Ohio Supreme Court Rules Next Door Neighbor in Next Door Town Lacks Standing to Pursue Regulatory Taking Claim

Clifton v. Blanchester, Slip Opinion No. 2012-Ohio-780

When we think of a “taking” of private property by a public entity, what typically comes to mind is a physical act to condemn and demolish, such as leveling a home in the way of a new highway. However, the law also recognizes that a taking can occur in cases where there is no physical invasion, but a regulation deprives property of less than 100% of its economically viable use. These are sometimes referred to as “partial takings”. See Penn Cent. Trans. Co. v. New York City, 438 U.S. 104 (1978).

The Supreme Court of the United States in Penn established that the following factors must be evaluated to determine if property is taken without physical means: 1) the economic impact of the regulation on the claimant; 2) the extent to which the regulation interfered with distinct, investment-backed expectations and 3) the character of the government action. This “factors test” was recently recognized by the Ohio Supreme Court in State ex rel. Gilmore Realty, Inc. v. Mayfield Hts., 119 Ohio St. 3d 11 (2008); State ex. rel. Shelly Materials, Inc. v. Clark Cty. Bd. of Commrs., 115 Ohio St. 3d 337 (2007); and in the December 4, 2008 case of State ex. rel. v Middlefield, 120 Ohio St. 3d. 313 (2008). Often, the regulation in question is a rezoning which is so burdensome to a subject property it can result in a partial or total taking of the regulated/rezoned property.

What about the neighbor (in a neighboring city) to a burdensome rezoning? Let’s say 23 acres of land are annexed by a city and then rezoned for “general industrial use”, and the adjoining 97 acre farm owner in the adjacent city is not happy and alleges an adverse economic impact to his/her land?

The above fact pattern describes the case recently decided by the Ohio Supreme Court in Clifton v. Blanchester, Slip Opinion No. 2012-Ohio-780.

The Court in Clifton recognized the body of law allowing “partial takings”, but concluded: “we can find no authority for the proposition that the zoning of a property is so burdensome on an adjacent property that is not the subject of the zoning that it results in the taking of the adjacent property. Instead, we have found some precedent [in Michigan] that indicates that a government’s regulation of property does not constitute a taking of an adjacent property.” The Court further bolstered its holding that the plaintiff had no standing (i.e., legal authority to initiate a claim) on these facts by recognizing that the City of Blanchester had no authority to pay Clifton’s claim, even if it wanted to. Justice Stratton, writing for the majority stated: “aside from acquiring property to operate a public utility that serves its own residents, a municipality has no authority to exercise its eminent domain powers beyond its corporate limits”. In other words, the next door neighbor from the next door town is out of luck.

Will the next door neighbor always be out of luck, without an opportunity for his/her “day in Court”? According to the Court in Clifton, that answer is no. The Ohio Supreme Court specifically provided: “… we emphasize that we do not hold that an adjoining property owner may never have standing. Instead, we hold that a property owner lacks standing under the facts and circumstances presented here”.

The three facts most important to the Court were: 1) the zoning at issue applied to the subject property, not the neighboring property, so the zoning imposed no limitation on the adjacent property owner’s use of his property; 2) the alleged diminution in value of the adjacent property was not a direct result of the village’s zoning, but instead caused by the subject property owner’s use of its property, as allowed by the rezoning; and 3) the rezoning that changed part of the subject property from “business industrial” to “general industrial” merely expanded a similar, existing, permitted use.

At first glance, it seems that the first two facts highlighted by the Court will always be present in “adjacent owner, partial takings claims”. The adjacent owner next door to a change from one zoning classification to another (e.g. residential to industrial) vs. within a classification (e.g. business industrial vs. general industrial), however, may still be allowed “through the courtroom door to get his/her day in court”.