By Jonathan Stempel

WASHINGTON, Jan 7 (Reuters) - The U.S. Supreme Court on Monday refused to hear an appeal over a Michigan city's zoning ordinance that led Wal-Mart Stores Inc to decide not to build a supercenter there.

Without comment, the court refused to hear a challenge by the Loesel family to new rules limiting the size of new construction by Frankenmuth, a German-themed city known as "Little Bavaria."

The Loesels said the ordinance caused Wal-Mart to back out of a $4 million contract to buy their land, and was "selective" discrimination that violated their equal protection rights.

While retailers have opened thousands of "big box" stores nationwide, several communities have tried to keep them out.

Wal-Mart bears the brunt of the opposition, from groups that accuse the world's largest retailer of siphoning sales from local businesses, underpaying its workers, and causing traffic problems and harm to the environment.

The Loesels' case went to trial in 2010, and a jury awarded them $3.6 million.

But the 6th U.S. Circuit Court of Appeals reversed that award in August 2012, saying a new trial was necessary because it was unclear whether the jury had relied on a "factually sufficient" theory to render its verdict.

Frankenmuth had separately challenged a trial court decision to let jurors consider the Loesels' equal protection claim.

It also asked the Supreme Court to declare that it had authority to adopt a generally applicable zoning ordinance designed to "preserve local character."

Lawyers for the Loesels did not immediately respond to requests for comment. Mary Massaron Ross, a lawyer for Frankenmuth, had no immediate comment.

The cases are Loesel et al v. City of Frankenmuth, U.S. Supreme Court, No. 12-563; and City of Frankenmuth v. Loesel et al, U.S. Supreme Court, No. 12-712. 

(Additional reporting by Jessica Wohl in Chicago)

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