In 2001, Toll entered into an option contract that gave it an exclusive option to buy a 160-acre tract of land at a fixed price, and barred the owner from entering into any lease, agreement of sale, or any other agreement affecting the property during the life of the agreement. In exchange, Toll promised to make periodic payments to the owner, Readington Properties. At the time, the land was zoned “research-office” and “rural-residential.” Toll developed plans and submitted the first one for approval to the Township in 2002. The Town denied approval and passed an ordinance rezoning the entire tract as “agricultural residential.” The only residential use allowed under this zoning was “one residential dwelling per six acres,” which effectively ended the developments Toll had in mind. Toll apparently viewed his move as part of a nefarious plot hatched by Township officials to “reduce the fair market value of properties held by disfavored landowners.” Toll maintained its option by rendering periodic payments to Readington Properties. It sued the Township, its planning commission, and various officials, claiming under the Equal Protection Clause; the Due Process Clause; the Takings Clause; The Fair Housing Act of 1968, and others, seeking to set aside the rezoning ordinance, and damages. The defendants moved to dismiss the complaint for lack of standing, pointing to the fact that Toll did not have any present interest in the Readington Properties parcel. The district court granted the motion.
On appeal, the Third Circuit held that the owner of an unexercised option to develop had Article III standing. Referring to Warth v. Seldin, 422 U.S. 490 (1975), and Village of Arlington Heights v. Metropolitan Housing Dev. Co., 429 U.S. 252 (1977), the court found that Toll had satisfied the injury requirement. Toll had paid substantial sums in planning its proposed developments, and the rezoning thwarted its specific development, one for which a formal application had been submitted, on land for which it held the exclusive option to purchase. These economic harms amounted to a legally cognizable injury-in-fact, as the option was more than just a “phantom connection” to the affected parcel, being itself a “valuable property right.” By driving down the value of the Readington Properties parcel, the Township had also driven down the value of the option. Dealing with the third element in standing, redressability, the court held it was sufficient for the plaintiff to establish a “substantial likelihood” that the requested relief would remedy the alleged injury in fact. Here, striking the ordinance would redress the injury by increasing the value of both the underlying real property and the option. Further, while all developments were subject to inherent uncertainties, the court did not require a guarantee of successful completion. Toll had stated its intent to exercise the option and move forward with construction if and when the Township approved its plans. This was sufficient to show that a favorable decision was substantially likely to result in construction of its planned developments.
Toll Bros., Inc v. Township of Readington, 2009 WL 250098 (C.A. 3d N.J. 2/4/2009).
The opinion can be accessed at: http://www.ca3.uscourts.gov/opinarch/061053p.pdf
This abstract initially appeared in the 2/11/2009 IMLA News. For more information about IMLA visit www.imla.org.
