Suppose a local government suddenly bans the production and sale of widgets because public opinion is that the widgets contribute to obesity. Although the land where the widget factory is located could be used for other purposes, the widgets are now worthless because they can’t be sold. And the widget maker has lost a great deal of the capital that was invested in the widget factory and equipment. Does the widget maker have an inverse condemnation claim? It may depend on whether his taking claim is framed as one for tangible or personal property, and not of real property. A claim that the real property had been taken would not likely be successful, since in this hypothetical, it could be used for other purposes.
Most readers will recall that there are physical takings and regulatory takings. Regulatory takings can be complete takings of all economically beneficial uses of a property—or they can be less, in which case courts use a balancing test to determine whether there has been a taking. Most of us in the environmental and land use arena are at least familiar with these concepts when it comes to real property. But what about tangible property?
As recent decisions from the U.S. Supreme Court and Florida courts make clear, tangible or personal property is also protected by the Fifth and Fourteenth Amendments. In Horne v. Department of Agriculture, 576 U.S. _, No. 14-275 (2015), which was decided earlier this year and has been bouncing around the courts for years, the U.S. Supreme Court examined a federal regulation requiring raisin farmers to set aside a percentage of each year’s crop for the government’s benefit—without payment. The Supreme Court held this to be a taking, tracing back the law of personal property takings back to the Magna Carta. Further, it held that because the taking was physical (as opposed to merely a regulatory burden), there was a per se taking, without regard to whether any claimed public benefit or the economic impact on the owner.
Florida's First District Court of Appeal has agreed in a case involving Florida’s oft-ridiculed “pregnant pig” constitutional amendment that banned the use of gestation crates in 2002. State v. Basford, 119 So. 3d 478, 480 (Fla. 1st DCA 2013). There, a farmer who had made substantial improvements to his property and based his pork business on use of the crates brought an inverse condemnation suit against the state. Explaining that “real property, tangible property, and intangible property may be the subject of a takings claim,” the court emphasized that the farmer had not alleged a taking of real property. Id. at 483. Rather, he claimed that the constitutional amendment had taken all economically viable use of his business assets—which included barns, animal crates, a feed mill, and lab equipment. Id. at 481, 483.
In a colorful concurrence, Judge Wolf saw this taking as just as if the government decided, in lieu of seizing a tractor, that it would allow a farmer to keep the tractor but forbid the owner from turning it on. Id. at 484. This explanation should give property owners some cheer, since it hints that, as in Horne, complete restrictions in use of personal property should be compared to physical takings. And it gives the attorney a simple framework for thinking about these kinds of problems.
Both these cases are instances of a takings case being successfully (and creatively) framed. In Horne, there was no way to frame a real property takings claim, and in Basford, the court itself recognized that a real property takings claim would not have had much of a chance of success. Inverse condemnation claims are almost always tricky, so why make a case any more difficult than it needs to be? It seems that Ben Franklin would agree that, as for others, for property rights attorneys, an ounce of prevention is worth a pound of cure.