South Grand View Development Company, Inc. v. City of Alabaster, Alabama

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-14044
________________________
D.C. Docket No. 2:13-cv-02183-MHH
SOUTH GRAND VIEW DEVELOPMENT COMPANY, INC.,
Plaintiff-Appellee,
versus
CITY OF ALABASTER, ALABAMA,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(June 21, 2021)
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Before WILSON, BRANCH, and JULIE CARNES, Circuit Judges.
BRANCH, Circuit Judge:
This appeal arises from a jury verdict finding that a city’s rezoning of a land
developer’s property constituted a regulatory taking without just compensation
under the Fifth Amendment to the U.S. Constitution.1 The plaintiff, South Grande
View Development Co. 2 (“SGV”), received an award of approximately $3.5
million against the defendant, the City of Alabaster (“the City”).
The City raises several issues on appeal, namely: (1) whether the just
compensation claim was ripe for trial, (2) whether the district court improperly
allowed evidence regarding the city’s motivation for enacting the zoning
ordinance, and (3) whether the district court erred in admitting and excluding
certain other types of evidence. After careful review of the record and the law, and
with the benefit of oral argument, we affirm.
I. Background
SGV is a real estate development company. In 1994, SGV bought
approximately 547 acres of land in the City of Alabaster for $1.65 million. The
Master Plan for the development was submitted to and approved by the City in
1
We refer to a claim alleged under the Fifth Amendment for a regulatory taking without
just compensation as a “just compensation” claim throughout this opinion.
2
The docket below misspelled the plaintiff’s name—“South Grand View” instead of
“South Grande View.” We are not at liberty to change the case caption; however, we use the
correct spelling in the text of our opinion.
2
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1995, and was zoned as R-2 (90-foot wide single-family residences), R-4 (60-foot
wide garden homes), and R-7 (townhomes). Most of the development was
completed by 2008, but the 142-acre portion of the land at issue in this lawsuit,
Sector 16, was one of the last phases of the development. Sector 16 was zoned
predominantly for R-4 and R-7 with a small part as R-2.3 On December 5, 2011,
however, the city rezoned Sector 16 for R-2 lots only.
Accordingly, in December of 2013, SGV filed a lawsuit against the City
pursuant to 42 U.S.C. §§ 1983, 1985(3), and 1988, alleging that the City had
violated its rights under the Fifth Amendment because the rezoning “constitute[d]
an unlawful taking of [its] property without just compensation therefor” and under
the Fifth and Fourteenth Amendments for denial of procedural and substantive due
process for the same taking. 4
Before trial, both parties filed several motions in limine. Relevant to this
appeal, the City moved to exclude any evidence challenging the zoning regulations
3
The portion of the purchase price for the 142 acres in Sector 16 was around $433,000.
4
The substantive due process claim alleged that “[t]he City has infringed upon [SGV]’s
property interest in an arbitrary, capricious and irrational manner.” The procedural due process
claim alleged that the City took SGV’s “property without providing a mechanism for just
compensation under State law for a regulatory taking” and failed “to provide adequate notice of
the change in zoning.”
The Court granted the City’s motion to dismiss the substantive due process claim as
subsumed by the procedural due process claim. After limited discovery into the process by
which the ordinance was passed, the district court granted the City’s motion for summary
judgment on the procedural due process claim. Only the just compensation claim went forward.
3
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as arbitrary and capricious, arguing that such evidence is irrelevant in a just
compensation case. The City also moved to exclude any evidence regarding the
value of SGV’s property as “lots,” since they were not legally lots at the time the
ordinance was passed. SGV moved to exclude any evidence regarding
foreclosures of SGV property after the date of the ordinance.
The district court denied the City’s motions and granted SGV’s. First, the
court noted that, in a just compensation case, the factfinder may consider evidence
relating to the reason for the regulatory action to demonstrate that the decision was
arbitrary. Second, the court ruled that SGV would be allowed to produce alternate
methods of calculation for damages, such as “the cost of preparing the property at
issue for R-4 lots,” if a fair market value was too difficult to ascertain on the date
of the alleged taking. Finally, the court found that evidence regarding the damages
in a just compensation case revolved around the query “what has the owner lost?”
at the time of the taking. For this reason, the court allowed the City to introduce
evidence regarding encumbrances on the property in existence at the time the
ordinance was passed but not after.
The City then filed a motion to reconsider the court’s pretrial ruling,
reiterating its objections to evidence of the City’s motive in passing the ordinance
and the “lot method” valuation of the property. For the first time, the City also
4
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argued that the case was not ripe for adjudication, since SGV had not sought
variances from the zoning ordinance.
The morning of trial, the court heard argument on the ripeness issue. The
court found that the question was addressed squarely by Eleventh Circuit
precedent, which held that a zoning ordinance was a final matter which could be
adjudicated.5 The court also noted that the city had not rezoned the property back
to its original R-4 designation since the commencement of the lawsuit (a period of
about four years) which indicated the City’s decision was final.
The evidence at trial, as relevant to this appeal, was largely undisputed.
Kyle Wood, an engineer who consulted on the initial layout of Sector 16, testified
that the site was originally zoned to have 321 R-4 or R-7 residences, with only 13
R-2 lots. SGV commissioned a plan that was primarily for R-4 lots, with only the
originally-zoned thirteen R-2 lots being built as R-2s. Wood testified that SGV
“mass graded” (i.e., graded all at once) Sector 16 for R-4 lots, as compared to
grading for R-2 lots which would have been individually graded. Wood also
5
In A.A. Profiles, Inc. v. City of Ft. Lauderdale, 850 F.2d 1483, 1487 (11th Cir. 1988)
(hereinafter A.A. Profiles I), this court found that a “rezoning ordinance was a final decision by
the City with respect to appellant’s property” and therefore held that the case was ripe for
adjudication.
