Island Park, LLC, Appellant,v.State of New York, Respondent.BriefN.Y.May 30, 2013To Be Argued By: J. Michael Naughton, Esq. Time Requested: 15 Minutes STATE OF NEW YORK COURT OF APPEALS ISLAND PARK, L L C , Claimant-Appellant, - against ~ STATE OF NEW YORK, Defendant-Respondent. APPELLANT'S BRIEF SUBMITTED B Y : YOUNG/SOMMER L L C J . M I C H A E L N A U G H T O N , ESQ. Attorneys for Appellant Island Park, LLC Five Palisades Drive, Suite 300 Albany, New York 12205 (518)438-9907 TO: Eric T. Schneiderman, Attorney General (Attention: William E. Storrs, Esq., Assistant Solicitor General) State of New York Office of the Attorney General Appeals & Opinions Bureau The Capitol Albany, New York 12224 (518)474-5464 Court of Claims No.: 117953 Appellate Division Docket No. 513273 Court of Appeals Mo. No. 2012-478 Dated: October 9, 2012 TABLE OF CONTENTS PAGE(S) Preliminary Statement 1 Statement of Facts 5 Closure Order 5 The Claim 6 History Of Crossing And Nursery Operation 6 DOT Commences Closure Process Linked To Design Of Connector Road And Bridge Project 7 Impact of Closure Order On Island Park's Fields And Operations 8 Island Park Commences Litigation 10 DOT Pursues Part II Of Its Plan: Acquisition Of Island Park's Lands For Bridge And Connector Road 10 Proceedings Below 11 Argument 12 POINT I DOT'S ORDER DIRECTING THE CLOSURE OF A B E L E ' S CROSSING WAS A C O M P E N S A B L E T A K I N G 12 A. The Law 12 1. Constitutional Prohibition 12 2. Police Power 13 i PAGEfS) 3. Perm Central Factors 16 B. DOT's Order And Subsequent Removal Of Crossing Was A Compensable Taking 17 1. Economic Impact/Degree Of Interference 17 2. Investment-Backed Expectations 19 3. Character Of State's Action 20 C. State's Action Singles Out Island Park 24 D. The Nursery Is Not A Highly Regulated Industry 25 E. Conflict With Prior Case Law 26 1. Walker v. State 26 2. Road Improvement Cases 26 POINT II THE STATUTE REQUIRES THE STATE TO C O N D E M N THE EASEMENT A N D COMPENSATE ISLAND P A R K 27 Conclusion. 31 ii TABLE OF AUTHORITIES CASES PAGEfS) Birnbaam v State of New York, 73 NY2d 638, 543 NYS2d 23, 541 NE2d23 [1989] 25 Bonnie Briar Syndicate, Inc. v Town of Mamaroneck, 94 NY2d 96, 699 NYS2d 721, 721 NE2d 971 [1999] 12 Borntrager v County of Delaware, 76 AD2d 969, 428 NYS2d 766 [3dDeptl980] 27 Charles v Diamond, 41 NY2d 318, 329 NYS2d 594, 360 NE2d 1295 [1977] 19 Chemung Canal Trust Co. v State of New York, 90 AD2d 889, 456NYS2d518 [3dDept 1982] 26,27 FredF. French Investing Co. v City of New York, 39 NY2d 587, 385 NYS2d 5, 350NE2d381 [1976] 2, 12, 13, 14, 15 Friedman v Connecticut General Life Ins. Co., 9 NY3d 105, 846 NYS2d 64, 877 NE2d 281 [2007] 28 Gerosa, Inc. v State, 180 AD2d 552, 580 NYS2d 280 [1st Dept 1992] 17 Gove v Zoning Bd. of Appeals of Chatham, 444 Mass. 754, 831 NE2d 865 [Mass. 2005] 16 Island Park, LLC v New York State Dept. ofTransp., 61 AD3d 1023, 876 NYS2d 203 [3d Dept 2009] 21, 30 Island Park, LLC v CSXTransp., 559 F3d 96 [2d Cir 2009] 5, 6 Island Park, LLC v CSX Transp. 2007 WL 1851784 [NDNY 2007] 5 iii CASES PAGE(S) Lingle v Chevron USA, Inc., 544 US 528, 125 S. Ct. 2074, 161 L.Ed.2d [2005] 17 Loretto v Teleprompter Manhattan CATV Corp., 458 US 419, 102 S. Ct. 3164, 73 L.Ed.2d. 868 [1982] 15 Long Island Railroad Co. v Madison, 36 AD3d 1106, 828 NYS2d 650 [2007] 29 Lucas v South Carolina Coastal Council, 505 US 1003, 112 S. Ct. 2886, 120 L.Ed. 798 [1992] 16 Penn Cent. Transp. Co. v City of New York, 438 US 104, 98 S. C t 2646, 57 L.Ed. 631 [1978]..; 2, 4, 13, 16 Pennsylvania Coal Co. v Mahon, 260 US 393, 43 S. Ct. 158, 67 L . E d . 322 [1922] 2 Ruckelshaus v Monsanto Co., 467 US 986, 104 S. Ct. 2862, 81 L.Ed.2d815 [1984] 16,21 Scoglio v County of Suffolk, 85 NY2d 709, 628 NYS2d 230, 651 NE2d 1249 [1995] ' 29 Smith v New York Cent. R.R. Co., 235 A D 262, 257 NYS 313 [4th Dept 1932] 21 Smith v Town ofMendon, 4 NY3d 1, 789 NYS2d 696, 822 NE2d 1214 [2004] 12, 13 Suhway-Surface Supei-visors Ass 'n v New York City Trans. Auth, 44 NY2d 101, 404 NYS2d 323, 375 NE2d 384 [1978] 14, 19 Syracuse Ready-Mix Concrete v New York, 43 AD2d 800, 350NYS2d474 [4th Dept 1973] 21 iv CASES PAGEfS) United States v Carmack, 329 US 230, 67 S. Ct. 252, 91 L.Ed. 209 [1946] 13 Village of Belle Terre v Boraas, 416 US 1, 94 S. Ct. 1536, 39 L.Ed.2d797 [1974] ; 14 Walker v State of New York, 33 NY2d 450, 354 NYS2d 626, 310NE2d304 [1974] 26,29 Walsh v State, Ct CI, Jan. 17, 2008, Sise, J., Claim No. 104981, UID No. 2008-028-001 29, 31 Wilmot v State of New York, 32 NY2d 164, 344 NYS2d 350, 297 NE2d 90 [1973] rearg denied, 33 NY2d 657, 348 NYS2d 1030, 303 NE2d 710 [1973] 18, 26 STATUTES US Const, 5 t h and 14th Amdt 2, 12 N Y Const, Art I, § 6 12 N Y Highway Law § 30(a)(13) 28 N Y Railroad Law § 52 3,21 N Y Railroad Law § 94(8) 28 N Y Railroad Law § 97 1, 3, 5, 8, 11,19, 24, 28, 29,30 N Y Railroad Law § 97-a 28 N Y Railroad Law §97(5) 28 N Y Transportation Law § 228 29 V TREATISES/LAW REVIEWS PAGE(S) M . Atkinson, On the Wrong Side of the Railroad Tracks: Public Access to the Hudson River, 13 Pace Envtl L Rev [1996] 21,24,29 R. Metz, Taking Law Today: A Primer for the Perplexed, 34 Ecology Law Quarterly 307 [2007] 13,16 Santemma, Condemnation Law and Procedures in New York, New York Bar Association, § 10.1 at 192 [2005] 15 vi PRELIMINARY STATEMENT This claim arises out of an order, dated February 28, 2006 that was issued by the State of New York Department of Transportation ("DOT" or "NYSDOT"). (R- 97)1 The order directed the closure and discontinuance of a private railroad crossing known as "Abele's Crossing" (the "crossing") on the Hudson Line. The administrative order was issued pursuant to Section 97 of the N Y Railroad Law. (R-97) After exhausting all other remedies in state and federal court, Island Park, L L C ("Island Park"), the owner of a commercial nursery business, commenced this action in the Court of Claims. Island Park is seeking compensation for: (1) the State's de facto talcing of Island Park's property interest—an easement—in the crossing, and (2) the consequential economic impacts of the closure. The Court of Claims dismissed Island Park's claim, finding the closure a non-compensable exercise of the State's police power. On appeal, the Appellate Division, Third Department affirmed. Consequently, this appeal involves the distinction between: (1) compensable takings of private property interests, and (2) non-compensable exercises of the State's police power. The court below held that the "safety" considerations