Regulatory Takings

The Tennessee Court of Appeals has released another interesting case related to zoning, land use planning law, and regulatory takings. In Phillips v Montgomery County, the issue was whether or not the denial of subdivision approval by the county because the location of the subdivision would essentially block the extension of a state highway, was unconstitutional.

Unfortunately, the plaintiff chose to sue solely under the terms of the Tennessee state constitution but did not include a cause of action under the federal Constitution. An interesting question, related to this issue, is whether or not you need the name either constitutional provision. Perhaps it’s safer to mention both, but it seems to me that the Tennessee Rules of Civil Procedure to not require it.

In any event, in this particular case, the Tennessee Constitution was specifically referenced as a result any potential claim concerning regulatory takings under the federal Constitution were waived. In addition, since the doctrine of regulatory takings has not yet been recognized by the Tennessee Supreme Court, the Court of Appeals was reluctant to make new law by concluding that there was a Tennessee doctrine prohibiting regulatory takings. The court did specifically note its earlier decision, B & B Enterprises of Wilson County, LLC v. City of Lebanon, 318 S.W.3d 839 (Tenn. 2010), and since that case was authored by Justice Koch, it may be that this decision was the Court’s way of suggesting that this case be appealed to the Tennessee Supreme Court, where this issue could be fully addressed. Certainly, one would assume that the state courts could entertain a theory based on a regulatory taking.

However, since the plaintiff had also sued under the theory of inverse condemnation, the Tennessee Court of Appeals dismissed the other claims and remanded based on the inverse condemnation claim under Tennessee law.

Although not involved in this case, the three United States Supreme Court decisions, Nolan v California Coastal Commission, Dolan v City of Tigard, and Koontz v St. James River Management Utility, the latter of which was only decided in late June of this year, clearly establish that if an application is denied based on what amounts to an unrelated requirement of the local government, that it is not only a take, but that the burden of proof is reversed and shifts to the local government itself.

For example, in this Phillips case, the government admitted that the only reason for the denial of the preliminary plat was the proposed future extension of the state highway. Presumably, the only reason to deny the plat approval would be to prevent construction and thereby hold down the amount of money which the state or local government would have to pay in order to condemn the property for the extension. But again, this is inappropriate. The single property owner should not have to pay, by having his project delayed, for a project of this nature. This is a cost of the entire government, state or local, and should be borne by the taxpayers of government. It is simply unacceptable for a local government to deny plat approval under those circumstances.