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NOTICE This opinion is
subject to further editing and modification.
The final version will appear in the bound volume of the official
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No. 93-2831
STATE OF WISCONSIN
: IN SUPREME COURT
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Alfred A. Zealy, Plaintiff-Appellant-Respondent, v. City of Waukesha, Defendant-Respondent-Petitioner. |
FILED JUN 4,
1996 Marilyn L. Graves Clerk of Supreme Court Madison, WI |
REVIEW
of a decision of the Court of Appeals. Reversed.
ROLAND B. DAY,
C.J. This is a review of a published decision of the court of
appeals[1]
affirming in part and reversing in part a judgment and order of the circuit
court for Waukesha County, Willis J. Zick, Judge, and remanding the cause with
directions. The issue before this court
is whether the zoning of certain land owned by Plaintiff-Appellant-Respondent
Alfred A. Zealy ("Zealy") as a conservancy district in order to
protect wetlands constitutes a constructive taking of property by the
government for which a landowner should be compensated. We conclude that the conservancy zoning
placed on Zealy's land did not effect a constructive taking. We therefore reverse the court of appeals.
The parcel of land here at
issue consists of approximately 10.4[2]
contiguous acres. The parcel was
originally part of an approximately 250-acre parcel annexed from the Town of
Waukesha to the City of Waukesha ("City") in 1967. Prior to annexation, the property was zoned
A-3 by the Town of Waukesha. This
zoning permitted agricultural use, and Zealy's parents used the property to
grow crops in a truck farming operation.
After annexation, the City zoned the land R-1, a zoning permitting,
among other uses, residential use.
Later, a small portion of the land was rezoned B-4, allowing business
use. The property continued to be used
for farming until approximately 1981.
The other lands in the 250-acre parcel were sold off until only the
10.4-acre parcel at issue in this case remained in Zealy's possession. As of the time he commenced this action,
Zealy used the land for peat mining.
On March 16, 1982, Zealy, his
mother, and his brother, all of whom at that time shared interests in the
property, executed an easement granting the City the right to construct,
maintain, and operate sanitary and storm sewers on Zealy's land. Prior to the execution of the easement,
Zealy had met with the City's Director of Public Works and City Engineer. The Director of Public Works presented Zealy
with a drawing showing proposed future development of the property as a
residential area. The easement provided
that the City would not levy any special assessments for the storm or sewer
mains installed on the property. Zealy
alleges that the representations made by the City's officials led him to grant
the easement. The City eventually
constructed a sanitary and storm sewer on a portion of the property.
On July 3, 1985, the City
changed the zoning on approximately 28.6 acres of land in the City from R-1 to
C-1, creating a conservancy district.[3] Included in the conservancy district were
8.2 acres of Zealy's parcel. These 8.2
acres may not be used for residential use; the remaining land in the parcel,
approximately 2.1 acres, is zoned for residential (1.57 acres) and business
(.57 acres) use. The C-1 zoning allows
agricultural use of the property.
Prior to the rezoning, the
City's assessor had valued the entire 10.4-acre parcel at approximately
$81,000.00; after the rezoning, the City assessed the value of the property at
approximately $57,000.00. Zealy claims
that the fair market value of the 8.2 acres, if developed for residential use
as allowed under R-1 zoning, would be approximately $200,000.00. Zealy has never submitted an application for
a building permit or plans to the City for residential construction on the
land, nor has Zealy shown that he has made any expenditures toward such
construction. Zealy claims that the
value of the 8.2-acre parcel under the present C-1 zoning is approximately $4,000.
Zealy brought an inverse
condemnation action[4] against the
City, claiming that its rezoning of his land constituted a regulatory taking
without compensation, and that the City should be equitably estopped from enforcing
the rezoning because of Zealy's reliance on its representations. The circuit court dismissed Zealy's claims
on both issues. With respect to the
first issue, the circuit court concluded that Zealy's parcel should be
considered as a whole in determining whether a taking occurred. On appeal, the court of appeals held that
the circuit court had erred when it considered the parcel as a whole, and
reversed and remanded for a new trial. See
Zealy, 194 Wis. 2d at 706, 718.
