Eminent Domain & Taking Issues

N.C. Federal Court Dismisses as Unripe a Takings Claim Based on Land Use Issue

Today’s blog post comes directly from The Law of the Land blog, from our prolific and brilliant friend Dean Patricia Salkin of the Touro College Jacob D. Fuchsberg Law Center.

Today’s piece digests a recent decision from the U.S.D.C. for the Eastern District of North Carolina dismissing as unripe a takings claim against the City of Raleigh.  Plaintiffs claimed the City “forced” them to give a public access right of way “in order to get a building permit”, even citing Lanvale Properties LLC v. County of Cabarrus, 366 N.C. 142 (2012) in opposition to the City’s dismissal motion.  The City, on the other hand, successfully argued that the plaintiff’s did not “obtain[] a final administrative decision” from the City before filing the takings, due process and equal protection claims against the City, rendering the lawsuit unripe.

We’re always excited when a land use issue — here, the dispute over a building permit and the conditions thereto — is the basis for a takings claim against a local government.

To Professor Salkin:

CarSpa Automotive, LLC, Marjorie Putnam, and Carl Deny (collectively, “plaintiffs”) filed a complaint against the City of Raleigh, North Carolina (“City”), claiming that the City had taken their property without paying just compensation, deprived them of property without due process of law, and denied them equal protection. Plaintiffs contended that the City “forced Plaintiffs to give a public access right of way in order to get a building permit for their property and as a result, their business had not been profitable”.
The City contended that plaintiffs’ claims were unripe because the plaintiffs had not obtained a final, reviewable decision from the City or sought compensation through state-law procedures for obtaining just compensation.
The federal district court noted that a takings claim is not ripe for adjudication in federal court unless the plaintiff has obtained a final administrative decision regarding the application of the challenged regulations to the property, and has sought and been denied just compensation through the available and adequate state procedures. Williamson Cnty. Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985). Here, plaintiffs had not obtained a final administrative decision or been denied just compensation.
As for finality, where the regulatory regime offers the possibility of a variance from its facial requirements, a landowner must go beyond submitting a plan for development and actually seek such a variance to ripen his claim. Here, property owner could have appealed to the Board of
Adjustment for a variance from the City’s ordinances but they did not. Accordingly, the court held the plaintiffs had not obtained a final administrative decision. This failure also barred their due process and equal protection claims.
Plaintiffs argued under Sherman v. Town of Chester. 752 F.3d 554 (2d Cir.2014), the finality requirement should not apply because the City had behaved badly throughout the permit process. In Sherman, the court held that a takings claimant was not required to satisfy Williamson County’s finality requirement because the defendant Town had used “repetitive and unfair procedures” to avoid issuing a final decision. Here, plaintiffs’ conclusory allegations of the City’s “bad behavior,” were insufficient to exempt them from obtaining a final administrative decision.

Alternatively, even if the final-decision requirement were waived, plaintiffs’ takings claim would still not be ripe because plaintiffs had not been denied just compensation. To satisfy Williamson County’s state-procedures requirement, plaintiffs “must not only file a state law inverse condemnation claim they must also be denied just compensation through a final adjudication in state court.” Town of Nags Head v. Toloczko, 728 F.3d 391 (4th Cir.2013). Here, the plaintiffs had not pursued the available and adequate procedures North Carolina provides for seeking just compensation. Accordingly, their takings claim was not ripe.

The case is CarSpa Automotive, LLC v. City of Raleigh, No. 5:14-CV-21-D (E.D.N.C.).  The Order dismissing the lawsuit for lack of subject matter jurisdiction can be viewed here.

Mike Thelen practices in Womble, Carlyle’s Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.

Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw and “like” us on Facebook here.

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