Norman v. U.S.

• Citation: 429 F.3d 1081
• Decision Date: 18 November 2005
• Docket Number: No. 05-5039.,05-5039.
• Parties: Don Roger NORMAN, Roger William Norman, and South Meadows Properties Limited Partnership, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

429 F.3d 1081

Don Roger NORMAN, Roger William Norman, and South Meadows Properties Limited Partnership, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 05-5039.

United States Court of Appeals, Federal Circuit.

November 18, 2005.

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Roger J. Marzulla, Marzulla and Marzulla, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Nancie G. Marzulla.

John L. Smeltzer, Attorney, Appellate Section, Environment & Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Kelly A. Johnson, Acting Assistant Attorney General, and Katherine J. Barton, Attorney.

Before MICHEL, Chief Judge, BRYSON, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

Don Norman, Roger Norman, and South Meadows Properties (collectively "appellants" or "the Normans") appeal two decisions of the United States Court of Federal Claims. The first, issued April 17, 2003, dismissed the Normans' illegal exaction claim for lack of jurisdiction. Norman v. United States, 56 Fed.Cl. 255 (2003) ("Norman I"). The second, issued December 10, 2004, dismissed, after a trial on the merits, the Normans' claim for just compensation under the Fifth Amendment. Norman v. United States, 63 Fed.Cl. 231 (2004) ("Norman II"). The Court of Federal Claims issued final judgment on December 14, 2004, and appellants timely filed a notice of appeal on January 5, 2005. For the reasons set forth below, we affirm.

I. BACKGROUND

The opinion of the Court of Federal Claims described the facts of this case in exhaustive detail. See Norman II, 63 Fed.Cl. at 234-43. As the trial judge stated, "[t]he background of this case spans over a decade of land acquisitions, purchases, sales, development plans, permit applications and issuances, with ever-changing persons, parties, companies, partnerships and entities involved." Id. at 233. We refer to the trial court's findings of fact, which appellants do not challenge, and set forth here only those facts that are necessary for the resolution of the appeal.

The Normans are real estate developers who, in the late 1980s, planned to develop commercial and industrial office space in Reno, Nevada, on a 2425-acre property previously used for ranching and agricultural activities (the "Ranch"). See id. at 234. In 1986, a company called Southmark Corporation purchased the Ranch, intending to develop it for commercial and residential uses. Southmark prepared a "master plan" for the development of the property and submitted it to the Reno City Council for approval. On January 30, 1987, the city council "conditionally approved" the master plan, identifying 41 conditions that the developer was required to satisfy before final approval would issue. One of those conditions required the developer to submit to the council "plans approved by the United States Army Corps of Engineers ... delineating wetlands or any other lands the development of which were subject to the issuance of federal permits." Id.

In June of 1988, the Army Corps of Engineers (the "Corps") sent a team of wetlands experts to "conduct field work necessary to prepare a final wetlands delineation." Norman II, 63 Fed.Cl. at 235. In the months before that team arrived, the Normans became interested in purchasing a 470-acre commercial portion of the Ranch for development as an industrial park, "per the Master Plan" prepared by Southmark. Id. The Normans "were unwilling, however, to purchase the 470-acre commercial portion until the Corps completed a final wetlands delineation of the property." Id.

On September 12, 1988, the Corps issued a delineation (the "1988 Delineation"), prepared pursuant to the 1987 version of the Corps' Wetlands Delineation Manual. The 1988 Delineation identified 28 acres of jurisdictional wetlands on the Ranch property, of which 17 acres were located on the 470-acre parcel desired by the Normans. Following completion of the delineation, the Normans acquired the property. Id. At the same time, Robert Helms purchased the 1800-acre "residential" portion of the Ranch. The Normans and Helms then entered into an agreement whereby they agreed to develop their properties consistently with Southmark's Master Plan. The parties do not dispute that the Normans relied upon the 1988 Delineation in purchasing the 470-acre plot, or that their reliance was reasonable.

After the 1988 Delineation became public, however, a "storm of controversy" erupted, as a variety of concerned entities criticized the delineation. Id. at 237. The Corps then "revoked the 1988 wetlands delineation and conducted a new delineation under the 1989 version of the Corps' Wetlands Delineation Manual" (the "1991 Delineation"). Id. The new delineation effort began in April of 1991 and ended in October of 1991.

