Today's post is by our colleague Thor Hearne, who regularly represents property owners in the Court of Federal Claims, the Federal Circuit, and the Supreme Court. He recently joined us on the faculty of the ALI-ABA eminent domain program in San Diego, and spoke at the 2011 Brigham-Kanner Property Rights Conference in Beijing. He's familiar to our readers who have followed his success in "rails to trails" cases in the CFC, and for his earlier guest posts on these issues. Thor reports on the latest developments in attorneys fee recovery in Tucker Act and Little Tucker Act cases below.
For more on the issue Thor discusses, see DOJ Ordered to Pay $2.24M in Legal Fees in Property Dispute (Blog of Legal Times).
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The Justice Department’s most recent defeat in a series of losses the DOJ has suffered was handed to the DOJ last week by Judge Williams of the Federal District of Idaho.
This decision – the latest in a series of decisions – was issued in the case Hash v. United States, 2012 WL 1252624 (D. Idaho) (Slip op. April 13, 2012). Hash is a Little Tucker Act inverse condemnation case in which the federal government took land pursuant to the National Trails System Act 16 U.S.C. §1241 et. seq. under the federal “Rails-to-Trails” program. Since the 1990 Supreme Court decision in Preseault v. I.C.C., 494 U.S 1 (1990), it has been settled law that the conversion of abandoned railway easements gives rise to a compensable per se taking for which the Fifth Amendment requires the government to pay the landowner "just compensation." See Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996 (en banc); Toews v. United States, 376 F.3d 1371 (Fed. Cir. 2004) and Ladd v. United States, 630 F.3d 1015 (2010) to name only three of the many Federal Circuit decisions affirming this settled point of law.
And, yet, the Justice Department still refuses to admit the federal government’s constitutional obligation to pay landowners for that property which the government had taken under the Trails Act. Instead, the Justice Department chose (in Hash and almost every other Trails Act case) to "vigorously contest[] this action for a period of almost ten years." The Justice Department contested – and lost - every possible issue. The district court and the Federal Circuit rejected the Justice Department’s arguments. See Hash, 403 F.3d 1308 (Fed. Cir., 2005).
The Justice Department’s failed "scorched-earth" litigation strategy came at significant cost to the taxpayers. The land which the federal government took from the landowners bringing the Hash case was worth $883,312. But, the landowners’ litigation expenses and attorney fees totaled almost $2.4 Million. Federal law requires the government to reimburse landowners for their litigation expenses and legal fees in inverse condemnation cases. See the Uniform Relocation Assistance and Real Estate Acquisition Act, 42 U.S.C. §4601 et. seq. The Justice Department claimed the landowners should only be reimbursed $685,000 in legal fees and litigation expenses for this decade-long lawsuit. As with the Justice Department’s other arguments, the court rejected the Justice Department’s attempt to shortchange the landowners’ legal fees. Judge Williams ordered the government to reimburse the landowners for more than $2.25 million in legal fees and expenses.
We do not know how much taxpayer money the Justice Department itself spent pursuing its failed – yet expensive – litigation strategy. (The Justice Department had to pay their own team of lawyers, experts and incurred significant litigation expenses.) This decade of losing litigation must have cost the Justice Department something at least close to the $2.25 million the landowners had to spend. Even if the Justice Department spent only $1.5 million, the total bill to the taxpayers for this decade of litigation is more close to $4 million. And the Justice Department spent all of these taxpayer funds to resolve an $800,000 liability. Were a lawyer in private practice to manage litigation in this manner, he would not last long in the profession.
And, the taxpayers are not the only victims of the DOJ’s failed litigation strategy. The landowners whose property the government took had to endure a decade of litigation before they were finally paid the "just compensation" these citizens are guaranteed under our constitution.
This is not an isolated case. In one of the earlier Trails Act taking cases the Justice Department required the landowner to endure years of scorched-earth litigation to recover about $19,000 for a strip of land the government had taken. Had the Justice Department been willing to admit the government’s liability and settled this claim, the Justice Department could have saved the taxpayers hundreds of thousands of dollars. Instead, the Justice Department made the landowner incur about $300,000 in legal fees litigating the claim. The landowner won and the government had to reimburse the owner the $300,000 they incurred in legal fees.
Currently, thousands of other landowners’ Trails Act taking claims are pending in cases now before the U.S. Court of Federal Claims. The Environmental and Natural Resources Division (ENRD) of the Justice Department is responsible for resolving these cases. In 2002 Congress held hearings into the ENRD’s management of Trails Act cases and directed the then-Assistant Attorney General to more cost-efficiently, more promptly, and more fairly resolve these citizens’ constitutional right to be paid for the property which the federal government has taken. See Litigation and its effect on the Rails-to-Trails Program: Hearing before the Sub Comm. On Commercial and Administrative Law of the H. Comm. on the Judiciary, 107th Cong., 2 (2002).
And, yet, in almost every Trails Act taking case the Justice Department is still making landowners endure (and taxpayers fund) the same failed “scorched-earth" litigation strategy. In just the past year and a half, the Justice Department has repeatedly made the same (or very similar) argument trying to escape liability. The court has rejected the Justice Department’s argument in seventeen consecutive decisions. (See list below).