5
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provided testimony that it was not financially feasible to convert the lots to comply
with the new zoning ordinance.6
The jury heard testimony from David Cox, owner of a local residential and
commercial construction company, that he previously was in a contract with SGV
for 60 R-4 lots in 2005. He also testified that, if SGV had put those lots on the
market again in 2011, he would have been interested in purchasing them for over
$40,000 a lot, assuming certain infrastructure was put in place. Cox had no interest
in purchasing R-2 lots.
SGV called multiple current and former representatives from the City to
testify. The former chairman of the planning and zoning board of Alabaster,
Robert Shinpaugh, testified that this incident with SGV was the sole incident he
could remember where the City had requested a rezoning from a previous zoning
decision. The former chairman also testified that the board had been unaware of
certain economic and geographic aspects of the property when it was rezoned.7
6
To convert the R-4 graded lots into R-2 lots, SGV had two options. First, SGV could
merge every other R-4 lot into its neighbor, thereby cutting the lots in half but making the
requisite plot size. The problem with that method, Wood said, was that the lot shape would
require the house to be turned sideways to the street. The second method also involved having
fewer lots but included bringing in additional dirt and a retaining wall to lengthen the amount of
flat land available for building, which would add “considerable expense.” Wood estimated that
this re-grading would cost $3.2 million dollars.
7
Specifically, the jury heard that when the board made its recommendation to rezone,
Shinpaugh had not seen the property; was unaware of the grading work SGV had already done;
did not discuss the impact of rezoning economically; did not consult the city engineer to see if it
was feasible to construct R-2 homes on that topography; could not remember who submitted the
application to rezone or why he signed it; and was generally unfamiliar with real estate
6
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The City’s mayor at the time relevant to this dispute testified that three people
spoke against the rezoning at the Alabaster city council meeting where the
ordinance was adopted. One of those people was the then-owner of SGV. A city
council member, Tommy Ryals, testified that Sector 16 was originally zoned
according to a master plan put out by the City. Ryals also testified regarding the
City’s motivation for the rezoning.8
The final witness that SGV called was Concetta Givianpour, the current
owner of SGV. She testified that Sector 16 was the last sector of the purchased
property to be developed. For years, SGV displayed in their sales center their
master plan for the entire property, which for Sector 16 included only R-4 homes.
In other words, they “made it known publicly” that Sector 16 was reserved for R-4
garden homes. Givianpour also testified that SGV obtained a permit to develop the
land from the Alabama Department of Environmental Management (ADEM), and
development practices. On cross, Shinpaugh clarified that the zoning board did not typically
consider the economic impact of its zoning regulations, and that some of the current residents of
the neighborhood next to which Sector 16 was located supported the zoning change.
8
According to Ryals, the City was rezoned in order to avoid any townhomes (R-7) being
built on the property. The City was aware that SGV planned only to build R-4 and R-2 homes
but was worried that there would be a foreclosure and a change in ownership. Ryals spoke of the
rezoning as simply a “starting point” to negotiate with the owner. On cross, Ryals testified that,
in his opinion, the preliminary plat submitted by SGV in 2006 was rejected because there was
not a second entrance, and that no revised preliminary plat was submitted by SGV thereafter.
Ryals also testified about a letter from 2004 in which the City committed to “support” SGV’s
request to rezone the R-7 portion of its property to R-4 as a result of discussions between SGV’s
owner and the City.
7
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another permit from the City of Alabaster to clear and grade Section 16, in
December of 2011, just before the zoning ordinance was passed.
Besides the purchase price, Givianpour testified that SGV, by 2008, had
spent a total of $3,532,849.19 to develop Sector 16. Givianpour explained that the
reason SGV did not finish developing Sector 16 for several years was because the
2008 recession hit the development industry, and they were going to wait until
after the recession to continue developing. Givianpour testified that, by the end of
2011, she saw the Alabama market returning.
Givianpour testified that R-4 and R-7 are “highly coveted” zoning
designations for a builder. By contrast, building R-2s was not economically
feasible because it would require greater expenditures, would result in half the
number of lots they expected to have, and would not result in marketable homes.
Givianpour estimated the lots would have sold for $35,000 to $40,000 each before
the rezoning, meaning that the fair market value of Sector 16 was $5.7 million on
December 4, 2011. Givianpour estimated that, after the rezoning, the property was
worth $200,000 on the theory that they could only sell the property to other
homeowners in the neighborhood.
The jury found that there was a regulatory taking without just compensation;
that before the taking, the value of the property was $3,532,849.19; and after the
taking, the value of the property was $500,000. The court added prejudgment
8
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interest of 6%, and entered a final judgment for SGV of $3,505,030.65. The City
filed a notice of appeal, and the court granted a motion for stay while the appeal
was pending.
II. Standards of Review
We review our own jurisdiction to hear a case, including questions of
ripeness, sua sponte. Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1573
n.7 (11th Cir. 1989). When a district court makes a jurisdictional ruling, we
review legal conclusions de novo and factual determinations for clear error.
Barnett v. Okeechobee Hosp., 283 F.3d 1232, 1238 (11th Cir. 2002).
Evidentiary rulings are reviewed under an abuse of discretion standard.
Haygood v. Auto-Owners Ins. Co., 995 F.2d 1512, 1515 (11th Cir. 1993). A
district court abuses its discretion where its decision rests upon a clearly erroneous
finding of fact, an erroneous conclusion of law, or an improper application of law
to fact. Furcron v. Mail Centers Plus, LLC, 843 F.3d 1295, 1304 (11th Cir. 2016).
