89 N.Y.2d 603 (1997)

A subsequent purchaser of property may bring a regulatory takings claim, but such a claim will only succeed if the regulation denies the owner economically viable use of the property.

Summary

Gazza sought to build a single-family home on his property, but his application was denied due to tidal wetlands regulations. He claimed the denial constituted a taking without just compensation. The New York Court of Appeals held that while a subsequent purchaser can bring a takings claim, Gazza failed to prove the regulation deprived his property of all economic value. The court reasoned that Gazza was aware of the regulations when he purchased the land, but that did not automatically bar his claim. However, because he could not demonstrate that the property retained no economic value, his takings claim failed.

Facts

Gazza purchased a parcel of land in 1988. The land was designated as tidal wetlands and subject to regulations under the Tidal Wetlands Act. Gazza applied to the Department of Environmental Conservation (DEC) for permission to build a single-family home on the property. The DEC denied the permit, citing the regulations protecting tidal wetlands. Gazza then filed suit, claiming the denial of the permit constituted a taking of his property without just compensation.

Procedural History

Gazza initially sued in Supreme Court, which ruled against him. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal to consider whether a subsequent purchaser can bring a regulatory takings claim and whether Gazza had established a taking.

Issue(s)

1. Whether a subsequent purchaser of property, who takes title with knowledge of pre-existing regulations restricting the use of the property, is automatically barred from bringing a regulatory takings claim.

2. Whether the denial of a permit to build on the property constituted a regulatory taking requiring just compensation.

Holding

1. No, because a subsequent purchaser is not automatically barred from bringing a regulatory takings claim; the timing of the purchase is a factor to be considered.

2. No, because Gazza failed to demonstrate that the denial of the permit deprived his property of all economically viable use.

Court’s Reasoning

The court acknowledged the split of authority on whether a subsequent purchaser can bring a takings claim. The court rejected a per se rule barring such claims, reasoning that it would unduly restrict the alienability of property. The court stated that while knowledge of the regulation is a factor in determining whether a taking occurred, it is not dispositive. The court emphasized the importance of analyzing whether the regulation denies the owner economically viable use of the property. Quoting from prior precedent, the court stated: “a subsequent purchaser may attack previously enacted regulations that affect the purchased property as beyond government’s legitimate police power”. The court found that Gazza failed to meet his burden of proving that the DEC’s denial deprived the property of all economic value. He did not demonstrate that the property was unsuitable for other uses or that it had no remaining market value. Therefore, his takings claim failed. Judge Wesley concurred, agreeing with the result but disagreeing with the majority’s view that a subsequent purchaser’s claim should be treated differently.