June 05, 2017

Supreme Court Decides Town of Chester v. Laroe Estates, Inc.

On June 5, 2017, the Supreme Court decided Town of Chester v. Laroe Estates, Inc., No. 16-605, holding that a litigant who wishes to seek relief different from that sought by a party with standing in a lawsuit may not intervene in that lawsuit as a matter of right under Federal Rule of Civil Procedure 24(a)(2) absent Article III standing.

In 2001, a land developer purchased hundreds of acres of land in the town of Chester, New York, on which he intended to build a housing subdivision. The developer then sought the town’s approval of the subdivision plan. After purportedly spending more than 10 years and millions of dollars to obtain the town’s approval, the developer sued the town on nine federal- and state-law claims, including a regulatory takings claim under the Fifth and Fourteenth Amendments. 

The town removed the action to the U.S. District Court for the Southern District of New York, which dismissed the developer’s takings claim as unripe. On appeal, the U.S. Court of Appeals for the Second Circuit reversed that decision and remanded the case.

On remand, real estate development company Laroe Estates, Inc. sought to intervene as a matter of right under Rule 24(a)(2) and filed an intervenor’s complaint asserting a regulatory takings claim that was substantively identical to the developer’s. The company contended that it had contracted with the developer in 2003 for a right to purchase some of the property in the subdivision, once approved, in exchange for a mortgage on the real estate, and had paid the developer several million dollars in furtherance of that agreement. It further contended that after a bank sought to foreclose on the real estate in 2013, the company and the developer had renegotiated their agreement and that, under that revised agreement, the company was permitted to settle the developer’s debt with the bank and was deemed to have paid the developer in full for the parcels, and the developer was obligated to transfer those parcels to the company once the town approved the subdivision plan.

The district court denied the company’s motion to intervene and held that the company’s equitable ownership of the real estate did not confer on it the Article III standing necessary to intervene. The court of appeals reversed and held that Article III standing was not necessary for intervention. The Supreme Court vacated the opinion and remanded the case to the court of appeals.

The Court began its analysis by reiterating that Article III limits the jurisdiction of courts to proper “cases” and “controversies” and that the doctrine of standing effects this limitation. It confirmed that a plaintiff must establish Article III standing for each claim advanced and each item of relief sought by showing “(1) . . . an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” And in the case of multiple plaintiffs, “[a]t least one plaintiff must have standing to seek each form of relief requested in the complaint.” The Court then confirmed that these same principles extend to litigants seeking to intervene as a matter of right, holding that, “[f]or all relief sought, there must be a litigant with standing, whether that litigant joins the lawsuit as a plaintiff, a coplaintiff, or an intervenor of right.”

Based on the record, the Court concluded that it was “ambiguous whether [the company] is seeking damages for itself or is simply seeking the same damages sought by [developer].” It thus remanded the case to the court of appeals to answer this question and thus whether the company is obligated to demonstrate its own Article III standing.

Justice Alito delivered the unanimous opinion of the Court.

Download Opinion of the Court

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