“However, even a clearly erroneous evidentiary ruling will be affirmed if harmless.
An error is harmless unless it affects the substantial rights of the parties.” Id.(internal citation omitted).
III. Discussion
The City makes five arguments on appeal. First, that the just compensation
claim was not ripe. Second, that the evidence tending to show the City acted in an
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arbitrary and capricious manner was irrelevant and prejudicial. Third, that
evidence concerning the value of SGV’s property was irrelevant. Fourth, Cox’s
testimony about how much he would have paid for hypothetical R-4 lots was
irrelevant and prejudicial. Finally, that the City’s evidence regarding how SGV
lost much of its property after the rezoning due to foreclosure was relevant and
thus the district court erred in precluding it.
A. Ripeness
Ripeness, like standing, “present[s] the threshold jurisdictional question of
whether a court may consider the merits of a dispute.” Elend v. Basham, 471 F.3d
1199, 1204 (11th Cir. 2006). “In order for [a just compensation] claim to be ripe
for adjudication . . . [t]he landowner must obtain a final decision regarding the
application of the zoning ordinance or regulation to his or her property[.]” Eide v.
Sarasota Cty., 908 F.2d 716, 720–21 (11th Cir. 1990).9
The City argues that the case was not ripe for trial because SGV never
received any determination from the City as to the application of the zoning on the
9
We note that in addition to the finality requirement, Eide also set forth a second
requirement for a just compensation claim to be ripe for adjudication—that the landowner must
“utilize state procedures which provide for obtaining just compensation.” 908 F.2d at 720–21.
However, the Supreme Court overruled the state-litigation requirement in Knick v. Township of
Scott, Pennsylvania, 139 S. Ct. 2162, 2167 (2019). Accordingly, a landowner is no longer
required to pursue state procedures to secure just compensation under state law before bringing a
Fifth Amendment just compensation claim in federal court. Id. Thus, the fact that SGV did not
pursue just compensation in state court does not affect our ripeness determination in this case.
Id.10
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property. In other words, the City argues that SGV has not satisfied the final
decision requirement. See Williamson Cty. Reg’l Planning Comm’n v. Hamilton
Bank of Johnson City, 473 U.S. 172, 186 (1985), overruled on other grounds by
Knick v. Twp. of Scott, Pa., 139 S. Ct. 2162 (2019) (“[A] claim that the application
of government regulations effects a taking of a property interest is not ripe until the
government entity charged with implementing the regulations has reached a final
decision regarding the application of the regulations to the property at issue.”).
The City centers its argument on our Eide decision, particularly one line
from the opinion: “The final decision requirement includes a requirement that the
property owner seek variances from the applicable regulations.” 908 F.2d at 721
(citing Williamson Cty., 473 U.S. at 188). Thus, the City argues our case law
requires SGV to have sought a variance from the zoning ordinance before pursuing
the case in court.
The City’s argument is unpersuasive for multiple reasons. First, our binding
precedent holds that a zoning ordinance can itself be a final decision on the merits.
See A.A. Profiles, Inc. v. City of Ft. Lauderdale, 850 F.2d 1483, 1487 (11th Cir.
1988) (hereinafter A.A. Profiles I) (“Because the rezoning ordinance was a final
decision by the City with respect to appellant’s property and because the Board
does not review the City’s zoning decisions, we now address the merits of the
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takings claim.”). 10 Second, the factual scenario underlying this case is
significantly different than that in Eide or Williamson County. See Eide, 908 F.2d
at 727 (“Decisions on ripeness issues are fact-sensitive.”).
The final decision requirement is a well-established component of federal
ripeness law. In Williamson County, a county changed its zoning ordinances to
“require that calculations of allowable density exclude 10% of the total acreage to
account for roads and utilities.” 473 U.S. at 178. This new density calculation
interfered with a subdivision already in the process of being built by the plaintiff.
Id. at 179–80. In this posture, the Supreme Court found that “[i]t appears that
variances could have been granted to resolve at least five of the Commission’s
eight objections to the plat” and that the plaintiff should have applied for those
variances. Id. at 187–88. In Eide, similarly, a county adopted a “comprehensive
plan . . . to map out the future development of land in the County.” 908 F.2d at
719.11 The plaintiff in Eide challenged the general sector plan as applied to his
property without requesting that his property be rezoned. See id. at 719–20. We
noted that the “[m]ere adoption of a sector plan does not change the zoning of any
10
Though we do not believe A.A. Profiles I conflicts with Eide, to the extent the City
argues that it does, we are required to follow A.A. Profiles I, as it is the older precedent. See
Walker v. Mortham, 158 F.3d 1177, 1188–89 (11th Cir. 1998).
11
Eide dealt with a challenge to the regulation itself, the “arbitrary and capricious” type
of challenge noted above. See 908 F.2d at 722. Because “different standards of ripeness”
govern different types of challenges, id., Eide is not dispositive for this just compensation claim,
but we find the factual situation instructive.
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of the properties involved,” id. at 719 (emphasis in original), and that “[i]n order to
challenge the County’s application of the sector plan to his property, Eide must
first demonstrate that the sector plan has been applied to his property.” Id. at 724(emphasis in original).
In both Eide and Williamson County, then, there was a general plan for a
large portion of the county that only coincidentally ended up affecting a discrete
portion of property owned by each plaintiff. That situation implicated the final
decision concern noted in A.A. Profiles I:
On numerous occasions the Supreme Court has noted that a takings
claim based on the application of a governmental regulation “is not
ripe [for adjudication] until the government entity charged with
implementing the regulations has reached a final decision regarding
the application of the regulations to the property at issue.” This
finality requirement is necessary so that the court can evaluate the
“economic impact” and the extent of interference with “reasonable
investment-backed expectations” by the challenged state action.
