# Petition for Writ of Certiorari — K&K Construction Construction, Inc. v. Michigan Department of Environmental Quality (No. 06-1071) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_2119%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2006 ## Text I Ou SANA | ms A ‘ iS N2 961071 JAN 2 9 2007 OFFICE OF THE CLERK Jn The Supreme Court of the Anited States + K&K CONSTRUCTION, INC., AND J.F.K. INVESTMENT COMPANY, L.L.C., Petitioners, Vv. THE MICHIGAN DEPARTMENT OF ENVIRONMENTAL QUALITY AND STATE OF MICHIGAN, Respondents. 4 On Petition for Writ of Certiorari to the Michigan Supreme Court ¢ PETITION FOR A WRIT OF CERTIORARI with Appendix o— * Robert L. Bunting Robert Charles Davis ATTORNEY AT LAW ATTORNEY AT LAW P.O. Box 7 20383 Hall Road Oxford, MI 48371 Macomb, MI 48044 248-628-5150 586-263-9500 * Counsel of Record Counsel for Petitioners Co-Counsel for Petitioners January, 2007 LEGAL ADVANTAGE @ 432 Walnut Street © Cincinnati, OH 45202 (800) 581-2252 If. QUESTIONS PRESENTED FOR REVIEW Whether the Michigan Court of Appeals erred when it ruled that if the regulation at issue is “widespread”, then the impacted property owner must show the “functional equivalent” of a full ~physical invasion to sustain an actionable regulatory taking, thus violating the settled Balancing Test rule of law in Penn Central Transportation Company v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). Whether the Michigan Court of Appeals erred when it ruled that the character of the government’s action did not weigh in favor of a taking because the regulatory action provided a “reciprocity of advantage” which does not single out the Plaintiffs even though the statutory scheme of the regulation expressly allows just compensation for a taking. PARTIES TO PROCEEDING Petitioner K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. Respondents The Michigan Department of Environmental Quality and State Of Michigan.’ ' J.F.K. Investment Company, L.L.C. is successor in interest to J.F.K. Company, and Resorts and Company, a Michigan corporation. > When this case started, the Michigan Department of Environmental Quality had the title Michigan Department of Natural Resources, referred to herein as the “DNR”. The original Defendants were the State of Michigan and the DNR. The Defendants are now the State of Michigan and the Michigan Department of Environmental Quality (collectively “Defendants’’). TABLE OF CONTENTS Page QUESTIONS PRESENTED FOR REVIEW .............0......... i PARED FP Fe ovcevisnccccercsrnccoesvecesevornaineusiinsn il Res Ce. SaaS Sat ie) sanrsesncecnitectecnnsonrigunstncenceiaaieabedediol iil CPE Fs FIRE EE ettertitin tien eeemcinninaanente 7 PETITION FOR WRIT OF CERTIORARI ....0.0.........2e l Fe SS OF eicintatecsncvnveniascnishineneiaiendeabsiatammabsiatieion 2 ABs Cir FUR 8 PING weiss cncnsnscccsinntintigcenresniavivevennatiots 5 CONSTITUTIONAL AND STATUTORY Ae EO CIE ED iiitsiccntlecevtisrntentconeiaiienl 6 EP SEE A BUOY i sctevniviccndcwnsieevcisnedaciparcbeninbeans 7 ARGUMENT SUPPORTING PEATEs CE FG FOIE vaerenssrecseceserveensvacicsrrnentinnen 13 I. The Michigan Court of Appeals’ Opinion Wholly Contradicts This Court’s Opinion in Penn Central and Its Progeny Including Lingle v. Chevron, 544 U.S. 528; 125 S.Ct. 2074; 161 L.Ed.2d. 876 (2005) Thereby Destroying the Penn Central Balancing Test in Michigan........... 13 iil Il. This Court Is Asked To Provide a Resolution to the Unsettled Definition of “Character” of Action Within the Penn Central Balancing Ill. | The Question Presented Is Important......... 29 IV. The Decision Of The Michigan Court Of Appeals Is Erroneous................:. 29 Pe A API cciniscsnsiciniiicihaceubegenivenbiniipneeshaniinaistciianiaidiuiuins 30 APPENDIX iV A TABLE OF AUTHORITIES CASES Armstrong v. U.S., 364 U.S. 40, 80 S.Ct. 1563, WL BE2e TESOL GI verrcsnsniseraisvensedsnnsnnven First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, California, 482 U.S. 304, 107 S.Ct. 2378, FE ESR BIO IP vik tvcsscosvsssesisdiasescivns Florida Rock Industries, Inc. v. United States, OF SA, 28 OFF cates dataenenrcsicinteasoieons K & K Construction, Inc., J.F.K. Company, and Resorts and Company v. Department of Natural Resources, 217 Mich. App. 56, S51 Ni W2d 413 (1995) ooo cco coseccscsersonseess K & K Construction, Inc., and J.F_K. Investment Company, LLC v. Department of Environmental Quality, 267 Mich. App. 523, FOS NW 26 365 (2005S) cccsecvsscsrsvecssases |, aw tte Bhs Fas 14, 20, 21, 24 PAGE K & K Construction, Inc., J.F.K. Company, Resorts and Company v. Michigan Department of Natural Resources, 454 Mich. 903, Be 1G Oe ae Fe CET i wsiencdsinetvcctiticatcctlnaseciencaiinatia 2 K & K Construction, Inc., J.F.K. Company, and Resorts and Company v. Department of Natural Resources, 456 Mich. 570, FE Ae EE CAE hist daleisiceasbseannddtiaiaaa 2 K & K Construction, Inc., and J.F_K. Investment Company, L.L.C. v. Department of Environmental Quality, 475 Mich. 856, 713 N.W.2d 268 (2006)................... 1, 3, 4, 5, 12, 20 K & K Construction, Inc., and JFK. Investment Company, L.L.C. v. Department of Environmental Quality, 477 Mich. 919, FE TOW Ae FPR CROOOD cvscseessssverencersnnsecanin 43. 82 K & K Construction Inc., et al. v. Michigan Department of Natural Resources, et al., 525 U.S. 1034, 119 S.Ct. 577, Aes ee PE OU ica scincecsassascerscnerervinnnienieied K & K Construction, Inc., et al. .v. Michigan Department of Natural Resources, et al., 525 U.S. 819, 119 S.Ct. 60, BAe Sante OF Cr OI tesencsssccctsteceneonnscbicncenapeiens 3, 10 Lingle v. Chevron, 544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005)................. 13, 15, 16, 19, 28 Loretto v. Teleprompter Manhattan CATV Corporation, 458 U.S. 419, 102 S.Ct. 3164, Fe Te de HE CED wihcenanecsnictdccctniceeereniniciebunts 14 Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992)..................000- 13, 15, 16, 18 Palazzolo v. Rhode Island, 533 U.S. 606, 121 S.Ct. 2448, Se Gi Fe CE ih cerrccasscetnhicoicnincaiinn 27, 28 Penn Central Transportation Company v. New York City, 438 U.S. 104, 98 S.Ct. 2646, $7 L.BG.20 G31 (1GTB) in. .20ccceceseceses i, 10, 11, 14-20, 22, 26-29 Pennsylvania v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 7g ro gk ss 5 PR eeoren 19, 24, 25 Vil STATUTES SEUSS A. Bet. CNicvinicowinsiee 5. ete Foe We USE y | Pe mmmeuelerancemermlre wun rtees her ait 22 os Te | iy, SARs mA EN bee Fue 6 St S| Es | a emt Sd CRE Spm oo LIES, 26 OTA SIA POI cient ee 6 DCN, BO DOIG si issesisiinscnnalica aac cee 22, 26, 27 OTHER AUTHORITIES U.S. Constitution, ot TEIN SORE TON Pees oR 6, 8, 10, 12, 14, 17, 22, 24, 26, 27 Fried, Modern Liberty And The Limits of Government (New York: W.W. Norton & Company, 2007) ................. 25 Vill PETITION FOR WRIT OF CERTIORARI On Petition for Writ of Certiorari to the United States Supreme Court, K & K Construction, Inc., J.F.K. Company and Resorts And Company (“Plaintiffs”) pray that a Writ of Certiorari be issued to review the decision entered by the Michigan Court of Appeals and the Denial of Discretionary Review by the Michigan Supreme Court. K & K Construction, Inc., and J.F_K. Investment Company, L.L.C. v. Department of Environmental Quality, 475 Mich. 856, 713 N.W.2d 268 (May 17, 2006), K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 477 Mich. 919, 722 N.W.2d 794 (October 31, 2006) and K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 267 Mich. App. 523, 705 N.W.2d 365 (2005) OPINIONS BELOW The Court of Claims’ Opinion and Order dated November 2, 1992 finding a compensable taking. (Court of Claims Opinion and Order, Apx NI—N16). ; The Court of Claims’ Second Opinion and Order dated May 4, 1993 finding a compensable taking. (Court of Claims Opinion and Order, Apx M1-M11). The Court of Claims’ Judgment dated September 8, 1993 of $5,279,178 in favor of Plaintiffs in an amount of $5,279,178. (Court of Claims Opinion and Order, Apx LI- L7). The Michigan Court of Appeals’ Opinion dated June 4, 1996 affirming the Court of Claims’ finding of a compensable taking. (K&K Construction, Inc., J.F.K. Company, and Resorts and Company v. Department of Natural Resources, 217 Mich. App. 56, 551 N.W.2d 413 (1996), Apx K1-K33). The Michigan Supreme Court’s Order granting application for leave to appeal. (K&K Construction, Inc., J.FL.K. Company, Resorts and Company v. Michigan Department of Natural Resources, 454 Mich. 903, 562 N.W.2d 788 (1997), Apx J1-J3). The Michigan Supreme Court’s Opinion dated March 24, 1998 reversing the Michigan Court of Appeals and remanding to the Court of Claims on defined remand issues. (K&K Construction, Inc., J.F.K. Company, and Resorts and Company v. Department of Natural Resources, 456 Mich. 570, 575 N.W.2d 531 (1998), Apx [1-136). This United States Supreme Court’s denial of the Plaintiffs’ Petition for Writ of Certiorarn. (K & K Construction, Inc., et al., v. Michigan Department of Natural Resources et al., 525 U.S. 819, 119 S.Ct. 60, 142 L.Ed.2d 47 (1998), Apx H1-H2). This United States Supreme Court’s denial of the Plaintiffs’ Motion for Rehearing. (K & K Construction, Inc., et al., v. Michigan Department of Natural Resources et al., 525 U.S. 1034, 119 S.Ct. 577, 142 L.Ed.2d 481 (1998), Apx Gl). The Court of Claims’ Opinion and Order dated May 24, 2002 finding a compensable taking after tnal on the remand. (Court of Claims Opinion and Order, Apx F1-F9). The Court of Claims’ Judgment dated September 30, 2002 for the Plaintiffs. (Court of Claims Judgment, Apx E1-E4). The Michigan Court of Appeals’ Opinion dated July 26, 2005 reversing the Court of Claims. (K & K Construction, Inc., and J.F_.K. Investment Company, LLC v. Department of Environmental Quality, 267 Mich. App. 523, 705 N.W.2d 365 (July 26,2005), Apx D1-D63). The Michigan Court of Appeals’ Order Dated September 16, 2005 denying Plaintiffs’ Motion for Rehearing. (Court of Appeals Order, Apx C1). The Michigan Supreme Court’s Order dated May 17, 2006 denying discretionary review. ier ae 3 Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 475 Mich. 856, 713 N.W.2d 268 (May 17, 2006), Apx B1-B2). The Michigan Supreme Court’s Order dated October 31, 2006 denying Plaintiffs’ Motion for Rehearing. (K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 477 Mich. 919, 722 N.W.2d 794 (October 31, 2006), Apx Al-A2). BASIS OF JURISDICTION The Michigan Court of Appeals’ Order reversing the trial Court of Claims’ finding of a compensable taking is dated July 26, 2005. (K & K Construction, Inc., and J.F.K. Investment Company, LLC v. Department of Environmental Quality, 267 Mich. App. 523, 705 N.W.2d 365 (July 26, 2005), Apx D1-D63). The Order of the Michigan Supreme Court denying the Plaintiffs’ Application for Leave is dated May 17, 2006. (K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 475 Mich. 856, 713 N.W.2d 268 (May 17, 2006), Apx B1-B2). The Order of the Michigan Supreme Court denying the Plaintiffs’ Motion for Reconsideration is dated October 31, 2006. (K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 477 Mich. 919, 722 N.W.2d 794 (October 31, 2006), Apx Al-A2). The jurisdiction of this Court is invoked under 28 U.S.C. Sec. 1257(a). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Fifth Amendment to the United States Constitution provides: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a “rand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” (United States Constitution Amendment V.) The Goemaere-Anderson Wetland Protection Act, MCL 281.701 et. seq. (MCL 281.701 ect. seq., Apx QI- Q56) was repealed and later reenacted as Part 303 of the Natural Resources and Environmental Protection Act — MCL 324.30301 et. seq.. (“Wetland Protection Act”) (MCL 324.30301 et. seq. , Apx R1-R46). STATEMENT OF THE CASE A. BACKGROUND l. In 1988, the Plaintiffs started a defined development of four contiguous parcels of property in Waterford Township, Oakland County, Michigan. (“Property”) In January of 1988, the DNR wrote an official letter to the Plaintiffs saying there are regulated wetlands within the Property. (Letter, Apx P1-P2). The DNR letter did not define the location of any wetlands. The DNR letter stated the need for a DNR Permit before constructing “anything” anywhere on the Property. The DNR letter referred to a map saying it was approximating the wetlands, but the DNR letter failed to even provide any such map. y 3 On May 9, 1988, Waterford Township issued a Cease-and-Desist Order because it was informed by the DNR that there were wetlands “within the parcel”. (Cease and Desist Order, Apx O11). The Waterford Township letter referred the Plaintiffs to the DNR saying until a DNR Permit is obtained, no work is allowed on the Property. 3. The Plaintiffs, at the request of the DNR and with input of the DNR, submitted engineered plans. The * The Property was made up of four parcels: parcel 1, parcel 2, parcel 3 and parcel 4. DNR summarily denied the plans for development on any of the Property. 4. On December 29, 1988, the Plaintiffs filed suit in the Court of Claims seeking compensation under the Taking Clause of the Fifth Amendment of the United States Constitution and Michigan Constitution. After a full trial, the Court of Claims found a taking of all of parcel | of the Property and awarded Plaintiffs the amount of five million nine hundred forty-one thousand dollars ($5,941,000.00) plus interest, attorney fees and costs under the Michigan Mediation Rule. 5, Defendants then, on their own initiative and without input from the Plaintiffs, requested from the trial Court of Claims an opportunity to “mitigate”. The Defendants now said the Plaintiffs could have limited development on the Property pursuant to the Goga Plan which was an engineered plan submitted by Plaintiffs. The Goga Plan was a compromise and fully engineered development plan submitted by the Plaintiffs but previously flatly denied by the DNR. The Court of Claims then ruled to incorporate the mitigation into the judgment and ruled to reduce the net takings money award by $2,237,000.00 to the Plaintiffs.‘ “NOW, THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED _ that Plaintiffs are awarded judgment in that their property interest have been condemned by the application of the Wetlands Preservation Act and there has been both a complete taking and interim taking entitling Plaintiffs to just compensation accordingly.” (Court of Claims Opinion and Order, Apx L2). 