Petition for Writ of Certiorari — Volkema v. Michigan

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Supreme Court, U.S.

(1) FILED

= 98 888 SEP 2-199

“"ORICE OF THE CLERK

In the

Supreme Court of the United States

October Term, 1997

—G-~

RUSSELL H. VOLKEMA and LOIS J. VOLKEMA,

Petitioners,

Vv.

STATE OF MICHIGAN; DEPARTMENT OF NATURAL

RESOURCES, and ROLAND HARMES, Director of

Department of Natural Resources,

Respondents.

sa.

On Petition for Writ of Certiorari to the

Court of Appeals of the State of Michigan

PETITION FOR WRIT OF CERTIORARI

“vr

R S. RADFORD

Counsel of Record

Pacific Legal Foundation

2151 River Plaza Drive,

Suite 305

Sacramento, California 95833

Telephone: .(916) 641-8888

Facsimile: (916) 920-3444

Counsel for Petitioners

QUESTION PRESENTED

When the government puts a discrete, aici viable

6-acre parcel of land to public use for wetlands preservation,

thereby depriving the owners of all economically beneficial use

of their property, may the government avoid the constitutional

requirement of just compensation merely because the 6-acre

segment is included within a larger, 24.6-acre tract?

TABLE OF CONTENTS

Page

ae ee Ca ks be otis bpd da 40am ee i

TABLE OF AUTHORITIES CITED .................. Vv

ION > aston bahia sip alildaiene dues Wid Gertie’ ]

BR Ee ry a ee een I

CONSTITUTIONAL AND STATUTORY

Pe ae MNES Se xs nae eS eae Oa sea dab eaas l

SEA PREECE GAN SEU MAGNO 6 is ce Ee We ei ica ees cus 2

REASONS FOR GRANTING THE PETITION ......... 6

1. THIS CASE INVOLVES AN IMPORTANT

QUESTION OF FEDERAL CONSTITU-

TIONAL LAW LEFT OPEN BY LUCAS v.

SOUTH CAROLINA COASTAL COUNCIL

THAT MUST BE RESOLVED BY THIS

A GPRIWES 0 w.0cka Gk a Dba eR eC AA 45485 6’ 6

A. When the Government Deprives an Owner

of All Beneficial Use of a Discrete,

Independently Viable Segment of Real

Property, Lucas’ Per Se Takings Rule

SOUT CP UI i i ise oa bh bce ocean 9

1. When the State Asserts and Exercises

Complete Dominion over a Discrete,

Well-Defined Segment of Land, Lucas”

Categorical Takings Rule Should Be

SUE Sk vee eh ech awake 10

2. A Categorical Taking Should Be Found

When Regulations Destroy All Bene-

ficial Use of What Was Previously an

Independently Viable Segment of Real

ili

Page

3. A Consistent Application of the

Takings Clause Should Not

Countenance the Complete

Extinguishment of an Owner’s

Reasonable Investment-Backed

Expectations Merely Because Other

Property Segments Are Also Owned ..... 13

4. The Rationale for Finding a Compen-

sable Partial Taking Is Strengthened

Where, as Here, There Is No Nexus

Between the Regulatory Burden Placed

on the Segment Taken and the Owner’s

Use of the Remainder of the Tract ....... 14

5. The Complete Usurpation of an

Owner's Rights to the Use of a

Discrete Segment of Real Property Is

Qualitatively Different from a Mere

Reduction in the Value of a Larger

Parcel of Which it Is a Part, and Should

Not Be Analyzed Under the Same Rule

og ar ee ae 15

B. When the Government Requires that a

Discrete Segment of Private Property Must

Be Used for a Public Purpose, Compensa-

tion Should Be Required Under Lucas ....... 17

Page

ll. THE DECISION BELOW CONFLICTS WITH

OPINIONS OF THE OREGON SUPREME

COURT AND THE UNITED STATES

COURTS OF APPEALS FOR THE NINTH

AND FEDERAL CIRCUITS IN THEIR

TREATMENT OF TAKINGS CLAIMS

BROUGHT UNDER THE FIFTH

FEE hihi toe nent viake a's ee se ots 20

A. The Oregon Supreme Court Has Found a

Taking Where Environmental Regulations

Required that a Discrete Segment of a

Larger Tract Be Used for Endangered

RE EOS 20

B. The Opinion Below Conflicts with the

Federal Circuit’s Decision in Loveladies

BP RCs Pec Eek Lee kk ccc eww 22

C. The Decision Below Conflicts with the

Ninth Circuit’s Decision in American

et ye te eee 26

TABLE OF AUTHORITIES CITED

Page

Cases

American Savings and Loan Association v.

County of Marin, 653 F.2d 364

Er og Ca He yg 0 dois « 23-25, 27

Boise Cascade Corporation v. Board of Forestry,

eR MS: ee ee ree 20-21, 27

Dolan v. City of Tigard, 512 U.S. 374 (1994) .......... 14

Fifth Avenue Corp. v. Washington County,

ee ee PPP CC IN Gt sok ict cco e ees 24

Hadacheck v. Sebastian, 239 U.S. 394(1915) ......... 16

Kaiser Development Co. v. City and County of

Honolulu, 649 F. Supp. 926 (D. Haw. 1986),

aff'd, 898 F.2d 112 (9th Cir. 1990)................ 25

Keystone Bituminous Coal Association v.

DeBenedictis, 480 U.S. 470 (1987) ............ 15, 19

Loretto v. Teleprompter Manhattan CATV

em A ts a 10, 17, 26

Loveladies Harbor, Inc. v. United States,

28 F.3d 1171 (Fed. Cir. 1994) .............. 22-23, 27

Lucas v. South Carolina Coastal Council,

A Te. a eae 3-9, 11-16, 26-27

Nectow v. Cambridge, 277 U.S. 183 (1928) ........ 24-25

Nollan v. California Coastal Commission,

on kc es 6 14

Penn Central Transportation Corp. v. City of

New York, 438 U.S. 104 (19738) ......... 4-5, 11, 13, 16

Page

Pennsylvania Coal Co. v. Mahon,

Oe Er ID tea Goa bie ww CRORES ed eas 19

Village of Euclid v. Ambler Realty Co..,

Pe rte Wo awe eames cases 15

Volkema v. Department of Natural Resources,

See es Be EE Wein ch cones panes nes l

United States Constitution

aren AMM a os as as eek ek ess passim

Michigan Constitution

Art. 4, § 52 see eee ee eee eee eee eee ees 18

Statutes

BO US Se: GRO oo es we Ree e he Oi xedlokhs ces k l

MICH. COMP. LAWS ANN. Chap. 324 § 30323 .......... 18

Rules

RR 8 RE ere a nee l

Miscellaneous

Richard A. Epstein, Takings: Private Property

and the Power of Eminent Domain (1985) ......... 7-8

John E. Fee, Comment, Unearthing the

Denominator in Regulatory Takings Claims,

61.0. COL b. Ra Sere ree? iis edacsess.. 11-12

Ann T. Kadlecek, Note, The Effect of Lucas v.

South Carolina Coastal Council on the Law of

Regulatory Takings, 68 Wash. L. Rev. 415

I Ue ey ea ae 13

Vii

Page

Marc R. Lisker, Regulatory Takings and the “|

| Denominator Problem, 27 Rutgers L. J. 663

SN C5950 + el WANE BEDE by sv vcs cece se 7

Roger Pilon, Property Rights, Takings, and a Free

Society, in Public Choice and Constitutional

Economics 151 (J. Gwartney & R. Wagner eds,

EE era's ibpaab mul cena inde Seleky sa de 10

Jed Rubenfeld, Usings, 102 Yale L.J. 1077 (1993) ...

]

Petitioners Russell H. Volkema and Lois J. Volkema

respectfully pray that a writ of certiorari issue to review the ——__

judgment and opinion of the Michigan Court of Appeals, entered

in the above-entitled proceeding on October 20, 1995.

OPINIONS BELOW

The decision of the Court of Appeals of the State of

Michigan is reported as Volkema v. Department of Natural

Resources, 542 N.W. 2d 282 (1995), and is reproduced—as—

Appendix (App.) B. The final judgment of the Michigan Court

of Claims is unreported and is reproduced as Appendix C. Page

references are to the versions in the appendices.

JURISDICTION

The opinion of the Court of Appeals of the State of

Michigan which is the subject of this petition was filed and

entered on October 20, 1995. App. B. The order of the

Michigan Supreme Court denying Petitioners’ application for

leave to appeal was entered on June 9, 1998. App. A. The

Michigan Court of Appeals considered and decided the question

of whether the state’s denial of all economically beneficial use

of an approximately six-acre segment of Petitioners’ land com-

prised an uncompensated regulatory taking of Petitioners’

property in violation of the Fifth Amendment to the United

States Constitution. This petition for writ of certiorari has been

timely filed in accordance with Rule 13.1 of the Rules of this

Court. This Court has jurisdiction over this matter pursuant to

28 U.S.C. § 1257(a).

CONSTITUTIONAL AND STATUTORY

PROVISIONS AT ISSUE

The Fifth Amendment to the United States Constitution

provides in pertinent part, “private property [shall not] be taken x:

for public use, without just compensation.”

STATEMENT OF THE CASE

Russell and Lois Volkema (Volkemas) own 24.6 acres of

commercial property in Kentwood, Michigan.' This land was

originally part of a larger parcel the Volkemas had been

progressively developing since they acquired the property in

1963.2 The Volkemas made extensive investments in infra-

structure over the years, and the property has an assessed value

in excess of $20,000 per acre.’ The property is zoned commer-

cial and is situated in a prime commercial development area.*

Seventeen years after the Volkemas acquired and began

developing their property, the State of Michigan adopted the

Wetland Protection Act.° Under authority of this Act, the

Michigan Department of Natura! Resources classified 4.3 acres

of the Volkemas’ property as wetlands.°

In 1991, the Volkemas proceeded with plans to complete

development of their 24.6 acres as a water park, in conjunction

with such a park already operating on a contiguous 10-acre

parcel. This final stage of development would require filling the

4.3 acres of wetlands. When the Volkemas applied to the

Michigan Department of Natural Resources (MDNR) for the

necessary permits, however, their applications were denied.’

