The Second Circuit applied the Williamson County Regional Planning Comm. v. Hamilton Bank Johnson City, 473 US 172 (1985) rule to a case involving an actual physical taking. The rule had been applied previously to claims involving regulatory takings. The Supreme Court held that a plaintiff must first obtain a final decision and exhaust all state remedies before suing in Federal Court.
In Kurtz v Verizon New York, Docket No 13-3900 CV, the Second Circuit ruled by decision dated July 16, 2014, that even in a physical taking, property owners may not seek compensation in Federal Court until they exhaust all State remedies. The plaintiffs alleged that Verizon installed multi-unit terminal boxes on their property without just compensation, also citing procedural due process violations in connection with the installation. Those procedural violations included: Concealing their right to compensation, or failing to notify them of it; offering no compensation, and giving the false impression that they must consent if they wanted telephone service in their buildings. The New York State Court of Appeals had earlier ruled in related litigation that class certification should be denied. Corsello v Verizon N.Y. Inc., 18 NY3d 777 (2012).
The Second Circuit noted that even though a physical taking in itself satisfies the need to show finality, this was only the first requirement under Williamson County. The Court held, “The plaintiff’s takings claim here is unripe. Although the pleading of a physical taking sufficiently shows finality, plaintiffs flunk the exhaustion requirement by their failure to seek compensation at the State level.” The Second Circuit addressed due process claims holding that Williamson County applies to due process claims arising from the same nucleus of facts as a taking claim. In short, the Court concluded that since New York’s inverse condemnation procedures are adequate on their face, no claim would arise until plaintiff’s, having availed themselves of these procedures, show them to be wanting in practice.