6. After the “reduced” judgment was entered, the Defendants then, on September 27, 1993, filed a blanket appeal on the entire judgment, including an appeal of the mitigation the Defendants sought, obtained and agreed to under the Goga Plan. rf On June 4, 1996, the Michigan Court of Appeals “unanimously” affirmed the Court of Claims’ ‘This is after the Trial Court ruled that the SEV limitation found in the wetland statute, as designed by the Michigan legislature, was an unconstitutional legislative provision unlawfully limiting just compensation. This ruling by the trial court was never upset on any of the appeals, including the appeal to the Michigan Supreme Court. The Trial Courts original net award was $5,941,i181.00. The Final Judgment of the Trial Court, however, was a reduced net award of $3,245,256.00 when the DNR mitigated under the Statute, plus $1,574,522.60 in stipulated interest and $459,400.00 interim takings for a total of $5,279,178.00 was ultimately awarded pursuant to this Trial. 9 Judgment in favor of the Plaintiffs, found that a taking had occurred within the meaning of the Fifth Amendment and found that the Plaintiffs were entitled to just compensation. “Thus, a taking occurred within the meaning of the Fifth Amendment and plaintiffs were entitled to just compensation for the fifty- five acres of land affected by the regulation.” (K&K Construction, Inc., J.F.K. Company, and Resorts and Company v. Department of Natural Resources, 217 Mich. App 56, 58, 551 N.W.2d 413 (1996), Apx K27). | 8. On July 2, 1996, the Defendants appealed to the Michigan Supreme Court and the Michigan Supreme Court reversed and remanded the case back to the Court of Claims with very defined and limited remand instructions for trial. 9. On October 5, 1998, this United States Supreme Court denied the Plaintiffs’ Petition for Writ of Certioran. (K & K Construction, Inc., et al., v. Michigan Department of Natural Resources et al., 525 U.S. 819, 119 S.Ct. 60, 142 L.Ed.2d 47 (1998), Apx H1). 10. On May 24, 2002, the Court of Claims, after another full trial, rendered its Opinion and Order on the binding remand issues. In addressing the first remand issue, the Court of Claims ruled factuaily that parcel three should be included in the denominator parcel. (Court of Claims Opinion and Order, Apx F1-F9). In addressing the second remand issue, the Court of Claims ruled that, after 10 applying the Penn Central Transportation Company v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) “Balancing Test” to the testimony and evidence presented, there is a taking entitling Plaintiffs to just compensation. (Court of Claims Opinion and Order, Apx F1-F8). 11. | On September 30, 2002, the Court of Claims issued a judgment in favor of the Plaintiffs in the amount of $16,486,228.00, which includes substantial statutory interest given the time since filing the Complaint as allowed by Michigan law. (Court of Claims Judgment, Apx EI1-E4). On October 21, 2002, the Defendants appealed to the Michigan Court of Appeals. 12. On July 26, 2005, the Michigan Court of Appeals issued an Opinion which reversed the Judgment for the Plaintiffs and, without any remand or additional trial, entered full Judgment for the Defendants saying there could be no takings at all as a matter of law. (K & K Construction, Inc., and J.F.K. Investment Company, LLC v Department of Environmental Quality, 267 Mich. App. 523, 705 N.W.2d 365 (July 26, 2005), Apx D1-D63). > The Plaintiffs filed a Cross-Appeal from the Judgment entered on September 30, 2002 with regard to the Trial Court using a low and legislatively controlled statutory interest calculation and not an actual investment loss interest based on uncontroverted proofs at trial offered by the Plaintiffs. 1] 13. On August 15, 2005, the Plaintiffs filed a _ Motion for Rehearing to the Michigan Court of Appeals. On September 16, 2005, the Michigan Court of Appeals denied the Plaintiffs’ Motion for Rehearing. (Court of Appeals Order, Apx C1). 14. On May 17, 2006, the Michigan Supreme Court issued an Order denying the Plaintiffs’ Application for Leave to Appeal. (K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 475 Mich. 856, 713 N.W.2d 268 (May 17, 2006), Apx B1-B2). 15. On June 7, 2006, the Plaintiffs timely filed a Motion for Reconsideration with the Michigan Supreme Court on the basis that Michigan by its published opinion would now require the equivalent of a full physical invasion of property before a regulatory taking is actionable and that there could never exist, in reality, a takings claim in the face of a reciprocity of advantage which the Court of Appeals invoked as a legal basis to eliminate 5" Amendment efficacy all together. On October 31, 2006, the Michigan Supreme Court issued an Order denying the Plaintiffs’ Motion for Reconsideration. (K & K Construction, Inc., and J.F.K. Investment Company, L.L.C. v. Department of Environmental Quality, 477 Mich. 919, 722 N.W.2d 794 (October 31, 2006), Apx Al-A2) 16. This serves as the Plaintiffs’ Petition for Writ of Certiorari to this Court. 12 ARGUMENTS SUPPORTING ALLOWANCE OF THE WRIT I. The Michigan Court of Appeals’ Opinion Wholly Contradicts this Court’s Opinion in Penn Central and Its Progeny Including Lingle v. Chevron, 544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d. 876 (2005) Thereby Destroying the Penn Central Balancing Test In Michigan. The Michigan Court of Appeals’ published Opinion flatly contradicts this Court’s Opinion in Penn Central and its progeny including Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) and Lingle v. Chevron,544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). According to this Court, the Penn Central Balancing Test is an ad hoc factual “balance” of three factors: 1.) economic impact of the regulation, 2.) investment backed expectations and 3.) character of government action. Under the Michigan Court of Appeals’ decision, where there is a “widespread” regulation at issue, a regulatory taking in Michigan is now only possible when the economic impact and_ the interference with distinct investment-backed expectations are the “functional equivalent” of a “physical invasion”. Thus, there is no Penn Central Balancing Test in Michigan. This is current precedent in Michigan. “Where, as here, the regulation serves an important public interest and is widespread and ubiquitous, we conclude that, to sustain 13 a regulatory takings claim, a plaintiff must prove that the economic impact and the extent to which the regulation has interfered with distinct investment-backed expectations are the functional equivalent of a physical invasion by the government of the property in question.” (K & K Construction, Inc., and J.F.K. Investment Company, LLC v. Department’ of Environmental Quality, 267 Mich. App. 523, 553; 705 NW2d 365 (July 26, 2005), Apx D17). (Emphasis Added) This Court has always ruled and consistently confirmed that a regulatory taking can be established by the application of the Penn Central Balancing Test. In 2005, this Court ruled that binding precedents first provide two categories of regulatory action that establish a per se taking: a permanent physical invasion and regulations that completely deprive an owner of all economically beneficial use of their property. “Our precedents stake out two categories of regulatory action that generally will be deemed per se _ takings for Fifth Amendment purposes. First, where government requires an owner to suffer a permanent physical invasion of her property-however minor-it must provide just compensation. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982) (state law requiring landlords to permit cable companies to install cable facilities in 14 apartment buildings effected a taking). A second categorical rule applies to regulations that completely deprive an owner of “all economically beneficial us[e]” of her property. Lucas, 505 U.S.., at 1019, 112 S.Ct. 2886 (emphasis in original). We held in Lucas that the government must pay just compensation for such “total ' regulatory, takings,” cxcept to the extent that “background principles of nuisance and property law” independently restrict the owner's intended use of the property. /d., at 1026-1032, 112 S.Ct. 2886.” (Lingle v. Chevron USA Inc., 544 U.S. 528, 125 S.Ct. 2074, 2081 (2005).) (Emphasis Added) Next, and outside of these two “narrow” categories, this Court again confirmed that regulatory takings are also viable by application of the Penn Central Balancing Test. {4} a these two relatively narrow categories (and the special context of land-use exactions discussed below, see infra, at 2085-2087), regulatory takings challenges are governed by the standards set forth in Penn Central Transp. Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978).” (Lingle v. Chevron USA Inc., 544 U.S. 528, 125 S.Ct. 2074, 2081 (2005).) (Emphasis Added) * * . “Today we correct course. We hold that the “substantially advances” formula is not a 15 valid takings test, and indeed conclude that it has no proper place in our takings jurisprudence. In so doing, we reaffirm that a plaintiff seeking to challenge a government regulation as an uncompensated taking of private property may procced under one of the other theories discussed above-by alleging a “physical” taking, a Lucas-type “total regulatory taking,” a Penn Central taking, or a land-use exaction violating the standards set forth in Nollan and Dolan.” (Lingle v. Chevron USA Inc., 544 US. 528, 125 S.Ct. 2074, 2087 (2005).) Here, the case was narrowly and specifically remanded to the Trial Court of Claims by the Michigan Supreme Court to determine the denominator parcel and to then apply this Court’s Penn Central Balancing Test. The Trial Court of Claims conducted a new trial on the remand, weighed the evidence, factually set the denominator parcel and then found a compensable taking based on the totality of the trial record. On appeal, and subject to a clear error standard of review, the Michigan Court of Appeals wholly rejected the Penn Central Balancing Test, the elaborate and largely uncontroverted record adduced, and then substituted its own test and record for a non-categorical regulatory taking. The Michigan Court of Appeals ruled that where there is a “widespread regulation”, a regulatory taking is only possible where the economic impact and interference with investment backed expectations are equivalent to a full 16 physical invasion. This is disquieting and syllogistically flawed because if there is the equivalent of a full physical invasion or a total deprivation of all economically beneficial use, then there is a per se categorical taking under the precedent of this Court and there is no need to apply the Penn Central Balancing Test at all! In effect, the Michigan Court of Appeals has elevated the character of government action prong to a level where Fifth Amendment remedies cease to exist. Pursuant to the Michigan Court of Appeals ruling, if there isn’t a per se categorical taking and the character of government action is the application of a “widespread” regulation, a court is not required to even consider the economic impact of the regulation or the investment backed expectations. These other two prongs of the Penn Central Balancing Test: investment backed expectation and the economic impact of the regulation, are effectively destroyed and rendered impotent legal factors. Through its now published ruling, the Michigan Court of Appeals has rendered the Penn Central Balancing Test non-existent in Michigan under the guise of this new absolute standard and by invoking the legal fiction of reciprocity of advantage when the character of the government action could not remotely provide any rational of logical legal basis for the same. ° ° With the Michigan Court of Appeals’ current ruling, the possibility of recovering for a temporary regulatory taking 17 As stated by this Court, the Penn Central Balancing Test is an “ad hoc factual inquiry” requiring an analysis of the case facts as a whole with particular significance on the economic impact of the regulation, the impact on investment backed expectations and the character of government action. (See: Penn Central Transportation Company v. New York City, 438 U.S. 104, 124; 98 S.Ct. 2646; 57 L.Ed.2d 631 (1978).) However, this Court has made it clear that a landowner does not have to show a complete deprivation to establish a regulatory taking. “FN 8 Justice STEVENS criticizes the "deprivation of all economically beneficial use” rule as "wholly arbitrary," in that "[the] landowner whose property is diminished in value 95% recovers nothing," while the landowner who suffers a complete elimination of value "recovers the land's full value." Post, at 2919. This analysis errs in its assumption that the landowner whose deprivation is one step short of complete is not entitled to compensation. Such an owner might not be able to claim the benefit of our categorical formulation, but, as we have acknowledged time and again, "[t}he economic impact of the regulation on the claimant and ... the extent to which the as provided for in First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 US 304, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987) is similarly destroyed. 18 regulation has interfered with distinct investment-backed expectations" are keenly relevant to takings analysis generally. Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978). “ (Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992).) (Emphasis Added) Since this Court’s ruling over 80 years ago in Pennsylvania v. Mahon, 260 U.S. 393, 43 S.Ct. 159, 67 L.Ed. 322 (1922), not one Justice has ever suggested that the regulatory takings doctrine is limited to physical occupation or a total deprived use. This Court did not rule in Lingle, nor has it ever ruled, that a regulatory taking is only possible where a government action is tantamount to a “physical invasion”. To the contrary, this Court has consistently ruled that when a regulatory taking is not by a physical invasion or a complete deprivation of all economically beneficial use of property, a regulatory taking remains viable after application of the Penn Central Balancing Test. Michigan has now rejected this rule of law. Il. This Court Is Asked To Provide a Resolution to the Unsettled Definition of “Character” of Action Within the Penn Central Balancing Test. When properly applied, the “character” of government action factor is a significant factor in the Penn Central Balancing Test. The Michigan Court of Appeals 19 stopped the balance once it ruled the newly enacted specific application of wetland regulation to Plaintiffs’ Property alone was somehow “widespread”. Aside from violating the Penn Central Balancing Test as directed by the remand, the Michigan Court of Appeals did not at all understand this factor. Since Penn Central, courts have struggled to define this factor. This Court has provided numerous potential definitions for “character” of action. One is the concept of average reciprocity of advantage which focuses on whether a regulation applies broadly across a governed community. Michigan Supreme Court Justice Markman identified the need for resolution as he promoted leave to consider the Michigan Court of Appeals’ application of the “average reciprocity of advantage” factor from Penn Central. “MARKMAN, J., would grant leave to appeal in order to further consider the Court of Appeals application of the “average reciprocity of advantage" factor from Penn Central’ (K & K Construction, Inc., and J.F_K. Investment Company, L.L.C. v. Department of Environmental Quality, 475 Mich. 856, 713 N.W.2d 268 (May 17, 2006), Apx B1-B2). (Emphasis Added) Once Michigan is instructed by this Court on the absolute and binding viability of the Penn Central Balancing Test, this Court should also use this case as a vehicle to further resolve the “character” of action factor under Penn Central. 