## Facts

- RRI Realty Corp. purchased a 63-room oceanfront mansion in Southampton and planned extensive renovations requiring local approvals and variances.
- Under the Village’s ordinances, final design plans required approval by the Architectural Review Board (ARB) before the Building Inspector could issue a building permit.
- The ARB repeatedly refused to approve RRI’s plans, preventing issuance of the permit.
- RRI pursued state-court relief and obtained an order directing the Village to issue the permit.
- RRI then filed a federal action under 42 U.S.C. § 1983 alleging deprivation of property without due process based on the permit denial and delay.
- After trial, a jury awarded roughly $2.7 million in damages, and the court awarded attorney’s fees under 42 U.S.C. § 1988.
- The district court denied RRI leave to amend to seek punitive damages against officials in their individual capacities.
- The Village and officials appealed the judgment; RRI cross-appealed the denial of leave to amend.

## Issues

1. Whether RRI had a “legitimate claim of entitlement” to the building permit—i.e., a protected property interest under the Fourteenth Amendment—given the discretion vested in local officials.
2. Whether, if a constitutional violation existed, the district court erred in denying leave to amend to seek punitive damages against officials individually.

## Decision

- The Second Circuit reversed and directed entry of judgment for the defendants.
- The court held the record did not show a sufficiently clear entitlement to the permit to constitute a protected property interest.
- The damages and attorney’s fee awards were vacated.
- The cross-appeal regarding punitive damages was dismissed as moot.

## Legal Principles

- A due process “property interest” requires more than a unilateral expectation; it requires a legitimate claim of entitlement grounded in state and local law.
- In land-use and permitting disputes, entitlement exists only when approval is virtually assured—i.e., when the issuing authority has little or no discretion to deny the permit.
- A state-court ruling that a permit must issue may show state-law error by local officials but does not, by itself, establish a federal constitutional property interest.
- Federal § 1983 due process liability does not arise from every improper or erroneous local permit decision; the constitutional inquiry turns on the degree of discretion under the governing legal scheme at the time of the alleged deprivation.

## Conclusion

Because local law vested the ARB with meaningful discretion over design approval, RRI lacked a constitutionally protected property interest in the permit; the Second Circuit therefore reversed the § 1983 judgment, vacated damages and fees, and dismissed the punitive-damages cross-appeal as moot.


RRI Realty Corp. v. Inc. Vill. of Southampton, 870 F.2d 911 (2d Cir. 1989)