Fourth Circuit Rejects Manipulation Of Judicial Process As Ocean Manhandles Homes

by McCarter & English: Climate Change & Renewable Energy
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Can a community condemn shorefront cottages where the beach has eroded at 8 feet per year and the cottages interfere with emergency responders traveling along the beach?  Based on the Fourth Circuit's decision at the end of last month in Sansotta v Town of Nags Head we just don't know. What we do know is that a municipality cannot play both ends of the law against the middle to address the problem.

Let us explain.  Nags Head is a shore community of about 2500 souls (soaring to 40,000 in the summer) on North Carolina's Outer Banks. Municipal ordinances provide that a building suffering storm damage or erosion damage may be a public nuisance where it is in danger of collapsing, where there is a likelihood of personal or property injury, or where the structure is on public trust or public land.  Nags Head Ordinance 16-31(6) (a), (b), (c).  A 2009 storm washed away much of the sand around six cottages leaving their septic tanks exposed. The Town declared the cottages nuisances under Ordinance 16-31(6)(b) and (c) and required their abatement. Demolition was the only way to satisfy the ordinance but the homeowners did not comply and the Town assessed fines accruing at $100 per day.  The homeowners sued. (Twenty other cottages were also declared nuisances resulting in at least two other suits. See Town of Nags Head v. Toloczko, 863 F. Supp. 2d 516 (E.D.N.C. 2012); Town of Nags Head v Cherry, Inc., 723 S.E.2d 156 (N.C. Ct. App. 2012).)
 
The suit was originally filed in state court with claims sounding in both state and federal law. The Town removed to federal court.  Both parties moved for partial summary judgment.  The trial court dismissed and the homeowners appealed.

The Fourth Circuit affirmed the trial court's dismissal of the equal protection and procedural due process claims; however, the court of appeals reversed the trial court's dismissal of the takings claim.

Fourteenth Amendment Procedural Due Process.  Due process requires that before one is deprived of life, liberty or property, a constitutionally fair process must be imposed. Here, while the homeowners asserted constitutionally protected interests in the money to pay the fines and the cottages themselves, the Town never deprived them of those interests. First, the fines were never paid. Second, the Town's "regulatory actions do not constitute a deprivation of property because they represent limitations on the use of property that 'inhere in the title itself, in the restrictions that background principles of the State's law of property and nuisance already place upon land ownership.'" Sansotta at 14.  "By acting to abate what it believed was a nuisance, the Town simply kept the Owners from using their property in a way that was prohibited by law." Id. at 15. 

Fourteenth Amendment Equal Protection. The homeowners asserted that they were treated differently than the 14 other cottages that were also located in the public trust area. This was true but it did not matter. The Town had a valid reason for treating the cottages differently:  they were closer to the ocean and obstructed the passage of emergency vehicles to a greater extent.  "Notwithstanding the Owners' contentions about all parts of the beach being valuable, different parts of the beach may present different issues with regard to public safety.  Hence, the difference in the locations of the cottages on the beach is a legitimate basis for treating them differently."  Id. at 20. 

Fifth Amendment Takings. The homeowners asserted that their property was taken without just compensation. However, the homeowners had not completed the process of pursuing their compensation claim under state law. This was fatal to a federal claim, which required that a "plaintiff must first have sought compensation 'through the procedures the State has provided for doing so.'" Id. at 21.  In state court, however, the homeowners could assert a taking, even though they had not completed the compensation process.  "[U]nder San Remo Hotel[, L.P. v. City & Cnty. of San Francisco, 545 U.S. 323, 346 (2005)], a plaintiff may bring a takings claim in state court without having already been denied compensation by the state, if he also brings his state-law claim for just compensation." Id. at 23.  And here was the rub:  the Town had removed the case from state court, where the homeowners takings claim was ripe. But in so doing, the Town asserted the claim became unripe in federal court. Id. at 24.

The Court of Appeals was not willing to "judicially condone[] manipulation of litigation." Id. at 25.  The requirement for a federal court to wait until the state court has ruled on a just compensation claim, was a "prudential" not a "jurisdictional" requirement.  State courts have more experience in land use matters than federal courts, but that "does not mean that federal courts are incapable of handling them."  Id. at 25.  "A defendant implicitly agrees with this conclusion when he removes a case involving such a state or municipal law to federal court."  Id. at 25-26. Thus, the court refused to apply the state court litigation requirement and reversed the trial court's dismissal of the takings claim. "Based on our conclusion that a state and its political subdivisions waive the state-litigation requirement by removing a case to federal court, the district court erred in dismissing the Owners' takings claim as unripe." Id. at 35.

We find three things of moment in this case and its decision:

First, Nags Head is just one small community on the Atlantic littoral beset by rising sea levels. Yet it has spawned at least three cases that have been litigated to the appellate level.  We can expect many more.

Second, the issues in the rising sea level cases are going to get right down to fundamentals. Constitutional rights will be invoked. This of course suggests the Supreme Court will get involved. We note that it already has.  See Stop the Beach Renourishment, Inc. v. Florida, 560 U.S. 2606 (2010).

Third, one of the homeowners' takings claim was based on "redefining private property as public land." Id. at 21 n.16. Observe that the states own the land below mean high water (or mean low water in some cases). As the oceans rise, the states' claims to more and more of the current landowners' shorefront will increase. Is it the case, then, that that is a taking?  If it is, then states better start setting aside some substantial funds to pay just compensation that they cannot avoid. 

The front cover of this month's National Geographic premiers Rising Seas, How They Are Changing Our Coast Lines.  In North Carolina, they are living (and litigating) that.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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