Steven J. Eagle on the Extent of Diminution in Value Required to Constitute a Partial Regulatory Taking

Steven J. Eagle on the Extent of Diminution in Value Required to Constitute a Partial Regulatory Taking


Professor Steven J. Eagle discusses the New York appellate court’s decision in Noghrey v. Town of Brookhaven, 2008 N.Y. App. Div. LEXIS 1329 (Feb. 13, 2008), which was an action to recover damages for a regulatory taking of property without just compensation. The commentary focuses on the key to finding a partial regulatory taking--the extent of the property's diminution in value. Professor Eagle writes:
 
     If a government regulation deprives a landowner of “all economically beneficial us[e]” of the property, there is a “total regulatory taking” for which the locality must pay just compensation. If the regulation deprives the owner of less than all value, there may be a compensable taking as well, since “[n]othing in the language of the Fifth Amendment compels a court to find a taking only when the Government divests the total ownership of the property; the Fifth Amendment prohibits the uncompensated taking of private property without reference to the owner’s remaining property interests.”
 
     ....


     In Noghrey v. Town of Brookhaven … plaintiff had purchased two parcels with the intent of building shopping plazas. Thereafter, the town restricted the land to residential use. The owner asserted state and federal takings claims, and the jury subsequently found a partial regulatory taking under [the United States Supreme Court’s decision in] Penn Central. The [New York] Appellate Division reversed and remanded on the grounds that the trial judge’s charge was insufficient to convey the extent of diminution necessary to support a taking. The trial judge had charged that the jury might consider “whether [the] reduction in value was a substantial reduction relative to the value before the properties were rezoned,” and that the plaintiff had to prove “a near total or substantial decrease or significant reduction in value.”
 
     The Appellate Division mandated that, on retrial, the jury be instructed that “the economic impact factor of the Penn Central analysis requires a loss in value which is ‘one step short of complete,’ ” … and that the owner must have been left with “a ‘bare residue’ of value.” 
 
(citations omitted.)
 
Professor Eagle concludes that the California Court of Appeal’s statement in Small Property Owners of San Francisco v. City & County of San Francisco, 141 Cal. App. 4th 1388, 1406 (Cal. Ct. App. 2006), that “while a small taking is still a taking, a small loss is less likely to be a taking” remains the safest starting point for any partial takings analysis.