Posted by: Patricia Salkin | April 8, 2013

2nd Cir. Court of Appeals Find No Underlying Property Interest in Certificate of Occupancy Due to Discretion to Withhold the CO Pending Violation on the Property USA, Inc. (“CCS”) appealed from an award of summary judgment in favor of the Town of Brookhaven and various town officials on CCS’s procedural due process claim for damages under 42 U.S.C. §§ 1983 and 1988, and its claims for a declaratory judgment and equitable relief. The facts of the controversy are scant, but the court noted that the claim began when Brookhaven denied CCS’s application for a building permit. The district court assumed, without deciding, that this deprived CCS of a significant property interest in its certificate of occupancy (“CO”). If CCS was in fact deprived of this significant property right, due process would require an adequate opportunity to be heard. Even so, the court concluded that denying the application had not been without due process. 

On appeal, CCS argued that the court erred in claiming that the informal conversations between CCS’s expediter and Brookhaven officials amounted to adequate pre-deprivation process. Furthermore, CCS contended that the delay in acting on its claim for correction of its CO failed to accord adequate post-deprivation process. 

The Second Circuit affirmed the trial court’s judgment, though for different reasons, noting  that it is firmly established in the Second Circuit that in order succeed on a due process claim, the plaintiff, in proving a federally protected property interest in a permit, “must show that, at the time the permit was denied, there was no uncertainty regarding his entitlement to it under applicable state or local law, and the issuing authority had no discretion to withhold it in his particular case.” In Brookhaven, before a building permit is issued, the chief building inspector must determine if any code violations exist on the property. Here, CCS sought to construct a building that contained a side structure not accounted for in the CO, and thus there was a code violation precluding the issuance of the permit. CCS had the burden of proving that no violation existed on the property in question, but because an existing violation created “uncertainty” as to CCS’s entitlement to the permit, CCS could not demonstrate that it held a property interest in an unissued permit affording it due process protections. 

C.C.S.COM USA, INC. v. Gerhauser, 2013 WL 406173  (2nd Cir. (NY) 2/4/2013) 

The opinion can be accessed at:

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