PropertyProf Blog

Reiss on Fannie Mae and Freddie Mac

David J. Reiss (Brooklyn Law School) has posted Fannie Mae and Freddie Mac: Privatizing Profit and Socializing Loss on SSRN.  Here's the abstract:

This book chapter describes the role of Fannie Mae and Freddie Mac in the ongoing financial crisis. The chapter first explains the hybrid public-private nature of Fannie and Freddie, which are what is known as Government Sponsored Enterprises (GSEs). Fannie and Freddie were originally chartered by the federal government to create a national mortgage market. The chapter then explains how the two GSEs morphed into extraordinarily large companies that profited enormously from their special relationship with the federal government, while providing only modest benefits to American homeowners. In what turned out to be a disastrous trade-off for American taxpayers, Fannie and Freddie ended up needing a bailout measured in the hundreds of billions of dollars. Ultimately, Fannie and Freddie exhibited the common failings of poor GSE design — after fulfilling their original purpose, they took on monstrously large lives of their own that defied political oversight. The chapter concludes that Fannie and Freddie should be privatized, with their remaining public functions assumed by pure government actors.

Ben Barros

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Finders Not Keepers in Lottery Ticket Case

AOL News has an interesting story about a finding case in England where a couple who found a winning lottery ticket were forced to return the money (at least the portion they hadn't spent) to the original owner, who had dropped it.  The story, and an accompanying poll, suggest the continued impact of the "finders keepers" cultural myth -- a majority of poll respondents say that the finders should have been able to keep the money won with the ticket.

Ben Barros

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Craig on Climate Change and Public Trust

Robin Kundis Craig (Florida State) has posted Adapting to Climate Change: The Potential Role of State Common Law Public Trust Doctrines on SSRN.  Here's the abstract:

Climate change is already altering historical expectations regarding water supply and aquatic ecosystems. In turn, changes in water supply may call into question the continued utility of existing water law rules in many areas of the country, unsettling private rights and expectations in water allocations in favor of more public interests and values in water, including protections for ecosystems and their services. Water law is already more sensitive than many other kinds of law to the ecological conditions that dominate in an area. As a result, water law is a likely legal mechanism for effectuating climate change adaptation, at least as relates to water resources. In particular, and far more than most fields of property law, water law is almost uniquely potentially available to support some of the adaptive management regimes that climate change adaptation will require. This Article argues that, within water law, state public trust doctrines can be particularly well-suited to providing legal support for adaptive management-based climate change adaptation regimes. In particular, it notes that courts have long adapted public trust doctrines in the United States to local needs and circumstances, and several states now explicitly characterize their public trust doctrines as evolutionary. With respect to water resources, therefore, these common-law public trust doctrines give willing states a means of (1) acknowledging climate change as a threat to public resources; (2) continually reassessing the cumulative impacts climate change is causing; (3) supporting fledgling adaptive management efforts by state agencies; and, at the extreme, (4) engaging in judicial adaptive management, in the sense of rebalancing private rights and public values in impacted aquatic resources, ecosystems, and ecosystem services.

Ben Barros

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Davis and Brophy on Family, Property, Will and Trust in the Antebellum South

Stephen Duane Davis II (Law Clerk, U.S. District Court, Northern District of Alabama) and our own Alfred L. Brophy (UNC - Chapel Hill) have posted The Most Esteemed Act of My Life: Family, Property, Will, and Trust in the Antebellum South on SSRN.  Here's the abstract:

This paper combines an empirical study of probate in Greene County, Alabama, one of the wealthiest counties in the United States in the years leading into Civil War, with a qualitative examination of property doctrine and ideology at that time. The data address three key themes in recent trusts and estates literature. First, what testators did with their extraordinary wealth; in particular, how they worked to maintain property within their families, and especially how male testators were suspicious of loss of their family's wealth through their daughters' marriages. Second, the testators used sophisticated trust mechanisms for both managing property and keeping it within their families. In the antebellum era, Americans celebrated the ways they harnessed technologies, from the steam engine to the telegraph and printing press, to create wealth and improve society. This study reveals that trusts should be added to that list of technologies that assisted in the creation and management of wealth. Finally, the data reveal the salience of enslaved human property, often managed through trusts after their owners died and also frequently divided between family members, to the maintenance of family wealth.

