Caseflicks

Supreme Court of the United States • 2017

Murr v. Wisconsin

582 U.S. 383 | 2017 U.S. LEXIS 4046 | 137 S. Ct. 1933 | 198 L. Ed. 2d 497 | 2017 D.A.R. 6029 | 85 U.S.L.W. 4441 | 26 Fla. L. Weekly Fed. S 717

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Takeaway

In short, this case adopts a multifactor, reasonable-expectations test for defining the relevant parcel in a regulatory-takings claim and holds that Wisconsin could treat the Murrs’ adjacent lots as one property, defeating their takings claim.

Background

The Murr siblings owned two adjacent lots, Lots E and F, along Wisconsin’s Lower St. Croix River. Their parents bought the lots separately in the 1960s and kept title to them separate until transferring Lot F to the children in 1994 and Lot E in 1995. Lot F contained a small recreational cabin; Lot E was undeveloped. Although each lot exceeded an acre in total area, steep terrain and the riverbank left each with less than one acre suitable for development.

Wisconsin and St. Croix County regulations generally required at least one acre of buildable land for a separate building site. They grandfathered undersized lots that had been separately owned when the regulations took effect in 1976, but they also contained a merger rule: adjacent substandard lots held in common ownership could not be sold or developed separately. Once the siblings acquired both lots, the rule prevented them from selling Lot E separately or developing each lot as a separate residential site.

The siblings sought variances so they could move the cabin on Lot F and sell Lot E to finance the project. The local Board of Adjustment denied the request. After state-court proceedings confirmed that the ordinance had effectively merged the lots, the siblings brought a regulatory-takings action. The county circuit court granted summary judgment for Wisconsin, reasoning that the family retained substantial residential and recreational uses and that the regulation reduced the combined property’s value by less than 10 percent. The Wisconsin Court of Appeals affirmed, treating Lots E and F as one parcel for takings purposes. The Supreme Court affirmed.

Issues

Issue #1

Whether Lots E and F should be treated as one parcel or as separate parcels when measuring the alleged regulatory taking.

Holding

Yes. For this takings inquiry, Lots E and F properly constituted a single parcel.

Reasoning

The Court explained that a regulatory-takings claim requires comparing the value lost because of a regulation with the value that remains. Identifying the relevant unit of property—the denominator of that comparison—is therefore important, but no single bright-line rule resolves the question. The Takings Clause inquiry must avoid artificially defining the property as only the segment directly burdened by the challenged regulation, as the Court had refused to do with air rights in Penn Central and a temporary period of restricted use in Tahoe-Sierra.

The proper inquiry is objective: courts should ask whether reasonable expectations about ownership would lead a landowner to anticipate that the holdings would be treated as one parcel or as separate tracts. Courts should give substantial weight to state and local law, including how the land is bounded and regulated, while recognizing that state law cannot alone define away a constitutional takings claim.

Courts also must consider the land’s physical characteristics. Relevant considerations include whether the tracts are contiguous, their terrain and topography, and their surrounding human and ecological setting. Land located in an area long subject to environmental regulation may carry objectively reasonable expectations of more extensive land-use restrictions.

Finally, courts should consider the regulated land’s contribution to the value of the owner’s other holdings. A burden on one tract may be mitigated when that tract increases the value of an adjoining tract by providing privacy, recreation, space for improvements, or protected views. Conversely, separate and nonadjacent holdings without such a relationship may be less likely to form one parcel.

Applying those considerations, the Court held that the Murr lots formed one parcel. State and local law validly merged the adjacent substandard lots after the siblings brought them into common ownership. The lots were contiguous, similarly shaped by steep terrain, and located beside a river that had long been subject to federal, state, and local protection. Lot E also added meaningful value to Lot F by increasing privacy and recreational space and by allowing a more advantageous location for improvements. The combined lots’ appraised value of $698,300 exceeded the sum of their asserted separate regulated values, confirming their complementary relationship.

Issue #2

Whether the merger regulation effected a compensable regulatory taking of the Murrs’ property.

Holding

No. Evaluated as a single parcel, the regulation neither eliminated all economic use under Lucas nor amounted to a taking under Penn Central.

Reasoning

The Lucas categorical rule applies when a regulation deprives an owner of all economically beneficial or productive use of land, subject to background principles of property and nuisance law. The Murrs retained the ability to use the combined property for a residence, including a larger or relocated improvement, as well as recreational use. Because the property retained substantial use and suffered less than a 10 percent reduction in combined market value, it was not rendered economically idle.

The Court also rejected the claim under Penn Central’s fact-specific framework. The economic impact was not severe because the regulation reduced the combined property’s value by less than 10 percent. The Murrs could not reasonably expect to sell or develop the lots separately because the merger restrictions predated their acquisition of both lots and were triggered when they voluntarily placed the lots in common ownership.

The character of the government action also favored Wisconsin. The merger rule was part of a coordinated federal, state, and local land-use program designed to protect the scenic and recreational qualities of the St. Croix River. Such merger provisions are a longstanding and common means of enforcing minimum-lot-size rules while gradually reducing the number of substandard development lots.

Dissents

Chief Justice Roberts

Reasoning

Chief Justice Roberts agreed that the bottom-line outcome was not troubling: the Murrs could still make meaningful use of both lots, and the ordinance was a familiar device for protecting scenic land. But he rejected the majority’s method for identifying the relevant parcel. In his view, the Takings Clause first requires identification of the owner’s “private property,” and state law ordinarily supplies that answer by defining the legal boundaries of distinct parcels.

The Chief Justice read Penn Central’s instruction to consider the “parcel as a whole” narrowly. It prevents an owner from isolating one stick in a single parcel’s bundle of rights—such as Grand Central Terminal’s air rights—and calling the loss of that one interest a total taking. It does not authorize courts to disregard state-law boundaries between legally distinct lots merely because the lots are adjacent and commonly owned.

Under the majority’s multifactor test, he warned, the government’s regulatory justification enters the analysis twice. A court may first use the reasonableness of the regulation, the land’s physical features, and the owner’s expectations to aggregate distinct parcels; it may then again weigh those same considerations under Penn Central. That double counting weakens the Takings Clause’s function of preventing government from shifting public burdens onto individual owners.

The Chief Justice would have vacated and remanded. The Wisconsin courts should first determine, under ordinary Wisconsin property law rather than a takings-specific rule, whether Lots E and F were legally distinct parcels. If Lot E were a separate parcel, the court could still consider its relationship to Lot F when deciding whether the regulation took Lot E, including in assessing economic use, investment-backed expectations, and the character of the government action.

Justice Thomas

Reasoning

Justice Thomas joined the Chief Justice’s dissent because, under existing regulatory-takings precedents, he believed the Chief Justice had correctly concluded that state law should define the relevant parcels. He wrote separately to question the foundation of the Court’s regulatory-takings doctrine itself.

In his view, the Court should eventually reconsider whether the rule announced in Pennsylvania Coal—that regulation can become a taking when it goes too far—has support in the original public meaning of either the Fifth Amendment’s Takings Clause or the Fourteenth Amendment’s Privileges or Immunities Clause. Before Pennsylvania Coal, the Court had generally understood the Takings Clause to cover direct appropriations or their functional equivalent, not regulatory restrictions.