McKay v. U.S.

Decision Date21 December 1999
Citation199 F.3d 1376
Parties(Fed. Cir. 1999) PERRY S. MCKAY and CHARLES C. MCKAY, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee. 98-5125 DECIDED:
CourtU.S. Court of Appeals — Federal Circuit

Holly I. Holder, Holly I. Holder, PC, of Denver Colorado, argued for plaintiffs-appellants.

Ethan G. Shenkman, Attorney, Appellate Section, Environment and Natural Resources Division, Department of Justice, of Washington, DC, argued for defendant-appellee. On the brief were Lois J. Schiffer, Assistant Attorney General; David C. Shilton and Michael K. Martin, Attorneys. Of counsel was Thornton W. Field, General Litigation Section.

Before MICHEL, PLAGER, and RADER Circuit Judges.

PLAGER, Circuit Judge.

Perry McKay and Charles S. McKay ("the McKays") sued the United States ("the Government") in the Court of Federal Claims for a Taking under the Fifth Amendment of the United States Constitution. See McKay v. United States, No. 94-580L (Fed. Cl. Apr. 8, 1998). The trial court granted summary judgment of no liability to the Government. Because the Court of Federal Claims did not properly draw all reasonable inferences for and view the facts in the light most favorable to the non-movant, the McKays, and because when that is done there are genuine issues of material fact in dispute, we reverse the grant of summary judgment and remand for further proceedings in accordance with this opinion.

BACKGROUND
1.

Perry McKay and Charles McKay each owned a fifty percent interest in 227 acres of land adjoining the Department of Energy's ("DOE") Rocky Flats Environmental Technology Site ("Rocky Flats"), a nuclear weapons research and production facility. The McKays had a clay mine on that land and had plans to mine gravel there as well.

In response to the Government's initiative to expand the buffer zone surrounding Rocky Flats, the McKays granted the surface rights of their land to the Government in the mid-1970s. The McKays explicitly reserved the mineral interests underlying the 227 acres of land and obtained 'special exception' mining permits in 1979 and 1987 from the local government, the Jefferson County Board of Adjustment ("Board"). In furtherance of their mining interests, the McKays entered into a mineral lease in 1990 with Western Aggregates, Inc. that provided the McKays would receive a minimum of $100,000 in annual payments, plus royalties on all materials mined.

Unbeknownst to the McKays, from 1982 through 1985, DOE periodically sprayed effluence from their facilities onto a 94-acre tract, known as the West Spray Field, which was in that part of the buffer zone overlying the McKays' mineral estate. The sprayed waste was pumped from one of a complex of ponds that were used to hold waste water from several production buildings in Rocky Flats, or to hold runoff or leakage from the ponds.

In the mid to late 1980s, DOE took soil samples from the West Spray Field and conducted a study to assess potential contamination of the area. In a Closure Plan published in 1988, DOE stated that it had preliminarily concluded from its studies of soil samples from the West Spray Field that there were elevated levels of nitrates and volatile organic compounds in the soil. In the Closure Plan, DOE recommended that additional testing be done.

In January of 1991, DOE, the Environmental Protection Agency ("EPA") and the Colorado Department of Public Health and Environment ("CDH") entered into a Federal Facility Agreement and Consent Order ("Interagency Agreement") setting forth schedules and responsibilities for investigating and remediating any contamination at Rocky Flats. Under the Interagency Agreement, because of the uncertainty about the effect of past spraying activities, the West Spray Field was designated a "Hazardous Substance Site."

As part of the studies of the possible contamination of the West Spray Field, groundwater monitoring wells that extended into the McKays' mineral estate were installed on the West Spray Field, without the McKays' consent. The monitoring wells remained there for a period of years.

In May of 1991, a few months after the Interagency Agreement had been signed, David P. Simonson of DOE's Rocky Flats Office sent a letter (the "Simonson letter") to H. Bruce Humphries, the Mineral's Program Supervisor of the Mined Land Reclamation Division of the Department of Natural Resources in Denver, Colorado. The letter demanded that McKays' lessee, Western Aggregates, not interfere nor aggravate the situation in the West Spray Field:

Our major concern is that Rocky Flats is currently a Superfund site. DOE entered into an interagency agreement with EPA and the Colorado Department of Health (CDH) in order to carry out investigation and remediation activities in compliance with applicable laws. Obviously, we would like assurances that Western Aggregates' activities will not interfere with these activities nor aggravate the existing situation.

