William B. CALDWELL, III, and Ben Frank Billings, III, (for themselves and as representative of a class of similarly situated persons), Plaintiff-Appellants, v. UNITED STATES, Defendant-Appellee.
No. 03-5152
United States Court of Appeals, Federal Circuit
DECIDED: Dec. 14, 2004.
391 F.3d 1226
iii. Per Se Takings Argument
Because we agree with the Court of Federal Claims that Appellants do not possess any cognizable property interest within the meaning of the Takings Clause, we necessarily hold that the Government could not commit a per se taking without just compensation any more than it could commit a regulatory or any other kind of taking.
III. CONCLUSION
The order of the Court of Federal Claims granting the Government‘s motion to dismiss and the resulting judgment for the Government are
AFFIRMED.
Kathryn E. Kovacs, Attorney, Appellate Section, Environment and Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Thomas L. Sansonetti, Assistant Attorney General; John Smeltzer, Attorney, of Washington, DC; and Kristine S. Tardiff, Trial Attorney, General Litigation Section, of Concord, New Hampshire. Of counsel on the brief was
Before NEWMAN, DYK, and PROST, Circuit Judges.
DYK, Circuit Judge.
Appellants William B. Caldwell, III and Ben Frank Billings, III (collectively “Caldwell“) brought a class action lawsuit seeking compensation for an alleged taking pursuant to the National Trail Systems Act (the “Trails Act“),
BACKGROUND
I
We have previously held that a Fifth Amendment taking occurs when, pursuant to the Trails Act, state law reversionary interests are effectively eliminated in connection with a conversion of a railroad right-of-way to trail use. Preseault v. United States, 100 F.3d 1525, 1543 (Fed. Cir. 1996) (en banc) (”Preseault II“); see also Toews v. United States, 376 F.3d 1371, 1376 (Fed. Cir. 2004). This case requires us, for the first time, to determine when the Fifth Amendment takings claim accrues for purposes of the six-year statute of limitations under the Tucker Act.
The Surface Transportation Board (the “STB” or “Board“)1 has authority to regulate the construction, operation, and abandonment of most railroad lines in the United States. A railroad seeking to abandon a railroad right-of-way within the jurisdiction of the STB must either: (1) file a standard abandonment application that meets the requirements of
The Trails Act, through a process known as “railbanking,” provides an alternative to abandoning a railroad right-of-way under sections 10903 and 10502. Section 8(d) of the Trails Act allows a railroad to negotiate with a state, municipality, or private group (the “trail operator“) to assume financial and managerial responsibility for operating the railroad right-of-way as a recreational trail.3 Id. at 6-7. If the railroad and the trail operator indicate willingness to negotiate a trail use agreement, the STB stays the abandonment process and issues a notice allowing the railroad right-of-way to be “railbanked.”
The statute does not specify in detail what procedures are to be followed under the Act. Pursuant to implementing regulations promulgated by the STB (and developed pursuant to notice and comment rulemaking), the typical railbanking process begins when a rail carrier files an abandonment application or, as in this case, a request for an exemption.
In some cases, such as that of the recreational trail at issue in Preseault II, an interim trail use agreement may in fact be reached prior to the issuance of the NITU. 100 F.3d at 1549-50. In other cases, however, such as the present case, the NITU is issued after the trail operator and the railroad indicate their intention to negotiate an agreement but prior to the finalization of an agreement.
Only one NITU is issued once the parties indicate their intent to negotiate for conversion of the corridor to trail use. If negotiations go as planned and an agreement is reached, the NITU extends indefinitely for the duration of recreational trail use subject to the trail operator‘s fulfillment of its agreed-upon obligations. The STB retains jurisdiction for possible future railroad use, and state law reversionary interests that would normally vest upon abandonment are blocked. Preseault I, 494 U.S. at 8. An “escape-clause” is also provided by the NITU such that if no agreement is reached within 180 days, the NITU “automatically converts into an effective ... notice of abandonment,” id. at 7 n. 5, which permits the rail carrier to “abandon the line entirely and liquidate its interest.” Id. at 7; see also
II
On July 5, 1994, the railroad in this case, Norfolk Southern Railway Company
On August 17, 1995, Norfolk entered into a purchase and sale agreement (“the purchase agreement“) with the Trust for Public Land (“the TPL“), the entity chosen by the City to negotiate the railbanking arrangement. Under the purchase agreement, Norfolk agreed to sell its railroad line right-of-way easement to the TPL for $1,000,000. Payment of the $1,000,000 (less $500 in earnest money) was to occur at a later date along with transfer of title to the right-of-way. The purchase agreement did not set a closing date, but provided that closing would “occur at a mutually agreeable time and location within three hundred sixty five (365) days.” (J.A. at 415.) However, the purchase agreement also gave the TPL the right to terminate the purchase agreement “without liability for damages or for an action for Specific Performance, at any time prior to the Closing Date upon five (5) days written notice to [Norfolk].” (J.A. at 420.)