20 The Michigan Court of Appeals ruled, independent on the factual record, that the character of government action at issue provided an “average reciprocity of advantage” calling the regulation “widespread” and “ubiquitous”. “Wetland regulations are, like zoning regulations, all but ubiquitous.” (K & K Construction, Inc., and J.F.K. Investment Company, LLC v. Department of Environmental Quality, 267 Mich. App. 523, 529; 705 NW2d 365 (July 26, 2005), Apx D6). (Emphasis Added) * * * “Accordingly, we conclude that the character of the government action was a wide-reaching, regulatory action that seeks to protect the rights of the public, and provides an "average reciprocity of advantage," and that this factor weighs heavily against finding that a compensable’ regulatory taking has occurred here.” (K & K Construction, Inc., and J.F.K. Investment Company, LLC v. Department of Environmental Quality, 267 Mich. App. 523, 563, 705 N.W.2d 365 (July 26, 2005), Apx D22). (Emphasis Added) This analysis and holding is flatly wrong. The regulation of wetlands in Michigan is not remotely akin to general zoning restrictions. Zoning restrictions may, if properly enacted, limit and control the uses of property. By doing so, the zoning restriction potentially diminishes the value of the property by use restriction and control. 21 However, any such decrease in value is partially offset by an increase in value which flows from similar restrictions as to use on all properties. These zoning restrictions provide a benefit for the municipality and the property pool within its boundaries as a whole and a common benefit for all the property owners in general. Under Michigan’s Wetland Protection Act, there is_no such reciprocity. The impacted wetiand area restricts the affected landowner from using the property specifically. This loss is borne solely by that individual landowner and there is no offset by any increase in value that flows from similar restrictions on surrounding properties. | Under zoning, the restrictions are developed by planners and boards of revicw. Wetlands develop by nature. In fact, there may be no similarly impacted properties for miles. The cost to the impacted property owner is substantial and is bore alone. There are no comparable reciprocal benefits. The loss imposed by the wetland regulation on the individual landowner is not at all similar or “akin” to local zoning and there is no average reciprocity of advantage. Interestingly, other Federal Courts which have considered regulatory taking claims involving wetlands have found a compensable taking. In Florida Rock Industries, Inc. v. United States, 45 Fed. Cl. 21 (1999), the plaintiff purchased a parcel of property in Florida largely composed of wetlands for the purpose of mining limestone. After the Florida Rock plaintiff purchased the property, the 22 amendments to the Clean Water Act, 33 U.S.C.A. Sec. 1251 (“Clean Water Act”) were signed into law which required the Florida Rock plaintiff to obtain permits to discharge into or dredge wetlands on the Florida Rock property. The Florida Rock plaintiff was denied its permits and brought suit seeking just compensation for a regulatory taking under the Fifth Amendment. The Court of Claims in Florida Rock applied the Penn Central Balancing Test and found a regulatory taking. Specifically, the Court of Claims ruled that the Florida Rock plaintiff had been made the “unwilling custodian” of the wetlands on its property for the benefit of the public at large.’ “Plaintiff has been made the unwilling custodian of the wetlands on its property for the benefit of the public at large, at plaintiff's own risk and expense. Having analyzed the economic impact of the regulation, plaintiff's reasonable, distinct investment-backed expectations, and the character of the governmental action, the court concludes that the denial of plaintiff's section 404 permit application by the Army ’ In looking at whether there is an average reciprocity of advantage, the Court of Claims ruled that a court must assess whether the party has been compensated directly through the regulation itself “Accordingly, when the court assesses economic impact, it must determine whether Florida Rock has been compensated through the regulation itself’ (Florida Rock, 45 Fed. Cl at p. 37.) fl Corps of Engineers effected a compensable partial regulatory taking of plaintiff's 98 acre property.” (Florida Rock, 45 Fed. Cl at p. 43.) As this Court knows, the Clean Water Act provides for the protection of wetlands at the federal level just as the Michigan Wetland Protection Act provides for protection of wetlands at the state level. In fact, the Michigan Court of Appeals admitted to this similarity: ‘Wetland regulations are, like zoning regulations, all but ubiquitous. At the federal level, the Clean Water Act (CWA) provides for the regulation and protection of wetlands, while Michigan's wetland protection act (WPA) ©™ serves the same purpose for this _ state.” mK &@ & Construction, Inc., and J.F.K. Investment Company, LLC v. Department of Environmental Quality, 267 Mich. App. 523, 529, 705 N.W.2d 365 (July 26, 2005), Apx D15). While the Court of Claims in Florida Rock found a regulatory taking when permits were denied under the Clean Water Act, the Michigan Court of Appeals did not find a taking where permits are denied under the Wetland Protection Act. The ruling of the Court of Claims in Florida Rock is in conflict with the Michigan Court of Appeals ruling illustrating the uncertainty of the definition of “character” of action and the concept of average reciprocity of advantage. 24 As this Court knows, the Fifth Amendment guarantees that individuals will not suffer public burdens which should be borne by the public as a whole. Wetland protection benefits the public as a whole. (Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct 1563, 4 L.Ed.2d 1554 (1960).) As Justice Holmes opined in Pennsylvania v Mahon, 260 U.S. 393, 416; 43 S.Ct. 158 (1922), a strong public desire to improve the public condition is not enough to warrant not paying for the change sought. “We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.” (Pennsylvania v Mahon, 260 U.S. 393, 416, 43 S.Ct. 158 (1922).) (Emphasis Added) Here, the Plaintiffs have suffered a uniquely felt multi-million dollar loss which is not offset by benefits flowing from the preservation of other wetlands. The benefits that flow from the Wetland Protection Act benefit the State of Michigan as a whole. The Plaintiffs here will not garner a larger share of these benefits. There is no average reciprocity of advantage demonstrating that the Plaintiffs receive benefits in proportion to their losses. Despite this, the Plaintiffs here are now asked to individually bear a multi-million dollar public burden because Michigan now views wetland regulations as general zoning ordinances. The alleged vision of good 25 garnered from the Wetland Protection Act ignores the good of the oppressed, the Plaintiffs. As Charles Fried wrote in his recent work “Modern Liberty?” “Those who impose on others are often convinced that the good they are after is a good as much for their victims as for themselves, and so they claim that there are no victims at all. . . But running through this history of subjection and enslavement is the claim of some to coerce the service of others, whether for a common good, the good of the oppressor, or some good that is an abstract from both and applicable to all.” (“Fried, Modern Liberty And The Limits of Government (New York: W.W. Norton & Company, 2007), p 18. Regardless of the benefit sought by the regulatory scheme, this violates the foundation of the Fifth Amendment. If a regulation is imposed on a discrete class of owners solely for the benefit of a larger class, there is a potential taking. This should hold true in Michigan and the Penn Central Balancing Test should serve to establish such takings. The Michigan Court of Appeals’ current application of the Michigan Wetland Protection Act is at odds with the Fifth Amendment as well as its own State’s legislative scheme providing for just compensation in the Wetland Protection Act. The drafters of the Michigan Wetland Protection Act expressly contemplated a taking. The Wetland Protection Act states that where a taking is caused by the 26 Act, the individual will be compensated for “lost value” -- MCL 281.721. The Wetland Protection Act was the precursor to the Natural Resources and Environmental Protection Act which provides, at MCL 324.30323, that if a person suffers a taking by way of the wetland regulation scheme in Michigan, then the Court can order that the department or the local unit of government to compensate the property owner for the full amount of the lost value. Now, this statute is abolished by the Michigan Courts. “(3) Lf the court determines that an action of the department or a local unit of government pursuant to this part or an ordinance authorized pursuant to section 30307(4) constitutes a taking of the property of a person, then the court shall order the department or the local unit of government, at the department's or the local unit of government's option, as applicable, to do 1 or more of the following: (a) Compensate the property owner for the full amount of the lost value... .” (MCLA 324.30323) (Emphasis Added) The Wetland Protection Act and NREPA both envision compensation for “lost value” under the wetland protection scheme. To say that the Wetland Protection Act itself weighs against the finding of a taking contradicts its controlling language. The application of the Wetland Protection Act offers a possible resolution to the unsettled definition of 27 “character” of action. The application of the Wetland Protection Act shows that the burdens imposed by the Wetland Protection Act are particular in their affect and, by statutory design, potentially violate the Fifth Amendment. This concept of “generality v. particularity” of regulation is critical to any proper takings analysis. The Plaintiffs suggest to this Court that the “character” of action element of the Penn Central Balancing Test should focus on the generality versus particularity of regulation. As this Court said in Palazzolo v. Rhode Island, 533 U.S. 606, 617, 121 S.Ct. 2448, 150 L.Ed.2d. 798 (2001), it has given some, “but not too specific”, guidance to Courts for analyzing regulatory takings. “Since Mahon, we have given some, but not too specific, guidance to _ courts confronted with deciding whether a particular government action goes too far and effects a regulatory taking.” (Palazzolo v. Rhode Island, 533 U.S. 606, 617, 121 S.Ct. 2448, 150 L.Ed.2d 798 (2001).) Given the Michigan Court of Appeals’ recent published Opinion at issue here, it is clear that more “guidance” is required and this case offers an opportunity to do so. It would make little sense in a condemnation case to suggest that the government is excused from its obligation to pay for a nght of way for a road on the grounds that the road serves an important or “widespread” public need. While the Wetland Protection Act provides a potential benefit to the public as a whole, the Plaintiffs cannot be 28 asked to bear this burden by being the honorary custodians of the State’s wetlands while the Property remains idle and the Plaintiffs continue to pay the taxes." Ill. The Question Presented Is Important. The Michigan Court of Appeals’ published Opinion now allows the State of Michigan and its agencies to tread fully and cavalierly on the rights of its citizens by taking their private property without any chance at all for relief by applying the Penn Central Balancing Test. This directly conflicts with this Court’s rulings including the recent Opinion in Ling/e. IV. The Decision Of The Michigan Court Of Appeals Is Erroneous. The Michigan Court of Appeals’ ruling that a takings analysis is now sharpened to a question of whether there has been a taking tantamount to a physical invasion is clearly erroneous. This Court long ago ruled, and has consistently confirmed, that a physical invasion is not the test for a regulatory taking. If not a taking per se, regulatory takings are assessed through the Penn Central Balancing Test. * Plaintiffs to this day faithfully pay annual heavy State property taxes while the development of the Property remains idle by virtue of the Court of Appeals’ Opinion. D9 This is the law in the United States and it should be made to apply in Michigan. The Michigan Court of Appeals’ ruling demanding evidence of a per se categorical taking tantamount to a “physical invasion” utterly destroys the balancing test. The Michigan Court of Appeals has no power to rewrite the State’s statutes. When enacting these regulatory schemes to address wetland protection, the Michigan legislature contemplated the regulatory scheme could cause a taking. The Michigan Court of Appeals has no business deleting this portion of the statute and ignoring Penn Central in the process. The Michigan Court of Appeals’ published Opinion affects every poiential property developer in Michigan. The Michigan Court of Appeals’ Opinion allows the State and its agencies to take private property without the Penn Central Balancing Test. Michigan is now left without a regulatory taking remedy. Certiorari jurisdiction is warranted to correct this error and clarify the law at issue. CONCLUSION For the reasons stated above, the Petitioners respectfully request that this Court grant the Petition for a Writ of Certiorari. 