While some in the United States at the time, including some jurists, as well as politicians and novelists, questioned the desirability to our country of inheritance, the Greene County data show an extraordinary devotion to maintenance of family wealth. The findings in 'The Most Esteemed Act of My Life' invite further study in other places in the South, as well as in the North, to test the extent to which the existence of wealth (particularly a wealth based on human property) led to different patterns of bequest from those seen among some of our nation's wealthiest individuals at critical period of American history.

Al has some further comments on this very interesting article over at the Faculty Lounge.

Ben Barros

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Homeowners Association Bans Smoking in Housing Units

From the Wisconsin Leader-Telegram:

It's not just indoor public places in Eau Claire where lighting up is prohibited. Now residents of a south side, owner-occupied housing complex will have to snuff out smoking in their homes, the most recent sign of public anti-smoking sentiment.

Members of the Fairfax Parkside Homeowners Association on Wednesday voted to outlaw smoking inside residences that are part of the 34-unit development. The ban also prohibits smoking in shared spaces, such as porches and garages, but does allow it in yards and on patios.

Of the 19 association members who voted on the issue, 15 favored the anti-smoking regulation proposed by association President Dave Hanvelt, while four argued that residents should be allowed to smoke in their homes.

"This doesn't restrict a smoker from living here," Hanvelt said of the smoking prohibition. "It just means that there are restrictions on where they can smoke." . . .

Hanvelt proposed the regulation earlier this year because homeowners in the development own twin homes, or each side of a duplex-style home. Because of their close proximity, smoke from one unit could flow into the one next door.

"If we all lived in separate units, this wouldn't have been necessary," Hanvelt said, noting homeowners association members made sure to allow outdoor smoking so as to not be too restrictive.

Ben Barros

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Two Jugs of Tea and a Chicken

My colleague Wes Oliver is hard at work on three different articles right now, and was just sharing his fuel for a late night writing session:  two jugs of (caffeinated, iced) tea and a (rotisserie) chicken.  I think that would make a great t-shirt.

Ben Barros

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Penalver on the Illusory Right to Abandon

Eduardo M. Penalver (Cornell) has posted The Illusory Right to Abandon on SSRN.  Here's the abstract:

The common law of property supposedly empowers owners of chattels freely and unilaterally to abandon them by manifesting the clear intent to do so, typically by renouncing possession of the object in a way that communicates the intent to forego any future claim to it. In contrast, the law has also traditionally prohibited the abandonment of possessory interests in land. On the rare occasion it is even discussed, this disparate treatment is usually treated as a puzzle that needs to be explained. In this essay, I argue that this way of framing the question misunderstands the structure of abandonment law. Viewed through the lens of land, the (prospective) right to abandon any form of tangible property, even chattels, is an illusion. This is because the legal prohibition of abandoning land, when coupled with the law of trespass, dramatically qualifies the unilateral right to abandon any property (even chattels) almost to the point of insignificance. On this view, the common law’s treatment of land is not an anomalous restriction within a legal regime that otherwise empowers owners freely to abandon their property. Instead, the inability to abandon land forms the foundation of a complex system that, among other things, regulates and directs the disposition of unwanted chattels by requiring those seeking to sever their bonds of ownership with chattels to do so in cooperation with others. Observing how rule prohibiting the abandonment of land undermines the usual understanding of the scope of the common law right unilaterally to abandon chattels does not definitively resolve the puzzle of why the common law restricts the right to abandon land. It merely reframes the question. Instead of asking why the common law treats land differently from chattels, the more appropriate question is why the common law expresses such suspicion of abandonment. A fuller explanation of this reframed question points towards the connections between the common law of property and a conception of property in land that views the institution of landownership as a social practice suffused with obligation and duty.

Ben Barros

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Dagan on Exclusion and Inclusion in Property

Hanoch Dagan (Tel Aviv) has posted Exclusion and Inclusion in Property on SSRN.  Here's the abstract:

Exclusion is in vogue in property discourse: the right to exclude is often considered property’s most defining feature. In this essay, I criticize exclusion-centrism in property theory and argue that inclusion is also a key component of property. Property is an umbrella for a diverse set of property institutions, and defies a perception viewing the right to exclude, or indeed any other feature, as the ultimate core of its definition. To illustrate this point, the essay points to three examples - the law of public accommodations, the copyright doctrine of fair use, and the law of fair housing, notably in the contexts of common-interest communities and leaseholds. The essay shows that limits on the right of owners to exclude, either by refusing to sell or lease or by insisting that non-owners refrain from physically entering their land, are quite prevalent in property law. It further argues that, in these examples, the right of non-owners to inclusion (to buy, rent, or physically enter) should not be viewed as an embarrassing aberration but rather as entailed by the very values that shape property institutions in the first place. I thus conclude that, although less characteristic, manifestations of inclusion are just as intrinsic to property as those of exclusion, and should not be analyzed as external limitations or impositions.