' App. B-1.

2 Id.

* App. F-1-2.

* App. D-1.

> App. B-2.

® Id.

” App. F-2.

The effect of MDNR’s denial was to require the 4.3 acres

to be used exclusively for wetlands preservation. The denial

deprived the Volkemas of all economically beneficial use of the

irregularly shaped 4.3-acre parcel. In order to square off the

boundaries of the preservation area, a surrounding 1.4 acres of

the Volkemas’ land was also rendered useless to them.*

In response to this loss of all productive use of approxi-

mately six acres of commercial property, the Volkemas sued

MDNR in the Michigan Court of Claims for a regulatory taking

of their property. Relying on this Court’s holding in Lucas v.

South Carolina Coastal Council,’ the Volkemas argued that the

uncompensated denial of all economically viable use of a

discrete, well-defined six-acre segment of their property com-

prised a categorical violation of the Takings Clause.'° The

federal question now being brought to this Court was first raised

in Petitioners’ complaint,'’ and was forcefully urged at each step

of the proceedings in the trial court and court of appeals.’*

Just as the trial court in Lucas found the property in that

case to be rendered “valueless” by the Beachfront Management

Act," the trial court below found that MDNR’s wetlands classi-

fication and permit denial ieft the affected segment of the

® App. D-1.

® 505 U.S. 1003 (1992).

” App. D-2-3.

'"' Complaint, Court of Claims Case No. 91-13914-CM, dated

October 29, 1991, at 4.

Brief of Plaintiffs/Appellants, Michigan Court of Appeals

No. 1598230, dated February 19, 1993, at 2.

8 505 U.S. at 1007.

Volkemas’ land “unusable.”'* However, the trial court held that

the relevant parcel for purposes of Fifth Amendment takings

analysis was not the 4.3 acres the state required to be utilized as

a wetlands preserve, nor the 6 acres that MDNR’s permit denial

had rendered unusable to the Volkemas, but the Volkemas’

entire 24.6-acre holding. The court analogized the denial of all

beneficial use of a discrete segment of the Volkemas’ property

to ordinary zoning setback requirements “that limit or prohibit

the ability of an owner to develop part of their property.”'°

Because the state “only” required one-fourth of the Volkemas”

total holdings to be used exclusively for wetlands preservation,

the court found no taking had occurred."*

The Michigan Court of Appeals affirmed. Citing to Lucas,

the appellate panel acknowledged that because of MDNR’s

actions the Volkemas had been “deprived of all the economically

beneficial use of their land.”'’ Nevertheless, the court below

found no taking had occurred. Referring to this Court’s opinion

in Penn Central Transportation Corp. v. City of New York,"* the

court of appeals affirmed that the relevant parcel for determining

takings liability consisted of the Volkemas” entire 24.6 acre

holding:

We conclude it would be contrary to the holding in

Penn Central to extract portions of a property and

* App. D-1.

'S App. D-3.

” App. B-4.

® 438 U.S. 104, 130 (1978).

examine those portions piecemeal when determining

the effect of a land-use regulation on the property.'°

In dissent, Judge Sawyer ‘pointed out a key distinction

between cases such as this one, in which regulations carve out

a discrete segment of land and press it into public use, and those

in which regulatory restrictions merely diminish the value of

some overall larger tract.

The effect of the Wetland Protection Act. . . and of

defendant's denial of a fill permit is to preclude

utterly the use of a portion of plaintiffs’ property.

Plaintiffs are not free to choose what portion of their

property to develop. Rather, the regulation allows

development of a specific portion of the property and

absolutely precludes the development of another

portion of the property.”°

Under these circumstances, where the state’s regulations

have themselves divided real property into independent, discrete

segments and pressed one of the newly defined parcels into

public service, a taking should be found “with respect to the

identifiable portion which cannot be used.””’

For purposes of applying Lucas’ categorical takings rule,

the dissent below recognized that it is not constitutionally

relevant whether the land owner possesses other holdings in

addition to what the state has converted to public use by

operation of its' regulations.

What is relevant is that the government has deter-

mined that a public purpose would be served by

denying the rightful owner of the property the use of

" App. B-8 n.7.

® App. B-12 (Sawyer, J., dissenting) (citation omitted).

2! App. B-13 (Sawyer, J., dissenting).

that property and requiring it to be used, or in this

case not used, in accordance with that public purpose.

While the government is permitted to do this, it must

compensate the property owner for putting the

property to public use. Our historical protection of

private property in the constitution allows no less.”

The Michigan Supreme Court held the Volkemas’

application for leave to appeal in abeyance for 14 months, finally

denying it on June 9, 1998.7". The Volkemas now file this

petition for writ of certiorari, hoping that this Court will take up

the important constitutional issue it left open in Lucas and

decide whether a categorical violation of the Takings Clause

occurs where a discrete, well-defined segment of real property

is carved out and devoted exclusively to public use by operation

of environmental or other land use regulations.

REASONS FOR GRANTING THE PETITION

THIS CASE INVOLVES AN IMPORTANT

QUESTION OF FEDERAL CONSTITUTIONAL

LAW LEFT OPEN BY LUCAS v. SOUTH

CAROLINA COASTAL COUNCIL THAT MUST

BE RESOLVED BY THIS COURT

In Lucas v. South Carolina Coastal Council, this Court

declared that land use restrictions that deprive owners of all

economically beneficial use of their property trigger the

requirement for just compensation under the Takings Clause of

the Fifth Amendment.” The Lucas opinion candidly admitted,

however, that

2 App. A.

* Lucas, 505 U.S. 1003.

the rhetorical force of our “deprivation of all econom-

ically feasible use” rule is greater than its precision,

since the rule does not make clear the “property

interest” against which the loss of value is to be

measured. When, for example, a regulation requires

a developer to leave 90% of a rural tract in its natural

State, it is unclear whether we would analyze the

situation as one in which the owner has been

deprived of all economically beneficial use of the

burdened portion of the tract, or as one in which the

owner has suffered a mere diminution in value of the

tract as a whole.”

The uncertainty surrounding this issue has imposed heavy costs

on property owners, as illustrated by the case at bar. Petitioners

respectfully submit that the time has come for this Court to

revisit the issue of partial categorical takings left open in Lucas.

in particular, Petitioners urge this Court to clarify that Lucas’

categorical takings rule comes into play whenever a discrete,

independently viable segment of real property is carved out of a

larger parcel and put to exclusively public use by operation of

State land use controls.

The so-called “denominator problem,” the task of deter-

mining the relevant parcel for Fifth Amendment takings claims,

is “[o]ne of the most troubling areas in current takings

jurisprudence.” The doctrinal importance of this issue has

been well summarized by Professor Epstein:

The protection afforded by the eminent domain

clause to each part of an endowment of private

property is equal to the protection it affords the

whole—no more and no less. No matter how the

> Lucas, 505 U.S. at 1016 n.7.

7° Marc R. Lisker, Regulatory Takings and the Denominator

Problem, 27 Rutgers L. J. 663, 725 (1996).

basic entitlements contained within the bundle of

ownership rights are divided and no matter how many

times the division takes place, all of the pieces

together, and each of them individually, fall within

the scope of the eminent domain clause.”’

In Lucas, this Court found the deprivation of all

economically viable use of David Lucas’ two beachfront lots

gave rise to a Categorical taking (barring a showing that the

Owner’s proposed property use was foreclosed by state common

law principles). Compensation was required because the

enactment of South Carolina’s Beachfront Management Act had

displaced the entirety of Mr. Lucas’ rights of dominion and

control over the use of his property. But the state would have

taken no less if Mr. Lucas had happened to own a third lot, on

which he could build. If Mr. Lucas had all along owned a third

parcel on the Isle of Palms, located inland of the “no-build” line

established by the Beachfront Management Act, would this have

altered the outcome of his case? There is no reason to believe

that fact would have been relevant to the takings analysis. As

Professor Epstein notes,

Prima facie, compensation must be paid for the land

taken no matter how much land the owner retains. . . .

In the case [where the state takes two acres of land

from a four-acre parcel], what is decisive is that

which is taken, not that which is retained. It matters

not if the claimant owns only the two acres taken or

the full four acres; the obligation to compensate is

constant in either case.”°

” Richard A. Epstein, Takings: Private Property and the Power of

Eminent Domain 57 (1985).

% 505 U.S. at 1029-31.

* Epstein, 7akings at 57-58.

There are doctrinally important reasons for this Court to

clarify that Lucas’ categorical rule applies to the taking of

discrete, independently viable parcels of real property, even

when these parcels comprise less than the totality of an owner’s

property holdings. Such a rule is especially compelling in cases

like the one at bar, where the government has imposed its own

preferred use of the property in place of the owners’ reasonable

investment-backed expectations. The state and federal courts are

in conflict on this important question of Fifth Amendment

interpretation, adding to the urgency of the need for this Court

to resolve this issue.

A. When the Government Deprives an Owner of All

Beneficial Use of a Discrete, Independently Viable

Segment of Real Property, Lucas’ Per Se Takings

Rule Should Be Triggered

There are compelling reasons for this Court to apply Lucas’

categorical takings rule to the regulatory deprivation of all

beneficial use of a discrete, independently viable segment of real

property. Deprivations such as those imposed by MDNR in the

case at bar entail the assertion of complete dominion and control

over real property by the state, for which compensation has

traditionally been required. The segment of property that has

been rendered unusable had independent economic viability

prior to application of the regulations at issue. The Voikemas

had formed concrete, reasonable, investment-backed expecta-

tions regarding their use of the property, which were completely

extinguished by MDNR’s actions. There was no essential nexus

between the state’s determination that the 6-acre segment must

be used exclusively for wetlands preservation and any burdens

arising from the Volkemas’ proposed use of their 24.6 acre tract.

Finally, the deprivation of all use of a discrete, independently

viable segment is qualitatively different from a mere reduction

in value of the larger tract and should not be analyzed under the

same rule of takings liability.

