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U.S. Supreme Court Decision Muddies Property Rights

August 25, 2017

The Supreme Court of the United States (SCOTUS) delivered a blow to a Wisconsin family and opened new questions about Fifth Amendment protections for private property throughout the nation.

The Supreme Court of the United States (SCOTUS) delivered a blow to a Wisconsin family and opened new questions about Fifth Amendment protections for private property.

In a 5 to 3 majority decision penned by Justice Anthony Kennedy, the high court ruled on June 23 in favor of the State of Wisconsin and St. Croix County and against the Murr family, who had been fighting both since 2004 for their right to sell a vacant lot.

The Murr family has owned two riverfront lots since the 1960s. One of the lots included a vacation cottage, and the other was undeveloped. Originally, one lot was in the parents’ names and the second was owned by the family’s company. The two lots were jointly conveyed to four of their children in 1994 and 1995.

Two Become One

As the children explored selling the empty lot to pay for improvements to the cottage in 2004, they found a 1975 zoning law enacted to protect water quality and waterfront environmental amenities prevented them from selling the empty lot separate from the one with the cottage, because the two adjoining lots were now owned by one entity. In addition, the 1975 zoning law prohibited the development of the empty lot because it didn’t meet minimum size requirements for an independent lot.

When the Murrs asked the county government to compensate them for the property’s lost value, the county offered $40,000, one tenth of the $400,000 assessed value. The Murrs’ lawsuit argued the government’s decision violated the Takings Clause of the Fifth Amendment, which requires “just compensation” when government takes private property for public use.

The nonprofit, public-interest Pacific Legal Foundation (PLF) represented the Murrs. Before the state appeals court, Wisconsin argued the properties should be considered as a whole in the takings analysis. The state appeals court agreed, ruling against the Murr family. The family filed an appeal with the U.S. Supreme Court, which accepted the case in January 2016.

The case was finally argued before SCOTUS in March 2017, after the Court granted several delays to allow the filing of “friend of the court” briefs supporting the petitioners’ arguments. By the time Joseph P. Murr et al. v. State of Wisconsin and St. Croix County reached the Supreme Court in March for oral arguments, it was accompanied by amicus briefs from Alaska, Arizona, Arkansas, Kansas, Nevada, Oklahoma, South Carolina, West Virginia, and Wyoming, and groups such as the U.S. Chamber of Commerce, the National Association of Home Builders, and other legal foundations, taking the Murrs’ side.

Redefining Property Boundaries

The National Constitution Center listed Murr et al. as one of the top 10 Supreme Court cases to watch in 2017. The primary case cited as a precedent in Murr et al. was the 1978 Penn Central case, in which the Supreme Court ruled whether a regulatory restriction on private property constitutes a taking depends on the regulation’s impact on the “parcel as a whole.”

In his June 23 ruling against the Murrs, Kennedy wrote, “The governmental action was a reasonable land-use regulation, enacted as part of a coordinated federal, state, and local effort to preserve the river and surrounding land. Like the ultimate question whether a regulation has gone too far, the question of the proper parcel in regulatory takings cases cannot be solved by any simple test.... Courts must instead define the parcel in a manner that reflects reasonable expectations about the property.”

‘A Surprise Analysis’

PLF General Counsel John Groen, who argued the Murrs’ case before SCOTUS, says Kennedy’s majority opinion applied Penn Central’s regulatory takings analysis for whole properties and used it to answer the separate question of how to define the relevant parcel of property affected by a taking.

“Justice Kennedy, for the majority, wrote a decision that no party was asking for,” said Groen. “This was a surprise analysis that no party briefed or asked for. If I knew Justice Kennedy would go that direction, I obviously would have addressed that concept in the briefs.”

In his dissent, Chief Justice John Roberts wrote. “State law defines the boundaries of distinct parcels of land, and those boundaries should determine the ‘private property’ at issue in regulatory takings cases.”

‘Family Legacy Taken Away’

Groen said the ruling is disappointing for the Murrs and contradicts the common understanding of constitutional protections for property rights nationwide.

“The Murrs are a typical American family that invested in a vacant parcel, paid their taxes, and now they have had a family legacy taken away from them without the constitutional guarantee of just compensation,” Groen said. “On the jurisprudence side, the Court’s opinion is contrary to traditional understandings of property.

“The real estate industry has long relied on the integrity of separate parcels as defined by lot lines and legal descriptions,” said Groen. “Now, in regulatory takings cases, property will not be defined by lot lines.”

Ilya Somin, a law professor at George Mason University who coauthored an amicus brief on behalf of nine states led by Nevada, says the Murr decision is bad news for everyone except a small group of lawyers.

“This decision is good news for takings lawyers and others who can profit from the additional litigation and the legal uncertainty this decision is likely to generate,” said Somin. “It is bad news for property owners and the general public.”

Kathy Hoekstra (kathy@kathyhoekstra.com writes from Saginaw, Michigan.

Author
Kathy Hoekstra is the Regulatory Policy Reporter for Watchdog.org, writing about national and state regulatory issues.
khoekstra@watchdog.org