Loretto v. Teleprompter Manhattan CATV Corp.

458 U.S. 419

Case Year: 1982

Case Ruling: 6-3, Reversed and Remanded

Opinion Justice: Marshall

FACTS

Effective January 1, 1973, Section 828 of the New York Executive Law provided that landlords must allow cable television (CATV) providers the right to install and maintain cable equipment in their apartment buildings. Under state regulations an apartment building owner was granted a one-time only payment of $1 when a cable company installed its equipment.

Jean Loretto purchased a five-story apartment building in New York City. When she took possession she discovered that the Teleprompter Manhattan CATV Corporation had installed cable equipment in the building. The equipment provided service to units in the building (“noncrossover” connections) as well as to neighboring buildings (“crossover” connections). Loretto considered the state law requiring her to allow cable companies to install and maintain their equipment in her building a “taking” that under the Constitution required compensation. Loretto lost in the state courts and requested Supreme Court review.

 

JUSTICE MARSHALL DELIVERED THE OPINION OF THE COURT.

This case presents the question whether a minor but permanent physical occupation of an owner’s property authorized by government constitutes a “taking” of property for which just compensation is due under the Fifth and Fourteenth Amendments of the Constitution. New York law provides that a landlord must permit a cable television company to install its cable facilities upon his property. In this case, the cable installation occupied portions of appellant’s roof and the side of her building. The New York Court of Appeals ruled that this appropriation does not amount to a taking. Because we conclude that such a physical occupation of property is a taking, we reverse....

The Court of Appeals determined that [Section] 828 serves the legitimate public purpose of “rapid development of and maximum penetration by a means of communication which has important educational and community aspects,” and thus is within the State’s police power. We have no reason to question that determination. It is a separate question, however, whether an otherwise valid regulation so frustrates property rights that compensation must be paid. We conclude that a permanent physical occupation authorized by government is a taking without regard to the public interests that it may serve. Our constitutional history confirms the rule, recent cases do not question it, and the purposes of the Takings Clause compel its retention.

In Penn Central Transportation Co. v. New York City [1978] the Court surveyed some of the general principles governing the Takings Clause. The Court noted that no “set formula” existed to determine, in all cases, whether compensation is constitutionally due for a government restriction of property. Ordinarily, the Court must engage in “essentially ad hoc, factual inquiries.” But the inquiry is not standardless. The economic impact of the regulation, especially the degree of interference with investment-backed expectations, is of particular significance. “So, too, is the character of the governmental action. A ‘taking’ may more readily be found when the interference with property can be characterized as a physical invasion by government, than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.”

As Penn Central affirms, the Court has often upheld substantial regulation of an owner’s use of his own property where deemed necessary to promote the public interest. At the same time, we have long considered a physical intrusion by government to be a property restriction of an unusually serious character for purposes of the Takings Clause. Our cases further establish that when the physical intrusion reaches the extreme form of a permanent physical occupation, a taking has occurred. In such a case, “the character of the government action” not only is an important factor in resolving whether the action works a taking but also is determinative....

In short, when the “character of the governmental action,” Penn Central, is a permanent physical occupation of property, our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner.

The historical rule that a permanent physical occupation of another’s property is a taking has more than tradition to commend it. Such an appropriation is perhaps the most serious form of invasion of an owner’s property interests. To borrow a metaphor, the government does not simply take a single “strand” from the “bundle” of property rights: it chops through the bundle, taking a slice of every strand.

Property rights in a physical thing have been described as the rights “to possess, use and dispose of it.” United States v. General Motors Corp. (1945). To the extent that the government permanently occupies physical property, it effectively destroys each of these rights. First, the owner has no right to possess the occupied space himself, and also has no power to exclude the occupier from possession and use of the space. The power to exclude has traditionally been considered one of the most treasured strands in an owner’s bundle of property rights. Second, the permanent physical occupation of property forever denies the owner any power to control the use of the property; he not only cannot exclude others, but can make no nonpossessory use of the property. Although deprivation of the right to use and obtain a profit from property is not, in every case, independently sufficient to establish a taking, it is clearly relevant. Finally, even though the owner may retain the bare legal right to dispose of the occupied space by transfer or sale, the permanent occupation of that space by a stranger will ordinarily empty the right of any value, since the purchaser will also be unable to make any use of the property.

