LADD et al v. USA
Filing
127
PUBLISHED OPINION (Status Report due by 4/26/2012) granting 112 Motion to Dismiss - Rule 12(b)(1); granting in part and denying in part 112 Motion for Summary Judgment. Signed by Sr. Judge Robert H. Hodges, Jr. (sjv) Copy to parties.
In the United States Court of Federal Claims
No. 07-271L
Filed: April 12, 2012
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JACK LADD et al.,
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Plaintiffs,
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v.
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UNITED STATES OF AMERICA,
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Defendant.
Rails-to-Trails Act; Fifth Amendment
Takings; Notice of Interim Trail Use
(NITU); Surface Transportation
Board; Application of State Property
Law; Notice of Exemption; Notice of
Consummation; Statute of Limitations;
Continuous Government Action; NITU
Extension; Renegotiation for Trail Use;
Renegotiation for Railway; Statutory
Construction
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Mark Fernlund Hearne, II, Arent Fox, LLP, Clayton, MO, for plaintiffs.
William James Shapiro, Environment and Natural Resources Division, United States Department
of Justice, Sacramento, CA, for defendant.
ORDER AND OPINION
HODGES, Judge.
This rails-to-trails case is on remand from the Court of Appeals for the Federal Circuit with
instructions to decide Fifth Amendment compensation for a temporary taking. Ladd v. United States,
630 F.3d 1015, 1025 (Fed. Cir. 2010), reh’g denied, 646 F.3d 910 (2011). We ruled in Ladd I that
defendant did not effect a Fifth Amendment physical taking of plaintiffs’ rights of reverter because
the Government had no physical presence on plaintiffs’ property. Ladd v. United States, 90 Fed. Cl.
221, 227 (2009), rev’d, 630 F.3d 1015.
The Federal Circuit stated that applicable precedent is clear where the Surface Transportation
Board issues a Notice of Interim Trail Use: a taking arises immediately upon issuance of the NITU.
If the parties do not agree on a trail, this affects damages only and not liability; the taking is a
temporary estate for years.1
Defendant contends that we lack jurisdiction over several plaintiffs because the statute has
run on their claims. It seeks summary judgment as to the remaining plaintiffs because they have no
property interests in the railroad corridor abutting their lands. In response, plaintiffs cite the Federal
Circuit’s remand order stating that the trial court should calculate just compensation. The mandate
leaves no room for us to consider legal issues, according to plaintiffs, as it assumes a temporary
taking.
Appeals court precedent is clear that we lack jurisdiction to consider the claims of plaintiffs
Heinzl, Castro, Windsor-Brown, Ladd, and Miller; the statute of limitations has run against their
claims. Plaintiff Lindsey has no property interest in the railroad corridor because the railroad owns
the land at that point in fee simple. The claims of plaintiffs Singletree Ranch and Miller Ranch Trust
arose separately from the other plaintiffs, and they are not barred by the statute of limitations. Those
claims state valid temporary takings entitled to just compensation under the Fifth Amendment,
according to the remand order.
BACKGROUND
We ruled that a physical takings did not occur in this rails-to-trails case, where the
Government did not have a physical presence on plaintiffs’ land. Ladd I, 90 Fed. Cl. at 227. The
appeals court remanded “for a determination of the compensation owed to the appellants for the
taking of the Southern Stretch and the Northern Stretch of railway line.” Ladd, 630 F.3d at 1025.
Upon remand, defendant moved to dismiss for lack of jurisdiction and for summary judgment on the
issue of liability.
Defendant contends that some property owners have no underlying property interest in the
railroad corridor. Plaintiffs argue that the Federal Circuit’s remand order states only that we should
calculate damages for takings; this does not permit us to consider property interests at this juncture.
However, the appeals court would not have ordered an assessment of the lands’ value for Fifth
Amendment purposes without sufficient trial court findings concerning plaintiffs’ interest in the land
taken.2
1
As this case is reconsidered on remand, trail negotiations are no longer contemplated.
