[*PG171]ANALYTICAL CHRONOLOGY OF PALAZZOLO V. RHODE ISLAND*
In this Chronology of the Palazzolo controversy, the basic facts, as the courts understood them, are set out in a bold font. Taken alone, they are incomplete, but appear to accurately reflect the basis for the courts’ decisions. Further relevant details that correct or supplement the facts used by the courts are indicated in plain text. They may, at times, appear to conflict.
1936—Carl Brucker owns a large parcel stretching north from Atlantic Avenue to the waters of Winnapaug Pond, a tidal inlet connected to Block Island Sound. He submits a subdivision plat to the town of Westerly, Rhode Island subdividing part of the property bordering Atlantic Avenue, leaving one undivided 18-acre tract behind them, which later became the Shore Gardens, Inc./Palazzolo property.1
7/28/1939—Carl Brucker conveys the large tract, as three separate parcels, to Howard Thorp.
8/31/1949—Howard Thorp conveys undivided half interests in the three parcels that make up the large 18-acre tract to both John and George Gibson.
5/20/1957—John and George Gibson both convey their interests in the three parcels to Natale and Elizabeth Urso for a total of approximately $3000. Natale Urso, using gravel fill, constructs Shore Gardens [*PG172]Road, a 1500-foot road running the length of the eastern portion of the property from Atlantic Avenue to Winnapaug Pond.2 He also helps arrange the running of public water into the tract of land from Atlantic Avenue. This public water supply services the houses that were later built in this area.
5/1959—The Ursos submit a subdivision plat to the town of Westerly, subdividing eighteen acres of the three parcels into eighty lots and proposing several roads. The plat is actually recorded on September 13, 1960 by Shore Gardens, Inc. (SGI) after approval by the Zoning Board and the Public Works Commission.3
7/29/1959—Documents for incorporation are submitted to the Rhode Island Secretary of State’s Office by Natale Urso and Anthony Palazzolo for SGI. Palazzolo and Natale Urso are the only stockholders, and Palazzolo is listed as the president of SGI.
8/6/1959—Urso, in the name of SGI, although SGI does not own the land yet, conveys one lot4 to Levcowich.5
12/1/1959—The Ursos convey an undivided one-half interest in the large tract to Palazzolo for approximately $8000. Mr. Palazzolo says that he understood this purchase covered seventy-four (not eighty) lots, due to several the informal “conveyances” of lots to third parties before this date.6
[*PG173] 12/2/1959—Palazzolo and the Ursos convey their interests in the large tract to SGI.
12/3/1959—A deed is executed by which SGI conveys one lot7 to the Ursos.8
12/4/1959—A deed is executed by which SGI conveys one lot9 to Gencarella.10
12/31/1959—A deed is executed by which SGI conveys one lot11 to Garafolo.12
6/1/1960—A deed is executed by which SGI conveys two lots13 to Serra.14
1960—Palazzolo buys out the Ursos’ half interest in SGI to become the sole shareholder. This deal includes an agreement by which Palazzolo and Urso will each personally take conveyance of five lots from the SGI’s seventy-four lots.15 Deeds were never executed for these “conveyances.”
3/20/1961—A deed is executed by which SGI conveys Urso’s five chosen lots16 to Algiere for approximately $2500; Urso personally receives the purchase price.
[*PG174]3/29/1962—SGI submits an application (March 1962 Application) with a non-detailed site plan to the Rhode Island Dept of Public Works, Division of Harbors and Rivers (DHR) to dredge Winnapaug Pond and place the dredged material behind a bulkhead wall to fill the marsh to make it “adaptable for useful development.”17
10/5/1962—DHR declines to consider the March 1962 Application and returns it to Palazzolo for “necessary corrections and revisions,” stating that “[o]wing to the inaccuracies and the absence of essential basic information in both the application and the plan of work submitted by Mr. Palazzolo, it is not possible at this time to render a decision in this matter.”
3/22/1963—SGI submits a second application (March 1963 Application) to DHR to build a bulkhead, dredge Winnapaug Pond, and use the dredge material to fill eighteen acres of marsh on the property. The March 1963 Application is a revision of the March 1962 Application with the site plan now showing bulkhead, fill, and added lot details.18 The March 1963 Application lingers in the agency and is never approved or denied. The March 1963 Application’s site plan is later post-dated and re-filed in 1983.