30 Respectfully submitted, ROBERT L. BUNTING Counsel of Record for Petitioner K&K Construction, Inc., and J.F.K. Investment Company, L.L.C. P.O. Box 7 Oxford, MI 48371 Telephone (248) 628-5150 Robert Charles Davis Co-Counsel for Petitioner K&K Construction, Inc., and J.F.K. Investment Company, L.L.C. 20383 Hall Road, Suite B Macomb, MI 48044 Telephone (586) 263-9500 Facsimile (586) 263-9526 3] APPENDIX MICHIGAN SUPREME COURT: Order Denying Motion for Rehearing, EE iad Sweve an eh onerceunees Order Denying Discretionary Review, PGES INO 8 oir 6 ercCFe Ri sexes pebedes MICHIGAN COURT OF APPEALS: Order Denying Motion for Rehearing, Re WOT EITEE ov vc Kédnens see sOi vevnees Opinion, ee SE Sa Vase ha devas ob avsen nee COURT OF CLAIMS: Judgment, EE ac cnuceendecevacedese burs Opinion and Order, SE nav Sutaceveet) sans ees UNITED STATES SUPREME COURT: Order Denying Plaintiffs’ Motion for Rehearing. SE SE ko idoceoesuee eee nseenenkosees G1 - Gl Order Denying Plaintiffs’ Petition for Writ of Certiorari. CEP bbe cvabunenavaniecewacesedcss H1 - H2 MICHIGAN SUPREME COURT: Opinion, PP Pere errr Perr err eT I] - 136 Order Granting Discretionary Review, NTE vcs es 6 Hed be woe eee ea eeavawer Ji - J3 MICHIGAN COURT OF APPEALS: Opinion, Ree pa etree er ee Ki - K33 COURT OF CLAIMS: Judgment, ED ox rats ceca 0k baer ederené te tes L1-L7 Second Opinion and Order, EE, ls pula ta wwe de cae. b a eo ean M1 -MiI Opinion and Order, SE RAMEE nad eacu ee ane ad ovae easy eneewe NI - N16 CEASE AND DESIST ORDER: Cease and Desist Order dated 05/09/88 ......... O1-Ol LETTERS: DNR Letter BN DUPE OP 0 00s a cet oa edd encsdsddecckann Pl - P2 STATUTES: oe ae tS Se nara rt Q1 - Q56 Ps ST ONeE Oh OOM, icc cccevwnassvenvess R1 - R46 477, Mich. 919, 722 N.W.2d 794 Bniefs and Other Related Documents Supreme Court of Michigan. K & K CONSTRUCTION, INC., and J.F.K. Investment Company, L.L.C., Plaintiffs-Appellants, v. | DEPARTMENT OF ENVIRONMENTAL QUALITY, Defendant-Appellee. Docket No. 129761. COA No. 244455 Oct. 31, 2006. On order of the Court, the motion for reconsideration of this Court’s May 17, 2006 order is considered, and it is DENIED, because id does not appear that the order was entered erroneously. TAYLOR, C.J., not participating. MARKMAN, J., would grant reconsideration and, on reconsideration, would grant leave to appeal for the reason set forth in K & K Construction, Inc. v. Dept of Environmental Quality, 475 Mich. 856, 713 N.W. 2d 268 (2006). Mich., 2006 K & K Const., Inc. v. Department of Environmental Quality 477 Mich. 919, 722 N.W.2d 794 A-] Briefs and Other Related Documents (Back to top) e 129761 (Docket) (Oct. 21, 2002) END OF DOCUMENT (C) 2006 Thompson/West. No. Claim to Orig. U.S. Govt. Works. A-2 475 Mich. 856, 713 N.W.2d 268 Briefs and Other Related Documents Supreme Court of Michigan. K & K CONSTRUCTION, INC., and _, J.F.K. Investment Company, L.L.C., Plaintiffs-Appellants, v. DEPARTMENT OF ENVIRONMENTAL QUALITY, Defendant-Appellee. Docket No. 129761. COA No. 244455. May 17, 2006. Prior report: 267 Mich.App. 523.705 N.W.2d 365. *269 Order On order of the Court, the application for leave to appeal the July 26, 2005 judgment of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the questions presented should be revicwed by this Court. TAYLOR, C.J., not participating. MARILYN J. KELLY, J., would grant leave to appeal. MARKMAN, J., would grant leave to appeal in order to further consider the Court of Appeals application of the “average reciprocity of advantage” factor from Penn B-1 Central Transportation Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). Mich., 2006. K & K Const., Inc. v. Department of Environmental Quality 475 Mich. 856, 713 N.W.2d 268 Briefs and Other Related Documents (Back to top) 129761 (Docket) (Oct. 21, 2002) B-2 COURT OF APPEALS, STATE OF MICHIGAN ORDER Brian K. Zahra Presiding Judge Henry William Saad Bill Schuette Judges K&K Construction Inc v Dept of Environmental Quality Docket No. 244455 LC No. 88-012120 CM The Court orders that the motion for reconsideration is DENIED. /s/ Brian K. Zahra Presiding Judge A true copy entered and certified by Sandra Schultz Mengel, Chicf Clerk, on Sep. 16, 2005 /s/ Sandra Shultz Mengel Chief Clerk C-1 267 Mich.App. 523, 705 N.W.2d 365 Court of Appeals of Michigan. K & K CONSTRUCTION, INC., and J.F.K. Investment Company, LLC, Plaintiffs-Appellees, Vv DEPARTMENT OF ENVIRONMENTAL QUALITY, Defendant-Appellant. Docket No. 244455. Submitted April 20, 2005, at Lansing. Decided July 26, 2005, at 9:25 a.m. Released for Publication Oct. 26, 2005. Background: Land developers whose application for permit to fill wetlands was denied sought compensation for regulatory taking. The Court of Claims judgment finding a compensable taking was affirmed by the Court of Appeals, 217 Mich.App. 56, 551 N.W.2d 413. The Supreme Court, 456 Mich. 570, 575 N.W.2d 531, reversed and remanded. On remand, the Court of Claims, William E. Collette, J., again found that a taking had occurred. Department of Environmental Quality (DEQ) appealed. Holding: The Court of Appeals, Saad, J., held that wetland regulations which led to denial by the DEQ of developers’ application for permit to fill wetlands did not effect a compensable regulatory taking of developers' property. Reversed. D-] West Headnotes [1] Eminent Domain 148 > 2.10(1) 148 Eminent Domain 1481 Nature, Extent, and Delegation of Power 148k2 What Constitutes a Taking; Police and Other Powers Distinguished 148k2.10 Zoning, Planning, or Land Use; Building Codes 148k2.10(1) k. In General. Most Cited Cases No compensable regulatory taking occurs where (1) a land use regulation is comprehensive and universal so that the private property owner is relatively equally benefited and burdened by the challenged regulation as other similarly situated property owners, (2) the owner purchased with knowledge of the regulatory scheme so that it is fair to conclude that the cost to the owner factored in the effect of the regulations on the return on investment, and (3) despite the regulation, the owner can make valuable use of his or her land. U.S.C.A. Const.Amend. 5. [2] Eminent Domain 148 > 262(1) 148 Eminent Domain 148III Proceedings to Take Property and Assess Compensation 148k250 Appeal 148k262 Review D-2 148k262(1) k. In General. Most Cited Cases Whether the government has effected a taking of one's property is a constitutional issue which the Court of Appeals reviews de novo. [3] Appeal and Error 30 > 1197 30 Appeal and Error 30XVII Determination and Disposition of Cause 30XVII(F) Mandate and Proceedings in Lower Court 30k1196 Powers and Duties of Lower Court 30k1197 k. Jurisdiction of Lower Court After Remand. Most Cited Cases Power of the lower court on remand is to take such action as law and justice may require so long as it is not inconsistent with the judgment of the appellate court. [4] Appeal and Error 30 > 1196.1 30 Appeal and Error 30X VII Detcrmination and Disposition of Cause 30XVII(F) Mandate and Proceedings in Lower Court 30k1196 Powers and Duties of Lower Court 30k1196.1 k. In General. Most Cited Cases Appeal and Error 30 2 1198 30 Appeal and Error 30X VII Determination and Disposition of Cause 30XVII(F) Mandate and Proceedings in Lower Court D-3 30k1196 Powers and Duties of Lower Court 30k1198 k. Compliance with Mandate or Directions. Most Cited Cases When an appellate court remands a case without instructions, lower court has the same power as if it made the ruling itself; however, when an appellate court gives clear instructions in its remand order, it is improper for a lower court to exceed the scope of the order. {5] Administrative Law and _ Procedure’ I5A Cr 09 15A Administrative Law and Procedure ISAV Judicial Review of Administrative Decisions LSAV(F) Determination 15Ak820 k. Further Administrative Proceedings. Most Cited Cases Appeal and Error 30 2 1198 30 Appeal and Error 30XVII Determination and Disposition of Cause 30XVII(F) Mandate and Proceedings in Lower Court 30k1196 Powers and Duties of Lower Court 30k1198 k. Compliance with Mandate or Directions. Most Cited Cases It is the duty of the lower court or tribunal, on remand, to comply strictly with the mandate of the appellate court. D-4 [6] Eminent Domain 148 > 2.27(2) 148 Eminent Domain 1481 Nature, Extent, and Delegation of Power 148k2 What Constitutes a Taking: Police and Other Powers Distinguished 148k2.27 Environmental Protection 148k2.27(2) k. Wetlands and Coastal Protection. Most Cited Cases Wetland regulations which led to denial by the Department of Environmental Quality (DEQ) of developers’ application for permit to fill wetlands did not effect a compensable regulatory taking of developers' property; though diminution of value was significant, the relevant tract retained substantial value and usefulness, the investment- backed expectations of the applicants, both experienced commercial land developers, had to take into account the extant regulations at time property was acquired, and the wetland regulations were comprehensive and universal throughout the state and did not single out the subject property to bear the burden of a public benefit. U.S.C.A. Const.Amend. 5; M.C.L.A. Const. Art. 10, § 2; M.C.L.A. § 324.30301 et seq. [7] Eminent Domain 148 3 2.1 148 Eminent Domain 1481 Nature, Extent, and Delegation of Power D-5 148k2 What Constitutes a Taking; Police and Other Powers Distinguished 148k2.1 k. In General. Most Cited Cases Governmental regulation that deprives a landowner of all economically beneficial use of his or her property is a categorical taking that requires compensation. U.S.C.A. Const.Amend. 5. [8] Eminent Domain 148 3 2.1 148 Eminent Domain 1481 Nature, Extent, and Delegation of Power 148k2 What Constitutes a Taking; Police and Other Powers Distinguished 148k2.1 k. In General. Most Cited Cases Reduction in the value of the regulated property is insufficient, standing alone, to establish a compensable regulatory taking. U.S.C.A. Const.Amend. 5. [9] Eminent Domain 148 — 2.1 148 Eminent Domain 1481 Nature, Extent, and Delegation of Power 148k2 What Constitutes a Taking; Police and Other Powers Distinguished 148k2.1 k. In General. Most Cited Cases In determining whether compensable regulatory taking has occurred, court must examine the extent to which the D-6 regulation has interfered with the property owncr's reasonable investment-backed expectations, with respect to which owner's notice of the applicable regulatory regime is a key factor. U.S.C.A. Const.Amend. 5. [10] Eminent Domain 148 > 2.1 148 Eminent Domain 148] Nature, Extent, and Delegation of Power 148k2 What Constitutes a Taking; Police and Other Powers Distinguished 148k2.1 k. In General. Most Cited Cases A “taking” may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good. U.S.C.A. Const.Amend. 5. [11] Eminent Domain 148 3 yp 148 Eminent Domain 1481 Nature, Extent, and Delegation of Power 148k2 What Constitutes a Taking; Police and Other Powers Distinguished 148k2.1 k. In General. Mosi Cited Cases In looking at character of government action to determine whether compensable regulatory taking has occurred, relevant inquines are whether the governmental regulation D-7 singles plaintiffs out to bear the burden for the public good and whether the regulatory act being challenged here is a comprehensive, broadly based regulatory scheme that burdens and benefits all citizens relatively equally. U.S.C.A. Const.Amend. 5. [12] Courts 106 eC 95(1) 106 Courts 106II Establishment, Organization, and Procedure 106II(G) Rules of Decision 106k88 Previous Decisions as Controlling or as Precedents 106k95 Decisions of Courts of Other State 106k95(1) k. In General. Most Cited Cases In assessing whether compensable regulatory taking has occurred, Court of Appeals is not bound by the decisions of the courts of other states, though it may look to those regulatory taking decisions as persuasive authority. **366 Robert L. Bunting, Oxford, Robert Charles Davis, Sterling Heights, and Richard L. Hoffman, Lake Orion, for the plaintiffs. Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and S. Peter Manning, Assistant Attorney General, for the defendant. Before: ZAHRA, P.J., and SAAD and SCHUETTE, JJ. D-8 SAAD, J. *526 The trial court entered judgment in favor of plaintiffs against defendant. Defendant appeals the judgment, and we reverse and enter judgment in favor of defendant. **367 I. NATURE OF THE CASE When a citizen claims that a governmental land-use regulation, or its regulatory implementation, adversely affects the value of his or her property, and seeks just compensation under the Taking Clause of the Fifth FNI our courts must decide whether the Amendment, challenged governmental action, and its consequent effect on private property, constitutes a “regulatory taking” under federal and state taking jurisprudence. FN1. U.S. Const., Am. V; see also Const. 1963, art. 10, § 2. More specifically, when, as here, the government regulates land use-as opposed to taking physical possession of land EN2and where, as here, the challenged *527 regulation is stipulated to be for the public good, our limited role is to answer the specific constitutional question: where implementation of a valid land use regulation ™ negatively impacts a private citizen's valuable property rights, does the Taking Clause require *528 compensation? To answer this question, our Supreme Court has instructed D-9 us to examine the United States Supreme Court's seminal decision in Penn Central Transportation Co. v. New_York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978).™ FN2. As the United States Supreme Court explained: The clearest sort of taking occurs when the government encroaches upon or occupies private land for its own proposed use. Our cases establish that even a minimal “permanent physical occupation of real property” requires compensation under the Clause. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 427, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). In Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922), the Court recognized that there will be instances when government actions do not encroach upon or occupy the property yet still affect and limit its use to such an extent that a taking occurs. In Justice Holmes' well- known, if tess than _ self-defining, formulation, “while property may be regulated to a certain extent, if a regulation goes too far it will be recognized as a taking,” Id a 415. 