We detect practically no likelihood that the issue will recur in the foreseeable future. Defendant
advises the court that negotiations are underway among rail companies to establish a new rail line
across the easement currently owned by the San Pedro Railroad Operating Company. This could
mean that the right-of-way or easement for railroad purposes could remain valid, or again
become valid. In that event, even a temporary taking argument for plaintiffs would sound highly
theoretical.
2
The first Opinion did not address property interests of individual plaintiffs because we
ruled that a physical taking by the Government could not occur without the Government’s
2
DISCUSSION
Defendant argues for the first time in this proceeding that the statute of limitations bars five
plaintiffs’ claims.3 Plaintiffs respond that the Government cannot make such an argument now,
having waived the statute of limitations by not raising it before.
The statute of limitations is jurisdictional in this court. A claim against the Government must
be filed within six years after accrual. 28 U.S.C. § 2501 (“Every claim of which the United States
Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within
six years after such claim first accrues.”); see also John R. Sand & Gravel Co. v. United States, 552
U.S. 130, 133-37 (2008) (holding that the six-year statute of limitations is jurisdictional). Challenges
to a court’s subject matter jurisdiction can be brought and must be decided whenever they arise.
RCFC 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the
court must dismiss the action.”) (emphasis added).
The Court of Appeals for the Federal Circuit holds that takings in rails-to-trails cases occur,
if at all, when the Government issues the first Notice of Interim Trail Use. Barclay v. United States,
443 F.3d 1368, 1375 (Fed. Cir. 2006); see also Caldwell v. United States, 391 F.3d 1226, 1234 (Fed.
Cir. 2004). Moreover, a taking claim ripens when the first NITU is issued, regardless when or
whether the Government issues additional NITU’s in the same case. Ladd, 630 F.3d at 1020-21
(“[T]akings law supplies a single bright-line rule for accrual.” (quoting Barclay, 443 F.3d at 1378)).
Plaintiffs base their claims on a Notice of Interim Trail Use issued in 2006, which would give
them until 2012 to file their Complaint. However, a NITU affecting five of the plaintiffs’ lands was
issued in 1998, more than six years before they filed in 2007. The 1998 NITU covered a 41.5-mile
stretch of railroad corridor between Paul Spur and Charleston, Arizona. Defendant issued the 1998
NITU in response to an application from San Pedro Trails, which intended to develop trails in the
area. San Pedro agreed with the railroad that the trail company would assume responsibility for
management of the right-of-way, pay taxes on the land, and hold the railroad harmless from any
liability arising from use of the trail by the public.
A NITU issued November 21, 2003, designated Cochise Trails as the new interim trail user
and trail manager, and vacated the 1998 NITU. The 2003 NITU also authorized the San Pedro
Railroad Operating Company to acquire and operate the railroad lines from San Pedro and
Southwestern Railway Operating Company. San Pedro Railroad requested abandonment authority
physical presence on the land taken. See Ladd I, 90 Fed. Cl. at 227. Plaintiffs did not argue the
case as a regulatory taking. The appeals court stated, “[t]he government disputes the character of
the property rights in this case. For purposes of summary judgment, however, we must assume
facts in favor of the appellants.” Ladd, 630 F.3d at 1024, n.4.
3
Plaintiffs subject to this argument are Heinzl, Castro, Windsor-Brown, the Ladd
claimants, and Miller.
3
from the Surface Transportation Board in 2005 after its plans to restore a connection with the
Mexican rail system did not materialize. The Board issued an Environmental Assessment4 in 2006,
followed by another new NITU.5 The 2006 NITU authorizes negotiation of a trail use agreement
with an organization called Trust for Public Land.6
The statute of limitations began to run against the five plaintiffs when defendant issued the
1998 NITU, not the NITU filed in 2006. By the time the five plaintiffs had filed taking claims in
2007, at least seven years had passed since they were legally on notice. Even if one NITU expires
before the next is issued, the first NITU remains the starting date for purposes of the statute of
limitations. See Ladd, 630 F.3d at 1020-21 ([A] series of NITU orders must be viewed as a single
and continuous government action . . . any extensions or modifications of the original NITU are not
separate compensable takings.” (citing Barclay, 443 F.3d at 1375-76)). Here, there was no gap
between NITU’s. The claims of plaintiffs Heinzl, Castro, Windsor-Brown, Ladd, and Miller, are
barred by the statute of limitations.