The 1991 Delineation substantially increased the acreage of jurisdictional wetlands on the subject property, identifying 230 acres of such wetlands. Of the 230 wetland acres, 87 acres were on the "commercial" portion of the parcel owned by the Normans. This increased the wetlands acreage by 70 acres. See Norman II, 63 Fed.Cl. at 237.

The revocation of the 1988 Delineation and the issuance of the subsequent 1991 Delineation lie at the heart of appellants' takings claims. The 1991 Delineation allegedly "forced" the owners of the Ranch property to revise their master development plan to account for the newly non-developable acreage. Id. at 238. In 1994, following creation of a new development plan that provided for development in three phases, the Normans began purchasing smaller properties adjacent to their 470-acre parcel. Later that year, Helms declared bankruptcy, and they purchased his 1800-acre parcel from his bankruptcy estate. The Normans then petitioned the City of Reno to re-annex that 1800 acres to the rest of the Ranch property (which had been de-annexed during Helms' ownership) and sought a master plan amendment to permit the 1800-acre parcel to constitute Phase III of their development plan. The city granted conditional approval in 1995. As of that date, plaintiffs owned approximately 2280 acres of property intended for development in the three-phase master plan. See id. at 238-39.

In 1995, appellants applied to the Corps for a permit under section 404 of the Clean Water Act¹ (a "404 Permit") enabling them to impact 15 acres of jurisdictional wetlands and other waters of the United States. As mitigation for the proposed impact, "plaintiffs proposed to create additional wetlands to ensure no net loss of wetlands functions and values." Norman II, 63 Fed.Cl. at 239. The Corps accepted the proposal and issued the permit.

In 1998, appellants submitted another 404 Permit application, this time seeking permission to impact wetlands throughout the 2280-acre development site. See id. at 239. The Corps responded that because appellants' proposed actions "would result in significant environmental impacts," the Corps would have to prepare an Environmental Impact Statement in compliance with the National Environmental Policy Act of 1969, unless appellants provided "a mitigation plan which clearly reduced the project impacts to a less than significant level." Id. The Corps also provided a "modified development alternative," suggesting a development plan with less significant environmental impacts. Id.

In July of 1999, appellants submitted a revised mitigation proposal that was, according to the trial court's findings of fact, "a result of a negotiations process between the Corps and plaintiffs," in which "the parties discussed which areas of property on the 2280-acre Development could be utilized as mitigation wetlands." Id. at 239. The resulting plan contemplated that "the areas designated ... for storm drainage could sufficiently serve as mitigation wetlands due to the hydrology surrounding that area." Id. at 240. Under the modified development plan, a substantial portion of the mitigation wetlands would be on lands that would not otherwise have been developed in any case.

The Corps approved the proposal and, on August 31, 1999, issued the Normans a 404 Permit enabling them to proceed with their development plan (the "1999 Permit"). The 1999 Permit enabled appellants to fill approximately 60 acres of wetlands; in exchange, it required them to create or restore approximately 195 acres of wetlands as mitigation. In addition, it required them to "[r]ecord[] the formation of a Corps approved funding mechanism for the long term maintenance of the mitigation and preserve areas," and "[r]ecord[] deed restrictions maintaining all mitigation preservation areas as wetland preserves and wildlife habitat in perpetuity" (the "Deed of Restrictions"). Norman II, 63 Fed.Cl. at 240. In order to comply with the 1999 Permit's requirement that appellants provide a funding mechanism, appellants elected to transfer title in 220.85 acres² to South Meadows Association, a non-profit property owners' association initially controlled by the Normans. Id.

Prior to and following issuance of the 1999 Permit, appellants "continued to sell the developable parts of the 2280-acre Development to various independent third parties." Id. at 242. At the time the 1999 Permit actually issued, appellants owned only 716 acres of the original 2280-acre parcel.

The Normans filed the first lawsuit in this matter in 1995, raising breach of contract and takings claims. The subsequent history of the litigation is lengthy and is recited in detail in Norman II, 63 Fed.Cl. at 242-43. For our purposes here, the directly relevant trial court actions occurred beginning in 2003. On April 17 of that year, the Court of Federal Claims issued an opinion dismissing appellants' illegal exaction claim—added in an amended complaint filed in 2001—for lack of jurisdiction. On November 20, 2003, two weeks before trial was scheduled to begin, appellants filed a motion to...