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The Del Monte Dunes Story.

 In 1984, the City of Monterey, California allowed Del Monte Dunes, a development company, to purchase a 37-acre parcel of beachfront property to construct a 190-unit condominium development. The project was not unique since other developments had been allowed on the beach.

But environmental groups opposed the development, arguing that the site was important habitat for the endangered Smith's blue butterfly. In 1986, the city council responded to the pressure and repealed its approval. Del Monte Dunes then sued, claiming the city's action had unfairly impaired the land's value.

A federal district court jury agreed, holding that the city's land-use restrictions amounted to a "taking" of property without "just compensation" as required by the U.S. Constitution's Fifth Amendment. The jury awarded the developer $1.45 million. The city appealed the decision, arguing that lawsuits involving land-use decisions should not go before juries that tend to be more sympathetic to individuals negatively affected by zoning laws while judges tend to side with the government.

The 9th U.S. Circuit Court of Appeals upheld the decision in 1996. The City of Monterey appealed the decision to the U.S. Supreme Court. In a closely-watched decision that both sides considered pivotal for the future of zoning regulatory policy, the High Court ruled in May 1999 that landowners who sue local governments over land-use regulations have a right to a jury trial.
Source: Pacific Legal Foundation