throbber
No. 16-1194
`
`In the
`Supreme Court of the United States
`
` Ë
`KINDERACE, LLC,
`Petitioner,
`
`v.
`CITY OF SAMMAMISH,
`Respondent.
`
` Ë
`On Petition for Writ of Certiorari
`to the Washington State Court of Appeals
` Ë
`BRIEF IN REPLY TO OPPOSITION TO
`PETITION FOR WRIT OF CERTIORARI
` Ë
`JOHN M. GROEN
`Pacific Legal Foundation
`930 G Street
`Sacramento, California 95814
`Telephone: (916) 419-7111
`Facsimile: (916) 419-7747
`JMGroen@pacificlegal.org
`
`BRIAN T. HODGES
`Counsel of Record
`Pacific Legal Foundation
`10940 NE 33rd Place
`Suite 210
`Bellevue, Washington 98004
`Telephone: (425) 576-0484
`Facsimile: (425) 576-9565
`
`bth@pacificlegal.org
`Counsel for Petitioner
`
`

`

`i
`QUESTION PRESENTED
`Whether the “relevant parcel” inquiry, as set out
`in Penn Cent. Transp. Co. v. New York City, 438 U.S.
`104, 130-31 (1978), allows a court to combine an
`owner’s interests in two legally distinct, but previously
`commonly owned, adjacent parcels when determining
`the extent of property that a court should consider
`when reviewing a regulatory takings claim. This issue
`raises a critical and unresolved question of
`constitutional law that is currently pending before this
`Court in Murr v. State of Wisconsin, Dkt. No. 15-214.
`
`

`

`ii
`TABLE OF CONTENTS
`
`Page
`QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . i
`TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . iii
`INTRODUCTION AND SUMMARY OF
`ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
`CORRECTION TO CITY’S
`STATEMENT OF FACTS . . . . . . . . . . . . . . . . 3
`ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
`I. THIS COURT HAS JURISDICTION;
`THERE ARE NO INDEPENDENT
`STATE-LAW GROUNDS FOR THE
`DECISION BELOW . . . . . . . . . . . . . . . . . . . . . 6
`II. THE DECISION OF THE WASHINGTON
`APPELLATE COURT RAISES AN
`IMPORTANT QUESTION OF FEDERAL
`TAKINGS LAW . . . . . . . . . . . . . . . . . . . . . . . . 7
`CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
`
`

`

`iii
`TABLE OF AUTHORITIES
`
`Page
`
`Cases
`Arkansas Game & Fish Comm’n v. United States,
`568 U.S. 23, 133 S. Ct. 511 (2012) . . . . . . . . . . . 10
`Keystone Bituminous Coal Ass’n v. DeBenedictus,
`480 U.S. 470 (1987) . . . . . . . . . . . . . . . . . . . 1, 7, 10
`Lost Tree Village Corporation v. United States,
`707 F.3d 1286 (Fed. Cir. 2013) . . . . . . . . . . 3, 6, 11
`Michigan v. Long, 463 U.S. 1032 (1983)
`. . . . . . . . . 7
`Palazzolo v. Rhode Island,
`533 U.S. 606 (2001) . . . . . . . . . . . . . . . . . . 9, 10, 12
`Penn Cent. Transp. Co. v. City of New York,
`438 U.S. 104 (1978) . . . . . . . . . . . . . . . . . . . 1, 9-10
`Phillips v. Washington Legal Foundation,
`524 U.S. 156 (1998).
`. . . . . . . . . . . . . . . . . . . . . . . 2
`Stop the Beach Renourishment, Inc. v. Florida
`Dep’t of Envtl. Prot., 560 U.S. 702 (2010)
`. . . . . . 2
`Village of Euclid, Ohio v. Ambler Realty Co.,
`272 U.S. 365 (1926) . . . . . . . . . . . . . . . . . . . . . . . . 9
`Warren Trust v. United States,
`107 Fed. Cl. 533 (2012) . . . . . . . . . . . . . . . . . . . 2, 9
`Webb’s Fabulous Pharmacies, Inc. v. Beckwith,
`449 U.S. 155 (1980) . . . . . . . . . . . . . . . . . . . . . . . 10
`
`

