Welty v. United States ( 2019 )


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  •   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.