Cully Corporation v. United States ( 2022 )

In the United States Court of Federal Claims
No. 19-339C
Filed: April 14, 2022
Amended: June 29, 2022 †
CULLY CORPORATION,
Plaintiff,
v.
THE UNITED STATES,
Defendant.
Samuel Fortier, Fortier & Mikko, P.C., Anchorage, AK, for Plaintiff.
Joseph A. Pixley, Trial Attorney, L. Misha Preheim, Assistant Director, Patricia M. McCarthy,
Director, and Brian M. Boynton, Acting Assistant Attorney General, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, D.C., with Robin M.
Richardson, Senior Environmental Litigation Attorney for AF/JA-Operations and International
Law, Environmental Law and Litigation Division, for Defendant.
MEMORANDUM OPINION AND ORDER
TAPP, Judge.
Alaska is different. As Chief Justice Roberts succinctly states, in application of the law,
“Alaska is often the exception, not the rule.” Sturgeon v. Frost, 577 U.S. 424, 440 (2016). This
case concerns the extent of one such exception. Plaintiff, Cully Corporation (“Cully”), is a
Native village corporation of Point Lay, Alaska. In that capacity, Cully claims that the United
States Air Force (the “Air Force”) donated to it three buildings in 2005. (Sec. Am. Compl. at 6–
7, ECF No. 42). Several years after that purported transfer, the Air Force independently
determined the prior transaction violated federal regulations and concluded that the buildings
were never effectively transferred. The buildings were subject to a lease to the North Slope
Borough (the “NSB” or the “Borough”). Cully assumed, based on discussions with the Air
Force, that the buildings were removed from the lease after transfer; they were not, and an
Alaskan state court found that Cully does not hold a present possessory interest. This Court is
bound by that finding. The questions that remain at this stage are whether Cully can maintain a
takings claim against the Air Force and whether it has established a quantum meruit claim.
†
This Opinion was originally filed on April 14, 2022. (ECF No. 122). On May 19, 2022, due to the
United States’ drastic change in legal positions, that Opinion was amended. (ECF No. 149). This
version incorporates that amendment and alters its findings as necessary.
The parties move for summary judgment. (Pl.’s Mot., ECF No. 80; Def.’s Mot., ECF No.
83). For the reasons set forth, the Court finds that Cully has established a valid, reversionary
interest in the property at issue and that interest was temporarily taken by the United States. In
order to be redressable, Cully will need to prove actual damages from that temporary taking at
trial. Second, the Court is unable to resolve Cully’s quantum meruit claim on the United States’
motion. Therefore, Cully’s Motion for Summary Judgment is granted-in-part and denied-in-part.
The United States’ Motion for Summary Judgment is denied.
I. Background 1
A. Alaska Native Regional and Village Corporations
The Alaska Statehood Act of 1958, (72 Stat. 339) Public Law 85-508, 85th Congress, H.
R. 7999, July 7, 1958, allotted Alaska approximately 104 million acres of land and
accompanying mineral rights, an unprecedented land grant to a new state at that time. This Act
did not comprehensively acknowledge many concerns of Alaskan natives. Among other
shortcomings, the Statehood Act failed to address the issue of legal title to land claimed by
Alaska Natives. See generally Alaska v. United States, 35 Fed. Cl. 685 (1996) (providing an
overview of the political debates surrounding Alaska’s statehood). Additional legislation was
necessary to rectify claims to land.
The Alaska Native Claims Settlement Act (“ANCSA”), Pub. L. No. 92–203, 85 Stat. 668(1971) (codified as amended at 43 U.S.C. §§ 1601–1629f), sought to achieve “a fair and just
settlement of all claims by Natives and Native groups of Alaska, based on aboriginal land
claims.” 43 U.S.C. § 1601(a). In order to effectuate this, the ANCSA authorized the transfer to
Native Alaskans of 40 million acres of land and $962.5 million in direct payments and mineral
royalties. § 1602(j). 2 In exchange, all Native land claims in Alaska based on aboriginal
occupancy were permanently extinguished. See § 1603. The ANCSA did not convey land or
money directly to individual Alaskans but instead provided for distributions to be made to
corporations that reflected preexisting Native organizations. § 1603. Congress created Alaska
Native Corporations (“ANCs”) to manage and develop the assets rather than vesting assets in
existing tribal governments, a route taken with Indian Reservations in the lower forty-eight
states. See Indian Reorganization Act of 1934 (IRA), ch. 576, 48 Stat. 984 (codified as amended
at 25 U.S.C. § 461 et seq.).
The ANCSA mandated two tiers of ANCs. First, it mandated the incorporation of twelve
Alaska Native regional corporations. 43 U.S.C. §1606 (stating that “[f]or purposes of this
chapter, the State of Alaska shall be divided by the Secretary within one year after December 18,
1
The Court has gone over these facts at earlier stages of litigation. (Op. on Mot. to Dism. I, ECF
No. 36; Op. on Mot. to Dism. II, ECF No. 59). Those recitations are adopted here as well.
2
As the United States correctly points out, the claims in this case are not based upon Alaska
Land Transfer Acceleration Act of 2004 (43 U.S.C. § 1602(e)) or the ANCSA (43 U.S.C. §
1601, et seq.). (Def.’s Resp. at 10, ECF No. 88). Discussion of those statutes is strictly for
illustrative purposes and not for analysis of Cully’s claims.
2
1971, into twelve geographic regions, with each region composed as far as practicable of Natives
having a common heritage and sharing common interests.”). The second tier of ANCs were
“village corporations.” See § 1607. The Native residents of each native village were required to
organize as a for-profit business or nonprofit corporation under the laws of Alaska before the
Native village could receive patents to lands or benefits under ANCSA. § 1607. A village
corporation under ANCSA is “organized under the laws of the State of Alaska as a business for
profit or nonprofit corporation to hold, invest, manage and/or distribute lands, property, funds,
and other rights and assets for and on behalf of a Native village[.]” § 1602(j). The initial articles
of incorporation for each village corporation were subject to the approval of the Regional
Corporation for the region in which the village is located. § 1607. Each village corporation is
entitled to select an allotment of land in and around the village it serves. § 1611. Plaintiff in this
case, Cully, is one such village corporation.
B. Land at Point Lay and Lease with North Slope Borough
Cully is the village corporation for the Native Village of Point Lay. (Sec. Am. Compl. at
1; Pl.’s Mot. Ex. 3, ECF No. 81-3). Point Lay is not incorporated as a municipality under state
law; it is an unincorporated community in the Borough. Official Website of the North Slope
Borough, Point Lay, http://www.north-slope.org/our-communities/point-lay (last visited March
12, 2022). The Native Village of Point Lay is a federally recognized tribe within the Arctic Slope
Regional Corporation. Arctic Slope Native Association, Point Lay,
https://arcticslope.org/about/communities/point-lay/ (last visited April 12, 2022). It lays within
the remote Arctic on the Chukchi Sea in northwestern Alaska, about 180 miles southwest of the
community formerly known as Barrow, now renamed Utqiagvik. A. Himes-Cornell, et al.,
Community Profiles for North Pacific Fisheries – Alaska – Technical Memorandum NMFS-
AFSC-259, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, Nov. 2013, at 195, 199.
The coastal landscape in that area is characterized by bays and inlets, lagoons with barrier
islands, gravel and sandy shores, basins, shallow lakes, and deltas. Id. at 5. The largest coastal
lagoon system in Arctic Alaska which abuts the village hosts a large summer concentration of
beluga whale, walrus, seal, and Brant geese. Id. at 195. In many respects, Point Lay is a
subsistence community relying on the harvest of whales, caribou, waterfowl, fish, and formerly
seals, walrus, and polar bears. Id. at 207, 217–18.
Pursuant to a series of public land orders, the United States withdrew public lands in and
near Point Lay for military purposes. (Sec. Am. Compl. at 2). The site was previously used as a
Distant Early Warning (“DEW”) location, which is a network of radar and communication
installations in, among other places, Alaska; it lies immediately adjacent to the Native Village of
Point Lay. (Id.). Though the radar stations were deactivated in 1994, the site of the DEW facility
remained contaminated with hazardous material. (Id. at 3).