Moreover, an owner suffers a special kind of injury when a stranger directly invades and occupies the owner’s property.... [P]roperty law has long protected an owner’s expectation that he will be relatively undisturbed at least in the possession of his property. To require, as well, that the owner permit another to exercise complete dominion literally adds insult to injury. Furthermore, such an occupation is qualitatively more severe than a regulation of the use of property, even a regulation that imposes affirmative duties on the owner, since the owner may have no control over the timing, extent, or nature of the invasion.

The traditional rule also avoids otherwise difficult line drawing problems. Few would disagree that if the State required landlords to permit third parties to install swimming pools on the landlords’ rooftops for the convenience of the tenants, the requirement would be a taking. If the cable installation here occupied as much space, again, few would disagree that the occupation would be a taking. But constitutional protection for the rights of private property cannot be made to depend on the size of the area permanently occupied. Indeed, it is possible that in the future, additional cable installations that more significantly restrict a landlord’s use of the roof of his building will be made. Section 828 requires a landlord to permit such multiple installations.

Finally, whether a permanent physical occupation has occurred presents relatively few problems of proof. The placement of a fixed structure on land or real property is an obvious fact that will rarely be subject to dispute. Once the fact of occupation is shown, of course, a court should consider the extent of the occupation as one relevant factor in determining the compensation due. For that reason, moreover, there is less need to consider the extent of the occupation in determining whether there is a taking in the first instance.

Teleprompter’s cable installation on appellant’s building constitutes a taking under the traditional test. The installation involved a direct physical attachment of plates, boxes, wires, bolts, and screws to the building, completely occupying space immediately above and upon the roof and along the building’s exterior wall.

In light of our analysis, we find no constitutional difference between a crossover and a noncrossover installation. The portions of the installation necessary for both crossovers and noncrossovers permanently appropriate appellant’s property. Accordingly, each type of installation is a taking.

Appellees raise a series of objections to application of the traditional rule here. Teleprompter notes that the law applies only to buildings used as rental property, and draws the conclusion that the law is simply a permissible regulation of the use of real property. We fail to see, however, why a physical occupation of one type of property but not another type is any less a physical occupation. Insofar as Teleprompter means to suggest that this is not a permanent physical invasion, we must differ. So long as the property remains residential and a CATV company wishes to retain the installation, the landlord must permit it....

Finally, we do not agree with appellees that application of the physical occupation rule will have dire consequences for the government’s power to adjust landlord-tenant relationships. This Court has consistently affirmed that States have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails. See, e.g., Heart of Atlanta Motel, Inc. v. United States(1964) (discrimination in places of public accommodation); Queenside Hills Realty Co. v. Saxl (1946) (fire regulation);Bowles v. Willingham (1944) (rent control); Home Building & Loan Assn. v. Blaisdell (1934) (mortgage moratorium); Edgar A. Levy Leasing Co. v. Siegel (1922) (emergency housing law); Block v. Hirsh (1921) (rent control). In none of these cases, however, did the government authorize the permanent occupation of the landlord’s property by a third party. Consequently, our holding today in no way alters the analysis governing the State’s power to require landlords to comply with building codes and provide utility connections, mailboxes, smoke detectors, fire extinguishers, and the like in the common area of a building. So long as these regulations do not require the landlord to suffer the physical occupation of a portion of his building by a third party, they will be analyzed under the multifactor inquiry generally applicable to nonpossessory governmental activity.

Our holding today is very narrow. We affirm the traditional rule that a permanent physical occupation of property is a taking. In such a case, the property owner entertains a historically rooted expectation of compensation, and the character of the invasion is qualitatively more intrusive than perhaps any other category of property regulation. We do not, however, question the equally substantial authority upholding a State’s broad power to impose appropriate restrictions upon an owner’s use of his property.

