Otay Mesa Prop., L.P. v. United States

• Decision Date: 25 January 2012
• Docket Number: 2011–5008.,Nos. 2011–5002,s. 2011–5002
• Citation: 670 F.3d 1358
• Parties: OTAY MESA PROPERTY, L.P., Rancho Vista Del Mar, Otay International, LLC, OMC Property, LLC, D & D Landholdings, LP, and International Industrial Park, Inc., Plaintiffs–Cross Appellants, v. UNITED STATES, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

670 F.3d 1358

OTAY MESA PROPERTY, L.P., Rancho Vista Del Mar, Otay International, LLC, OMC Property, LLC, D & D Landholdings, LP, and International Industrial Park, Inc., Plaintiffs–Cross Appellants,

v.UNITED STATES, Defendant–Appellant.

Nos. 2011–5002

2011–5008.

United States Court of Appeals, Federal Circuit.

Jan. 25, 2012.

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

John E. Arbab, Attorney, Appellate Section, Environment & Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief was Ignacia S. Moreno, Assistant Attorney General.

Before NEWMAN, SCHALL, and MOORE, Circuit Judges.

SCHALL, Circuit Judge.

The United States appeals the final decision of the United States Court of Federal Claims in Otay Mesa Property, L.P. v. United States, 93 Fed.Cl. 476 (2010) (“ Compensation Decision ”). In that decision, the court awarded plaintiffs $3,043,051, plus interest, for the temporary taking of a blanket easement over five parcels of land in the Otay Mesa area of San Diego County, California. For their part, plaintiffs cross-appeal the decision of the court which limited the government's liability to the taking of an easement over those five parcels and which limited the period of the taking to April of 1999 to October of 2008. See Otay Mesa Prop., L.P. v. United States, 86 Fed.Cl. 774, 790–91 (2009) (“ Liability Decision ”); Compensation Decision at 486–87. As far as the government's appeal is concerned, we hold that the Court of Federal Claims erred when it concluded that the government's taking of the easement was a temporary rather than a permanent physical taking. This error resulted in an erroneous calculation of plaintiffs' damages. As far as the plaintiffs' cross-appeal is concerned, we hold that the court did not err in limiting the government's liability. We therefore affirm-in-part, vacate-in-part, and remand the case to the Court of Federal Claims for further proceedings.

Background

I

Plaintiffs Otay Mesa Property, L.P., Rancho Vista Del Mar, Otay International, LLC, OMC Property, LLC, D & D Landholdings, LP, and International Industrial Park, Inc. (collectively, “Otay Mesa”) own eleven contiguous parcels of largely undeveloped land adjacent to the Mexican border in the Otay Mesa area of San Diego County. Liability Decision at 775. In 1992, Rancho Vista del Mar granted the United States Border Patrol a twenty-foot-wide easement along the Mexican border. The easement was for the purpose of enabling the Border Patrol to monitor and respond to illegal alien activity. Id. According to Otay Mesa, the Border Patrol dramatically increased its operations on Otay Mesa's property in the aftermath of the September 11, 2001 terrorist attacks. Id.

Otay Mesa filed suit in the Court of Federal Claims in 2006. ¹ The suit alleged that the Border Patrol's activities of patrolling outside the boundaries of the easement, assuming stationary positions on Otay Mesa's land, creating new roads, constructing a permanent tented structure on Otay Mesa's land, and installing underground motion-detecting sensors constituted a “permanent and exclusive occupation” entitling the plaintiffs to just compensation under the Fifth Amendment's Takings Clause.² Liability Decision at 775 (citing Boise Cascade Corp. v. United States, 296 F.3d 1339, 1353 (Fed.Cir.2002)).

II

After a trial on liability, the Court of Federal Claims ruled that, with the exception of the placement of the sensors, it lacked jurisdiction to consider Otay Mesa's claims. The court reasoned that “[i]f the Border Patrol's activity on [Otay Mesa's] property ever arose to a ‘permanent and exclusive occupation,’ it did so between 1996 and 1999.” Id. at 788. The court held that because Otay Mesa did not file suit until 2006, its claims were barred by the six-year statute of limitations in 28 U.S.C. § 2501 (2006), id. at 786–90. See John R. Sand & Gravel Co. v. United States, 552 U.S. 130, 133–34, 128 S.Ct. 750, 169 L.Ed.2d 591 (2008) (noting that the Supreme Court has “long interpreted” the statute of limitations for the Court of Federal Claims as setting forth a jurisdictional deadline). Otay Mesa has not appealed that ruling.