Ben Barros

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Advanced Placement for Law Schools

Legal education faces a quandary.  On the one hand, law school costs a lot of money and takes a lot of time.  The tuition that can easily leave students with over $100,000 in debt is the most obvious cost of law school, but the opportunity costs of lost income over three years are also substantial.  On the other hand, a reasonable case can be made that three years is not enough to provide students with a full legal education.  Surprising as this may sound to students grousing about the purported uselessness of the third year of law school, the ABA Out of the Box Committee recently suggested that law school should be four years for regular division students (much to Gordon Smith's dismay).  As its name suggests, the Out of the Box Committee is designed to make provocative suggestions.  The Committee was cognizant of the problem of cost, but argued that three years is not sufficient time to fully prepare law students for the practice of law.  What you think of the idea probably turns on what you think the purpose of law school should be.  To be clear, an additional year of law school does not necessarily mean another year of doctrinal coursework.  It could be argued that four years are needed to provide law students with both the doctrinal knowledge and the skills training necessary to thrive as a practicing lawyer.  Think medical school, and you get the basic idea.

Even if you buy the Out of the Box Committee’s basic premise, concerns about cost make an additional year of graduate-level law school untenable.  If some component of legal education could be pushed to the undergraduate level, though, we might be able to have the best of both worlds.  Students already have to pay for undergraduate tuition, and if they came to graduate-level law school with some specified quantity of legal knowledge, then graduate-level law school could be devoted to more advanced topics.  If a sufficient amount of legal education was achieved at the undergraduate stage, then graduate-level law school might be shortened to two years while the overall amount of legal education received by students might actually increase.

What we teach in law school can be roughly divided into two components:  stuff and skills.  In its current incarnation, legal education is largely focused on teaching stuff – the basic doctrinal rules, and related policy issues, of various areas of law.  There is a reasonable amount of legal analytic skill that is taught in your typical casebook course, especially in the first year.  But most of what we teach is stuff – basic knowledge of one sort or another.  Some types of stuff are more complex than others, but most of the basics really aren’t that hard.  I’m pretty confident that undergraduates would be able to handle most of the basics of property law, and of any other legal area.

If students came into graduate-level law school with a decent introduction to the law of property, then we could do so much more with them.  What this more might be might vary – it could be more practice oriented, more theory oriented, or remain doctrinal, but on a deeper level.  Students wouldn’t need to enter with the same knowledge base that we expect them to have at the end of the first-year course.  Just a basic understanding of the basic areas of property law would suffice.

Presuming that it is desirable to shift some legal education to the undergraduate level, how do we get there?  My proposal is to create an advanced placement system for law school.  High school students can take advanced placement tests in a wide range of subject areas.  If they score well enough, they are given college credit and can place out of some introductory college courses.  The same thing could be done with legal education.  Exams could be offered in a number of doctrinal areas.  If students score well enough, they would be given law school credit and could place out of the introductory course in that subject (or could take an abbreviated version of that course).

One advantage of using placement exams as a vehicle is that it would let the market decide how best to promote undergraduate legal education.  If the ABA approves the tests, and allows accredited law schools to give placement credit for them, then it wouldn’t matter how students are prepared for the tests.  All that will matter is student performance.  Most of the basics of legal subjects could be taught well on-line, or through distance learning.  Kaplan, the Princeton Review, etc. might offer prep tests.  So long as students display a basic level of competency, it shouldn’t matter how that competency is achieved.  I would imagine (and hope) that undergraduate institutions would start to offer law majors, but students could prepare for the tests any way they like.  Initially, the tests would allow some students to gain some law school credit before starting law school, making it easier for them to get a J.D. in two years.  Over time, the tests might morph into law boards that all students are expected to take before admission to graduate-level law school. 

Moving to this system would have advantages for everyone involved.  For students, it would allow them to get the J.D. in two years.  If enough material was moved to the undergraduate level, then students might end up with the equivalent of four years of graduate legal education for less money and overall time.  If a lot of the basics were moved to the undergraduate level, graduate-level law school could focus on more complex and creative course offerings, better preparing students for practice.  Having a part of legal education done at the undergraduate level would also lead to more people getting some legal education.  Not everyone who studied law at the undergraduate level would go on to graduate law school to become a practicing lawyer.  Students with some undergraduate legal education would hopefully be able to make better-informed decisions about whether to get a graduate education in law or to pursue another career.  Students who decide that they want to go school late could take intensive programs like those designed for people who want to go to medical school but who have not completed the prerequisites.  Or, law schools could continue to offer full programs for those students who don't have an undergraduate legal education.

