Macy Elevator, Inc. v. United States

• Decision Date: 21 June 2012
• Docket Number: No. 09-515L,09-515L
• Parties: MACY ELEVATOR, INC., et al., Plaintiffs, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

MACY ELEVATOR, INC., et al., Plaintiffs,

v.THE UNITED STATES, Defendant.

No. 09-515L

United States Court of Federal Claims

Filed: June 21, 2012

"Rails-to-Trails" Case; Just

Compensation Valuation Method;

"Before and After" Valuation Under

the Trails Act; Indiana State Law

Governing Termination of Easements

J. Robert Sears, St. Louis, MO, for plaintiffs. Brent W. Baldwin and Steven M. Wald, St. Louis, MO, and Thomas S. Stewart and Elizabeth G. McCulley, Kansas City, MO, of counsel.

Lary Cook Larson, United States Department of Justice, Washington, DC, with whom was Ignancia S. Moreno, Assistant Attorney General, for defendant.

OPINION

FIRESTONE, Judge.

In this "Rails-to-Trails" case, this court previously ruled that the government violated the Fifth Amendment when it "took" an interest in plaintiffs' property without paying just compensation by authorizing recreational trail use across plaintiffs' properties under a Notice of Interim Trail Use ("NITU"), issued pursuant to the National Trails System Act Amendments of 1983 ("Trails Act"), 16 U.S.C. § 1247(d) (2006). Macy Elevator v. United States, 97 Fed. Cl. 708, 731-36 (2011). Now pending before the courtare the parties' cross-motions for summary judgment on the methodology that the parties will use to value plaintiffs' properties in determining the correct measure of just compensation. In making this determination, the court must address two issues that it had deferred in its earlier liability decision. First, the court must rule on whether "railbanking," as authorized under the Trails Act, falls within the scope of the railroad purpose easements granted by these plaintiffs.¹ Id. at 730. Second, the court must determine "whether the Indiana statute on railroad abandonment is relevant to valuing the property interest taken from plaintiffs." Id. at 735.

While the parties were briefing those issues before this court, the Supreme Court of Indiana accepted certification on similar issues in a different Rails-to-Trails case pending in this court. On March 20, 2012, the Indiana Supreme Court issued its decision in that case. Howard v. United States, 964 N.E.2d 779 (Ind. 2012). The Indiana Supreme Court, in line with the liability opinion in this case, concluded that "under Indiana law, . . . interim trail use pursuant to the federal Trails Act [is] not within the scope of railroad [purpose] easements." Id. at 784. The Indiana Supreme Court also clarified that "railbanking" is not within the scope of railroad purpose easements under Indiana law. Id. The Indiana Supreme Court did not discuss, however, "the consequences of [a finding that "railbanking" and interim trail use fall outside the scopeof railroad purpose easements] under Indiana law." Id. (citing the government's brief in that case). Therefore, the Indiana Supreme Court did not address whether railroad purpose easements in Indiana terminate, by legal abandonment or otherwise, when those easements are used as recreational trails subject to "railbanking."

After the Indiana Supreme Court issued its opinion in Howard v. United States, plaintiffs, on April 30, 2012, filed their reply and response to the pending cross-motions. Pls.' Resp., ECF No. 79. The government has not filed a reply. For the reasons that follow, plaintiffs' motion for partial summary judgment is GRANTED, and the government's motion for partial summary judgment is DENIED.

I. STANDARD OF REVIEW

When considering a summary judgment motion, the court's proper role is not to "weigh the evidence and determine the truth of the matter," but rather "to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Here, the parties' dispute involves only the legal issue of the correct method for determining just compensation under the Trails Act and Indiana law. Summary judgment is appropriate where the only issues to be decided are issues of law. Huskey v. Trujillo, 302 F.3d 1307, 1310 (Fed. Cir. 2002) (citing Dana Corp. v. United States, 174 F.3d 1344, 1347 (Fed. Cir. 1999)); 10A Charles Alan Wright et al., Federal Practice & Procedure § 2725 (3d ed. 2012) ("It necessarily follows from the standard set forth in the rule that when the only issues to be decided in the case are issues of law, summary judgment may be granted.").

