Merit Decision: Court Limits Standing in Regulatory Takings Claim. Clifton v. Blanchester.

On March 1, 2012, the Supreme Court of Ohio decided Clifton v. v. Blanchester. 2012-Ohio-780, one of two cases it heard on the same day about standing in a takings case. The issue in Clifton is whether a property owner whose property is outside the limits of a municipality (in this case a village) has standing to bring a regulatory takings claim.  A 6-1 Court, in an opinion written by Justice Stratton, held that the answer is no.

Clifton owned 99 acres of land adjacent to J&M Precision Machining, Inc. He farmed his land, but ultimately had planned to sell it to a developer. In 1997 Clifton sold about two acres to J&M.  Those two acres were in Blanchester.  In 2002, Blanchester annexed all of J&M’s property, including the two acres Clifton had sold it, and re-zoned it for general industrial use. According to Clinton, this reduced the value of his property.

The case has a lengthy procedural history. After a number of procedural twists and turns and remands, ultimately the trial court found that Clifton did not have standing to bring a takings claim, and even if he did, the re-zoning of J&M’s property did not result in a partial taking of his property.  The Twelfth District Court of Appeals affirmed. 

The Supreme Court of Ohio rejected Clifton’s first proposition of law which asserted that “a nonresident contiguous property owner has standing to litigate a partial regulatory takings claim against an adjacent political subdivision.” Because of the way it resolved the case, the Court did not address the second proposition of law, which dealt with the issue of whether significant diminution in economic value can amount to a regulatory taking when the regulatory action does not deny a claimant all economically viable use of the property.

The Court rejected Clifton’s first proposition of law on two straightforward grounds.  The first dealt with standing in its simplest sense.  Since Blanchester’s zoning was not directed at Clifton’s property, and in no way directly limited Clifton’s use of his own property, he suffered no injury in fact in the personal sense required for standing under Ohio law.   

Second, while the Home Rule Amendment to the Ohio Constitution clearly grants municipalities (villages are municipalities) the power of eminent domain, “ a municipality has no authority to exercise its inherent eminent domain powers beyond its corporate limits,” wrote Stratton.  While there is some statutory authority for municipalities to acquire property beyond its borders, that is only for certain enumerated purposes and appropriating property for an alleged regulatory taking is not one of them.

At oral argument almost all the justices had asked questions indicating skepticism that a municipality could appropriate property beyond its boundaries.

The majority went on to address the question of whether a property owner had standing to challenge the government’s regulation of someone else’s property. Clifton argued that Blanchester’s zoning of J&M’s property (albeit perfectly lawful as to J&M) was so burdensome to his property that it resulted in a taking of his property.

Relying on Michigan authority, the Court rejected Clifton’s argument and found that government regulation of property does not constitute a taking of an adjacent property. In one case in particular, Murphy v. Detroit, 201 Mich. App.54, 506 N.W.2d 5 (1993), the rezoning of adjacent property led to a drastic decrease in business at plaintiffs’ adjacent commercial properties. The plaintiffs claimed they purchased the property with the expectation that the customer base would remain constant. The Murphy court pointed out that “expectations are not rights” and held that there was no taking because the city took no deliberate action toward  plaintiffs’ property that deprived them of possession or use of the land or buildings.

In response to the what-you-do-to-others-harms-me argument, the Court concluded in Clifton that “when a government’s taking or regulation of property causes incidental damage to an adjacent but unregulated property, the damage is not attributable to the government actor for the purposes of supporting a takings claim. ”

Summing up, the Court held that there was no limitation on Clifton’s property since the zoning did not apply to his property; any alleged diminution in value to Clifton’s property did not result from the rezoning, but from J&M’s expanded permitted use of its property, and because Clifton’s property is outside the village limits, Blanchester has no authority to appropriate the property for an alleged regulatory taking. 

Justice Pfeifer wrote a solo dissent. Conceding that the majority opinion was logical and the end result “hardly unconscionable” he was concerned that its holding would make it harder for “future plaintiffs with legitimate complaints to force the government to initiate appropriation actions in similar circumstances.”   In his dissent, he challenged the majority’s major points, and tackled some of Clifton’s partial regulatory takings issues.

Pfeifer agreed with the majority that Blanchester’s zoning did not and could not directly limit Clifton’s use of his property because it was outside the village limits.  But he found that the zoning could indirectly limit Clifton’s use of his property and could cause a diminution in the value of that property. Regulatory takings challenges are governed by the seminal case of Penn Central Trans. Co. v. New York City, 438 U.S. (1978).  As subsequently interpreted in Lingle v. Chevron U.S.A., Inc. 544 U.S. 528 (2005), the primary factors to consider in evaluating regulatory takings claims are “the economic impact of the regulation on the claimant and, particularly the extent to which the regulation has interfered with distinct investment-backed expectations.” Pfeifer noted that the majority did not engage in any of this analysis, and felt that Clifton should have had a chance to prove this.

 While Pfeifer agrees that Blanchester has no authority to appropriate property outside its boundaries, he would propose that if Clifton can prove that Blanchester has effectuated a virtual taking, which Pfeifer further describes, the Court should order an equitable remedy requiring Blanchester to buy the affected property or pay the amount of diminution. The end result, he notes, would be the same as an appropriation action.

Finally, Pfeifer agrees that under existing law Clifton has no standing to force an appropriation action.  But he questions why Ohio should “countenance a remedy in one instance but not another…Ought not the law of Ohio provide a remedy for an aggrieved landowner even if he lives in a different political subdivision from the one whose zoning change diminishes the value of his property?” At a minimum, he contends, such out-of-jurisdiction landowners must have the right to be heard on such zone changes, with as much consideration given to their rights as to the municipality’s residents.  At oral argument of this case, Justice Cupp expressed his concern about this, along with Justice Pfeifer.

Pfeifer concluded  that “it is possible for Clifton to show that the Blanchester zoning change limits his use of his property, that even though Blanchester cannot appropriate Clifton’s property, it can compensate him as if it had appropriated his property, and therefore that Clifton raises an issue that is redressable. I conclude that Clifton has standing. I would allow the case to move forward on its merits.”

 

Case syllabus

A property owner lacks standing to bring a regulatory-taking claim against a municipality when the affected property is outside the municipality’s corporate limits.

 Concluding Observations

The majority clearly took the easy way out here, with lone dissenting Justice Pfeifer writing the far more nuanced decision.  But the Court still has Moore v. City of Middletown, argued the same day as Clifton, under submission, which raises similar standing issues. Moore is clearly bound by the syllabus of Clifton. Yet in Clifton the majority went out of its way to make clear that its holding was limited to the facts and circumstances presented in that case, and was not holding that an adjoining property owner will never have standing.  And at oral argument the justices seemed much more sympathetic to the homeowners in Moore than to the farmer in the Clifton case.  

 

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