November 11, 2014

Town settles one PLF beach takings case; dragged to trial in another

By J. David Breemer Senior Attorney

Several years ago, Pacific Legal Foundation (PLF) become involved as lead counsel in two important beach property disputes out of North Carolina, as discussed further here.  The cases are Town of Nags Head v. Toloczko and Sansotta v. Town of Nags Head.  In both cases, the Town denied repairs for private beach cottages, and tried to remove the cottages from their private lots, on the theory that the dry sand area on which the homes sit (though privately owned) must be opened for beach recreation as a “public trust” area. I have written more on that theory, and its problems, here.  The Town labeled the cottages a public nuisance based on this theory. When the owners refused to comply with the order to demolish their cottages so the public could use the land, the Town levied hefty fines against them. The dispute ended up in federal court in 2011, with the Town trying to get a court order to destroy the cottages and to fine the owners and the owners claiming the Town’s acts were illegal and unconstitutional.

The cases are now winding down and it has not been a pleasant experience for the Town.   First, after PLF got involved, the property owners won an appeal which reversed an initial procedural victory for the Town, sending the case back to the federal court. See here and here for more background on the 2013 appellate wins and their importance.

Then, back in the trial court, the Town argued that the Court should rule immediately in its favor, without a trial.  With PLF’s representation and excellent assistance from local counsel at Morningstar Law Group, the property owners fought back, arguing that the Court should reject the Town’s arguments and hold the Town liable for violating the owners’ constitutional rights, or at least send this claim to a jury. In the meantime, the Town finally began issuing permits to the owners to put the cottages into a usable state even as the court battle continued over the Town fines and the owners’ constitutional claims.

In late August of this year, we received a favorable decision from the Court in the Toloczko case. Rejecting the Town’s claims, the Court ruled that the Town could not declare the Toloczko’s private land to be a public area. It went onto hold that the Town could not remove the homes nor fine the owners for refusing to so earlier themselves because the Town simply had no authority to target homes under a “public trust” beach theory. It further ruled that Due Process principles barred the Town from fining the owners for maintaining unrepaired cottages when the Town refused to grant permits to repair the homes.   The court held that the Tolockzos’ claim that their property had been taken without just compensation, in that it had been deprived of all use for four years, had merit and should go to trial.

Yet, rather than go to trial and risk further losses, the Town recently settled with the Toloczkos. It paid them two hundred thousand dollars and agreed to give the Toloczkos an adjacent parcel of beachfront property owned by the Town.  When the case started, the Toloczkos had an unusable, vacant cottage, an order to remove the cottages, land declared to be “public,” and they were subject fines accruing daily for their refusal to abandon their property.  Now, they have a permitted cottage, a fully private lot, $200,000 in damages, and perhaps best of all, a piece of the Town’s own property!

The Sansotta case appears to be on the same trajectory.  Two weeks ago, we received a ruling in that case that was very similar to the Toloczko ruling.  The Court held that the Town could not go after Sansotta’s homes on a “public trust” theory, could not impose fines against him for refusing to demolish the homes, and that Sansotta’s “denial of all economic use of property” takings claim was strong and should go to trial.

It remains to be seen whether the Town will try to explain to a jury why it owes no compensation to Sansotta for making it impossible for him to use his cottages for four years, or whether it will simply settle the matter before trial, as in Toloczko. In any event, we are pleased with the direction both cases have taken since PLF got involved.   Matthew Toloczko puts the work in perspective when he says: “PLF was instrumental in saving our thirty-year old family beach house– and our constitutional rights — after the Town of Nags Head tried to destroy the home and fine us for maintaining our home. With the Foundation’s assistance, we were able to compel the Town to return our home, rescind the fines, and pay damages. We are extremely grateful for the Foundation.”

PLF applauds the Toloczkos and Roc Sansotta for standing up for their constitutional property rights.  PLF will continue to monitor the Sansotta case as it heads to trial,  and we will continue to monitor the treatment of all coastal property owners subject to governmental pressure to hand over their private property for public use, without just compensation.

 

 

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