cited by DOT as the basis for its decision to close the crossing provided immunity from 1 Citations to the Record on Appeal are designated "R- ," 1 a taking claim. The Appellate Division reasoned that the State "did not appropriate Claimant's easement for public use, but, rather, ordered it closed..." for safety reasons. (R-7) Island Park submits that the State's action in this instance goes "too far." (See Pennsylvania Coal Co. v Mahon, 260 US 393, 415, 43 S. Ct. 158, 67 L.Ed. 322 [1922]) Under the three factors set forth in Penn Cent. Tramp. Co. v City of New York, 438 US 104, 124, 98 S. Ct 2646, 57 L.Ed.2d 631 [1978], the State's actions constituted a taking in violation of the takings clause of the Fifth and Fourteenth Amendments of the United States Constitution and Article I, Section 6 of the New York Constitution. The State's reliance on police power does not provide immunity for takings. By failing to compensate Island Park for the economic costs associated with the closure, the State impermissibly allocated the entire cost of improving rail corridors to a private individual, with no attempt to apportion the cost to the primary beneficiary: society at large. {See generally Fred F. French Investing Co. v City of New York, 39 NY2d 587, 596, 385 NYS2d 5, 350 NE2d 381 [1976])) The safety considerations cited by the State relate, primarily, to the safety of the public travelling on high-speed passenger trains between New York City and Albany. The decisions of this Court and the United States Supreme Court make it clear that the State has the power to improve travel corridors for the benefit of the 2 public, but the State must compensate individuals whose private property interests are taken in the process. As discussed in Point II of this Brief, the Legislature recognized the State's obligation to compensate private individuals when the State exercises its authority under Section 97 of the N Y Railroad Law. The statute grants the Commissioner the power to acquire real property and "easements" needed for closure of a crossing. By failing to follow the eminent domain process, or compensate Island Park for the closure of Abele's Crossing, the State violated Island Park's constitutional rights. In this case, two separate questions are presented: (1) Is the State required to compensate property owners whenever it closes a private railroad crossing pursuant to the authority granted DOT under the Railroad Law; and (2) If not, do the specific facts of this case wan-ant a finding that a compensable taking has occurred? A uniform rule requiring compensation in eveiy case is supported by the statutory framework of Section 97 of the N Y Railroad Law, the statutory obligation to provide "farm crossings" under Section 52 of the N Y Railroad Law, and other considerations. 3 If, however, the Court finds that a bright line rule is not warranted, the specific facts of this case demonstrate that the State's actions rise to the level of a compensable taking. Takings cases are largely dependent upon the particular circumstances in each case. (See Penn Cent. Tramp. Co. v City of New York, 438 US 104, 124, 98 S. Ct. 2646, 57 L.Ed.2d 631 [1978]) The facts in this case present a classic case of a compensable "taking": ® Island Park had a cognizable property interest in the crossing: an easement. © Island Park's property is uniquely adapted to the use and depends on the crossing remaining open. © Prior to the closure, the 400 acre nursery operation functioned as a unified whole, with the equipment stored on one side of the tracks being used to till, irrigate, and fertilize the fields on both sides of the tracks. • The closure of the crossing had a significant economic impact on Island Park's operations and business by separating 70 acres of active nursery fields on the west side of the tracks from the equipment and operations on the east side of the tracks. 4 • The "taking" involved the elimination of the easement over the railroad's private property, but, more importantly, it diminished the value of Island Park's property and business as a whole. ® DOT singled out Abele's Crossing for a reason. DOT has plans to build a road and bridge next to Abele's Crossing, and needed to ensure the private crossing was closed before it could proceed with its highway project. Based on these factors, DOT's actions constitute a compensable taking. STATEMENT OF FACTS Closure Order The Department of Transportation ordered the closure of Abele's Crossing in February, 2006. (R-84) The closure order was issued after DOT conducted an administrative hearing pursuant to Section 97 of the N Y Railroad Law. (R-88-97) For several years, the State was enjoined from carrying out the terms of the closure order as a result of a permanent injunction" issued by the United States District Court. (See Island Park, LLC v CSX Transp., 2007 WL 1851784 [ND N Y 2007]) When the District Court's order was reversed on appeal (see Island Park, LLC v CSX Transp., 559 F3d 96 [2d Cir 2009]), DOT resumed its efforts to close Abele's Crossing. (R-120-21) 2 The injunction was issued on the ground that DOT's regulation of the crossing was pre- empted by federal law. 5 On November 25, 2009, DOT, or its agents (R-106), permanently closed Abele's Crossing by: (1) removing the crossing surface between the railroad tracks, and (2) barricading the crossing. (R-19; 176) The barricades blocked access to Island Park's 70 acre field on the west side of the railroad tracks. For decades, the fields had been connected to Island Park's property on the east side of the tracks via a private road. (R-172-73) The Claim On January 27, 2010, Island Park timely filed a Claim in the Court of Claims seeking damages. (R-41; 46) Island Park alleged that the closure constituted a de facto talcing of Island Park's property interest. Island Park sought: (A) compensation for the de facto taking of Island Park's easement in the crossing, (B) compensation for the diminution of the value of Island Park's adjoining property, and (C) consequential damages attributable to the closure. Histoiy of Crossing and Nursery Operation Island Park operates a commercial nursery on the properties. (R-172; 176) It grows trees, shrubs, and sod. (R-50) The fields are located in a designated Agricultural District. (R-49) Until November, 2009, Island Park had an easement3 3 (See Island Park, LLC v CSX Transp., 559 F3d 96, 98 [2009] ("Island Park possesses an easement to use a private rail