In 1985 the plaintiff purchased two parcels of property with the intention of building shopping plazas, an allowable use at the time. In 1987 the Town enacted a moratorium on new commercial development in certain areas while it reviewed and updated its master plan. Following this review, the Town changed the zoning on numerous parcels, including the two owned by the plaintiff, from J-2 Business to B-1 Residence. The plaintiff then commenced this action alleging that the rezoning amounted to an unconstitutional taking of his property under both the State and federal constitutions.
After trial, while the jury found that the plaintiff had not established a total regulatory taking under federal law pursuant to Lucas v. South Carolina Coastal Council, 505 U.S. 1003, nor any of his state law claims, the jury did find that the plaintiff had established a partial regulatory taking under federal law pursuant to the factors in Penn Central Transp. Co. v. City of New York, 438 U.S. 104.
The New York Appellate Court (Second Department) reversed the jury decision and remitted the matter for a new trial finding that the jury charge did not convey the proper standard by which to evaluate the economic impact of the rezoning for purposes of determining whether there was a taking under federal law. The Court said it was an error to instruct the jury that the standard was whether there was a “substantial” or “significant” diminution in value, citing to cases where the federal courts have suggested that diminutions in value approaching 85 to 90 percent do not necessarily dictate the existence of a taking. The Appellate Court directed that upon retrial, the jury be instructed that the economic impact factor of the Penn Central analysis “requires a loss in value which is ‘one step short of complete…’” and that a “mere diminution in the value of property, however serious, is insufficient to demonstrate a taking…and that a land use restriction ‘is not rendered unconstitutional merely because it causes the property’s value to be substantially reduced.’” In conveying to the jury the high threshold of loss necessary to support a partial regulatory taking, the Appellate Court stated that on retrial, the Court should instruct the jury that the proper inquiry is whether the regulation left on a “bare residue” of value (or similar language should be used).
Noghrey v. Town of Brookhaven, 2008 WL 384441 (N.Y.A.D. 2 Dept. 2/13/2008).
The opinion can also be accessed at: http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2008/D17980.pdf
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