Beavertail, Inc. v. United States of America

Filing 38

MEMORANDUM DECISION AND ORDER. IT IS ORDERED that Defendant's Motion to Dismiss 23 is GRANTED WITH LEAVE TO AMEND. Plaintiffs shall file any amended complaint within 21 days of this Order. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
BEAVERTAIL, INC., et al.,
Case No. 4:12-cv-610-BLW
Plaintiff,

MEMORANDUM DECISION AND
ORDER

v.
UNITED STATES OF AMERICA,
Defendant.

INTRODUCTION
Pending before the Court is Defendant the United States of America’s Motion to
Dismiss for lack of subject-matter jurisdiction (Dkt. 23). The Court heard argument on
the motion on September 6, 2016, and now issues its decision. For the reasons explained
below, the Court will grant the motion with leave to amend.
BACKGROUND
Grays Lake is a 22,000-acre marsh in eastern Idaho, northeast of Soda Springs.
Orestes S. John first surveyed Grays Lake in 1877, describing it as “a shallow lake of
uncertain or variable extent . . . margined by fields of tule, and treacherous bog.” See
Sibbett Dec. ¶¶ 2, 3 & Ex. 1. The marsh was historically used by ranchers and
homesteaders for haying and grazing.
Over time, tensions arose between the ranchers and the United States government.
Both sides claimed ownership to the property. The government wished to use the marsh

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as a water storage facility for the Shoshone Bannock Tribes and for a wildlife refuge,
while the ranchers wished to continue using the marsh for haying and grazing.
In 1965, to clarify uses and ameliorate tensions, various ranchers (including the
plaintiffs here) and the government entered into identical 99-year Refuge Use and
Cooperative Use Agreements. Compl., Dkt. 1, ¶ 4; see also Agreement, Dkt. 23-3. The
agreement provides that the government will use the middle of the lakebed – which
plaintiffs describe as a donut hole, or the inner ring – for a wildlife refuge and for water
storage. As for the remaining, 1/2 –mile wide outer ring, the ranchers would continue to
use that area for haying and grazing. See Dkt. 23-3.
The government also proposed to build a “perimeter dike” that would enclose the
donut hole. The basic idea was that the water within the dike would be used for the
Tribes and for waterfowl, while the dried area outside the dike would be used for
continued haying and grazing.
The government began construction on the dike, but eventually gave up,
concluding that it was not feasible. The government left the partially constructed dike in
place, rather than removing it. Plaintiffs say that say the partially constructed dike has
exacerbated spring flooding on their upland properties.
In 2009, the plaintiffs notified the government that they were rescinding the
agreement. They demanded that the government cease its use and occupation of Grays
Lake. The government has not done so, contending, among other things, that the
agreement allows it to leave structures – partially built or otherwise – in place.

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The ranchers filed this action in December 2012. Shortly thereafter, the Court
granted the parties’ motion to stay the proceedings while they attempted to settle their
differences. Mar. 13, 2013 Stay Order, Dkt. 10. Several co-plaintiffs (including the
Crystals, the Sibbetts, and Mr. Riley) resolved their disputes, which included selling their
lakebed properties to the government. See Motion, Dkt. 23, at 3; Response, Dkt. 27, at
18-19. The remaining two plaintiffs – Beavertail, Inc. and Grays Lake Land & Cattle,
Inc. – have not settled. In November 2015, the Court lifted the stay, and the government
later filed its motion to dismiss.
LEGAL STANDARD
1.

Rule 12(b)(1) – Subject Matter Jurisdiction
A defendant may move to dismiss a complaint for lack of subject matter

jurisdiction under Rule 12(b)(1) in one of two ways. See Leite v. Crane Co., 749 F.3d
1117, 1121 (9th Cir. 2014). The first is known as a “facial” attack, and it accepts the truth
of the plaintiff's allegations but asserts that they are insufficient on their face to invoke
federal jurisdiction. Id. The second method is known as a “factual” attack, and it does not
assume the truth of plaintiff's allegations but instead challenges them by introducing
extrinsic evidence, requiring the plaintiff to support his jurisdictional allegations with
“competent proof.” Id.
Here, the government has launched a factual attack. When considering such an
attack, Court may review evidence beyond the complaint without converting the motion
to dismiss into a motion for summary judgment. White v. Lee, 227 F.3d 1214, 1242 (9th

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Cir. 2000). “Once the moving party has converted the motion to dismiss into a factual
motion by presenting affidavits or other evidence properly brought before the court, the
party opposing the motion must furnish affidavits or other evidence necessary to satisfy
its burden of establishing subject matter jurisdiction.” Safe Air for Everyone v. Meyer,
373 F.3d 1035, 1039 (9th Cir.2004) (internal quotations omitted). Where no evidentiary
hearing is held, conflicts in the submissions by the parties must be resolved in the
plaintiffs’ favor. Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1160 (9th Cir. 2007).
2.

