Today’s blog post is from one of my Bay Area Eminent Domain Partners, Nora E. Wetzel. You can learn more about Nora by clicking on her name.
In the recent case 640 Tenth LP v. Gavin Newsom as Governor, the California Court of Appeals held that, among other things, the Governor’s public health orders restricting business operations during the COVID-19 pandemic were not a “taking” of private property without compensation.
The Governor and the Department of Public Health issued a series of emergency orders that required gyms, restaurants, and other nonessential business to close for several months, and banned indoor dining for an additional period of time. A group of gym and restaurant owners sued the Governor, state officials, the County of San Diego, and the County’s Public Health Officer for inverse condemnation, as well as other causes of action.
The owners claimed the public health orders effected a “regulatory taking” –-where a government regulation effects a taking by leaving a property owner without economic beneficial use of his or her property. Specifically, the owners claimed that they suffered a “significant” loss of revenue, profit, and income and would suffer imminent total loss of their property interests if the public health orders were not stopped. But that was not enough to qualify as a regulatory taking which required on the order of an 85% reduction in value, and actual loss, not just a threat of loss, according to the Court.
The owners also pointed out that they depend on in-person patronage for their sales; the public health orders removed their businesses’ ability to operate because they were not allowed in-person customers, harming what is called their “investment-backed expectations”. While finding some merit in this factor, the Court’s overall analysis weighed against the owners, with the Court comparing the public health orders to historic examples of government actions undertaken to respond to serious threats to the public that were not found to be takings.
Though the Court exhibited sympathy for and acknowledged the hardship to small business owners, the Court found the businesses did not show that the public health orders qualified as a regulatory taking.