7 months ago

Murr argument today at Supreme Court

By James S. Burling Vice President for Litigation

Here’s a recap of what the Murr case is about and what happened today at the Court. For more detail, you can find the Court’s transcript here.

Many property owners own adjacent lots. A farmer might acquire a neighboring farm with the hope that his children can live next door. Or a person might fall in love with a vacation home and buy an empty lot next door. But what happens when new zoning laws declare those lots to be too small and substandard? If the government denies use of one parcel, can it avoid any takings liability simply because the owner happens to own the next door property? That is the question in Murr v. State of Wisconsin, reported on in some detail in last year’s report, and argued before the Supreme Court on March 20, 2017.

As you may recall, the Murrs own two adjacent lots on the St. Croix River that their parents purchased in the early 1960s. Each lot is over an acre in size. The Murr parents built a tiny cabin on one lot and kept the other as an investment. New regulations were passed in the 1970s, making the lots “nonconforming” because after setbacks for waterfront and slopes were added in, each lot had less than one-acre of buildable area. Now, if different individuals owned the lots separately, each person could sell or develop their single lot under a “grandfather clause.” But there was an exception to that clause when an owner, such as the Murrs, owns an adjacent lot. As the lower court said, these lots were “effectively merged” by the land use regulation.

The children need to sell the unoccupied lot in order to raise money to make badly needed repairs on the cabin. But they cannot. In short, the children have been robbed of property worth over $400,000 just because they own the lot next door. Anyone else owning that lot could sell it, but the Murr children cannot. The children sued in state court and lost, with the court holding that there was no taking because the family still retained the use of the original cabin lot. In other words, the more property someone owns, the more the government can steal without paying for it.

The legal question boils down to what the “relevant parcel” is for a takings case. This is important because courts often consider how much use and value of property has been restricted when determining whether there is a taking. If a regulation, for example, sets aside an acre of property as a wetland, it could make a difference whether the owner owns just that one acre (making it more likely that there will be a taking) or owns 99 other acres on the same farm. Here, in Murr, the question comes down to whether the court should consider, for takings purposes, just the one lot that the Murrs cannot use or sell, or both lots combined together. Because they can put up at least one home, there is some use and value in the combined lots. Quite obviously, to the Murrs, having two lots joined together will make it impossible for them to sell one lot to raise the money necessary to repair their cabin.

We had expected oral argument to be held in October of 2016, but, along with a handful of other cases, the argument was delayed without explanation until this spring. This could possibly mean that the Chief Justice thinks the vote would be close and did not want it to split 4 – 4 without at least the prospect of an additional Justice. As it stands, Judge Gorsuch was not confirmed in time for the oral argument.

Oral argument was held on March 20, 2017. It was a lively bench and there were plenty of questions for both sides. Pacific Legal Foundation, arguing for the Murrs, suggested that there should be a rebuttable presumption that when separate lots have been created and taxed as such, they should be considered as separate. While there may be some circumstances where the lots might be considered as a unified whole – such as when the owner of both lots has treated and used them as a single lot, say by building a house straddling the lot lines – that should be the exception to the rule. The State argued, on the other hand that in determining the property interest taken, all state law should be considered together – including the state land use laws that effectively merged the two lots. Our response to that is that the land use regulations are relevant to whether there has been a taking, not to the preliminary question of what the relevant parcel is. The county, on the other hand, argued that merger laws are an important part of state property law, and should not be upset here. Lastly, the federal government argued that there should be a highly amorphous multi-factor test that looks at “spatial, temporal and functional” aspects of property to determine what the property interest is that is subject to a takings claims. That seems to be a recipe for confusion.

The questions from the court reflected the usual ideological split. Some justices clearly understood the Murrs’ predicament and problems with combining these lots in a takings analysis. Other justices seemed convinced because the land use regulations called for these lots to be joined, they should be treated as joined. It is premature at this time to predict the final outcome, other than to say that it will be close. A decision is expected by June.

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Murr v. Wisconsin

The Murr family owned two separately deeded lots that were purchased independently by their parents in the 1960s. They built a small cabin on one lot and held the other one as an investment for the future. But when the time came to sell, subsequently enacted regulations forbade the Murrs from making any productive use of the vacant lot – and without any use, it had no value they could sell. PLF represents in the Murrs in a lawsuit arguing that the regulation was an uncompensated taking because it took away all the use and value of the lot. The courts ruled against the family because they owned the adjacent lot with the cabin, and therefore hadn’t lost everything.

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