A.A. Profiles I, 850 F.2d at 1486 (alteration in original) (internal citations omitted)
(quoting Williamson Cty., 473 U.S. at 186, 191). The zoning ordinances in
Williamson County and Eide were not “final decisions” in the sense that the county
had not decided how it was going to apply a broad, county-wide zoning ordinance
or regulation to a specific piece of property owned by the plaintiff.
The facts of this case are quite different. The City engaged in discussions
with SGV for years about what SGV was going to do with Sector 16. Then the
recession hit, and the City began to hear complaints from neighbors adjacent to
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Sector 16 who were worried that SGV would lose the property through foreclosure
and another builder would ruin the aesthetic value of the neighborhood. In
response, the City passed a specific ordinance that targeted precisely and only
Sector 16. Moreover, it passed the ordinance over objection by SGV. In this case,
there was no ambiguity as to how a general plan would be applied to a specific
project—the zoning ordinance itself was the City’s final decision on the matter.
See A.A. Profiles I, 850 F.2d at 1487. This factual distinction between a targeted
zoning ordinance where the plaintiff contested the application to his or her land,
and a general ordinance where a plaintiff has not asked the city to rezone his or her
property, harmonizes the A.A. Profiles I and Eide decisions. See Strickland v.
Alderman, 74 F.3d 260, 266 (11th Cir. 1996) (“Decisions on ripeness are fact
sensitive.” (quoting Eide, 908 F.2d at 727)); see also Reahard v. Lee Cty., 30 F.3d
1412, 1415 (11th Cir. 1994) (“In most cases, no ‘final decision’ has been reached
until an aggrieved landowner has applied for at least one variance to a contested
zoning ordinance.” (emphasis added) (citing Williamson, 473 U.S. at 186)).
The other case on which the City relies, MacDonald, Sommer & Frates v.
Yolo County, 477 U.S. 340 (1986), is inapposite to the facts here. In that case, the
plaintiff filed a just compensation claim against a county planning commission
immediately after the commission rejected plaintiff’s proposed subdivision plan.
See id. at 342–43. The MacDonald court held that the plaintiff, by “submit[ting]
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one subdivision proposal and . . . receiv[ing] the Board’s response thereto,” had not
received a “final, definitive position regarding how [the commission] will apply
the regulations at issue to the particular land in question.” Id. at 351 (quoting
Williamson Cty., 473 U.S. at 191). Unlike the present case, then, the county had
not clearly spoken as to how the zoning ordinance would be applied to the subject
property because the plaintiff had not sought such an answer. Here, we have a
different issue: whether the City’s zoning ordinance for Sector 16 affected the
economic value of that property so greatly as to constitute a taking. See
Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1576 (11th Cir. 1989) (“As
there is no uncertainty regarding the level of development that would be permitted,
MacDonald’s reapplication requirement serves no purpose here.” (citing
MacDonald, 477 U.S. at 352 n.8)).
In summary, the zoning ordinance that specifically targeted the plaintiff’s
property—over SGV’s objection and without means of relief under Alabama
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law 12—was a final decision on the matter such that the case is ripe. 13 See
Palazzolo v. Rhode Island, 533 U.S. 606, 620 (2001) (“While a landowner must
give a land-use authority an opportunity to exercise its discretion, once . . . the
permissible uses of the property are known to a reasonable degree of certainty, a
takings claim is likely to have ripened.”).
12
Even assuming arguendo the City’s decision was not final, we still hold that this case
is ripe because of the futility exception: “An exception to the final decision requirement exists
where it would be futile for the plaintiff to pursue a final decision.” Strickland, 74 F.3d at 265.
In Greenbriar, we analyzed a takings claim where a zoning ordinance was construed as a “final
zoning decision[]” under the finality doctrine. 881 F.2d at 1573. Greenbriar involved the exact
same city as this case (Alabaster, Alabama) and based its decision, in part, on that city’s
governmental structure. See id. at 1572. We held the plaintiff “did not fail to secure any
variances which might be available” because “there are no variances available under the
applicable local law which could change the zoning classification of the property.” Id. at 1575.
We also noted that the structure of Alabama law prohibited the local zoning board from
modifying an ordinance to rezone a tract of land. Id. at 1575 n.9; see also Ala. Code § 11-52-
80(d)(3) (1975). Thus, we concluded, Alabaster’s zoning decision was necessarily final. See
Greenbriar, 881 F.2d at 1575. As SGV argues, Alabama law still does not have a process
through which variances can change zoning ordinances. Alabama law empowers the board of
adjustment to “authorize upon appeal in specific cases such variance from the terms of the
ordinance as will not be contrary to the public interest.” Ala. Code § 11-52-80(d)(3). However,
those variances must “not be contrary to the public interest” and must ensure “the spirit of the
ordinance shall be observed.” Id. These criteria show that the variance cannot undo an
ordinance; given that the ordinance here was for only Sector 16, a variance for Sector 16 would
plainly not be within “the spirit of the ordinance.” Therefore, on the record before us, the case is
ripe for adjudication under the futility doctrine.
13
The City also argues that the case is not ripe because SGV failed to exhaust its
administrative remedies. But in non-prisoner civil cases, such as here, “exhaustion of state
administrative remedies [is] not [] required as a prerequisite to bringing an action pursuant to §
1983.” Patsy v. Bd. of Regents of State of Fla., 457 U.S. 496, 516 (1982); Knick, 139 S. Ct. at
2179 (finding that States are “[not] free to require plaintiffs to exhaust administrative remedies
before bringing constitutional claims”); see also Greenbriar, 881 F.2d at 1574 n.8 (“Thus,
exhaustion of administrative remedies is not required either for a takings claim or for a
substantive due process claim.”). The City’s claim that the matter was not ripe due to SGV’s
failure to exhaust administrative remedies fails as a matter of law.