Rule 12(b)(6) – Failure to State a Claim
Alternatively, the government brings its motion under Rule 12(b)(6) “because

Plaintiffs have failed to allege the elements of rescission or jurisdiction over their
rescission claim.” Motion Mem., Dkt. 23, at 5.
Federal Rule of Civil Procedure 8(a)(2) requires only a “short and plain statement
of the claim showing that the pleader is entitled to relief,” to “give the defendant fair
notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by a Rule 12(b)(6)
motion to dismiss “does not need detailed factual allegations,” it must set forth “more
than labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Id.
To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to “state a claim to relief that is plausible on its face.” Id. at 570. A
claim has facial plausibility when the plaintiff pleads factual content that allows the court

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to draw the reasonable inference that the defendant is liable for the misconduct alleged.
Id. at 556. The plausibility standard is not akin to a “probability requirement,” but it asks
for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a
complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops
short of the line between possibility and plausibility of ‘entitlement of relief.’” Id. at 557.
The Court uses a two-step approach for deciding when a complaint meets the
plausibility requirement. First, the Court strips the complaint of legal conclusions and
accepts as true all factual allegations made in the complaint, drawing all reasonable
inferences in favor of the plaintiff. Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009). Second,
the Court analyzes the remaining factual allegations in the complaint to determine
whether a plausible claim of entitlement to relief has been alleged. Id.
ANALYSIS
Plaintiffs’ complaint alleges four claims, for (1) negligence, (2) negligence per se; 1
(3) trespass; and (4) ejectment. Broadly speaking, the government challenges subject
matter jurisdiction based on three separate arguments. First, the government says that,
despite the labels, plaintiffs are not pursuing any tort claims; rather they are pursuing
contract claims which must be heard in the Federal Court of Claims. Second, the
government contends that plaintiffs’ trespass and ejectment claims are more logically

1

Here, the complaint cites to and relies upon Idaho statutory law relating to nuisance. See
Compl., Dkt. 1, ¶¶ 75-81.

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viewed as takings claims – again meaning the Court would lack jurisdiction to decide the
claims. Third, and finally, the government says that the Quiet Title Act does not provide
this Court with jurisdiction over plaintiffs’ fourth claim for ejectment. The Court will
consider each argument in turn.
1.

The Nature of Plaintiffs’ Claims
If Plaintiffs’ claims are contract claims, then then this Court cannot decide them.

Rather, the Tucker Act requires plaintiffs to pursue the claims in the Court of Federal
Claims. The Tucker Act grants the Court of Federal Claims exclusive jurisdiction and
waives sovereign immunity for “any claim [in excess of $10, 000] against the United
States founded ... upon any express or implied contract with the United States.” 28 U.S.C.
§ 1491(a)(1). Plaintiffs apparently seek recovery in excess of $10,000.
Whether plaintiffs’ claims are contract or tort claims is determined by federal law
– not by how plaintiff labels the complaint or how the complaint would be characterized
under state law. See Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989). Of
course, “[m]any breaches of contract can also be treated as torts.” Woodbury v. United
States, 313 F.3d 291, 295 (9th Cir. 1963). In those instances, plaintiffs – as master of
their complaints – typically may choose how to proceed. See generally Healy v. Sea Full
Specialty Co., 237 U.S. 479, 480 (1915) (“the plaintiff is absolute master of what
jurisdiction he will appeal to . . . .”). But there are limits on plaintiffs’ ability to choose.
In cases “where the ‘tort’ complained of is based entirely upon breach by the government
of a promise made by it in a contract, so that the claim is in substance a breach of contract

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claim, and only incidentally and conceptually also a tort claim,” id., then the plaintiff
must pursue that claim in the Court of Federal Claims.
Many courts have wrestled with whether a claim should be characterized as a tort
or contract claim for purposes of determining jurisdiction. One of the most oft-cited
cases is the Third Circuit’s seminal decision in Aleutco Corp. v. United States, 244 F.2d
674 (3rd Cir. 1957). 2 In Aleutco, the plaintiff purchased $868,000 of surplus war goods
in Alaska. When the Navy refused to let the plaintiff take possession of some of the
goods, the plaintiff brought an FTCA suit for conversion. The court held that the plaintiff
had sufficiently stated “a cause in tort for conversion” even though it “could have equally
well made out a complaint for breach of contract.” Id. at 678–79. The Aleutco Court
clarified that “[t]he fact that the claimant and the United States were in a contractual
relationship does not convert an otherwise tortious claim into one in contract.” Id. at 678.
In Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989), the Ninth Circuit
approved this principle from Aleutco, concluding that the Love plaintiff could pursue a
tort claim for conversion, even though the same facts would have supported a breach-ofcontract claim. Id. at 1246. The court noted that, “the Loves’ allegations could have

