Esposito v. South Carolina Coastal Council

No. D:88-2055-1 (D.S.C. October 13, 1989)

The court holds that amendments to the South Carolina Beachfront Management Act preventing construction within 20 feet of the coastal baseline do not constitute a taking because the property owner has a house on the property and therefore is able to make economically viable use of the land. The statutes seek to protect the beaches by creating a no-construction zone. Though the statutes have had a chilling effect on the sale of the property, they do not restrict alienability. The court also holds that the statutes do not violate the Due Process clause because the statutes are substantially related to an important state interest.

Counsel for Plaintiffs
Randall Chastain
Lourie, Curlee, Barrett & Popowski
1224 Pickens St., P.O. Box 12089, Capitol Station, Columbia SC 29211
(803) 799-9805

John V. Esposito
P.O. Box 5705, Hilton Head SC 29938
(304) 752-7300

Counsel for Defendants
C. C. Herness III, General Counsel
South Carolina Coastal Council
Saber Pl., Ste. 300, Charleston SC 29405
(803) 744-5838

William L. Want
P.O. Box 1088, 174 E. Bay St., Ste. 202, Charleston SC 29402
(803) 723-5148

[20 ELR 20397]

Hawkins, J.:

Order

This is an action charging the defendants with violations of the fifth amendment to the United States Constitution. Specifically, the plaintiffs contend that the enactment of the 1988 amendments to Title 48, Chapter 39 of the Code of Laws of South Carolina, 1976 (48-39-270 through 48-39-360) violates the due process and just compensation provisions of the fifth amendment. Originally, the defendants denied all material allegations of the complaint; however, prior to trial, the parties stipulated to all of the relevant facts. Those stipulations are adopted as the factual findings of the court and they are incorporated into this order by reference. (See exhibits 1 and 2 attached.)¹

On September 5, 1989, the parties appeared before this court, sitting without a jury, for oral argument on the legal issues. The court, having considered the stipulated facts and the proposed findings of fact and conclusions of law submitted by the parties, makes the following Conclusions of Law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

Conclusions of Law

1. This court has jurisdiction over the parties to this action.

2. This court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331.

The Takings Clause Claim

3. As a preliminary matter, the court feels compelled to note that the plaintiffs' claim under the takings clause is mature. The Supreme Court has stated that

[g]iven the "essentially ad hoc, factual inquir[y]" involved in the takings analysis, . . . we have found it particularly important in takings cases to adhere to our admonition that "the constitutionality of statutes ought not be decided except in an actual factual setting that makes such a decision necessary."

Pennell v. San Jose, U.S. , 108 S. Ct. 849 (1988). The facts of record reveal that although the plaintiffs have not petitioned for a change in the baseline or the setback line, such a request would be futile because the defendants have taken the position that those lines are not subject to change. (Ex. 1, Para. XXXVI.) Moreover, as evidenced by the South Carolina Supreme Court's refusal to accept questions certified to it by this court on July 21, 1989, there is significant uncertainty as to the availability of an inverse condemnation action in state court. Hence, the takings issue is ripe for resolution by this tribunal.

4. The final clause of the fifth amendment prohibits the taking of private property "for public use, without just compensation." U.S. Const. amend. V. When determining whether or not the terms of this prohibition have been transgressed, the Supreme Court has traditionally examined the character of the government action and the economic impact of that action on the property owner. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922); Penn Central Transportation Company et al. v. City of New York et al., 438 U.S. 104 [8 ELR 20528] (1978); Nollan v. California Coastal Commission, U.S. , 107 S. Ct. 3141 [17 ELR 20918] (1987). The Court has long adhered to the view that a particular land use regulation does not constitute "a taking if it 'substantially advance[s] legitimate state interests' and does not 'den[y] an owner economically [20 ELR 20398] viable use of his land.'" Nollan, U.S. at , 107 S. Ct. at 3146.

5. The stated purpose of the challenged statutes is to protect South Carolina's beaches (Ex. 1,Para. IV), and it is beyond dispute that this is an objective in which the state has an important interest. The beaches are a valuable resource providing both recreational opportunities and tourist revenue to the state. (See Ex. 1, Para. XLII, XLIV.) The thrust of the plaintiffs' claim is that the statutes at issue are not substantially related to the attainment of this end; however, that contention is not supported by the record. Essentially, the statutes purport to preserve the beaches by restoring the beach/dune system to its natural equilibrium. (Ex. 1, Para. IV.) Further, the legislature decided that the best method of rejuvenating the beach/dune system is by preventing all new construction and/or reconstruction in that area. (Ex. 1, Para. XXIV-XXV.) The internal logic of this scheme is apparent, and thus the court concludes that the statutory restrictions are substantially related to the important goal of preserving South Carolina's beaches.²

6. Additionally, the plaintiffs have failed to demonstrate an economic injury sufficient to invoke the protection of the takings clause. When considering this aspect of the takings inquiry, a court must draw a "distinction between a claim that the mere enactment of a statute constitutes a taking and a claim that the particular impact of government action on a specific piece of property requires the payment of just compensation. Keystone Bituminous Coal Association v. DeBenedictis, U.S. , 107 S. Ct. 1232, 1247 [17 ELR 20440] (1987). In actions involving a facial challenge to the validity of regulatory activity, the Court has held that a statute regulating the use of private property effects a taking only if the mere enactment of the legislation denies an owner economically viable use of his land. Hodel v. Virginia Surface Mining and Reclamation Association, Inc., 452 U.S. 264, 296-296 [11 ELR 20569] (1981) (citations omitted); Keystone, U.S. at , 107 S. Ct. at 1247 (citing Hodel).³ However, in an action contesting the enforcement of a statute, the inquiry focuses on the economic impact of a specific application of the regulation. Penn Central, 438 U.S. at 136.