The City, as well as several
of the parties submitting briefs as amici curiae, argue to this court that this
matter is not ripe for adjudication.
These parties note that a regulatory takings claim is not ripe
"until the government entity charged with implementing the regulations has
reached a final decision regarding the application of the regulations to the
property at issue." Streff v.
Town of Delafield, 190 Wis. 2d 348, 354, 526 N.W.2d 822 (Ct. App.
1994) (quoting Williamson County Regional Planning Comm'n v. Hamilton Bank,
473 U.S. 172, 186 (1985)). In the
present matter, Zealy has never sought to have his property rezoned.[5] We recognize that a lack of ripeness in a
takings claim should normally result in dismissal. See, e.g., Schlieper v. DNR, 188 Wis. 2d 318,
322-23, 525 N.W.2d 99 (Ct. App. 1994).
However, we conclude that addressing the merits of the case at bar would
best serve the interests of justice. The
resolution of this case will settle issues presently unclear in our law of
regulatory takings. We also address the
merits in consideration of the extensive briefing by numerous interested
persons and entities who filed amicus briefs, many of which exclusively discuss
the takings issues raised in this case.
This court has previously recognized such considerations in reaching the
merits of the takings issue in M & I Marshall & Ilsley Bank v. Town
of Somers, 141 Wis. 2d 271, 286, 414 N.W.2d 824 (1987). For the reasons above stated, we pursue a
similar course of action here.
The issue in this case is
whether the City's ordinance constituted a taking of Zealy's property without
compensation. This is a question of
law, and thus we undertake our review without deference to the decisions of the
courts below. Ball v. Dist. No. 4,
Area Bd., 117 Wis. 2d 529, 537, 345 N.W.2d 389 (Ct. App. 1984). The Fifth Amendment to the United States
Constitution, made applicable to the states by the Fourteenth Amendment,
provides in part that private property shall not "be taken for public use,
without just compensation."
Article I, § 13 of the Wisconsin Constitution states:
Private
property for public use. Section
13. The property of no person shall be
taken for public use without just compensation therefor.
Takings jurisprudence has
developed from two competing principles: on one hand, respect for the property
rights of individuals; on the other, recognition that the government retains
the ability, in furtherance of the interests of all citizens, to regulate an
owner's potential uses of land. Thus,
in Euclid v. Ambler Realty Co., 272 U.S. 365 (1926), the United States
Supreme Court held municipal zoning to be a permissible exercise of the police
power, while in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415
(1922), the Court held that "while property may be regulated to a certain
extent, if regulation goes too far it will be recognized as a
taking." Such takings are
described as "constructive" or "regulatory" takings.
In cases decided since Mahon,
the United States Supreme Court has established a rough framework for
determining when a regulatory taking has occurred: "In 70-odd years of
succeeding `regulatory takings' jurisprudence, we have generally eschewed any
`set formula' for determining how far is too far, preferring to `engag[e] in .
. . essentially ad hoc, factual inquiries.'" Lucas v. South Carolina Coastal Council, 505 U.S. 1003,
1015 (1992) (quoting Penn Central Transp. Co. v. New York City, 438 U.S.
104, 124 (1978)). This court has
adopted a similar method of inquiry. See
Noranda Exploration, Inc., v. Ostrom, 113 Wis. 2d 612, 624, 335
N.W.2d 596 (1983). The United States
Supreme Court has identified several factors particularly relevant to the
inquiry in cases alleging a regulatory taking: "[T]he Fifth Amendment is
violated when land-use regulation `does not substantially advance legitimate
state interests or denies an owner economically viable use of his
land.'" Lucas, 505 U.S. at
1016 (quoting Agins v. City of Tiburon, 447 U.S. 255, 260 (1980)). When a landowner alleges that a regulation
effects a taking as applied to a particular piece of property, the factors
courts should examine are described as "the character of the governmental
action," "the economic impact of the regulation on the
claimant," and "the extent to which the regulation has interfered
with distinct investment-backed expectations." Penn Central, 438
U.S. at 124 (quoted in Lucas, 505 U.S. at 1019 n.8).
