U.S. Supreme Court Decision on Land-Use Exactions Impacts Developers, Government

Bilzin Sumberg Baena Price & Axelrod LLP
Stanley B. Price

January 29, 2014

If you have ever filed a zoning application and been subjected at the public hearing to a version of the game show “Let’s Make a Deal,” you may find of interest a June 2013 decision by the U.S. Supreme Court that addresses government-imposed conditions on the issuance of development permits.

Relying upon fairly recent rulings in the Dolan and Nollan cases, the Supreme Court in Koontz v. St. John’s River Water Management District determined that monetary exactions, sought by governmental agencies through the zoning and permitting process, could ripen into a taking of property in violation of the United States Constitution.

Exaction Must Be Rationally Related And Roughly Proportionate To Impact

The Court, expanding on its previous taking jurisprudence, pronounced that any exaction sought by a governmental agency, including cash exactions, will be subject to whether the exaction is rationally related to the impact caused by the development approval and is roughly proportionately consistent with the impact.

Justice Alito, writing for the Court majority, stated in pertinent part:

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Family Businesses and Environmental Liability

Davis Wright Tremaine LLP
Lynn T. Manolopoulos and Keith Baldwin

February 7, 2014

We all know that environmental laws impose heavy liability on businesses that release environmental contaminants into the air, soil or water. The family business is not immune to such liability. In fact, many multi-generational family businesses have owned or operated on family real estate for decades. Many have done business for generations without really questioning their environmental compliance. They may also have leased properties they own to businesses that cause contamination and as the owner of that property, the liability may fall to the family.

The consequences can be disastrous. Family net worth can be wiped out by one large environmental claim and/or remediation costs. Inter-generational family relationships can be eroded or permanently destroyed.

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Third Circuit Holds Interrelated Claims Provision is an Exclusion to Coverage

Traub Lieberman Straus & Shrewsberry LLP
Brian Margolies

February 7, 2014

In its recent decision in Borough of Moosic v. Darwin National Assurance Co., 2014 U.S. Ap. LEXIS 2118 (3d Cir. Feb. 4, 2014), the United States Court of Appeals for the Third Circuit, applying Pennsylvania law, had occasion to consider whether an interrelated claims provision in claims made policy should be considered a condition precedent to coverage or an exclusion of coverage.

Darwin insured the Borough of Moosic under a public officials professional liability policy, providing coverage for the period August 1, 2010 to August 1, 2011.  During the policy period, Moosic was named as a defendant in a suit alleging that Moosic had committed a civil rights violation in connection with a land use dispute.  Upon learning that the underlying claimants had brought other suits against Moosic prior to the policy’s date of inception, Darwin denied coverage.  Specifically, Darwin asserted that the civil rights lawsuit was related to a mandamus suit brought against Moosic in 2006 for a dispute pertaining to the same land use issue.  Darwin relied on the following provision in its policy’s Conditions section, stating:

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Ninth Circuit CERCLA Subrogation Ruling Stands After Supreme Court Cert Denial

Manatt Phelps & Phillips LLP
Amy B. Briggs, David B. Killalea , Stephen T. Raptis, Robert H. Shulman
and Susan P. White

January 30, 2014

Why it Matters:

Last year the Ninth U.S. Circuit Court of Appeals issued a noteworthy decision addressing the subrogation rights of insurers under the federal Comprehensive Environmental Response, Compensation, and Liability Act in Chubb Custom Ins. Co. v. Space Systems/Loral, Inc. According to the Ninth Circuit, an insurer lacked standing to bring a subrogation suit under CERCLA because the insurer did not directly incur environmental response costs and did not allege that the insured was a “claimant” or that it had made a claim to the Superfund or to a potentially liable party, as required by the CERCLA statutes. Thus an insurer can maintain a subrogation action against potentially liable parties only if the insured has made a written demand for a sum certain to the allegedly liable party. In that case, the insured had not made such a demand, leaving Chubb unable to recover the money it paid for the required environmental cleanup. Chubb appealed the decision, filing a writ of certiorari to the U.S. Supreme Court. But in January the justices denied the writ without comment, leaving the Ninth Circuit opinion in place as good law. As a result, insurers may seek to obligate policyholders to make such written demands (perhaps through adding language in the policy) to potentially liable parties, allowing insurers the ability to recover for environmental costs.

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