Fear of Taking and Allegations of Conspiracy Not Enough to Stop Redevelopment Designation

by: Allan Zhang
25 Apr 2022

This recent Third Circuit Court of Appeals opinion stemmed from the district court’s dismissal of Plaintiff’s Complaint in Lieu of Prerogative Writ. Merrick Wilson, Academy Hill, Inc., and River Valley Heights Corp. (“Plaintiffs”) brought this action challenging the City of Lambertville’s resolution (100-2018) declaring an area that included Plaintiffs’ property as “in need of redevelopment.” The resolution authorized the City to acquire property in the area by condemnation. Plaintiffs also alleged in their Complaint that a conspiracy existed between then-mayor David DelVecchio and his employer Jingoli & Sons, Inc. (City, DelVecchio and Jingoli & Sons referenced collectively as “Defendants”). The alleged conspiracy was that Defendants were working together to deprive Plaintiffs of the economic value of their property. The Third Circuit Court of Appeals affirmed the district court’s dismissal of Plaintiffs’ Complaint.

In their Complaint, Plaintiffs did not allege that their property was taken by the City, but instead that because of the City’s resolution, they were unable to develop the property. The resolution in question did not require the City to condemn Plaintiffs’ property. In dismissing the Complaint, the Court relied on steadfast principles stated in Danforth v. United States, 308 U.S. 271, 286 (1939), “The mere enactment of legislation which authorizes condemnation of property…cannot be a taking” and United States v. Sponenbarger, 308 U.S. 256, 267 (1939), that allegations of fear of a taking, which may or may not occur, fails to give rise to a taking.

As to the conspiracy allegation, facts to the conspiratorial agreement must have been asserted. Great W. Mining & Co. v. Fox Rothschild LLP, 615 F.3d 159, 178 (3d Cir. 2010). The Court found none and concluded that, Plaintiffs have failed to plead facts plausibly suggesting a meeting of the minds between the City, Mayor and the Jingoli defendants. Instead, the Complaint alleged, at best, conclusory allegations which were not entitled to an assumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). As such, the Court affirmed the dismissal of Plaintiffs’ Complaint.

This federal appeals court decision reaffirms the principle that property owners face an uphill battle in establishing actionable wrongs when they allege that governmental actions or regulations have interfered with their property rights.  Maintaining a successful inverse condemnation claim ordinarily requires that the complaining party establish that substantially all of the beneficial use and enjoyment has been deprived by government action or regulation.  Here, the plaintiff’s presumed loss of development potential was not found to be sufficient to support a viable takings claim.

A sampling of our prior blog posts covering various inverse condemnation cases and results from New Jersey and in other jurisdictions can be found here.

The full Third Circuit opinion can be reviewed here.