Although phrased in slightly
differing terms in the cases, the rule emerging from opinions of our state
courts and the United States Supreme Court is that a regulation must deny the
landowner all or substantially all practical uses of a property in order to be
considered a taking for which compensation is required. See Lucas, 505 U.S. at 1015
(regulatory taking occurs when regulation "denies all economically
beneficial or productive use of land"); Dolan v. City of Tigard,
114 S. Ct. 2309, 2316 (1994) (regulatory taking occurs if it denies an owner
"economically viable use of his land") (quoting Agins, 447
U.S. at 260); Zinn v. State, 112 Wis. 2d 417, 424, 334 N.W.2d 67
(1983) (regulatory taking occurs "when the government restriction placed
on the property `practically or substantially renders the property useless for
all reasonable purposes'") (quoted sources omitted); Reel Enters. v.
City of La Crosse, 146 Wis. 2d 662, 674, 431 N.W.2d 743 (Ct. App.
1988), review denied, 147 Wis. 2d 887 (1988) (regulatory taking
occurs if it "deprives the owner of all, or practically all, of the
use"). Thus, for example, the United
States Supreme Court in Lucas held that a landowner who purchased two
residential lots at a combined price of nearly one million dollars and was
subsequently barred from building residential structures by a state beachfront
preservation law, rendering the lots without value, may be entitled to
compensation for his loss. See Lucas,
505 U.S. at 1006-07, 1019-32.
However, before reaching this
determination, a court must first determine what, precisely, is the
property at issue:
Because
our test for regulatory taking requires us to compare the value that has been
taken from the property with the value that remains in the property, one of the
critical questions is determining how to define the unit of property
"whose value is to furnish the denominator of the fraction."
Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 497 (1987) (quoting Frank I.
Michelman, Property, Utility, and Fairness: Comments on the Ethical
Foundations of "Just Compensation" Law, 80 Harv. L. Rev. 1165,
1192 (1967)). The court of appeals in
this case held that a landowner's anticipated investment opportunities should
be examined in order to determine what the parcel at issue should be. In this, the court of appeals was in
error. We conclude that the United
States Supreme Court has never endorsed a test that "segments" a
contiguous property to determine the relevant parcel; rather, the Court has
consistently held that a landowner's property in such a case should be
considered as a whole.
"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 . . . .
Penn Central, 438 U.S.
at 130-31.
Similarly, in Keystone, 480 U.S. at 498, the Court noted
practical arguments against allowing the segmentation of the property at issue:
Many
zoning ordinances place limits on the property owner's right to make profitable
use of some segments of his property. A
requirement that a building occupy no more than a specified percentage of the
lot on which it is located could be characterized as a taking of the vacant
area . . . . [O]ne could always argue
that a setback ordinance requiring that no structure be built within a certain
distance from the property line constitutes a taking because the footage
represents a distinct segment of property for takings law purposes.
The court of appeals in this case cited Lucas, 505 U.S. at
1016-17 n.7, for the proposition that courts should use a flexible approach in
deciding when to segment the property at issue in takings cases. See Zealy, 194 Wis. 2d at
716-17 & n.6. However, we note that
this issue was not before the Lucas Court. The Court did not have to consider whether the property in that
case might require segmentation because the trial court had found that the
entirety of the property at issue was rendered valueless by the contested
regulation. See Lucas,
505 U.S. at 1016-17 n.7. Justice
Scalia's comments on this point were therefore dicta. Furthermore, in Concrete Pipe and Prods. v. Construction
Laborers Pension Trust, 113 S. Ct. 2264, 2290 (1993), Justice Souter,
writing for the majority of the Court, replied in the following manner to an
argument that the property at issue should be segmented:
[W]e
rejected this analysis years ago in Penn Central . . . where we held
that a claimant's parcel of property could not first be divided into what was
taken and what was left for the purpose of demonstrating the taking of the
former to be complete and hence compensable.
