QC Const. Co., Inc. v. Verrengia

• Decision Date: 30 November 1988
• Docket Number: Civ. A. No. 87-0470L.
• Citation: 700 F. Supp. 86
• Parties: Q.C. CONSTRUCTION COMPANY, INC., Nicholas Cambio and Frank Paolino v. Albert VERRENGIA, in his capacity as Director of Finance of the Town of Johnston.
• Court: U.S. District Court — District of Rhode Island

700 F. Supp. 86

Q.C. CONSTRUCTION COMPANY, INC., Nicholas Cambio and Frank Paolino v. Albert VERRENGIA, in his capacity as Director of Finance of the Town of Johnston.

Civ. A. No. 87-0470L.

United States District Court, Rhode Island.

November 30, 1988.

Michael A. Kelly and Patricia Rocha, Adler Pollock and Sheehan, Providence, R.I., for plaintiffs.

William Connell and Richard Tallo, Providence, R.I., for defendant.

MEMORANDUM AND ORDER

LAGUEUX, District Judge.

This matter is presently before the Court on defendant's motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), and also his motion for summary judgment pursuant to Fed.R.Civ.P. 56. Defendant is Director of Finance of the Town of Johnston, Rhode Island and is being sued in his official capacity.

Plaintiffs Q.C. Construction Company, Inc., Nicholas Cambio and Frank Paolino instituted this action in an attempt to recover compensation for a temporary taking by regulation of their property by the Town of Johnston. In a prior, 1986 decision, this Court held that a Johnston Town Council resolution which imposed a moratorium on the issuance of building permits and thereby prohibited plaintiffs from developing their property constituted a deprivation of property rights without due process of law. Q.C. Construction Co., Inc. v. Gallo, 649 F.Supp. 1331 (D.R.I.1986) (hereinafter "Q.C.I").¹ Such governmental action is often referred to as a "taking by regulation" or "inverse condemnation." Specifically, this Court held that the Town of Johnston had violated plaintiffs' right to substantive due process as guaranteed by the Fourteenth Amendment to the United States Constitution. Id. at 1338. Therefore, this Court invalidated the moratorium resolution.

In 1987, the United States Supreme Court held that a temporary taking of property by regulation without just compensation violates the takings clause of the Fifth Amendment to the United States Constitution and the owner thereof must be properly compensated. First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 107 S.Ct. 2378, 96 L.Ed.2d 250. As a result of that ruling, plaintiffs filed the present action in an effort to force "the Town of Johnston to pay them just compensation in the amount of $300,000 as a result of the temporary taking" that occurred during the period that the moratorium was in effect. Plaintiffs' Complaint at 5. The Town of Johnston responded that plaintiffs' action is premature since they have not yet been denied compensation through the auspices of the State of Rhode Island.

This Court agrees that plaintiffs' action is premature. Under Supreme Court precedent, a federal action for an unconstitutional taking of property without just compensation does not lie until the state has denied just compensation or the plaintiff demonstrates that no means of obtaining compensation exists. It is not the taking of property that is unconstitutional; what is unconstitutional is the taking of property without just compensation. In the instant case, plaintiffs have not been denied compensation under state law by the Rhode Island courts, nor have they shown that a procedure for seeking compensation does not exist. To the contrary, Rhode Island precedent indicates that a means of pursuing compensation is available in state court. Therefore, defendant's motion to dismiss must be granted. For this reason, the Court need not reach defendant's motion for summary judgment.

BACKGROUND

Nicholas Cambio and Frank Paolino are joint owners of Q.C. Construction Company. Together these three "persons" are the plaintiffs in this action. Plaintiffs are engaged in the business of residential real estate development and construction. In conducting their business, plaintiffs purchase undeveloped land and, after acquiring the necessary permits, they build homes on the land and sell these homes to the public.

In 1983 plaintiffs purchased a number of lots in the town of Johnston for the purpose of residential development. Soon thereafter, plaintiffs obtained building permits for twelve of the sites after filing the necessary documents required by the Johnston Building Code. Plaintiffs intended to develop at least fifteen other lots located in close proximity to the twelve approved lots; however, on July 11, 1983 the Johnston Town Council passed a resolution which imposed a moratorium on the issuance of new building permits in the area where plaintiffs' lots lay. The Town Council was motivated by recurring problems with the public sewer system in the area of plaintiffs' land. The sewer system had been constructed and extended in a hodge-podge, patchwork manner over a number of years by various developers as a condition for the Town's approval of their building plans. As a result, the system frequently clogged and overflowed into surrounding homes. The Town's response, therefore, was to ban the issuance of building permits in the area for homes requiring access to the Town sewer, and thereby prevent new houses from using the faulty waste system.

