Murr — SCOTUS Meets Dick Babcock’s Ghost

So the Murr v. Wisconsin opinion has finally come down, and as predicted by us, it’s an intellectual mess, as must be evident to anyone with some knowledge of eminent domain law, who has read it. We could spend a lot of time surveying the Murr disaster area, but others have begun doing it, so why duplicate their efforts? As we often do, we recommend today’s blog post of our colleague, Robert Thomas in his blog for an overview of Murr. Also, check out Roberts’ post of June 26, 2017, for a more in-depth analysis. Here, we concentrate on only one aspect of it. Quoting one passage from Justice Kennedy’s opinion:

“Though a use restriction may decrease the market value of the property, the effect may be tempered if the regulated land adds value to the remaining property, such as by increasing privacy, expanding recreational space, or preserving surrounding natural beauty. A law that limits use of a landowner’s small lot in one part of the city by reason of the landowner’s nonadjacent holdings elsewhere may decrease the market value of the small lot in an unmitigated fashion. The absence of a special relationship between the holdings may counsel against consideration of all the holdings as a single parcel, making the restrictive law susceptible to a takings challenge. On the other hand, if the landowner’s other property is adjacent to the small lot, the market value of the properties may well increase if their combination enables the expansion of a structure, or if development restraints for one part of the parcel protect the unobstructed skyline views of another part. That, in turn, may counsel in favor of treatment as a single parcel and may reveal the weakness of a regulatory takings challenge to the law.” Slip Opinion at 12-13.

But the question of how the taking benefits the owner’s remaining land that is not taken, goes to the measure of compensation, not to liability for the taking. It is basic appraisal lore that only after the value of the taken part of the subject property is determined, and benefits (usually special ones, but sometimes general ones too) to the remainder are determined, that they are deducted from the severance damages (or in some places, from the entire just compensation). That’s how the owner’s net just compensation is determined. Justice Kennedy thus confuses liability with the measure of compensation, and puts the cart before the horse. In other words, first you determine that a taking occurred and then you value the economic harm done to the owner, from which you deduct benefits. But by Kennedy’s lights you first value the harm done, and then — in an amazing feat of circular reasoning — you use that harm to decide whether a taking occurred. Justice Kennedy also forces the owner to try valuation twice — once in what is usually a bench trial for the purpose of determining liability and if successful, once again, this time before a jury, to fix compensation for the taking. With all due respect, this is wasteful of both the parties’ and of judicial time and resources, it violates the judicial economy principle, and accomplishes nothing except maybe placing an unwarranted and illegitimate obstacle in the path of the aggrieved land owners seeking relief from an unconstitutional taking of their land.

We could go on, but in a tour de force of self-restraint, we won’t. Suffice it to say that the Murr majority opinion provides the aggrieved party with a suggested “remedy” that is akin to advising a car driver with a flat tire to change it with a screwdriver, and then to do it again.

All of which brings to mind a bit of history. After the “taking issue” burst upon the legal scene in the 1970s, I had a talk about it with the late Richard Babcock, then the dean of the nation’s land-use bar. Dick was opposed to the damages remedy for regulatory takings, and being from Illinois, a fabled, far-away place where at that time judges actually provided non-monetary remedies, notably what Dick called the “builder’s remedy” whereby a court would invalidate an overreaching land regulation and order the regulators to issue a building permit. The photo below depicts Babcock (left) and your faithful servant, engaged in scholarly discourse concerning the proper remedy for regulatory takings.

His punch line to me was: “You may win a right to ‘just compensation’ for regulatory takings, but even if you do, judges will never allow an actual payment of money to land owners.” Though I thought at the time that he was being unduly cynical by thus questioning the good faith of judges, he turned out to be right on that one — the “taking issue” has been coming up before the US Supreme Court time and again during the past thirtysomething years, but with two exceptions the court never affirmed an actual money judgment against a land-use regulatory agency. Owners’ victories have consisted of invitations to go back and try the whole shebang all over again. Those exceptions were City of Monterey v. Del Monte Dunes, a case of such transparently bad-faith city conduct, that it caused some harsh remarks from the bench to the city’s lawyer during oral argument (by Justice Kennedy, inter alia, come to think about it). The other was the bizarre “California raisins” case where the feds’ trucks pulled up in front of Mr. Horne’s ranch and demanded that he fill them up with some $400,000 worth of raisins without any compensation. The 9th Circuit — who else? — thought this was hunky dory, but the Supreme Court reversed and ordered the feds to cancel the fine they imposed on poor Mr. Horne and to pay him the value of the raisins which had already been determined. No, we are not making this up — see Horne v. USDA.

In one of his law review article, the late Justice Scalia noted that Roman Emperor Nero would issue decrees, but then had them posted on poles so high that no one could read them. The law of takings is sort of like that. The court has established as a matter of principle that when private property is taken by the government, just compensation is payable whether the taking is physical or regulatory. But then it surrounded this basic holding with a thicket of conceptual and procedural obstacles, that make it nearly impossible for aggrieved parties — except perhaps wealthy folks with multi-million-dollar litigation budgets and decades of time to devote to byzantine litigation — to secure enforcement of their constitutional rights under the Fifth Amendment’s “Just Compensation” clause. Indeed in the notorious Penn Central case the court confessed that it has been “simply unable” to articulate any rule whereby to determine when compensation is required, and that it was deciding these cases ad hoc, one by one.

Bottom line: to invoke the insights of another old-time takings law maven, Fred Bosselman: the courts are denying land owners due process of law — they do so by providing too much process, not too little.