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Takings Claim Ripe Despite No Final Determination

The Second Circuit Court of Appeals held there was a claim that was ripe for adjudication, in view of the ten years of delay in processing the Plaintiffs application, even though there was no final determination on Plaintiff’s subdivision application. In Sherman v. Town of Chester, the Court’s summary of the background, drawing an analogy to the novel “Catch 22,” is worth reading verbatim:

“Hungry Joe packed up his bags and wrote happy letters home. He had flown the 25 missions required to complete a tour of duty. But things were not so simple on Catch‐22’s Pianosa island. He soon discovered that Colonel Cathcart had just raised the number of missions to 30, forcing Hungry Joe to unpack his bags and rewrite his happy letters. At the time, Yossarian had flown 23 missions.The Colonel later increased the number to 35. When Yossarian was just three away from that mark, the number was increased to 40, and then to 45. When Yossarian had 44 missions under his belt, the Colonel made the number 50. And later 55. When Yossarian reached 51 missions, he knew it was no cause to celebrate: ‘He’ll raise them,’ Yossarian understood. He appealed to squadron commander Major Major to be exempted from flying his four remaining missions. ‘Every time I get close he raises them,’ Yossarian complained. Major Major responded, ‘Perhaps he won’t this time.’ But of course Yossarian was right. Colonel Cathcart raised the number to 60, then 65, then 70, then 80, with no end in sight.

Plaintiff Steven M. Sherman must have felt a lot like Yossarian in his decade of dealing with defendant Town of Chester. In 2000, Sherman applied for subdivision approval while he was in the process of buying a nearly 400 acre piece of land for $2.7 million. That application marked the beginning of his journey through the Town’s ever‐changing labyrinth of red tape. In 2003, the Town enacted a new zoning ordinance, requiring Sherman to redraft his proposed development plan. When he created a revised proposal in 2004, the Town again enacted new zoning regulations. When he created another revised plan in 2005, the Town changed its zoning laws once more. And again in 2006. And again in 2007.

On top of the shifting sands of zoning regulations, the Town erected even more hurdles. Among other tactics, the Town announced a moratorium on development, replaced its officials, and required Sherman to resubmit studies that he had already completed. When the Town insisted that Sherman pay $25,000 in consultants’ fees before he could obtain a hearing, he might have thought,’The Colonel will just raise it again.’ And he would have been right. After paying the $25,000, he was told he owed an additional $40,000, and that he would also have to respond to a lengthy questionnaire.

By the time this lawsuit was filed, over ten years had passed. In that time, Sherman became financially exhausted – forced to spend $5.5 million on top of the original $2.7 million purchase. The District Court (Edgardo Ramos, Judge) ruled that Sherman’s claim under the Takings Clause was not ripe under Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), because Sherman had not received a final decision on his property and seeking a final decision would not be futile. The court reasoned that while Sherman may have to jump through more hoops in the future, he had not established that his application would definitely be denied in the end. To Sherman, this must have sounded a lot like: ‘Perhaps he won’t raise the number this time.’

We conclude that under these circumstances, Sherman was not required to obtain a final decision from the Town. Sherman’s takings claim was ripe and adequately alleged. Accordingly, we REVERSE that part of the District Court’s decision that dismissed the takings claim, and we REMAND for further proceedings consistent with this opinion.”

The Court concluded that the Williamson decision establishes a two prong test for ripeness of a takings claim that includes a final decision by the state authorities and pursuit of relief in the state courts. First addressing finality, the Court also noted the requirement of finality is”prudential” rather than jurisdictional. Citing several other decisions, the Court stated that a municipality cannot merely throw up one hurdle after another in order to avoid a final determination. In finding that the District Court had used too narrow a test by determining that the Plaintiff had failed to establish that the Town had placed a proverbial brick wall in his path, the Court held:

“This analysis does not account for the nature of the Town’s tactics. The Town will likely never put up a brick wall in between Sherman and the finish line. Rather, the finish line will always be moved just one step away until Sherman collapses. In essence, the Town engaged in a war of attrition with Sherman. Over ten years, Sherman was forced to spend over $5.5 million on top of the original $2.7 million purchase. As a result, he became financially exhausted to the point of facing foreclosure and possible personal bankruptcy. Moreover, at no point could Sherman force the Town to simply give a final ‘yay or nay’ to his proposal.”

The Court therefore concluded:

“Unfortunately, it is no simple task to distinguish procedures that are merely frustrating from those that are unfair or would be futile to pursue. But when the government’s actions are so unreasonable, duplicative, or unjust as to make the conduct farcical, the high standard is met. And it was met in this case. Seeking a final decision would be futile because the Town used – and will in all likelihood continue to use – repetitive and unfair procedures, thereby avoiding a final decision. Sherman is therefore not required to satisfy the first prong of Williamson County.”

The Court found that as a result of the procedural history, the second prong of the Williamson test had also been met.

“Under the second prong of Williamson County. a plaintiff’s claim is ripe only if the ‘plaintiff has sought just compensation by means of an available state procedure.’ Dougherty, 282 F.3d at 88.

While Williamson County prevents a plaintiff from bringing his takings claim in federal court before first seeking compensation from the state, it ‘does not preclude state courts from hearing simultaneously a plaintiff’s request for compensation under state law and the claim that, in the alternative, the denial of compensation would violate the [Takings Clause of the] Fifth Amendment of the Federal Constitution.’ San Remo Hotel, L.P. v. City and Cnty. of S.F., 545 U.S. 323, 347 (2005). This is because ‘[r]eading Williamson County to preclude plaintiffs from raising such claims in the alternative would erroneously interpret [the Supreme Court’s] cases as requiring property owners to ‘resort to piecemeal litigation or otherwise unfair procedures.’ Id. (quoting MacDonald, 477 U.S. at 350 n.7).

Sherman first brought suit against the Town in federal court in 2008. The Town argued that the takings claim was unripe in part because Sherman had not alleged that he sought and was denied just compensation by an available state procedure. Sherman voluntarily dismissed the case, and followed San Remo by filing his federal takings claim and his state law claim for compensation in state court. The Town then removed the case from state court to federal court, where it argued once again that the takings claim must be dismissed because it can be heard only in state court under Williamson County.

In Sansotta v. Town of Nags Head, 724 F.3d 533 (4th Cir. 2013), the Fourth Circuit concluded that when the defendant removes a takings claim to federal court, the state procedures prong of Williamson County does not apply. We agree with that court’s reasoning that ‘refusing to apply the state‐litigation requirement in this instance ensures that a state or its political subdivision cannot manipulate litigation to deny a plaintiff a forum for his claim.’ Id. at 545.

The removal maneuver prevents Sherman from litigating his federal takings claim until he finishes litigating his state law claim for compensation. In other words, it prevents Sherman from pursuing both claims simultaneously, no matter what forum they are brought in. This runs against San Remo, which allows plaintiffs to do just that. In other words, the removal tactic can ‘deny[ ] a plaintiff any forum for having his claim heard,’ or at least force the plaintiff into the kind of piecemeal litigation that, under San Remo, cannot be required. See id. at 547.”

The Court went on to discuss several other issues, including the Town’s claim that the takings claim was barred by the three year statute of limitations. While declining to reach the ultimate issue raised by the Town, the Court held that where the action arises out of the cumulative actions of a government agency, so long as one act occurred within three years of commencing the action the statute of limitation had not run.

-Steven Silverberg