The purchase agreement was amended on April 18, 1996, to make clear that the conveyance was governed by section 8(d) of the Trails Act. On July 1, 1996, a second amendment was made to indicate the TPL‘s intent to assign its rights under the purchase agreement to the City. The second amendment also required the TPL and Norfolk to cooperate with the City to file a joint motion to further extend the NITU deadline. The following day the TPL assigned its rights under the purchase agreement to the City.
On July 5, 1996, the City informed the STB that a “railbanking agreement” had been reached, but requested that the NITU deadline be further extended “through the time of the actual transfer of the corridor to the interim trail manager, which [was] anticipated to occur on or
On November 2, 1996, the City filed a “Notification of Railbanking/Interim Trail Use Agreement” to “formally notify the [STB] that, on October 13, 1996, the railroad lines [were] transferred to the City of Columbus as interim trail manager pursuant to an interim trail use/railbanking agreement.” (J.A. at 454.) The notification further stated that “[a]s a result of the successful completion of this railbanking/interim trail use transaction, the NITU should now extend indefinitely.” Id. This notice was entered into the STB record on November 5, 1996.
III
The appellants, Caldwell, own land that was burdened by the easement Norfolk owned for the 10.6 mile railroad line right-of-way that was the subject of NITU and the railbanking agreement. On October 7, 2002, Caldwell filed a complaint in the Court of Federal Claims pursuant to the Tucker Act,
On June 30, 2003, the Court of Federal Claims granted the government‘s motion to dismiss the complaint because the six-year statute of limitations under
Caldwell filed a motion for reconsideration on July 15, 2003, arguing for the first time that a parallel class action, filed in a
DISCUSSION
We review the legal aspects of the determination by the Court of Federal Claims that the appellants’ claim was barred by the statute of limitations without deference. Applegate v. United States, 25 F.3d 1579, 1581 (Fed. Cir. 1994).
I
The appellants argue that the Court of Federal Claims erred by holding that their claim was barred by the statute of limitations. Specifically, Caldwell urges that a taking under the Trails Act did not occur until the railroad line right-of-way was actually converted into a trail for interim trail use on October 11, 1996. We disagree.
The taking, if any, when a railroad right-of-way is converted to interim trail use under the Trails Act occurs when state law reversionary property interests that would otherwise vest in the adjacent landowners are blocked from so vesting. Preseault II, 100 F.3d at 1552; see also Toews, 376 F.3d at 1376. The question, then, is in the context of an exemption proceeding, when are state law reversion interests forestalled by operation of section 8(d) of the Trails Act? We conclude that this occurs when the railroad and trail operator communicate to the STB their intention to negotiate a trail use agreement and the agency issues an NITU that operates to preclude abandonment under section 8(d).
In implementing the Trails Act, the STB chose to place the primary responsibility for creating railbanking arrangements on the railroad and trail operator. The Board has stated that in order “to promote and expedite the Trails Act process” it has “declined to burden the Trails Act process, unnecessarily either by rule or adjudication.” Policy Statement on Rails to Trails Conversions, Ex Parte No. 274 (Sub-No. 13B), slip op. at 4 (I.C.C. Jan. 29, 1990). Indeed, in the STB‘s view, it “lack[s] discretion to deny or condition a trails use proposal (other than to ensure that the statutory qualifications are met).” Id. at 3. As a result, the NITU is issued only after both the railroad and the trail operator indicate their intent to negotiate a trail use agreement. The process begins when the railroad initiates the abandonment process (either through standard abandonment or exemption procedures).
The issuance of the NITU is the only government action in the railbanking process that operates to prevent abandonment of the corridor and to preclude the vesting of state law reversionary interests in the
After a final trail use agreement is reached, the NITU remains in effect indefinitely and “abandonment cannot be accomplished under the ... NITU until trail use terminates (without restoration of rail service).” Policy Statement on Rail Abandonments—Use of Rights of Ways as Trails, Ex Parte No. 274 (Sub-No. 13), 5 I.C.C.2d 370, 373, 1989 WL 238666 (1989) If, however, “no trail use agreement is reached within 180 days, the ... NITU converts into a ... notice of abandonment,” id., which “permit[s] the railroad to fully abandon the line.”
Thus, the NITU operates as a single trigger to several possible outcomes. It 7 may, as in this case, trigger a process that results in a permanent taking in the event that a trail use agreement is reached and abandonment of the right-of-way is effectively blocked. Preseault II, 100 F.3d at 1552; see also Toews, 376 F.3d at 1376. Alternatively, negotiations may fail, and the NITU would then convert into a notice of abandonment. In these circumstances, a temporary taking may have occurred.8 It is not unusual that the precise nature of the takings claim, whether permanent or temporary, will not be clear at the time it accrues.
