Bhl Properties, LLC v. United States ( 2017 )

In the United States Court of Federal Claims
No. 15-179L
Filed: November 21, 2017
) Keywords: Rails-to-Trails; National Trails
BHL PROPERTIES, LLC, et al., ) System Act; Fifth Amendment; Takings
) Clause.
Plaintiffs, )
)
v. )
)
THE UNITED STATES OF AMERICA, )
)
Defendant. )
)
Mark F. Hearne, II, Arent Fox, LLP, Washington, DC, for Plaintiffs. Lindsay S.C. Brinton,
Meghan S. Largent, Stephen S. Davis, and Abram J. Pafford, Arent Fox, LLP, Washington, DC,
Of Counsel.
Davene D. Walker, Trial Attorney, Natural Resources Section, U.S. Department of Justice,
Washington, DC, for Defendant, with whom was Jeffrey H. Wood, Acting Assistant Attorney
General, Environment and Natural Resources Division.
OPINION AND ORDER
KAPLAN, Judge.
This rails-to-trails case was brought by a group of landowners claiming a taking of their
property interests in a railroad corridor in Racine County, Wisconsin. At this point in the
litigation, all of Plaintiffs’ claims, with the exception of a single claim by plaintiff Dennis Lee,
have been voluntarily dismissed.
Currently before the Court is Plaintiffs’ motion for partial summary judgment as to the
government’s liability for a taking of Mr. Lee’s property. The government has filed a cross-
motion for summary judgment. For the reasons set forth below, the government’s motion for
summary judgment is GRANTED and Plaintiffs’ motion for partial summary judgment is
DENIED.1
1
As an alternative to its cross-motion for summary judgment, the government moved for a stay.
In light of the Court’s disposition of the cross-motions for summary judgment, the government’s
motion for a stay is DENIED as moot.
BACKGROUND2
I. Statutory Framework
Section 8(d) of the National Trails System Act, as amended, represents “the culmination
of congressional efforts to preserve shrinking rail trackage by converting unused rights-of-way to
recreational trails.” See Preseault v. Interstate Commerce Comm’n (Preseault I), 494 U.S. 1, 5
(1990) (footnote omitted). Entitled “[i]nterim use of railroad rights-of-way,” the statute
authorizes the Surface Transportation Board (STB or the Board) “to preserve for possible future
railroad use rights-of-way not currently in service and to allow interim use of the land as
recreational trails.” See id. at 7; see also 16 U.S.C. § 1247(d) (2012).
By law, a railroad that wishes to abandon a line must secure the STB’s approval either by
following the regular abandonment process or through an exemption proceeding. See 49 U.S.C.
§ 10903(a)(1), (d); see also id. § 10502; 49 C.F.R. § 1152.29(a); Barclay v. United States, 443
F.3d 1368, 1374 (Fed. Cir. 2006). Once the railroad files its abandonment request, a “state,
political subdivision, or qualified private organization” that wishes to acquire or use the right-of-
way for interim trail use and rail banking “must file a comment or otherwise include a request in
its filing . . . or a petition . . . indicating that it would like to do so.” 49 C.F.R. § 1152.29(a). The
railroad must then respond to the potential trail sponsor by informing the STB whether it intends
to negotiate a trail use agreement with that sponsor. See id. § 1152.29(b).
If the railroad is willing to negotiate an agreement and if the potential sponsor meets the
Board’s requirements, the Board then issues either a Certificate of Interim Trail Use or
Abandonment or a Notice of Interim Trail Use or Abandonment (NITU). See id. §§ 1152.29(c),
(d). The certificate or notice authorizes the railroad to discontinue service, salvage track and
materials, and fully abandon the line if no trail use agreement is reached within 180 days of
issuance. See id. § 1152.29(c)(1). On the other hand, “if an interim trail use agreement is
reached . . . the parties [must] file . . . notice” with the Board. Id. § 1152.29(c)(2).
