Brief Fact Summary. In 1959, Palazzolo (Petitioner) and associates formed Shore Gardens, Inc. (SGI) and purchased parcels of land, which bordered a pond, other houses and was a marsh subject to tidal flooding. After trying to gain approval from the Rhode Island Division of Harbors and Rivers (DHR) for two development projects, which were not approved, the land was designated by the Council, an agency charged with the duty of protecting the state’s coastal properties, as protected “coastal wetlands.” Then, in 1983, Petitioner succeeded to ownership of the property by virtue of the dissolution of SGI.
Synopsis of Rule of Law. It would be illogical and unfair to bar a regulatory takings claim because of the post-enactment transfer of ownership where the steps necessary to make the claim ripe were not taken, or could not have been taken, by a previous owner.
Issue. Was the Petitioner deprived of all economic value of his property?
Held. No. Affirmed in part and reversed in part.
The Court disagreed with the portion of the Rhode Island opinion, which held that the Petitioner’s claims were not ripe due to his taking exclusive ownership of the property after the wetlands law was enacted. The Court here held that the enactment of the wetlands act did not automatically amount to a valid regulation by virtue of Petitioner’s succeeding to ownership after the regulation was passed because if the regulation accomplished a taking under the constitutional precedents, then the mere fact that Petitioner took exclusive ownership after the regulation could not bar a claim for compensation.
It would be illogical and unfair to bar a regulatory takings claim because of the post-enactment transfer of ownership where the steps necessary to make the claim ripe were not taken, or could not have been taken, by a previous owner.
The Court held that Petitioner should be afforded the opportunity to prove a diminished economic value, under which the Petitioner can attempt to prove that his property has been deprived of value by regulation, but the deprivation falls short of total deprivation of economic use. This may be shown by investment-backed expectations.
Assuming a taking is otherwise established, a State may not evade the duty to compensate on the premise that the landowner is left with a token interest. Here, however, the evidence showed that Petitioner was left with more than a token interest.
Dissent. One portion of the dissent would hold that the Petitioner’s claims were not ripe, while another portion of the dissent would hold that Petitioner is without standing.
Concurrence. The concurrence points out that the case of Penn Central v. New York is to be the controlling decision for analysis on remand.
Discussion. The student should be aware of the investment-backed expectations consideration for a claim analyzed under Penn Central v. New York, especially the reasonableness of the expectations. Although prior enactment of the wetlands act is not a bar to a claim, one must question how much the Petitioner could have reasonably expected to gain from the property, which he succeeded to, in light of the regulatio