To the extent that any portion of property is taken, that portion is
always taken in its entirety; the relevant question, however, is whether the
property taken is all, or only a portion of the parcel in question.
We note that this opinion was written subsequent to Lucas, and
that Justice Scalia joined the opinion.
We conclude, therefore, that the cases of the United States Supreme
Court do not support the proposition that a contiguous property should be
divided into discrete segments for purposes of evaluating a takings claim.
We also note a possible
difficulty in the application of the rule proposed by the court of appeals in
the present case. Looking to a
landowner's anticipated use of various parcels and sub-parcels of land in order
to determine the extent of the parcel at issue would require ascertaining a
landowner's subjective intent before being able to evaluate a possible takings
claim. This would confuse both the
agencies responsible for zoning and the courts called on to adjudicate such
claims, and increase the difficulty of an already complex inquiry.
The court of appeals also
cited Ciampitti v. United States, 22 Cl. Ct. 310 (1991), and Loveladies
Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994), for its rule
allowing segmentation of property.
These precedents, which in any event are merely persuasive, see Thompson
v. Village of Hales Corners, 115 Wis. 2d 289, 307, 340 N.W.2d 704
(1983), do not alter our view of the rule we apply in this case. First, we note that the court in Ciampitti
had to determine what the extent of the property at issue was after a lengthy
series of purchases, see Ciampitti, 22 Cl. Ct. at 311-17,
and ultimately decided against segmentation of the property, id. at
320. The case thus bears little
relation to the instant case, in which the property is part of a single
purchase. Second, in Loveladies,
28 F.3d at 1180, the court of appeals excluded from the parcel at issue lands
that had already been developed and/or sold, as well as lands for which the
development rights had been dedicated to the state in return for a building
permit on the remaining lands. No such
concerns are present in the instant case, in which we consider only the 10.4
undeveloped acres owned by Zealy at the time of its rezoning.
We thus conclude that the
property at issue in this case is Zealy's entire 10.4-acre parcel, and now
examine the facts in the record to determine whether the City's C-1 zoning
effected a taking.[6] First, we note that after the rezoning,
Zealy still retains approximately 2.1 acres zoned for business and/or
residential use. The City's assessor
has valued the property at nearly three-fourths of its former value. Zealy presented the circuit court with an
assessment valuing the 8.2-acre parcel at approximately $200,000, presuming
residential use was allowed, but as this court stated in Just v. Marinette
County, 56 Wis. 2d 7, 23, 201 N.W.2d 761 (1972):[7]
[The
landowners] argue their property has been severely depreciated in value. But this depreciation of value is not based
on the use of the land in its natural state but on what the land would be worth
if it could be filled and used for the location of a dwelling. While loss of value is to be considered in
determining whether a restriction is a constructive taking, value based upon changing
the character of the land at the expense of harm to public rights is not an
essential factor or controlling.
Finally, we note that under the City's current zoning ordinance, the
8.2 acres of land zoned C-1 may still be used for its historical use,
farming. Viewed as a whole, the parcel
retains a combination of residential, commercial, and agricultural uses.
It may be true that in some
cases, as Justice Scalia stated in Lucas, that "the rhetorical
force of [the] `deprivation of all economically feasible use' rule is greater
than its precision," Lucas, 505 U.S. at 1016 n.7, but this is not
such a case. The extent of the parcel
at issue in this case is clearly identified, and just as clearly the parcel
retains substantial uses. Under these
facts, we cannot conclude that the City's rezoning deprived Zealy of all or
substantially all of the use of his land.
Without any such loss to the landowner, a taking cannot occur. We therefore conclude that the circuit court
correctly granted summary judgment against Zealy on this issue.
Two further points are raised
by the takings issue in this case.
First, our conclusion that the City's ordinance did not effect a taking
was compelled by our holding that Zealy did not suffer the loss of substantially
all of the beneficial uses of his land.
