The power of local governments preserved in Murr v. Wisconsin

by Eric Christianson

Murr v. Wisconsin

United States Supreme Court, June 23, 2017

In the 1960s, the Murr family purchased two adjoining lots along the St. Croix River in Wisconsin. Lot F, was purchased in 1960 and used to build a vacation cabin. The other, Lot E, was purchased in 1963 and was primarily held as an investment. Originally the properties were held separately. Lot F was owned by the family plumbing company, and Lot E was owned by the family directly. In 1994 and 1995, the ownership of the two parcels was transferred from the parents, who purchased the lots, to their children. In 2004 the children began to attempt to sell Lot E to fund improvements to the cabin on Lot F; however, they were prevented from selling Lot E separately due to intervening changes in state and local land use laws. Both of these lots are now considered substandard as building sites, and a state law passed in 1976 considers adjoining substandard lots in common ownership to be effectively merged.

According to Wisconsin law in the area where these properties are located, a parcel must have at least one acre of buildable land to be developed or subdivided. Although both of these parcels are approximately 1.25 acres, the topography of the bluffs running through the lots as well as the steep river bank leaves only 0.98 acres of buildable land between the two. Wisconsin law does allow substandard lots to be developed through a grandfather clause, but does not allow them to be further subdivided. Despite the fact that they appear to be two separate lots on the plat map and have been taxed separately, they are effectively merged. The property owners are therefore barred by state and local law from “subdividing” the larger effective parcel and selling either lot independently.

The Murr family sought a variance from the St Croix County Board of adjustment to allow for separate sale of the lots. The Board denied the request, and the family appealed, alleging that the land use regulations deprived them of all economically beneficial use of Lot E. As the case moved through the Wisconsin court system, the argument for regulatory takings hinged largely on the “denominator problem.” This meant that the courts had do determine whether the parcels should be considered as a whole or if the takings analysis should be applied to Lot E alone. In this case, this decision would be determinative as the loss to Lot E is fairly significant, more than 90% of its value, while the loss to the two parcels taken together is fairly minor, less than 10% of the total value.

In a 5-3 decision written by Justice Kennedy (Justice Gorsuch took no part in this case) the court upheld the rulings of the lower courts that the two lots had been effectively merged and that the law as applied did not constitute a regulatory taking. In doing so, the court adopts a new multi factor test to determine the relevant parcel for a takings claim.

The Court continues to rely on the “Penn Central Test” in determining if government action goes too far and constitutes a regulatory taking. Unless regulations deprive property owners of all economically beneficial use of land, there are no hard and fast rules. Instead, courts are asked to reconcile the individual’s right to private property ownership and the government’s power to adjust rights for the public good. Courts have generally relied on a three-part test first established in Penn Central (1) the economic impact of the regulation (2) the extent to which the regulation has interfered with distinct investment-backed expectations, and (3) the character of the governmental action.

In this case as in Penn Central itself, before applying the three pronged “Penn Central Test”, the court must establish the relevant parcel. Because the test relies on the value of the property before and after application of a regulation, defining the parcel itself can be key to the the ultimate decision. In this case the state of Wisconsin and the local governments asked the court to defer to state law in determining the relevant parcel. The state argued that the court should take the state at its word that the two parcels are now one. The Murr family disagreed and preferred the lot lines as drawn on the plat maps.

The Court has never been entirely clear about how to determine the parcel to be used for analysis, but there are some principles to be drawn from previous decisions. Historically the court has not allowed petitioners to segment the most effected part of their property to allow them to claim a total loss of value in that particular segment. On the other hand, although property law has its foundations in state law, states have not been granted complete authority to define property rights.

This decision does not offer us a simple answer of how to determine the parcel in question for a takings claim. Instead, Kennedy offers up yet another multi-factor test considering: (1) state and local law, (2) the physical characteristics of the land, and (3) the prospective value of the land.

Under this new test, Lots E and F are considered effectively merged. (1) State law considers adjoining parcels to be merged if held in common ownership. The Murr family brought these two parcels into common ownership in 1995 well after the local law that merged them went into effect in 1976. (2) The physical characteristics of these lots support their treatment as a single parcel. The lots are contiguous along their longest edge and their rough terrain makes it reasonable to expect their use may be limited. (3) Even if Lot E cannot be sold independently it still contributes value to the parcel as a whole. A new larger cabin could be built anywhere on the two lots and the property has more privacy and recreational space than other substandard lots.

Chief Justice Roberts dissented joined by Thomas and Alito; however, they did not dispute the outcome, only the reasoning. Roberts would have preferred a much clearer ruling which takes state law as determinative of the relevant parcel in “all but the most exceptional circumstances.” Justice Thomas also filed a separate dissent stating his desire to “take a fresh look at our regulatory takings jurisprudence” in a way that could be better grounded in the original meaning of the constitution.

Later this week we will upload another post with more analysis of the implications of this decision for practitioners.

