Fed. Dist, Court of NV Holds Takings Claims Brought Under § 1983 Do Not Have an Implicit Administrative Exhaustion Requirement 

This post was authored by Matthew Loescher, Esq.

Plaintiff Evans Creek, LLC, alleged that Defendant City of Reno violated the Fifth Amendment’s Takings Clause and the Fourteenth Amendment’s Equal Protection Clause by preventing it from developing land formerly known as the Ballardini Ranch in southwest Reno. The City expressed various concerns in response to Plaintiff’s previous annexation applications, including the City’s “desire to maintain open space,” the risk of exacerbating “the shortage of neighborhood parks,” “deficiencies in emergency access to nearby subdivisions,” that development “may cause harm to unidentified and unknown archaeological sites on the property,” that development “would create an annexation island of non-contiguous City property,” and that development would “overburden Washoe County School District. Plaintiff alleges that the City’s refusal to grant annexation wholly deprived the property of any viable commercial use. Plaintiff further claimed that it was treated differently from other developers because it was not aware of any other instance in which the City had similarly denied an annexation request.

In this case, Plaintiff contended it was intentionally discriminated against because the 2020 Application was the only annexation application submitted pursuant to NRS § 268.670 the City ever denied. The Complaint did not allege any facts about the other annexation applications or land, or how the City’s decision to approve the other annexations differed from its decision to deny the 2020 Application. Instead, Plaintiff simply made a conclusory allegation the City routinely grants annexation applications “irrespective of the characteristics of the subject properties” when the Complaint lacked any facts to support such an assertion. As pleaded, the Complaint lacked factual support to plausibly allege that Plaintiff was similarly situated to all other property owners in Washoe County who applied for annexation.

Plaintiff next claimed that denying the 2020 Application constituted a regulatory taking. The City argued that Plaintiff’s claim was not ripe because the denial was not a “final decision” about the use of the Property. The court noted that the Supreme Court rejected that takings claims brought under §1983 have an implicit administrative exhaustion requirement. Pakdel, 141 S. Ct. at 2230. Thus, requiring Plaintiff to take further action to exclude the property from the SOI would create an exhaustion requirement analogous to what the Supreme Court rejected in Pakdel.

The record indicated that the City had already denied the 2003 Application, and circumstances surrounding the 2002 Application and 2014 Application made Plaintiff to believe they would be unsuccessful. Accordingly, as pleaded, the Complaint did not adequately allege that Plaintiff reasonably believed the 2020 Application’s approval was reasonably probable. Moreover, as pleaded, the Complaint lacked any information about the value of the property when the 2020 Application was submitted or its value after the 2020 Application was denied. Without this information, the court found that is was not possible to determine what the economic impact to the property was, even taking the allegations in the Complaint as true.

Evans Creek, LLC v City of Reno, 2021 WL 4173919 (D. NV 9/14/2021)