1. When the State Asserts and Exercises

Complete Dominion over a Discrete, Well-

Defined Segment of Land, Lucas’ Categorical

Takings Rule Should Be Triggered

Our takings jurisprudence rests in large measure on the

recognition that private property rights are inextricably linked

with individual liberty and autonomy.” As this Court has

recognized, property owners suffer a unique injury—regardless

of the scale of the government's intrusion—when they are

required by state action to “permit another to exercise complete

dominion” over a portion of their land.*' It is this complete loss

of dominion that is the gravamen of a categorical taking, regard-

less of whether the whole or only a part of the landowner’s

holdings are taken. .

In the present case, the State of Michigan has wholly eradi-

cated the Volkemas* autonomous decision-making authority over

six acres of their land, and supplanted it with its own. MDNR‘s

actions in classifying the Volkemas’ property as wetlands and

then denying the permits required to make any beneficial use of

the land cut through the Volkemas’ entire bundle of ownership

rights with respect to that segment. The land can now be used

only for the purpose the state has dictated—for wetlands

preservation.** It is the state’s exercise of complete dominion

® See, e.g., Roger Pilon, Property Rights, Takings, and a Free

Society, in Public Choice and Constitutional Economics 151, 176

(J. Gwartney & R. Wagner eds, 1988) (“property nghts are at the very

heart of a free society, serving to define the normative relationships

among its members and to enable those individuals to pursue their

various ends free from the interference of others”).

* Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,

436 (1982).

and control over this six-acre segment that triggers the require-

ment for just compensation under Lucas.

There is a qualitative difference between government

regulation that imposes some restriction on property use by

“adjusting the benefits and burdens of economic life”’** and the

unilateral exercise of total government control over a productive

parcel of private land. There simply is no greater governmental

intrusion into the realm of personal liberty and autonomy than

when the state confiscates all meaningful decision-making

authority in private land for the general public good.

2. A Categorical Taking Should Be Found When

Regulations Destroy All Beneficial Use of

What Was Previously an Independently Viabie

Segment of Real Property

One useful test of whether a taking has occurred is to

examine whether the segment of land pressed into public service

could, prior to the application of the regulations in question.

“have been put to at least one economically viable use.

independent of the surrounding land segments.”** This inquiry

looks to the uses to which the owner could have put the property

in the absence of the regulations to determine whether these uses

would have been economically viable in their own right. This

avoids bringing ordinary zoning setbacks and buffer zones under

the rubric of categorical takings:

The most obvious example . . . is the property

between the edge of a building and the street. In

most situations, this buffer zone would be of no

economic use to anyone except the owner of the

building, and the owner of the building typically

would have no economic use for it other than to plant

8 Penn Central, 438 U.S. at 124.

* John E. Fee, Comment, Unearthing the Denominator in Regulatory

Takings Claims, 61 U. Chi. L. Rev. 1534, 1557 (1994).

grass, expand the existing enterprise, or otherwise

add value to a larger segment of land. In such a case,

it would be inappropriate to consider the buffer zone

an independent parcel for regulatory taking purposes,

for it has no economic use in and of itself.*°

The trial court below mistakenly held that MDNR’s taking

of the Volkemas’ six acres was not different in kind from impos-

ing zoning setbacks or buffer zones.*° The court missed the

crucial distinction that such residual strips of land are not

ordinarily economically viable in their own right, and thus could

not fall within Lucas’ categorical takings rule.

Instead, the court should have examined the six acres of

wetlands “to see if it could have been put to at least one

economically viable use independent of the surrounding land

prior to the regulation.”*’ The record in this case indicates that

the segment in question consists of six acres of prime commer-

cial land in a rapidly developing area.“ This land had an

assessed value of some $120,000 in its natural condition,”*’ and

a 1991 market value in excess of $212,000 if properly graded

and filled.’ Because this six-acre segment would obviously

have independent economic viability but for the application of

MDNR’s regulations and permit denial, it should be subject to

Lucas’ categorical takings rule regardless of the remainder of the

Volkemas’ holdings.

* John E. Fee, Comment, at 1559.

* App. D-3.

* John E. Fee, Comment, at 1557.

*® App. D-1.

» App. F-2.

Stipulation of the parties, Michigan Court of Claims No. 91-13914-

CM.

i - ;

3. A Consistent Application of the Takings Clause

Should Not Countenance the Complete

Extinguishment of an Owner’s Reasonable

Investment-Backed Expectations Merely Because

Other Property Segments Are Also Owned

Applying Lucas to the type of taking at issue here would be

consistent with the well-recognized importance of protecting

reasonable, investment-backed expectations.*!

After Lucas . . . the Supreme Court may take the

position that the “economically viable use” test

should be applied to smaller portions of the owner’s

property. The Lucas Court dismissed Penn Central's

consideration of the owner’s other holdings in the

area as “unsupportable.” It suggested instead that the

appropriate unit should be determined by the owner's

expectations.”

The court below expressly found that the Volkemas “had an

investment-backed expectation in the property in question.’

The Volkemas had invested heavily over the years in construc-

ting and installing roadways, parking facilities, utilities, sewers,

and a retention pond for the benefit of the six-acre segment as

“! See, e.g., Penn Central, 438 U. S. at 124 (“the extent to which the

regulation has interfered with distinct investment-backed

expectations” an important consideration in determining takings

liability); Lucas, 505 U.S. at 1034 (“[w]here a taking is alleged from

regulations which deprive the property of all value, the test must be

whether the deprivation is contrary to reasonable, investment-backed

expectations”). .

“ Ann T. Kadlecek, Note, The Effect of Lucas v. South Carolina

Coastal Council on the Law of Regulatory Takings, 68 Wash. L. Rev.

415, 433 (1993) (footnote omitted).

well as the rest of their holdings.“* The Volkemas’ expectations

regarding the 6-acre segment were indistinguishable from their

expectations of developing the larger 24.6-acre parcel. When

MDNR carved out the six acres for dedication to a public use,

the Volkemas’ admittedly reasonable expectations with respect

to that independently viable segment were utterly extinguished.

This should be grounds for applying Lucas’ categorical takings

analysis to the loss of all beneficial use of a discrete segment of

real property.

4. The Rationale for Finding a Compensable Partial

Taking Is Strengthened Where, as Here, There Is

No Nexus Between the Regulatory Burden Placed

on the Segment Taken and the Owner’s Use of

the Remainder of the Tract

The trial court below likened MDNR’s permit denial to the

imposition of “set backs from property lines and other require-

ments that limit or prohibit the ability of an owner to develop

part of their property. These do not constitute a taking since it

is recognized that such rules are for the good of all.”*’ The

kernel of truth in the court’s reasoning is that such restrictions

do not constitute a taking because they are inextricably con-

nected to the owner’s proposed use of the remainder of the

property. In this Court’s takings parlance, setbacks and

comparable limitations bear an essential nexus“ to the

placement of buildings and other development activity occurring

on the surrounding property. Similarly, certain restrictions on

the use of part of a property may be necessitated by health and

“ App. F-1-2.

* App. D-3.

“ See Dolan v. City of Tigard, 512 U.S. 374, 383 (1994); Nolian v.

California Coastal Commission, 483 U.S. 825, 837 (1987).

safety concerns arising from the owner’s use of the balance of

the estate.*”

No such nexus exists in the present case. Nothing in the

Volkemas’ proposed use of their 24 acres of land as a water park

would create a burden that could be mitigated by devoting 6

acres to wetlands preservation. The two uses of the Volkemas’

property are wholly unrelated. Because of this absence of nexus,

the trial court’s analogy to zoning setbacks fails. The state’s

determination that the Volkemas must devote their property to

wetlands preservation is wholly gratuitous, motivated solely by

the state’s desire to press private resources into public use

without the inconvenience of paying for them.

5. The Complete Usurpation of an Owner’s Rights

to the Use of a Discrete Segment of Real

Property Is Qualitatively Different from « Mere

Reduction in the Value of a Larger Parcel of

Which it Is a Part, and Should Not Be Analyzed

Under the Same Rule of Takings Liability

In Lucas, this Court referred to regulations that would not

be classified as takings because they resulted in a “mere dimin-

ution in value” of private land.“ Typically, these cases involve

regulatory restrictions that reduce the utility of the owner’s entire

holdings. Classic examples include Village of Euclid v. Ambler

Realty Co.“ (approximately 75% diminution in value due to

*” See Keystone Bituminous Coal Association v. DeBenedictis,

480 U.S. 470, 497-502 (1987) (law requiring some coal to be left in

pillars upheld in part on grounds that this restriction was necessary to

prevent subsidence that would otherwise be caused by owners’

extraction of remainder of coal).

* 505 U.S. at 1016 n.7.

® 272 US. 365, 384 (1926).

imposition of zoning ordinance); and Hadacheck v. Sebastian”

(92.5% diminution in value due to ordinance limiting operation

of brickyard to certain areas).

The court below characterized the State of Michigan's

«/imination of all beneficial use of the Volkemas’ property as

comprising just such a diminution in value, for which compen-

sation is not required.*' However, this case does not fit within

this Court's regulatory diminution decisions. In none of these

cases did the government attempt to carve out a discrete portion

of the owner's property and require it to be devoted to some

public use. The closest analogy would be the decision described

as “extreme and unsupportable” in Lucas—Penn Central

Transportation Co. v. City of New York. Yet Penn Central did

not involve the complete deprivation of beneficial use of any

portion of the subject property. The owners alleged a taking of

the air space over Grand Central Terminal,*’ but the record

established that they had not in fact been denied all use of this or

any other segment of their property holdings.™

Regulations that cause a general decrease in the value of an

owner's total holdings are properly subject to the multifacted

balancing test of Penn Central. Land-use restrictions of this

kind are qualitatively different from the complete deprivation of

beneficial use of a discrete, independently viable segment of real

property. Deprivations of the latter kind, as Judge Sawyer

* 239 U.S. 394, 405 (1915).

*! App. B-9.

* 438 U.S. 104.

* Jd. at 130.

* Jd. at 137.