II. The NITU in This Case
On January 28, 2014, Soo Line Railroad, doing business as Canadian Pacific, filed a
“notice of exempt abandonment of trackage” with the STB. See Wisconsin Landowners’ Mem.
in Supp. of Their Mot. for Partial Summ. J. (Pls.’ Mot.) Ex. 1A, ECF No. 47-2. The notice
specified that the trackage was “located between milepost 7.8 +/- and milepost 18.43 +/-
(Waxdale Spur) which traverses through United States postal service zip codes 53139, 53182,
and 53177 in Racine County, Wisconsin.” Id. The railroad noted that “[n]o local traffic ha[d]
moved over the line for at least two years and all overhead traffic ha[d] been routed over other
lines.” Id. at 1. It further stated that it planned on consummating its proposed abandonment “on
or after March 18, 2014.” Id. at 2.
On February 14, 2014, the STB granted Soo Line authority for an exempt abandonment
of the corridor, effective March 19, 2014, subject to the receipt of any petitions from potential
trail sponsors. Def.’s Cross-Mot. for Summ. J. & Resp. to Pls.’ Mot. for Partial Summ. J. (Def.’s
2
Unless otherwise specified, the facts set forth in this section are not in dispute.
2
Mot.) Ex. 4, ECF No. 48-4.3 Two weeks later, on February 27, 2014, the Wisconsin Department
of Natural Resources petitioned the STB for a NITU. Pls.’ Mot. Ex. 1B, ECF No. 47-3. The
department proposed to “use or preserve the land corridor and related real property for interim
public transportational and recreational purposes . . . subject to restoration for railroad purposes.”
Id. at 1–2. On March 13, 2014, the railroad informed the STB that it was “willing to negotiate an
agreement for interim trail use with the Wisconsin Department of Natural Resources.” Pls.’ Mot.
Ex. 1C, ECF No. 47-4.
Subsequently, on March 18, 2014, the STB granted the department’s request in a
“Decision and Notice of Interim Trail Use.” Pls.’ Mot. Ex. 1D, ECF No. 47-5. The NITU was to
last for a period of 180 days, until September 15, 2014. Id. at 3. The STB ordered that “[i]f an
interim trail use agreement is reached (and thus, interim trail use is established), the parties shall
jointly notify the Board within 10 days that an agreement has been reached.” Id. It reiterated that
“[i]f an agreement for interim trail use/rail banking is reached by September 15, 2014, for the
right-of-way, interim trail use may be implemented. If no agreement is reached, Soo Line may
fully abandon the line, upon expiration of the public use condition imposed here.” Id. at 4.
The STB has since granted the parties seven extensions of the NITU to complete
negotiations for a trail use agreement. See Docket, Soo Line R.R. Co.—Abandonment
Exemption—In Racine Cty., Wis., No. AB-57-61-X (STB). The NITU is currently in effect until
November 29, 2017. Decision, Soo Line R.R. Co.—Abandonment Exemption—In Racine Cty.,
Wis., No. AB-57-61-X (STB June 9, 2017).
III. This Action
On February 26, 2015, twenty-two plaintiffs filed a complaint alleging that they owned
land underlying Soo Line’s railroad corridor and that the STB’s issuance of the NITU effected a
taking of their property under the Fifth Amendment, for which the government owed them
compensation. See Compl. at 23–30, ECF No. 1. On May 15 and August 14, 2015, Plaintiffs
filed amended complaints adding thirty-one additional landowners as plaintiffs. See ECF Nos. 6,
10.
On August 8, 2016, following the completion of discovery, the parties filed a joint status
report, ECF No. 26, along with a stipulation “regarding title matters,” ECF No. 25. In the joint
status report, the parties indicated that: 1) Plaintiffs intended to voluntarily dismiss sixty-one of
the seventy-four claims set forth in the complaint; 2) the parties had entered a stipulation as to
title for six of the claims set forth in the complaint, including the claim of plaintiff Dennis Lee
3
The STB also advised Soo Line that it was required to “file a notice of consummation with the
Board to signify that it ha[d] exercised the authority granted and fully abandoned the line,” and
that if it failed to do so by February 14, 2015, Soo Line’s “authority to abandon [would]
automatically expire.” Def.’s Mot. Ex. 4 at 3.
3
(see ECF No. 25); and 3) the parties intended to file cross-motions for summary judgment to
resolve liability as to the remaining seven claims.4 Joint Status Report at 1–4.
