Rezoning Does Not Create Due Process or Taking Liability Absent Vested Rights (and Renewal Requires Justification): Dagro Assoc., LLC v City of Yonkers

1. Introduction

Dagro Assoc., LLC v City of Yonkers (2026 NY Slip Op 01032 [2d Dept Feb. 25, 2026]) addresses a familiar land-use dispute: a property owner sought damages based on alleged constitutional violations after a municipality denied site plan approval and later rezoned the parcel from commercial to residential, allegedly collapsing a pending sale.

Parties. Plaintiff-appellant Dagro Associates, LLC owned an undeveloped parcel in the City of Yonkers (defendant-respondent). Dagro had contracted to sell the parcel to MJM Travel Group, Inc. contingent on governmental approvals.

Key events. MJM applied for site plan approval in March 2013; the Planning Board denied it on December 11, 2013. In June 2014, Yonkers rezoned the property to residential, after which MJM canceled under the approvals contingency.

Claims at issue. The first four causes of action alleged (i) substantive due process, (ii) procedural due process, (iii) inverse condemnation, and (iv) an unconstitutional taking under state and federal constitutions. The Supreme Court granted summary judgment dismissing those claims and later denied Dagro’s motion to renew its opposition. The Second Department affirmed.

2. Summary of the Opinion

  • Substantive due process dismissed: Dagro lacked a vested property interest in continued commercial zoning because it had not begun substantial construction or made substantial expenditures before the zoning change; equitable estoppel did not apply absent municipal misconduct or bad-faith delay.
  • Procedural due process dismissed: Without a vested property interest, the procedural due process claim failed at the threshold.
  • Inverse condemnation/taking dismissed: Applying regulatory-takings principles, the rezoning was not a taking; diminution in value and loss of an unclosed sale were insufficient, and the regulation did not eliminate economic value “one step short of complete.”
  • Renewal denied: Dagro failed to give a reasonable justification for not presenting the allegedly “new” facts earlier, as required by CPLR 2221(e).

3. Analysis

A. Precedents Cited

1) Substantive due process and vested rights

The court framed substantive due process in land-use cases through Glacial Aggregates LLC v Town of Yorkshire, 14 NY3d 127, 136, and Nicolakis v Rotella, 24 AD3d 739, 740: the claimant must show (1) deprivation of a vested property interest and (2) government action wholly without legal justification. This sequencing matters: without vesting, the court does not reach whether the action was “wholly without legal justification.”

For vesting, the court relied on the classic New York rule that rights vest only after “substantial construction” and “substantial expenditures” before the zoning change: Matter of Lombardi v Habicht, 293 AD2d 474, 475-476, and Town of Orangetown v Magee, 88 NY2d 41, 47. It reinforced (as applied to an undeveloped parcel) that the absence of begun construction is dispositive, citing Greenport Group, LLC v Town Bd. of the Town of Southold, 167 AD3d 575, 578, and Matter of Berman v Warshavsky, 256 AD2d 334, 335-336.

2) Equitable estoppel against a municipality

To defeat vesting’s strictness, Dagro argued equitable estoppel—i.e., that Yonkers’ conduct should prevent it from changing the zoning. The court rejected that theory under Cymbidium Dev. Corp. v Smith, 133 AD2d 605, 608, and Matter of Mascony Transp. & Ferry Serv. v Richmond, 71 AD2d 896, affd 49 NY2d 969: equitable estoppel requires evidence of municipal misconduct or extraordinary (bad-faith) delay designed to prevent vesting. The court held Dagro offered no indication the Planning Board’s timing was a bad-faith tactic to block vesting.

3) Procedural due process requires an underlying property interest

The court used the two-step framework from Kentucky Dept. of Corr. v Thompson, 490 US 454, 460, and Shakur v Selsky, 391 F3d 106, 118: first determine whether there is a protected liberty/property interest; only then assess adequacy of procedures. Citing Azizi v Thornburgh, 908 F2d 1130, 1134, and Orange Lake Assoc., Inc. v Kirkpatrick, 825 F Supp 1169, 1178, affd 21 F3d 1214, the court treated the absence of a vested right as fatal—ending the procedural due process analysis at step one.

4) Inverse condemnation and regulatory takings

The court described inverse condemnation using Corsello v Verizon N.Y., Inc., 18 NY3d 777, 786, and the standard for a de facto taking from Matter of Willis Ave. Bridge Replacement, 177 AD3d 453, 455.

For regulatory takings by zoning, the court invoked the familiar multi-factor approach: Blue Is. Dev., LLC v Town of Hempstead, 131 AD3d 497, 502, which in turn draws from Penn Cent. Transp. Co. v City of New York, 438 US 104, 124 (economic impact, interference with distinct investment-backed expectations, and character of the governmental action). The court also emphasized limits on “diminution” theories via de St. Aubin v Flacke, 68 NY2d 66, 76-77, and reiterated the high bar for loss of value: Noghrey v Town of Brookhaven, 48 AD3d 529, 532 (loss in value must be “one step short of complete”). It analogized to cases finding no taking where property retains economic use, including Greenport Group, LLC v Town Bd. of the Town of Southold, 167 AD3d at 578, and Matter of New Cr. Bluebelt, Phase 4, 122 AD3d 859, 862.

