Update: Gideon Kanner's thoughts on the case here.
As we mentioned in this post about earlier proceedings in the case, when the plaintiff/property owner's name is "Jerry McGuire" and he is asserting a claim for compensation, it's inevitable that we all make reference to the "show me the money" catchphrase from Jerry Maguire, the 1996 Cameron Crowe film. So we have.
With that out of the way, let's get to the Federal Circuit's opinion in Maguire v. United States, No. 2012-5073 (Feb. 20, 2013), in which the court held that McGuire's takings claim was not ripe and he had no "property" that was taken.
First, the facts. McGuire leased farmland from an Arizona indian tribe, administered by the Bureau of Indian Affairs. The BIA removed a bridge that connected two of the parcels over a canal, which effectively landlocked one of the parcels. The bridge was not on the leased property, but was within a right of way owned by the BIA. Once the agency announced its plans to remove the bridge, McGuire and the
agency had some discussions regarding the possibility of him replacing it, but the
end result was that the BIA deemed his efforts "insufficient" and
eventually removed the bridge. Without access to the parcel on the other
side of the canal, McGuire's efforts to farm it were fruitless, and
after several months he stopped making lease payments. He ended up in Bankruptcy Court after seeking Chapter 11 protection.
McGuire did "not claim that removal of the bridge was itself a taking, but rather that the BIA’s alleged refusal to authorize replacement of the bridge was a taking of his property rights." Slip op. at 2. To conclude that McGuire's case became a "complex procedural history," slip op. at 5, may be an understatement, since it began in tribal court, then progressed to federal bankruptcy court which after a trial awarded him $1.132 million in compensation for his inverse condemnation claim, and ultimately wound its way to the Federal Circuit after stops in the U.S. District Court, the Ninth Circuit, and the Court of Federal Claims.
Although the bankruptcy court awarded McGuire just compensation, the district court rejected the claim because it was not ripe because he did not avail himself of the permit process, and that '[t]he fact that the permit process was nebulous d[id] not amount to a denial of a permit.'" Slip op. at 6. The Ninth Circuit held that neither the bankruptcy court nor the district court had jurisdiction to hear the takings claim, since it belonged exclusively in the CFC. Even though it lacked jurisdiction, however, the Ninth Circuit issued a ruling on the ripeness claim as a "courtesy" to the CFC, concluding that the case was ripe because McGuire had "sufficiently complied with the permitting system
as practiced by the [government]." Since the BIA's did not have a formal process, and McGuire had done everything reasonably within his power to get permission to rebuild a bridge, the CFC should not dismiss. The Ninth Circuit transferred to the CFC.
There, faced with another motion by the BIA that the case was not ripe, the CFC agreed that it would not have concluded that the takings claim was ripe, but held that it was bound by the Ninth Circuit's decision as law of the case. The CFC also rejected the BIA's motion for summary judgment on the merits, concluding that issues of fact required a trial. A bench trial in the CFC resulted in two rulings. First, the case was ripe under the law of the case doctrine. Second, on the merits, the CFC held that McGuire did not have a property interest in the removed bridge, and therefore did not have a takings claim. McGuire appealed to the Federal Circuit.
On ripeness, the court held that it and the CFC were not bound by the Ninth Circuit's ruling, "because the Ninth Circuit lacked authority to decided the question, which was a prudential inquiry not necessary to the transfer decision." Slip op. at 8. The court's analysis mostly focused on the language and meaning of the transfer statute, 28 U.S.C. § 1631, and concluded that there was "no question" that the district court and the Ninth Circuit did not have subject matter jurisdiction over McGuire's claim for compensation. Thus, that court's ripeness analysis was merely "prudential" and not binding on the CFC or the Federal Circuit.
The Federal Circuit therefore revisited the ripeness issue, and concluded that McGuire did not obtain a "final decision" from the BIA regarding how it would (or would not) be allowed to develop his property. The court held there was a permitting process "available" that might have resulted in McGuire being able to replace the removed bridge. The court found it of little import that the process was "informal rather than formal" --
Although the government never provided McGuire with a written form listing the requirements of a written submission, a permitting process existed. McGuire was referred to the process of § 171.9 on numerous occasions, and he was told to submit written plans with specifications. Thus the process, albeit informal, required something in writing from McGuire.
The informal nature of the procedures does not allow McGuire to escape the exhaustion requirement.
Slip op. at 13 (citing Estate of Hage v. United States, 687 F.3d 1281, 1290 (Fed. Cir 2012)). The court rejected McGuire's argument that he informally complied with this informal process, and that he did not show that further requests would be futile:
In sum, McGuire had a burden to pursue the available administrative remedies, and to secure a final decision from the agency. He failed to do so. McGuire’s claim thus fails for lack of ripeness.
Slip op. at 17.
Next, the Federal Circuit held that even if ripe, McGuire's takings claim failed because he did not show he had a property interest in replacing the bridge:
Here, McGuire presents several theories as to why he had a cognizable property interest. He argues that he had a property interest because (1) the CRIT lease provided him with access rights to the bridge; (2) BIA regulations conferred rights allowing him to replace the bridge; (3) he had an easement by necessity in the bridge; and (4) his investment-backed expectations created a property interest in accessing the bridge.
Slip op. at 18. The court rejected each in turn. Id. at 19-23.
Thus, the end result (assuming there's not a cert petition) of this odyssey is that McGuire has been through six courts, two trials and two appeals, and years of litigation, only to be told "you're too early." Yeah, the process for McGuire to request to rebuild the bridge is so informal that even the BIA doesn't seem to understand what the process is, but hey, he still has to take a run at it. It seems to us that the burden should be on the agency, not the property owner, to show that there exists an obvious, clear, and formalized process to ask permission to rebuild. Otherwise, administrative approvals become a game much like those of which the Supreme Court disapproved of in Del Monte Dunes.
It's the BIA's own procedures -- shouldn't it know it and be able to tell McGuire what it is?
Maguire v. United States, No. 12-5073 (Feb. 20, 2013)
