Welty v. United States , 926 F.3d 1319 ( 2019 )

United States Court of Appeals
for the Federal Circuit
______________________
RUSSELL B. WELTY, SHARON A. STANLEY,
LINDA K. FULTON,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2018-1558
______________________
Appeal from the United States Court of Federal Claims
in No. 1:16-cv-01017-PEC, Judge Patricia E. Campbell-
Smith.
______________________
Decided: June 14, 2019
______________________
RICHARD MAGEE, JR., The Magee Law Firm LLC, Clay-
ton, MO, argued for plaintiffs-appellants.
JOAN M. PEPIN, Environment and Natural Resources
Division, United States Department of Justice, Washing-
ton, DC, argued for defendant-appellee. Also represented
by ERIC GRANT, JEFFREY H. WOOD.
______________________
Before DYK, MAYER, and BRYSON, Circuit Judges.
2 WELTY v. UNITED STATES
MAYER, Circuit Judge.
Russell B. Welty, Sharon A. Stanley, and Linda K. Ful-
ton (collectively, “the Landowners”) appeal the judgment of
the United States Court of Federal Claims dismissing their
complaint alleging that the United States took their prop-
erty without just compensation by requiring or approving
the construction and maintenance of a levee on a farm ad-
jacent to their property. See Welty v. United States, 135
Fed. Cl. 538, 550–51 (2017) (“Welty I”). We affirm.
I. BACKGROUND
The Landowners inherited a farm (“the Welty Farm”)
as joint tenants with the right of survivorship when their
mother died. The Welty Farm, which is located in Cape
Girardeau County, Missouri, is bordered on the west by the
Whitewater River. Terry Givens purchased a farm (“the
Givens Farm”) bordering the Welty Farm to the south in
1998. The Welty Farm is directly upstream from the Giv-
ens Farm.
Givens maintains a drainage ditch and levee system on
portions of his property near the Whitewater River. Since
1998, the Givens Farm has been enrolled in the Conserva-
tion Reserve Program (“CRP”). See 16 U.S.C. § 3831. Un-
der the CRP, landowners can enter into contracts to
remove environmentally sensitive land from agricultural
production and to manage it in accordance with an ap-
proved conservation plan. See 7 C.F.R. § 1410.20. In ex-
change, participants in the CRP are eligible for monetary
compensation from the United States Department of Agri-
culture (“USDA”). Id. § 1410.21. Under the CRP, conser-
vation plans for land adjacent to streams or rivers
commonly require the maintenance of a “filter strip,” which
is defined as “a strip or area of vegetation adjacent to a
body of water the purpose of which is to remove nutrients,
sediment, organic matter, pesticides, and other pollutants
from surface runoff and subsurface flow.” Id. § 1410.2(b).
WELTY v. UNITED STATES 3
In 2014, the Landowners filed suit against Givens in
Missouri state court, alleging that the levee and ditch sys-
tem that he built on his property had resulted in the drain-
age of wetlands on the Welty Farm. See Welty v. Givens,
No. ED106864, slip op. at 2–5 (Mo. Ct. App. Apr. 2, 2019)
(non-precedential memorandum supplementing order af-
firming judgment) (“Welty II”). They asserted, moreover,
that Givens’ levee and ditch system had “caused unnatural
flooding,” which had rendered the Welty Farm “unfit for
cultivation.” Id. at 5.
Givens moved to dismiss, asserting that under Mis-
souri law a landowner has the right “to make a reasonable
use of his land even though the flow from surface waters is
thereby altered and causes more harm to others.” Supple-
mental App. (“S.A.”) 32. Givens also submitted an affidavit
stating that his CRP contracts with the USDA required
him to maintain a filter strip around the perimeter of his
farm. Id. at 28–29. According to Givens, the function “of
the filter strip is to protect bank erosion of the Whitewater
River, provide wildlife habitat and serve as a buffer and
filter between the farmland and the Whitewater River.” Id.
at 29. Givens asserted, moreover, that the removal of the
levee on his property would “substantially eliminate and
destroy the filter strip running along it,” resulting in the
breach of his CRP contracts. Id.
The Missouri Court of Appeals recently affirmed the
dismissal of the Landowners’ tort action against Givens.
