Second Circuit Finds Developer’s Takings Claim Was Ripe Notwisthanding Pending Subdivision Application

In March of 2000, Plaintiff applied to the Planning Board for subdivision approval to develop a nearly 400-acre parcel he buying. The project would include 385 housing units and “an equestrian facility, baseball field, tennis courts, clubhouse, on-site restaurant and a golf course that wove through the property.” In October 2003, the Planning Board “deemed complete” Plaintiff’s Draft Environmental Impact Statement (“DEIS”). However, in 2003 the Town Board approved amended zoning regulations. Plaintiff was assured by the Town Planner that he could meet the new requirements with only “a modest amount of additional work” and would soon receive preliminary approval. Plaintiff revised his plan, but the Town again amended its zoning regulations. Eleven months later, Town amended its zoning law for a third time without informing Plaintiff in advance. Plaintiff revised his application again, and in February 2006, the Town again changed its zoning law without warning.  Plaintiff submitted yet another plan in March 2007, and the Town changed its zoning for the fifth time, again without notice. Plaintiff then filed suit in federal court. The District Court held Plaintiff had failed to show that seeking a final decision from the Town would be futile, and Plaintiff appealed.

On appeal, Plaintiff conceded that the Town has not reached an official final decision, but argued that he did not need to meet this requirement of the ripeness doctrine because of the futility exception. The Court reasoned that requiring Plaintiff to persist with this protracted application process to meet the final decision requirement would implicate concerns about disjointed, repetitive, and unfair procedures.  Accordingly, the Court ruled Plaintiff’s claim was ripe for review.

With respect to the takings claim, the Court weighed the three Penn Central factors for whether the interference rose to the level of a taking: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action. On the first prong, the Court held the Town had effectively prevented Plaintiff from making any economic use of his property. The second was similarly satisfied, as when Plaintiff bought the property, it was already zoned for residential use, and his expectation was that he would begin recouping that investment after a reasonable period to get the Town's approval for some form of development. On the final prong, the Court found the Town's alleged conduct was unfair, unreasonable, and in bad faith. Thus, the court held that Plaintiff stated a non-categorical takings claim and remanded it to be heard on the merits in District Court.

The case was Sherman v Town of Chester, 752 F.3d 554 (2nd Cir. 2014).

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