7. The stipulated facts reveal that these plaintiffs have suffered no concrete injury as a result of the defendants' application of the statutes. The statutes prevent any new construction in the area twenty (20) feet landward of the baseline. (Ex. 1, Para. XXIV.) Further, with regard to habitable structures currently located in that area, the statutes prevent reconstruction of those dwellings if they are destroyed beyond repair. (Ex. 1, Para. XXV.) While it is undisputed that the plaintiffs' homes are located within this no construction zone (Ex. 1, Para. XXXII), there is no evidence indicating that any of them has been denied permission to build, or rebuild, any structure or recreational amenity within this area. Additionally, although the record contains evidence that several of the plaintiffs have been unable to sell their homes (Ex. 2, Para. XLII), that situation is not the result of any direct restriction on alienability contained in the statutes. Rather, this situation is the result of a chilling effect on the real estate market caused by the enactment of the statutes. Since the plaintiffs have not suffered any adverse consequences as a result of the enforcement of the statutes, the court must decide if the enactment of the statutes has deprived them of economically viable use of their land.⁴

8. Application of these principles to the instant action indicates that the enactment of the statutes at issue does not amount to an uncompensated taking. As the stipulated facts indicate, the Town of Hilton Head Island has been developed to offer residents and vacationers an exclusive resort environment. (Ex. 1, Para. XLIII.) The economic utility of this scheme is reflected in the growing popularity of the town among those visiting South Carolina. (Ex. 1, Para. XLIV.) Consistent with this concept, all of the plaintiffs used their properties as either permanent residences or vacation quarters prior to the enactment of the statutes. (Ex. 2, Para. IXXV.) Furthermore, it is clear that the plaintiffs continue to use their property in the same manner since the occurrence of the events that gave rise to this action. (Ex. 1, Para. XXXIX.) Consequently, as the enactment of the statutes did not deprive the plaintiffs of economically viable use of their real estate, they are not entitled to relief under the takings clause of the fifth amendment.

The Due Process Clause Claim

9. Alternatively, the plaintiffs assert that the enactment of the statutes violated the due process clause of the fifth amendment. In pertinent part that amendment states that "[n]o person shall be . . . deprived of life, liberty, or property without due process of law. . . ." U.S. Const. amend. V. This limitation on the power of the federal government is likewise applicable to the states under the fourteenth amendment. U.S. Const. amend. XIV, § 1. A legislative restriction on the use of privately owned property does not violate the due process clause unless it is "clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, moral or general welfare." First Assembly of God v. City of Alexandria, Virginia, 739 F.2d 942, 944 (4th Cir. 1984), citing Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926); See also Spring Branch Mining Co. v. United Mine Workers of America, 854 F.2d 37 (4th Cir. 1988). As stated in the previous section, the statutes at issue are substantially related to the important state interest in preserving the beaches; thus, the plaintiffs' due process claim must fail.

10. Finally, the record contains a significant amount of evidence concerning the South Carolina Legislature's delegation of rulemaking authority to the defendants. To the extent that this evidence is intended to support the plaintiffs' due process claim, the court concludes that this action does not render the statutes arbitrary and capricious. Moreover, to the extent that this evidence could be construed as a challenge to the rules and regulations promulgated by the defendants, the court does not reach that issue because it was not specifically raised by either party.

Conclusion:

Accordingly, based upon the foregoing, it is

ORDERED, that the Clerk of Court enter judgment in favor of the defendants as to the fifth amendment takings claim. It is

ORDERED FURTHER, that the Clerk of Court enter judgment in favor of the defendants as to the fifth amendment due process claim.

AND IT IS SO ORDERED.

1. The stipulations marked as Exhibit 1 contain references to the affidavits of Chris Jones, Dr. Per Bruun, Dr. Robert Dolan, Steven Linsday, and Steven Moore. (Ex. 1, Para. XLVI-L.) These affidavits contain conflicting expert testimony regarding various factual issues which are not addressed in the stipulations. Obviously, because the court has not had an opportunity to hear the testimony of these witnesses, their credibility cannot be evaluated at this time. Hence, this evidence will not be relied upon or incorporated into this order.

2. This conclusion has been reached without the benefit of the technical evidence concerning the validity of the methods used to define the area encompassed by the beach/dune system. See fn. 1.

3. The distinction between the doctrine of ripeness and the concept of a facial challenge to legislative action merits some discussion. In this context, the ripeness inquiry is designed to ascertain whether or not the plaintiff has alternate means of obtaining the relief requested, such as seeking a variance or filing an inverse condemnation suit in state court. Naegele Outdoor Advertising, Inc. v. City of Durham, 844 F.2d 172, 175 (4th Cir. 1988). Conversely, the facial challenge concept allows the plaintiff to question the constitutionality of a statute without showing a concrete injury resulting from the enforcement of the statute. Keystone, U.S. at , 107 S. Ct. at 1246.

4. The record also demonstrates that the Beaufort County Tax Assessor has reduced the assessed value of the plaintiffs' properties by thirty-five percent (35%) as a result of the statutes at issue. (Ex. 2, Para. XXXIX). While this action may reflect some diminution in the plaintiffs' property values, this action in itself represents a benefit of the new law in that the plaintiffs' tax burden has been reduced. As for any reduction of the fair market values of the affected properties, this untoward result is merely another aspect of the chilling effect discussed in the body of the opinion.