Second Circuit Finds Developer’s Takings Claim Was Ripe, Even Though Town Had Not Yet Reached an Official Decision on Application for Subdivision Approval

In March of 2000, Sherman applied to the Planning Board for subdivision approval so that he could use and develop MareBrook. The proposed project would include 385 units of housing as well as “an equestrian facility, baseball field, tennis courts, clubhouse, on-site restaurant and a golf course that wove through the property.” When Sherman completed his purchase of the property in 2001, it was already zoned for residential use. In October 2003, the Planning Board “deemed complete” Sherman’s Draft Environmental Impact Statement (“DEIS”). In 2003, the Town Board approved the first in a series of changes to its zoning regulations. When Sherman learned of the new requirements early the next year, he was assured by the Town Planner that he could meet all its requirements with only “a modest amount of additional work” and that he would soon obtain preliminary approval. Sherman finished revising his plan, but the Town had again amended its zoning regulations. It took him approximately eleven months to once again revise his application, but one month later the Town amended its zoning law for a third time without informing Sherman in advance. Sherman revised his application again, and in February 2006, the Town for the fourth time changed its zoning law without warning Sherman. Sherman responded by submitting yet another revised plan, this one in March 2007. That same month, the Town changed its zoning for the fifth time, and it once again did not let Sherman know these changes were coming. Sherman then filed suit in federal court. The District Court concluded that Sherman had failed to show that seeking a final decision from the Town would be futile, and Sherman timely appealed.

As to the ripeness issue, Sherman conceded that the Town has not reached an official final decision, but argued that he did not need to meet this requirement because seeking a final decision would be futile. The court reasoned that requiring Sherman to persist with this protracted application process to meet the final decision requirement would implicate concerns about disjointed, repetitive, and unfair procedures.

In regards to the takings claim, the court weighed the three Penn Central factors to determine whether the interference with property rises 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. The first prong was satisfied because the Town’s actions effectively prevented Sherman from making any economic use of his property. The second was also found to be satisfied since when Sherman bought MareBrook, it was already zoned for residential use, and his expectation was that he would begin recouping that investment after a reasonable time to get the Town’s approval on at least some form of development. The final prong was satisfied because the Town’s alleged conduct was unfair, unreasonable, and in bad faith. Thus the court held that Sherman stated a non-categorical takings claim and remanded it to be heard on the merits in District Court.

Sherman v Town of Chester, 752 F3d 554 (2nd Cir. 5/16/2014)

The opinion can be accessed at: http://caselaw.findlaw.com/us-2nd-circuit/1666765.html