Furthermore, our conclusion that [Section] 828 works a taking of a portion of appellant’s property does not presuppose that the fee which many landlords had obtained from Teleprompter prior to the law’s enactment is a proper measure of the value of the property taken. The issue of the amount of compensation that is due, on which we express no opinion, is a matter for the state courts to consider on remand.

The judgment of the New York Court of Appeals is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

JUSTICE BLACKMUN, WITH WHOM JUSTICE BRENNAN AND JUSTICE WHITE JOIN, DISSENTING.

If the Court’s decisions construing the Takings Clause state anything clearly, it is that “[t]here is no set formula to determine where regulation ends and taking begins.” Goldblatt v. Town of Hempstead (1962).

In a curiously anachronistic decision, the Court today acknowledges its historical disavowal of set formulae in almost the same breath as it constructs a rigid per se takings rule: “a permanent physical occupation authorized by government is a taking without regard to the public interests that it may serve.” To sustain its rule against our recent precedents, the Court erects a strained and untenable distinction between “temporary physical invasions,” whose constitutionality concededly “is subject to a balancing process,” and “permanent physical occupations,” which are “taking[s] without regard to other factors that a court might ordinarily examine.”

In my view, the Court’s approach “reduces the constitutional issue to a formalistic quibble” over whether property has been “permanently occupied” or “temporarily invaded.” The Court’s application of its formula to the facts of this case vividly illustrates that its approach is potentially dangerous as well as misguided. Despite its concession that “States have broad power to regulate ... the landlord-tenant relationship ... without paying compensation for all economic injuries that such regulation entails,” the Court uses its rule to undercut a carefully considered legislative judgment concerning landlord-tenant relationships. I therefore respectfully dissent.

... [I]t is worth reviewing what was “taken” in this case. At issue are about 36 feet of cable one-half inch in diameter and two 4” x 4” x 4” metal boxes. Jointly, the cable and boxes occupy only about one-eighth of a cubic foot of space on the roof of appellant’s Manhattan apartment building. When appellant purchased that building in 1971, the “physical invasion” she now challenges had already occurred. Appellant did not bring this action until about five years later, demanding 5% of appellee Teleprompter’s gross revenues from her building, and claiming that the operation of N.Y. Exec. Law 828 “took” her property. The New York Supreme Court, the Appellate Division, and the New York Court of Appeals all rejected that claim, upholding 828 as a valid exercise of the State’s police power....

Given that the New York Court of Appeals’ straightforward application of this Court’s balancing test yielded a finding of no taking, it becomes clear why the Court now constructs a per se rule to reverse. The Court can escape the result dictated by our recent takings cases only by resorting to bygone precedents and arguing that “permanent physical occupations” somehow differ qualitatively from all other forms of government regulation....

... [H]istory teaches that takings claims are properly evaluated under a multifactor balancing test. By directing that all “permanent physical occupations” automatically are compensable, “without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner,” the Court does not further equity so much as it encourages litigants to manipulate their factual allegations to gain the benefit of its per se rule. I do not relish the prospect of distinguishing the inevitable flow of certiorari petitions attempting to shoehorn insubstantial takings claims into today’s “set formula.”

Setting aside history, the Court also states that the permanent physical occupation authorized by [Section] 828 is a per se taking because it uniquely impairs appellant’s powers to dispose of, use, and exclude others from, her property. In fact, the Court’s discussion nowhere demonstrates how 828 impairs these private rights in a manner qualitatively different from other garden-variety landlord-tenant legislation....

In the end, what troubles me most about today’s decision is that it represents an archaic judicial response to a modern social problem. Cable television is a new and growing, but somewhat controversial, communications medium. The New York Legislature not only recognized, but also responded to, this technological advance by enacting a statute that sought carefully to balance the interests of all private parties. New York’s courts in this litigation, with only one jurist in dissent, unanimously upheld the constitutionality of that considered legislative judgment.

This Court now reaches back in time for a per se rule that disrupts that legislative determination. Like Justice Black, I believe that “the solution of the problems precipitated by ... technological advances and new ways of living cannot come about through the application of rigid constitutional restraints formulated and enforced by the courts.” United States v. Causby (dissenting opinion). I would affirm the judgment and uphold the reasoning of the New York Court of Appeals.