Ohio Supreme Court Affirms Denial of Property Owner’s Regulatory-Takings Claim

The Supreme Court of Ohio, in the case of Gilmour Realty, Inc. v. City of Mayfield Heights1, recently affirmed the Cuyahoga County Court of Appeals’ denial of a property owner’s petition for a writ of mandamus to compel a city and its planning commission to commence appropriation proceedings based on an alleged regulatory taking.

In Gilmour Realty, Inc., the property owner’s company operated a mortgage brokerage and title agency on property it owned in the City of Mayfield Heights, Ohio. In 2003, the company purchased two more properties in the city for use as additional office space. Prior to making the purchases, the company received verification from the city that the zoning of the properties permitted commercial use. But in March 2004, the city council rezoned the properties from commercial to residential use based on the recommendation of the Mayfield Heights Planning Commission. Prior to the rezoning, however, the company had relocated its business from the properties at issue and eventually sold them.

The company later filed an action for declaratory and injunctive relief against the City in the Cuyahoga County Court of Common Pleas, in which it sought to enjoin the City from rezoning the properties on grounds that the rezoning constituted a compensable taking. The company also filed a complaint in the Court of Appeals for a writ of mandamus to compel the City to commence appropriation proceedings. Specifically, the company alleged that the rezoning constituted a taking because it denied the company the economically viable use of its land and interfered with its investment-backed expectations.

The Court of Appeals dismissed the company’s mandamus complaint because it concluded that the company’s pending action for declaratory and injunctive relief in the common pleas court constituted an adequate remedy at law, which precluded the mandamus action. On appeal, the Supreme Court reversed, holding that the pending common pleas action did not preclude the company’s mandamus action to compel the City to institute appropriation proceedings. Accordingly, the case was remanded in order to allow the parties the opportunity to introduce evidence on the company’s regulatory-takings claim. On remand, the Court of Appeals granted summary judgment in favor of the City and denied the company’s mandamus claim based on the previously filed motions and briefs as well as the supplemental briefs filed on remand. The company then appealed.

Although mandamus is the appropriate action to compel public authorities to commence appropriation cases, the property owner must still establish a clear legal right to compel the commencement of an appropriation action and a corresponding clear legal duty on the part of the public authority to institute the action. The property owner must also establish the lack of an adequate remedy in the ordinary course of law.² In making these determinations, the court must consider (1) the economic impact of the regulation, (2) the extent to which the regulation has interfered with the property owner’s distinct investment-backed expectations, and (3) the character of the government action.³

In affirming the Court of Appeals’ granting of summary judgment in favor of the City, the Supreme Court of Ohio reasoned that the rezoning had little or no effect on the company because it had moved its business from the properties at issue for reasons other than the rezoning. Indeed, the company had vacated the property and relocated its business before the rezoning became effective. As such, the Court concluded that the rezoning did not interfere with the company’s distinct investment-backed expectations. Accordingly, the Court held that the company’s regulatory-takings claim lacked merit.

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¹(2009), 122 Ohio St.3d 260, 910 N.E.2d 455, 2009-Ohio-2871.
²State ex rel. Shelly Materials, Inc. v. Clark Cty. Bd. of Commrs. (2007), 115 Ohio St.3d 337, 875 N.E.2d 59, 2007-Ohio-5022, 15.
³Penn Cent. Transp. Co. v. New York City (1978), 438 U.S. 104, 124.