Toll Bros Inc v. Readington

Opinions of the United

2009 Decisions States Court of Appeals

for the Third Circuit

2-4-2009

Toll Bros Inc v. Readington

Precedential or Non-Precedential: Precedential

Docket No. 06-1053

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

No. 06-1053

____________

TOLL BROS., INC.,

Appellant

v.

TOWNSHIP OF READINGTON; MAYOR AND

COMMITTEE FOR THE TOWNSHIP OF READINGTON,

individually and in their official capacities; TOWNSHIP OF

READINGTON PLANNING BOARD; MEMBERS OF THE

TOWNSHIP OF READINGTON PLANNING BOARD,

individually and in their official capacities; JULIA C. ALLEN,

individually and in her official capacity; RONALD P.

MONACO, individually and in his official capacity; BEATRICE

MUIR, individually and in her official capacity; GERARD J.

SHAMEY, individually and in his official capacity; FRANK L.

GATTI, individually and in his official capacity; JOHN AND

JANE DOES 1-20; ABC MUNICIPAL AGENCIES 1-10,

fictitious agencies

____________

On Appeal from the United States District Court

for the District of New Jersey

(No. 04-cv-06043)

District Judge: Hon. Garrett E. Brown, Jr., Chief Judge

Argued: Tuesday, January 23, 2007

Before: SCIRICA, Chief Judge, FUENTES and CHAGARES,

Circuit Judges.

______________________

(Filed: February 4, 2009)

Darren H. Goldstein [Argued]

James A. Kozachek

Albert M. Belmont, III

Carl S. Bisgaier

Flaster Greenberg, P.C.

1810 Chapel Avenue West

Cherry Hill, NJ 08002

Counsel for Appellant

Valerie J. Kimson [Argued]

Susan A. Lawless

Purcell, Ries, Shannon, Mulcahy & O’Neill

One Pluckemin Way

Suite 210, P.O. Box 754

Bedminster, NJ 07921

John M. Bowens, Esq.

Schenck, Price, Smith & Smith

10 Washington Street

P.O. Box 905

Morristown, NJ 07963-0905

Counsel for Appellees

_________

OPINION OF THE COURT

____________

CHAGARES, Circuit Judge.

We consider whether a real estate developer with an option

to buy a parcel of land has standing to challenge zoning restrictions

that prevent its planned development from going forward. We hold

2

that it does.

I.

Appellant Toll Brothers, Inc. describes itself as “the nation’s

leading builder of luxury homes . . . .” See Toll Brothers,

http://www.tollbrothers.com (last visited January 15, 2009).1 Toll

Brothers prides itself on developing communities in prime

locations; it carefully chooses “the most scenic areas that offer a

blend of rural charm and suburban convenience.” Id. In early

2001, Toll Brothers found just such a setting on a 160-acre tract of

land in the Township of Readington, New Jersey (“the Township”).

Toll Brothers entered into an option contract with the tract’s owner,

Readington Properties, LLC.

Pursuant to the contract, Readington Properties granted Toll

Brothers an exclusive option to buy the tract at a fixed price. In

exchange, Toll Brothers promised to make periodic payments to

Readington Properties. The original contract stated a five-year

option with an expiration date of January 2006. Subsequent

amendments have extended the option period, and Toll Brothers’

exclusive option remains in force. During the life of the option,

Readington Properties cannot “enter into any lease, agreement of

sale,” or any other agreement affecting the property. Appendix

(“App.”) 203. In addition, Toll Brothers has the right to come onto

the property “to perform engineering, environmental and such other

feasibility studies” as it deems necessary. App. 200.

At the time of the contract’s formation, the Township’s

zoning laws classified part of the tract as “research-office,” and

part as “rural-residential.” The rural-residential classification

allowed for “development of detached single-family dwelling units,

1

“For purposes of ruling on a motion to dismiss for want of

standing, both the trial and reviewing courts must accept as true all

material allegations of the complaint, and must construe the

complaint in favor of the complaining party.” Warth v. Seldin, 422

U.S. 490, 501 (1975); see Bennett v. Spear, 520 U.S. 154, 168

(1997). Our recitation of the facts reflects this standard.

3

farm and agricultural uses, and open space and parks.” App. 45.

Residential development in this zone could not exceed one unit per

three acres. In the research-office zone, “general office

development” was permitted. Id.

Toll Brothers quickly began to formulate plans for both the

rural-residential and research-office portions of the property. For

the rural-residential zone, the company “engaged in preliminary

planning” to develop housing “for families with children.” App.

46, 49. As to the research-office zone, Toll Brothers drafted plans

for an office park. For whatever reason, the office plans advanced

more rapidly than the residential plans. In May 2002, Toll Brothers

submitted a formal application to the Township Planning Board

requesting approval for construction of an office development.