43 S.Ct. 158. {Palazzolo v. Rhode Island, 533 U.S. 606, 617, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001).] FN3. Land-use regulations, such as zoning, are necessary to protect private property D-10 nghts and values. Zoning regulations can be used to prevent, for example, a mining operation or a factory from being built within a residential neighborhood. See, e.g., Euclid v. Ambler Realty Co., 272 U.S. 365, 385-389, 47 S.Ct. 114, 71 L.Ed. 303 (1926). Such a zoning regulation creates what Justice Holmes termed “an average reciprocity of advantage,” Mahon, supra _at 415, 43 S.Ct. 158, which both burdens and benefits landowners relatively equally. Such regulations are not considered takings, and thus do not require compensation, in part because, as Justice Holmes. stated, “{glovernment hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.” Jd. at 413, 43 S.Ct. 158. On the other hand, “if regulation goes too far it will be recognized as a taking.” Jd. at 415, 43 S.Ct. 158. When the effect of a regulation goes as far as to deprive a property owner of ail economically beneficial value of his or her land, it results in a “categorical taking.” See, e.g., Palazzolo, supra at 615-616, 121 S.Ct. 2448, citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992); see also Mahon, supra at 413-416, 43 S.Ct. 158 (regulation forbade coal mining on land for which the plaintiff was the holder of mineral rights, thus destroying the plaintiff's entire interest in the land); see also Tahoe-Sierra Preservation Council, Inc. _v._ _ Tahoe D-11 Regional Planning Agency, 535 U.S. 302, 324, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002) (“Land-use regulations are ubiquitous and most of them impact property valucs in some tangential way- often in completely unanticipated ways. Treating them all as per se takings could transform government regulation into a luxury few governments could afford.”). FN4. See K_& K Constr., Inc. v. Dep't of Natural Resources, 456 Mich. 570, 587-588, 575 N.W.2d 531 (1998). Indeed, as we will discuss further below, our Supreme Court so instructed the trial court. However, the trial court, while acknowledging the Penn Central test and our Supreme Court's mandate, failed to actually apply the Penn Central factors during the trial after remand. **368 The United States Supreme Court in Penn Central laid out a three-factor test for courts to apply to answer this important constitutional question: [1] The economic impact of the regulation on the claimant and, particularly, {2] the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations. So, too, is [3] the character of the governmental action. A “taking” may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to D-12 promote the common good. [J/d. at 124, 98 S.Ct. 2646 (citations omitted). | The taking jurisprudence articulated by the United States Supreme Court in Penn Central and its progeny oS requires that our courts consider the following factors in deciding whether a “regulatory taking” claim is compensable: (1) what is the average reciprocity of advantage, in other words, is the aggrieved property owner singled out to pay for the public good, or is the land-use regulation so universal and ubiquitous that the benefits and burdens of the land-use regulation fall relatively equally among all, including the complaining *529 party; (2) what use could the landowner reasonably expect to make of the land given the state of the land-use regulations at the time of acquisition (as part of this inquiry, it is necessary to take into account whether the landowner knew, or should have known, of the land-use regulation at the time of purchase); and (3) did the specific, challenged application of the land- use regulation leave the property owner valuable land use rights or did it instead render the land virtually worthless? FNS. See, e.g., Tahoe-Sierra, supra; Palazzolo, supra; Lucas, supra. [1] Stated another way, if the land-use regulation, like traditional zoning and wetland regulations: (1) is comprehensive and universal so that the private property owner is relatively equally benefited and burdened by the D-13 challenged regulation as other similarly situated property owners, and (2) if the owner purchased with knowledge of the regulatory scheme so that it is fair to conclude that the cost to the owner factored in the effect of the regulations on the return on investment, and (3) if, despite the regulation, the owner can make valuable use of his or her land, then compensation is not required under Penn Central. Here, plaintiffs claim that the denial by the Department of Environmental Quality (DEQ) of a permit to fill in the wetland on their property constitutes a regulatory taking. Wetland regulations are, like zoning regulations, all but ubiquitous. At the federal level, the Clean Water Act (CWA) FN provides for the regulation and protection of wetlands, while Michigan's wetland protection act (WPA) EN’ serves the same purpose for this state. Our Legislature made clear that it enacted the WPA to benefit all the people of this state. The act provides that “[t]he legislature finds that ... [wJetland *530 conservation is a matter of state concern since a wetland of 1 county may be affected by acts on a river, lake, stream, or **369 wetland of other counties.” M.C.L. § 324.30302(1 (a ENS FN6. 33 U.S.C. § 1251, et seq. FN7. M.C.L. § 324.30301 et seq. D-14 FN8. The statute provides that the Legislature further found that: (b) A loss of a wetland may deprive the people of the state of some or all of the following benefits to be derived from the wetland: (i) Flood and storm control by the hydrologic absorption and storage capacity of the wetland. (ii) Wildlife habitat by providing breeding, nesting, and feeding grounds and cover for many forms of _ wildlife, waterfowl, including migratory waterfowl, and rare, ' threatened, or endangered wildlife species. (111) Protection of subsurface water resources and provision of valuable watersheds and recharging ground water supplies. (iv) Pollution treatment by serving as a biological and chemical oxidation basin. (v) Erosion control by serving as a sedimentation area and filtering — basin, absorbing silt and organic matter. (vi) Sources of nutnents in water food cycles and nursery grounds and sanctuaries for fish. (c) Wetlands are valuable as an agricultural resource for the production of food and D-15 fiber, including certain crops which may only be grown on sites developed from wetland. [M.C.L. § _324.30302(1)(b)- (1)(c).] Clearly, all people, including property owners, are the intended beneficiaries of the regulation of wetlands. Like zoning regulations, wetland regulations place a burden on some property owners, but this burden ultimately benef** all property owners, including those who claim they are unfairly burdened. As we will discuss in detail later, we reject plaintiff's claim because (1) wetland regulations are, much like *531 zoning regulations, comprehensive, universal, and ubiquitous, and provide an “average reciprocity of advantage” for all property owners, including plaintiffs; (2) plaintiffs have developed and retain the ability to develop a significant amount of their property, and thus plaintiffs' property retains a significant value even after the permit denial; and (3) plaintiffs are experienced commercial land developers who clearly had or were on notice of the wetland regulations promulgated under the WPA, and, therefore, plaintiffs’ distinct, investment-backed expectations would reasonably have been tempered with the knowledge that their development of the property would be restricted because of the presence of wetlands. ll. FACTS AND PROCEDURAL HISTORY A. Procedural History This case was originally filed in the Court of Claims on December 29, 1988. Plaintiffs, K & K Construction, Inc., the J.F.K. Company, and Resorts and Company, alleged that defendant, then the Michigan Department of Natural Resources (DNR) (currently the Department of Environmental Quality),)™? had effected a regulatory taking of plaintiffs' property when it designated part of that property as wetland and denied a permit to fill in the wetland and build on the property. Following a nonjury trial, the trial court entered judgment in favor of plaintiffs. The tral court found that the DEQ's failure to issue the requested permit constituted a categorical taking of plaintiffs’ property. FN9. For the sake of consistency, though the Department of Environmental Quality was known as the Department of Natural Resources at the outset of this case, we will refer to defendant as “DEQ” throughout our opinion. *532 The DEQ appealed to this Court, which, as it turns out, erroneously affirmed the trial court's judgment. K & K Constr., Inc. v. Dep't of Natural Resources, 217 Mich.App. 56, 551 N.W.2d 413 (1996) (K & **370 K), rev'd 456 Mich. 570, 575 N.W.2d 531 (1998). The DEQ then D-17 appealed to our Supreme Court, which reversed this Court's - @ecision and the trial court's judgment. K_& K Constr., Inc. v. Dep't of Natural Resources, 456 Mich. 570, 575 N.W.2d 531 (1998) (K & K IJ). Our Supreme Court held that (1) the trial court erred when it considered only the parcel of land that contained wetland (parcel one) and did not include two other contiguous parcels of land owned by plaintiffs (parcels two and four) and (2) plaintiffs were not deprived of all economic use of the land and thus there was no “categorical taking.” Jd. at 586, 575 N.W.2d 531. Further, our Supreme Court remanded to the trial court with instructions (1) to include the value of the two other parcels, (2) to make a finding of fact regarding whether a third parcel (parcel three) should be included in the value, and (3) to apply the balancing test articulated by the United States Supreme Court in Penn Central to determine whether plaintiffs proved their regulatory taking claim. K & K Il at 588, 575 N.W.2d 531. On remand, plaintiffs LEK. Company and Resorts and Company were succeeded by J.F.K. Investment Co., LLC (JFK). The parties stipulated that parcel four was not to be included in the trial court's determination, and the trial court held that parcel three would be included with parcels one and two when it determined whether a takir 1ad occurred because of the wetland regulation. The trial court then held that under Penn Central, a taking had occurred and entered judgment in favor of plaintiffs. D-18 The DEQ once again has appealed to this Court, and plaintiffs have cross-appealed. *533 B. Factual History 1. Overview This case involves four contiguous parceis of land with a total area of approximately eighty-two acres in Waterford Township in Oakland County (parcels one through four). In 1988, a partnership was formed between J.F.K. Company and Resorts and Company, with each holding a fifty percent interest, for the purpose of developing the land FNIO in issue. At some point, plaintiff J.F.K. Investment Company, LLC, replaced J.F.K. Company and Resorts and Company as a successor in interest. Plaintiff K & K Construction is a Michigan corporation in which Kosik owns fifty percent of the shares of stock.““U FN10. Joseph Kosik, Sr. (Kosik), and his wife Elaine acquired the land, which was originally farmland, in 1976. A series of often confusing real estate transactions ensued, as well as reorganizations of various business entities. The Kosiks quitclaimed the land in 1977 to Kosik and Leon Blachura as individual guarantors, and to Waterford Mall, a partnership consisting of the J.F.K. Company, a Michigan limited partnership consisting of their five sons; Alpine Valley D-19 Ski Area, Inc., a Michigan corporation; Alpine Valley Resort, Inc., a Wisconsin corporation; and the North Oakland Development Corporation. In 1983, Kosik; Alpine Valley Ski Area, Inc.; and Alpine Valley Resorts, Inc., conveyed their interests in the land to J.F.K. Company. In the meantime, litigation, through which the Kosiks and J.F.K. Company sought to quiet title to the land in their favor because of the North Oakland Development Corporation's default on its obligations, was resolved in 1986 with a circuit court warranty deed conveying the entire interest in the land to the Kosiks and J.F.K. Company. Because of the Kosiks' and Alpine Valley's conveyances, J.F.K. Investment Company ultimately held title to the land. FN11. While K & K Construction, Inc., does not own any interest in the land, it was under contract to develop a part of it. It appears that to date there is no dispute with respect to whether K & K is a proper party to this case. Yet, both K & K J, and K & K II, acknowledge that K & K Construction has no ownership interest in the land, and for reasons that remain unclear, K & K was permitted to continue as a party to this suit. **371 *534 Parcel one is zoned for commercial use, consists of approximately fifty-five acres, and approximately twenty-seven of those acres are wetland. Parcel two consists of sixtcen acres directly south of parcel D-20 one and has a small area of wetland. Parcel three is 9.34 acres of land directly south of parcel two, with no wetland. Parcel four is 3.4 acres of land bordering the south side of parcel one and the east side of parcel two, and it has no wetland. Parcels two, three, and four are zoned for multiple-family housing. The parcels are bounded by Highland Road (M-59) on the north, North Oakland Drive on the east, Hospital Road on the west, and Pontiac Lake Road on the south. Plaintiffs began work on a “C.J. Barrymore's Restaurant” in 1988, which was to occupy forty-two acres on parcel one and to consist of a restaurant and a sports complex, including a baseball diamond. Waterford Township issued plaintiffs a cease-and-desist letter that stated that part of parcel one contained wetland and that plaintiffs would need to get a permit from the DEQ. Plaintiffs then filed a permit application with the DEQ dated May 28, 1988, which was received by the DEQ on June 21, 1988. On June 7, 1988, plaintiffs filed an “administrative complaint” with the DEQ and sought a ruling from the department that would remove a “designation of wetland” from plaintiffs’ property. Waterford Township sent a letter to plaintiffs informing them that their permit for lowland filling would be denied pending the outcome of the DEQ permit process. In November 1988, the DEQ issued a letter that denied plaintiffs’ permit application"™’ Plaintiffs. filed this action*535 in December 1988.'