Darby Development Company, Inc. v. United States
112 F.4th 1017 (2024)
Rule of Law:
A government action, even if later found to exceed an agency's specific statutory authority, can be deemed "authorized" for Fifth Amendment Takings Clause purposes if it was taken by agents within the general scope of their duties and not in contravention of an explicit congressional prohibition. A temporary, government-mandated physical occupation of private property, such as an eviction moratorium that removes a landlord's right to exclude non-rent-paying tenants, constitutes a per se physical taking requiring just compensation.
Facts:
- In September 2020, the Centers for Disease Control and Prevention (CDC) issued a nationwide order titled "Temporary Halt in Residential Evictions To Prevent the Further Spread of COVID-19" in response to the COVID-19 pandemic.
- The CDC Order prevented landlords, owners of residential property, or other persons with a legal right to pursue eviction from actually evicting any "covered person" from residential property for nonpayment of rent.
- The CDC Order did not relieve tenants of their obligation to pay rent, nor did it prevent landlords from commencing eviction proceedings.
- The CDC initially set the Order to expire on December 31, 2020.
- On December 27, 2020, Congress extended the CDC Order through January 31, 2021, and simultaneously appropriated $25 billion in emergency rental assistance.
- The CDC, under a different administration, subsequently extended the moratorium several more times, ultimately through October 3, 2021.
- Rental property owners, including Darby Development Company, Inc., incurred losses due to their inability to evict non-rent-paying tenants during the moratorium period.
Procedural Posture:
- Rental property owners, including Darby Development Company, Inc., sued the United States in the U.S. Court of Federal Claims under the Tucker Act, claiming the CDC's eviction moratorium constituted a physical taking.
- The government moved to dismiss the complaint under Court of Federal Claims Rule 12(b)(6) for failing to state a claim upon which relief could be granted.
- The Court of Federal Claims granted the government's motion, dismissing the complaint, on the grounds that a takings claim cannot be premised on unauthorized government action and that the Supreme Court's Alabama Association of Realtors ruling essentially confirmed the Order was unauthorized.
- Darby Development Company, Inc., et al. (Plaintiffs-Appellants) timely appealed the dismissal to the United States Court of Appeals for the Federal Circuit.
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Issue:
Does a nationwide eviction moratorium, issued by a government agency within the general scope of its public health duties but later found to exceed its specific statutory authority, constitute an "authorized" action for Fifth Amendment Takings Clause purposes, and if so, does its temporary removal of a landlord's right to exclude non-rent-paying tenants constitute a physical taking requiring just compensation?
Opinions:
Majority - Circuit Judge Prost
Yes, the CDC's nationwide eviction moratorium was an "authorized" government action capable of triggering Fifth Amendment Takings Clause liability, and it stated a claim for a physical taking requiring just compensation, even though it was later deemed to exceed the agency's statutory authority. The court clarified that for takings purposes, "authorized" is not synonymous with "lawful" or "done with legal authority," but rather asks "whether the alleged invasion of property rights is chargeable to the government." An action is typically deemed authorized if done by government agents "within the general scope of their duties" and "pursuant to the good faith implementation of a congressional act," unless an explicit prohibition exists. The CDC, as a national public-health agency, acted within its normal duties under section 361 of the Public Health Service Act (PHSA) to prevent disease spread, and the Order was issued in a good-faith attempt to apply its authority, even if that interpretation was ultimately rejected by the Supreme Court in Alabama Association of Realtors. Importantly, Congress did not explicitly prohibit the action; instead, it extended the Order and appropriated significant rental assistance, further suggesting the action was chargeable to the government. This differs from cases like Hooe v. United States or North American Transportation & Trading Co. v. United States, where specific congressional prohibitions or limitations on authority existed. Regarding whether it constituted a physical taking, the court found the complaint stated a claim. Relying on Cedar Point Nursery v. Hassid, the court held that government-authorized invasions of property that appropriate an owner's right to exclude (even temporarily) are per se physical takings. The CDC Order, by removing landlords' ability to evict non-rent-paying tenants, directly infringed upon one of the most fundamental elements of property ownership: the right to exclude. The court distinguished Yee v. City of Escondido, noting that Yee was fundamentally a rent-control case where evictions for nonpayment were still permitted, and it included a crucial caveat that a different case would be presented if a landowner were compelled to refrain from terminating a tenancy.
Dissenting - Circuit Judge Dyk
No, the CDC's nationwide eviction moratorium was not an "authorized" government action for Fifth Amendment Takings Clause purposes because it exceeded the agency's statutory authority, and therefore, it cannot trigger takings liability. Justice Dyk argued that for over 100 years, Supreme Court precedent, including Hooe v. United States and Mitchell v. United States, has consistently held that unauthorized actions by federal agents cannot create takings liability because they are not properly chargeable to the United States. He contended that if a government agent exceeds the authority conferred by the specific statute granting it the power to act, that action is unauthorized. The majority's reliance on Del-Rio Drilling Programs Inc. v. United States is a misreading, as Del-Rio only contemplates actions unlawful due to violations of other statutes or mistakes of fact, not actions exceeding the fundamental statutory grant of authority itself. The CDC's eviction moratorium was well outside the "normal scope of duties" for an agency operating under Section 361 of the PHSA, which was historically focused on quarantine and inspection, not economic regulations like eviction moratoriums. The Supreme Court in Alabama Association of Realtors deemed the CDC's claim of expansive authority "unprecedented" and "virtually certain" to exceed its authority, describing Section 361 as a "wafer-thin reed" for such power. This strong condemnation from the Supreme Court, according to the dissent, demonstrates that the action was clearly outside the agency's normal duties and any reasonable interpretation of its powers. Allowing takings claims for such unauthorized actions would work a "sea change" in takings jurisprudence, imposing massive potential liability and discouraging legitimate government programs, and is inconsistent with Congress's "power of the purse." Furthermore, the dissent argued that property owners had other meaningful remedies, such as seeking injunctions or declaratory judgments, which were not promptly pursued by the appellants.
Analysis:
This case significantly clarifies and potentially expands the concept of "authorized" government action for Fifth Amendment Takings Clause purposes, distinguishing between a general lack of statutory authority and an explicit congressional prohibition. It reinforces the broad application of the per se physical takings rule, particularly concerning the fundamental right to exclude, even for temporary government-mandated occupations. The decision may encourage claims against agencies that overstep their specific statutory mandates in good faith while pursuing broader mission objectives, especially in novel emergency situations. Future cases will likely grapple with delineating the boundaries of "general scope of duties" and what constitutes an "explicit prohibition" by Congress.
