When the Conservation Commission refused to permit the construction of a house on her residential lot in a Falmouth subdivision, Janice Smyth decided to take action and sought damages for a regulatory taking of her land under the U.S. Constitution and the Massachusetts Declaration of Rights. She was successful initially, recovering damages of $640,000. But, in Smyth v. Conservation Commission of Falmouth, the Appeals Court reversed the lower court’s decision.
Smyth inherited the undeveloped lot from her parents, who had purchased it in 1975. The fact that the family had incurred only minimal costs since that time appears to have been fatal to her claim.
In 2012, the Con. Comm. refused to grant Smyth several variances from the wetlands protection bylaw necessary to allow her to build a house.
Based on her appraiser’s testimony, a Superior Court jury awarded Smyth regulatory taking damages.
The Appeals Court reversed, first holding that there was no right to a jury trial on the complex question of whether a regulatory taking had occurred. It then went on to address that question by considering the following factors.
First up was the economic impact of the regulation. The Appeals Court accepted that the value of the lot dropped from $700,000 to $60,000 due to the wetlands regulations. However, the Court pointed out case law that even substantial reductions in value did not require a conclusion that a regulatory taking had occurred. It also relied on the fact that the land was worth more than the original purchase price of $49,000. The Court also noted that the lot might be attractive to abutters, or for use as a park or a playground. Of course, it did not explain who would want to place a park there, the impact of the wetlands regulations on a potential playground or why an abutter would want to purchase land that likely would remain open because its owner could not build.
Next, the Court considered the impact of the wetlands regulations on the investment-backed expectations of Smyth and her parents. The Court made clear that it viewed a takings award as a windfall to Smyth given that the lot was now worth more than its purchase price and the nearly complete lack of spending on the lot by its owners over and above that price.
Lastly, the Appeals Court looked at the character of the governmental action. In doing so, the Court relied on the rule that a reasonable government action that does not involve a total regulatory taking or an act akin to a physical invasion of the land typically does not require compensation.
Many landowners wish for some recourse for financial pain caused by government regulations. Smyth’s refusal to find a regulatory taking even when stringent regulations prohibit construction of a home on a residential lot does little to offer them hope.
We will stay tuned to see if the Supreme Judicial Court reviews this decision.