Petition for Writ of Certiorari — R. W. Docks & Slips v. Wisconsin

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O01 520 SEP 25 2008

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In The

Supreme Court of the United States

+

R.W. DOCKS & SLIPS,

Petitioner,

STATE OF WISCONSIN and WISCONSIN

DEPARTMENT OF NATURAL RESOURCES,

«

Respondents.

On Petition For Writ Of Certiorari

To The Supreme Court Cf Wisconsin

+

PETITION FOR WRIT OF CERTIORARI

+

Jason W. WHITLEY

Counsel of Record

NovitzkE, Gust,

SemprF & WHITLEY

314 Keller Ave. N.

Ste. 399

Amery, Wisconsin 54001

Telephone: 715-268-6130

Facsimile: 715-268-7890

Don Paut Novitzke

Of Counsel

NovitzkE, Gust,

Semper & WHITLEY

314 Keller Ave. N.

Ste. 399

Amery, Wisconsin 54001

Telephone. 715-268-6130

Davip J. BEDERMAN

Of Counsel

GAMBRELL HALL

Atlanta, Georgia

30322-2770

Telephone: 404-727-6822

Bruce L. Rasmussen

Of Counsel

2116 2nd Ave.

Minneapolis, Minnesota

55404

Telephone: 612-874-7071

Counsel for Petitioner

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

“Th

~~

QUESTIONS PRESENTED

I.

Is the public trust doctrine a “background principle” of

state property law as to always be a complete defense to a

regulatory taking claim?

If.

Are individual condominium units to be regarded each as

the relevant parcel in the “takings fraction,” for purposes

both of the categorical rule of Lucas v. South Carolina

Coastal Council and the balancing test of Penn Central

Transportation Co. v. City of New York?

li

TABLE OF CONTENTS

Page

QUESTIOINS PRESEN ESO? 6c. ccnesksadisaaewamoncns i

TABLE OF AUEPROIREE Wee soso cea cnacdathosenentes iii

PETITION FOR WRIT OF CERTIORARI............ 1

OPINIONS AND JUDGMENT BELOW ............. 1

FURTSORCTOON ..... ccc0vkendicbicda Mens vennuasaee s 1

CONSTITUTIONAL PROVISIONS AT ISSUE ....... 2

STATEMENT OF THE CASE.............--0++0005: 2

A. ENOTROM FIGs 5 hss Ccd nd ewaeeeaslawsemss 2

B. FACTUAL BACKGRONIINGD 65 scccssinnwdseces 3

C. JUDICIAL BACKGROUND? on csccsccducnpiece 7

REASONS FOR GRANTING THE WRIT ........... 10

I.

A TAKING CAN OCCUR EVEN WHEN THE

UNDERLYING REGULATORY ACTION IS BASED

UPON THE PUBLIC TRUST DOCTRINE......... 10

Il.

WHETHER THE REFUSAL TO ALLOW CONSTRUC-

TION OF 71 SEPARATE CONDOMINIUM UNITS

IS A CATEGORICAL TAKING UNDER LUCAS OR

PARTIAL TAKING UNDER PENN CENTRAL .... 17

COINCLATGIUIN 6.0 can civssnceuxnaebap eagelaiebess 22

a ee

iil

TABLE OF AUTHORITIES

Page

Cases

Boston Waterfront Dev. Corp. v. Commonwealth, 393

N.E.2d 356 (Mase. 1979) 2... .ccccrcccccccccccccess 13

Concrete Pipe & Prods. v. Constr. Laborers Pension

Trust, S086 U.S. 602 (1993). ....ccccsccccccccccceces 21

East Cape May Associates v. New Jersey, 693 A.2d

114 (N.J. Super. 1997). .........ccceeeeeeeeceeeeees 19

Eberle v. Dane County Bd. Of Adjustment, 227

Wis.2d 609, 595 N.W.2d 730 (1999)..........---4.- 17

Florida Rock Industries, Inc. v. United States, 18 F.3d

BIOS COG. Cie. T9DE)... occ cccccccsccccccecccccacccs 21

Gillen v. City of Neenah, 219 Wis.2d 806, 580

SRE ME CRUUED conse ccciccsscdersecsssstbcceces 11

Good v. United States, 39 Fed. Cl. 81 (1997)..........17

Illinois Central R.R. Co. v. Illinois, 146 U.S. 387

NG iiees da dbg whew idseesensseusciceudedcsenss 13

Kaiser Aetna v. United States, 444 U.S. 164 (1979)..... 17

Keystone Bituminous Coal Assn. v. DeBenedictis, 480

EE, ch Givcedseketeacrecs iheeeaneoenoe 19

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

CE Ds cca cneccasedetcccssarscsceccasencs 19

Lucas v. South Carolina Coastal Council, 505 U.S.

SE MEER Sa cc encccdvcdscnacciscccccscssvecs passim

McQueen v. South Carolina Coastal Council, 340 S.C.

Ge isi d shad cddu ks Caveussesdvccccasvesess 19

Muench v. Public Serv. Comm'n, 261 Wis. 492, 53

CP UED ccc ctsewesdsccdencereses 10, 12, 13

iv

TABLE OF AUTHORITIES - Continued

Page

National Audubon Society v. Superior Court (Mono

Lake), 658 P.2d 709 (Cal. 1983) ........cccccssccess 13

Oneida County v. Converse, 173 Wis.2d 78, 496

IN.W2G 326 (Ct. App. T9RZ). 2 occ ccscccsccsssveness 11

Orion Corp. v. Washington, 747 P.2d 1062 (Wash.

1987), cert. denied, 486 U.S. 1022 (1988)........... 13

Palazzolo v. Rhode Island, 121 S.Ct. 2448 (2001)

EEE TTP Pe eC ee Terre 15, 16, 17, 20, 21, 22

Palm Beach Isles Association v. United States, 208

ae See Ce, Ge Bek 6 ave csssnctenenscstss 16

Penn Central Transportation Co. v. City of New York,

458 US. TOG CIGTED ocak cccccscccnescsasseccces passim

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

CRUE hk cca cccnssscciccsendbiasededhieesiktvdee 11, 14

R.W. Docks & Slips v. State, 2000 WI App. 183, 238

Wis.2d 182, 617 N.W.2d 519 (Ct. App. 2000) ....... 1

R.W. Docks & Slips v. State, 2001 WI 73, 244 Wis.2d

497, G2B W.W2G TEL CRG) ooo ec cccccenscns ly Fo We ha

R.W. Docks and Slips v. Department of Natural

Resources, 145 Wis.2d 854, 429 N.W.2d 86 (Wis.

App. BGGB) 6. oc cccccnvtvcnaccetcecsccstecsecsensas 7

Sea Cabins on the Ocean v. City of North Myrtle

Beach, 345 S.C. 418 (2001)...... bons caeenbnnesna ade 19

State v. Deetz, 66 Wis.2d 1, 224 N.W.2d 407 (1974)....11

Vv

TABLE OF AUTHORITIES —- Continued

Page

State v. Trudeau, 139 Wis.2d 91, 408 N.W.2d 337

PROT voc ccccdenancosonscnsunacssehecketeasdzaecs 11

Vermont v. Central Vermont Ry., 571 A.2d 1128 (Vt.

Peer rrr rr rrr Tr rere er rT er Tre 13

Volkema v. Department of Natural Resources, 542

N.W.2d 282 (Mich. App. 1996), cert. denied, 525

UD. - 1008 (3906) oc cc cccacvccdacsssovsduswenas¥ees 19

Zealy v. City of Waukesha, 201 Wis.2d 365 N.W.2d

BZD CIDDE) conc cvcccncvescccosscnasencagguaves teens 17

CONSTITUTIONS

SS. Camel, epee. Fo os icccsspivaccnnvandaes 2, 8, 3, 21

CEE Cat aed, FE Ss cn ca cde unos ed bhedkaveneas 2, 8

Wie. Comet. Axt. EA, G06: Bin ccccvvvccrsscssinsisesen a 32

Wad, Comet. Ast: £, ones TB. icc cvcaeartaacrratawsseesree 8

STATUTES

2B UGC. © UBT) aac ccddshcedececsccavevas ssrncsnes 1

OTHER AUTHORITIES

John E. Fee, Unearthing the Denominator in Regula-

tory Taking Claims, 61 U. Cui. L. Rev. 1535, 1557

Liege POEREER EET ECPOTT CLEP P Cee ete eer eee 19

Joseph L. Sax, Takings, Private Property and Public

Rights, 81 Yate L.J. 149 (1971)........-- eee eee eens 13

Takings and the Police Power, 74 Yate L.J. 36 (1964) .... 13

on mew Oe ee en . . ans Cg Rwy ~~ . o-+ «ee

PETITION FOR WRIT OF CERTIORARI

R.W. Docks and Slips respectfully petitions for a writ

of certiorari to review a decision of the Supreme Court of

the State of Wisconsin.

OPINIONS AND JUDGMENT BELOW

The opinion of the Supreme Court of Wisconsin is

reported as R.W. Docks & Slips v. State, 2001 WI 73, 244

Wis.2d 497, 628 N.W.2d 781 (2001). The opinion is repro-

duced and attached to this petition as Appendix pages

1-17. (App. 1-17)

The decision of the Wisconsin Court of Appeals is

reported as R.W. Docks & Slips v. State, 2000 WI App. 183,

238 Wis.2d 182, 617 N.W.2d 519 (Ct. App. 2000); it is

reproduced and attached as Appendix pages 18-24. (App.

18-24) The decision of the Bayfield County Circuit Court

(Wisconsin) is unpublished. The Circuit Court Order and

Judgment and a partial transcript of the Decision is repro-

duced and attached as Appendix pages 25-31. (App.

25-31)

JURISDICTION

The judgment of the Wisconsin Supreme Court was

filed on June 28, 2001. (App. 1) That decision was a final

judgment not subject to further review by any court save

the Supreme Court of the United States. This Court has

jurisdiction pursuant to 28 U.S.C. § 1257(a).

+

CONSTITUTIONAL PROVISIONS AT ISSUE

The Fifth Amendment to the United States Constitu-

tion provides in pertinent part: “nor shall private prop-

erty be taken for public use without just compensation.”

Section 1 of the Fourteenth Amendment to the United

States Constitution provides in pertinent part: “nor shall

any State deprive any person of life, liberty, or property,

without due process of law.”

Article IX, sec. 1 of the Wisconsin Constitution

adopts verbatim the Northwest Ordinance of 1787 and

provides: “The state shall have concurrent jurisdiction on

all rivers and lakes bordering on this state so far as such

rivers or lakes shall form a common boundary to the state

and any other state or territory now or hereafter to be

formed, and bounded by the same; and the river Missis-

sippi and the navigable waters leading into the Missis-

sippi and St. Lawrence, and the carrying places between

the same, shall be common highways and forever free, as

well to the inhabitants of the state as to the citizens of the

United States, without any tax, impost or duty therefore.”

(This provision is commonly referred to as the Public

Trust Doctrine.)

+

STATEMENT OF THE CASE

A. INTRODUCTION

The Petitioner, R.W. Docks & Slips (“R.W. Docks” or

“Docks”) is a general partnership in the business of

developing recreational marinas. (App. 3) In 1969, R.W.

Docks began the development of Port Superior Marina in

DoE ee RES it lat SMT ME RDS RE PRL HE ites be

Bayfield, Wisconsin. The marina was designed to be a

deep water sailboat harbor consisting of 272 boat slips

with associated on-land infrastructure. (App. 32-34)

The marina and infrastructure were built with the

approval of the Army Corps of Engineers and the Wis-

consin Department of Natural Resources (DNR). (App.

