Daly, Michael J.

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2000 Survey of Rhode Island Law: Cases: Property Law

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Roger Williams University Law ReviewVolume 6 | Issue 2 Article 17Spring 20012000 Survey of Rhode Island Law: Cases: PropertyLawMichael J. DalyRoger Williams University School of LawFollow this and additional works at: http://docs.rwu.edu/rwu_LRThis Survey of Rhode Island Law is brought to you for free and open access by the Journals at DOCS@RWU. It has been accepted for inclusion inRoger Williams University Law Review by an authorized administrator of DOCS@RWU. For more information, please contact mwu@rwu.edu.Recommended CitationDaly, Michael J. (2001) "2000 Survey of Rhode Island Law: Cases: Property Law," Roger Williams University Law Review: Vol. 6: Iss. 2,Article 17.Available at: http://docs.rwu.edu/rwu_LR/vol6/iss2/1720011 SURVEY SECTION 775Property Law. Palazzolo v. State ex rel. Tavares, 746 A.2d 707(R.I. 2000). A regulatory takings claim is not ripe if the landownerhas never submitted an application specifying the planned devel-opment of the property. Upon rejection by the state, the landownermust submit a "less grandiose" plan for development.FACTS AND TRAVELAnthony Palazzolo (Palazzolo) brought an inverse condemna-tion action against Rhode Island's Coastal Resource ManagementCouncil (CRMC). 1 Palazzolo claimed that CRMC's denial of his ap-plication to fill eighteen acres of his coastal wetlands constituted ataking of his property for which just compensation was requiredunder the United States and Rhode Island Constitutions. 2 Palaz-zolo was seeking compensation in the amount of $3,150,000. 3 Thatamount was based on the profit he stood to gain had he been ableto develop a seventy-four lot subdivision on his property. 4From 1960 to February 27, 1978, Palazzolo was the presidentand sole shareholder of Shore Gardens, Inc. (SGI). 5 During thattime, SGI was the owner of the property in question. On February27, 1978, SGI's corporate charter was revoked and Palazzolo be-came the sole owner of the property.6Between 1962 and 1985, Palazzolo filed several applicationswith various state agencies seeking permission to substantially al-ter his property. 7 On April 1, 1971, the Division of Harbors andRivers (DHR) approved Palazzolo's application to dredge the pondand fill his property so he could construct a beach club.8 On No-vember 17, 1971, DHR revoked its assent.9 Palazzolo did not ap-peal this revocation. 10 By 1977, the state's regulatory frameworkevolved so that the Coastal Resources Management Council1. See Palazzolo v. State ex rel. Tavares, 746 A.2d 707, 709 (R.I. 2000).2. See id. at 711.3. See id.4. See id.5. See id. at 710.6. See id.7. See id.8. See id.9. See id.10. See id.776 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 6:593(CRMC) was the agency responsible for issuing permits for the fill-ing of coastal wetlands."In 1983 and 1985, Palazzolo, acting in his own capacity, filedapplications with CRMC to fill his property.12 His 1985 applica-tion sought permission to construct a beach club.' 3 Both applica-tions were denied.' 4 Thereafter, Palazzolo filed a regulatorytakings claim against CRMC and the state.' 5 At a jury waivedtrial, the trial justice found that Rhode Island's regulatory schemedid not amount to a taking of Palazzolo's property and that no com-pensation was required under the Rhode Island or United StatesConstitutions.' 6BACKGROUNDThe Fifth Amendment to the United States Constitution pre-vents states from taking private property without just compensa-tion. 17 Traditionally, this concept was applied to a physicalintrusion onto, or confiscation of, real property.' However, theUnited States Supreme Court has found that a government-im-posed regulation may rise to a level at which just compensation isrequired. 19 This is referred to as a regulatory taking.20A person seeking compensation for a regulatory taking mustfirst show that his claim is ripe.2 ' A regulatory takings claim "isnot ripe until the government entity charged with implementingthe regulations has reached a final decision regarding the applica-tion of the regulations to the property at issue."2211. Rhode Island's regulatory framework underwent dramatic changes be-tween 1962 and 1985. See Palazzolo, 746 A.2d at 710 and accompanying notes.However, the court found that Mr. Palazzolo could not possibly have owned theproperty in his own name until the corporation dissolved in 1978. See id. at 716.Hence, the relevant law in this case is that which was in place as of Mr. Palazzolo'sacquisition date of February 27, 1978. See id. at 716-17.12. See Palazzolo, 746 A.2d at 711.13. See id.14. See id.15. See id.16. See id.17. See id. at 712.18. See id.19. See id.20. See id.21. See id.22. Id. (quoting Williamson County Reg'l Planning Comm'n v. HamiltonBank, 473 U.S. 172, 186 (1985)).SURVEY SECTIONUpon a showing of ripeness, the court must determine if thegovernment regulation constitutes a per se taking.23 A per se tak-ing may occur if a regulation requires any physical invasion of aproperty owner's property.24 Alternatively, a per se regulatorytaking may occur if a regulation "denies all economically beneficialor productive use of land."25A regulation not amounting to a per se taking may still consti-tute a regulatory taking for which compensation is required. 