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Breitinger v. State of New Jersey, Department of Environmental Protection

A-426-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

EMINENT DOMAIN; INVERSE; REGULATORY TAKINGS—NJDEP can restrict a shore property to the building of a one-slip dock and can bar building a house on the property without triggering an inverse condemnation claim.

The Department of Environmental Protection (DEP) allowed a property owner to construct a dock but not a house, on pilings. The property was a marshy beach, with wetlands and intertidal shallows, and was partially submerged during high tide. In response, the owner filed a condemnation complaint, claiming this preventive action resulted in both a categorical and regulatory taking of her property. Specifically, the owner contended that the DEP’s proposed rearrangement of the owner’s lot was not feasible and that the resulting property would be only of minimal value. The DEP asserted that building a dock on the property would increase its value because private recreational docks were in demand in the real estate market in the municipality.

As to the categorical taking, the lower court ruled in favor of the DEP, holding that the dock would have increased the property’s value. It held that the property owner incorrectly focused on the difference between the property with a house on it and the property with a dock on it when she argued that there would be no economically viable use of the property. The court held that the State was not obligated to compensate the owner for the most profitable use of the property.

In terms of the regulatory taking, the lower court addressed whether the regulation deprived the owner of virtually all economically viable uses of the property and whether the owner had had any distinct investment-backed expectations at the time she acquired the property. First, the lower court rejected the owner’s claim that the denial of a permit to build a house left the property virtually useless. It held that the dock would increase the value of the property by several thousand dollars. Furthermore, it held that the value of the property, with or without a dock, was already yielded a considerable return on the owner’s investment. It also rejected the owner’s contention that she should have been able to recover the value of the property with a house on it because her predecessor could have built a house on the property. The court held that development rights are not absolute, and new purchasers may be bound by later restrictions. Otherwise, any changes in zoning laws or environmental regulations would be meaningless because all purchasers could assert development rights and property values merely by tracing back to the development potential before the governmental restriction, regardless of their actual expectations at the time of purchase.

To determine just compensation, courts usually examine a purchaser’s reasonable, investment-backed expectation before the implementation of the regulations. Here, the Court acknowledged that the owner’s husband, prior to his death, stated that he bought the property with the intent to build a house on it. Unfortunately, all of the evidence demonstrated that such construction was not feasible. Had the owner and her late husband done some research, or actually visited the property prior to its purchase, they would have realized it was partially submerged in marshes and clearly located in wetlands. Furthermore, the extraordinarily low purchase price should have provided reasonable notice that the property was not available for residential development. The couple had made several hundred similar purchases over the years, and were therefore well versed in real estate investment. For those reasons, the Court held that the owner’s husband could not have reasonably believed that he was purchasing a lot for the purposes of building a home.

The Appellate Division also agreed with the lower court’s holding that the owner failed to demonstrate that she suffered a taking and affirmed the grant of summary judgment in favor of the DEP.

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