`

`1
`INTRODUCTION AND
`SUMMARY OF ARGUMENT
`The City of Sammamish opposes Kinderace’s
`(Elliot Severson’s) petition on several grounds, most of
`which are unrelated to the question presented, and
`none of which has any merit. First, the City rewrites
`the question presented to shift focus away from the
`lower court’s relevant parcel determination, asking
`instead whether the court properly resolved the merits
`of Severson’s regulatory takings claim. Opp. at i; 18-
`21, 24-27. Determination of the relevant parcel,
`however, is a threshold issue in a regulatory takings
`case because it provides the denominator against
`which the impact of regulations must be measured.
`See Penn Cent. Transp. Co. v. City of New York, 438
`U.S. 104, 130-31 (1978); Keystone Bituminous Coal
`Ass’n v. DeBenedictus, 480 U.S. 470, 497 (1987). Thus,
`the City’s rewritten issue statement merely begs the
`question presented.
`Second, the City argues that review is not
`warranted because the lower court decided this case on
`an independent state-law basis. Opp. at 14-18. Not so.
`According to the Washington court, the relevant parcel
`determination—indeed, the entire regulatory takings
`analysis—was based on federal takings law. Pet. App.
`A at 8. The fact that the lower court referenced state
`property law when discussing the extent of Severson’s
`
`

`

`2
`property rights is a ubiquitous feature of takings law
`and does not provide an independent basis to uphold
`the decision below.1
`Third, the City claims the petition does not
`identify issues worthy of this Court’s review. It does so
`by rephrasing the lower court’s relevant parcel
`determination as an application of a per se rule holding
`that, once a landowner makes an economic use of his
`property, the owner “is not legally entitled to a second
`use, regardless of his future plans for some portion of
`the property.” Opp. at 24. The City is wrong. That
`conclusion plainly constitutes a determination of the
`residual value of the property—thus, it is the relevant
`parcel determination. And, insofar as the lower court
`adopted a rule that property owners have no
`development rights in their land once they make an
`economic use of it, the decision conflicts with decisions
`from other courts. See, e.g., Warren Trust v. United
`States, 107 Fed. Cl. 533, 563-64 (2012) (discussing
`cases where prior development is considered as part of
`a relevant parcel determination).
`The City also attempts to justify the lower court’s
`decision by rearguing the underlying facts of this
`case—primarily contesting Severson’s investment-
`backed expectations when he purchased Parcel 9032.
`Opp. at 2-11. Notably, none of the lower courts entered
`findings crediting the City’s argument, rendering the
`City’s claims irrelevant to the petition. The lower
`courts resolved all factual issues necessary to decide
`this petition: (1) Severson purchased Parcel 9032 prior
`
`1 Courts look to state law to define property interests. Stop the
`Beach Renourishment, Inc. v. Florida Dep’t of Envtl. Prot., 560
`U.S. 702, 707 (2010) (citing Phillips v. Washington Legal
`Foundation, 524 U.S. 156, 164 (1998)).
`
`

`

`3
`to the City’s adoption of its critical areas ordinance
`(Pet. App. A at 2-3); (2) Severson later conveyed the
`detention pond to the new owners of Parcel 9058 (Pet.
`App. A at 5-6); and (3) the City applied its new critical
`areas ordinance to deny all new development on Parcel
`9032, which remains zoned and taxed as commercial
`property. Pet. App. A at 3-4, 7. These facts cannot be
`contested.
`Fourth, the City argues that the decision below is
`distinguishable from Murr v. State of Wisconsin, Dkt.
`No. 15-214 (pending on the merits), and Lost Tree
`Village Corporation v. United States, 707 F.3d 1286,
`1294 (Fed. Cir. 2013) (certiorari petition pending No.
`15-1192). In making this argument, however, the City
`focuses on the differences arising from distinct land
`use proposals, ignoring the common legal question of
`how a court determines the relevant parcel when an
`owner has an interest in adjacent development.
`Ultimately, the City does not contest that the
`relevant parcel inquiry raises an important question of
`federal constitutional law upon which the lower courts
`are divided. This Court’s decision in Murr will likely
`offer a framework for deciding the relevant parcel
`question and this case. Certiorari is therefore
`warranted and this Court should grant review and
`hold the case pending the decision in Murr and the
`resolution of the Lost Tree Village petition.
` Ë
`CORRECTION TO CITY’S
`STATEMENT OF FACTS
`The City’s “statement of facts” largely consists of
`an argument contesting Severson’s expectations when
`
`

