If that headline calls out to you, congratuations: you are officially a takings nerd.
In Brandt v. United States, No. 12-5050 (Mar. 26, 2013), the Federal Circuit held that a takings claim originally submitted as a compulsory counterclaim to the federal government's attempt to quiet title in a District Court action -- which was then subsequently filed as a separate action in the Court of Federal Claims -- was not barred by 28 U.S.C. § 1500. That statute deprives the CFC of subject-matter jurisdiction "of any claim for or in respect to which the plaintiff ... has pending in any other court any suit or process against the United States...."
If this case name sounds familiar, here's why. Last week we posted the cert petition in a companion case (the one that the government alleged was pending at the time that Brandt filed his takings counterclaim). Brandt's petition challenges the Tenth Circuit's conclusion in the quiet title action that the federal government retained an "implied reversionary interest" when it issued land patents back in the day, and not simple easements that were extinguished when the rights-of-way ceased to be used as railways.
Brandt is the succesor-in-title to land originally patented and subject to a right-of-way for railroad purposes. In 1996, the railroad filed a notice with the Surface Transportation Board that it was abandoning rail service and the right-of-way. After the abandonment process completed in 2004, the federal government instituted a quiet title action in the District of Wyoming, seeking a declaratory judgment that the right-of-way was government property and not the Brandts, because it was an "implied reversionary interest" and not an easement. Reversionary interests cannot be extinguished, while easements may be.
Brandt asserted a counterclaim arguing that "to the extent the government acquired some interest in the portion of the land formerly occupied by the railroad easement, that interest would constitute a taking for which just compensation is owed." Slip op. at 3. Apparently Brandt's counsel was following along with Horne, and requested the District Court bifurcate the takings counterclaim and transfer it to the CFC. The District Court partially agreed, and bifurcated the quiet title and the takings issues, but stayed the takings claim while it adjudicated the quiet title claim. After the court ruled in favor of the government on the quiet title claim, it dismissed Brandt's takings counterclaim for lack of subject-matter jurisdiction. After the District Court dismissed, but before Brandt filed his Tenth Circuit appeal, he instituted a Tucker Act claim for the taking in the CFC.
The CFC action alleged the District Court's ruling effected a taking, and that "but for the court's application of [the federal rails-to-trails statute], the easement would have been terminated upon abandonment and no longer would have burdened his property." Slip op. at 6. The Tenth Circuit eventually affirmed the quiet title ruling. See United States v. Brandt, No. 09-8047, slip op. at 5 (10th Cir. Sep. 11, 2012). That's the case now up on the cert petition.
Meanwhile, back in the CFC the government moved to dismiss the takings claim under § 1500 and the Supreme Court's decision in United States v. Tohono O'odham Nation, 131 S. Ct. 1723 (2011), arguing that in Tohono, the Supreme Court held that two lawsuits are "for or in respect to the same claim" when they are based on the same operative facts, and Brandt's CFC takings claim and his District Court counterclaim were based on the same facts and were "pending" when Brandt filed the CFC complaint. The CFC agreed and dismissed:
Specifically, the court found that: (1) Brandt’s case was "pending" within the meaning of § 1500 when he filed in the Court of Federal Claims because the time for filing a notice of appeal to the Tenth Circuit had not yet expired; and (2) Brandt’s takings claim filed in the Court of Federal Claims was "for or in respect to" the claims filed in Wyoming district court because they shared "substantially the same operative facts."
Slip op. at 7.
The Federal Circuit reversed, holding that even though § 1500 was designed to "save the Government from burdens of redundant litigation," slip op. at 8 (quoting Tohono, 131 S. Ct. at 1729-30), and a counterclaim is a "suit or process," the counterclaim was no longer "pending" in the District Court at the time he filed the CFC lawsuit even though the time for Brandt to appeal to the Tenth Circuit had not yet expired (and indeed, he did appeal shortly thereafter). Brandt also argued that the takings claim did not arise from the "same operative facts" because it only ripened once the District Court ruled in the government's favor on the quiet title issue.
The Federal Circuit agreed that the District Court case was not "pending" even though the appeal period had yet to expire at the time Brandt filed the CFC complaint. The District Court's judgment was final but Brandt had not yet instituted the Tenth Circuit appeal, and thus, in the interregnum there was not a "suit or process against the United States pending in any court." The case had been dismissed by the CFC which means it was no longer "pending." When the Tenth Circuit notice of appeal was subsequently filed, Brandt had already filed his CFC complaint, and subject-matter jurisdiction is measured at the time the complaint is filed.
According to the government, Brandt should have waived his right to appeal in order to be able to file his CFC takings claim. Read that again in case it didn't soak in:
According to the government, Brandt should have affirmatively waived his right to appeal the district court’s decision to signify that the case was officially terminated. The government cites no authority requiring a litigant to forgo its appellate rights in these circumstances, and we have found none. Although the government is correct that § 1500 "was enacted to prevent a claimant from seeking recovery in district court and the Court of Claims for the same conduct pleaded under different legal theories" and to prevent the government from having to defend against duplicative lawsuits, Trusted Integration, 659 F.3d at 1163, here, it was the government – not Brandt – that affirmatively chose to file suit in district court. And, as Brandt points out, once the government filed suit, he was compelled to file counterclaims relating to the abandoned railroad easement or risk waiving his right to do so. See Fed. R. Civ. P. 13(a)(1)(A) ("A pleading must state as a counterclaim any claim that – at the time of its service – the pleader has against an opposing party if the claim: arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim").
Slip op. at 18. The court rightly rejected that argument as "particularly strange," given the split in the circuits. See id. at n.8.
Because it ruled in favor of Brandt, the court did not address the argument that the District Court counterclaim and the CFC takings claim arose from the "same operative facts."
One final note. In Tohono, a case involving the Indian Tucker Act and claims of breaches of trust, we filed an amicus brief arguing that takings claims are different than statutory and common law claims because the Fifth Amendment's compensation requirement is self-executing, and warning of the types of arguments that arose in Brandt being raised in takings cases.
Will the government seek en banc review or perhaps even a return visit to the Supreme Court? Does this decision highlight the circuit split in the other Brandt case (see, e.g., slip op. at 18 n.8)? Stay thirsty, my friends.