On January 18, 2017, Plaintiffs filed a motion for partial summary judgment as to the
government’s liability for a taking with respect to ten claims made by six plaintiffs, including the
claim of plaintiff Dennis Lee. See Pls.’ Mot. at 1, ECF No. 47. On February 21, 2017, the
government filed a response and cross-motion seeking summary judgment as to all claims that
were not the subject of Plaintiffs’ motion for summary judgment. Def.’s Mot. at 1, 22, ECF No.
48. It further argued that the facts in the record did not establish the government’s liability with
respect to the plaintiffs whose claims were at issue in Plaintiffs’ motion, and that Plaintiffs’
motion should be denied or the case stayed. See id. at 1.
On April 4, 2017, Plaintiffs moved to voluntarily dismiss certain claims pursuant to Rule
41(a)(2) of the Rules of the Court of Federal Claims (RCFC). ECF No. 51. On April 7, 2017, the
Court granted Plaintiffs’ motion and dismissed without prejudice fifty-seven claims made by
forty-seven different plaintiffs. ECF No. 52.
Four months later, on August 11, 2017, and based upon the receipt of new information
from Soo Line, the government revoked its title stipulations as to all plaintiffs except Dennis
Lee. ECF No. 61. As to Mr. Lee, the government clarified that while it stood by its stipulation
that Soo Line held only an easement over the portion of the railroad corridor that was near Mr.
Lee’s property, it did not stipulate that the property owned by Mr. Lee is “adjacent” to the
railroad corridor. Id. at 2.5
Shortly after the government revoked its stipulations, on August 15, 2017, Plaintiffs filed
a second motion to voluntarily dismiss, this time as to all of the claims on which they had sought
partial summary judgment, except for the claim of Mr. Lee. ECF No. 62. In addition, Plaintiffs
filed a response to the government’s cross-motion for summary judgement and reply in support
of their motion for summary judgment, in which they addressed only Mr. Lee’s claim. Wisconsin
Landowners’ Reply in Supp. of Their Mot. for Partial Summ. J. & Resp. to the Government’s
Cross-Mot. (Pls.’ Reply) at 1, ECF No. 63.
The government filed a response to Plaintiffs’ motion to voluntarily dismiss on August
18, 2017. ECF No. 64. It argued that the Court should dismiss the claims with prejudice “given
the progress of this litigation.” Id. at 1. On September 28, 2017, the Court granted Plaintiffs’
second motion for voluntary dismissal, but agreed with the government and dismissed the claims
with prejudice. ECF No. 66. Plaintiffs then filed a third motion to voluntarily dismiss without
prejudice, on November 10, 2017. ECF No. 68. The government again urged the Court to
dismiss the claims with prejudice. ECF No. 69. For the reasons set forth in its September 28,
4
Certain plaintiffs made multiple claims, which is why the number of claims exceeded the
number of plaintiffs. See Joint Status Report at 1–4.
5
The government “also clarifie[d] that the portion of railroad corridor located across Durand
Avenue from Plaintiff Lee’s property was acquired by the railroad by adverse possession, not
condemnation.” ECF No. 61 at 2.
4
2017 Order, the Court granted Plaintiffs’ motion but dismissed the claims with prejudice. ECF
No. 71.
Based on the foregoing, only the claim of plaintiff Dennis Lee remains at issue in this
case. The Court held oral argument on the cross-motions for summary judgment as to that claim
on November 15, 2017. Order, ECF No. 67.
DISCUSSION
I. Subject Matter Jurisdiction
Pursuant to the Tucker Act, the United States Court of Federal Claims has jurisdiction to
“render judgment upon any claim against the United States founded either upon the Constitution,
or any Act of Congress or any regulation of an executive department, or upon any express or
implied contract with the United States, or for liquidated or unliquidated damages in cases not
sounding in tort.” 28 U.S.C. § 1491(a) (2012). The Tucker Act serves as a waiver of sovereign
immunity and a jurisdictional grant, but it does not create a substantive cause of action. Jan’s
Helicopter Serv., Inc. v. Fed. Aviation Admin., 525 F.3d 1299, 1306 (Fed. Cir. 2008). A
plaintiff, therefore, must establish that “a separate source of substantive law . . . creates the right
to money damages.” Id. (quoting Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005)
(en banc in relevant part)).
