Appeals Court Overturns $640,000 Jury Verdict for Regulatory Taking Featured

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In an important case on an often-raised issue, Smyth v. Conservation Commission of Falmouth, Case No. 17-P-1189, the Massachusetts Appeals Court on February 19, 2019 reversed a Superior Court jury verdict of $640,000.00 on a claim that the Falmouth Wetland Bylaw, as applied, created a “regulatory taking” of plaintiff’s property. This decision has been long-awaited by land use and real estate practitioners.

The decision illustrates the formidable showing that any regulatory taking plaintiff must make to show that his or her property has been “taken” by a bylaw, ordinance, regulation or permit denial, so that he or she should be compensated by money damages. Incidentally, the Appeals Court ruled for the first time in Massachusetts that there is no right to a jury trial on a regulatory taking claim.

The property owner, now supported by the Pacific Legal Foundation, has filed a petition for further appellate review (FAR) by the Supreme Judicial Court, which has not yet acted on it.

The property owner had inherited an unimproved lot from her parents. She engaged various professionals and prepared a Notice of Intent (NOI) under the state Wetland Protection Act and the local Wetlands Bylaw. She requested from the Conservation Commission several variances from the provisions of the Bylaw, which the Commission denied, with respect to requirements for the Resource Areas known as coastal bank, salt marsh, and land subject to coastal storm flowage. (The Appeals Court opinion does not discuss whether the application complied with the Wetland Protection Act).

The Appeals Court ruled that claims of regulatory taking, where there is no permanent physical invasion and no complete deprivation of all economically beneficial use, require a “highly nuanced balancing of multiple factors.” The factors that have particular significance include the economic impact on the plaintiff, the extent to which the regulation has interfered with the property owner’s distinct investment-backed expectations, and the character of the governmental action.

The Appeals Court commented that the property could be used, among other things, as a park or a playground, and it would be attractive to the abutting owners on either side for privacy or expansion.

Applying the above factors, the Appeals Court ruled that, even though the value of the property if unbuildable ($60,000) was substantially less than if buildable ($700,000), the unbuildable amount was still more than the amount plaintiff’s parents paid for it ($49,000), so that the compensation would be a “windfall.”

The Court also noted a lack of any financial investment toward developing the property by the plaintiff’s parents or the plaintiff for many years.

Finally, the Court observed that there was no physical invasion of plaintiff’s property and the regulation at issue did not single out the plaintiff’s property but was uniformly applicable throughout the Town.

In summary, a regulatory taking claim requires proof that the law, regulation or action challenged causes complete deprivation of all economically beneficial use of the property (known as a per se taking) or, in the alternative, fails the highly nuanced balancing of multiple factors (known as the Penn Central test).

The Appeals Court ruled that there is no right to a jury trial on the merits of whether a regulatory taking occurred, meaning the judge not jury decides that issue, as regulatory taking was not recognized as a cause of action when the Constitution of the Commonwealth was adopted in 1780.

Environmental attorney Gregor I. McGregor presenting on Smyth v. Conservation Commission of Falmouth.Note: On April 23, 2019, REBA’s Environmental Law Section hosted a luncheon on the case, for REBA members, featuring guest speakers Michelle N. O'Brien of Pierce Atwood LLP, special counsel for the Town of Falmouth, and Rebekah Lacey of Miyares and Harrington LLP, counsel for the amicus curiae Massachusetts Association of Conservation Commissions (MACC). Attorney McGregor presented on this topic.

Read 1587 times Last modified on Wednesday, 15 May 2019 15:48
Michael J. O'Neill, Esq.

MICHAEL J. O’NEILL, ESQ., is a Senior Associate of McGregor & Legere, P.C. He has more than thirty-five years of experience in a wide range of litigation in all courts and in real estate and commercial law, concentrating in environmental and land use law and litigation since 1992 and real estate and commercial law and litigation from 1983 to 1992.

Mr. O’Neill represents clients in all types and phases of environmental and land use law and litigation, including prosecution and defense of claims for or involving: clean-up, cost recovery, and property damage under the Massachusetts Superfund Law, G.L. c. 21E; deceit, misrepresentation, and unfair and deceptive acts under Massachusetts G.L. c. 93A arising out of the sale of real estate; ownership and use of real estate; nuisance, negligence, and trespass; citizen suits under the Clean Water Act; appeals to court from decisions of local boards and commissions on special permits, subdivisions, zoning enforcement, and permits under the Wetland Protection Act; Article 97 of the Massachusetts Constitution; condominiums; contracts; and injunctive relief. He regularly represents clients before local boards regarding land use permits and appeals to administrative agencies and court from decisions of local boards. He does opinions, lawsuits, and problem-solving concerning real estate titles, transactions involving contaminated land, easements, and leases.

Mr. O’Neill has extensive experience in the preparation, trial, and appeal of cases in all courts. He has successfully represented clients in all Massachusetts courts, including the Massachusetts Supreme Judicial Court, Appeals Court and all Divisions of the Trial Court. He has tried and argued cases before the United States Courts of Appeal for the First and Fourth Circuits, the United States District Courts for Massachusetts, New Hampshire, Rhode Island, and West Virginia; the United States Bankruptcy Courts for Massachusetts, New York, and Pennsylvania; the Vermont Supreme Court, the Pennsylvania Superior Court (an Appellate Court), and the Pennsylvania Court of Common Pleas. He is also experienced in arbitration and mediation.

Mr. O’Neill has taught workshops in environmental, land use, and real property law for the Citizen Planner Training Collaborative, the Massachusetts Association of Conservation Commissions, Massachusetts Continuing Legal Education, Inc., and National Business Institute, Inc.

Mr. O’Neill has received the Founders Award presented by Alternatives for Community and Environment, Inc. (ACE) and the Community Merit Award presented by Concerned Citizens of Freetown, Inc. for pro-bono work. Mr. O’Neill is rated “BV-Distinguished,” a “Very High” Rating, by Martindale-Hubbell, a legal directory.

Mr. O’Neill is a graduate of the College of the Holy Cross and a cum laude graduate of Suffolk University Law School, where he won the American Jurisprudence Award in Evidence.

Mr. O’Neill’s clients find him responsive, knowledgeable, sympathetic, and a strong advocate. His results before juries and justices have earned him the loyalty of many long term clients.

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