SUPREME COURT RULES FOR DEVELOPER, BUT AFFIRMS COMMUNITY
FOR IMMEDIATE RELEASE
May 24, 1999
CONTACT: Doug Kendall or Tim Dowling, 202-296-6889
In ruling today in City of Monterey v.
Del Monte Dunes, the U.S. Supreme Court handed developers
and advocates of community rights a decidedly mixed bag.
The Court affirmed a $1.45 million jury verdict
in favor of Del Monte Dunes, LTD, a California development
company. The Court ruled first that the developer had a
right to jury trial under the Seventh Amendment of the U.S.
Constitution in the extremely limited context of a federal
claim alleging both that a state had (1) taken property
within the meaning of the Fifth Amendment and (2) provided
no procedure by which a developer could recover compensation
for that taking. Second, the Court upheld the jury's award
on procedural grounds - the fact that the city had not objected
to the jury instructions -- without addressing whether the
jury's ruling on the merits was legally sound.
Despite the Court's narrow ruling in the developer's
favor, the Court's opinion contains significant good news
for state and local governments seeking to defend reasonable
community protections. Specifically:
Doug Kendall, CRC's Executive Director, comments:
"While ruling for this particular developer,
the Supreme Court has given communities much to cheer about.
Monterey has lost, but state and local governments around
the country have largely prevailed in this case."
CONTACTS: Doug Kendall or Tim Dowling, CRC's
Chief Counsel, at 202-296-6889 can provide you with extensive
information about the Del Monte Dunes ruling. Community
Rights Counsel is a nonprofit public interest law firm in
Washington, D.C. that helps local governments defend challenges
to land use controls and other community protections.
CITY OF MONTEREY vs. DEL MONTE DUNES AT MONTEREY, LTD.
The case involves a 37.6-acre parcel of environmentally
sensitive, oceanfront property in Monterey, California at
Del Monte Beach. The sand dunes on the property are among
the largest and best preserved in central California. The
property's native flora includes buckwheat, which is the
natural habitat of the Smith's Blue Butterfly, a species
listed as endangered under the federal Endangered Species
In 1981, the previous owner of the property,
Ponderosa Homes, applied to the City of Monterey for a permit
to build a 344-unit residential complex on the property.
After denying several development proposals,
the City Council approved a site plan for 190 units in 1984,
subject to 15 conditions. The conditions included a requirement
that the developer submit an adequate habitat restoration
In late 1984, Del Monte Dunes at Monterey,
Ltd. bought the property for $3.7 million, with full knowledge
that development of the site was subject to the 15 conditions.
Del Monte pursued final approval of the permit application
by seeking to fulfil the conditions.
In June 1986, the City denied the permit.
The City Council listed six reasons for the denial, including
the significant harm to the environment expected from the
development and the lack of adequate access to and from
the property. During public hearings on the permit, regulatory
agencies, environmental experts, city staff, and others
advised the City that Del Monte's proposed habitat restoration
plan would not adequately mitigate the environmental impact
of the development.
In 1991, while the litigation was on-going,
the State of California purchased the property for $4.5
million, $800,000 more than Del Monte had paid for the site
in 1984. The $4.5 million purchase price was based on an
appraisal that assumed that the highest and best use of
the property is residential development with a density up
to 150 units.
In late 1986, Del Monte filed suit in federal
district court, alleging that the permit denial constituted
a "taking" of private property under the Fifth
Amendment that entitled Del Monte to just compensation.
Del Monte also claimed that the denial violated the Equal
Protection and Due Process Clauses of the Fourteenth Amendment.
The parties argued for several years about whether Del Monte's
claim was "ripe" for adjudication. In 1990, the
Ninth Circuit Court of Appeals allowed Del Monte's suit
to proceed. Viewing the facts in the light most favorable
to Del Monte, the Ninth Circuit ruled that it would have
been "futile" for Del Monte to make further permit
The litigation proceeded to trial. The district
court ruled for the City on the due process claim, concluding
that the permit denial was "not arbitrary and irrational,
but was for valid purposes." The trial record shows
that regulatory agencies and many others advised the City
that Del Monte's habitat restoration plan would not adequately
mitigate the environmental impact of the proposed development.
Del Monte presented contrary evidence. The court found that
the evidence before the City was "in conflict,"
there were "differences of opinion" regarding
the proposed development's effect on the environment. It
concluded that the City's resolution of the conflicting
evidence was reasonable and its decision to deny the permit
was "for valid regulatory reasons." The district
court also specifically concluded, based on a full factual
record presented at trial, that the City was "not attempting
to forestall all reasonable development." Finally,
the district court found that city staff and the city planning
commission spent "exhaustive time and energy"
on the proposal and that they engaged in "a sincere
effort" to work with Del Monte on the proposal.
Notwithstanding these rulings, the court sent
the takings claim to the jury, instructing the jury to rule
for Del Monte if the permit denial either (1) deprived Del
Monte of all economically viable use of the property, or
(2) did not substantially advance a legitimate public purpose.
The jury awarded Del Monte $1,450,000, without specifying
which theory of takings liability it has accepted. The Ninth
The City sought review in the U.S. Supreme
Court on three issues: (1) whether the trial court erred
in having a jury decide the takings claim; (2) whether the
trial court erred in allowing the jury to reweigh the evidence
concerning the reasonableness of the permit denial; and
(3) whether the appeals court erred in ruling that a development
permit denial must be "roughly proportional" to
the harm expected from the proposed development. In March
1998, the Supreme Court agreed to review the case, and in
October 1998 it heard oral argument.