McGuire v. U.S.

• Decision Date: 24 December 2008
• Docket Number: No. 06-15812.,06-15812.
• Citation: 550 F.3d 903
• Parties: Jerry McGUIRE, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

550 F.3d 903

Jerry McGUIRE, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 06-15812.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 15, 2008.

Filed December 24, 2008.

Robert M. Cook; Phoenix, AZ; David A. Domina and James F. Cann, Omaha, NE, for the appellant.

Sue Ellen Wooldridge, Assistant Attorney General, Richard G. Patrick, Assistant U.S. Attorney, Phoenix, AZ; Elizabeth A. Peterson, Katherine J. Barton, Attorneys, Department of Justice, Environment & Natural Resources Division, Washington, D.C., for the appellee.

Appeal from the United States District Court for the District of Arizona; James A. Teilborg, District Judge, Presiding. D.C. No. CV-05-02694-JAT.

Before: SIDNEY R. THOMAS and JAY S. BYBEE, Circuit Judges, and FREDERIC BLOCK,^* District Judge.

THOMAS, Circuit Judge:

This appeal presents the question of whether district courts have jurisdiction to entertain a bankruptcy debtor's Tucker Act claims. We conclude that the Tucker Act's sovereign immunity waiver is limited to suits filed in the United States Court of Federal Claims. We reverse the judgment of the district court and remand with instructions to transfer the action to the Court of Federal Claims, which is the appropriate venue for takings claims in excess of $10,000.

I

Jerry McGuire is an experienced farmer with a degree in agronomy and agricultural economics from the University of Arizona. In 1994, McGuire entered into a lease with the Colorado River Indian Tribe ("the Tribe") for 1,355.97 acres of farmland ("Leased Property") on the Tribe's reservation near Parker, Arizona. The lease was for a ten-year period commencing on January 1, 1995 and expiring on December 31, 2004. McGuire was required to pay the Tribe $226,411.92 per year, subject to an appraisal for the years 2000 through 2004. Because the Leased Property was land held in trust for the Tribe by the United States, the lease required the approval of the United States Bureau of Indian Affairs ("BIA"). Allen Anspach, Superintendent of the Colorado River Agency of the BIA, approved the lease on June 13, 1996.

A BIA canal running east to west bisected the Leased Property, dividing the property into a northern half and southern half. At the time the lease was executed, a bridge crossed the BIA canal providing access to the north portion of the property from Mohave Road, the main road that runs from Parker, Arizona to Interstate Highway 10. The bridge was constructed by a former tenant sometime in the 1960's and was made of wood with round concrete piers or bulkheads underneath. The bridge provided the most common and easiest access to the northern portion.

McGuire planted and maintained alfalfa on most of the Leased Property. McGuire made substantial investments towards harvesting the alfalfa crop, purchasing tractors, other farming equipment, trucks, seed, labor, laser leveling, tillage, herbicides and fertilizer. In total, McGuire invested roughly $1,225,300 at the outset of the lease. McGuire acquired a long-term and short-term/revolving loan to finance his investments. From 1995 through 1999, McGuire timely paid his lease payment and water bills every year.

In summer 1998, Anspach verbally informed McGuire that the BIA was going to remove the bridge because it was unsafe. On December 9, 1998, after meeting with McGuire, the Tribe sent a letter to the BIA stating that removal of the bridge would severely limit access to farming lands and decrease the value of the land. The Tribe asked for time to work out a solution. The Tribe sent a second letter on December 23, 1998 asking the BIA to explore alternatives to removing the bridge because the tenants needed the bridge to access the farm land.

Anspach replied to the Tribe on December 24, 1998. Anspach stated that the bridge would be removed in early 2000 because the bridge was not legally authorized under 25 C.F.R. § 171.9 and because the BIA believed the bridge was unsafe. Anspach recommended that the farmers either reroute access or develop a new bridge approved by the BIA. On February 5, 1999, Anspach sent the first of three letters to McGuire giving him written notice that the bridge would be removed in January 2000 because it was deemed to be unsafe and unauthorized. The letter stated:

"If you should decide that you need to bridge the canal in order to operate your farm you may submit to the Agency Superintendent plans, with specifications, for a new bridge and apply for a crossing permit. See attached; Reference to 25 CFR, Ch. 171.9 Structures."

