Opinion
C.A. No. 98C-02-021.
Submitted: October 6, 2000.
Decided: January 19, 2001.
On Plaintiff's Motion for Summary Judgment. Denied. On Defendants' Motion for Summary Judgment. Granted.
Constantine F. Malmberg, Young Malmberg, P.A., Dover, Delaware, Attorneys for the Plaintiff.
Thomas H. Ellis, Department of Justice, Wilmington, Delaware, Attorney for the Defendants.
MEMORANDUM OPINION
This is the Court's decision on Plaintiff's and Defendants' Cross-Motions for Summary Judgement. The facts are as follows:
On May 23, 1996, The Village at Cannon Mill ("Plaintiff' or "Village"), entered into a contract to purchase land. The Village proceeded to have the land evaluated for suitability as a multi-housing style residential neighborhood (the parties refer to this transaction as the "Project"). The Plaintiff then engaged in the process of developing the property to pursue these objectives. Over the next few months, the Village secured all of the requisite approvals from the City of Dover Planning Commission and the City Council for the City of Dover. On December 8, 1997, the City Council granted preliminary approval of the Project and the necessary waivers. According to the Plaintiff, the Village incurred approximately $312,479.88 in expenses for the Project by February 13, 1998. The Village received final approval for its development plan on June 25, 1998 and recorded its final plat for the Village of Cannon Mills on June 26, 1998 with the Kent County Recorder of Deeds.
After the Project's preliminary approval by the Planning Commission, Farm Lands, L.P. ("Defendant"), the owner of an adjacent tract of land consisting of approximately 244.5 acres of land, filed an application with the Delaware Agricultural Land Foundation ("Foundation") to create an agricultural preservation district ("preservation district") pursuant to the provision of the Delaware Agricultural Lands Preservation Act ("ALPA"), 3 Del. C., § 901, et seq., to be called the Raughley District. On January 6, 1998, this application was approved by the Farm Land Preservation Advisory Board for Kent County. Thereafter, on January 8, 1998, the application was partially approved by the Kent County Regional Planning Commission, with slight modifications.
On January 6, 1998. the Foundation published notice in the Delaware State News and the Wilmington News Journal for the January 13, 1998, meeting where final approval of the Agricultural Preservation District was to be considered. At the Foundation's public hearing on January 13, 1998, the Village's counsel was given limited opportunity to object to the creation of the Preservation District. Plaintiff claims that they were not given personal notice of this hearing and were afforded only a limited opportunity to object to the creation of the preservation district. Ultimately, the Foundation approved the Agricultural Preservation District and recorded it on February 13, 1998 with the Kent County Recorder of Deeds. To the Plaintiff's detriment, the Agricultural Lands Preservation Act in 3 Del. C., § 910(a)(2) requires that the Village, if it is considered a "new subdivision development, " observe a fifty-foot setback requirement on their property. Plaintiff states that this fifty-foot setback renders them unable to build on certain lots and significantly impairs the value of twenty-eight of the lots. This fifty-foot setback is the cornerstone of the current litigation.
On February 12, 1998, Plaintiff filed suit against the Delaware Agricultural Lands Foundation ("Foundation"); John F. Tarburton, ("Tarburton") in his official capacity as Secretary of the Department of Agriculture; and Farm Lands, L.P. in a "Petition for Review and Declaratory Judgment." The complaint filed with this Court alleged the following six counts: (1) that the Village not be considered a "new subdivision development" under 3 Del. C., § 910 as they had preliminary approval for their plan before the Preservation district was created; (2) the Village's due process rights were violated by insufficient notice of the meeting, insufficient opportunity to be heard and that the Foundation was neither neutral nor detached; (3) the Foundation failed to follow the procedures for notice and hearing of case decisions; (4) the Foundation and Farmland Advisory Board failed to establish an adequate record and failed to set forth on the record the factual basis for its decision; (5) the actions of the Defendants were in violation of 42 U.S.C. § 1983 of the Civil Rights Act; and (6) the taking of plaintiff's property constitutes an inverse condemnation within the meaning of 29 Del. C., § 9504. Plaintiff seeks a declaratory judgement that the requirement of a fifty-foot setback requirement not apply to its property; or, in the alternative, the recovery of money damages for the alleged taking of its property for public use, pursuant to 42 U.S.C. § 1983.