32-34) As the marina development neared completion,

R.W. Docks needed a final dredging permit to facilitate

construction of the iast 71 slips. (App. 3-4)

After eighteen years of cooperation, the Wisconsin

Department of Natural Resources denied the final permit

in order to protect a small emergent weed bed that had

grown behind the breakwater. (App. 35; App. 3-4) The

subject weed bed would never have grown except for the

sheltering effect of the breakwater built by R.W. Docks

and approved by the DNR. (App. 1-2) Thereafter, R.W.

Docks brought an inverse condemnation action against

the State of Wisconsin and the Wisconsin Department of

Natural Resources.

Under the guise of the public trust doctrine, the

courts of the State of Wisconsin held that R.W. Docks

does not have a cognizable property interest which can be

unconstitutionally taken. (App. 12) As a result, the public

has gained the benefit of one acre of aquatic vegetation at

the expense of more than one million of R.W. Dock’s

dollars. |

B. FACTUAL BACKGROUND

1. This matter arises from a Wisconsin trial court

decision granting summary judgment in favor of the

Respondents, State of Wisconsin and the Wisconsin

Department of Natural Resources (DNR). The relevant

facts are undisputed. (App. 3) An illustration depicting

Port Superior Marina is reproduced in the Appendix at

page 37. The shaded areas on Docks #4 and #5 consist of

the 71 boat slips which are the subject of the petitioner’s

claim. (App. 37) With the exception of shaded areas on

Docks #4 and #5, all depicted structures are currently in

existence. (App. 3; 32-35)

2. In 1968, R.W. Docks applied to the Army Corps of

Engineers for a permit to construct a breakwater and boat

harbor in Pikes’s Bay of Lake Superior in Bayfield, Wis-

consin. (App. 33) At the same time R.W. Docks applied to

the DNR for a permit to construct a breakwater and boat

harbor, the DNR was fully apprized of the plaintiff’s plan

to install sailboat docks in the entire sheltered area. (App.

33) In 1969, the DNR granted the plaintiff a permit to

construct a breakwater sufficient to provide a protected

harbor for a marina. (App. 33) The Army Corps of Engi-

neers also granted the necessary permit for the construc-

tion of the breakwater and boat harbor. (App. 33)

Thereafter, construction of the marina moved steadily

forward. As needed, R.W. Docks applied to the Wisconsin

DNR for a contract to dredge material from the bed of

Lake Superior. (App. 35)

The initial construction phase consisted of the break-

water, four and one half docks containing 201 boat slips,

a legislated shoreline (seawall), a lagoon, pool, racquet

club, tennis court, wells and water system, sewage treat-

ment plant, lift station and sewer laterals and connec-

tions. (App. 33-34) Docks invested heavily in this

infrastructure to build a marina capable of supporting

gl

272 deep water sailing vessels. (App. 34) R.W. Docks

planned to recover the cost of these investments by

developing and selling the entire 272 boat slips. (App. 34)

In 1971, during the construction phase, a dispute

ensued between the plaintiff and the DNR over whether

the lagoon was located upland or on the lake bed. (App.

33-34) R.W. Docks assumed the lake’s natural shoreline

was the actual shoreline, while the DNR asserted that the

actual shoreline was located somewhere inland of the

natural shoreline. This dispute jeopardized the construc-

tion of Docks #4 and #5. (App. 33-34)

In resolving the dispute, R.W. Docks explained that it

was necessary to own land abutting the planned position-

ing of docks #4 and #5 in order to complete construction

of the marina. (App. 33-34) Therefore, the DNR agreed to

allow R.W. Docks to construct a legislated shoreline in the

upland area north of the lagoon and a quay, south of the

lagoon, on the lake bed which would facilitate access to

docks #4 and #5. (App. 33-34) The purpose of the quay

was to secure and provide access to docks #4 and #5.

(App. 33-34)

3. In 1977, the marina was converted to a condomin-

ium under Wisconsin law and recorded in the Bayfield

County Register of Deeds. (App. 34; App. 38-44) A partial

reproduction of the Condominium Association docu-

ments are attached to this petition as Appendix pages

38-44. The entire document is part of the lower court

record and is a public document accessible through the

Bayfield County Wisconsin Register of Deeds volume 307

of Records, pages 337-429.

The condominium units consist of 272 separate and

distinct boat slip units which includes the 71 slips at

issue. (App. 44) Each condominium unit was numbered,

1-272, and consisted of a floating boat slip and an

undivided interest in the common areas and marina facil-

ities. (App. 38-44) Two hundred and one of the units were

developed and sold prior to the DNR’s denial of the

permit necessary to complete the remaining 71 units on

docks #4 and #5. (App. 34)

4. The initial revenue from the sale of the first 201

units was used to pay for the breakwater, the existing

docks and the on-land infrastructure. (App. 34) However,

the revenue from these 201 units was not sufficient to

recapture the costs incurred in constructing the marina.

(App. 34) R.W. Docks, to date, has lost in excess of one

million dollars on the marina development. (App. 34) The

remaining 71 units have a combined value of approxi-

mately $1.5 million. (App. 35)

Port Superior Marina was developed on an incremen-

tal basis as demand for units warranted. For a period of

eighteen years, R.W. Docks would apply to the Army

Corps of Engineers for a permit to dredge and construct

floating docks and then, after receiving the federal per-

mit, contract with DNR to remove materials from the lake

bed. (App. 35; App. 3)

The DNR would routinely enter contracts with the

plaintiff for dredging which required only a nominal cash

payment, posting of a bond, and a proper disposal of

dredging spoils. (App. 35) The plaintiff complied with

this regulatory scheme and relied on it in the develop-

ment of the marina. (App. 35).

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In 1983, Docks applied to the DNR to dredge 20,000

cubic yards of material from the lake bed to facilitate the

completion of docks #4 and #5. Docks #4 and #5 were to

be anchored on the quay pursuant to the 1971 agreement

with the DNR. (App. 33-34) In a departure from its pre-

vious practice, the DNR, in 1986, refused to allow the

requested dredging. (App. 3; App. 35)

C. JUDICIAL BACKGROUND

1. This present litigation arises from the DNR’s 1986

denial of the final permit necessary to complete the

marina. The basis for the DNR’s refusal was that the

dredging would result in the destruction of a small emer-

gent weed bed that came into existence as a result of the

calming effect of the breakwater constructed by R.W.

Docks. (App. 1) But “[TJhe small emergent weed bed

would not have ‘emerged’ at all were it not for the

calming effect of a breakwater the developer had built in

the early stages of the project. The presence of the emer-

gent weed bed prompted the DNR to block the devel-

oper’s construction of the last set of boat slips in the

marina...” (App. 1-2; R.W. Docks & Slips v. State, 2001

WI 73, 244 Wis.2d 497, 628 N.W.2d 781 (2001)).

In a previous action, R.W. Docks appealed the DNR’s

1986 denial. After a series of exhaustive administrative

appeals, Wisconsin Circuit Court reviews and a Wiscon-

sin Court of Appeals’ decision, R.W. Docks and Slips v.

Department of Natural Resources, 145 Wis.2d 854, 429

N.W.2d 86 (Wis. App. 1988), R.W. Docks was ultimately

and finally denied the necessary dredging permit which

would facilitate the construction of the final 71 slips.

(App. 4)

2. On January 4, 1999, the plaintiff filed this present

inverse condemnation action in Bayfield County, Wiscon-

sin, alleging a taking of property without just compensa-

tion in violation of Article I, sec. 13 of the Wisconsin

Constitution and the Fifth and Fourteenth Amendment of

the Constitution of the United States. (App. 25)

On March 18, 1999, the Respondents, State of Wiscon-

sin and Wisconsin Department of Natural Resources filed

a motion for summary judgment seeking dismissal of the

complaint. (App. 25) On October 19, 1999, the Bayfield

County. Circuit Court granted summary judgment in

favor of the State and DNR. (App. 25-31) The Circuit

Court held that the denial of the permit was not an

unconstitutional taking because: 1) the right to build the

additional boat slips was not part of the plaintiff's title

pursuant to the public trust doctrine; 2) even if the plain-

tiff had a property right, such right was subject to the

public trust doctrine; and 3) the plaintiff retained consid-

erable practical use of the property and there is no evi-

dence showing adverse economic impact resulting from

state action. (App. 4, 25-30)

3. R.W. Docks filed a timely appeal to the Wisconsin

Court of Appeals. (App. 18) That court affirmed, stating

that Docks maintained the benefit of all or substantially

all of its property. In addition, the Court of Appeals

concluded that Docks assumed the risk of loss inherent in

commencing a project without all necessary permits, and

thus did not suffer a taking of property.

4. R.W. Docks’ timely petition for review to the

Wisconsin Supreme Court was accepted and on June 28,

2001, the Supreme Court of Wisconsin affirmed the lower

court’s decision. R.W. Docks & Slips v. State, 2001 WI 73,

244 Wis.2d 497, 628 N.W.2d 781 (2001). While recognizing

that private property can be subject to a regulatory tak-

ing, the Wisconsin high court concluded that there are

only two types of regulatory takings: those which result

in some sort of “physical invasion” of private property

and those which deny “all economically beneficial or

productive use of land.” (App. 7) Observing that R.W.

Docks was not physically invaded by any regulation and

that Docks still had 201 of the 272 slips, the court con-

cluded there was no categorical taking under Lucas v.

South Carolina Coastal Council, 505 U.S. 1003 (1992). (App.

7)

Next, the Wisconsin Supreme Court turned to the

question of whether R.W. Docks had been subjected to a

regulatory taking under Penn Central Transportation Co. v.

City of New York, 438 U.S. 104 (1978). However, before

proceeding to this inquiry the court addressed the ques-

tion of whether Docks had any property interest deserv-

ing of protection under the Fifth Amendment and the

Wisconsin Constitution. The court noted that if Docks

had no private property right, it can not have suffered an

unconstitutional taking. (App. 8) While recognizing that

the public trust doctrine originally existed to protect com-

mercial navigation, the court concluded that R.W. Docks

does not have a private property right because Wisconsin

has “expansively interpreted [the public trust doctrine] to

safeguard the public’s use of navigable water for purely

10

recreational purposes such as boating, swimming, fish-

ing, hunting, recreation and to preserve scenic beauty.”

(App. 10) The Wisconsin Supreme Court recognized that

R.W. Docks does have property rights as a riparian but

concluded that all such rights are subordinate to the

public trust doctrine insofar as the State sees fit to

expand, interpret, develop and apply the doctrine to pri-

vate riparians. Thus, the court held: “Docks has failed to

demonstrate a compensable regulatory taking under Penn

Central.” (App. 12)

+

REASONS FOR GRANTING THE WRIT

I.

A TAKING CAN OCCUR EVEN WHEN THE

UNDERLYING REGULATORY ACTION IS BASED

UPON THE PUBLIC TRUST DOCTRINE.

The Wisconsin Supreme Court has held that a rip-

arian property owner can never suffer a Penn Central

taking of his riparian rights if the governmental action is

exercised pursuant to the public trust doctrine. (App. 12)

Implicitly and logically it’: must be concluded that the

Wisconsin high court decision also applies to categorical

takings under Lucas. As the court aptly noted, if there is

no private property right there can not be an unconstitu-

tional taking. (App. 8)

1. As with many states of the Union, the public trust

doctrine developed in Wisconsin as a concept which pro-

vides that the state holds beds underlying navigable

waters in trust for all Wisconsin citizens. Muench v. Public

Serv. Comm'n, 261 Wis. 492, 501-02, 53 N.W.2d 514 (1952).

11

The public trust doctrine, in itself, does not create legal

rights, it “merely establishes standing for the state, the

ability to vindicate the public trust, to assert a cause of

action recognized by the existing law of Wisconsin.” State

v. Deetz, 66 Wis.2d 1, 13, 224 N.W.2d 407, 413 (1974).