Since the 1980s, the Air Force and the NSB, the Alaskan municipal body for the North
Slope, have executed several agreements for the Borough’s use of facilities at Point Lay. In
1996, the Borough entered a 5-year lease for the airstrip at the DEW Site. (Sec. Am. Compl. at
2). In 2000, Cully formed an interagency planning group with NSB, the Air Force, the Bureau of
Land Management (“BLM”), the Federal Aviation Administration (“FAA”), and the Arctic
Slope Regional Native Corporation to discuss issues surrounding any potential land transfer and
airstrip improvements. (See Pl.’s Mot. Ex. 9 at 1). The NSB and Cully pursued funding through
3
the FAA for runway improvements at the Point Lay airstrip; per the Air Force, the FAA requires
a minimum 20-year lease of the property to a non-federal before authorizing funds for airfield
improvements. (Pl.’s Mot. Ex. 10 (2002 Letter from USAF Commander Chamberlain to Senator
Ted Stevens)).
On May 23, 2005, the Air Force and the NSB executed a renewed lease for 25 years,
beginning on November 1, 2004 and concluding on October 31, 2029. (Def.’s Mot. Appendix
(“A__) at 4 (Lease excerpt, ¶ 1.0), A42 (Cully Corp. v. AECOM, Inc., No. 2BA-13-00214 CI,
Alaska Super. Ct., Sept. 18, 2015) (AECOM Decision at 2)). The Lease encompasses thirteen
facilities, notably including the Vehicle Maintenance Shop (garage), Air Freight Terminal
(hangar), and Warehouse Supply and Equipment Base (warehouse), identified respectively as
buildings 2, 3, and 4 (collectively referred to here as “the Buildings”). (Def.’s Mot. A24 (Lease.
Exhibit A – Description of Premises); A42 (AECOM Decision at 2)). The Borough’s use of the
thirteen facilities includes storage, an emergency shelter, an administrative office, and a
workshop space. (Def.’s Mot. A6 (Lease, ¶ 6.0), A42 (AECOM Decision at 2)). In lieu of paying
rent, the NSB maintains and manages the property and premises, insures them, and provides
utilities, fire service, and police service. (Def.’s Mot. A5, A11–12, A15–16 (Lease, ¶ 4.1, ¶ 11, ¶
15, ¶ 18); A42 (AECOM Decision at 2)). The Borough is obligated to pay all property taxes on
the premises. (Def.’s Mot. A7 (Lease ¶ 8.0)). The lease authorized the Air Force to make
“outgrants” consisting of “uses, easements, and rights-of-way” to third parties so long as they did
not interfere with the Borough’s use. (Id.).
C. Remediation and Purported Transfer
In January 2005, Cully learned that the Air Force planned to demolish the Buildings as
part of a decontamination project. (Def.’s Mot. at 4; Sec. Am. Compl. at 4). With the ultimate
goal to take possession of those Buildings, Cully wished to maintain rather than demolish them
and learned that transfer would be dependent on the cleanup of the garage. (Sec. Am. Compl. at
4). Because the garage was under lease to the Borough, Cully needed an outgrant to begin
remediation efforts. (See id. at 5–6; Def.’s Mot. at 5). In March 2005, Air Force officials sought
funding to remediate the garage subfloor due to contamination. (Sec. Am. Compl. at 4). Cully
passed a resolution to support the lease from the Air Force to NSB in order to secure FAA
funding to upgrade the gravel airstrip. (Id. at 5). In its resolution for renovation of the runway,
Cully agreed that it would receive the site and reconvey the runway portion to the Borough for
operation of the airport. (Pl.’s Mot. Ex. 9, ECF No. 81-9).
Meanwhile, the Air Force sought to effectuate transfer of the buildings. On May 11,
2005, an email communication within the Air Force indicated that General Services
Administration (“GSA”) approved the donation of the buildings to Cully. (Pl.’s Mot. Ex. 22,
ECF No. 82-2). The email specifically stated that the Air Force was “able to get [GSA] to
approve the donation without going through [the GSA’s] usual process[,]” and indicated that
“[t]his is good to know for future facilities going to Native corporations, as well as the land.”
(Id.).
On June 21, 2005, the remedial project manager emailed Cully regarding a license to
begin remediation work, stating:
4
If you guys do sign the license, I feel strongly that we can make the building
transfer happen . . . unfortunately we can’t guarantee it. For example, it would
be against the law for us to ‘trade’ the labor involved in removing the soil for
the value of the building. [W]e are very motivated to give you the building.
(Pl.’s Mot. Ex. 23, ECF No. 82-3). On June 30, 2005, the project manager emailed Cully again,
stating: “. . . I’ve mentioned over the phone, any work done under the garage is being done at
Cully’s own risk. In other words, we can’t promise you the building as a result of the work you
do.” (Id.). On July 7, 2005, the Air Force sent a letter to Cully affirming that “[t]he decision to
cancel demolition as planned [was] contingent upon Cully Corporation signing the attached
license agreement with 611 ASG and Cully Corporation completing the soil removal activities,”
but it did not mention a property transfer. (Def.’s Mot. at 6). On July 21, 2005, the Air Force
granted Cully a license to enter the garage and decontaminate the soil therein. (Sec. Am. Compl.
at 6; Pl.’s Mot. Ex. 24, ECF No. 82-4).
Cully cites three documents as effectuating the transfer of property: (1) a Facility
Disposal Form; (2) Form DD-1354 “Transfer and Acceptance of Military Real Property”; and (3)
the Letter of Transfer. (Sec. Am. Compl. Exs. 3 (ECF No. 42-3), 4 (ECF No. 42-4), and 5 (ECF
No. 42-5)). Once remediation was complete and after communication between Cully and the Air
Force, on November 8, 2005, the Air Force issued a Facility Disposal form for the Buildings
which stated that “[t]he facilities are no longer utilized and are excess to [Air Force]
requirements, very poor condition and uneconomical to maintain. Recommend disposal by
donation.” (Id. Ex. 3). The value of each building was listed as “$0.00.” (Id.). This form
indicated that on November 8, 2005, the Facilities Board recommended approval of the plan to
donate the Buildings to Cully. (Id.).
On November 10, 2005, the Air Force issued Form DD-1354, entitled “Transfer And
Acceptance Of Military Real Property.” (Id. Ex. 4). This form stated that the Buildings were “to
be donated to Cully Corp ‘as is’ and ‘where is’” at a cost of “$0.00.” (Id.). On March 10, 2006,
the USAF sent Cully both the form DD-1354 and an unexecuted copy of the Transfer Letter
which purported to transfer the relevant Buildings to Cully pursuant to 41 C.F.R. § 102-75.990.
(Id. Ex. 5). On March 27, 2006, the letter was signed by Colonel Joseph Skaja on behalf of the
Air Force. (Id.).
Despite these forms purporting to transfer the Buildings to Cully, as well as the myriad
communications between the Air Force confirming that transfer was being effectuated, the
Buildings were never removed from the NSB Lease. (Def.’s Mot. A46 (AECOM Decision at 6),
A40 (March 6, 2013 letter), A55–58 (Laura Keiser Depo, Excerpt)). The Air Force failed to
notify Cully of its inaction. Years passed before this became problematic for Cully.
D. Third-Party Use of Buildings
The premises leased to the Borough were subject to existing “uses, easements, and rights-
of-way (‘outgrants’).” (Def.’s Mot. A4 (Lease ¶ 2.1)). As previously stated, the Lease authorizes
the Air Force (the Lessor) to make additional “outgrants,” provided such outgrants are not
“inconsistent with” the NSB’s “use of the [p]remises under [the] Lease.” (Def.’s Mot. A4 (Lease
¶ 2.1), A44-45 (AECOM Decision at 4-5)). Under that provision, in 2011, the Air Force awarded
5
a third-party, AECOM, Inc. (“AECOM”), a contract to remove a landfill located at Point Lay.
(Def.’s Mot. A42 (AECOM Decision at 2); Sec. Am. Compl. at 6). Incident to that project,
AECOM needed to store equipment during the winter months of 2012–2013. (Id.).
In October 2012, Vikki Gilmore, a realty specialist employed with the 611th Civil
Engineer Squadron of the Air Force, notified AECOM that it had permission to store heavy
equipment and hazardous waste in the hangar, which was still under Lease to the NSB. (Def.’s
Mot. A73–74, A75–78 (Gilmore Depo.), A42 (AECOM Decision at 2), A65 (Jan. 22, 2013
email)). After learning of this arrangement, Cully sent AECOM a letter objecting to the
contractor’s receipt of that permission, stating:
We understand that you were told that AECOM may store equipment at the
Point Lay facilities by Vickie Gilmore of the 611th [Civil Engineer Squadron
of the Air Force] and perhaps someone at the North Slope Borough.
We believe that Ms. Gilmore misspoke, and may not have been aware of the
fact that the Air Force in fact transferred ownership in 2006 of the facilities
at the Point Lay Airport, that is all three buildings, to Cully Corporation.