Defendants then filed a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. This Court denied the Motion to Dismiss, but stayed Counts I-V pending the outcome of Count VI. In staying the first five counts the Court found that the Village had "not exhausted the State's procedures for determining whether a taking has occurred, and if so what compensation is due from the State for this taking." After this Court's ruling on the motion to dismiss, defendants filed for summary judgment as to Count VI on July 17, 2000. Plaintiff filed a response opposing this motion on September 22, 2000. Four days later, Plaintiff also filed a motion for summary judgement. The following is a brief summary of Plaintiff's and Defendants' arguments on the taking subject.
In re: 244.5 Acres of Land; The Village, L.L.C. v. Delaware Agricultural Lands Preservation Foundation, Del. Super., C.A. No. 98C-02-021, Witham, J. (Feb. 10, 2000), Order at 1.
In the Defendants' Motion for Summary Judgement, they claim that the issue before the Court is simply deciding whether any taking has occurred. Defendants claim that no taking occurred as the Plaintiff would have to be deprived of all viable economic use of the property. Defendants further argue that the Court should evaluate the takings claim by considering the effect on the entire sixty five acres and not the effect on the individual subdivided lots within the proposed development. Plaintiff claims that inverse condemnation is appropriate because Defendants have taken part of their property without compensation. In support of this, Plaintiff alleges that a "constructive" or "de facto" taking occurs when government action directly and substantially interferes with a private landowner's property rights. The Plaintiff landowners claim that the fifty foot setback requirement instead of the City of Dover's usual forty foot setback constitutes substantial interference with their property rights. The Village claims that the additional ten foot setback requirement diminished their property value by $429,190.00. Plaintiff further alleges that the taking is unconstitutional as it is not for public use. In addition, Plaintiff re-alleges the lack of notice and a public hearing which violates its due process rights of life, liberty and property.
The property value decreased as the area within each lot that was usable for construction was diminished thereby making the lots less marketable.
Superior Court Civil Rule 56 governs motions for summary judgement. The rule states that summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." When cross motions for summary judgment are filed, the analysis is very similar. In Emmons v. Hartford Underwriters Insurance Co., the court stated that "when opposing parties make cross motions for summary judgment, neither party's motion will be granted unless no genuine issue of material fact exists and one of the parties is entitled to judgment as a matter of law." The courts have also stated that when cross motions for summary judgment are filed "the parties implicitly concede the absence of material factual disputes and acknowledge the sufficiency of the record to support their filing of cross motions for summary judgment." While the parties may "implicitly concede" the absence of material factual dispute, the Court must still evaluate the motions under Rule 56 and determine that no material issues of fact do exist and that one party is entitled to judgment as a matter of law. The Court is persuaded that material issues of fact do not exist and will evaluate the law to decide the effect of the additional ten foot setback requirement underlying this action.
Emmons v. Hartford Underwriters Ins. Co., Del. Supr., 697 A.2d 742, 743 (1997); Playtex FP, Inc. v. Columbia Casualty Co., Del. Super., 622 A.2d 1074, 1076 (1992).
Browning-Ferris, Inc. v. Rockford Enterprises, Inc., Del. Super., 642 A.2d 820, 823 (1993).
