Supreme Court Overturns Williamson County: Allows a Property Owner Challenging a Local Government Regulation to Bring a Fifth Amendment Taking Case in Federal Court without Having to First Litigate in State Court

July 2019

June 21, 2019 saw a significant win for property owners. The United States Supreme Court, in a 5-4 decision in Knick v. Township of Scott (“Knick”), overturned its finding in the 1985 case Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (“Williamson County”).

In Williamson County, the Supreme Court held that a property owner who was claiming an unlawful taking by a local government under the Fifth Amendment must first pursue an inverse-condemnation action for “just compensation” in state court before bringing a claim in federal court. The Supreme Court reasoned that no constitutional violation of the Fifth Amendment occurs until the property owner is denied “just compensation” at the end of the state court proceeding. In practice, this meant that property owners had to litigate their takings claims to finality before the state court and lose before they could access the federal courts. Further, property owners who lost at the state court level could be denied access to the federal courts on the grounds that the state court had already decided the constitutional issue.

In Knick, the Supreme Court held that Williamson County was wrongly decided and that an inverse-condemnation action can be brought in federal court at any time, without the need for a property owner to first bring a state court action. The basis for overturning Williamson County was the Supreme Court’s reading of the Fifth Amendment – that a constitutional violation occurs as of the effective date of the “taking” (when the local regulation takes effect), not later when “just compensation” is denied.

While the Supreme Court’s decision in Knick leaves certain questions unanswered, it marks a victory for property owners pursuing unlawful local government takings claims insofar as it clears the way for them to file suit directly in federal court. Case in point – property owners in New York City have recently sued the State of New York in federal court to challenge updated state rent control laws, with one of the claims being a Fifth Amendment “taking” without “just compensation.”