Temporary Regulatory Takings Do Exist in California!

by Nossaman LLP

Given the maze of procedural and substantive hurdles involved, property owners rarely succeed with regulatory takings claims.  Even when owners do win, it is yet more uncommon for courts to award damages, instead allowing the public agency to repeal the regulation.  But securing a victory on liability and a damages award for a temporary regulatory taking, well, that is nearly uncharted territory (going into the realm of unicorns, the Loch Ness Monster, and other mythical creatures); we've heard stories of such events, but it is rare to find reliable documentation.

That all changed last week when the California Court of Appeal issued its decision in Lockaway Storage v. County of Alameda (May 9, 2013), holding that the County's application of a voter-approved growth control initiative resulted in a compensable temporary regulatory taking entitling the owner to nearly one million in damages and over $725,000 in attorneys' fees.


In May 2000, Lockaway purchased 8.45 acres of land in Alameda County for $800,000 with the intent to build a boat and RV self-storage facility.  Prior to the close of escrow, Lockaway confirmed with the County that the property could be used for this purpose.  The prior owner had secured a Conditional Use Permit (CUP) in 1999 which permitted the development of a storage facility that would expire in September 2002 if not implemented before its expiration.  Escrow closed in August 2000 and Lockaway assumed the rights and obligations of the seller under the 1999 CUP.

In November 2000, the Alameda County voters passed Measure D, a growth control initiative which generally prohibited the development of storage facilities in the area of Lockaway's property.  Measure D included two exceptions:  (i) the ordinance could not be applied in a way that would deprive anyone of their "constitutional or statutory rights or privileges;" and (ii) the ordinance would not affect "existing parcels, developments, structures, and uses," nor apply to development or proposed development which had received all discretionary permits and approvals. 

Despite Measure D's adoption, Lockaway pursued its plan to develop the property and was assured by County staff that it had implemented the CUP, as required.  However, one month before the CUP was set to expire, the County informed Lockaway that it would not renew the CUP and the project could not go forward without a new CUP.  By then, Lockaway had spent approximately $400,000 on the project and only needed a building permit from the County to proceed with construction, which the County did not issue prior to the CUP's expiration.  The County considered the new CUP Lockaway filed under protest and determined the project was prohibited under Measure D because Lockaway had not secured its building permit and commenced construction prior to Measure D taking effect.  Lockaway subsequently filed a lawsuit against the County for inverse condemnation, along with a writ of mandate to force the County to allow Lockaway's project to proceed.

The Trial Court

The trial court determined that Measure D did not apply to Lockaway's project and commanded the County to issue permits so the project could proceed.  Lockaway continued to pursue its inverse condemnation claim, seeking damages for a temporary regulatory taking for the 30 month delay during which the County applied Measure D and prohibited the property's development.

At trial, the court determined that the County's application of Measure D resulted in a temporary regulatory taking of Lockaway's property.  Using the three-factor test provided in Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104, 115-116 -- i.e., (1) the economic impact of the regulation on the owner, (2) the extent to which the regulation interfered with distinct investment-backed expectations, and (3) the character of the governmental action, the court held that the County's conduct had a "substantial, negative economic impact on Lockaway's use of the property, had materially interfered with [its] distinct, investment-backed expectations and that its conduct could not be justified as a normal regulatory mistake."  The trial court awarded damages totaling $989,640.96, comprised of lost profits, increased construction costs and interest.  Lockaway was also awarded attorneys' fees amounting to $728,015.50.  The County appealed.

The Court of Appeal

The Court of Appeal confirmed that Lockaway's project was not subject to the growth control initiative but instead fell within one of the Measure D exceptions since the project had secured the discretionary CUP permit, and any remaining permits were ministerial actions.

The Court also agreed that the County's actions went "too far" when considering the three-pronged Penn Central test.  While the County's actions did not render the property completely worthless, the County did "unreasonably impair the value or use of the property" during the time it was enforcing Measure D.  Expecting Lockaway to develop another project consistent with Measure D would have caused a substantial decrease in the value of the property; moreover, the funds devoted towards the property's development would have been wasted, and Lockaway would have been deprived of a reasonably expected return on its investment since it had always intended to develop the property for storage facilities.  As such, the County had affected a temporary taking of Lockaway's property and compensation for that time period was appropriate.

The County argued that under Landgate Inc. v. California Coastal Comm. (1998) 17 Cal.4th 1006, there could be no liability for a temporary regulatory taking where a legally erroneous decision of a government agency results in a delay in the permitting process.  But given more recent, conflicting authority from the U.S. Supreme Court in Lingle v. Chevron (2005) 544 U.S. 528, the Court questioned Landgate's validity, and at a minimum narrowly interpreted its application, holding that at most it could factor into consideration of a "normal delay in the permit process."  That was not the case with Lockaway, as the County's "doctrinal shift" in interpreting Measure D took "the case out of the ‘normal-if-mistaken-regulatory-activity' paradigm and turns it into a taking."


While successful regulatory takings claims are still infrequent, there does appear to be a judicial shift towards reigning-in overreaching government regulations.  The Lockaway decision is important not only because it documents the reality of liability and damages for temporary regulatory takings, but also because it highlights the court's focus on the government's conduct and whether a property owner was treated fairly during the regulatory process.  Lockaway also signals the narrow applicability of the "normal delay in the permitting process" defense public agencies could turn to under the prior Landgate decision.

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.

© Nossaman LLP | Attorney Advertising

Written by:

Nossaman LLP

Nossaman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.