inversecondemnation.com

Federal Circuit: "Before" Condition Must Account For Railroad Junk That Would Have Been Left Behind

A short one from the Federal Circuit, Rasmuson v. United States, No. 14-5089 (Oct. 5, 2015), that comes out of a rails-to-trails case, but has wider applicability. 

The case involved the usual: plaintiffs owned lands over which the railroad had rights of way, and when the railroad ceased operating and the Surface Transportation Board issued a Notice of Interim Trail Use, the owners' takings claim ripened because but for the issuance of the NITU, under Iowa law the land otherwise would have reverted back to the owners. So far, so good. 

In the valuation trial, the Court of Federal Claims applied the "before and after" method, and concluded that the "before" condition of the land was as it existed before the trails easements, but that the appraisers should "ignore any physical remnants of the railway's use, which would have remained if the railway easement had been permitted to lapse. Slip op. at 4. The Government appealed.

It argued that the appraisers should have considered the land in its before condition (as the railway left it, with the railroad's junk left behind), and not under the "counterfactual assumption" that the land would revert to the owners with all that stuff gone. The CFC concluded that in the absence of the NITU, the railroad "did not have an obligation to remove the physical railroad construction features" and that the owners would be stuck with it if the land wasn't going to be used for a trail. 

The Federal Circuit concluded that "[a] proper appraisal methodology has to account for those physical conditions." Slip op. at 6. "Thus," according to the court, "a 'before' calculation that does not take into account the costs of removing the physical remnants of the railway will result in an artificially inflated value and yield a windfall to the landowner." Slip op. at 7. 

And we can't have that now, can we? Vacated and remanded.

Rasmuson v. United States, No. 14-5089 (Fed. Cir. Oct. 5, 2015).1

Amici Brief In § 1500 Case: Congress Cannot Limit Property Owners' Rights To Just Compensation By Narrowing CFC Jurisdiction, Especially With An Absurd Statute

Remember the Roca Solida case? That's the follow up to the Supreme Court's recent decision in United States v. Tohono O'odham Nation, 131 S. Ct. 1723 (2011), highlighting the jurisdictional problem in takings cases which that case left open. We labeled it a "jurisdictional ambush" that awaits any property owner who has a takings claim against the federal government.   

The question presented by the cert petition in Roca Solida is whether 28 U.S.C. § 1500, the statute which deprives the Court of Federal Claims of jurisdiction over a case if a related case is pending in another court at the time the CFC complaint is filed, applies to takings claims. In Tohono O'odham, which was not a takings case, the Court held that the statute prohibited the CFC from taking jurisdiction over the Nation's monetary claim against the United States, when its related claims against the federal government for alleged breaches of its trust duties to the Nation were pending in a district court.

The Supreme Court dodged the jurisdictional question: when a takings claim is involved, can § 1500 be applied to bar such claims where they are required to be split between the CFC and the district courts (aka the "Tucker Act Shuffle")? We filed an amicus brief in Tohono O'odham, arguing that the statute cannot be read to deprive takings plaintiffs of their right to secure just compensation, when they may be required to file their district court actions first.

The Cato Institute and the National Association of Reversionary Property Owners (those folks under the gun in Rails-to-Trails cases) have filed an amici brief urging review in Roca Solida:

This Court should grant certiorari to clarify the point that Tohono does not (and cannot) be read to hold §1500 may bar owners from vindicating their constitutionally-guaranteed right to just compensation. This is because the Fifth Amendment right of just compensation is self-executing and requires no waiver of sovereign immunity.

Br. at 3. The brief is short and to the point, and well worth reviewing in toto.

But we can't resist leaving without pointing out this bit from the brief, a quote from a recent law review article urging reform of § 1500:

Section 1500 is a “judicial embarrassment, a monument to cynicism” and justifies the conclusion that “the law is an ass.”

Br. at 10 (footnote omitted) (citing Emily S. Bremer and Jonathan R. Siegel, The Need to Reform 28 U.S.C. § 1500, Administrative Conference of the United States Report at 34-35 (2012)). See also Emily S. Bremer and Jonathan R. Siegel, Clearing the Path to Justice: The Need to Reform 28 U.S.C. § 1500, 65 Ala. L. Rev. 1, 6-7 (2013) ("Section 1500 has long been subject to widespread criticism. Federal judges have characterized the statute as a “trap for the unwary” that has outlived its purpose.” They have characterized the dismissals § 1500 compels as “neither fair nor rational” and have critiqued “the injustice that often results in the application of this outdated and ill-conceived statute.” They have referred to § 1500’s “awkward formulation,” called it “a badly drafted statute,” and suggested that it would be “salutary” to repeal or amend it. They have criticized the government for using the statute to lay traps for unsuspecting plaintiffs. One judge even remarked that the statute would justify the famous conclusion that “the law is an ass.”).

Stay tuned. 

Brief for the Cato Institute and the National Ass'n of Reversionary Property Owners as Amici Curiae in...

Related articles

Texas Supreme Court Wants More Argument: Is Court Powerless When A Condemnor Dithers?

Kelo At 10: Still Stinks, And A Decade Has Not Lessened The Odor

Raisin Round-Up

SCOTUS GVR's Anti-Eminent Domain Sign Case

Takings Claim Rejected, But Property Owners Win In Louisiana: Statute Limiting Closing Of Private Railroad Crossing Isn't A Taking Under State Constitution

Here's a case in which the court ruled there wasn't a taking, but it could be argued that the property owners won. How so? Because this case pitted the property rights of railroads against the property rights of the owners over whose land the rail lines run.

The U.S. Court of Appeals asked the Louisiana Supreme Court to answer this certified question:

Whether the application of LA. REV. STAT. § 48:394 to any of the properties in this case amounts to an unconstitutional taking of private property without a public purpose, in violation of Article I, Section 4 of the Louisiana Constitution.

In Faulk v. Union Pacific Railroad Co., No. 2014-CQ-1598 (June 30, 2015), the Supreme Court answered no.  

The case arose in 2007 after the railroad planned to close 100-year old private crossings over its tracks, which the property owners asserted disrupted their farming operations and their ability to access their land on both sides of the tracks. They sued in Louisiana state court, seeking among other things, an injunction prohibiting the railroad from closing the crossings. The railroad removed to federal court. The railroad counterclaimed, seeking a declaration that it could close the crossings, and an injunction prohibiting the plaintiffs from interfering. 

After the lawsuit was filed, the Louisiana legislature adopted the statute noted above, which required railroads planning on closing private crossings to give the state PUC and affected property owners advance written notice. It is then up to the PUC to determine whether the crossing can be closed. The statute became operative in August 2008.

The district court ruled for the railroad on the claims of some plaintiffs, but also concluded that the railroad had no right to close any crossings after the effective date of the statute unless it followed the statutory process. The court rejected the railroad's claims that the statute was unconstitutional.

On appeal to the Fifth Circuit, it held the district court should not have reached the takings claim because the railroad had not established a record to show that it owned anything. The case was remanded to develop that record. Returning to the district court, the parties agreed that the railroad owned a property interest, even though they didn't agree precisely what that interest was. The railroad asserted it owned the fee, while the plaintiffs claimed it was only a "servitude." The district court agreed with the plaintiffs. 

The district court certified the takings question (both state and federal) to the Fifth Circuit, which, after concluding that the railroad had waived its federal takings claims by failing to brief them earlier, in turn certified the state law takings question to the Louisiana Supreme Court.   

The railroad argued the statute prevented  closure or removal of private crossings and was a taking under Louisiana's rules for inverse condemnation under which the court must:

(1) determine if a recognized species of property right has been affected; (2) if it is determined that property is involved, decide whether the property has been taken or damaged in a constitutional sense; ;and (3) determine whether the taking or damaging is for a public purpose under Article I, Section 4.

Slip op. at 10 (citing Avenal v. State, 886 So.2d 1085, 1104 (La. 2004). Applying the test and detailing Louisiana's civil property law, the court held there wasn't a taking because the grants to the railroads by the property owners' "ancestors in title" was only the right for the railroad to use the land together with the landowner. It was not a fee simple grant, nor a grant of exclusive use to the railroad. And here's the interesting part: 

Union Pacific's attempt to gain exclusive use of the land burdened by its servitude (by contending that requiring it to leave in place the private railroad crossings, which have been in place for decades for the plaintiff/landowners' use, is a “taking”) turns the constitutional “taking” law on its head. To deny the plaintiff/landowners the simple right to cross over the tracks to reach the remainder of their property when there are no trains on the tracks (in other words, when Union Pacific is not using its right of use servitude) would change the nature of the right Union Pacific possesses from mere use to something more closely resembling ownership. If Union Pacific obtains what it seeks -- exclusive use of the property – it, not the plaintiff/landowners, seemingly will have accomplished an inverse condemnation, not having complied with expropriation procedures, and there is no indication that “just compensation” was paid to the plaintiff/landowners “to the full extent of [their] loss,” as required by LSA-Const. Art. I, § 4.

Slip op.at 21. 

Nor was it a temporary physical taking of the railroad's property, because the statute is only a reasonable restriction on use. And railroads are already a highly regulated industry, subject to tight PUC rules. The court also concluded that the statute applied retroactively.  

Finally, it concluded that the railroad's takings claim was not ripe, because it had not submitted the matters to the PUC, which might allow the crossings to be closed.  

Faulk v. Union Pacific Railroad Co., No. 2014-CQ-1598 (La. June 30, 2015)

Related articles

Today's Other Supreme Court Property Rights Decision

Raisin Round-Up

Texas: Property Owners Entitled To Trial On What Govt Knew About Flooding And When It Knew It

Cal Supreme Court: Affordable Housing Exaction Subject Only To Rational Basis Review

Leviathan Shrugged: Oral Arguments In Horne Reveals The Taking, But Remedy Still Open

            "It's Frank's world, we just live in it."

                      - attributed to Dean Martin, about Frank Sinatra

A narrowly drawn opinion from the Supreme Court in Horne v. Dep't of Agriculture, No. 14-275, argued in April and to be decided by the Court sometime before the Term ends this month, could attract more than the needed five Justices to form a bare majority, and the initial reports from the arguments agree that the Hornes' takings argument appeared to gain traction with at least a couple of Justices from the Court's left bloc. Combined with the property-friendly Justices and Justice Kennedy (who appeared to view the government's arguments with great skepticism), they could put the Hornes well over the top. 

There may be much more at stake, however, if any part of the government's arguments -- a full-throated defense of the overweening regulatory state -- are accepted.   

Earlier today, I spoke to the ABA Section of State and Local Government Law's Land Use Committee about the oral arguments and the case. My remarks are reprinted below. The merits and amicus briefs filed in the case are available here. The sound recording of the arguments is posted above, and the argument transcript is posted here.

++++++++++++++++++++

Horne is one of those cases that could easily be overlooked because it’s not a traditional regulatory takings or inverse condemnation case in which a property owner is asserting a positive claim that the government has either physically harmed, or overregulated her real property such that it is the equivalent of the exercise of eminent domain, and seeks just compensation as the remedy. 

Here, the takings claim arose as a defense by the Hornes to what Justice Kagan characterized as “perhaps the world’s most outdated law” the first time the case went up to the Supreme Court. They assert the USDA cannot legally impose fines on them for violating a statute that regulates the production and sale of raisins, because to do so would violate the Takings Clause. They want those fines to be voided, and are not – at least now – asking for just compensation.

Indeed, the remedy was the issue resolved unanimously in their favor in the first Supreme Court opinion, which held that the Hornes were not required to press their takings claim in the U.S. Court of Federal Claims exclusively, and were not required to only seek just compensation as their remedy. They could, the Court held, raise a takings defense, and were not limited to the ridiculous process that the Ninth Circuit would have required them to pursue: which was pay the fines in the District Court, and then later seek for those fines to be reimbursed as just compensation by way of a Tucker Act claim in the Court of Federal Claims. The CFC was, in the Ninth Circuit’s view, the only court with subject matter jurisdiction to consider a takings claim against the federal government, even when it is raised as a defense.

As a regulatory enforcement action, the litigation began when the USDA fined the Hornes, who had structured their raisin farming and processing operation in such a way that they believed they were exempt from the reach of the statute. The regulatory scheme is, as Justice Kagan aptly noted, complex, and I won't go into great detail on how it works. But here’s the short version.

The statute is one of those New Deal-era price controls designed to pump up the price of raisins by limiting supply through something called a “raisin marketing order.” I won’t get into the statute’s technical distinction between a raisin “producer” (essentially, someone who grows raisins) and raisin “handlers” (who buy raisins from the producers, and who manage the sale further down the supply chain), but suffice it to say that the raisin marketing order requires producers to physically reserve a certain percentage of their yearly crops “for the account of” the Raisin Administrative Committee, an agent of the USDA.

The Raisin Administrative Committee, in turn, controls the sale of these “reserve tonnage raisins” and keeps the proceeds for itself, or distributes them to the handlers. The bottom line is that producers are compelled to turn over title to a large percentage of the raisins they grow to the government (actually, an agent of the government, the Raisin Administrative Committee, but as we shall see, any distinction there was abandoned by the government during oral arguments), and the statute itself provides no compensation mechanism.

The Hornes established a system where they were both producers and handlers and they didn’t comply with the reserve tonnage requirements. This raised the ire of the USDA, which imposed massive fines – nearly $700,000 -- which were affirmed in the USDA’s regulatory appeals process. The Hornes sought judicial review in the U.S. District Court under the APA.

Thus, their takings defense: you can’t do this USDA, because you are physically taking our raisins and in effect turning them over to someone else for public benefit or use, all without just compensation.

So after the Supreme Court rejected the Ninth Circuit’s jurisdictional dodge, it sent the case back to the Ninth Circuit for a decision on the merits. That court again pulled another fast one, however. It held that this was not a taking because – get this – raisins are personal property and not real property, and thus were not subject to the “physical occupation” per se rule of Kaiser Aetna, Loretto, and similar cases that we land use lawyers know intimately.

The basis of the decision was so ridiculous that the government didn’t even defend it, and although regulatory takings nerds were a bit surprised that the Supreme Court granted cert again simply because this was the second time up (and a single grant of cert is rare, much less two in one case), we kind of were not all that surprised given the low-hanging curve ball which the Ninth Circuit’s rationale offered up. There’s never been a substantive distinction between personal and real property for purposes of takings or expropriation, back to the colonial days and even earlier.

I was able to attend the Supreme Court’s oral arguments in late April, and came away with some distinct impressions.

First, and here’s the bottom line up front: I’m pretty sure that the Hornes argument has secured more than the five justices needed for them to win, and indeed, they may get a few more than a bare majority if the questioning – and the government’s responses – are any indication. Some Court observers have even suggested that this may be another unanimous Court, although I have some reservations about that.

But all you need is five.

I think that at least this many justices will view the reserve requirement as a physical taking, subject to the per se rules of Kaiser Aetna and Loretto. Despite arguing otherwise in its briefs, the government admitted during argument that title to the reserve tonnage raisins was transferred to an agent of the government – the Raisin Administrative Committee – meaning this is a physical occupation.

And what of the Ninth Circuit’s ruling that the physical takings rules don’t apply because raisins are not real property? The government – wisely, in my view because it would have been hard to make with a straight face – did not defend this rationale at either the cert or merits stage. So I think all of the Justices will agree that there’s no distinction between personal and real property for purposes of applying the Court’s categorical takings rules. No Justice seemed prepared to defend the Ninth Circuit on this one.

So the question is whether there are any other rationales that would support the Ninth Circuit’s ruling.

