Rule on De Facto Finality and Accrual of §1983 Procedural and Substantive Due Process Claims in Land-Use Disputes

Introduction

Potter v. Incorporated Village of Ocean Beach (2d Cir. Apr. 10, 2025) is a summary order addressing the timeliness of a §1983 challenge to municipal land-use decisions. Plaintiff‐appellant Philip G. Potter, owner of a seasonal residence in Ocean Beach, alleged that village officials violated his procedural and substantive due process rights when they:

Revoked his Certificate of Occupancy (CO) in 2011;
Issued criminal citations in early 2012 for alleged building-code violations;
Denied his rental‐permit applications in 2016–2018;
Refused to conduct a state-court-ordered hearing on the CO revocation.

The Village of Ocean Beach, various building inspectors, a prosecutor, hearing officer, and board trustees (defendants), moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing that Potter’s claims were time-barred. The District Court (Brown, J.) granted dismissal, and Potter appealed.

Summary of the Judgment

The Second Circuit affirmed. It held:

Section 1983 claims borrow New York’s three-year statute of limitations (N.Y. C.P.L.R. § 214(5)).
Accrual of a §1983 claim occurs when “the plaintiff has a complete and present cause of action”—i.e., when he knows enough of the critical facts of injury and causation to seek legal advice (Wallace v. Kato, 549 U.S. 384 (2007); Kronisch v. United States, 150 F.3d 112 (2d Cir. 1998)).
Potter’s claims based on the 2012 citations and the 2016–2018 rental-permit denials accrued before August 29, 2020, and are therefore barred.
Despite the Village Board’s 2015 “indefinite tabling” of the CO revocation recommendation, the record showed that by 2016 Potter understood the Village acted as though his CO were invalid—thus triggering accrual by that time as well.
Neither the continuing-violation doctrine nor equitable estoppel saved his suit against the CO revocation.

Analysis

Precedents Cited

Pearl v. City of Long Beach, 296 F.3d 76 (2d Cir. 2002): §1983 borrows New York’s three-year limitations period.
Owens v. Okure, 488 U.S. 235 (1989): Federal law determines accrual; state law sets period.
Wallace v. Kato, 549 U.S. 384 (2007): Claim accrues when plaintiff can file suit and obtain relief.
McDonough v. Smith, 588 U.S. 109 (2019): Common-law accrual principles apply.
DeSuze v. Ammon, 990 F.3d 264 (2d Cir. 2021): A claim accrues once the plaintiff knows “critical facts of injury and causation.”
Kronisch v. United States, 150 F.3d 112 (2d Cir. 1998): Accrual when plaintiff has reason to seek legal advice.
Ateres Bais Yaakov Academy v. Town of Clarkstown, 88 F.4th 344 (2d Cir. 2023): Ripeness and de facto finality in land-use decisions.
National R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002): Continuing-violation doctrine excludes discrete acts.
Ellul v. Congregation of Christian Brothers, 774 F.3d 791 (2d Cir. 2014): Equitable estoppel applies only when defendant’s misconduct prevented timely filing.

Legal Reasoning

1. Statute of Limitations as an Affirmative Defense
Although a limitations defense ordinarily arises under Rule 8(c), this Court permits a pre–answer Rule 12(b)(6) dismissal where the defense is clear on the face of the complaint and judicially noticeable materials. Whiteside v. Hover-Davis, Inc., 995 F.3d 315 (2d Cir. 2021).

2. Accrual—Federal Law Governs
Borrowing New York’s three-year period, accrual was determined by federal common-law: “when the plaintiff knows or has reason to know of the injury which is the basis of his action.” Veal v. Geraci, 23 F.3d 722, 724 (2d Cir. 1994).

3. De Facto Finality in Land-Use Disputes
Even if the Village Board never formally voted to revoke Potter’s CO, its repeated denial of rental permits on the ground that the CO was invalid constituted a “definitive position” causing “de facto finality” and concrete injury. Pakdel v. City & Cnty. of San Francisco, 594 U.S. 474, 478–79 (2021).

4. Rejection of Tolling Doctrines
• Continuing Violation: Discrete acts (each permit denial) do not form a single continuing violation. Morgan, 536 U.S. at 114–15.
• Equitable Estoppel: Potter did challenge the CO revocation in state court in 2019, so defendant misconduct did not cause his delay. Ellul, 774 F.3d at 802.

Impact

Clarifies that land-use due process claims under §1983 accrue when a municipal body, through words or conduct, takes a definitive position affecting property rights—even if formal votes are deferred indefinitely.
Warns property owners that repeated administrative actions (e.g., permit denials) can trigger the running of limitations.
Encourages municipalities to adopt clear procedures and formalize final decisions rather than leave matters in limbo.
Provides a roadmap for lower courts assessing ripeness and accrual in zoning and building‐code disputes.

Complex Concepts Simplified

§1983 Claim Accrual: Your lawsuit “starts the clock” when you know both that you’ve been wronged and who did it.
Certificate of Occupancy (CO): A permit confirming a building complies with local laws and may be occupied.
De Facto Finality: Even without a formal vote, government actions can be “final” if they unmistakably set a policy or decision that harms you.
Continuing Violation Doctrine: Only applies when the unlawful conduct is ongoing and indistinct—not a series of separate denials or citations.
Equitable Estoppel: Prevents a defendant from hiding facts to lull a plaintiff into delay—but here the plaintiff did challenge the CO revocation in 2019, so estoppel did not apply.

Conclusion

Potter v. Incorporated Village of Ocean Beach affirms that §1983 due process claims rooted in land-use decisions accrue when the property owner becomes aware of a final administrative position—even if that position is communicated informally through repeated permit denials. The decision underscores the importance of timely legal challenges and provides clarity on accrual, ripeness, and the limited role of tolling theories in zoning disputes. Municipalities and property owners alike must recognize the decisive effect of “de facto” administrative actions on the statute of limitations.