Here, Plaintiffs allege that the government owes them compensation pursuant to the Fifth
Amendment’s Takings Clause, which provides that “private property [shall not] be taken for
public use, without just compensation.” U.S. Const. amend. V. The Takings Clause supplies a
money-mandating source of substantive law in rails-to-trails cases. Preseault I, 494 U.S. at 11–
12. Accordingly, the Court has jurisdiction over plaintiff Dennis Lee’s claim.
II. The Cross-Motions for Summary Judgment
A. Standards
The standards for granting summary judgment are well established. Summary judgment
may be granted where there is no genuine issue of material fact and the movant is entitled to
judgment as a matter of law. RCFC 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250
(1986). A fact is material if it “might affect the outcome of the suit under the governing law.”
Anderson, 477 U.S. at 248. An issue is genuine if it “may reasonably be resolved in favor of
either party.” Id. at 250.
The moving party bears the burden of demonstrating the absence of any genuine issue of
material fact. Conroy v. Reebok Int’l, Ltd., 14 F.3d 1570, 1575 (Fed. Cir. 1994); see also Celotex
Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). All significant doubts regarding factual issues
must be resolved in favor of the party opposing summary judgment. Mingus Constructors, Inc. v.
United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). “[T]he party opposing summary judgment
must show an evidentiary conflict on the record; mere denials or conclusory statements are not
sufficient.” Id. at 1390–91. “[E]ntry of summary judgment is appropriate against a [party] ‘who
fails to make a showing sufficient to establish the existence of an essential element to [its] case,
and on which [it] will bear the burden of proof at trial.’” Zafer Taahhut Insaat ve Ticaret A.S. v.
5
United States, 833 F.3d 1356, 1362–63 (Fed. Cir. 2016) (quoting Celotex Corp., 477 U.S. at 322)
(third and fourth alterations in original).
B. Takings Liability Standards Under the Trails Act
Under the Takings Clause, the federal government must pay just compensation when it
“requires [a] landowner to submit to the physical occupation of his land.” Yee v. City of
Escondido, 503 U.S. 519, 527 (1992) (emphasis omitted); see also Nollan v. Cal. Coastal
Comm’n, 483 U.S. 825, 831 (1987) (observing that the appropriation of a public easement across
a private landowner’s premises “constitute[s] the taking of a property interest”); Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982). In a rails-to-trails takings case,
the STB’s issuance of a NITU results in a compensable taking if a plaintiff has a “state law
reversionary interest[]” in the land subject to the railroad right-of-way that is “effectively
eliminated in connection with [the] conversion of [the] railroad right-of-way to trail use.”6
Caldwell v. United States, 391 F.3d 1226, 1228 (Fed. Cir. 2004) (citing Preseault II, 100 F.3d at
1543); see also Rogers v. United States, 814 F.3d 1299, 1303 (Fed. Cir. 2015) (“The government
must provide just compensation under the Fifth Amendment[’s] Takings Clause if the issuance
of a NITU results in the taking of private property.”).
In analyzing a takings claim based upon the Trails Act, the court must first determine
“who own[s] the strips of land involved.” See Preseault II, 100 F.3d at 1533. As the Federal
Circuit has noted, “if the Railroad obtained fee simple title to the land over which it was to
operate . . . the [adjacent landowners seeking compensation for a taking] would have no right or
interest in those parcels and could have no claim related to those parcels for a taking.” Id. If, on
the other hand, the railroad only had an easement rather than fee simple title, the court must look
to whether “the terms of the easement[] [were] limited to use for railroad purposes, or [whether]
they include[d] future use as public recreational trails.” Id. If the latter, then the Court must
determine whether “the[] easement[] terminated prior to the alleged taking so that the property
owners at that time held fee simples unencumbered by the easements.” Id.