And here is where I think it gets particularly interesting. Because the government’s response was what I would call a full-throated defense of the regulatory state. Hobbes’ Leviathan, if you will.

You recall that apocryphal statement, attributed to Dean Martin, that “it’s Frank [Sinatra’s] world – we just live in it?” Well, that’s how I viewed the government’s argument. The federal government is permitted to control the markets and establish the ground rules for entry, exit, and participation. Yes, you can grow raisins, but if you want to sell them, you must play by the rules we set. The markets are their world, and people like the Hornes who actually produce things – well, they just live in it.

The SG attempted to characterize the regulatory scheme as simply an “in kind tax,” and “just a standard regulation.” It argued that these regulations benefitted the Hornes, and that they were free to do other things with their grapes if they didn't like the raisin regulations and government seizure. Nothing to see here, folks, move along.

And while this elicited a strong reaction from certain usual suspect Justices – Justice Scalia remarked that “[c]entral planning was thought to work very well in 1937, and Russia tried it for a long time” – but Justice Breyer picked up on the government’s argument, and noted that the Hornes may be “free riders” – they benefited from the price increases which have been attributed to the Raisin Marketing Orders, but are ungrateful and not willing to take the bitter with the sweet. On one hand, they enjoy the fruits (so to speak) of the price controls in the form of higher prices for their raisins, while at the same time are challenging the very program from which they benefit. 

The Los Angeles Times picked up on this characterizing the Hornes' challenge as "[t]he case [which] could unravel one of the last New Deal-era programs that allows farmers to band together with government backing to prop up prices." There is a huge difference, however, between a program that allows farmers to voluntarily “band together” and a coercive mandatory requirement that if you want to sell raisins that you grow, you’ve got to agree to give up a portion of your crop.

Three of the Court’s prior cases were on the Justices’ minds.

First, Leonard & Leonard v. Earle, 279 U.S. 392 (1929). In that case, the Court upheld a Maryland state tax, which required oyster farmers turn over to the state 10% of the empty oyster shells which they harvested, or pay a monetary equivalent. This case, hardly mentioned in the government’s merits brief, played a key role at oral argument, because in the government's view, it meant the Court long ago upheld these type of regulations as a tax, even though the USDA has never before argued the raisin marketing order was a “tax.” After all, the same tactic worked in the ACA case, so why not here?

Professor McConnell, the Hornes’ lawyer, attempted to distinguish the Leonard case, arguing that there’s a difference between wild oysters grown on state-owned sea beds (for which the oyster harvesters needed a state license), and raisins grown on private land. The regulatory police power hawk commentators certainly have picked up on the thread, arguing this mean “game over, man, game over.” Whether that distinction gains any traction, we shall see.

Second, the Justices focused on Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). There, the Court upheld a requirement that Monsanto turn over trade secrets to the government and disclaim any takings claim in return for the privilege of selling certain products. Again, on its face, this seems like a good case supporting the government.

Professor McConnell also sought to distinguish the case, arguing that later opinions such as Nollan cut back on that ruling by concluding that the certain rights – in Nollan, the right to use and develop one’s own property – could not be characterized as a government benefit. And here, he argued, the right to sell raisins that you grow is not some “government benefit.”

The third case which played into the arguments was Yee v. City of Escondido, 503 U.S. 519 (1992). That was a takings case which held that owners of mobile homes which were put up for rent do not have a physical takings claim because they voluntarily opened up their properties to the renters. Nobody forced them to rent their properties. Thus, they could not argue that the rent controlled tenants occupying their land. This case’s rationale, if affirmed by the Court, could support the government’s argument that “hey, no one is forcing the Hornes to grow and sell raisins,” and “they can always do something else with their grapes and not turn them into raisins.” No one is forcing them to sell their raisins. 

Justice Alito proposed the most evocative hypothetical of the day, when he asked whether it would be okay for the government to require cell phone manufacturers, as a condition of selling them, to set aside one out of every five phones for a give-away.

Is there any is there any limit to that argument? There are some examples in the briefs that are pretty startling. Could the government say to a manufacturer of cellphones, you can sell cellphones; however, every fifth one you have to give to us? Or a manufacturer of cars, you can sell cars in the United States, but every third car you have to give to the to the United States.

Tr. at 28-29.

And this I think sums it up. My guess is that more than five but perhaps less than all – forgive me, fans of Justice Sotomayor, but her questions in this and other takings cases, and particularly her solo dissent in the Brandt rails-to-trails case last Term give me scant hope that she “gets” takings law at all – will find the government's argument that such set asides are not takings persuasive.

The number of Justices signing on to the majority opinion will also depend, I think, on the remedy. If they get tied up is issues of measuring compensation – which, in my view are irrelevant given the procedural posture of the case – then we might not see unanimity. 
The government argued this wasn’t a taking because on the whole, the Hornes are better off under the regulations than not; they actually come out ahead. This is another version of the “free rider” argument outlined by Justice Bryer earlier.

But I believe that the Court will successfully avoid that quagmire. Because the Hornes are not seeking just compensation as a remedy (and indeed, in the District Court, they are jurisdictionally barred), merely the voiding of the fines. If they want compensation after all of this, they can -- somewhat ironically given the first Supreme Court decision -- pursue compensation for the taking of their raisins in the Court of Federal Claims.

Overall, I predict that the Court will adhere to its recent general trend in takings cases and issue a narrow ruling which reverses the Ninth Circuit and ends the case. It will not craft new takings doctrine, and will, yet again, affirm the existing rules: physical occupations and wipeouts of all property (personal and real) means you apply the Kaiser Aetna, Loretto, and Lucas rules. Everything else, you go Penn Central. You want declaratory or injunctive relief (or, what I call “you can’t do that” relief), you can go to the District Court. For just comp, you go to the CFC. And oh, file your CFC claim first under Tohono, even if it makes no sense.

Let me wrap up with this thought on how this case is one that every land use lawyer needs to understand, however it comes out. Yes, I know this is about raisins, and reading and understanding the regulatory scheme is a chore. But the Court’s opinion will refine takings doctrine, if not clarify it. (I am not sure that is possible, frankly.) But anything helps, and this decision certainly will.

Stay tuned. A decision is forthcoming this month. 

Oral Argument Transcript, No. 14-275 (Apr. 23, 2015)

Related articles

Mark Your Calendars June 12, 2015: Free ABA Teleconference "Everything a Land Use Lawyer Needs To Know About Dancing California Raisins: A Report From the Oral Arguments in Horne v. USDA"

Protip: File Your CFC Complaint First, And Then File Your District Court Action - Even If It Makes No Sense

New Article: "Eminent Domain in The Aftermath of Hurricane Katrina"

New Cert Petition: Revisiting Tohono And § 1500 In Federal Takings Claims

2d Cir: Amtrak SOL On Claim Its Property Immune From NY's Eminent Domain Power

The State of New York wants to build the Bronx River Greenway, a "23-mile-long ribbon of green with a multi-use path that will extend along the full length of the river in Westchester County and the Bronx." Who could argue with that?

Amtrak, that's who. After failing to acquire 6 parcels along the river owned by the "private corporation created by the Rail Passenger Service Act of 1970, 49 U.S.C. § 24101," in 2008, the state filed notices of appropriation and maps with the county clerk, and title to the land vested in the state. They kept trying to work things out, apparently, but to no avail and in 2012, Amtrak sued in federal court, arguing that the takings were invalid under the Supremacy Clause because they were expressly or impliedly preempted by federal law.

In National Railroad Passenger Corp. v. McDonald, No. 13-4161-cv (Feb. 24, 2015), the Second Circuit never reached the merits of Amtrak's preemption claim, concluding instead that Amtrak waited too long to raise it. The court applied New York's six-year statute of limitations, and detailed the series of events that convinced the court that Amtrak knew or should have known about the injury:

We do not pause to determine the precise date on which NYSDOT knew, or had reason to know, because both possible dates are well beyond six years from the date this action was brought. In 2005, when Weld sent the email informing Amtrak that NYSDOT would hold a May 2005 public hearing on the subject of condemning Amtrak’s land, Amtrak arguably had reason to know of the alleged Supremacy Clause violation that is the basis of its present claim. Eminent domain proceedings cloud title, and Amtrak concedes that it suffered not merely potential, but actual injury once its property became the subject of EDPL proceedings. At the very latest, Amtrak had notice of this harm in August 2005, when NYSDOT announced its findings.

Slip op. at 9. 

But wait, you say, the takings actually didn't take place until 2008, and since Amtrak sued in 2012, it was okay. Not so held the court, the "completion of the takings was merely the final act of the intrusion on Amtrak's alleged Supremacy Clause rights that accrued in 2005 at the outset of the condemnation proceedings." Slip op. at 10. 

It would make no sense to begin the limitations period -- or restart it -- when title to the real estate actually vests in the state, an act that occurs only after notice to interested parties and the requisite findings have been made. Indeed, Amtrak's proposed rule would leave the validity of a condemnation of its property in doubt for some six years after title has passed. Common sense, not to mention the record of Amtrak's failure to take any of the obvious protective measures, directs otherwise.

Slip op. at 10 (footnote omitted).

In other words, don't wait for the final hammer to fall before formally objecting. We're not sure we agree with the court's analysis here, because before the 2008 notices of appropriation and filing of the maps and vesting of the title in the state, nothing was written in stone, and it appears to us that there was some chance the state and Amtrak would reach an agreement. "Common sense" tells us that it would have tainted the negotiations were Amtrak to have thrown down a lawsuit at that point, and perhaps the reasons it didn't file then wasn't that it was idly sitting on its rights, but rather (1) its property was still its property because the state had not taken the final act to vest title, and (2) it hoped that the ongoing negotiations might be successfully concluded short of a taking.

But the Second Circuit thought otherwise, so the prudent course is to file early and perhaps often. Landowners in these situations are put in a tough spot because invariably, if they do file suit as the Second Circuit requires, either for inverse condemnation or to stop a taking, the condemnor will argue that the case isn't ripe. 

Sidebar: for an Amtrak-related post, see "'Shoot, Move & Communicate' En Route To The ABA Annual Meeting" about our adventures traveling cross-country on the train. 

National Railroad Passenger Corp. v. McDonald, No. 13-4161-cv (2d Cir. Feb. 24, 2015)

Related articles

9th Circuit Oral Arguments: Reg Takings, Private Takings, Due Process ... And Williamson County

NC App: "Map Act," Which Land Banks Property For Future Highways, Is A Taking

NJ Court: There's No Substitute For The Eminent Domain Process, Even On The Shore, Even In An "Emergency"

Nevada: That Contract For Future Condemnation Proceeds Isn't Property

ALI-CLE 2015 Eminent Domain Conference: Links From Today's Presentation

Here are the cases which I spoke about this morning at the 2015 ALI-CLE Eminent Domain and Land Valuation Litigation conference:

• Brandt: Supreme Court benchslap on Rails-to-Trails
• Utah: You might have a public use problem if your only reason for taking excess property is that you wanted to avoid litigating severance damages
• Fourth Circuit: the Uniform Relocation Act is like the Pirate's Code: more like "guidelines" than actual rules
• More from the Fourth Circuit: Govt not necessarily off the hook for EAJA fees because it later upped its unreasonable pretrial offer
• Plaintiff: "Alliance for Property Rights and Fiscal Responsibility." Defendant: the City of Idaho Falls, Idaho. Court: Ninth Circuit. Any guesses who won?
• Pipeline through Kentucky is not a pipeline to Kentucky. If the Kentucky public doesn't benefit, maybe it's not for public use

Here is our annual "proof of life" photo, the view from the dais. Proof that despite the conference being held in beautiful San Francisco with its many distractions, we are all here (all 150+ of us) getting our eminent domain groove on. 

Here are links to the cases and issues to watch:

• Horne v. USDA: California Raisins part II - the "world's most outdated law crashes headlong into takings (SCOTUS granted cert, merits briefing underway)
• Texas v. Clear Channel: is a billboard really "moveable" property? (case submitted to the Texas Supreme Court, decision pending)
• Property Reserve: pushing California's entry statutes too far (the merits briefing in the California Supreme Court has not been completed, but we will post the briefs filed so far in a separate post)
• Oregon: is common law highway access a property right, but one that's essentially worthless? (discretionary review pending in the Oregon Supreme Court)
• Hillcrest v. Pasco County: must a property owner challenge an illegal exaction for facial due process invalidity before he has standing to bring an as-applied challenge? (cert petition pending at SCOTUS)

One last photo: sitting on the dock of the Bay:

Related articles

4th Cir OK's City's Sign Ordinance: You Can "Whisper" Your Anti-Eminent Domain Message, But You Can't "Shout" It

California Raisins Redix: SCOTUS Grants Cert In Horne II

2015 Hawaii Land Use Law Conference

Still Time To Join Us For The 2015 ALI-CLE Eminent Domain Programs In San Francisco

Right To Compensation Self-Executing: Property Owners Entitled To Jury & Article III Judge In Federal Inverse Cases

It's been accepted for such a long time that it's become one of those things that "everyone knows we've always done it that way," but most probably don't quite know why that is so: if you have to sue the United States for a regulatory taking or inverse condemnation, you go to the Court of Federal Claims.

In the CFC, just compensation determined isn't determined by a jury, nor is your case presided over by an Article III judge. In other words, your case is wholly decided by a judge with a 10-year appointment who technically is an employee of the Executive branch, instead of your peers and a guy or gal with life tenure, who is independent and in the Judicial branch. 

Comes now a complaint, filed in the United States District Court for the Western District of Michigan earlier this week, that one would normally expect to have been filed in the CFC, if one were in the mindset of "we've always done it that way" -- a rails-to-trails takings case against the federal government, seeking compensation. Not only was it filed in a District Court (where you get an Article III judge), it also demands a jury determine just compensation because ... well, because the Seventh Amendment guarantees the right to a jury, that's why.

Interested yet? Here's the Summary of This Lawsuit:

This lawsuit is a Fifth Amendment taking case in which Michigan landowners seek to vindicate their right to be justly compensated for property the federal government took from them, and to uphold foundational rights and principles the United States Constitution guarantees all citizens. Twenty individuals, families, and small businesses own land in Muskegon, Michigan. In 1886, the Grand Rapids & Indiana Railroad built a railway across land now owned by these twenty owners. Under the terms of the original 1886 right-of-way easements and Michigan law, when the railroad no longer operated a railroad across the strip of these owners’ land, the easement terminated and these owners enjoyed unencumbered title and exclusive possession of their land. But that is not what happened. The federal Surface Transportation Board (STB) issued an order invoking the federal Trails Act. The STB’s order nullified these owners’ right to their land under Michigan law and encumbered their land with a new easement for a federally established public recreational trail under the perpetual jurisdiction of the STB.

The Fifth Amendment allows the federal government to take privately owned land for a public use but requires the government to justly compensate the owners for that property it has taken. In 1990, the United States Supreme Court held that establishing a public recreational trail across privately owned land is a taking of private property for which the federal government must compensate the owner. Because the government has not compensated these Michigan owners, or even offered to compensate them, these owners have been forced to bring this inverse condemnation action to vindicate their Fifth Amendment right to be justly compensated.

This case is different from previous Trails Act taking cases in the following respect: These Michigan owners want their Fifth Amendment claim adjudicated by this federal district court, an Article III Court; and they also want the compensation they are due determined by a jury as the Seventh Amendment guarantees.

Thus, these twenty Michigan landowners ask this Court to award them the full measure of just compensation they are owed for that property the federal government took from them – as guaranteed by the Fifth Amendment. And they request this to be determined in a trial by jury – as guaranteed by the Seventh Amendment.