® Jd. at 123.

pointed out in the dissent below,” should be viewed as

categorical takings under Lucas.

B. When the Government Requires that a

Discrete Segment of Private Property Must

Be Used for a Public Purpose, Compensation

Should Be Required Under Lucas

This Court has always exercised special vigilance to ensure

compliance with the Takings Clause when the state puts any

segment of private property to public use through regulatory

enactments or other actions.*’ In Loretto v. Teleprompter

Manhattan CATV Corp.,* this Court found a New York statute

to effect a taking because it required an apartment owner to

allow a cable television company to place cable equipment on

the roof of her building.’ Although usually classified as a

“physical invasion” case, Loretto is perhaps better characterized

as one in which the state dictated the specific use to which a part

of Mrs. Loretto’s property would have to be devoted. Because

the government required the property owner to devote a segment

of her property to providing a cable television installation, a

compensable taking was found even though this use was

imposed on no more than 1.5 cubic feet of space directly above

and on the roof of the building.

In the present case, the State of Michigan has imposed an

exclusive public use on 6 acres of the Volkemas’ property, as

opposed to the 1.5 cubic feet in Loretto. The courts below

* App. B-9-14 (Sawyer, J., dissenting).

*” See, e.g., Jed Rubenfeld, Usings, 102 Yale L.J. 1077, 1111-30

(1993).

* 458 U.S. 419.

® Id. at 435-40.

treated MDNR’s actions as a mere restriction on the Volkemas*

use of their land, rather than the dedication of this six acres to an

exclusively public use.°' However, it is little more than semantic

game playing to argue that the state has not put the Volkemas’

property to use for wetlands preservation. As one commentator

has noted,

[w]etlands laws prohibiting all development not only

prevent harm, but also take over property in order to

exploit some of its use-values for state-dictated

service.™

Indeed, wetlands preservation is a well-recognized govern-

mental use of property. Land is commonly acquired by govern-

ment through eminent domain or comparable proceedings and

put to precisely the same use that the state has imposed on the

Volkemas’ property. The only difference is that in this case, the

State of Michigan chose not ‘o pay for what it took.’

Employing the Volkemas’ property for use in wetlands

preservation advances policy objectives of the State of Michigan

that can be (and are) equally well advanced by purchasing

* App. B-9; App. D-3.

*’ The conservation of natural resources is identified as a “paramount

public concern” under the Michigan Constitution, art. 4, § 52.

MDNR aggressively pursues this objective through such policies as

acquinng private wetlands through reversion to the state for non-

payment of taxes. See St. Clair Flats Management Plan (April, 1981).

The Wetland Protection Act itself provides for the public acquisition

of wetlands from private owners—but only if those owners first go to.

court and obtain a judgment against the state. MicH. Comp. Laws

ANN. Chap. 324 § 30323.

similar parcels of land throughout the state. The government

cannot reasonably protest that it only “uses” land for wetlands

preservation when it acquires title, whereas imposing this same

use On private land without compensation is really a “non-use.”

This case is not comparable to Keystone, where the govern-

ment gained no utility from requiring mine owners to forgo the

extraction of certain columns of coal. There, the columns were

required to alleviate legitimate public health and safety concerns

related to the owners’ use of the remainder of the property.

Here, in contrast, the use of land for wetlands preservation is an

independent policy objective of the State of Michigan, unrelated

to the Volkemas’ use of their property. This policy objective can

be pursued either by acquiring land for state management and

control, or by imposing state control to direct the use of privately

owned land, as has occurred here. In either case, employing

land exclusively for wetlands preservation is clearly a public use

of that property within the meaning of the Takings Clause.

It should be noted that the Volkemas have no cause to

dispute that wetlands preservation is a legitimate, or even laud-

able, governmental objective. That issue is not before the Court.

As Justice Holmes reminds us,

[t]he protection of private property in the Fifth

Amendment presupposes that it is wanted for public

use, but provides that it shall not be taken for such

use without compensation.

We are in danger of forgetting that a strong

public desire to improve the public condition is not

enough to warrant achieving the desire by a shorter

cut than the constitutional way of paying for the

change.”

“ Pennsylvania Coal Co. v. Mahon Co., 260 U.S. 393, 415-16

(1922).

THE DECISION BELOW CONFLICTS WITH

OPINIONS OF THE OREGON SUPREME COURT

AND THE UNITED STATES COURTS OF APPEALS

FOR THE NINTH AND FEDERAL CIRCUITS IN

THEIR TREATMENT OF TAKINGS CLAIMS

BROUGHT UNDER THE FIFTH AMENDMENT

The importance of the constitutional question raised by this

case is underscored by the existence of deep conflicts on this

issue between the states and among the federal circuit courts of

appeals. Although the Volkemas’ Fifth Amendment takings

claim was denied by the Michigan courts, it would have been

upheld by the Oregon Supreme Court under that states interpre-

tation of the federal Constitution. Similarly, if the defendant had

been the United States instead of the State of Michigan, the

Volkemas would have prevailed in the Federal Circuit Court of

Appeals. Other states and circuits are hopelessly divided in their

treatment of federal takings claims based on the taking of

discrete, well-identified segments comprising less than the

entirety of a landowner’s holdings. The rights guaranteed to

citizens under our Constitution should not depend on the

particular state or federal jurisdiction in which they are asserted.

This Court should grant the petition to establish uniformity in the

treatment of partial takings claims brought under the Fifth

Amendment.

A. The Oregon Supreme Court Has Found a

Taking Where Environmental Regulations

Required that a Discrete Segment of a Larger

Tract Be Used for Endangered Species Habitat

In a case strikingly similar on its facts to the one at bar, the

Oregon Supreme Court arrived at precisely the opposite

conclusion from the court below on the proper application of

federal constitutional law. In Boise Cascade Corporation v.

Board of Forestry,® the state Board of Forestry denied an

application to harvest timber on a 64-acre tract to protect an

endangered species (the northern spotted owl) that had estab-

lished its habitat on the plaintiff's property. The board specified

an 8-acre segment that could be harvested subject to certain

conditions, thereby carving out a 56-acre segment that was

deprived of all economically viable use and forced into service

as species habitat.“ The property owner sued, alleging a Fifth

Amendment taking of the 56-acre segment.

The Oregon Supreme Court found that the plaintiff had

stated a claim for a taking by alleging “depriv[ation] . . . of the

only economically viable use of approximately 56 acres of

merchantable timber.”*’ The court emphasized that it considered

the regulated 56 acres to be the relevant parcel for its takings

analysis by denying a concurrent claim for a temporary taking of

the remainder of the 64-acre tract!™

By focusing its takings analysis on the discrete 56-acre

tract that the State of Oregon required to be used as owl habitat,

the Oregon Supreme Court (correctly) applied the Takings

Clause in a manner completely contrary to the doctrine of the

Michigan court below. It is antithetical to our constitutional

form of government that rights secured under the Fifth

Amendment should be protected in some states but not in others.

This petition should be granted so that this Court can establish

a uniform interpretation of the Takings Clause for categorical

takings of discrete segments of larger tracts of land.

®’ Jd. at 420 (citing complaint).

® Jd. at 420-21.

B. The Opinion Below Conflicts with the Federal

Circuit’s Decision in Loveladies Harbor

In Loveladies Harbor, Inc. v. United States,°’ landowners

brought a claim for the regulatory taking of a 12.5-acre segment

of a Sl-acre parcel. Originally, the 51 acres had been part of a

250-acre tract, most of which had already been developed and

sold.”” When the Army Corps of Engineers denied Loveladies

a federal permit needed to develop the 12.5 acres, instead

requiring the land to be used for wetlands preservation,

Loveladies brought suit against the federal government for just

compensation under the Takings Clause.

The Federal Circuit Court of Appeals was directly

confronted with the “denominator” issue. The government

contended that the relevant property for a takings analysis was

either Loveladies’ original 250-acre parcel or the 51 acres which

it still owned when the permit was denied.”' Loveladies argued

that the denominator of the takings fraction was the 12.5 acres

for which it had sought a permit.”

The court of appeals agreed with Loveladies, declining to

include the impact of the permit denial on the remaining 38.5

acres. The court concluded that “the relevant property for the

takings analysis is the 12.5 acres, for which the trial court found

the remaining value to be de minimis.” Consequently, the

court of appeals held Loveladies had been deprived of all

economically beneficial use of the “relevant parcel.” Thus the

® 28 F.3d 1171 (Fed. Cir. 1994)

” Id. at 1180.

" Id

2 Id. at 1181

™ Id.

permit denial was “effectively a total taking of the property

owners’ interest in these [12.5] acres.””

The Federal Circuit’s focus in Loveladies on the property

actually carved out for dedication to a public use by the

operation of land use regulations, rather than on the owners’

entire holdings, stands in stark contrast to the approach of the

Michigan courts in the present case. If the plaintiffs in

Loveladies Harbor had brought their takings claim against

MDNR in the Michigan courts, instead of against the Corps of

Engineers in the Court of Federal Claims, it is safe to conclude

they would have suffered the same fate as the Volkemas.”°

C. The Decision Below Conflicts with the Ninth

Circuit’s Decision in American Savings

In American Savings and Loan Association v. County

of Marin,” Marin County applied two different zoning classifi-

cations to two contiguous segments of a landowner’s property.

One 48-acre section called Strawberry Spit was zoned as urban

open space with a 5-acre minimum lot size. An adjacent 20-acre

section known as Strawberry Point was zoned to allow 4 multi-

residential units per acre.’ The point was worth some

™ Jd. at 1182 (emphasis added)

* The court below purported to distinguish Loveladies on the basis

that the property owners had executed deed restriction to the State of

New Jersey on the 38.5-acre segment. App B-5. However, this

misses the point that the Federal Circuit evaluated Loveladies’ takings

claim by examining the impact of the government’s action on the

12.5-acre segment it had carved out for wetlands preservation, rather

than evaluating the 51-acre parcel as an organic whole.

” Id. at 367.

