Dorman v. Township of Clinton
269 Mich. App. 638, 714 N.W.2d 350 (2006)
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Rule of Law:
A municipality's rezoning of property that diminishes its value does not constitute a regulatory taking if the property retains an economically viable use. A property owner's right in a particular zoning classification does not vest until the owner has obtained a valid building permit and completed substantial construction.
Facts:
- The property in question, located in a residential neighborhood in Clinton Township, was originally zoned 'Residential Multiple' according to the township's Master Plan.
- In 1993, the township rezoned the property to 'Light Industrial' to allow an Elks Club to build a lodge, but the township never amended its Master Plan to reflect this change.
- After the Elks Club defaulted on its mortgage, the property was foreclosed in 2000.
- In April 2001, Michael Dorman, a real estate speculator, purchased the property for $273,000, intending to develop a public storage business.
- Dorman purchased the property after a single visit and without reviewing the township's Master Plan.
- Dorman began preparing the interior of the existing lodge for reconstruction but had not begun substantial construction on the land itself or obtained building permits.
- Following a public hearing, the Clinton Township board voted to rezone Dorman's property back to 'Residential Multiple' to conform with the Master Plan and the surrounding residential area.
- The rezoning prevented Dorman from proceeding with his proposed storage facility development.
Procedural Posture:
- Plaintiff Michael Dorman filed an inverse condemnation action against defendant Clinton Township in the trial court.
- The lawsuit alleged that the township's rezoning of his property constituted a regulatory taking and a violation of his substantive due process rights.
- After discovery, both parties filed cross-motions for summary disposition.
- The trial court granted summary disposition in favor of Clinton Township, dismissing all of Dorman's claims.
- Plaintiff Michael Dorman, as the appellant, appealed the trial court's order to the Michigan Court of Appeals.
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Issue:
Does a township's rezoning of a property from 'Light Industrial' to 'Residential Multiple' constitute an unconstitutional regulatory taking or a violation of substantive due process when the rezoning decreases the property's value but still allows for profitable development, and the owner has not yet obtained a building permit or commenced substantial construction?
Opinions:
Majority - Cooper, J.
No. The township’s rezoning of the property does not constitute a regulatory taking or a violation of substantive due process. A mere diminution in property value due to a zoning change does not amount to a taking; the owner must show the property is unsuitable or unmarketable as zoned. Here, Dorman’s own expert acknowledged that the property could be profitably developed for residential use, meaning it retained economic viability. Applying the Penn Central test, the court found the rezoning was a legitimate government action to ensure conformity, it did not eliminate the property's economic value, and it did not interfere with distinct, investment-backed expectations. Dorman's expectations were unreasonable because he conducted minimal due diligence and had no vested right in the 'Light Industrial' classification, which requires a valid building permit and substantial construction—neither of which he had. Similarly, the substantive due process claim fails because the rezoning advanced the legitimate government interests of preserving the neighborhood's residential character and controlling traffic, and was therefore not arbitrary or capricious.
Analysis:
This decision reinforces the high threshold required to succeed on a regulatory takings claim based on rezoning. It clarifies that a significant reduction in potential profit or market value is insufficient; a claimant must demonstrate a near-total loss of economic viability. The case also solidifies the 'vested rights' doctrine in Michigan, providing a clear rule that preliminary work is not enough to protect a developer from subsequent zoning changes. This holding provides municipalities with significant latitude in land use planning and serves as a strong caution to developers and investors to conduct thorough due diligence, as courts will not protect speculative expectations that are not grounded in permits and substantial construction.
