Property owners have long suffered under the Supreme Court’s erratic rulings. It got worse today. In Murr v. Wisconsin, the Court ruled against the owners, 5-3, with Justice Kennedy writing for the majority, Chief Justice Roberts writing a dissent, joined by Justices Thomas and Alito, Thomas writing a separate dissent, and Justice Gorsuch taking no part. The problem isn’t simply with the majority’s holding and opinion, it’s with the dissent as well. Only Thomas points in the right direction.
This was a regulatory takings case arising under the Fifth Amendment’s Takings Clause, which prohibits government from taking private property for public use without just compensation. In separate conveyances in 1994 and 1995, the Murrs, four siblings, inherited two contiguous lots on the St. Croix River that their parents had purchased in 1960 and 1963. The parents had built an ancestral home on the first lot. They bought the second for investment purposes.
The trouble began in 2004 when the Murrs sought to sell the second lot, valued at $410,000, and use the proceeds to upgrade the ancestral home. But they were blocked by a 1975 local zoning ordinance that treated the two lots as one, even though they had long been deeded and taxed separately. Under the ordinance they had to sell the lots together or not at all. Out $410,000, the Murrs sued, claiming that the ordinance had deprived them of their right to sell their property.
Here it gets complicated. In a 1992 decision, Lucas v. South Carolina Coastal Council, a 5-4 Court held that David Lucas was entitled to compensation after an ordinance prohibiting him from building on his property effectively wiped out all of its value. The problem with this “wipeout” rule, of course, is that most regulations leave at least some value in the property. When Justice Stevens called the rule “arbitrary” since “the landowner whose property is diminished in value 95% recovers nothing,” Justice Scalia, writing for the Court, responded tersely, “Takings law is full of these ‘all or nothing’ situations.”
In so writing, Scalia was citing a 1978 decision, Penn Central v. New York, which gave us a balancing test that nobody understands, least of all Justice Brennan who crafted it. There that Court held that its test must be applied to “the parcel as a whole,” not to some portion of it. Combined with Lucas, that makes all the difference in the world for the Murrs. If their lots are treated separately, as they have always been except for this ordinance, virtually all value in the second has been wiped out and the Murrs, under Lucas, are entitled to compensation for the taking. But with the two lots combined as one, value remains, so the state can escape paying the Murrs any compensation. Thus, the question before the Court was whether the state could do that simply by treating the two lots as one.
Read more at https://www.cato.org/blog/another-bleak-day-property-owners
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