Plaintiffs’ response is essentially that none of this matters because the Federal Circuit decided
“implicitly” that the landowners have property interests in the corridor. The appeals court issued a
remand order that directs this court to assess damages for takings, plaintiffs note. Such an implicit
direction could be reasonable only if the Federal Circuit had made sufficient findings of fact and law
to direct entry of judgment for the property owners. We interpret the remand as a direction to
consider plaintiffs’ rights in the subject property, including the impact of limitations, if any. As
noted earlier, the statute of limitations may be raised at any time during the proceedings.
PLAINTIFFS’ PROPERTY INTERESTS
This court’s Order and Opinion will dismiss five plaintiffs whose time for filing claims
expired before 2007. The three property owners remaining are plaintiffs Lindsey, Singletree Ranch,
and Miller Ranch Trust. Defendant moved for summary judgment on liability as to these plaintiffs.
The Government contends that we can consider plaintiffs’ allegations of fact to be true and still rule
as a matter of law that they have no cognizable cause of action against the United States. A party
is entitled to summary judgment when “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” RCFC 56(a).
4
This form, filed during the NITU process, included the following statement in reference
to the corridor containing the five plaintiffs’ property, “[s]ince August 17, 1998, this segment has
been operated under an agreement for trail use/rail banking.”
5
This was the NITU that plaintiffs relied on as the trigger for their takings claims. See,
e.g., Caldwell, 391 F.3d at 1234 (holding that the taking occurs upon issuance of a NITU).
6
The 2006 NITU does not reference the earlier NITU’s. Neither party raised a question
about their possible impact on plaintiffs’ claims until after the Circuit issued its remand order.
4
Settled law in this Circuit provides, “a Fifth Amendment taking occurs in Rails-to-Trails
cases when government action destroys state-defined property rights by converting a railway
easement to a recreational trail, if trail use is outside the scope of the original railway easement.”
Ladd, 630 F.3d at 1019. The Court of Appeals for the Federal Circuit provided this framework for
analyzing liability in rails-to-trails cases:
(1) [W]ho owned the strips of land involved, specifically did the Railroad . . .acquire
only easements, or did it obtain fee simple estates; (2) if the Railroad acquired only
easements, were the terms of the easements limited to use for railroad purposes, or
did they include future use as public recreational trails; and (3) even if the grants of
the Railroad’s easements were broad enough to encompass recreational trails, had
these easements terminated prior to the alleged taking so that the property owners at
that time held fee simples unencumbered by the easements.
Preseault v. United States, 100 F.3d 1525, 1533 (Fed. Cir. 1996).
We apply state real property laws to make such decisions, including those governing the
interpretation of deeds and other interests in land. Controlling state law in this case is Arizona’s.
The nature of a plaintiff’s property interest is the first issue for a court to resolve in deciding
whether just compensation is appropriate. In rails-to-trails takings cases, property underlying the
railroad corridor becomes important. If a railroad has a fee simple interest in the land underlying its
corridor, abutting landowners have no basis for claiming takings – the railroad can use its corridor
for any conforming or non-conforming use it pleases, as any other fee title owner might. In the
language of takings jurisprudence, claimants cannot show that they possess a compensable
ownership interest in the land alleged to have been taken. See id.
