Supreme Court Holds no Right to Have Federal Takings Claims Heard in Federal Court

On June 20, 2005, the Supreme Court announced its opinion in San Remo Hotel v. City and County of San Francisco, 545 U.S. ___ (2005), the second of its three property-related decisions this term.  In an opinion for a unanimous Court, Justice Stevens explained that even though San Remo Hotel may have been required to bring its takings claim in state court under the Williamson County decision, the federal courts could not disregard the preclusive effects of the state court’s holding.  In other words, once San Remo Hotel brought its takings claim in state court, it could not relitigate its case in federal court.  

In San Remo Hotel, the plaintiff did what it thought was required by Williamson County.  It brought a state takings claim in state court and later brought a federal takings claim in federal court.  The lower federal courts, however, barred San Remo’s federal case.    

The Supreme Court agreed with the lower courts.  Relying on the doctrines of claim preclusion and issue preclusion, the Court essentially held that a takings litigant can not get two bites at the apple.  Specifically, the Court wrote that “issues actually decided in valid state-court judgments may well deprive plaintiffs of the ‘right’ to have their federal claims relitigated in federal court.”    In other words, property owners do not have a “right” to have their federal takings claims heard by a federal court. 

San Remo takes away the “Catch-22” where property owners were told to litigate in state before bringing their federal claims to federal court, and then told by the federal court that it would not hear their claims.  Unfortunately, now property owners can effectively only bring claims for just compensation in state court.

There is, however, one encouraging aspect of the opinion.   The Court did not specifically uphold the Williamson County decision.  In fact because the plaintiffs did not challenge that decision, the Court did not address it.  NAHB addressed the Williamson County problem in its amicus brief, and in their concurring opinion, Justices Rehnquist, O’Connor, Thomas and Kennedy recognized the problem Williamson County poses for property owners.  Chief Justice Rehnquist wrote, that “the Court should reconsider whether plaintiffs asserting a Fifth Amendment takings claim based on the final decision of a state or local government entity must first seek compensation in state courts.”  This is a clear indication that they would like to hear a case that challenges Williamson County. 

For more information, please contact Duane Desiderio, Staff Vice President - Legal Affairs at NAHB, via e-mail at ddesiderio@nahb.com or call him at 800-368-5242 x8146.

For the complete opinion, please visit the U.S. Supreme Court web site at:  http://a257.g.akamaitech.net/7/257/2422/20jun20051200/www.supremecourtus.gov/opinions/04pdf/04-340.pdf

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