See Welty II, slip op. at 8–12. The court explained that un-
der Missouri law “each possessor is legally privileged to
make a reasonable use of his land,” id. at 7, and that it
could not “say Givens’ use of [his] ditch and levee [was] un-
reasonable [or] inappropriate to defend against surface wa-
ter,” id. at 8. The court concluded, moreover, that the
Landowners’ cause of action was time-barred since “Giv-
ens’ levee and ditch were constructed and known to [the
Landowners] sixteen years before they filed their petition,
4 WELTY v. UNITED STATES
and eleven years after the statute of limitations had run.”
Id. at 11–12.
In August 2016, the Landowners filed suit against the
United States in the Court of Federal Claims. They alleged
that the government had taken their property without just
compensation by “requiring and/or approving the construc-
tion and maintenance” of the levee on Givens’ property.
J.A. 23. According to the Landowners, the “positioning” of
Givens’ levee was such that it caused upstream flooding
and the “permanent loss of all beneficial use of the Welty
Farm as productive agricultural land.” Id. at 29–30.
On December 8, 2017, the Court of Federal Claims
granted the government’s motion to dismiss the Landown-
ers’ complaint for failure to state a claim upon which relief
could be granted. See Welty I, 135 Fed. Cl. at 550–51. Alt-
hough the court rejected the government’s contention that
the Landowners’ complaint was time-barred, 1 id. at 549, it
determined that the Landowners had failed to allege facts
sufficient to demonstrate that the government, as opposed
to Givens, was responsible for the alleged flooding on their
farm, id. at 550–51. The court explained that no taking
occurs when the challenged activities “are those of private
parties, not the government,” and that the “voluntary na-
ture” of the CRP contracts between Givens and the USDA
was “fundamentally at odds with the coercion required to
support a takings claim.” Id. According to the court, “[t]o
the extent any of the alleged damage to [the Landowners’]
property [was] related to modifications made or
1 On appeal, the government does not challenge the
Court of Federal Claims’ decision to deny its motion to dis-
miss the Landowners’ complaint as untimely. See Welty I,
135 Fed. Cl. at 549 (“After careful consideration of this con-
flict, the court concludes that the best course is to . . . take
[the Landowners’] allegations relating to the stabilization
doctrine as true for purposes of determining jurisdiction.”).
WELTY v. UNITED STATES 5
maintenance performed for purposes of complying with the
terms of the CRP, that damage is a result of Givens’[] vol-
untary decision to participate in that program, not the re-
sult of any actions required by or coerced by [the
government].” Id. at 551.
The Landowners then filed a timely appeal with this
court. We have jurisdiction under 28 U.S.C. § 1295(a)(3).
II. DISCUSSION
A. Standard of Review
We review de novo a decision by the Court of Federal
Claims to dismiss a complaint for failure to state a claim
upon which relief can be granted. See Boyle v. United
States, 200 F.3d 1369, 1372 (Fed. Cir. 2000). “A motion to
dismiss under Court of Federal Claims Rule 12(b)(4) for
failure to state a claim upon which relief can be granted is
appropriate when the facts asserted by the claimant do not
entitle him to a legal remedy.” Lindsay v. United States,
295 F.3d 1252, 1257 (Fed. Cir. 2002).
B. Fifth Amendment Takings
To maintain a cognizable claim for a Fifth Amendment
taking, a plaintiff must establish that he possessed an en-
forceable property right that was taken by the government
for public purposes without just compensation. See, e.g.,
Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1014–19
(1992). “A compensable taking can occur not only through
the government’s physical invasion or appropriation of pri-
vate property, but also by government regulations that un-
duly burden private property interests.” Huntleigh USA
Corp. v. United States, 525 F.3d 1370, 1378 (Fed. Cir. 2008)
(footnote and citations omitted).
“The paradigmatic taking requiring just compensation
is a direct government appropriation or physical invasion
of private property.” Lingle v. Chevron U.S.A. Inc., 544
U.S. 528, 537 (2005); see United States v. Pewee Coal Co.,
6 WELTY v. UNITED STATES
341 U.S. 114, 115–17 (1951) (concluding that a taking oc-
curred when the government seized and operated a private
party’s coal mines). Here, the Landowners do not allege
that the United States directly appropriated their prop-
erty. Nor do they point to any provision in the CRP con-
tracts between Givens and the USDA that explicitly
requires Givens to maintain a levee on his farm. Instead,
the Landowners’ claim of injury from governmental action
is significantly more “attenuated.” Air Pegasus of D.C., Inc.