Originally designed to protect commercial navigation, the

doctrine has been expanded to safeguard the public’s use

of navigable waters for enjoyment of natural scenic

beauty, as well as for recreational and nonpecuniary pur-

poses. See State v. Trudeau, 139 Wis.2d 91, 104, 408 N.W.2d

337 (1987); Gillen v. City of Neenah, 219 Wis.2d 806, 820,

580 N.W.2d 628, 633 (1998). From there it grew to public

control of boating, swimming, fishing, hunting, and pre-

servation of scenic beauty. Oneida County v. Converse, 173

Wis.2d 78, 83, 496 N.W.2d 124, 126 (Ct. App. 1992). And,

in the present matter, the public trust doctrine was

extended to enable the requisition of private property in

order to protect aquatic vegetation.

With such a historical application it is obvious that

this doctrine gives the state the power to regulate naviga-

ble waters. To that end, R.W. Docks never questioned the

State’s right, through the DNR, to regulate. However, the

question is not whether the DNR has the power to regu-

late but, rather, has the exercise of that regulation gone

“too far.” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416

(1922). Indeed, in view of the decision below, the real

question is whether any regulation can ever go too far?

Under the Wisconsin Supreme Court’s analysis of rele-

vant takings and public trust doctrines, it can not. This

Petition thus raises the critical issue of whether the public

trust doctrine serves as a blanket immunity for states’

12

liability under the just compensation guarantee of the

federal Constitution.

A detailed analysis of the historic origins of the pub-

lic trust doctrine is, obviously, beyond the scope of this

Petition. But some recitations are required, if only for the

purpose of indicating the wide ambit of effect the Wis-

consin Supreme Court’s decision will have, if left unre-

viewed. In 1784, Virginia authorized the ceding of the

Northwest territory to the Confederation upon two con-

ditions: 1) the new states admitted to the Federal Union

were to have the same sovereign rights as the original

states; and 2) the navigable waters flowing into the Mis-

sissippi and the St. Lawrence rivers, and the connecting

water ways were to be forever free public highways.

These conditions were incorporated into the Northwest

Ordinance of 1787 which provided for the government of

the Northwest Territory. Muench v. Public Service Commis-

sion, 261 Wis. 492, 499, 53 N.W.2d 514, 516 (Wis. 1952).

Article IX, sec. 1 of the Wisconsin Constitution, incor-

porates verbatim the wording of the Northwest Ordi- -

nance with respect to navigable waters. The provision

provides:

“The state shall have concurrent jurisdiction on

all rivers and lakes bordering on this state so far

as such rivers or lakes shall form a common

boundary to the state and any other state or

territory now or hereafter to be formed, and

bounded by the same; and the river Mississippi

and the navigable waters leading into the Mis-

sissippi and St. Lawrence, and the carrying

places between the same, shall be common high-

ways and forever free, as well to the inhabitants

of the state as to the citizens of the United

13

States, without any tax, impost or duty there-

fore.” Id. at 261 Wis. 499-500, 53 N.W.2d 514,

516.

A number of jurisdictions have relied on the public

trust doctrine as a categorical exclusion of governmental

regulation from the ambit of the Takings Clause. Whether

the doctrine is viewed as an historic artifact of the North-

west Ordinance (affecting only the common law of prop-

erty in Illinois, Indiana, Wisconsin, Michigan and

Minnesota), or a wider concept that is in force in every

state of the Union, it is clear that it has been employed as

a means of evading this Court’s takings jurisprudence.

See Orion Corp. v. Washington, 747 P.2d 1062, 1072 (Wash.

1987), cert. denied, 486 U.S. 1022 (1988); Boston Waterfront

Dev. Corp. v. Commonwealth, 393 N.E.2d 356, 369 (Mass.

1979); Vermont v. Central Vermont Ry., 571 A.2d 1128, 1135

(Vt. 1989); National Audubon Society v. Superior Court

(Mono Lake), 658 P.2d 709, 723 (Cal. 1983). See also, Joseph

L. Sax, Takings, Private Property and Public Rights, 81 YALE

L.J. 149 (1971); Id., Takings and the Police Power, 74 Yate L.J.

36 (1964). This is despite the fact that in what is the locus

classicus of federal recognition of the doctrine, Illinois

Central R.R. Co. v. Illinois, 146 U.S..387 (1892), this Court

was careful to hold that states are still obligated under

the Just Compensation guarantee for certain regulatory

actions. See Id. at 455.

2. Likewise, in Lucas v. South Carolina Coastal Coun-

cil, 505 U.S. 1003 (1992), this Court held that a categorical

taking must be compensated unless the State regulation is

one which prohibits a use which was never a part of the

land owner’s title to begin with. Id. at 1027. In other

14

words, if the State imposed restriction prohibited some-

thing that was prohibited by the “background principles”

of state law or inherently noxious or a nvisance then no

taking could be realized. Id. at 1029.

Seizing on this concept, the State of Wisconsin con-

cluded that because the public trust doctrine is so long

acquiesced as to become a rule of property, then any

regulation perpetuated under that doctrine is, inherently,

a noncompensable taking under Lucas. (App. 12) No heed

is given to the fact that any such restrictive regulation

was never “part of the title.” The only necessary inquiry

is whether the regulation was brought to life under the

umbrella of the public trust doctrine. (App. 12) Likewise,

the Wisconsin Supreme Court's analysis gives no recogni-

tion to the fact that the specific regulation itself was

never part of a background principle or that the proposed

use, at least in the present matter, was not noxious.

In Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922),

this Court stated that while property can be regulated to

a certain extent, if regulation goes too far it will be

recognized as a taking. But if the Wisconsin Supreme

Court is to be credited, regulations promulgated under a

public trust doctrine can never go too far because all such

regulations, regardless of when or how they are applied,

relate back to an organic law of state property. (App. 12)

The narrowly-drawn exception in Lucas to categorical

compensable takings made in accordance with “back-

ground rules” of state property law, has thus been vastly

expanded by the Wisconsin Supreme Court-into a hard

and fast rule which is applicable without regard to factual

or individual nuances of each particular regulatory

action.

15

3. Similarly, Wisconsin courts are now able to dis-

miss any takings claim under Penn Central, 438 U.S. at

124, 127, 130 n.27. No riparian owner can ever have

reasonable investment-backed expectations because his

property rights are forever subordinate to the public trust

doctrine and, therefore, all regulatory action exercised

under its guise should have been anticipated by the rip-

arian. As noted by the Wisconsin Supreme Court:

“Assuming that riparian rights, subordinate as they are to

the rights of the pubic, are included in the ‘bundle of

rights’ recognized as private property for the purposes of

Fifth Amendment taking analysis, Docks has failed to

demonstrate a compensable taking under Penn Central.”

(App. 12)

Under the Wisconsin Supreme Court’s approach,

quick work can be made of takings claims under Penn

Central because the ad hoc inquiry concerning the charac-

ter of the governmental action, the economic impact of

the regulation on the claimant and the extent to which the

regulation interfered with distinct investment-backed

expectations need never be reached. (App. 12); Penn Cen-

tral, 438 U.S. 104, 124. “If there is no private property

right there can not be an unconstitutional taking.” (App.

8).

4. The Wisconsin Supreme Court’s mis-step is ana-

lytically similar to the pathology of the Rhode Island

Supreme Court’s decision reviewed by this Court in Pal-

azzolo v. Rhode Island, 121 S.Ct. 2448 (2001), which, inci-

dently, was decided on the same day the Wisconsin

Supreme Court decided the present matter. Id. It appears

the Wisconsin courts have merely shadowed the Rhode

Island concept in Palazzolo that a regulation in existence

16

prior to private ownership of property can never rise to

the level of a taking. Wisconsin has simply added a new

twist: the regulation need not predate the property inter-

est so long as the regulation is promulgated under the

public trust doctrine which, obviously, did predate the

property interest.

In this respect, a large portion of the present question

may have been addressed in Palazzolo v. Rhode Island, but

the guidance of that decision was unavailable to the

Wisconsin high court. It seems unlikely, though, that

Wisconsin would have reached a different conclusion

even with the benefit of the Palazzolo decision. Given its

belief that the public trust doctrine establishes a supra-

constitutional regulatory power, the Wisconsin Court’s

decision can not be wholly resolved by Palazzolo. So while

Petitioner would not be adverse to this matter being

GVR’ed in light of the Palazzolo decision, it is cognizant

that the issues raised here may well require plenary

review by this Court.

5. In addition to the foregoing reasons, this writ

should be accepted because the Wisconsin decision is in

conflict with court rulings in other navigable servitude

cases. In Palm Beach Isles Association v. United States, 208

F.3d 1374, 1385 (Fed. Cir. 2000), it was held that in order

to use a navigational servitude to avoid paying compen-

sation the government needs to show that regulatory

restriction was for a purpose related to navigation. Id. at

1385. Here, the Wisconsin — had nothing to do

with navigation.

Assuming that the public trust doctrine is no more

than what it was intended to be - a restriction on the

17

State’s ability to hinder commercial navigation — then the

Wisconsin decision is also in conflict with this Court’s

decision in Kaiser Aetna v. United States, 444 U.S. 164, 172

(1979) in which it was stated: “this Court has never held

that the navigational servitude creates a blanket excep-

tion to the Takings Clause.” See also, Good v. United States,

39 Fed. Cl. 81 (1997).

6. As a consequence of its application of the public

trust doctrine, Wisconsin has created a rule which wholly

abrogates traditional takings analysis. In Penn Central,

this Court held that in takings law it is best to avoid any

“set formula” and it is better to engage in individual “ad

hoc” factual inquiries as warranted by each case. Penn

Central, 438 U.S. at 124. In Palazzolo, this court flatly

rejected the idea that a sweeping doctrine can eviscerate

the need for each case to be analyzed under its own

factual background. Here, too, it is necessary that this

court address the question of whether the public trust

doctrine, as applied in Wisconsin, is wholly free of Fifth

Amendment limitations as developed under Lucas, Penn

Central and their progeny.

Il.

WHETHER THE REFUSAL TO ALLOW

CONSTRUCTION OF 71 SEPARATE

CONDOMINIUM UNITS IS A CATEGORICAL

TAKING UNDER LUCAS OR PARTIAL TAKING

UNDER PENN CENTRAL

1. According to its decisions in R.W. Docks & Slips v.

State, 2001 WI 73, 244 Wis.2d 497, 628 N.W.2d 781 (2001);

Zealy v. City of Waukesha, 201 Wis.2d 365, 548 N.W.2d 528

(1996) and Eberle v. Dane County Bd. Of Adjustment, 227

18

Wis.2d 609, 595 N.W.2d 730 (1999), the Wisconsin

Supreme Court appears not to recognize partial regula-

tory takings. Wisconsin recognizes only “two discrete

categories of regulatory action as compensable without

case-specific inquiry into the public interest advanced in

support of the restraint.” (App. 7) citing, Lucas v. South

Carolina Coastal Council, 505 U.S. 1003, 1015 (1992).

Accordingly, Wisconsin recognizes that the first type of

categorical taking involves a regulatory action that brings

about an actual physical “invasion” of private property.

Id. The second type involves regulatory actions that deny

“all economically beneficial or productive use of land.”

Id.

Here, however, the Wisconsin Supreme Court con-

cluded that because R.W. Docks has 201 of the intended

272 boat slips, Docks retained all or substantially all

practical uses of its property. (App. 7) Disposing thus

with R.W. Docks’ claim that he had suffered a total or

categorical taking under Lucas, the court proceeded to

conclude that Docks did not actually have any property

rights which could be unconstitutionally deprived and,

therefore, Docks could not have suffered a taking under

Penn Central either.