Complaint and Jury Demand, Brott v. United States, No. 15-cv-00038 (W.D. Mich. Jan. 14, 2015).

In other words, we don't need no stinkin' Tucker Act (which dictates the claim is filed in the CFC, an Article I court) in order to get compensation. As we've said before, the entitlement to just compensation is self-executing once property is taken.

Read the entire complaint. It's fascinating, and well worth your time.

In our view, this is a serious effort -- the property owner-plaintiffs are represented by Thor Hearne, no slouch when it comes to considering serious issues.

We will definitely be following along as this case progresses up the chain.

Complaint and Jury Demand, Brott v. United States, No. 15-cv-00038 (W.D. Mich. Jan. 14, 2015)

HSBA Real Estate Litigation Update 2014

Every year, our partners Mark Murakami and Greg Kugle make a presentation sponsored by the Hawaii State Bar Association's Real Property and Financial Services Section, summarizing the most important decisions of the year, appropriately titled "Real Estate Litigation Update."

Mark has summarized the cases they discussed over at his blog, Hawaiioceanlaw.com (despite the label, Mark covers more than ocean and maritime related topics). Check it out. 

New Blog Worth Following: Federal Takings

Here's one to definitely add to your blogroll: Federal Takings, by the rails-to-trails litigation practice at Arent Fox, including our frequent guest blogger, Thor Hearne. 

The focus is on rails-to-trails cases, but also by necessity covers takings cases in the Court of Federal Claims and the Federal Circuit. Recent posts include, "Arent Fox Files ‘Rails to Trails’ Cert Petition with US Supreme Court for High Line Park Landowners," and  a summary of an ongoing R-T-T case from Michigan. 

Highly recommended. 

Related articles

Amicus Brief In Rails-to-Trails Case: Switching Tracks To Undermine Takings Claims

New Cert Petition: In Rails-To-Trails Case, Fed Circuit Should Have Punted State Law Contracts Question To State Court

Guest Post: Two More Rails-To-Trails Property Owner Victories

New Cert Petition: In Rails-To-Trails Case, Fed Circuit Should Have Punted State Law Contracts Question To State Court

Here's a new cert petition, filed yesterday, that poses two interesting issues, the first of federalism, the other of exactions.

This is a rails-to-trails case in which the federal government asserts that the easements imposed on private property for a public park in New York City after the railway was abandoned did not result in a taking because the owners signed agreements with the city giving up their rights in exchange for development rights on other parcels. Included within this agreement -- to which the federal government was not a party -- was a covenant not to sue the city or the federal government. When the owners sought compensation in the Court of Federal Claims, the CFC dismissed because the federal government was the third-party beneficiary of the city-owner agreement. 

This is a question of New York law, and according to the petition, no New York court has ever allowed a non-party to enforce a covenant not to sue. The CFC decided the issue anyway, ruling also that the surrender of the right to seek compensation in return for development rights was not an unconstitutional exaction.

The Federal Circuit summarily affirmed, and rejected the property owners' call to certifiy the state law question to the New York Court of Appeals.  

The Questions Presented:

1. When the resolution of a novel or unsettled issue of New York law would allow the Federal Circuit to avoid deciding a difficult question of federal constitutional law, may the Federal Circuit summarily (and without explanation) decline to certify the issue to the New York Court of Appeals contrary to the principles of judicial federalism and constitutional avoidance underlying this Court’s decisions in Railroad Comm’n of Texas v. Pullman, 312 U.S. 496 (1941), and Arizonians for Official English v. Arizona, 520 U.S. 43 (1997)?

2. When the United States takes an easement from New York landowners pursuant to the National Trails System Act Amendments of 1983, Pub. L. No. 98-11, 16 U.S.C. §§ 1241, et seq., and transfers it to New York City for a park, can the City require the landowners to forfeit their Fifth Amendment right to just compensation as a condition of the City granting owners development rights in their remaining land, or is this an unconstitutional exaction prohibited by this Court’s decisions in Nollan v. Cal. Coastal Comm’n, 483 U.S. 825 (1987), Dolan v. City of Tigard, 512 U.S. 374 (1994), and Koontz v. St. John’s River Water Management District, 133 S. Ct. 2586 (2013)?

The petition argues that the Court should "GVR" (grant, vacate, remand), meaning issue summary relief:

The Federal Circuit could have, indeed should have, avoided all of these problems simply by certifying the unsettled question of New York law to the New York Court of Appeals. This Court can avoid them too, by granting certiorari, vacating the Federal Circuit’s ruling, and remanding with instructions to certify the state law question to New York’s highest court. In so doing, it would promote the values of federalism and constitutional avoidance, provide clarification to the Federal Circuit about when issues of state law should be certified and ensure this Court’s holdings in Nollan, Dolan and Koontz are faithfully applied.

Pet. at 4. Stay tuned. 

Petition for a Writ of Certiorari, West Chelsea Buildings, LLC v. United States, No. 14-____ (filed July 29...

Related articles

New Article On Nollan-Dolan-Koontz

Koontz: 5-4 Supreme Court Sides with Landowner in Takings Case

Surprise! Environmental Lawprof Dislikes Koontz

SCOTUS On Exactions: Nollan/Dolan Apply

Cal App: County Can Condition Building Permit On Landowner Allowing Aircraft Overflight Easement

SCOTUS Benchslap: Railroad Right Of Way Is An Easement, Just Like We Said A Long Time Ago

New York Times SCOTUS Reporter: Wow, Brandt Was About Rails-To-Trails And Property Rights!

Late to the Game: Koontz and whether you can have a takings claim without an actual takings

New York Times SCOTUS Reporter: Wow, Brandt Was About Rails-To-Trails And Property Rights!

We finally got around to reading "What Lies Beneath," an opinion piece from the New York Times that we've been saving in our to-read list since the spring, Linda Greenhouse's musings on the U.S. Supreme Court's 8-1 decision in Marvin M. Brandt Revocable Trust v. United States.

In that piece, Ms. Greenhouse notes that Brandt was one of those cases she pretty much didn't care about ("I hadn't read the briefs or the argument transcript, let alone attended the argument itself."). In other words, it wasn't about Citizens United, abortion, or religion, the usual things the reporters who cover the Supreme Court beat consider hot topics. No, this was one that -- even after she read the opinion -- "I had only a vague sense of what the case was about and none whatsoever of its significance, if any," that it it concerned what happens when a railroad abandons a right of way, "and "the landowner won and the government lost."

Seeking "enlightenment" in Justice Sotomayor's solitary dissent, Ms. Greenhouse found in its last paragraph "a clue about why the decision might matter." That last paragraph is the same one which we wrote about in this post, where Justice Sotomayor complains that the other eight Justices missed the importance of the case, and this decision could -- horror of horrors -- potentially cost the government "hundreds of millions of dollars." As Ms. Greenhouse put it, "Aha - rails to trails."

She rightly notes that court opinions often do not provide the larger context ("How far the Supreme Court should go to acknowledge the real-world context of its decisions is a question worth considering. Notice that I said context rather than consequences."). But in our view, she entirely misses the real context of the Brandt case:

But context is another matter. It took only a quick perusal of the briefs (available through the court’s website) to see that the roots of the dispute between the Wyoming landowner and the government lie deep in the property-rights movement. The property owner had lost in the lower courts, and briefs urging the justices to hear his appeal were filed by leading libertarian and property-rights-friendly organizations. The lawyer who argued on the landowner’s behalf, Steven J. Lechner, is the chief legal officer of the Mountain States Legal Foundation, long a prominent defender of Western land interests.

To see Brandt as only being about the property rights movement is to grasp only the effect, but not the cause. First, it wasn't just the property owners who urged the Court to take the case. Instead of a brief in opposition, the government took the unusual step of agreeing with the property owner's petition, and urged the Court to take the case. Second, as we explained in this post (and in our amici brief), the Brandt case was a quiet title action, instituted by the government, in which it sought to undermine the rights of reversionary landowners under established precedent, by pulling the floor out from under their takings claims. The government was hoping the Court would agree with its argument that the railroad grants were subject to the government's implied reversionary interest, which resulted in the reversionary owners not having any property rights that could be taken. Which, of course, would render moot any claim for a taking when an abandoned railway is converted into a public recreational trail instead of beng returned to the private owner.

Property owners, you see, were on a win streak in the Court of Federal Claims and the Federal Circuit (some recent examples here), and the government's obvious reason for instituting Brandt was to try and wipe out many of these (and future) takings claims. As our brief argued:

Unable to prevail on a variety of theories in rails-to-trails takings cases in the Court of Federal Claims (CFC) and the Federal Circuit for more than a decade, the Government appears to have switched tracks. Instead of continuing its fruitless frontal attacks on these takings claims—attacks which the courts have repeatedly rebuffed—the Government in this case has sought to undermine the very notion of property ownership by redefining the rights of way granted for railway uses under the 1875 Act from easements that are extinguished when no longer used for a railroad, to "implied reversionary interests." 

In other words, they drew first blood.

Thus, the win in Brandt was only an acknowledgement by the Court that the government's strategy to undermine the rights of the reversionary property owners failed. And while Ms. Greenhouse is "grateful to Justice Sotomayor for cluing us in to what it’s about," perhaps she should have not stopped with the dissent, which revealed only more trees, and not the actual forest. 

Related articles

Transcript In Brandt: Pay Attention In Property I

More Amici Briefs In SCOTUS Rails-To-Trails Case

SCOTUS Benchslap: Railroad Right Of Way Is An Easement, Just Like We Said A Long Time Ago

A Big Legal Blow to the Rails-to-Trails Movement

Court ruling in land dispute could threaten bike trails

Supreme Court to Government: Stop Railroading Property Owners

Mark Your Calendars: 2015 ALI-CLE Eminent Domain and Land Valuation, and Condemnation 101 - February 5-7, 2015, San Francisco

ALI-CLE, the good folks who put on the annual programs on Eminent Domain and Land Valuation, and Condemnation 101: How to Prepare and Present an Eminent Domain Case, have announced the dates and venue for the 2015 conferences:

Thursday - Saturday, February 5-7, 2015 

Hotel Nikko, in San Francisco.

Those of you who have attended or taught at these conferences in the past know they are the premier programs on this topic, and feature exciting presentations and excellent faculty.

I've been honored to be asked to serve as the Planning Co-chair of the 32d annual Eminent Domain and Land Valuation Litigation program, stepping into the able shoes of Leslie Fields, who retired last year. Joe Waldo is continuing as Planning Co-Chair. Joe and I are currently putting together the agenda and faculty for the program, and we will have more on that soon. Andrew Brigham and Jack Sperber are also hard at work assembling the next year's 101 program.  

The Eminent Domain and Land Valuation Litigation program is designed for those with some familiarity with the fundamentals of eminent domain law, and is a chance to hear advanced presentations on some of the more cutting-edge issues in the area from the nation's most experienced condemnation lawyers and scholars. The 101 program is designed as an introduction to the fundamentals, and can be used to introduce lawyers new to the area to condemnation law, as a "refresher" for those who already have some experience, or as a primer before moving on to the Eminent Domain program. 

Here are the 2014 agendas for the Eminent Domain and Land Valuation Litigation, and Condemnation 101 courses, to give you some idea about these conferences.  

But for now, please mark your calendars and save the date so we can meet again in San Francisco. 

Related articles

31st Annual ALI-CLE Eminent Domain And Land Valuation Litigation (New Orleans)

Upcoming ALI-CLE Eminent Domain Conferences

The Latest Takings Decision From The Federal Circuit On Railway "Rights Of Way"

For you rails-to-trails fans, here's the latest from the Federal Circuit. In Biery v . United States, No. 13-5082 (June 2, 2014), the court held that interests which certain Kansas property owners conveyed to railroads back in the day were grants in fee simple, and some were grants of an easement.  

The issue was dispositive because if the grants were in fee simple, then when the railroad abandoned railroad operations, the land could be converted to public recreational trail use without triggering a taking, but if the grants were easements, then upon abandonment, the owners should have got the land back, and are owed compensation. 

As noted, in 2004, the stretch of rail corridor at issue was converted to a public trail pursuant to the Trails Act. If, prior to the conversion, the BNSF held fee-simple title to the land underlying the corridor, then, for their part, plaintiffs-appellants possess no compensable property interests. That is because the railroad’s fee-simple title would constitute complete ownership in the land. Tiffany Real Prop. § 27 (3d ed. 2013). If, however, the BNSF held only easements over the land, then plaintiffs-appellants retained a fee-simple interest in the land. Under those circumstances, if the BNSF’s conversion of the railroad tracks to a recreational trail was outside the scope of the easements and thus constituted abandonment, then the BNSF would have lost its interest because “if the beneficiary of [an] easement abandons it, the easement disappears, and the landowner resumes his full and unencumbered interest in the land.” Marvin M. Brandt Revocable Trust v. United States, 134 S. Ct. 1257, 1265 (2014) (citing Smith v. Townsend, 148 U.S. 490, 499 (1893)). In short, if plaintiffs-appellants hold fee-simple title to the land, they may potentially have a compensable property interest for purposes of a takings claim.

Slip op. at 4-5.

Applying Kansas property law, the court concluded that some of the owners granted easements, some granted the railroad fee simple title, while for others, the record was not developed enough to tell. Thus, some owners go back to the CFC for compensation, some go back to the CFC for more record-building, and some get shown the door. 

Overall, an interesting decision on the history and real property law front, but not much there on the takings issues (yet). 

Biery v. United States, No. 13-5082 (Fed. Cir. June 2, 2014)

Related articles

Guest Post: Two More Rails-To-Trails Property Owner Victories

New Amici Brief: Attempting To Derail Rails-To-Trails Takings Cases

Was public railroaded in trail deal?

SCOTUS Benchslap: Railroad Right Of Way Is An Easement, Just Like We Said A Long Time Ago

Supreme Court rules right of way abandoned by railroads reverts to private property

Mark Your Calendars: "Rails-to-Trails and the Impact of Brandt Revocable Trust v. United States" (4/9/2014) - Free To ABA Members

For those of you who are members of the ABA, here's a tangible member benefit.

On Wednesday, April 9, 2014, tune in for a free webinar, "Rails-to-Trails and the Impact of Brandt Revocable Trust v. United States." The program is sponsored by the Real Property, Trusts & Estates Legal Education and Uniform Laws Group. 

Here are the details:

ABA-RPTE Professors’ Corner - A FREE monthly webinar featuring a panel of law professors, addressing topics of interest to practitioners of real estate and trusts/estates

This is a One Hour WEBINAR

Wednesday, April 9, 2014
12:30 pm Eastern / 11:30 am Central / 10:30 am Mountain / 9:30 am Pacific

Register online here.  

March’s Program: “Rails-to-Trails and the Impact of Brandt Revocable Trust v. United States”

Professors’ Corner is a monthly webinar (on the second Wednesday of each month) featuring a panel of law professors, discussing recent cases or issues of interest to real estate or trust and estate practitioners and scholars.

Speakers:

• Professor Danaya C. Wright, University of Florida Levin College of Law
• Professor Michael Allan Wolf, University of Florida Levin College of Law

On March 10, 2014, the U.S. Supreme Court decided Brandt Revocable Trust v. U.S., involving the interpretation of the General Railroad Right-of-Way Act of 1875. The case involved a railroad right of way obtained in 1908, crossing land conveyed by the U.S. to the Brandt family in a 1976 land patent that did not specify what would happen if the railroad later relinquished its right of way (which occurred some years later). In the case, the U.S. sought to quiet title to the abandoned right of way, including the portion that crossed the land conveyed by the Brandt patent. Reversing the Tenth Circuit, which had affirmed a grant of summary judgment for the U.S., the Supreme Court held that the right of way was only an easement and was extinguished when the railroad abandoned it. The decision has already created some substantial consternation regarding its potential impact on the Rails-to-Trails movement and recreational trail development along abandoned rail corridors.

