What is Inverse Condemnation and How is it Applied When Ownership of the Land Changes?

In an unpublished opinion, the Appellate Division of the Superior Court of New Jersey addressed the difficult issues surrounding inverse condemnation. Inverse condemnation is when a property owner is deprived of all or substantially all of the beneficial use of the totality of his property by an action of the government. The reason that this is called an inverse condemnation is that it usually involves action by the government that indirectly, but effectively takes the property, rather than a formal proceeding by the government to openly and directly condemn particular property.

The inverse condemnation concept leaves a number of unanswered questions. One of them is whether a purchaser of land that was not inversely condemned can then seek a determination of inverse condemnation based upon the same circumstances as existed when the previous purchaser owned it. This question was addressed in the context of a situation in which the first owner of the property brought a claim for a hardship variance that was denied, and the new owner brought a claim for inverse condemnation regarding the same property. Was the new owner allowed to bring such a claim, or was it too late to do so?

Ciaglia v. West Long Branch Zoning Bd. of Adjustment, No. L-4484-06, 2011 WL 5041329 (N.J. Sup. App. Div. Oct. 25, 2011) the plaintiff, Ciaglia, was the owner of a vacant lot located on De Forrest Plane in West Long Branch. This lot was a part of a larger tract of land prior to its subdivision in 1957. The subdivision placed the lot in a residential district whose zoning ordinance required each lot to have lot frontage of not less than 100 feet and a depth of not less than 150 feet. Id. at 1. Even though the lot did not comply with these zoning requirements, the West Long Branch Planning Board approved the subdivision and certified that the subdivision map conforms with all the laws of the state and municipal ordinances and requirements applicable thereto. Ibid. At some point in future, the lot was subjected to even more restrictive regulations, which required minimum lot areas of 22,500 square feet and 150 feet of street frontage. Ibid

Borst, Ciaglia’s immediate predecessor in title, obtained the title to the lot through a tax foreclosure in 1988. In 1994, Borst applied for a variance for the lot which was denied by the Board of Adjustment (Board). Borst appealed the denial, and in 1997, the Board once again denied Borst’s application. In response to this, Borst asserted a claim for inverse condemnation against the Board. Finally, in 1998, Borst dismissed the Board from the action with prejudice and six months later, the court dismissed the remainder of the action with prejudice. This is when Ciaglia entered into a contingent contract to purchase the lot from Borst, and submitted a variance application seeking permission to construct a single-family home on the lot. The Board denied the application on the grounds that Ciaglia’s proposal was the same or substantially the same as Borst’s application of 1994. Id. at 3. Ciaglia then submitted amended plans which the Board found to be “substantially different from the Borst [a]pplication.” Ibid. In spite of the differences, the Board denied the variances and indicated the possibility of approval of a smaller dwelling. Ciaglia responded by filing a complaint that sought damages for wrongful inverse condemnation from the Borough. The trial court rejected the Boards finding that Ciaglia’s hardship was self-created on the grounds that Ciaglia had met his burden of proving undue hardship and had also attempted to contact the neighboring lot owners regarding the purchase of their lots. However, the trial court affirmed the Board’s denial of Ciaglia’s amended variance application on the grounds that the Board did not act arbitrarily, capriciously or unreasonably in reaching their decision.

Following this ruling, Ciaglia submitted another application based upon the Board’s earlier indication of the possibility of approval of a smaller dwelling. But the Board denied the variance application. In spite of this denial, Ciaglia purchased the land from Borst and then moved for summary judgment on his claim for inverse condemnation. The Borough filed a cross-motion for summary judgment asserting that:

(1) Ciaglias hardship was self-imposed; and

(2) The action for inverse condemnation was barred by the statute of limitations. Id. at 4.

The motion judge held that the subdivider’s 1957 application for a substandard lot constituted a self-imposed hardship, and this self-imposed hardship was imputed to the successors of the lot, namely Ciaglia. Ibid. Therefore, Ciaglia was disqualified from inverse condemnation relief. Furthermore, the motion judge held that Ciaglia was not barred by the statute of limitations but later amended his opinion and held that the statue of limitations had expired.

Ciaglia appealed and the Appellate Division held that Ciaglia was entitled to relief for his claim of inverse condemnation. In arriving at its decision, the Court first looked at the underlying constitutional principles that prohibit governmental takings of private property without paying just compensation. The Takings Clause of the Fifth Amendment of the United States Constitution bars taking of private property for public use without paying just compensation. U.S. Const. Amend. V. The Takings Clause is made applicable to the States by the Fourteenth Amendment. Kelo v. City of New London, 545 U.S. 469, 477 (2005). The New Jersey Constitution provides protections against governmental takings of private property without just compensation, coextensive with the Takings Clause of the Fifth Amendment of the United States Constitution. Id. The taking can be physical (e.g., deprivation of access, land seizure) or it can be a regulatory taking (when government regulations deprive the property owner of all economically viable use of land). Klumpp v. Bor. of Avalon, 202 N.J. 390, 405 (2010). A property owner who is deprived of all or substantially all of the beneficial use of the totality of his property can bring a claim for inverse condemnation. Greenway Dev. Co. v. Bor. of Paramus, 163 N.J. 546, 553 (2000).

The Court held that due to the fact-sensitive nature of the action for inverse condemnation, its adjudication must be individually tailored to the particular circumstances at the time the claim is presented. Id. at 7. The Court stated that at any time, Borst could have submitted a completely different variance application, or subsequent submissions, that would not be barred on land use res judicata grounds. Ibid. Therefore, the Court held that Borst’s dismissal of his inverse condemnation claim with prejudice did not bar Ciaglia from bringing an independent cause of action for inverse condemnation.

The Court also held that the availability of hardship variance depends always on how the hardship was created, not on who suffers from it at the time of application for a variance. Id. at 8. Furthermore, the Court disagreed with the Board’s contention that the hardship was self-created because the Planning Board approved the subdivision map with its eyes wide open and in conformity with existing law. It also imposed more restrictions on the lot, thereby zoning the lot into idleness. See ibid.

Therefore, Ciaglia was entitled to a judgment requiring the Borough to commence procedures for the acquisition of the lot pursuant to the Eminent Domain Act of 1971, N.J.S.A. 20:3-1 to -50.

Therefore, Ciaglia was entitled to a judgment requiring the Borough to commence procedures for the acquisition of the lot pursuant to the Eminent Domain Act of 1971.