Palazzolo v. State, C.A. No. WM 88-0297 (RI 7/5/2005)
| Decision Date | 05 July 2005 |
| Docket Number | C.A. No. WM 88-0297 |
| Parties | ANTHONY PALAZZOLO v. STATE OF RHODE ISLAND |
| Court | Rhode Island Supreme Court |
This is an inverse condemnation1 action brought by Plaintiff Anthony Palazzolo (Palazzolo or Plaintiff), a Westerly property owner, against the Rhode Island Coastal Resources Management Council (CRMC). In his complaint, Palazzolo alleges that the CRMC's denial of his application to fill and develop approximately eighteen acres of salt marsh property constitutes a taking for which he is entitled to compensation under both the Federal and State Constitutions.2
This case is back before the Superior Court on remand from the Rhode Island Supreme Court. After a bench trial held over seven days in 1997, the Superior Court entered judgment for the State, holding, inter alia, that there was no taking as to Plaintiff Palazzolo because the regulations3 relied on by the State to bar the two proposals submitted for agency approval were in effect prior to Plaintiff's ownership of the parcel in question. Accordingly, the Court reasoned that Plaintiff could not have had reasonable investment-backed expectations in light of regulations prohibiting developments which require filling of salt marsh. The Superior Court likewise found that the state's guarantee to permit the development of a single lot worth approximately $200,000 did not deny Plaintiff all beneficial use of his property. Moreover, the trial justice found that the development contemplated by Plaintiff would constitute a public nuisance, a fact which the court concluded would bar compensation to Plaintiff. Finally, the trial court found that the Plaintiff did not have any investment-backed expectations, relying on Alegria v. Keeney, 687 A.2d 1250 (R.I. 1997)4 and applying a Penn Central5 analysis.
Palazzolo appealed the trial court's decision.6 The Rhode Island Supreme Court affirmed, holding that the appeal was not ripe for decision because Plaintiff had never properly submitted an application to CRMC for the development of his property. Therefore, the court reasoned, Plaintiff had never received a final decision regarding either the development which he wished to pursue or one with lesser environmental impact which would be better suited for the location. Palazzolo v. State, 746 A.2d 707, 714 (R.I. 2000).7
On writ of certiorari, the United States Supreme Court found the case ripe for decision, reversed the holding of the Rhode Island Supreme Court, and remanded the case for the purpose of a Penn Central analysis. Palazzolo v. Rhode Island, 533 U.S. 606 (2001). The Rhode Island Supreme Court entered an Order, dated June 24, 2002, remanding the case to the Superior Court with express guidelines. By Administrative Order this case was specially assigned to this Associate Justice. After several continuances which were requested by both parties, additional evidence was taken over eleven days to augment the 1997 trial record. As mandated by the June 24, 2002 Order, evidence was taken for the purpose of determining "the claim of Anthony Palazzolo for monetary damages against the State of Rhode Island for an alleged regulatory taking of his property by analyzing his reasonable investment-backed expectations in accordance with the principle enunciated in [the Penn Central case]."
The analysis contained in this Court's decision will respond to each of the guideline requirements of the June 24, 2002 Order.8
As developed by evidence received during both the first and the second trials,9 the subject property (site) is located on the south side of Winnapaug Pond, a tidal, salt water pond. Although the breachway allowing salt water tidal flow to and from the pond has frequently been filled in and the breachway location has changed over time, there is substantial geologic evidence which shows this pond to have been tidal for more than 2000 years.10 While the substantially developed land to the north of the pond is markedly higher than pond level, the entire southern perimeter of the pond consists of salt water marsh.11 Even today it remains nearly devoid of development. It is within this area that Palazzolo first acquired a property interest through his long time friend, lawyer Natale Urso, in 1959.12
Access to the Palazzolo property is by means of traveling on Atlantic Avenue, a nearly straight, two-lane highway which parallels the ocean and beaches. Atlantic Avenue is several feet above high water, it being located on a sand spine or berm upland formed over centuries by storm wash. At times storm surge has carried substantial quantities of sand (overwash) over the sand berm on which Atlantic Avenue is located and deposited the sand on the north side of the road.13 The geological formations made over time thus permitted relatively easy development of the lots located immediately adjacent to Atlantic Avenue.