™ D-21 FN12. The letter stated, among other things, that the proposed development was “not wetland dependent,” that plaintiffs had “alternatives available in the avoidance of the wetland,” and that there had been no public need for the development demonstrated. The letter went on to note that DEQ representatives saw “drainage ditches present[,] which cut through the wetland area, as well as large amounts of sand fill deposited over much of the site,” and ordered plaintiffs to cease and desist from any further excavation of ditches and placement of sand fill in the wetland area. FN13. Though we need not comment on plaintiffs’ failure to seek administrative relicf, we note that the Legislature provided for an extensive administrative appeal process and for judicial review of the administrative appeal. See M.C.L. § 324.30307. In May 1990, plaintiffs filed another application for a permit, under what is called the “Goga Plan.” ™'* The Goga Plan would have allowed plaintiffs to fill three acres of wetland, convert five acres of “upland” property to wetland, and develop the upland ring around the wetland. This permit application was also denied. At some point, both an office building for J.PF.K. Investment Company and D-22 a Ram's Horn Restaurant were built on upland portions of parcel one./'S FN14. This alternative plan for development was apparently named for an engineer who devised the plan for plaintiffs. We will hereafter refer to this permit as the “Goga permit.” FN15. Though pursuant to our Supreme Court's holding in K & K Il, we are to consider the entire denominator parcel, which consists of parcels one, two, and three, we find it necessary at times to refer to the constituent parcels individually. Nevertheless, our ultimate analysis under Penn Central is applied, as our Supreme Court has mandated, to the denominator parcel as a whole. This matter was originally tried in December 1991, and the only issue before the trial court was whether the permit denials constituted a taking of plaintiffs' property. The trial court held that only parcel one **372 was relevant to its analysis of whether a taking had occurred and concluded that the permit denials had rendered the parcel, which was worth approximately $6 million before the permit denial, completely worthless after the denial. Having found a categorical taking, the trial court ordered the DEQ to compensate plairtiffs for this $6 million loss in value. D-23 *536 After the trial court's ruling, the DEQ opted to mitigate the loss under M.C.L. § 324.30323, which requires a trial court to give the DEQ the option, once a taking has been found, to mitigate its damages by doing one of the following: compensate the property owner for the lost value, purchase the property, or “/m/odify its action or inaction with respect to the property so as to minimize the detrimental affect [sic] to the property's value” (emphasis added).™© The DEQ chose to reverse its previous decision and issue the Goga permit. The trial court entered judgment in favor of plaintiffs against the DEQ for a “temporary taking” “” of the land that was *537 subsequently allowed to be developed under the Goga Plan for the full value of the wetland on parcel one. The judgment was for approximately $450,000 plus interest for the alleged temporary taking, and approximately $3.25 million plus interest for the alleged wetland taking. At the original tnal, the trial court took into account the mitigating effect of the DEQ's issuance of the Goga permit when it calculated the amount of the judgment. FN16. M.C.L. § 324.30323(3) provides: If the court determines that an action of the department or a local unit of government pursuant to this part or an ordinance authorized pursuant to section 30307(4) constitutes a taking of the property of a person, then the court shall order the department or the local unit of government, at the department's or the local unit of D-24 government's option, as applicable, to do 1 or more of the following: (a) Compensate the property owner for the full amount of the lost value. (b) Purchase the property in the public interest as determined before its value was affected by this part or the local ordinance authorized under section 30307(4) or the action or inaction of the department pursuant to this part or the local unit of government pursuant to its ordinance. (c) Modify its action or inaction with respect to the property so as -to minimize the detrimental affect [sic] to the property's value. FN17. We note that the United States Supreme Court rejected a “temporary taking” claim in 7ahoe-Sierra, supra at 330- 335, 122 S.Ct. 1465. The Court reasoned that requiring a governmental agency to compensate a property owner for the loss of value while considering applications for permits and variances under a_ land-use regulatory scheme would either become cost-prohibitive or lead to governmental agencies making hasty, presumably haphazard, decisions. Jd. at_ 334-335, 122 S.Ct. 1465. D-25 The DEQ appealed the trial court's ruling to this Court. Another panel of this Court affirmed the trial court's judgment and agreed with the trial court that plaintiffs had been denied all economically beneficial use of their land, which resulted in a categorical taking. Our Supreme Court reversed, and reasoned (1) that the trial court erred in only considering parcel one and in not including parcels two and four in its valuation of plaintiffs’ property, ENIS and (2) in considering parcels one, two, and four, “it is clear that there was not a categorical taking...” “™!? The Court then remanded to the trial court, and instructed it to calculate the total value of the property using parcels one, two, and four, and to make a finding regarding whether parcel three should be considered part of the “denominator parcel.” Additionally, the **373 Court held that, while the record was not clear regarding whether the trial court had failed to include the value of the two developed portions of parcel one in its valuation, there was no'reason for the trial court not to do so. The Court then held that, once the trial court determined whether parcel three should also be included, and the total value including all relevant parcels (either parcels one, two, and four, or all four parcels) was calculated, the trial court was to apply the *538 three-part balancing test from Penn Central to determine whether the DEQ's administrative decision had constituted a regulatory taking." ~— After _plaintiffs' unsuccessful petition for certiorari in the United States Supreme Court, the case returned to the trial court. ~S”! property. estate appraiser. FN18. K & K II, supra at 578-582, 575 N.W.2d 531. FN19. Jd. at 586, 575 N.W.2d 531. FN20. After remand, at the second trial, the parties stipulated that parcel four would not be considered in the trial court's determination of the value of plaintiffs’ property, because that parcel was purchased after the denial of the permits. FN21. Plaintiffs assert that throughout the pendency of this litigation, their attempts to develop or sell parcel one have been thwarted by the DEQ's appeal of this case. Of course the DEQ has the absolute right to appeai and, indeed, the duty to appeal an erroncous damage award because the DEQ is the appropnate state agency to protect both public funds and wetlands. Plaintiffs had the right to pursue development under the Goga permit that plaintiffs themselves proposed. Unsurpnisingly, during trial, plaintiffs and the DEQ offered conflicting deposition testimony relating to the value of the At the first trial, plaintiffs presented the testimony of Edward Cheyz, who is not a licensed real approximately $5.94 million before the denial of the permit. The trial court accepted this figure while rejecting D-27 He testified that parcel one was valued at the testimony of the DEQ's appraiser. As discussed previously, the trial court found the value of these parcels to be zero after the first trial. On remand, plaintiffs offered the deposition testimony of James Mawson, a licensed appraiser, who initially testified that the pre-denial value of $5.94 million calculated by Cheyz was correct. This figure apparently represented a figure of $1.50 per square foot used by Cheyz in calculating the total value. However, on cross-examination, Mawson testified that he did not believe that Cheyz would be correct in valuing wetland at $1.50 per square foot and that a more appropriate figure might be $0.05 per square foot of wetland. *539 On the other hand, the DEQ offered its own expert testimony and evidence in an attempt to show that the property's “before” value had been overestimated and that its “after” value had been grossly underestimated. The DEQ also submitted evidence that, contrary to plaintiffs’ arguments that the non-wetland (upland) portion of parcel one was too shallow for development, other similar “shallow” lots had been developed in the area. Regardless, the trial court, in its opinion and order issued after the second trial, stated incorrectly that, because our Supreme Court “did not disturb” its initial valuation of parcel one, it would reaffirm that value, and the trial court again concluded that parcel one had no value after the denial of the permit. The tral court did so despite the fact D-28 that our Supreme Court held that a categorical taking EN22 had not occurred. K & K JI, supra at 585-587, 575 N.W.2d 531. Furthermore, the trial court reaffirmed its finding that parcel one had zero value despite the existence of the **374 Ram's Horn and the JFK office building, and despite the fact that our Supreme Court stated that it saw “no reason for [the office building and the Ram's Horn] to be excluded from the taking analysis. They were both part of parcel one ... and neither was sold or developed before the enactment of the regulations in question.” K & K J/, supra at 584 n. 9, 575 N.W.2d 531. It further concluded that the value of parcels two and three, which totaled over $3 million, was not enough to offset this loss, and that the total value before the denial was just over $9 million, while the value after the denial was just over $3 million, representing a sixty-seven percent *540 loss. The trial court then briefly addressed each of the three Penn Central factors before concluding again that the DEQ's permit denial constituted a taking. The trial court's opinion stated that it would reaffirm its previous award. FN22. As we will discuss in greater detail later, when a governmental regulation deprives a landowner of “ ‘all economically beneficial use’ ~ of his or her property, a categorical taking occurs, which requires compensation. Palazzolo, supra at 615-616, 121 S.Ct. 2448, quoting Lucas, supra. D-29 At a hearing on plaintiffs' posttrial motion for entry of judgment, the trial court found that the DEQ's issuance of the Goga permit had not been a valid or effective way of mitigating its damages as required by M.C.L. § 324.30323 and entered judgment in September 2002 against the DEQ in the amount of $16,486,228, which included compensation for a taking of plaintiffs’ property in the amount of $5.9 million, the value the trial court allocated to parcel one, together with interest, costs, and attorney fees. The judgment further imposed interest on the entire judgment, including fees and costs. Plaintiffs moved the trial court to reconsider the judgment rate of interest. They argued ©” that the statutory rate of interest was insufficient, because plaintiffs were experienced real estate developers who could easily earn several times greater returns on their investment. The trial court rejected this argument and denied plaintiffs’ motion for a greater rate of interest. Plaintiffs have filed a cross- appeal to challenge the denial of this motion. FN23. Interestingly, plaintiffs raised this argument for the first time on remand. 2. Damages and the Goga Permit EN24 D-30 FN24. The appendix to our opinion is a chart that summarizes the trial court's award of damages after both trials. After the first trial, the DEQ faced a judgment in excess of $6 million for what the trial court wrongly *541 held to be a categorical taking of plaintiffs’ property. As permitted by statute, M.C.L. § 324.30323, the DEQ decided to mitigate these damages and opted to issue the Goga permit pursuant to the permit application submitted by plaintiffs. The trial court then issued a written opinion that acknowledged that the DEQ's election of this option had reduced the amount of the taking award to approximately $3.25 million. © The trial court additionally awarded approximately $450,000 for the temporary taking of plaintiffs’ property up to the issuance of the Goga permit. FN25. This amount reflects the trial court's calculation of the value of the percentage of parcel one that constituted wetland based upon its valuation of the entire parcel at approximately $5.94 million, plus interest up to the time of the judgment. However, plaintiffs did not build on parcel one as they were entitled to do pursuant to the Goga permit.‘™° Instead, plaintiffs insisted that the DEQ's appeal of the nearly $4 million judgment against it also constituted an appeal of the permit and that the DEQ intended to revoke the permit if it prevailed on appeal. The DEQ **375 sent D-31 plaintiffs a letter in which it stated that it did not believe that there should have been a judgment entered against the DEQ, and, therefore, that there should not have been damages assessed that the DEQ needed to mitigate by issuing the Goga permit. More importantly, however, the DEQ stated that the permit was valid and could be used by plaintiffs to begin development of parcel one. Yet plaintiffs continued in their assertion that the permit was subject to revocation because of the DEQ's appeal. JFK office building were constructed on the non-wetland (upland) portion of parcel one; plaintiffs did not require the Goga permit to build these structures. As stated above, after this Court heard this case, and after our Supreme Court reversed the decisions of the *542 tral court and this Court, the case returned to the trial court after the United States Supreme Court denied a wmit of certiorari. In the meantime, the Goga permit expired. After the case returned to the trial court in 1999, plaintiffs attempted to amend their complaint to raise claims in relation to the Goga permit and their claim that the permit was essentially an empty gesture. And the tnal court originally, correctly, rejected plaintiffs’ argument and stated that plaintiffs could not raise new claims centered on the DEQ's alleged failure to comply with the trial court's judgment. The trial court said that, instead of waiting six years to try and bring new D-32 claims, plaintiffs should have gone before the trial court to address the alleged noncompliance. _ Notwithstanding plaintiffs' attempt to mischaracterize their rights and the DEQ's conduct regarding the Goga permit, the DEQ reissued the expired Goga permit for five years. Nonetheless, plaintiffs continued to insist that the Goga permit was essentially worthless because the DEQ could revoke it if it prevailed on appeal. Plaintiffs made this assertion despite yet another letter from the DEQ in which it was stated that the DEQ had no intention of revoking the permit regardless of the outcome of the case.