If the railroad only obtained an easement, and its purposes did not include recreational
trail use, or if the easement was extinguished prior to trail conversion, then a taking occurs
“when a railroad right-of-way is converted to interim trail use under the Trails Act” because
“state law reversionary property interests that would otherwise vest in the adjacent landowners
are blocked from so vesting.” Caldwell, 391 F.3d at 1233; see also Ladd v. United States, 630
F.3d 1015, 1019, 1023–24 (Fed. Cir. 2010). To be entitled to compensation, a plaintiff must
demonstrate that she or he is the owner of the burdened estate over which the easement crosses,
6
As the Federal Circuit has noted, because “traditional common law estates
terminology . . . . describes an easement as a ‘use’ interest” rather than as “a ‘possessory’
interest,” a plaintiff’s retained interest in land burdened by an easement would not classically be
described as a “reversionary” interest. Preseault v. United States (Preseault II), 100 F.3d 1525,
1533 (Fed. Cir. 1996). Regardless of how the plaintiff’s retained interest is characterized, “the
result upon termination of the easement is the same”: the plaintiff’s resumption of unencumbered
ownership of the property. Id. at 1534.
6
or, absent contrary evidence of ownership, that she or he is the owner of property adjacent to the
rail corridor. See Caldwell, 391 F.3d at 1233; see also Barclay, 443 F.3d at 1373.
In determining the property interests involved, the court relies upon the common law and
statutes of the state in which the rail corridor lies, here, the State of Wisconsin. See Preseault II,
100 F.3d at 1533. Under Wisconsin law, when a railroad abandons an easement, “the land goes
back to the original owner or his grantees.” Pollnow v. State Dep’t of Nat. Res., 276 N.W.2d
738, 744 (Wis. 1979). Further, “[i]n the absence of evidence to the contrary, title is presumed to
be in the abutting landowners.” Id.C. Whether the Government is Liable for a Taking with Respect to Plaintiff
Dennis Lee
It is undisputed that Mr. Lee owns a two-acre parcel of land in fee simple that is
separated from the rail corridor by a county highway known as Highway 11 (also referred to as
Durand Avenue). See United States’ Reply Br. in Supp. of Its Cross-Mot. for Summ. J. (Def.’s
Reply) at 1, ECF No. 65; Pls.’ Reply at 3; Pls.’ Reply Ex. 1 at 3, ECF No. 63-1. Plaintiffs
contend that in addition to the two-acre parcel, Mr. Lee also owns the land underlying Durand
Avenue, burdened by a highway easement held by the county. Because Durand Avenue abuts the
rail corridor, Plaintiffs argue, under state law Mr. Lee is presumed to have title to the land
underlying the rail corridor as well. Pls.’ Reply at 3.
The government, on the other hand, argues that Mr. Lee has failed to prove that he owns
the land underlying Durand Avenue. Therefore, according to the government, Mr. Lee cannot
take advantage of the presumption that he has title to the land underlying the adjacent rail
corridor. Because he has not demonstrated any ownership interest in the land underlying the rail
corridor, it argues, his takings claim must fail.
The Court agrees with the government. Thus, there are two deeds in the record
representing conveyances to Dennis Lee. The first is a deed recorded November 30, 1977, from
Donald B. Lee and Carol Lee to Dennis J. Lee and Suz Anne Lee. Def.’s Reply Ex. 1 at
BHL00581, ECF No. 65-1. The second conveyance to Dennis Lee is a quitclaim deed from Suz
Anne Lee to Dennis Lee recorded January 12, 1982. Pls.’ Reply Ex. 1 at 1. Both deeds contain
metes and bounds descriptions of land in “the Southwest ¼ of the Northwest ¼ of Section 25,
Township 3 North, Range 21 East,” measuring two acres and lying in Yorkville, Racine County,
Wisconsin. Id.; Def.’s Reply Ex. 1 at BHL00581.
At oral argument, counsel for Mr. Lee properly acknowledged that these metes and
bounds descriptions do not include Durand Avenue. Moreover, the deed to Mr. Lee’s immediate
predecessors-in-interest, Donald B. Lee and Carol Lee, dated May 28, 1965, described the
property granted to them, in pertinent part, as follows: “[t]he East One-Half (E½) of the
Northeast One-Quarter (NE¼) of Section 26, Township 3 North, Range 21 East, lying South of
Highway 11,” and “[t]he West 37 Acres of that part of the South One-Half (S½) of the
Northwest One-Quarter (NW¼) of Section 25, Township 3 North, Range 21 East, lying South of
Highway 11.” Def.’s Reply Ex. 1 at BHL00579 (emphasis added). Further, Plaintiffs have
submitted a map prepared by their own expert which shows that to the north, Mr. Lee’s property
ends at Durand Avenue. See Pls.’ Reply Ex. 1 at 3.
