High Court Punts Snaggle on Intervenor Standing

WASHINGTON (CN) –  Punting an issue that has divided 10 federal appeals courts, the Supreme Court voiced confusion Monday about what relief is being sought by a developer trying to intervene in a takings case.

The case at hand hails from Chester, New York — an area of the Catskill Mountains, about an hour northwest of New York City.

Though popular in the 1950s as the “Borscht Belt” or Jewish Alps, the Orange County town has battled claims over the past decade that it has been manipulating zoning laws to thwart plans for a 400-unit residential subdivision on 400 acres.

As reported in 2008 by the Times Herald-Record, Chester worried that developer Steven Sherman would market the MareBrook development to Hasidic Jews who would create an orthodox enclave. A similar development in the nearby village of Kiryas Joel has inspired years of litigation.

Sherman’s battle with Chester meanwhile drew help from Laroe Estates Inc. Banking on the the town’s approval of the subdivision, the local real estate developer had offered some financial relief in exchange for lots on which to build. When that never happened, according to court documents, the land was lost to bank foreclosure in 2014.

Laroe filed to intervene after the Second Circuit revived Sherman’s takings case, which after the developer’s death is now being fought by his widow, Nancy. Though Laroe says its earlier land deal with Sherman gives it an interest in the dispute, a federal judge denied it intervention.

Noting that the company was not an owner of the property at the time of the alleged taking, the District Court ruled in 2015 that the company lacked standing.

Laroe persuaded the Second Circuit that a proposed intervenor need not demonstrate independent standing in an existing case, but the Supreme Court vacated the decision Monday.

“The parties do not dispute — and we hold — that such an intervenor must meet the requirements of Article III if the intervenor wishes to pursue relief not requested by a plaintiff,” Justice Samuel Alito wrote for the unanimous court. “In the present case, it is unclear whether the intervenor seeks different relief, and the Court of Appeals did not resolve this threshold issue. Accordingly, we vacate the judgment and remand for that court to determine whether the intervenor seeks such additional relief.”

Neal Kumar Katyal of Hogan Lovells in Washington, D.C., is counsel of record for the town; Shay Dvoretzky of Jones Day in Washington represents Laroe.

If Laroe is seeking additional damages in its own name, as Laroe’s counsel had even conceded at oral argument, Alito added, an Article III inquiry would be required.

“Laroe’s complaint — the best evidence of the relief Laroe seeks — requests a judgment awarding damages to Laroe,” the 9-page opinion states. “Unsurprisingly, Sherman requests something different: specifically, compensation for the taking of his interest in the property.”

Alito said Laroe’s counsel conceded this point at oral argument but also “made statements that arguably indicated that Laroe is not seeking damages different from those sought by Sherman.”

“Taken together, these representations at best leave it ambiguous whether Laroe is seeking damages for itself or is simply seeking the same damages sought by Sherman,” the decision continues. “Unfortunately, the Court of Appeals did not resolve this ambiguity. In fact, the section of its opinion concerning standing did not discuss whether Laroe sought different relief than Sherman.”

Alito added: “This confusion needs to be dispelled. If Laroe wants only a money judgment of its own running directly against the town, then it seeks damages different from those sought by Sherman and must establish its own Article III standing in order to intervene.”

At oral arguments in April, Neal Kumar Katyal of Hogan Lovells in represented the town. Shay Dvoretzky of Jones Day represented Laroe.

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