Arizona law states that a conveyance is presumed to be in fee simple unless it is limited to
a lesser interest expressly in the granting clause or elsewhere in the deed.7 Ariz. Rev. Stat. § 33432(A) (“Every estate in lands granted, conveyed or devised, although other words necessary at
common law to transfer an estate in fee simple are not added, shall be deemed a fee simple if a lesser
estate is not limited by express words . . . .”). We construe a deed in Arizona by “giv[ing] effect to
the intent of the contracting parties. If the instrument is unambiguous, the intent of the parties must
be discerned from the four corners of the document.” Spurlock v. Santa Fe Pac. R.R. Co., 694 P.2d
299, 304 (Ariz. Ct. App. 1984).
7
Some states provide that any real property conveyance to a railroad is presumed to be an
easement and not a fee title. The wording of an instrument transferring an interest in land to a
railroad therefore may not be so important as here. Arizona law does not include such a
presumption.
5
Lindsey Property
The Lindsey family obtained its property rights by deed from the owners of a single tract that
included the Lindsey lot and the property under the railroad corridor. The Lindseys’ predecessor-intitle conveyed the corridor to the El Paso & Southwestern Railroad Company in fee simple. The
relevant portion of the El Paso deed states consideration of $250 and this granting language:
“[Grantor] does bargain, sell, grant, [and] convey . . . in fee simple, all that certain lot, piece or parcel
of land . . . [to the railroad].” (emphasis added). The property granted is described as “[a] strip of
land on the east side of the San Pedro River . . . for the relocation of the El Paso & Southwestern
Railroad Company8 . . . .”
The grantor’s deed uses language that creates a fee simple estate in nearly every jurisdiction.
It does not use the terms ‘easement’ or ‘right-of-way.’ The Lindseys own the land abutting the
railroad corridor in fee, but they have no interest in the railroad corridor that the Government could
have taken by forestalling state law abandonment.
Ranch Properties
The remaining plaintiffs are Singletree Ranch and Miller Ranch Trust. The railroad obtained
its interest in the corridor abutting their lands pursuant to an 1875 Act of Congress. That Act
conveyed easements to railroad companies while allowing ownership of the land under the railroad
bed to remain in the hands of abutting landowners. See Hash v. United States, 403 F.3d 1308, 131318 (Fed. Cir. 2005) (holding that the patent holder, not the United States, held the reversionary
interest9 in land obtained by a railroad under the 1875 Act).
Plaintiffs Singletree Ranch and Miller Ranch Trust have neither of the problems that caused
their fellow plaintiffs’ claims to fail. They have undisputed fee simple interests in the land under
the railroad corridor abutting their parcels. The NITU that caused a taking of their reversionary
rights in the corridor was filed in 2006; so the statute of limitations is not an issue in their cases.
Therefore, Singletree Ranch and Miller Ranch Trust own the land under the railroad corridor in fee
simple, and they are entitled to just compensation according to the Federal Circuit’s mandate, so long
as the remaining Preseault factors are satisfied.
8
A description of the purpose for which a grant of property is made does not diminish a
fee simple estate in Arizona. See Lacer v. Navajo County, 687 P.2d 404, 408-10 (Ariz. Ct. App.
1983) (holding that a description of purpose did not transform a fee simple grant into a fee
subject to condition subsequent or a fee simple determinable).
9
We use “reversionary interest,” for convenience, and because the term has been adopted
by most courts to describe the rights of a landowner who holds fee simple title to land subject to
a railroad’s easement. See Hash, 403 F.3d at 1313.
6
Scope of Easements and Abandonment
The second prong of the Preseault test requires a determination whether the easement
obtained by the railroad was broad enough to allow for recreational trail use. Preseault, 100 F.3d
at 1533. The Railroad obtained an easement for railroad purposes pursuant to the 1875 Act.
Defendant argues that the NITU does not authorize a new use on the corridor and that no activity has
occurred in this instance that could have exceeded the scope of a railroad purposes easement. By its
argument that the NITU does not authorize a new use, defendant must mean no such new use has
come to pass. Certainly, the Government’s policy is to support and encourage such non-conforming
uses.
Courts have found repeatedly in applying property laws of other states that railroad
operations are different from the recreational trail use contemplated by 16 U.S.C. § 1247(d), “Interim
use of railroad rights-of-way.” The trail use authorized by the NITU exceeds the scope of the
Railroad’s 1875 Act easements.
