Purchasing Agricultural Land for Development After Rezoning Request Denied Hurts Takings Claim

January 31, 2013 | Erika Eckley

The doctrine of res judicata prevents the continued litigation of an issue previously resolved through the court system. The concepts of issue preclusion and claim preclusion are both included in the doctrine. Issue preclusion prevents the relitigation of issues in a second action when the issues were previously raised and decided in another action. Claim preclusion bars a second legal action on a claim in which a valid and final judgment had already been issued. This applies to all matters actually decided in an earlier action as well as all matters that could have been determined to prevent multiple actions over the same claim to prevent a “second bite” through advancing a second theory if the first was unsuccessful.

In this case, the plaintiff tried to relitigate an issue in which a valid and final judgment had been entered years earlier. The plaintiff, a developer, sought to purchase agricultural land outside the city of Waverly. The land was zoned for agricultural use and designated by the county’s Comprehensive Land Use Plan (CLUP) as an area for future residential growth.

Prior to the sale of land, the landowner and plaintiff requested a rezoning of the land from agricultural to residential. The land was designated as “prime” agricultural land that should be preserved under the CLUP. The planning and zoning committee denied the rezoning request. The board of supervisors considered the request and voted to deny the change as well stating that good agricultural land should not be taken out of production.

A revised rezoning request was made that took the best four acres of the property out of the request which brought the average suitability rating down, but more than half the acres still had high ratings. The zoning committee again denied the request. The board of supervisors denied the revised request as well.

The plaintiff filed suit against the county board of supervisors alleging arbitrary denial of its rezoning application, which resulted in the “taking.”  The plaintiff purchased the property after the suit was filed.

The district court granted summary judgment to the board holding that the board’s actions were not arbitrary and capricious because the board took into consideration all arguments on both sides, considered the zoning board’s recommendation, statutory language favoring preservation of agricultural land, and other factors. The court also held the plaintiff failed to establish claims for equal protection or due process failures by the board. The plaintiff appealed and the court of appeals affirmed the decision.

The board later amended its CLUP and the parcel at issue was included in a redesignation excluding planned development on certain land. The plaintiff filed a new suit in federal court alleging an unconstitutional taking. The complaint was dismissed because it was not ripe for judicial determination because the plaintiff failed to seek compensation through state procedures.

The plaintiff filed this current suit in state court claiming inverse condemnation from the arbitrary denial of its rezoning application, which resulted in the “taking” of at least half the value of its land. The district court granted summary judgment in favor of the board. The court held that the board was entitled to judgment as a matter of law because its actions did not constitute a governmental taking requiring compensation. The district court held that the crux of the plaintiff’s argument was that the board’s denial of the rezoning request was arbitrary and capricious. The resolution of this issue was decided in the original state court case and under the doctrine of res judicata was conclusively established in favor of the board. The plaintiff appealed.

On appeal, the plaintiff continued to argue that the board’s decision to deny the rezoning resulted in a “taking” of half the value of its land without providing adequate compensation. The appellate court agreed that the underlying issue of whether the board acted arbitrarily had been litigated and resolved in the first lawsuit. The issue of an inverse condemnation, however, could not have been resolved in the first lawsuit.

In order to establish an inverse condemnation, the plaintiff was required to show he had a constitutionally protected property interest at stake, the property interest was “taken” by the government for public use, and just compensation had not been paid to the plaintiff.  The question was whether a “regulatory taking” had occurred through the board using its police powers to restrict the plaintiff’s use of its property. Loss of development potential can be a significant factor, but the interference must be “substantial.”  Whether the loss is substantial is determined by examining the value of the use remaining in the entire parcel rather than reviewing any diminution in value of the property or whether particular segments have been limited.

Upon review, the court agreed that there was no taking. The facts established that the plaintiff was not subject to any diminution of value in the property through the zoning decision. The plaintiff merely complained of the loss of an increase in value from the denial for rezoning. Even more compelling, however, was the fact that the plaintiff purchased the land after the denial of rezoning had already been decided and the land remained as economically viable as it did before the plaintiff’s purchase. Under these facts, the court affirmed the district court’s decision that no taking occurred.  J.D. Francis, Inc. v. The Bremer County Board of Supervisors, No. 2-787, 2013 Iowa App. LEXIS 61 (Iowa Ct. App. Jan. 9, 2013).