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No right to jury trial in regulatory taking case.

Byline: Eric T. Berkman

A landowner who alleged a town land-use regulation that rendered her property unbuildable constituted a regulatory taking should not have had her claim decided by a jury, the Appeals Court has found in a case of first impression.

The plaintiff inherited a parcel in Falmouth that her parents bought in the 1970s but never developed. The town denied a variance from local regulations prohibiting building on lands adjacent to certain wetlands.

A Superior Court jury deemed the denial a regulatory taking and awarded the plaintiff $640,000, the difference between the $700,000 the land was assessed at as a buildable lot and the $60,000 it was worth unbuildable.

The town appealed, arguing that in Massachusetts there is no right to have a jury decide if a regulatory taking has occurred.

The Appeals Court agreed, reversing the judgment.

"The question whether the plaintiff is entitled to a jury trial on her claim of regulatory taking depends on whether it is analogous to a common-law claim entitled to trial by jury in 1780 [when the Massachusetts Constitution was adopted] or whether it is a wholly new cause of action," Chief Justice Mark V. Green wrote for the panel. "We conclude that the question whether a particular regulatory scheme has effected a regulatory taking, as distinct from the question of what constitutes just compensation for the taking or, in other words, the question of liability in a regulatory taking claim is a 'wholly new' cause of action, to which the right to a jury trial does not attach."

The Appeals Court also reversed on the merits, noting that the unbuildable lot was still worth more than what the plaintiff's parents paid for it and that abutters might still want to buy it.

The 17-page decision is Smyth v. Conservation Commission of Falmouth, et al., Lawyers Weekly No. 11-019-19. The full text of the ruling can be found at masslawyersweekly.com.

Issue of first impression

Michelle N. O'Brien of Boston, who represented the town, said the decision is important because it establishes for the first time that regulatory takings claims are not a matter for juries. A regulatory taking case is exactly the type of matter best left to a judge, she added.

"It's easy to see a jury being sympathetic to a landowner who's not allowed to develop his or her property," she said. "But [a case like this] necessarily requires looking at what courts have said both here in Massachusetts and elsewhere about what does or doesn't constitute a regulatory taking and comparing these facts to those situations. That certainly seems more appropriate for a judge to do."

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"[A case like this] requires looking at what courts have said both here in Massachusetts and elsewhere about what does or doesn't constitute a regulatory taking and comparing these facts to those situations."

Michelle N. O'Brien, Boston

[divider]

Plaintiff's counsel Brian J. Wall of Sandwich said the decision should "raise an alarm" to property owners.

For one thing, he said, the Appeals Court found that the $60,000 residual value of the land, in today's dollars, was more than what his clients paid for the property in 1975 and thus it would constitute a windfall for her to receive damages for a taking.

"This suggests that, in order to succeed on a taking claim, a property owner must establish that the land-use regulation at issue must render the land completely valueless," he said.

Additionally, the town had assessed the lot as buildable the entire time, and his client and her parents paid property taxes on that basis for more than 40 years, Wall said. But now the Appeals Court was implying that that did not give rise to an expectation that the land was buildable.

"If a land-use regulation renders a buildable lot unbuildable, obtaining compensation for the loss by way of a regulatory taking claim is going to be very difficult after [this] decision," Wall said.

Daniel P. Dain, a real estate litigator in Boston, said he would have been surprised to see the Appeals Court rule any other way on the issue of whether a jury should be able decide a regulatory taking case.

"It is pretty clear that the concept of a regulatory taking is modern and hence not entitled to a right to jury determination," he said.

With respect to the ruling on the merits, Dain said it is always difficult to establish a regulatory taking, particularly in the context of environmental regulation.

Edward J. DeWitt of Falmouth, who submitted an amicus brief on behalf of the Association to Preserve Cape Cod, said the ruling clarifies procedural issues on how to bring a regulatory taking case.

DeWitt noted that the Supreme Judicial Court, in its 2005 Gove v. Zoning Bd. Of Appeals of Chatham decision, laid out a rational procedure to bifurcate claims into whether there was a regulatory taking, which is a question for the judge, and damages, which a jury could decide.

"These cases are classic mixed law and facts kind of cases, and it's really hard for juries to make these kinds of decisions," DeWitt said.

Wellesley attorney Rebekah Lacey, who submitted an amicus brief on behalf of the Massachusetts Association of Conservation Commissions, said the decision allows municipalities to "breathe a sigh of relief."

"Application of reasonable regulations intended to prevent public harm from private use of land is not the type of government action that requires that an affected property owner be compensated," Lacey said. "If the kind of permit denial at issue in this case were held to be a taking, municipalities' ability to prevent harm from flooding and coastal storms would be severely impeded."

Permit denial

In 1975, plaintiff Janice Smyth's parents purchased an empty lot in Wild Harbour Estates, a residential subdivision in Falmouth, for $49,000. They apparently intended to build a house on the lot for when they retired but never took steps toward doing so.

They did, however, pay property taxes and homeowner association dues on the property until the plaintiff inherited it in 2005.

Beginning in 2006, the plaintiff started planning to build a home on the property and, in 2012, sought a permit. That required variances from the town's wetlands protection bylaw as the project did not comply with its requirements regarding coastal banks, salt marshes or land subject to coastal storm flowage.

The town Conservation Commission denied her request, prompting her to file suit in Superior Court against the commission and the town. The suit alleged that the denial amounted to a regulatory taking for which she was constitutionally entitled to compensation.

A jury found in the plaintiff's favor, awarding $640,000 in damages.

The defendants appealed.

Contemporary cause of action

On appeal, the defendants argued that a jury should not have been allowed to decide whether there was regulatory taking because no such action was recognized in 1780 when the Massachusetts Constitution was adopted.

The Appeals Court agreed, finding that a claim based on an alleged regulatory taking was a wholly new cause of action and rejecting the plaintiff's argument that it was akin to a tort action for trespass.

"Among other differences, a claim of regulatory taking at least of the type framed by the plaintiff's amended complaint is markedly different from an action for trespass, in that the plaintiff raises no claim of physical invasion of her property," Green said, adding that in a regulatory taking case, the question of liability does not concern whether wrongdoing occurred.

Rather, the panel found, the issue is whether enforcement of a regulatory scheme has unfairly burdened a landowner's ability to use the property.

The court also found that, as a matter of law, the denial was not a regulatory taking.

"Based on the valuation determined by the plaintiff's appraiser, the regulation reduced the value of the property from $700,000 (if buildable) to $60,000 (if unbuildable)," Green wrote. "While significant, we observe that even as unbuildable the property's value is still greater than the amount ($49,000) the plaintiff's parents paid for the property when they purchased it."

Additionally, the panel found, the property could be used as a park or playground and could be attractive to abutting owners seeking more privacy or to expand their own property.

Accordingly, the court found, the judgment should be reversed and a new one entered for the defendants.

Smyth v. Conservation Commission of Falmouth, et al.

THE ISSUE: Was a landowner who claimed a town land-use regulation that made her property unbuildable constituted a regulatory taking entitled to a jury trial?

DECISION: No (Appeals Court)

LAWYERS: Brian J. Wall of Troy Wall Associates, Sandwich (plaintiff)

Michelle N. O'Brien and Nicholas P. Brown, of Pierce Atwood, Boston (defense)

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Title Annotation:Smyth v. Conservation Commission of Falmouth, Massachusetts Appeals Court
Author:Berkman, Eric T.
Publication:Massachusetts Lawyers Weekly
Date:Mar 7, 2019
Words:1464
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