5/6/1963—Rhode Island Division of Sanitary Engineers recommends that the March 1963 Application be denied, finding that the “proposed house lots will be unsuitable for the disposal of sewage . . . because the proposed finished grade . . . does not permit installation of the sewage seepage systems above the ground water table.”
5/16/1963—SGI submits an application (May 1963 Application) to DHR to build a bulkhead around the property, dredge Winnapaug Pond, and use the dredged material to fill eighteen acres of marsh.19 The courts mistakenly believe that the previous March 1963 Application is the application that was submitted here and they have no knowledge as to the actual contents of this application. This May 1963 Application, in reality, includes plans for creating [*PG175]two channels, or “lagoons,” that are 600 feet and 680 feet long, each sixty feet wide, to be bordered by marina-style residential lots “like in Florida,” as described by Palazzolo, to be built by the purchasers of the lots once the purchasers obtained the required permits.20 Decision on the May 1963 Application was deferred for eight years and then briefly granted in 1971.
1/1965—The Rhode Island Legislature passes a tidal wetlands law, giving DHR authority to regulate the filling of coastal wetlands.1 It is not clear why SGI submitted any of the previous applications to DHR at all. It is later argued at trial that these applications were not for permission to fill, but were applications for free fill material from the State.21
4/29/1966—SGI submits an application (April 1966 Application) to DHR to dredge Winnapaug Pond and use the material to fill eighteen acres of marshland on the property in order to build a recreational beach facility with no bulkheads.22
7/20/1966—DHR denies the April 1966 Application, noting that the Rhode Island laws enacted “to protect and preserve the coastal wetlands of the state” in DHR’s opinion forbid approval of the application. The May 1963 Application is theoretically still pending.
8/1966—Palazzolo, seeking a writ of mandamus ordering the issuance of a permit for the April 1966 Application, files a complaint in Rhode Island Superior Court against the Director of the Department of Natural Resources, Frederick C. Lees, alleging that, due to the total lack of regulatory standards, the denial was an “invalid exercise of the police power and a denial of due process of law.”23
12/30/1966—Judge Leach of the Rhode Island Superior Court, in the Lees case, finds that the record is insufficient and remands to DHR for a “finding of fact and without prejudice to the plaintiff’s right to amend his application.” Judge Leach also comments that, under the [*PG176]current laws, he cannot see how DHR can deny the permit, and that the DHR has “got to do something with [Palazzolo].”24
1/1967—The Rhode Island Legislature passes an inter-tidal salt marsh law giving DHR guidance on issuing permits for development on salt marshes, stating that a permit will be denied if the “dumping or depositing of mud, dirt, or rubbish or excavation would disturb the ecology of intertidal salt marshes.”25
12/31/1968—SGI’s charter of incorporation is forfeited [for the first time, as it will be again in 1978] for failure to pay taxes and failure to file annual reports over the past five years.26 By operation of Rhode Island state law, all assets of a forfeited corporation become individual property of the stockholders. It appears that under Rhode Island law Mr. Palazzolo becomes the owner of the then-remaining sixty-nine lots personally as of this date, not ten years later.
5/15/1969—Palazzolo, acting as president of SGI, buys back the five lots that SGI had previously sold2 from Algiere for approximately $5000. The large parcel is now back to seventy-four lots. These are the lots that Urso had previously sold in the name of SGI in 1961. Here, Palazzolo is acting as the president of what appears to be a non-existent SGI.
11/7/1969—Raymond Surdut, Leroy Marcotte, and Alfred Silverstein incorporate Shore Gardens, Inc. in the State of Rhode Island.27 Mr. Palazzolo never sold any of these three people any interest in the first SGI or any land. Except for having taken the moniker of Palazzolo’s now defunct corporation, this “new” SGI appears to be completely divorced from Palazzolo. Also, the incorporation of the “new” SGI does not appear to be an automatic conveyance passing title for Palaz[*PG177]zolo’s tract to the “new” SGI simply because it has the same name as the corporation that used to hold title to the land.
1/19/1970—A deed is executed, signed by Palazzolo as president of SGI, conveying SGI’s land to SGI. Mr. Palazzolo was under the impression that this conveyance would unify the three distinct parcels. However, Palazzolo had no apparent ownership in the “new” SGI. An explanation of this conveyance could also be as an attempt by the “old” SGI to convey the eighteen-acre parcel to the “new” SGI. Whatever the reason may be, this appears to be an invalid conveyance, since at this point the “old” SGI does not own the land because title had passed to the sole shareholder, Palazzolo.
