McQueen v. South Carolina

• Decision Date: 17 April 2000
• Docket Number: No. 25108.,25108.
• Citation: 530 S.E.2d 628,340 S.C. 65
• Parties: Sam B. McQUEEN, Respondent, v. SOUTH CAROLINA COASTAL COUNCIL, n/k/a South Carolina Department of Health and Environmental Control, Office of Ocean and Coastal Resource Management, Petitioner.
• Court: South Carolina Supreme Court

340 S.C. 65

530 S.E.2d 628

Sam B. McQUEEN, Respondent, v. SOUTH CAROLINA COASTAL COUNCIL, n/k/a South Carolina Department of Health and Environmental Control, Office of Ocean and Coastal Resource Management, Petitioner.

No. 25108.

Supreme Court of South Carolina.

Heard February 3, 2000.

Decided April 17, 2000.

Rehearing Denied May 24, 2000.

Mary D. Shahid, of South Carolina Department of Health and Environmental Control, Office of Ocean and Coastal Resource Management, of Charleston, for petitioner.

Ronald R. Norton, of Conway, for respondent. James S. Chandler, Jr., of Pawleys Island, for Amicus Curiae South Carolina Environmental Law Projects.

Glenn Sugameli, of National Wildlife Federation, of Washington, D.C., for Amicus Curiae National Wildlife Federation and South Carolina Wildlife Federation.

BURNETT, Justice:

Petitioner South Carolina Coastal Council¹ appeals the decision of the Court of Appeals holding Coastal Council's denial of permits to bulkhead and fill lots owned by respondent constituted a taking requiring just compensation. McQueen v. South Carolina Coastal Council, 329 S.C. 588, 496 S.E.2d 643 (Ct.App.1998). We reverse.

FACTS

Respondent purchased a lot on 53rd Avenue in the Cherry Grove section of North Myrtle Beach in 1961 for $2500, and a lot on 48th Avenue in 1963 for $1700. Each lot is valued at $22,800 for tax purposes. Both lots are located on manmade, saltwater canals and were created by fill, as were all the lots in the area. Respondent's lots are unimproved, but most of his neighbors' lots have houses and bulkheads constructed on them.

In July 1991, respondent applied to the South Carolina Coastal Council for permits to build bulkheads on his lots to prevent further erosion of his own and his neighbors' property. In January 1992, the Coastal Council issued a permit for the 53rd Avenue lot only, with the condition the bulkhead be constructed 75 feet from the street. Respondent sought a 90-foot setback to comply with the City of North Myrtle Beach's requirements to build on the property. Due to some confusion on the part of the Army Corps of Engineers, which participates in the permitting process, no action was taken on the 48th Avenue lot. The Coastal Council determined the only way to correct the confusion would be to resubmit both applications and begin the review process anew.

Respondent resubmitted the applications to the Coastal Council in 1993. Both permits were denied because the proposed bulkheads were located within the tidelands critical area, so that any backfill would result in filling of tidal wetlands, adversely affecting the environment.

Respondent appealed the denial of the permits, first to the Coastal Council, then to the Coastal Zone Management Appellate Panel. Both bodies upheld the denial of the permits. The Panel found the permits sought by respondent were prohibited by S.C.Code Ann.Regs. 30-12(G)(2)(a) (Supp.1998), which provides that the creation of residential lots for private gain is not justification for filling in wetlands and that permit applications for this purpose should be denied. The Panel further found denial of the permits did not constitute a taking because respondent had no distinct investment-backed expectations, as evidenced by his failure to take action to prevent the erosion of his property.

Respondent appealed the Panel's decision to the circuit court, arguing the permit denials constituted a taking without just compensation. The case was referred to the master-inequity, who found that by denying respondent the permits, the Coastal Council deprived him of all economically beneficial use of his property, resulting in a taking. Based on respondent's testimony that he had been offered $50,000 for each of the lots, the master found respondent was entitled to $100,000 in compensation. The Coastal Council appealed. A divided Court of Appeals affirmed the master's ruling that respondent suffered a taking, but found insufficient evidence in the record to support the master's determination as to compensation. McQueen v. South Carolina Coastal Council, 329 S.C. 588, 496 S.E.2d 643 (Ct.App.1998). The court therefore remanded the issue of just compensation to the circuit court. We granted Coastal Council's petition for certiorari.

ISSUES

Did Coastal Council's permit denial constitute a "taking" of respondent's property?

A. Do background principles of state law bar respondent from filling his lots?

Is Carter v. South Carolina Coastal Council a background principle of state property law?