There are two issues before this Court. First, whether or not the fifty foot setback requirement applies to the Village, and second, whether the statutory fifty foot setback requirement constitutes a taking. On the first issue, Plaintiff argues that the term "new subdivision development" in 3 Del. C., § 910(a)(2) is ambiguous because it is not defined in the statute. To guide the Court in developing a standard, we may examine the "permit-plus" rule which applies in re-zoning cases. By using the permit-plus rule the Court is saying that the effect of ALPA, particularly in this case, is analogous to a re-zoning. The Court is not characterizing or finding that ALPA is a zoning regulation or re-zoning. Under the permit-plus rule "[a]s of the time of the zoning change, there must have been a substantial change of position, expenditures, or incurrence of obligations, made lawfully and in good faith under the [building] permit, before the land owner becomes entitled to complete the construction and to use the premises for a purpose prohibited by a subsequent zoning change." Using the permit-plus rule as a guide, ALPA's "new subdivision development" term will apply to developments which are in their initial, planning stages until the permit-plus standard has been satisfied. To date, the Village has not applied for a building permit nor taken any steps beyond recording the development plan; therefore, the fifty foot setback requirement of ALPA will apply to the Village.
Acierno v. Cloutier, 3d Cir., 40 F.3d 597, 615-620 (1994); Shellburne, Inc. v. Roberts, Del. Supr., 224 A.2d 250 (1966).
The Court draws special attention to this distinction because zoning/re-zoning engenders its own body of law that does not apply to this regulation.
Shellburne at 254.
The second issue is whether the fifty foot setback requirement in 3 Del. C., § 910(a)(2) as applied to the Village constitutes a taking under Delaware law. If the setback requirement is found to be a taking, Defendants do not dispute that compensation would be due. Takings law is governed by both Federal and State constitutional law. The Fifth Amendment of the United States Constitution states "nor shall private property be taken for public use, without just compensation." This has been applied to the states through the Fourteenth Amendment. Similarly in Art. I, § 8, the Delaware Constitution states "nor shall any man's property be taken or applied to public use without the consent of his representatives, and without compensation being made." Under either Federal or State law, the government must compensate private property owners when a taking occurs. The difficult question lies in determining exactly when a taking has occurred. One particularly challenging area of takings law is regulatory takings where the court must determine when the government regulation involved reaches the level of intrusiveness and harm that it constitutes a taking.
In 1922, the United States Supreme Court established the general principle in Pennsylvania Coal v. Mahon that "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." The Supreme Court has admittedly never defined the exact circumstances or "set formula" for determining when the government regulation goes far enough to be considered a taking. Instead of a "set formula" the Court prefers to "engag[e] in . . . essentially ad hoc, factual inquiries." While espousing ad hoc inquiries, seventy years after the Mahon opinion, the court provided direction with respect to two scenarios. In Lucas v. South Carolina Coastal Council the following two types of regulatory action were found to be "compensable without case-specific inquiry into the public interest advanced in support of the restraint." The first scenario concerns situations where there are "regulations that compel the property owner to suffer a physical "invasion" of his property." The second scenario in which the Supreme Court found "categorical treatment" appropriate occurs when the government "regulation denies all economically beneficial or productive use of land."
Pennsylvania Coal v. Mahon, 260 U.S. 393, 415 (1922).
Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992).
Lucas at 1015, quoting with approval, Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124 (1978); See also, BE LF, Inc. v. New Castle County, Del. Super., C.A. No. 83C-MR-6, Poppiti, J. (June 26, 1989), Order at 7 (stating that case specific inquiries are necessary to determine if regulatory taking occurred).
Lucas at 1015.
Id.
Id.
While these situations create bright-line categories and rules, there exists a great number of cases in which neither of these apply as demonstrated by the case sub judice. In Lucas, the majority opinion recognized that it did not answer some of the toughest questions about regulatory takings. In the extensive footnotes in Lucas the Supreme Court pointed out the problem but stated that they would "avoid this difficulty" in this opinion. The question that remains unanswered after Lucas is what is "the "property interest' against which the loss of value is to be measured." This problem is echoed in the arguments raised by the parties in this case. The Defendant claims that Plaintiff has not been denied all viable economic use of the entire sixty-five acre tract, and Plaintiff argues that it has been denied all viable economic use of the land encompassed within statutory setback requirement, thereby affecting the entire value of their property.