5/19/1971—DHR approves the May 1963 Application (not the non-lagoon March 1963 Application as the court believes) and the April 1966 Application—the lagoon plan and the beach club plan—stating that Palazzolo must choose between building a bulkhead and constructing a recreational beach facility. Perhaps fearing the pending 1966 Lees complaint remanded to it by the Superior Court, DHR notes optimistically that both proposals would be “favorable to quahogs,” would produce a “better scallop habitat,” “the marsh has low waterfowl or other wildlife value,” and that the damage done by it would have no greater impact than “the State’s operations in the general area.”
9/1/1971—DHR notifies Palazzolo of its assent to the March 1963 Application and the April 1966 Application, telling him that he must choose between the two. As stated above, this is incorrect. DHR actually approves the May 1963 Application (not the non-lagoon March 1963 Application as the court believes) and the April 1966 Application—the lagoon plan and the beach club plan. Mr. Palazzolo says that he told the DNR that he would go forward with the April 1966 Application for the recreational beach club.
9/18/1971—DHR informally revokes its assent to the two applications by a “cease-and-desist order.”
11/17/1971—DHR formally revokes its assent to the two applications, implying that its former approval was based on the 1962 statements of the Division of Fish and Game and four members of the faculty of the URI Graduate School of Oceanography, but had disregarded the 1966 revised statements of the Division of Fish and Game [*PG178]and the Division of Planning and Development. In addition, DHR implied that it had mistakenly ignored a negative 1963 statement by a URI professor of oceanography that undercut the other oceanographers’ statements. This revocation is not appealed.
1971—Rhode Island creates the Coastal Resources Management Council (CRMC) and gives CRMC the authority to regulate coastal wetlands under the terms of a Coastal Resources Management Plan (CRMP). CRMC succeeds DHR as regulator of coastal wetlands in Rhode Island.28
1976—CRMC adopts a CMRP that prohibits the filling of coastal wetlands without a special exception.
2/27/1978—SGI’s corporate charter is revoked by the Rhode Island Secretary of State for failure to pay taxes. By operation of Rhode Island state law, all corporate assets become individual property of Palazzolo, the sole stockholder. As of July 2001, SGI still remains the tract’s record owner and tax bills are still sent to SGI. This is the revocation of the second SGI’s charter, and, as previously noted, it is not clear if Mr. Palazzolo has any legal relationship with this corporation or if this corporation had any assets to begin with.
3/1983—Palazzolo submits an application (March 1983 Application) for the assent of CRMC to build a bulkhead, dredge Winnapaug Pond and use the dredge material to fill eighteen acres of the marsh.3 This application also provides for a shoreline 50-foot buffer zone. Palazzolo later specifically disclaims any intention to build residences, but he gives no further details of his plans; the site plan shows bulkheads and seventy-four lots. The court mistakenly claims that this application is similar to the March 1963 Application; it is in actuality similar to the non-lagoon May 1963 Application.
[*PG179]6/1983—CRMC revises the CRMP to prohibit filling, removal, or grading in coastal wetlands adjacent to Type 1 or Type 2 waters “unless the primary purpose of the alterations is to preserve or enhance the feature as a conservation area or buffer against storms.” SGI’s property is adjacent to such waters.
8/18/1983—A subcommittee of the CRMC holds a public hearing where the March 1983 Application is discussed. It recommends the denial of the application.
1984—CRMC denies Palazzolo’s 1983 application, stating that Palazzolo failed to address biological concerns, impacts from runoff and flooding, and impacts on the waters and wetlands of Winnapaug Pond. CRMC also notes that the plans are “vague and inadequate for a project of this size and nature.” Palazzolo does not appeal that decision.
1/1985—SGI submits an application (January 1985 Application) for the assent of the CRMC to fill 11.4 acres of the property with bank-run gravel to create a recreational beach facility, with no bulkheads, for seasonal use. SGI proposed to mitigate environmental impacts by not filling in a fifty-foot, shoreline buffer zone, grading and sloping the property, and by planting Soil Conservation Seed Grass, although SGI conceded that this would still have “somewhat of an impact upon the biological communities that exists there now . . . .”4 Objections are immediately heard from the Town Engineer, the Conservation Commission of the Town of Westerly, the CRMC’s staff engineer, the Statewide Planning Board, and the State Division of Fish and Wildlife.
