Kenneth and Norma CAQUELIN, Plaintiffs, v. UNITED STATES, Defendant.
No. 14-37L
United States Court of Federal Claims.
(Filed: June 17, 2015)
121 Fed. Cl. 658
LETTOW, Judge.
Rails-to-trails takings case; liability for a taking arising upon issuance of a NITU by the STB
IT IS SO ORDERED.
Julia S. Thrower, Trial Attorney, Natural Resources Section, Environmental and Natural Resources Division, United States Department of Justice, San Francisco, California, for defendant. With her on the briefs was John C. Cruden, Assistant Attorney General, Environmental and Natural Resources Division, United States Department of Justice, Washington, D.C.
OPINION AND ORDER
LETTOW, Judge.
In this takings case, a Notice of Interim Trail Use (“NITU“) issued by the federal Surface Transportation Board (“STB“) authorized conversion of a portion of a railroad line located, in Hardin and Franklin Counties, Iowa and its attendant right-of-way into a public recreational trail under Section 208 of the National Trails System Act Amendments of 1983, Pub.L. No. 98-11, § 208, 97 Stat. 42 (“Trails Act“) (codified at
For the reasons stated, the court concludes that the government is liable to the plaintiffs for the taking of their property upon the issuance of the NITU that exceeded the scope of the former easement.
BACKGROUND3
The parties’ dispute concerns a 10.46-mile strip of land extending from milepost 201.46 near Ackley, Iowa, to milepost 191.0, outside Geneva, Iowa, upon which North Central Railway Association, Inc. (“North Central Railway“) previously acquired easements for railway purposes through a series of mesne conveyances. Compl. ¶ 3. A railroad had been constructed by the Eldora Railroad and Coal Company in 1866 from approximately one mile north of Eldora, Iowa, to Ackley, Iowa, for the purpose of transporting coal from the Coal Bank Hill area in the Iowa River valley near Eldora4 to a connection at Ackley with an east-west railroad, then known as the Dubuque & Sioux City Railroad, which later became part of the Illinois Central Railroad. See Pls.’ Mem. in Support of Mot. for Partial Summary Judgment on Liability (“Pls.’ Mot.“) at 12-13, ECF No. 12. Between 1868 and 1870, the line was extended north to Northwood, Iowa, and south to Marshalltown, Iowa, where it connected with the Chicago & North Western Railroad. Id. at 13 & Ex. F (Historic Report (May 9, 2013)). A predecessor extending the rail line, the Central Railroad of Iowa,5 acquired rights in one of the parcels at issue by a right of way deed, see id. at Exs. A-2 (Maps of the Line) & J (Right of Way Deed by Henry and Maria Ihde to Central Railroad of Iowa (filed Apr. 30, 1870)), and rights to the second parcel by a condemnation, see id. at Ex. K (Latham Condemnation, Franklin County, Iowa (witnessed Aug. 31, 1870)). North Central Railway acquired property rights in the rail corridor in 1989. See Unit-
On May 13, 2013, North Central Railway filed a Proposed Abandonment with the STB,7 including a verified notice of exemption pursuant to
Shortly before the abandonment exception became effective, on June 25, 2013, the City of Ackley and the Iowa National Heritage Foundation (collectively “the City“) filed a request for the issuance of a Public Use Condition under
On October 15, 2013, the Iowa Trails Council filed a Trail Use Request with the STB, and negotiations over a Trail Use Agreement ensued, contemplating that the rail corridor would be used as a public recreational trail with railbanking for possible future activation as a railroad. Compl. ¶ 6.11 However, no agreement was reached. See Def.‘s Cross-Mot. at 4. On December 6, 2013, the Iowa National Heritage Foundation requested a 180-day extension to continue negotiations, see id. Ex. 1 (Letter to Cynthia T. Brown, STB, from President, Iowa Natural Heritage Foundation (Dec. 6, 2013)), but North Central Railway did not file a letter indicating its consent. On December 30, 2013, the NITU expired. See id. see also Hr‘g Tr. 29:22 to 30:4. On March 31, 2014, the railroad consummated abandonment of its line, and the STB‘s regulatory jurisdiction ended. Def.‘s Cross-Mot. at 2, 4 & Ex. 3 (STB Decision (May 9, 2014)). On April 24, 2014, North Central Railway notified the STB that it had exercised the authority to fully abandon the line. Pls.’ Mot. Ex. D (Notice of Consummation (Apr. 24, 2014)).
