Chicago Coating Company, LLC v. United States
131 Fed. Cl. 503
Fed. Cl.2017Background
- Plaintiffs (Chicago Coating Co., LLC and the Martinez brothers) claim the Government’s issuance of a NITU under the National Trails System Act effected a Fifth Amendment taking of their alleged reversionary interests in two segments of a dormant rail corridor in Chicago.
- The underlying land transfers at issue are two 19th-century source deeds: the Jones Deed (Apr. 22, 1878) adjoining Chicago Coating’s property and the Wilkins Deed (Apr. 1, 1875) adjoining the Martinez property.
- BNSF (successor to Chicago & Southern Railroad Co.) initiated abandonment/NITU proceedings; the STB issued a NITU allowing interim trail negotiations to proceed.
- Plaintiffs argue their predecessors conveyed only easements (so recreational trail use exceeds the easement scope and triggers a takings claim); the Government contends the deeds conveyed fee simple interests (so no compensable taking).
- The court applied Illinois deed-construction rules (including the Conveyance Act presumptions) and the Federal Circuit’s three-part rails-to-trails test (ownership interest; scope of easement; abandonment timing) and limited analysis to the first two elements.
- Holding: Court found the Jones and Wilkins deeds conveyed fee simple (subject to conditions subsequent that lapsed), so plaintiffs lack a cognizable property interest and the Government’s motion for summary judgment was granted; plaintiffs’ partial summary judgment denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Jones Deed conveyed only an easement or fee simple | Jones deed grants “the right of way” and thus conveys an easement | Deed conveys “all interest” in the described real estate, invoking Conveyance Act presumption of fee simple | Conveyed fee simple; “all interest” is object, “right of way” descriptive; presumption not rebutted |
| Whether the Wilkins Deed conveyed only an easement or fee simple | Language describing a “strip” for railroad use and conditions implies an easement/reversionary interest | Granting clause and reconveyance penalty reflect a fee simple subject to condition subsequent; no “right of way” language limiting estate | Conveyed fee simple subject to condition subsequent; condition not enforced and right of reentry lapsed |
| Whether Plaintiffs have a cognizable property interest for a rails-to-trails taking | Plaintiffs lack a fee interest and assert easement scope was exceeded by trail use | If railroad held fee, no protected state-law reversionary interest exists and no taking | Plaintiffs failed first step of test — no ownership/easement interest — so no Fifth Amendment liability |
| Effect of express condition clauses (reversion/reentry language) | Clauses create automatic reversion supporting easement characterization | Clauses create a condition subsequent requiring reentry; absent timely reentry, fee simple remains | Conditions were not exercised; statute of limitations passed; fee simple now unencumbered |
Key Cases Cited
- Preseault v. ICC, 494 U.S. 1 (1990) (railbanking/NITU can give rise to takings claims because federal action may prevent state-law reversion)
- Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996) (takings inquiry focuses on scope of railroad’s original grant, not current owners’ expectations)
- Ellamae Phillips Co. v. United States, 564 F.3d 1367 (Fed. Cir. 2009) (articulates three-part rails-to-trails liability test)
- Caldwell v. United States, 391 F.3d 1226 (Fed. Cir. 2004) (discusses railbanking’s preservation of STB jurisdiction and effect on state reversionary interests)
- Keen v. Cleveland, Cincinnati, Chicago & St. Louis Ry. Co., 64 N.E.2d 499 (Ill. 1945) (Illinois rule: deed construed to effect parties’ intent; conveying words and granting clause inform estate conveyed)