Lucas at 1016 n. 7. "Regrettably, the rhetorical force of our "deprivation of all economic feasible use" rule is greater than its precision, since the rule does not make clear the "property interest" against which the loss of value is to be measured. When, for example, a regulation requires a developer to leave 90% of a rural tract in its natural state, it is unclear whether we would analyze the situation as one in which the owner has been deprived of all economically beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a mere diminution in value of the tract as a whole." Id.
In 1992, Delaware courts dealt with partial takings law in cases involving the State's acquisition of land for the Route 1 bypass. Similar to the case currently before this Court, these cases involved land taken by the State for the highway and the dispute centered around the "buffer zone" required for property bordering such highways. Applying Lucas, these cases found that because the plaintiffs had not been denied all "economically viable use of [their] property" no taking had occurred for which compensation was due. The Court noted that the "buffer zone" regulations did not prohibit farming, the existing use, from occurring. Plaintiffs argued that a taking occurred because the buffer zone would prohibit any future development from occurring. The Supreme Court found that the buffer zone could be used as part of the set-back requirement required by Kent County and used this as a factor to demonstrate that Plaintiffs had not been denied all viable economic use of their property. While the buffer zone problem is similar to the situation faced by this Court, those cases are not dispositive. In the Route 1 cases there were no plans to build in the buffer zone at the time of the conflict. The Plaintiffs in those cases were actively farming the buffer zone and had only considered the possibility of future development. In the immediate case, Plaintiff had preliminary approval for subdivision when the preservation district was formed. To address this difference the Court will take a more extensive look at regulatory takings.
State v. Ellery, Del. Super., C.A. No. 90C-NO-31, Steele, J. (Sept. 2, 1992), aff'd, Del. Supr., 633 A.2d 369 (1993); State v. Booker, Del. Super., C.A. No. 89C-NO-13, Steele, J. (Sept. 2, 1992), aff'd, Del. Supr., No. 254, 1993, Walsh, J. (March 24, 1994) (ORDER); State v. Booker, Del. Super., C.A. No. 90C-NO-31, Steele, J. (Sept. 2, 1992).
Ellery (Del.Supr.) at 8.
Id.
While the Lucas opinion did not answer the difficult questions of regulatory takings, the Court drew attention to the Penn Central case. Penn Central involved the denial of a building permit to construct an office tower in the airspace above the existing Penn Central station because the terminal had been approved as a "landmark site" under New York City's Landmark Preservation Law. The regulatory ordinance in question was enacted for the public purpose of historical conservation of landmarks within the city. The Court stated that the Landmarks Law had similar effect on the airspace above the train terminal to a zoning law and stated that the "inquiry may be narrowed to the question of the severity of the impact of the law on appellants' parcel." The Supreme Court articulated a whole parcel concept stating that ""Taking' jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated." Penn Central identified three specific considerations that must be made when making these ad hoc, factual decisions. The three factors to consider when determining whether government regulations have become takings are "the character of the governmental action, its economic impact, and its interference with reasonable investment-backed expectations."
Lucas at 1016 n. 7; Lucas at 1019 n. 8.
Penn Central at 107-117.
Id.
Id. at 136.
Id. at 130.
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984), quoting with approval, Penn Central at 124.
The first element the Court will address is the character of the governmental action involved. The two categorical takings categories of Lucas do not apply because no physical invasion occurred and the Plaintiff has admittedly not been denied all viable economic use of the sixty-five acre tract. Under ALPA the land which becomes part of the preservation district is part of a ten year easement in which the land has a strong preference to be used for agricultural purposes. In return for the permanent farming easement on the land, the property owners receive certain tax advantages. New developments that neighbor the preservation district must observe a fifty foot setback requirement "in which no improvement requiring an occupancy approval shall be constructed." Essentially, the statute creates a buffer zone around the preservation easement to protect neighboring properties from nuisances such as dust, manure, etc. It could be viewed as ironic that the Plaintiff does not want this protection for perceived economic or investment-backed expectations. The General Assembly determined that preservation of farmlands was a public purpose, and this Court finds that the statute advances legitimate state interests.