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B. Evidence Regarding the City’s Motive
The City next argues that, by permitting evidence regarding the City’s
reasoning for passing the zoning ordinance (hereinafter referred to as the City’s
“motivation”), the court allowed an “arbitrary and capricious” challenge to the
ordinance, which is proper only under a substantive-due-process claim, not
aregulatory-taking-without-just-compensation claim. Essentially, the City invites
us to recognize a categorical rule which would exclude all evidence regarding why
a zoning ordinance was passed in just compensation trials. This we cannot do.
While we agree with the City that some of the evidence presented below went
beyond what was relevant to the just compensation claim, we disagree that all the
evidence regarding why and how the City passed the zoning ordinance was
irrelevant. Moreover, given the record before us, we find any error in the
admission of irrelevant evidence harmless.
1. Relevance of the Evidence
Evidence is relevant if it has any tendency to make any fact which is of
consequence in determining the action more or less probable than it would be
without the evidence. Fed. R. Evid. 401. As we have noted before, “[t]he standard
for what constitutes relevant evidence is a low one.” United States v. Tinoco, 304
F.3d 1088, 1120 (11th Cir. 2002). “Relevant evidence” in a takings case includes
anything related to the value of the property taken. United States v. Certain Land
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at Irving Place & 16th St., 415 F.2d 265, 271 (2d Cir.), amended sub nom. United
States v. Certain Land, Irving Place & 16th St., 420 F.2d 370 (2d Cir. 1969).
Relevant evidence can also include the “circumstances under which a plaintiff’s []
property was confiscated” that underlie the takings claim. Paalan v. United States,
58 Fed. Cl. 99, 102 (2003).
The City’s argument that delving into the reasons for the zoning ordinances
was an irrelevant inquiry is based primarily on Eide, wherein this court recognized
“four types of challenges which a plaintiff may bring” to a regulation affecting his
or her property under the Fifth Amendment. Eide, 908 F.2d at 720. “We refer to
these claims as just compensation, due process takings, arbitrary and capricious
due process, and equal protection claims.” Id. For an arbitrary and capricious
claim, “a plaintiff may argue that the regulation is arbitrary and capricious, does
not bear a substantial relation to the public health, safety, morals, or general
welfare, and is therefore an invalid exercise of the police power.” Id. at 721.
While Eide certainly established different types of takings claims, and
acknowledged that “[t]his court has itself confused due process takings and
arbitrary and capricious due process claims,” Eide stated that the danger of this
“confusion” is that it “may result in incorrect analyses of cases because different
standards of ripeness are required for each” type of claim. Id. at 722–23
(emphasis added). Eide’s four categories, therefore, are primarily concerned with
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factual scenarios of ripeness; we did not hold that different types of claims require
completely separate types of evidence. Indeed, it is inevitable that there is some
crossover in evidence between the different categories of takings claims. For
example, in A.A. Profiles I, we addressed a just compensation claim by analogizing
to a case dealing with an arbitrary and capricious claim. 850 F.2d at 1488 (quoting
Wheeler v. City of Pleasant Grove (Wheeler I), 664 F.2d 99, 100 (5th Cir. Unit B
Dec. 1981)).
Thus, these cases demonstrate that the line between evidence relevant to
show a just compensation claim and evidence relevant to show an arbitrary and
capricious claim will not always be cleanly divisible. This overlap is especially
true in jury trials, where the need for contextual evidence sometimes requires the
court to admit evidence regarding the process of passing the regulation. See, e.g.,
Whitehead v. Bond, 680 F.3d 919, 930 (7th Cir. 2012) (“Even where evidence is
not directly related to a disputed fact, it may be relevant when it provides
background information.”); Fisher v. Procter & Gamble Mfg. Co., 613 F.2d 527,
540–41 (5th Cir. 1980) (upholding judge’s decision to allow in evidence of
discrimination not directly relevant to plaintiff’s employment discrimination claim
because “[t]horough and coherent consideration of the plaintiff’s claims would
necessarily require the recognition of various factors which carry no independent
legal consequences”).
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2. Specific Motive Evidence is Irrelevant Pursuant to the Penn Central Factors
Our review of the record demonstrates that some of the motivation evidence
admitted by the district court indubitably went beyond providing mere context.
The district court admitted evidence of the City’s motivation based on language
from our precedent in A.A. Profiles I: “For there to be a taking in this case the
City’s action must have failed to substantially advance a legitimate state interest.
A government regulation will constitute a taking if it is ‘not reasonably necessary
to the effectuation of a substantial public purpose . . .’” 850 F.2d at 1487 (citing
Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 127 (1978)). The A.A.
Profiles I decision was based on Penn Central, the landmark Supreme Court case
that set out three factors factfinders should consider when determining whether a
zoning ordinance constitutes a taking: “The economic impact of the regulation on
the claimant and, particularly, the extent to which the regulation has interfered with
distinct investment-backed expectations are, of course, relevant considerations.
So, too, is the character of the governmental action.” Penn Cent., 438 U.S. at 124.
The district court thus found that the evidence was relevant under one of the Penn
Central factors. 14
14
We assume for purposes of this analysis that the motivation of the City was understood
to fall under the “character of the government action” factor, as SGV urges on appeal. But we
note the district court did not explicitly state this theory in its ruling from the bench.
