RW Docks & Slips v. State

• Citation: 244 Wis.2d 497,628 N.W.2d 781,2001 WI 73
• Decision Date: 28 June 2001
• Docket Number: No. 99-2904.,99-2904.
• Parties: R.W. DOCKS & SLIPS, Plaintiff-Appellant-Petitioner, v. STATE of Wisconsin and Wisconsin Department of Natural Resources, Defendants-Respondents.
• Court: United States State Supreme Court of Wisconsin

244 Wis.2d 497

2001 WI 73

628 N.W.2d 781

R.W. DOCKS & SLIPS, Plaintiff-Appellant-Petitioner, v. STATE of Wisconsin and Wisconsin Department of Natural Resources, Defendants-Respondents.

No. 99-2904.

Supreme Court of Wisconsin.

Oral argument April 30, 2001.

Decided June 28, 2001.

For the plaintiff-appellant-petitioner there were briefs by Jason W. Whitely and Novitzke, Gust & Sempf, Amery, and oral argument by Jason W. Whitley.

For the defendants-respondents the cause was argued by JoAnne F. Kloppenburg, assistant attorney general, with whom on the brief was James E. Doyle, attorney general.

¶ 1. DIANE S. SYKES, J.

This case pits a small emergent weedbed along the shores of Lake Superior in Bayfield, Wisconsin, against the developer of a private marina on those same shores. The Wisconsin Department of Natural Resources sided with the weedbed, and denied the developer a dredging permit needed to complete the final phase of the marina development. The case has an ironic twist: the small emergent weedbed would not have "emerged" at all were it not for the calming effect of a breakwater the developer had built in the early stages of the project. The presence of the emergent weedbed prompted the DNR to block the developer's construction of the last set of boat slips in the marina, 71 out of a total of 272 slips.

¶ 2. So the developer took the DNR to court, alleging a regulatory taking without just compensation. The case was dismissed on summary judgment, and the court of appeals affirmed, concluding that because the developer retained the benefit of all or substantially all of its property—including over 200 boat slips and various recreational facilities associated with the marina onshore—the denial of a permit for the construction of the remaining boat slips was not an unconstitutional taking.

¶ 3. We affirm. As takings law has evolved, there is no compensable categorical taking unless the regulatory action in question deprives a property owner of all economically beneficial use of his property. We do not perform the analysis piecemeal, but, rather, consider the property as a whole in order to determine the extent of the deprivation. Because the denial of the dredging permit did not deny the marina developer all economically beneficial use of its property, there was no categorical regulatory taking.

¶ 4. Further, and again considering the property as a whole, the regulatory action in this case at most affected only the developer's riparian right of reasonable access to the lake, which is subordinate to the public trust doctrine. Therefore, the DNR's action did not so severely impact or interfere with the developer's reasonable investment expectations as to constitute an unconstitutional taking under traditional, ad hoc takings analysis.

I

¶ 5. The relevant facts are undisputed. R.W. Docks, a general partnership in the business of developing marinas, is the riparian owner of 1100 feet of frontage along Lake Superior in Bayfield, Wisconsin. In 1969, Docks began building a marina, called Port Superior, on this lake frontage land. At the outset, Docks sought and obtained permits from the DNR and the Army Corps of Engineers to construct a breakwater and boat harbor in connection with the marina development.

¶ 6. The marina was then built in stages. The initial phases of the project consisted of the breakwater, several docks eventually containing 201 boat slips, a sea wall, a lagoon, a solid pile quay structure placed on the lakebed, a port, racquetball club, tennis court, and supporting infrastructure. Throughout the gradual development of the marina, Docks sought and received the necessary permits from the DNR, including dredging permits pursuant to Wis. Stat. § 30.20.

¶ 7. In 1977, Docks converted the marina into condominiums. The 201 condominium boat slips, each of which included an undivided interest in the common areas of the marina facilities, were developed and sold before Docks obtained the necessary permits to complete construction of the final 71 boat slips at the marina.

¶ 8. In 1983, Docks applied to the DNR for a permit to dredge 20,000 cubic yards of material from the lakebed, a necessary prerequisite to the completion of the remaining 71 boat slips. The DNR, after expressing concern over the environmental impact of the dredging, divided the application in two, the first to remove 5,000 cubic yards, and the second to remove 15,000 cubic yards of lakebed material. The DNR then granted the first dredging permit. In 1986, the DNR denied the second, larger dredging permit, and without the permit, the final 71 boat slips could not be built.

