Is Iowa Code §657A.10A A Regulatory Step Too Far Under Federal Takings Law?

Abstract

This paper was prepared for publication in 104 Iowa L. Rev. ___ (2019). The paper analyzes a 2017 Iowa Supreme Court decision, Eagle Grove v. Cahalan Investments, LLC. In this case the Iowa Court unanimously upheld the City’s confiscation of the title to two city lots owned by Cahalans on which there were run down houses the City claimed were public nuisances. Under Iowa Code Section 657A.10A the City was authorized to go to court to have Cahalans’ lots declared “abandoned public nuisances.” If the court so ruled, the City was then entitled to have the court transfer ownership of the two lots from the Cahalans to the City, without the City having to pay any compensation, just or otherwise.

To justify approving this harsh result, the Iowa Court cited the 1972 U.S. Supreme Court case, Lucas v. the South Carolina Coastal Commission. The Lucas case created new federal “takings” law in two respects. First, it held that a regulation that totally removed all economic or productive value from a private owner’s land without compensation was a per se taking. Second, it created an exception to this new “categorical” taking rule in the case where background principles of a state’s property or nuisance law already prevented the land owner from using the land in the way the new regulation forbid. In such a case, the Court reasoned there was no taking because the new regulation just duplicated the existing state law and the land owner had lost nothing. The Iowa Supreme Court seized upon what I dub this “Lucas Exception” to rule that this new Iowa statute as applied to Cahalans’ lots did not result in a taking because the public nuisances on the lots were already subject to abatement by neighbors or public officials. My paper argues that the Iowa Court seriously misunderstood the strict limits of the Lucas Exception, which was expressly restricted to background common law principles. The Iowa Court therefore totally misapplied the Lucas Exception to find no taking on the facts of the case. I argue that the reading the Iowa Court gave the Lucas Exception eviscerates the first holding of the Lucas case regarding per se takings, contrary to the clear directions provided in the majority opinion for applying the exception. A recent U.S. Supreme Court decision applying the 8th amendment ban on excessive fines to the states further erodes the legitimacy of the Eagle Grove ruling. I claim that if the case had reached the U.S. Supreme Court it would have been quickly reversed, and therefore either the Iowa Supreme Court should reconsider its ruling or the Iowa General Assembly should weigh in with an amendment limiting the force of 657A.10A.

Keywords: Takings, Forfeiture, 5th Amendment, 14th Amendment, Due Process, Abandoned Property, Per Se Taking, Nuisance Abatement, Public Nuisance, Categorical Taking