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Owner of Property Outside Village Lacks Standing to Pursue a 'Regulatory Taking' Claim Based on Rezoning Within Village

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2010-1196.  Clifton v. Blanchester, Slip Opinion No. 2012-Ohio-780.
Clinton App. No. CA2009-07-009, 2010-Ohio-2309.  Judgment of the court of appeals affirmed.
O'Connor, C.J., and O'Donnell, Lanzinger, Lundberg Stratton, Cupp, and McGee Brown, JJ., concur.
Pfeifer, J., dissents.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-Ohio-780.pdf

Video clip View oral argument video of this case.

(March 1, 2012) The Supreme Court of Ohio ruled today that a property owner does not have legal standing to pursue a claim for “regulatory taking” of that property against a municipality when the affected property is outside the municipality’s corporate limits.

Applying that analysis to a Clinton County case, the court held that Richard Clifton, who owns 97 acres of farmland outside the Village of Blanchester, did not have standing to challenge the village’s rezoning of property located within the village and immediately adjoining his land.

The court’s 6-1 majority opinion was authored by Justice Evelyn Lundberg Stratton.

The case involved a dispute that arose in 2002 when Blanchester annexed 23 acres of land in Clinton and Warren counties owned by J&M Precision Machining, Inc. and rezoned that property for “general industrial” use. Neither the annexation nor the rezoning applied to Clifton’s property, which was immediately adjacent to the J&M parcel. Clifton’s property remained outside the village and retained its zoning for agricultural or single family residential use.

Clifton filed an administrative appeal of the rezoning order, which was denied. He also sought a declaratory judgment that the rezoning constituted a regulatory “taking” of his property by Blanchester for which he was entitled to compensation. The Clinton County Court of Common Pleas granted summary judgment in favor of the village, dismissing Clifton’s claim on the basis that his property retained  economic value following the rezoning. 

Clifton appealed that ruling. The Twelfth District Court of Appeals affirmed the decision that the rezoning did not result in a total taking of Clifton’s property. However, the court found that the trial court had failed to inquire as to whether the rezoning resulted in a partial taking under the U.S. Supreme Court’s decision in Penn Cent. Transp. Co. v. New York (1978), and remanded to the trial court to undertake a partial-taking analysis under Penn Central.

While the case was pending on remand, the village filed a motion for reconsideration, alleging that Clifton lacked standing to bring a taking claim in the first place. The court of appeals ordered the trial court to consider the issue of standing on remand. On remand, the trial court granted summary judgment to the village, finding that Clifton had no standing to bring a taking claim, and that even if he did, the rezoning of J&M’s property did not result in a partial taking of Clifton’s property. The court of appeals affirmed the trial court’s judgment.

Clifton sought and was granted Ohio Supreme Court review of the Twelfth District’s decision.

Writing for the supreme court in today’s decision, Justice Stratton noted that while Clifton’s appeal challenged the court of appeals’ rulings on both the issues of standing and partial taking, the justices’ conclusion that he did not have standing to sue the village in the first place made it unnecessary for them to address the merits of Clifton’s partial taking claim.

In order to establish standing in the context of a regulatory taking claim, Justice Stratton explained, a property owner must show that 1) a loss of enjoyment or value of the owner’s property was caused by the  action of a government entity; and 2) the government entity has the legal capacity to redress the owner’s loss.

In this case, Justice Stratton wrote that while there is case law holding that when zoning or rezoning of an owner’s property becomes too burdensome, “(I)t can result in a partial or total taking of the regulated property. ...  However, we can find no authority for the proposition that the zoning of a property is so burdensome on an adjacent property that is not subject to the zoning that it results in a taking of the adjacent property. Instead, we have found some precedent that indicates that a government’s regulation of property does not constitute a taking of an adjacent property.”

Citing two Michigan takings cases arising from urban renewal projects in the Detroit area, Fahoome v. St. Clair Shores (1998) and Murphy v. Detroit (1993), Justice Stratton wrote: “In Fahoome ... the city of St. Clair Shores rezoned property adjacent to the plaintiff’s property.  The plaintiff alleged that the rezoning of his neighbor’s property resulted in a taking of his property. The court held that there was no taking because the zoning was not specifically directed toward plaintiff’s property.”