¶ 9. The permit was denied primarily because a small emergent weedbed had developed near the shore within the marina as a result of the sheltering effect of the breakwater that Docks had built. Weedbeds, evidently, are good for many things, including the proliferation of game fish, forage fish and associated macroinvertebrates and zooplankton, and so the DNR acted to protect this environmentally sensitive natural resource.

¶ 10. After exhausting available administrative appeals and judicial review of the DNR's action, Docks sued the DNR in circuit court alleging an unconstitutional taking of its property without just compensation. The Bayfield County Circuit Court, the Honorable Thomas J. Gallagher, granted the DNR's motion for summary judgment, concluding that: (1) Docks did not have a recognizable property interest in the 71 undeveloped boat slips; (2) even if Docks had a recognizable property interest in the 71 undeveloped boat slips, there was no unconstitutional taking because its riparian right to construct structures on the bed of Lake Superior was subject to the public trust doctrine; and (3) there was no unconstitutional taking because Docks retained considerable practical use of the property.

¶ 11. The court of appeals affirmed only the last conclusion of the circuit court, refraining from addressing the alternate arguments. The court of appeals agreed that the denial of the final dredging permit did not constitute a regulatory taking because Docks maintained the benefit and use of all or substantially all of its marina property. Furthermore, the court concluded that Docks assumed the risk inherent in commencing the project without all necessary permits, and therefore any economic loss it suffered as a result of the inability to build the last 71 slips could not be transferred to the State on a regulatory takings theory. We accepted review.

II

[1, 2]

¶ 12. We review a circuit court's decision granting or denying a motion for summary judgment independently, using the same methodology as the circuit court. Wisconsin Dep't of Corrections v. Kliesmet, 211 Wis. 2d 254, 259, 564 N.W.2d 742 (1997); Wis. Stat. § 802.08(2). "[S]ummary judgment is proper where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Kenefick v. Hitchcock, 187 Wis. 2d 218, 224, 522 N.W.2d 261 (Ct. App. 1994).

[3]

¶ 13. The issue in this case is whether the DNR's denial of the final dredging permit constituted a regulatory taking of Docks' property without just compensation. This is also a question of law that we review without deference to the lower courts. Zealy v. City of Waukesha, 201 Wis. 2d 365, 372, 548 N.W.2d 528 (1996). The Fifth Amendment to the United States Constitution, made applicable to the states by the Fourteenth Amendment, provides that private property shall not "be taken for public use, without just compensation." Article I, Section 13 of the Wisconsin Constitution provides that "[t]he property of no person shall be taken for public use without just compensation therefor." We have stated that:

Takings jurisprudence has developed from two competing principles: on one hand, respect for the property rights of individuals; on the other, recognition that the government retains the ability, in furtherance of the interests of all citizens, to regulate an owner's potential uses of land. Thus, in Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926), the United States Supreme Court held municipal zoning to be a permissible exercise of the police power, while in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 159-60, 67 L.Ed. 322 (1922), the Court held that "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." Such takings are described as "constructive" or "regulatory" takings.

Zealy, 201 Wis. 2d at 373.

[4, 5]

¶ 14. "A `taking' need not arise from an actual physical occupation of land by the government." Eberle v. Dane County Bd. of Adjust., 227 Wis. 2d 609, 621, 595 N.W.2d 739 (1999). If a regulatory restriction or action of the government deprives a property owner of all economically beneficial use of his property, there has been a categorical regulatory taking subject to compensation. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992); Zealy, 201 Wis. 2d at 374-75.

[6-8]

¶ 15. In determining whether a regulatory restriction "goes too far" for purposes of the Fifth Amendment, the United States Supreme Court has generally "eschewed any `set formula' for determining how far is too far, preferring to `engag[e] in...essentially ad hoc, factual inquiries." Lucas, 505 U.S. at 1015 (citing Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978)); Zealy, 201 Wis. 2d at 373. However, the Supreme Court has recognized "at least two discrete categories of regulatory action as compensable without case-specific inquiry into the public interest advanced in support of the restraint." Lucas, 505 U.S. at 1015. The first includes regulatory actions that bring about some form of physical "invasion" of private property. Id. The second includes regulatory actions that deny "all economically beneficial or productive use of land." Id. We have in Wisconsin interpreted this latter category...