7/30/1985—A CRMC sub-committee holds a hearing on SGI’s 1985 application, believing that it was to decide whether or not to grant SGI a special exception from the CRMP. Objections are heard from CRMC’s staff engineer, a biologist, the Statewide Planning Board, the State Division of Fish and [*PG180]Wildlife, and members of the public. Favorable accounts of the application were heard from Mr. Palazzolo, Mr. Palazzolo’s engineer, and the Historical Preservation Commission. The sub-committee recommends a denial of the permit.
11/26/1985—CRMC considers SGI’s 1985 application at a general meeting and votes to follow the sub-committee’s recommendation and deny SGI a permit for its 1985 application, citing adverse environmental impacts.
2/18/1986—CRMC issues its decision to deny the 1985 application, stating that the “[f]illing of the marsh would destroy the natural shoreline protection, decrease sediment trapping and accretion, decrease flood storage, [and] eliminate or greatly reduce nutrient retention in the area.” CRMC added that the proposal was in conflict with the CRMP and that “it appear[ed] that the proposed activity [would] detrimentally impact the coastal resources of the state.”
ADMINISTRATIVE APPEAL: Palazzolo appeals the CRMC’s decision in Rhode Island Superior Court alleging that CRMC was collaterally estopped by its 1971 assent from making its adverse environmental impact findings and that its decision was arbitrary, capricious, and an abuse of discretion.29
6/6/1986—ADMINISTRATIVE APPEAL: CRMC’s record is certified to Rhode Island Superior Court for an appeal of CRMC’s decision, but is “lost or misplaced.” The court uses the record disclosed in the parties’ memoranda and copies of the record in the parties’ files.30
6/15/1988—TAKINGS: Palazzolo files a complaint alleging that the CRMC’s denial of SGI’s applications constitutes a taking without just compensation. Palazzolo seeks $3.1 million in compensation based on [*PG181]the profits from developing the property as seventy-four lots for single-family homes.31
4/1993–9/1993—TAKINGS: Because of his counsel’s failure to appear in court on several dates, Palazzolo attempts to change counsel to Adler, Pollock & Sheehan (APS). His original counsel refuses to turn over his files. Palazzolo is forced to file a disciplinary complaint.32
9/1993—TAKINGS: Palazzolo’s original counsel, who is still the counsel of record, having not formally withdrawn, relinquishes a large portion of the files.33
10/15/1993—TAKINGS: Palazzolo’s former counsel notifies APS that the trial is scheduled for the week of January 10, 1994. APS asks Palazzolo’s former counsel, who is still the counsel of record, to appear and request a continuance because of the change of counsel. APS also contacts CRMC’s counsel and asks them to agree to a continuance. Predictably, CRMC denies agreeing and APS contends that there was agreement on the continuance.34
10/16/1993—TAKINGS: CRMC files a motion to dismiss Palazzolo’s takings claim for lack of diligent prosecution and failure to comply with the Rhode Island Rules of Civil Procedure and orders of the court. Only the counsel of record, Palazzolo’s former counsel, receives notice of this motion. Palazzolo’s former counsel fails to communicate this to APS. As a result, no one shows up to represent Palazzolo or SGI at the motion hearing.35
1/24/1994—TAKINGS: CRMC’s motion to dismiss Palazzolo’s takings claim is granted.36
1/1994—TAKINGS: Even after the dismissal, files are still being turned over to APS from Palazzolo’s former counsel.37
[*PG182]2/21/1994—TAKINGS: Palazzolo and his new counsel file a motion to vacate the order of dismissal, which is denied by the Superior Court. Palazzolo appeals to the Rhode Island Supreme Court.38
1/5/1995—ADMINISTRATIVE APPEAL: Judge Israel of the Rhode Island Superior Court finds that the issue of CRMC being collaterally estopped by its 1971 assent from making its adverse environmental impact findings was not properly raised because the assent was never introduced into the agency record. Thus, the assent cannot be used in a review of the agency decision. The court also found that CRMC’s decision was not arbitrary, capricious, or an abuse of discretion, that a takings claim had not been raised in the original complaint, and that an administrative appeal is not the proper venue to bring such a claim.39
5/1/1995—TAKINGS: The order to dismiss Palazzolo’s takings claim is reversed.40
10/24/1997—TAKINGS: Judge Williams of the Rhode Island Superior Court enters a decision on the takings claim finding that Palazzolo failed to show that he was denied all beneficial use of his property because evidence was presented showing that an eastern portion of the parcel could be developed for a value of $200,000.41 In addition there was evidence that the parcel had an open-space gift value of $157,500.42 The court also found that the filling of the 18 acres of salt marsh was a public nuisance due to the “probability of an increase in the nitrate levels in Winnapaug Pond . . . the threat to ground water, and based on evidence that Palazzolo’s proposal would not be suitable for the locality.”43 [Only one of the applications to CRMC required the filling of 18 acres of land. The 1985 application only required an 11.4-acre fill.] Palazzolo appeals to the Rhode Island Supreme Court.
