Here's the latest in the Houston flood cases against the federal government asserting inverse condemnation, which we've been following.
In this Opinion and Order, the Court of Federal Claims (Judge Lettow) rejected the Government's motion to dismiss, deferring it until trial. If you want a quick rundown of the case, the procedures, and the claims, you can't do better than the order. It also sets out the Arkansas Game test established by the Supreme Court:
To establish a viable takings claim, a plaintiff must prove two things. First, he or she must show that he or she has “a property interest for purposes of the Fifth Amendment.” Members of the Peanut Quota Holders Ass’n v. United States, 421 F.3d 1323, 1330 (Fed. Cir. 2005) (citing Conti v. United States, 291 F.3d 1334, 1339 (Fed. Cir. 2002)); Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir. 2001) (“[O]nly persons with a valid property interest at the time of the taking are entitled to compensation.”) (internal citations omitted). Second, he or she must establish that the government’s actions “amounted to a compensable taking of that property interest.” American Pelagic Fishing Co. v. United States, 379 F.3d 1363, 1372 (Fed. Cir. 2004). For flooding cases, the Supreme Court has identified at least five factors relevant to, but not necessarily dispositive of, this latter inquiry. See Arkansas Game I, 568 U.S. at 38-39. They include (1) time—the duration of the physical invasion; (2) causation; (3) intent or foreseeability, that is, “the degree to which the invasion is intended or is the foreseeable result of authorized government action;” (4) “the owner’s reasonable investment-backed expectations regarding the land’s use,” including “the character of the land;” and (5) the “[s]everity of the interference.” Id. (internal quotations omitted); see also Arkansas Game II, 736 F.3d at 1369-75 (considering each of these factors).
Slip op. at 6.
The Government raised five issues in its motions to dismiss:
- Statute of limitations - the dams at issue were built 70 years ago, last modified in the 1980's. That's more than six years ago. The court concluded, however, the taking was experienced by the plaintiffs in 2016, and they filed suit within six years of that date. Slip op. at 7-8.
- Action vs inaction - the court held that the complaints alleged that government action in building the dams -- not its inaction of not buying land -- was the complained-of action. Slip op. aat 8.
- Property interest - the court rejected the Government's argument that under Texas law, the property owners do not possess a property interest in keeping water off their land in these circumstances. Slip op. at 10 ("Almost as if he were addressing this case directly, then-Justice Willett, writing for the Texas Supreme Court, explained: “[W]here the government made a conscious decision to subject particular properties to inundation so that other properties would be spared, as happens when a government builds a flood-control dam knowing that certain properties will be flooded by the resulting reservoir[,] . . . of course the government must compensate the owners who lose their land to the reservoir.”).
- Investment-backed expectations - The Government also argued that because the property owners purchased their land after construction of the dams, they had no expectation the dams would not one day flood their properties. No, held the court, Palazzolo says otherwise: "The government’s argument based on preexistence fails. Palazzolo explicitly rejects the “sweeping rule” that “[a] purchaser or a successive title holder . . . is deemed to have notice of an earlier-enacted restriction and is barred from claiming that it effects a taking.” Slip op. at 12 (citing Palazzolo, 533 U.S. at 626).
- Police power - Finally, the court rejected the Government's claim that because it was exercising its police power to protect property and life, it could not be liable for a taking. Slip op. at 12 ("Thus, it was not that the government had to respond to Tropical Storm Harvey as an emergency that necessitated the flooding of private land, but rather it was the design of the dams and the government’s procedures for operating them, all put in place well before Harvey arrived. The government cannot, therefore, invoke its police power to limit plaintiffs’ property rights and obtain dismissal of their complaint.").
Claimants who assert inverse condemnation based on government induced flooding also must prove that "treatment under takings law, as opposed to tort law, is appropriate under the circumstances." Slip op. at 7 (quoting Ridge Line, Inc. v. United States, 346 F.3d 1346, 1355 (Fed. Cir. 2003)). The court rejected the Government's invitation to adopt a "one free flood" rule, noting (correctly, in our view) that the Supreme Court rejected that same argument in Arkansas Game.
Final analysis of all of the Government's arguments requires development of a factual record, and since this was a motion to dismiss for failure to state a claim and for lack for jurisdiction, the court accepted the complaints' version of the facts, reserving final ruling until later.
In other words, stay tuned.