55 Fed. Cl. 164 | Fed. Cl. | 2003
OPINION
This matter is before the court on its order directing plaintiff to show cause why its takings claim should not be dismissed in light of the United States Court of Appeals for the Federal Circuit’s (Federal Circuit) decision in Castle, et al. v. United States, 301 F.3d 1328 (Fed.Cir.2002). Plaintiff asserts that dismissing its takings claim prior to resolving contractual liability and damages is premature because it is unclear if plaintiff will receive “just compensation” for defendant’s breach of contract. Defendant contends that plaintiffs takings claim is identical to that considered in Castle and should be dismissed.
Factual Background
This case presents facts and issues which permeate throughout Winstar-related cases.
In Granite Management Corp. v. United States, the court held that there was a contractual relationship between the parties and that defendant breached the contract when it enacted FIRREA. 53 Fed.Cl. 228 (2002). Since the court has already ruled on liability, the case is currently before the court to determine damages. On November 7, 2002, the court held a telephonic conference in this matter and lifted the stay on plaintiffs remaining counts. Pursuant to the telephonic conference, plaintiff voluntarily dismissed its implied-in-fact contract claim and promissory estoppel claim on November 22, 2002. Then, on November 25, 2002, plaintiff filed its response to the court’s order to show cause why plaintiffs takings claim should not be dismissed. On December 6, 2002, defendant filed its response and on December 13, 2002, plaintiff filed its reply. All pertinent documents have therefore been submitted.
Discussion
In Castle, the Federal Circuit held, inter alia, that the government’s enactment of FIRREA did not constitute a taking of the plaintiffs’ property. 301 F.3d at 1341-43. The court placed particular emphasis on the fact that the plaintiffs were not precluded from seeking contractual remedies and damages. Id. at 1341—42 (“[T]he government did not take the plaintiffs’ property because they retained ‘the range of remedies associated with the vindication of a contract.’ ”) (quoting Castle v. United States, 48 Fed.Cl. 187, 219 (2000)). Further, the court noted that “the alleged contract did not create a reasonable expectation that the government would cease regulating the thrift industry, or any particular thrift therein.” Castle, 301 F.3d at 1342 (relying on United States v. Winstar Corp., 518 U.S. 839, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996)). Therefore, the government’s enactment and enforcement of FIRREA was a breach of contract and the Federal Circuit was unwilling to extend takings law into Winstar-related cases.
Plaintiff maintains that its takings claim is distinguishable from the takings claim in Castle because plaintiff does not seek “just compensation beyond damages for breach of contract.” Castle, 301 F.3d at 1342. Plaintiff asserts that it only seeks traditional contract damages, but that it may not recover said damages if the court adopts defendant’s position as to restitution damages. Defendant maintains that lack of a “complete” contract remedy is an insufficient basis for permitting a takings claim. Defendant also avers that plaintiffs takings claim is indistinguishable from the takings claim in Castle.
The Federal Circuit “has cautioned against commingling takings compensation and contract damages.” Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060, 1070 (Fed.Cir.2001); accord Home Sav. of America, F.S.B. v. United States, 51 Fed.Cl. 487, 496 (2002). With this statement in mind, the court will examine the arguments advanced by plaintiff before addressing the precedential impact of Castle on the present case.
In Home Savings, this court opined:
[T]he lack of a “complete” contract remedy, either because it would not include interest or because the contract theory does not yield a recovery, does not give life to a takings theory. If the contract remedy does not produce a recovery, it is because the contract did not give a right to a recovery. In the absence of that contract remedy, no other property right is implicated.
Home Savings, 51 Fed.Cl. at 495-96. Plaintiff concedes that the aforementioned principle is “undoubtedly correct in the vast majority of cases....”
Plaintiff asserts that “[i]f the government has provided an adequate process for obtaining compensation, and if resort to that process ‘yield[s] just compensation,’ then the property owner ‘has no claim against the Government’ for a taking.” Preseault v. I.C.C., 494 U.S. 1, 11, 110 S.Ct. 914, 108 L.Ed.2d 1 (1990) (quoting Williamson County Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194-95, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) (emphasis added)). In these cases, however, the Court was providing guidance as to when takings actions in general are ripe for review. Preseault, 494 U.S. at 11-12, 110 S.Ct. 914; Williamson County, 473 U.S. at 194-95, 105 S.Ct. 3108. In this case, the issue is not whether plaintiffs takings claim is ripe for judicial review, but whether a takings action can be maintained at all.
Plaintiff further avers that since prejudgment interest is not available as a contractual remedy it will not receive just compensation.
Turning now to the dispositive question before the court: whether Castle warrants the dismissal of plaintiffs takings claim. The court’s answer to the question is in the affirmative. Both Castle and Granite fall within the Winstar context. Castle, 48 Fed.Cl. at 191-93; Granite, 53 Fed.Cl. at 229-37. All causes of action arose from the government’s breach of contractual promises with the enactment and enforcement of FIRREA. Castle, 48 Fed.Cl. at 191; Granite, 53 Fed.Cl. at 231. In addition, the takings claim in this case cannot be distinguished from the takings claim in Castle.
Further, for this court to find that plaintiffs takings claim should not be dismissed would require the court at the very least to assume that the enactment and enforcement of FIRREA may constitute a taking. The Federal Circuit, however, expressly rejected such an argument in Castle. Id. at 1341-42. Plaintiff, just as the plaintiffs in Castle, did not have “a reasonable expectation that the government would cease regulating the thrift industry, or any particular thrift therein.”
Conclusion
For the above-stated reasons, and in light of the Federal Circuit’s decision in Castle, plaintiffs takings claim is DISMISSED.
IT IS SO ORDERED.
. The facts were discussed in greater detail in the court’s opinion in Granite Management Corp. v. United States, 53 Fed.Cl. 228 (2002). Only facts relevant to this opinion are recited herein.
. Plaintiff’s (PL's) Complaint ¶ 3.
. Pl.’s Reply to Defendant’s Response to Pl.'s Response to Order to Show Cause, at 4.
. Pl.’s Response to Order to Show Cause, at 2 n. 1 ("[Plaintiff] does seek prejudgment interest as part of just compensation .... ”).
. Akin to Castle, plaintiff asserts:
[its] right to treat the goodwill created by the [supervisory thrift acquisitions] as an asset for regulatory capital purposes, to amortize that goodwill over twenty-five years on a straight-line basis, and to count the cash contributed by FSLIC towards its subsidiaries’ regulatory capital, constitute property protected by the Fifth Amendment to the United States Constitution.
Pl.’s Complaint ¶ 82.