Vested rights

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In Huntleigh USA Corp. v. United States, No 2007-5118 (May 15, 2008), the US Court of Appeals for the Federal Circuit held that a company which provides passenger and baggage screening services at airports did not have a protectable Fifth Amendment property interest in contracts to provide those services to airlines.  Huntleigh sought just compensation for a taking after the federal government assumed security screening in the wake of the 2001 terror attacks, and rendered its existing screening service contracts worthless.

In 1974, Congress required the airlines to screen passengers and luggage, and most airlines hired private contractors to perform the screenings.  In 2001, Huntleigh had contracts with 75 airlines, and was responsible for screening at 35 airports nationwide.  After the 2001 terrorist attacks, Congress created the Transportation Security Administration and determined that the new agency could provide better security.  Congress enacted the Air Transportation Security Act which provides that the TSA could accomplish the screening itself, or could “assume the rights and responsibilities” of the airlines by assuming private security contracts.  If TSA chose the latter option, ATSA required it to provide “adequate compensation to parties to the contract.”

The law effectively terminated Huntleigh’s security contracts, and it filed suit in the Court of Federal Claims seeking just compensation for a taking of its property, and compensation under ATSA.  The CFC held that Congress had merely frustrated Huntleigh’s business expectations, and that TSA had not actually assumed any of its contracts but had instead taken over its screening duties.

The Federal Circuit affirmed, holding that the contracts were not property.  Huntleigh argued that the government did not merely frustrate its business expectations, but had, in effect, made its contracts illegal.  Relying upon Omnia Commercial Co. v. United States, 261 U.S. 502 (1923), the court disagreed.

In this case, the purpose of ATSA was not to take action with respect to any security screening contract to which Huntleigh was a party. Rather, its purpose was to transfer security screening responsibilities from the airlines to the federal government. This action, directed at the airlines, frustrated Huntleigh’s business interests.

Slip op. at 17.  The court also affirmed the CFC’s determination that ATSA compensation was not required because TSA did not actually assume Huntleigh’s contracts, but took over its duties.  A fine distinction, but one that was enough for the Federal Circuit.  Slip op. at 22.
Continue Reading Federal Circuit: No Property in Contract for Airport Screening Service

In Charles A. Pratt Constr. Co., Inc. v. Cal. Coastal Comm’n, No. B190122 (May 8, 2008), the California Court of Appeal (2d District) held the property owner’s right to develop was not vested, and that a takings claim was not ripe since the owner could submit other plans for development.

In that case, the California Coastal Commission denied a coastal development permit, and the property owner sought an order compelling the permit to issue, as well as damages for the taking of its property.  The owner’s first claim was that its right to develop was vested in 1990 pursuant to Cal. Govt. Code § 66498.1 et seq. when it filed the vesting tentative map.  The court rejected the argument, holding that vesting only applies to “requirements created and imposed by local ordinances,” and coastal policies are matters of statewide concern.  Slip op. at 4-5. The court also rejected…

Continue Reading Cal. Court of Appeals: Taking Claim For Denial of Coastal Development Permit Not Ripe

To all who attended Wednesday’s Integrating Water Law and Land Use Planning seminar, thank you.  Here are links to the cases and statutes I discussed:

Continue Reading Water Law Seminar Links and Materials

Today we filed the Opening_Brief (250kb pdf) in Maui Vacation Rental Association, Inc. v. County of Maui, No. 08-15251, the Ninth Circuit appeal from the Hawaii district court’s dismissal of MVRA‘s complaint which sought to declare Maui’s shut down of vacation rentals illegal. 

I won’t go into details of the case since the brief spells out the facts and arguments, but here are some prior posts on the case, and links to media coverage:

Continue Reading Opening Brief Filed in Ninth Circuit Maui Vacation Rental Appeal

The recording of today’s oral arguments in Unite Here! Local 5 v. City and County of Honolulu, No. 28603 has been posted here.  (Be prepared — it’s a 93mb file).  The briefs of the parties are posted here.

A report from KHON-TV2, with video of the site and the arguments is posted here.

The appeal involves the question of whether the City should haverequired the Kuilima Resort to prepare a supplemental EnvironmentalImpact Statement.

Update: Charley Foster has posted a summary of the arguments and analysis.  Continue Reading Oral Arguments in ICA Appeal on Kuilima EIS (mp3)

To all those who attended today’s seminar, thank you.  Here are the links to the cases I mentioned.  From the morning session on Case Law Update:

  • Franco – District of Columbia Court of Appeals – allegations of pretext cannot be summarily dismissed
  • Goldstein v. Pataki – Second Circuit – government’s claim of public use trump claims of pretext – cert. petition filed March 31, 2008
  • Brescia – shoreline setback and equitable estoppel – HAWSCT holds you gotta get your “official assurances” from the right party
  • Private agreements and public process – development and settlement agreements not a substitute for zoning process

From the afternoon session…

Continue Reading Cases and Links From Today’s Seminar

As reported here, a lawsuit was filed in Arizona state courts seeking to invalidate Sedona, Arizona’s prohibition on short-term rentals (less than 30 days):

Approximately 450 short-term rental properties in Sedona have beenimpacted by the new Ordinance making it illegal to advertise short-termrentals, and the Code prohibiting short-term rentals.

This ordinance was enacted by the city council Jan. 22 to putteeth into the Code, on the books since 1995, which made it illegal torent properties for less than 30-days

The tail end of the article lists the claims asserted by the plaintiffs, which include vested rights, selective enforcement, and other constitutional and statutory claims. Continue Reading Legal Challenge to Sedona, Arizona Short-Term Rental Ban

The San Francisco Chronicle posts “Maui County closes unlicensed bed and breakfasts and vacation rentals,” with background on the issue and the pending Ninth Circuit appeal.

In what is becoming a divisive battle – bothin court and in residential neighborhoods – the owners of the B&Bsand rental homes charge that the new leadership of Maui County, whichencompasses all three islands, has broken promises made by theirpredecessors to allow unlicensed properties to remain open, pending anoverhaul of the cumbersome licensing process.

County inspectors began their crackdown last July, when about 20properties were ordered to close, mainly in the Upcountry and NorthShore areas of Maui.

Complete story here.  Check out the public comments on the story here. 

Disclosure: I represent the Maui Vacation Rental Association in its Ninth Circuit appeal.

Continue Reading Maui Vacation Rental Ban in the News

In Palmyra Pacific Seafoods, L.L.C. v. United States, No 07-35L (Jan. 22, 2008), the U.S. Court of Federal Claims (the article I court that hears inverse condemnation claims against the federal government) held that federal regulations which prohibited commercial fishing in waters around Palmyra Atoll and Kingman Reef did not take the plaintiffs’ licenses for  commercial fish processing facilities on the atoll.

The plaintiffs were exclusively licensed by the owners of Palmyra Atoll (located approximately 1,000 miles south of Hawaii) to commercially fish the nearby waters, and to use the atoll’s airstrip, dock, harbor, and base came for their commercial fishing enterprise.  In reliance on the licenses, the plaintiffs invested several millions of dollars in on-island infrastructure, and actually began commercial fishing operations.  Slip op. at 2 & n.1.   

In 2001, however, the Secretary of the Interior designated the waters surrounding Palmyra and Kingman Reef as National Wildlife…

Continue Reading Court of Federal Claims: Commercial Fishing License Not “Property”