Miller v. United States

Decision Date16 April 1980
Docket NumberNo. 296-74.,296-74.
PartiesHarold A. MILLER, Jane S. Miller, Joanne Miller Lilley, Prudence M. Miller, also known as Prudence Miller, Achsah Jane Graham, Individually and as Trustees, Stimson Lumber Company, Rellim Redwood Co. and Miller Redwood Company v. The UNITED STATES.
CourtU.S. Claims Court

COPYRIGHT MATERIAL OMITTED

Manley B. Strayer, Portland, Or., attorney of record for plaintiffs. Stoel, Rives, Boley, Fraser & Wyse and Tonkon, Torp & Galen, Portland, Or., of counsel.

Howard O. Sigmond, Washington, D. C., with whom was Asst. Atty. Gen., James W. Moorman, Washington, D. C., for defendant.

Richard Murray, Washington, D. C., for Jane W. Bodington, et al., amici curiae. Angelo A. Iadarola, Washington, D. C., for Georgia-Pacific Corp., amicus curiae. McCutchen, Doyle, Brown & Enersen, W. Scott Burke, San Francisco, Cal., and Wilkinson, Cragun & Barker, Washington, D. C., of counsel.

Before KASHIWA, KUNZIG and BENNETT, Judges.

OPINION

BENNETT, Judge:

This case comes before the court on plaintiffs' exceptions to the recommended decision of Trial Judge Thomas J. Lydon, filed May 30, 1979, pursuant to Rule 134(h). Plaintiffs' claim arises from the taking of some 2,646.22 acres from an area known as the Mill Creek tract, owned by the individual plaintiffs,1 for inclusion in Redwood National Park in Del Norte and Humboldt Counties, California. This was a legislative taking pursuant to Pub.L. No. 90-545, approved October 2, 1968, 82 Stat. 931, 16 U.S.C. § 79a et seq. (1976).

Defendant has already paid plaintiffs $11,687,955, plus simple interest thereon at the rate of 6 percent per annum, to compensate them for the taking of their entire property and to stop the running of interest on the amount paid. At trial plaintiffs maintained that the amount paid was not adequate compensation for the taking. The principal valuation disputes between the parties involved the value of the old-growth redwood timber and whether any severance damages were incurred by plaintiffs. The parties stipulated at trial that the fair market value of all land, improvements, and timber other than old-growth redwood timber taken from plaintiffs was $2,981,881.80. With respect to the unresolved issues, the trial judge found that:

(1) the fair market value of the old-growth redwood timber taken from the individual plaintiffs was $10,918,376;

(2) no severance damages were incurred as a result of the taking;

(3) the 6-percent interest rate fixed by Pub.L. No. 90-545 for the delay in payment of just compensation was an appropriate rate of interest; and

(4) plaintiffs were not entitled to recover litigation expenses under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Pub.L. No. 91-646, 91st Cong., 2d Sess., approved January 2, 1971, 84 Stat. 1894, 42 U.S.C. § 4651 (hereinafter Uniform Relocation Act).

Upon consideration of the exceptions, briefs, and oral argument of counsel, and after review of all the evidence, we find that the trial judge was correct in his conclusions with respect to the fair market value of the old-growth redwood timber taken, and in the denial of severance damages and litigation expenses. With respect to the appropriate rate of interest due as just compensation for delay in payment, we have determined that the 6-percent rate per annum set as a minimum by Pub.L. No. 90-545 would not be appropriate in this case.2

I

The families of both Harold A. Miller, the patriarch plaintiff, and his wife, plaintiff Jane S. Miller, were in the timber business, principally in the State of Oregon, prior to their marriage in 1929. Jane S. Miller was the daughter of the founder of the Stimson Lumber Company (Stimson), also a plaintiff herein. In the 1930's the families decided to purchase timberlands in northern California in an effort to establish an independent timber source for lumber operations. Timberland purchases in Del Norte County, California, began in 1942 and continued into the mid-1960's. As of October 2, 1968, the individual plaintiffs, see note 1 supra, owned some 19,390 acres, known as the Mill Creek tract, as tenants-in-common with individual interests of each specified by percentages, e.g., Harold A. Miller had, as a tenant-in-common, an undivided interest of 48 percent in the Mill Creek tract. Harold A. Miller and others owned additional tracts of timberland in Del Norte County as of October 2, 1968.

