Homeowners can’t show county took beach house

Where owners of an Outer Banks beach house argued that Dare County took their property without compensation when it banned non-resident property owners from entering the county during the early days of the COVID-19 pandemic, their suit was dismissed. Although the order might have interfered with their ability to visit their beach house, it wasn’t a physical appropriation or per se taking of the property.

Background

Joseph Blackburn Jr. and Linda Blackburn own a beach house in Dare County, North Carolina. In the early days of the COVID-19 pandemic, Dare County banned non- resident property owners from entering the county. As a result, the Blackburns could not reach their beach house for 45 days. In response, they sued Dare County, alleging that their property was taken without compensation in violation of the Fifth Amendment. The district court found that the ban was not a Fifth Amendment taking and dismissed the Blackburns’ suit for failure to state a claim.

Physical appropriation

The Blackburns first argue that the non-resident property order constitutes a physical appropriation. This occurs when the government physically appropriates private property for itself or a third party. This is true no matter if the appropriation occurs through regulation or physical entry. But Dare County’s non-resident property order did not physically appropriate anything from them. The order did not authorize government officials or third parties to physically occupy or possess the Blackburns’ vacation home.

The Blackburns emphasize that the order effectively excluded them from their own property. This, they say, makes the order a physical appropriation, because the Supreme Court has repeatedly held that an appropriation occurs when the government eliminates a property owner’s right to exclude. But temporarily excluding an owner from their own property differs from eliminating the owner’s right to exclude.

‘Lucas’

The Blackburns next argue that the non-resident property order is a per se taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), which holds that a use restriction that deprives owners of all economically valuable use of their property is per se a taking. But Lucas’s per se rule does not apply here.

The order did not deprive the Blackburns’ property of all economic value. The restriction was enacted under the county’s state of emergency declaration and so would only be operative while that state of emergency persisted. And it lasted only 45 days. This “temporary prohibition” could not have rendered the Blackburns’ property valueless. Moreover, the Blackburns could have lived in their house so long as they arrived before the ban took effect. And even during the 45 days that the ban lasted, they were still able to rent their property to someone within the county or certain adjoining counties.

‘Penn Central’

The test from Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), considers three factors of “particular significance”: (1) “the economic impact of the regulation on the claimant”; (2) “the extent to which the regulation has interfered with distinct investment-backed expectations” and (3) “the character of the governmental action.” After considering and weighing each factor, this court agrees that the Blackburns have failed to plead a plausible Penn Central claim.

The first factor requires that a plaintiff allege that the challenged regulation caused a substantial diminution in value to the regulated property. The Blackburns have not met this standard. They pled no facts establishing a diminution in value, let alone a substantial one.

The second factor might slightly favor the Blackburns. The Blackburns have a preexisting property right in their vacation home. But even accepting their allegations, the order did not deny the Blackburns the use of their vacation home. It simply required them to be at their home by March 20, 2020, if they wanted to use it personally. And the Blackburns remained free to rent the house to those within the county, or to sell it.

The third factor favors Dare County. Based on the allegations in the Blackburns’ complaint, the order is not “functionally equivalent” to a government appropriation of private property. Nor is the order “functionally equivalent” to an ouster. And its impact was distributed broadly.

Affirmed.

Blackburn v. Dare County, Case No. 20-2056, Jan. 25, 2023. 4th Cir. (Richardson), from EDNC at Elizabeth City (Flanagan). Lloyd C. Smith Jr. and Lloyd Clifton Smith III for Appellants. Brian Florencio Castro for Appellees. VLW 023-2-025. 16 pp.