crossing.")) Island Park's property interest in the crossing was established in a prior lawsuit filed by Island Park's predecessor in interest (R-51), which resulted in a judgment requiring the railroad to restore the crossing and maintain the crossing in perpetuity. (Id. at 98) (R-174) 6 (R-5; 51) to use the crossing. The tracks are owned by CSX. (R-173-74) Prior to the closure, Island Park used the crossing on a regular basis to access the farmlands for the purpose of tilling, irrigating, fertilizing, spraying, mowing, and harvesting the trees, shrubs, and sod. (R-173; 176) Abele's Crossing is accessible from a private, unpaved road on Island Park's property via NYS Route 9J in Rensselaer County, New York. (R-172-73) The Island Park properties are bisected by the railroad tracks. (R-173) In all, Island Park's real property holdings on the east and west sides of the CSX tracks comprise approximately 400 acres. (R-173) DOT Commences Closure Process Linked To Design Of Connector Road And Bridge Project The process to close Abele's Crossing started in 2004. (R-l74-75) In late 2004, DOT representatives informed Island Park that DOT had plans: (A) to close Abele's Crossing (R-l74-75), (B) to build a connector road—to be known as the South Port Road4 (R-l77; 181)—between Route 9J and American Oil Road, and (C) to construct a bridge across the railroad tracks in the vicinity of Abele's Crossing. (R-l 75-77) The DOT representatives invited Island Park representatives to meet at DOT's headquarters. (R-l74) DOT explained the plan, and requested Island Park to prepare an estimate of the financial consequences of a 4 The South Port Road project is intended to improve access to the Port of Rensselaer, which is currently serviced by one road and bridge. (R-266-69) 7 crossing closure on Island Park's operations. (R-174-75) Citing a lack of funding, however, DOT later decided to proceed with the process of closing the crossing without compensating Island Park. (R-l76; 178) In March, 2005, DOT commenced an administrative proceeding pursuant to Section 97 of the Railroad Law. DOT directed that a public hearing be conducted to determine whether the crossing "should be altered or closed and discontinued." (R-l75) After holding hearings, DOT issued an order dated February 28, 2006 (the "closure order") directing the closure of Abele's Crossing. (R-98-99) Impact Of Closure Order On Island Park's Fields and Operations The closure of Abele's Crossing blocked the principal3 means of access to Island Park's fields on the west side of the CSX tracks. (R-l76-77) As a result of the closure, the fields on the west side of the tracks no longer function as a unit with the Island Park's other properties—and equipment—on the east side of the railroad tracks. (R-l76-77) Island Park owns approximately: (A) 300 acres of cultivated fields on the east side of the CSX tracks, and (B) 70 acres of cultivated fields on the west side of the tracks. (R-173) The fields are prime agricultural bottom land irrigated by tributaries of the Hudson River. The fields are all 3 Access to the fields via a public road, American Oil Road, is available, but involves a nine mile round trip. (R-l77) 8 connected with internal farm roads (R-173), and, until the crossing was closed, the properties functioned as whole, (R-173; 176) Until Abele's Crossing was closed, Island Park did not have to use public roads to transport its farm equipment. (R-l76) The tractors are slow moving, and certain equipment requires special lights to operate on public roads. In some instances, special permits and "low boy" trailers are required. (R-173; 176-77) Access to Island Park's fields on the west side of the tracks has always been compromised by a stream—Papscane Creek—which runs parallel to American Oil Road and makes access via public roads impracticable. (R-173; 176-77) Island Park stores and maintains its equipment (tractors, tree planters, irrigation equipment, mowers, and graders) on the east side of the railroad tracks. (R-l76) Island Park has a substantial investment in its equipment, which Island Park itemized for DOT. (R-l 10; 175) Before the crossing was closed, Island Park used the equipment for cultivating the fields on both sides of the railroad tracks. (R-l76) As a result of the closure, Island Park now has to move tractors and slow- moving equipment on public roads (Route 9 J) a distance of over 4.7 miles (one way) to access Island Park's fields on the west side of the railroad tracks. (R-l 76¬ 77) The round trip route through the Port of Rensselaer is nine (9) miles. (R-l 77) Accordingly, the closure of Abele's Crossing has had a substantial negative impact on Island Park's operation, and the value of its commercial nursery. (R-l 10; 177) 9 Island Park Commences Litigation Because of the importance of the crossing to Island Park's operations and the value of its holdings, Island Park commenced litigation to enjoin the closure. (R-54) Island Park commenced an action in federal court challenging DOT actions. (R-54-55) Island Park also filed an Article 78 proceeding in state court (R-55) to challenge the DOT process, and exhaust its state court remedies. Neither case sought monetary damages. Both the federal court action and the Article 78 proceeding were unsuccessful. (R-54-56) In the short term, however, Island Park succeeded in delaying the economic impacts of DOT's order because the United States District Court issued a permanent injunction prohibiting the closure of the crossing. (R-54) The injunction remained in effect until late 2009. (R-55) Eventually, the injunction was vacated. DOT closed the crossing on November 25, 2009. (R-34) On January 27, 2010, Island Park filed this claim in the Court of Claims. DOT Pursues Part II Of Its Plan: Acquisition Of Island Park's Lands For Bridge And Connector Road The record reflects that DOT pursued a two part plan. (R-266-69; R-174-75) Elimination of Abele's Crossing was Part I of the plan; construction of a bridge was Part II. While Island Park's litigation was pending, DOT proceeded with the second part of its plan: (A) designing a connector road and bridge next to Abele's 10 Crossing (R-l77-78), (B) surveying Island Park's fields for the road and bridge (R- 177), and (C) talcing preliminary steps to condemn Island Park's fields for the project (R-178; 181-89) There was never any dispute that the two were connected. The DOT official in charge of the grade crossing elimination unit conceded at