B. Did respondent have distinct investment-backed expectations entitling him to compensation?

DISCUSSION

The Fifth Amendment to the United States Constitution provides "private property [shall not] be taken for public use without just compensation." U.S. Const. amend. V. The government "takes" property for public use when it regulates the property in a manner which denies the owner all economically beneficial use of his property. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992). In order to recover on a regulatory takings claim, a property owner must establish:

(1) there was a denial of economically viable use of the property as a result of the regulatory imposition;

(2) the property owner had distinct investment-backed expectations; and

(3) the interest taken was vested in the owner, as a matter of state property law, and not within the power of the state to regulate under common law nuisance doctrine.

Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1179 (Fed.Cir.1994) (restating the law of regulatory takings as defined by cases up to and including Lucas ). The Court of Appeals held respondent suffered a "textbook regulatory taking." McQueen, 329 S.C. at 600, 496 S.E.2d at 650. We disagree.

It is uncontested the permit denial at issue here deprives respondent of all economically viable use of his property. The questions before this Court are whether respondent had a vested right to backfill his property and whether respondent had investment-backed expectations of developing his property.

Coastal Council contends the Court of Appeals erred in finding the instant case bears "a remarkable similitude" to Lucas. David Lucas purchased two coastal tracts in 1986 for $975,000, with the intent to build single-family homes on them. In 1988, the General Assembly enacted the Beachfront Management Act, S.C.Code Ann. § 48-39-250 et. seq. (Supp. 1998), which had the direct effect of barring Lucas from erecting any permanent habitable structures on his property. Lucas, 505 U.S. at 1006-07,112 S.Ct. 2886. The United States Supreme Court held "[w]here the State seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner's estate shows that the proscribed use interests were not part of his title to begin with." Id. at 1027, 112 S.Ct. 2886.

In the instant case, respondent neglected his property for thirty years, allowed the land to revert to wetlands, and now expects the State of South Carolina to pay him the going rate for high ground—a twenty-fold return on his initial investment. We agree with Coastal Council that this case is distinguishable from Lucas.

A. Do background principles of state law bar respondent from filling his lots?

In addressing the third prong of the regulatory takings test, the Court of Appeals majority asked: What rights did respondent possess when he purchased the lots? McQueen, 329 S.C. at 599,496 S.E.2d at 649. The majority assumed, with no citation to authority, "the right to add a bulkhead and fill were [respondent's] at the time of purchase." Id. We do not think this is a valid assumption.² Nevertheless, we affirm the Court of Appeals' ruling that Carter v. South Carolina Coastal Council, 281 S.C. 201, 314 S.E.2d 327 (1984) is not a background principle of state law that bars respondent from developing his land.

Is Carter v. South Carolina Coastal Council a background principle of state property law?

Coastal Council asserts this case falls into the Lucas exception, i.e., the proscribed use interests were not part of respondent's title to begin with. Coastal Council argues that Carter v. South Carolina Coastal Council, 281 S.C. 201, 314 S.E.2d 327 (1984), survives Lucas and represents a "background principle[ ] of state nuisance and property law that prohibit[s] the uses [respondent] now intends in the circumstances in which the property is presently found." Lucas, 505 U.S. at 1031, 112 S.Ct. 2886. We disagree.

In Carter, we held denial of a permit to fill 5.3 acres of wetlands was not a taking because "[a]n owner of land has no absolute and unlimited right to change the natural character of his land so as to use it for a purpose for which it was unsuited in its natural state and which injures the rights of others." Id. at 205, 314 S.E.2d at 329. We concluded the permit denial there was a valid exercise of the State's police power to prevent public harm. Id. at 204-05, 314 S.E.2d at 329.

Carter followed the landmark decision of Just v. Marinette County, 56 Wis.2d 7, 201 N.W.2d 761 (1972). Commentators are divided on whether the principle stated in Just (there is no absolute right to change the natural character of land) is a background principle of state property law that can be used as a basis for denying wetlands takings claims after Lucas. See, e.g., Hope M. Babcock, Has the U.S. Supreme Court Finally Drained the Swamp of Takings Jurisprudence?: The Impact of Lucas v. South Carolina Coastal Council on Wetlands and Coastal Barrier Beaches, 19 Harv.Envtl.L.Rev. 1, 46 & n. 260 (1995) (Just is a background principle), Jan Goldman-Carter, Protecting Wetlands and Reasonable Investment-Backed Expectations in the Wake of Lucas v. South Carolina Coastal Council, 28 Land & Water L.Rev. 425, 447 & n. 138. (1993) (same)³; but see Joseph L. Sax, Property...