Love Terminal Partners, L.P. v. United States
126 Fed. Cl. 389
Fed. Cl.2016Background
- Plaintiffs Love Terminal Partners and Virginia Aerospace (Hampstead-controlled entities) held a Master Lease (26.8 acres) and a 9.3-acre sublease at Dallas Love Field; they developed a six‑gate Lemmon Avenue terminal and invested ~$60–70 million into the project.
- Congress enacted the Wright Amendment Reform Act of 2006 (WARA), which (among other things) incorporated a Five‑Party Agreement, limited Love Field to 20 gates, required Dallas to acquire/demolish the Lemmon Avenue gates, and prohibited use of the site as a passenger terminal.
- The court previously held (2011) that WARA incorporated the Five‑Party Agreement into federal law and effected a per se physical taking of the six Lemmon Avenue gates for which the United States is liable.
- After a trial on remaining issues, the court considered whether WARA effected a taking of the entire leasehold (regulatory/categorical or under Penn Central) and assessed just compensation.
- The court credited plaintiffs’ experts (airport operations and appraisal) over defendant’s experts, concluding WARA eliminated all economically viable use of the leasehold (highest and best use = passenger terminal) and thus constituted a Lucas categorical taking; alternatively, Penn Central factors also favored plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did WARA effect a categorical (Lucas) regulatory taking of the entire leasehold by depriving it of all economically beneficial use? | WARA barred the property’s highest and best use (passenger terminal), leaving no economically viable use; therefore a categorical taking. | WARA did not eliminate all value; viable aviation or parking/hangar uses remained so no Lucas taking. | Held for plaintiffs: experts showed highest and best use was passenger terminal and WARA eliminated that use; Lucas categorical taking established. |
| Alternatively, did WARA effect a compensable taking under Penn Central? | Economic impact was total; investment‑backed expectations were reasonable (industry expectation of Wright Amendment repeal); character of action favored plaintiffs because statute primarily benefitted Five‑Party signatories. | Plaintiffs lacked reasonable investment‑backed expectations; losses pre‑date WARA; gate limits applied equally to all. | Held for plaintiffs: all three Penn Central factors weigh for plaintiffs (total economic impact; reasonable investment‑backed expectations; character akin to ouster benefiting specific parties). |
| Is there also a separate per se physical taking of the six Lemmon Avenue gates? | Yes—WARA mandated demolition/sanctioned Dallas’s taking of the gates; plaintiffs entitled to compensation. | Defendant previously litigated but court already ruled defendant liable. | Court reiterates prior holding: per se physical taking of the six gates by the United States. |
| What is just compensation (valuation and interest) for the takings? | Plaintiffs’ valuation experts (DCF and multiples) value the 26.8‑acre leasehold at $133,500,000; the 9.3‑acre terminal/garage at $21,165,000; request compounded interest and fees. | Defendant criticized assumptions (lease extensions, cost estimates, rent‑share) and urged lower valuations; proposed alternative interest metrics. | Held: award of $133,500,000 for the leasehold (court accepts plaintiffs’ valuations), $21,165,000 for the 9.3‑acre terminal/garage; interest compounded annually from Oct 13, 2006 at Moody’s Aaa long‑term corporate bond index; attorneys’ fees reserved for later application. |
Key Cases Cited
- Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) (categorical taking where regulation deprives all economically beneficial use)
- Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978) (multi‑factor ad hoc inquiry for noncategorical regulatory takings)
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (permanent physical occupation is a per se taking)
- Tahoe‑Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302 (2002) (physical takings distinct from regulatory takings; compensation principles)
- First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987) (temporary regulatory prohibitions can require compensation)
- Olson v. United States, 292 U.S. 246 (1934) (just compensation = fair market value at date of taking; consider highest and best use)
- John R. Sand & Gravel Co. v. United States, 457 F.3d 1345 (Fed. Cir. 2006) (loss of right to exclude supports physical‑taking conclusion)