Supreme Court Preview: Justices revisit landmark property case

When can a family sell a vacation property lot? The Supreme Court will look back at one of its big decisions from the 1970s when it hears a dispute involving four family members and the state of Wisconsin.

In 1978, Justice William Brennan wrote for a 6-3 majority in the Penn Central v. New York City case that redefined property rights under the Fifth Amendment’s Takings Clause and also served as a foundation for historic preservation programs at a local level.  A New York City commission prohibited the Penn Central Railroad from redeveloping Grand Central Station after two plans substantially changed the building’s historic look above the building.  Penn Central sued, claiming it should receive full compensation for the air rights about Grand Central Station.

Brennan and the majority disagreed, saying the commission’s decision wasn’t a taking under the Fifth Amendment and that the railroad still could derive a reasonable economic return from the building’s use. The decision also established a four-part test to determine if a property holder should receive “just compensation” under the Firth Amendment if a government policy or action results in a taking of their property.

One of the four parts of those tests involves a concept called the “parcel of a whole.”  In his decision, Brennan wrote that “this Court focuses rather both on the character of the action and on the nature and extent of the interference with rights in the parcel as a whole—here, the city tax block designated as the ‘landmark site.’” In that context, the Court considered the Grand Central building and the air space above it as one property in terms of the Fifth Amendment’s Takings Clause.

In his Penn Central dissent, Justice William Rehnquist questioned how this concept would be applied.  “The need to consider the effect of regulation on some identifiable segment of property makes all important the admittedly difficult task of defining the relevant parcel,” he said.

Now, the Court will consider that logic and a precedent from another noteworthy case in Murr v. Wisconsin.  The Murr family has owned two riverfront  lots since the 1960s; one of the lots contained a vacation cottage; the other lot wasn’t developed.  The parents bought the two lots originally, and they were conveyed to four of their children in 1994 and 1995.

In 2004, when the children began to explore selling the empty lot to pay for improvements in the cottage, they found out that a zoning law established in 1975 barred the children from selling the empty lot separate from the cottage. The zoning law also prohibited the development of the empty lot because it didn’t meet minimum size requirements for an independent lot.

The family’s lawyers cited another Supreme Court decision, Lucas v. South Carolina Coastal Council (1992), which said that the denial of all economic use of a property by a government regulation was a taking under the Fifth Amendment and required just compensation. The state government argued that the properties should be considered as a “whole” in the takings analysis, citing the Penn Central decision. The state appeals court ruled against the Murr family and the family filed an appeal with the Supreme Court, which was accepted in January 2016.

The question now before the Court is, “in a regulatory taking case, does the ‘parcel as a whole’ concept as described in Penn Central Transportation Company v. City of New York (1978), establish a rule that two legally distinct, but commonly owned contiguous parcels, must be combined for takings analysis purposes?”

The Justice Department has filed a brief supporting the state of Wisconsin.