Posted by: Patricia Salkin | March 16, 2013

GA Supreme Court Finds Takings Claim Not Ripe for Review as Futility Exception Does Not Apply

Between 2006 and 2007, Settles Bridge Farm LLC purchased 36 acres of property in a low-density residential zone in the City of Suwanee, Georgia, with plans to construct a residential subdivision there. In Dec. 2006, a 41-lot subdivision plan was submitted to the City, and several variances to make way for the development were issued.

Before Settles Bridge began construction on the subdivision, the company was approached by Notre Dame Academy, which had hoped to purchase the property to build a school. Since the R-140 residential zone in which the property was included allowed schools as a permitted use, Settles Bridge abandoned its residential plan, and agreed to sell the property to Notre Dame. A purchase contract was signed in Feb. 2008.

Upon learning of the sale, City officials took an interest in the school project, which they discovered was allowed as of right in the R-140 zone without public review. In late Feb. 2008, the City Council imposed a 3-month moratorium on all building permits for large projects over a certain square footage located in residential zones. The City Council, in May 2008, amended its zoning ordinance to require a special use permit (SUP) for large development projects in residential zones. Projects covered included those with one or more buildings of 20,000 square feet total, a cumulative land disturbance of more than five acres, and any residential subdivision with more than seven lots. Projects which obtained approval prior to the amendment were not required to obtain an SUP, but new developments were required to do so, meaning that Settles Bridge’s residential development would not have required an SUP, but the Notre Dame School project, having obtained none of its required approvals, would have needed an SUP.

Neither Settles Bridge nor Notre Dame applied for an SUP for the school project. Instead, both parties filed suit against the City challenging the ordinance and the moratorium. Notre Dame settled its suit with the City and terminated its purchase contract with Settles Bridge.

At trial, the court found in favor of Settles Bridge, holding that the City had effected a regulatory taking of the property, and awarding Settles Bridge over $1.8 million in damages based on diminution in property value, as well as over $461,000 in interest. The City appealed.

On appeal, the City argued, and the appellate court agreed, that the case was unripe for review because Settles Bridge had not applied for an SUP, nor had the City denied an SUP for the school project, meaning that Settles Bridge had not exhausted its administrative remedies before the City Council. The only way Settles Bridge could have survived the City’s motion to dismiss was by showing that its application for an SUP would have been futile in this case because the decision-making body had already decided the issue against Settles Bridge. Here, the court held that the amendment of the City ordinance which required an SUP did not decide the question of whether the Notre Dame school project was entitled to an SUP for that specific project. Thus, the court held that the futility exception did not apply, and Settles Bridge could not survive a motion to dismiss for failure to exhaust administrative remedies. The court granted the City’s motion and reversed the trial court’s findings and monetary award.

City of Suwanee v. Settles Bridge Farm LLC, 2013 WL 593504 (Ga. 2/18/13)

The opinion can be accessed at: http://www.gasupreme.us/sc-op/pdf/s12a1599.pdf


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