(Def.’s Mot. A48). In the same letter, Cully demanded payment of rent for use of the hangar.
(Id.). Cully has never received rent or lease payments for the three buildings. (Def.’s Mot. A50,
A54 (Awalin Depo.)).
On March 6, 2013, Air Force Colonel Robyn Burk sent Cully a letter that stated, in
relevant part:
The Air Force remains the owner of all lands and buildings at Point Lay
LRRS and the North Slope Borough has a leasehold interest in facilities 2, 3
and 4. A Letter of Transfer dated 27 March 2006 and signed by the 611th Air
Support Group Commander purported to transfer facilities 2, 3 and 4 to Cully
Corporation. That letter cites an authority for transfer of government property
to public bodies. As an Alaska for-profit corporation, Cully Corporation is
not a public body. The Air Force has therefore determined that the Letter of
Transfer was not authorized and is not effective.
(Def.’s Mot. A40). On April 17, 2013, Cully responded that the transfer letter was valid and
enforceable. (Sec. Am. Compl. Ex. 9). Faced with few options, litigation in state court ensued.
E. Cully Corporation v. AECOM Litigation
Once AECOM refused to pay rent or evacuate the hangar, Cully initiated litigation before
the Alaska Superior Court, Second Judicial District at Barrow, Case No. 2BA-13-00214 CI. (See
Def.’s Mot. A41 (AECOM Decision at 1)). There, Cully asserted claims for trespass and unjust
enrichment. After completion of discovery in 2014, AECOM and Cully filed cross-motions for
summary judgment. (Def.’s Mot A42 (AECOM Decision at 2)). On September 18, 2015, the
Alaska Superior Court granted judgment for AECOM. (Def.’s Mot. A41, A47 (AECOM
Decision at 1, 7)).
6
AECOM presented two arguments to the Alaska Superior Court. First, AECOM argued
that Cully lacked standing to sue because the March 6, 2006 Letter of Transfer was invalid;
AECOM also argued that Cully could not establish possession of the hangar because Cully’s
interest is subject to the NSB Lease. (Def.’s Mot. A43 (AECOM Decision at 3)). The Alaska
Superior Court declined to reach the first issue as to the validity of the Letter of Transfer,
deciding that issue would have required the appearance of the Air Force as an indispensable
party. (Id.). Instead, the court determined that AECOM’s second theory was dispositive, and
noted that, for purposes of the motion, “the Court assumes the Letter of Transfer was valid in
conveying the Air Force’s interest to Cully.” (Id. at n.17). The crux of the Alaska Superior
Court’s decision was “whether Cully’s interest is subject to the Lease, thereby precluding Cully
from having possession of the Hangar.” (Id.).
In deciding this question, the Alaska Superior Court interpreted the Lease using its plain
language. (Def.’s Mot. A44 (AECOM Decision at 4)). The court stated that, as a general rule of
property law, a lease confers the right of possession and that a “lessee has exclusive possession
and has legal control of leased property and premises.” (Id. at n.22 (citing Prudential Ins. Co. of
America v. United States, 801 F.2d 1295, 1299 (Fed. Cir. 1986)). The Alaska Superior Court
iterated that, “[o]nce a lessor has conveyed its present possessory interest to a lessee, the same
interest cannot be conveyed to a third party.” (Def.’s Mot. A44 (AECOM Decision at 4)).
Ultimately, the court concluded that pursuant to the Lease, the Air Force conferred exclusive
possession of the hangar to the NSB for twenty-five years. Because the same interest could not
also be conveyed to Cully, the court held that the Letter of Transfer, at most, conveyed a
reversionary interest to Cully that would be subject to the Lease. (Def.’s Mot. A45 (AECOM
Decision at 5)).
In reaching its conclusion, the court found that “no evidence has been offered showing
that the Air Force and Borough modified or amended the Lease.” (Def.’s Mot. A46 (AECOM
Decision at 6)). The Alaska Superior Court specifically concluded:
AECOM has established, as described above, that the Lease conveyed
possession of the Hangar to the Borough for a term of 25 years. The Lease
was executed and recorded over one year before the Letter of Transfer, which
Cully points to as giving it possession of the Hanger [sic]. Because Cully did
not have possession of the Hangar at the time of the alleged injury as a matter
of law, it cannot maintain its trespass claim. Cully’s claim of unjust
enrichment likewise requires possession and fails for the same reasons.
(Def.’s Mot. A47 (AECOM Decision at 7)). Harpooned by defeat and still hunting relief, Cully
brought its claims before this Court on March 5, 2019. (ECF No. 1).
F. Recission of 2013 Ouster Letter
This Opinion was originally issued on April 14, 2022. Since that time, the United States
has changed its position. On April 27, the United States filed the following notice:
Defendant . . . respectfully notifies the Court that on April 27, 2022, the
United States Air Force sent a letter to the President of Cully Corporation
7
(Cully), Ms. Martha Awalin, rescinding the March 6, 2013 letter from Air
Force Colonel Robyn Burk to Ms. Awalin (that, in turn, rescinded the March
27, 2006 Letter of Transfer). A copy of the April 27, 2022 letter was also sent
on the same day to plaintiff’s counsel and is attached as an exhibit to this
Notice. Because the March 6, 2013 letter serves as the basis of Cully’s Fifth
Amending [sic] takings claim against the United States, see ECF No. 42 ¶ 34
(2nd Amended Complaint), and consistent with this Court’s recent decision
on the matter, see ECF No. 122, the rescission of the March 6, 2013 letter
moots plaintiff’s takings claim.
(Recission Notice, ECF No. 137). 3 The referenced letter is signed by Colonel Paul S. Cornwell,
Commander of Pacific Air Forces Regional Support Center. (2022 Recission Letter, ECF No.
137-1). That letter states:
In the 6 March 2013 letter from Colonel Robyn M. Burk, Commander, 611th
Air Support Group to Martha Awalin, President/CEO, Cully Corporation,
concerning facilities 2, 3, and 4 at Point Lay Long Range Radar Site, the Air
Force determined that the 27 March 2006 Letter of Transfer was not
authorized and not effective. That 6 March 2013 determination is hereby
rescinded, and the letter of 6 March 2013 is hereby withdrawn. A copy of the
6 March 2013 letter, as well as the 27 March 2006 Letter of Transfer, are
enclosed.
(Id.). This recission recognizes the validity of the 2006 Letter of Transfer, a dramatic and
unilateral shift in the government’s legal position. The United States asserts this change was
spurred by the Court’s original Summary Judgment Opinion, (ECF No. 122), issued almost two
weeks earlier. The Court will consider the United States’ concession in its revised takings
analysis.
II. Discussion
Cully brings two causes of action against the United States, asserting (1) a Fifth
Amendment takings claim; and (2) a quantum meruit claim. (Sec. Am. Compl. at 9–11). Cully
bases its takings claim on the theory that Air Force transferred the buildings to it in March 2006
and, by ousting Cully from the property, the United States effected a taking without providing
just compensation as mandated by the Fifth Amendment to the Constitution. (Sec. Am. Compl. at
9–10). Concerning its quantum meruit claim, Cully contends that it reasonably relied on the
3
The Court notes the drastic change in the United States’ legal positions throughout the course
of this litigation, as they seem to be based on convenience rather than its actual stance. The
uncertainty it has caused has wasted a great deal of time and that has not gone unnoticed. For
example, many months after insisting that Cully acknowledge the United States’ authority for the
purported taking, the resulting opinion, and Second Amended Complaint, the United States now
“rescinds” the 2013 “ouster” letter and concedes it has no interest whatsoever in the property.
Any legitimate purpose underlying the United States’ maneuverings, when weighed against the
resulting delay and costs, are difficult to discern.
8
United States’ promises and assurances in remediating the soil and accepting the Buildings and
that the United States benefitted from Cully’s reliance. (Sec. Am. Compl. 10–11). Based on costs
associated with that remediation, Cully claims it is entitled, in quantum meruit, to monetary
relief for the benefits conferred on, and accepted by, the United States. (Id.).
Cully moves for summary judgment as to its takings claim. (See Pl.’s Mot.). The United
States cross-moves for summary judgment on both of Cully’s claims. It alleges that Cully’s
takings claim fails because Cully did not hold a cognizable title to the property and that its
quantum meruit claim must fail for the same reasons as an alternative claim. (See Def.’s Mot.).
The Court ultimately finds that Cully held a reversionary property interest in the Buildings and
that interest was temporarily taken by the United States. Whether that taking is compensable is a
different issue reserved for trial. Further, Cully’s quantum meruit claim is based on the
remediation of the soil, not an interest in the buildings; this is not adequately addressed in the
United States’ motion.
