ARTICLE
15 April 2024

Louisiana Regulatory Taking Claim Defeated

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Gray Reed & McGraw LLP

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A full-service Texas law firm with offices in Dallas, Houston and Waco, Gray Reed provides legal services to companies ranging from start-up to Fortune 100 as well as high net worth individuals. For more information, visit www.grayreed.com.
Itching to sue the government for taking your property? Treme v. St. John the Baptist Parish Council is a reminder that you must have a property interest subject...
United States Real Estate and Construction
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Co-author Gunner West

Itching to sue the government for taking your property? Treme v. St. John the Baptist Parish Council is a reminder that you must have a property interest subject to being taken in order to have standing to sue for a regulatory taking.

Louisiana law recognizes that leases are property interests, and any "substantial interference" with such rights may constitute a taking within the meaning of the state and federal constitutions. But there is the pesky question of standing to sue.

The facts

Treme and his partners (or joint venturers, or not; that was an unanswered question) entered into a mineral lease with Montegut to mine clay from property in St, Bernard Parish to be used in a Lake Pontchartrain flood control project. The lease's primary term was for three years "from the date Lessee procures approval to commence operations from local, state, and federal authorities, as needed".

In order to mine for clay the property had to be rezoned to "rural". After neighbors complained, Treme et al's several applications to rezone the property were denied. Treme et al sued the Parish and the Parish Council alleging that denial of the applications was a regulatory taking without compensation in violation of state and federal constitutions and that the denials violated the due process an equal protection clauses of the 14th Amendment. The United States Fifth Circuit affirmed a district court summary judgment for the Parish and the Council dismissing the suit.

The suspensive condition

Both courts held that under Louisiana law, the lease's habendum clause constituted a suspensive condition that was required to be fulfilled for primary term of lease to begin. Under Louisiana law, a suspensive condition prevents enforcement of an obligation until the uncertain event occurs. Think "condition precedent" in the common law. Consider a top lease that becomes effective if and when the existing lease expires or terminated.

Treme failed to satisfy the suspensive condition, and therefore the Treme-Montegut lease terminated automatically. Treme had no property interest that was taken from them. Even if the Council prevented the lessees from fulfilling the condition, this did not mean that the condition could be considered fulfilled based on fault of a party. Treme had no standing to sue.

A difference between the district and appellate courts' rulings was the appellate court dismissed without prejudice, giving the plaintiffs another opportunity if something were to change (what that would be, we don't know).

Your musical interlude

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
15 April 2024

Louisiana Regulatory Taking Claim Defeated

United States Real Estate and Construction

Contributor

A full-service Texas law firm with offices in Dallas, Houston and Waco, Gray Reed provides legal services to companies ranging from start-up to Fortune 100 as well as high net worth individuals. For more information, visit www.grayreed.com.
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