the Section 97 hearing that the decision to build the bridge/connector road and the decision to close Abele's Crossing "go hand in hand." (R-291-92) The plans had been in development for ten (10) years. (R-272; 254-62; 266-72) DOT plans to condemn 4.1± acres of Island Park's property for the road/bridge project. (R-178)6 Nevertheless, the State continues to segment the two related aspects of the same project, and claims it has no responsibility to compensate Island Park for the closure of Abele's Crossing. PROCEEDINGS BELOW The Appellate Division, Third Department affirmed the order of the Court of Claims, which granted the State's motion for summary judgment dismissing Island Park's claim. The trial court (Hon. W. Brooks DeBow, presiding) found that the State's closure of Abele's Crossing pursuant to Section 97 of the N Y Railroad Law was not a compensable taking. The Court of Claims determined that DOT's decision to order the closure of the crossing was an exercise of the State's police 6 To date, no offer has been made by the State for acquisition of Island Park's 4.1± acres that are needed for the road and bridge. 11 power and, therefore, immune from claims for compensation. The court dismissed the claim, and denied Island Park's motion for partial summary judgment on the question of liability. The Appellate Division adopted the lower court's reasoning, and affinned. ARGUMENT POINT I DOT'S ORDER DIRECTING THE CLOSURE OF ABELE'S CROSSING WAS A COMPENSABLE TAKING A. The Law 1- Constitutional Prohibition The police power of the State is broad, but "the State may not, under the guise of regulation" deprive owners of private property "of the reasonable income production or other private use of [private] property...." (Fred. F. French Investing Co., Inc. v City of New York, 39 NY2d 587, 591, 385 NYS2d 5, 350 NE2d 381 [1976]) A talcing of private property interests without just compensation violates the State and Federal Constitutions. (NY Const., art I, § 6; US Const., 5 t h Amdt; 14th Amdt, § 1) Over the years, courts have struggled to formulate a framework for distinguishing regulations that constitute a compensable taking from those that do not. (See, e.g., Smith v Town of Mendon, 4 NY3d 1, 789 NYS2d 696, 822 NE2d 1214 [2004] (collecting cases); Bonnie Briar Syndicate, Inc. v Town of Mamaroneck, 94 NY2d 96, 699 NYS2d 721, 721 NE2d 971 [1999] 12 (summarizing takings analyses)) The law has evolved to distinguish the types of property interests that are entitled to constitutional protection, and the degree of government interference that merits compensation. The analysis remains a fact specific balancing test first outlined in Penn Cent. Transp. Co. v City of New York, 438 US 104, 124, 98 S. Ct. 2646, 57 L.Ed.2d 631 [1978]. The three factors7 comprising the Penn Central test are governed by the overarching principle that the government should not force "'some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole."' (See R. Metz, Taking Law Today: A Primer for the Perplexed, 34 Ecology Law Quarterly 307 at 311 [2007], quoting United States v Carmack, 329 US 230, 241-42, 67 S. C t 252, 91 L.Ed. 209 [1946]) 2. Police Power This Court has recognized that the distinction between a compensable taking and a non-compensable exercise of police power depends on a number of factors. (See Fred. F. French Investing Co., Inc. v City of New York, 39 NY2d 587, 595, 7 The three part balancing test has been summarized as follows: [1] the regulation's economic impact on the claimant; [2] the extent to which the regulation interferes with the claimant's "distinct, investment-backed expectations"; and [3] the character of the governmental action.... (See Smith v Mendon, 4 NY3d at 16, 789 NYS2d at 704, 822 NE2d at 1222 [Read, J., dissenting], citing Penn Cent. Transp. v City of New York, 438 U.S. 104, 124, 98 S. Ct. 2646, 57 L.Ed. 631 [1978]) 13 385 NYS2d 5, 350 NE2d 381 [1976]) The facts of each case are critical in determining the appropriate balance between private and social interests. (Id, citing, e.g., Village of Belle Terre v Boraas, 416 US 1, 4, 94 S. Ct. 1536, 39 L.Ed.2d 797 [1974]) Because the "State's self-interest is at stake," courts do not defer to the State when it invokes the police power in this context. (See generally, Subway-Surface Supervisors Ass'n v New York City Trans. Auth., 44 NY2d 101, 110, 404 NYS2d 323, 375 NE2d 384 [1978]) When the government invokes the State's "police power" to avoid constitutional mandates, the critical focus of judicial inquiry is "whether the means chosen by [the government] to serve that purpose are reasonable and necessary so as to escape what would otherwise be the strictures of [the Constitution]." (Id.) (holding that Transit Authority was required to prove wage freeze was reasonable and necessary such that it would allow the government to avoid complying with the Constitution's Contracts Clause)) Under one formulation of the test, an exercise of police power becomes "unreasonable"—a taking—when: (1) it "renders the property unsuitable for any reasonable income production or other private use for which it is adapted and thus destroys its economic value," and (2) it forces the individual landowner "to assume the cost of providing a benefit to the public without recoupment." (Fred. F. 14 French Investing Co., Inc. v City of New York, 39 NY2d at 596, 385 NYS2d 5, 350 NE2d381 [1976]) When assessing the first prong of the analysis, it is important to remember that the "'value' of property is not concrete...but an abstraction derived from the economic uses to which the property may be put." Id. at 597. The size of the property interest taken may be miniscule, but the landowner may still be entitled to compensation. (See, e.g., Loretto v Teleprompter Manhattan CATV Corp., 458 US 419, 102 S. Ct. 3164, 73 L.Ed.2d. 868 [1982] (cable tv equipment occupying 1.5 cubic feet of exterior of building)) The overriding principle is one grounded in fairness. Courts should be vigilant to avoid the "ultimate evil" 8: placing an unfair or disproportionate burden on an individual property owner to provide a benefit to the public without compensation. Id. 596-98. This Court recognizes that: The ultimate evil of a deprivation of property, or better, a frustration of property rights, under the guise of an exercise of the police power is that it forces the owner to assume the cost of providing a benefit to the public without recoupment. There is no attempt to share the cost