The third question under the Preseault test is, if trail use is within the scope of the relevant
easements, did the railroad abandon its easements prior to the NITU. Preseault, 100 F.3d at 1533.
If the railroad had already abandoned its easement under Arizona law, the actions of the STB would
be a taking because the land otherwise would have reverted to plaintiffs then.
Abandonment under Arizona law requires a showing of “an intention to abandon, together
with an act or an omission to act by which such intention is apparently carried into effect.” City of
Tuscon v. Koerber, 313 P.2d 411, 418 (Ariz. 1957). Filing a request for a NITU is sufficient in many
states to establish intent to abandon. The matter is not often reached in these cases because
abandonment becomes important only if a court can find that trail use by the general public was an
acceptable purpose according to the terms of the easement or right of way. The scope of easements
analysis is determinative in this case.
DURATION OF TEMPORARY TAKINGS
The railroad in this case has not filed a Notice of Consummation of Abandonment or
otherwise taken steps to complete abandonment under federal law. Defendant has raised the
possibility that the railroad wants to reinstitute service along the line, or sell the easement to
someone who will. The Surface Transportation Board extended the 180-day, July 2006 NITU
applicable to the Ranches for thirty days, then allowed it to expire on February 21, 2007.10 Since
then, the STB has granted several extensions to the railroad to complete abandonment of the line by
filing a Notice of Consummation. The routine extensions have assigned the lands of Singletree and
Miller on the “Northern Stretch” a limbo status. The Rails-to-Trails Act provides that abandonment
10
The period for negotiation was 210 days.
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of the corridor is not complete until the Notice of Consummation is filed.11 The current extension
for filing a Notice of Consummation of Abandonment expires on July 26, 2012.12
Filing a NITU results in a physical taking irrespective of whether a trail has been built on the
property. Ladd, 630 F.3d at 1025. However, the Court of Appeals for the Federal Circuit ruled that
a physical taking without a trail could be a temporary taking in this case, an estate for years. See id.
The NITU signals the beginning of a taking by the Government, but so far we do not have the
taking’s end. Where no trail is in place when the court calculates just compensation, and the railroad
has not filed a Notice of Consummation, we must have some means to assume an end for appraisal
purposes.
The railroad has not reached agreement with a trail operator qualified under the statute to
build a trail. No trail exists and none is proposed. The last NITU expired years ago, but the
Government has granted a number of extensions for the Railroad to consummate abandonment. The
rails-to-trails statute gives the railroad an option to consummate abandonment upon expiration of
a NITU, but otherwise does not make clear what happens with no trail and no consummation. 49
C.F.R. § 1152.29. The process begun by issuing a NITU can end only when the railroad files a
Notice of Consummation of Abandonment. See id. The railroad has not done so.
Abandonment of the railroad easement by the federal regulatory process and expiration of
the NITU do not always occur on the same date, as is evident from the situation here. Because
abandonment has not occurred, and the STB still retains jurisdiction of plaintiffs’ property, the
temporary taking has not ended.13
The Government contends that a temporary taking lasts only so long as the period of
negotiation provided by the NITU is in force, including any extensions. Plaintiffs respond that they
are being kept off of their land in perpetuity, and that a permanent taking has occurred.14 They point
11
Defendant has argued that the railroad alone can file a Notice of Consummation, and
therefore the matter is out of the Government’s hands.
12
See 49 C.F.R. § 1152.29(e)(2) (“A railroad that receives authority from the Board to
abandon a line . . . shall file a notice of consummation with the Board to signify that it has
exercised the authority granted and fully abandoned the line.”).
13
If the statute provided that expiration of the NITU and abandonment were one and the
same, the process of calculating just compensation would be relatively straightforward. For
example, if expiration of the final NITU without an extension were a statutory alternative to
Consummation of Abandonment, just compensation for a temporary taking would be calculated
for the time between the first NITU and expiration of the final NITU.