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Based on our precedent, the district court had additional reasons to classify
the evidence as pertaining to the Penn Central factors. We previously defined the
“character of the government action” to include the “nature of the state’s interest”
in the regulation. See Vesta Fire Ins. Corp. v. State of Fla., 141 F.3d 1427, 1433
(11th Cir. 1998) (“But the nature of the state’s interest is critical in determining
whether a taking has occurred. When important public interests are served, a
taking is less likely to have occurred.”); see also id. (finding that proper analysis of
a takings claim includes a “necessary study of competing interests”); A.A. Profiles,
Inc. I, 850 F.2d at 1488 (considering in part the alternatives to re-zoning available
to the city while analyzing whether its action constituted a taking). However
permissive our rule on what constitutes the “character of the government’s action”
has been, we now must recognize that the precedent on which the district court
relied has been abrogated. 15
15
Our precedent on this issue seemed backed by Supreme Court precedent at the time it
was issued. In Connolly v. Pension Benefit Guaranty Corporation, the Court analyzed as the
“nature of the government action” the fact that the regulation “arises from a public program that
adjusts the benefits and burdens of economic life to promote the common good and, under our
cases, does not constitute a taking requiring Government compensation.” 475 U.S. 211, 225
(1986). And in Palazzolo, the Supreme Court seemed to indicate that the Penn Central factors
themselves seem to require at least examination of the purpose of the regulation: “These
inquiries [into the Penn Central factors] are informed by the purpose of the Takings Clause,
which is to prevent the government from ‘forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the public as a whole.’” Palazzolo, 533
U.S. at 617–18 (quoting Armstrong v. United States, 364 U.S. 40, 49 (1960)). These Supreme
Court cases, however, predate Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005), the case
which abrogates our prior conclusions on what evidence is considered relevant to the “character
of the government action.”
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In 2005, the Supreme Court addressed whether the phrase “substantially
advances a legitimate government interest” was “valid[] as a freestanding takings
test.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 540 (2005). The Court found it
was not: “We conclude that this formula prescribes an inquiry in the nature of a
due process, not a takings, test, and that it has no proper place in our takings
jurisprudence.” Id. The Lingle court explicitly rejected the argument that the Penn
Central factor of the “character of government action” addressed the purpose of
the regulation:
In addition, the “character of the governmental action”—for instance
whether it amounts to a physical invasion or instead merely affects
property interests through “some public program adjusting the
benefits and burdens of economic life to promote the common
good”—may be relevant in discerning whether a taking has
occurred. . . [E]ach of these [Penn Central factors] focuses directly
upon the severity of the burden that government imposes upon private
property rights.
Lingle, 544 U.S. at 539 (quoting Penn Central, 438 U.S. at 124). In explaining
why a takings claim should focus exclusively on the severity of the government
intrusion and not the purpose of that intrusion, the Court stated:
an inquiry [into the purpose of regulation] is logically prior to and
distinct from the question [of] whether a regulation effects a taking,
for the Takings Clause presupposes that the government has acted in
pursuit of a valid public purpose. The Clause expressly requires
compensation where government takes private property “for public
use.” It does not bar government from interfering with property
rights, but rather requires compensation “in the event of otherwise
proper interference amounting to a taking.” Conversely, if a
government action is found to be impermissible—for instance because
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it fails to meet the “public use” requirement or is so arbitrary as to
violate due process—that is the end of the inquiry. No amount of
compensation can authorize such action.
Lingle, 544 U.S. at 542–43 (emphases removed) (quoting First English
Evangelical Lutheran Church of Glendale v. Los Angeles Cty., Cal., 482 U.S. 304,
315 (1987)). Lingle, then, abrogates our case law which held that for a taking to
have occurred, the fact finder must examine whether the city’s action was
“reasonably necessary to the effectuation of a substantial public purpose.” A.A.
Profiles I, 850 F.2d at 1487 (quoting Penn Central, 438 U.S. at 127). Instead, for
just compensation claims, the “character of the government action” is another way
to examine the severity of the government interference with property rights.
Lingle, 544 U.S. at 539.16 Lingle changed the type of inquiry permitted in a just
compensation claim, and abrogated our earlier precedent permitting an inquiry into
the rationale behind the regulation. See Rose Acre Farms, Inc. v. United States,
16
We are not the first circuit to conclude that Lingle changes the type of claim falling
under the just compensation portion of the takings clause:
In concluding the “substantially advances” theory was not appropriate under the
Takings Clause, the Supreme Court explained that the Takings Clause merely
requires compensation for an otherwise valid governmental interference with
private property rights. It does not, in and of itself, provide a cause of action for
allegations that the interference with property rights is arbitrary or irrational, a
theory that instead resembles a due process claim.
Alto Eldorado P’ship v. Cty. of Santa Fe, 634 F.3d 1170, 1175 (10th Cir. 2011) (citing Lingle,
544 U.S. at 543); see also Rose Acre Farms, Inc. v. United States, 559 F.3d 1260, 1277 (Fed. Cir.
2009) (“[Lingle]’s language itself signals the change in the law.”); Spoklie v. Montana, 411 F.3d
1051, 1057 (9th Cir. 2005) (dismissing a ballot initiative takings challenge as using the abrogated
“substantially advances a legitimate public purpose” test).
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559 F.3d 1260, 1278 (Fed. Cir. 2009) (“Thus, we can confidently say that, under
Lingle, the regulatory takings paradigm has changed. We can no longer ask
whether the means chosen by government advance the ends or whether the
regulation chosen is effective in curing the alleged ill. All those concerns, albeit
relevant concerns in many cases dealing with governmental regulations, are now
confined to a substantive due process inquiry.”).