Toll Brothers claims that this proposal was consistent with the

Township’s zoning ordinance “and with the general character” of

the area. App. 46.

The Township did not approve Toll Brothers’ application.

Instead, it passed an ordinance rezoning the entire tract

“agricultural-residential.” The agricultural-residential zone

allowed for just three uses by right: “(1) farms; (2) open space and

parks; and (3) residential uses at one residential dwelling per six

acres.” App. 47. As a result, office parks were prohibited. The

requirement of six acres per dwelling, according to Toll Brothers,

made any residential development economically unfeasible. Toll

Brothers’ development plans thus have been thwarted.

Toll Brothers contends that this change in law was no

ordinary zoning decision. It was instead part of a nefarious plot

hatched by Township officials to “reduce the fair market value of

properties held by disfavored landowners.” App. 33. By

frustrating the lawful plans of Toll Brothers and other developers,

Township officials sought to “drive down the value of the

[targeted] propert[ies] and acquire [them] cheaply at . . . price[s]

below their fair market values.” App. 36. They also “intended to

discriminate against families with children . . . in an effort to

reduce [their] residential opportunities” within the Township. App.

41-42.

4

Toll Brothers claims the Township’s actions have caused it

considerable injury. The company is in the real estate development

business, but the Township has prevented all profitable

development of the Readington Properties parcel. Toll Brothers is

maintaining its option by rendering periodic payments to

Readington Properties. If and when the Township approves Toll

Brothers’ plans, the company still intends to exercise its option. In

the meantime, Toll Brothers has spent considerable amounts of

money on planning, including fees for “architects and other

professionals.” App. 291. In addition to these “sunk costs,” Toll

Brothers has also lost out on the potential profits.

In August 2002, Toll Brothers filed a lawsuit against the

Township in New Jersey Superior Court. The complaint alleged

violations of the New Jersey Municipal Land Use Law, N.J. Stat.

Ann. §§ 40:55D-1 to -163; the Equal Protection Clause; the Due

Process Clause; the Takings Clause; equivalent provisions of the

New Jersey Constitution; and the public policy and law of New

Jersey as expressed in the state Supreme Court’s Mount Laurel

decisions.2 That action remains pending.

In December 2004, Toll Brothers brought this suit against

the Township, the Township Committee, the Township Planning

Board, and various Township officials (collectively, “defendants”).

The allegations in this case are quite similar to the claims pending

in state court, but they do not overlap completely. In this case, Toll

Brothers brings claims under the Equal Protection Clause; the Due

Process Clause; the Takings Clause; The Fair Housing Act of 1968,

as amended, 42 U.S.C. §§ 3601-31; the New Jersey Law Against

Discrimination, N.J. Stat. Ann. §§ 10:5-1 to -49; the federal

Racketeer Influenced and Corrupt Organizations (RICO) Act, 18

U.S.C. §§ 1961-66; and New Jersey’s RICO Act, N.J. Stat. Ann. §§

2C:41-1 to -6.2. Toll Brothers seeks an order “[i]nvalidating and

setting aside” the Township’s zoning ordinance, an order

“enjoining Defendants . . . from enforcing” the ordinance, and

2

See generally S. Burlington County NAACP v. Twp. of

Mount Laurel, 456 A.2d 390 (N.J. 1983); S. Burlington County

NAACP v. Twp. of Mount Laurel, 336 A.2d 713 (N.J. 1975).

5

money “damages sustained as a result of Defendants’ illegal

actions.” App. 67.

The defendants moved to dismiss Toll Brothers’ complaint

for, inter alia, lack of standing.3 Toll Brothers opposed the motion

and, in the alternative, sought leave to file an amended complaint.

In an unreported decision, the District Court granted the motion to

dismiss. See Toll Bros. v. Twp. of Readington, No. 04-6043, 2005

U.S. Dist. LEXIS 25793 (D.N.J. Oct. 31, 2005). The court found

it significant that Toll Brothers was “the owner of an unexercised

option.” Id. at *14. It noted that a favorable decision would still

leave Toll Brothers “free to elect not to exercise the option.” Id.

Thus, the court concluded, Toll Brothers’ claimed injury was “not

concrete and particularized, nor [was] it likely to be redressed by

a favorable decision.” Id. at *14-*15 (quotation marks omitted).

Independent of that analysis, the court also pointed out that Toll

Brothers’ complaint alleged discrimination against families with

children. These families, however, were not parties. Id. at *12.

As a result, the court concluded that Toll Brothers lacked third-

party standing to assert the families’ rights. Id. The court did not

specifically consider Toll Brothers’ request for leave to amend the

complaint in its decision, but the court squarely rejected the request

in its opinion denying Toll Brothers’ motion for reconsideration.