of the benefit among those benefited, that is, society at large. (Fred. F. French Investing Co., Inc. v City of New York, 39 N Y 2 d 587, 596 [1976]. See generally Santemma, Condemnation Law and Procedures in New York, New York Bar Association, § 10.1 at 192 [2005]) 15 3. Penn Central Factors To constitute a compensable talcing, the government regulation need not completely eliminate all economic use of the property. (Compare Lucas v South Carolina Coastal Council, 505 US 1003, 1015, 112 S. Ct. 2886, 120 L.Ed. 798 [1992] ("total taking") with Penn Cent. Transp. Co. v New York City, 438 US 104, 124, 98 S. Ct. 2646, 57 L.Ed.2d 631 [1978] ("partial regulatory taking governed by three-part test)) The Penn Central test requires examination of the government action for: (1) economic impact on the property owner; (2) degree of interference with the owner's reasonable investment- backed expectations; and (3) character. The three factors are not necessary given equal weight.9 One factor may be compelling or conclusive. (See R. Metz, Taking Law Today: A Primer for the Perplexed, 34 Ecology Law Quarterly 307 at 329 [2007]) For example, when the government acts in a manner that is contrary to a statutory right or guarantee, the court is more likely to find a compensatory taking. (See, generally, Ruckelshaus v Monsanto Co., 467 US 986, 1005, 104 S. Ct. 2862, 81 L.Ed.2d. 815 [1984]) 9 As the Supreme Court of Massachusetts noted, all regulatory takings cases involve "ad hoc inquiries" using the Penn Central analysis. (See Gove v Zoning Bd. of Appeals of Chatham, 444 Mass. 754, 831 NE2d 865, 873 [Mass. 2005]) 16 Similarly, i f the government has singled out one property owner, instead of imposing a broad regulation, the action is more likely to constitute a taking. (See generally Lingle v Chevron USA, Inc., 544 US 528, 542-44, 125 S. Ct. 2074, 161 L.Ed.2d [2005]) B. DOT's Order And Subsequent Removal Of Crossing Was A Compensable Taking DOT's closure order, which directed the railroad to remove the crossing surface and barricade the crossing, was a taking of Island Park's easement. The removal of the improvements, and the permanent barricades that were installed, constituted a physical taking. Island Park also is entitled to compensation for the economic impact of the closure on Island Park's adjoining property and nursery business. (See, e.g., Gerosa, Inc. v State, 180 AD2d 552, 580 NYS2d 280 [1st Dept 1992] (appropriation and loss of access to riverfront entitled industrial landowner to compensation for impact to owner's remaining property)) f- Economic Impact/Degree Of Interference The closure order resulted in a partial talcing of Island Park's surrounding property. Island Park's property has been adapted for a commercial nursery, which has been in operation for over 30 years. (R-l72-73; 176-77) The closure order had a significant economic impact on Island Park. (R-l76-77) The record 17 demonstrates that the crossing was integral to Island Park's business. The closure order split Island Park's operation in two, and left 70 acres on the west side of the tracks cut off from the equipment, supplies, and operations on the east side of the tracks. (Id. at 8) The easement was vital 1 1 to Island Park's ability to productively use the 70 acre field on the west side of the tracks. The State never challenged Island Park's assessment of the economic impacts associated with the closure. (R-l 10) Nor did the State dispute Island Park's account (R-l74-75) of the meetings with DOT officials in 2004, and their representations that Island Park would be compensated. (R-l74-75) DOT recognized that the tractors, tree planters, pumps, irrigation equipment, mowers, sprayers, and land plains stored on the east side of the tracks (R-l76) were also vital to the operations on the west side of the tracks. Once access was cut off, the costs in terms of lost production time, fuel and poor access were obvious. DOT initially suggested that Island Park could be compensated based on the costs of purchasing duplicate equipment, and erecting a storage shed, for the fields on the east side of the tracks. (R-l 75) DOT, however, ultimately decided there was no 1 0 The DOT officials recognized this in 2004, and led Island Park to believe that it would be compensated. (R-l74-75) 1 1 This is a classic case in which the property as a whole has more value than the two separate parcels that emerged from the closure. This Court has recognized that a landowner should be compensated when, as here, the State's actions reduce the value of a property that has significantly more value as a whole. (See, e.g., Wilmot v State of New York, 32 NY2d 164. 344 NYS2d 350, 297 NE2d 90 [1973]) 18 money in the budget to compensate Island Park (R-l75-76), and withdrew its offer of compensation. It takes little imagination to see that the State's closure of the crossing has had a concrete economic impact on Island Park. (R-l 10) Because DOT recognized that the closure of the crossing would have a significant impact on Island Park's business and operations, DOT's decision not to comply with the eminent domain process outlined in Section 97(5) of the Railroad Law was particularly unreasonable.12 • 2. Investment-Backed Expectations The order closing the crossing interfered with Island Park's "investment- backed expectations." The record shows that the crossing has been in use by Island Park and its predecessor since the 1960s. (R-173) The owner of Island Park noted that he, personally, had been cultivating the fields on both sides of the tracks for over thirty (30) years. (R-l72) When Island Park purchased the nursery 1 2 The statute grants the Commissioner of DOT the power to acquire land and easements for a closure. If the State wishes to justify its actions on the basis of safety concerns, and the exercise of "police power," the State must nevertheless prove that taking the easement without following the proper eminent domain procedure was reasonable and necessary. (See generally, Subway- Surface Supervisors Ass'n v New York City Trans. Auth, 44 NY2d 101, 110, 404 NYS2d 323, 375 NE2d 384 [1978]) Normally, this requires the State to show: (1) the exigency of the circumstances, and (2) the government "acted in response to a dire necessity...." (Charles v Diamond, 41 NY2d 318, 324, 329 NYS2d 594, 360 NE2d 1295 [1977]) Given the fact that the DOT studied Abele's Crossing for ten (10) years (R-272) before it took any action to close it, the State cannot show a dire necessity to close the crossing prior to following the statutory procedures set forth in Section 97 of the N Y Railroad Law. Section 95(5) and the eminent domain process are designed to protect the constitutional rights of private parties. In this case, DOT violated those rights. 