“(I)n Murphy ... the city of Detroit used its eminent domain powers to purchase and raze 1,400 residential properties, pursuant to an urban-renewal plan. Business owners located adjacent to these properties filed inverse-condemnation claims against the city alleging that the city’s actions caused a 75 percent decrease in their businesses and resulted in a de facto taking of their property. The court in Murphy recognized that the value of plaintiffs’ properties had greatly diminished because of the city’s actions ... Ultimately, the court held there was no taking because ‘[d]espite the diminution in value of plaintiffs’ land and buildings, resulting from defendants’ change in the way they used their land, defendants took no deliberate action toward plaintiffs’ property rights that deprived plaintiffs of possession or use of their land or buildings.’

“Together, Fahoome and Murphy can be interpreted to stand for the proposition that when a government’s taking or regulation of property causes incidental damage to an adjacent but unregulated property, the damage is not attributable to the government actor for the purpose of supporting a taking claim.”

With regard to whether Clifton’s claim was redressable by Blanchester, Justice Stratton noted that the village qualifies as a municipality under Ohio law, and as a municipality it has the home-rule power of eminent domain.  “However,” Justice Stratton wrote, “aside from acquiring property to operate a public utility that serves its own residents, a municipality has no authority to exercise its inherent eminent domain powers beyond its corporate limits.”

“The General Assembly has also provided municipalities statutory authority to use eminent domain powers to acquire property that lies outside the municipality’s corporate limits ‘when reasonably necessary,’ but only for certain enumerated public purposes (set forth in)  R.C. 719.02 and 719.01.  However, none of the enumerated purposes listed in R.C. 719.01 include appropriating property for an alleged regulatory taking. Thus, a municipality has no authority to initiate appropriation proceedings in response to a property owner’s complaint in mandamus alleging a regulatory-taking claim if the affected property lies outside the municipality’s limits.  ... Accordingly, a property owner has no redressable regulatory-taking claim against a municipality where the affected property lies outside the municipality’s corporate limits.”

“Applying our holding to the facts of this case, we conclude that Clifton lacks standing to bring a taking claim against the village. The zoning at issue applies to J&M’s property, not Clifton’s. Therefore, the zoning imposes no limitation on Clifton’s use of his property whatsoever.  Further, the alleged diminution in value of Clifton’s property is not a direct result of the village’s zoning, but instead is caused by J&M’s use of its property, as allowed by the rezoning. ... Accordingly, we affirm the judgment of the court of appeals.” However, the court emphasized “that we do not hold that an adjoining owner may never have standing. Instead we hold that a property owner lacks standing under the facts and circumstances here.”

Justice Stratton’s opinion was joined by Chief Justice Maureen O’Connor and Justices Terrence O’Donnell, Judith Ann Lanzinger, Robert R. Cupp and Yvette McGee Brown.

Justice Paul E. Pfeifer entered a dissent in which he acknowledged that Blanchester lacked legal authority to appropriate property outside of its corporation limits, but said that fact should not serve as an absolute bar to a property owner’s ability to pursue an equitable claim that zoning by an adjacent political subdivision had resulted in a “virtual taking” by causing a reduction in the value of the owner’s land.

Justice Pfeifer wrote: “If a zoning change really does diminish the value of an adjacent property, then it diminishes the value whether the adjacent property is in the same or a different political subdivision.  Why would the law countenance a remedy in one instance but not the other?  All of the involved parties are in Ohio. Ought not the law of Ohio provide a remedy for an aggrieved landowner even if he lives in a different political subdivision from the one whose zoning change diminishes the value of his property?”

“I am persuaded that Clifton’s problem is redressable. The concept of a regulatory taking or a virtual taking and our authority when sitting in equity are broad enough to fashion a remedy for Clifton. ... I conclude that it is possible for Clifton to show that the Blanchester zoning change limits his use of his property; that even though Blanchester cannot appropriate Clifton’s property, it can compensate him as if it had appropriated his property; and therefore that Clifton raises an issue that is redressable.  I conclude that Clifton has standing.  I would allow the case to move forward on its merits.”

William G. Fowler, 513.932.7444, for Richard Clifton.

Lawrence E. Barbiere, 513.583.4200, for the Village of Blanchester.