$2 million under this zoning arrangement.” Nevertheless the

owner sued, alleging a regulatory taking of the spit because of

the severe zoning restrictions on the 48-acre segment. The trial

court held that, since the spit and point were contiguous sections

of land under common ownership, the entire 68 acres comprised

the relevant parcel for purposes of determining takings liability.”

On appeal, the Ninth Circuit recognized that the issue

before it was “whether the challenged ordinance creates two

separate parcels for taking purposes by adopting different zoning

designations for each parcel.“ The court rejected as inappli-

cable cases where property was treated as a single unit for

takings purposes because in those cases “the entire subject

property was covered by a uniform restriction.”*' Instead, the

Ninth Circuit noted that this Court in Nectow v. Cambridge®

applied separate constitutional analysis to two contiguous

segments of property under common ownership that had been

subjected to different zoning.”

The Ninth Circuit also agreed with the Oregon Supreme

Court’s analysis in Fifth Avenue Corp. v. Washington County“

wherein that court “divided the property analytically into two

® Id. at 368.

® Id. at 367.

® Jd. at 370.

8! Id. at 369.

® 653 F. 2d at 370.

* 581 P.2d 50 (Or. 1978).

parcels” depending on whether they were zoned as developable

or not.®°

Most significantly, the American Savings court concluded

by holding that if the appellant can show that “the Spit and

Point have been, or would be, treated separately when its

development plans are submitted . . . [then] the spit must be

analyzed as a separate parcel for takings purposes.”

This holding clearly conflicts with the treatment of the

Volkemas’ takings claim by the court below. The Michigan

court refused to consider the 6-acre parcel, which had been

dedicated for use exclusively as a wetlands preserve, separately

from the contiguous 18 acres on which development could

occur.*’ Moreover, the court below did not find it significant

that the Volkemas had prepared a development plan embodying

their investment-backed expectations for their entire 24.6 acres,

and the government responded by treating the two segments of

property as different entities with respect to their development

potential.™

® 653 F.2d at 370.

*® Jd. at 372 (emphasis added). Accord, Kaiser Development Co. v.

City and County of Honolulu, 649 F. Supp. 926 (D. Haw. 1986),

aff'd, 898 F.2d 112 (9th Cir. 1990). In deciding to treat different

segments of a single legal property as separate parcels for purposes

of its takings analysis, the court cited as the “most important”

consideration the fact that “the City has treated Queen’s Beach separ-

ately for zoning and planning purposes. . . . In summary, under the

facts of this case, Queen’s Beach is to be considered a separate parcel

for the purposes of determining whether there has been a taking.”

649 F. Supp. at 947-48.

* App. B-7.

It places an unacceptable strain on our constitutional form

of government when rights guaranteed under the Fifth

Amendment are recognized and protected in some state and

federal jurisdictions but not in others. This Court should grant

the petition for certiorari to establish that Michigan citizens are

entitled to the same rights under the Takings Clause as property

owners who bring suit in the courts of the Ninth Circuit, or the

Federal Circuit, or the State of Oregon.

CONCLUSION

In Lucas, this Court established that a governmental

deprivation of all beneficial use of private land categorically

triggers the requirement of just compensation under the Takings

Clause.*” In Loretto and other decisions, this Court has also

applied a categorical takings rule to situations where the govern-

ment actually puts any discrete segment of private land to public

use, even if the affected property is only a small part of the

owner’s holdings.” This case stands at the intersection of these

two categorical rules. The State of Michigan has carved out a

discrete, well-defined segment of the Volkemas’ land and

required it to be put to public use as a wetlands preserve. In so

doing, the state has also deprived the Volkemas of all beneficial

use of this land, which previously had independent economic

viability. However, instead of triggering categorical takings

liability under either Lucas or Loretto, the court below found

that the state incurred no liability to compensate the Volkemas

for the six-acre parcel it had taken.”!

Other state and federal courts interpret the Fifth

Amendment differently on this question. The Volkemas would

have prevailed if their claim had been brought in Oregon under

® Lucas, 505 U.S. at 1019.

® E.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.

at 426.

” App. B-9.

Boise Cascade,” or in the Federal Circuit under Loveladies

Harbor,”’ or in the Ninth Circuit under American Savings.”

This Court should grant this petition so that it can address

the issue of categorical regulatory takings of less than the

entirety of a landowner’s holdings, an issue the Court raised but

left open in Lucas. The facts of this case provide an opportunity

for this Court to provide much needed guidance to the lower

federal and state courts and to establish a uniform base of

constitutional protection under the Fifth Amendment. The

Volkemas urge this Court to adopt the rule set forth by Judge

Sawyer in the dissent below:

nn re

[A] taking occurs where a regulation precludes the

use of an identifiable, discrete piece of property, even

if that property forms only a portion of a larger

parcel.”

For these reasons, Petitioners Russell and Lois Volkema

respectfully request that this Court grant the petition for writ of

certiorari.

DATED: September, 1998.

Respectfully submitted,

R S. RADFORD

Counsel of Record

Pacific Legal Foundatior

2151 River Plaza Drive,

Suite 305

Sacramento, California 95833

Telephone: (916) 641-8888

Facsimile: (916) 920-3444

Counsel for Petitioners

® 935 P.2d 411.

® 28 F. 3d 1171.

™ 653 F.2d 364.

® App. B-13 (Sawyer, J., dissenting).

Appendix A-1

Filed 6/9/98

ORDER Michigan Supreme Court

Entered: June 9, 1998 Lansing, Michigan

RUSSELL H. VOLKEMA and

LOIS J. VOLKEMA, husband

and wife,

Plaintiffs-A ppellants/

Cross-Appellees,

Vv SC: 104723

COA: 159820

MICHIGAN DEPARTMENT OF LC: 91-13914

NATURAL RESOURCES,

Defendant-Appellee/

Cross-Appellant.

By order of April 29, 1997, the application for leave to

appeal was held in abeyance pending the decision in K&K

Construction, Inc. v. Michigan Dep't of Natural Resources,

(Docket No. 106712).

On order of the Court, the decision having been issued

on March 24, 1998, 456 Mich 570 (1998), the application is

again considered. The motions to file briefs amici curiae are

considered and they are GRANTED. The application is again

considered, and it is DENIED, because we are not persuaded

that the question presented should be reviewed by this Court.

The result reached by the Court of Appeals is correct pursuant

to this Court’s decision in K&K Construction, Inc., supra. The

Court of Appeals’ analysis, particularly its reliance on

Loveladies Harbor, Inc. v. United States, 28 F 3d 1171 (1994),

is disavowed insofar as it is inconsistent with this Court’s

decision in K&K Construction.

The application for leave to appeal as cross-appellant is

DENIED as moot.

Appendix A-2

1, CORBIN R. DAVIS, Clerk of the Michigan Supreme

Court, certify that the foregoing is a true and complete copy of

the order entered at the direction of the Court.

June 9_, 1998 /s/ Jacqueline B. McKinna

Deputy Clerk

Appendix B-1

Filed 10/20/95

STATE OF MICHIGAN

COURT OF APPEALS

Russell H. VOLKEMA and

Lois J. Volkema, husband No. 159820.

and wife, LC No. 91-013914-CM

Plaintiffs-Appellants/

Cross-Appellees,

DEPARTMENT OF NATURAL

RESOURCES,

Defendant-Appeliee/

Cross-Appellant,

and

Michigan Association of Realtors,

Amicus Curiae.

Before NEFF, P.J., and SAWYER and MARKEY, JJ.

Narr, &.J.

Plaintiffs appeal, and defendant cross appeals, from an

order of the circuit court denying plaintiffs relief with respect to

their inverse condemnation claim. We affirm.

Plaintiffs purchased approximately forty-five acres of

commercial property in Kentwood in 1963 and an additional

contiguous five-acre parcel in 1979. Plaintiffs made various

improvements to the property, sold parcels of the property, and

leased a ten-acre parcel to a water park operator. After the sales

and lease, 24.6 acres remained, which are the subject of the

Appendix B-2

present litigation. Plaintiffs sought to have the water park

developed on the remaining 24.6 acres in conjunction with the

leased ten acres. The water park has a plan that eventually calls

for the purchase of the property. However, the 24.6-acre parcel

includes some lowlands, which have been classified as protected

wetlands under the Wetland Protection Act, M.C.L. § 281.701

et seq., M.S.A. § 18.595(51) et seg., which was enacted in

1980. Defendant denied plaintiffs’ request for a permit to fill

4.3 acres of wetlands. Plaintiffs now seek compensation for the

six acres they claim are rendered useless by the denial of the fill

permit.

The trial court determined that the relevant parcel to

consider in determining whether there was a taking is the

remaining 24.6-acre parcel. The trial court determined that

because only approximately one-quarter of the property was

affected, there was no taking.

On appeal, the parties present a number of arguments, all of

which essentially raise the same issue, namely, whether there

was a taking. Because we conclude there was none, we affirm

the trial court's decision.

]

It is now well-established under constitutional doctrine that

a taking of property requiring just compensation may occur if a

landowner’s property is either physically invaded or regulated

“too far.” See Lucas v. South Carolina Coastal Council,

505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992).

Although the Supreme Court has declined to definitively state

what “too far” is, two circumstances exist in which

compensation is afforded the property owner without a case

specific inquiry. /d. at 1015, 112 S.Ct. at 2893.

Appendix B-3

The first category in which compensation is automatically

awarded is when the government physically invades a

landowner’s property. Jd. This case, however, does not present

such a circumstance, and thus any case law or arguments of the

parties based on a physical invasion of property are irrelevant to

this appeal.

The second distinct category in which compensation is

automatically awarded is where a regulation denies all economic-

ally beneficial or productive use of one’s land. /d. In other

words, the Fifth Amendment right to just compensation is

violated when a land-use regulation either (1) does not

substantially advance a legitimate state interest, or (2) denies a

landowner all economically viable use of his land in contraven-

tion of the property owner’s investment-backed expectations. '

Id. at 1016, 112 S.Ct. at 2894.

This is not to suggest that compensation is always awarded.

