We're in court today (so blogging about lawyering must yield to the actual practice of lawyering) so we're going to just post this here, and let you consider it. And maybe wait for our New York City colleagues (who just happen to represent the property owner), to weigh in via their eminent domain blog.
The New York Appellate Division's opinion in City of New York v. Baycrest Manor, Inc., No. D59668 (Nov. 15, 2017) is an eminent domain case which involves the valuation of wetlands on Staten Island, and Palazzolo's holding that long-existing restrictive regulations are not baked into a parcel's value.
The City claimed that the condemned property was not worth a whole lot because the wetlands regulations predated the condemnee's purchase. The owner, by contrast, argued that it had a pretty good shot at prevailing on a regulatory takings claim, because the Supreme Court in Palazzolo v. Rhode Island, 533 U.S. 601 (2001) concluded that acquisition of land after the time the government imposes an allegedly restrictive regulation does not deprive the owner of the ability to challenge the restrictive regulation as a taking. The Supreme Court in that case held that prohibiting the a takings challenge would result in a "windfall" to the government, allowing the state to "shape and define property rights and reasonable investment-backed expectations." Id. at 626. Thus, because the state cannot "put an expiration date on the Takings Clause," the Court held that "[f]uture generations, too, have a right to challenge unreasonable limitations on the use and value of land." Id. at 627.
We get it, but as we noted here, New York's courts aren't exactly on our same wavelength when it comes to Palazzolo and preexisting regulations.
The Appellate Division in this case agreed with the property owner that Palazzolo took out the City's preexisting regulation argument, and that the owner had shown there was a reasonable probability that the wetlands regulations worked a regulatory taking under Penn Central, rejecting the City's argument that "a subsequent purchaser cannot challenge a preexisting regulation as a taking." Slip op. at 4.
Wait... did we say the owner proved a Penn Central taking?
Yes, yes we did.
So it was a doubleplusgood decision: a court that gets both Palazzolo and Penn Central.
But it wasn't all great news, because the court wrapped up the opinion by agreeing with the condemnor that the valuation for the property should have been done the way the condemnor's appraiser said it should be done. The court reduced the just compensation award from nearly $400k to just over $150k.
Disappointing, but we're liking the court's Palazzolo and Penn Central analysis, even in spite of this letdown.
One final note: the owner's lawyer, Jon Houghton, will be presenting at the upcoming ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Charleston, SC, January 25-27, 2018. He'll be talking about "Second Avenue Subway: Valuation Issues in Transportation Corridor Construction." But we suspect if you buy him a cup of coffee, he'll be glad to talk Palazzolo, Penn Central, and this case, too.