A. Standard of Review
The Court may grant summary judgment 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.” RCFC 56(a). The moving party bears the
initial burden to demonstrate the absence of any genuine issue of material fact. See Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986). Facts are material if they “might affect the outcome of the
suit.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine factual dispute
exists when “the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Id. A party seeking to establish a genuine dispute of material fact must “cit[e] to
particular parts of materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations [ ], admissions, interrogatory answers, or
other materials.” RCFC 56(c)(1)(A).
While “the inferences to be drawn from the underlying facts . . . must be viewed in the
light most favorable to the party opposing the motion,” United States v. Diebold, Inc., 369 U.S.
654, 655 (1962), summary judgment may still be granted when the party opposing the motion
submits evidence that “is merely colorable . . . or is not significantly probative.” Anderson, 477
U.S. at 251 (internal citation omitted). Courts may only grant summary judgment when “the
record taken as a whole could not lead a rational trier of fact to find for the non-moving party.”
Matsushita, Elec. Indus. Co., Ltd. v. United States, 475 U.S. 574, 587 (1986) (quoting First Nat.
Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
B. Takings Claim
i. Issue Preclusion
Because its final ruling is heavily dependent on the doctrine of issue preclusion, the Court
begins by analyzing whether Cully’s claims are limited by the prior decision of the Alaska
Superior Court. The United States argues that Cully is precluded from asserting ownership of the
Buildings based on the Alaska Superior Court’s decision in Cully Corp. v. AECOM. (Def.’s Mot.
at 14–18). Specifically, the United States cites the Alaska Superior Court’s statement that “the
9
Letter of Transfer, at most, conveyed a reversionary interest to Cully that is subject to the
Lease.” (Def.’s Mot. A45 (AECOM Decision at 5)). Cully counters that issue preclusion is
inapplicable in this case and maintains that the Alaska court’s order is not preclusive, but
evidentiary at best. (Pl.’s Resp. at 14, ECF No. 87). The Court finds that the elements of issue
preclusion do apply, therefore Cully’s claims cannot be based on the United States taking of a
possessory interest in the Buildings. However, because the Alaska Superior Court’s decision
could not extend to the validity of the transfer, both because it lacked jurisdiction to do so and
because the Air Force was not joined as an indispensable party, further analysis is required.
The doctrine of issue preclusion, or collateral estoppel, “protects the finality of judgments
by precluding relitigation in a second suit of claims actually litigated and determined in the first
suit.” Laguna Hermosa Corp. v. United States, 671 F.3d 1284, 1288 (Fed. Cir. 2012) (internal
quotations omitted). Issue preclusion “does not include any requirement that the claim (or cause
of action) in the first and second suits be the same. Rather, application of issue preclusion centers
around whether an issue of law or fact has been previously litigated.” In re Freeman, 30 F.3d
1459, 1465 (Fed. Cir. 1994). A party seeking to apply the doctrine of issue preclusion must
show: “(1) the previous determination was necessary to the decision; (2) the identical issue was
previously litigated; (3) the issue was actually decided in a decision that was final, valid, and on
the merits; and (4) the party being precluded from relitigating the issue was adequately
represented in the previous action.” United Access Techs., LLC v. Centurytel Broadband Servs.
LLC, 778 F.3d 1327, 1331 (Fed. Cir. 2015). “[T]he party asserting preclusion bears the burden of
showing with clarity and certainty what was determined by the prior judgment.” Id. (internal
citations and quotations omitted).
In this action, the United States argues that collateral estoppel bars re-litigation of
whether Cully has the right to possess the buildings. (Def.’s Mot. at 15). The state court did not
analyze whether the transfer from the Air Force was valid, nor could it. (Def.’s Mot. A43 (“[T]he
Court declines to address whether the Letter of Transfer is invalid.”)). It instead conducted its
analysis assuming that the transfer was valid, but still found that any interest Cully had was
subject to the NSB Lease, thereby preventing Cully’s possession of the hangar. 4 (Id.). The
Alaska Superior Court held that, pursuant to the plain language of the Lease, the Borough, not
Cully, had “exclusive possession” of the hangar for 25 years, and any authorization of future
outgrants had no effect on NSB’s possession. (Def.’s Mot. at A41–45 (AECOM Decision)). The
Alaska court also found that, even if valid, the Letter of Transfer did not modify or amend the
Lease. (Id. at 45–46 (AECOM Decision at 5–6)). The Alaska court granted judgment in favor of
AECOM because, without exclusive possession, Cully could not maintain its trespass claims. (Id.
at 47 (AECOM Decision at 7)).
Because possession of the hangar was germane to the Alaska state court’s decision to
grant judgment to AECOM, the previous determination is necessary for this decision. Further,
4
The Court recognizes that the only building at issue in the Alaska Superior Court case was the
hangar. Cully has not argued that the Alaska court’s decision cannot be extended to the other
buildings. However, should this Court reach a different conclusion regarding the warehouse or
garage, it could produce inequitable results that run counter to the state court ruling. Therefore,
the Court applies that finding to each of the three buildings.
10
though the ultimate claims of the cases are not identical, defining Cully’s interest in the
Buildings involves identical analysis in both cases. Thus, the Court finds that whether Cully had
a possessory interest in the Buildings was a previously litigated issue. The nature of Cully’s
property interest is vital in determining whether its takings claim is cognizable. As to whether the
state court’s decision was final, it indisputably was. When a court resolves a motion for summary
judgment it results in a judgment on the merits. See Kunkes v. United States, 78 F.3d 1549, 1550
n.2 (Fed. Cir. 1996) (“Unlike a Rule 12(b)(6) motion, a summary judgment motion does not
simply test the sufficiency of the complaint; it involves an examination of material outside the
complaint, and determines whether on the undisputed facts presented in that material, the movant
is entitled to judgment as a matter of law . . .. Accordingly, for purposes of the appeal we treat
the matter not as a dismissal but as an entry of judgment . . ..”); Indium Corp. of Am. v. Semi–
Alloys, Inc., 781 F.2d 879, 883 (Fed. Cir. 1985) (noting that a motion for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure “seeks a judgment on the merits of a
case”). At this point, the Alaska court’s judgment is final, valid, and on the merits. Finally,
because Cully is the named Plaintiff in both cases, the Court finds that Cully’s interests were
adequately represented in the previous action. The United States has therefore met its burden to
show, with clarity and certainty, that Cully’s possessory property interest was adjudicated by the
Alaska court’s judgment.
Despite the United States’ contention, though, the Alaska court’s holding does not mean
that Cully does not have any property interest whatsoever. (See Def.’s Mot. at 15). In fact, that
opinion clearly states that the Letter of Transfer may have conveyed a reversionary property
interest. (Def.’s Mot. A45 (AECOM Decision at 5)). The Alaska Superior Court has merely
determined the ceiling of Cully’s possible interests, but the floor is an issue reserved for this
Court. Whether Cully possesses a reversionary interest and whether that interest is cognizable for
the purposes of a takings claim must be further analyzed.
ii. Statute of Limitations
The Court previously decided at the Motion to Dismiss stage that Cully’s takings claim
was not barred by the statute of limitations. (Sec. Op. Denying Mot. to Dism., ECF No. 59). That
said, the United States renews its argument at this stage based on evidence revealed in discovery
that it believes gives rise to earlier accrual of the statute of limitations. The United States argues
that the takings claim is time-barred because it began to accrue when Cully was made aware of
AECOM’s presence in the hanger, more than six years before the date on which this suit was
filed. (Def.’s Mot. at 6). Cully asserts that it was effectively ousted from the garage, hangar, and
warehouse by the letter of March 6, 2013, because that letter insisted that the transfer of the
buildings to Cully was void or that, alternatively, Cully lacked exclusive possession. (Pl.’s Mot.
at 39). Thus, Cully responds that the claim would not have accrued until the Government put
Cully on notice on March 6, 2013, and that this suit, instituted on March 5, 2019, is thus timely.
(Id.). Again, the Court agrees with Cully.
A plaintiff has six years to file a claim over which the Court of Federal Claims has
jurisdiction, or else the claim is barred by the statute of limitations. 28 U.S.C. § 2501. The six-
year statute of limitations is jurisdictional and is not subject to equitable tolling. John R. Sand &
Gravel Co. v. United States, 552 U.S. 130, 136–39 (2008). The burden of establishing subject
matter jurisdiction rests with the plaintiff, who must do so by a preponderance of the evidence.
11
Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); Reynolds v. Army & Air Force Exch.
Serv., 846 F.2d 746, 748 (Fed. Cir. 1988).