When a land-use regulation merely results in diminution in a

property's value, the property owner is not entitled to compensa-

tion. /d. at 1016, 112 S.Ct. at 2894. The justification for this

rule is often stated as being that:

Government hardly could go on if to some extent

values incident to property could not be diminished

without paying for every such change in the general

law.... [/d.]

After a review of the parties’ appeal and cross appeal, it is

apparent that neither party here is arguing that the land-use

regulation at issue does not substantially advance a legitimate

State interest. Accordingly, we express no opinion with regard

' An exception to this rule exists: a State government may always

regulate land pursuant to its common law regarding nuisances. /d.

Appendix B-4

to that matter and assume, for the purposes of this appeal, that

the regulation does advance a legitimate state interest.’

Thus, the only question that must be answered here is

whether plaintiffs were denied all economically viable use of

their land. The answer to this question depends on what parcel

of land is used to compare plaintiffs’ before and after property

values.’ In other words, if we focus only on the six acres that

plaintiffs claim were rendered economically useless by the

Wetland Protection Act, then plaintiffs have established that they

were deprived of all the economically beneficial use of their

land. If, however, we use some larger parcel, say the 24.6-acres

that encompasses the six acres, or the fifty acres that previously

made up all of plaintiffs’ property, then all plaintiffs have

established is a mere diminution in value, and although they still

might be eligible to obtain compensation for the loss, they would

fall outside the categorical entitlement to such compensation.’

See Lucas, supra at 1019, n. 8, 112 S.Ct. at 2895.

? In presuming the validity of this enactment, we recognize that a

broad range of governmental purposes and regulations satisfy the

requirement that the laws must advance a legitimate state interest.

See Bevan v. Brandon Twp, 438 Mich. 385, 398, 475 N.W.2d 37,

modified 439 Mich 1202 (1991). We also note that the validity of

the Wetland Protection Act is presumed and that, on the basis of the

record below, plaintiffs have not met their burden of overcoming this

presumption. /d.

* The record demonstrates that plaintiffs had an investment-backed

expectation in the property in question.

* Although the Supreme Court’s opinion in Lucas settled some

aspects of takings law, it expressly declined to answer the question

before us today, i.e., which parcel should be used as a denominator in

regulatory takings causes of actions. /d. 505 U.S. at 1016, n. 7,

112 S.Ct. at 2894, n. 7. Thus, we must look elsewhere for the answer

to that question.

Shia teh ieee a cilie

Appendix B-5

We have found two cases to be instructive in making this

determination.

In Loveladies Harbor, Inc. v. United States, 28 F.3d 1171

(C.A.Fed.1994),° Loveladies originally owned 250 acres of land

adjacent to wetlands. In 1972, after Loveladies developed

approximately 199 acres, § 404 of the Clean Water Act,

33 U.S.C. § 1344, was enacted, and Loveladies was forced to

obtain a permit to fill in the remaining land in accordance with

their overall development plan. In the following years, New

Jersey, the state in which the land was located, and Loveladies

entered into negotiations to allow Loveladies to develop the

remaining fifty-one acres. Ultimately, Loveladies agreed to

essentially donate 38.5 acres to the state, in order to allow 12.5

acres to be filled and developed. The state accepted this plan.

Unfortunately for Loveladies, the permit process also

required obtaining approval from the Army Corps of Engineers.

Apparently the corps traditionally follows the state's

recommendation, and, although New Jersey had previously

granted the state permit, it recommended to the corps that it

deny the federal permit. The corps followed New Jersey's

recommendation. /d. at 1174.

Loveladies sued the United States, claiming that a

compensable regulatory taking had occurred because it was

denied all economically feasible use of the 12.5 acres of land.

The United States disagreed, arguing that Loveladies merely

suffered a diminution in its property's value, comparing the 12.5

The court’s opinion in Loveladies, in concise yet complete detail,

lays out the history of the law of regulatory takings and successfully

puts into perspective the effects of Lucas on the development of the

law in this area. The court in Loveladies then specifically addresses

the issue presented here and brings that issue into sharp, clear focus.

Appendix B-6

acres with either the original 250 acres, or the fifty-one acres

remaining after the 1972 amendment in the law. Thus, as here,

one of the main issues before the court was how much of

Loveladies’ land to use as a comparison to the affected parcel to

determine the extent of Loveladies’ loss. Otherwise stated, the

court in Loveladies was called on to determine the denominator

parcel.® /d. at 1179.

The court of appeals began its discussion by eschewing any

bright-line test to determine the denominator parcel and instead

held that a flexible approach designed to account for factual

nuances of each individual case should be used. Loveladies,

supra at 1181.

The court then examined the factual nuances of the case

before it and held that the 199 acres that had been developed

before the enactment of § 404 of the Clean Water Act should not

be considered as part of the denominator because no effort had

been made by the state to regulate that land. /d. The court then

determined that the 38.5 acres that had, in essence, been

dedicated to the state should not be part of the denominator

because it had no value to Loveladies. /d. Thus, the court was

left with the 12.5 acres of land affected by the corp’s permit

denial. Because the court found the remaining value to be so

small as to be useless, it concluded that Loveladies was denied

all economically viable use of the property, thus entitling it to

compensation under Lucas, supra.

® The court in Loveladies, cited Keystone Bituminous Coal Ass'n v.

DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987),

in which the Court defined the “denominator parcel” in the following

manner:

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. Loveladies, supra

- at 1180 n. 13.

Appendix B-7

Here, employing a similar analysis, we conclude that the

denominator should not consist of the entire forty-five acres

originally owned by plaintiffs because approximately half of that

land already had been developed before the enactment of the

Wetland Protection Act.

Examining the remaining 24.6 acres, we see no reason to

exclude some eighteen acres of that land as part of the denomi-

nator in determining plaintiffs’ loss. This case is in stark

contrast with Loveladies, supra, to the extent the court in

Loveladies determined that only the affected 12.5 acres in

question had value to Loveladies. Here, the entire 24.6 acres is

admittedly of high value to the plaintiffs. In other words,

although plaintiffs lost the use of approximately six acres of the

remaining 24.6-acre parcei, the land, when viewed as a whole,

continues to have substantial value and may still be used in the

manner intended by plaintiffs, i.e., it may be developed for

commercial purposes.

Accordingly, the trial court properly concluded that

plaintiffs’ loss should be considered in light of the 24.6 acres,

not merely the affected six acres.

Bevan v. Brandon Twp., 438 Mich. 385, 475 N.W.2d 37,

modified 439 Mich 1202 (1991), also supports our conclusion

here. In Bevan, the plaintiffs owned two parcels of lakefront

property but were restricted by a zoning ordinance to being able

to develop only one house on the two parcels. Although the

plaintiffs argued that because of the restriction they were denied

all economically feasible use of one of the parcels, our Supreme

Court disagreed, holding that both of the parcels must be

examined as a whole to determine the plaintiffs’ loss. /d.

at 396-397, 475 N.W.2d 37.

Appendix B-8

The Court relied on two United States Supreme Court

opinions, Keystone Bituminous Coal Ass'n. v. DeBenedictis,

480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987), and Penn

Central Transportation Co. v. New York City, 438 U.S. 104,

98 S.Ct. 2646, 57 L.Ed.2d 631 (1978),’ to support its ultimate

conclusion that when determining whether a taking has occurred,

the “plaintiffs’ land, and the full bundle of property rights

associated with it, must be viewed in its entirety,” Bevan, supra

438 Mich. at 397, 475 N.W.2d 37.

Accordingly, on the basis of squarely applicable precedent

of the Supreme Courts of both the United States and Michigan,

we conclude that the trial court properly considered the panoply

of plaintiffs’ remaining property rights, rather than merely a

portion of those rights, in determining the extent of the Wetland

Protection Act’s effect on plaintiffs’ property. In other words.

the court correctly used the 24.6-acre parcel as the denominator

in determining the extent of plaintiffs” loss.

” With regard to Penn Central, the United States Supreme Court in

Lucas, supra, suggested that New York’s determination that all of

Penn Central’s holdings in the area could be used as the denominator

was unsupportable. The Court in Penn Central, however, did not rely

on that determination. Instead, the Court focused on the property in

question and the alleged total loss of airspace rights when it stated:

“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. [438 U.S.

at 130.]

Thus, while it may be argued that the extent of New York’s decision

in Penn Central was unsupportable, it cannot be gainsaid that the

Supreme Court approved the concept of viewing an affected property

as a whole. We conclude it would be contrary to the holding in Penn

Central to extract portions of a property and examine those portions

piecemeal when determining the effect of a land-use regulation on the

property.

Appendix B-9

We also conclude that the trial court did not err in

determining that plaintiffs were not entitled to compensation for

the diminution in the value of their property. See Lucas, supra

505 U.S. at 1019, 112 S.Ct. at 2895, n. 8. Plaintiffs have failed

to show that their property either is unsuitable for use because of

the Wetland Protection Act or is now unmarketable. Bevan,

supra 438 Mich. at 403, 475 N.W.2d 37. Indeed, as plaintiffs

acknowledge, their land, even as regulated, is still worth more

than $600,000, and the majority of it may still be developed for

commercial purposes. Accordingly, we find no error in this

aspect of the trial court’s conclusion.

In sum, we conclude that the trial court properly determined

the extent of plaintiffs’ loss by considering how the land-use

regulation in question affected plaintiffs’ rights to their property

as a whole, rather than by examining the effect of the regulation

on only the affected six acres. Employing this analysis, we also

agree with the trial court that the mere diminution in the value of

plaintiff's property is not compensable.

Affirmed.

Pere

/s/ Janet T. Neff

/s/ Jane E. Markey

SAWYER, J (dissenting).

I respectfully dissent.

The majority correctly looks to the United States Supreme

Court’s decision in Lucas v. South Carolina Coastal Council,

505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), for

guidance. However, the majority fails to appreciate the ramifi-

cations of the Lucas decision.