The district court’s reliance on our abrogated precedent is perhaps
understandable. 17 Until today, we had not yet recognized that the Supreme Court
overruled this aspect of our just compensation case law. And because we find
below that any error the district court made in admitting evidence under the Penn
Central factors regarding motivation which was not necessary for context was
17
Neither, however, should our holding today come as a shock. Some of our other pre-
Lingle precedent seemed to anticipate the Supreme Court’s distinction between due process
claims that challenge the public necessity of a regulation and a just compensation claim under
the Takings Clause:
Technically, the fifth amendment’s just compensation clause is not applicable
where there has been no “public use.” Such may be the case where, as here, the
land use regulation that effected the taking was not enacted in furtherance of the
public health, safety, morals, or general welfare. The affected landowner may
nevertheless have a damage cause of action under section 1983 since the taking
may violate his fourteenth amendment rights to due process. Regardless of which
constitutional provision a taking falls under, the measure of damages to which the
aggrieved landowner is entitled is the same.
Wheeler v. City of Pleasant Grove, 833 F.2d 267, 270 n.3 (11th Cir. 1987) (hereinafter Wheeler
III) (citation omitted); see also A.A. Profiles II, 253 F.3d at 583 (recognizing that if a
government’s “regulation is not enacted in furtherance of the public health, safety, morals, or
general welfare,” then there is “no Fifth Amendment taking”).
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harmless, the admission of evidence regarding the City’s motivation was not
reversible error.
3. Harmless Error
Erroneous evidentiary rulings in a just compensation case, as in all civil
cases, are subject to harmless error review. See Fed. R. Civ. P. 61 (“Unless justice
requires otherwise, no error in admitting or excluding evidence—or any other error
by the court or a party—is ground for granting a new trial, for setting aside a
verdict, or for vacating, modifying, or otherwise disturbing a judgment or order.
At every stage of the proceeding, the court must disregard all errors and defects
that do not affect any party’s substantial rights.”).
In the just compensation context, an evidentiary error is harmless if there is
no demonstrable effect on the ultimate verdict or other prejudice to the appellant.
See United States v. 158.24 Acres of Land, 696 F.2d 559, 564 (8th Cir. 1982) (“We
turn then to consideration of the prejudice, if any, resulting from the offending
testimony, for we recognize that admission of evidence to some extent is
discretionary, and we are mindful of the harmless error rule as applied to jury
cases. Moreover, we commonly sustain [just compensation] awards that are
‘within the scope of the evidence.’” (quoting United States v. 9.20 Acres of Land,
638 F.2d 1123, 1126 (8th Cir. 1981) (internal citations omitted))); United States v.
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191.07 Acres of Land, 482 F.3d 1132, 1137 (9th Cir. 2007) (holding error harmless
when appellant failed to identify the particular harm in a just compensation case).18
We find any error here harmless because substantial, permissible evidence
produced at trial supports the jury’s verdict. It was undisputed that developing
Sector 16 into R-2 was not economically feasible. It was undisputed also that the
rezoning occurred after SGV spent a significant sum of money preparing the
property for R-4 homes. The only evidence regarding the value of the property
before and after the zoning was brought by SGV—in fact, the City did not call any
witnesses. The evidence clearly supported a finding that a taking occurred.
Further, the jury awarded an amount that was about $2.5 million dollars less than
SGV’s estimate—the only estimate provided to the jury. City has not
demonstrated any prejudice resulting from the erroneous admission of testimony
regarding the City’s motive.19
18
Because we have not previously ruled on a just compensation case where the evidence
relating to a decision maker’s motivation in passing an ordinance was erroneously admitted
based on abrogated precedent, we necessarily are guided in this analysis by our sister circuits.
19
To the extent that the City bases its argument for harmful error on SGV’s closing
argument, the record demonstrates that the jury was specifically instructed that “anything the
lawyers have said in their opening statements, their questions, their objections, the closing
arguments that they are about to make, these things are not evidence and counsel’s statements are
not binding on you.” We also note that the amount of argument dedicated to the City’s
motivation, and the amount of evidence that came in over the course of the four-day trial that
was improper, was de minimis. See Bailey v. S. Pac. Transp. Co., 613 F.2d 1385, 1389 (5th Cir.
1980) (“Even assuming the trial court erred in not sustaining defendant’s objection, the doctrine
of harmless error surely encompasses one statement during the course of a two day trial . . . .”).
Finally, portions of SGV’s argument could be construed as going to the “severity of the burden
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C. Evidence Regarding the Value of Sector 16
The City next argues that the district court committed reversible error by
admitting “hypothetical values” of Sector 16. The City objects to SGV’s valuation
of the property as though the entirety of Sector 16 was previously zoned R-4 when
in truth a small portion of it was actually zoned R-2 or R-7.20 The City also objects
to SGV’s use of the “lot method” of valuation on “raw land,” suggesting that it
results in valuations that are too speculative. The City has waived these
arguments.
The City raises its argument regarding the use of R-4 lot values for lots
zoned R-2 and R-7 for the first time on appeal. Although the City filed a motion in
limine to preclude certain valuation evidence, and the City objected to opposing
counsel speaking about the value of the lots in opening arguments, those two
objections were not sufficient to preserve this issue because the substance of the
City’s objection was quite different from what it now argues. At trial, the City
objected that a contract from 2005 was being used as a basis to calculate lots in
2011. In the motion in limine, the City argued that the disputed 2005 contract
could not serve as a basis for the value of the property because the lots did not
that [the] government impose[d]” on SGV, which is consistent with the Penn Central factors.
Lingle, 544 U.S. at 539.
20
To be clear, the jury did not specify how it reached the amount of compensation it
awarded. The number it awarded was lower than the figure SGV calculated.