We're registered, and you should too.

Worth Reading - The Last Word On Honolulu Rail, And 2013 Eminent Domain Year In Review

It's Friday, so we're slacking a bit on the blogging. But our colleagues at the Nossaman firm have given us a couple of good pieces for our reading enjoyment.

• First is "9th Circ. Simplifies Enviro Process For Transit Projects," by Robert D. Thornton. If his name sounds familiar, it's because he's the lawyer who represented the City and County of Honolulu in its succcessful defense of a federal lawsuit. The Ninth Circuit and the District Court recently sided with the City on the project (see our summary of the Ninth Circuit and the District Court rulings), and the plaintiffs have stated that they are not going to seek further review. In other words, this is probably the final substantive chapter in the major legal challenges to the Honolulu rail project. Mr. Thornton notes that the decision is one "of national importance for transit and highway projects" because it "recognizes that federal transportation agencies may (1) define a project's purpose and need and the range of alternatives based on the objectives described in an approved metropolitan transportation plan, and (2) narrow the range of alternatives based on prior state and local studies of project alternatives under certain circumstances." Worth reading.
• Rick Rayl and Brad Kuhn, who, with others, produce the California Eminent Domain Report, have written "2013 Eminent Domain Year in Review & 2014 Forecast," which runs down their view of the biggest cases of the year in our favorite area of law. Covers al the major cases. Good stuff. Read it. 

Professor Epstein On SCOTUS Rails-To-Trails Decision

Professor Richard Epstein shares his insight about the U.S. Supreme Court's recent 8-1 decision in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Mar. 10, 2014).

The issue in the case was whether the federal government retained an "implied reversionary interest" when it issued railroad patents to private landowners, or whether these grants were subject only to a railroad easement. The Court concluded they were easements, which means that they were extinguished when the railroad ceased using them as railroads. 

Professor Epstein joined an amicus brief filed in support of the property owners in the case, which argued that a contrary ruling would violate "the special need for certainty and predictability where land titles are concerned." 

Listen to the podcast here. Or go to this page and follow the link from there. 

Related articles

SCOTUS Benchslap: Railroad Right Of Way Is An Easement, Just Like We Said A Long Time Ago

SCOTUS Rails-to-Trails Argument - SCOTUSblog's Preview

Last Two Amicus Briefs In SCOTUS Rails-To-Trails Case

Brandt: No Free Ride For Rails-To-Trails

Happy Trails - Property Owner Wins Before USSCT

Brandt: No Free Ride For Rails-To-Trails

In addition to the initial media coverage of and commentary about the Supreme Court's 8-1 decision in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Mar. 10, 2014) rendered earlier this week, there has been more, mostly focused on the final lines of Justice Sotomayor's solo dissent:

By changing course today, the Court undermines the legality of thousands of miles of former rights of way that the public now enjoys as means of transportation and recreation. And lawsuits challenging the conversion of former rails to recreational trails alone may well cost American taxpayers hundreds of millions of dollars.

Dissent at 8 (emphasis added).

What she was getting at, of course, was the fact -- not stated anywhere in the majority opinion but made clear by the amicus briefs -- that by holding that the interest granted was only an easement and did not revert to the United States upon abandonment by the railroad, the Court did not affect the rights of the revisionary property owners to bring takings claims in the Court of Federal Claims. When land they believed they were getting when the railroads stopped using it for railroads was instead converted to recreational trails, the owners must be paid just compensation. It should be pretty routine for the CFC to determine what's owed in those cases.

But there's probably a good reason the majority opinion didn't go into all of that: it wasn't at issue in the case,  at least not directly. Remember that Brandt was a quiet title action, brought by the government against the property owners. A test case in the sole federal circuit that had already ruled the government's way in an earlier decision on the easement-or-revisionary-interest question. Thus, it was no surprise that the District Court, applying that earlier precedential case, ruled in favor of the government, as did the Tenth Circuit. And it was not that much of a surprise that at the cert stage, the government actually agreed with the property owners, and urged the Court to review the case. Let's take that Tenth Circuit precedent and make it nationwide. 

As we argued in our amicus briefs, this was a strategy designed to virtually wipe out those CFC takings cases. As Gideon Kanner pointed out, the government's track record in those cases was pretty bad. A win in Brandt would have eliminated the problem of having to pay for public recreational trails in many cases. No property, no taking, no compensation. All the Supreme Court's ruling in the case meant is that this strategy failed, and the existing process, envisioned long ago by the Court in Preseault v. Interstate Commerce Comm'n, 494 U.S. 1 (1990), would remain. In that case, the Court sustained the National Trails System Act, 16 U.S.C. § 1241, et seq. as a valid exercise of the federal commerce power, but concluded that converting an abandoned railroad right of way to trail use may "giv[e] rise to just compensation claims” under the Takings Clause. Id. at 13. If the public wants a recreational trail, that's just fine as long as it pays for it. As Justice Holmes wrote long ago, "[w]e are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change." Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922). 

In other words, no free rides for rails-to-trails.   

But instead of focusing on that, much of the coverage makes it seem like the property owners got away with something, and that the Supreme Court's decision will result in a big change in the existing landscape:

• Supreme Court deals setback to rails-to-trails movement (Los Angeles Times)
• Supreme Court Wakes Up in 1875 (Bloomberg)
• Supreme Court Sides With Landowner in Rails-to-Trails Case (Wall Street Journal)
• The Supreme Court Decision: How Does It Affect Rails-Trails? (Rails-to-Trails Conservancy)
• U.S. Supreme Court Deals Blow to National Rails-to-Trails Movement (LegalPlanet blog)
• Sotomayor Earns Another Scolding As She Breaks From Majority In Railroad Case (Forbes)

But the only "setback" or "blow" the Court dealt to rails-to-trails is what should be the unremarkable idea that property owners must be compensated if their property is impressed into public service, and that even though bike paths on former railroad easements may be a good thing doesn't mean we get them for nothing. Getting that free ride might be simpler and easier for everyone (but the property owner, of course), but as Professor Richard Epstein recently pointed out, the Just Compensation requirement forces us to ask the right questions when deciding whether to do things like institute a rail-to-trail conversion program. Questions like "can we afford this?"

Protecting private property does not stand in opposition to the welfare of the community at large, but is thoroughly consistent with it. For example, forcing New York City to put the cost of landmark preservation "on budget" improves the political process by forcing a more candid deliberation of relative costs and benefits. It is the failure to incorporate this check on deliberation that has contributed so much to economic stagnation in New York City and the nation.

See Epstein, Our Property Principle (Mar. 10, 2014). 

Maybe after Brandt, the right questions will finally be asked about the rails-to-trails program.

Brandt Round-Up

Here are some reports and commentary on the Supreme Court's opinion in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Mar. 10, 2014).

• Supreme Court Hands Down Disappointing Decision for Trails in U.S. (Rails-to-Trails Conservancy)
• Supreme Court rules for landowner disputing US claim to bike-trail right of way (ABA Journal)
• Family Trust Wins Supreme Court Fight Against Bike Trail (National Public Radio)
• Supreme Court Issues Landmark Ruling in Property Rights Case (NFIB - disclosure: we filed an amici brief with NFIB in support of the petitioner)
• Supreme Court to Government: Stop Railroading Property Owners (Cato at Liberty blog)
• U.S. Supreme Court upholds property rights in rails-to-trails case (Pacific Legal Foundation Liberty Blog)
• Court ruling in land dispute could threaten bike trails (USA Today)
• How the West Was Won: What Does the Brandt Decision Mean for Property Rights (NFIB)
• US Supreme Court Upholds Property Rights in Key Decision (Arent Fox)

SCOTUS Benchslap: Railroad Right Of Way Is An Easement, Just Like We Said A Long Time Ago

As we predicted it would after oral argument, today the U.S. Supreme Court ruled in the property owner's favor in Marvin M. Brandt Revocable Trust v. United States, No.12-1173 (Mar. 10, 2014). Chief Justice Roberts wrote for the entire Court less Justice Sotomayor, who filed a solo dissent. SCOUTSblog posts a summary of the opinon here ("Victory - and money - for landowners"). 

As you might recall, the issue in the case was whether the federal government retained an "implied reversionary interest" when it issued these patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to the property owner. As the opinion stated it:

This dispute turns on the nature of the interest the United States conveyed to the LHP&P in 1908 pursuant to the 1875 Act. Brandt contends that the right of way granted under the 1875 Act was an easement, so that when the railroad abandoned it, the underlying land (Brandt’s Fox Park parcel) simply became unburdened of the easement. The Government does not dispute that easements normally work this way, but maintains that the 1875 Act granted the railroads something more than an easement, reserving an implied reversionary interest in that something more to the United States.

Slip op. at 8. 

The Court concluded that it was an easement, "in large part because it won when it argued the opposite before this Court more than 70 years ago, in the case of Great Northern Railway Co. v. United States, 315 U. S. 262 (1942)."  

The Court then benchslapped the SG's argument that Great Northern was inapplicable: "[c]ontrary to this straightforward conclusion, the Government now tells us that Great Northern did not really mean what it said." Slip op. at 12. The next few pages were spent deconstructing that argument, concluding on pages 16 and 17 that the argument is filled with "irony," in that both Congress and the Government did an "about-face" and tried to change the law and the arguments, but "[t]hat policy shift cannot operate to create an interest in land that the Government had already given away." Slip op. at 17. The Court concluded:

More than 70 years ago, the Government argued before this Court that a right of way granted under the 1875 Act was a simple easement. The Court was persuaded, and so ruled. Now the Government argues that such a right of way is tantamount to a limited fee with an implied reversionary interest. We decline to endorse such a stark change in position, especially given "the special need for certainty and predictability where land titles are concerned." Leo Sheep Co., supra, at 687.

Slip op. 17. More on that point from lawprof Josh Blackman.

Now search as you might, today's majority opinion does not contain the words "takings" or "rails to trails." That's because neither was directly at issue. But make no mistake, this quiet title action was designed to deal with landowners who sued to recover just compensation when land that was supposed to come back to them after a railroad abandoned its operations was instead converted to recreational trails use. Thus, if successful, this case would have undermined an entire class of rails-to-trails takings cases in the Court of Federal Claims and Federal Circuit by legally wiping out the property interests that the owners claim was taken, a point we made in the amicus brief we filed in the case in support of the petitioners on cert and on the merits. 

Unable to prevail on a variety of theories in rails-to-trails takings cases in the Court of Federal Claims (CFC) and the Federal Circuit for more than a decade, the Government appears to have switched tracks. Instead of continuing its fruitless frontal attacks on these takings claims—attacks which the courts have repeatedly rebuffed—the Government in this case has sought to undermine the very notion of property ownership by redefining the rights of way granted for railway uses under the 1875 Act from easements that are extinguished when no longer used for a railroad, to "implied reversionary interests."

The only allusion to those issues was in Justice Sotomayor' solo dissent, where she concluded:   

Since 1903, this Court has held that rights of way were granted to railroads with an implied possibility of reverter to the United States. Regardless of whether these rights of way are labeled “easements” or “fees,” nothing in Great Northern overruled that conclusion. By changing course today, the Court undermines the legality of thousands of miles of former rights of way that the public now enjoys as means of transportation and recreation. And lawsuits challenging the conversion of former rails to recreational trails alone may well cost American taxpayers hundreds of millions of dollars.

Dissent at 8 (emphasis added). 

Oh, that pesky Fifth Amendment. 

Marvin M. Brandt Revocable Trust v. United States, No 12-1173 (Mar. 10, 2014)

A Dispatch From The ALI-CLE Eminent Domain Conference (With Links)

This morning, I joined my Owners' Counsel colleagues Leslie Fields and Joe Waldo (the programming co-chairs), and more than 100 fellow eminent domain experts in New Orleans under the auspices of ALI-CLE at our annual gathering for the start of 2 1/2 days of legal education. 

Joe and Leslie asked me to join Professor James Ely to speak about "The Full and Perfect Equivalent for Just Compensation: The Historical Context and Practice." Professor Ely led us off with a crash history of just compensation, starting with the Magna Carta and where we've been, and then handing it off to me for the "where we are and where we may be going" segment.

Just to prove to you all that while in New Orleans, I really did show up and not get distracted by the many (many) distractions that this city can offer, the above is a "proof of life" photo I took from the lectern before starting my talk on the upcoming trends in the field.

Just to show that we didn't fake it, a colleague in the audience took this photo of our panel, incluidng the jumbotron which allows those in the back of room to see the speakers.

Anyhow, here are the links to the cases and materials I mentioned during the talk:

• The decision by Canada's Supreme Court about business losses in expropriation cases, even where the property has not been taken, but only been affected by a taking.
• The Columbia Law Review article on undercompensation in eminent domain, Just Undercompensation: The Idiosyncratic Premium in Eminent Domain, 113 Colum. L. Rev. 593 (2013).
• The Fourth Circuit decision about EAJA fees, and how the government's reasonable trial conduct does not automatically insulate it from overall liability for its pretrial unreasonable behavior.
• The case, now pending before the California Supreme Court, about whether the judge or the jury decides questions about whether there was a reasonable probability that a city would condition a property owner's use on the owner's dedication of property, and if so, whether the dedication passed the Nollan/Dolan nexus and rough proportionality requirements. 

One final photo. One of the afternoon sessions was held on the hotel's rooftop conference room, 16 floors above the French Quarter. Hard to concentrate on takings, compensation, and relocation benefits when this is the view out of the window, no?

Update On The "Awkward" SCOTUS Oral Arguments - Viral Lesson, Or Piling-On?

After we posted our initial thoughts on the oral arguments in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173, wherein we were of the opinion that arguing counsel did a good job overall despite Justice Scalia's initial question about the lawyer reading off his notes ("So come on folks, give the guy a break. At least until you have stood in his brogues, and gone toe-to-toe with Their Honors and lived to tell the tale."), many others weighed in.  

At the same time, lawprof Josh Blackman posted his thoughts, labeling Justice Scalia's behavior "a dick move" ("Justice Scalia Chastises Lawyer For Reading From Notes"). Josh kindly linked back to our thoughts for good measure. Soon enough, other commentators picked up on the meme, with Business Insider reposting Josh's post, and Blog of Legal Times weighing in ("An Embarrasing Supreme Court Moment"). Even the ABA Journal got in on the action ("Scalia calls out lawyer for a failure to extemporize"). The comments to these pieces are worth reviewing, some forgiving, some critical. Yes, in the perfect world you aren't supposed to argue by reading notes, but after the initial stumble, counsel did get back on his game. And this is a highly technical case (we know, we filed an amicus brief supporting the petitioner).

Josh has a complete rundown of the now-viral episode ("More on Justice Scalia's "Dick Move"). 

But how awkward was it, truly? You can't really tell from the transcript (transcripts are lawyers' friends most of the time -- most of them thankfully do not include the weird silences, the awkward pauses, our repeated "uhhhs" and similar tics; overall, court reporters do a good job of making us look good). So here's the actual recording, which, until the Court one day allows video of arguments, is the best we're going to get:

12-1173

Having now listened, I don't think it was all that awkward, just a case of nerves. I know the Rules advise "do not read" (see S. Ct. R. 28.1: "Oral argument read from a prepared text is not favored"), but it sounds like counsel started with his prepared remarks, and just kept going once the usual pile-on of Justices did not start after his first sentence.  