This appeal followed.

II.

3

The defendants’ motion to dismiss also raised the issue of

Colorado River abstention. See Colorado River Water

Conservation Dist. v. United States, 424 U.S. 800 (1976). Under

Colorado River, the threshold question is whether a parallel state

proceeding raises “substantially identical claims [and] nearly

identical allegations and issues.” Yang v. Tsui, 416 F.3d 199, 204

n.5 (3d Cir. 2005) (quotation marks omitted). If so, then the court

must consider the relative inconvenience of federal litigation, the

need to avoid piecemeal adjudication, and the order in which the

actions were filed. See Colorado River, 424 U.S. at 818. We note

the Colorado River issue, but leave it for the District Court to

address in the first instance.

6

Toll Brothers alleged that the District Court had jurisdiction

pursuant to 28 U.S.C. §§ 1331 and 1332 and supplemental

jurisdiction over its state law claims pursuant to 28 U.S.C. § 1367.

This Court has jurisdiction pursuant to 28 U.S.C. § 1291.

We exercise plenary review over the District Court’s

dismissal of the complaint for lack of standing. See Goode v. City

of Philadelphia, 539 F.3d 311, 316 (3d Cir. 2008); ACLU-NJ v.

Twp. of Wall, 246 F.3d 258, 261 (3d Cir. 2001). We review the

District Court’s denial of Toll Brothers’ request for leave to file an

amended complaint for abuse of discretion. Winer Family Trust v.

Queen, 503 F.3d 319, 325 (3d Cir. 2007).

III.

Article III of the Constitution limits federal “judicial Power”

to the adjudication of “Cases” or “Controversies.” U.S. Const. art.

III, § 2. This limitation is essential to our system of separated

powers. See Valley Forge Christian Coll. v. Ams. United for

Separation of Church & State, Inc., 454 U.S. 464, 473-74 (1982);

see also Hein v. Freedom From Religion Found., Inc., 551 U.S. —,

127 S. Ct. 2553, 2570 (2007) (plurality opinion). In cases

involving state or local government, “it also serves to protect and

preserve the principle of dual sovereignty” embedded in our

founding charter. Storino v. Borough of Point Pleasant Beach, 322

F.3d 293, 300 (3d Cir. 2003). Without a case-or-controversy

requirement, the judicial power would “‘extend[] to every question

under the constitution,’” and “‘the other departments would be

swallowed up by the judiciary.’” DaimlerChrysler Corp. v. Cuno,

547 U.S. 332, 341 (2006) (quoting 4 Papers of John Marshall 95

(C. Cullen ed. 1984)) (emphasis removed). With the case-or-

controversy requirement, on the other hand, courts stay confined to

their “proper—and properly limited—role,” Warth v. Seldin, 422

U.S. 490, 498 (1975), of “decid[ing] on the rights of individuals,”

Marbury v. Madison, 5 U.S. (1 Cranch) 137, 170 (1803). There is,

therefore, “‘[n]o principle . . . more fundamental to the judiciary’s

proper role in our system of government than the constitutional

limitation of federal-court jurisdiction to actual cases or

controversies.’” Raines v. Byrd, 521 U.S. 811, 818 (1997)

(quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37

7

(1976)).

Courts enforce the case-or-controversy requirement through

the several justiciability doctrines that “‘cluster about Article III.’”

Allen v. Wright, 468 U.S. 737, 750 (1984) (quoting Vander Jagt v.

O’Neill, 699 F.2d 1166, 1178-79 (D.C. Cir. 1983) (Bork, J.,

concurring)). They include standing, ripeness, mootness, the

political-question doctrine, and the prohibition on advisory

opinions. See DaimlerChrysler, 547 U.S. at 352; Erwin

Chemerinsky, Federal Jurisdiction § 2.1 (5th ed. 2007). “[P]erhaps

the most important of these doctrines” is standing. Allen, 468 U.S.

at 750.

The “irreducible constitutional minimum” of Article III

standing consists of three elements. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992). First, the plaintiff must have

suffered a “concrete,” “particularized” injury-in-fact, which must

be “actual or imminent, not conjectural or hypothetical.” Id.

(quotation marks omitted). Second, that injury must be “fairly

traceable to the challenged action of the defendant, and not the

result of the independent action of some third party not before the

court.” Id. (quotation marks and alterations omitted). Third, the

plaintiff must establish that a favorable decision likely would

redress the injury. Id.; see AT&T Commc’ns of N.J., Inc. v.

Verizon N.J., Inc., 270 F.3d 162, 170-71 (3d Cir. 2001).

A.

