The Supreme Court Makes a Mess of Takings Law

On June 23, the Supreme Court finally addressed directly the frequently posed question: When considering the claimed taking of a property interest by government regulation, what is the affected property to be considered? All of one’s land? Or the regulated parcel? In short, what is the proper denominator? By a 5-3 vote in Murr v. Wisconsin, Justice Kennedy wrote an opinion that will ensure a generation of litigation in the lower courts on precisely the same question.

Background on the Murr Case

A family of siblings, the Murrs, own two adjacent lots along the Lower St. Croix River in St. Croix County, Wisconsin. They inherited the recorded lots from their parents, who bought them in 1960 and 1963. Lot F has a small cabin. Lot E is vacant. The family wished to move and improve the cabin on Lot F and, to finance the improvement, sell Lot E. But because of intervening zoning and environmental restrictions enacted over the years, State and county laws deemed the two lots to have “merged” into a single lot for development purposes.

The Murrs sued both State and county, claiming a regulatory taking of Lot E and seeking just compensation under the Constitution for a 100% wipeout of their property. The governments countered that the lots had effectively merged into a single buildable lot, and thus only half the Murrs’ property had been allegedly taken, so no taking requiring compensation had occurred. The State courts of Wisconsin, using traditional property definitions, ruled for the State and county and found no taking.

The Supreme Court’s Holding

In Murr v. Wisconsin, the Court majority held for the governments. Interestingly, in dissent, Chief Justice Roberts did not fault the majority for its “bottom-line conclusion” that the Murrs lose. Instead, his analysis lays out how the Court has needlessly and dangerously re-defined “private property” in the takings law context. According to the Court’s cumbersome new test, instead of looking only to how State and local law defines property (which has been the bedrock principle of American law), courts are now told they should also look to the physical characteristics of the land, the prospective value of the regulated land, the reasonable expectations of the owner, and the background customs of our legal tradition.

This means, for example, that the issue of a land’s value, which has always properly been the second question to be answered (by a jury) if a court first finds a regulatory taking of property has occurred, has now been thrown into the threshold “liability” question. In short, “double counting” will now take place. None of this has anything to do with the heretofore easily understood rule that “private property” is defined by State and local law.

The great mischief created by the new multi-factor policy test is that, at least in the takings law context, clear rules defining “private property” and the “taking” of it have become unmoored. Thus, far from providing the certainty that private landowners and developers need and hoped the Supreme Court would provide, we now sail into uncharted waters.