What We Have Here Is a Failure to Compensate: The Case for a Federal Damages Remedy in Koontz 'Failed Exactions'

Abstract

In Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), the Supreme Court held that an agency could not, consistent with the Takings Clause, condition a permit on a land exaction unless the exaction bears an “essential nexus” and “rough proportionality” to the harms the government seeks to mitigate. Then, in Koontz v. St. Johns Water Management District, 133 S. Ct. 2586 (2013), the Court extended Nollan and Dolan to exactions that were never completed because the property owner refused to acquiesce to the demand. Nevertheless, the Court held that such property owners suffer a “constitutionally cognizable injury” under the unconstitutional conditions doctrine because the government has significantly burdened their right not to have property taken without just compensation. Because the case arose under a Florida statute, the Court did not decide what the proper federal remedy would be in these “failed exaction” cases.This Article argues that failed exaction plaintiffs should be entitled to actual damages under the federal civil rights statute, 42 U.S.C. § 1983. Because failed exactions do not involve a completed taking, the Just Compensation Clause is not the proper remedy. But a recognized constitutional injury cannot go uncompensated. Limiting the remedy to invalidation of the offending condition suffers from two faults. First, it fails to provide property owners with adequate compensation. Second, it does not serve as a deterrent to agencies. An invalidation remedy standing alone gives permitting agencies a “do-over” and encourages them to use to permitting process to prevent development through the use of unconstitutional conditions. On the contrary, a damages remedy is supported by Section 1983 and serves the twin aims of deterrence and compensation. Courts should hold that property owners bringing a failed exaction claim under Koontz are entitled to their actual economic damages.Along with that federal damages remedy, the Article argues that these plaintiffs should be able to bring their claims directly in federal court. Because failed exaction plaintiffs have not suffered a taking, they cannot seek Just Compensation. Therefore, the ripeness rule for federal takings claims established in Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 185 (1985), which generally requires property owners to seek just compensation in state court to “ripen” a takings claim, does not apply to failed exactions. Property owners suing under a Koontz theory should be able to assert their federal constitutional rights directly in federal court.