While all three of these elements are constitutionally

mandated, the injury-in-fact element is often determinative.4 Under

4

See Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482

F.3d 1330, 1337 (Fed. Cir. 2007) (“Of the three standing

requirements, injury-in-fact is the most determinative.”); Nat’l

Wildlife Fed’n v. Hodel, 839 F.2d 694, 704 (D.C. Cir. 1988)

(describing the injury-in-fact prong as “the core of standing”);

Gregory P. Magarian, Note, Fighting Exclusion from Televised

Presidential Debates: Minor Party Candidates’ Standing to

Challenge Sponsoring Organizations’ Tax-Exempt Status, 90 Mich.

8

it, the plaintiff must suffer a palpable and distinct harm. See Allen,

468 U.S. at 751. That harm “must affect the plaintiff in a personal

and individual way.” Lujan, 504 U.S. at 560 n.1. The injury can

be widely shared, FEC v. Akins, 524 U.S. 11, 24 (1998), but it

must nonetheless be concrete enough to distinguish the interest of

the plaintiff from the generalized and undifferentiated interest

every citizen has in good government. See Lujan, 504 U.S. at 573-

74; Schlesinger v. Reservists Comm. to Stop the War, 418 U.S.

208, 220-21 (1974). In this way, injury-in-fact “keeps the judicial

branch from encroaching on legislative prerogatives, thereby

preserving the separation of powers.” Danvers Motor Co., Inc. v.

Ford Motor Co., 432 F.3d 286, 291 (3d Cir. 2005); see also John G.

Roberts, Jr., Article III Limits on Statutory Standing, 42 Duke L.J.

1219, 1224 (1993) (“The need to insist upon meaningful limitations

on what constitutes injury for standing purposes . . . flows from an

appreciation of the key role that injury plays . . . in a limited and

separated government.”).

The critical issue for us is whether the Township’s rezoning

of the Readington Properties parcel has cognizably injured Toll

Brothers, an optionee with a plan to develop the property.5 No

L. Rev. 838, 844 n.45 (1992) (“[C]ourts rarely recognize an injury

as cognizable and proceed to deny standing on one of the other

constitutional grounds.”).

5

We note that Toll Brothers seeks both injunctive relief and

damages. Standing, the Supreme Court has stated, “is not

dispensed in gross.” Lewis v. Casey, 518 U.S. 343, 358 n.6 (1996).

Toll Brothers “must demonstrate standing separately for each form

of relief sought.” Friends of the Earth, Inc. v. Laidlaw Envtl.

Servs. (TOC), Inc., 528 U.S. 167, 185 (2000) (citing City of Los

Angeles v. Lyons, 461 U.S. 95, 109 (1983)). This is because

“[p]ast exposure to illegal conduct does not in itself show a present

case or controversy regarding injunctive relief . . . if

unaccompanied by any continuing, present adverse effects.”

O’Shea v. Littleton, 414 U.S. 488, 495-96 (1974). Here, though,

Toll Brothers claims both past and present injury from the

Township’s zoning ordinance. So long as both the zoning

ordinance and Toll Brothers’ option remain in force, the standing

9

binding authority directly addresses an optionee’s standing to

challenge zoning restrictions. Three decisions of our sister courts

of appeals, however, indicate that an optionee with a plan to

develop the underlying property suffers the requisite injury from

zoning restrictions that block the planned development. See Scott

v. Greenville County, 716 F.2d 1409, 1412, 1415 (4th Cir. 1983)

(holding that a real estate developer who “acquired a purchase

option for the land; . . . put together a partnership to pursue the

project; and . . . obtained earmarking of federal subsidy funds” had

standing to challenge zoning restrictions that prevented

construction of multi-family low-income housing); Chipanno v.

Champion Int’l Corp., 702 F.2d 827, 829, 831-32 (9th Cir. 1983)

(concluding that the holder of “an option to purchase certain timber

lands in Oregon” had standing to challenge defendants’ conspiracy

“to eliminate competition, fix prices, and allocate timber from”

Oregon lands); Huntington Branch, NAACP v. Town of

Huntington, 689 F.2d 391, 392, 394-95 (2d Cir. 1982) (holding that

“a non-profit housing assistance corporation” with “an option to

purchase a 14.6 acre tract” and a plan to develop the property had

standing to challenge a local zoning ordinance as racially

discriminatory). In addition, two Supreme Court decisions, while

not directly on point, provide useful guideposts.

The first is Warth v. Seldin, 422 U.S. 490 (1975). Warth

involved a challenge to an exclusionary zoning ordinance in

Pennfield, New York. One of the many plaintiffs was an

association of “firms engaged in the development and construction

of residential housing” in the area. Id. at 514. The association

analyses for both forms of relief are identical. We will therefore

analyze them together.