For some reason the court then proceeded with a

discussion of the Penn Central factors. (App. 15-17) Yet,

given the Wisconsin Supreme Court’s conclusion that no

categorical taking had occurred, what would be the point

of a Penn Central analysis when the Wisconsin courts do

not recognize that a non-physical regulatory action can

result in anything less than a categorical taking? In this

respect, Wisconsin jurisprudence tracks a number of

jurisdictions which appear to reject even the possibility of

19

partial regulatory takings, and which have prescribed

narrowing constructions of the “relevant parcel” being

taken by regulation. See, e.g., McQueen v. South Carolina

Coastal Council, 340 S.C. 65 (2000), vacated and remanded,

121 S.Ct. 2581 (2001); Sea Cabins on the Ocean v. City of

North Myrtle Beach, 345 S.C. 418 (2001); East Cape May

Associates v. New Jersey, 693 A.2d 114 (N.J. Super. 1997);

Volkema v. Department of Natural Resources, 542 N.W.2d 282

(Mich. App. 1996), cert. denied, 525 U.S. 1040 (1998); see

also, John E. Fee, Unearthing the Denominator in Regulatory

Taking Claims, 61 U. Cur. L. Rev. 1535, 1557 (1994).

2. These issues were well-articulated in Leveladies

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

where it was asked whether the plaintiff could maintain a

taking claim under circumstances where he was pre-

cluded, by regulation, from developing only a portion of

his property. Loveladies at 1179-80. In a footnote, the Wis-

consin Court declined Petitioner’s “invitation to follow

the lead” of Loveladies. (App. 15, n.5) The problem with

this footnote does not arise so much from the spurned

invitation as it does from the Court’s rejection of the idea

that a compensable taking can result from something less

than a total wipe-out of the property owner’s value. See,

Lucas at 1019 n.8 (whether a loss of some but not all

economic use can result in a compensable taking). And,

as noted by this Court in Keystone Bituminous Coal Assn. v.

DeBenedictis, 480 U.S. 470, 497 (1987), “our test for regula-

tory taking requires us to compare the value that has

been taken from the property with the value that remains

in the property, [and] one of the critical questions is

determining how to define the unit of property whose

value is to furnish the denominator of the fraction.”

20

The Penn Central analysis is intrinsically bound-up

with partial regulatory takings. “[W]here a regulation

places limitations on land that fall short of eliminating all

economically beneficial use, a taking nonetheless may

have occurred, depending on a complex of factors includ-

ing the regulation’s economic effect on the landowner, the

extent to which the regulation interferes with reasonable

investment-backed expectations, and the character of the

government action.” Palazzolo, 121 S.Ct. at 2457. The

analytical process set forth in Penn Central enables courts

to decide on an ad hoc basis whether a partial taking has

occurred. But the Wisconsin Supreme Court trivializes

the Penn Central analysis by simply holding that there are

no partial regulatory takings. (App. 13-14)

3. A related question raised in this petition is

whether R.W. Docks’ remaining 71 slips and the infra-

structure associated with those slips should be viewed as

individual separate pieces of property. Docks asserted,

but the lower courts did not resolve, the fact that each

unit is a separate parcel pursuant to the condominium

declaration. (App. 34, 38-44) Likewise, the courts did not

recognize that R.W. Docks sold the original 201 slips prior

to the 1986 regulatory action. (App. 34; App. 7)

If the remaining 71 slips are viewed as separate from

the first 201 slips then there should be no doubt that

Docks has stated a valid claim for a categorical total

taking under Lucas. Each slip is a separate and distinct

parcel of real estate under Wisconsin condominium law.

Each slip is a condominium unit which consists of a place

on the surface of the lake and an undivided interest in the

common on-land infrastructure. (App. 38-44) The

removal of any one of the existing 201 slips would be a

21

total deprivation of that property owner’s interest in his

or her property. Likewise, the refusal to allow the con-

struction of the final 71 slips is a total deprivation of 71

distinct property interests which are completely separate

from the original 201.

4. The conundrum raised by the Wisconsin Supreme

Court’s rationale needs to be resolved here because it is at

odds with the underlying purpose for the Penn Central

analysis. “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.” Con-

crete Pipe & Prods. v. Constr. Laborers Pension Trust, 508

U.S. 602, 644 (1993). The rule of law is, and has been, as

stated in Palazzolo: “Our polestar instead remains the

principles set forth in Penn Central itself and our other

cases that govern partial regulatory takings. Under these

cases, interference with investment-backed expectations

is one of a number of factors that a court must examine.”

Palazzolo, 121 S.Ct. at 2466. Wisconsin’s rejection of Peti-

tioner’s “invitation” to apply these principles is deserv-

ing of this Court’s attention.

Nothing in the language of the Fifth Amendment

compels a court to find a taking only when the Govern-

ment divests the total ownership of the property; the

Fifth Amendment prohibits the uncompensated taking of

private property without reference to the owner’s

remaining property interests. Florida Rock Industries, Inc.

v. United States, 18 F.3d 1560, 1568 (Fed. Cir. 1994). This

Petition thus raises the question unsuccessfully mooted in

Palazzolo. In that decision, the Court properly regarded

22

the question of determining the “denominator in the tak-

ings fraction” as “difficult” and “persisting.” 121 S.Ct. at

2465. Unlike in Palazzolo, these arguments were “pressed”

below in the state courts, although by no means satisfac-

torily resolved.

CONCLUSION

At stake in this Petition is nothing less than the

integrity of this Court’s takings jurisprudence. This is

true in respect not only of delimiting “background princi-

ples” of state property law that can sweepingly defeat all

regulatory takings claims, but also determining the rele-

- vant parcel for purposes of both Lucas’ categorical taking

rule and Penn Central's balancing test. The petition for a

writ of certiorari should be granted.

Respectfully submitted,

Jason W. WHITLEY

Counsel of Record

Novitzke, Gust,

Sempr & WHITLEY

314 Keller Ave. N.

Ste. 399

Amery, Wisconsin 54001

Telephone: 715-268-6130

Facsimile: 715-268-7890

Don Paut NovitzkE

Of Counsel

Novitzke, Gust,

Semper & WHITLEY

314 Keller Ave. N.

Ste. 399

Amery, Wisconsin 54001

Telephone: 715-268-6130

Davip J. BEDERMAN

Of Counsel

GamBrRELL HALL

Atlanta, Georgia

30322-2770

Telephone: 404-727-6822

Bruce L. RASMUSSEN

Of Counsel

2116 2nd Ave.

Minneapolis, Minnesota

55404

Telephone: 612-874-7071

Submitted: September 24, 2001

“Ve a a Oe ee ee Oe eer

App. 1

IN SUPREME COURT

2001 WI 73

NOTICE

This opinion is subject to further

editing and modification. The final

version will appear in the bound

volume of the official reports.

No. 99-2904

STATE OF WISCONSIN

R.W. Docks & Slips,

Plaintiff-Appellant-Petitioner,

v.

State of Wisconsin and Wisconsin

Department of Natural Resources,

Defendants-Respondents.

(FILED JUN. 28, 2001)

REVIEW of a decision of the Court of Appeals.

Affirmed.

{ 1 DIANE S. SYKES, J. This case pits a small emer-

gent weedbed along the shores of Lake Superior in

Bayfield, Wisconsin, against the developer of a private

marina on those same shores. The Wisconsin Department

of Natural Resources sided with the weedbed, and denied

the developer a dredging permit needed to complete the

final phase of the marina development. The case has an

ironic twist: the small emergent weedbed would not have

“emerged” at all were it not for the calming effect of a

App. 2

breakwater the developer had built in the early stages of

the project. The presence of the emergent weedbed

prompted the DNR to block the developer’s construction

of the last set of boat slips in the marina, 71 out of a total

of 272 slips.

{ 2 So the developer took the DNR to court, alleg-

ing a regulatory taking without just compensation. The

case was dismissed on summary judgment, and the court

of appeals affirmed, concluding that because the devel-

oper retained the benefit of all or substantially all of its

property - including over 200 boat slips and various

recreational facilities associated with the marina onshore

- the denial of a permit for the construction of the

remaining boat slips was not an unconstitutional taking.

{3 We affirm. As takings law has evolved, there is

no compensable categorical taking unless the regulatory

action in question deprives a property owner of all eco-

nomically beneficial use of his property. We do not per-

form the analysis piecemeal, but, rather, consider the

property as a whole in order to determine the extent of

the deprivation. Because the denial of the dredging per-

mit did not deny the marina developer all economically

beneficial use of its property, there was no categorical

regulatory taking.

{4 Further, and again considering the property as a

whole, the regulatory action in this case at most affected

only the developer’s riparian right of reasonable access to

the lake, which is subordinate to the public trust doctrine.

Therefore, the DNR’s action did not so severely impact or

interfere with the developer’s reasonable investment

App. 3

expectations as to constitute an unconstitutional taking

under traditional, ad hoc takings analysis.

|

45 The relevant facts are undisputed. R.W. Docks, a

general partnership in the business of developing

marinas, is the riparian owner of 1100 feet of frontage

along Lake Superior in Bayfield, Wisconsin. In 1969,

Docks began building a marina, called Port Superior, on

this lake frontage land. At the outset, Docks sought and

obtained permits from the DNR and the Army Corps of

Engineers to construct a breakwater and boat harbor in

connection with the marina development.

¢ 6 The marina was then built in stages. The initial

phases of the project consisted of the breakwater, several

docks eventually containing 201 boat slips, a sea wall, a

lagoon, a solid pile quay structure placed on the lakebed,

a port, racquetball club, tennis court, and supporting

infrastructure. Throughout the gradual development of

the marina, Docks sought and received the necessary

permits from the DNR, including dredging permits pur-

suant to Wis. Stat. § 30.20.

{7 In 1977, Docks converted the marina into condo-

miniums. The 201 condominium boat slips, each of which

included an undivided interest in the common areas of

the marina facilities, were developed and sold before

Docks obtained the necessary permits to complete con-

struction of the final 71 boat slips at the marina.

q 8 In 1983, Docks applied to the DNR for a permit

to dredge 20,000 cubic yards of material from the lakebed,

App. 4

a necessary prerequisite to the completion of the remain-

ing 71 boat slips. The DNR, after expressing concern over

the environmental impact of the dredging, divided the

application in two, the first to remove 5,000 cubic yards,

and the second to remove 15,000 cubic yards of lakebed

material. The DNR then granted the first dredging per-

mit. In 1986, the DNR denied the second, larger dredging

permit, and without the permit, the final 71 boat slips

could not be built.

{ 9 The permit was denied primarily because a

small emergent weedbed had developed near the shore

within the marina as a result of the sheltering effect of the

breakwater that Docks had built. Weedbeds, evidently,

are good for many things, including the proliferation of

game fish, forage fish and associated macroinvertebrates

and zooplankton, and so the DNR acted to protect this

environmentally sensitive natural resource.

q{ 10 After exhausting available administrative

appeals and judicial review of the DNR’s action, Docks

sued the DNR in circuit court alleging an unconstitu-

tional taking of its property without just compensation.

The Bayfield County Circuit Court, the Honorable

Thomas J. Gallagher, granted the DNR’s motion for sum-

mary judgment, concluding that: (1) Docks did not have a

recognizable property interest in the 71 undeveloped boat

slips; (2) even if Docks had a recognizable property inter-

est in the 71 undeveloped boat slips, there was no uncon-

stitutional taking because its riparian right to construct

structures on the bed of Lake Superior was subject to the

public trust doctrine; and (3) there was no unconstitu-

tional taking because Docks retained considerable practi-

cal use of the property.

App. 5

¢ 11 The court of appeals affirmed only the last

conclusion of the circuit court, refraining from addressing

the alternate arguments. The court of appeals agreed that

the denial of the final dredging permit did not constitute

a regulatory taking because Docks maintained the benefit

and use of all or substantially all of its marina property.

Furthermore, the court concluded that Docks assumed

the risk inherent in commencing the project without all

necessary permits, and therefore any economic loss it

suffered as a result of the inability to build the last 71

slips could not be transferred to the State on a regulatory

takings theory. We accepted review.