2

The Ninth Circuit has cited Aleutco with approval many times. See, e.g., Love v. United States, 915
F.2d 1242, 1245 (9th Cir. 1989) (“Our circuit has approved this principle from Aleutco.”); Fort
Vancouver Plywood Co. v. United States, 747 F.2d 547, 549 (9th Cir. 1984) (“The seminal case is Aleutco
Corporation v. United States, 244 F.2d 674 (3d Cir. 1957).”); Walsh v. United States, 672 F.2d 745, 750
(9th Cir. 1982) (referring to the “leading case” of Aleutco . . . .”)

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been brought as a breach of contract claim, but they equally supported a tort claim for
conversion.” Id.
Similarly, in Fort Vancouver Plywood Co. v. United States, 747 F.2d 547 (9th Cir.
1984), the Ninth Circuit again cited Aleutco in determining that the plaintiff could pursue
a tort claim in distract court, rather than being forced to pursue a contract claim in the
Federal Court of Claims. In Fort Vancouver, the government contracted to buy timber
from Fort Vancouver Plywood Company. Fort Vancouver cut and bucked the timber and
laid it on the ground. The government was conducting a slash burn on adjacent property.
The fire swept through the area where Fort Vancouver’s timber lay, destroying the
timber. Id. at 549. Fort Vancouver sued the government for negligence.
The Ninth Circuit held that Fort Vancouver’s claim sounded in tort – not contract
– even though the parties had an underlying contract regarding the timber. The court
explained that while the contract established ownership to the timber, it was not
“otherwise implicated” in the case; certainly the underlying contract did not “allocate
liability under the circumstances presented by [the] case, . . . .” Id. at 552.
Plaintiffs here say they are similar to the plaintiff in Fort Vancouver. That is, they
say that although they had a contract with the government, the government nevertheless
breached a separate duty to them – the duty to refrain from damaging other property with
the dike the government has partially constructed. The government, by contrast says Fort
Vancouver is distinguishable because “there was a contractual arrangement, but also a
separate tort – negligently causing the fire.” Reply, Dkt. 30, at 5. The government says

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that, unlike the timber company, the ranchers “cannot identify a tort separate from the
breach of contract.” Id.
The government also says that “[t]o reach Plaintiffs’ claims, the Court would first
have to determine whether the United States breached the leases [i.e., the use agreements]
– a determination outside this Court’s jurisdiction.” Motion Mem., Dkt. 23, at 8. At the
same time, however, the government says it had no contractual obligation to construct the
dike and, further, it has no contractual obligation to remove the partially constructed
dikes. So the ranchers’ point is ultimately well taken: The dike is sitting there regardless.
It may be contractually permissible for the dike to be there, and it may not be. But the
larger point, according to the plaintiffs, is that the government has a duty – separate and
apart from any contract – to refrain from damaging their property. The Court thus
concludes that the plaintiffs could choose to pursue tort claims without running afoul of
the Tucker Act.
The only problem is that the complaint, as drafted, often focuses on the underlying
contractual relationship between the parties, with plaintiffs implicitly asking this Court to
resolve disputes about that contract. For example, plaintiffs repeatedly allege that the
government breached various duties to the them after the contract was allegedly
rescinded. See, e.g., Compl., Dkt. 1, ¶ 65 (alleging that the government breached duties
by failing to remove the dike “after the Agreement was rescinded”); see also id. ¶¶ 67,
69, 71, 73, 77, 85-90, 92-94). These sorts of allegations muddy the waters, because even
though plaintiffs’ claims are labeled as torts, it appears that they are seeking to resolve

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contract questions. That said, however, Plaintiffs could easily pursue tort claims on the
stated facts. The Court will therefore grant the government’s motion to dismiss, though it
will give plaintiffs an opportunity to amend their complaint to pursue tort claims.
Granted, the government may still choose to assert a defense to plaintiff’s repleaded tort claims based on the parties’ underlying contract, but such a defense would
not strip the Court of jurisdiction over plaintiffs’ tort claims. See Kennewick Irrigation
Dist. v. United States, 880 F.2d 1018, 1032 (9th Cir. 1989) (the “government may of
course assert a contractual defense in a tort action under the FTCA without running afoul
of the Tucker Act, 28 U.S.C. § 1346(a)(2), . . . .”); see also Aleutco Corp. v. United
States, 244 F.2d 674 (3d Cir. 1957). 3 Likewise, the government may claim that
plaintiffs’ claims are barred by the statute of limitations, but the Court will table that
issue for another day. Among other things, the limitations issue has not been fully
briefed as the government raised it on reply.
2.