19 business from the Abeles (R-l74), all the fields on both sides of the tracks were connected by internal farm roads. (R-173) Part of the value of the property was that Island Park did not have to use public roads to transport its farm equipment from one side of the tracks to the other. (R-173) Lost production time in transporting the equipment and personnel to the fields on the west side of the tracks is significant. The value of the easement to Island Park's operations has been established in prior litigation. In 1988, the railroad agreed to pay Island Park's predecessor in interest $100,000 for the railroad's wrongful closure of the crossing. (R-l 74) Island Park, and its predecessor, have vigorously defended their rights to use the crossing because the crossing is critical to the nursery operations. (R-l76-77) Although there is alternate access to the 70 acre field on the west side of the tracks, the nursery can no longer operate as a single unit. (R-l76-77) With the closure of the crossing, operating costs have soared (R-l 10), and the value of Island Park's operation, and the parcel on the west side of the tracks, has diminished in light of the limited access to the property. (R-l76-77) 3. Character Of State's Action The "character" of the State's actions in this case also points to a compensable taking. The legislature recognized the importance of maintaining 20 access to farm fields when it enacted Section 52 of the N Y Railroad Law. 1 3 The statute requires railroads to provide a crossing when a railroad acquires a right-of- way that divides private property under single ownership. (See M . Atkinson, On the Wrong Side of the Railroad Tracks: Public Access to the Hudson River, 13 Pace Envt. L Rev at 819) By ordering the closure of the crossing, the State not only deprived Island Park of its "cognizable property interest" in the crossing (see Island Park, LLC v New York State Dept. of Transp., 61 AD3d 1023, 876 NYS2d 203 [3d Dept 2009]), it also acted in contravention of the public policies embodied in Section 52 of the N Y Railroad Law. Courts take special notice when the "taking" involves a right guaranteed by statute. (See, e.g., Ruckelshans v Monsanto Co., 467 US 986, 1010-11, 104 S. Ct. 2862, 81 L.Ed.2d 815 [1984] (taking found; statute contained confidentiality guaranty and provided assurances that the EPA would not "frustrate Monsanto's reasonable investment-backed expectation" in its trade secrets)) Section 52 of the N Y Railroad Law provided Island Park an investment-backed expectation that the crossing, which the railroad was required to maintain in perpetuity (R-91-92), would not be closed. The history of the statute is discussed in Smith v New York Cent. R.R. Co., 235 A D 262, 257 N Y S 313 [4th Dept 1932] and Syracuse Ready-Mix Concrete v New York, 43 AD2d 800, 350 NYS2d 474 [4th Dept 1973]. 21 Related to the "character" of the taking is the government's motive. The record leaves no doubt that the closure of Abele's Crossing was part and parcel of DOT's broader plan to build a road and bridge in the vicinity of Abele's Crossing. DOT had studied Abele's Crossing for ten (10) years (R-272) before it took any steps to close this allegedly "dangerous" crossing.14 First, DOT prepared a comprehensive study of 22 crossings on a stretch of the Hudson Line covering three counties. (R-258-61) The study was then incorporated into a 100 page report (R-259), which was submitted to DOT's grade crossing unit. The report contained recommendations for Abele's Crossing and other crossings. (R-263-64) For Abele's Crossing, the report recommended the construction of a road and bridge to eliminate Abele's Crossing. (R-261-62; R-270) DOT also hoped to use the bridge as a means of closing two other crossings in the immediate vicinity of Abele's Crossing. (R-266) DOT touted the benefits of the planned South Port Road and bridge project. (R-266) The road is designed to provide "unimpeded access to the southern portion of the Rensselaer Port." (R-266) The head of the DOT unit in charge of the project testified that the two actions were directly related: "it would be 1 4 The administrative record showed there was no evidence of any property damage or accident history at Abele's Crossing. (R-l09) Other crossings within one (1) mile of Abele's Crossing, however, do have a history of accidents, but DOT has not taken any steps to close those crossings. (R-278) 22 inconceivable—we would not progress with a grade separation13 without any certainty of crossing closures or a reasonable certainty. So they go hand in hand." (R-292) Consequently, the closure of Abele's Crossing was more than just a "safety" measure; it was part of DOT's road construction plans. Moreover, the elimination of the crossing is needed to advance DOT's plans for high-speed rail for Amtrak trains traveling between New York City and Albany. (R-283-85) DOT's grade crossing unit's "primary concern" in closing crossings is to ensure "the overall safety of the operation in this corridor" in general, and for high speed passenger trains in particular. (R-285) DOT's long term plan is to operate trains at speeds up to 125 miles per hour (mph) in this corridor. (R-285) To operate in excess of 110 mph, all at-grade crossings must be closed. (R-283) The State's taking in this case, therefore, was part of a road/bridge constatction project designed: (1) to improve access to the Port, and (2) to facilitate high-speed rail service. DOT's decision to close the crossing furthered the State's goal of achieving high-speed passenger rail service between New York City and Albany. Accordingly, the "character" of the State's regulatory action was akin to acquiring lands and easements for a highway corridor. This is a classic example of a compensable taking. 