NC Homeowners Associations hope to get their day in Federal Court

By Deborah Goonan, Independent American Communities

Last summer, I posted an article about several lake communities struggling to pay to fix dams that are no longer safe or functional.

In that article, I cited as an example several North Carolina lake communities. Devonwood-Loch Lomond, Rayconda and the Strickland Bridge Road Homeowners Associations’ and residents’ filed a Federal lawsuit to force the city of Fayetteville to rebuild their lakes’dams, all of which were breached during Hurricane Matthew.

The City says it cannot and will not spend public tax dollars to repair dams for private lakes. Fayetteville leaders say they are only obligated to repair dams bridged by public roads.

For their part, the HOAs and homeowners point out that, for many years, Fayetteville used their community lakes for public benefit, and, therefore they City should pay to rebuild the dams. Specifically, the attorney for the homeowners argues that the City violated the property rights of the HOAs and homeowners, by “taking” their private lakes, and using them as public storm water drainage basins.

The homeowners brought their lawsuit to federal court, to enforce their Constitutional property rights, seeking just compensation for unlawful taking.

But attorneys for the city of Fayetteville asked the court to dismiss the case, in part, because it hasn’t been heard yet in state court. Their motion cites Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, a 1985 case where the SCOTUS ruled that Takings Claims must first be litigated in state court.

The homeowners’ attorneys asked the federal court to delay its decision to dismiss, pending the outcome of a US Supreme Court decision in the case of Knick v. Scott Township Pennsylvania.

I’ll briefly explain both cases, and their impact on property rights.

Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City

Hamilton Bank of Johnson (Tennessee) was a landowner and developer of a tract of land in Williamson County. The lawsuit centered on a dispute over the number of homes the developer would be permitted to construct on the land. Original plans in 1973 allowed for “clustered” development of a planned community around a golf course. (Obviously a common interest development that would have had deed restrictions and an HOA)

Williamson County later changed its zoning requirements to reduce the density of construction allowed. Reduced density is industry language meaning that fewer homes can be built per acre of vacant land.

Predictably, the developer did not like the lower density restrictions, because the more homes a builder can put on each acre of land, the higher its profit potential.

Hamilton Bank sued Williamson County under the Takings Clause. The state court system found in favor of the developer, and the County had to allow construction at the higher density allowed by original development plans. But the court also denied financial compensation, reasoning that the “taking” of private property was only “temporary.”

At that point, Hamilton appeals to the U.S. Court of Appeals, and was awarded $350,000 for lost use of land under the lower density zoning restrictions.

Williamson County appealed to the SCOTUS, reversing the U.S. Court of Appeals award, and sending the case back to the state courts.

The decision is summarized in brief:

Question
Is a property owner entitled to money damages for the time during which zoning laws affect a temporary taking of the property?

Conclusion
No decision. In a 7-1 decision, Justice Harry A. Blackmun wrote for the majority, reversing and remanding to the lower court. The Supreme Court held that even if there was a temporary taking, a decision on money damages was premature because Hamilton Bank had not obtained a final administrative decision on the subdivision layout. The claim was premature under the Due Process Clause of the Fourteenth Amendment for the same reason. Justice Byron R. White dissented from the holding that the issues in the case were not ripe for decision.

Source: “Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City.” Oyez. Accessed January 23, 2019. www.oyez.org/cases/1984/84-4.

 

Knick v. Scott Township Pennsylvania

Rose Knick owns farm land in Scott Township, Pennsylvania, a rural area north of the city of Scranton.

According to her legal counsel from the Pacific Legal Foundation, Scott Township passed an ordinance to allow the town to “snoop around on private property for evidence of gravesites.” Soon afterward, township officials discovered a colonial graveyard on Knick’s property, and designated it as public land.

Knick was then required to keep the “cemetery” well-groomed by removing weeds and keeping a clear path for anyone in the public to visit the site.

Understandably, Knick objected to Scott Township’s demands and invasion of her private property. If the township wanted to take a portion of her private land, the Fifth Amendment to the U.S. Constitution would also require the town to pay her the value of the land they designated as open to the public.

Knick tried to take her case to state court, but they denied it, saying that the case could not be tried unless and until Scott Township took her to court for not following their ordinances and mandates.

When Knick took the matter to federal court, it wouldn’t hear the case either, citing the Williamson case explained above.

Pacific Legal Foundation took on Knick’s case, seeking a reversal of the Williamson decision by the SCOTUS. PLF argues that all other legal claims involving constitutional rights are handled in federal court, so why not property rights claims under the Fifth Amendment?

The Knick case had its second hearing before the SCOTUS earlier this month.

If the court decides that property owners can bring “takings” claims straight to federal court, bypassing state court, it could have significant impacts on property rights for HOAs and individual homeowners.

Devonwood-Loch Lomond Lake Association Inc et al v. City of Fayetteville et al and beyond

For homeowners in Fayetteville’s lake communities, a SCOTUS reversal of Williamson v. Hamilton would allow their case to move forward in federal court, potentially increasing the odds of a ruling in their favor.

The Plaintiffs hope to compel Fayetteville to fix their dams, as compensation for using them as public drainage basins for many years.

For individual homeowners, it could also open up the possibility of making property rights claims against HOAs in federal court, bypassing state courts and one-sided laws rigged by the HOA industry.

But don’t get too excited yet.

For one thing, the SCOTUS had not yet made its decision.

And even if the SCOTUS rules in favor of Knick and property rights, federal cases between homeowners and HOA organizations are bound to bring up the larger issue. Whose rights matter more in the U.S. — the rights of a corporation or non-profit organization or the rights of an individual property owner?

References:

“Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City.” Oyez, 23 Jan. 2019, www.oyez.org/cases/1984/84-4.

Homeowners seek delay in lawsuit against city over dam repairs

Supreme Court Set To Decide A Critical Property Ownership Case

Devonwood-Loch Lomond Lake Association Inc et al v. City of Fayetteville et al (Pace Monitor)

Knick v. Scott Township Pennsylvania (Pacific Legal Foundation)

Knick v. Township of Scott, Pennsylvania (SCOTUS blog)