Physical taking claims “accrue[] when the scope of what is taken is fixed . . . and the
plaintiff knew or should have known of the acts that fixed the government’s alleged
liability.” Katzin v. United States, 908 F.3d 1350, 1358 (Fed. Cir. 2018). Stated differently,
accrual begins “when all the events have occurred which fix the liability of the Government and
entitle the claimant to institute an action.” FloorPro, Inc. v. United States, 680 F.3d 1377, 1380
(Fed. Cir. 2012). In Peterson v. United States, the Court held that the cause of action for a taking
accrued not when an agreement between the government and a third party was reached, but when
the government’s conduct seemed to renounce that agreement. 140 Fed. Cl. 1, 9 (2018); see also
Langenegger v. United States, 756 F.2d 1565, 1571 (Fed. Cir. 1985) (“When considering a
possible taking, the focus is not on the acts of others, but on whether sufficient direct and
substantial United States involvement exists.”) (emphasis removed).
The United States’ successful argument regarding issue preclusion creates a paradox
impeding the success of its statute of limitations argument. In considering when the statute of
limitations would begin to run, the Court must determine when Cully’s possible claims accrued.
Because of the Alaska state court’s ruling that AECOM did not interfere with Cully’s property
rights, Cully’s claims could not have accrued until the United States interfered with its remaining
possible interest. Stated differently, as the Alaska court held, and as this Court follows,
AECOM’s presence in the hangar did not interfere with Cully’s rights, thus Cully’s knowledge of
AECOM’s presence could not give rise to Cully’s claims. Assuming Cully’s claim is cognizable,
it was not until the United States’ direct interference with Cully’s future, reversionary rights that
Cully’s claims began to accrue. As the Court previously held, using the date of that letter as a
marker means that Cully’s claims did not begin to accrue until at least March 6, 2013. (See Pl.’s
Mot. Ex. 46). Cully’s original complaint was filed on March 5, 2019, 5 years and 364 days after
the date of that letter. Therefore, Cully’s takings claim is not barred by the statute of limitations.
iii. Validity of Transfer
The United States’ letter informing Cully that transfer of the buildings was not valid
precipitated Cully’s claims before this Court. The United States argues here that, because
transfer was not valid, a taking could not have occurred. The United States contends that “Cully
is not a ‘public body’ within the meaning of applicable regulation, which means that no valid
transfer of the property could occur.” (Def.’s Resp. at 4, 12). Cully counters that, by virtue of
being an Alaskan Native Corporation, it is necessarily a public body. (Pl.’s Reply at 26, ECF No.
93). To make that determination, the Court must analyze relevant regulations and statutory
schemes that allow the United States to donate property.
The starting point for interpreting a statute is the language of the statute itself. Consumer
Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). “Absent a clearly
expressed legislative intention to the contrary, that language must ordinarily be regarded as
conclusive.” Id. “To ascertain whether Congress had an intention on the precise question at issue,
[Courts] employ the ‘traditional tools of statutory construction.’” Timex V.I., Inc. v. United
States, 157 F.3d 879, 882 (Fed. Cir. 1998). When interpreting a statute or regulation, the Court
starts with its plain language. Barela v. Shinseki, 584 F.3d 1379, 1382–83 (Fed. Cir. 2009)
12
(citation omitted). That language is not interpreted in a vacuum and the Court “must consider not
only the bare meaning of each word but also the placement and purpose of the language within
the statutory scheme.” Id. at 1383 (citation omitted). A statute’s meaning, regardless of whether
the language is plain or not, depends on the context. Id. (citation omitted). While the Court may
look to context to understand the meaning of a statute, it does not look beyond “the language and
design of the statute as a whole.” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988).
In this case, whether transfer of the Buildings was valid depends on whether Cully is a
“public body” for purposes of the Federal Regulations governing the transfer or donation of real
property. The Court begins by addressing the legal status of Alaska Native regional and village
corporations, as they are uniquely situated in the law. In its past cases “address[ing] the unique
circumstances of Alaska and its indigenous population,” the Supreme Court has repeatedly
recognized “[t]he ‘simple truth’ . . . is that ‘Alaska is often the exception, not the rule.’” Yellen v.
Confederated Tribes of Chehalis Rsrv., 141 S.Ct. 2434, 2438 (2021) (quoting Sturgeon v. Frost,
577 U.S. at 440).
Attributing to their distinct status, ANCs must meet various requirements. The ANCSA
and its implementing regulations require village corporations to have “on April 1, 1970, an
identifiable physical location evidenced by occupancy consistent with the Natives’ own cultural
patterns and life style . . .; [t]he Village must not be modern and urban in character; and . . . [i]n
the case of unlisted Villages, a majority of the residents must be Native . . ..” 43 C.F.R. §
2651.2(b)(2), (3) & (4). For many legal purposes, Alaskan villages are primarily treated as Indian
tribes. The Supreme Court has long held that statutes should be construed liberally in favor of
Indian tribes, with ambiguous provisions interpreted to their benefit. McClanahan v. Arizona
State Tax Comm’n, 411 U.S. 164 (1973); Choate v. Trapp, 224 U.S. 665, 675 (1912). The Indian
Self-Determination and Education Assistance Act (“ISDA”) defines an “Indian tribe” as
[1] any Indian tribe, band, nation, or other organized group or community,
[2] including any Alaska Native village or regional or village corporation as
defined in or established pursuant to the Alaska Native Claims Settlement
Act (85 Stat. 688), [3] which is recognized as eligible for the special programs
and services provided by the United States to Indians because of their status
as Indians.
25 U.S.C. § 5304(e).
ANCs, such as Cully, are for-profit corporations incorporated under Alaska state law that
Congress created just four years before ISDA. Yellen v. Confederated Tribes of Chehalis Rsrv.,
141 S. Ct. at 2449. “They are not at all the type of entities normally considered for a
government-to-government relationship with the United States.” Id. citing 25 C.F.R § 83.4
(1994) (“The Department will not acknowledge,” i.e., federally recognize, “[a]n association,
organization, corporation, or entity of any character formed in recent times unless the entity has
only changed form by recently incorporating or otherwise formalizing its existing politically
autonomous community”). The United States does not contest that Cully, as an Alaska village
corporation, is an ANC and, therefore, an “Indian tribe,” under the holding in Yellen. (Def.’s
Resp. at 14, citing 141 S. Ct. at 2438). Instead, the United States maintains that the regulations
allowing the donation of real property do not provide for Indian Tribes, thereby also excluding
13
ANCs. This argument would require the Court to ignore distinct differences between ANCs and
Indian tribes.
Turning to the regulations at issue, federal agencies may transfer or donate property
under 41 C.F.R. § 102-75.990. 5 Pursuant to that regulation:
[A]ny Federal agency having control of real property that has no commercial
value or for which the estimated cost of continued care and handling exceeds
the estimated proceeds from its sale, may—
(a) Abandon or destroy Government-owned improvements and related
personal property located on privately-owned land;
(b) Destroy Government-owned improvements and related personal property
located on Government-owned land (abandonment of such property is not
authorized); or
(c) Donate to public bodies any Government-owned real property (land
and/or improvements and related personal property), or interests therein
41 C.F.R. § 102-75.990.
As it relates to the transfer of real property, the term “public body” is further defined to
mean “any State of the United States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, or any political subdivision, agency, or instrumentality of the
foregoing.” 41 C.F.R. § 102-71.20. This is in contrast with the subchapter related to donating
personal property, which defines a “public body” as “any department, agency, special purpose
district, or other instrumentality of a State or local government; any Indian tribe; or any agency
of the Federal Government.” 41 C.F.R. § 102-37.560 (emphasis added).
The Supreme Court has observed that “[w]here Congress includes particular language in
one section of a statute but omits it in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Russello
v. United States, 464 U.S. 16, 23 (1983) (cleaned up); see also Heino v. Shinseki, 683 F.3d 1372,
1379 (Fed. Cir. 2012) (endorsing the Russello principle). When the same term is defined and
used differently in the same title, the Court assumes that it is intentional and considers the
purpose of the eliminated language and which definition is broader. A basic reading of the two
definitions would indicate an intention for states, and instrumentalities thereof, to have more
direct control over the real property located in its bounds. In contrast, the regulation governing
personal property indicates that transfer is limited to smaller, similarly situated groups; it limits
donations to those instrumentalities and specific groups rather than generally to states.
5
There is no argument or evidence that the implementing agency has interpreted the language at
issue in this regulation. Therefore the Court has no reason to consider deference under Chevron
U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).