A copy of the regulations was included with the letter. Anspach directed McGuire to contact Ted Henry, Irrigation Systems Manager, if he had any questions.

During 1999, McGuire contacted Henry and Jeff Hinkins, Supervisory General Engineer, and discussed the bridge with them on several occasions. At trial, McGuire recounted one instance in which he drew a sketch of a design for a new bridge with Hinkins, and Hinkins said he was going to discuss it with Anspach. McGuire was told on several occasions by BIA staff that any decision concerning the bridge could only be made by Anspach. McGuire called Anspach throughout the year, but never spoke with Anspach or received a return phone call from him. During this time, BIA staff never provided McGuire with a permit form or formal application for a bridge permit.

In October 1999, McGuire retained local counsel and filed a complaint in tribal court against BIA for the impending removal of the bridge. The complaint alleged that removal of the bridge would be illegal, would breach the lease between McGuire and the Tribe and would take his leasehold. The BIA declined to appear in tribal court. McGuire also appealed Anspach's decision within the BIA to the Western Regional Office, which upheld Anspach's decision. McGuire did not take the appeal any higher within the BIA.

Anspach sent McGuire two additional letters on August 25, 1999 and November 12, 1999 stating that the bridge would be removed in January 2000 and that McGuire could apply for a permit for a new bridge in accordance with 25 C.F.R. § 171.9. On November 12, 1999—the same date as Anspach's last letter to McGuire— the BIA blocked the bridge. The bridge was dismantled and removed in January 2000.

Although the northern portion of the Leased Property could be reached by a few other routes, none were reasonable means of access for McGuire's farming equipment. McGuire and his haulers attempted to access the northern portion in a variety of ways, but none proved successful. McGuire subsequently tried to renegotiate the lease with the Tribe, but the Tribe was unwilling to lower the lease payment or decrease the amount of Leased Property to only include the southern portion. McGuire could not generate enough revenue to make the lease payment from the income from the southern portion alone, and defaulted on his lease in 2000.

McGuire filed for Chapter 11 bankruptcy relief on June 5, 2001. On November 13, 2001, he filed this inverse condemnation action against the United States in bankruptcy court, seeking $2 million in compensation.¹ The United States moved to dismiss for lack of jurisdiction on sovereign immunity grounds. On December 9, 2002, the bankruptcy court issued "Findings and Recommendations." The court held that the Tucker Act, 28 U.S.C. § 1491, waived the government's immunity to suit in district court, relying on the Federal Circuit's decision in Quality Tooling v. United States, 47 F.3d 1569 (Fed. Cir.1995). The court found that it should maintain jurisdiction over the action in the interests of judicial economy and not unduly burdening McGuire. Finally, the court held that the proceeding was not a "core proceeding" and therefore it should report its findings and recommendations to the district court for action under 28 U.S.C. § 157(c). On July 11, 2003, the district court adopted the bankruptcy court's "Findings and Recommendations" and denied the United States' motion to dismiss.

The district court remanded the case to bankruptcy court for trial, which was conducted on April 14 and 15, 2005. Following trial, the bankruptcy court issued "Proposed Findings of Fact and Conclusions of Law," in which the court found that the United States had committed a regulatory taking of McGuire's leasehold interest and recommended an award of $1,132,059.60 in damages—the fair market value of the lease on the entire property for the remaining five years of the lease.

The district court rejected the bankruptcy court's recommendations. The court agreed with the bankruptcy court that the government's actions could qualify as a "regulatory taking," but held that McGuire's claim was not ripe for review because the government never denied an application for a permit to construct a new bridge. This timely appeal followed.

We review the district court's conclusions of law de novo and its findings of fact for clear error. Lim v. City of Long Beach, 217 F.3d 1050, 1054 (9th Cir. 2000). We review jurisdictional issues in bankruptcy de novo. In re Mantz, 343 F.3d 1207, 1211 (9th Cir.2003).

II

The district court erred in holding that McGuire's takings claim was not ripe for review because he never applied for a permit to develop a new bridge. The Supreme Court has held that "a claim that the application of government regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue." Williamson Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 186, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). A court must know "the nature and extent of permitted development before adjudicating the constitutionality of the regulations that purport to limit it." MacDonald v. County of Yolo, 477 U.S. 340, 351, 106 S.Ct. 2561, 91 L.Ed.2d 285 (1986). Until a property owner obtains a final...