7
Notwithstanding the metes and bounds descriptions in the deeds and the language
indicating that the land conveyed lies south of Durand Avenue/Highway 11, at oral argument
counsel for Mr. Lee insisted that the deeds have no significance and that Mr. Lee has a property
interest in the land underlying Durand Avenue. Oral Argument at 2:52pm (answering Court’s
question about property description in the deed by stating that “it means nothing to me Your
Honor”); see also id. at 2:59pm. Among other things, counsel cited the presumption under
Wisconsin law “that the abutting owner has title to the center of the highway . . . adjacent to his
property, subject to the public easement.” Spence v. Frantz, 217 N.W. 700, 701 (Wis. 1928).
This presumption may control even where a deed contains language identifying the public
highway as the property’s boundary, as was the case with the deed to Donald and Carol Lee. See
id. But Mr. Lee’s reliance on this presumption is unavailing. For even if Mr. Lee is the presumed
owner of the land underlying Durand Avenue to its centerline, he would not own the northern
portion of Durand Avenue on the other side of its centerline, and he thus still would not own
property abutting the railroad corridor.
Mr. Lee also attempts to meet his burden of proving ownership of the land underlying the
highway by citing a deed dated September 22, 1926 from one “E.A. Elliot” to Racine County,
conveying an easement to the county for the operation of Highway 11. Pls.’ Reply at 3–4 (citing
id. Ex. 2, ECF No. 63-2). This document is sufficient to establish that E.A. Elliot once owned the
land under Durand Avenue in fee simple. But there is nothing in the record showing that Mr. Lee
is in the chain of title as successor-in-interest to E.A. Elliot with respect to the land underlying
Durand Avenue. In other words, the record contains no evidence of conveyances that link E.A.
Elliot’s retained interest in the land under Durand Avenue to Mr. Lee. And the language of Mr.
Lee’s deeds is to the contrary. It is thus entirely possible that someone other than Mr. Lee (such
as, for example, a neighbor whose land also abuts Durand Avenue either to the north or the
south) is the successor-in-interest to Mr. Elliot as to the land Mr. Lee claims he owns.
At the oral argument, it became apparent to the Court that Mr. Lee had not expected the
government to challenge his ownership of the land underlying Durand Avenue and that
accordingly he had not gathered the documentary evidence needed to prove the chain of title.
Indeed, Plaintiffs’ counsel several times pointed out that, in her experience, the government has
not required plaintiffs to supply evidence that establishes the entire chain of title in
circumstances such as those presented here. The Court, of course, has no way of knowing the
extent to which the cases to which counsel referred are similar to this one. But even assuming
that they were identical, on August 11, 2017, the government clearly signaled that it intended to
challenge Mr. Lee’s ownership interest by filing a Notice of Revocation and Clarification of the
Parties’ Stipulations in which it stated that “it is not stipulating that the property owned by
Plaintiff Dennis Lee is adjacent to the railroad corridor.” ECF No. 61 at 2. Further, it is Mr.
Lee’s burden to prove his ownership of the land abutting the railway corridor; it is not the
government’s burden to disprove it.
In short, to defeat the government’s motion for summary judgment, Mr. Lee must do
more than simply cite the absence of evidence in the record that another individual currently
owns the land underlying Highway 11. He must produce evidence sufficient to support his claim
that the land at issue belongs to him. This he has not done. Plaintiffs’ motion for partial summary
judgment is therefore DENIED and the government’s cross-motion for summary judgment is
GRANTED.
8
CONCLUSION
Based on the foregoing, the government’s motion for summary judgment is GRANTED
and Plaintiffs’ motion for partial summary judgment is DENIED. The Clerk is directed to enter
judgment accordingly. Costs are allowed to the government in accordance with RCFC 54(d)(1).
IT IS SO ORDERED.
s/ Elaine D. Kaplan
ELAINE D. KAPLAN
Judge
9