Fresh Pond Shopping Center, Inc. v. Callahan Et Al.

Citations: 464 U.S. 875; 104 S. Ct. 218; 78 L. Ed. 2d 215; 52 U.S.L.W. 3286; 1983 U.S. LEXIS 1749Docket: 82-2151

Court: Supreme Court of the United States; October 11, 1983; Federal Supreme Court; Federal Appellate Court

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The Supreme Court dismissed the appeal of Fresh Pond Shopping Center, Inc. due to a lack of a substantial federal question. The case originated from a June 1979 purchase agreement for a six-unit apartment building, which the appellant intended to demolish to create parking for a commercial tenant. The building was subject to rent control under Cambridge City Ordinance 926, requiring permission from the Cambridge Rent Control Board to remove it from the rental market. Although only one unit was occupied at the time of the permit request, the Board denied the removal application.

The Middlesex County Superior Court upheld the constitutionality of the restrictions imposed by Ordinance 926, referencing the Massachusetts Supreme Judicial Court's ruling in Flynn v. City of Cambridge. The Massachusetts Supreme Judicial Court affirmed the Superior Court’s decision with an equally divided opinion. Justice Rehnquist dissented, suggesting that the case raised significant questions regarding the Takings Clause of the Fifth and Fourteenth Amendments that had not been previously addressed by the Supreme Court.

The Cambridge rent control statute largely places residential rental properties under the control of the Rent Control Board, which has broad discretion in granting eviction certificates. Landlords can only evict tenants for specific reasons, including personal occupancy or if the property is to be removed from the rental market. However, Ordinance 926 restricts landlords' ability to evict tenants without a removal permit, allowing the Board to deny such permits based on factors like tenant protections and the city's housing shortage, without consideration of the landlord's property use rights.

The limitations imposed by state enabling statutes and Ordinance 926 effectively deny the appellant, a corporate entity, the use of its property by preventing the occupation of the remaining apartment. The Rent Control Board's determination restricts the appellant from vacating and demolishing the building until the current tenant voluntarily leaves. This situation is likened to a permanent physical invasion, akin to the precedent set in *Loretto v. Teleprompter Manhattan CATV Corp.*, where a government-authorized physical occupation was deemed a taking under the Fifth and Fourteenth Amendments, regardless of public interest served. The appellant's ability to evict the tenant is limited to specific circumstances, and the right to demolish is controlled by the Cambridge ordinance, denying the appellant possession until the tenant vacates.

The case closely parallels *Teleprompter*, where the power to terminate the invasion lies with a private party, and the Massachusetts legislature could modify the rent control statute to restore property control, yet this does not alter the conclusion that the physical invasion constitutes a taking. Although one might argue the rent control provisions are justified by an emergency housing shortage, the lack of a foreseeable end to this emergency differentiates it from the ruling in *Block v. Hirsh*, where a temporary wartime emergency justified such measures. The current situation raises constitutional questions about the permanence of the Cambridge rent control ordinance, which were left unresolved in the *Block* case.

The Massachusetts statute guarantees landlords a fair net operating income but does not alter the outcome of this case. Property ownership inherently includes rights such as possession, use, and disposal. While the tenant's rent is not in question, the focus is on the transfer of control over the landlord's reversionary interest. The ability to exclude others is a fundamental aspect of property rights; if a property is permanently occupied by a tenant, its value diminishes for potential sale or transfer. Wartime rent control did not mandate that property owners must rent out their accommodations, and the rent control provisions do not entitle the landlord to compensation for the loss of control over their property.