14
As the United States points out, the Supreme Court has held that Indian tribes are
“distinct, independent political communities, retaining their own natural rights.” See Worcester
v. State of Georgia, 31 U.S. 515, 559 (1832); see also Montana v. United States, 450 U.S. 1245,
566 (1981) (Indian tribes retain inherent, sovereign power). Thus, as the United States claims, it
is in this sense that Cully, as a sovereign “Indian tribe,” does not meet the definition of a public
body under the regulations. (Def.’s Resp. at 17). Although ANCs classify as Indian tribes in
many provisions of the law, the United States fails to recognize that there are significant
differences between ANCs and Indian tribes within the lower 48 states.
Indian tribes are sovereign entities and federal law limits the applicability of state and
local law to tribal Indians on reservations. Indian tribes cannot be considered public bodies by
virtue of that sovereignty. See Charles F. Wilkinson & John M. Volkman, Judicial Review of
Indian Treaty Abrogation: “As Long as Water Flows, or Grass Grows Upon the Earth”–How
Long a Time Is That?, 63 Calif. L. Rev. 601, 604-05 (1975) ( “[R]eservations are sanctuaries
where land is not subject to taxation; where individual Indians are free of most taxes; where
many state laws do not apply; and where Indian customs and traditions are supreme.”). It is not
lost on the Court though that ANCSA ended many of the powers and protections that American
Indian Tribal Corporations otherwise enjoy. In Alaska v. Native Village of Venetie Tribal
Government, the Supreme Court ruled that land held by Alaska Native Corporations no longer
possessed the protections of “Indian country,” since the lands were neither a federal set-aside nor
were they under federal superintendence like Indian reservations. 522 U.S. 520, 532 (1998).
Further, the corporations have specific procedures to follow as provided by ANCSA, but they are
also incorporated under State of Alaska law and must follow state corporation law. See 43 U.S.C.
§ 1607(a); see also, AS 10.06.960-.961 (providing that corporations organized under ANCSA are
subject to corporation’s code provisions, with specified overriding exceptions). While the
ANCSA approach is not without benefit, Alaska Native tribes lost powers of sovereignty in
exchange for clear title land. This stark difference was lightly mentioned in Yellen v.
Confederated Tribes of Chehalis Reservation, where the Supreme Court held that, while ANCs
are not federally recognized tribes in a sovereign political sense, ANCs are Indian tribes under
the plain definition in ISDA. 141 S. Ct. at 2449. It is that stark difference in “sovereignty” that
distinguishes ANCs and Indian Tribes.
Acknowledging that ANCs are Indian tribes, the Court turns back to whether Cully could
classify as a public body. There is only one category an ANC could fit into under the relevant
regulations—the key question is whether ANCs classify as “political subdivisions.” 6 The term is
not defined in the relevant regulations governing the donation of real property (41 C.F.R. § 102-
6
The Court acknowledges that this is not an argument raised by either party. However, courts are
not bound to accept the parties’ legal theories as to questions of law, particularly in statutory and
regulatory interpretation. See United States v. Trek Leather, Inc., 767 F.3d 1288, 1300 (Fed. Cir.
2014) (finding that in analyzing statutory language, the court “is not limited to the particular
legal theories advanced by the parties, but rather retains the independent power to identify and
apply the proper construction of governing law.”) (citing Kamen v. Kemper Fin. Servs., Inc., 500
U.S. 90, 99 (1991)).
15
71.20) or personal property (41 C.F.R. § 102-37.560). Therefore, the Court looks to several
sources, including dictionary definitions and Congress’s definition of “political subdivision” in
other statutory schemes. A political subdivision is “[a] division of a state that exists primarily to
discharge some functions of local government.” Black’s Law Dictionary, 10th Ed. at 1346. In
other statutory schemes, Congress has defined “political subdivision” to mean virtually any local
political jurisdiction immediately below the State level of government—some including city,
town, borough, county, parish, district, association, or similar government entity. See e.g., 33
U.S.C. § 701n; 43 U.S.C. § 1356a; 42 U.S.C. § 247b-21; 12 C.F.R. § 160.42; 49 C.F.R. §
110.20.
As stated, ANCs are different. They are not municipalities in themselves and operate
quite differently. For instance, ANCs have boards of directors and shareholders. 43 U.S.C. §§
1606(f)–(h), 1607(c). The initial ANC shareholders were exclusively Alaska Natives; each
Native received one hundred shares of the regional and village corporation operating where they
lived. §§ 1606(g)(1)(A), 1607(c). Regional ANCs may provide “health, education, or welfare”
benefits to Native shareholders and to shareholders’ family members who are Natives or Native
descendants, without regard to share ownership. § 1606(r). However, under ANCSA, native
villages are defined to include “any tribe, band, clan, group, village, community, or association
in Alaska” either listed by name or determined by the Secretary of Interior to have met certain
requirements. § 1602(c) (emphasis added). Though ANCs operate as corporations in form, they
ostensibly appear as a local government on their face.
Because the Court does not interpret statutes and regulations in a vacuum, the Court
looks to other relevant regulations in the same title. Importantly, under 41 C.F.R. § 102-75.945,
the GSA’s policy is to “[p]lace excess and surplus real property in productive use through
interim utilization, provided, that such temporary use and occupancy do not interfere with, delay,
or impede its transfer to a Federal agency or disposal.” If the Court were to adopt the United
States’ limited definition of “public body,” the resulting decision would run counter to that broad
policy proclamation and limit the powers of donation. That is an impractical result.
The United States seems to take the extreme position that ANCs and Indian Tribes are
unable to receive donated, excessed real property in any scenario. Other legal provisions show
that this is simply incorrect. For instance,
In connection with any compact or funding agreement executed pursuant to
this subchapter or an agreement negotiated under the Tribal Self-Governance
Demonstration Project . . ., upon the request of an Indian tribe, the Secretary
. . . may donate to an Indian tribe title to any personal or real property found
to be excess to the needs of any agency of the Department, or the General
Services Administration.”
25 U.S.C. § 5392. If Congress intended to exclude Indian tribes from receiving real property
donations, it would not grant the Secretary of Health and Human Services the ability to donate
property deemed excess by the General Services Administration. (See Pl.’s Mot. Ex. 22 (email
from GSA representative determining the buildings were excess and could be donated to Cully)).
The Court therefore finds that, for the purposes of 41 C.F.R. § 102-71.20, ANCs qualify as
“political subdivisions,” and thus, public bodies under the governing regulations. The Transfer
16
documents are therefore valid to the extent a reversionary interest was transferred. The Court
will further analyze what that means in relation to the NSB lease and Alaska state court’s ruling.
iv. Takings Analysis
The parties both move for summary judgment on Cully’s takings claim. Cully argues
that, because the transfer documents were valid and they were subsequently ousted, it is therefore
entitled to just compensation. (Pl.’s Mot. at 28–36). The United States argues, on the other hand,
that even assuming that the Court were to find the validity of transfer, ultimately it does not
matter because Cully’s property interests are not cognizable and any claim for taking is not ripe.
(Def.’s Reply at 8–15, ECF No. 94). This position is starkly untenable given in the nearly the
same breath the United States complains that Cully waited too long to assert its takings claim.
The Court finds that Cully has shown a reversionary interest in the Buildings and that the United
States committed a temporary taking of that interest.
The Fifth Amendment of the United States Constitution places an important limit on the
government's power to take private property. Preseault v. I.C.C., 494 U.S. 1, 11 (1990). As a
bedrock principle of the United States Constitution, it mandates that private property shall not
“be taken for public use, without just compensation.” U.S. Const. Amend. V. Courts analyze
claims under the Fifth Amendment by determining whether a cognizable property interest exists,
and, if one does, “whether the government's action amounted to a compensable taking of that
interest.” Casitas Mun. Water Dist. v. United States, 708 F.3d 1340, 1348 (Fed. Cir. 2013). A
compensable taking occurs “when government action destroys state-defined property rights.”
Ladd v. United States, 630 F.3dd 1015, 1019 (Fed. Cir. 2010).
The Court employs a two-part test to determine when a government action constitutes a
taking. See Hearts Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326, 1329 (Fed. Cir.
2021) (citing Acceptance Ins. Co. v. United States, 583 F.3d 849, 854 (Fed. Cir. 2002), Am.
