property to talk to workers did not merely restrict the owners' right to use the property, but rather, appropriated the right to exclude, which constituted a per se taking.

Pursuant to the California Agricultural Labor Relations Act, which recognizes the organizational rights of unions to have access to employees, the California Agricultural Labor Relations Board promulgated regulations allowing two labor organizers per work crew to enter an employer's property for up to one hour before and after work as well as during lunch for the sole purpose of meeting and talking with employees.⁴

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Under the regulations, interference with the organizers' right of access could constitute an unfair labor practice.⁵

Two produce growers with hundreds of workers that did not live on-site sued several board members in their official capacity, alleging that the access regulation, as applied to them, effected a taking of their property in violation of the Fifth Amendment and also effected an unlawful seizure of their property under the Fourth Amendment. The court of appeals upheld the district court's dismissal, holding that the regulation was not a per se taking as there was no continuous physical invasion. It also found no unreasonable seizure because there was no meaningful interference in the employers' possession of its property. The Supreme Court granted certiorari to determine whether the regulation constituted a per se physical taking under the Fifth and Fourteenth Amendments.

The Court set the stage by quoting John Adams, who said that "[p]roperty must be secured, or liberty cannot exist."⁶ It continued, "[w]hen the government physically acquires private property for a public use, the Takings Clause imposes a clear and categorical obligation to provide the owner with just compensation."⁷ The Court acknowledged the category of regulatory takings, whereby "if regulation goes too far it will be recognized as a taking,"⁸ and that for such takings, the Court typically applies the flexible test announced in Penn Central Transportation Co. v. New York City.⁹

The Penn Central test involves the balancing of factors such as "the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action."¹⁰ However, the Court immediately cautioned that the term "regulatory taking" can be misleading, and cited Horne v. Department of Agriculture,¹¹ as a case where it found a regulation resulted in a physical taking. Thus, it framed the "essential question" here not as "whether the government action at issue comes garbed as a regulation (or statute, or ordinance, or miscellaneous decree)," but "whether the government has physically taken property for itself or someone else—by whatever means—or has instead restricted a property owner's ability to use his own property."¹² Where there is physical appropriation of property, the Court stated, "a per se taking has occurred, and Penn Central has no place."

The Court then held that the regulation here "appropriates a right to invade the growers' property and therefore constitutes a per se physical taking." The Court found that by allowing union organizers the right to physically enter the growers' properties, regardless of time restrictions, the regulation did not restrain the growers' use of their own property, but rather, "appropriate[d] for the enjoyment of third parties the owners' right to exclude."¹³ The Court found support for its position in a number of cases that the Court characterized as involving government-authorized invasions of property that constituted physical takings requiring just compensation.¹⁴ Identifying the current regulation as "appropriat[ing] a right to physically invade the growers' property—to literally 'take access,'" the Court found it to be a per se taking.

The Court rejected the argument that the regulation was not a taking because it did not grant permanent or continuous access, noting that a physical invasion is a taking whether permanent or temporary,¹⁵ and it emphasized that under Nollan, continuous access is not required to find a taking. Thus, it disagreed that the limitations of the regulation "transform[ed] it from a physical taking into a use restriction."

The majority also dismissed the dissent's and the board's contention that PruneYard Shopping Center v. Robins¹⁶ established that the regulation was not a per se taking. The PruneYard court applied the Penn Central factors to conclude that no compensable taking occurred when individuals engaged in leafleting at a privately owned shopping center. While the dissent argued that PruneYard showed that "limited rights to access to private property should be evaluated as regulatory rather than per se takings," the majority disagreed, noting that the property in PruneYard was open to the public, unlike the growers' properties here. Specifically, it found that "[l] imitations on how a business generally open to the public may treat individuals on the premises are readily distinguishable from regulations granting a right to invade property closed to the public."¹⁷

Finally, the majority rejected what it deemed the dissent's "distinctive view of property rights," in which the regulation should be viewed as not appropriating anything, but rather, regulating the owner's right to exclude, and therefore properly assessed under Penn Central. The Court dismissed fears of endangering state and federal government activities involving entry onto private property, noting that its decision did "nothing to efface the distinction between trespass and takings."¹⁸ It also noted "longstanding background restrictions on property rights,"¹⁹ as well as the fact that property owners may cede a right of access as a condition of receiving certain benefits.²⁰ Lastly, the Court commented that, unlike the health and safety regulations in many of the cases cited, "the access regulation is not germane to any benefit provided to agricultural employers or any risk posed to the public." Thus, the judgment was reversed, and the matter remanded.

Justice Breyer's dissent, which Justices Sotomayor and Kagan joined, reiterated the essential disagreement with the majority, which was whether the regulation actually appropriates anything or merely regulates the growers' right to exclude.

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For the dissent, the answer came down to whether the taking was permanent or temporary. It posited that the majority was simply wrong in finding an appropriation because here the access was temporary, and that the correct question regarding a temporary taking is whether it goes "too far."²¹ Thus, the dissent concluded that precedent demonstrated that "a taking is not inevitably found just because the interference with property can be characterized as a physical invasion by the government, or, in other words, when it affects the right to exclude."²²

Comment: The majority acknowledged that a temporary right of access is not automatically a taking and appeared...