In response, on April 18, 1985, the plaintiffs in this action filed a separate civil rights suit against public officials of the Town of Johnston in their official capacities. Q.C.I, 649 F.Supp. 1331. Plaintiffs alleged that the moratorium violated their Fifth and Fourteenth Amendment rights. On December 15, 1986 this Court held, "the moratorium Resolution enacted by the Johnston Town Council is unconstitutional and thus invalid because it results in the taking of plaintiffs' property without due process of law." Id. at 1335.

On January 6, 1987, this Court entered Judgment in plaintiffs' behalf. The Judgment provided: 1) that the moratorium resolution is unconstitutional; 2) that the Johnston Building Inspector, upon application by plaintiffs for the disputed building permits with accompanying plans and other documents that establish compliance with the Johnston Building Code, shall issue such permits; 3) that upon issuance of the building permits the Chairman of the Johnston Sewer Commission shall issue permits allowing plaintiffs to connect their lots to the town sewer lines; and 4) that plaintiffs are entitled to recover their costs of pursuing Q.C.I including attorneys fees.

Subsequently, the Town Building Inspector issued permits for some of the lots but balked at issuing permits for the remainder. Therefore, on February 20, 1987 plaintiffs filed a motion to Adjudge in Contempt. This Court treated plaintiffs' motion as a motion to amend judgment. The parties engaged in oral argument before the Court on April 7, 1987. Then, on April 27, 1987, the Court amended the January 6 Judgment to order Frank Gallo, the Johnston Building Inspector, to forthwith issue building permits for the remaining lots. He complied with the Court's order and issued the remaining necessary permits.

On July 23, 1987, plaintiffs notified the Johnston Town Council that they would be seeking just compensation for the temporary taking of their property from February, 1985 to April, 1987 pursuant to Rhode Island General Law § 45-15-5.² The Town failed to respond. As a result, plaintiffs filed the instant action on September 15, 1987. Plaintiffs claim that the Town of Johnston owes them "just compensation in the amount of $300,000 as a result of the temporary taking and loss of use of their land, from the time the moratorium was enacted to the time the permits were issued, plus attorneys' fees and costs." Plaintiffs' Complaint at 5.

On August 11, 1988, defendant filed a Motion to Dismiss and a Motion for Summary Judgment. He seeks dismissal on the ground that plaintiffs' action is premature, and alternatively seeks summary judgment on the ground that plaintiffs' suit is barred by the doctrine of res judicata. This Court heard oral argument on these motions on September 12, 1988, and took the matter under advisement.

DISCUSSION

The issue raised by defendant's Motion to Dismiss is whether a plaintiff may bring a federal action seeking just compensation under the takings clause of the Fifth Amendment for a temporary taking of property by regulation when the plaintiff has not sought compensation through available state procedures. Under recent United States Supreme Court precedent, it is clear that a plaintiff must first be denied compensation by the state before he may maintain an action for deprivation of the Fifth Amendment right to compensation. Since plaintiffs have not sought compensation through available Rhode Island state mechanisms, their action is premature and must be dismissed.

In the 1985 case of Williamson Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126, the Supreme Court held that an action by a developer under the takings clause of the Fifth Amendment for a taking by regulation was premature. Among other rulings, the Court determined that the complaint in Williamson had to be dismissed because the plaintiff had not pursued state compensatory procedures. The Court held that "if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation." Id. at 195, 105 S.Ct. at 3121. The rationale underlying this holding is that "the Fifth Amendment does not proscribe the taking of property; it proscribes taking without just compensation." Id. at 194, 105 S.Ct. at 3120 (citing Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264, at 297, n. 40, 101 S.Ct. 2352, at 2371, n. 40, 69 L.Ed.2d 1 (1981)). Based on the above described nature of the Fifth Amendment right to just compensation, the Court ruled:

Thus, the State's action is not "complete" in the sense of causing a constitutional injury "unless or until the State fails to provide an adequate postdeprivation remedy for the property loss." Hudson v. Palmer, 468 U.S.

...