Pelagic Fishing Co. v. United States, 379 F.3d 1363, 1372 (Fed. Cir. 2004)). Under the first step,
the Court “determines whether the claimant has identified a cognizable Fifth Amendment
property interest that is asserted to be the subject of the taking.” See Acceptance Ins., 583 F.3d
854. This step is a “threshold” matter, for if a claimant fails to demonstrate the existence of a
legally cognizable property interest, the Court’s task is at an end. See Am. Pelagic Fishing, 379
F.3d at 1373. Only when the first step is satisfied does the court determine whether that property
interest was “taken.” Id. at 1372. The plaintiff bears the burden of establishing a cognizable
property interest for its takings claim. See Klamath Irrigation Dist. v. United States, 635 F.3d
505, 519 n.12 (Fed. Cir. 2011).
The Court of Federal Claims has recognized reversionary interests as being compensable
under federal statutory schemes. For instance, a Fifth Amendment taking occurs in a “rails to
trails” case when the issuance of a certificate or notice of interim trail use authorizing
recreational trail use effectively extinguishes the state property rights of reversion of the right-of-
way to the fee owner. Butler v. United States, 139 Fed. Cl. 617, 622 (2018) (citing Macy
Elevator, Inc. v. United States, 97 Fed. Cl. 708, 718 (2011)); see also Caldwell v. United States,
391 F.3d 1226, 1228 (Fed. Cir. 2004) (“[A] Fifth Amendment taking occurs when, pursuant to
the Trails Act, state law reversionary interests are effectively eliminated in connection with a
conversion of a railroad right-of-way to trail use.” (citation omitted)). In instances such as these
17
though, state law determines whether a plaintiff in a takings case has a compensable private
property interest. See Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972); Preseault, 494 U.S. at 24(O’Connor, J., concurring).
There are no Alaska cases mirroring Cully’s unique situation. Even so, looking to local
eminent domain laws is particularly telling. Under Alaskan law, “if the court determines that the
property is to be taken for a public use, and if all parties to the action do not object, the court
shall appoint a master to determine the amount to be paid by the plaintiffs to each owner or other
person interested in the property as compensation and damages by reason of the appropriation of
the property.” Alaska Stat. § 09.55.300 (emphasis added). This language clearly contemplates
multiple interests in a property and does not explicitly limit compensation only available to those
with possessory interests.
It is a well-founded tenet of property law that, when determining whether a property
interest is a compensable one, courts determine whether the asserted property right is “one of the
sticks in the bundle of rights that inhered in ownership of the underlying res.” Am. Pelagic
Fishing, 379 F.3d at 1381–82 (holding that because the right to use a fishing vessel in an
exclusive economic zone in the Atlantic was not inherent in the appellant’s ownership of the
vessel, the appellant did not suffer the loss of a property interest when its fishing permit was
revoked). The Alaska Supreme Court has recognized reversionary interests as being a stick in the
bundle of property rights. In Ethelbah v. Walker, the court held that, in reference to the “bundle
of property rights,” it was not an abuse of discretion for the court to order that the rights to a
party’s pension benefits revert to a spouse. 225 P.3d 1082, 1095 (Alaska 2009).
Though case law and state-law analysis as to Alaska’s position here are admittedly scant,
there is a clear indication that reversionary interests are compensable under Alaskan law.
Considering this and having found that transfer of the Buildings was valid to the extent a
reversionary interest was transferred, Cully has established it owned cognizable property
interests in the buildings and therefore survives the first prong of the analysis.
The Court turns to the second prong of the analysis. “[I]f the court concludes that a
cognizable property interest exists, it determines whether that property interest was ‘taken.’”
Acceptance Ins. Cos., Inc. v. United States, 583 F.3d at 854 (citations omitted). “Whether a [Fifth
Amendment] taking has occurred is a question of law based on factual underpinnings.” Caquelin
v. United States, 959 F.3d 1360, 1366 (Fed. Cir. 2020). With the Court’s finding that transfer
was valid to the extent it grants a reversionary interest, the 2013 ouster letter is rendered
baseless.
This rendering was the alleged catalyst for the United States’ recission of the 2013 ouster
letter. On May 5, 2022, the United States explained the purpose of the 2022 Recission Letter:
[T]he sole purpose of issuing that letter is that in the Court’s . . . April 14th
opinion, the Court posed the question whether the United States plans to
continue with the ouster should the buildings revert to Cully. So in other
words—and elsewhere in the opinion the Court refers to a future taking. The
purpose was to reassure the Court and the parties as to any prospective—in
other words, it’s our understanding that when the lease expires, those
18
buildings, via letter of transfer, will revert to Cully. And the 2022 letter from
Colonel Cornwell offers that reassurance.
(Transcript of May 5, 2022 Status Conference (“Cully 5/5/22 Tr.”) at 21:19–22:6, ECF No. 147).
As the United States correctly points out, there can be no case or controversy over an
uncertain “future taking.” See Nw. LA Fish & Game Pres. Comm’n v. United States, 446 F.3d
1285, 1291 (Fed. Cir. 2006) (holding that a possible future taking of property cannot give rise to
a present action for damages). With the United States’ recission of the 2013 letter contesting
Cully’s interest, Cully no longer possesses a viable permanent takings claim. Any interference in
the future would be a claim separate and apart from this one. But this finding does not end the
Court’s analysis. 7 The United States 2022 Recission Letter leaves only one question before the
Court—whether a temporary taking occurred. It has.
“To rise to the level of a taking, . . . interference [with plaintiff’s property rights] must be
‘so complete as to deprive the owner of all or most of his interest in the subject matter.’” Nat’l
Food & Beverage Co., Inc. v. United States, 105 Fed. Cl. 679, 695 (2012) (quoting R.J. Widen
Co. v. United States, 357 F.2d 988, 993 (Ct. Cl. 1966)). This is true even when the taking has
been short or temporary in nature. Although there has been some confusion over the use of the
terms “temporary” and “permanent” in the takings context, courts recognize both types of
physical takings. The United States mischaracterizes the implications of a reversionary interest.
Though it is correct that a possible future taking of property cannot give rise to a present action
for damages, that edict is inapplicable. Here, the claimed harm is not a possible future taking but
instead a certain past taking. The 2022 Recission Letter limits Cully’s viable claim to that of a
temporary, past taking.
The United States explains that its position is that “any taking of Cully’s reversionary
interest can only happen in the future and has not happened, and it’s not [ripe].” (Cully 5/5/22 Tr.
at 22:21–24). That assertion—that a taking of a reversionary interest could not happen until the
future—is incorrect. Though reversions are generally regarded as future interests, they vest
existing, nonpossessory estates. Restatement (First) of Property § 153 (1936) (quoting Squantum
Gardens, Inc. v. Assessors of Quincy, 335 Mass. 440, 140 N.E.2d 482 (1957)). 8 That does not
mean that a reversionary interest can only be taken in a future sense. A material interference with
the existing estate also constitutes a taking. As the Federal Circuit has noted, “a taking occurs
when the owner is deprived of use of the property,” even if the government later abandons its
7
A case is not rendered moot solely because it may be “unreasonable to expect that the alleged
violation will recur.” Square One Armoring Serv., Inc. v. United States, 123 Fed. Cl. 309, 324
(2015) (citing Los Angeles Cnty. v. Davis, 440 U.S. 625, 631 (1979)). Instead, for the case to
become moot, “interim relief or events” must have also “completely and irrevocably eradicated
the effects of the alleged violation.” Id.; see also Savantage Fin. Servs. v. United States, 188 Fed.
Cl. 487, 490 (“[A] case will not be rendered moot by subsequent acts if some of the requested
relief remains available.”) (citing Intrepid v. Pollock, 907 F.2d 1125, 1131 (Fed. Cir. 1990)).
8
Beyond the determination that a reversionary interest exists, the specifics of Cully’s interest
and its rights and obligations arising therefrom are not within the jurisdiction of this Court.
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permanent taking—i.e., abandons the ultimate act of physical ouster from the property after the
reversionary right has vested. Ladd v. United States, 630 F.3d 1015, 1025 (Fed. Cir. 2010) (citing
Caldwell v. United States, 391 F.3d 1226, 1235 (Fed. Cir. 2004).
Here, the United States, after having admittedly transferred a valid, reversionary interest
to Cully, substantially interfered with those accompanying rights. (See Def.’s Mot. A40, ECF
No. 83). It is not a physical ouster that led to the taking. Though a possessory estate had not yet
vested, the March 6, 2013 assertion, despite the Air Force’s belief at the time, acted to cloud and
forestall Cully’s interest. That cloud acted as a complete deprivation of Cully’s reversionary
interest in the buildings. Because the cloud has since lifted, the taking is temporary. “[F]or all
that the [g]overnment takes it must pay.” In re Upstream Addicks & Barker (Texas) Flood-
Control Reservoirs, No. 17-9001L, 2022 WL 1284465, at *14 (Fed. Cl. Apr. 29, 2022) (quoting
United States v. Dickinson, 331 U.S. 745, 750 (1947)).