On January 16, 2014, plaintiffs filed suit in this court. In their complaint, they allege an uncompensated taking of their property in contravention of the Fifth Amendment. Specifically, plaintiffs argue that cessation of railroad activities across the burdened property effected an abandonment under Iowa law of the railroad-purposes easement, leading to a taking when the STB prevented plaintiffs from regaining use and possession of their property. Compl. ¶¶ 7-9. Plaintiffs aver that the government‘s action “diminish[ed] the value of the remaining property[] and [engendered] delay damages based upon the delayed payment of compensation.” Compl. ¶ 10. Plaintiffs request damages equal to the “full fair market value of the property ... on the date it was [allegedly] taken, including severance damages and delay damages, and costs and attorneys’ fees” in addition to “such further relief as [the] [c]ourt may deem just and proper.” Compl. at 3.
On January 16, 2015, plaintiffs filed their motion for partial summary judgment on the issue of liability. See Pls.’ Mot. On March 6, 2015, the government responded with a cross-motion for partial summary judgment on the same issue. See Def.‘s Cross-Mot. These cross-motions have now been thoroughly briefed and were argued at a hearing held on May 14, 2015.
STANDARD FOR DECISION
A grant of summary judgment is appropriate if the pleadings, affidavits, and evidentiary materials filed in a case reveal that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Rule 56(a) of the Rules of the Court of Federal Claims (“RCFC“). A material fact is one “that might affect the outcome of the suit.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine dispute exists when the finder of fact may reasonably resolve the dispute in favor of either party. Id. at 250, 106 S.Ct. 2505.
The moving party bears the burden of demonstrating the absence of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Accordingly, “the inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (alteration in original) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)). To establish “that a fact cannot be
The same standard applies when the parties have cross-moved for summary judgment. See Marriott Int‘l Resorts, L.P. v. United States, 586 F.3d 962, 968 (Fed. Cir. 2009). “The fact that both parties have moved for summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other.” Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987). Rather, the court must evaluate each motion on its own merits, “taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” Id.
ANALYSIS
To find a taking giving rise to liability under the Fifth Amendment in a rails-to-trails case, the court must perform a three-part analysis outlined by the Federal Circuit in Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996) (”Preseault II“):
(1) who owned the strips of land involved, specifically did the Railroad ... acquire only easements, or did it obtain fee simple estates;
(2) if the Railroad acquired only easements, were the terms of the easements limited to use for railroad purposes, or did they include future use as public recreational trails; and
(3) even if the grants of the Railroad‘s easements were broad enough to encompass recreational trails, had these easements terminated prior to the alleged taking so that the property owners at that time held fee simples unencumbered by the easements.
100 F.3d at 1533; see also Ellamae Phillips Co. v. United States, 564 F.3d 1367, 1373 (Fed. Cir. 2009); Haggart v. United States, 108 Fed. Cl. 70, 77 (2012); Geneva Rock Prods., Inc. v. United States, 107 Fed. Cl. 166, 170 (2012); Ingram v. United States, 105 Fed. Cl. 518, 534 (2012); Longnecker Prop. v. United States, 105 Fed. Cl. 393, 405 (2012); Beres v. United States, 104 Fed. Cl. 408, 423-24 (2012); Jenkins v. United States, 102 Fed. Cl. 598, 605 (2011). To prevail, plaintiffs must demonstrate that the railroad held only an easement, rather than a fee simple estate, on their property, and that either the easement did not encompass future use as a public recreational trail or that it terminated prior to the alleged taking.
