White Oak Realty, LLC et al v. United States Army Corps of Engineers et al

Filing 203

ORDER AND REASONS granting 185 Motion for Summary Judgment. Plaintiffs' claims are DISMISSED WITH PREJUDICE. Signed by Judge Jane Triche Milazzo on 3/28/2017. (ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

WHITE OAK REALTY, LLC

CIVIL ACTION

VERSUS

NO: 13–4761

UNITED STATES ARMY CORP
OF ENGINEERS, ET AL.

SECTION “H”(3)

ORDER AND REASONS
Before the Court is Defendants’ Motion for Summary Judgment (Doc.
185). For the following reasons, the Motion is GRANTED.
BACKGROUND
This is a civil action for declaratory and injunctive relief. The plaintiffs
are White Oak Realty, LLC and Citrus Realty, LLC. The defendants are the
United States Corps of Engineers (the “Corps”) and various Corps employees.
The dispute involves mitigation requirements imposed by the Corps on a tract
of land in Southeast Louisiana (“Idlewood Stage 2”), jointly owned by Plaintiffs.
In response to the devastation caused by Hurricanes Katrina and Rita,
Congress authorized the Corps to undertake a series of projects collectively
known as the Hurricane and Storm Damage Risk Reduction System
1

(“HSDRRS”). One of these projects involves the use of soil and clay (“borrow
material”) to reinforce levees and floodwalls in the Gulf South. In order to
respond to the unprecedented amount of borrow material needed for this
project, the Corps instituted the contractor-furnished borrow program. The
contractor-furnished borrow program allows landowners to have their land
pre-qualified as a suitable source for borrow material based on certain
requirements. 1 These government-approved properties are then placed on a
list for selection as supply sources by contractors working on the levee project.
Contractors may then select a borrow supplier from that list, and the borrow
is excavated for use on the Corps’s projects.
At some point in 2010, Plaintiffs discovered the presence of borrow
material on their property.

They subsequently filed a “suitability

determination” with the Corps to confirm the borrow material could be used in
HSDRRS projects.

Some of the property (Idlewild Stage 1) was quickly

qualified and clay mining began. On other portions (Idlewild Stages 2 and 3),
the Corps approved the land’s use for borrow material but found that the
excavation of borrow material would cause “unavoidable impacts” to the
bottomland hardwood (“BLH”) forests on the property, and therefore
mitigation would be required. In addition, the portions of the land that were
wetlands were excluded from excavation. Plaintiffs, therefore, sought to mine
clay only from the uplands portions of Idlewild Stage 2 and that area was later
cleared of the BLH forest.
In a letter dated November 4, 2010, the Corps notified Plaintiffs that
Idlewood Stage 2 “appears to be acceptable for use as a source” of borrow
material. The letter confirmed the preliminary report’s determination that
excavation would harm the environment.
1

Doc. 115-4, p. 12.

2

The letter required “proof of

mitigation to the Corps[] . . . prior to excavation.” The Corps issued a similar
letter on April 14, 2011, reaffirming the requirement that the impacts to the
BLH forests on the land be mitigated. The letter informed Plaintiffs that their
“compensatory mitigation requirements may be met” by obtaining credits from
select mitigation banks.
Plaintiffs subsequently hired Mitigation Strategies, LLC (“Mitigation
Strategies”) hoping to convince the Corps of the “legal and factual errors
underlying [its] mitigation requirements.” Mitigation Strategies argued to the
Corps on numerous occasions that mitigation was neither necessary nor
appropriate under the law. In the alternative, if mitigation was required,
Mitigation Strategies argued the law required in-kind mitigation, rather than
the purchase of credits from mitigation banks.
The Corps disagreed. A February 20, 2013 letter from the District
Commander reiterated the Corps’s position that if borrow material from
Idlewood Stage 2 is used in connection with the HSDRRS project, the impacts
to the BLH forests on that land must be mitigated (the “Mitigation
Requirement”). It further confirmed the Corps’s position that such mitigation
must occur through the purchase of mitigation bank credits (the “Purchase
Requirement”).
As a result of the Corps’s position, Plaintiffs filed this suit, arguing that
the Water Resource Development Act of 2007 (“WRDA”), 33 U.S.C. § 2201 et
seq., does not require mitigation for Idlewood Stage 2 or alternatively, that the
WRDA does not authorize the Corps to mandate the purchase of mitigation
credits as the sole form of compensatory mitigation. This Court has previously
dismissed all of Plaintiff’s claims on summary judgment, save a regulatory
takings claim. Defendant has filed the instant Motion for Summary Judgment
seeking dismissal of that remaining claim.
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LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” 2 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” 3
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor. 4 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.” 5 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.” 6 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial.” 7 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the