`

`4
`he purchased Parcel 9032. Opp. at 2-13. In fact, the
`City only cites the lower court’s decision four times
`across its 12-page rendition of “facts,” relying instead
`on inferences from trial court exhibits. Opp. at 2-11.
`Notably, none of the lower courts entered findings
`supporting the City’s arguments
`in regard to
`Severson’s investment-backed expectations. Thus, its
`rendition of the facts is irrelevant to the question
`whether the lower court’s determination of the relevant
`parcel conflicts with Penn Central.
`Even so, the City’s “facts” are misleading. The
`record plainly establishes that Severson intended to
`develop the unused portion of the commercial parcel,
`which was expressly allowed by the City’s code and
`critical areas regulations at the time he purchased the
`property and at the time he agreed to install the
`detention pond. See Pet. App. A at 3-7 (detailing
`Severson’s attempts to develop the property); Petition
`at 4-5 (detailing Severson’s investment in developing
`the land); Petition at 6-7 (discussing regulations in
`effect at time of purchase). Indeed, Severson invested
`years and hundreds of thousands of dollars developing
`alternative proposals to develop the property in
`accordance with the City’s pre-2005 and post-2005
`critical areas requirements.
`Although immaterial to the question presented, it
`is also necessary to correct the City’s repeated
`contention that Severson “admitted” that the only
`value in Parcel 9032 was its use as a location for a
`detention pond. Not so. See Pet. App. E (maps
`showing buildable areas at time of purchase). Again,
`the City only offers this Court its own self-serving
`inferences from (1) a checklist submitted before
`Severson purchased Parcel 9032 (CP 797), and (2) a
`
`

`

`5
`letter in which Severson’s agent stated that the
`northern portion of Parcel 9032 could only be
`developed as a detention pond. CP 265. Severson
`contested the City’s inferences below,2 and none of the
`state courts credited the City’s argument. The City’s
`decision to raise a factual dispute at this stage of
`review is nothing more than an attempt to distract this
`Court from the relevant parcel question.
`So, too, is the City’s misleading claim that
`Severson “lucratively developed” Parcel 9032 prior to
`the boundary line adjustment. Opp. at 1, 2, 4, 22, 24,
`27. In truth, all commercial development occurred on
`the neighboring Parcel 9058. Pet. App. A at 4-5. The
`City code required that Severson install a storm water
`detention facility, which was located on an otherwise
`non-developable portion of Parcel 9032. Id. Severson
`later conveyed that portion of Parcel 9032 to the
`purchaser of Parcel 9058 and combined the detention
`pond with Parcel 9058 via an approved boundary lot
`adjustment. Id. Contrary to the City’s contention,
`there is no finding below that Severson purchased
`Parcel 9032—a 0.75-acre parcel of vacant,
`commercially zoned property—for the sole purpose of
`installing the pond. The City’s arguments in this
`regard must be disregarded.
`The City’s accusation that Severson applied for a
`boundary line adjustment in order to “manufacture” a
`regulatory takings claim is absurd. Opp. at 27-28.
`The suggestion that any businessman would invest
`years of effort and hundreds of thousands of dollars on
`consultants and
`lawyers and submit multiple
`development proposals and mitigation studies just to
`
`2 See Declaration of Elliot Severson (CP 2153), quoted in Petition
`at 4-5.
`
`

`

`6
`“gin up” a risky lawsuit is beyond reasonable belief and
`does not warrant this Court’s attention.
`Finally, the City’s summary of the decision below
`is also incomplete and misleading. The opposition brief
`skips past
`the
`lower court’s relevant parcel
`determination (Pet. App. A at 8-10) to focus instead on
`the court’s conclusion that no taking occurred. Opp. at
`12-13 (citing Pet. App. A at 13). The City’s omission is
`an attempt to redirect the Court’s attention from the
`threshold determination of the relevant parcel to the
`subsequent question whether the lower court properly
`considered the effect of the critical areas ordinance on
`the parcel as a whole. Opp. at i, 14-18. The answer to
`that question, of course, cannot be arrived at without
`first addressing the relevant parcel question.
`
` Ë
`
`ARGUMENT
`I
`THIS COURT HAS JURISDICTION;
`THERE ARE NO INDEPENDENT
`STATE-LAW GROUNDS FOR THE
`DECISION BELOW
`The City does not dispute that this Court has
`jurisdiction under 28 U.S.C. § 1257(a). Instead, the
`City argues review should be denied because there is
`an independent state-law basis for upholding the lower
`court’s decision. Not so.
`The question presented focuses on the relevant
`parcel question, which is a “crucial antecedent that
`determines the extent of the economic impact wrought
`
`

