## Facts

- Bradley Industrial Park, Inc., owned by John and Patrick Magee, acquired about 34 acres in the Town of Orangetown to build a large industrial facility.
- The Town approved the development plans in 1980, and the Building Inspector issued a building permit.
- Relying on the permit, defendants began work and made substantial improvements; the trial court found expenditures exceeding $4 million before the Town halted the project.
- Although the permit text referenced land clearing and foundational work, the courts found it effectively authorized construction of the entire building if later detailed plans remained consistent with the approved design.
- Community opposition intensified, and the Town Supervisor directed the Building Inspector to revoke the permit; the permit was revoked on July 25, 1985.
- The trial court found the Town’s stated code-based reasons were largely unauthorized by ordinance and unsupported by evidence, and that revocation occurred solely to satisfy political concerns.
- After revocation, the Town amended its zoning code to bar commercial buildings on the parcel.
- The Town sued to require removal of a temporary structure on the site; defendants counterclaimed for reinstatement of the permit and damages under 42 U.S.C. § 1983.

## Issues

1. Whether defendants had a constitutionally protected property interest in the building permit under New York vested-rights doctrine due to substantial, good-faith reliance expenditures.
2. Whether the Town’s revocation and related actions constituted a final, ripe governmental determination for § 1983 purposes.
3. Whether the permit revocation reflected municipal policy attributable to the Town for § 1983 liability.
4. Whether the damages award, including use of an economic model to measure loss, was legally permissible and supported by the evidence.

## Decision

- The Court of Appeals affirmed the judgment reinstating the permit and awarding § 1983 damages (and affirming liability as modified below regarding fees).
- The court held defendants had a vested right in the permit based on substantial changes and expenses incurred in good-faith reliance on a legally issued permit.
- The court upheld the finding that the revocation was arbitrary and pretextual, driven by political opposition rather than valid ordinance-based grounds.
- The court rejected the Town’s ripeness/finality arguments, concluding the Town’s actions definitively blocked the project.
- The court held the Building Inspector’s revocation, directed by the Town Supervisor and reinforced by subsequent rezoning, constituted official municipal action supporting § 1983 municipal liability.
- The court upheld damages of $5,137,126 as supported by the record and an appropriate measure of loss from the unconstitutional deprivation.

## Legal Principles

- A landowner acquires vested rights in a permit when, pursuant to a legally issued permit, the owner makes substantial changes and incurs substantial expenses in good-faith reliance on the permit.
- Revocation of a vested permit based on pretext or political pressure, without lawful support in applicable ordinances and evidence, can constitute an unconstitutional deprivation of property without due process actionable under 42 U.S.C. § 1983.
- For § 1983 municipal liability, actions of an official with final local authority over permits, especially when directed or ratified by senior municipal officials and confirmed through related governmental acts, may be treated as municipal policy.
- A land-use deprivation claim is sufficiently final and ripe when the authorized official formally revokes the permit and the municipality takes definitive steps (including rezoning and enforcement litigation) that foreclose the proposed development.
- Economic-loss damages for an unconstitutional permit revocation may be awarded under § 1983 when supported by competent proof linking the governmental action to the loss.

## Conclusion

The court held that substantial, good-faith reliance on a legally issued permit created a protected property interest, and that the Town’s politically motivated revocation and related measures amounted to an unconstitutional deprivation attributable to municipal policy, supporting reinstatement of the permit and a substantial § 1983 damages award.


Town of Orangetown v. Magee, 88 N.Y.2d 41, 665 N.E.2d 1061 (N.Y. 1996)