Here’s one worth reading. In GRE Downtowner LLC v. City of Seattle, No. 87886-7-I (Wash. App. Oct. 26, 2026), the Washington Court of Appeals reversed a Rule 12(b)(6) dismissal of a property owner’s regulatory takings claims arising from the combined effects of several Seattle rental-housing ordinances.
GRE operates a 254-unit low-income apartment complex in downtown Seattle. It alleged that after investing approximately $39 million in the property, the combined effect of Seattle’s Fair Chance Housing Ordinance, Roommate Ordinance, Winter Eviction Ban, COVID eviction moratorium, and other regulations cratered rent collections and increased expenses, leaving the property “functionally valueless on an income approach valuation basis.” Slip op. at 6. The complaint asserted both regulatory takings theories: an ad hoc Penn Central claim, and a categorical physical taking.
The trial court dismissed for failure to state a claim, but the court of appeals reversed.
On Penn Central, the court correctly emphasized that this is an intensely factual inquiry. GRE alleged serious economic losses and interference with investment-backed expectations established before Seattle adopted the challenged ordinances. And the court rejected the City’s categorical argument that because rental housing is highly regulated, GRE could not have formed any reasonable expectations. Being in a regulated business doesn’t mean surrendering your property rights, and it doesn’t require an owner to anticipate every future regulatory change. The court rightly rejected the bootstrap logic where government regulations justify themselves by creating a regulated environment, which is then used to say the owner knew the environment was regulated. After all, what isn’t regulated these days?
Good (and unfortunately somewhat rare) analysis. Most courts treat a motion to dismiss as a chance to screen out takings cases it believes are no good, which is not a function of pleadings motions. See this case, for example. In our view, courts tend to treat takings complaints a lot differently than other civil rights complaints (and indeed, other civil complaints). The latter are reviewed to ensure that they give notice to the defendant of the claim being asserted and the facts which allegedly support that claim. Subject to the plausibility standards of Twiqbal, of course, but that’s not a requirement that should trip up most complaints. Not so much with takings claims which, in the Seventh Circuit’s words, are subject to a “demanding test for alleging a regulatory taking.” Wrong! (The test for proving a regulatory taking may be demanding, but not the test for pleading it.)
The court here got it right, when it concluded that the GRE complaint’s detailing of “over 35 paragraphs of factual allegations on the economic impact that the City’s ordinances have had on Addison,” was sufficient (slip op. at 9), and that “[a]ny weighing of evidence at this stage is premature.” Id. at 11. The court rejected the City’s invitation to view these allegations categorically and conclude that since all of the regulations were “accepted in exchange for financing” by GRE, the impact didn’t count.
A solid treatment of Penn Central pleading, but don’t overlook the court’s consideration of the right to exclude.
Seattle’s Roommate Ordinance grants occupancy rights not merely to a tenant, but to specified additional residents and family members. The court distinguished Yee v. City of Escondido, where the Supreme Court reasoned that landlords had voluntarily invited their tenants onto the property, and as a consequence, restrictions on the power to evict were merely adjustments to the terms of the voluntary tenancy, and not a forced occupation. Here, the court concluded, the ordinance allegedly requires the owner to accept uninvited third parties, a fact that makes Cedar Point Nursery v. Hassid, and its protection of the owner’s right to exclude, the more useful guide than Yee‘s narrow conclusion.
Or, as the court neatly put it, the key question is whether the landlord-tenant relationship was initially voluntary:”if it was, Yee applies with full force; if it was not, Cedar Point is where we look.” Slip op. at 26, n.10.
Bottom line: reversed. Both takings theories live to fight another day.
And remember, this was only a pleading-stage decision. Whether GRE can actually prove a taking under Penn Central or Cedar Point remains for another day. But for property owners facing dismissal at the courthouse door, there’s quite a bit here worth reviewing.
GRE Downtowner LLC v. City of Seattle, No. 87886-7-I (Wash. App. Oct. 26, 2026)