14
Persuasive arguments can be made either that a permanent taking has occurred,
assuming that issuance of a NITU marks the beginning of the taking, or that plaintiffs have not
8
out that the statute of limitations continues to run through a series of NITU’s, even where some have
expired and left gaps. Because of this precedent, we have barred five Constitutional claims in this
case. Meanwhile, defendant argues that the taking stops when the negotiation period for a NITU
expires – even though the Government maintains jurisdiction until the Notice of Consummation is
filed. A series of NITU’s is one continuing government action. See Barclay, 443 F.3d at 1375 (“[A]
series of STB NITU orders must be viewed as part of a single and continuous government action
rather than as new takings.”).15 The Surface Transportation Board retains jurisdiction over the land,
and plaintiffs continue to be prevented from enjoying their reversionary interests. The Court of
Appeals for the Federal Circuit has not ruled that the Government is entitled to the best of both worlds
by naming the expiration date of a NITU as the end of a temporary taking, but not for interrupting the
running of a statute of limitations.
Defendant remains in control of the railroad corridor abutting plaintiffs’ lands as this Opinion
and Order is issued. See Barclay, 443 F.3d at 1374 (“Until the [STB] issues a certificate of
abandonment, the railway property remains subject to the [STB’s] jurisdiction, and state law may not
cause a reverter of the property.” (quoting Preseault v. ICC, 853 F.2d 145, 150 (2d Cir. 1988))).16
The estate of years taken by defendant does not end so long as the Government remains in control of
the subject property. Id. at 1376 (“So long as abandonment was not consummated, the STB retained
jurisdiction over the right-of-way.”).
CONCLUSION
Plaintiffs Singletree Ranch and Miller Ranch Trust are entitled to compensation for a
temporary taking. Counsel will agree on an appraiser who will calculate the value of a temporary
taking given a beginning date of July 26, 2006. The appraisal will include a total value ending on the
date of this Order and a daily factor for determining value at a later date if necessary. If or when the
suffered a taking at all. If a trail is built ultimately, the land remains subject to STB jurisdiction
in that termination of the trail requires filing with the STB and starting again with the
abandonment process. If a trail is not built during the STB’s jurisdiction, and a Notice of
Consummation is not filed, the corridor may be sold to another railroad or reestablished by the
same railroad. In that circumstance, it is not clear what the landowners will have lost or had
taken.
15
The Court reasoned that “the new NITU in substance merely extended the original
NITU,” despite a gap between the expiration of one 180-day NITU negotiation period and the
issuance of a second NITU. Barclay, 443 F.3d at 1376.
16
But see Farmers Cooperative Co. v. United States, 98 Fed. Cl. 797 (2011),
reconsideration denied, 100 Fed. Cl. 579 (2011), where the court ruled that a temporary taking
ended at the expiration of the most recent NITU.
9
Railroad files a Notice of Consummation of Abandonment, the value will be recalculated by applying
that date. This court will retain jurisdiction to enter judgment on that basis.
The Government’s motion to dismiss the claims of plaintiffs Heinzl, Castro, Windsor-Brown,
Ladd, and Miller, for lack of subject matter jurisdiction is GRANTED. The Clerk of Court will
dismiss those plaintiffs from the Complaint. The Government’s motion for summary judgment as to
the Lindsey family for lack of a compensable property interest is GRANTED. The Clerk of Court
will dismiss the Lindseys from the Complaint.
The Government’s motion for summary judgment as to plaintiffs Singletree Ranch and Miller
Ranch Trust is DENIED. The parties will agree to a schedule for obtaining an appraiser to determine
value according to the terms of this Order. If they cannot agree on an appraiser, they will contact the
court to schedule a hearing to decide on alternative means of appraisal jointly acceptable to the
parties. Counsel will advise the court of the schedule by status report no later than April 26, 2012.
IT IS SO ORDERED.
s/Robert H. Hodges, Jr.
Robert H. Hodges, Jr.
Judge
10
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