Banks v. United States

• Citation: 741 F.3d 1268
• Decision Date: 28 January 2014
• Docket Number: No. 2012–5067.,2012–5067.
• Parties: John H. BANKS, et al., Plaintiffs–Appellants, v. UNITED STATES, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

741 F.3d 1268

John H. BANKS, et al., Plaintiffs–Appellants,

v.UNITED STATES, Defendant–Appellee.

No. 2012–5067.

United States Court of Appeals,

Federal Circuit.

Jan. 28, 2014.

Eugene J. Frett, Sperling & Slater, P.C., of Chicago, IL, argued for plaintiffs-appellants. Of counsel on the brief were Mark E. Christensen, Christensen & Ehret, LLP, of Chicago, IL, and John Ehret, of Olympia Fields, IL.

Elizabeth Ann Peterson, Attorney, Environment & Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief was Ignacia S. Moreno, Assistant Attorney General.

Brian T. Hodges, Pacific Legal Foundation, of Bellevue, WA, and R.S. Radford, of Sacramento, California, for amicus curiae Pacific Legal Foundation.

Before RADER, Chief Judge, LINN, and WALLACH, Circuit Judges.

WALLACH, Circuit Judge.

These consolidated individual actions were brought by thirty-seven lakefront property owners seeking just compensation under the Fifth Amendment of the United States Constitution for a partial physical taking of their respective properties by the United States Army Corps of Engineers (“Corps”). The United States Court of Federal Claims dismissed the actions as time-barred. Because the Court of Federal Claims violated this court's mandate in Banks v. United States ( Banks II ), 314 F.3d 1304, 1310 (Fed.Cir.2003), and clearly erred in finding that Appellants knew or should have known of their claims before 1952, the Court of Federal Claims' dismissal is reversed.

Background

I. The St. Joseph Harbor Jetties

Beginning in the 1830s, the Corps began constructing two major harbor jetties on Lake Michigan near the St. Joseph River. These jetties protrude outward from the mouth of the river into the body of the lake. They were periodically extended until 1903, when they reached their current length. After 1903, major construction on the jetties ceased until 1950, when the Corps began a project to encase the jetties in steel-sheet piling. This project was completed in 1989.

Appellants (also referred to as “Plaintiffs”) are landowners along approximately four and one-half miles of the eastern shore of Lake Michigan, south of the jetties. This shoreline is eroding naturally, but Appellants allege the jetties block the flow of sand and sediment from the river and the lakeshore north of their properties. Specifically, they argue that the structures interrupt the natural littoral drift within the lake, leading to increased erosion on their properties, amounting to an unlawful taking under the Fifth Amendment.

The Corps has also been concerned with erosion along the Lake Michigan shoreline. In 1958, the Corps released a “Beach Erosion Control Study” (the “1958 Study”) that examined the effects of beach erosion on Berrien County, Michigan, where the St. Joseph jetties are located. This Report documented increased erosion in certain areas as a result of the jetties and recommended that a nourishment program “be initiated at the earliest practicable date.” J.A. 5939. This program did not target Appellants' land because the land was then private and ineligible for federal funding. Nonetheless, the project was expected to benefit them by “restoration of normal littoral drift” in the area. J.A. 5959.

In 1968, Congress enacted the “Rivers and Harbors Act,” which authorized the Secretary of the Army to “investigate, study, and construct projects for the prevention or mitigation of shore damages attributable to Federal navigation works.” River and Harbor Act of 1968, Pub.L. No. 90–483, § 111, 82 Stat. 731, 735 (1968) (codified as amended at 33 U.S.C. § 426i (2012)). Pursuant to this authority, the Corps proposed a plan to mitigate the erosion caused by the jetties by dumping sand into feeder beaches located to the north of Appellants' properties. This endeavor was projected to “provide the quantities of littoral material interrupted by the [jetties] to the shores downdrift.” J.A. 5061.

Implemented in 1976, the mitigation plan “involved placing fine sand from the harbor maintenance dredging on the downdrift [southerly] beaches.” Banks v. United States ( Banks I ), 49 Fed.Cl. 806, 818 (2001), rev'd,314 F.3d 1304 (Fed.Cir.2003) (internal quotation marks and citation omitted). After fifteen years of beach nourishment, the mitigation efforts shifted to using coarser sediment, in the hope it would have a longer retention time than fine sand. Eventually, in 1995, the Corps dumped “barge-loads of large rocks into the lake.” Id. at 819.

In relation to these projects, the Corps released a series of reports in 1973, 1996, 1997, and 1999 on the erosive effects of the jetties and the progress of mitigation efforts. There is also an April 20, 1998, newspaper article relating to the erosion.