1 3 In DOT terminology, the bridge is referred to as a "grade separation." C. State's Action Singles Out Island Park DOT singled-out Abele's Crossing for closure. The cases hold that when the government singles out a property owner, instead of relying on a regulation that applies to all similarly situated landowners, the action requires close scrutiny. In this case, the State sought to rely on cases involving broad regulations designed to eliminate dangerous or noxious activities, but the analogy fails. There are thousands of railroad crossings in the State. The DOT (R-l42) and the Federal Railroad Administration ("FRA") (R-108) consider all at-grade railroad crossings to be dangerous.16 In the words of the FRA representative who testified at the hearing, "the safest crossings are those that are closed...." (R-l08) The FRA has encouraged the elimination of grade crossings through legislation and federal funding. (See M . Attkinson, On the Wrong Side of the Railroad Tracks: Public Access to the Hudson River, 13 Pace Envtl L Rev 747, 810 n. 337 [1996]) Neither the State nor the federal government, however, have enacted laws or regulations to close all at-grade crossings. Consequently, the State's reliance on cases construing broad legislation, such as a zoning ordinance or wetland restriction, is misplaced. The State's decision to close Abele's Crossing was based on an ad hoc use of Section 97 of the Railroad Law. 1 6 It is the policy of NYSDOT to "eliminate or close them altogether—thereby eliminating all possibility of vehicle/train contact." See 2010 Annual Evaluation Report Highway Safety Improvement Program [NYSDOT] (https://www.dot.nv.gov/divisions/ operating/osss/highway- repository/ 2010% 20HSIP%20Rail-Highway%20Report. pdf, p.2, accessed April 25, 2012. In sum, the State's decision to single out Abele's Crossing was motivated by a number of factors, which are all relevant to the "character" of the government's action in this case. D. The Nursery Is Not A Highly Regulated Industry This is not a case in which the economic consequences of the State's regulatory action can be justified on the basis that the claimant is involved in a highly-regulated industry, whose investment-backed expectations are diminished by licensing requirements. Island Park is involved in operating a commercial nursery, not a hospital. Nevertheless, the Appellate Division relied on Birnbaitm v State of New York, 73 NY2d 638, 543 NYS2d 23, 541 NE2d 23 [1989]. Bimbaum involved a "pervasively regulated industry," a nursing home. (Id. at 646, 543 NYS2d 23, 541 NE2d at 646) This Court recognized that businesses subject to licensing requirements from a regulatory agency may be.required to "suffer interim reasonable losses" without compensation. (Id.) Unlike, Bimbaum, this case does not involve an industiy subject to pervasive regulation. "While the railroad may be subject to DOT's regulation, the rationale of Bimbaum cannot be applied to DOT's taking of Island Park's easement. 25 E. Conflict With Prior Case Law 1. Walker v. State The Appellate Division's decision in this case is in conflict with prior decisions of this Court regarding de facto takings. (See Walker v State of New York, 33 NY2d 450, 354 NYS2d 626, 310 NE2d 304 [1974]) The Walker decision addressed the "divergent interests" of private landowners and the interests of the State in ensuring transportation routes "vital to the development of the economy" (id. at 454). In Walker, this Court recognized that adjoining landowners should be compensated when the State appropriates a right of way. (Id. at 452-53.) 2. Road Improvements Cases The Appellate Division's decision also cannot be reconciled with the body of case law involving road improvements designed to increase safety of the traveling public. (See generally Wilmot v State of New York, 32 NY2d 164, 344 NYS2d 350, 297 NE2d 90 [1973] (claimants purchased land for development as a regional shopping center and were left with two non-contiguous parcels when the state appropriated eleven acres bisecting the property for a new road), rearg denied, 33 NY2d 657, 348 NYS2d 1030, 303 NE2d 710 [1973]; see also Chemung Canal Trust Co. v State of New York, 90 AD2d 889, 456 NYS2d 518 [3d Dept 1982] (driveway access closed for safety; bank had viable claim for consequential 26 damages); Bomti-ager v County of Delaware, 76 AD2d 969, 428 NYS2d 766 [3d Dept 1980] (realignment of highway)) The power exercised by DOT in deciding to close a railroad crossing is akin to the powers conferred by the Highway Law. Both allow DOT to realign, alter or close dangerous intersections. The cases recognize that DOT has authority to close access to private properties in connection with the re-design of highway intersections for safety reasons, but the State remains liable for de facto takings. (See, e.g., Chemung Canal Trust Co. v State of New York, 90 AD2d 889, 456 NYS2d 518 [3d Dept 1982]) In sum, DOT has the power to close Abele's Crossing, but it is required to compensate Island Park for the talcing. POINT II THE STATUTE REQUIRES THE STATE TO CONDEMN THE EASEMENT AND COMPENSATE ISLAND PARK This case represents the first time the State has used its power under Section 97 of the Railroad Law to order the closure of a private railroad crossing. (R-275- 76) The statute authorizes the Commissioner of DOT to close a private rail crossing when the Commissioner "determines it appropriate." N Y Railroad Law § 97(3). The statute makes it clear, however, that determinations to close a crossing will require compensation to property owners affected by the Commissioner's decision. Subsection (5) of the statute provides: 27 The commissioner shall have the power to acquire any real property, easements, rights of way or similar rights...as property is acquired for state highway purposes pursuant to the provisions of section thirty of the highway law. (NY Railroad Law § 97(5)) Similar provisions are found in: (1) the Grade Crossing Elimination Act, Transportation Law § 228, (2) Section 97-a of the N Y Railroad Law, and (3) Section 94(8) of the Railroad Law. Each statute grants DOT the right to close railroad crossings, and grants the Commissioner of DOT the authority to condemn property and easements to further the goals of the statute. The lower court's interpretation of Section 97 of the Railroad Law renders the DOT's obligation to "acquire" real property interests, including easements, superfluous. The interpretation of Section 97 of the Railroad Law is contrary to settled rules of statutory construction. (See McKinney's Statutes §§ 97 - 98. Friedman v Connecticut General Life Ins. Co., 9 NY3d 105, 115, 846 NYS2d 64, 877 NE2d 281 [2007] (court should harmonize all parts of a statute with each other and give effect and meaning to the entire statute and every part and word Section 30(a)(13) of the N Y Highway Law provides, in relevant part: The owner of any property, easements, interests or rights acquired, may present to the court of claims, pursuant to section five hundred three of the eminent domain procedure law, a claim for the value of such property appropriated and for legal damages, as provided by law for the filing of claims with the court of claims. Awards and judgments of the court of claims shall be paid in the same manner as awards and judgments of that court for the acquisition of land generally and shall be paid out of the state treasury from moneys appropriated for the construction, reconstruction or improvement of state highways and bridges. 