A. Easements
Plaintiffs have satisfied the first element of the Preseault II inquiry because it is undisputed by the parties that North Central Railway possessed only an easement for railroad purposes derived from the 1870 Ihde deed and the 1870 Latham Condemnation. See Def.‘s Cross-Mot. at 3 (“For purposes of summary judgment, the United States does not dispute that under applicable Iowa law and the original deed to the railroad and condemnation proceedings, the railroad acquired an easement for railroad purposes to the segments of the corridor adjacent to the two parcels of land owned by the [p]laintiffs on the date the NITU was issued.“); see also Hr‘g Tr. 13:23 to 14:1 (“[O]n the first factor [of the Preseault II inquiry], there is no dispute for purposes of the summary judgment [motion] that the [p]laintiffs owned fee simple the right-of-way or the rail corridor.“). “Under Iowa law, deeds are interpreted according to the ordinary rules of contract construction.” Burgess v. United States, 109 Fed. Cl. 223, 228 (2013) (citing Wiegmann v. Baier, 203 N.W.2d 204, 206 (Iowa 1972); Maxwell v. McCall, 145 Iowa 687, 124 N.W. 760 (1910); Jackson v. Benson, 54 Iowa 654, 7 N.W. 97 (1880)). Here, the relevant “Right of Way Deed” from Henry and Maria Ihde granted a right of way to the railroad company for “construction of
B. Limited Use for Railroad Purposes
In rails-to-trails cases, a taking by the government is established if the railroad acquired only an easement, the easement was limited to railroad purposes, and the scope of the easement does not include recreational trail use upon issuance of a NITU. See Ladd v. United States, 630 F.3d 1015, 1019 (Fed. Cir. 2010), reh‘g and reh‘g en banc denied, 646 F.3d 910 (Fed. Cir. 2011) (“It is settled law that a Fifth Amendment taking occurs in [r]ails-to-[t]rails cases when government action destroys state-defined property rights by converting a railway easement to a recreational trail, if trail use is outside the scope of the original railway easement.“) (emphasis added). Plaintiffs claim that the STB‘s issuance of the NITU exceeded the scope of the easement by blocking their reversionary interest and contemplating conversion of the railway into a recreational trail. Pls.’ Mot. at 19. Therefore, plaintiffs contend that they are entitled to compensation for a temporary taking of their property. Id. at 2.
The government acknowledges that the easements granted to North Central Railway were limited to railroad purposes and did not include recreational trail use. See, e.g., Def.‘s Cross-Mot. at 15. However, it contends that the question of whether trail use exceeds the scope of the railroad‘s easement is “irrelevant” under the circumstances presented because the NITU was in effect for only six months and expired on its own terms, and because no interim trail-use agreement was reached. Def.‘s Cross-Mot. at 16; see also Hr‘g Tr. 14:6-9. The government emphasized that “there was no actual non-railroad use that occurred during the time that the NITU was effective.” United States’ Reply in Support of Cross-Mot. for Summary Judgment (“Def.‘s Reply“) at 1, ECF No. 20. Therefore, in the government‘s view, “[a]lthough the issuance of the NITU may have delayed the railroad‘s abandonment of an easement ..., that delay did not defeat [p]laintiffs’ interests nor burden those interests in a manner that rises to the level of a compensable taking.” Def.‘s Cross-Mot. at 15.
In support of its position, the government largely relies upon, but seeks to distinguish, the Federal Circuit‘s decisions in Caldwell v. United States, 391 F.3d 1226 (Fed. Cir. 2004), and Barclay v. United States, 443 F.3d 1368 (Fed. Cir. 2006), in which the court of appeals addressed the question of the proper date of accrual in Fifth Amendment rails-to-trails actions. In Caldwell, the court held that because the issuance of a 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 right-of-way,” the proper date of accrual of a takings claim is the date of the NITU issuance. 391 F.3d at 1233-34 (emphasis in original); see also Def.‘s Cross-Mot. at 11-12. The court explained:
[T]he NITU operates as a single trigger to several possible outcomes. It 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.... Alternatively, negotiations may fail, and the NITU would then convert into a notice of abandonment. In these circumstances, a temporary taking may have occurred. 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.
Caldwell, 391 F.3d at 1234 (citing Preseault II, 100 F.3d at 1552; Toews v. United States, 376 F.3d 1371, 1376 (Fed. Cir. 2004)). In Barclay, the court of appeals reaffirmed this resulting “bright-line rule” by holding that the proper date of accrual for several landowners’ claims was the date of the NITU issuance. 443 F.3d at 1378.
The government attempts to distinguish Caldwell and Barclay by observing that while in those cases the STB‘s issuance of a NITU had led to an interim trail use agreement, no such agreement was reached here. See Def.‘s Cross-Mot. at 11-12. In addition, the government underscores that in Caldwell, the Federal Circuit employed noncommittal language and specifically left open the question of whether issuance of a NITU itself was sufficient to trigger a temporary takings claim, noting that, “[t]his case does not involve, and we do not herein address, whether the issuance of the NITU in fact involves a compensable temporary taking when no agreement is reached.” 391 F.3d at 1234 n.7. Correlatively, the government points out that the court‘s decision in Barclay also did not address a temporary takings claim. See 443 F.3d 1368. On this basis, the government avers that whether the issuance of a NITU gives rise to a compensable takings claim where no trail agreement is reached and the NITU is not extended is an open question and urges the court to find that the United States is not liable for a taking because “there was no transfer of the railroad‘s easement” and therefore “no resulting trail use.” Def.‘s Cross-Mot. at 16; see also Hr‘g Tr. 22:1-7.
