Palazzolo v. Rhode Island (United States Supreme Court; Rhode Island Supreme and Superior Courts)

Rhode Island’s Coastal Resources Management Council (CRMC) determined that Anthony Palazzolo could not fill fifteen wetland acres on his property and could only build a single home on a small upland portion of the lot. Because Palazzolo acquired title in his own name following the dissolution of his solely owned corporation after CRMC’s enabling legislation was enacted, the Rhode Island Supreme Court held that his investment-backed expectations were not reasonable. The Court relied on the “post-enactment purchaser” theory — that a purchaser on notice of a regulation cannot contest its validity. The United States Supreme Court granted certiorari. At the United States Supreme Court, NELF filed a brief on behalf of similarly situated Rhode Island property owners, arguing that the “post-enactment purchaser” theory is contrary to sound public policy. The Supreme Court argued with NELF's position and remanded, holding that acquisition of property with knowledge of existing regulations cannot bar challenges to such regulations. The Court also determined that the presence of one buildable lot on the 74-lot parcel was sufficient to deny treatment as a categorical (total) taking. The Court remanded for consideration as a partial regulatory taking under the test established in Penn Central Transportation Co. v. City of New York. On remand, NELF has undertaken direct representation of the plaintiff in the Rhode Island courts. After briefing by the parties, the Rhode Island Supreme Court further remanded the case to the Rhode Island Superior Court for consideration of the Penn Central test and the other outstanding issues, including the state’s public trust defense and Palazzolo’s revival of the “total taking” theory in light of the State’s denial of a septic permit for the one “buildable” lot. Because NELF pressed the issue, the State ultimately granted Palazzolo all necessary permits for the single buildable lot, which he is now marketing. Trial commenced in April, 2004, and concluded in June, 2004. Post-trial briefing was completed on September 15, 2004. On July 5, 2005, the Superior Court issued a decision unfavorable to Palazzolo, who has decided not to file an appeal.