Physical takings are compensable, even when temporary. Ladd, 630 F.3d at 1025 (citing
Hendler v. United States, 952 F.2d 1364, 1376 (Fed. Cir. 1991)). The duration of a physical
taking pertains not only to the issue of whether a taking has occurred, but also to the
determination of just compensation. Otay Mesa Prop., L.P. v. United States, 670 F.3d 1358,
1364 (Fed. Cir. 2012). A temporary taking of a reversionary interest, though attenuated, has the
potential to cast a long shadow. As the United States conceded at the May 5, 2022 Status
Conference, without government interference, Cully could have sold its interest at any point
between the Letter of Transfer in 2006 and the 2022 Recission Letter. When asked if Cully could
have sold its reversionary interest, the United States asserted that, “[o]ne of the indices of
possession or ownership of an interest, yeah, I . . . think they could.” (Cully 5/5/2022 Tr. at 30:6–
8). Further, in many instances, a party or corporation may borrow against a reversionary interest
and record that interest as a corporate asset in its financial statements. Relatedly, depreciation of
that corporate asset may reduce corporate tax liability. Conceivably, when the United States told
Cully it had no interest in the properties because they were not effectively transferred, it
foreclosed Cully from pursuing those avenues.
Although the Court has referred to the 2013 Letter as an “ouster letter” and used that
ouster as a benchmark for timeline purposes, the temporary taking stems from encumbering
Cully’s interests, not the physical ouster. The United States outwardly told Cully that the transfer
was invalid and that Cully had no interest whatsoever in the buildings going forward. This
constitutes a complete deprivation of Cully’s rights to the property—Cully was foreclosed from
selling the buildings, from claiming them as assets, from borrowing against its reversionary
interests, etc. Though the Air Force had no authority to do so, physical expulsion from the
building based on this mistaken position is not compensable since Cully did not have a
possessory interest.
Second, the Court must analyze whether Cully has incurred actual damages. Not all
losses suffered by the owner are compensable under the Fifth Amendment. U.S. ex rel.
Tennessee Valley Auth. v. Powelson, 319 U.S. 266, 281 (1943). Based on the record before it,
trial is necessary to determine whether the temporary taking in this case is compensable. Once a
taking has been classified as either temporary or permanent, the Court applies the appropriate
method of determining just compensation. Otay Mesa, 670 F.3d at 1364. For instance, the usual
measure of just compensation for a temporary taking is the “fair rental value of the property for
20
the period of the taking.” Id. (citing Kimball Laundry Co. v. United States, 338 U.S. 1, 7 (1949)).
However, when considering a reversionary interest, that method is inapplicable. The Federal
Circuit has held that traditional compensation methods are not exclusive; for example, there may
be appropriate alternative valuation methods for the taking of an easement. See Vaizburd v.
United States, 384 F.3d 1278, 1285–87 (Fed. Cir. 2004). It remains to be seen what actual
damages Cully can prove, if any, as a result of the temporary taking, but the Court will not
foreclose that proof at this juncture. The only outstanding issue as to this temporary taking is
what damages, if any, Cully can prove regarding the United States’ interference with Cully’s use
of its reversionary interest. Cully’s Partial Motion for Summary Judgment is granted-in-part.
C. Quantum meruit
Cully pleads that it is entitled to compensation on a theory of quantum meruit. (Sec. Am.
Compl. at 10–11). In support, Cully argues that it performed remediation of the contaminated
soil and accepted the Buildings in good faith and reasonable reliance on the promises,
assurances, Transfer Letter, DD-1354, and Facilities Disposal Form of the government. (Id.).
Based on that reliance, Cully claims that it incurred costs and conferred significant benefits to the
United States, including relieving the government of costs that it would have otherwise incurred
in demolishing the Buildings. (Id. at 11). The United States moves for judgment on this claim.
Citing the preclusive effect of the Lease to the Borough and the Alaska Superior Court’s holding,
the United States argues that Cully’s claim to damages on the quantum meruit claim is limited.
(Def.’s Mot. at 18–19). 9 However, the United States does not elaborate on that argument. The
Court denies summary judgment on those grounds.
“Quantum meruit is a ‘claim or right of action for the reasonable value of services
rendered.’” United Pac. Ins. Co. v. United States, 464 F.3d 1325, 1329 (Fed. Cir. 2006) (quoting
Black's Law Dictionary 1276 (8th ed. 2004)). The Federal Circuit distinguishes two types of
quantum meruit claims: implied-in-law and implied-in-fact. See Int’l Data Prods. Corp. v.
United States, 492 F.3d 1317, 1325 (Fed. Cir. 2007). The Court of Federal Claims lacks
jurisdiction over contracts implied in law. 28 U.S.C. § 1491(a)(1). Where a benefit has been
conferred by the contractor on the government in the form of accepted goods or services, a
contractor may recover on a quantum meruit basis for the value of the conforming goods or
services received by the government prior to the rescission of the contract for invalidity. Int’l
Data Prods. Corp., 492 F.3d at 1325–26 (citing United Pac. Ins. Co. v. United States, 464 F.3d
at 1329–30). The contractor is not compensated under the contract but rather under an implied-
in-fact contract. Id.The Court of Federal Claims has jurisdiction over quantum meruit claims “when a
contractor provides goods or services in good faith under an express contract that is later
rescinded for invalidity.” Lee v. United States, 895 F.3d 1363, 1366 (Fed. Cir. 2018) (internal
quotations omitted). Thus, the Court’s “jurisdiction extends only to contracts either express or
implied in fact, and not to claims on contracts implied in law.” Hercules Inc. v. United States,
9
This Court previously ruled that “costs incurred after the Transfer Letter was rescinded are not
recoverable in quantum meruit.” (See ECF No. 36 at 13). This Opinion does not deviate from
that holding.
21
516 U.S. 417, 423 (1996). The two types of implied contracts differ significantly. City of
Cincinnati v. United States, 153 F.3d 1375, 1377 (Fed. Cir. 1998).
An agreement implied in fact is “founded upon a meeting of minds, which,
although not embodied in an express contract, is inferred, as a fact, from
conduct of the parties showing, in the light of the surrounding circumstances,
their tacit understanding.” By contrast, an agreement implied in law is a
“fiction of law” where “a promise is imputed to perform a legal duty, as to
repay money obtained by fraud or duress.”
Hercules Inc., 516 U.S. at 424 (citations omitted) (quoting Balt. & Ohio R.R. Co. v. United
States, 261 U.S. 592, 597 (1923)).
Implied-in-fact contracts have the same requirements as express, valid contracts. See
Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997) (“[T]he general
requirements of a binding contract with the United States are identical for both express and
implied contracts.”). These general requirements are “(1) mutuality of intent to contract; (2)
consideration; and (3) lack of ambiguity in offer and acceptance.” Lewis v. United States, 70
F.3d 597, 600 (Fed. Cir. 1995) (quoting City of El Centro v. United States, 922 F.2d 816, 820
(Fed. Cir. 1990), cert. denied, 501 U.S. 1230 (1991)). “When the United States is a party, a
fourth requirement is added: the government representative whose conduct is relied upon must
have actual authority to bind the government in contract.” Id. (internal quotation marks omitted).
Cully’s quantum meruit claim is separate and distinct from its takings claim. That claim
is based upon the performance of remediation work in 2005, the cost of which was $45,000.
(Pl.’s Pre-trial Memo. at 10, ECF No. 113). While the claims are based on the same operative
facts, the takings claim seeks compensation for property, and the quantum meruit claim seeks to
recover costs of remediation. Thus, the United States’ argument, that quantum meruit is an
alternative claim that must fail for the same reasons that the takings claim, is misplaced. Because
the Court has found that the transfer of a reversionary interest was valid, whether Cully can
recover in quantum meruit is limited to the extent Cully believed it was performing remediation
to receive a possessory interest and what interest the parties believed were being transferred.
Thus, questions of fact necessitate trial on these issues. Judgment on the quantum meruit claim is
therefore denied.
III. Conclusion
The Court finds that Cully has established a valid, reversionary interest in the property at
issue and that a temporary taking of that interest. However, trial is necessary to determine what
actual damages Cully can prove as just compensation. Therefore, Cully’s Motion for Summary
Judgment is GRANTED-IN-PART and DENIED-IN-PART. Second, the Court is unable to
resolve Cully’s quantum meruit claim on the United States’ motion. The United States’ Motion
for Summary Judgment is DENIED.
IT IS SO ORDERED.
s/ David A. Tapp
DAVID A. TAPP, Judge
22