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“legally exist,” as the preliminary plat was never approved, and did not “physically
exist,” because the relevant infrastructure was not in place. These objections went
to the attenuation of the evidence over time and the lack of work SGV had done on
the property. On appeal, the City argues that not all the lots were zoned R-4, so it
was error to allow evidence regarding the value of R-4 lots to serve as the
valuation basis for all of Section 16. The City points to no place in the record
below where it made that particular argument, and our review of the record does
not reveal such an objection. See Fed. R. Evid. 103 (to preserve an objection, the
party must “state[] the specific ground” for the objection).
As to the City’s second ground, that the “lot method” of valuation is
inappropriate for raw land, the timing of that objection was insufficient to preserve
the issue. The City objected on that ground only in a motion in limine. But “[t]he
overruling of a motion in limine is not reversible error; only a proper objection at
trial can preserve error for appellate review.” Hendrix v. Raybestos-Manhattan,
Inc., 776 F.2d 1492, 1504 (11th Cir. 1985) (quoting Collins v. Wayne Corp., 621
F.2d 777, 784 (5th Cir. 1980)). We therefore decline to consider this waived
argument on appeal. 21
21
We note that, even if either argument were not waived, the City would have likely been
unsuccessful, as our abuse of discretion review is highly deferential. See Nat’l Hockey League v.
Metro. Hockey Club, Inc., 427 U.S. 639, 642 (1976) (noting that, under an abuse of discretion
standard, an appellate court is not to substitute its judgment for that of the district court’s so long
as there is a basis for the district court’s decision).
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D. Evidence from Cox about Desire to Purchase Lots
The City also argues that it was error for the district court to allow Cox to
testify that he would have been interested in making an offer for SGV’s R-4 lots,
but not R-2 lots, if they were back on the market in 2011. We find no error here.
That evidence was relevant to SGV’s just compensation claim—that they lost
property through the rezoning from R-4 to R-2 because (1) there was not a market
for the type of R-2 they would have to build to comply with the zoning ordinances,
and (2) R-4 zoning was more “coveted” by prospective builders. Cox’s testimony
was also relevant to show there was a potential market for the lots designated R-4
in 2011 before the rezoning occurred. As another circuit has noted,
[t]he landowner is . . . entitled to have the fact finder take into
consideration all factors of value that would affect the market value of
the property. From the landowner’s standpoint, a factor of value
would be anything that would induce a reasonable seller to demand
more for the property and would induce a reasonable buyer to pay
more on account of the existence of the value factor.
United States v. 91.90 Acres of Land, 586 F.2d 79, 87 (8th Cir. 1978). A favorable
zoning designation, and interest from a potential buyer, are both such factors.
Finally,
[i]n determining what a hypothetical willing buyer would give for
property, courts often look to actual, comparable sales on the open
market between other willing buyers and sellers. “Generally, the
more comparable a sale is, the more probative it will be of the fair
market value of the condemned property.” “Sound and just trial
practice is to admit as many of the most comparable sales available as
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is necessary to fairly permit each side to present its argument of fair
market value for the jury’s consideration.”
480.00 Acres of Land, 557 F.3d at 1307 (quoting United States v. 320 Acres, 605
F.2d 762, 781 n.23, 798 (5th Cir. 1979)). Thus, the court was committing “sound
and just trial practice” in admitting evidence of a sale, or at least interest in a sale,
that was “most comparable” to the situation at hand, since it was for the disputed
lots themselves. See 320.0 Acres of Land, 605 F.2d at 798–99 (defining
“comparability” as a combination of “three variables: characteristics of the
properties, their geographic proximity to one another, and the time differential.”);
United States v. Deist, 442 F.2d 1325, 1327 (9th Cir. 1971) (“Whether or not a sale
constitutes a comparable sale so as to constitute evidence of value is within the
sound discretion of the trial court.” (quoting United States v. Eden Mem’l Park
Ass’n, 350 F.2d 933, 935 (9th Cir. 1965))). The admission of Cox’s testimony was
not an abuse of discretion.
E. Precluding Evidence of Post-Ordinance Foreclosures
Finally, the City argues that it was error to preclude evidence that SGV was
about to lose the property to banks in foreclosure before the rezoning. The City
admits, however, that the foreclosures occurred after the rezoning. The exclusion
of the evidence was not an abuse of discretion because it was not relevant to
SGV’s just compensation claim. See A.A. Profiles, Inc. v. City of Fort Lauderdale,
253 F.3d 576, 585 (11th Cir. 2001) (hereinafter A.A. Profiles II) (holding that it
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was an abuse of discretion to admit testimony regarding the company’s financial
ability to develop the property after the taking because “the relevant inquiry is not
whether [the property owner] would have been successful in proceeding with its
business, but to what extent the City’s actions diminished the property’s market
value”). 22
IV. Conclusion
This case demonstrates the particularity with which jurisdictional questions
such as ripeness turn on the specific facts of the case. We find that the City took a
final position on how the Sector 16 could be used, and therefore the case is ripe for
adjudication. Although it may have been error for the district court to allow some
evidence of the City’s motivation beyond that which was necessary to provide
context, we find that the error was harmless. Finally, we find that the district court
did not abuse its discretion regarding the other evidentiary objections.
AFFIRMED.
22
The City argues that A.A. Profiles II is distinguishable from this case because the
property here was not being developed. Whether the property was in the midst of active
development does not affect the relevancy of testimony regarding SGV’s financial status as it
pertains to this property’s value. And further, the record contradicts the City’s assertion. SGV
had already paid $2.6 million dollars to have the property graded. It is true that there was a
hiatus in operations due to the recession, but the owner of SGV testified that they were beginning
to explore the market again in 2011. In fact, SGV went through the process of getting an
environmental building permit just days before the regulation in this case was promulgated.
31