Rellim Redwood Company (Rellim), a California corporation and a plaintiff herein, was established in 1955 to manage, harvest, and sell the timber from the timberlands in Del Norte County owned by the individual plaintiffs under contractual arrangements, amended from time to time, which spelled out the rights, liabilities, and obligations of the individual and corporate parties. As of October 2, 1968, almost all of the timber harvested by Rellim was sold as logs to Miller Redwood Company (Miller Redwood). The individual plaintiffs were paid by Rellim when timber was harvested from the Mill Creek tract. Harold A. Miller has been president of Rellim at all times material herein.

Miller Redwood, a California corporation and a plaintiff herein, was established sometime in the early 1960's. In that time period, the individual plaintiffs transferred some 102.33 acres of land, located in the midst of the Mill Creek tract, to Miller Redwood for the purpose of constructing a sawmill and other lumber manufacturing facilities. A sawmill was constructed in 1964 and a veneer plant was constructed in 1967, although the necessary steam vats for the plant were not completed until mid-1968. As of October 2, 1968, Miller Redwood obtained its entire supply of logs from the timberlands of the individual plaintiffs through Rellim and manufactured those logs into lumber, veneer, or other forest products. Harold A. Miller has been president of Miller Redwood at all times material herein.

Stimson, an Oregon corporation, was established in 1930. As indicated earlier, Stimson owned all of the outstanding stock of both Rellim and Miller Redwood and the individual plaintiffs owned and/or controlled some 97 percent of Stimson outstanding stock as of October 2, 1968. The profits of both Rellim and Miller Redwood inured to the benefit of Stimson. The profits of Stimson were paid to its shareholders who were predominantly the individual plaintiffs herein. Harold A. Miller was, at all times material herein, president and chairman of the board of directors of Stimson.

Immediately prior to October 2, 1968, the individual plaintiffs owned some 21,305.15 acres of timberlands in Del Norte County, California, of which some 8,248.87 acres contained old-growth redwood timber. Timber more than 100 years old is classified as old-growth timber. Pub.L. No. 90-545 took 2,646.62 acres of forest lands from the individual plaintiffs, of which 876.57 acres contained old-growth redwood timber. The taken acreage was located on the northern portion of the Mill Creek tract.

The taken lands were located southeast of, and in close proximity to, Crescent City, California, and U.S. Highway 101. These lands contained both high quality paved roads and poorly maintained dirt roads. The topography of the land ranged from 200 feet above sea level along Mill Creek, a body of water running through the area, to over 1,500 feet above sea level in the northeast area. The taken lands contained a variety of timber species, the most important of which was coastal old-growth redwood (known as sequoia sempervirens). These lands contained virgin timbered areas, cutover areas, second-growth areas, and residual timbered areas.

Roughly 500 acres of the timbered area taken support stands of large old-growth redwood timber. Nearly 100 of these 500 acres contain stands of extra large-sized, old-growth redwood trees. Generally these large-sized trees are located on the flats bordering Mill Creek, about 1 mile north of the Miller Redwood sawmill, veneer plant, and manufacturing facilities. This 100-acre area was approximately 3 miles from U. S. Highway 101 and was accessible by means of a main access road. Large numbers of old-growth redwood trees in this 100-acre area are over 100 inches in diameter and some of these trees are over 300 feet in height. The largest old-growth redwood tree measured 202 inches in diameter, and the tallest tree was over 330 feet in height. In terms of timber volume, i.e., thousand board feet (MBF) per acre, the stands in this 100-acre area averaged higher than any other old-growth redwood timber stand included within Redwood National Park. Defendant's timber experts readily admitted that this 100-acre area contained some of the best old-growth redwood timber in existence. The old-growth redwood timber on the remaining areas of the taken lands generally was smaller in size, but some good-sized trees were in those areas as well. On the whole, the old-growth redwood timber taken from the individual plaintiffs was of very high quality.

As of October 2, 1968, it is conceded that the highest and best use of the lands taken from the individual plaintiffs was timber crop production. There is also no dispute about the fact that the fair market value of the taken timber must be determined as of October 2, 1968. United States v. Miller, 317 U.S. 369, 374, 63 S.Ct. 276, 280, 87 L.Ed. 336 (1943).

The parties engaged private consulting firms to determine the volume and the fair market value of the old-growth redwood timber taken from the individual plaintiffs and to determine whether plaintiffs, individual and corporate, incurred severance damages as a result of this taking. Plaintiffs engaged the firm of Mason, Bruce & Girard (MBG), Consulting Foresters, whose principal office was located in Portland, Oregon. Defendant engaged the firm of Hammon, Jensen, Wallen, & Associates (HJW), whose principal office was located in Oakland, California. Both of these firms were well known in the forest industry and...

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