Indeed, the Supreme Court has previously contemplated precisely this possibility. In United States v. Dow, 357 U.S. 17, 78 S.Ct. 1039, 2 L.Ed.2d 1109 (1958), the Court also grappled with the issue of fixing the accrual of a takings claim. The question was whether the taking accrued at the time when the initial judgment of “immediate possession” was obtained, or three years later, when the government filed a declaration under the Declaration of Taking Act and title formally passed. At issue was respondent Dow‘s ability to collect compensation from the government, as Dow had purchased the property from the original owner after the government physically occupied the property, but before the formal conveyance of title to the government. Dow had argued that no permanent taking occurred until the filing of the declaration and the formal passage of title, and that only a temporary taking occurred
The Court held that the taking occurred at the earlier date, when the government entered into physical possession of the land and the owner was deprived of valuable property rights, even though title had not formally passed. Id. at 23. The Court rejected, as “bizarre,” the argument that there were “two different ‘takings’ of the same property, with some incidents of the taking determined as of one date and some as of the other.” Id. at 24. Rather, the Court endorsed a rule similar to the one that we adopt here, namely that a taking occurs when the owner is deprived of use of the property, there by physical possession, here by blocking the easement reversion. While the taking may be abandoned—in Dow, by the government‘s possible surrender of possession prior to the formal passage of title, here by the termination of the NITU—the accrual date of a single taking remains fixed. As the Court observed in Dow, the government‘s decision to abandon the taking “merely results in an alteration in the property interest taken—from full ownership to one of temporary use and occupation.” Id. at 26.
We therefore hold that the appropriate triggering event for any takings claim under the Trails Act occurs when the NITU is issued. The NITU marks the “finite start” to either temporary or permanent takings claims by halting abandonment and the vesting of state law reversionary interests when issued. See, e.g., Seiber, 364 F.3d at 1364.
II
Having determined that the appellants’ takings claim accrued on the date when the NITU was issued, we must now determine if the six-year statute of limitations bars Caldwell‘s claim in this case. We hold that the statute of limitations is a bar here under either of the two potential dates of NITU issuance. The first NITU was issued on August 31, 1994, for the 7.4-mile segment. The scope of the NITU was enlarged to cover the full 10.6 miles on June 2, 1995. Both of these dates are more than six years before the complaint in this case was filed, and therefore Caldwell‘s claim is barred by the statute of limitations.
III
Appellants further argue that our decision in Stone Container Corp. v. United States, 229 F.3d 1345 (Fed. Cir. 2000), would apply to toll the statute of limitations during the eleven-month pendency of a class action in Kansas filed by Cheryl Swisher in October 1998.
We conclude that Caldwell has waived on appeal the argument that the statute of limitations was tolled during the eleven-month pendency of the Swisher class action. This issue was first raised below not at trial, but in a motion for reconsideration under
CONCLUSION
We hold that the Fifth Amendment taking, if any, under the Trails Act is accomplished when an NITU is issued and state law reversionary interests that would otherwise take effect pursuant to normal abandonment proceedings are forestalled. Because Caldwell‘s claim was filed on October 7, 2002, more than six years after either of the NITUs issued in this case, that claim is barred by the statute of limitations under
AFFIRMED.
COSTS
No costs.
PAULINE NEWMAN, Circuit Judge, dissenting.
I respectfully dissent from the court‘s ruling that the statute of limitations started to accrue from a date before the Caldwell property was “taken” in Fifth Amendment terms. All authority is contrary to this position.
Neither the dates of the Interstate Commerce Commission‘s authorization to the Norfolk Southern Railroad to abandon railroad use and negotiate transfer of the easement (the ICC‘s Notices of Intent to Use, whose dates of August 31, 1994 and June 2, 1995 are selected by the panel majority as the dates on which the statute of limitations started to accrue), nor the date the City of Columbus notified the ICC of the intended trail use (the date of July 5, 1996 chosen by the Court of Federal Claims) was an actionable taking of property. Neither event vested a cause of action in the owner of the fee, for neither event was a ripened taking. Neither the federal approval to discontinue railway operations, nor the ongoing negotiation between the railway and the city concerning conversion to trail use, vested a right of compensation by the United States. Thus neither of these events started accrual of the six-year period of limitations of
A Fifth Amendment taking can indeed flow from a Trails Act conversion of a railway easement. See Preseault v. United States, 100 F.3d 1525, 1553 (Fed. Cir. 1996) (en banc). However, these plaintiffs could not have prosecuted their claim until the taking occurred. The taking occurs “when all events have occurred that fix the alleged liability of the Government and entitle the plaintiff to institute an action.” Seldovia Native Association, Inc. v. United States, 144 F.3d 769, 774 (Fed. Cir. 1998). Until the easement was transferred to the City of Columbus, Norfolk Southern Railroad not only continued as owner of the right-of-way, but retained all of the benefits and obligations of ownership, including the right to exclude, the obligation to pay taxes, and liability for injury and liens. Until the right of trail use was vested in the City the cause of action had not ripened, and liability of the government for compensation was not fixed. Suit at this stage would have simply been premature; the statute of limitations can not start to accrue before suit could have been filed.