Maybe I'm more forgiving than some of the commenters because I've been there, although not in the Supreme Court venue. My big fault is that I talk too fast in oral arguments. By the time argument commences and the "May it please the Court" business is out of the way, I usually am so ready to go that mentally I just want to get it all out there. So between that and the usual nerves that come with oral argument, I become a fast-talker. Maybe not this fast, but it sure feels that way. And it's by no means my only oral argument peccadillo. I use the crutch of notes, too, although I do not read except for when I must quote something. I end up not using the notes most of the time, but it feels good having them there, just in case I vapor lock. 

And although most lawyers have their own oral argument faults, we work on them. We moot arguments. We talk to ourselves in the courthouse restroom, to remind ourselves (in my case) to slow down. We try and eliminte the "you knows" and "uhhhs." But sometimes you still fall back. 

So I have tried to take a few lessons from this. First, try not to read. This is the big leagues, and there's no crying in baseball. Message received loud and clear, Justice Scalia. Second, Justice Breyer seems like a nice fellow. While I don't often agree with his rulings in the takings arena, after this argument, I believe that he's a kinder person than I thought he was before. I don't know if that's helpful to advocates or even relevant to the business of judging, but it seems like it would make him a better judge than someone who is not kind, or courteous. Finally, the peanut gallery is pretty harsh. Statistically speaking, most of us lawyers never have -- and never will -- stand at the Supreme Court lectern and argue a case. But that doesn't prevent the armchair quarterbacks from piling-on and giving a first-time advocate hell in the comment section, and adding to what already was undoubtedly a difficult moment.

Time will tell of course, and should the Supreme Court rule in the petitioner's favor (as we believe it should), counsel will have the last laugh. For in the end, it's not the advocate's performance that matters, it's whether they win the case. And in that arena, we think Mr. Lechner's argument, after he settled down, was just fine. 

Transcript In Brandt: Pay Attention In Property I

Update: More thoughts here, after having heard the argument recording, available here:

12-1173

Here's the transcript from today's oral arguments in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173. That's the case in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute. 

We were going to review the transcript and then post some thoughts, but the speedsters at SCOTUSblog beat us to it with "Argument recap: Oh give me land, lots of land...," wherein they report that the arguments were a "seminar-like hour," where Justice Breyer repeatedly disclaimed knowledge of his law school Property class basics. One thing we noted right off the bat in our quick skim of the transcript was that Justice Scalia must've been chapped about something, because no sooner did petitioner's counsel begin, than the Justice interrupted to ask whether he was "reading."

You know, we've all been there in some venue, haven't we? We're all not übermensch Supreme Court litigators who can do this without a net and who have the stones to go to the lectern sans notes. Heck, we won't even go down to muni court naked (so to speak). Especially when what's at stake is the language in an otherwise obscure 1875 federal statute, where it's important to get the language just so.

To the Justices, oral argument is just another day at the office. And maybe that's also true for the usual suspects downrange at the Court who appear regularly. But for those lawyers from outside the D.C. bubble, a Supreme Court case can be a once-in-a-career experience, and, we imagine, a very nerve-wracking experience, even if you do get a nice feather pen for your troubles. Especially with all of the coverage of every argument -- even those not of obvious public interest that may have in years past, gone unnoticed by the larger media -- where counsel's every movement is blogged, twittered, and splashed all over the front pages of the papers for everyone to comment upon. So come on folks, give the guy a break. At least until you have stood in his brogues, and gone toe-to-toe with Their Honors and lived to tell the tale. 

But maybe Justice Scalia was just giving counsel gas, given that SCOTUSblog reports that "[h]e had Scalia on his side almost all the way (at least after the Justice’s initial taunt)."

Our takeaway from SCOTUSblog's report is that neither petitioner's counsel, nor the deputy SG arguing the case for the government could tell the Justices how much land might be affected by their ruling. We made a related point in our amici brief, although it was not a question of acres affected, but of Tucker Act cases and just compensation dollars. We argued that the government has taken the position it has here in the hope of obtaining a nationwide ruling that will virtually wipe out an entire class of rails-to-trails takings cases that the government has consistently lost in the Court of Federal Claims and the Federal Circuit. You want to know how many? For a start read our brief, which has more than a few examples of cases that could have had a different outcome. 

Besides, should it be all that surprising that the government lawyer would be reluctant to provide the answer (if the government even knows the answer) of how much havoc would result if the Court ruled its way, given it could be the petard on which their argument is hoist?

Petitioner's counsel on rebuttal focused the court in the right area, we think, by noting that he couldn't say about how much land overall might be affected by a decision, but that he could tell the Justice how much of his client's land was at stake. As a respected colleague of ours remarked (someone who actually has stood in his brogues at the SCOTUS lectern more than a few times), the job of figuring out the larger facts are for legislators, and our job as lawyers is to know our clients' cases. In that regard, we think petitioner's counsel finished on a strong note when he stated that "I don't have any light to shed on the actual mileage [of property affected overall]," but that "[w]e do know how many acres are involved in this case, and the government is claiming 10 of the 83 acres that it patented to Marvin Brandt's parents."

And as far as we can tell, he wasn't reading that.   

Transcript of oral argument, Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Jan. 14, 2014)...

SCOTUS Rails-to-Trails Argument - SCOTUSblog's Preview

Tomorrow, Tuesday, January 14, 2014, the U.S. Supreme Court will hear arguments in Marvin M. Brandt Revocable Trust v. United States, No. No. 12-1173. That's the case in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute. 

As our amici brief argues, if the Court accepts the government's theory in the case, it could wipe out an entire class of rails-to-trails takings cases, and indeed could undermine title to a wider range of property in which a federal patent is involved. 

SCOTUSblog has a good preview of the issues here. Greenwire also has a good report on the case here. 

Gov't Merits Brief In Rails To Trails Case

Here's the Brief for the United States in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (filed Dec. 17, 2013).

That's the case, set for argument on January 14, 2014, in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute.

As our amici brief argues, if the Court accepts the government's theory in the case, it could wipe out an entire class of rails-to-trails takings cases.

Brief for the United States, Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Dec. 17, 2013)...

Last Two Amicus Briefs In SCOTUS Rails-To-Trails Case

Here are the final two amicus briefs supporting the petitioner in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. granted Oct. 1, 2013). That's the case in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute. As our amici brief argues, if the Court accepts the government's theory in the case, it could wipe out an entire class of rails-to-trails takings cases.

• Brief of Amicus Curiae New England Legal Foundation in Support of Petitioners

• Brief for the Northwest Legal Foundation as Amicus Curiae in Support of Petitioners

Next up, the government's merits brief.

Brief of Amicus Curiae New England Legal Foundation in Support of Petitioners, Marvin M. Brandt Revocable T...

Brief for the Northwest Legal Foundation as Amicus Curiae in Support of Petitioners, Marvin M. Brandt Revo...

More Amici Briefs In SCOTUS Rails-To-Trails Case

Here are two more amici briefs supporting the petitioner in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. granted Oct. 1, 2013). That's the case in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute. 

• Brief for Cato Institute, American Farm Bureau Federation, American Land Title Association, National Cattlemen's Beef Association, Public Lands Council and Professors of Property Law as Amici Curiae in Support of Petitioners

• Brief for the National Association of Reversionary Property Onwers as Amicus Curiae in Support of Petitioners

The Cato, et al brief argues:

We doubt there is serious dispute that protecting individuals’ right to their property is a foundational purpose for which our national and state governments were established. But we begin from this point because the right landowners have to be secure in their property is undermined – or forfeited entirely – when title to property is not determined by established rules of property and principles of common law. Simply stated, faithful and consistent application of settled principles of property law is essential to secure an owner’s fundamental right to their property.

The Reversionary Property Owners' brief argues:

For more than a century after passage of the 1875 Act, the administrative agency responsible for patenting public lands to private landowners issued patents without reserving any interests in the rights of way granted under the Act. This policy was consistent with the terms of the Act, the intent of Congress, and this Court’s precedent, including its unequivocal ruling in Great Northern Railway Co. v. United States, 315 U.S. 262 (1942): the 1875 Act granted merely easements, not limited fees with an implied condition
of reverter.

Accordingly, affirming the Tenth Circuit’s decision in United States v. Brandt, 496 Fed. App’x 822, 824 (2012), would reverse the historical disposition of the property interests like the ones at issue here—likely in excess of a million acres.

The result would not merely revest ownership in the United States long after it disposed of the lands in question. It would correspondingly divest ownership from thousands of property owners who, for generations, have sold their lands under warranty deeds, unaware of the unstated reversionary rights only relatively recently claimed by the United States

More briefs to come.

Brief for Cato Institute, American Farm Bureau Federation, American Land Title Association, National Cattle...

Brief for the National Association of Reversionary Property Owners as Amicus Curiae in Support of Petitione...

Amici Brief In Rails-To-Trails Case: Tenth Circuit Repudiated Common Law Rules Of Property

Here's the amici brief of Pacific Legal Foundation and the Center for Constitutional Jurisprudence in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. granted Oct. 1, 2013). That's the case in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute.

As we've explained, although this case is a quiet title action out of a Colorado U.S. District Court, it could have huge implications for rails-to-trails takings cases in the Court of Federal Claims and the Federal Circuit. The issue is whether the federal government retained an "implied reversionary interest" when it issued railroad patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot.

The Tenth Circuit, in contrast to other courts, held that the right of way is subject to an implied reversionary interest in favor of the United States, meaning that the property owner doesn't have "property" that was taken when the railroad was abandoned and was turned into a recreational trail. The merits brief of the petitioners is posted here.

We filed an amicus brief in the case, available here. 

The PLF/CCJ brief argues:

This case raises important questions regarding the common law system of property ownership and the certainty of titles in property.

...

In the decision below, however, the Tenth Circuit repudiated the common law rules of property ownership in favor of a per se rule, holding that the United States—the original grantor of the railroad easement and the Brandts’ fee estate—will retain an "implied reversionary interest" in an 1875 Act right-of-way, even after the government patents the underlying land and conveys it to a private party without any express reservation of reversionary rights. ... The decision below extended the Tenth Circuit’s rule, holding that all private landowners whose titles are traceable to a federal land patent will be subject to the government’s unexpressed reservation of a reversionary interest in a railroad right-of-way, regardless of the rights and expectations established by their titles.

...

If not reversed, the Tenth Circuit’s rule will unsettle the rights and expectations of tens of thousands of landowners across the nation. ... Amici urge this Court to reverse the Tenth Circuit’s opinion in this case and to reaffirm the fundamental common law principle that ownership of land will be determined by title, not implication.

More background on the case in a piece in Jurist by PLF's Brian T. Hodges, "Brandt v. US: Should the Common Law of Propert be Scrapped?"  

Amicus Curiae Brief of Pacific Legal Foundation and Center for Constitutional Jurisprudence in Support of P...

New Amici Brief: Attempting To Derail Rails-To-Trails Takings Cases

Here's the amici brief we are filing (along with our firm colleagues Mark Murakami and Bethany Ace) in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. granted Oct. 1, 2013). That's the case in which the Court is considering the meaning of the term railroad "right of way" as used in an 1875 federal statute. 

As we explained here, although this case is a quiet title action out of a Colorado U.S. District Court, it could have huge implications for rails-to-trails takings cases in the Court of Federal Claims and the Federal Circuit. The issue is whether the federal government retained an "implied reversionary interest" when it issued railroad patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot.

In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in district court asserting it owned the right of way, and that it did not revert to the property owner. The Tenth Circuit, in contrast to other courts, held that the right of way is subject to an implied reversionary interest in favor of the United States, meaning that the property owner doesn't have "property" that was taken when the railroad was abandoned and was turned into a recreational trail. The merits brief of the petitioners is posted here.

We're filing the amici brief on behalf of our colleagues at Owners' Counsel of America (check out footnotes 2 and 3 starting on page 2 of our brief if you want to know a bit about what kind of firepower OCA has), and the National Federation of Independent Businesses Small Business Legal Center.

Our brief argues:

Unable to prevail on a variety of theories in rails-to-trails takings cases in the Court of Federal Claims (CFC) and the Federal Circuit for more than a decade, the Government appears to have switched tracks. Instead of continuing its fruitless frontal attacks on these takings claims—attacks which the courts have repeatedly rebuffed—the Government in this case has sought to undermine the very notion of property ownership by redefining the rights of way granted for railway uses under the 1875 Act from easements that are extinguished when no longer used for a railroad, to "implied reversionary interests."

This brief makes two points. First, the Tenth Circuit’s conclusion if accepted and applied nationwide as the Government urges, will eliminate an entire class of takings claims, and is nothing more than a backdoor way to avoid paying just compensation in cases that the Government keeps losing. Second, this Court’s decision in Great Northern Ry. Co. v. United States, 315 U.S. 262 (1942) — holding that 1875 Act rights of way are easements — is supported by the common law definition of right of way prevailing at the time that the 1875 Act was adopted. In the absence of an express indication of contrary intent, statutory terms used by Congress should be interpreted as having the meaning commonly assigned to them at the time.  This case presents the Court with the opportunity to provide definitive guidance that terms in a federal statute that are not expressly defined by Congress — but which have a commonly understood meaning—are not wholly malleable.

OCA and NFIB Legal Center respectfully ask this Court to reverse the Tenth Circuit and hold that railroad rights of way under the 1875 Act are easements, and the reversionary owners are entitled to continue to pursue claims for just compensation when their property is taken for public recreational trails. 

Stay tuned. More amici briefs are coming, and we'll post them when they are filed. 

Motion for Leave to File Brief Amici Curiae and Brief Amici Curiae of Owners' Counsel of America and Nation... 

Petitioner's Brief In Rails-to-Trails Case

Here's the property owner's merits brief in the case about the meaning of the term "railroad right of way" in an 1875 federal statute, Marvin M. Brandt Revocable Trust v. United States, No. 12- 1173. The meaning of a term in a somewhat obscure federal statute in a quiet title action isn't a case of obvious interest here, but as the amicus brief we filed at the cert stage points out, a decision in the government's favor could jeopardize rails-to-trails takings cases.

The issue in Brandt is whether the federal government retained an "implied reversionary interest" when it issued railroad patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to the property owner. The Tenth Circuit, in contrast to other courts, held that the right of way is subject to an implied reversionary interest, meaning that the property owner doesn't have "property" that was taken when the railroad was abandoned and was turned into a recreational trail.

Disclosure: we filed an amicus brief in the case supporting the petition, and intend to file a similar amicus brief on the merits next week.

Here's the argument as framed by the petitioner's brief:

The United States does not retain an implied reversionary interest in 1875 Act ROWs after the underlying lands are patented. The 1875 Act granted an easement, not a limited fee with an implied reversionary interest in favor of the United States. In Great Northern, based upon the language of the 1875 Act, the history surrounding its passage, the DOI’s early interpretation of the Act, and Congress’s subsequent construction of the Act, this Court unconditionally ruled that 1875 Act ROWs are easements. Fifteen years later, in Union Pacific, this Court reaffirmed that ruling.

It was against this legal background that the United States issued the Patent in 1976. The Patent conveyed fee simple title to the land "subject to those rights for railroad purposes" granted under the 1875 Act. The "subject to" clause merely advised that the patented land was burdened by an easement "for railroad purposes." When a grantor, such as the United States, conveys fee simple title to land burdened by an easement the grantor does not retain an implied reversionary interest in the easement. Accordingly, when the 1875 Act ROW was abandoned, the railroad easement was extinguished and Brandt’s land became unburdened. These principles alone demonstrate that the Tenth Circuit erred.