Also, Toll Brothers’ complaint contains eleven separate

claims, and the company must “demonstrate standing for each

claim [it] seeks to press.” DaimlerChrysler, 547 U.S. at 352. All

the claims, however, challenge the Township’s rezoning of the

Readington Properties parcel, and they all allege precisely the same

injuries to Toll Brothers. As such, a claim-by-claim discussion of

Toll Brothers’ constitutional standing is unnecessary.

10

claimed the ordinance “had deprived some of its members of

substantial business opportunities and profits.” Id. at 515

(quotation marks omitted). The Supreme Court, however, found

these allegations insufficient to establish injury-in-fact. The

association “refer[red] to no specific project of any of its members

that [was] precluded . . . by the ordinance,” and there was “no

averment that any member ha[d] applied . . . for a building permit

or a variance with respect to any current project.” Id. at 516. As

a result, the association “failed to show the existence of any injury

to its members of sufficient immediacy . . . to warrant judicial

intervention.” Id.

The second Supreme Court decision is Village of Arlington

Heights v. Metropolitan Housing Development Corp., 429 U.S. 252

(1977). The plaintiff there was a nonprofit corporation seeking to

develop low-income housing in the Village of Arlington Heights,

Illinois. Id. at 256. The developer entered into a 99-year lease on

a parcel within the Village, and it also contracted to purchase the

parcel. Id. The sale was contingent on the developer “securing

zoning clearances from the Village and . . . housing assistance from

the Federal Government.” Id. When the Village denied the

developer’s request for rezoning, the developer brought an equal

protection challenge. Id. at 258-59. The Supreme Court first noted

that injunctive relief “would not . . . guarantee that [the project

would] be built.” Id. at 261. After all, the developer “would still

have to secure financing, qualify for federal subsidies, and carry

through with construction.” Id. The developer, though, had a

“detailed and specific” plan, and, as such, the Court was “not

required to engage in undue speculation as a predicate for finding

that the plaintiff ha[d] the requisite personal stake in the

controversy.” Id. at 261-62. The Village claimed the developer

had “suffered no economic injury” because it was “not the owner

of the property in question,” and it “owe[d] the owners nothing if

rezoning [was] denied.” Id. at 262. The Court disagreed, noting

that the developer had “expended thousands of dollars on the plans

for [the project] and on the studies submitted to the Village in

support of the petition for rezoning.” Id. If rezoning was not

granted, “many of these plans and studies [would] be worthless.”

Id. The developer thus established cognizable economic injury. Id.

11

Both cases are instructive here. First, Toll Brothers’ alleged

injuries are far more particularized and concrete than those of the

Warth homebuilders. For example, where the Pennfield ordinance

prevented none of the Warth homebuilders from developing any

particular project, 422 U.S. at 516, the Township’s agricultural-

residential zone has thwarted Toll Brothers’ specific development

plans. Where none of the Warth homebuilders “ha[d] applied . . .

for a building permit or a variance with respect to any current

project,” id., Toll Brothers has submitted a formal application to

construct an office development on the Readington Properties

parcel. And, perhaps most significant of all, where the Warth

homebuilders alleged only unspecified losses of “business

opportunities and profits,” id. at 515, Toll Brothers points to a lost

opportunity to develop a specific tract of land for which it holds an

exclusive option to buy.6 Accordingly, Toll Brothers’ injuries are

more distinct and immediate than those of the Warth plaintiffs.

Toll Brothers’ alleged injuries also bear a strong

resemblance to the injuries of the developer in Arlington Heights.

Both plaintiffs had “detailed and specific” plans for the restricted

properties. See Arlington Heights, 429 U.S. at 261. The Arlington

Heights developer “expended thousands of dollars” on plans and

studies to support its rezoning petition. See id. at 262. So too has

Toll Brothers paid substantial sums in planning its proposed

developments, seeking approval for its office development, and

maintaining its option. Just as in Arlington Heights, these front-

end expenditures remain “worthless” so long as a restrictive zoning

ordinance remains in force. See id. (“[I]t is inaccurate to say that

6

Some have read Warth “to leave substantial latitude for

builders to obtain standing in other cases: the minimal property

interest necessary to apply for a zoning variance—such as a

conditional contract or option—would probably be sufficient to

establish the requisite concrete dispute.” The Supreme Court, 1974

Term: Standing to Challenge Exclusionary Zoning Ordinances, 89

Harv. L. Rev. 189, 194 (1976) (emphasis added). Indeed, the New

Jersey Municipal Land Use Law permits “the holder of an option

or contract to purchase” to apply for a zoning variance. N.J. Stat.