An objection, which is sometimes raised about European systems that have an undergraduate component to legal education, is that students end up knowing law but nothing else.  This could be called the liberal arts objection.  I'm a huge fan of liberal arts education, so this objection has a lot of resonance with me.  My initial response to it has a few parts.  First, an undergraduate legal education doesn't have to be as doctrine-focused as current law school programs.  If I was designing an undergraduate law program, I would require basic courses in logic and economics, and would highly recommend other courses in history, philosophy, and political science.  Second, students can and should take courses as undergraduates outside of their major.  Third, if someone was to object that it is a problem for lawyers to only know law, a logical response would be to ask what, exactly, lawyers should know in addition to law.  Students come to law school with such a wide range of undergraduate (and graduate) backgrounds that most have little exposure to any given subject area.

Shifting some legal education to the undergraduate level would change existing law schools, but would not hurt them.  So long as the graduate law degree – the J.D. – is the one required for practice, law schools are secure.  The placement exams would give graduate law schools a much-improved data set to use for admissions decisions – performance on actual law-related standardized exams would seem to me to be the best possible predictor of law school success.  (The LSAC folks shouldn’t be threatened – they’d be good candidates to administer the exams, and the LSAT wouldn't go away in any event.  US News would have a new data point for rankings, and this one (unlike many of their current ones) would actually be relevant and hard to game.).  Law schools might expand, becoming legal education centers providing both graduate and undergraduate offerings (alone or in joint ventures with undergraduate institutions) in law.  If the J.D. program was only two years, it might become common for students to do a specialized LL.M.  Law schools could compete in LL.M. specialization.  If you’re thinking about going to graduate school in philosophy, you would pick Pitt over NYU if you were interested in philosophy of science, but would pick NYU over Pitt if you wanted to study moral philosophy.  So, too, you might pick NYU over George Washington for an LL.M. in tax, but George Washington over NYU for an LL.M. in intellectual property.

The shift would also be good for law professors.  To begin with, there would be a lot more of them if undergraduate institutions started offering programs in law.  Those teaching at graduate law schools would have more freedom to be creative with their courses, and would be able to spend more time on complex issues rather than the basics.  I personally would love to try teaching Property to undergraduates.  I would also love the opportunity to teach more advanced Property issues to my law school students.  Even with six credits to teach Property, I can only scratch the surface of most issues.  If students had a basic background in, say, the law of servitudes, then I could spend more time on some important issues that I currently don't have time to cover, such as common interest community governance.

So it seems to me that moving to an advanced placement system for law school would be a win for everyone.  Others probably will see drawbacks that I'm missing.  If so, have at it in the comments.

Ben Barros

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Disclosure of Energy Star Data in Commercial Real Estate Transactions

According to an alert by some folks at Greenberg Traurig's land development group, California will soon require the disclosure of energy efficiency data in non-residential real estate transactions: 

On January 1, 2010, owners of non-residential buildings in California will be required to disclose the Energy Star performance rating of any building that they want to sell, lease or finance when the entire building is involved in the potential transaction. This disclosure obligation was created by Assembly Bill 1103, which has received little attention from building owners, managers or commercial brokers. However, these parties need to prepare for this new obligation.

The stated purpose of the disclosure requirement is to “motivate building operators to take actions to improve their buildings’ energy profiles” and “to allow building owners and operators to compare their buildings’ performance to that of similar buildings and to manage their buildings’ energy costs.”

Ben Barros

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Revive INS v. AP to Save Newspapers?

From an Op-Ed in the Cleveland Plain Dealer:

"If the copyright law doesn't open the way for originators of news to stop the free-riding, newspapers will die," he said. "No exceptions."

The Marburgers propose a change in federal law that would allow originators of news to exploit the commercial value of their product. Ideally, news originators' stories would be available only on their Web sites for the first 24 hours.

There is precedent for this change, David Marburger says. In 1918, the Associated Press sued International News Service for essentially the same problem now posed to newspapers by Web aggregators. INS was copying or rewriting AP stories and transmitting them by telegraph and telephone to papers in western U.S. time zones.