Takings
The government next argues that plaintiffs’ claims sound “suspiciously” like

takings claims, rather than tort claims. Under the Tucker Act, the Court of Federal
Claims has exclusive jurisdiction over takings claims exceeding $10,000. 28 U.S.C.

3

In response to the Court’s questions regarding this issue during oral argument, the government
submitted a helpful post-argument brief. In this brief, the government stated, “It appears that the
Government’s ability to assert a contract-related defense may not render re-pleading futile.” Notice of
Supp. Authority, Dkt. 37, at 2.

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§ 1491 (referring to exclusive jurisdiction over suits “founded either upon the
Constitution . . . or any express or implied contract with the United States.”).
But just because a particular set of facts could support a takings claim does not
mean that plaintiffs must pursue such a theory. See, e.g., Hansen v. United States, 65
Fed. Cl. 76, 101 (2005) (“tort and takings claims may arise from the same operative facts,
both in practice and in principle”). Rather, the fact that the government’s alleged actions
might support a takings claims simply demonstrates that those same facts could support
tort claims. “While not all torts are takings, every taking that involves invasion or
destruction of property is by definition tortious.” Hansen v. United States, 65 Fed. Cl.
76, 99 (2005).
The government relies on Myers v. United States, 323 F.2d 580 (9th Cir. 1963) to
support its assertion that plaintiffs are actually alleging takings claims, as opposed to tort
claims. The plaintiffs in Myers requested a damage award under the FTCA for trespass
and waste resulting from road construction which allegedly altered private roads and
driveways, involved unauthorized digging and destruction of lands, destroyed timber and
trees, resulted in parking equipment on private lands, obstructed entry to places of
business, and made it necessary to move one plaintiff’s home. With almost no
explanation, the Ninth Circuit concluded that these allegations meant that the plaintiffs
were alleging Fifth Amending takings claims: “To us the claims of appellants against the
United States are founded upon the [Fifth Amendment of the] Constitution, and the acts

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of the United States complained of are in the nature of [a taking by] inverse
condemnation.” Id. at 583.
Myers does not control the outcome here because after that case was decided, the
Ninth Circuit adopted a less restrictive approach to finding jurisdiction under the FTCA.
See, e.g., Walsh v. United States, 672 F. 2d 746 (9th Cir. 1983) (claim sounds essentially
in tort rather than in contract when a landowner sued the United State as owner of a
highway easement for negligently permitting cattle guards to become damaged).
3.

The Quiet Title Act
Finally, the government says jurisdiction cannot arise under the Quiet Title Act, 28

U.S.C. § 2409a, suggesting that title is not, in fact, disputed. At the same time, however,
the government will not expressly concede that the plaintiffs in fact own the disputed,
lakebed property. Given that, the Court concludes that title to the lakebed property
remains in dispute – meaning that jurisdiction could arise under the Quiet Title Act.
Plaintiffs’ complaint expressly refers to the Quiet Title Act, stating, “This action
arises under the Federal Tort Claims Act, 28 U.S.C. § 2674 (“FTCA”), under Idaho
negligence, trespass, nuisance, and other state law, and under the Quiet
Title Act, 28 U.S.C. § 2409a.” Compl., Dkt. 1, ¶ 10. at 3 (emphasis added).
The government also says plaintiffs failed to properly plead a Quiet Title action
because they did not join the State of Idaho, which claims an interest in the property. See
Reply, Dkt. 30, at 9. Failing to join a necessary party is not a jurisdictional defect,
however. See Fed. R. Civ. P. 19; Fed. R. Civ. P. 12(b)(7).

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Theoretically, then, plaintiffs could allege a quiet title action. The question is
whether they have actually done so. The Court concludes they have not. They do not,
for example, seek a declaration establishing title in their names. Nevertheless, given that
the government has refused to concede title, and further indicates that the State of Idaho
refuses to concede title, the Court will allow plaintiffs to amend their complaint to state a
quiet title action.
ORDER
IT IS ORDERED that Defendant’s Motion to Dismiss (Dkt. 23) is GRANTED
WITH LEAVE TO AMEND. Plaintiffs shall file any amended complaint within 21
days of this Order.
DATED: September 29, 2016

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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