Fed. R. Civ. P. 56(c) (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
4 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 532 (5th Cir. 1997).
5 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
6 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
7 John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
2
3

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necessary facts.” 8 Additionally, “[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion.” 9
LAW AND ANALYSIS
I.

Procedural History

As a threshold matter, Plaintiffs dispute the appropriateness of
considering Defendants’ second motion for summary judgment. They argue
that Defendants’ motion is improper under the scheduling order and should be
considered under the standard of a motion for reconsideration.
This case has followed an unusual procedure. Initially, the Court set a
scheduling order establishing a trial date, as well as a deadline for nonevidentiary pre-trial motions. After the parties filed a motion for judgment on
the pleadings and cross-motions for summary judgment, however, the Court
vacated the scheduling order pending resolution thereof. 10 The parties moved
for summary judgment on all claims except the regulatory taking claim at issue
herein.

The Court granted summary judgment in Defendants’ favor and

dismissed all of Plaintiffs’ claims, save their regulatory takings claim.
Thereafter, a scheduling conference was held to select a trial date upon which
to try Plaintiffs’ remaining claim. In addition to a trial date, the Court set a
new discovery deadline and pre-trial motion deadline as well. Thereafter, the
parties conducted discovery, and Defendants filed the instant motion for
summary judgment within the deadline set by the Court. 11 Defendants argue

Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
9 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
10 Doc. 140.
11 Defendants requested a one week extension from the date originally set in the
scheduling order. Doc. 178.
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that the deposition testimony obtained after their first motion for summary
judgment was important in making their arguments in the instant motion.
“Courts have found that a subsequent summary judgment motion based
on an expanded record is permissible.” 12 The Fifth Circuit has stated that such
a determination is in the district court’s discretion. 13 “That discretion may be
exercised whether or not new evidence is submitted with the subsequent
motion.” 14 This Court, therefore, finds it appropriate to allow Defendants’
successive summary judgment motion.

Defendants move for summary

judgment on a claim not yet addressed by this Court after additional discovery
and within the deadlines set by the Court’s revised scheduling order. It is in
the interest of efficiency to review Defendants’ motion in lieu of proceeding
directly to a potentially unnecessary trial. Accordingly, this Court rejects
Plaintiffs’ procedural objections and proceeds to the merits of Defendants’
motion.
II.

Defendants’ Arguments for Dismissal

The Fifth Amendment of the Constitution prohibits the government
from taking private property without just compensation. “A ‘taking”‘ may
occur either by physical invasion or by regulation.” 15 In Plaintiffs’ remaining
claim, they assert that the Purchase Requirement constitutes a regulatory
taking. Plaintiffs seek equitable relief—namely, exclusion from the Purchase
Requirement.

Under the Supreme Court’s decision in Penn Central

Transportation Co. v. City of New York, three key factors’ guide the regulatory
taking analysis: “(1) the economic impact on the claimant; (2) the extent of

Enlow v. Tishomingo Cty., Miss., 962 F.2d 501, 506 (5th Cir. 1992).
Id.
14 Johnson v. PPI Tech. Servs., L.P., 605 F. App’x 366, 367 (5th Cir. 2015).
15 Hearts Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326, 1328 (Fed. Cir.
12
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2012).

