The U.S. Supreme Court recently granted certiorari in Murr v. Wisconsin. This case will address how to define the term “parcel as a whole” in a regulatory taking case, a question that has divided the federal and state courts.
The Facts of the Case
The Murr family owns two contiguous waterfront parcels known as Lot E and Lot F. A cabin was built on Lot F, while Lot E has remained vacant and undeveloped. In 2004, the Murr family planned to sell investment Lot E, and use the proceeds from the sale to fund improvements to the cabin. However, they learned from government officials that Development of Lot E was precluded by zoning regulations adopted in 1975 that required lots to be of a certain net size. Under a grandfather clause in the regulation, the property could still be developed if the lot “is in separate ownership from abutting lands.” Because the Murrs also owned the abutting parcel, Lot F, the exception did not apply. The ordinance also precluded the Murrs from selling Lot E to anyone else unless it was combined with Lot F.
After being denied a variance, the Murrs filed a complaint alleging an uncompensated taking of vacant Lot E. They alleged that without the ability to sell or develop the lot, it is economically useless. The Wisconsin Court of Appeals rejected the claim, finding there was no taking as a matter of law because “the Murrs’ property, viewed as a whole, retains beneficial and practical use as a residential lot.”
In reaching its decision, the Wisconsin Court of Appeals relied on the Supreme Court’s “parcel as a whole” rule set forth in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). In that case, the Court held:
“Taking” jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole…
The Issues Before the Supreme Court
The justices have agreed to consider the following question: “In a regulatory taking case, does the “parcel as a whole” concept as described in Penn Central Transportation Company v. City of New York, 438 U.S. 104, 130-31 (1978), establish a rule that two legally distinct, but commonly owned contiguous parcels, must be combined for takings analysis purposes?” In essence, the issue before the Court is whether physically contiguous parcels that are owned by the same entity should be considered one parcel for purposes of a takings claim even if they are legally distinct.
The Court is expected to take up the case this Spring and a decision is anticipated by the end of the Term in late June. Given the potential impact on local governments, commercial property owners, and real estate developers, we will be closely tracking this case. Please stay tuned for updates.
For more information about the eminent domain case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.