BILOXI MARSH LANDS CORPORATION et al v. USA

Filing 18

ORDER denying 9 Motion to Dismiss - Rule 12(b)(1) Joint Status Report due 7/8/2013. Signed by Sr. Judge Robert H. Hodges, Jr. (sjv) Copy to parties.

In the United States Court of Federal Claims
No. 12-382L
Filed: June 24, 2013
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BILOXI MARSH LANDS CORP. and
LAKE EUGENIE LAND &
DEVELOPMENT INC.,

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Plaintiffs,

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v.

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UNITED STATES OF AMERICA,

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Defendant.
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Fifth Amendment Taking; Inverse
Condemnation; Statute of Limitations;
Erosion; Mitigation; Dickinson
principle; Mildenberger; Banks;
Applegate

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Camilo Kossy Salas, Salas & Co., L.C., New Orleans, LA, for plaintiffs.
Joshua Pratt Wilson, United States Department of Justice, Washington, DC, for defendant.

ORDER AND OPINION

This is an inverse condemnation action. Plaintiffs allege a taking of their properties adjacent
to the Mississippi River Gulf Outlet (MRGO). The MRGO is a 76-mile-long channel between the
Gulf of Mexico and New Orleans. The channel was authorized by Congress and is managed by the
Army Corps of Engineers. Over the years, the channel has eroded well past the original servitudes
granted to the Government for this purpose. Plaintiffs allege this erosion has effected a taking of
their lands – around 150,000 acres of Biloxi Marsh estuary, a value of at least $30 million plus future
erosion costs.
Defendant filed a motion to dismiss for lack of jurisdiction, contending that the six-year
statue of limitations has run on plaintiffs’ taking claim. The majority of the erosion took place
between 1968 and 1988, and a predictable rate of future erosion was known to plaintiffs by 1988,
according to the Government.
Plaintiffs contend that their claims had not stabilized by 2006, six years before they filed this
action. They do not propose a date certain for stabilization. Plaintiffs’ alternative contention is that
defendant’s efforts to mitigate the erosion gave them “justifiable uncertainty” about the extent of

their takings claims, essentially tolling the statute of limitations. See Banks v. United States, 314
F.3d 1304, 1310 (Fed. Cir. 2003).
The six-year statute of limitations is jurisdictional in this court. John R. Sand & Gravel Co.
v. United States, 457 F.3d 1345, 1354 (Fed. Cir. 2006); see 28 U.S.C. § 2501. Claims generally
accrue when events giving rise to the Government’s alleged liability have occurred and the claimant
is or should be aware of their existence. Hopland Band of Pomo Indians v. United States, 855 F.2d
1573, 1577 (Fed. Cir. 1988). When the alleged taking is gradual, as in an erosion case or a flooding
case, accrual occurs when the condition has “stabilized.” United States v. Dickinson, 331 U.S. 745,
749 (1947) (discouraging a strict application of accrual principles in cases involving Fifth
Amendment takings by continuous physical processes). The Court of Appeals for the Federal Circuit
ruled recently on the application of the stabilization doctrine:
[T]he touchstone for any stabilization analysis is determining when the
environmental damage has made such substantial inroads into the property that the
permanent nature of the taking is evident and the extent of the damage is foreseeable.
The obligation to sue arises once the permanent nature of the Government action is
evident, regardless of whether damages are complete and fully calculable.
Mildenberger v. United States, 643 F.3d 938, 946 (Fed. Cir. 2011) (citations omitted).
Plaintiffs argue that stabilization has not yet occurred in this case because the MRGO
continues to affect their property. The surface width of the channel has increased fifteen feet on
average each year since the completion of the channel in 1968.
The expectation that erosion will occur at the rate of fifteen feet per year cuts both ways,
however. Arguably, plaintiffs knew of the permanent nature of the taking and could foresee the
damage at some point before 2006, given ongoing damage to their lands at a consistent rate. The
Mildenberger rule suggests that plaintiffs’ claims likely accrued before 2006, six years before they
filed this lawsuit. However, the Government’s promises to mitigate might have rendered plaintiffs’
claims uncertain and therefore timely. See Banks, 314 F.3d at 1310.
The Federal Circuit has ruled that the Government’s efforts to mitigate damage to plaintiffs’
land can render the predictability and permanence of the extent of damage “justifiably uncertain.”
Id. This uncertainty results in a delay of the permanence of a taking and therefore a delay in
stabilization and accrual of plaintiffs’ claims. Id.
Defendant contends that the facts of this case are distinguishable from those of Banks and
its predecessor Applegate v. United States, 25 F.3d 1579 (Fed. Cir. 1994). For example, the
Government did not promise mitigation to plaintiffs here, according to defendant. Because the
mitigation programs did not target plaintiffs’ land specifically, they were too broad to establish
justifiable uncertainty. However, the appeals court emphasized in Banks that the presence of a
legally binding promise or duty is not necessary for delaying stabilization. Banks, 314 F.3d at 1309
(citing Applegate, 25 F.3d at 1583). Rather, the inquiry should be when the permanent nature of the
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taking is evident. Id. (citing Boling v. United States, 229 F.3d 1365, 1372 (Fed. Cir. 2000)). The
landowners’ justifiable uncertainty about the permanency of the taking delays stabilization. Id.
The problem of erosion along the MRGO has been known for decades. The Federal Coastal
Wetlands Planning, Protection and Restoration Act of 1990 was enacted to restore 120,000 acres of
wetlands in coastal Louisiana, some of those along the MRGO. Other reports over the years
recognized the need for stabilization of the MRGO, including a 2000 EPA report. A 2004 Army
Corps study stated that “rapid action” was required to prevent additional erosion of the MRGO
channel banks. As late as 2008, the Corps published plans to “physically modif[y] the MRGO
channel and restor[e] areas affected by the channel,” among other things. The Corps recommended
appropriation of $108 million to restore a land bridge, the banks of the MRGO, and the associated
wetlands. In 2008, the Corps finally recommended total closure of the MRGO. These reports and
recommendations to restore the banks of the MRGO might have rendered plaintiffs’ claims
uncertain. If justifiable, such uncertainty could mean that plaintiffs’ claims might accrue later, for
jurisdictional purposes.
Plaintiffs are not clearly without our jurisdiction. Application of the tests from Mildenberger
and Banks may offer plaintiffs a possibility of surviving defendant’s motion to dismiss. However,
whether the statute of limitations has run depends on questions of predictability and mitigation.
Defendant’s motion to dismiss is DENIED, without prejudice to its right to raise this jurisdictional
issue at a later date. Counsel may wish to brief the matters raised by this Order or request an
evidentiary hearing. Counsel will file a joint status report on or before July 8.

s/ Robert H. Hodges, Jr.
Robert H. Hodges, Jr.
Judge

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