On October 9, 1996 the Norfolk Southern Railroad conveyed to the City of Columbus the deed for the 10.6 mile right-of-way. I cannot agree that the plaintiffs could have brought earlier suit and obtained compensation for this taking, based on the ICC‘s authorizations on August 31, 1994 and June 2, 1995 to Norfolk Southern to negotiate a Trails Act conversion. These preliminary events did not fix a ripe takings claim. Negotiation of a possible future event may state a hope and a plan, but it is not a fixed, ripe, and compensable taking. The owners of the fee had no right to compensation based on or at the time of these authorizations to negotiate; thus these authorizations could not accrue the period of limitations.
Nor were the various negotiating documents involving the City of Columbus, starting with the document of August 17, 1995 styled “Purchase Agreement,” an actionable taking. This Agreement, from which the City could withdraw on five days’ notice, was amended on April 18, 1996 to add the Trails Act‘s requirement that the manager accept financial and legal responsibility; this acceptance in turn was conditioned on completion of the transaction, and only then would become operable. Thus an Amendment to the Purchase Agreement stated that “at closing Buyer, its successor or assignee, shall assume full responsibility for the management of the right of way, for any legal liability arising out of its transfer or use, and for any payment of taxes in accordance with the requirements of section 8(d).” Another amendment dated July 1, 1996 provided that the City and the railroad would jointly request the ICC (now named the Surface Transportation Board) to extend the time period for negotiation of a “mutually acceptable interim trial use/railbanking agreement” through and including November 1, 1996. Thus the Agreement itself documented its own negotiating status; these documents could not have formed the basis of a takings action by July 5, 1996, as the Court of Federal Claims held in selecting the date when the City and the railway jointly requested the time extension for further negotiation. This Agreement and its amendments were recordations of the negotiation, not a completed transaction having Fifth Amendment consequences.
Taking claims accrue when the liability of the government is fixed, not simply prospective. In Hopland Band of Pomo Indians v. United States, 855 F.2d 1573 (Fed. Cir. 1988) the court reiterated that
The panel majority places great weight on United States v. Dow, 357 U.S. 17, 78 S.Ct. 1039, 2 L.Ed.2d 1109 (1958). In Dow the Court held that a taking occurs upon possession and occupancy of the property, and that a subsequent filing under the Declaration of Taking Act did not negate the effect of the earlier possession and occupancy. Id. at 22. In Dow the government in 1943, by eminent domain, obtained a judgment of “immediate possession” of a right-of-way through a larger tract of land, entered into immediate possession of the right-of-way, and within ten days began laying a pipeline through the tract. In 1945 the owners conveyed the entire tract to Dow, including their right to any compensation for the land taken by eminent domain; and in 1946 the government filed in court a declaration of taking, obtained title to the right-of-way, and deposited estimated compensation with the court. The issue was Dow‘s rights under the Assignment of Claims Act; there was no issue of the running of a statute of limitations. The Court held that the taking occurred when the United States entered into possession in 1943, when the government “entered and appropriated the property to public use,” id. at 23, and that the taking neither awaited the later transfer of title to the right-of-way, nor was negated by the later proceeding. The Court stressed that the determinative event of the taking was whether “the Government has already entered into possession.” Id. at 25. This case well supports the plaintiffs herein.
It is not disputed that the City of Columbus did not possess and occupy the property, and had no authorization or right to do so, until the Closing and transfer of the deed. Although the panel majority relies heavily on Dow, the analogy is not apt. In Dow the government was in full possession of the property it had obtained by condemnation decree and was actively building the pipeline; thus the Court held that the taking had occurred. In contrast, the authorization from the ICC to the Railway and the City to start to negotiate did not change the possession and occupancy of the easement. My colleagues’ view that it is irrelevant when title passes does not mean that the property was earlier taken; that is not the rule of Dow. To the con-
Thus I must, respectfully, dissent from the court‘s conclusion that the statute of limitations started to accrue when the parties told the ICC that they were negotiating for the purpose of reaching a trail use agreement.