Even if these principles were not sufficient, Brandt should have prevailed on the strength of his Patent. A patent from the United States is the highest evidence of title. When the United States issued the Patent, it did not reserve any interest in the 1875 Act ROW, although it could have done so. In Leo Sheep, this Court reiterated the cardinal principle that the United States does not retain any property interests not expressly reserved in the patent, granting statute, or regulations. Nothing in the Patent, the 1875 Act, or the applicable DOI regulation suggested that an implied reversionary interest may be lurking in favor of the United States. The Tenth Circuit’s finding of an implied reversionary interest not only violated the sanctity of Brandt’s Patent, it upset the settled expectations of thousands of landowners who trace their title to patents issued by the United States "subject to" 1875 Act ROWs.

The implied reversionary interest found by the Tenth Circuit simply does not exist. It is not in the 1875 Act, the applicable DOI regulation, or Brandt’s Patent. Instead, the Tenth Circuit created the implied reversionary interest from § 912, an act passed 47 years after the 1875 Act. This act did not amend the 1875 Act. Nor did it alter previously granted ROWs to include an implied reversionary interest. Instead, the language and history surrounding § 912 confirms that Congress originally intended to grant only easements to railroads under the 1875 Act. Based upon the inaccurate statement in Stringham that 1875 Act ROWs were limited fees, Congress mistakenly believed that the United States would be saddled with worthless strips of land as 1875 Act ROWs were abandoned. Accordingly, Congress passed § 912 to more closely effectuate Congress’s original intent in passing the 1875 Act, i.e., to ensure that homesteaders received all the land described in their patents, including 1875 Act ROWs upon abandonment. The Tenth Circuit’s finding of an implied reversionary interest in 1875 Act ROWs completely frustrates Congress’s intent in passing the 1875 Act, as reflected in both the 1875 Act and § 912.

More to follow, and we'll post the amici briefs when they are filed.

Brief of Petitioners, Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Nov. 15, 2013)

Cert Grant In Brandt

Hey, that rhymes! Today, in a not-entirely-unexpected move, the U.S. Supreme Court granted cert and agreed to review United States v. Brandt Revocable Trust, No. 09-8047 (Fed. Cir. Sep. 11, 2012).

We say not-unexpected for two reasons. First, the Tenth Circuit expressly noted its ruling created a circuit split (that's catnip to counsel considering a petition). Second, the Solicitor General did not oppose the petitition, but agreed that it should be granted to resolve the split in the government's favor. 

The issue in the case is whether the federal government retained an "implied reversionary interest" when it issued these patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to the property owner.

Disclosure: we filed an amicus brief in the case supporting the petition. Our brief argues that the case was an attempt to undercut takings claims in which the plaintiff's rights are based on a patent subject to the 1875 Act, since the government's track record in the Court of Federal Claims and the Federal Circuit isn't very good. Because it has been unable to prevail on a variety of theories in rails-to-trails takings cases in the CFC and Federal Circuit for more than a decade, the government appears to have switched tracks. Instead of continuing its fruitless frontal attacks on these takings claims—efforts that repeatedly have been rebuffed by the courts—the Government in this case has sought to undermine the very notion of property by redefining the "rights of way" granted for railway uses under the 1875 Act from easements that are extinguished when no longer used for a railroad, to "implied reversionary interests." Our brief argues that the government's strategy to redefine property rights based on the 1875 Act will virtually wipe out an entire class of takings claims without justification.

Programming note: the case formally being reviewed is the Tenth Circuit's opinion in the government's quiet title action, and not the Federal Circuit's opinion in a related case as reported by SCOTUSblog (Brandt's claim for compensation, Brandt Revocable Trust v. United States, 710 F.3d 1369 (Fed. Cir. 2013)), which held that a takings claim originally submitted as a compulsory counterclaim to the federal government's attempt to quiet title in a District Court action -- which was then subsequently filed as a separate action in the CFC -- was not barred by 28 U.S.C. § 1500. But maybe the Supreme Court will do a "two fer" and resolve both issues?

Major CFC Decision On Rails-To-Trails Takings

Here's the Opinion and Order of the Court of Federal Claims after the damages trial in Childers v. United States, No.  08-1981 (Aug. 5, 2013). It's a very long opinion (145 pages, with a table of contents!), so we're not going to summarize it, but if you want to know how a rails-to-trails case is tried, you can't do better than this. Here's the court's overview:

This Fifth Amendment taking case comes before the Court following a trial on damages. Plaintiffs, landowners of 13 separate properties in Sarasota, Florida, seek just compensation stemming from the imposition of a recreational trail across their properties pursuant to the Rails to Trails Act. Specifically, Plaintiffs seek $8,703,800, representing $4,938,200 for the encumbrance of the trail and $3,765,600 in severance damages. Defendant asserts that compensation should be limited to the encumbrance, which it claims is properly valued at $2,220,900. The Court awards just compensation in the amount of $5,701,579.73 representing $4,706,047.56 for the land encumbered by the corridor plus severance damages of $995,532.17.

Opinion at 6 (footnote omitted).

Congratulations to colleague Thor Hearne on the victory.

Opinion and Order, Childers v. United States, No. 08-1981 (Fed. Cl. Aug. 5, 2013)

SG's Brief Not-In-Opposition In Railbanking Case: Court Should Resolve Circuit Split

The federal government has filed its brief responding to the cert petition which asks the Supreme Court to review a Tenth Circuit decision and resolve a lower court split about the meaning of the term railroad "right of way" as used in an 1875 federal statute and federal land patents subject to the 1875 Act.

The issue is whether the federal government retained an "implied reversionary interest" when it issued these patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to the property owner.

Disclosure: we filed an amicus brief in the case supporting the petition. Our brief argues that the case was an attempt to undercut takings claims in which the plaintiff's rights are based on a patent subject to the 1875 Act, since the government's track record in the Court of Federal Claims and the Federal Circuit isn't very good. Because it has been unable to prevail on a variety of theories in rails-to-trails takings cases in the for more than a decade, the government appears to have switched tracks. Instead of continuing its fruitless frontal attacks on these takings claims—efforts that repeatedly have been rebuffed by the courts—the Government in this case has sought to undermine the very notion of property by redefining the "rights of way" granted for railway uses under the 1875 Act from easements that are extinguished when no longer used for a railroad, to "implied reversionary interests." Our brief argues that the government's strategy to redefine property rights based on the 1875 Act will virtually wipe out an entire class of takings claims without justification.

The government's brief doesn't challenge those arguments, made in our brief and the other amicus briefs (see also here) filed supporting the property owner. Indeed, the government's brief agrees there is a circuit split, and that the Court should grant cert and resolve it. The only dispute is on the underlying merits, and the government seems to have doubled down on its strategy: it now wants to wipe out these type of takings claims nationwide, and not just in the Tenth Circuit:

As petitioners note (Pet. 32-33), and as the court of appeals (Pet. App. 5-6) and the district court (id. At 26) recognized, the decision below conflicts with the Federal Circuit’s decision in Hash v. United States, 403 F.3d 1308 (2005), which held, in the context of a suit seeking
just compensation for a taking under  the Fifth Amendment, That the United States did not “retain[]” a “reversionary interest to the land underlying [1875 act] rights of-way after disposing of the land by land grant patent under the Homestead Act.” Id. At 1318. Moreover, the Seventh Circuit has, in dictum, concluded that Hash "make[s] better sense than [the Tenth Circuit's decision in] Marshall.” Samuel C. Johnson 1988 Trust v. Bayfield Cnty., 649 F.3d 799, 803 (2011). By contrast, the Ninth Circuit has, in dictum, agreed with Oregon Short
Line that Section 912 applies to rights-of-way granted “both before and after 1871.” Vieux v. East Bay Reg’l Park Dist., 906 F.2d 1330, 1335, cert. denied, 498 U.S. 967 (1990). There is also disagreement in state courts of last resort.

. . . .

Whether the United States has reversionary interests in 1875 Act rights-of-way is a question of sufficient importance to warrant this Court's review.

. . . .

To date, thousands of claims pertaining to 1875 Act rights-of-way have been filed. Under current Federal Circuit precedent, the United States will be obligated to pay just compensation on many claims in which ownership of the right-of-way is often a determining factor. Those claims could impose considerable financial liability on the United States and the public fisc, making it appropriate for this Court to review whether the United States holds a reversionary interest in an 1875 Act right-of-way.

Brief at 17-20.

The petitioner has declined to file a response, and the case will now be placed on the Court's calendar for consideration. Stay tuned, folks.

Brief for the United States, Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (Sep. 5, 2013)

A Summary Of Rails-to-Trails Takings Cases

Every now and then, we post an update from the rails-to-trails arena. But we've never provided a "big picture" look at the issue. Well, law.com has saved us the effort. In "Rails-to-Trails Program Costly to Taxpayers," Jenna Greene provides an overview of how a law the Congressional Budget Office said "wouldn't cost the federal government a thing," ended up costing the taxpayers $49 million in the last year alone. Worth reading.

For our latest foray into this area, see our amicus brief urging the Supreme Court to review a Tenth Circuit case about the meaning of the term railroad "right of way" in an 1875 federal statute. We argue that the case, if left unreviewed by the Court, is an effort to undercut rails-to-trails takings cases.

CFC Provides Roadmap For Proving Damages And Just Compensation

Here's one we've been meaning to post for a few days because it involves the nuts-and-bolts of eminent domain and inverse condemnation work -- the calculation of just compensation and damages, and another victory for colleague Thor Hearne.

In a rails-to-trails taking case our of Florida, McCann Holdings, Ltd. v. United States, No. 07-4261 (June 27, 2013), the Court of Federal Claims awarded $3.1 milllion for the taking, which the government claimed was valued at only $825,000. 

We won't walk through the entire case, but the court's Opinion and Order is a very good roadmap for how to calculate severance damages in a partial taking of an easement.

Here's more about the decision from the local paper.

McCann Holdings, Ltd. v. United States, No. 07-4261L (Fed. Cl. Jun 27, 2013)

ABA Spring Conference: Public Use And Regulatory Takings Updates

We just wrapped up the spring meeting of the ABA's Section of State and Local Government Law in Nashville, which included our presentation of two updates, one on the latest in public use in eminent domain, the other on regulatory takings.

Here are the draft papers presented:

• Recent Developments in Eminent Domain: Public Use (coauthored with Mark Murakami and Bethany Ace)

• Recent Developments in Regulatory Takings

For those of you who attended, you already have these articles in your materials.

One More Amicus Brief In Railbanking Case: Growing And Well-Documented Circuit Split

Here's the third and final amicus brief supporting the petitioner in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. petition filed Mar. 22, 2013). The Pacific Legal Foundation brief argues:

This case raises important questions regarding the common law of property ownership and the certainty of titles in property.

. . . .

As fully set out in the Petition, the Tenth Circuit’s rule directly conflicts with decisions of this Court as well as decisions from the Federal Circuit, the Court of Federal Claims, and the Seventh Circuit. Pet. at 17-34. The split of authority regarding ownership of abandoned railroad rights-of-way has been growing for years, and is well-documented. See, e.g., Pet. Cert. App. at 5-6, 22-24 (discussing split of authority); Hash v. United States, 403 F.3d 1308, 1318 (Fed. Cir. 2005) (same); 11 Powell on Real Property § 78A (referring to the existing split of authority as a "mess [that] is not entirely fixed" and in need of "thorough analysis"); Roger Cunningham, et al., The Law of Property § 8.9, p. 460 (2d ed. 1993) (decisions concerning railroad rights-of-way "are in considerable disarray"). Amicus PLF urges the Court to grant the Petition to resolve this conflict, especially because the Tenth Circuit’s rule departs from ordinary understandings of property ownership.  ... If left unreviewed, the decision below will unsettle the rights and expectations of thousands of property owners within the Circuit and nationwide.

Br. at 2-3.

The brief by the Cato Institute and the National Association of Reversionary Property Owners is posted here, and the brief we filed on behalf of Owners' Counsel of America is here. The cert petition is posted here.

Brief Amicus Curiae of Pacific Legal Foundation in Support of Petition for Writ of Certiorari, Marvin M. Br...

Amicus Brief In Railbanking Case: Circuit Split May Upset Title To Millions Of Acres

Here's the amici brief of the Cato Institute and the National Association of Reversionary Property Owners supporting the petitioners in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. petition filed Mar. 22, 2013).

In that case, the Tenth Circuit's opinion held that the term railroad "right of way" as used in an 1875 federal statute was a grant of land to railroads in fee simple with an "implied reversionary interest" to the United States, and not merely an easement. The difference is that easements may be extinguished, while reversionary interests are not. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court claiming it and and not Brandt owned the right of way.

The amici brief argues:

This case is important to the Association because the Tenth Circuit’s decision unsettles long-established property interests and clouds the title of many landowners whose property is (or was) encumbered by a railroad right-of-way easement established under the General Railroad Right-of-Way Act of 1875, 43 U.S.C. 934-939 ("1875 Act"). And because the Tenth Circuit’s split from the holding of the Seventh and Federal Circuits, resolution of title disputes will be more costly and time-consuming.

We filed an amicus brief in the case also. Here's the cert petition.

More, including the BIO, when filed.

Brief for the Cato Institute and the National Association of Reversionary Property Owners as Amici Curiae i...

Amicus Brief In Rails-to-Trails Case: Switching Tracks To Undermine Takings Claims

Here's the amicus brief we filed today on behalf of our colleagues at Owners' Counsel of America, urging the U.S. Supreme Court to grant cert in Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (cert. petition filed Mar. 22, 2013).

That petition asks the Court to review a Tenth Circuit decision that continued a lower court split about the meaning of the term railroad "right of way" as used in an 1875 federal statute and federal land patents subject to the 1875 Act. The issue is whether the federal government retained an "implied reversionary interest" when it issued these patents, or whether these grants were subject only to a railroad easement. The difference is that easements may be extinguished, while reversionary interests cannot. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to Brandt.

Our brief argues that this is an attempt to undercut takings claims in which the plaintiff's rights are based on a patent subject to the 1875 Act, since the Government's track record in the Court of Federal Claims and the Federal Circuit isn't very good.

Here's the Summary of Argument from the brief:

Unable to prevail on a variety of theories in rails-to-trails takings cases in the Federal Circuit and the Court of Federal Claims (CFC) for more than a decade, the Government appears to have switched tracks. Instead of continuing its fruitless frontal attacks on these takings claims—efforts that repeatedly have been rebuffed by the courts—the Government in this case has sought to undermine the very notion of property by redefining the “rights of way” granted for railway uses under the 1875 Act from easements that are extinguished when no longer used for a railroad, to “implied reversionary interests.”

This brief makes two points. First, the Government’s strategy to redefine property rights based on the 1875 Act will virtually wipe out an entire class of takings claims without justification. Second, this Court’s decision in Great Northern Ry. Co. v. United States, 315 U.S. 262 (1942)—holding that 1875 Act rights of way are easements—is supported by the common law definition of “right of way” prevailing at the time that the 1875 Act was adopted. In the absence of evidence of contrary intent, statutory terms used by Congress should be interpreted as having the meaning commonly assigned to them at the time. This case presents the Court with the opportunity to provide definitive guidance that terms in a federal statute that are not defined by Congress are not wholly malleable, and OCA respectfully asks this Court to review the important issues raised in the petition.

Br. at 4.

There will be other amicus briefs, and we'll post those as they become available. With a clear circuit split and the attendant weird result (two similarly-situated landowners could have entirely different rights, depending on whether their land is in the Tenth Circuit, or elsewhere), we think there's a good chance this case will catch the Court's attention.