II. DISCUSSION

The "just compensation" due for a taking is "reimbursement to the owner for the property interest taken. [The property owner] is entitled to be put in as good a position pecuniarily as if his property had not been taken." United States v. Va. Elec. & Power Co., 365 U.S. 624, 633 (1961) (quotation omitted); Otay Mesa Prop., L.P. v. United States, 670 F.3d 1358, 1364 (Fed. Cir. 2012) ("Where the property interest permanently taken is an easement, the 'conventional' method of valuation is the 'before-and-after' method, i.e., 'the difference between the value of the property before [the easement was imposed] and after the Government's easement was imposed.'" (quoting Va. Elec., 365 U.S. at 632)). The parties do not dispute that just compensation in this case is the difference in the value of the property before and after the taking. Instead, the parties' dispute centers on the precise status of the "before" condition of plaintiffs' properties.

To determine the "before" condition of plaintiffs' properties, the court asks "what interest [plaintiffs] would have enjoyed under [state] law, in the absence of the" government action. See Preseault v. Interstate Commerce Comm'n ("Preseault I"), 494 U.S. 1, 21 (1990) (O'Connor, J., concurring). In this regard, to the extent that the government characterizes the "before" condition as measured by the condition of plaintiffs' properties immediately prior to the issuance of the NITU, this characterization is inconsistent with the nature of a "taking" under the Trails Act. By operation of law, the Trails Act blocks plaintiffs' state law reversionary interests when the NITU is issued and the taking occurs. What was "taken" from plaintiffs were these reversionaryinterests. If state law defines these reversionary interests as a right to unencumbered land, and if these interests would have been triggered absent the issuance of the NITU, then the "before" condition of plaintiffs' properties should be those properties unencumbered by any easement.² See Ladd v. United States, 630 F.3d 1015, 1023 (Fed. Cir. 2010) ("A taking occurs when state law reversionary property interests are blocked. . . . The NITU is the government action that prevents the landowners from possession of their property unencumbered by the easement." (citations omitted)); Ybanez v. United States, 102 Fed. Cl. 82, 87 (2011) ("The determination of what was taken from plaintiffs turns not on the status of the land at the time of the NITU but what interest plaintiffs would have had in the absence of the NITU."); Raulerson v. United States, 99 Fed. Cl. 9, 12 (2011) ("Contrary to defendant's position, the extent of the taking depends not on plaintiffs' property interests at the time of the NITU, but rather upon the nature of the state-created property interest that petitioners would have enjoyed absent the federal action and upon the extent that the federal action burdened that interest." (quotation omitted)).

In its present motion, the government argues that the "before" condition of plaintiffs' properties should be properties that remain encumbered by a railroad purpose easement. The government contends that, under Indiana statutory and common law,railroad purpose easements are not abandoned when they are "railbanked" under the Trails Act or transferred to a trail operator to be used as a recreational trail subject to reactivation as a railroad. ³

Plaintiffs argue in response that the Indiana law of abandonment does not control the outcome of the valuation question. According to plaintiffs, regardless of whether the railroad purpose easements were legally abandoned under Indiana law, the "before" status of their properties for valuation purposes is their properties unencumbered by any easements. Plaintiffs contend that once the railroad purpose easements across their properties were used as a recreational trail, the easements terminated, and plaintiffs should have received possession of their properties unencumbered by any railroad purpose easements. The imposition of recreational trail use by the NITU, plaintiffs argue, blocked those reversionary interests.

The court agrees with plaintiffs. In Indiana, easements may terminate and the property interest may revert to the underlying fee owner not only through abandonment, but also when reversion is expressly provided for in the granting deed, Erie-Haven, Inc.v. First Church of Christ, 292 N.E.2d 837, 841 (Ind. Ct. App. 1973), or when the easement holder changes the use in a way that goes far beyond the purpose for which the easement was created, see Selvia v. Reitmeyer, 295 N.E.2d 869, 874 (Ind. Ct. App. 1973). Applying these principles to the railroad purpose easements at issue in this case, the court concludes that, under Indiana law, the railroad purpose easements terminated when the railroad stopped using the easements for railroad purposes and instead transferred the easements to a trail operator for use as a recreational trail. Absent the continued imposition of trail use pursuant to the NITU, plaintiffs' properties would have reverted to plaintiffs in fee. Therefore, for the reasons discussed in detail below, the "before" condition of plaintiffs' properties must be valued as property unencumbered by any railroad purpose easements.

A. Under Indiana law, easements may be terminated by means other than legal abandonment.

The abandonment of railroad easements under Indiana law is now controlled by statute. Consol. Rail Corp. v. Lewellen, 682 N.E.2d 779, 783 (Ind. 1997). However, this statutory scheme does not impact Indiana law governing the termination of easements by other means. For example, an easement may be terminated in...