You'd think the proposition in the title of this post, upheld today by the U.S. Court of Appeals for the Federal Circuit in Ladd v. United States, No. 2012-5086 (Apr. 9, 2013), would seem kind of obvious. That a landowner could not be charged with notice that a government act is a taking if the government admits to not even knowing about the event? But it wasn't, and required a court of appeals' opinion to lock it down.
This case is the latest from our colleague Thor Hearne. Readers know Thor as our semi-regular updater of the latest from the Court of Federal Claims in "rails-to-trails" takings cases, and this appeal is from a Court of Federal Claims case on that subject.
The Federal Circuit has a "bright-line rule" that the six year statute of limitations begins to run on a physical takings claim in a rail-to-trail case when a property owner's state law reversionary interest is blocked. Caldwell v. United States, 391 F.3d 1226 (Fed. Cir. 2005) and Barclay v. United States, 443 F.3d 1368 (Fed. Cir. 2006). The CFC dismissed Ladd's Fifth Amendment takings claim stemming from a rail conversion in Arizona because the claim was filed past the six-year Tucker Act statute of limitations. A Trails Act case begins when the Surface Transportation Board issues an order (a NITU) that converts an otherwise abandoned railroad easement into a new federal rail-trail easement. The new easement can be used by the public for recreation and the STB retains jurisdiction to "railbank" the corridor, potentially allowing some railroad in the future to build a new railway line across the land.
In early 2007, after learning of the STB’s order, the Arizona ranchers filed claims in the CFC seeking to be paid compensation for that land which the federal government had taken. The government argued they did not need to pay the landowners because the STB’s order (which authorized the conversion of the owners land to public recreational use and prevented the owners from using their property) was "only" a "temporary regulatory taking" for which the owner was owed no compensation. The CFC accepted the government’s argument and dismissed their case.Ladd appealed, and a Federal Circuit panel unanimously reversed and remanded the case for "a determination of the compensation" the government was constitutionally obligated to pay.
On remand, however, the government raised a new argument, claiming that the takings claims should be dismissed because the government had found an earlier order of the STB authorizing a taking of the land in 1998. On the basis of this earlier order the government argued the CFC should dismiss these landowners’ claims as time-barred under the six-year statute of limitations in Tucker Act cases.
However, no one – not even the government itself - knew about this 1998 NITU that supposedly started the statute of limitations clock ticking. The Trails Act does not require the STB – or anyone else – to ever tell a landowner when the government takes their property. The order taking the landowner’s property is issued by the STB as part of a railroad abandonment proceeding of which landowners have no notice and were not a party. In this case, even the Director of the STB and the Justice Department lawyers did not know the 1998 NITU existed until 2011 when, on remand, someone in the bowels of the federal government found this 1998 order. Apparently, it had been as buried as the Lost Ark, and the "top men working on it right now" only discovered it after the statute of limitations had expired.
Top ... men.
In essence this argument boils down to this: "we didn't know, but the property owner should have." Seems sort of silly, no? But the CFC bought it and dismissed.
The Federal Circuit reversed, You can read the analysis in the opinion, since it's not all that long, or difficult, and pretty much says what you think it would in a case where the government admits it didn't know of the event supposedly triggering the statute of limitations, but argues the landowner should be charged with knowledge. The panel also surely exercised judicial restraint when it didn't "benchslap" the sheer chutzpah of the government's argument that suspending the accrual date would "eviscerate the 'bright line rule" for claim accrual that Barclay and Caldwell establishd when landowners have notice of a NITU (these were the two cases that the government pretty much ignored earlier, resulting in the 2010 opinion). Instead, the court concluded:
There is simply no reason why the landowners should have known about the 1998 NITU. And even the government was not aware of the 1998 NITU until 2011—four years into this case. In these circumstances, the government’s interest in bright-line legal rules must yield to the landowners’ right to receive actual or constructive notice that their claims have accrued.
Slip op. at 9.Ladd is not necessarily an isolated case. The STB has repeatedly refused to notify owners when it issues an order taking their property for public recreational use, Most landowners never learn their land has been subject to a federal Trails Act taking until years after the government issues its order taking their land. Many do not learn of the NITU until more than six-years after the NITU is issued. Since the mid-1990's, property owners have been asking Congress and the STB to provide notice to landowners when the STB issues an order that takes land pursuant to the Trails Act, yet neither have acted to correct the situation.
Maybe "top men" are working on that, too.
Ladd v. United States, No. 12-5086 (Fed. Cir. April 9, 2013)
Brief for Plaintiffs-Appellants, Ladd v. United States, No. 2012-5086 -5087 (filed July 20, 2012)