Appendix B-10

In Lucas, the Supreme Court reiterated the rule that where

regulation denies all economically beneficial or productive use

of land, a taking occurs and the owner is entitled to

compensation. /d. at 1015, 112 S.Ct. at 2893. The Lucas Court

found a taking where a state statute prohibited building on the

plaintiff's beach-front property. The instant dispute involves the

question raised, but not directly answered, in Lucas, namely,

whether all the economic use of all of plaintiffs’ property must

be deprived by the regulation before there is a taking or whether

it is sufficient that a portion of plaintiffs’ parcel is denied all of

its beneficial use because of the taking.’ The Court commented

on this question in Lucas, id. at 1016, n. 7, 112 S.Ct. at 2894,

n.7:

Regrettably, the rhetorical force of our “deprivation of

all economically feasible use” rule is greater than its

precision, since the rule does not make clear the

“property interest” against which the loss of value is to

be measured. When, for example, a regulation

requires a developer to leave 90% of a rural tract in its

natural state, it is unclear whether we would analyze

the situation as one in which the owner has been

deprived of all economically beneficial use of the

burdened portion of the tract, or as one in which the

owner has suffered a mere diminution in value of the

tract as a whole. (For an extreme--and, we think,

unsupportable—view of the relevant calculus, see Penn

Central Transportation Co. v. New York Cit,

42 NY2d 324, 333-334; 366 NE2d 1271, 1276-1277

(1977), aff'd 438 US 104 [98 S.Ct. 2646, 57 L.Ed.2d

' This appears to be the basis of the dispute between the parties

conceming whether the remaining 24.6-acre parcel should be

considered or whether the original fifty-acre parcel should be

considered in analyzing whether there was a taking. However, it is

not relevant which of those two parcels is viewed. Rather, the focus

is on the 4.6-acre parcel that forms the subject of the regulation.

Appendix B-1]

631] (1978), where the state court examined the

diminution in a particular parcel’s value produced by

a municipal ordinance in light of total value of the

taking claimant’s other holdings in the vicinity.)

Unsurprisingly, this uncertainty regarding the

composition of the denominator in our “deprivation”

fraction has produced inconsistent pronouncements by

the Court.

While the Supreme Court was able to avoid the question in

Lucas because it was undisputed that Lucas was denied the

beneficial use of all of his property by the regulatory taking, that

question cannot be avoided in the case at bar. If either the

remaining 24.6-acre parcel or the original fifty-acre parcel is

viewed as a whole, then it is clear that plaintiffs have not been

denied all economic use of their property because the property

is usable with the exception of approximately 4.3 to 6 acres of

wetlands and surrounding area. On the other hand, if we focus

on the wetland parcel itself, plaintiffs are denied the economic

use of that property inasmuch as the denial of the fill permit

precludes them from developing and making use of that parcel.

In reaching its decision, the majority finds support in

Bevan v. Brandon Twp, 438 Mich. 385, 475 N.W.2d 37 (1991).

In Bevan, our Supreme Court concluded that there was no taking

where a zoning ordinance had the effect of allowing the property

owner to build only one house on two contiguous lots.? Our

Supreme Court concluded that in determining whether a taking

existed, the property must be viewed as a whole. /d. at 397,

475 N.W.2d 37. However, I do not believe that Bevan is

controlling for two reasons.

2 The reason for the restriction was that the property was accessible

only by an easement that was twenty feet wide while a zoning

ordinance required a road with a night of way of sixty-six feet in width

if it was servicing two or more houses.

Appendix B-12

First, the Michigan Supreme Court’s decision in Bevan was

rendered before the United States Supreme Court’s decision in

Lucas. Accordingly, there is a question whether Bevan remains

good law. The viability of the decision in Bevan, moreover, is

additionally questionable because of Bevan's strong reliance on

the United States Supreme Court’s decision in Penn Central.

supra. Indeed, the Michigan Supreme Court directly cites Penn

Central in support of the proposition that the property must be

viewed as a whole. However, when the United States Supreme

Court decided Lucas the following year, it disavowed that view

expressed in Penn Central, declaring that view to be “extreme”

and “unsupportable.” 505 U.S. 1016, n. 7, 112 S.Ct. at 2894,

Moreover, even if we were to defer to the Supreme Court

to address the question of the continuing viability of Bevan in

light of Lucas, 1 do not believe that Bevan is relevant to the

disposition of the case at bar. In Bevan, the property owner was

not denied the beneficial use of all of his property, or even a

portion of his property. Rather, he merely was restricted with

respect to the extent to which he could use and develop the

property. That is, unlike the case at bar, the property owner in

Bevan could build a single-family detached house, the intended

use of the lots, anywhere he wanted on either of the lots

involved. He merely was precluded from building two houses,

one on each lot, as he had intended. Therefore, the property

owner was able to use all of his property, though not in the

manner he desired. In the case at bar, however, the property

owner enjoys no such freedom. The effect of the Wetland

Protection Act, M.C.L. § 281.701 et seg., M.S.A. § 18.595(51)

et seq., and of defendant’s denial of a fill permit is to preclude

utterly the use of a portion of plaintiffs’ property. Plaintiffs are

not free to choose what portion of their property to develop.

Rather, the regulation allows development of a specific portion

of the property and absolutely precludes the development of

another portion of the property.

Appendix B-13

The majority’s strong reliance on Loveladies Harbor,

Inc. v. United States, 28 F.3d 1171 (C.A.Fed.1994), is

somewhat mystifying inasmuch as that court ruled in favor of

the property owner. Ultimately, like Lucas, it avoided a clear

determination on partial takings, concluding that a full taking

had occurred. Loveladies, supra at 1182.

In sum, where there is a mere restriction on the extent of

use of property, as was the case in Bevan, there is no taking.

However, where a property owner is prohibited from making use

of his property, or even a portion of the property, then there is a

taking with respect to the identifiable portion which cannot be

used. In short, in light of the strong historical protection of

private property in this country and the constitutional mandate

that the government may put private property to public use only

after compensating the owner of that property, | believe that the

question posed in Lucas is best answered by concluding that a

taking occurs where a regulation precludes the use of an

identifiable, discreet piece of property, even if that property

forms only a portion of a larger parcel. I do not find it relevant

how large a portion of property the owner possesses. What is

relevant is that the government has determined that a public

purpose would be served by denying the rightful owner of the

property the use of that property and requiring it to be used, or

in this case not used, in accordance with that public purpose.

While the government is permitted to do this, it must compen-

sate the property owner for putting the property to public use.

Our historical protection of private property in the constitution

allows no less.”

* It should be noted that the conclusion that there is a taking does

not necessarily compel the conclusion that there must always be

compensation. Compensation is, of course, required for the value

taken. If the property is utterly worthless, then there is no value taken

and no need for compensation. Similarly, if the cost of filling the

property and rehabilitating it to the point that it can be developed

(continued...)

Appendix B-14

For the above reasons, | would conclude that the trial court

erred in determining that there was no taking. Rather, the trial

‘court should have determined that a taking occurred by the

denial of the fill permit under the Wetland Protection Act and

should have proceeded to determine the amount, if any, of

compensation due plaintiffs.

/s/ David H. Sawyer

(...continued )

would exceed the value of the property once it is rehabilitated, then

nothing of value is taken. However, we are not called upon in this

appeal to address the issue of the amount of compensation, rather

only whether there was a taking. I would conclude that there was a

taking, but leave it for the trial court to determine the amount, if any,

of compensation that is due.

Appendix C- |

Filed 12/23/92

STATE OF MICHIGAN

IN THE COURT OF CLAIMS

RUSSELL H. VOLKEMA and

LOIS J. VOLKEMA, husband

and wife,

Plaintiffs,

Vv File No. 91-13914-CM

HONORABLE

STATE OF MICHIGAN; THE WILLIAM E. COLLETTE

DEPARTMENT OF NATURAL

RESOURCES, and ROLAND

HARMES, Director of the

Department of Natural Resources,

Defendants.

JUDGMENT

At a session of court, held in Lansing,

Michigan on _December 23 , 199.2 .

This action was commenced with the filing of a

Complaint on October 29, 1991. In an Opinion and Order dated

June 18, 1992, the court denied plaintiffs’ Motion for Summary

Judgment or Alternative Partial Summary Disposition. In an

Opinion and Order dated September 29, 1992, the court denied

plaintiffs’ Second Motion for Summary Judgment or Partial

Summary Disposition, denied defendants’ Motion for Summary

Disposition as to Count I and granted Defendants’ Motion for

Summary Disposition as to Count IJ. Trial was held on

November 9, 1992. In an Opinion and Order dated

December 10, 1992, the court determined that defendants’

denial of a permit pursuant to the Goemaere-Anderson Wetland

Appendix C- 2

Protection Act did not constitute an unconstitutional taking of

plaintiffs’ property.

WHEREFORE, for reasons set forth in this court’s

Opinion and Orders dated June 18, September 29, and

November 9, 1992,

IT IS ORDERED, judgement of no cause of action is

entered in defendants’ favor.

/s/ William E. Collette

William E. Collette

Circuit Judge

Approved for entry

pursuant to MRC 2.602(B\(2)

/s/ Russell H. Volkema

Russell H. Volkema

Attorney for Plaintiffs

/s/ Kevin T. Smith

Kevin T. Smnh

Assistant Attorney General

Attorney for Defendants

Appendix D-1

Filed 12/10/92

STATE OF MICHIGAN

IN THE COURT OF CLAIMS

RUSSELL H. VOLKEMA and

LOIS J. VOLKEMA, husband

and wife,

Plaintiffs, File No. 91-13914-CM

v. Hon. William E. Collette

OPINION AND ORDER

STATE OF MICHIGAN, THE

DEPARTMENT OF NATURAL

RESOURCES, and ROLAND

HARMES, Director of Department

of Natural Resources,

Defendants.

FACTS

Russell H. Volkema and Louise T. Volkema are the

owners of a 24.6 acre parcel of property located in the City of

Kentwood, Kent County, Michigan. This parcel is zoned

commercial and runs along 28th Street, a prime commercial

development area.

A 4.6 acre piece of the property has been determined to

be a protected wetland under the Goemaere-Anderson Wetland

Protection Act. MCLA Section 281.701, et seg. In order to

“square off” the boundaries of the protected property, another

1.4 acres of Plaintiffs’ property is also unusable.

