Palazzolo v. Rhode Island Case Brief

Why is the case important?

In 1959, Palazzolo (Petitioner) and associates formed Shore Gardens, Inc. (SGI) and purchased parcels of land, which bordered a pond, other houses and was a marsh subject to tidal flooding. After trying to gain approval from the Rhode Island Division of Harbors and Rivers (DHR) for two development projects, which were not approved, the land was designated by the Council, an agency charged with the duty of protecting the state’s coastal properties, as protected “coastal wetlands.” Then, in 1983, Petitioner succeeded to ownership of the property by virtue of the dissolution of SGI.

Facts of the case

“Anthony Palazzolo owns a waterfront parcel of land in Rhode Island. Most of the property is salt marsh, subject to tidal flooding. The Rhode Island Resources Management Council’s Coastal Resources Management Program regulations designate salt marshes as protected “”coastal wetlands,”” on which development is greatly limited. After multiple development proposals of his were denied, Palazzolo filed an inverse condemnation action in Rhode Island Superior Court. Palazzolo asserted that the State’s wetlands regulations had taken his property without compensation in violation of the Fifth and Fourteenth Amendments because the Council’s action had deprived him of “”all economically beneficial use”” of his property. Ruling against Palazzolo, the court held that his takings claim was not ripe, that he had no right to challenge the regulations predating his acquisition of the property’s title, and that he could not assert a takings claim based on the denial of all economic use of his property in light of undisputed evidence that he had $200,000 in development value remaining on an upland parcel of the property.”

Question

Was the Petitioner deprived of all economic value of his property?

Answer

No. Affirmed in part and reversed in part.
The Court disagreed with the portion of the Rhode Island opinion, which held that the Petitioner’s claims were not ripe due to his taking exclusive ownership of the property after the wetlands law was enacted. The Court here held that the enactment of the wetlands act did not automatically amount to a valid regulation by virtue of Petitioner’s succeeding to ownership after the regulation was passed because if the regulation accomplished a taking under the constitutional precedents, then the mere fact that Petitioner took exclusive ownership after the regulation could not bar a claim for compensation.
It would be illogical and unfair to bar a regulatory takings claim because of the post-enactment transfer of ownership where the steps necessary to make the claim ripe were not taken, or could not have been taken, by a previous owner.
The Court held that Petitioner should be afforded the opportunity to prove a diminished economic value, under which the Petitioner can attempt to prove that his property has been deprived of value by regulation, but the deprivation falls short of total deprivation of economic use. This may be shown by investment-backed expectations.
Assuming a taking is otherwise established, a State may not evade the duty to compensate on the premise that the landowner is left with a token interest. Here, however, the evidence showed that Petitioner was left with more than a token interest.

Conclusion

The state court erred in finding that the claims were unripe, because the landowner obtained a final decision from the council determining the permitted use for the land. The state court also erred in ruling that acquisition of title after the effective date of the regulations barred the claims. However, the state court did not err in finding that the landowner failed to establish a deprivation of all economic value, because it was undisputed that the upland portion of the parcel retained significant worth for construction of a residence. The case was remanded so the claims could be examined under the Penn Central analysis.

  • Case Brief: 2001
  • Petitioner: Palazzolo
  • Respondent: Rhode Island
  • Decided by: Rehnquist Court

Citation: 533 US 606 (2001)
Argued: Feb 26, 2001
Decided: Jun 28, 2001