II

¢ 12 We review a circuit court’s decision granting or

denying a motion for summary judgment independently,

using the same methodology as the circuit court. Wiscon-

sin Dep't of Corrections v. Kliesmet, 211 Wis. 2d 254, 259,

564 N.W.2d 742 (1997); Wis. Stat. § 802.08(2). “[S]ummary

judgment is proper where there are no genuine issues of

material fact and the moving party is entitled to judg-

ment as a matter of law.” Kenefick v. Hitchcock, 187 Wis. 2d

218, 224, 522 N.W.2d 261 (Ct. App. 1994).

¢ 13 The issue in this case is whether the DNR’s

denial of the final dredging permit constituted a regula-

tory taking of Docks’ property without just compensa-

tion. This is also a question of law that we review without

deference to the lower courts. Zealy v. City of Waukesha,

201 Wis. 2d 365, 372, 548 N.W.2d 528 (1996). The Fifth

Amendment to the United States Constitution, made

applicable to the states by the Fourteenth Amendment,

App. 6

provides that private property shall not “be taken for

public use, without just compensation.” Article I, Section

13 of the Wisconsin Constitution provides that “[t]he

property of no person shall be taken for public use with-

out just compensation therefor.” We have stated that:

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, 47 S.Ct. 114, 71 L.Ed. 303 (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, 43 S.Ct. 158, 159-60, 67 L.Ed.

322 (1922), the Court held that “while property

may be regulated to a certain extent, if regula-

tion goes too far it will be recognized as a tak-

ing.” Such takings are described as

“constructive” or “regulatory” takings.

Zealy, 201 Wis. 2d at 373.

{14 “A ‘taking’ need not arise from an actual phys-

ical occupation of land by the government.” Eberle v. Dane

County Bd. of Adjust., 227 Wis. 2d 609, 621, 595 N.W.2d 739

(1999). If a regulatory restriction or action of the govern-

ment deprives a property owner of all economically bene-

ficial use of his property, there has been a categorical

regulatory taking subject to compensation. Lucas v. South

Carolina Coastal Council, 505 U.S. 1003, 1015 (1992); Zealy,

201 Wis. 2d at 374-75.

re

App. 7

Y 15 In determining whether a regulatory restric-

tion “goes too far” for purposes of the Fifth Amendment,

the United States Supreme Court has generally

“eschewed any ‘set formula’ for determining how far is

too far, preferring to ‘engag[e] in . . . essentially ad hoc,

factual inquiries.” Lucas, 505 U.S. at 1015 (citing Penn

Cent. Transp. Co. v. New York City, 438 U.S. 104, 124

(1978)); Zealy, 201 Wis. 2d at 373. However, the Supreme

Court has recognized “at least two discrete categories of

regulatory action as compensable without case-specific

inquiry into the public interest advanced in support of

the restraint.” Lucas, 505 U.S. at 1015. The first includes

regulatory actions that bring about some form of physical

“invasion” of private property. Id. The second includes

regulatory actions that deny “all economically beneficial

or productive use of land.” Id. We have in Wisconsin

interpreted this latter category to include regulatory

actions that “deny the landowner all or substantially all

practical uses of a property.” Eberle, 227 Wis. 2d at 622;

Zealy, 201 Wis. 2d at 374.

{ 16 The DNR’s denial of the dredge permit in this

case did not bring about a physical invasion of private

property. Nor did it deny Docks all economically benefi-

cial or productive use of its property, or substantially all

practical use of its property, inasmuch as it retained the

economic benefit and use of the 201 boat slips and related

recreational facilities at the marina. Accordingly, there

has been no categorical regulatory taking under Lucas

and Zealy.

9 17 We are left, then, with the ad hoc factual,

traditional takings inquiry of Penn Central and Zealy. This

involves an analysis of the nature and character of the

App. 8

governmental action, the severity of the economic impact

of the regulation on the property owner, and the degree

to which the regulation has interfered with the property

owner’s distinct investment-backed expectations in the

property. Zealy, 201 Wis. 2d at 374 (citing Penn Cent., 438

U.S. at 124).

7 18 But first there is a threshold question, and that

is the nature and extent of the private property interest at

stake here. This case involves riparian rights, which are

subject to and limited by the public trust doctrine. The

State argues that the bed and waters of Lake Superior

belong to the public, not Docks, and so no taking of

private property occurred. Indeed, the Supreme Court

has stated that:

[t]he hallmark of a protected property interest is

the right to exclude others. That is “one of the

most essential sticks in the bundle of rights that

are commonly characterized as property.” Kaiser

Aetna v. United States, 444 U.S. 164, 176, 100 S.Ct.

383, 62 L.Ed.2d 332 (1979). That is why the right

that we all possess to use the public lands is not

the “property” right of anyone — hence the sar-

donic maxim, explaining what economists call

the “tragedy of the commons,” res publica, res

nullius.

Coll. Sav. Bank v. Florida Prepaid Postsecondary Educ.

Expense Bd., 527 U.S. 666, 673 (1999). If Docks had no

private property right to place boat slips on the lakebed

at the marina, it cannot have suffered an unconstitutional

taking.

a

App. 9

{ 19 The public trust doctrine originated in the

Northwest Ordinance of 1787 and the Wisconsin Consti-

tution, Article IX, Section 1.1 See Gillen v. City of Neenah,

219 Wis. 2d 806, 820, 580 N.W.2d 628 (1998). The state

holds titic to the beds of lakes, ponds, and rivers as

follows:

“The title to the beds of all lakes and ponds, and’

of rivers navigable in fact as well, up to the line

of ordinary high-water mark, within the bound-

aries of the state, became vested in [the state] at

the instant of its admission into the Union, in

trust to hold the same so as to preserve to the

people forever the enjoyment of the waters of

such lakes, ponds, and rivers, to the same extent

that the public are entitled to enjoy tidal waters

at the common law.”

State v. Trudeau, 139 Wis. 2d 91, 101, 408 N.W.2d 337

(1987) (quoting Illinois Steel Co. v. Bilot, 109 Wis. 418, 425,

84 N.W. 855 (1901)). This includes the beds of the Great

Lakes as well as lesser inland waters. Id. Public owner-

ship of the bed of a lake applies whether the water is

1 Wisconsin Const. art. IX, § 1 states:

Jurisdiction on rivers and lakes; navigable waters.

The state shall have concurrent jurisdiction on all

rivers and lakes bordering on this state so far as such

rivers or lakes shall form a common boundary to the

state and any other state or territory now or hereafter

to be formed, and bounded by the same; and the river

Mississippi and the navigable waters leading into the

Mississippi and St. Lawrence, and the carrying places

between the same, shall be common highways and

forever free, as well as to the inhabitants of the state

as to the citizens of the United States, without any tax,

impost or duty therefor.

App. 10

deep or shallow, and extends to areas covered with

aquatic vegetation within the ordinary high water mark

of the body of water in question.? Id. at 103-04. Although

the public trust doctrine originally existed to protect com-

mercial navigation, it has been expansively interpreted to

safeguard the public’s use of navigable waters for purely

recreational purposes such as boating, swimming, fish-

ing, hunting, recreation, and to preserve scenic beauty.

See State v. Bleck, 114 Wis. 2d 454, 457, 338 N.W.2d 492

(1983); see also Gillen, 219 Wis. 2d at 820.

{ 20 The legislature administers the trust for the

protection of the public’s rights, and it may use the

power of regulation to effectuate the intent of the trust.

Id. at 498. In this regard, as applicable here, the legisla-

ture has declared it to be unlawful to place a structure on

the bed of a navigable waterway unless a permit has been

granted by the DNR, or unless the structure is otherwise

authorized by statute.* See Wis. Stats. §§ 30.12, 30.13;

Cassidy v. DNR, 132 Wis. 2d 153, 158, 390 N.W.2d 81 (Ct.

App. 1986). Further, the legislature has prohibited the

2 The high water mark is: “[T]he point on the bank or shore

up to which the presence and action of the water is so

continuous as to leave a distinct mark either by erosion,

destruction of terrestrial vegetation, or other easily recognized

characteristic.” State v. Trudeau, 139 Wis. 2d 91, 102, 408 N.W.2d

337 (1987) (citing Lawrence v. American W.P. Co., 144 Wis. 556,

562, 128 N.W. 440 (1911)).

3 A “structure” for these purposes has been defined as

“something constructed or built ... something made up of more

or less interdependent elements or parts.” State v. Bleck, 114 Wis.

2d 454, 463, 338 N.W.2d 492 (1983).

LON ht nn Sti das San nF

HO taba Sac ‘ee eal oh tps ain Sa HS te ices s Bek

App. 11

removal of material from the bed of a navigable water-

way without a permit. Wis. Stat. § 30.20.

' J 21 However, subject to the requirements of the

public trust doctrine, “Wisconsin has . . . recognized the

existence of certain common law rights that are incidents

of riparian ownership of property adjacent to a body of

water.” Bleck, 114 Wis. 2d at 466. These include:

[t]he right to reasonable use of the waters for

domestic, agricultural and recreational pur-

poses; the right to use the shoreline and have

access to the waters; the right to any lands

formed by accretion or reliction; the right to

have water flow to the land without artificial

obstruction; the limited right to intrude onto the

lakebed to construct devices for protection from

erosion; and the right, now conditioned by stat-

ute, to construct a pier or similar structure in aid

of navigation.

Cassidy v. DNR, 132 Wis. 2d at 159 (footnotes omitted).

{ 22 The rights of riparian owners, however, are

qualified, subordinate, and subject to the paramount

interest of the state and the paramount rights of the

public in navigable waters. Bleck, 114 Wis. 2d at 467-68.

The common law only requires that riparian owners be

allowed reasonable access and use. Sterlingworth Condo.

Ass'n, Inc. v. DNR, 205 Wis. 2d 710, 731, 556 N.W.2d 791

(Ct. App. 1996).

[E]very . . . right which a riparian owner

acquires, as such, to the waters. . . by his land,

is restricted always to that which is a... rea-

sonable use, and these terms are to be measured

and determined by the extent and capacity of

the [lake], the uses to which it has been put, and

App. 12

the rights that other riparian owners on the

same [lake] also have.

Id. (citing Apfelbacher v. State, 167 Wis. 233, 239, 167 N.W.

244, 245 (1918); State v. Zawistowski, 95 Wis. 2d 250,

261-62, 290 N.W.2d 303, 309 (1980)).

{ 23 The public trust doctrine as an encumbrance

on riparian rights is established “by judicial authority so

long acquiesced in as to become a rule of property.”

Franzini v. Layland, 120 Wis. 72, 81, 97 N.W. 499 (1903). It

is part of the organic law of the state, and is to be broadly

and beneficially construed. Diana Shooting Club v. Hust-

ing, 156 Wis. 261, 271-72, 145 N.W. 816 (1914).

{ 24 The DNR’s denial of the dredging permit

affected only Docks’ ability to construct the final 71 boat

slips on the bed and in the waters of Lake Superior, and,

as such, implicated only Docks’ riparian rights, which are

subject to the public trust doctrine. Assuming that rip-

arian rights, subordinate as they are to the rights of the

public, are included in the “bundle of rights” recognized

as private property for purposes of Fifth Amendment

takings analysis, Docks has failed to demonstrate a com-

pensable regulatory taking under Penn Central and Zealy.*

4 Docks claimed at oral argument that United States v.

Chandler-Dunbar Water Power Co., 229 U.S. 53 (1913) supported

its position that it had a property right for Fifth Amendment

purposes in the 71 additional boat slips. The riparian property

owner in Chandler-Dunbar claimed a right to construct in the

river and upon its land such structures as were necessary to

control and use the current of the river for commercial

purposes, provided only that such structures not impede or

hinder navigation. As the Court noted, under state law, the

owner of riparian land carried title all the way to the middle

App. 13

7 25 In Zealy, we noted that the United States

Supreme Court has not endorsed an analysis that subdi-

vides a contiguous property for purposes of determining

whether a compensable taking has occurred. Zealy, 201

Wis. 2d at 375-76.