We therefore need not consider another factor we may look to in takings
cases, whether the regulation did not advance a legitimate state interest. Zealy only contested the interests served by
the City's ordinance to the extent that he claimed the City's regulation served
the improper purpose of allowing the City to "take" his land rather
than purchase it outright, an argument we reject. Second, we also do not reach the issue of the continuing validity
of this court's analysis in Just in view of the Supreme Court's majority
opinion in Lucas, which expressed disagreement with the South Carolina
Supreme Court's conclusion that the regulation at issue could be justified as
an exercise of the police power in order to prevent the harm to the public
interest resulting from residential development of wetlands. See Lucas, 505 U.S. at
1020-32. Such an evaluation would be
required only in a case in which, as in Lucas, the value of the land at
issue is "wholly eliminated."
Lucas, 505 U.S. at 1026.
For the same reason, we need not here consider the argument, raised by
several amici curiae in this case, that Just is a "background
principle[] of the State's law of property," see Lucas, 505
U.S at 1029, that would justify even a total regulatory taking. Nothing in this opinion limits our holding
in Just and cases following its rule.
Finally, Zealy also argues
that he obtained a vested right to the former residential zoning on his land by
virtue of the representations made to him by City officials during the
negotiations for his granting of the City's easement. Property owners obtain no vested rights in a particular type of
zoning solely through reliance on the zoning.
Buhler v. Racine County, 33 Wis. 2d 137, 148, 146 N.W.2d 403
(1966). Zealy has not shown that he
made any expenditures in reliance on the zoning, nor has he ever submitted an
application for a building permit proposing a residential use of the land. Thus, he did not meet the requirement of
submitting an application for a building permit "which conforms to the
zoning or building code requirements in effect at the time of the
application," see Lake Bluff Hous. Partners v. City of South
Milwaukee, 197 Wis. 2d 157, 177, 540 N.W.2d 189 (1995),[8]
and his claim for vested rights must fail.
Wisconsin has a long history
of protecting its water resources, its lakes, rivers, and streams, which depend
on wetlands for their proper survival.
As stated in Just, 56 Wis. 2d at 17:
Swamps
and wetlands were once considered wasteland, undesirable, and not
picturesque. But as the people became
more sophisticated, an appreciation was acquired that swamps and wetlands serve
a vital role in nature, are part of the balance of nature and are essential to
the purity of the water in our lakes and streams. Swamps and wetlands are a necessary part of the ecological
creation and now, even to the uninitiated, possess their own beauty in
nature.
Our review of the relevant law of this court and the United States
Supreme Court leads us to the conclusion that the circuit court correctly
dismissed Zealy's claims. We therefore
reverse the decision of the court of appeals and reinstate the circuit court's
judgment and order.
By the Court.—The decision of the court of appeals is reversed.
SUPREME
COURT OF WISCONSIN
Case No.: 93-2831
Complete Title
of Case: Alfred A. Zealy,
Plaintiff-Appellant,
v.
City of Waukesha,
Defendant-Respondent-Petitioner,
______________________________________
REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at: 194 Wis. 2d
701, 534 N.W.2d 917
(Ct. App. 1995)
PUBLISHED
Opinion Filed: June 4, 1996
Submitted on Briefs:
Oral Argument: April
29, 1996
Source of APPEAL
COURT: Circuit
COUNTY: Waukesha
JUDGE: WILLIS J. ZICK
JUSTICES:
Concurred:
Dissented:
Not Participating:
ATTORNEYS: For the defendant-respondent-petitioner
there were briefs by Curt R. Meitz, City Attorney and Karen A.
Macherey, assistant city attorney and oral argument by Curt R. Meitz.
For the
plaintiff-appellant James W. Hammes and Cramer, Multhauf & Hammes,
Waukesha and oral argument by James W. Hammes.
Amicus
curiae brief was filed by John S. Greene, assistant attorney general for
the State of Wisconsin with whom on the brief was James E. Doyle,
attorney general.
Amicus
curiae brief was filed by Brian W. Ohm, Madison for The Association of
State Wetland Managers, Inc.
