Larkin Hoffman Client Prevails in Long Fought Takings Case, Noted by National Association of Home Builders

02/10/2009

Larkin Hoffman client Frank Kottschade obtained new life in his unconstitutional takings lawsuit against the City of Rochester as a result of a Minnesota Court of Appeals decision reversing a lower court dismissal of Kottschade’s lawsuit against the City because the lower court concluded that Kottschade had waited too long to sue. Kottschade v. City of Rochester, App. Ct. No. A08-0143 (Minn. App. Feb. 10, 2009).

The victory was noted by the Legal Action Network for Development Strategies (LANDS), which is the legal branch of the National Association of Home Builders, in its latest news report (see attached). Larkin attorneys Gary A. Van Cleve and Rob A. Stefonowicz were part of the appellate team that convinced the court of appeals to rule in Kottschade’s favor that he had properly followed the law in taking all reasonable, necessary and final steps to allow the City to reconsider development plan conditions imposed by the City that Larkin Hoffman attorneys argued amounted to an unconstitutional taking of Kottschade’s property.

The conditions imposed by the City on Kottschade’s plan to build 104 townhomes on a 16.4-acre site included a dedication of land for an expanded city street, further land dedication for ponding, payment of a substandard street fee and grading the property to a significantly higher street elevation, which, combined with other conditions, would increase Kottschade’s development costs by 400 percent and reduce the buildable site to under five acres. The effect of the conditions would be to reduce the number of buildable townhomes from 104 to 26 units. The City justified the conditions by stating that city ordinances required them.

Kottschade filed a variance request with the City to seek relief from the conditions, but the request was denied by the City’s Zoning Board of Appeals and the City Council. The district court had ruled that it was not necessary for Kottschade to attempt to seek a variance before suing and therefore, when Kottschade did bring his lawsuit, it was too late. The court of appeals reversed this decision and ruled that under applicable United States Supreme Court authority, Kottschade was required to exhaust his administrative remedies by seeking a variance from the conditions before bringing a lawsuit. Accordingly, Kottschade’s lawsuit was timely and not subject to dismissal.

The court of appeals also reversed the district court conclusion that because Kottschade had allowed his development permit to expire after two years under a city ordinance, this also barred his lawsuit. The court of appeals recognized that because of the conditions imposed on the development by the City, Kottschade’s townhome project was “no longer viable”, at which point, “all [Kottschade] had was a lawsuit … so asking him to ‘preserve the permit’ … would essentially be asking him to reinjure himself every two years.”

The City may seek review of the decision by the Minnesota Supreme Court. If the decision stands, the case will go back to district court to allow Larkin Hoffman attorneys the opportunity to prove that the conditions imposed by the City worked a taking of Kottschade’s property. If the district court agrees, then a damages trial will follow.