[R]ather, 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 abro-

gated. In deciding whether a particular gov-

ernmental 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, 98 S.Ct. at

2662-63. Similarly, in Keystone [Bituminous Coal

thread of the riverbed. However, the Court found this title to be

qualified at best, subordinate to the public right of navigation.

The Court stated that the riparian owner had the “right of access

to deep water, and when not forbidden by public law may

construct for this purpose, wharves, docks, and piers in the

shallow water of the shore. But every such structure in the water

of a navigable river is subordinate to the right of navigation,

and subject to the obligation to suffer the consequences of the

improvement of navigation, and must be removed if Congress,

in the assertion of its power over navigation, shall determine

that their continuance is detrimental to the public interest in the

navigation of the river” Id. at 70. Thus, Docks’ reliance on this

case is misplaced. Chandler-Dunbar actually stands for the

proposition riparian rights are subject to the public’s superior

rights.

App. 14

Ass'n v. DeBenedictis], 480 U.S. at 498 107 S.Ct. at

1248-49, the Court noted practical arguments

against allowing the segmentation of the prop-

erty at issue:

“Many zoning ordinances place limits on

the property owner’s right to make profita-

ble 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 con-

stitutes a taking because the footage repre-

sents a distinct segment of property for

takings law purposes.”

Zealy, 201 Wis. 2d at 376.

{ 26 The Supreme Court has reaffirmed its opposi-

tion to subdividing property for purposes of takings anal-

ysis:

[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 pur-

pose 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 rele-

vant question, however, is whether the property

taken is all, or only a portion of, the parcel in

question.

Concrete Pipe & Prods. v. Constr. Laborers Pension Trust, 508

U.S. 602, 642-44 (1993).

App. 15

{1 27 Accordingly, we evaluate the character of the

DNR’s action, its economic impact and the degree to

which it interfered with Docks’ investment-backed expec-

tations in light of the marina as a whole rather than the

parcel that was to have contained the 71 boat slips.5 And

we do so recognizing that at most, only riparian rights of

reasonable access and use, subject to the public trust

doctrine, are implicated here.

q 28 The DNR acted primarily to protect an emer-

gent weedbed on behalf of the public, and secondarily, to

prevent interference with the rights of neighboring rip-

arian owners. Reasonable minds can differ about whether

governmental protection of weedbeds is of such a charac-

ter as to outweigh private property interests. But the

state, not Docks, holds title to the lakebed, and therefore,

to the extent that a private property interest is implicated

here, it is riparian only and therefore qualified in nature,

encumbered by the public trust doctrine. We have “jeal-

ously guarded the navigable waters of this state and the

rights of the public to use and enjoy them.” Delta Fish and

Fur Farms v. Pierce, 203 Wis. 519, 523, 234 N.W. 881 (1931).

The character of the governmental action in this case,

5 Docks invites us to follow the lead of the United States

Court of Appeals for the Federal Circuit in Loveladies Harbor, Inc.

v. United States, 28 F.3d 1171, 1181 (Fed. Cir. 1994), and adopt “a

flexible approach, designed to account for factual nuances” in

determining whether to consider the property as a whole or

only that portion affected by the regulatory action in question.

We declined to do so in Zealy v. City of Waukesha, 201 Wis. 2d 365,

378, 548 N.W.2d 528 (1996), and also decline to do so here, where

the private property right asserted is so limited.

App. 16

therefore, weighs against a finding that Docks has suf-

fered a compensable regulatory taking.

{ 29 Similarly, our evaluation of the severity of the

economic impact of the DNR’s action, and the extent to

which it interfered with Docks’ investment-backed expec-

tations, is strongly influenced by the fact that the devel-

opment of this private marina on the bed and waters of

Lake Superior was encumbered by the public trust doc-

trine and heavily regulated from the get-go. A riparian

owner may apply to the DNR for a permit to remove

material from or erect a structure on the bed of a naviga-

ble waterway in order to facilitate reasonable access and

use. But the riparian owner does not have a right to the

issuance of a permit if it is detrimental to the public

interest. See Wis. Stat. §§ 30.12, 30.13 and 30.20.

{| 30 Docks alleges that the revenue from the sale of

the 201 existing boat slips was insufficient to cover the

cost of developing the marina and that it has to date lost

in excess of $1 million. It claims that the final 71 boat

slips would have a combined value of approximately $1.5

million, enough to cover its losses and make a small

profit. But the fact that the marina development has thus

far yielded a loss does not make out a takings case, and

Docks never possessed an unfettered “right” to a particu-

lar number of boat slips in the first place. Under the

circumstances of this case, the DNR’s action cannot be

said to have “gone too far” to cause the sort of negative

economic impact or substantial interference with invest-

ment expectations as to amount to a regulatory taking.

{ 31 In any event, the DNR’s denial of the final

dredging permit has not interfered with Docks’ present

App. 17

economic use of its property, considered as a whole. It

has a 201-slip marina, and associated recreational facili-

ties, and may have other means of recouping its losses. It

is true that Docks’ plans for a larger marina have been

frustrated, but those plans were encumbered by the pub-

lic trust doctrine and contingent upon the periodic issu-

ance of DNR permits from the beginning. See Concrete

Pipe, 508 U.S. at 645 (rejecting takings claim where claim-

ant “had long been subject to federal regulation, and

‘[t]hose who do business in the regulated field cannot

object if the legislative scheme is buttressed by subse-

quent amendments to achieve the legislative end’ ”).

{ 32 Accordingly, we conclude that the DNR’s

denial of the final dredging permit did not deny Docks all

economically beneficial use of its property, or substan-

tially all practical use of its property, and as such, did not

constitute a categorical regulatory taking. In addition,

because the DNR’s action affected only riparian rights,

subordinate to the public trust doctrine, and affected only

a small portion of the marina development as a whole, it

cannot be said to have resulted in the sort of severe

economic impact or interference with distinct investment-

backed expectations as to constitute a regulatory taking

under traditional, ad hoc takings analysis.

By the Court. —- The decision of the court of appeals is

affirmed.

App. 18

COURT OF APPEALS NOTICE

DECISION

DATED AND FILED This opinion is subject to

further editing. If pub-

July 11, 2000 lished, the official version

‘ will appear in the bound

Page snc yep ss volume of the Official

: PP Reports.

of Wisconsin

A party may file with the

Supreme Court a petition

to review an adverse deci-

sion by the Court of

Appeals. See Wis. Start.

§ 808.10 and Rute 809.62.

No. 99-2904

STATE OF WISCONSIN IN COURT OF APPEALS

DISTRICT III

R.W. Docks & S.uIPs,

PLAINTIFF-APPELLANT,

Vv.

StTaTE OF WISCONSIN AND WISCONSIN DEPARTMENT OF

NATURAL RESOURCES,

DEFENDANTS-RESPONDENTS.

APPEAL from a judgment of the circuit court for

Bayfield County: THOMAS J. GALLAGHER, Judge.

Affirmed.

Before Cane, C.j., Hoover, P.J., and Peterson, J.

q@1 CANE, C.J. R.W. Docks & Slips appeals from a

summary judgment dismissing Docks’ claim against the

App. 19

Wisconsin Department of Natural Resources. Docks

argues that the circuit court erred by concluding that the

DNR’s denial of a dredging permit did not constitute a

regulatory taking. Because Docks maintains the benefit of

all or substantially all of its property and because it

assumed the risk of loss inherent in commencing a project

without all necessary permits, we affirm the circuit

court’s judgment dismissing Docks’ claim.

BACKGROUND

{2 The relevant facts are undisputed. Docks, a gen-

eral partnership in the business of developing recre-

ational marinas, developed Port Superior in Bayfield.

Port Superior was designed to consist of 272 boat slips. In

1986, the DNR refused to grant Docks the dredging per-

mit necessary to construct the remaining seventy-one of

its 272 planned boat slips. After exhausting the available

administrative appeals, Docks filed suit against the DNR

in circuit court, alleging a taking of property without just

compensation in violation of both the state and federal

constitutions. The circuit court subsequently granted the

DNR’s motion for summary judgment and this appeal

followed.

ANALYSIS

{3 Whether summary judgment was appropriately

granted presents a question of law that we review inde-

pendently of the circuit court. See Fortier v. Flambeau

Plastics Co., 164 Wis. 2d 639, 651-52, 476 N.W.2d 593

(Ct. App. 1991). When reviewing summary judgments,

we utilize the same analysis as the circuit court and must

App. 20

apply the standards set forth in Wis. Stat. § 802.08(2). See

Schultz v. Industrial Coils, 125 Wis. 2d 520, 521, 373

N.W.2d 74 (Ct. App. 1985). In general, “summary judg-

ment is proper where there are no genuine issues of

material fact and the moving party is entitled to judg-

ment as a matter of law.” Kenefick v. Hitchcock, 187

Wis. 2d 218, 224, 522 N.W.2d 261 (Ct. App. 1994).

44 The circuit court concluded that (1) Docks did

not have a recognizable property interest in the seventy-

one undeveloped boat slips; (2) even if Docks had a

recognizable property interest in the undeveloped boat

slips, its interest was subject to the public trust doctrine;}

and (3) in any event, there was no unconstitutional taking

because Docks has retained considerable practical use of

the property. Docks contends that the circuit court mis-

characterized its argument. It concedes that the DNR had

the authority to deny the permits necessary to develop

the remaining boat slips. Docks argues, however, that the

DNR’s denial of the dredging permit necessary to com-

plete the remaining seventy-one boat slips constituted a

regulatory taking of Docks’ property without just com-

pensation. Specifically, Docks contends that the DNR’s

denial of the dredging permit either deprived Docks of

substantially all of the beneficial use of its property or

deprived it of its reasonable investment expectations.

1 Under the public trust doctrine, “the state holds the beds

of navigable waters in trust for all of its citizens.” State v. Bleck,

114 Wis. 2d 454, 465, 338 N.W.2d 492 (1983). Although originally

designed to protect commercial navigation, the doctrine “has

been expanded to safeguard the public’s use of navigable

waters for purely recreational and nonpecuniary purposes.” Id.

App. 21

475 The issue of whether the DNR’s denial of the

dredging permit constituted a regulatory taking of Docks’

property without just compensation is a question of law

that this court reviews de novo. See Zealy v. City of

Waukesha, 201 Wis. 2d 365, 372, 548 N.W.2d 528 (1996).

Article I, § 13 of the Wisconsin Constitution provides:

“The property of no person shall be taken for public use

without just compensation therefor.” Our supreme court

has recognized, however, that a taking “need not arise

from an actual physical occupation of land by the govern-

ment.” Eberle v. Dane Cty. Bd. of Adjust., 227 Wis. 2d

609, 621, 595 N.W.2d 730 (1999). Rather, “[t]here can be a

‘taking’ if a restriction, short of an actual occupation,

deprives the owner of all, or substantially all, of the

beneficial use of his property.” Id. (quoting Howell

Plaza, Inc. v. State Highway Comm’n, 66 Wis. 2d 720,

726, 226 N.W.2d 185 (1975)). Takings that do not involve

physical invasions of land are called “regulatory tak-

ings.” Id. at 622.

{76 When a landowner alleges a regulatory taking, a

court should examine the following factors: (1) the char-

acter of the governmental action; (2) the economic impact

of the regulation on the claimant; and (3) the extent to

which the regulation has interfered with distinct invest-

ment-backed expectations. See Zealy, 201 Wis. 2d at 374.

Although a court should consider these factors, “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.” Id.

App. 22

{7 Before determining whether a regulatory taking

has occurred, however, a court must first determine what

is the property at issue. See id. at 375. Our supreme court

has recognized that a landowner’s property 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 seg-

ment 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.

