No property interest exists, when no building permit application has been filed

by Victoria Heldt

American Central City, Inc., v. Joint Antelope Valley Authority
(Nebraska Supreme Court, June 17, 2011)

Edward Patterson, the owner and sole shareholder of American Central City, Inc. (ACC), owned three properties and claimed a compensable property interest in properties owned by Edward and Dorothy Schwartzkopf, which are located in the same neighborhood.  Patterson based his claim of interest on an option to purchase the Schwartzkopf’s property on the condition that he obtain a building permit.  He planned to construct a building that would sit both on his property and on theirs.  All of these properties were condemned as a part of the Antelope Valley project, which was designed to provide Lincoln with flood control, transportation improvements, and community revitalization.   Patterson claimed he was not properly compensated after the condemnation of the properties and that his substantive due process rights were affected during the trial process.

Patterson argued that he had a compensable property interest in a building permit he wanted to obtain because he spent considerable time and money planning and designing the building.  He claimed that city officials falsely informed him that it would not be possible to build underground parking or place underground telecommunications on the property, and that this information prevented him from going forward with this plans and affected his substantive due process rights.  The Court noted that the granting of a building permit does not give a property owner the right to build or a property interest in the permit.  The Court further recognized that Patterson never actually filed for the permit.  In light of this, it concluded that that the law does not recognize a property interest in a permit that was  never filed.

Patterson also claimed an interest in the Schwartzkopf properties because of the 1995 option to purchase.  Once Patterson failed to obtain a permit, both parties signed a release agreement excusing them from performance.  Then in 2004, the property was sold to JAVA.  Patterson claimed he still had an oral agreement to buy the property even after the release was signed in 1995.  The Court found that he had no compensable interest in the property because the oral agreement would not stand up in court.  The sale of land is subject to the statute of frauds and must be in writing.  Patterson further argued that his case falls under one of the exceptions to the statute of frauds (partial performance) since he incurred expenses and invested time in the planning and designing of the building.  The Court found that any oral agreement Patterson had was with the Schwartzkopf’s, and cannot be enforced against JAVA.

Patterson further argued that the government engaged in inverse condemnation, which means that the government took property without proper compensation or proper condemnation proceedings.  He claimed the government prevented him from putting his property to the “highest and best use” by preventing him from obtaining a building permit and that this qualified as inverse condemnation.  Without the building permit, he could not purchase the Schwartzkopf properties in order to develop his properties as planned.  The Court noted that this claim rested partially on the belief that he had a property interest in the building permit and the Schwartzkopf properties, but as stated earlier he did not.  Additionally, it found that Patterson did not submit sufficient facts to establish that the government acted to prevent him from developing the land.

The Court dismissed all of Patterson’s claims and affirmed the decision of the district court.

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