Palazzolo v. Rhode Island
533 U.S. 606 (2001)

Annotate this Case

OCTOBER TERM, 2000

Syllabus

PALAZZOLO v. RHODE ISLAND ET AL.

CERTIORARI TO THE SUPREME COURT OF RHODE ISLAND No. 99-2047. Argued February 26, 200l-Decided June 28, 2001

In order to acquire the waterfront parcel of Rhode Island land that is here at issue, petitioner and associates formed Shore Gardens, Inc. (SGI), in 1959. After SGI purchased the property petitioner bought out his associates and became the sole shareholder. Most of the property was then, and is now, salt marsh subject to tidal flooding. The wet ground and permeable soil would require considerable fill before significant structures could be built. Over the years, SGI's intermittent applications to develop the property were rejected by various government agencies. After 1966, no further applications were made for over a decade. Two intervening events, however, become important to the issues presented. First, in 1971, the State created respondent Rhode Island Coastal Resources Management Council (Council) and charged it with protecting the State's coastal properties. The Council's regulations, known as the Rhode Island Coastal Resources Management Program (CRMP), designated salt marshes like those on SGI's property as protected "coastal wetlands" on which development is greatly limited. Second, in 1978, SGI's corporate charter was revoked, and title to the property passed to petitioner as the corporation's sole shareholder. In 1983, petitioner applied to the Council for permission to construct a wooden bulkhead and fill his entire marshland area. The Council rejected the application, concluding, inter alia, that it would conflict with the CRMP. In 1985, petitioner filed a new application with the Council, seeking permission to fill 11 of the property's 18 wetland acres in order to build a private beach club. The Council rejected this application as well, ruling that the proposal did not satisfy the standards for obtaining a "special exception" to fill salt marsh, whereby the proposed activity must serve a compelling public purpose. Subsequently, petitioner filed an inverse condemnation action in Rhode Island Superior Court, asserting that the State's wetlands regulations, as applied by the Council to his parcel, had taken the property without compensation in violation of the Fifth and Fourteenth Amendments. The suit alleged the Council's action deprived him of "all economically beneficial use" of his property, resulting in a total taking requiring compensation under Lucas v. South Carolina Coastal Council, 505 U. S. 1003, and sought $3,150,000 in damages, a figure derived from an appraiser's estimate as to the value of a 74-lot residential subdivision on the property. The court ruled against


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petitioner, and the State Supreme Court affirmed, holding that (1) petitioner's takings claim was not ripe; (2) he had no right to challenge regulations predating 1978, when he succeeded to legal ownership of the property; (3) he could not assert a takings claim based on the denial of all economic use of his property in light of undisputed evidence that he had $200,000 in development value remaining on an upland parcel of the property; and (4) because the regulation at issue predated his acquisition of title, he could have had no reasonable investment-backed expectation that he could develop his property, and, therefore, he could not recover under Penn Central Transp. Co. v. New York City, 438 U. S. 104, 124.

Held:

(a) A takings claim challenging application of land-use regulations is not ripe unless the agency charged with implementing the regulations has reached a final decision regarding their application to the property at issue. Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U. S. 172, 186. A final decision does not occur until the responsible agency determines the extent of permitted development on the land. MacDonald, Sommer & Frates v. Yolo County, 477 U. S. 340, 351. Petitioner obtained such a final decision when the Council denied his 1983 and 1985 applications. The State Supreme Court erred in ruling that, notwithstanding those denials, doubt remained as to the extent of development the Council would allow on petitioner's parcel due to his failure to explore other uses for the property that would involve filling substantially less wetlands. This is belied by the unequivocal nature of the wetland regulations at issue and by the Council's application of the regulations to the subject property. The CRMP permits the Council to grant a special exception to engage in a prohibited use only where a "compelling public purpose" is served. The proposal to fill the entire property was not accepted under Council regulations and did not qualify for the special exception. The Council determined the use proposed in the second application (the beach club) did not satisfy the "compelling public purpose" standard. There is no indication the Council would have accepted the application had the proposed club occupied a smaller surface area. To the contrary, it ruled that the proposed activity was not a "compelling public purpose." Although a landowner may not establish a taking before the land-use authority has the opportunity, using its own reasonable procedures, to decide and explain the reach of a challenged regulation, e. g., MacDonald, supra, at 342, once it becomes clear that the permissible uses of the property are known to a reasonable degree of certainty, a takings claim is likely to have ripened. Here, the Council's decisions make plain that


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Full Text of Opinion

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Primary Holding

A property owner can bring a takings claim even when gaining control of the property after a government regulation restricted its use, and a taking is not total when a property retains 6 percent of its total development value.

Facts

Most of a waterfront parcel of property that Palazzolo owned was designated as coastal wetlands. He sought to develop his property but was unable to obtain permission. Filing suit in state court, he argued that the wetlands regulation resulted in a taking of his property under the Fifth Amendment, since it prevented him from making any economically beneficial use of it. The lower court was not persuaded, since the designation had been in effect since before Palazzolo acquired the property.

Opinions

Majority

  • Anthony M. Kennedy (Author)
  • William Hubbs Rehnquist
  • Sandra Day O'Connor
  • Antonin Scalia
  • Clarence Thomas

Kennedy found that the date when a property owner acquired the land, relative to when the regulation was imposed, did not affect the investigation into whether a government taking had occurred. However, he ruled that the regulation still did not constitute a taking because it did not remove 100 percent of the economically beneficial use of the property. Palazzolo still could develop the small portion of it that was not designated as coastal wetlands.

(Stevens joined with respect to Part II-A.)

Concurrence

  • Sandra Day O'Connor (Author)

Emphasizing the importance of analyzing specific facts in a case-by-case inquiry, O'Connor wrote to emphasize her agreement with the principle that the date of acquiring the property made no difference in whether the taking principle might apply. She understood this principle broadly as requiring compensation for private property owners who would be more affected by land use regulations than the general public.

Concurrence

  • Antonin Scalia (Author)

Scalia noted that a land use regulation should not be presumed to be constitutional if it had not been challenged by a previous owner of the same property.

Concurrence/Dissent In Part

  • John Paul Stevens (Author)

While Stevens found that a taking might have occurred, he felt that compensation was due to the owner of the property at the time that the regulation was enacted, since the property was literally taken from that owner. He felt that Palazzolo lacked standing because he was merely a later owner of the property.

Dissent

  • Ruth Bader Ginsburg (Author)
  • David H. Souter
  • Stephen G. Breyer

Raising the concern of whether the controversy was ripe for judicial review, Ginsburg pointed out that Palazzolo might not have received a final decision on his development plans. She agreed with Stevens that the takings analysis should be affected by whether the owner had taken title before or after the regulation.

Dissent

  • Stephen G. Breyer (Author)

Like Ginsburg, Breyer felt that the matter was not yet ripe for adjudication. Unlike Ginsburg, he felt that the date of when a property owner took title was not a decisive factor in a takings analysis.

Case Commentary

Someone who acquires property after a regulation is imposed still has the right to challenge its constitutionality because there is no statute of limitations on constitutional rights, and it would not be appropriate to give different rights to old and new owners. Also. this would impede the transfer of land because its value would be greatly reduced by the regulation.

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