[*PG183]2/25/2000—TAKINGS: The Rhode Island Supreme Court determines that Palazzolo’s claim is not ripe for review because there has not been a final decision by CRMC because Palazzolo has not submitted applications for less ambitious uses.44 Although the ripeness determination is “dispositive of the case,” the court “briefly discuss[es] the merits of Palazzolo’s [takings] claim.”45 The court states that when Palazzolo received the property from SGI in 1978 the state regulations limited his right to fill the wetlands.46 “[A]ll subsequent owners take the land subject to the pre-existing limitations and without the compensation owed to the original affected owner.”47 “Palazzolo [due to the regulations] could not reasonably have expected that he could fill the property and develop a seventy-four-lot subdivision” and therefore had no reasonable investment backed expectations.48 In addition, the court comments that the claimed compensation sought for loss of an “anticipated $3.1 million ‘profit’ was unrealistically optimistic” because it was based on the future sale of seventy-four lots. The town’s zoning laws would not permit seventy-four lots to be developed on only eighteen acres, and there was no evidence that Palazzolo would be able to obtain the necessary permits for the required septic systems.49
Summer 2000—TAKINGS: The Pacific Legal Foundation, now representing Palazzolo, seeks certiorari to the United States Supreme Court on the takings claim.
10/10/2000—TAKINGS: The United States Supreme Court grants certiorari.50
2/26/2001—TAKINGS: Oral arguments in United States Supreme Court.51
6/28/2001—TAKINGS: Palazzolo v. Rhode Island is decided by the United States Supreme Court, with six opinions, remanding to the [*PG184]Rhode Island Supreme Court for a Penn Central Analysis.52 The New England Legal Foundation takes over the remand for the Pacific Legal Foundation.
8/30/2001—The Rhode Island Department of Environmental Management denies Palazzolo a permit to install a septic system on the “buildable lot” that had been valued at $200,000.53
9/25/2001—TAKINGS: The Rhode Island Supreme Court directs the parties to submit memoranda for suggestions for guidelines that should be presented to the Superior Court concerning the “mandated” Penn Central analysis. It asks the parties to address:
a)the need for a survey of the Palazzolo property in respect to that portion thereof which is below the mean high water line in tidal effect;
b)information regarding the initial purchase price of the property by Shore Gardens, Inc.;
c)the proceeds and/or consideration received by SGI when 6 of the parcels were sold from the original lands purchased;
d)the relevance of the Public Trust Doctrine . . . to the reasonable investment-backed expectations of plaintiff Palazzolo.54
Subdivision Plat, as submitted by Natale Urso for Shore Gardens, Inc. The lot numbers on this plat differ from the numbers that the Tax Assessor’s Office assigns them. The plat contains 80 lots and proposes several roads. The unnumbered lots along Atlantic Avenue (at the bottom of the plat) were sold by a prior owner and developed, and they have no relevance to the Palazzolo case.
The Town of Westerly, Rhode Island’s Tax Assessment Map of Plat 155 as of June 2001. The Shore Gardens/Palazzolo property is located within the darkened border.
The courts believed that this represented the maps for both the May 1963 Application and the March 1983 Application. In fact, this is really the map for the March 1963 Application and the March 1983 Application. The actual May 1963 Application involved the dredging of “lagoons.”
Almost identical site plans were submitted for the April 1966 Application and the January 1985 Application for the development of a recreational beach facility. However, the January 1985 Application only required the filling of 11.4 acres of marshland, as opposed to the April 1966 Application’s 18 acres (as indicated above arrows).