Appendix D-2

This Court has previously addressed several issues in this

lawsuit in two opinions on file. Those two opinions are

incorporated herein.

OPINION

In view of this Court’s previous rulings, the only issue

remaining to be determined is whether the application of the

Wetland Protection Act to Plaintiff's property has destroyed the

economic value of Plaintiffs’ property or interfered unreasonably

with Plaintiffs’ investment-backed expectations. Loveladies

Harbor, Inc. v. US, 31 ERC 1848 (1990).

During the trial, it was shown that the 4.6 acre wetland is

confined to one side of the property. Commercial development

has occurred in a portion of the balance of the property by the

construction of a parking lot and such development is planned

and feasible for the balance of the non-wetland areas of the

parcel. The testimony demonstrated that the non-wetlands have

a commercial value of $35,000 to $40,000 per acre. Plaintiffs

have argued that the wetlands have a negative impact on the

other property because of the taxes paid on them, because

mosquitos breed there, and because they are unsightly. This

Court notes that property taxes on lands determined to be

wetlands are to be reduced accordingly to reflect the obvious

impact on value. Further, mosquitos breed all over the state of

Michigan and wetlands, while unsightly to some, have an

intrinsic beauty in the eyes of other beholders. In this Court's

opinion, where the balance of this parcel has a value in excess of

$600,000, it cannot be said that the economic impact is such as

to constitute a taking.

During argument in this case, Plaintiffs continued to rely

on the theory that, since they are prohibited from any commer-

cial development of the six-acre area, a taking has occurred.

They contend this Court must ignore the value of the balance of

Appendix D-3

the property. In support of this view, Plaintiffs have cited

Lucas v. South Carolina Coastal Council, 112 S Ct 2886

(1992).

However, Lucas is distinguishable on its facts. There the

regulation prohibited amy use or development of the entire parcel

of property owned by the plaintiff. Here, only a quarter of the

total parcel is restricted and the balance has a value in excess of

$600,000. As this Court has noted before, zoning regulations

often require set backs from property lines and other require-

ments that limit or prohibit the ability of an owner to develop

part of their property. These do not constitute a taking since it

is recognized that such rules are for the good of all. Only where

the regulation amounts to a confiscation or a total denial of use

does it constitute a taking. In this case, most of the economic

value of the 24.6 acre parcel remains. This Court finds for the

Defendants.

Defendants shall prepare and file an appropriate order.

Dated _ 12/10/92 /s/ William E. Collette

William E. Collette, Circuit Judge

Appendix E-1

Filed 9/29/92

STATE OF MICHIGAN

IN THE CIRCUIT COURT

FOR THE COUNTY OF INGHAM

RUSSELL H. VOLKEMA and

LOIS J. VOLKEMA, husband

and wife,

Plaintiffs, File No. 91-13914-CM

Vv Hon. William E. Collette

OPINION AND ORDER

STATE OF MICHIGAN, THE

DEPARTMENT OF NATURAL

RESOURCES, and ROLAND

HARMES, Director of Department

of Natural Resources,

Defendants.

This matter is before the Court on Plaintiffs’ Second

Motion for Summary Judgment, or Partial Summary Disposition

and Defendants’ Motion for Summary Disposition, both based

on MCR 2.116(C\(10). This Court, having read the motions,

responses, briefs, and related filings, having heard oral argument

of the parties, and being fully advised in the premises, makes the

following determinations:

FACTS

The Court incorporates herein the facts set forth in its

Opinion and Order dated June 18, 1992.

In its June 18, 1992, Opinion and Order, the Court held

that for purposes of the taking analysis, the whole of the parcel

is determined to be 24.6 acres. Subsequently, the parties filed

cross-motions for summary disposition.

ewe, arian

Appendix E-2

Even though the Court has previously determined that

for purposes of a taking analysis the whole of the parcel is

determined to be 24.6 acres, Plaintiffs’ motion argues once again

that the Defendants’ actions have affected a taking of the six

acres. Plaintiffs further argue that the six acres of wetland

carries with it a heavy property tax burden which gives the entire

24.6 acre parcel a negative value. As evidence of its negative

value, Plaintiffs attach tax bills and the Affidavit of Carl Fink,

President of a general partner of a limited partnership, which

owns the water park adjacent to the 24.6 acres of Plaintiffs”

property. The Affidavit states that the partnership has an interest

in purchasing the 24.6 acreage except for the wetland acreage,

and further states that the property tax on the wetland acreage

creates a negative value on the entire 24.6 acres.

Defendant argues that Plaintiffs have not lost any

compensable property right as a result of the denial, that there is

no taking because regulation of the wetland is a valid exercise of

the state’s police power, and that the permit denial does not

involve an actual invasion of Plaintiffs’ property, does not deny

Plaintiffs all economically beneficial or productive use of their

property, and does not go so far in restricting Plaintiffs’ use as

to constitute a taking. Defendant further argues that the Uniform

Condemnation Procedures Act is not applicable to inverse

condemnation or takings claims.

DISCUSSION

Plaintiffs continue to argue that this Court should only

consider the six acres for purposes of the taking analysis.

Plaintiffs argue that the Court should follow Loveladies Harbor,

Inc. v. US, 15 Cl Ct 381 (1988). This issue was previously

decided in the Court’s Opinion and Order dated June 18, 1992,

wherein the Court determined that 24.6 acres was the proper

consideration for the taking analysis. This Court notes that in

Loveladies Harbor, Inc., supra, the reason the court defined the

whole parcel as 12.5 acres and not 51 acres is because some of

that property was not contiguous, and because the possibility of

Appendix E-3

obtaining a permit for the remaining property was an

impossibility. Therefore, it also was almost certainly as equally

valueless as the 12.5 acres, making any inquiry into the

regulations’ economic impact and its interference with reason-

able investment backed expectations on the 51 acres, a fruitless

endeavor.

Having laid that issue to rest, the Court can address the

core issue in these motions: Whether there is a genuine issue of

material fact as to whether or not there has been a taking. This

court determines that there remain genuine issues of material

fact to be determined at trial.

As noted in this Court’s earlier opinion, the Supreme

Court has characterized the taking analysis as one where ad hoc,

factual inquires into the circumstances of each case must be

made. Penn Central Transportation Co v. New York, 438 US

104, 130-131; 98 S Ct 2646; 57 L Ed 2d 631 (1978).

The Court agrees with Plaintiffs that Loveladies

Harbor, Inc. v. US, 31 ERC 1848 (1990) set forth the applicable

law. The Court in Loveladies recognized that Courts look to

several issues in determining whether a taking has occurred.

First, a taking can occur where the imposition

of a government regulation fails to substan-

tially advance a legitimate governmental

interest... Second, a taking can occur where

the imposition of a governmental regulation

has the effect of depriving the owner’s land of

all economic value. (citations omitted).

Loveladies Harbor, Inc. v. US, 15 Cl Ct 381 (1988). The first

issue is not challenged in this case. In order to analyze the

second issue, whether a government regulation has deprived an

owner of the economic value of his land, three factors have been

utilized:

1) the character of the governmental action;

Appendix E-4

2) the economic impact of the regulation on the

claimant,

and

3) the extent to which the regulation has interfered with

reasonable investment-backed expectations.

Loveladies, supra, at 391, citing Keystone Bituminous Coal

Ass'n v. DeBenedictis, 480 US 470, 495; 107 S Ct 1232, 1247;

94 L Ed 2d 472 (1987).

In the first factor, the court must determine whether the

act closely parallels an act of eminent domain. The central

inquiry is “whether the act is equivalent to the physical invasion

or destruction of substantial rights held in the property.”

Loveladies Harbor, Inc. , supra. As in Loveladies, the Plaintiffs

have not been directly hindered in their rights to possess,

dispose, and exclude others. Therefore, as in Loveladies, this

Court finds that this case is not the equivalent of any destruction

or intrusion attendant with an act of eminent domain.

In order to properly evaluate the second and third

factors, the court must compare the value of property before and

after the regulation’s interference. This involves comparing the

differing fair market values of the property. Loveladies, supra

at 391.

The only evidence provided by Plaintiff of the fair

market value of the property after the regulation is Mr. Fink’s

Affidavit. The Affidavit, however, states that the general

partners of Water Park of Michigan Limited Partnership wish to

purchase the property and that the wetiand area has a negative

value effect on the total parcel. This is not sufficient evidence

of fair market value. Defendants provide absolutely no evidence

of fair market value. As such, this Court is unable to properly

determine the economic impact of the regulation, if any, and its

interference with reasonable investment-backed expectations, if

any. Therefore, based upon the foregoing, Plaintiffs’ Motion for

Appendix E-5

Summary Disposition is denied, and Defendants’ Motion for

Summary Disposition, as it applies to these issues, is also

denied.

Defendants also argue that Plaintiffs should not be

compensated because the regulation prevents a harmful use and

that Plaintiffs should not be compensated because there is a valid

application of the State’s police power. The Supreme Court

rejected these arguments in Pennsylvania Coal Co. v. Mahon,

260 US 393; 43 S Ct 158; 67 L Ed 2d 322 (1922), and more

recently in Lucas v. South Carolina Coastal Council, _ US _:

112 S Ct 2886; LEd2d__ (1992). Therefore, Defendants’

Motion for Summary Disposition on these issues is denied.

Finally, Defendants argue that the Uniform Condemna-

tion Act, MCL 213.50, has no application to inverse

condemnation actions, and therefore Count II of Plaintiffs’

Complaint should be dismissed. The Court agrees. The law is

well settled that the Act is not applicable to inverse condem-

nation proceedings. Jack Loeks Theatres, Inc. v. City of

Kentwood, 189 Mich App 603, 616 (1992) lv den, 439 Mich 962

(1992).

NOW, THEREFORE, IT IS HEREBY ORDERED that

Plaintiffs’ Motion for Summary Disposition is DENIED, and

Defendants’ Motion for Summary Disposition is DENIED as to

Count I and GRANTED as to Count II.

Dated: _Sept 29. 1992 /s/ William E. Collette

William E. Collette

Circuit Judge

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