Id. at 376 (quoting Penn Cent. Transp. Co. v. New York

City, 438 U.S. 104, 130-31 (1978)). To the extent that Docks

may argue that it has been deprived of all or substantially

all of the beneficial use of its property, it is mistaken. We

do not look to the value of the undeveloped boat slips,

but rather to the value of Docks’ property as a whole.

Further, any depreciation in the property’s value must

not be based upon changing the character of the land at

the expense of harm to public rights. See id. at 380.

Despite its inability to develop the seventy-one boat slips,

Docks retains the reasonable use of the whole of its

‘riparian property, including the existing 201 boat slips,

marina and appurtenant structures.

{8 Docks nevertheless argues that its investment-

backed expectations have been thwarted. It contends:

[T]he taking has resulted from government

approval of the development of marina facilities

and infrastructure necessary to incorporate five

App. 23

main docks and then, after the facilities and

infrastructure have been built, refusing the nec-

essary permit to complete the marina in order to

protect a weedbed that would have never grown

but for R.W. Docks’ investments.

Conversely, the DNR responds that “a property owner

who acquires and begins to develop property knowing

that permits are required to do so, cannot presume the

permits will be granted, and assumes the risk of loss in

the event of a denial.” We agree. Although Docks inti-

mates that the DNR granted the previous permits with

knowledge of Docks’ intent to ultimately build 272 boat

slips, it nevertheless concedes that it did not have all

permits necessary to complete the project and further

concedes that the DNR had the authority to deny the

necessary permits. As such, Docks should not have pre-

sumed that all necessary permits would be granted. It

assumed the risk of loss in the event of the DNR’s denial

of the permits sought.

49 Because Docks maintains the benefit of all or

substantially all of its property and because it assumed

the risk of loss inherent in commencing a project without

all necessary permits, we affirm the circuit court’s judg-

ment dismissing Docks’ claim.? |

By the Court. - Judgment affirmed.

2 We refrain from addressing any alternative arguments

because only dispositive issues need be addressed. See Sweet v.

Berge, 113 Wis. 2d 61, 67, 334 N.W.2d 559 (Ct. App. 1983).

App. 24

Not recommended for publication in the official

reports.

App. 25

STATE OF WISCONSIN BAYFIELD COUNTY

CIRCUIT COURT

R. W. DOCKS & SLIPS,

Plaintiff,

v. Case No. 99-CV-1

STATE OF WISCONSIN and

WISCONSIN DEPARTMENT OF

NATURAL RESOURCES,

Defendants.

ORDER AND JUDGMENT

(FILED OCT. 19, 1999)

The plaintiff R. W. Docks & Slips filed this action

claiming that the denial of a permit to develop 71 addi-

tional slips in its 201-slip marina was a taking of private

property without compensation, in violation of the state

and federal constitutions. The defendants State of Wis-

consin and Wisconsin Department of Natural Resources

moved for summary judgment dismissing the complaint.

The parties filed briefs and supporting documents, and a

hearing on the motion was held before the court on

August 31, 1999. The plaintiff appeared by its attorneys

Bruce A. Rasmussen and Don P. Novitzke, and the defen-

dants appeared by Assistant Attorney General JoAnne F.

Kloppenburg. At the hearing the court issued an oral

decision, having reviewed the pleadings, briefs and

papers filed with the court and having heard the argu-

ments at the hearing.

App. 26

For the reasons stated in the oral decision on August

31, 1999, a transcript of which is attached and incorpo-

rated by reference, the court finds that 1) there is no

recognizable property interest in the additional 71 slips

because under the longstanding common law principle of

the public trust doctrine the right to build these addi-

tional slips was not part of the plaintiff’s title, 2) even if

there is a recognizable property interest that could be

taken, there was no unconstitutional taking because the

plaintiff’s riparian rights to construct structures on the

surface and above the bed of Lake Superior were always

subject to the public trust doctrine, which has long been

in place in Wisconsin, and 3) even if there is a recogni-

zable property interest, there was no unconstitutional

taking because the plaintiff has retained considerable

practical use of the property in that it has built and sold

201 slips, the property is not valueless but is worth at

least $2 million, and there is no evidence showing

adverse economic impact resulting from the state action.

NOW, THEREFORE, IT IS ORDERED that:

1. The defendants’ motion for summary judgment is

GRANTED.

2. The complaint is DISMISSED.

3. JUDGEMENT is ENTERED with costs in the

amount of $100 in favor of the defendants.

App. 27

Dated this 19 day of October, 1999.

BY THE COURT:

/s/ Thomas J. Gallagher

THOMAS J. GALLAGHER

Circuit Court Judge

STATE OF WISCONSIN BAYFIELD COUNTY

CIRCUIT COURT

R. W. DOCKS & SLIPS,

Plaintiff,

Vs.

STATE OF WISCONSIN and

WISCONSIN D.N.R.,

Defendants. Case No. 99-CV-01

HONORABLE THOMAS J. GALLAGHER, PRESIDING

PARTIAL TRANSCRIPT

DECISION

Hearing held on August 31, 1999 at the Bayfield County

Courthouse, Washburn, WI

App. 28

Appearances: For the Plaintiff:

Mr. Don Paul Novitzke,

Attorney of Record

Mr. Bruce Rasmussen,

Attorney at Law

For the Defendant:

Ms JoAnne Kloppenburg,

Assistant Attorney Gen.

[2] THE COURT: Alright, here’s what I’m going to

do. I’m going to grant the defendant’s motion for sum-

mary judgement dismissing the plaintiff's complaint on

the merits, together with the taxable costs and disburse-

ments of the action. And here’s why:

First of all, I find that the plaintiffs have no recogni-

zable property interest at stake in this case. What the

plaintiffs are claiming in the complaint, and I have to

liberally construe the complaint in the plaintiffs’ favor to

even go by the test as to whether it states a cause of

action, is that the plaintiff somehow has a property,

recognizable property interest, in developing 71 more

boat slips than are already there. Plaintiff has developed

a marina, there’s breakwater, already 201 slips. There’s

already considerable improvements connected with the

marina on the riparian land adjacent to Lake Superior to

which the plaintiffs claim, I guess, that it owns, although

that’s not entirely clear to me, liberally construing the

complaint I will give them that. The 71 boat slips do not

exist today, they have not been built, and they will not

apparently be built, because they cannot obtain the

approval they need to build them from the Department of

Natural Resources. Those decisions were made by the

Department, and by Administrative Law Decision, and

App. 29

by Circuit Court Decision affirming the Administrative

Law Decision. At least one of the Administrative Law

Decisions apparently was not even taken for review in

the Circuit Court, that’s concerning the estoppel issue. So

it’s settled, as far as this case goes, they’re not going to be

[3] able to develop the remaining 71 boat slips which

were to be built on the surface of Lake Superior.

Plaintiff on the one hand contends that the 71 boat

slips are somehow a recognizable property interest of

riparian land owner, even though they don’t exist, and on

the other hand claim that condominium declaration filed

in the Register of Deeds Office in this county creates this

recognizable property interest in the 71 boat slips, which

apparently are, I’m satisfied are included in the condo-

minium declaration. That’s on record. No approval by

anyone were necessary to record these condominium dec-

larations. All they had to do was hire a surveyor, have

some lawyer draft the condominium declaration as to

conform to the statute and title them to be recorded in the

Register of Deeds Office. I do not find that creates recog-

nizable property interest under either the Fifth Amend-

ment, or the Wisconsin Constitution. These 71 slips that

exist only in condominium declaration cannot be con-

veyed today they do not exist. Any right of riparian land

owner, including the right to develop these condominium

slips that are in the declaration are qualified by the Public

Trust Doctrine in this State where the State owns the bed

of Lake Superior. That’s a long standing common law

tradition, so that such use of riparian rights by the plain-

tiff were always not part of its title to begin with. Even if

somehow one can find that there is a recognizable prop-

erty interest that could be taken, there’s been no taking.

App. 30

As I indicated earlier, such a right was always subject to

the property . . . subject to the Public Trust and well

understood for [4] centuries in this State that the State

powers over the Public Trust Doctrine, or under the Pub-

lic Trust Doctrine over construction on the surface of

Lake Superior and above the bed of Lake Superior. That

anyone who acquired riparian rights takes that title sub-

ject to the Public Trust Doctrine.

Further, the plaintiff has had reasonable use of the

property. They have constructed a considerable marina

development. They have constructed 21, and sold .. . not

21, 201, and sold 201 boat slips under condominium

ownership. This property is not valueless. The plaintiffs

themselves give the riparian real estate a value at the

present time of $2 million Dollars. They have retained a

considerable practical use of the property. They appar-

ently no longer have an active interest in the operation of

the marina, but they could have, and I’m not satisfied, in

any event, that the evidence submitted by the plaintiff in

opposition to the motion show any adverse economic

impact. And even if it did that was probably due to

business decision, or other development problems that

were made, or created by the plaintiff.

For those reasons I’m not even going to bother to go

to the just compensation issue. And Ms Kloppenburg, do

you want to draft something?

MS KLOPPENBURG: Certainly.

THE COURT: Thank you.

App. 31

I, DELORES KITTLESON, do hereby certify that the

above transcript is a complete and accurate copy of the

proceedings taken by me on the Stenograph Machine, and

transcribed into typewritten form by myself.

Dated: 9-29-99

/s/ Delores Kittleson

DELORES KITTLESON

CIRCUIT COURT REPORTER

BAYFIELD COUNTY

COURTHOUSE

P. O. BOX 12

WASHBURN, WI 54891

App. 32

CIRCUIT COURT

STATE OF WISCONSIN BAYFIELD COUNTY

R. W. DOCKS & SLIPS,

Plainti:f,

Vv. Case No. 990-CV-1

STATE OF WISCONSIN and

WISCONSIN DEPARTMENT OF

NATURAL RESOURCES,

Defendants.

AFFIDAVIT OF ROBERT F. HOLMGREN

STATE OF MINNESOTA )

) ss.

COUNTY OF HENNEPIN _)

Robert F. Holmgren, being duly sworn and on his

oath, deposes and says of his own personal knowledge:

1. I am the managing agent of plaintiff and have

been since the inception of the Pike’s Bay Marina project

in Bayfield County, Wisconsin in 1968.

2. Attached hereto is an illustration which accu-

rately depicts Port Superior Marina at the time of the

proceedings herein.

3. Plaintiff acquired the parcel of real estate riparian

to Pike’s Bay in 1968 for the purpose of developing a

sheltered harbor with depths sufficient to accommodate

sailboats.

App. 33

4. In 1968, plaintiff applied to the U. S. Army Corps

of Engineers for a permit to construct a breakwater and

boat harbor. I fully apprised officials of the Corps of

plaintiff’s plans to install sailboat docks in the entire

sheltered harbor. The Corps gave plaintiff permission to

proceed and in 1972 formally issued a permit “to con-

struct a breakwater and boat harbor in Pike’s Bay on Lake

Superior in Bayfield, Wisconsin.”

5. Upon receiving permission from the Corps to

proceed, plaintiff applied to the Department of Natural

Resources for a contract to remove materials from the bed

of Lake Superior. A contract was made between the

Department of Natural Resources and Plaintiff on Decem-

ber 30, 1968.

6. In 1968, plaintiff also applied to the Department

of Natural Resources for a permit to construct a breakwa-

ter and boat harbor. I fully apprised officials of the

Department of Natural Resources of plaintiff’s plans to

install sailboat docks in the entire sheltered harbor. In

1969, the Department issued plaintiff a permit to con-

struct a breakwater on the bed of Lake Superior “to

provide a protected harbor for a marina.”

