Show Me The Money (In The Court of Federal Claims), Williamson County Ripeness, And A Possible Circuit Split

When the case is captioned "Jerry McGuire v. United States," and involves an inverse condemnation claim seeking compensation from the government, how could anyone resist making a reference to Jerry Maguire, the 1996 Cameron Crowe film that added "show me the money" to the lexicon?  I couldn't, nor, apparently, could others.

In McGuire v. United States, No. 06-15812 (9th Cir. Dec. 24, 2008), the government might have to show Jerry the money, but not in a district court. The Ninth Circuit held that an inverse condemnation claim brought by McGuire against the federal government (the Bureau of Indian Affairs) for removing a bridge connecting two parcels of land that he leased from the Colorado Indian River Tribe, could only be heard in the Court of Federal Claims.

Williamson County Final Decision

After the bridge was removed, McGuire filed for bankruptcy protection, and brought the claim for just compensation in the bankruptcy court, which held that the federal government waived its sovereign immunity in the Tucker Act, 28 U.S.C. § 1491.  After trial, the bankruptcy court recommended a finding that "the United States had committed a regulatory taking of McGuire's leasehold interest and recommended an award of $1,132,05960 in damages -- the fair market value of the lease on the entire property for the remaining five years of the lease."  Slip op. at 16745. The district court disagreed, relying upon Williamson County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) to find the regulatory taking claim was not ripe because the BIA had not denied an application for a permit to build a new bridge. Id.

The district court relied upon the "final decision" requirement in Williamson County, which requires that the reviewing court know the "nature and extent" of permitted use before determining the legality of restrictions (we recently filed an amicus brief urging the U.S. Supreme Court to review this issue).  McGuire had not obtained a permit to build another bridge, but the Ninth Circuit held that he "sufficiently complied with the permitting system as practiced by the [government]." Slip op. at 16746.  Although the BIA had formal permit application procedures, the BIA superintendant testified at trial that, in practice, the BIA did not follow them, that those who want to build a bridge simply approach the BIA and say "[w]e'd like to put a bridge here," and that he had never personally received a written proposal during his tenure at the BIA." Id. at 16747.  Over the years, McGuire had approached the BIA a number of times, and did "everything reasonably within his power to prevent removal of the bridge and, when those efforts proved ineffective, to build a new one." Id. The Ninth Circuit held this was sufficient, and a formal application would serve no purpose.

Tucker Act Waiver and the Court of Federal Claims

However, McGuire was destined for disappointment, at least for now, because having found the case ripe for review, the Ninth Circuit determined that it could only be brought in the Court of Federal Claims, since under the Tucker Act, the federal government has only waived its sovereign immunity for non-tort monetary claims in excess of $10,000 in the CFC. See United States v. Hohri, 482 U.S. 64 (1987).  Regulatory takings claims seeking just compensation are covered by the Tucker Act's waiver of immunity, and thus must be brought in the CFC.

Finally, the Ninth Circuit considered whether the Bankruptcy Code provided an independent basis for the district court to exercise jurisdiction over the claim.  See slip op. at 16751. The court held that although the district court could exercise jurisdiction because the inverse condemnation claim was "related to" the chapter 11 bankruptcy case, the federal government had not waived sovereign immunity in the Tucker Act except as to suit in the Court of Federal Claims.

Circuit Split?

To reach this result, the court disagreed with the Federal Circuit's ruling in Quality Tooling v. United States, 47 F.3d 1569 (Fed. Cir. 1995), which held that the Tucker Act "broadly waived" the government's immunity, and that district courts sitting as bankruptcy courts have "plenary authority over the bankrupt's estate and all claims by or against it."  The Ninth Circuit's decision seems to create or deepen a split in the circuits over the scope of the Tucker Act's waiver of sovereign immunity, and, as we all know, one of the best tickets for SCOTUS review is the "circuit split."