Mansoldo v. State

On June 5, 2006, the New Jersey Supreme Court decided Mansoldo v. State of New Jersey. 187 N.J. 50 (2006). In this case, a property owner sued the Department of Environmental Protection (DEP) for just compensation after the Office of Administrative Law affirmed the DEP’s rejection of the property owner’s application for a hardship waiver from the Flood Hazard Area Control Act Rules, N.J.A.C. 7:13-1.1, et. seq. to construct two single-family homes in a floodway. The effect of the DEP’s denial of the hardship waiver was to limit the property owner’s use of his land to parkland, open space or a parking lot. The trial court ruled that the DEP’s action constituted a compensable taking, but also determined that compensation was due only “‘[f]or those uses for which there is no economic viability, and which do not pose a danger to the health and safety of the public.’” 187 N.J. at 56. The uses for the property that fit this description were limited to parkland, open space and parking. In the trial court’s view, development of single family homes in a floodway would be a “‘public danger’” and, therefore, could not form the basis for the value of the condemned property. Ibid. The Appellate Division affirmed.

The Supreme Court began its analysis by surveying the law applicable to inverse takings claims, and used the Mansoldo case as an opportunity to clarify the facts and circumstances that courts must consider in determining whether government regulation of property requires compensation. According to the Court, when action by government denies all economically beneficial or productive use of land the regulatory agency must provide just compensation to the affected property owner “[u]nless ‘background principles of the State’s law of property and nuisance’ would restrict the owner’s intended use of the property.” Ibid. at 58 (quoting Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1029, 112 S.Ct. 2886, 2900, 120 L.Ed.2d 798, 821 (1992)). However, even if the subject regulation does not deny all economically beneficial or productive use of the land, just compensation may still be due the property owner depending upon other factors, “the most important of which are the ‘economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations [and] the character of the government action.’” Ibid. at 59 (quoting Penn Central Transportation Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)).

In applying this analysis to the case at hand, the Court determined that “[t]he lower courts incorrectly applied the governing case law to this appeal and, therefore the matter must be remanded to the trial court for further proceedings.” Ibid. at 58. According to the Court, the lower courts “[f]ocused on the State’s interest in enacting the floodway regulations and, using similar rationales, found that because the regulation prevented a public danger to the community, Mansoldo’s compensation should be limited only to those uses that did not pose such a danger. However, . . . considerations of ‘legitimate state interest[s]’ have no bearing on whether the DEP regulation effected a taking or what compensation is due.” Ibid. at 59 (quoting Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005) (emphasis added)). The Court in Mansoldo also addressed whether the doctrine of collateral estoppel and certain admissions given in discovery applied to the matter at hand and determined that they did not.

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