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Appellate Division Takes Victory in Wetlands Takings Case from the State

A state appeals court reversed the dismissal of a regulatory takings law suit on April 17th in the case of LH Wagner Realty Corp and Leo H Wagner v. the DEP, Docket Number A-3441-12T4. The procedural history of the case is a bit confusing, but the essence of it concerns the effect of a state DEP order requiring restoration of wetlands on three parcels of property owned by the plaintiffs.

Under a substantial body of case law over the last 30 years, regulatory actions that effectively render real property useless may result in a right to compensation by the government under the “Takings Clause” of the Fifth Amendment of United States Constitution, and applicable portions of the New Jersey Constitution. The plaintiff property owner made that claim against the DEP because the restored wetlands resulted in extremely limited buildable space remaining on the impacted properties, therefore making them worthless.

In response the DEP moved to dismiss the matter, alleging that a DEP order alone did not constitute an actionable taking and that the case was filed out of time. The trial court did not just rely on the pleadings when it dismissed the case, but also relied on matters outside of the pleadings, effectively treating the motion as one for summary judgment. That Court dismissed the claims with prejudice.

In reversing the dismissal, the Appellate Division found that the trial court improperly focused on the ultimate merits of the case. The Appellate Division ruled “at this stage in the proceeding, however, the [lower] Court should not have concerned itself with plaintiff’s ability to prove their allegations.” The Court also held that if dismissal was appropriate, it should have been without prejudice, allowing the plaintiff an opportunity to amend its pleadings.

Yes, the Lord giveth and the DEP sometimes taketh away; when it does, it may result in the filing of a takings lawsuit by the property owner. A suit that the DEP may not be able to so quickly taketh away itself.

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At Lieberman & Blecher, our legal team is well versed in the ins and outs of regulatory takings, wetlands development, and working with the DEP to resolve discrepancies in actions. If you are having issues with development, wetlands, zoning, or permitting, please contact our office to see how we can assist you.


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