State's Bad Faith Undermines Taking
The Appellate Division, Second Department, used an affirmance as an “opportunity to distinguish the concepts of bad faith and lack of a proper public purpose in the context of condemnation proceedings.” Zutt, et al v. State of New York, 2012 NY Slip Op 05645 (2nd Dept., July 18, 2012).
This case is only the latest skirmish in a decade-long litigation concerning damages caused by stormwater discharge along NYS Route 9D in Garrison. In November, 2001, Zutt’s property was damaged by stormwater runoff discharged from a culvert constructed by New York State. Zutt commenced an action in the Court of Claims seeking damages for continuing trespass and the State asserted a prescriptive easement for drainage. The Court of Claims found no prescription and awarded damages. The Appellate Division affirmed.
Zutt later commenced an action in Supreme Court seeking to enjoin the continuing trespass. The State again asserted a prescriptive easement. The Court held that the prescriptive easement and continuing trespass claims had been fully determined in Zutt’s favor during the earlier litigation. An injunction was entered directing the State to implement a specific stormwater diversion plan proposed by Zutt’s engineering expert. While the State’s appeal was pending, Zutt filed another claim in the Court of Claims to recover damages caused during another storm. By way of defense, the State again asserted a prescriptive easement. In addition, the State conceded that it had done nothing to stop the trespass or comply with the injunction. Zutt was awarded damages.
While the appeal from the injunction was still pending, the State issued a notice of condemnation for a 15,411 square-foot permanent easement over the Zutt parcel. The State did not conduct a public hearing as required by the Eminent Domain Procedure Law or an environmental impact review as required by the State Environmental Quality Review Act. It claimed that the proposed taking was “de minimus” for EDPL purposes and a “Type II” action under SEQRA because it was a “reconstruction of an existing structure” with “no significant effect on the environment.” Zutt filed a hybrid proceeding seeking CPLR Article 78 review of the condemnation proceeding and an injunction prohibiting the condemnation. Supreme Court held that the State had acted in bad faith and issued the injunction.
Bad faith allegations in the eminent domain context usually accompany claims that the proposed use is not for a public purpose or is a pretext for the benefit of a private entity. The Appellate panel found “that the State has a valid public purpose for the proposed condemnation,” but that bad faith could be shown independent of a claim of pretextual taking. In this case, because “the State deliberately ignored a court mandate [the earlier injunction] in making its site selection, it was incumbent upon the State to offer some reasoned basis for its determination.” It failed to do so. “In addition, the State has unreasonably persisted in advancing the theory of prescriptive easement in two litigations subsequent to a determination against it” and violated both the EDPL and SEQRA during the course of the condemnation proceedings. All of this adds up to a “clear showing” of bad faith that results in an injunction prohibiting the condemnation.
This dispute has made two trips to the Court of Claims, three to the Supreme Court of Putnam County, five to the Appellate Division (including an original proceeding that was dismissed without prejudice) and one to the Court of Appeals, which denied leave to appeal the affirmance of the original injunction. We presume the State will seek to appeal this most recent defeat.