Ann. § 40:55D-4.

12

[the plaintiff] suffers no economic injury from a refusal to rezone

. . . . [where it] has expended thousands of dollars on the plans for

[the property] and on the studies submitted . . . in support of the

petition for rezoning.”). In addition, both the Village’s ordinance

in Arlington Heights and the Township’s ordinance stand as

“absolute barrier[s]” to moving forward with construction and

recouping up-front costs. See id. at 261. These parallels strongly

indicate that Toll Brothers has satisfied the injury requirement.

Yet, as the defendants point out, there are differences

between the harm alleged in Arlington Heights and the harm

alleged in this case. The Arlington Heights developer had a 99-

year lease on the restricted property and a conditional contract to

purchase the land. See id. at 256. The developer’s leasehold was

an estate in land. It gave the developer a present possessory

interest in the property. See William B. Stoebuck & Dale A.

Whitman, The Law of Property 74-77 (3d ed. 2000). As such, the

Arlington Heights developer could show injury-in-fact based on

harm to its own proprietary interest in the tract itself. Viewed this

way, Arlington Heights fits squarely within the “substantial body

of law recognizing that the owner of an interest in [real] property

has standing to challenge [zoning] restriction[s]” that affect its

development. von Kerssenbrock-Praschma v. Saunders, 48 F.3d

323, 326 (8th Cir. 1995) (citing cases).

Here, on the other hand, Toll Brothers is neither a lessee nor

a contract purchaser. It has only an option to buy. Although that

option does give Toll Brothers “an inchoate right to acquire the

land which . . . [is] protected in equity,” Toll Brothers does not

have any present interest in the Readington Properties parcel.

Bright v. Forest Hill Park Dev. Co., 31 A.2d 190, 198 (N.J. Ch.

1943); Stoebuck & Whitman, supra, at 802 (“An unexercised

option is not yet . . . an interest in real property.”).

The defendants say this distinction makes all the difference.

Toll Brothers’ option, they assert, is just a “phantom connection”

to the Readington Properties parcel, and the Township’s rezoning

of the tract has produced “nothing more than the loss of a

speculative business opportunity.” Def. Br. 13. The defendants

thus deride Toll Brothers’ allegations as abstract claims of future

13

harm insufficient to establish injury-in-fact. See Storino, 322 F.3d

at 297.7

But these arguments unfairly diminish the valuable rights

possessed by an optionee. Toll Brothers has paid (and continues to

pay) substantial sums to Readington Properties. In exchange, Toll

Brothers has gained the right to demand conveyance of the

Readington Properties parcel for a set price at any time during the

option period. See Stoebuck & Whitman, supra, at 799-800; see

also Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr.

Assocs., 864 A.2d 387, 395 (N.J. 2005). That option is itself a

valuable property right.8 Its value is largely dependant on the value

of the Readington Properties parcel. If the tract’s market value

falls, then the value of Toll Brothers’ option to purchase it at a

predetermined price falls with it. And if the tract’s market value

falls below the option price, then the option becomes essentially

valueless. See In re Hannover Corp., 310 F.3d 796, 802 (5th Cir.

2002) (“Like all speculative financial instruments, the value of an

option can change over time, depending upon the value of the

underlying property.”).

7

The District Court also distinguished Arlington Heights by

noting that the developer there was “a non-profit organization

whose primary interest [was] making low-income housing

available,” while Toll Brothers’ “primary interest . . . is clearly

economic gain.” Toll Bros., 2005 U.S. Dist. LEXIS 25793, at *12.

This distinction has no bearing on constitutional standing. To say

Toll Brothers’ “primary interest . . . is clearly economic gain” is to

recognize the possibility of economic injury.

8

See Helvering v. San Joaquin Fruit & Inv. Co., 297 U.S.

496, 498 (1936) (“The option itself was property, and doubtless

was valuable.”); Chas. J. Smith Co. v. Anderson, 95 A. 358, 361

(N.J. Ch. 1915) (same); see also Tuecke v. Tuecke, 131 N.W.2d

794, 795 (Iowa 1964) (“[A]n option . . . is more than a mere right;

it is an asset of very substantial economic value.”) (quotation marks

omitted); In re Estate of Niehenke, 818 P.2d 1324, 1328 (Wash.

1991) (“[A]n option to purchase real estate is a valuable and

substantial property right.”).

14

Toll Brothers’ complaint alleges that the Township rezoned

the Readington Properties parcel to “drive down [its] value” and

“acquire [it] cheaply.” App. 36. By driving down the value of the

Readington Properties parcel, the Township has also driven down

the value of Toll Brothers’ option. See Hannover, 310 F.3d at 802.

