May 10, 2013

Former PLF attorney scores remarkable regulatory takings victory in Lockaway Storage v. County of Alameda

By Former PLF attorney scores remarkable regulatory takings victory in Lockaway Storage v. County of Alameda

Tim Kassouni, a former PLF attorney, scored a remarkable victory this week in the California First District Court of Appeal in Lockaway Storage v. County of Alameda.  Kassouni’s client, Lockaway Storage, purchased property in Alameda County in 2000, relying on an existing Conditional Use Permit that would allow it to build a boat and RV self-storage facility.  Lockaway worked with County planning officials over the next two years who assured it that the project could move forward.  But then in 2002, the County decided that Lockaway needed to apply for a new permit which the County Zoning Board and Board of Supervisors denied.  These officials claimed that a voter initiative, which limited new growth in the County, prohibited Lockaway from moving forward with its project.  The problem, was that the initiative specifically authorized projects which had already obtained all necessary discretionary permit approvals.  And Lockaway had!

The company, represented by Tim Kassouni, then filed an action in state superior court, alleging that the County’s withholding of the permit constituted a regulatory taking of its property and violated other of its constitutional rights.  Lockaway won, and the trial court ordered the County to allow the project to proceed.  Lockaway had to institute a contempt proceeding to enforce that order, but eventually, the County complied by issuing the remaining permits Lockaway needed so it could finally complete the project and open its business.

On appeal, the court affirmed the trial court’s finding that the County’s actions rose to the level of a temporary regulatory taking.  It also affirmed a damages award of $989,640.96 and a separate attorney fee award of $728,015.50.  The court found that the County’s argument, that the voter initiative measure prohibited Lockaway’s project from moving forward—even though Lockaway had already received all required discretionary approvals—lacked “any merit.”  More significantly, however, is the court’s finding that the County’s actions constituted a regulatory taken under the Penn Central test.

As Justice Chief Justice Roberts hinted during the Koontz oral argument, it is virtually impossible for any landowner to win under Penn Central.  (He pointedly asked the government’s attorney if he knew of any Penn Central case where a property owner had won).  It has traditionally been difficult to win under Penn Central because the test involves balancing various factors which are imprecise and malleable—(1) the “economic impact” of the regulation on the property owner; (2) the extent to which the regulation interferes with “distinct investment-backed expectations,” and (3) the “character of the governmental action.”  Here, however, the court affirmed that each of these factors weighed in Lockaway’s favor.  And, that “the County’s regulatory about face” regarding the status of Locakway’s project, “was manifestly unreasonable.”

In reaching this conclusion, the court made some important pronouncements on regulatory takings law.  It questioned the continuing relevance of Landgate v. California Coastal Commission—a case stating that delays in the permitting process do not generally give rise to temporary takings claims.  The court adopted a point made in PLF’s amicus brief, that Landgate is no longer relevant to takings claims after the U.S. Supreme Court’s decision in Lingle v. Chevron.  But rather, it is limited to substantive due process claims.  The court stated: “In light of Lingle, we reject the County’s contention that Landgate establishes an independent test for evaluating whether government action is a regulatory taking.”  It went on to say that even if Landgate remains good law, it does not apply to this case because the County’s actions vis-a-vis Lockaway were not “normal delay” caused by plausible mistakes.  Rather, the County’s litigation position regarding the voter initiative was “nonsense,” as was its contention that its denial of Lockaway’s project was justified.  The court likewise affirmed the damages and attorney fee award.

Congratulations to Lockaway and to Tim Kassouni on this great victory!  PLF will continue its support as amicus curiae if the County seeks review of this decision in the California Supreme Court.

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