Amicus
curiae brief was filed by Lawrence E. Classen, Madison for the
Wisconsin's Environmental Decade, Inc.
Amicus
curiae brief was filed by Kristine A. Euclide, Meg Vergeront and Stafford,
Rosenbaum, Rieser & Hansen, Madison for the National Wildlife
Federation, Wisconsin Wildlife Federation, National Audubon Society and
Wisconsin Audubon Council. Of counsel
was Glenn P. Sugameli, and National Wildlife Federation,
Washington, D.C.; Cameron Davis and National Wildlife Federation,
Ann Arbor, MI and John D. Echeverria and National Audubon Society,
Washington, D.C.
Amicus
curiae brief was filed by Peter A. Peshek, Paul G. Kent, L. Stuart Rosenberg
and DeWitt, Ross & Stevens, S.C., Madison; Curtis A. Witynski,
Madison; Thomas W. Harnish, Madison; William P. O'Connor and Wheeler,
Van Sickle & Anderson, Madison for the City of Madison, League of
Wisconsin Municipalities, Wisconsin Towns Association and the Wisconsin
Association of Lakes, Inc and oral argument by Paul G. Kent.
[2] Throughout the proceedings in this case, the parties have provided varying figures for the acreage of Zealy's land. At the trial court, the parties and the court stated that the entire parcel consisted of 11 or 11.2 acres. In their briefs before this court, Zealy states that the parcel consists of 10.2 acres, while the City describes the parcel as being 10.3 acres. The court of appeals decision states that the parcel is 10.1 acres. The figure we here provide, 10.4 acres, is based on documents attached to the affidavit of the City's director, which are included in the record. These documents show that the parcel currently consists of .57 acres zoned B-4, 1.57 acres zoned R-1, and 8.24 acres zoned C-1, for a total of 10.38 acres. (All figures are rounded to the nearest hundredth of an acre.) Rounding to the nearest tenth, we will henceforth describe the parcel as consisting of a total of 10.4 acres.
[3] Zealy has filed a motion with this court asking that we take judicial notice of the minutes of the City's Plan Commission meeting of November 14, 1984, and the City's rezoning ordinance. We hereby grant Zealy's motion.
[5] At oral argument, Zealy's counsel contended that taking such actions would have been fruitless. We also note that, in answers to interrogatories filed in this case, Zealy stated that his proposed use, presumably residential, would not be allowed even under a variance to the existing zoning.
[6] The
court of appeals stated in its opinion that Zealy conceded that "when all
[10.4] acres are viewed together, the effect of the zoning change is not severe
enough to support a constructive taking claim because of the value of his
commercial property." Zealy,
194 Wis. 2d at 706. In both oral
argument and in his briefs before this court, Zealy's counsel now claims that
he made no such concession. We note
that the following exchange between Zealy's counsel (Mr. Hammes) and the
circuit court, from the record of the hearing at which the circuit court
granted summary judgment against Zealy on the regulatory taking issue, appears
to represent just such a concession:
THE
COURT: . . . . I am open to proof if you can offer some
proof that [the zoning] deprives of reasonable use of [sic] the entire [10.4]
acres.
MR.
HAMMES: It can't, because he has a
buildable business site before and after.
. . . .
THE
COURT: You concede it doesn't deprive
reasonable use of [10.4] acres?
MR.
HAMMES: Under the Court's analysis,
that's correct.
We further note that, at another point in his brief, Zealy's counsel states that the 2.1 acres that were not rezoned retain "substantial value." In any event, whether or not Zealy concedes that the remaining 2.1 acres of his parcel contain sufficient value to defeat a regulatory taking claim, we can and do find facts in the record, as we describe in the text of this opinion, sufficient to support the summary judgment rendered against him by the circuit court.
[7] Zealy argues that this decision is limited to cases involving the public trust doctrine, under which the state has the duty to protect shoreland areas. However, as this court stated in Somers, 141 Wis. 2d at 287, Just is not limited to cases involving that doctrine, and the case is thus equally applicable to wetland regulations.