As the award of the attorney fees in Hash v. United States demonstrates, the DOJ’s litigation strategy is an exorbitant waste of taxpayer funds. When the law is settled and the government owes these landowners a clear constitutional obligation to pay them for the property it has taken, there is no justification for protracted litigation. This is especially so when the government must pay both its own cost of litigating the case and reimburse the landowner and pay interest for the sometime decade-long delay while the government litigates the case.
It is time someone at Justice evaluate the ENRD division’s failed litigation strategy and find a more just and cost-efficient manner to resolve the federal government’s constitutional obligation to pay landowners whose property the government has taken as part of the Trails Act. The Justice Department’s current strategy is a frivolous waste of the taxpayers’ money.
- Jenkins v. United States, 2011 WL 6393515, Fed. Cl., Dec. 20, 2011 (No. 09-241L) (Firestone, J.) (Iowa) (holding the government liable pursuant to the Trails Act for taking the Iowa landowners’ right to regain unencumbered fee title to their land);
- Ybanez v. United States, --- Fed. Cl. ----, 2011 WL 6016979, Fed. Cl., Dec. 05, 2011 (No. 09-172L) (Hodges, J.) (Texas) (holding the “The measure of just compensation is the difference between the value of plaintiffs' land unencumbered by a railroad easement, and the value of plaintiffs' land encumbered by a perpetual easement for recreational trail use.”);
- Rogers v. United States, --- Fed. Cl. ----, 2011 WL 5154550, Fed. Cl., Oct. 31, 2011 (No. 07-273L, 10-187L, 07-426L, 10-200L, 08-198L) (Williams, J.) (Florida) (holding the proper measure of compensation is the difference between the land unencumbered by a railroad easement and the land encumbered by an easement for recreational trail use and railbanking);
- Raulerson v. United States, 99 Fed. Cl. 9 (2011) (Margolis, J.) (South Carolina) (holding the proper measure of compensation is the difference between the land unencumbered by a railroad easement and the land encumbered by an easement for recreational trail use and railbanking);
- Geneva Rock Products, Inc. v. United States, 2011 WL 4099150, Fed. Cl., Sept. 15, 2011 (No. 08-920L) (Lettow, J.) (Utah) (granting Utah landowners’ motion for class certification on Trails Act takings case);
- Toscano v. United States, 98 Fed. Cl. 152 (2011) (Bruggink, J.) (Utah) (granting Utah landowners’ motion for class certification on Trails Act takings case);
- Farmers Co-op. Co. v. United States, 98 Fed. Cl. 797 (2011) (Damich, J.) (Kansas) (finding “a right-of-way for railway purposes and that such purposes are distinct from, and inconsistent with, use of the right-of-way as a recreational trail.”);
- Ellamae Phillips Co. v. United States, --- Fed. Cl. ---, 2011 WL 2466201 *7 (Jun. 21, 2011)., (Baskir, J.) (Colorado) (“There is clear consensus that recreational trail use is fundamentally different in nature than railroad use.”);
- Biery v. United States, 99 Fed. Cl. 565 (2011), (Firestone, J.) (Kansas) (“Indeed, a recreational trail is only viable where the operation of trains has ceased. As such, recreational trail use is outside the scope of a railroad purpose easement.”);
- Ybanez v. United States, 98 Fed. Cl. 659 (2011) (Hodges, J.) (Texas) (“The original parties to railroad conveyances between 1887 and 1891 would not likely have contemplated use of the right-of-way as a recreational trail. Such a use would be ‘clearly different’ from railway operations.”);
- Capreal, Inc. v. United States, 99 Fed. Cl. 133 (2011) (Wheeler, J.) (Massachusetts) (“A railroad…has the primary purpose of transporting goods and people. The purpose of a recreational trail is fundamentally different. A bicycle trail does not exist to transport people but rather to allow the public to engage in recreation and enjoy the outdoors. The two uses are distinct and an easement for a recreational trail is not like in kind to an easement for railroads.”);
- Anna F. Nordhus Trust v. United States, 98 Fed. Cl. 331 (2011), (Wheeler, J.) (Kansas) (“To state the obvious, removing tracks to establish recreational trails is not consistent with a railroad purpose, and cannot be regarded as incidental to the operation of trains.”);
- Macy Elevator v. United States, 97 Fed. Cl. 708, 730 (2011), (Firestone, J.) (Indiana) (“The taking arises because recreational trail use does not fall within the scope of the original railroad easement”);
- Thompson v. United States, __ Fed. Cl. ___ (Slip Op. October 13, 2011), 2011 WL 4914782 (Braden, J.) (Michigan);
- Hodges v. United States, __ Fed. Cl. __ (Slip Op. October 25, 2011), 2011 WL 5042383 (Damich, J.) (Michigan);
- Buford v. United States, __ Fed. Cl. ___ (Slip Op. February 7, 2012), 2012 WL 401607 (Smith, J.) (Mississippi);
- Beres v. United States, 97 Fed.Cl. 757 (2011) (holding that deeds to railroads conveyed and easement rather than a fee simple interest and finding that so-called “rail-banking” is not a railroad purpose within contemplation of the original easements by which the railway line was established.) (Horn, J.) (Idaho).
