Carpenter v. United States, 19-047T

CourtCourt of Federal Claims
PartiesJOHN CARPENTER et al., Plaintiffs, v. UNITED STATES, Defendant.
Docket NumberNo. 19-047T,19-047T
Decision Date03 April 2020

Keywords: rails-to-trails, easements, Fifth Amendment, Vermont, takings, railroad, right-of-way, merger doctrine, partial summary judgment, railbanking, RCFC 56(a)

Adam Riley, and Ethan Flint, Flint Law Firm, LLC, Edwardsville, IL, for Plaintiffs.

Christopher Chellis, United States Department of Justice, Environment & Natural Resources Division, Natural Resources Section, with whom were Jean Williams, United States Department of Justice, Environment & Natural Resources Division, Deputy Assistant Attorney General, Washington, D.C., for Defendant.


TAPP, Judge.

This case arises under the National Trails System Act of 1968 (Trails Act) and concerns several parcels of land along a railway line in Bennington, Vermont. Before the Court are the parties' cross-motions for partial summary judgment. On November 9, 2019, Plaintiffs moved for partial summary judgment on one claim by Amory Pacific, LLC,1 alleging that the United States Surface Transportation Board's ("STB" or the "Board") conversion of the railway corridor into recreational trail, by operation of the Trails Act, effected a taking of Plaintiffs' property. (Pls. Mot., ECF No. 21). On December 6, 2019, the United States responded and filed a cross-motion seeking partial summary judgment on five parcels, including the Amory Pacific claim that is the subject of Plaintiffs' motion, arguing that Amory Pacific has no ownership interest on which to base its takings claim. (Def. Mot. at 1, ECF No. 24). On December 27, 2019, and January 10, 2020, the parties filed their respective replies. (Pls. Reply, ECF No. 26; Def. Reply, ECF No. 27). This matter is now fully briefed and ripe for decision.

For the reasons set forth below, the Court GRANTS Plaintiffs' Motion for Partial Summary Judgment with respect to the claim brought by Amory Pacific, LLC; DENIES-IN-PART the United States' Cross-Motion for Partial Summary Judgment as it relates to the Amory Pacific claim; and GRANTS-IN-PART the United States' Cross-Motion for SummaryJudgment as it relates to the claims brought by John and Sylvia Carpenter,2 Dwayne Scott Dupee,3 and SEALL, INC.4 Finally, Plaintiffs' motion requesting oral argument (ECF No. 28) is DENIED AS MOOT.

I. Background

The property at issue is a 1.57-mile segment of a railroad right-of-way corridor running through the Town of Bennington, Vermont. (Def. Mot. at 5). This segment is part of a 131-mile rail line owned by the State of Vermont and currently operated by Vermont Railway, Inc. ("VTR"), but has been owned or used by several railroad companies over the years.5 (See Def. Mot, Ex. 1). Vermont's acquisition and VTR's operation of this line was authorized by the Interstate Commerce Commission ("ICC")—a predecessor agency to the STB— in 1964. (Id., Ex. 2). In 2004, the STB authorized VTR to operate the line under a modified certificate, which exempted VTR from the requirements of 49 U.S.C. § 10903 regarding termination of operations. (Id.).

On July 5, 2018, VTR filed a 49 C.F.R. § 1152.50 Notice of Exemption to abandon rail service over the 1.57-mile segment of rail line and pursue a public use and interim trail use agreement with the Town of Bennington. (Id., Ex. 1). On September 14, 2018, pursuant to VTR's Notice and the Town of Bennington's request, the STB issued a Notice of Interim Trail Use ("NITU"). (Id., Ex. 2). On October 16, 2018, the Town of Bennington, State of Vermont, and VTR filed their interim trail use agreement with the STB. (Id., Ex. 4). Under the terms of the agreement, the Town of Bennington assumed responsibility for the management of the right-of-way corridor, as well as the associated legal and tax liabilities. (Id.).

On November 9, 2019, Plaintiffs moved for Partial Summary Judgment on a single parcel belonging to Amory Pacific, LLC. (Pls. Mot. at 2). On December 6, 2019, the United States filed its Response and Cross-Motion for Partial Summary Judgment on five parcels: John Carpenter and Sylvia Carpenter; Dwayne Scott Dupee; Amory Pacific, LLC; and SEALL, INC. (Def. Mot. at 10, 12, 14; see also Stipulations, ECF No. 18). In their response and reply, Plaintiffs conceded the Carpenter, Dupee, and one of the SEALL claims should be dismissed.6 (Pls. Reply at 3).