5) CPLR renewal is unavailable without a reasonable justification

Turning to post-summary-judgment practice, the court relied on CPLR 2221(e)(2) and (3) (new facts + reasonable justification), and the strict rule stated in Caronia v Peluso, 170 AD3d 649, 651: where the movant fails to provide reasonable justification, the court “lacks discretion” to grant renewal. It also cited Bockstruck v Town of Islip, 219 AD3d 439, 442-443, applying that requirement.

B. Legal Reasoning

1) The decision is structured as “threshold” analysis

The opinion proceeds by gatekeeping doctrines that narrow constitutional land-use claims: (i) substantive due process requires a vested property interest; (ii) procedural due process likewise requires an underlying protected property interest; and (iii) takings liability requires near-total economic deprivation or a sufficiently severe regulatory burden under Penn Cent.

2) No vested right: undeveloped land + no substantial expenditures

The court treated the parcel’s undeveloped status as central. Because “no construction had begun prior to the effective date of the ordinance,” and because Dagro did not show substantial expenditures beyond ordinary carrying/maintenance costs, Yonkers met its prima facie burden on summary judgment. Dagro’s inability to point to qualifying pre-amendment reliance investment meant it could not create a triable issue.

3) No estoppel: no bad-faith municipal conduct aimed at preventing vesting

The court required proof that the municipality’s conduct was not merely adverse but strategically improper—misconduct or extraordinary delay undertaken to thwart vesting. Dagro’s record (as characterized by the court) lacked evidence that the Planning Board acted in bad faith in its processing timeline.

4) No taking: loss of a contingent sale and diminished value are not enough

The court’s takings analysis is notably practical. It distinguished the “investment-backed expectations” of a deal that had not closed—especially one expressly contingent on approvals— from expectations grounded in substantial reliance investment. It also emphasized the “character” factor: this was not a physical invasion; it was a regulation. Finally, even crediting diminution in value, the court held Dagro failed to show deprivation of value approaching the “one step short of complete” standard.

5) Renewal denied: strict compliance with CPLR 2221(e)

The renewal holding underscores that a losing party cannot use CPLR 2221(e) as a second chance absent a concrete, reasonable explanation for why the new material was unavailable or could not have been presented earlier. Without that justification, the court treated denial as mandatory under Caronia v Peluso.

C. Impact

  • Reinforces vesting as a high bar in rezoning disputes: Owners of undeveloped parcels face substantial difficulty framing rezoning as a due process deprivation unless they can document substantial, pre-amendment construction/expenditures tied to the prior zoning.
  • Limits reliance on pending transactions as “expectations”: A contract contingent on governmental approvals is weak evidence of “distinct investment-backed expectations” for takings purposes, especially where the buyer can walk away upon denial.
  • Signals evidentiary demands for estoppel claims: Allegations of delay are not enough; litigants should expect to need concrete proof of bad faith or misconduct targeted at preventing vesting.
  • Procedural posture matters: Because the case was resolved on summary judgment, the opinion highlights what records must contain (construction timelines, expenditure proof, valuation impact) to survive dismissal.
  • Post-decision motion practice is constrained: The renewal discussion warns that CPLR 2221(e) is rigid—failure to justify omission of facts is fatal.

4. Complex Concepts Simplified

Vested rights (in zoning)
A landowner’s right to keep using property under old zoning after the law changes. In New York, it usually requires substantial construction and substantial expenditures made before the new zoning takes effect—planning or hoping to build is not enough.
Substantive due process (land-use)
A constitutional claim that government action is so unjustified it violates fundamental fairness. In land-use, courts first ask whether the owner had a vested property interest that was taken away.
Procedural due process
A constitutional claim about unfair process (lack of notice, hearing, etc.). Courts first ask whether the person had a protected property interest at all; if not, the claim ends.
Inverse condemnation
A lawsuit by the property owner seeking compensation for a “de facto” taking when the government did not formally condemn the property but allegedly took it in practice.
Regulatory taking / Penn Central factors
A taking claim based on regulation (like rezoning), evaluated by economic impact, interference with investment-backed expectations, and the character of government action. A mere decrease in value usually does not qualify; near-total economic wipeout is typically required.
Motion to renew (CPLR 2221[e])
A request to reargue based on new facts that would change the result, coupled with a reasonable justification for not presenting those facts earlier. Without justification, the court cannot grant renewal.

5. Conclusion

Dagro Assoc., LLC v City of Yonkers consolidates key constraints on constitutional challenges to rezoning. The Second Department affirmed summary judgment because Dagro lacked vested rights (no substantial construction/expenditures), could not invoke equitable estoppel absent proof of bad-faith municipal misconduct, and could not meet the demanding standards for a regulatory taking under Penn Cent. Transp. Co. v City of New York and related New York authority. The court also reinforced that CPLR 2221(e) renewal is unavailable without a reasonable justification for earlier omission—tightening the procedural pathway for relitigating failed land-use claims.