Brief Amicus Curiae of Owners' Counsel of America in Support of Petitioners, Brandt v. United States, No. 1...

Federal Circuit: Statute Of Limitations In Tucker Act Doesn't Start Running Until Govt Provides Notice Of The Taking

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)

Federal Circuit: Takings Counterclaim Not Barred By Section 1500 - A Dismissed Claim Is Not "Pending" Even Though It Might Be Appealed

If that headline calls out to you, congratuations: you are officially a takings nerd.

In Brandt v. United States, No. 12-5050 (Mar. 26, 2013), the Federal Circuit held that a takings claim originally submitted as a compulsory counterclaim to the federal government's attempt to quiet title in a District Court action -- which was then subsequently filed as a separate action in the Court of Federal Claims -- was not barred by 28 U.S.C. § 1500. That statute deprives the CFC of subject-matter jurisdiction "of any claim for or in respect to which the plaintiff ... has pending in any other court any suit or process against the United States...."

If this case name sounds familiar, here's why. Last week we posted the cert petition in a companion case (the one that the government alleged was pending at the time that Brandt filed his takings counterclaim). Brandt's petition challenges the Tenth Circuit's conclusion in the quiet title action that the federal government retained an "implied reversionary interest" when it issued land patents back in the day, and not simple easements that were extinguished when the rights-of-way ceased to be used as railways.

Brandt is the succesor-in-title to land originally patented and subject to a right-of-way for railroad purposes. In 1996, the railroad filed a notice with the Surface Transportation Board that it was abandoning rail service and the right-of-way. After the abandonment process completed in 2004, the federal government instituted a quiet title action in the District of Wyoming, seeking a declaratory judgment that the right-of-way was government property and not the Brandts, because it was an "implied reversionary interest" and not an easement. Reversionary interests cannot be extinguished, while easements may be.

Brandt asserted a counterclaim arguing that "to the extent the government acquired some interest in the portion of the land formerly occupied by the railroad easement, that interest would  constitute a taking for which just compensation is owed." Slip op. at 3. Apparently Brandt's counsel was following along with Horne, and requested the District Court bifurcate the takings counterclaim and transfer it to the CFC. The District Court partially agreed, and bifurcated the quiet title and the takings issues, but stayed the takings claim while it adjudicated the quiet title claim. After the court ruled in favor of the government on the quiet title claim, it dismissed Brandt's takings counterclaim for lack of subject-matter jurisdiction. After the District Court dismissed, but before Brandt filed his Tenth Circuit appeal, he instituted a Tucker Act claim for the taking in the CFC.

The CFC action alleged the District Court's ruling effected a taking, and that "but for the court's application of [the federal rails-to-trails statute], the easement would have been terminated upon abandonment and no longer would have burdened his property." Slip op. at 6. The Tenth Circuit eventually affirmed the quiet title ruling. See United States v. Brandt, No. 09-8047, slip op. at 5 (10th Cir. Sep. 11, 2012). That's the case now up on the cert petition.

Meanwhile, back in the CFC the government moved to dismiss the takings claim under § 1500 and the Supreme Court's decision in United States v. Tohono O'odham Nation, 131 S. Ct. 1723 (2011), arguing that in Tohono, the Supreme Court held that two lawsuits are "for or in respect to the same claim" when they are based on the same operative facts, and Brandt's CFC takings claim and his District Court counterclaim were based on the same facts and were "pending" when Brandt filed the CFC complaint. The CFC agreed and dismissed:

Specifically, the court found that: (1) Brandt’s case was "pending" within the meaning of § 1500 when he filed in the Court of Federal Claims because the time for filing a notice of appeal to the Tenth Circuit had not yet expired; and (2) Brandt’s takings claim filed in the Court of Federal Claims was "for or in respect to" the claims filed in Wyoming district court because they shared "substantially the same operative facts."

Slip op. at 7.

The Federal Circuit reversed, holding that even though § 1500 was designed to "save the Government from burdens of redundant litigation," slip op. at 8 (quoting Tohono, 131 S. Ct. at 1729-30), and a counterclaim is a "suit or process," the counterclaim was no longer "pending" in the District Court at the time he filed the CFC lawsuit even though the time for Brandt to appeal to the Tenth Circuit had not yet expired (and indeed, he did appeal shortly thereafter). Brandt also argued that the takings claim did not arise from the "same operative facts" because it only ripened once the District Court ruled in the government's favor on the quiet title issue.

The Federal Circuit agreed that the District Court case was not "pending" even though the appeal period had yet to expire at the time Brandt filed the CFC complaint. The District Court's judgment was final but Brandt had not yet instituted the Tenth Circuit appeal, and thus, in the interregnum there was not a "suit or process against the United States pending in any court." The case had been dismissed by the CFC which means it was no longer "pending." When the Tenth Circuit notice of appeal was subsequently filed, Brandt had already filed his CFC complaint, and subject-matter jurisdiction is measured at the time the complaint is filed.

According to the government, Brandt should have waived his right to appeal in order to be able to file his CFC takings claim. Read that again in case it didn't soak in:

According to the government, Brandt should have affirmatively waived his right to appeal the district court’s decision to signify that the case was officially terminated. The government cites no authority requiring a litigant to forgo its appellate rights in these circumstances, and we have found none. Although the government is correct that § 1500 "was enacted to prevent a claimant from seeking recovery in district court and the Court of Claims for the same conduct pleaded under different legal theories" and to prevent the government from having to defend against duplicative lawsuits, Trusted Integration, 659 F.3d at 1163, here, it was the government – not Brandt – that affirmatively chose to file suit in district court. And, as Brandt points out, once the government filed suit, he was compelled to file counterclaims relating to the abandoned railroad easement or risk waiving his right to do so. See Fed. R. Civ. P. 13(a)(1)(A) ("A pleading must state as a counterclaim any claim that – at the time of its service – the pleader has against an opposing party if the claim: arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim").

Slip op. at 18. The court rightly rejected that argument as "particularly strange," given the split in the circuits. See id. at n.8.

Because it ruled in favor of Brandt, the court did not address the argument that the District Court counterclaim and the CFC takings claim arose from the "same operative facts."

One final note. In Tohono, a case involving the Indian Tucker Act and claims of breaches of trust, we filed an amicus brief arguing that takings claims are different than statutory and common law claims because the Fifth Amendment's compensation requirement is self-executing, and warning of the types of arguments that arose in Brandt being raised in takings cases. 

Will the government seek en banc review or perhaps even a return visit to the Supreme Court? Does this decision highlight the circuit split in the other Brandt case (see, e.g., slip op. at 18 n.8)? Stay thirsty, my friends. 

Brandt v. United States, No. 12-5050 (Fed. Cir. Mar. 26, 2013)

Circuit Split Alert: New Petition Asks - What Is It About "Easement" That You Don't Understand?

When a court of appeals opinion holding that the federal government has retained a reversionary interest in railroad rights-of-way contains the following language, that sound you hear is the cracking of smiles on appellate lawyers' faces:

Though we recognize that the Seventh Circuit, the Federal Circuit and the Court of Federal Claims have concluded that the United States did not retain any reversionary interest in these railroad rights-of-way, we are bound by our precedent.

United States v. Brandt, No. 09-8047, slip op. at 5 (10th Cir. Sep. 11, 2012). That, you see, is the court acknowledging the holy grail of Supreme Court review, the vaunted "circuit split," and the presence of a genuine disagreement in the law among the lower courts is one of the tickets to getting the Justices' -- or at least the cert pool clerk's -- attention.

Thus, the cert petition filed yesterday seeking SCOTUS review of the Tenth Circuit's unpublished opinion seems like a good candidate and a case to watch, even though it involves a less-than-flashy area of the law, the conversion of abandoned railway easements into public recreational trails.

The issue is whether the federal government retained an "implied reversionary interest" when back in the day it issued land patents, or whether these patents were subject only to a railway right-of-way easement. The difference is that easements may be extinguished, while reversionary interests cannot. In this case, the railway abandoned its use, after which the federal government instituted a quiet title action in federal court asserting it owned the right of way, and that it did not revert to Brandt. So dust off your old Property hornbooks and follow along.

Let's start with the Question Presented, which details the necessary background:

This case involves the General Railroad Right-of-Way Act of 1875 ("1875 Act"), under which thousands of miles of rights-of-way exist across the United States. In Great Northern Ry. Co. v. United States, 315 U.S. 262 (1942), this Court held that 1875 Act rights-of-way are easements and not limited fees with an implied reversionary interest. Based upon the 1875 Act and this Court’s decisions, the Federal and Seventh Circuits have concluded that the United States did not retain an implied reversionary interest in 1875 Act rights-of-way after the underlying lands were patented into private ownership. In this case, the Tenth Circuit reached the opposite conclusion and acknowledged that its decision would continue a circuit split. The question presented is:

Did the United States retain an implied reversionary interest in 1875 Act rights-of-way after the underlying lands were patented into private ownership?

As noted above, the Tenth Circuit held that it did. Its opinion didn't really analyze Brandt's claims, but simply relied on circuit precedent which held that these were not easements. Marshall v. Chicago & Northwestern Transportation Co., 31 F.3d 1028 (10th Cir. 1994).

The Seventh Circuit, in Samuel C. Johnson 1988 Trust v. Bayfield County, 649 F.3d 799 (7th Cir. 2011) (Posner, J.), rejected Marshall's reasoning, and further highlighted the circuit split:

Marshall v. Chicago & Northwestern Transportation Co., 31 F.3d 1028, 1031 (10th Cir.1994), holds, it is true, that the 1875 Act created a reversionary interest in the federal government, in which event a right of way abandoned by a railroad would revert to the federal government and so be transferable to the County. But Hash v. United States, 403 F.3d 1308, 1316-17 (Fed.Cir.2005), and Beres v. United States, 64 Fed.Cl. 403, 425-28 (Fed.Ct. Cl.2005), are to the contrary, and, though criticized in Darwin P. Roberts, "The Legal History of Federally Granted Railroad Rights-of-Way and the Myth of Congress's `1871 Shift,'" 82 U. Colo. L.Rev. 85, 150-64 (2011), make better sense than Marshall, as well as being supported by the characterization in Great Northern Ry. v. United States, 315 U.S. 262, 271-79, 62 S.Ct. 529, 86 L.Ed. 836 (1942), of the rights of way created under the 1875 Act as "easements." The Act does not hint at a reversionary interest, and who searching the chain of title of a lot never owned by a railroad would suspect a lurking governmental right so unsettling to the security of private property rights?

Apparently, there are thousands of property owners across the nation that could be affected, and the rule of law applicable depends on where a parcel is located. Besides, why pay for and take all these lapsed right-of-way interests if you can simply declare that they never belonged to the owners at all?

Petition for Writ of Certiorari, Brandt Revocable Trust v. United States, No. ___ (Mar. 22, 2013)

NY Appellate: How To Value A Rail Corridor

Check out New York Central Lines, LLC v. State of New York, No. 2011-03494 (Dec. 19, 2012), a short opinion from the New York Supreme Court Appellate Division (Second Department) (if you didn't know that in New York, the trial court of general jurisdiction is the "Supreme Court," and the intermediate court of appeals is the "Appellate Division" of the Supreme Court, you have not been watching enough Law & Order).

Both the state's and the property owner's valuation experts testified that the highest and best use of the property was its current use, a rail corridor. But the two experts differed on the proper method of valuation.

The State's expert advocated a cost, or reproduction cost less depreciation, approach to valuation, which is employed in valuing "specialty" properties (see generally Matter of Allied Corp. v Town of Camillus, 80 NY2d 351, 357; Matter of Al Turi Landfill, Inc. v Town of Goshen, 93 AD3d 786). However, the Court of Claims properly rejected this approach because, inter alia, the evidence demonstrated that the appropriated property did not constitute a specialty property. Additionally, the Court of Claims properly rejected the State's lump-sum reduction of the market value of the appropriated property to 15% of the estimated value. Since the opinion of the State's expert as to this particular issue was not supported with sufficient facts, figures, and calculations, his opinion in this regard lacked probative value (see Matter of County of Dutchess [285 Mill St.], 186 AD2d 891, 891-892; Matter of Northville Indus. Corp. v Board of Assessors of Town of Riverhead, 143 AD2d 135, 136).

On the other hand, the property owner's appraiser

valued the appropriated property pursuant to a comparable sales approach, which "is generally the preferred measure of a property's value for assessment" (Matter of Allied Corp. v Camillus, 80 NY2d at 356; see Matter of Al Turi Landfill, Inc. v Town of Goshen, 93 AD3d at 792). The specific comparable sales approach advocated by Rex [the appraiser] was the "corridor valuation" method, which is, at its essence, a two-step process. First, the "across-the-fence" value (hereinafter the ATF value) of the land is estimated based on, among other things, the location of the corridor and market conditions. The ATF value is then multiplied by a "corridor factor." According to Rex, the "purpose of the corridor factor is to convert [ATF] value into the value of the corridor. Into market value. The corridor factor measures the importance of the corridor." In other words, when a property's highest and best use is as a corridor, and the property is to remain as a corridor, that property will generally sell for more than the ATF value of the land, and the corridor factor figures this into the valuation.

The trial court rejected the state's approach, applied the property owner's comparable sales method, but did not apply the "corridor factor." The Appellate Division reversed the latter holding, and sent the case back "for a determination as to the appropriate corridor factor to be applied." 

The court also reversed the trial court's conclusion that the taking of permanent easements over certain parcels resulted in no loss in value. The state's appraiser opined that the easements caused a 5% loss, while the property owner's appraiser testifed to a loss of 50% of value. The Appellate Division concluded that the state's valuation was the correct one, and that the market value of the 5% loss is to be determined by the ATF value and the applied "corridor factor."

This comes to us by way of our Owners' Counsel of America colleague Mike Rikon, who reports that his partner Jonathan Houghton tried the case and prevailed on property owner's cross-appeal. 

Ohio: Federal Law Does Not Preempt City's Condemnation

Here's a short one from the Ohio Supreme Court. In City of Girard v. Youngstown Belt Railway Co., No. 2012 Ohio 5370 (Nov. 21, 2012), the court held:

In this case, we are called upon to determine the extent to which the Interstate Commerce Commission Termination Act ("ICCTA"), 49 U.S.C. 10101 et seq., preempts a state’s eminent-domain action over a parcel of property owned by a railway company. Based on our interpretation of the legislation at issue and its application to the unique facts of this case, we find no preemption, and we therefore reverse the judgment of the court of appeals.

Slip op. at 1-2. Not really an eminent domain heavy issue, and if federal preemption is your thing, check it out. More here from the local newspaper.

City of Girard v. Youngstown Belt Railway Co., No 2012 Ohio 5370 (Nov. 21, 2012)

Reply Brief In Fed Cir Rails-to-Trails Appeal: Statute Of Limitations Doesn't Start To Run Until Gov't Gives Notice Of The Taking

In July, we posted the opening brief in Ladd v. United States, the case in which the Court of Federal claims dismissed the property owners' Fifth Amendment takings claim stemming from a rail conversion. The CFC held that the claim was filed past the six-year Tucker Act statute of limitations even though the government did not provide the owners notice of the action that they assert was a taking.

The appeal, now pending in the Federal Circuit, asks whether the federal government can take an owner’s property without providing any notice to the landowner, and avoid its constitutional obligation to pay compensation because the statute of limitations began to run when the government issued the order, not when the landowner had notice of the government’s order taking their property? Our colleague Thor Hearne has sent along the recently-filed Reply Brief. which argues:

The government defends the CFC’s dismissal by asking this Court to embrace the amazing proposition that a federal agency may issue an edict taking an owner’s property and, by not telling the owner of its order until after the limitations period has expired, escape the government’s constitutional obligation to justly compensate the owner.

