Can a regulatory taking claim be filed even if the claimant has failed to comply with all administrative procedures for seeking relief? According to the Supreme Court in Pakdel v. City and County of San Francisco, California, (2021), the regulatory taking claim is ripe even if there are administrative missteps, so long as the government has reached its final and conclusive position.
The Pakdels owned a tenancy-in-common interest in a residential building in the City of San Francisco.Id. at 2. In seeking to convert their tenancy-in-common interest into a condominium-style arrangement, the Pakdels applied to the City’s Expedited Conversion Program. Id. One requirement of this program was that non-resident owners who rented their units had to offer the tenants a lifetime lease. Id. After obtaining approval, the Pakdels asked the City for either an exemption to the lifetime lease requirement, or for compensation. Id. When the City refused, the Pakdels sued under 42 U.S.C § 1983 arguing that the lifetime lease requirement was an unconstitutional regulatory taking in violation of the Fifth Amendment. Id. On appeal, the 9th Circuit dismissed the Pakdels claims on grounds of ripeness. Id.at 3. The 9th Circuit concluded that the Pakdels had not obtained a final decision from the City on their application because the Pakdels had requested exemptions from the lease requirement after approval, instead of timely seeking it before. Id.
On appeal, the Supreme Court disagreed. According to the Court, although a regulatory taking claim is not ripe until the government has reached a final decision, finality does not require compliance with all administrative procedures for seeking relief. The Court reasoned that, “[t]he Fifth Amendment right to full compensation arises at the time of the taking, regardless of post-taking remedies that may be available to the property owner.” Id. at 3 quoting Knick v. Township of Scott, (2019). Such strict interpretation of finality would be contrary to the settled principle that exhaustion of state remedies is not required before filing suit under 42 U.S.C § 1983. Id. at 5.
This ruling has an impact on eminent domain and taking cases throughout the State of California. It also provide additional guidance on when a claim for a regulatory taking is actually ripe. For assistant with your eminent domain matter or to schedule a consultation with one of our real estate litigation attorneys regarding real estate litigation or appeals, please contact us at (310) 954-1877.