De Facto Taking Claim Fails

de facto taking claim

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Owner claimed de facto taking when City installed storm drains that flooded land designated as a wetland. The firm 594 Associates, Inc. acquired vacant land on Staten Island in 1985. The land was designated freshwater wetlands or wetlands adjacent area, and therefore development was not permitted. On September 26, 2005, the City constructed a headwall on the property’s border with an adjacent street. The headwall contained an outlet for one of the adjacent street’s storm drains and a second overflow outlet. These devices caused storm-water to accumulate on the 594 Associates land during storms. In October 2010, the City of New York acquired the land under eminent domain as part of its South Richmond Bluebelt, Phase 3, Project.

In 2010, Associates Inc. sued the City for damages resulting from the taking. Associates Inc.’s appraiser valued the property as of September 26, 2005, the date when the headwall was constructed and the alleged de facto taking commenced.  Associates Inc. also claimed it had no knowledge of the headwall devices until January 2011 when a land use expert investigated the property.

The City moved to strike Associates Inc.’s appraisal report from the record on the theory that the claim for damages for the alleged September 26, 2005 taking was barred by the three-year statute of limitations.

The Supreme Court ruled for the City, declaring that Associate Inc. had waited too long to assert its de facto takings claim.

The Appellate Division, Second Department affirmed. Just compensation is determined by the property’s market value at the time of the taking. Where an owner can establish a de facto taking occurred before the formal one, the owner will be entitled to just compensation beginning on the earlier de facto taking date. However, a de facto taking claim has a three-year statute of limitations to recover damages. Associates Inc. had until September 2008 to act. Its 2010 claim was too late.

In the Matter of South Richmond Bluebelt, Phase 3, 35 N.Y.S.3d 628 (2d Dep’t 2016) (Attorneys: Michael Rikon, for 594 Associates, Inc.; Zachary W. Carter, Michael Chestnov, Rochelle Cohen, for City).

By: Alexis Shankman (Alexis is a student writer for CityLaw and student at New York Law School, Class of 2018).

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