The Supreme Court ruled that INS engaged in unfair competition that ultimately would drive AP out of business. It enjoined INS from reproducing the AP stories, but only for a brief period while AP's dispatches had commercial value.

The court decision was diluted over time. In 1976, Congress further weakened the ruling with a new section in the copyright bill that didn't anticipate future problems of the Internet.

The Marburgers recommend amending the federal Copyright Act to provide two remedies for unjust enrichment:

• Aggregators would reimburse newspapers for ad revenues associated with their news reports.

• Injunctions would bar aggregators' profiting from newspapers' content for the first 24 hours after stories are posted.

Ben Barros

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RLUIPA and Eminent Domain

Over at Prawfs, Nelson Tebbe has an interesting post on the impact of RLUIPA on takings of property owned by religious entities.  The post is based on an article co-authored by Tebbe and Chris Serkin titled  Condemning Religion: RLUIPA and the Politics of Eminent Domain.

Ben Barros

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Possession in Property Law and Theory

I'm presently working on a paper on possession.  What follows is my current thinking on the different roles that possession plays in property law and theory.  Comments of any sort would be very welcome.

The idea of possession plays three important, but distinct, roles in property law and theory.  First, possession is central to theories justifying individual ownership of objects that previously had been unowned.  These theories seek to explain and defend the origin of a system of private ownership.  In Locke’s theory of property, for example, people gain ownership of objects by possessing those objects and mixing labor with them.  Initial ownership theories rest on an idea of first possession, in which the first possessor becomes the first owner of an object.

Second, the idea of prior possession lies at the heart of many property law doctrines.  Under the rule of prior possession, a prior possessor will generally have a superior claim to an object as compared to a subsequent possessor.  If formal ownership cannot be established between two claimants for the same object, the rule of prior possession states that the prior possessor will be given ownership of the object.  There are many disputes in property law about what actually constitutes possession.  For example, the famous case of Pierson v. Post involved a dispute about whether pursuit of an animal by a hunter was sufficient to establish possession, or whether the actual killing or grabbing of the animal was necessary to possess it.  All cases agree, however, that once the issue of possession is resolved, a prior possessor typically will win over a subsequent possessor.

Prior possession bears a resemblance to first possession, in that both are consistent with the maxim “first in time, first in right” and give superior claim to an object to the earliest person to lay claim to it.  First possession and prior possession, however, tend to do different types of work.  First possession is concerned with the initial ownership of an object, and in a world where there are few unowned objects, first possession is largely relevant to theoretical debates about the idea of ownership itself.  Prior possession, in contrast, is a working doctrine reflected in the operation of property law.  It assumes the big-picture normative justification of a system of private ownership, and addresses the competing claims of ownership of two possessors, neither of whom in the typical case was the first to own the object in question.  This is not to say that the rule of prior possession is without normative content – it reflects a normative position that prior possessors should have superior rights to current possessors.

Third, possession plays an evidentiary role in disputes about ownership.  Absent other evidence about ownership, current possession may create a presumption of ownership.  This evidentiary role of possession is reflected in Lord Mansfield’s famous observation that “Possession is very strong; rather more than nine points of the law.”   Despite its evidentiary significance, however, current possession plays little substantive role in property law.  If person B has current possession, and person A can demonstrate prior possession, then the rules of property law will generally operate to vindicate A’s ownership of the object.

The difference between prior possession and current possession is reflected in the basic operation of property law.  The essential function of property law is to vindicate prior rights in an object.  If B has current possession and A had prior possession or other evidence of ownership, the law will force B to return the object to A.  We could imagine an alternative set of ownership rules that protects current possession over prior possession.  This alternative ownership law would be consistent with the playground maxim “finders keepers, losers weepers.”  (Despite its popularity with the six-to-ten-year-old set, this maxim is not reflected in the actual law of finding, and the original owner or possessor does not lose ownership to the finder.).  Under this alternate ownership regime, whoever currently possesses the object would own the object.  If B has current possession and A had prior possession, the alternate approach would protect B’s possession and would not force a return to A.  This approach is exactly the opposite of the current law of property.

Ben Barros

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What’s At Stake in Stop the Beach Renourishment

As I noted a couple of weeks ago, the Supreme Court recently granted cert in Stop the Beach Renourishment v. Florida Department of Environmental Protection.  The cert petition presented three questions, but the case will likely center on the first:

The Florida Supreme Court invoked “nonexistent rules of state substantive law" to reverse 100 years of uniform holdings that littoral rights are constitutionally protected. In doing so, did the Florida Court's decision cause a ''judicial taking" proscribed by the Fifth and Fourteenth Amendments to the United States Constitution?