The subject of the parties' remaining dispute is whether the railroad source deed ("Patchin deed") recorded at Book 31, Page 489 (the "31/489 deed") in Bennington County, Vermont, conveys property in fee simple or merely an easement.

II. Summary Judgment Standard

The jurisdiction of the Court of Federal Claims is primarily found in the Tucker Act, which allows the Court "to render any judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express of implied contract with the United States . . . in cases not sounding in tort." 28 U.S.C. § 1491(a)(1). Under the Tucker Act, the United States waives its sovereign immunity for certain claims founded on another source of substantive law. United States v. Testan, 424 U.S. 391, 298 (1976); Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005). "Rails-to-rails" claims based on the Fifth Amendment's takings clause fall squarely within this Court's jurisdiction. See Preseault v. I.C.C., 494 U.S. 1 (1990).

"The court shall grant summary judgment if the movant shows 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). A "genuine dispute" exists where a reasonable factfinder "could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "Material facts" are those which might significantly alter the outcome of the case; factual disputes which are not outcome-determinative will not preclude summary judgment. Id. In determining whether summary judgment is appropriate, the court should not weigh the credibility of the evidence, but simply "determine whether there is a genuine issue for trial." Id. at 249. In so deciding, the Court must draw all inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 578-88 (1986).

III. Discussion

The parties agree that, in 1852, the Western Vermont Railroad ("WVR") acquired a parcel from Lyman Patchin by quitclaim deed for use in railroad operation. (See Stipulations at 2; Pls. Mot, Ex. F). The parties further agree that Amory Pacific is the current owner of the parcel conveyed in this transaction. (See Stipulations at 2). The parties disagree whether this deed conveyed an easement or conveyed the corridor in fee simple. (See Pls. Mot. at 10; Def. Mot. at 12-13).

Plaintiffs argue the Western Vermont Railroad company obtained only an easement in the Patchin transaction and that easement expired once rail operations ceased. (Pls. Mot. at 1). If the transaction conveyed only an easement, Plaintiffs argue, Amory Pacific assumed full ownership in the land once railroad operations ceased and the parcel was converted to recreational trail use. (Id.). Consequently, Plaintiffs argue Amory Pacific is entitled to compensation under the Fifth Amendment takings clause. (Id. at 2). The United States argues the railroad acquired the parcel from Amory Pacific's predecessors-in-interest in fee simple, thus Amory Pacific has no standing to pursue a takings claim. (Def. Mot. at 1-2). Resolution of these arguments requires an analysis of several different bodies of law, as explained below.

a. The Trails Act

The Interstate Commerce Act of 1887 vested the ICC with excusive authority over the construction, operation, and abandonment of most railroad lines in the United States. Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311 (1981); Caldwell v. United States, 391 F.3d 1226, 1228 (Fed. Cir. 2004). The STB, as a successor agency to the ICC, was vested with this exclusive and plenary authority in 1996. 49 U.S.C. § 1302.

A railroad under the jurisdiction of the STB cannot discontinue service without the consent of the Board. Caldwell, 391 F.3d at 1228. To terminate service along a rail line, the railroad "must either (1) file a standard abandonment application that meets the requirements of 49 U.S.C. § 10903; or (2) seek an exemption, under 49 U.S.C. § 10502." Id. The Trails Act provides a third option, colloquially known as "railbanking," whereby the railroad negotiates with a "trail operator" (usually a state or local municipality) to "assume financial and managerial responsibility for operating the railroad right-of-way as a recreational trail." Id. at 1229; 16 U.S.C. § 1247. When a right-of-way is "railbanked," the abandonment proceedings are stayed, and the STB retains jurisdiction over the corridor with the option to restart rail service at later date. Caldwell, 391 F.3d at 1229; 49 C.F.R. § 1121.4. Because the abandonment proceedings are stayed, so too is the operation of state property law which might "result in extinguishment of easements for railroad purposed and reversion of rights of way to abutting landowners." Id. (quoting 2 I.C.C.2d 591, 1986 WL 68617 (1986)). Therefore, a Fifth Amendment "taking" occurs "if the original easement granted to the railroad under state property law is not broad enough to encompass a recreational trail." Id. (citing Preseault v. United States, 100 F.3d 1525, 1552 (Fed. Cir. 1996) ("Preseault II")).

The railbanking process begins when the railroad either files an abandonment application under 49 U.S.C. § 10903 or a notice of exemption under 49 U.S.C. § 10502. Id. at 1229-30. A potential trail operator then files a railbanking petition which must include: (1) a map and description of the right-of-way; (2) a statement assuming managerial, financial, and legal responsibility for the right-of-way; and (3) an...

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