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interference with the claimant’s investment-backed expectations; and (3) the
character of the government’s action.” 16 “The Fifth Circuit has explained that
‘[i]n order for regulatory action to rise to the level of an unconstitutional taking,
there must be a complete deprivation of the owner’s economically viable use of
his property.’” 17 Before a takings claim can be considered, however, a court
must determine whether the plaintiff holds a property interest that is
protected by the Fifth Amendment. 18 Defendants allege that Plaintiffs cannot
succeed on their regulatory takings claim either because this Court lacks
jurisdiction over the claim or because Plaintiffs lack a compensable property
interest in the property allegedly taken.

This Court will consider each

argument in turn.
A. Jurisdiction
At the outset, Defendants reassert many of the arguments previously
made in their Motion for Judgment on the Pleadings alleging that this Court
lacks jurisdiction to hear Plaintiffs’ takings claim. Defendants argue that
Congress has not withdrawn Tucker Act jurisdiction over Plaintiffs’ claims,
and thus Plaintiffs’ claims should be brought in the United States Court of
Federal Claims. This Court has already addressed these arguments, and
Defendants’ renewed objection to jurisdiction does not dissuade this Court from
its prior holding. Accordingly, this Court again holds that it has jurisdiction
to hear Plaintiffs’ takings claims for the reasons stated in Record Document
142.

Hackbelt 27 Partners, L.P. v. City of Coppell, 661 F. App’x 843, 850 (5th Cir. 2016).
Laredo Rd. Co. v. Maverick Cty., Texas, 389 F. Supp. 2d 729, 739 (W.D. Tex. 2005)
(quoting Matagorda County v. Russell Law, 19 F.3d 215, 223 (5th Cir. 1994)).
18 See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001 (1984).
16
17

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B. Compensable Property Interest
Next, Defendants argue that Plaintiffs lack a compensable property
interest in the property that they allege was taken. At the outset, the parties
dispute the nature of Plaintiffs’ takings claim.

Defendants characterize

Plaintiffs’ claim as alleging a taking of the clay itself as well as the business
opportunity to sell the clay as part of the HSDRRS project. They argue that
Plaintiffs’ ownership of Idlewild Stage 2 does not give them a right to insist
that their clay be purchased by the Corps, to demand they be exempt from the
Purchase Requirement, or to dictate the terms of the Corps’s contracts.
Plaintiffs, on the other hand, characterize their claim as one for a loss of
rights in an existing asset. They argue that their right to mine the borrow
material from Idlewild Stage 2 is inherent in their interest in the property and
that the Purchase Requirement destroyed the right to realize profits from that
material. Plaintiffs argue that ownership “means that a landowner has the
right to exercise those property rights that are inherent in ownership, such as
mining and realizing the value of sub-surface minerals, and it is that interest
that Defendants have destroyed in this case.”
“Property interests . . . are not created by the Constitution. Rather, they
are created and their dimensions are defined by existing rules or
understandings that stem from an independent source such as state law.” 19 In
order to identify the “existing rules,” a court must identify “the group of rights”
inhering to a party’s relation to a physical thing. 20
[U]nder Louisiana law, the essential features of the “bundle of
rights” commonly characterized as “property” are: (1) usus—the
right to use or possess, i.e., hold, occupy, and utilize the property;
(2) abusus—the right to abuse or alienate, i.e., transfer, lease, and
encumber the property, and (3) fructus—the right to the fruits, i.e.,
19
20

Id.
Dennis Melancon, Inc. v. City of New Orleans, 703 F.3d 262, 269 (5th Cir. 2012).