This case gives the Court the opportunity to answer one of the great open questions in takings law:  when, if ever, can a judicial decision constitute a taking of private property in violation of the Fifth Amendment’s Just Compensation Clause?  There is a widespread assumption among many property professors that the answer to this question is “never.”  After all, we teach cases like Matthews v. Bay Head, where the Supreme Court of New Jersey appeared to alter the state’s property law to allow public access to beachfront property that had previously been private.  There is little doubt that if the legislature had required the same access it would have been a per se taking (see, e.g., Nollan, Loretto, Kaiser Aetna).  But because the judiciary, rather than the legislature, made the change, there is a sense that the takings problem somehow disappears.

The Supreme Court has not squarely addressed the judicial takings issue, although there is some precedent from early substantive due process cases that might help the petitioners in Stop the Beach.  The issue has also been addressed in some more recent concurring and dissenting opinions, and was raised at least by implication in Webb's Fabulous Pharmacies v. Beckwith.  One of the most important statements on judicial takings by a member of the Court is the following passage from Justice Stewart’s concurrence in Hughes v. Washington:

Surely, it must be conceded as a general proposition that the law of real property is, under our Constitution, left to the individual States to develop and administer.  And surely Washington or any other State is free to make changes, either legislative or judicial, in its general rules of real property law, including the rules governing the property rights of riparian owners. . . . To the extent that the decision of the Supreme Court of Washington on [the property issue in dispute] arguably conforms to reasonable expectations, we must of course accept it as conclusive.  But to the extent that it constitutes a sudden change in state law, unpredictable in terms of the relevant precedents, no such deference would be appropriate.  For a State cannot be permitted to defeat the constitutional prohibition against taking property without due process of law by the simple device of asserting retroactively that the property it has taken never existed at all.  Whether the decision here worked an unpredictable change in state law thus inevitably presents a federal question for the determination of this Court.

389 U.S. 295-97 (1967) (Stewart, J., concurring). 

Both Hughes and Stop The Beach involve the doctrine of accretion, which at common law gave ownership of land that was gradually deposited by the ocean to the beachfront property owner.  In Hughes, however, the beachfront land had been owned and conveyed by the United States before Washington became a state.  The Court therefore held that the issue of accretion was governed by federal rather than state law, and concluded that, as a matter of federal common law, the accreted land was owned by the beachfront owner.

This issue of prior federal ownership is not present in Stop The Beach, where the Florida Supreme Court (over vigorous dissent) held that as a matter of Florida law, the beachfront owner did not have a property right in the accreted land.  The petitioners argue that the Florida Supreme Court’s holding was contrary to more than a century of precedent, and therefore constituted an unconstitutional judicial taking of the beachfront owners’ property rights.  I have not read the prior Florida caselaw, but from reading the briefs on cert and the opinions in the Florida Supreme Court, I think that the petitioners make a good case that the Florida Supreme Court’s decision represents a radical departure from its prior law.  I seriously doubt that the Court would have granted cert it had been able to find precedential support for the Florida Supreme Court’s position.  It is also notable, though perhaps not directly relevant, that the Florida Supreme Court’s position is contrary to the U.S. Supreme Court’s statement of the common law in Hughes.

Stop The Beach therefore appears to squarely and cleanly present the judicial takings issue.  Below are some thoughts on how the case might play out and what’s at stake for the larger law of regulatory takings.  First a word of disclosure – I’m on the record (albeit in my student note) as favoring Supreme Court review of state court property decisions under a judicial takings theory.

(1) There are two different ways in which the judicial takings issue can present itself.  First, a state legislature might pass a law that appears to take property rights.  In deciding a takings challenge to the statute, a state court might hold that the claimed property rights did not exist, and reject the takings challenge because there was nothing to take.  Second, in a case brought by private litigants, a state court might make a major change to the state’s existing property law.  Matthews v. Bay Head is an example of the second type of case.  Stop the Beach is an example of the first – the underlying litigation was about provisions of Florida’s Beach and Shore Preservation Act, and the Florida Supreme Court insulated the Act from constitutional problems by holding that there was no protected private property interest to be taken.  There isn’t much of a theoretical basis for a distinction between the two categories, but the Supreme Court’s prior caselaw might be marginally more applicable to the facts in Stop the Beach because of the legislature’s involvement.  As Buzz Thompson has noted, the Court has held in cases such as Muhlker v. New York & Harlem Railroad, 197 U.S. 544 (1905) that it can review a state court’s property rights determination “where a property holder challenge[s] a legislative or executive action as a taking and the state court ha[s] ruled that there was no property to take.”  Barton H. Thompson, Jr., Judicial Takings, 76 Va. L. Rev. 1449, 1467 (1990).  The Supreme Court recently noted in Lingle v. Chevron that it can be problematic to rely on early substantive due process cases as precedent in contemporary regulatory takings cases, but I would expect cases like Muhlker to come into play in Stop the Beach.