This harm to Toll Brothers’ own property is a classic form of

economic injury. See Danvers, 432 F.3d at 291 (“‘Standing is

found readily, particularly when injury to some traditional form of

property is asserted.’”) (quoting 13 Wright & Miller, Federal

Practice and Procedure, § 3531.4, at 830 (Supp. 2005)). It satisfies

the constitutional requirement of injury-in-fact.

In sum, Toll Brothers holds an exclusive option to buy the

Readington Properties parcel, and the company has expended

considerable sums maintaining its option, planning office and

residential developments, and submitting an application to build an

office park on the property. The zoning restrictions that bar Toll

Brothers’ planned developments have left the company unable to

recoup these front-end costs, and the restrictions have also

decreased the value of the company’s option. These economic

harms amount to legally cognizable injury-in-fact.

B.

The second requirement for Article III standing is

“traceability.” Pitt News v. Fisher, 215 F.3d 354, 360 (3d Cir.

2000). If the injury-in-fact prong focuses on whether the plaintiff

suffered harm, then the traceability prong focuses on who inflicted

that harm. The plaintiff must establish that the defendant’s

challenged actions, and not the actions of some third party, caused

the plaintiff’s injury. See Lujan, 504 U.S. at 560. This causal

connection need not be as close as the proximate causation needed

to succeed on the merits of a tort claim. See Pub. Interest Research

Group of N.J., Inc. v. Powell Duffryn Terminals Inc., 913 F.2d 64,

72 (3d Cir. 1990). Rather, an indirect causal relationship will

suffice, Pitt News, 215 F.3d at 361 & n.4, so long as there is “a

fairly traceable connection between the alleged injury in fact and

the alleged conduct of the defendant,” Vt. Agency of Natural Res.

v. United States ex rel. Stevens, 529 U.S. 765, 771 (2000)

(quotation marks and alterations omitted).

15

The defendants do not seriously argue that Toll Brothers

fails to establish traceability. Toll Brothers challenges the

defendants’ rezoning of the Readington Properties parcel to

“agricultural-residential.” That rezoning directly caused Toll

Brothers’ inability to move forward with its development plans,

and it directly impacted the value of Toll Brothers’ option. No

action of a third party is a more immediate cause of these harms.

We therefore conclude that Toll Brothers easily satisfies the

traceability element.

C.

Redressability is the final element of constitutional standing.

This requirement is “closely related” to traceability, and the two

prongs often overlap. Powell Duffryn, 913 F.2d at 73; see

Dynalantic Corp. v. Dep’t of Def., 115 F.3d 1012, 1017 (D.C. Cir.

1997) (describing traceability and redressability “as two sides of a

causation coin”). The difference is that while traceability looks

backward (did the defendants cause the harm?), redressability looks

forward (will a favorable decision alleviate the harm?). See Lujan,

504 U.S. at 560-61. The redressability prong thus requires a

showing that “the injury will be redressed by a favorable decision.”

Laidlaw, 528 U.S. at 181.

Redressability is not a demand for mathematical certainty.

It is sufficient for the plaintiff to establish a “substantial likelihood

that the requested relief will remedy the alleged injury in fact.”

Stevens, 529 U.S. at 771 (quotation marks omitted); see also

Chemerinsky, supra, at § 2.3.3 (describing redressability as an

“assessment[] of probability”). Arlington Heights nicely illustrates

this point. As mentioned earlier, even if the developer in that case

had secured an injunction against the Village’s zoning practices,

there still would have been no “guarantee” of the development’s

successful completion. See 429 U.S. at 261. The developer still

would have needed “to secure financing, qualify for federal

subsidies, and carry through with construction.” Id. at 261. As the

Court noted, though, “all housing developments are subject to some

extent to similar uncertainties.” Id. And it was at least more likely

than not that the developer could procure the necessary federal

subsidies. See id. at 261 n.7. That likelihood was enough to satisfy

16

the redressability requirement. Id. at 262; see also Huntington

Branch, 689 F.2d at 395 (deeming the plaintiff’s injury redressable

where “[i]nvalidation of the challenged ordinance . . . would

tangibly improve the chances of construction”).

As in Arlington Heights, a decision striking down the

Township’s zoning ordinance would not “guarantee” successful

completion of Toll Brothers’ development plans. The District

Court correctly pointed out that “even if the Court were to rule in

[Toll Brothers’] favor, it need not exercise its option.” Toll Bros.,

2005 U.S. Dist. LEXIS 25793, at *14. But just as the uncertain

availability of federal subsidies did not defeat standing in Arlington

Heights, Toll Brothers’ freedom to refrain from exercising its

option does not defeat standing here. The relevant question is not

whether Toll Brothers might walk away from its development plans

after receiving a favorable decision; the relevant question is

whether it is likely to do so. Stevens, 529 U.S. at 771. Toll

Brothers has invested large sums of money on the plans for its

proposed developments. It has spent additional funds maintaining

its option. And it has now spent several years litigating this dispute

in state and federal court. The defendants have not provided any

reason why Toll Brothers would abandon the project. Indeed, Toll

Brothers has stated its intent to exercise the option and move

forward with construction if and when the Township approves its

plans. A favorable decision, therefore, is substantially likely to

result in construction of Toll Brothers’ planned developments.