v. United States, 424 F.3d 1206, 1215 (Fed. Cir. 2005). Spe-
cifically, they assert that they are entitled to compensation
for a Fifth Amendment taking because “the government co-
erced Mr. Givens into participating in the [CRP] by the lure
[of] monetary compensation even though [a result] of par-
ticipation would be the taking [of] a flowage easement
across [the Welty Farm].” Appellants’ Br. 12. In essence,
the Landowners contend that the government should be
held liable because: (1) the CRP contracts between Givens
and the USDA require the maintenance of a filter strip on
portions of the Givens Farm near the Whitewater River; (2)
Givens asserts that the removal of his levee would cause
damage to, or the destruction of, this filter strip; and (3)
Givens’ levee causes the Whitewater River periodically to
flood the Welty Farm, rendering it unfit for cultivation.
J.A. 22–31.
We do not find this argument persuasive. Under cer-
tain circumstances, a viable takings claim can arise “when
the government instigates action by a third party.” A & D
Auto Sales, Inc. v. United States, 748 F.3d 1142, 1153 (Fed.
Cir. 2014). In this regard, actions of a third party that
harm a plaintiff’s private property rights can be attributed
to the United States “if the third party [was] acting as the
government’s agent or the government’s influence over the
third party was coercive rather than merely persuasive.”
Id. at 1154; see Preseault v. United States, 100 F.3d 1525,
1551 (Fed. Cir. 1996) (en banc) (“[W]hen the Federal Gov-
ernment puts into play a series of events which result in a
WELTY v. UNITED STATES 7
taking of private property, the fact that the Government
acts through a state agent does not absolve it from the re-
sponsibility, and the consequences, of its actions.”). Here,
however, the Landowners have not pled facts plausibly es-
tablishing either that Givens was acting as an agent of the
government when he constructed and maintained his levee
or that Givens’ actions related to the levee were the product
of coercion by the USDA.
C. Agency
“An agency relationship may exist where [a] third
party is hired or granted legal authority to carry out the
government’s business.” A & D Auto Sales, 748 F.3d at
1154; see also Brubaker Amusement Co. v. United States,
304 F.3d 1349, 1360 (Fed. Cir. 2002) (“[A]n agency relation-
ship results from the manifestation of consent by one per-
son to another that the other shall act on his behalf and
subject to his control, and consent by the other to so act.”
(internal quotation marks omitted)). The Landowners
have pled no facts showing that the government hired Giv-
ens to build or maintain the levee on his farm or that it
otherwise required or directed him to construct the levee
on its behalf. 2 See Navajo Nation v. United States, 631 F.3d
1268, 1276 (Fed. Cir. 2011) (concluding that an Indian tribe
was not acting as an agent of the federal government since
it “was not acting under the direction or control of the
United States . . . or for its benefit”); Casa de Cambio
Comdiv S.A. v. United States, 291 F.3d 1356, 1363 (Fed.
Cir. 2002) (concluding that no taking occurred “[b]ecause
the government did not direct [the third party] to take ac-
tion against [the plaintiff], and because [the third party]
did not act as the alter ego or agent of the government”).
To the contrary, there is no provision in the CRP contracts
2 Givens asserts that part of the levee was present
on his farm at the time of purchase, but that he “added” to
it after he acquired his property. S.A. 29.
8 WELTY v. UNITED STATES
between Givens and the USDA requiring the construction
or maintenance of a levee. Instead, these contracts only
require the establishment and maintenance of a filter strip,
designed to protect the Whitewater River from agricultural
pollutants. S.A. 40, 99.
Landowners who enroll their properties in the CRP are
eligible for financial assistance from the USDA. See 7
C.F.R. § 1410.21. But Givens’ alleged receipt of financial
compensation for participating in the CRP is insufficient,
standing alone, to show that he was acting as an agent of
the United States when he constructed and maintained his
levee, particularly given that, as noted above, the CRP con-
tracts only mandate the establishment of a filter strip and
not a levee. The government often attaches conditions and
restrictions on the receipt of federal financial assistance,
see United States v. Orleans, 425 U.S. 807, 815–16 (1976),
but such conditions and restrictions do not necessarily cre-
ate any form of an agency relationship, see B & G Enters.,
Ltd. v. United States, 220 F.3d 1318, 1323–24 (Fed. Cir.
