WASHINGTON -- The Supreme Court yesterday let stand a ruling that cities may be held liable for monetary damages under the federal Constitution when they violate state laws.

The court's decision not to hear arguments in the case leaves intact a Washington State Supreme Court ruling that the city of Seattle is liable for damages in a dispute with developers stemming from efforts to preserve the city's housing stock.

Seattle officials downplayed the development. Hugh R. Tobin, assistant city attorney, said the action "does not result in any immediate liability" for Seattle.

But others warned that the impact of the court's refusal to review the case, Seattle v. Robinson, could be felt far beyond the city's borders.

The National League of Cities, U.S. Conference of Mayors, and National Association of Counties, in a friend-of-the-court brief filed on Seattle's behalf, said the Washington State court's ruling "vastly expands" municipal liability for damages and will serve as precedent for state courts around the nation.

In general, no national precedent is set in a case when the Supreme Court declines to review it. Instead, the ruling is binding as precedent only in the jurisdiction of the last court to act in the case. Consequently, the ruling in the Seattle case is binding only within Washington State. But courts in other jurisdictions likely will look at the ruling when faced with similar disputes, and are free to adopt the Washington court's rationale.

"The inevitable result will be a patchwork quilt of decisions -- some following the separation of powers doctrine and showing deference for state and local legislation, others employing, as here, unprecedented scrutiny in violation of that doctrine," the National League of Cities said in its brief.

The Seattle case goes back to an ordinance the City Council passed in 1980 to stem a decline in rental housing units. Under the law, developers who demolished housing units would have to pay a license fee, which would be used solely to produce low-income housing.

The law also required developers to relocate displaced tenants or pay relocation assistance, unless the tenant received other relocation benefits from the state or federal governments.

The law was challenged in 1983 by San Telmo Associates, a local developer. The King County Superior Court said the fee was a tax the city did not have authority to levy and ordered the city not to enforce it against San Telmo Associates. The city continued to enforce the law against other developers.

In 1985, the City Council enacted a new housing preservation law that did away with the licensing fee, but which required developers to replace any destroyed housing and provide relocation assistance.

San Telmo challenged the housing replacement provisions of the law in 1986, and the Superior Court ordered the city not to enforce it against San Thelmo. The city continued to enforce the law against others.

Also in 1986, R/L Associates Inc., another developer, challenged the relocation assistance requirement in Superior Court. The court enjoined the city from enforcing that provision against R/L Associates, but the city continued to enforce it against others.

In 1988, a class of plaintiffs filed suit against the city on behalf of everyone who had made any sort of payments under either of the housing preservation laws. The complaint asked for refunds and for monetary damages. The Superior Court in 1990 held the city liable for refunds, but not for damages.

But on May 14 of this year, the Washington Supreme Court said the housing law violated the due process clause of the Constitution's 14th Amendment because it was "unduly oppressive." Under the 14th Amendment, states may not "deprive any person of life, liberty or property, without due process of law." Moreover, because the city continued to enforce the law after it was declared invalid, Seattle was liable for damages, the state Supreme Court ruled.

Groups representing cities and counties said the state court went too far. By holding Seattle liable for damages for enforcing the law after portions had been ruled invalid under state law, the Washington court went further than the U.S. Supreme Court has deemed necessary in past cases, they said. "This court has long recognized that mere violations of state or local law seldom rise to the level of constitutional violations," the groups argued in their brief.

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