`

`7
`by the regulation.” Lost Tree Village, 707 F.3d at 1292.
`The City’s supposed “independent state-law ground”
`argument focuses on the lower court’s subsequent
`resolution of the regulatory takings claim on the
`merits. Opp. at 14-18. That aspect of its decision,
`however, occurred after and was inextricable from the
`relevant parcel determination. Keystone, 480 U.S. at
`497. There is no way the lower court could weigh the
`economic impact of the City’s critical areas ordinance
`against the residual value in Severson’s property
`without implicating the relevant parcel question.
`Thus, the decision on the merits cannot provide an
`independent basis for affirming the opinion below.
`Moreover, this Court will only decline jurisdiction
`where “the state court decision indicates clearly and
`expressly that it is alternatively based on bona fide
`separate, adequate, and independent grounds[.]”
`Michigan v. Long, 463 U.S. 1032, 1041 (1983). The
`Washington court did not do so. Instead, it stated in
`its decision that it decided the case under the Takings
`Clauses of both
`the Washington and U.S.
`Constitutions. Pet. App. A at 8; see also Opp. at 20; 24-
`27 (arguing that the lower court followed this Court’s
`takings case law). The City’s argument is without
`merit.
`
`II
`THE DECISION OF THE
`WASHINGTON APPELLATE COURT
`RAISES AN IMPORTANT QUESTION OF
`FEDERAL TAKINGS LAW
`the
`In determining
`the
`relevant parcel,
`Washington court adopted two rules of federal takings
`law that significantly limit the protections guaranteed
`
`

`

`8
`by the Fifth Amendment to the U.S. Constitution. Pet.
`App. A at 8-10. First, the court held that the
`enactment of a land-use regulation—the critical areas
`ordinance—will determine an owner’s rights in his or
`her land. Id. And second, the court held that prior
`development will establish the value of the subject
`property—even where the improvement was lawfully
`conveyed to another person. Id. Both rules conflict
`with this Court’s regulatory takings case law and put
`property owners’ rights at risk.
`Contrary to the City’s contentions, those two rules
`are readily apparent in the decision below. The
`conclusion that Severson extracted all economic value
`from his vacant commercial property when he located
`a detention pond on a corner of the lot constitutes a
`determination of the relevant parcel. Pet. App. A at 8-
`10. Necessary to that determination is the premise
`that the relevant parcel was the configuration of the lot
`after the City enacted its new critical areas ordinance.3
`The court’s determination also failed to consider the
`legal metes and bounds of the lot after the pond was
`conveyed to the neighboring property owner; adopting
`a rule that historic development will be considered the
`parcel as a whole, regardless of any other residual
`value in the property. Id.
`The City does not meaningfully address the lower
`court’s relevant parcel determination. Instead, the
`City broadly asserts that the court faithfully followed
`Penn Central and Keystone when determining the
`parcel as a whole. Opp. at 24-25. The City is wrong
`
`3 The version of the ordinance in effect when Severson purchased
`the parcel only imposed a 25-foot stream buffer, leaving most of
`the southern portion of the lot available for commercial
`development. Pet. App. E.
`
`

`

`9
`for several reasons. First, this Court’s discussion of
`the parcel as a whole in Penn Central and Keystone did
`not provide clear guidance for how to determine the
`relevant parcel, resulting in a nationwide split of
`authority. See Palazzolo v. Rhode Island, 533 U.S.
`606, 631 (2001) (noting “the difficult, persisting
`question of what is the proper denominator in the
`takings fraction”). Thus, the decision below only adds
`to the growing split of authority—it is up to this Court
`to say whether or not the decision is correct.
`Second, the City claims that the lower court was
`following Penn Central and Keystone when it held that,
`once a landowner makes any economic use of his
`property, the owner “is not legally entitled to a second
`use, regardless of his future plans for some portion of
`the property.”4 Opp. at 24-25. Again, the City is
`wrong—there is no federal rule limiting property
`owners to one single use in the lifetime of a lot. See
`Warren Trust, 107 Fed. Cl. at 563-64. Indeed, the
`relevant parcel inquiry is intended to determine the
`residual value of a property at the time a regulation is
`applied to deny a development application—a
`determination that necessarily takes into consideration
`both prior and allowable future uses. Penn Central,
`438 U.S. at 130-31.
`The lower court’s conclusion that any historic use
`of a parcel of property will preclude a regulatory taking
`claim directly conflicts with Penn Central which
`requires the court to analyze several ad hoc factors,
`
`4 The City also mistakenly relies on Village of Euclid, Ohio v.
`Ambler Realty Co., 272 U.S. 365, 384 (1926). Euclid involved a
`substantive due process challenge to the enactment of a zoning
`ordinance and was decided 50 years before Penn Central, which
`first announced the parcel as a whole inquiry.
`
`