(2) I would guess that Justice Scalia was instrumental in obtaining the cert grant.  I predict that the Supreme Court will find a taking in Stop the Beach and that Justice Scalia will write the opinion of the Court.  This, of course, is speculation, but it is informed speculation.  Justice Scalia has argued in the past that the Court should take up the judicial takings issue.  In a lengthy dissent (joined by Justice O’Connor) from a denial of cert in Stevens v. City of Cannon Beach, 510 U.S. 1207 (1994), Justice Scalia wrote:

As a general matter, the Constitution leaves the law of real property to the States. But just as a State may not deny rights protected under the Federal Constitution through pretextual procedural rulings, see NAACP v. Alabama ex rel. Patterson, 357 U.S. 449, 455-458, 78 S.Ct. 1163, 1168-1170, 2 L.Ed.2d 1488 (1958), neither may it do so by invoking nonexistent rules of state substantive law. Our opinion in Lucas, for example, would be a nullity if anything that a state court chooses to denominate “background law”-regardless of whether it is really such-could eliminate property rights. “[A] State cannot be permitted to defeat the constitutional prohibition against taking property without due process of law by the simple device of asserting retroactively that the property it has taken never existed at all.” Hughes v. Washington, 389 U.S. 290, 296-297, 88 S.Ct. 438, 442, 19 L.Ed.2d 530 (1967) (Stewart, J., concurring). No more by judicial decree than by legislative fiat may a State transform private property into public property without compensation. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 164, 101 S.Ct. 446, 452, 66 L.Ed.2d 358 (1980). See also Lucas, supra, 505 U.S., at 1031, 112 S.Ct., at 2901. Since opening private property to public use constitutes a taking, see Nollan v. California Coastal Comm'n, 483 U.S. 825, 831, 107 S.Ct. 3141, 3145, 97 L.Ed.2d 677 (1987); Kaiser Aetna v. United States, 444 U.S. 164, 178, 100 S.Ct. 383, 392, 62 L.Ed.2d 332 (1979), if it cannot fairly be said that an Oregon doctrine of custom deprived Cannon Beach property owners of their rights to exclude others from the dry sand, then the decision now before us has effected an uncompensated taking.

I suspect that Justice Scalia has been looking for a suitable judicial takings case ever since.  The petitioners in Stop the Beach note that at least 15 cases have sought cert on the judicial takings issue.  I would guess that many of those previous cases had various problems with them that made them poor cert candidates.  This is one reason why I think that the Court (or some members, at least) were reasonably confident that the Florida Supreme Court opinion is not supported by prior Florida law – I don’t think they would have granted cert otherwise.

(3) The sentence referencing Lucas in Justice Scalia’s Cannon Beach dissent helps to explain how the judicial takings issue fits into the Court’s larger regulatory takings jurisprudence.  In Lucas, the Court held that a severe limitation on property rights that would constitute a per se taking would only be constitutional if the state’s background law of property or nuisance established that the property owner had no property rights to begin with.  I have heard anecdotally that some state courts have been aggressive in using the background principles of state law exception to defeat takings claims, perhaps going to the extent of creating such background principles out of what Justice Scalia terms “nonexistent rules of state substantive law”.  Note, by the way, that the cert petition in Stop the Beach quotes this language in describing the Florida Supreme Court’s action.  If the Court holds that such a judicial reformulation of property rights is unconstitutional, then it would place a practical limit on state courts’ ability to use the background principles exception to defeat takings claims.

(4) It should be obvious that accepting the idea of judicial takings would put the Supreme Court in the awkward position of reviewing a state court’s decisions on the substance of state property law.  I doubt that the Court, if it accepts the idea of judicial takings, would defer to a state court’s characterizations of their own decisions – to do so would be to replace the “stupid staffer” that Justice Scalia referred to in Lucas with the stupid law clerk or stupid state court judge.  So the Court would need to review the state court’s analysis to see if it was supported by precedent.  I expect that the Court would only find a judicial taking if the state’s prior law was remarkably clear and that the court decision under review represented a clear departure from that precedent.  Otherwise, the Court risks becoming the court of last resort in any state law property case.