*? Instead of developing the land as they clearly could have under the newly reissued permit, plaintiffs continued to maintain that the Goga permit was an empty gesture. On the other hand, the DEQ maintains that plaintiffs’ actions are not motivated by a fear that the Goga permit might be revoked as much as they are by a desire to continue to accrue damages related to the alleged inability to develop their land. FN27. This letter stated, in relevant part, “As I have repeatedly expressed, it is not now and never was the intention of [the DEQ] to seek to revoke or otherwise limit the “Goga Plan” permit through appeal.” *543 After the second tnal, the tnal court reversed its initial decision and agreed with plaintiffs regarding the Goga permit. The trial court issued a brief opinion in D-33 which it stated that it essentially was reaffirming its first judgment. After the trial court issued its opinion, plaintiffs moved for the entry of an order of judgment that included an award for the full value of parcel one. During a hearing on the motion, the DEQ reminded the trial court of the reissuance of the Goga permit and asked the trial court to take this into account, pursuant to M.C.L. § 324.30323, when it entered judgment, as the court had done after the first trial. However, this time, the trial court erroneously refused to take the Goga permit into account. _ Indeed, during the hearing, the trial court stated, in response to the DEQ's request, that it “{found] the state's handling of the Goga permit personally offensive.” Ultimately, the trial court entered judgment in the amount of the entire value of parcel one, approximately $5.94 million, plus interest, costs, and attorney fees, **376 which resulted in a total judgment in excess of $16 million, with additional interest payable from the date of judgment at the statutory rate. On appeal, plaintiffs continue to assert that the Goga permit's issuance by the DEQ was a hollow gesture that did not, in reality, mitigate any damages, while the DEQ insists that plaintiffs’ claims that the permit is ineffective constitute a pretense for an attempt to accrue further damages. D-34 We review a trial court's findings of fact for a clear error and disturb the trial court's findings only where we are “left with the definite and firm conviction that a *544 mistake has been made.” Inc., 259 Mich.App. 257, 265, 673 N.W.2d 815 (2003)./™8 lil. STANDARDS OF REVIEW Essexville v. Carrollton Concrete Mix, [2] Whether the government has effected a taking of one's property is a constitutional issue, U.S. Const., Am. V; FN28. The DEQ urges us to set aside the clearly erroneous standard in favor of a review de novo. The DEQ argues that the trial court's findings are not entitled to deference because the trial court conducted the trial solely on the submission of de benne esse depositions, exhibits, and oral argument. However, the DEQ stipulated the entry of an order that specified exactly that procedure for tral. The DEQ cannot claim an error to which it contributed. arm Credit Services of Michigan's Heartland, PCA vy. Weldon, 232 Mich.App. 662, 683- 684, 591 N.W.2d 438 (1998). Accordingly, we will not set aside the clearly erroneous standard here. Const. 1963, art. 10, § 2, which we review de novo. People v. Cain, 238 Mich.App. 95, 111, 605 N.W.2d 28 (1999). D-35 IV. ANALYSIS A. Trial Court's Compiiance with the Supreme Court's Remand Order {3}[4][5] The DEQ correctly asserts that the tral court disregarded the specific remand instructions of our Supreme Court. “ ‘The power of the lower court on remand is to take such action as law and justice may require so long as it is not inconsistent with the judgment of the appellate court.’ ” People v. Fisher, 449 Mich. 441, 446-447, 537 N.W.2d 577 (1995) (citations omitted); Waatti & Sons Electric Co. v. Dehko, 249 Mich.App. 641, 646, 644 N.W.2d 383 (2002). When an appellate court remands a case without instructions, a lower court has the “same power as if it made the ruling itself.” Fisher, supra at 447, 537_N.W.2d 577. However, when an appellate court gives clear instructions in its remand order, it is improper for a lower court to exceed the scope of the order. Waatti & Sons, supra at 646, 644 N.W.2d 383. “It is the duty of the lower court or *545 tribunal, on remand, to comply strictly with the mandate of the appellate court.” Rodriguez _v. Gen. Motors Corp. (On Remand), 204 Mich. App. 509, 514, 516 N.W.2d 105 (1994). D-36 1. The Trial Court's Findings of Fact on Remand Regarding the Value of the Denominator Parcel During the first trial, the trial court considered only the value of parcel one in making its decision whether the DEQ's denial of a wetland permit constituted a taking. The trial court held that the DEQ's action deprived parcel one of all its economic value and that the DEQ had taken plaintiffs’ property. Our Supreme Court, however, held, consistently with Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), that a categorical taking had not occurred. K & K II, supra at 585-587, 575 N.W.2d 531. The Court then remanded the case to the trial court and clearly directed the trial court to make a new finding of fact with respect to the value of **377 plaintiffs’ property and to include parcel two with parcel one when doing so. Furthermore, the trial court was clearly directed to make a finding of fact regarding whether parcel three should also be included in its analysis. Jd. at 588, 575 N.W.2d 531. After the trial court made these new findings of fact, the trial court was to apply the three Penn Central factors, as mandated by our Supreme Court, to determine whether the DEQ's action here constituted a taking. Unfortunately, on remand, the trial court failed to adhere to the Supreme Court's mandates. The trial court did make a finding of fact that parcel three should be included in its analysis during the new trial. Furthermore, the trial court D-37 purportedly considered parcels one, two, and three together in its analysis, as our Supreme Court's decision required. However, the court *546 rationalized its ruling by contending that our Supreme Court had not specifically disturbed its valuation of plaintiffs' property before and after the permit denial, simply reaffirmed its finding that the value of parcel one had diminished from nearly $6 million to zero. The court did this despite the fact that our Supreme Court essentially foreclosed any possibility of a finding that parcel one had a value of zero: Even if we did limit our analysis to parcel one, the Court of Appeals conclusion that a categorical taking had occurred is not supported by the record. In its first opinion, the trial court stated: “While it is true that some financial value will remain, this Court finds that what little economic value remains is but a small fraction of the economic value the property would have had if all of it could be developed.” (Emphasis added.) Thus, while the regulations may have diminished the value of plaintiffs' land, this diminution in value would not give rise to a categorical taking.... [K & K Il, supra at 587 n. 13, 575 N.W.2d 531 (emphasis in the original). | After a careful review of the trial proceedings, it is clear that the trial court failed to include the values of a Ram's Hom Restaurant and plaintiff JFK's office bu:iding, both located on upland portions of parcel one. Our Supreme D-38 Court stated that it saw “no reason for [the office building and the restaurant} to be excluded from the taking analysis. . They were both part of parcel one as originally purchased, and neither was sold or developed before the enactment of the regulations in question.” Jd. at 584 n. 9, 575 N.W.2d 531. The evidence presented during the trial after remand shows that the Ram's Horn and the JFK office building have a combined value of at least $1 million. Furthermore, our Supreme Court explicitly stated that “plaintiffs were not prohibited from developing the remaining upland on parcel one....” K_& K JI, supra at 587, 575 N.W.2d 531. Were the trial court to have complied *547 with our Supreme Court's remand instructions, the trial court could not reasonably have reaffirmed its previous finding that the value of parcel one had been reduced to zero. For this reason alone, the trial court's holding must be reversed. Additionally, the trial court then found that parcels two and three had a value of approximately $3 million. The trial court reasoned that this value was not high enough to “offset” the diminution in value that the court ruled parcel one had sustained. While the trial court held that the value of the entire “denominator parcel,” consisting of parcels one, two, and three, had been diminished in valuc by sixty- seven percent, from approximately $9 million to just over $3 million, the trial court's analysis here centered on the value of parcel one. Rather than treating the three parcels as a single denominator parcel**378 as our Supreme Court D-39 mandated, the trial court erroneously continued to treat parcel one as the relevant parcel, and only considered the values of parcels two and three to the extent that they might “offset” the diminution in the value of parcel one. This directly contradicts our Supreme Court's holding that any taking analysis here must look beyond the value of parcel one, and include the value of the entire denominator parcel. Accordingly, we conclude that the trial court did not comply with our Supreme Court's remand instructions with respect to determining the value of the denominator parcel. Because we so conclude, we hold that the trial court's findings of fact with respect to the value of the denominator parcel are clearly erroneous, and its decision is reversed. 2. Compliance with the Supreme Court's Order to Apply the Facts to Penn Central The trial court's Penn Central analysis also failed to comply with the Supreme Court's remand instructions.*548 EN2? A trial court must “ comply strictly” with our Supreme Court's mandate. Rodriguez, supra at 514, 516 N.W.2d 105. Here, the trial court, without an explanation of what the factors mean, and, indeed, without so much as a *549 citation of Penn Central, devoted not much more than a page of its analysis to this difficult, crucial, and dispositive analysis that was clearly mandated by our Supreme Court's remand order. Moreover, and dispositively, the tral court's ruling simply failed to properly apply the law to the facts. D-40 FN29. The trial court's conclusions regarding the three factors read, in its entirety: 1. What is the Character of the Government Action in this Case? In this case, the government activity, as noted, has taken the entire value of parcel one with the exception of two small areas that were developed prior to the wetland determination in this case. Thus the declaration of a wetland has taken, for all intents, the entire value of the parcel as previously found. 2. The Economic Effect of the Regulations. This Court finds that the regulations in this case have deprived the Plaintiffs of the entire economic value of parcel one which is approximately two-thirds of the value of the entire denominator parcel. 3. The Interference with Investment-Backed Expectations. Clearly, Plaintiffs intended to develop parcel one for economic gain. There is no question from the facts of this case that Plaintiffs have always intended to develop parcel one. They applied for zoning and dutifully paid commercial taxes on this parcel for many years. In addition, this D-41 property is not a characteristic wetland where an owncr would likely be on notice of potential difficulties with development. The record showed an investment of several millions of dollars and the loss of a huge commercial development on parcel one. Applying the law to these facts demonstrates that the loss of parcel one far overshadows parcels two and three in area and in value. This Court finds that applying the test as required to the entire parcel under consideration shows a taking. This Court reaffirms its award as previously entered for Plaintiff [sic] together with costs and attorney fees. Interest shall run in the proscribed [sic] manner from the date of taking. For these reasons and reasons we will discuss in greater detail below, we hold that the trial court did not comply with our Supreme Court's remand instructions with respect to its purported Penn Central analysis. 3. The Goga Permit and Mitigation As outlined above, our Legislature, following the lead of the United States Congress, passed comprehensive legislation to protect Michigan's wetlands for the benefit of its citizens. This represents a clear public policy determination and statement of the importance to the citizens of this **379 state, including property owners, of D-42 preserving wetlands for public welfare. M.C.L. § 324.30302. Moreover, the Michigan Constitution provides that “[t]he Jegislature shall provide for the protection of the air, water and other natural resources of this state....”” Const. 