The 1973 Report “has been described, without contradiction, ‘as the first credible look at the St. Joseph Harbor structures in estimating the total amount of material trapped in the structures.’ ” Banks v. United States, 78 Fed.Cl. 603, 612 (2007) (“Liability Op.”). The Corps started implementing mitigation programs after this Report.

The 1996 Report concluded that the St. Joseph shoreline was “in a state of recession” and that the erosion that occurs during lakebed downcutting ¹ is “permanent.” Larry E. Pearson, Andrew Morang & Robert B. Nairn, U.S. Army Corps of Engineers, Geologic Effects on Behavior of Beachfill and Shoreline Stability for Southeast Lake Michigan 9, 48 (1996) (“1996 Report”). However, the Report also indicated uncertainty regarding the effects of mitigation efforts: the mitigation program “may provide at least partial protection to the underlying glacial till along and offshore of the feeder beach and the waterworks revetment section of shore. It is unclear whether the beach nourishment is having any negative or positive impact along the 3.5–km revetment section of shoreline south of the waterworks.” Id. at 49; see also Banks II, 314 F.3d at 1307.

The 1997 Report observed that some areas were benefitting from nourishment but in other areas the results were “questionable.” J.A. 5516. The 1999 Report—made public in 2000—identified Lake Michigan as a cohesive, rather than sandy, shoreline, and stated that “ ‘[e]rosion of the consolidated layer [underlayer of a cohesive coastline] is generally irreversible.’ ” ²Banks I, 49 Fed.Cl. at 823 (quoting J.A. 5637). The 1999 Report also found that the effects of the nourishment programs were limited because the programs were based on the assumption that the coastline was sandy, with an unlimited sand supply, and not cohesive. Appellants relied on the 1999 Report in arguing their claims were not time-barred and stated that “the language in this [R]eport is the first clear indication of permanent damage caused by the harbor structures.” Id. (internal quotation marks and citation omitted).

II. Procedural History

This case began in 1999, when a majority of Appellants filed suit in the Court of Federal Claims against the Government claiming an unconstitutional taking under the Fifth Amendment.³See28 U.S.C. § 1491 (1994). In 2001, the Government filed a Motion to Dismiss the Complaint as being time-barred. There was already a “well-developed” evidentiary record before the court because the parties had been preparing for trial. Banks I, 49 Fed.Cl. at 809 n. 4. Appellants also offered expert testimony from Dr. Guy Meadows, a mechanical engineering professor at the University of Michigan. The Court of Federal Claims granted the Motion and dismissed for lack of subject matter jurisdiction, finding that the claims had accrued in 1989 and were therefore barred by the Tucker Act's six-year statute of limitations. Id. Appellants appealed, and this court reversed and remanded in 2003, holding that Appellants' claims did not materialize until 2000, when the Corps' Reports “collectively indicated that the erosion was permanent and irreversible.” Banks II, 314 F.3d at 1310. Specifically, this court held: “We are satisfied that the [P]laintiffs met their jurisdictional burden before the Court of Federal Claims.” Id.

On remand, the Court of Federal Claims held separate trials on liability and damages. On June 4, 2007, the case proceeded to the trial on liability. Liability Op., 78 Fed.Cl. 603. The primary issues addressed were: (1) the zone of influence of the jetties and whether Appellants' properties were located within that zone; (2) whether the composition of the lakebed adjacent to the property was sandy or cohesive; and (3) the effectiveness of the beach nourishment mitigation program. Id. at 613–14. The Court of Federal Claims concluded that, contrary to the allegations in Appellants' Complaints, the jetties were impermeable to sand before they were encased in steel. See id. at 636. The court also found that the United States was liable for 30% of erosion between 1950 and 1970, after each owner's acquisition of his or her property. It held that, after 1970, the United States was responsible for 30% of any losses to erosion that had not been effectively mitigated. Id. at 656. In so concluding, the Court of Federal Claims “heard testimony from 22 witnesses and received some 75 exhibits into evidence.” Id. at 608.

Following the Liability Opinion, Appellants made additional motions, including a Motion in Limine based on the law-of-the-case doctrine to preclude (1) all evidence that the erosion suffered by Appellants was not permanent and irreversible; and (2) evidence relating to the composition of the nearshore lakebed adjacent to Appellants' properties. J.A. 1859. The Court of Federal Claims denied the Motion as to both requests. Appellants also moved to clarify the measure of damages. The court granted the motion to clarify and modified its ruling, finding “that property owners at the time of the taking are entitled to compensation for ‘all damages, past, present, and prospective.’ ” J.A. 1755 (internal citation omitted). The court then held a...