3 Del. C., §§ 909, 910.
3 Del. C., §§ 901, 902.
Plaintiffs presuppose that a taking has occurred and allege constitutional violations claiming that private individuals are the primary beneficiaries of the statute. This argument is not addressed because ALPA is found by this Court to be a regulation that does not constitute a taking.
The second consideration which must be made is its economic impact. It is important to begin with the understanding that more than diminution in property value must be shown for the regulation to rise to the level of being a taking. Under the circumstances of this case, plaintiff claims that with the Village's current subdivision plot, the setback requirement would render certain lots unusable for building a residence and affect the development of twenty-eight other lots. Plaintiff also points to the expenses already incurred as evidence that its property rights have been significantly impacted. Again, using the permit-plus rule by analogy, the Court is not persuaded that Plaintiff had a vested property right in the forty foot setback requirement which was constitutionally violated by the extension of this setback by ten feet.
Penn Central at 131.
Specifically, Plaintiff claims a loss in property value of $429,190.00. The Court recognizes that the State has not proffered any numbers concerning decrease in property value.
The Court surmises that this entire expense would not have to duplicated to make adjustments for the additional ten foot setback requirement.
The third and primary consideration is the "extent to which the regulation has interfered with distinct investment-backed expectations." In Goldberg v. City of Rehoboth, Plaintiffs application to partition their property was denied by the Planning Commission. Plaintiffs filed suit alleging that denial of their partition application was a compensable taking. The Court discussed the Penn Central factors in determining "the nature and extent of the interference with rights in the parcel as a whole." The Goldberg Court determined that denial of the partition application was not a regulatory taking because the "use and value of the property as a whole did not change as a result of the City's action."
Penn Central at 124.
Goldberg v. City of Rehoboth, Del. Super., 565 A.2d 936 (1989), aff'd, Del. Supr., No. 94, 1989, Christie, J. (Aug. 24, 1989) (ORDER).
Goldberg at 945.
Id.
In evaluating the Plaintiff's reasonable investment-backed expectations, the Court will look at the effect the regulation had on the use and value of the property on the whole. Plaintiff intends to develop the Village property into a multi-house development with both single family homes and apartments. Plaintiff claims that ALPA affects a taking because it has significantly impacted their development plans on twenty-eight lots and completely precluded development on other lots. By its very language the ALPA provision in question only affects "new subdivision developments" and only prohibits structures that require occupancy approval from being built within the setback requirement. Like the Route 1 cases, the property within the setback requirement can be put to other use. In this case, the preliminary subdivision plot was approved by the city and almost simultaneously the preservation district was formed thereby creating the fifty foot setback requirement. The facts and circumstances of this case are unusual because of the timing of the events; however, the Village can develop the majority of the property as it sees fit and use the land contained within the setback requirement for many uses except for homes.
After thorough consideration, this Court is not persuaded that a statutory addition of ten feet to an existing forty foot setback requirement is enough of an interference with reasonable investment-backed expectations to find that a taking has occurred. Therefore, this Court finds that the buffer zone created under 3 Del. C., § 910(a)(2) is a regulation that does not rise to the level of interference with property rights to constitute a taking in this case. As no taking has occurred, the inverse condemnation requested in Count VI of the Complaint is unnecessary and no compensation is due. Count I of the Complaint is also resolved by this opinion as the term "new subdivision development" is found to apply to the Plaintiff. In addition, the Plaintiffs 42 U.S.C. § 1983 claim in Count V is resolved as there has been no taking and therefore no deprivation of property rights. This opinion does not dispose of the remaining Counts.
IT IS SO ORDERED.
oc: Prothonotary xc: Order Distribution File