26 Aregulation may constitute a regulatory taking if it meets the three-factor test established in Penn Central Transportation Co. v. NewYork City.27 Under Penn Central, the first consideration is thecharacter of the regulation. 28 The second is the economic impact ofthe regulation.29 Finally, the trial court should consider the extentto which the regulation complained of has interfered with the prop-erty owner's "investment-backed expectations." 30ANALYSIS AND HOLDINGThe Rhode Island Supreme Court reviewed the issue of ripe-ness de novo.31 The court held that as a matter of law Palazzolo'sclaim was not ripe.32 Justice Lederberg referred to two facts tojustify her holding.33 The first concerned the contents of Palaz-zolo's applications. Palazzolo's 1966 and 1985 applications soughtto fill the wetlands so he could construct a beach club. 34 His 1963and 1983 applications sought permission to fill the wetlands, butmade no mention of his planned use of the property.3 5 As Palaz-zolo never submitted an application concerning the development ofthe seventy-four lot subdivision that he claims to have had taken23. See id. (citing Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992)).24. See id.25. Id. (quoting Lucas, 505 U.S. at 1015).26. See id at 713 (citing Penn Cent. Transp. Co. v. New York City, 438 U.S.104, 124 (1978)).27. See id. (citing Penn Cent., 438 U.S. at 124).28. See id. (citing Penn Cent., 438 U.S. at 124).29. See id. (citing Penn Cent., 438 U.S. at 124).30. Id. (citing Penn Cent., 438 U.S. at 124).31. See id. at 714.32. See id.33. See id.34. See id.35. See id.2001] 777778 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 6:593from him, the state never rendered a "final decision regarding theapplication of the regulations to the property at issue."36The second fact that convinced Justice Lederberg that Palaz-zolo's claim was not ripe was that he never modified his applicationto seek permission for a "less grandiose" plan.37 Palazzolo's 1963and 1983 applications sought to fill all eighteen acres of his prop-erty.38 His 1966 and 1985 applications sought to fill all eighteenacres except a fifty-foot strip between the pond and area of the pro-posed fill.39 Palazzolo failed to ripen his claim by not seeking touse the property in a way that would allow him to fill a substan-tially smaller amount of his property. 40 Additionally, Palazzolocould have built at least one house on the upland portion of theland without having to fill any of the property.41The supreme court's holding that Palazzolo's claim was notripe for review disposed of the case. However, in dicta, the courtwent on to discuss the merits of Palazzolo's claim.42 The courtstated that even if the claim was ripe, the government's regula-tions did not constitute a taking for which compensation wasrequired.43In its analysis of Palazzolo's claim under a per se takings the-ory, the court stated that Palazzolo was not deprived of all econom-ically beneficial use of his property.44 The court relied on the factthat Palazzolo would have been able to receive up to $200,000 hadhe developed the upland portion of his property.45 Although thiswas significantly less than the $3,150,000 he stood to gain if hewas permitted to fully develop his property, the fact was that therewas still remaining value in the land.46 Accordingly, Palazzolowas not deprived of all economically valuable or beneficial use ofhis land.4736. Id. (quoting Williamson County Reg'l Planning Conm'n, 473 U.S. at 186).37. See id.38. See id.39. See id.40. See id.41. See id.42. See id.43. See id. at 714-17.44. See id. at 715.45. See id.46. See id.47. See id.SURVEY SECTIONFurther, the court stated that Palazzolo could not show a perse taking if he was not the owner of the property at the time theregulation was passed.4 The court stated that Palazzolo could nothave acquired the property in his name until SGI was dissolved in1978.49 By that time, regulations limiting his ability to fill the wet-lands were already in place so he never had the right to fill thewetlands.50 Hence, nothing had been taken from him.51The supreme court also found that Palazzolo could not haveprevailed in his takings claim under a Penn Central analysis.52The court again relied on the fact that Palazzolo was not the ownerof the property until 1978.53 In light of the regulations that werein place at that time, Palazzolo could not have reasonable invest-ment back expectations to develop the property as he wished. 54The lack of reasonable investment backed expectations caused Pal-azzolo's claim of a regulatory taking under Penn Central to fail.55CONCLUSIONThe Rhode Island Supreme Court determined that becausePalazzolo had neither sought permission to undertake less grandi-ose plans nor applied for the subdivision that he claims was takenfrom him, his claim was not ripe for review. Additionally, the courtfound that substantial value still remains in Palazzolo's land de-feating his claim of a per se regulatory takings claim. Palazzolo'sclaim also failed under a Penn Central analysis because he neverhad a reasonable investment backed expectation to develop a sev-enty-four lot subdivision.Michael J. Daly48. See id.49. See id. at 716.50. See id.51. See id.52. See id. at 717.53. See id.54. See id.55. See id.20011 779

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2000 Survey of Rhode Island Law: Cases: Property Law

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