The government’s position is repugnant to the fundamental principles embodied in The Fifth Amendment.

The CFC should be reversed and this case remanded to determine the compensation these landowners are due.

Br. at 4.

Federal Circuit: What's All The "Sturm Und Drang" About?

Check out Evans v. United States, No. 2010-1303 (Fed. Cir. Sep. 17, 2012), a rails-to-trails case in which the Federal Circuit "confess[ed] to some puzzlement over exactly what all this sturm und drang is about." Slip op. at 9 (footnote omitted). The court resolved a procedural issue in favor of property owners (represented by our colleague Thor Hearne, who is a frequent guest poster on rails-to-trails takings issues, most recently here).

It's a short opinion so we won't go into it in detail, but the case details the procedural hurdles that property owners often must go though and the jurisdictional maze they must navigate to get their takings claims against the federal government resolved. Takings lawyers who practice in the Court of Federal Claims refer to the constant jumping back and forth between the District Courts and the CFC as the "Tucker Act Shuffle," and this opinion, while it does not mention that term, is clearly exasperated with the way the case played out. Read page 10 for more. 

Evans v. United States, No. 2010-1303 (Fed. Cir. Sep. 17, 2012)

Can The Statute Of Limitations In Tucker Act Start Running Before The Govt Provides Actual Notice Of The Taking?

Check out the latest brief filed in the Federal Circuit by 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 CFC case on that subject.

In Ladd v. United States, the CFC dismissed the property owners' Fifth Amendment takings claim stemming from a rail conversion in Arizona. The court held that 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 a series of cases since 1990, the Supreme Court and the Federal Circuit have concluded this is a taking of the landowner’s right to unencumbered title and possession of their land, and that the Fifth Amendment requires the federal government to pay just compensation. But, as Thor has pointed out in several guest posts (see the above link, and this one), the fJustice Department has been trying one argument after another in an effort to claim the government can avoid its constitutional obligation to pay landowners for these takings. The Ladd case has been though that, and the CFC's dismissal is the latest.

Ladd II is the second round in the battle of landowners v. federal government. In 2006 the STB issued an order that "railbanked" an 80 mile-long abandoned railroad easement and authorized the railroad to sell the easement to a non-railroad for use as a recreational trail.  Shortly thereafter, the railroad removed the railroad tracks and the corridor began to be heavily-use by illegal immigrants and drug smugglers entering the United States from Mexico. The Arizona ranchers wanted to fence the corridor and – but for the federal Trails Act – they could have done so. However, under the Trails Act, their Arizona law right to unencumbered title and possession of their land was taken while the land was "railbanked" and the railroad negotiated a possible public recreational trail across their land. That was more than six years ago, yet the Arizona landowners still do not have possession of their land which remains perpetually subject to the STB’s jurisdiction.

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. The Arizona landowners appealed, but the Federal Circuit reversed.

The court unanimously reversed and remanded the case for "a determination of the compensation" the government was constitutionally obligated to pay. On remand, however, the Justice Department 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 Justice Department 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 are 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, they had "top men working on it right now." (Hence the video clip at the top of this post.)

This 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 this gotcha: no one -- not even the Director of the STB or the DOJ -- knew of the STB’s order, yet, when on remand to determine compensation the government "found" a 1998 NITU in some file cabinet, which results in a dismissal because the property owners failed to timely bring a lawsuit for a claim no one knew about.

In essence this argument boils down to this: "we didn't know, but the property owner should have."

Thus, it seems to us that this appeal to the Federal Circuit – a court of national jurisdiction in all taking claims against the federal government – raises one of the more fundamental issues underlying the Fifth Amendment: can the federal government take an owner’s property without providing any notice to the landowner and then avoid its constitutional obligation to pay the owner because the statute of limitations began to run when the government issued the order, not when the landowner had notice of the government’s order taking their property?  We think not. We'll be following this case as it progresses.

Brief for Plaintiffs-Appellants, Ladd v. United States, No. 2012-5086 -5087 (filed July 20, 2012)

Guest Post: Two More Rails-To-Trails Property Owner Victories

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.

__________________________________________________

The Justice Department has now lost more than twenty consecutive Trails Act taking cases in the past year and one-half. Ingram v. United States, No. 10-463L (May 24, 2012), and Whispell Foreign Cars, Inc. v. United States, No. 09-315L (June 5, 2012) are the two latest defeats for the federal government. 

Years ago a railroad operated by the South Carolina port authority abandoned an 80-mile long railroad right-of-way easement in Beaufort County, South Carolina. This railroad easement had been established before the Civil War. Under South Carolina law and the terms of the easement, when the railroad stopped using the right-of-way, the easement terminated and the owners of the fee estate regained unencumbered title and possession of the land.  But, under auspices of the National Trail System Act, the STB issued an order establishing a new rail-trail corridor easement across the land. Almost twenty-five years ago the Supreme Court declared that such a "rail-to-trail" conversion was a taking of the owners’ property for which the Fifth Amendment required the federal government to pay “just compensation” to the owner. See Preseault v. ICC, 494 U.S. 1 (1990).

But, rather than acknowledge its constitutional obligation to compensate property owners in Trails Act taking cases, the Justice Department has chosen to dispute the government’s constitutional obligation to pay any compensation to the landowner. The Justice Department contends that because the federal Trails Act allows for a new railroad to be built across the land in the indefinite future (so-called "railbanking"), current public recreational use of the land is the same as operating a railroad and, therefore, such use of the land is within the scope of the original railroad easement. Every time the Justice Department has made this argument, it has lost, including before the Supreme Court which, literally, laughed the government’s argument out of court. Yet, the DOJ continues making this losing argument.  Not surprisingly, Judge Horn rejected the government’s argument in Ingram. Judge Horn wrote, "courts in this Circuit have declined to find railbanking a railroad purpose or even a relevant consideration for analysis of a claim for a Trails Act taking."

Ingram v. United States is one of the most recent cases to reject the government’s argument. In Ingram, the government attempted a twist on its prior argument. It argued, in essence, "OK, so we took your land for a federal rail-trail corridor easement. But, since a railroad had once run across your land, we need only pay you for the nominal 'incremental' burden imposed by the public using this land for recreation." The government made this same argument in Raulerson v. United States, 99 Fed. Cl. 9 (2011), Rogers  v. United States, 90 Fed. Cl. 432 (2011), and Ladd v. United States, 630 F.3d 1015 (Fed. Cir. 2010) – and other cases. In all these earlier cases the government’s argument was rejected and the court emphatically declared the nature of a Trails Act taking was a taking of the landowners’ right to unencumbered title and exclusive possession of the land. And, yet, the Justice Department continues to make this same losing argument. 

Judge Horn followed this settled law and held, "but for issuance of the [STB’s order], upon transfer of the easements for other than railroad purposes, the easements would have reverted to the plaintiffs in fee simple and plaintiffs would have held their property interests unencumbered by any easements. The measure of just compensation to the plaintiffs for the takings of plaintiffs’ property should capture the value of the reversionary interests in their “before taken” condition, unencumbered by the easements."

On June 5, 2012, Chief Judge Emily Hewitt of the Court of Federal Claims handed the Justice Department another defeat. Whispell Foreign Cars, Inc. v. United States involved a Trails Act taking of land in St. Petersburg, Florida next to the Tropicana Dome. The railroad right-of-way was originally established in the early 1900’s. A portion of the railroad ran across platted city streets. The city passed an ordinance in 1914 authorizing the railroad to construct the railroad line within city street easements, and the railroad was abandoned in 2004. The STB issued an order authorizing a rail-to-trail conversion of the abandoned railroad line and the landowner sought compensation. The court had earlier found the government liable for Fifth Amendment taking of this property, See Whispell, 100 Fed. Cl. at 541 concluding that the easement originally granted the railroad was "limited to constructing, maintaining, and operating railway tracks, and the government effected a taking of plaintiffs’ property by imposing a new easement for public recreational trail use on their property."

But, the Justice Department still denied the government’s obligation to pay the landowner and argued the owner did not hold title to the land under the street and abandoned railway right-of-way. The DOJ refused to recognize the "Florida rule that, when a platted street is dedicated to the public, the abutting lot owner remains the owner of the land underlying the street to the center line." This "centerline" presumption is a principle of property law recognized by almost every state. The Justice Department’s decision to contest this long-settled principle of law required significant additional briefing and delay. Judge Hewitt ruled, "[The landowner] was the owner in fee simple of the property to the centerline of the land underlying the railway easement at the time of the taking and is entitled to just compensation therfor." The Justice Department is currently also contesting the "centerline presumption" in a Trails Act case where this issue was referred to the Colorado Supreme Court. 

As these two most recent decisions demonstrate, the Justice Department continues to pursue – and lose – a costly litigation strategy in Trails Act taking cases. Both taxpayers and the landowners whose property has been taken would be well-served if the Justice Department would reconsider its "scorched-earth" response to Trails Act takings litigation and work for a prompt, fail and cost-efficient resolution of these landowners’ constitutional right to be paid just compensation.

Hash v. United States – Attorneys Fees Under The URAA

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).

----------------------------------------------------------------------------------------------------------

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).

Guest Post: The DOJ And The Definition Of Insanity

Today's commentary is by our colleage 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. Thor reports on the latest developments in those cases below.

Thor recently posted this summary, noting that the U.S. Department of Justice had lost a series of 16 Trails Act cases in a row during the past 12 months, and now updates us with the most recent decision, this time from the Indiana Supreme Court, Howard v. United States, No. 94S00-1106-CQ-333 (Mar. 20, 2012), a case in which the state court answered a question certified to it by the Court of Federal Claims:

Under Indiana law, are railbanking and interim trail use pursuant to 16 U.S.C. § 1274(d) uses that are within the scope of the easements acquired by the railroad companies either by prescription, condemnation, or the deed at issue; and if either is not within the scope of the easements originally acquired, is railbanking with interim tr[ai]l use a shifting public use?

Slip op. at 1-2. The court answered "both parts in the negative. Under Indiana law, railbanking and interim trail use pursuant to 16 U.S.C. § 1274(d) are not uses within the scope of the easements, and railbanking with interim trail use does not constitute a permissible shifting public use."

Barista's note: we added the title to this post, a reference to the cliche supposedly originated by Albert Einstein that the definition of insanity is doing the same thing over and over again and expecting different results.

Thor writes:

In most of these cases the DOJ makes the – by now inane – argument that under state law,  a public recreational trail is really the same as if a railroad was currently operating across the land because the federal STB could (under the federal Trails Act and not any provision of state-law) could maybe allow some unnamed railroad to build a railway line across this land in the future.

The Federal Circuit in an en banc decision (Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996) (en banc)) has rejected this argument, the Supreme Court in Preseault v. ICC, 494 U.S. 1 (1990) literally laughed this argument out of court. Numerous subsequent courts including the Federal Circuit in a series of decisions and the U.S. Court of Claims in an unbroken series of something like 20 or more decisions, have all rejected this specious argument. Now, the Indiana Supreme Court has added its weight to this settled point of law. In Howard, the Indiana Supreme Court issued a decision that overwhelming rejected the Justice Department’s argument that "railbanking" is a "railroad purpose."

The question one needs to ask is why on earth is the Justice Department continuing to spend millions of taxpayer funds trying to beat this long-dead horse. Hopefully, there is some "grown-up" at the Justice Department with the wisdom and authority to say, “enough is enough, we lost this argument and now we need to devote our resources to fairly compensating these landowners." Really, how many Supreme Courts need to reject the Justice Department’s specious argument before they finally give up? It is costing taxpayers millions to keep making an entirely specious argument. The Justice Department might as well repeatedly argue the world is flat in the hope that but simply repeating the argument it somehow gains merit.

Howard v. United States, No. 94S00-1106-CQ-333 (Mar. 20, 2012)

Federal Circuit Talks Attorneys Fees Under The Uniform Relocation Act

Here's today's second decision about attorneys fees and costs, this time in an inverse condemnation claim out of the Federal Circuit, Bywaters v. United States, No. 2011-1032 (Mar. 1, 2012).

In a class action rails-to-trails takings case under the Little Tucker Act (less than $10,000 per claim, district court venue), the trial court awarded the property owners attorneys fees and costs under the Uniform Relocation Assistance and Real Property Acquisition Policies Act. The government had stipulated to liability and the parties worked together to determine compensation for class members. Eventually, the district court approved a settlement for the entire class of approximately $1.25 million, interest included. The property owners then filed a claim seeking $832,000 in fees for 2,000+ hours of work. The market rate they sought was for attorneys in the District of Columbia (where their office is located), and not the Eastern District of Texas (the lawsuit's venue).

In response, the government argued for application of the forum rule. The government also argued for the reduction of the fees claimed based on various grounds, including that the hours claimed were unreasonable in light of the government’s stipulation to liability early in the case, and the fact that a fee agreement between appellants and their counsel provided for the award of attorneys’ fees calculated at the greater of counsel’s regular hourly rate or one third of appellants’ total recovery.

Slip op. at 5. The district court used the "lodestar" method (reasonable rate x reasonable time), and used reasonable hourly rates from D.C., and awarded the property owners $826,000. Because that figure represented 2/3 of the recovery and was "extremely high considering the amount at stake in this case and the actual results obtained," slip op. at 7, the court cut the award in half.

The Federal Circuit first rejected the government's argument that Fifth Circuit law controlled, not Federal Circuit precedent. The court noted that it has exclusive appellate jurisdiction over the Little Tucker Act claims regardless of trial venue, even though it shares jurisdiction with the regional circuits on URA issues. Because this case was a takings case under the Little Tucker Act, Federal Circuit law controlled even though the case was litigated in the Eastern District of Texas.

The court then held that the district court miscalculated the attorneys fees because it used a two-step process (calculate the lodestar, then reduce it because it was a small case) when it should have considered the "amount involved and the results obtained" and the nature of the work in its calculation of the lodestar figure itself, not as a post-lodestar whack:

In conclusion the district court should have consid-ered the "amount involved and results obtained," as well as the administrative nature of the work and the fee agreement, in determining the reasonable number of hours expended or the reasonable hourly rate.

Slip op. at 18.

The court also held that the district court should have applied the "forum rate" (Eastern District of Texas) rather than the D.C. rate, because Texas is the "relevant community" for calculating the lodestar.

Contrary to appellants’ contention, nothing in Avera suggests that the forum rate should be disregarded when plaintiffs elect to retain counsel who are located outside the forum in a jurisdiction that charges higher rates than the forum rates.

Slip op. at 20. The court refused to apply the specialized counsel exception (the party cannot find a local attorney to help her), because "[t]here is no evidence to suggest that no local attorneys were competent to handle Bywaters's case. Nor is there any indication that Bywaters conducted a resonable search for local countl to handle his case." Id. at 22.

The court vacated the award, and remanded the case for another go at the calculation.

Judge Plager dissented. He agreed with the substantive rulings that the district judge miscalculated the amount when he halved the lodestar figure, but believed that remand was pointless, since "[o]n remand, the same lodestar figure, absent the halving, is the only outcome the record could support." Dissent at 4. Judge Plager also would have held that using D.C. counsel rates was acceptable because "the plaintiffs explained fully about their search for the best counsel for this type of specialized takings litigation." Id. at 5. He would have concluded that it was within the district court's discretion to apply D.C. rates.

For those of you fortunate to be in the position of determining attorneys fees, check this case out.

Bywaters v. United States, No.11-1032 (Fed. Cir. Mar. 1, 2012)