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Wednesday, May 21, 2014

Takings Claim is Ripe Because Final Decision Would be Futile

The U.S. Supreme Court has established a "ripeness" test for takings claims.  Before a property owner can proceed with a takings claim against a regulatory agency, it must show that he or she has (1) obtained a final decision from the local regulatory agency and (2) sought just compensation under available state procedures. 

There is an exception to the Williamson County ripeness requirement, however, where a property owner can show that seeking a final decision from the local agency would be futile or where the government imposes repetitive or unfair land use procedures in order to avoid a final decision.  In this case, that is what happened to the property owner in Sherman v. Town of Chester (2d Cir., May 16, 2014).  Based on these exceptions to the ripeness test, the Second Circuit Court of Appeals allowed Sherman's takings claim to proceed, even without the local final decision.

Steven Sherman purchased 400 acres of property for $2.7 million in 2000.  He applied for subdivision approval, but the Town put in place a moratorium that prevented him from developing.  After the moratorium expired, the Town  enacted a new zoning ordinance that required him to revise and resubmit his development plan.  He did so, and resubmitted his application, only to have the Town again amend its zoning regulations.  The cycle continued for years - each time he resubmitted a plan based on an amended zoning ordinance, the Town would amend its zoning ordinance again.  Until 2010, when he filed suit against the Town.  At that point, he had spent $5.5 million on top of the initial $2.7 million for the land.  At the time the lawsuit was filed, he was facing foreclosure and personal bankruptcy.  

The federal district court ruled against Sherman, finding that his takings claim was not ripe under Williamson County.  He appealed to the Second Circuit Court of Appeals, which reversed, concluding that Sherman was not required to obtain a final decision from the Town because it would have been futile, based on the Town's use of repetitive and unfair procedures over a 10 year period to avoid making a final decision on Sherman's land development proposal.  The court also rejected the Town's argument that Sherman failed to meet the second prong of the ripeness test by bringing a just compensation claim in state court, finding that it was the Town, not Sherman, who removed the case to federal court.  

After finding the case ripe for adjudication, the Court then addressed the merits of Sherman's takings claim. Applying the Penn Central analysis of a non-categorical taking, the Court determined that Sherman had stated a takings claim against the Town, finding the Town's actions in this case to be  "unfair, unreasonable, and in bad faith."  Thus, the district court's dismissal of his claim was improper, and the Court  remanded the case back to the district court for further proceedings.

Post Authored by Julie Tappendorf, Ancel Glink


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