`

`10
`including existing uses, when evaluating a takings
`claim. 438 U.S. at 123-24 ; see also Palazzolo, 533 U.S.
`at 617 (“Where a regulation places limitations on land
`that fall short of eliminating all economically beneficial
`use, a taking nonetheless may have occurred,
`depending on a complex of factors . . . .”). The lower
`court’s adoption of a per se rule in place of this Court’s
`ad hoc inquiry conflicts with a fundamental tenet of
`takings law:
`[N]o magic formula enables a court to judge,
`in every case, whether a given government
`interference with property is a taking. In
`view of the nearly infinite variety of ways in
`which government actions or regulations can
`affect property interests, the Court has
`recognized few invariable rules in this area.
`Arkansas Game & Fish Comm’n v. United States, 568
`U.S. 23, 133 S. Ct. 511, 518 (2012).
`Third, the City’s argument that the critical areas
`ordinance was determinative of Severson’s
`development rights conflicts with decisions of this
`Court’s holding that the government’s adoption of a
`regulation cannot extinguish an owner’s rights in his
`or her property. Palazzolo, 533 U.S. at 628 (“[A] State,
`by ipse dixit, may not transform private property into
`public property without compensation.” (quoting
`Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449
`U.S. 155, 164 (1980))). The lower court’s error is plain:
`the impact of a regulation provides the numerator for
`the takings equation. Keystone, 480 U.S. at 496. That
`impact is to be measured against the residual value of
`the property—the denominator. Id. The lower court’s
`conclusion that Severson had no development rights in
`Parcel 9032 after the City enacted its new critical areas
`
`

`

`11
`ordinance made the regulatory impact both the
`numerator and denominator, rendering the takings
`equation meaningless (measuring the regulatory
`impact against the uses allowed by the regulation will
`always result in a determination of no impact).
`Finally, the City’s attempt to distinguish the
`relevant parcel determination in this case from those
`in Murr and Lost Tree Village is unconvincing.
`Certainly, the fact that each case involves a unique
`land-use proposal will result in different fact patterns,
`but each case shares the common legal question: how
`does the court determine the relevant parcel where the
`owner has an interest in adjacent land? In Murr, the
`state court held that the family had no development
`rights in a vacant parcel of land based on a state
`statute deeming certain properties “merged.” That
`conclusion is not meaningfully distinguishable from
`the decision below, which held that the City’s
`enactment of
`its new critical areas ordinance
`extinguished Severson’s development rights in Parcel
`9032; thus, the location of the pond constituted the full
`value of the vacant commercial property. Pet. App. A
`at 8-10.
`The Federal Circuit reached an opposite
`conclusion in Lost Tree Village. It first held that
`enactment of an environmental regulation constitutes
`a restriction on property rights. Lost Tree Village, 707
`F.3d at 1291-92. Second, the court held that an
`owner’s interest in adjacent parcels, standing alone, is
`an
`insufficient basis upon which to aggregate
`development rights when determining the relevant
`parcel. Lost Tree Village, 707 F.3d at 1294. Instead,
`the court considers a variety of factors, including the
`owner’s investment-backed expectations. Id. Thus,
`
`

`

`12
`under the reasoning of Lost Tree Village, Severson
`would be entitled to show that, at the time he
`purchased Parcel 9032, he had valuable rights on the
`southern portion of the lot and the enactment of the
`new critical areas ordinance deprived him of those
`rights. See also Palazzolo, 533 U.S. at 628.
`There is no meaningful difference between the
`legal questions decided in Murr, Lost Tree Village, and
`the present case. Certiorari is warranted.
` Ë
`CONCLUSION
`The petition for writ of certiorari should be
`granted and held pending this Court’s decision in Murr
`and the resolution of the Lost Tree Village certiorari
`petition.
`DATED: May, 2017.
`
`Respectfully submitted,
`
`BRIAN T. HODGES
`Counsel of Record
`Pacific Legal Foundation
`10940 NE 33rd Place
`Suite 210
`Bellevue, Washington 98004
`Telephone: (425) 576-0484
`Facsimile: (425) 576-9565
`bth@pacificlegal.org
`
`JOHN M. GROEN
`Pacific Legal Foundation
`930 G Street
`Sacramento, California 95814
`Telephone: (916) 419-7111
`Facsimile: (916) 419-7747
`JMGroen@pacificlegal.org
`
`Counsel for Petitioner
`
`

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