Warren (MI) holiday display does not violate First/Fourteenth Amendments

by Kaitlin Heinen

Freedom from Religion Foundation, Inc. v. City of Warren, Michigan
(Federal 6th Circuit Court of Appeals, February 25, 2013)

For the past several years between Thanksgiving and New Year’s, the City of Warren, Michigan has put up a holiday display in its civic center, which includes both secular and religious symbols, such as a lighted tree, reindeer, wreaths, snowmen, a mailbox for Santa, a “Winter Welcome” sign, and a nativity scene. In 2010, the Freedom from Religion Foundation and one of its members, Douglas Marshall, wrote letters asking Mayor James Fouts to remove the nativity scene, which the City refused.  So in 2011, the Foundation instead asked the City to add the Foundation’s sign with the following words: “At this season of THE WINTER SOLSTICE may reason prevail. There are no gods, no devils, no angels, [n]o heaven or hell. There is only our natural world, [r]eligion is but [m]yth and superstition [t]hat hardens hearts [a]nd enslaves minds…State/Church KEEP THEM SEPARATE.” The City refused again via a letter from Mayor Fouts, so the Foundation filed a lawsuit based on the freedom-from-establishment and free-speech guarantees of the First and Fourteenth Amendments. The district court rejected these claims, so the Foundation appealed to the U.S. 6th Circuit Court.

In the letter, Mayor Fouts wrote:

When I allowed a display in city hall celebrating Ramadan, the Moslem holy season, I received many calls objecting but I would never have allowed a sign next to the Ramadan display mocking or ridiculing the Moslem religion. In my opinion, Freedom of Religion does not mean “Freedom Against or From Religion.” […] Your non-religion is not a recognized religion. Please don’t hide behind the cloak of non-religion as an excuse to abuse other recognized religions. You can’t make a negative into a positive. Clearly, your proposed display in effect would create considerable ill will among many people of all recognized faiths. During this holiday season, why don’t we try to accomplish the old adage of ‘Good will toward all’?”

To address this, the court turned to the First Amendment: “Congress shall make no law respecting an establishment of religion,” which prohibits government from favoring one religion over another or from favoring religion over irreligion. Two safe harbors have been identified in the past: “(1) a government may provide benefits to faith-based entities if the benefits are available to secular and religious entities alike; and (2) a government may invoke the divine through words and symbols if they have religious and historical meanings or faith-based and solemnizing effects, and in the process offer at most incidental benefits to any one faith or to faith in general.” A similar suit to this one from Pawtucket, Rhode Island (Lynch) had been brought before the courts previously, which held that “in the context of all components of the display…the display was ‘no more an advancement or endorsement of religion’ than the recognition of Christmas as a national holiday.” Five years later, County of Allegheny upheld a holiday display in front of a city hall that included a Christmas tree, a menorah, and a “salute to liberty” sign, but invalidated a nativity scene displayed by itself in the county courthouse. So this court concluded that “if the multi-purpose, multi-symbol Pawtucket and Allegheny County displays did not offend the Establishment Clause, then neither does the Warren display.”

Even so, the Foundation claimed that Warren’s rejection of its sign betrayed the City’s lack of religious neutrality. But the court reasoned that only one of the objects in the holiday display was religious. Some of the other objects were pagan symbols (i.e. the tree); some were connected to the winter season; and some embodied the holidays’ commercialism. So none of the secular symbols had roots in one faith or in faith in general. The variety of symbols in the Warren display reflected not just the demands of the First Amendment’s “Establishment Clause but also the demands of democracy in an increasingly pluralistic country.” This is “why some cities no longer have such displays, [and] why others have made a point of featuring symbols connected to other faiths.” After all, Warren did feature a Ramadan sign one year. “The key lesson of Lynch and Allegheny County is that a city does not run afoul of the Establishment Clause by including a [nativity scene] in a holiday display that contains secular and religious symbols.”

The Foundation also argued that the Mayor’s letter showed that the City’s purpose in putting up a holiday display was to advance religion. The Foundation focused their argument on the Mayor’s objection that the sign would “counter the religious tone of the Nativity Scene.” However, “[j]ust as a court may not isolate a creche in deciding whether a holiday display amounts to an impermissible establishment of religion…it also may not isolate two sentences in a letter to show what the City meant by a particular action.” The point of the letter was to illustrate that the sign would be offensive to religious and nonreligious alike. The Religion Clauses protect both the religious and nonreligious, and the Supreme Court has long permitted exhibits like the Warren holiday display. The Foundation pointed out as well that Warren located its display in the City’s principal government building, “[b]ut that does not doom the display.” The permitted Allegheny County display appeared on public property and was more faith-centered than this one.
The Foundation separately argued that the City violated its free-speech rights by its refusal to add the sign to the display. The First Amendment prohibits governments from making any law “abridging the freedom of speech” of individuals. The court held that this “guarantee prevents governments from restricting the speech of individuals; it does not empower individuals to abridge the speech of government.” Warren’s holiday display is government speech. “The City erected, maintained, took down and stored the display each year and covered the costs in doing so. The City reserved final approval of all components of the display to itself.” The City held full authority over what to include. “And it could choose to deny a message disparaging any one religion or religion in general.” Governments must still comply with the Establishment Clause, which is why Warren could not put up a holiday display that contained only a nativity scene.

Neither does the Warren display violate the Equal Protection Clause of the Fourteenth Amendment, which prohibits States and cities from denying individuals equal protection of the law. “To the extent the Foundation means to claim that the City’s government speech commemorating the holiday disparately treats its preferred message, the answer is: welcome to the crowd. Not everyone, we suspect, is happy with the City’s holiday display from one year to the next. And the Foundation, like everyone else, is free to urge the City to add or remove symbols from the display each year or to try to elect new officials to run the City.” After rejecting the above First Amendment and Fourteenth Amendment claims raised by the Foundation, the district court’s ruling was affirmed by the U.S. 6th Circuit Court.

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