2000) (concluding that “California did not act as an agent
of the United States by enacting . . . vending machine re-
strictions” even though it enacted those restrictions as part
of an effort to obtain a block grant from the Department of
Health and Human Services); see also Griggs v. Allegheny
Cty., 369 U.S. 84, 88–90 (1962) (concluding that a county
government, not the federal government, was liable for the
taking of an air easement over a plaintiff’s property for use
by a county airport, notwithstanding the fact that the
county airport was funded in part by a federal grant condi-
tioned on compliance with federal regulations); D.R.
Smalley & Sons, Inc. v. United States, 372 F.2d 505, 507
(Ct. Cl. 1967) (holding that the conditional grant of federal
funds to the State of Ohio for highway projects did not
make it an agent of the United States for purposes of lia-
bility related to those projects).
The Landowners point to the fact that Givens submit-
ted an affidavit, in connection with the Missouri state court
WELTY v. UNITED STATES 9
tort action, see Welty II, slip op. at 8–12, stating that the
dismantling of his levee would result in a breach of his CRP
contracts with the USDA because it would “substantially
eliminate and destroy the filter strip running along [the
levee].” S.A. 29. Even accepting this statement as true,
however, the fact remains that the government did not,
pursuant to the CRP contracts, specifically mandate the
construction or maintenance of a levee on the Givens Farm.
Nor is there any credible allegation that the USDA other-
wise required the particular levee and ditch configuration
that Givens uses on his farm, the configuration which, ac-
cording to the Landowners, is responsible for upstream
flooding across the Welty Farm. See Welty II, slip op. at 5,
8–11; J.A. 9–10, 27–30. In short, the Landowners have
pled no facts suggesting that the alleged flooding of their
farm was a direct and intended result of the government’s
actions with respect to Givens. See A & D Auto Sales, 748
F.3d at 1154 (explaining that a takings claim may arise
when a plaintiff’s injuries are the “direct and intended” re-
sult of governmental actions directed at third parties); see
also Air Pegasus, 424 F.3d at 1215 (explaining that a tak-
ings claim does not arise in situations in which there is only
an “attenuated” causal link between a plaintiff’s injury and
governmental actions directed at a third party); Casa de
Cambio, 291 F.3d at 1361 (“Under decisions of the Supreme
Court and this court, a compensable taking does not occur
unless the government’s actions on the intermediate third
party have a ‘direct and substantial’ impact on the plaintiff
asserting the takings claim.”).
D. Coercion
Nor have the Landowners pled facts sufficient to show
that Givens was “coerced” into constructing and maintain-
ing his levee. 3 In many instances, “[t]he line between
3 We reject the Landowners’ contention that we
should remand this case to the Court of Federal Claims
10 WELTY v. UNITED STATES
coercion (which may create takings liability) and persua-
sion (which does not create takings liability) is highly fact-
specific and hardly simple to determine.” A & D Auto
Sales, 748 F.3d at 1154. Here, however, the Landowners
do not allege facts plausibly suggesting that the USDA
compelled Givens to construct or maintain a levee on his
farm. The fact that the USDA provides financial incentives
for participating in the CRP is insufficient, standing alone,
to show that Givens’ construction and maintenance of his
levee was the product of government coercion. See B & G
Enters., 220 F.3d at 1325 (“[I]t was California’s decision to
create restrictions on the placement of tobacco vending ma-
chines, not the federal government’s. Congress may have
provided the bait, but California decided to bite.”);
Langenegger v. United States, 756 F.2d 1565, 1572 (Fed.
Cir. 1985) (concluding that the United States was not liable
for the expropriation of the property of U.S. citizens by El
Salvador given that its influence over the expropriation
was not coercion but “‘friendly’ persuasion”).
III. CONCLUSION
Accordingly, the judgment of the United States Court
of Federal Claims is affirmed.
AFFIRMED
with instructions to grant them leave to amend their com-
plaint to allege that Givens was coerced into entering into
the CRP contracts. Because the Landowners did not re-
quest leave to amend their complaint when they were be-
fore the Court of Federal Claims, that issue is forfeited on
appeal. See, e.g., San Carlos Apache Tribe v. United States,
639 F.3d 1346, 1355 (Fed. Cir. 2011) (explaining that an
argument not raised “before the Court of Federal Claims
. . . is waived on appeal”). Significantly, moreover, the
Landowners have failed to explain how any amendments
could cure the deficiencies in their complaint.