(emphasis added). The Simonson letter was copied to the Jefferson County Board of Adjustment.

In June of 1991, a month after the Simonson letter was sent, the Jefferson County Board held a hearing to reconsider the McKays' 1987 special exception mining permit for areas underlying the West Spray Field. At the hearing, the Board resolved, inter alia, that:

Due to the existence of the spray field, no disturbance of the site shall occur (except for remedial action work performed by the Environmental Protection Agency or the Colorado Department of Health) until written evidence is presented at a public hearing which clearly demonstrations [sic] to the satisfaction of the Board of Adjustment that no hazards to human health or to the environment would be created by disturbance of the site.

Thus, the McKays' special exception to mine the area around Rocky Flats was reduced in size to exclude the area underlying the West Spray Field. As a result of the reduction in area allowed to be mined, Western Aggregates could not mine the 94 acres under the West Spray Field. Eventually, Western Aggregates terminated its lease with the McKays.

After four years of studies, the agencies released their conclusions from their investigations in a "Final Corrective Action Decision/Record of Decision OU11: West Spray Field" ("ROD"). The ROD stated that no remedial action was necessary for the West Spray Field and that mining of the site would not pose significant risk to human health or the environment.

2.

The McKays filed suit in the United States District Court for the District of Colorado against the United States and others, seeking tort damages and alleging an inverse condemnation claim against the United States. In August of 1994, the district court dismissed the tort claims and transferred the inverse condemnation claim to the Court of Federal Claims. See McKay v. United States, No. 93-B-1121 (D. Col. Aug. 26, 1994).

In the Court of Federal Claims, the McKays alleged a taking based on three theories: 1) that the effluence physically sprayed onto the West Spray Field contaminated their mineral interests underlying the Field; 2) that the installation of groundwater monitoring wells that extended into their mineral estate constituted a physical taking of their property; and 3) that the Board's reduction of the area of their mining permit, instigated by the Government, was a regulatory taking that deprived them of all economic value in their property.

After conducting some discovery, the McKays moved for summary judgment regarding their taking claims, and the Government filed a cross-motion for summary judgment of no liability. The Court of Federal Claims denied the McKays' motion and granted the Government's cross-motion.

In an April 8, 1998 opinion, the Court of Federal Claims discussed its reasons for concluding that all three of the McKays' taking allegations failed. See McKay v. United States, No. 94-580L (Fed. Cl. Apr. 8, 1998). As to the McKays' first allegation, the trial court concluded that the McKays had not provided any objective evidence that the minerals below the West Spray Field were contaminated to such a degree that a permanent physical occupation of their property had occurred. On the McKays' claim that groundwater monitoring wells installed on the West Spray Field constituted a physical taking, the trial court concluded that, according to Colorado law, the wells did not interfere with the use, possession, enjoyment or disposition of the McKays' mineral interests. On the McKays' third claim, that the Board's reduction in their mining permit amounted to a regulatory taking, the trial court concluded that there was no taking because the Board merely granted the McKays' voluntary request for a reduction. Concluding that all three of the McKays' claims failed, the trial court granted the Government's cross-motion for summary judgment of no liability.

DISCUSSION

In reviewing a trial court's grant of summary judgment, we must make an independent determination as to whether the standards for summary judgment have been met. See Conroy v. Reebok Int'l Ltd., 14 F.3d 1570, 1575, 29 USPQ2d 1373, 1377; Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1560, 19 USPQ2d 1111, 1114 (Fed. Cir. 1991); C.R. Bard, Inc. v. Advanced Cardiovascular Sys., Inc., 911 F.2d 670, 673, 15 USPQ2d 1540, 1542-43 (Fed. Cir. 1990). In considering whether summary judgment should have been granted, we view the evidence in a light most favorable to the non-movant and draw all reasonable inferences in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); SRI Int'l v. Matsushita Elec. Corp., 775 F.2d 1107, 1116, 227 USPQ 577, 581 (Fed. Cir. 1985) (en banc). A motion for summary judgment is properly granted only if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c). When both parties move for...

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