In the Federal Circuit‘s decision in Ladd, 630 F.3d 1015, the government raised, and the court of appeals rejected, virtually identical arguments to those the government is now making. Ladd concerned landowners who owned tracts adjacent to a railway in Cochise County, Arizona. The landowners brought a Fifth Amendment takings action against the government after the STB issued a NITU suspending abandonment proceedings by the local railway. Id. at 1017-18. After no trail use agreement was reached, the negotiating period was extended. Id. At the time that plaintiffs’ claims were first considered on the merits, the NITU was set to expire and trigger the consummation of abandonment of the easement in the following year. The trial court concluded that no taking had occurred, reasoning that “[a] physical taking cannot have occurred in these circumstances, where neither the NITU nor another aspect of the federal abandonment process has resulted in construction of a trail for public use.” Ladd v. United States, 90 Fed. Cl. 221, 226 (2009), rev‘d and remanded, 630 F.3d 1015. The court justified its position by explaining that “[i]ssuance of a NITU cannot be a physical taking where the landowners have not suffered a physical invasion of the property in which they claim interests.” Id.
The Federal Circuit reversed. In doing so, the court stated that it found the government‘s attempts to distinguish Caldwell and Barclay to be unpersuasive, reasoning:
In Caldwell and Barclay, we indicated that physical occupation is not required. See, e.g., Barclay, 443 F.3d at 1374 (“The barrier to reversion is the NITU, not physical ouster from possession.“). Indeed, the Barclay appellants’ claim accrued while the railroad was still operating. Id. “In general, a takings claim accrues when ‘all events which fix the government‘s alleged liability have occurred and the plaintiff was or should have been aware of their existence.‘” Boling v. United States, 220 F.3d 1365, 1370 (Fed. Cir. 2000). Because according to our precedent, a takings claim accrues on the date that a NITU issues, events arising after that date—including entering into a trail use agreement and converting the railway to a recreational trail—cannot be necessary elements of the claim. Hence it is irrelevant that no trail use agreement has been reached and that no recreational trail has been established.
Ladd, 630 F.3d at 1024 (emphasis added).12
Applying Ladd to the facts at issue is also consistent with Supreme Court precedent on the subject. In Arkansas Game & Fish Comm‘n v. United States, 568 U.S. 23, 133 S.Ct. 511, 184 L.Ed.2d 417 (2012), the Supreme Court held that government-induced flooding of temporary duration may be compensable. The Court specified that “we have rejected the argument that government action must be permanent to qualify as a taking.” Id. at 33, 133 S.Ct. at 519. Similarly, in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), the Court observed that an easement of passage of cables, although not a permanent occupation of land, constitutes a physical invasion that “is a government intrusion of an unusually serious character.” Id. at 433, 102 S.Ct. 3164 (citing Kaiser Aetna v. United States, 444 U.S. 164, 100 S.Ct. 383, 62 L.Ed.2d 332 (1979) (involving the government‘s imposition of a navigational servitude requiring public access to a landowner‘s pond)). The Supreme Court has also specified that once the government‘s actions have “worked a taking of all use of property, no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective.” First English Evangelical Lutheran Church of Glendale v. Los Angeles Cnty., Cal., 482 U.S. 304, 321, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987).
C. Ownership of the Underlying Fee
A qualifying plaintiff must have owned pertinent property on the date of the taking. The date of the taking is identified as the date “when state law reversionary property interests that would otherwise vest in the adjacent landowners are blocked from so vesting.... [T]his 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.” Caldwell, 391 F.3d at 1233; see also Ladd, 630 F.3d at 1025; Barclay, 443 F.3d at 1373 (“Thus, a Trails Act taking begins and a takings claim accrues, if at all, on issuance of the NITU.“). Therefore, the date of the taking is July 3, 2013, when the NITU was issued. The government has not disputed that plaintiffs then owned the adjacent property and the underlying fee to the centerline of the rail corridor.
CONCLUSION
For the reasons stated, the government is liable for the taking of plaintiffs’ property on July 3, 2013, upon issuance of the NITU. Accordingly, plaintiffs’ motion for summary judgment on liability is GRANTED. The government‘s cross-motion for summary judgment on the same issue is DENIED.
The court requests that the parties file a joint status report by July 16, 2015, providing a plan and schedule for addressing damages.
It is so ORDERED.
Charles F. Lettow
Judge