Williamson City Planning v Hamilton Bank Limited Where Takings Claims May Be Filed

In Williamson City Planning v Hamilton Bank, 473 U.S. 172 (1985), the U.S. Supreme Court clarified where plaintiffs may file Fifth Amendment takings claims. It held that “if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.”

Facts of Williamson City Planning v Hamilton Bank

In 1973, Hamilton Bank of Johnson City’s (Hamilton bank) predecessor in interest, a land developer, obtained the Williamson County Regional Planning Commission’s (Planning Commission) approval of a preliminary plat for development of a tract, as was required under Tennessee law. The tract was to be developed in accord with the requirements of a county zoning ordinance for “cluster” development of residential areas and the Commission’s implementing regulations. In 1977, the county zoning ordinance was changed so as to reduce the allowable density of dwelling units, but the Commission continued to apply the 1973 ordinance and regulations to the developer’s tract. In 1979, however, the Commission decided that further development of the tract should be governed by the ordinance and regulations then in effect. The Commission thereafter disapproved plats proposing further development of the remainder of the tract on various grounds, including failure to comply with current density requirements.

Hamilton Bank filed suit against the Commission in Federal District Court pursuant to 42 U.S.C. § 1983, alleging that the Commission had taken its property without just compensation by refusing to approve the proposed development. The jury found that respondent had been denied the “economically viable” use of its property in violation of the Just Compensation Clause of the Fifth Amendment and awarded damages for the temporary taking of respondent’s property. The District Court entered an injunction requiring the Commission to apply the 1973 ordinance and regulations to the project, but it granted judgment notwithstanding the jury’s verdict for the Commission on the taking claim, concluding that the temporary deprivation of economic benefit from respondent’s property, as a matter of law, could not constitute a taking.

The Sixth Circuit Court of Appeals reversed. It held that the application of government regulations affecting an owner’s use of property may constitute a taking, and that the evidence supported the jury’s finding that the property had no economically feasible use during the time between the Commission’s refusal to approve the plat and the jury’s verdict.

Supreme Court’s Decision in Williamson City Planning v Hamilton Bank

The Supreme Court reversed by a vote of 7-1, concluding that Hamilton Bank’s claim was not yet “ripe” for adjudicated by the federal court. “Even assuming, arguendo, that government regulation may effect a taking for which the Fifth Amendment requires just compensation, and assuming further that the Fifth Amendment requires the payment of money damages to compensate for such a taking, the jury verdict in this case cannot be upheld because respondent’s claim is premature,” Justice Harry A. Blackmun wrote. “Respondent has not yet obtained a final decision regarding the application of the ordinance and regulations to its property, nor utilized the procedures Tennessee provides for obtaining just compensation, and its claim therefore is not ripe.”

In reaching its decision, the majority first concluded that the government entity charged with a taking must have reached “a final decision regarding the application of the regulations to the property at issue.” Justice Blackmun further explained, “While there is no requirement that a plaintiff exhaust administrative remedies before bringing a § 1983 action, the question whether administrative remedies must be exhausted is conceptually distinct from the question whether an administrative action must be final before it is judicially reviewable.”

The majority went on to hold that prior to alleging a violation of the Just Compensation Clause in federal court, the plaintiff must seek compensation via the procedures established by the state. “If a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation,” Justice Blackmun wrote. “Under Tennessee law, a property owner may bring an inverse condemnation action to obtain just compensation for an alleged taking of property under certain circumstances. Respondent has not shown that the inverse condemnation procedure is unavailable or inadequate, and until it has utilized that procedure, its taking claim is premature.”