1963, art. 4, § 52. In keeping with this mandate, the Legislature enacted the Natural Resources and Environmental Protection Act (NREPA), M.C.L. § 324.101 et seq., which contains the WPA. The Legislature vests the DEQ with the responsibility for guarding our state's valuable natural resources on behalf of the citizens of this state. M.C.L. § 324.501. In keeping with this constitutional and statutory scheme, our Legislature also expressed its intent that the DEQ should act to preserve public funds as well as public resources by establishing a statutory framework to mitigate damages to the state should a court find that the DEQ “went too far” in implementing the wetland *550 regulations in a particular case. M.C.L. § 324.30323(3) represents our Legislature's well-considered plan to serve the dual purpose of having the DEQ protect the environment while also protecting the pocketbooks of our citizens by creating a mechanism to mitigate damages in those cases where courts find that the DEQ may have gone too far. Here, the DEQ, as our Legislature envisioned, acted properly under the statute to mitigate damages. The trial court should not have disregarded this legislative mandate where the DEQ, acting to preserve the citizens’ D-43 financial resources, agreed to an alternative use of the land, as proposed by plaintiffs, that would have allowed substantial development of the property at issue. The courts of this state must recognize that our constitutionally and statutorily mandated agencies, like the DEQ, have a difficult duty in administering complex laws to preserve the environment for all citizens while respecting the important private property rights of those directly affected by the regulations. Our Legislature clearly saw the wisdom of anticipating that, in balancing these competing, important interests, the DEQ might err, at least in the judgment of a judge who is asked to review a specific application of the wetland regulations to a specific piece of property. And, when a judge rules against the DEQ, the state agency has the further task of again deciding how best to preserve taxpayer dollars and the environment by choosing the legislative options of purchasing the property, paying the amount of the lost economic value, or taking some other action, such as the issuance of an alternative permit that allows greater development, but with minimal damage to wetlands. Our courts should not ignore this complex, important statutory mitigation scheme. This legislative mandate is an important application of constitutional, statutory, and administrative law that *551 must be resected and administered by our courts in the best interests of the public. This, the trial court simply failed to do. The statute does not allow a trial court to D-44 deny the state a chance to mitigate a regulatory taking judgment on the basis of the trial court's views of the DEQ. Moreover, we agree with the trial court's original ruling with respect to the Goga permit, and further hold that plaintiffs waived this claim that the DEQ's appeal rendered the Goga permit invalid. If plaintiffs truly believed that the DEQ disobeyed that portion of the trial court's original order regarding the Goga permit, then plaintiffs should have sought the appropriate relief. Our review of the record reveals no attempt by plaintiffs to seek declaratory or other relief with respect to the Goga permit. Any claim that the DEQ's appeal rendered the Goga permit invalid here was waived by plaintiffs’ own **380 conduct.” Lewis v. LeGrow, 258 Mich.App. 175, 210, 670 N.W.2d 675 (2003) (“[E]rror requiring reversal may only be predicated on the trial court's actions and not upon alleged error to which the aggrieved party contributed by plan or negligence.”). FN30. We hold only that plaintiffs have waived any claim that the DEQ's appeal rendered the Goga permit invalid. Nothing in our holding prevents plaintiffs from pursuing their right to seck issuance of a Goga-type permit in the future. D-45 B. The Penn Central Factors as Applied to This Case [6] In Penn Central, the United States Supreme Court noted that “[t}he question of what constitutes a ‘taking’ ... has proved to be a problem of considerable difficulty.” Penn Central, supra at 123, 98 S.Ct. 2646. The constitutional requirement that the state provide just compensation for the taking of one's property is “ ‘designed to bar Government from forcing some people alone to bear public *552 burdens which, in all fairness and justice, should be borne by the public as a whole.’ ” Jd. at 123-124, 98 S.Ct. 2646, quoting Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960). The Court stated that taking determinations are “essentially ad hoc, factual inquiries...."" Penn Central, supra at 124, 98 S.Ct. 2646. {7] Since the United States Supreme Court's decision in Penn Central, and, indeed, since our Supreme Court's decision in K & K JI, the United States Supreme Court has further explained its holding in Penn Central. A governmental regulation that deprives a landowner of “all economically beneficial use” of his or her property, is a categorical taking that requires compensation. Palazzolo v. Rhode Island, 533 U.S. 606, 615-616, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001), citing Lucas, supra. Here, our Supreme Court rejected the trial court's ruling that the DEQ had effected a categorical taking of plaintiffs’ property and remanded the case to the trial court with the instruction to D-46 determine, pursuant to Penn Central, whether a taking had occurred despite the fact that plaintiffs’ property had some, but because of the trial court's error, a yet to be determined, remaining value. The United States Supreme Court in Penn Central identified three factors to be examined when a court makes such a determination: [1] The economic impact of the regulation on the claimant and, particularly, [2] the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations. So, too, is [3] the character of the governmental action. A “taking” may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good. [Penn Central, supra at 124, 98 S.Ct. 2646 (citations omitted). ] *553 As we will discuss in greater detai} below, while no one of the three factors is dispositive in and of itself, a key factor in terms of wetland regulations is the third, the character of the government action. Where, as here, the regulation serves an important public interest and is widespread and ubiquitous, we conclude that, to sustain a regulatory taking claim, a plaintiff must prove that the economic impact and the extent to which the regulation has interfered with distinct investment-backed expectations are D-47 the functional equivalent of a physical invasion by the government of the property in question. 1. Economic Impact of the Regulation [8] A reduction in the value of the regulated property is insufficient, standing **381 alone, to establish a compensable regulatory taking. Penn Central, supra at 131, 98 S.Ct. 2646. Indeed, the Supreme Court in Penn Central cited two of its previous opinions in which the Court refused to hold that there was a regulatory taking: Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926), in which a zoning regulation resulted in a seventy-five percent diminution in value, and Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 (1915), in which the regulation resulted in an 87.5 percent diminution. a Here, the DEQ's initial refusal to grant the requested permit unquestionably caused some decrease in the value of the property. After the second tnal, the trial court held, erroneously, that the value had declined from a value before the denial of the permit of approximately $8.94 million to a value after denial of approximately $3 million, which represents a diminution of value of approximately sixty-seven percent. Even under this incorrect, inflated “damage calculation,” plaintiffs *554 failed to demonstrate a sufficient decrease in value to constitute a compensable D-48 regulatory taking under Penn Central; Euclid, and Hadacheck.*™?' FN31. Indeed, in Lucas, the Court noted that it is quite possible for a landowner to suffer a ninety-five percent diminution in value as the result of a regulatory action and nevertheless be unable to establish a regulatory taking. Lucas, supra at 1019 n. 8, ea 112 S.Ct. 2886. However, as we discussed above, the trial court not only failed to account for the substantial value of the land that could have been developed pursuant to the Goga permit, worth at least $2.8 million, as it had after the first trial, but it also did not include the approximate $1 million value of the Ram's Horn and JFK office building. Accordingly, the proper value after denial for the denominator parcel would -be approximately $5.8 to $6.8 million, which represents a decrease in value of approximately twenty-four to thirty- three percent. While this diminution of value is significant, we conclude that this figure most certainly does not weigh in favor of a finding that the DEQ's actions constitute a FN32 compensable regulatory taking. FN32. This conclusion is supported by the fact that far greater diminutions of value have been found not to give nse to taking claims. See Euclid, supra, and Hadacheck, supra; see also William C. Haas & Co., Inc. v. City & Co. of San Francisco, 605 F.2d D-49 1117, 1120 (C.A.9, 1979) - (ninety-five percent diminution in value). Moreover, the Supreme Court has held time and again that even a significant diminution in value is not enough on its own to establish a regulatory taking. See Penn Central, supra at_131, 98 S.Ct. 2646; Concrete Pipe and Products of California, Inc. v. Constr. Laborers Pension Trust, 508 U.S. 602, 645, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993). Moreover, as we discussed above, plaintiffs could have developed the land pursuant to the Goga permit, and could possibly have increased the value of the land, or, at the very least further mitigated any loss in value but for their unjustifiable inaction. *555 2. Plaintiffs’ Distinct Investment-Backed Expectations {9] A court must also examine the extent to which the regulation has interfered with the property owner's “reasonable investment-backed expectations.” Palazzolo, supra at 618, 121 S.Ct. 2448, citing Penn Central, supra at 124, 98 S.Ct. 2646. A key factor is notice of the applicable regulatory regime, here wetland regulations. The Supreme Court in Palazzolo rejected the principle that the purchase of property after the enactment of a wetland regulation absolutely bars a taking claim. Palazzolo, supra at 626-630, 121 S.Ct. 2448.*™*3 However, notice of such regulations**382 should nevertheless be taken into D-50 4 account. EN3: In her separate concurrence in Palazzolo, Justice O'Connor explained the importance of notice: FN33. Indeed, the Court stated, “A blanket rule that purchasers with notice have no compensation right when a claim becomes ripe is too blunt an instrument to accord with the duty to compensate for what is taken.” Id. at 628, 113 S.Ct. 2264. FN34. See Cordes, The Effect of Palazzolo v. Rhode- Island on _ Takings and Environmental Land Use Regulation, 43 Santa Clara L. R. 337, 376 (2003), citing the concurring opinion of Justice O'Connor in Palazzolo, supra at 635, 121 S.Ct. 2448; Justice Stevens, dissenting in part and concurring in part, id. at 637-645, 121 S.Ct. 2448; and Justice Ginsburg's dissent, id. at 645 n. 3, 121 S.Ct. 2448. As the Court holds, the Rhode Island Supreme Court erred in effectively adopting the sweeping rule that the preacquisition cnactment of the use restriction ipso facto defeats any takings claim based on that use restriction... The more difficult question is what role the temporal relationship between regulatory enactment and_ title acquisition plays in a proper Penn Central analysis. Today's holding does not mean that the timing of the regulation's enactment relative to the acquisition of title is immaterial to the Penn Central analysis. Indeed, it would be just as much error to expunge this consideration from D-51 the takings inquiry as it would be to accord it exclusive significance. Our polestar instead remains the principles set forth in Penn Central itself and our other cases that govern partial *556 regulatory takings. Under these cases, interference with investment-backed expectations is one of a number of factors that a court must examine. Further, the regulatory regime in place at the time the claimant acquires the property at issue helps to shape the reasonableness of those expectations. {Palazzolo, supra at 632-633, 121 S.Ct. 2448 (O'Connor, J., concurrmng) (emphasis added). ] In other words, equity is no better served by ignoring a claimant's knowledge of existing land-use regulations than it would be by holding that the claimant's knowledge of those regulations absolutely barred recovery regardless of how inequitable those regulations might be. [1]f existing regulations do nothing to inform the analysis, then some property owners may reap windfalls and an important indicium of fairness is lost. As I understand it, our decision today does not remove the regulatory backdrop against which an owner takes title to property from the purview of the Penn Central inquiry. It simply restores balance to that inquiry. [Jd. at 635, 121 S.Ct. 2448.) D-52 The WPA was originally enacted as the Goemaere- Anderson Wetland Protection Act in 1979.F8* Here, plaintiffs acquired title to the property in 1986. And, as plaintiffs themselves point out, JFK and Kosik are experienced commercial land developers with extensive knowledge of land-use regulations. *° This knowledge and experience logically must be taken into account when determining what plaintiffs’ reasonable, investment-backed expectations were with respect to the denominator parcel and in determining the extent of the WPA's effect on those expectations. Despite this admitted extensive commercial land development and *557 legal expertise, plaintiffs nonetheless claim that they were unable to discover a EN37 Given _ the significant **383 area of wetland on the denominator twenty-seven-acre area of wetlands. parcel and plaintiffs’ experience in commercial land development, together with their notice of wetland regulations, we conclude that a reasonable person with the extensive expertise that plaintiffs possess would have notice of the existence of both the wetlands and the WPA. FN35. The WPA was later reenacted as Part 303 of the Natural Resources and Environmental Protection Act of 1994. FN36. Indeed, Kosik is a lawyer by training. FN37. Plaintiffs claim that the wetland was “not characteristic” because it was sandy; however, there is evidence, in the form of D-53 the DEQ's initial permit denial letter, that the wetland consisted of sand because “someone” had filled it in with sand. We also note that plaintiffs had begun attempting to develop the wetland area over an unspecified time before Waterford Township officials sent them a cease-and- desist letter. As Palazzolo teaches us, the mere fact that plaintiffs had notice of the WPA does not end the inquiry with respect to their reasonable, investment-backed expectations and the effect of the governmental regulation challenged here. However, as Justice O'Connor explained, plaintiffs’ notice of the WPA does help shape the analysis of whether plaintiffs’ expectations were reasonable. Plaintiffs’ alleged actual expectations involved building a_ forty-two-acre restaurant/sports complex on parcel one. However, with their experience, notice of the WPA, and the fact that twenty-seven acres of wetland existed on parcel one, this expectation was not reasonable. Looking at the denominator parcel as a whole, a reasonable expectation would be that plaintiffs would be able to develop the upland areas of the denominator parcel that are not wetlands. Indeed, there has been significant development on parcels two and three. On parcel one, there has been some development on the upla [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_2119%3A1. Public record. Not legal advice.