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to receive and enjoy the earnings, profits, rents, and revenues
produced by or derived from the property. 21
Under Louisiana law, the borrow material on Idlewild Stage 2 is a
“product.” Products are things the production of which result in the diminution
of the property. 22 Products belong to the owner of the property. 23 The Court
therefore agrees that Plaintiffs have a right to and interest in the products of
Idlewild Stage 2—that is, they have a right to receive earnings from the borrow
material derived from the property. The Purchase Requirement, however, does
not destroy Plaintiffs’ right to the products of the land as Plaintiffs allege. The
requirement does not affect their right to mine and sell the borrow material on
their property.

Rather, Defendants’ characterization is more fitting—the

Purchase Requirement resulted in the taking of a business opportunity.
Specifically, the Purchase Requirement lessened the value of the sale of the
borrow material for use on the HSDRRS project. The law is clear that such is
not a compensable property interest. “The sovereign must only pay for what it
takes, not an opportunity the owner loses.” 24
In Hearts Bluff Game Ranch v. U.S., the plaintiff alleged a taking when
the Corps denied it a permit to create a mitigation bank on its property. 25 The
Federal Circuit Court held that the plaintiff did not have a compensable
property right in obtaining a mitigation bank permit. 26 It stated that even
without the permit, the plaintiff was “still able to sell, assign, or transfer the
land, or exclude others from its use, as it always was able to do.” 27 The court
Id.
La. Civ. Code art. 488.
23 Id.
24 Allain-Lebreton Co. v. Dep’t of Army, New Orleans Dist., Corps of Engineers, 670
F.2d 43, 45 (5th Cir. 1982).
25 Hearts Bluff Game Ranch, Inc., 669 F.3d at 1328.
26 Id. at 1331–32.
27 Id. at 1331.
21
22

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went on to say that it has “rejected claims of a cognizable property interest in
government programs where the government has discretionary authority to
deny access to that program.” 28
In Schooner Harbor Ventures, Inc. v. U.S., the plaintiff alleged a takings
claim when it was required to give seventy-seven acres of property to the Fish
and Wildlife Service (“FWS”) to be used as a wildlife refuge in order to sell
another parcel of land to the U.S. Navy. 29 The plaintiff alleged that “it could
not sell to the Navy without meeting the Navy’s conditions, and that FWS’s
determination of the scope of those conditions constitutes a taking.” 30 The
Federal Circuit Court agreed with the lower court’s decision that the plaintiff
did not have a compensable right to sell its property to the United States
without any conditions imposed upon the sale. 31 It noted that the conditions
did not attempt to limit to whom plaintiff sold the property. “[T]he only
possible direct limitation on its right of alienation was . . . the inability to sell
[to the Navy] without conditions.” 32
As in these cases, here, the only limitation on Plaintiffs’ right to sell the
borrow material on its property is the condition that it is required to purchase
mitigation credits if the borrow will be used in the HSDRRS project. The
imposition of this condition is in the Corps’s sole discretion, and it does not
destroy any of the “bundle of rights” that Plaintiffs have in owning the land.
Plaintiffs are still entitled to mine and sell the borrow material on their
property. Accordingly, Plaintiffs do not have a compensable property interest

28
29

2009).

Id.
Schooner Harbor Ventures, Inc. v. United States, 569 F.3d 1359, 1361 (Fed. Cir.

Id. at 1364.
Id. The court went on to say that the district court erred in not focusing on the
plaintiff’s right to develop its land without restriction.
32 Id.
30
31

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in selling their borrow material for use in the HSDRRS without satisfying the
Purchase Requirement. 33 They therefore cannot succeed on their regulatory
takings claim, and the claim must be dismissed.
CONCLUSION
For the foregoing reasons, Defendants’ Motion for Summary Judgment
is GRANTED, and Plaintiffs’ claims are DISMISSED WITH PREJUDICE.

New Orleans, Louisiana, this 28th day of March, 2017.

JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

Defendants also argued that Plaintiffs did not even own the borrow material on
Idlewild Stage 2 at the time of the alleged taking. However, in light of its holding, this Court
need not address this argument.
33

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