The eighteen (18) acres of land (74 lots) at issue are almost all near pond elevation and much of the site is subject to daily tidal inundation.14 Immediately after Palazzolo's acquisition of a half interest in the site, six lots15 were sold off. At least some of these lots were easily developed because of their location on upland close to Atlantic Avenue. As to the remainder of the site, the survey filed with the Court indicates that approximately one-half of the site is below mean high water (MHW).16 Moreover, the vast majority of the site is not readily available for home construction, the soil surface being composed of Matunuck mucky peat between six to eighteen inches thick. Before any type of development can occur, that soil must be removed and as much as six feet of fill placed over much of the remainder of the site now owned by Palazzolo.17 An exception is the upland area of glacial remains near the pond shoreline to which a gravel road extending from Atlantic Avenue was connected prior to Palazzolo's involvement with the site.
There is substantial development on the land located immediately to the west, east, and north of the pond. Although that development has in large part not involved filling of wetlands, there is no doubt that several houses at the eastern and western ends of the pond were built on fill placed over previously existing wetlands.18 The houses located on fill at the eastern end of the pond were built on deposits derived from dredging and improvement of the breachway by governmental authority. Other lots to the immediate north of Atlantic Avenue have been filled to facilitate development. However, it is not at all clear that any substantial area of salt marsh has been filled here without state approval. On the other hand, substantial fill — mostly sand — has been deposited on the northern side of Atlantic Avenue by both mankind and the millennia of ocean storms.19
The site owned by Palazzolo is similar to all of the remaining 146 acres of salt marsh contiguous to the pond, almost all of which is on its south side. These marshes provide valuable habitat for wildlife including birds and fish.20 With the exception of the two houses built on upland (glacial remnants) contained within or adjacent to the extensive salt marshes found on the south shore of the pond, there has been essentially no development within the salt marsh.21
The 446 acre Winnapaug Pond is a shallow,22 tidal pond used for fishing, boating and shell fishing. Its size and shallow depth make it a particularly fragile ecosystem.23 The adjacent salt marsh provides, inter alia, a valuable filtering system regarding water runoff containing pollutants and nitrogen from adjacent land.24 The ISDS25 systems from the proposed subdivision would add significant nitrogen to the pond. While experts disagree on the precise amount of nitrogen removal the site is responsible for, filling of the Palazzolo site would result in 12% less salt marsh and a reduction of pollutant and nitrogen filtering by the pond's salt marsh ecosystem. The effect of the denigration of the natural purifying salt marsh is viewed by experts as significant.26 Loss of the marsh filtering effect, together with the loss of wildlife habitat which would occur if Plaintiff's planned subdivision was constructed, was previously found by this Superior Court to constitute a nuisance.27
Moreover, there can be no doubt that the pond and its surroundings, particularly the undeveloped salt marsh, have an amenity value to both the land owners in the area as well as the entire vacation/recreation community in Westerly.28 This Court likewise finds that the evidence is to the effect that not only has there never been a subdivision near Winnapaug Pond which rivals the scope of that proposed by Palazzolo, but none exists anywhere on the Rhode Island shore.29 Additional facts will be supplied as necessary in the discussion that follows.
Prior to discussing Plaintiff's takings claim in the context of a Penn Central analysis, it is necessary to consider certain background legal principles which bear on the extent of plaintiff's property interest. See Lucas v. South Carolina, 505 U.S. 1003, 1029-30 (1992). The State contends that this Court's conclusion following the initial trial to the affect that Plaintiff's proposed development would constitute a public nuisance, precludes a Plaintiff's verdict on his takings claim. Moreover, despite the fact that both parties substantially augmented the trial record in 2004 with evidence which spoke to the issues of public and private nuisance, the State claims that this Court's 1997 decision, as to the issue of nuisance, is law of the case and can not be disturbed. Plaintiff vigorously disagrees.
The State also contends that a strong Public Trust Doctrine in Rhode Island must result in a finding that the subject parcel is not capable of being developed economically. This is because, the State maintains, approximately one-half of Plaintiff's property lies below the mean high water mark and is, therefore, not Plaintiff...
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