(5) I worry that a decision in favor of the petitioners in Save the Beach will contain some language that can be read to place a broad limit on states’ ability to reform their property law.  Justice Stewart was clear in Hughes that this was not the result that he had in mind:  “surely Washington or any other State is free to make changes, either legislative or judicial, in its general rules of real property law . . . .”  The easiest way to avoid this problem in Stop the Beach would be to simply hold that the judiciary cannot achieve through deciding a case what the legislature cannot do by statute.  The Court’s current caselaw is clear that the legislature cannot transfer private property to public ownership without compensation, and this is what happened in Save the Beach if petitioners’ factual claims are accurate.  This transfer of ownership to the public might be a good way to distinguish between judicial alterations of property law that are takings and those that are not.  Beach access cases come up all the time in the judicial takings literature because they tend to present issues of public ownership or public access.  Similarly, the property reform that was invalidated in Hodel v. Irving involved a statute that escheated certain property interests to the government.  In Lucas, the ability to build on the property was destroyed outright, not transferred to another person.  In contrast with these types of scenarios would be cases that involved alteration of property rights between private parties.  Statutes and judicial decisions alter, and sometimes destroy, property rights all the time.  This does not seem to present a takings problem when the result is that one private party owns the property rather than another private party.  For example, the abolition of the fee tail in many states destroyed the reversionary right in the original owner, effectively transferring that right to the holder of the present interest.  Alterations in almost any part of property law, and many alterations in other areas such statutes of limitations and the law of contracts, can result in A owning a particular property rather than B owning that property.  It would be a big problem if stray language in a Supreme Court case raised questions about states’ ability to make these basic changes to the law.

(6) I wonder about procedural issues if the Court allows judicial takings claims.  Will litigants have to litigate these issues in state court, and rely on cert petitions to remedy judicial takings, or will litigants be able to bring takings claims against the states based on judicial decisions in the lower federal courts?  I’m not an expert on Williamson County and San Remo, and don’t know how those cases might impact the issue.

(7) There are two other questions presented in the cert petition that might be wild cards:

Is the Florida Supreme Court's approval of a legislative scheme that eliminates constitutional littoral rights and replaces them with statutory rights a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that allows an executive agency to unilaterally modify a private landowner's property boundary without a judicial hearing or the payment of just compensation a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

I read the first of these questions as raising a substantive due process claim and the second as raising a procedural due process claim.  I’m not sure how these might play out, though I note that Justice Kennedy has expressed sympathy for due process arguments in the takings context – see, for example, his concurrence in Lingle.

(8) Here’s my guess on how the case comes out:  5-4 in favor of petitioners; opinion of the Court by Justice Scalia, joined by the Chief Justice and Justices Kennedy, Thomas, and Alito.  [UPDATE:  I am fully aware of the Court's procedures for allocating writing assignments for majority opinions; my point in predicting that Justice Scalia will author the majority is that I think he has something that he wants to say in this case, and that he might try to seek out the writing assignment in this case].  Possible concurrence on due process grounds by Justice Kennedy.  Justices Stevens, Ginsburg, Breyer, and Sotomayor if confirmed, dissenting, with Justice Stevens especially likely to write.  This may be a case where the replacement of the moderate-conservative Justice Souter with the moderate-liberal Judge Sotomayor might make a difference in the voting, if not in the outcome.  Unlike earlier liberal justices like William Brennan (see, e.g., his dissent in San Diego Gas and Electric), the liberal wing of the current Court has rarely expressed much sympathy for regulatory takings claims.  Justice Stevens, of course, dissented in Penn Central, but has been the leader of the anti-regulatory takings wing of the Court since at least the mid-1980’s.

(9) If you are new to the judicial takings issue, here are four articles to read:  (a) Buzz Thompson’s article in the Virginia Law Review mentioned above – it is the classic on the subject; (b) David Bederman’s The Curious Resurrection of Custom:  Beach Access and Judicial Takings, 96 Colum. L. Rev. 1375 (1996); (c) Roderick Walston’s The Consitution and Property:  Due Process, Regulatory Takings, and Judicial Takings, 2001 Utah L. Rev. 379; and (d) David Sarratt’s Judicial Takings and the Course Pursued, 90 Va. L. Rev. 1487 (2004).

Ben Barros

Photo of Destin, Florida beach via Wikicommons

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