by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
randolphp@umkc.edu

CONSTITUTIONAL LAW; SUBSTANTIVE DUE PROCESS; CONSTITUTIONAL PROPERTY: Second Circuit reiterates "clear entitlement theory" - only governmental permits as to which approval is "virtually certain" rise to the level of protected property rights. Villager Pond, Inc. v. Town of Darien, 1995 U.S. App. LEXIS 11655, 1995 WL 299931. Developer alleged that the Town improperly withheld zoning compliance permits (similar to certificates of occupancy) for condominium units in order to coerce the Developer into conveying two of the units to the Town for moderate income housing. The developer did transfer the units, each with a value of $90,000, and the City later retransferred one of them with no deed restriction on retransfer. The Developer alleged a violation of substantive and procedural due process and of its right to be compensated for a taking of its property for public use.

Held: To be deprived of property in violation of the Due Process clause, a cognizable property interest must be at stake. An applicant for a permit has a protected interest in that permit only when the applicant has a clear entitlement to the approval sought. Clear entitlement depends upon the degree of discretion enjoyed by the issuing authority, i.e. clear entitlement is available only when approval is virtually certain. If a property right in the permits existed, then the applicant must establish that the Town's additional condition for issuance of the permits, namely, that two units must be conveyed to the Town, was so arbitrary as to constitute a violation of substantive due process and, if so, whether the Developer suffered damage. The Second Circuit remanded for further proceedings, since there was some question as to whether all discretionary determinations had already been made in favor of the landowner before the exactions demands were made..

The court ruled that an ancillary "takings" claim was unripe because the landowner had not attempted to obtain just compensation through procedures provided by the State of Connecticut. The Developer must first look to the State for compensation before its takings claims will lie.

Comment: The "clear entitlement" rule was already an established part of Second Circuit jurisprudence in this area. See RRI Realty Corp. v. Incorporated Village of Southampton, 870 F.2d 911 (2nd Cir. 1989). The property owner argued that a new test was appropriate in light of Dollan, the the court properly responded that the exactions/taking issue, at least on its face, is a different question from the substantive due process claim involved here. Whether Dollan in fact bespeaks a new philosophy on the Supreme Court that will become a factor in substantive due process cases as well is, of course, an issue for another day.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. Contact Shawn Kaminsky at the ABA. (312) 988 5260.

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.