28 thereof...."); Scoglio v County of Suffolk, 85 NY2d 709, 713, 628 NYS2d 230, 651 NE2d 1249 [1995] (narrow construction of statute would render the provision surplusage)) The purpose of the N Y Railroad Law § 97 is to provide statutory authority to alter or close private crossings. Prior to the enactment of Section 97 of the Railroad Law, railroads were required, by statute (NY Railroad Law § 52), to maintain farm crossings. (See Walker v State of New York, 33 NY2d 450, 354 NYS2d 626, 310 NE2d 304 [1974] (affirming order awarding damages for taking of easement in connection with elimination of railroad crossing)) Sections 97 and 97-a of the Railroad Law 1 8 were enacted to provide statutory authority for the closure, or alteration, of railroad crossings on intercity and commuter rail corridors. (See generally, Long Island Railroad Co. v Madison, 36 AD3d 1106, 828 NYS2d 650 [3d Dept 2007]; M . Atkinson, On the Wrong Side of the Tracks; Public Access to the Hudson River, 13 Pace Envtl L Rev at 800, 819 (surveying the history of farm crossings and the enactment of grade crossing elimination acts)) The statutes provide an administrative process for closure of railroad crossings similar to the Grade Crossing Elimination Act, N Y Transportation Law § 228, et seq. 1 8 The history of these statutes, as explained by DOT employees, is discussed in detail in Walsh v State, Ct CI, Jan. 17, 200S, Sise, J., Claim No. 104981, UID No. 2008-028-001. (Copies of the Walsh decision, and a subsequent, related decision of the Court of Claims, Walsh v State, Ct CI, March 19, 2012 (Ferreira, J.), are available on the Court of Claims website.) A l l statutes relating to the closure of railroad crossings confer upon the Commissioner of DOT the power to condemn property interests needed to carry out the purpose of those statutes. The power of eminent domain conferred by subsection (5) of Section 97 of the Railroad Law includes the power to acquire "real property, easements and rights of way or similar rights for the puiposes of this article...." The interests to be condemned include the interests of the railroad that own the railroad tracks and the owners of land adjoining the tracks who have acquired easements in the crossing. The Appellate Division, however, rejected this interpretation.59 The lower court's interpretation of the statute does not comport with common sense, the statutory framework or constitutional law. If the court's interpretation of the statute were correct, a landowner whose sole means of ingress and egress to a landlocked parcel on the other side of the railroad tracks would have no claim for compensation for the closure of the crossing—as long as the 1 9 Ironically, the Appellate Division, in an earlier decision, concluded that: Nothing in the Railroad Law § 97 requires the Commissioner [of DOT] to exercise his power to acquire [Island Park's] property interest prior to issuing the closure order.... (See Island Park, LLC v New York State Dept. of Transp., 61 AD3d 1023, 1028, 876 NYS2d 203 [3d Dept 2009] (italics added)) This statement suggests an implicit acknowledgement that the State may acquire the easement when the crossing is closed, or file an acquisition map prior to the closing, but—at some point—the State must either: (1) condemn the property interest, or (2) pay damages for the closure. The Appellate Division subsequently ruled, however, that the landowner has no right to be compensated for the property interest that was extinguished when DOT closed the crossing. 30 state closes the railroad crossing for "safety" reasons." Under the State's interpretation, the landowner would not be entitled to any compensation for the landlocked parcel. Clearly, such an inequitable result was not intended. The correct interpretation of the statute is that whenever the State orders a closure of a crossing and eliminates a private easement, the State has the concomitant duty to compensate the landowner for the taking. CONCLUSION For the foregoing reasons, Island Park respectfully submits that the Appellate Division's order should be reversed. Private landowners should be compensated when the State determines to close private railroad crossings. The Constitution, and the statutory framework of the statute, require the State to compensate landowners when crossings are closed. Compensation is particularly appropriate when, as here, the closure is designed: (A) to advance the State's goal of achieving high-speed rail service, (B) to facilitate the construction of a new road or bridge, and (C) to improve safety of passengers who ride on trains. In fact, the State made this argument in a recent case. (Walsh v State, Ct CI, March 19, 2012) In Walsh, DOT closed a private railroad crossing. After the closing, the landowner's waterfront property on the Hudson was landlocked. The State relied on the Court of Claims decision in the Island Park case, and asked the Court of Claims to reconsider an earlier decision in Walsh v State. Even though DOT's closure of the crossing resulted in a landlocked parcel, the State nevertheless argued that it was immune from liability because the State was exercising its police power. The Court of Claims, however, rejected the argument, and found the State liable for the de facto taking. The case was recently settled. 31 Because DOT's actions constitute a compensable talcing of Island Park's property interest, the Court should reverse, grant Island Park's motion for partial summary judgment, and remand the case for a trial on the issue of damages. DATED: October 9, 2012 Albany, New York Respectfully submitted, / ^ I M J 3 7 ^ 0 N ^ ^ N L L C By: J. Michael Naughton, E§q. ^Attorneys for Appellaj [and Park, LL£, Executtve^Voods Five Palisades Drive Albany, New York 12205 (518) 438-9907 Ext. 244 (Tele) (518) 438-9914 (Fax) mnaughton@youngsommer.com 32