OH Appeals Court Upholds Denial of Takings Claim

This post was authored by Matthew Loeser, Esq.

Lorain Fulton purchased a parcel of property located in a Local Retail Business District, which was part of a Pedestrian Retail Overlay (“PRO”) district. The stated purpose of the PRO district was to “maintain the economic viability of older neighborhood shopping districts by preserving the pedestrian-oriented character of those districts and to protect public safety.” Lorain Fulton leased the property to McDonald’s Restaurants, which planned for 86-foot frontage and a drive-through on the parcel. The planning commission denied the conditional-use approval for the 86-foot frontage, and the Board of Zoning Appeals (“BZA”) affirmed. The court of common pleas reversed, finding the PRO’s 40-foot limitation on building frontage was “incapable of rational application and bears no rational basis to the stated purpose of the PRO.” While that appeal was pending, Lorain Fulton sold the property to MetroHealth for $1,175,000. The court subsequently dismissed the appeal as moot. Lorain Fulton then filed a mandamus action against the city to compel it to begin appropriation proceedings, alleging that the city’s regulation had caused a partial “taking” of its property. In this case, Lorain Fulton appealed the trial court’s denial of a writ of mandamus.

 

On appeal, Lorain Fulton contended that the trial court failed to find that the planning commission denied the approval without evidence, and that the court mistakenly believed that Lorain Fulton’s planned use required a variance. Here, the court found that although the trial court referenced the term “variance,” it fully appreciated that this matter concerned the “conditional-use approval” for the 86-foot frontage. Furthermore, the record reflected that the trial court applied the Penn Central analysis to this case, as requested by the parties and as required under law. Accordingly, we cannot conclude that the trial court applied incorrect law to this matter or that it erroneously evaluated the evidence.

 

Lorain Fulton next contended that the trial court erroneously applied the Penn Central analysis to this case. The record indicated that although Lorain Fulton was denied the conditional use approval for the 86-foot frontage, there were numerous other uses for the property, and the property remained extremely economically viable after the denial. Specifically, when the ground lease was terminated with McDonalds, Lorain Fulton sold the property to MetroHealth for $1,175,000; thus, realizing 78 percent of their expected sale price from the McDonald’s deal. Additionally, Lorain Fulton’s reasonable expectations of a profit were realized despite the lower anticipated sale price, given the substantial gain in relation to the $600,000 purchase price. Lastly, while the trial court recognized that the city treated Lorain Fulton less favorably than Hansa Haus, a similarly situated business, trial court concluded that no partial regulatory taking had occurred as Lorain Fulton suffered only a relatively small diminution from their expected profit, and realized a significant gain, given the purchase price. Accordingly, the judgment of the trial court was affirmed.

 

State ex. rel. Fulton v City of Cleveland, 2019 WL 1857107 (OH App. 4/25/2019)