Gadsden Industrial Park, LLC v. United States
956 F.3d 1362
Fed. Cir.2020Background
- In 2002 Gadsden Industrial Park (GIP) bought certain assets from a bankrupt steel mill but expressly excluded the "Eastern Excluded Property" (real estate) while purchasing personal property that included kish, scrap, and an allotment of "420,000 cubic yards of slag."
- The Eastern Excluded Property contained two large industrial-landfill piles (millions of cubic yards, >80 ft high) of slag, kish, and scrap. The Bill of Sale and GIP’s own exclusion list allocated 420,000 cu. yds. of slag and did not identify particular physical subsets.
- Starting in 2003 the EPA investigated leachate and, in 2008, ran a remediation program (2009–2013) that recovered and sold material (245,890 tons, ≈$13.5M proceeds) and used 92,500 cu. yds. of slag onsite; contractors processed ~50% of the piles before the project ended.
- GIP sued in the Court of Federal Claims alleging a Fifth Amendment taking of slag, kish, and scrap; it sought compensation for slag and expert fair-market valuations (or lost-profits) for kish/scrap.
- The Court of Federal Claims found a taking occurred, awarded $755,494 for 92,500 cu. yds. of slag, but awarded zero for kish and scrap because GIP’s valuation (Mr. Gleason) relied on unreliable assumptions (inflated June 2008 price; speculative avoided-costs based on a non-final Watkins deal).
- On appeal the Government contested the slag property interest ruling; GIP challenged the amount of slag compensated and the zero award for kish/scrap.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GIP had a cognizable property interest in the slag the EPA recovered | GIP: exclusion language conveyed ownership of 420,000 cu. yds. of slag and EPA’s remediation prevented recovery of that allotment, so compensation should cover remaining allotment (405,000 cu. yds.) | Gov’t: GIP’s exclusion created an undifferentiated fungible allotment but gave no right to specific physical tons or to exclude others; sufficient slag remained on the parcel after EPA work | Court: GIP had no property right to particular slag removed by EPA; trial court’s finding that EPA "embalmed permanently" remaining material was clearly erroneous; vacated award for 92,500 cu. yds. of slag (no cognizable taking of those tons) |
| Whether trial court erred by awarding $755,494 (and not more) for slag | GIP: trial court should have awarded compensation for 405,000 cu. yds. remaining in its allotment | Gov’t: GIP cannot show a right to specific slag tons and had no superior right blocked by EPA operations | Held with first issue: GIP cannot establish right to particular slag recovered; cannot increase award; trial court’s award vacated |
| Whether the trial court erred in awarding zero for kish and scrap after finding they had value and were taken | GIP: once taking is found, court must fashion an appropriate compensation award and should not award zero when value is established | Gov’t: GIP failed to prove damages with reasonable certainty—expert used inflated prices and speculative avoided-costs; trial court properly exercised discretion | Court: Plaintiff bears burden to prove actual damages with reasonable certainty; trial court did not err in awarding zero where GIP’s valuation was unreliable and critical avoided-cost evidence was insufficient |
Key Cases Cited
- Wheeler v. First Ala. Bank of Birmingham, 364 So. 2d 1190 (Ala. 1978) (written-document construction is a question of law)
- Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470 (1973) (just compensation measure for leasehold improvements—fair market value principles)
- Otay Mesa Prop., L.P. v. United States, 779 F.3d 1315 (Fed. Cir. 2015) (trial court may fashion its own valuation when evidence supports it)
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010) (plaintiff must prove damages with reasonable certainty)
- Palmyra Pac. Seafoods, L.L.C. v. United States, 561 F.3d 1361 (Fed. Cir. 2009) (plaintiff bears burden to demonstrate protectable property interest)
- Holland v. United States, 621 F.3d 1366 (Fed. Cir. 2010) (standard of review: legal questions de novo, fact findings for clear error)
- United States v. General Motors Corp., 323 U.S. 373 (1945) (discussion of appropriate measures of just compensation)