Moreover, even leaving aside the likelihood of construction,

a favorable decision likely will remedy the harm to Toll Brothers’

option. As discussed earlier, the option itself is property. If, as

Toll Brothers claims, the agricultural-residential ordinance has

decreased the value of the Readington Properties parcel, then it has

also decreased the value of Toll Brothers’ option. An order

striking down the ordinance is likely to redress that injury by

increasing the value of both the underlying real property and the

option. We therefore hold that Toll Brothers satisfies the

redressability requirement.

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D.

As the previous discussion demonstrates, Toll Brothers

satisfies all three constitutional standing elements. Further

buttressing that conclusion are the very separation-of-powers

principles that animate the doctrine. Article III standing preserves

the separation of powers by limiting federal courts to matters “‘of

a Judiciary nature.’” DaimlerChrysler, 547 U.S. at 342 (quoting 2

Records of the Federal Convention of 1787 430 (M. Farrand ed.

1966)). Thus, “‘a plaintiff raising only a generally available

grievance about government—claiming only harm to his and every

citizen’s interest in proper application of the Constitution and laws,

and seeking relief that no more directly and tangibly benefits him

than it does the public at large—does not state an Article III case

or controversy.’” Hein, 127 S. Ct. at 2563-64 (plurality opinion)

(quoting Lujan, 504 U.S. at 573-74).9

In this case, Toll Brothers alleges the defendants

“specifically identified” the company as a “target[] for their illegal

enterprise.” App. 44. The defendants then enacted their ordinance

“to intentionally and maliciously block” Toll Brothers’

development of the Readington Properties parcel. App. 47. They

did this because Toll Brothers was a “disfavored” developer. App.

38.

These allegations are not even remotely akin to “generally

available grievance[s].” See Hein, 127 S. Ct. at 2563-64 (plurality

9

The Supreme Court has not always been consistent about

whether the prohibition on “generalized grievances” is an Article

III mandate or a prudential standing limitation. Compare Warth,

422 U.S. at 499 (referring to the bar on generalized grievances as

“[a]part from th[e] minimum constitutional mandate”), with Lujan,

504 U.S. at 573-74 (treating it as an Article III requirement). The

Court’s more recent standing cases clarify that a generalized

grievance is not a case or controversy under Article III. See Hein,

127 S. Ct. at 2563-64 (Alito, J., joined by Roberts, C.J., and

Kennedy, J.); id. at 2582 & n.5 (Scalia, J., joined by Thomas, J.,

concurring in the judgment); Lance v. Coffman, 549 U.S. 437, 439-

40 (2007) (per curiam).

18

opinion) (quotation marks omitted). Rather, Toll Brothers claims

to be the specific target of the defendants’ challenged ordinance.

The adjudication of such a dispute raises no separation-of-powers

problems at all. See Antonin Scalia, The Doctrine of Standing as

an Essential Element of the Separation of Powers, 17 Suffolk U. L.

Rev. 881, 894 (1983) (“[W]hen an individual who is the very

object of a law’s requirement or prohibition seeks to challenge it,

he always has standing.”).

* * * *

Toll Brothers has alleged cognizable injuries that are fairly

traceable to the defendants’ challenged actions and likely to be

redressed by a favorable decision. As such, the District Court erred

when it dismissed Toll Brothers’ complaint for lack of Article III

standing.10

IV.

Toll Brothers’ allegations, if true, give the company

constitutional standing to press its claims. We will vacate the

District Court’s contrary judgment and remand the case for further

proceedings, with instructions that the District Court grant Toll

Brothers leave to amend its complaint.

10

We also hold that the District Court abused its discretion

by refusing to grant Toll Brothers leave to amend its complaint.

Under Federal Rule of Civil Procedure 15(a), leave to amend

should be “freely given when justice so requires,” and we have

recognized that “a district court must permit a curative amendment

unless such an amendment would be inequitable or futile.” Phillips

v. County of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008). Toll

Brothers’ proposed amendment would not have been inequitable

and was not futile. In fact, the proposed amended complaint would

have, inter alia, added Readington Properties as a plaintiff and the

addition of that entity as a plaintiff would likely have solved any

standing problem in this case.

19