Otay Mesa's claim relating to the Border Patrol's use of underground sensors was not found to be time-barred because on August 28, 2008, the government filed a stipulation of partial liability directed to its placement of underground sensors on five of Otay Mesa's eleven parcels (Nos. 1, 3, 4, 5, and 10). Liability Decision at 777; Def.'s Stip., Otay Mesa Prop., L.P. v. United States, No. 06–CV167 (Fed.Cl. Aug. 28, 2008, am. Oct. 16, 2008) (“Def.'s Stip.”).³ The stipulation acknowledged that the Border Patrol had installed fourteen “seismic intrusion sensors” at various underground locations on parcels 1, 3, 4, 5, and 10 between April of 1999 and November of 2005. Liability Decision at 777. The government stipulated that “by virtue of its placement of the 14 sensors ... on the [five] parcels of land, it had taken a property interest in the nature of an easement over the parcel of land on which the sensors have been placed....” Id. (quoting Def.'s Stip. ¶ 6). The stipulation described the easement as:

A perpetual and assignable easement to locate, construct, operate, maintain and repair or replace the specified underground seismic intrusion sensors on the specified parcels, including the right to ingress and egress to each sensor location. The easement shall be deemed to have commenced on the date the sensor is listed as having been installed, and will continue until the sensor is no longer needed or the property is developed. Each sensor is and shall be located so as not to affect the functionality of the property. Should the landowner desire to develop any portion of the subject parcel, the sensor will be removed or redeployed upon 30 days written notice that a grading permit has been issued by the County of San Diego permitting development of all or a portion of the property. Upon removal of a sensor, the portion of the easement relating to that sensor shall terminate....Liability Decision at 777 (quoting Def.'s Stip. ¶ 7).

Based on the government's stipulation, the Court of Federal Claims held that the government was liable for the physical taking of an easement over the five parcels for the purpose of installing and operating the sensors. Liability Decision at 790–91. The court reserved the determination of damages for a subsequent proceeding. Id. at 791.

Following a damages trial, the Court of Federal Claims concluded that Otay Mesa was entitled to just compensation of $3,043,051, plus interest, for the sensor easement. The court based this conclusion on its finding that the Border Patrol “possesses a temporary, nonexclusive, blanket easement to deploy seismic sensors” on the parcels identified in the stipulation. Compensation Decision at 479–80. The court reasoned that the taking was temporary because either party may terminate the easement, i.e., it terminates “upon the occurrence of one of two events: (1) when the sensor is removed because it is no longer needed [by the Border Patrol]; or (2) when [Otay Mesa] obtain[s] a grading permit from the County of San Diego permitting development of all or a portion of the property.” Id. at 480, 488. The court determined the period of the easement to be from April of 1999 to October of 2008. Id. at 486. The court arrived at the April 1999 beginning date because that was when the first sensor identified in the stipulation was installed. The court selected October of 2008 as the ending date because that was the cut-off date used by Otay Mesa in presenting its damages evidence. Id. at 480, 481. The court ruled that the easement was “non-exclusive” because it found that the Border Patrol's use of the sensors placed no restriction on Otay Mesa's use of the property. Id. at 480. Finally, because the stipulation permitted the sensors to be placed anywhere on Otay Mesa's property and included the right of ingress and egress over the property, the court determined that the easement was a “blanket” easement over the entirety of the five parcels. Id. at 485–86.

Having found the easement to be temporary, the Court of Federal Claims calculated the amount of compensation to be awarded to Otay Mesa based upon the “fair market rental value” of the property. Id. at 488–89. The court determined that value by averaging the monthly rental for a skydiving training lease ($25 per acre) and a parachute training lease ($58 per acre), which resulted in a rental of $41.50 per acre per month. Id. at 489. The court then applied this rate to each of the five parcels identified in the stipulation, which range in size from 89 acres (parcel 1) to 393.6 acres (parcel 3), beginning with the date the first sensor was installed on that parcel and ending with the October 2008 damages cut-off date employed by Otay Mesa, to arrive at a total damages amount of $3,043,051. Id. at 490. ⁴ The court rejected the government's contention that the easement was permanent and that therefore Otay Mesa's compensation should be calculated based upon the “before-and-after” compensation method, whereby a parcel is valued before and after an easement is imposed. Id. at 488–89.

The government's appeal and Otay Mesa's cross-appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

Discussion

We review the Court of Federal Claims's legal conclusions de novo and its findings of fact for clear error. Ind. Mich. Power Co. v. United States, 422 F.3d 1369, 1373 (Fed.Cir.2005).

On appeal, the government argues that the court erred in its damages award because it incorrectly ruled that the taking was temporary rather than permanent, which led the court to use the fair market rental value method of determining compensation rather than the before-and-after...