7. In 1971, plaintiff commenced construction of a

lagoon in what it considered upland on the assumption

that the shoreline of the lake was the natural shoreline. A

dispute ensued with the Department of Natural

Resources over whether the lagoon was actually on the

lakebed. I explained to officials of the Department of

Natural Resources that it was necessary for plaintiff to

own the real estate which subtended docks 4 and 5 as

construction of those docks was necessary to complete

App. 34

the marina. The Department of Natural Resources and

plaintiff ultimately reached a negotiated settlement which

was designed to permit plaintiff to construct docks 4 and

5. The Department of Natural Resources and plaintiff

agreed to a legislated shoreline in the upland which gave

plaintiff riparian rights to the area occupied by docks 4

and 5 and the Department of Natural Resources agreed to

grant plaintiff, as riparian owner, a permit to construct a

structure on the bed of the lake. The purpose of the

structure, called the quay, was to serve as the base of

docks 4 and 5 of the marina.

8. In 1977, plaintiff converted the marina to a 272

boat/slip marina condominium under Wisconsin law.

Two hundred one of these condominium units were

developed and sold.

9. Plaintiff invested heavily in the improvements

required by a first class marina of 272 boat slips. Among

the improvements made by plaintiff are land acquisition,

breakwater, seawall, dredging, pool and racquet club,

swimming pool, tennis court, surfacing and landscaping,

wells and water system, sewage treatment plant, lift sta-

tion and force main, sewer laterals and connections.

10. Plaintiff planned to recover its investment by

developing and selling the entire 272 condominium units.

The revenues from the first units sold would be used to

pay for the improvements and plaintiffs profit, if any,

would be derived from the sale of the final units. Plaintiff

developed and sold 201 units. The revenues from these

units was not sufficient to pay for the improvements and

plaintiff has lost in excess of one million dollars on the

marina development.

App. 35

11. The remaining 71 units have a retail value of

approximately $1.5 million.

12. The regulatory scheme imposed by the Corps

and the Department in 1968 for dredging and dock con-

struction worked as follows. Plaintiff would apply to the

Corps for a permit to dredge and construct docks. Upon

receipt of the permit from the Corps, plaintiff would

apply to the Department of Natural Resources for a con-

tract to remove materials from the bed of the lake. The

Department of Natural Resources would routinely enter

contracts with plaintiff requiring a nominal cash pay-

ment, posting of a bond, and proper disposal of dredging

soils. The Department of Natural Resources required no

permits of its own. This regulatory scheme as to dredging

contracts remained in effect until 1986 when the Depart-

ment refused to contract with plaintiff for the removal of

15,000 cubic yards of material from the bed of the lake

and until 1996 when the Department first imposed a

requirement for a structure permit to construct floating

docks. Prior to 1996, plaintiff continued to install finger

docks on the previously constructed main docks.

13. Plaintiff in good faith applied to the Department

for all approvals required by the Department to complete

its marina but its applications were denied.

Further affiant sayeth naught save that he gives this

affidavit in opposition to defendants’ motion for sum-

mary judgment.

/s/ Robert F. Holmgren

Robert F. Holmgren

App. 36

Subscribed and sworn to before me

this 20th day of May, 1999.

/s/ Lee A. Sanford

Notary Public

(SEAL) LEE A. SANFORD

NOTARY PUBLIC « MINNESOTA

My Comm. Expires Jan. 31, 2000

App. 37

PORT SUPERIOR MARINA

BAYFIELD, WISCONSIN

Large Emergent a SN :

Weedbed mit

Small Emergent Weedbed

9 Existing Slips

m4 Proposed Slips

PIKES BAY - LAKE SUPERIOR

ILLUSTRATION

App. 38

Exhibit 70

Exhibit K

Port Superior Marina Association

in Port Superior Village

Bayfield Wisconsin 316951

DECLARATION OF TRUST

IN ACCORDANCE WITH THE UNIT OWNERSHIP

ACT OF WISCONSIN

PORT SUPERIOR MARINA ASSOCIATION

Article 1. Purpose: This Declaration of Trust is exe-

cuted by the undersigned developers, Robert F.

Holmgren and Gertrude I. Holmgren d/b/a R. W. Docks

& Slips, a Minnesota partnership, licensed to do business

in Wisconsin, fee simple owner of the real estate

described hereinafter, for the purpose of forming an asso-

ciation for itself and all future owners pursuant to the

UNIT OWNERSHIP ACT, Sections 703.01 to 703.28 of the

Wisconsin Statutes.

Article 2. Name: The name of the association shall be

Port Superior Marina Association.

| Article 3. Duration: The period of existence of the

| association shall be perpetual.

Article 4. Definition: Unless the context of this Decla-

ration requires otherwise, the definitions of the words

used herein, in the By-laws, and in any other documents

executed pursuant to this Declaration of trust shall be

those set forth in Wisconsin Statutes Section 703.02.

Article 5. Description of Land: The property submitted

and subjected to the provisions of the Unit Ownership

ES ESS a

App. 39

Act is a Leasehold Interest as described in Volume 307

page 383 & 384 in the Register of Deeds for Bayfield

County describing real, personal property and/or ease-

ments, said Leasehold Interest is described as follows:

REGISTER’S OFFICE __)

) SS.

Bayfield County, Wis. )

RECORDED AT 4:30 P.M.

ON OCT 3-77 IN

Vol. 307 of Rec

Page 337-429, Incl.

/s/ Otto Korpela

REGISTER OF DEEDS

Fee Due 71.30

Marina Area

That part of Government Lot 3, Section 22, T. 50

N., R. 4W, Bayfield County, Wisconsin,

described as follows: Beginning at an iron pipe

at the intersection of the North-South 1/4 line of

said Section 22 with the water’s edge of Lake

Superior. Thence N. 00° 21' E., along said 1/4 line

233.24 feet, to a °/s inch rebar. Thence S. 76° 04'

43"W., 609.89 feet to a 1" iron pipe. Thence S. 29°

43' 20" E., 221.30 feet to a '/2" rebar. Thence N.

60° 16' 40" E., 188.66 feet to a 1/2" rebar. Thence

S. 29° 43' 20" E., 121.25 feet to a 1/2" rebar.

Thence S. 60° 16' 40" W., 325.85 feet (passing

thru a }/2" rebar at 188.66 feet.) Thence S. 29° 43’

20" E., 19.62 feet to a 1" iron pipe on the Bulk-

head line of Lake Superior. Thence N. 60° 49' 11"

E., 607.18 feet along said Bulkhead line to the

point of beginning. Together with an easement

for purposes of egress, ingress and regress over

App. 40

and across a strip of land 30 feet in width on

either side of the following described line; Com-

mencing at the Southwest corner of said Section

22; thence east along the South section line a

distance of 1,320 feet; thence North 692 feet;

thence North 57° East a distance of 90 feet to the

point of beginning; thence South 30° East a dis-

tance of 420 feet; thence North 72° East a dis-

tance of 368 feet more or less. To be included

along with this description are all docks, fuel

and waterlines, breakwalls and seawalls of Port

Superior Marine Association and area between

breakwalls and seawalls, in Lake Superior and

bulkhead lines as established. Grantors reserve

easement on above described premises to use

parking facilities and grant same to others. Par-

cel contains 3.08 acres.

Also:

A second easement for purposes of egress,

ingress and regress over and across the follow-

ing described property: That part of Govern-

ment Lot 3, Section 22, T. 50 N., R 4W., Bayfield

County, Wisconsin, described as follows: To

locate point of beginning, commence at the iron

pipe marking the intersection of the North-

South '/s line of said Section 22 with the water’s

edge of Lake Superior. Thence run S. 87° 48' 20"

W., 317.23 feet to a 1/2 inch rebar. Thence S. 60°

16' 40" W., 188.66 feet to a 1/2 inch rebar. Thence

N. 29° 43' 20" W., 221.30 feet to a 1 inch iron pipe

which is the point of beginning. Thence S. 75°

37° 10" W., 142.25 feet to a 1/2 inch iron pipe.

Thence S. 29° 43' 20" E. 40 feet. Thence N. 75° 37'

10" E. 142.25 feet. Thence N. 29° 43' 20" W. 40

feet to the point of beginning.

App. 41

All as described in the Plat of Survey attached hereto as

Exhibit “A” and incorporated herein by reference as a

portion of this Declaration of Trust.

Article 6. Description of Buildings: All buildings and

attachments located on premises.

Article 7. The Units: The unit numbers of the units

contained in the said Exhibit “A” are as follows: Boat

Slips numbered consecutively from 1 through and includ-

ing 272 and Docks “A”; “1”; “2”; “3”; “4”; and “5.”

Each future lessee shall be entitled to the exclusive

possession of his unit in accordance with the terms of this

Declaration. Each unit, together with its undivided inter-

est in the common areas and facilities, shall for all pur-

poses constitute real property.

The location, approximate area, and immediate com-

mon area to which each unit has access is set forth in

Exhibits “A” and “B”. The legal description of each unit

shall consist of its number as aforesaid. Every deed, lease,

mortgage, or other document may describe a unit by its

identifying number shown on Exhibit “A”, and such

description shall be good and sufficient for all purposes.

No unit owner may sub-divide his unit smaller than that

shown on Exhibit “A”. Each unit shall consist of the space

enclosed and bounded by the interior surfaces of the unit

as shown on Exhibit “A”, and further designated on

Exhibit “B”, subject to any encroachment created by set-

tlement or moving of the docks, or permissible repairs or

modifications which are deemed valid easements for the

benfit [sic] of such unit owners, or the common element;

as the case may be, excepting such as may be created by

willful conduct.

Les Ue Rene

App. 42

Article 8. Description of Common Areas and Facilities:

The common areas and facilities shall consist of all of the

property designated on the said Plat of Survey (Exhibit

“A”) as common areas. Any structures erected or main-

tained within said common boundary as aforesaid shall

be a part of the common areas and facilities.

All easements and rights described herein are appur-

tenant, running with the land, perpetual, bonding on the

undersigned, its successors and assigns, and where desig-

nated as common areas and facilities, shall constitute

such common areas and facilities pursuant to this Decla-

ration of Trust.

Article 9. Description of Limited Common Areas and

Facilities: There are no limited common areas as defined

in the unit Ownership Act designated as such in this

Declaration of Trust, except that when all units are leased

the By-laws may designate specific parking areas as lim-

ited common area reserved for the use of parking.

Article 10. Value of Property: The value of the property

as defined in the Unit Ownership Act is $1,496,000.00.

The value of each unit and the percentage of undivided

interest in the common areas and facilities appertaining

to each unit and its owner for all purposes, including

voting, shall be an average value of $5500 for each of the

units and each unit shall have an equal share of one vote

per unit owned.

Each unit owner shall own an undivided interest, in

the percentages hereinbefore set forth, in the common

areas and facilities as a tenant in common with all other

unit owners, and, except as may otherwise be limited in

this Declaration, shall have the right to use and occupy

App. 43

the common areas and facilities for all purposes incident

to the use and occupancy of his unit, including the right

to vote as hereinafter set forth, and such incidental uses

permitted by this Declaration, which right shall be appur-

tenant to and run with his unit. The above percentages

shall be permanent and may not change without consent

of all unit owners by amendment to this Declaration.

The building and premises, including ali individual

units, are to be used solely for recreational purposes in

strict conformity with the restrictions and covenants

hereto attached.

Article 11. Rights and Obligations of the Association:

Robert F. Holmgren and Gertrude I. Holmgren d/b/a R.

W. Docks & Slips (“The Developer”) shall retain fee sim-

ple title to the Boat Slip/ Units, Common Areas and Facil-

ities (hereinafter referred to as “demised premises”) (See

Attachment “A”) for and during the term hereinafter

mentioned. Said “demised premises” is more particularly

described in this Declaration and Exhibits, recorded

under the Unit Ownership Act, in the office of the Regis-

ter of Deeds, Bayfield County, Wisconsin, which are made

a part hereof by reference.

App. 44

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